<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission File Number: 1-10883
-------------------------------------------
WABASH NATIONAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1375208
- ---------------------------- ------------------------
(State of Incorporation) (IRS Employer
Identification Number)
1000 Sagamore Parkway South,
Lafayette, Indiana 47905
- ---------------------------- ------------------------
Registrant's telephone number, including area code: (317) 448-1591
--------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares of common stock outstanding at August 2, 1996 was
18,908,424.
<PAGE> 2
WABASH NATIONAL CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 1996 and December 31, 1995 1
Condensed Consolidated Statements of Income
for the three and six months ended
June 30, 1996 and 1995 2
Condensed Consolidated Statements of Cash
Flows for the six months ended
June 30, 1996 and 1995 3
Notes to Condensed Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of 9
Security-Holders
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE> 3
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ -----------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 2,606 $ 2,097
Accounts receivable, net 81,775 77,535
Current portion of finance contracts 5,364 5,979
Inventories 159,458 134,294
Prepaid expenses and other 11,677 7,657
------------ -----------
Total current assets 260,880 227,562
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, net 79,122 76,192
------------ -----------
EQUIPMENT LEASED TO OTHERS, net 54,525 35,362
------------ -----------
FINANCE CONTRACTS, net of current portion 25,951 35,123
------------ -----------
OTHER ASSETS 10,917 9,895
------------ -----------
$ 431,395 $ 384,134
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 9,549 $ 12,527
Accounts payable 78,217 88,490
Accrued liabilities 16,956 13,347
------------ -----------
Total current liabilities 104,722 114,364
------------ -----------
LONG-TERM DEBT, net of current maturities 128,204 73,726
------------ -----------
DEFERRED INCOME TAXES 20,060 18,045
------------ -----------
OTHER NONCURRENT LIABILITIES 288 368
------------ -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value 24,700,000 --- ---
shares authorized; no shares issued
Series A Junior Participating Preferred stock,
$.01 per value, 300,000 shares authorized; --- ---
no shares issued
Common stock, $.01 par value, 75,000,000
shares authorized; 18,908,424 and 18,943,228
shares issued and outstanding at
June 30, 1996 and December 31, 1995 189 189
Additional paid-in capital 99,339 99,246
Retained earnings 79,872 78,701
Treasury stock, at cost, 59,600 and
19,600 shares, respectively (1,279) (505)
------------ -----------
178,121 177,631
------------ -----------
$ 431,395 $ 384,134
============ ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 4
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------- ------------------
1996 1995 1996 1995
-------------- --------------- -------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 140,606 $ 193,450 $ 301,828 $ 371,084
COST OF SALES 134,726 176,352 286,879 338,926
-------------- --------------- -------------- ---------------
Gross Profit 5,880 17,098 14,949 32,158
GENERAL AND ADMINISTRATIVE
EXPENSES 1,854 1,768 3,799 3,456
SELLING EXPENSES 1,098 940 2,146 1,916
-------------- --------------- -------------- ---------------
Income from operations 2,928 14,390 9,004 26,786
OTHER INCOME (EXPENSE):
Interest Expense ( 2,908) (1,466) (5,496) (2,458)
Other, net 153 264 292 531
-------------- --------------- -------------- ---------------
Income before income taxes 173 13,188 3,800 24,859
PROVISION FOR INCOME TAXES 71 5,134 1,494 9,843
-------------- --------------- -------------- ---------------
Net Income $ 102 $ 8,054 $ 2,306 $ 15,016
============== =============== ============= ==============
NET INCOME PER SHARE $ 0.01 $ 0.43 $ 0.12 $ 0.79
============== =============== ============= ==============
CASH DIVIDENDS PER SHARE $ 0.03 $ 0.025 $ 0.06 $ 0.05
============== =============== ============= ==============
AVERAGE SHARES OUTSTANDING 18,905 18,945 18,916 18,942
============== =============== ============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 5
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-------------------------------
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,306 $ 15,016
Adjustments to reconcile net income to net
cash used in operating activities-
Depreciation and amortization 7,572 4,741
Bad debt provision 311 292
Deferred income taxes 1,578 2,375
Change in net operating assets-
(Increase) in accounts receivable (4,551) (10,788)
(Increase) in inventories (27,362) (36,797)
(Increase) in prepaid expenses and other ( 3,581) (1,437)
(Decrease) Increase in accounts payable (10,273) 20,741
Increase in accrued liabilities 3,610 1,172
(Increase) in other assets (923) (2,287)
------------ ------------
