<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 MARCH 31, 1996
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
[ ] SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-10883
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WABASH NATIONAL CORPORATION
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(Exact name of registrant as specified in this 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
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 May 14, 1996 was
18,905,928.
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WABASH NATIONAL CORPORATION
INDEX
FORM 10-Q
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
March 31, 1996 and December 31, 1995 1
Condensed Consolidated Statements of Income
for the three months ended
March 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash
Flows for the three months
ended March 31, 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 6. Exhibits and Reports on Form 8-K 8
<PAGE> 3
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- ---------------
(Unaudited) (Note 1)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 773 $ 2,097
Accounts receivable, net 108,986 77,535
Current portion of finance contracts 5,503 5,979
Inventories 142,421 134,294
Prepaid expenses and other 7,022 7,657
--------- ---------
Total current assets 264,705 227,562
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, net 79,227 76,192
--------- ---------
EQUIPMENT LEASED TO OTHERS, net 39,557 35,362
--------- ---------
FINANCE CONTRACTS, net of current portion 30,140 35,123
--------- ---------
OTHER ASSETS 10,274 9,895
--------- ---------
$ 423,903 $ 384,134
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 9,810 $ 12,527
Accounts payable 77,692 88,490
Accrued liabilities 22,092 13,347
---------- ----------
Total current liabilities 109,594 114,364
---------- ----------
LONG-TERM DEBT, net of current maturities 117,265 73,726
----------- ----------
DEFERRED INCOME TAXES 18,316 18,045
----------- ----------
OTHER NONCURRENT LIABILITIES 208 368
----------- ----------
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; 18,904,728 and 18,938,449
shares issued and outstanding, respectively 189 189
Additional paid-in capital 99,272 99,246
Retained earnings 80,338 78,701
Treasury stock, at cost, 59,600 and 19,600
shares, respectively ( 1,279) ( 505)
----------- ----------
178,520 177,631
----------- ----------
$ 423,903 $ 384,134
=========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1996 1995
-------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES $161,222 $177,634
COST OF SALES 152,153 162,574
----------- -----------
Gross profit 9,069 15,060
GENERAL AND ADMINISTRATIVE
EXPENSES 1,945 1,688
SELLING EXPENSES 1,048 977
----------- -----------
Income from operations 6,076 12,395
OTHER INCOME (EXPENSE)
Interest Expense (2,588) (992)
Other, net 139 268
----------- -----------
Income before income taxes 3,627 11,671
PROVISION FOR INCOME TAXES 1,423 4,709
----------- -----------
Net Income $ 2,204 $ 6,962
=========== ===========
NET INCOME PER SHARE $ 0.12 $ 0.37
=========== ===========
CASH DIVIDENDS PER SHARE $ 0.03 $ 0.025
=========== ===========
AVERAGE SHARES OUTSTANDING 18,927,101 18,938,449
========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 5
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,204 $ 6,962
Adjustments to reconcile net income to net
cash (used in) operating
activities--
Depreciation and amortization 3,705 2,206
Bad debt provision 180 146
Deferred income taxes 298 1,300
Change in net operating assets--
(Increase) in accounts receivable (31,630) (13,351)
(Increase) in inventories (10,000) (18,239)
Decrease (increase) in prepaid expenses and
other 608 (1,059)
(Decrease) increase in accounts payable (10,798) 9,461
Increase in accrued liabilities 8,747 3,959
(Increase) in other assets (196) (442)
----------- -----------
Total adjustments (39,086) (16,019)
----------- -----------
Net cash used in
operating activities (36,882) (9,057)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,118) (12,303)
Investment in equipment leased to others (4,051) (4,923)
Proceeds on disposal of equipment 4,993 ---
Investment in finance contracts (2,250) (6,068)
Principal payments on finance contracts 1,215 869
Payments for RoadRailer technology (638) (121)
Other (99) 186
----------- -----------
Net cash used in investing
activities (3,948) (22,360)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt (3,071) (1,987)
Borrowings under long-term revolver 85,000 36,920
Payments under long-term revolver (96,500) (25,170)
Proceeds from issuance of long-term debt 55,394 ---
Proceeds from issuance of common stock,
net of expenses 26 ---
Payment of common stock dividend (569) (473)
Purchase of treasury stock (774) ---
------------ ------------
Net cash provided by
financing activities 39,506 9,290
------------ ------------
NET (DECREASE) IN CASH (1,324) (22,127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,097 39,655
------------ ------------
$ 773 $ 17,528
CASH AND CASH EQUIVALENTS AT END OF PERIOD ============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for-- $ 1,803 $ 969
Interest ============ ============
Income Taxes $ 26 $ 674
============ ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
Finance contracts converted to operating leases $ 2,963 ---
Used trailers transferred from inventory for
operations $ 1,873 ---
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<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 March 31, 1996 and December 31, 1995 and its results of
operations and cash flows for the three months ended March 31, 1996 and 1995.