Total adjustments (33,619) (21,988)
------------ ------------
Net cash used in operating activities (31,313) (6,972)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,684) (24,490)
Proceeds on disposal of leased equipment 11,579 ---
Investment in equipment leased to others (22,519) (10,107)
Investment in finance contracts (3,620) (14,780)
Principal payments on finance contracts 2,398 2,609
Payments for RoadRailer technology (1,054) (20)
Other 42 (44)
------------ ------------
Net cash used in investing activities (17,858) (46,833)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt (5,861) (4,027)
Borrowings under long-term revolver 179,000 132,920
Payments under long-term revolver (185,000) (119,689)
Proceeds from issuance of long-term debt 63,361 10,000
Proceeds from issuance of common stock,
net of expenses 92 389
Payment of common stock dividend (1,138) (947)
Purchase of treasury stock (774) ---
------------ ------------
Net cash provided by financing activities 49,680 18,646
------------ ------------
NET INCREASE(DECREASE) IN CASH 509 (35,159)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,097 39,655
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,606 $ 4,496
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for-
Interest $ 3,861 $ 2,158
============ ============
Income Taxes $ 706 $ 8,613
============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Finance contracts converted to operating leases $ 3,032 ---
Operating leases converted to finance contracts $ 681 ---
Used trailers transferred from inventory into
operations $ 2,198 ---
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 6
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1. GENERAL
The consolidated financial statements included herein have been prepared
by Wabash National Corporation and Subsidiaries (the Company) without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations; however, the Company believes that the disclosures are adequate to
make the information presented not misleading. The condensed consolidated
financial statements included herein should be read in conjunction with the
financial statements and the notes thereto included in the Company's 1995
Annual Report on Form 10-K.
In the opinion of the registrant, the accompanying financial statements
contain all material adjustments (consisting only of normal recurring
adjustments), necessary to present fairly the consolidated financial position
of the Company at June 30, 1996 and December 31, 1995 and its results of
operations and cash flows for the six months ended June 30, 1996 and 1995.
NOTE 2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Raw material and components $ 93,718 $ 89,961
Work in progress 22,147 13,582
Finished goods 24,481 14,034
Used trailers 19,112 16,717
------------ ------------
$159,458 $134,294
============ ============
</TABLE>
4
<PAGE> 7
NOTE 3. LEASING AND FINANCE OPERATIONS
Wabash National Finance Corporation (the Finance Company), a wholly
owned subsidiary of the Company, provides leasing and finance programs to
customers for new and used trailers. The Finance Company's revenues were
$18,234 and $10,653 during the six months ended June 30, 1996 and 1995,
respectively. Income before income taxes was $1,160 and $2,103 during the six
months ended June 30, 1996 and 1995, respectively. Included below is condensed
balance sheet information which segregates the assets and liabilities of the
Finance Company. All of the Finance Company's debt is on a stand alone basis
without guarantees by the Company.
<TABLE>
<CAPTION>
June 30, 1996
--------------------------------------
(Unaudited) December 31,
Wabash Finance 1995
National Company Consolidated Consolidated
--------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets $ 251,698 $ 9,182 $260,880 $ 227,562
Property, plant and
equipment, net 79,064 58 79,122 76,192
Equipment leased to
others, net --- 54,525 54,525 35,362
Finance contracts, net
of current portion --- 25,951 25,951 35,123
Other assets 10,764 153 10,917 9,895
Due from subsidiary/(to) parent 6,912 (6,912) --- ---
Investment in subsidiary 26,556 --- --- ---
--------- ------- -------- ---------
$ 374,994 $82,957 $431,395 $ 384,134
========= ======= ======== =========
LIABILITIES AND STOCK-
HOLDERS' EQUITY:
Current liabilities $ 95,000 $ 9,722 $104,722 $ 114,364
Long-term debt, net of
current maturities 86,235 41,969 128,204 73,726
Other long-term
liabilities 15,638 4,710 20,348 18,413
--------- ------- -------- ---------
196,873 56,401 253,274 206,503
Stockholders' equity 178,121 26,556 178,121 177,631
--------- ------- -------- ---------
$ 374,994 $82,957 $431,395 $ 384,134
========= ======= ======== =========
</TABLE>
NOTE 4. LONG-TERM DEBT
On January 31, 1996, the Company issued $50 million of unsecured 6.41%
Series A Senior Notes due on January 31, 2003. The proceeds were used to
repay amounts outstanding under the Company's revolving line of credit.
5
<PAGE> 8
In addition, during June, 1996, the Finance Company concluded a one-year
extension of its existing $50 million secured, revolving bank line of credit
which will now expire on June 10, 1997, at which time the terms of the credit
facility can be renegotiated, or at the election of the Finance Company, the
outstanding principal balance can be paid down in 36 equal monthly
installments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
Net sales for the second quarter of 1996 decreased $53 million or 27%
compared to the same period in 1995 and were $69 million or 19% lower for the
six month period ended June 30, 1996 compared to the corresponding period in
1995. The decreased sales for the second quarter and six month period were
primarily attributable to a decrease in new trailer sales of $59.9 million and
$81.8 million, respectively, offset in part by an increase in sales of used
trailers which were previously under lease by the Finance Company of $6 million
and $11 million, respectively. The decreases in new trailer sales of $59.9
million and $81.8 million for the three and six month periods, respectively,
were caused by a 31% and 24% decrease in units sold, primarily as a result of
weak market conditions in the domestic trailer industry and decreased production
on the Company's plate trailer line as a result of a limited supply of composite
material for the Company's newly introduced composite plate trailer. New
trailer sales in the second quarter of 1996 compared to the same period in 1995
were further impacted by a 2.7% decrease in the average sales price per new
trailer sold, reflecting the shift in production mix during the quarter to lower
priced doubles and away from higher priced plate trailers. For the six month
period ended June 30, 1996, the average sales price per new trailer sold was
approximately even with the same period in 1995. The Finance Company's lease
portfolio increased from 6,800 new trailers at June 30, 1995 to 7,083 trailers
at June 30, 1996. Lease revenues, for the three and six month periods ended
June 30, 1996, excluding revenue from the sale of leased trailers, are even with
revenues in the same periods in 1995. Revenues from aftermarket parts sales
increased 30% and 17% for the three and six month periods ended June 30, 1996
compared to the same periods in 1995. The increase in aftermarket parts sales
reflects the Company's strategy of continuing to increase its independent dealer
network and branch operations.
6
<PAGE> 9
Gross Profit
Gross profit as a percentage of sales totaled 4.2% for the second quarter
of 1996 compared to 8.8% for the same period in 1995. The gross profit margin
for the six-month period ended June 30, 1996 as a percentage of sales was 5.0%
versus 8.7% for the same period in 1995. The decrease in the gross profit
percentage in 1996 reflects the decrease in sales volume, changes in product
mix and increased costs related to the significant expansion of capacity during
1995. The expansion related costs included, among other things, increased
depreciation and labor in both the three and six month periods ended June 30,
1996.
Income From Operations
Income from operations for the three and six month period ended June 30,
1996 as a percentage of net sales was 2.1% and 3.0% compared to 7.4% and 8.7%
for the same period in 1995. Income from operations in 1996 was impacted
primarily by the decrease in the gross profit margins previously discussed.
Interest Expense
Interest expense for the three and six month period ended June 30, 1996
totaled $2.9 million and $5.5 million compared to $1.5 million and $2.5 million
for the same period in 1995. The increase in interest expense primarily
reflects new term and bank line of credit debt associated with the growth in
the leasing operations and working capital requirements, primarily due to the
increase in inventory.
Taxes
The provision for income taxes for the three and six month periods ended
June 30, 1996 of $.1 million and $1.5 million, respectively, represents 41.0%
and 39.3% of pre-tax income for the periods compared to the provision of $5.1
million and $9.8 million, or 38.9% and 39.6% of pretax income, respectively,
for the same periods in 1995. The effective tax rates are higher than the
Federal statutory rates of 35% due primarily to state income taxes.
7
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Condensed Consolidated Statement of Cash Flows, net
cash used in operating activities was $31.3 million during the first six months
of 1996 primarily as a result of changes in working capital resulting from
increases in accounts receivable and inventory coupled with a decrease in
accounts payable. These changes in working capital were primarily the result
of the continued weakness in the domestic trailer market as well as the
Company's focus on new product introduction.
During the first six months of 1996, the lease portfolio (finance
contracts and equipment leased to others) increased $9.4 million, as the
Company continued to expand its leasing operations. In addition, the Company
used $4.7 million of cash for capital expenditures during the first six months
of 1996, principally for the purpose of achieving increased manufacturing
capacity and improved manufacturing productivity.
At June 30, 1996, the Company's total debt was $137.8 million compared to
$86.3 million at December 31, 1995. The net increase in the Company's debt
primarily reflects new term and bank line of credit debt associated the
increased working capital requirements due to higher receivables and inventory
levels. Also, during January, 1996, the Company issued $50 million of
unsecured 6.41% Series A Senior Notes due January 31,2003 and used the proceeds
to repay amounts under the Company's revolving line of credit.