NOTE 2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(Unaudited)
<S> <C> <C>
Raw material and components $ 82,641 $ 89,961
Work in progress 18,528 13,582
Finished goods 22,955 14,034
Used trailers 18,297 16,717
--------- ---------
$ 142,421 $ 134,294
========= =========
</TABLE>
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<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
$8,473 and $5,641 during the three months ended March 31, 1996 and 1995,
respectively. Income before income taxes was $721 and $1,045 during the three
months ended March 31, 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>
March 31, 1996
--------------------------------
(Unaudited) December 31,
Wabash Finance 1995
National Company Consolidated Consolidated
-------- ------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets $ 256,723 $ 7,982 $ 264,705 $ 227,562
Property, plant and
equipment, net 79,198 29 79,227 76,192
Equipment leased to
others, net --- 39,557 39,557 35,362
Finance contracts, net
of current portion --- 30,140 30,140 35,123
Other assets 10,117 157 10,274 9,895
Due (to subsidiary)/from parent (2) 2 --- ---
Investment in subsidiary 26,293 --- --- ---
---------- ---------- ------------ -----------
$ 372,329 $ 77,867 $ 423,903 $ 384,134
========== ========== ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities $ 99,605 $ 9,989 $ 109,594 $ 114,364
Long-term debt, net of
current maturities 80,235 37,030 117,265 73,726
Other long-term
liabilities 13,969 4,555 18,524 18,413
---------- ---------- ------------ -----------
193,809 51,574 245,383 206,503
Stockholders' equity 178,520 26,293 178,520 177,631
---------- ---------- ------------ -----------
$ 372,329 $ 77,867 $ 423,903 $ 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 January 31, 2003. The proceeds were used to repay
amounts outstanding under the Company's revolving line of credit.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
Net sales for the first quarter of 1996 decreased 9.2% compared to the
same period in 1995. The decrease in net sales amounted to $16.4 million for
the first quarter, 1996 and was attributable to a decrease in new trailer
sales of $21.9 million offset by an increase in sales of used trailers which
were previously under lease by the Finance Company of approximately $5 million.
The decrease in new trailer sales of $21.9 million for the three-month period
was caused by a 16% decrease in units sold, primarily as a result of weak
market conditions in the domestic trailer industry and the effects of new
product introductions on the Company's plate trailer line, offset by a 3.3%
increase in the average sales price per new trailer sold. The increase in the
average sales price primarily reflects changes in the product mix during the
first quarter of 1996. The Finance Company's lease portfolio increased from
6,700 trailers at March 31, 1995 to 6,858 trailers at March 31, 1996. Lease
revenues, excluding revenue from the sale of leased trailers, as well as
aftermarket parts sales were even with the sales in the same period of 1995.
Gross Profit
Gross profit as a percentage of sales totaled 5.6% for the first
quarter of 1996 compared to 8.5% for the same period in 1995. The decrease in
the gross profit percentage in 1996 reflects the decrease in net sales, changes
in product mix and increased costs related to the expansion of capacity during
1994 and 1995. The expansion related costs included, among other things,
increased depreciation and labor in the first quarter of 1996. During the
first quarter of 1996 the number of associates increased 7% compared to the
same period of 1995.
Income from Operations
Income from operations for the first quarter of 1996 as a percentage of
net sales was 3.8% versus 7.0% for the same period in 1995. Income from
operations in 1996 was impacted primarily by the decrease in the gross profit
margins previously discussed.
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<PAGE> 9
Interest Expense
Interest expense for the three-month period ended March 31, 1996
totaled $2.6 million compared to $1.0 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 increased
working capital requirements, primarily due to the increases in receivables and
inventories.
Taxes
The provision for income taxes for the three month period ended March
31, 1996 and 1995 at $1.4 million and $4.7 million respectively, represents
39.2% and 40.3% of pre-tax income for the periods. The effective tax rates are
higher than the Federal statutory rates of 35% due primarily to state income
taxes.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Condensed Consolidated Statement of Cash Flows,
net cash used in operating activities was $36.9 million during the first three
months of 1996 primarily as a result of changes in working capital. Cash was
used in operating activities primarily as a result of the 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
introductions.
During the first three months of 1996, the lease portfolio (finance
contracts and equipment leased to others) decreased $1.3 million, primarily as
a result of the buyout of equipment previously on finance contracts. In
addition, the Company used $3.1 million of cash for capital expenditures during
the first three months of 1996, principally for the purpose of increasing
manufacturing productivity.
At March 31, 1996, the Company's total debt was $127.1 million compared
to $86.3 million at December 31, 1995. The net increase in the Company's debt
primarily reflects new term debt associated with 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.
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<PAGE> 10
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.
BACKLOG
The Company's backlog of orders was approximately $750 million at March
31, 1996 and $858 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.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
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: May 10, 1996 By: /s/ Mark R. Holden
----------------------- ----------------------
Mark R. Holden
Vice President - Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
-8-
<PAGE> 11
[ARTHUR ANDERSEN LLP LOGO]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wabash National Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
WABASH NATIONAL CORPORATION (a Delaware corporation) and subsidiaries as of
March 31, 1996, and the related condensed consolidated statements of income for
the three-month periods ended March 31, 1996 and 1995, and the condensed
consolidated statements of cash flows for the three-month periods ended March
31, 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 accompanying
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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
April 12, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 773
<SECURITIES> 0
<RECEIVABLES> 108,986
<ALLOWANCES> 0
<INVENTORY> 142,421
<CURRENT-ASSETS> 264,705
<PP&E> 79,227
<DEPRECIATION> 0
<TOTAL-ASSETS> 423,903
<CURRENT-LIABILITIES> 109,594
<BONDS> 117,265
0
0
<COMMON> 189
<OTHER-SE> 178,331
<TOTAL-LIABILITY-AND-EQUITY> 423,903
<SALES> 161,222
<TOTAL-REVENUES> 161,222
<CGS> 152,153
<TOTAL-COSTS> 152,153
<OTHER-EXPENSES> 2,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,588
<INCOME-PRETAX> 3,627
<INCOME-TAX> 1,423
<INCOME-CONTINUING> 2,204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,204
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