On April 27, 1995, the Company announced that the Board of Directors
authorized a common stock repurchase plan of up to $30 million in the
aggregate. The Company may purchase its common stock in the open market or in
block transactions from time to time as it deems appropriate.
Other sources of funds for capital expenditures, continued expansion of
businesses, potential contingent payments associated with the acquisition of
RoadRailer technology, dividends, principal repayments on debt, stock
repurchase and working capital requirements are expected to be cash from
operations, additional borrowings under the credit facilities and term
borrowings which are negotiated by the Finance Company related to specific new
lease arrangements. The Company believes that these funding sources will be
adequate for its anticipated requirements.
8
<PAGE> 11
BACKLOG
The Company's backlog of orders was approximately $590 million
at June 30, 1996 and $1,028 million at December 31, 1995. The Company builds
trailers to customer order and does not maintain an inventory of new trailers
built in anticipation of future orders. The Company's backlog represents the
amount of orders the Company believes to be firm. Such orders may be subject
to extension, delay or cancellation under certain circumstances.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company held its annual meeting of security-holders on May
14, 1996, at which security-holders elected the Board of Directors for the
ensuing year.
(1) Nominees Elected to the Board of Directors:
<TABLE>
<CAPTION>
WITHHOLD AUTHORITY
NOMINEES FOR TO VOTE
-------- --- -------
<S> <C> <C>
Richard E. Dessimoz 17,400,021 80,494
Donald J. Ehrlich 17,400,710 79,805
John T. Hackett 17,400,210 80,305
E. Hunter Harrison 17,400,110 80,405
Mark R. Holden 17,400,110 80,405
Ludvik F. Koci 17,398,971 81,544
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.40 First Amendment, dated December 5, 1995, to Credit
Agreement dated June 13, 1995, between Core States
Bank, N.A. and certain other banking institutions and
Wabash National Finance Corporation.
10.41 Second Amendment, dated June 11, 1996, to Credit
Agreement dated June 13, 1995, between Core States
Bank, N.A. and certain other banking institutions and
Wabash National Finance Corporation.
10.42 Third Amendment, dated June 11, 1996 to Credit
Agreement dated June 13, 1995, between Core States
Bank, N.A. and certain other banking institutions and
Wabash National Finance Corporation.
9
<PAGE> 12
15.01 Report of Independent Public Accountants
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WABASH NATIONAL CORPORATION
Date: August 4, 1996 By: /s/ Mark R. Holden
------------------------ --------------------------------
Mark R. Holden
Vice President - Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
10
<PAGE> 1
EXHIBIT 10.40
FIRST AMENDMENT TO CREDIT AGREEMENT
IN WITNESS WHEREOF, effective December 5, 1995, the parties hereby amend the
Credit Agreement dated June 13, 1995 as follows:
Section 5.2(a)(3) shall be deleted and replaced in its entirety with the
following:
"(3) No piece of equipment shall be included in the Borrowing Base in the first
instance if the lessee is the subject of any proceeding, action or circumstance
of the character referred to in Section 6.1(h) through 6.1(l) hereof."
WABASH NATIONAL FINANCE CORPORATION
By: Richard E. Dessimoz V.P.
------------------------------------------
Name and Title
CORESTATES BANK, N.A. for itself and as Agent
By: William J. Hieb V.P.
------------------------------------------
Name and Title
HARRIS TRUST AND SAVINGS BANK
By:
------------------------------------------
Name and Title
NATIONAL CITY BANK, INDIANA
By:
------------------------------------------
Name and Title
NATWEST BANK, N.A.
By:
------------------------------------------
Name and Title
THE NORTHERN TRUST COMPANY
By:
------------------------------------------
Name and Title
<PAGE> 1
EXHIBIT 10.41
SECOND AMENDMENT
TO
CREDIT AGREEMENT
Second Amendment, dated June 11, 1996 (herein called the "AMENDMENT")
to Credit Agreement, dated June 13, 1995, (herein called the "AGREEMENT")
between and among WABASH NATIONAL FINANCE CORPORATION, an Indiana corporation,
with its main business office located at 9 North Vail Avenue, Arlington
Heights, Illinois 60005 (herein called "WABASH NATIONAL FINANCE"), the banking
institutions named in Exhibit A attached thereto (herein called collectively
the "BANKS" and individually a "BANK") and CORESTATES BANK, N.A., a national
banking association, as agent for the Banks under this Agreement (herein in
such capacity called the "AGENT"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed to them in the
Agreement.
PRELIMINARY STATEMENT
WHEREAS, Wabash has requested that a new Facility Termination Date be
established 364 days from the previous Facility Termination Date as
contemplated by Section 1.1(a)(1) of the Agreement, and has requested certain
modifications be made to the Agreement as set forth in this Amendment.
WHEREAS, Wabash has requested that NatWest Bank N.A. cease to be a Bank
as provided in the Agreement, as amended, and the Commitment of each Bank other
than NatWest Bank N.A. be increased as provided in this Amendment.
WHEREAS, the Banks agree to the requests of Wabash on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and promises
hereinafter set forth and intending to be legally bound hereby, the parties
hereto agree as follows:
1. SECTION 1.1 OF THE AGREEMENT. The date "JUNE 11, 1996" set
forth in two places in the first sentence of Section 1.1 of the Agreement is
hereby deleted and shall be and hereby is replaced by the date "JUNE 10, 1997."
2. SECTION 5.2(a) OF THE AGREEMENT. Section 5.2(a) of the
Agreement is hereby amended and restated in its entirety to read as follows:
"(a) BORROWING BASE. The aggregate principal amount of the
Revolving Credit Loans (or the Refunding Term Loans, as applicable)
plus the aggregate principal amount of all Other Intercreditor Agreement
Debt shall not at any time exceed the Borrowing Base; provided, however,
that this covenant shall not be deemed breached if, with respect to any
time such aggregate amount exceeds said level, within five Business Days
after the earlier of the date Wabash National Finance first has
knowledge of such breach or the date of the next Borrowing Base
Certificate disclosing the existence of such breach a prepayment of the
Revolving Credit Loans or the Refunding Term Loans, as applicable,
Second Amendment to
Credit Agreement -1- June 11, 1996
<PAGE> 2
shall be made in an amount sufficient to assure continued compliance with this
covenant in the future.
The term "BORROWING BASE" shall mean the sum of:
(i) 80% of the net book value of over the road chassis and
trailers, and domestic intermodal containers, on lease to unaffiliated
Persons which leases are either current or less than three months
contractually delinquent,
(ii) 70% of the net book value of RoadRailer(TM) trailers on
lease to unaffiliated Persons which leases are either current or less
than three months contractually delinquent,
(iii) 70% of the net book value of RoadRailer(TM) rail bogies
on lease to unaffiliated persons which leases are either current or less
than three months contractually delinquent, provided, that the value of
RoadRailer(TM) rail bogies shall not exceed 25% of the total eligible
Borrowing Base, and
(iv) 50% of the net book value of each piece of "Class IV
Equipment" (defined below), provided, that, the value of Class IV
Equipment shall not exceed 10% of the total eligible Borrowing Base, and
no piece of Class IV Equipment shall be continue to be included in the
eligible Borrowing Base for more than six months.
"CLASS IV EQUIPMENT" shall mean equipment of the types
referred to in clauses (i), (ii) and (iii) of the definition of the term
"Borrowing Base" which equipment initially was eligible to be included
in the Borrowing Base but subsequently has ceased to be eligible because
(A) the piece of equipment has ceased to be the subject of a valid and
binding lease to an unaffiliated person, (B) the lease applicable to the
piece of equipment is no longer less than three months contractually
delinquent, or (C) a circumstance of the type referred to in
subparagraphs (3), (4), (5) or (12) of the next paragraph shall have
occurred and be continuing.
Each of the following requirements also shall be applicable to
the Borrowing Base, except to the extent specifically provided otherwise
in clause (iv) said definition:
(1) No piece of equipment shall be included in the Borrowing
Base in the first instance unless it shall be the subject of a valid and
binding lease.
(2) No piece of equipment shall be included in the Borrowing
Base in the first instance if the lessee is one month or more in default
with respect to its payment obligations under any lease from Wabash
National Finance (whether or not such default is in respect of the lease
applicable to the piece of equipment in question).
Second Amendment to
Credit Agreement -2- June 11, 1996
<PAGE> 3
(3) No piece of equipment shall be included in the Borrowing
Base in the first instance if the lessee is the subject of any
proceeding, action or circumstance of the character referred to in
Section 6.1(h) through Section 6.1(l) hereof.
(4) No piece of equipment shall remain in the Borrowing Base
for more than three months immediately following termination of the
lease applicable to it unless the piece of equipment shall become the
subject of a new lease.
(5) No piece of equipment shall be included in the Borrowing
Base if the lease applicable thereto has been amended or modified to
reduce the amount or frequency of the lease payments or any waiver of
non-payment is granted with respect thereto, with the purpose of such
amendment, modification or waiver being principally the avoidance of a
payment default in said lease.
(6) The net book value of equipment in the aggregate from
any one lessee includable in the Borrowing Base calculation shall be
limited to 20% of the Borrowing Base as of the compliance date unless
inclusion of the excess is first approved by the Banks.
(7) The depreciation of each piece of equipment included in
the Borrowing Base which is the subject of a lease (that is not a
finance lease) with either a Terminal Rental Adjustment Clause
("TRAC") or a purchase option shall be for a period not greater than
the lease term to the contractual TRAC or purchase option price, as
applicable.
(8) The depreciation of each piece of equipment included in
the Borrowing Base which is the subject of a fixed term non-cancelable
lease (that is not subject to a TRAC or a purchase option) shall be for
either (a) a period not exceed 11 years from the date of manufacture
(except in the case of RoadRailer(TM) rail bogies which shall be 16
years) to a zero residual value or (b), when the number of years from
the date of manufacture plus the remaining fixed non-cancelable lease
term exceeds 11 years in the aggregate (16 years in the case of
RoadRailer(TM) rail bogies), a period not greater than the remaining
fixed non-cancelable lease term to a zero residual value.
(9) No piece of equipment shall be included in the Borrowing
Base if it is more than 12 years from its date of manufacture (except in
the case of RoadRailer(TM) rail bogies which shall be 16 years) or it
has previously been depreciated to a zero value.
(10) No piece of equipment shall be included in the Borrowing
Base unless the Collateral Agent shall have (for the benefit of the
Banks and the holders of the Other Intercreditor Agreement Debt) a first
priority, perfected, lien and security interest in said equipment
(provided, that in the case of equipment which is the subject of a
certificate of title, Wabash National Finance instead shall have taken
all necessary steps to procure the necessary title and to cause the lien
or security interest of the Collateral Agent for the benefit of the
Banks and the
Second Amendment to
Credit Agreement -3- June 11, 1996
<PAGE> 4
holders of the Other Intercreditor Agreement Debt to be noted
on the face of such certificate.
(11) No piece of equipment shall be included in the
Borrowing Base if the executive office of the lessee is located in any
jurisdiction other than the United States or Canada.
(12) No piece of equipment shall be included in the
Borrowing Base if any other piece of equipment on lease to the same
lessee, or any affiliate of such lessee, is ineligible for inclusion in
the Borrowing Base for any reason other than as set forth in clauses
(6), (7) and (10) above."
3. References to "Original Value". All references to the term
"Original Value" in the Agreement is hereby deleted.
4. Exhibit A to Agreement. Exhibit A to the Agreement is hereby
amended and restated to be in form and substance attached hereto.
5. Representations and Warranties. Wabash hereby restates the
representations and warranties made in the Agreement, including but not limited
to Article 3 thereof, on and as of the date hereof as if originally given on
this date.
6. Covenants. Wabash hereby represents and warrants that it is in
compliance and has complied with each and every covenant set forth in the
Agreement, including but not limited to Article 5 thereof, on and as of the
date hereof.
7. Proceedings, Instruments, Etc. All proceedings and actions
taken on or prior to the date hereof in connection with this Amendment and all
instruments incident thereto and hereto shall be in form and substance
satisfactory to the Banks, and the Agent shall have received for each Bank
copies of all documents that any Bank may request in connection with such
proceedings, actions and transactions (including, without limitation, a
replacement Revolving Credit Note duly executed, completed and issued in
accordance herewith, copies of court documents, certifications and evidence of
the correctness of the representations and warranties contained herein and
certifications and evidence of the compliance with the terms and the
fulfillment of the conditions of the Agreement, all in form and substance
satisfactory to each Bank and evidence of the payment in full of the Revolving
Credit Note issued to NatWest Bank, N.A. under the Agreement prior to this
Amendment).
8. Affirmation. Wabash hereby affirms its absolute and
unconditional promise to pay to each Bank the Loans and all other amounts due
under the Agreement and any other Loan Document on the maturity date(s)
provided in the Agreement or any other Loan Document, as such documents may be
amended hereby.
9. Effect of Amendment. This Amendment amends the Agreement only
to the extent and in the manner herein set forth, and in all other respects the
Agreement is ratified and confirmed.
10. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures hereto were upon the same instrument.
Second Amendment to
Credit Agreement -4- June 11, 1996
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have each caused this Amendment
to be duly executed by their duly authorized representatives as of the date
first above written.
WABASH NATIONAL FINANCE CORPORATION
By Richard E. Dessimoz
---------------------------------
Name Richard E. Dessimoz
Title Vice President
Notices To:
Mr. Richard E. Dessimoz
Chief Executive Officer
Wabash National Finance Corporation
9 North Vail Avenue
Arlington Heights, Illinois 80005
FAX No. (708) 577-2204
CORESTATES BANK, N.A., for itself and as Agent
By
---------------------------------
William J. Hieb
Vice President
Notices To:
Mr. William J. Hieb
Vice President
CoreStates Bank, N.A.
Transportation, Leasing and Construction Industry Services
FC 1-8-11-24
Widener Building 11th Floor
1339 Chestnut Street
P.O. Box 7618
Philadelphia, PA 19101-7618
FAX No. (215) 786-7704
Second Amendment to
Credit Agreement -5- June 11, 1996
<PAGE> 6
HARRIS TRUST AND SAVINGS BANK
By Peter Krawchuk
----------------------------
Name
Title V.P.
Notices To:
Mr. Peter Krawchuk
Vice President
Harris Trust and Savings Bank
111 W. Monroe Street
Chicago, IL 60603
FAX No. (312) 461-2591
NATIONAL CITY BANK, INDIANA
By
----------------------------
Name
Title
Notices To:
Mr. Rafe L. Boldrick
Senior Vice President
National City Bank, Indiana
101 West Washington Street
Suite 200 East
Indianapolis, IN 46255
FAX No. (317) 267-8899
THE NORTHERN TRUST COMPANY
By
----------------------------
Name
Title
Notices To:
Mr. G. Anthony Colletta
Second Vice President
The Northern Trust Company
50 South LaSalle Street, Floor B-2
Chicago, IL 60675
FAX No. (312) 444-7028
Second Amendment to
Credit Agreement -6- June 11, 1996
<PAGE> 1
EXHIBIT 10.42
THIRD AMENDMENT
TO
CREDIT AGREEMENT
Third Amendment, dated June 11, 1996, (herein called the "AMENDMENT")
to Credit Agreement, dated June 13, 1995 as amended prior to the date hereof,
(herein called the "AGREEMENT") between and among WABASH NATIONAL FINANCE
CORPORATION, an Indiana corporation, with its main business office located at 9
North Vail Avenue, Arlington Heights, Illinois 60005 (herein called "WABASH
NATIONAL FINANCE"), the banking institutions named in Exhibit A attached
thereto (herein called collectively the "BANKS" and individually a "BANK") and
CORESTATES BANK, N.A., a national banking association, as agent for the Banks
under this Agreement (herein in such capacity called the "AGENT"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Agreement.
PRELIMINARY STATEMENT
WHEREAS, Wabash has requested that an increase in the amount of debt
which may be incurred under Section 5.4((v).
WHEREAS, the Banks agree to the request of Wabash on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and promises
hereinafter set forth and intending to be legally bound hereby, the parties
hereto agree as follows:
1. SECTION 5.4 OF THE AGREEMENT. Section 5.4 of the Agreement is hereby
amended and restated in its entirety to read as follows:
"5.4 DEBT. Wabash National Finance will not create, incur,
assume or in any other manner be liable upon (directly, by guarantee or
otherwise) or permit to exist any Debt except (i) the Debt incurred
hereunder, (ii) Debt for salaries and wages incurred in the ordinary
course of its business, (iii) accounts payable to trade creditors for
goods or services which accounts are paid within 90 days from billing
date, (iv) Debt in existence on the date hereof and described in
reasonable detail on Schedule 1 hereto, (v) Debt arising after the
Closing Date, not to exceed $30,000,000 at any one time outstanding,
(vi) Debt arising after the Closing Date, for which the holder of the
Debt shall have no recourse against Wabash National Finance other than
with respect to collateral pledged to secure such Debt and Wabash
National Corporation shall have no remarketing obligation, (vii) Debt
arising after the Closing Date for goods and/or services which are
reasonable, incidental to and in the regular course of the business of
Wabash National Finance such as items of office equipment and does not
at any one time exceed $100,000 in aggregate amount outstanding, (viii)
Debt arising after the Closing Date, which is for a fixed term and at a
fixed rate from a lender that has entered into the Intercreditor and
Collateral Agency Agreement and pursuant to a debt instrument that
conforms with the covenants and events of default set forth in this
Agreement, and (ix) Debt arising after the Facility Termination Date,
provided that at the time such Debt is incurred and after giving effect
to such Debt and the receipt of the proceeds thereof, no Default or
Event of Default (as defined in Section 6.1) shall exist. Debt meeting
the foregoing exceptions shall
Third Amendment to
Credit Agreement -1- June 11, 1996
<PAGE> 2
be deemed to be "PERMITTED DEBT" for purposes of this Agreement and the
other Loan Documents."
2. REPRESENTATIONS AND WARRANTIES. Wabash hereby restates the
representations and warranties made in the Agreement, including but not limited
to Article 3 thereof, on and as of the date hereof as if originally given on
this date.
3. COVENANTS. Wabash hereby represents and warrants that it is in
compliance and has complied with each and every covenant set forth in the
Agreement, including but not limited to Article 5 thereof, on and as of the
date hereof.
4. PROCEEDINGS, INSTRUMENTS, ETC.. All proceedings and actions taken on
or prior to the date hereof in connection with this Amendment and all
instruments incident thereto and hereto shall be in form and substance
satisfactory to the Banks, and the Agent shall have received for each Bank
copies of all documents that any Bank may request in connection with such
proceedings, actions and transactions (including, without limitation, a
replacement Revolving Credit Note duly executed, completed and issued in
accordance herewith, copies of court documents, certifications and evidence of
the correctness of the representations and warranties contained herein and
certifications and evidence of the compliance with the terms and the
fulfillment of the conditions of the Agreement, in form and substance
satisfactory to each Bank).
5. AFFIRMATION. Wabash hereby affirms its absolute and unconditional
promise to pay to each Bank the Loans and all other amounts due under the
Agreement and any other Loan Document on the maturity date(s) provided in the
Agreement or any other Loan Document, as such documents may be amended hereby.
6. EFFECT OF AMENDMENT. This Amendment amends the Agreement only to the
extent and in the manner herein set forth, and in all other respects the
Agreement is ratified and confirmed.
7. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this Amendment
to be duly executed by their duly authorized representatives as of the date
first above written.
WABASH NATIONAL FINANCE CORPORATION
By Richard E. Dessimoz
-------------------------------------
Name Richard E. Dessimoz
Title Vice President
Notices To:
Mr. Richard E. Dessimoz
Chief Executive Officer
Wabash National Finance Corporation
9 North Vail Avenue
Arlington Heights, Illinois 80005
FAX No. (708) 577-2204
Third Amendment to
Credit Agreement -2- June 11, 1996
<PAGE> 3
CORESTATES BANK, N.A., for itself and as Agent
By William J. Hieb
-------------------------------------
William J. Hieb
Vice President
Notices To:
Mr. William J. Hieb
Vice President
CoreStates Bank, N.A.
Transportation, Leasing and
Construction Industry Services
FC 1-8-11-24
Widener Building 11th Floor
1339 Chestnut Street
P.O. Box 7618
Philadelphia, PA 19101-7618
FAX No. (215) 786-7704
HARRIS TRUST AND SAVINGS BANK
By
-------------------------------------
Name
Title
Notices To:
Mr. Peter Krawchuk
Vice President
Harris Trust and Savings Bank
111 W. Monroe Street
Chicago, IL 60603
FAX No. (312) 461-2591
NATIONAL CITY BANK, INDIANA
By
-------------------------------------
Name
Title
Notices To:
Mr. Rafe L. Boldrick
Senior Vice President
National City Bank, Indiana
101 West Washington Street
Suite 200 East
Indianapolis, IN 46255
FAX No. (317) 267-8899
Third Amendment to
Credit Agreement -3- June 11, 1996
<PAGE> 1
EXHIBIT 15.01
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wabash National Corporation:
We have reviewed the condensed consolidated balance sheets of WABASH NATIONAL
CORPORATION (a Delaware corporation) and subsidiaries as of June 30, 1996, and
the related condensed consolidated statements of income for the three-month and
six-month periods ended June 30, 1996 and 1995, and the condensed consolidated
statements of cash flows for the six-month periods ended June 30, 1996 and
1995. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Wabash National Corporation and
subsidiaries as of December 31, 1995 (not presented herein) and, in our report
dated January 20, 1996, we expressed an unqualified opinion on that statement.
In our opinion, the information set forth in the condensed consolidated balance
sheet of Wabash National Corporation and subsidiaries as of December 31, 1995
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
July 12, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,606
<SECURITIES> 0
<RECEIVABLES> 81,775
<ALLOWANCES> 0
<INVENTORY> 159,458
<CURRENT-ASSETS> 260,880
<PP&E> 79,122
<DEPRECIATION> 0
<TOTAL-ASSETS> 431,395
<CURRENT-LIABILITIES> 104,722
<BONDS> 128,204
0
0
<COMMON> 189
<OTHER-SE> 177,932
<TOTAL-LIABILITY-AND-EQUITY> 431,395
<SALES> 140,606
<TOTAL-REVENUES> 140,606
<CGS> 134,726
<TOTAL-COSTS> 134,726
<OTHER-EXPENSES> 2,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,908
<INCOME-PRETAX> 173
<INCOME-TAX> 71
<INCOME-CONTINUING> 102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0
</TABLE>
