<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 204549
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 SEPTEMBER 30, 1996
OR
TRANSITION REPORT UNDER SECTION 13 OF 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 November 14, 1996 was
18,908,424.
<PAGE> 2
WABASH NATIONAL CORPORATION
INDEX
FORM 10-Q
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at 1
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Income 2
for the three and nine months ended
September 30, 1996 and 1995
Condensed Consolidated Statements of Cash 3
Flows for the nine months
ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial 4
Statements
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
<PAGE> 3
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 6,283 $ 2,097
Accounts receivable, net 78,017 77,535
Current portion of finance contracts 5,948 5,979
Inventories 148,842 134,294
Prepaid expenses and other 12,691 7,657
-------- --------
Total current assets 251,781 227,562
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net 78,664 76,192
-------- --------
EQUIPMENT LEASED TO OTHERS, net 60,377 35,362
-------- --------
FINANCE CONTRACTS, net of current portion 25,864 35,123
-------- --------
OTHER ASSETS 12,078 9,895
-------- --------
$428,764 $384,134
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 10,902 12,527
Accounts payable 66,439 88,490
Accrued liabilities 16,153 13,347
-------- --------
Total current liabilities 93,494 114,364
-------- --------
LONG-TERM DEBT, net of current maturities 137,572 73,726
-------- --------
DEFERRED INCOME TAXES 19,717 18,045
-------- --------
OTHER NONCURRENT LIABILITIES 332 368
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value 25,000,000
shares authorized; no shares issued --- ---
Series A Junior Participating Preferred
stock, $.01 par 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 September 30, 1996
and December 31, 1995,respectively 189 189
Additional paid-in capital 99,338 99,246
Retained earnings 79,401 78,701
Treasury stock, at cost, 59,600 and 19,600
shares, respectively (1,279) (505)
-------- --------
177,649 177,631
-------- --------
$428,764 $384,134
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $161,303 $176,128 $463,131 $547,212
COST OF SALES 155,196 162,342 442,075 501,268
-------- -------- -------- --------
Gross Profit 6,107 13,786 21,056 45,944
GENERAL AND ADMINISTRATIVE
EXPENSES 2,304 1,752 6,624 5,209
SELLING EXPENSES 1,249 994 3,396 2,909
-------- -------- -------- --------
Income from operations 2,554 11,040 11,036 37,826
OTHER INCOME (EXPENSE):
Interest Expense (2,567) (1,690) (7,561) (4,148)
Other, net 147 196 459 727
-------- -------- -------- --------
Income before income
taxes 134 9,546 3,934 34,405
PROVISION FOR INCOME TAXES 39 3,717 1,533 13,560
-------- -------- -------- --------
Net Income $ 95 $ 5,829 $ 2,401 $ 20,845
======== ======== ======== ========
NET INCOME PER SHARE $ 0.01 $ 0.31 $ 0.13 $ 1.10
======== ======== ======== ========
CASH DIVIDENDS PER SHARE $ .03 $ .025 $ .09 $ .075
======== ======== ======== ========
AVERAGE SHARES OUTSTANDING 18,908 18,959 18,914 18,948
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 5
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------
1996 1995
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,401 $ 20,845
Adjustments to reconcile net income to net cash
provided by (used in) operating
activities-
Depreciation and amortization 11,640 7,970
Bad debt provision 285 431
Deferred income taxes 1,234 2,060
Change in operating assets-
(Increase) in accounts receivable (767) (11,508)
(Increase) in inventories (16,746) (55,540)
(Increase) in prepaid expenses and other (4,596) (2,324)
(Decrease) increase in accounts payable (22,051) 3,005
Increase in accrued liabilities 2,806 26
(Increase) in other assets (1,898) (2,136)
-------- --------
Total adjustments (30,093) (58,016)
-------- --------
Net cash used in operating activities (27,692) (37,171)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,150) (32,515)
Proceeds on disposal of leased equipment 17,124 ---
Investment in equipment leased to others (35,431) (14,056)
Investment in finance contracts (5,480) (18,073)
Principal payments on finance contracts 3,654 4,276
Payments for RoadRailer technology (1,759) (41)
Other 85 (48)
-------- --------
Net cash used in investing activities (27,957) (60,457)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt (11,739) (6,531)
Borrowings under long-term revolver 310,300 228,920
Payments under long-term revolver (304,700) (175,689)
Proceeds from issuance of long-term debt 68,361 15,000
Proceeds from issuance of common stock, net of
expenses 92 494
Payment of cash dividend (1,705) (1,421)
Purchase of treasury stock (774) ---
-------- --------
Net cash provided by financing activities 59,835 60,773
-------- --------
NET INCREASE (DECREASE) IN CASH 4,186 (36,855)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,097 39,655
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,283 $ 2,800
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest 6,668 2,883
Income taxes 713 12,700
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Finance contracts converted to operating leases $ 3,201 ---
Operating leases converted to finance contracts $ 998 ---
Used trailers transferred from inventory into
operations $ 2,198 ---
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<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 September 30, 1996 and December 31, 1995 and its results of
operations for the three and nine month periods ended September 30, 1996 and
1995 and cash flows for the nine month period ended September 30, 1996 and
1995.
NOTE 2. INVENTORIES
-----------
Inventories consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
----- ----
(Unaudited)
<S> <C> <C>
Raw material and components $ 81,360 $ 89,961
Work in process 21,343 13,582
Finished goods 24,462 14,034
Used trailers 21,677 16,717
-------- --------
$148,842 $134,294
======== ========
</TABLE>
<PAGE> 7
NOTE 3. LEASING 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 $27,407 and
$15,344 during the nine months ended September 30, 1996 and 1995 respectively.
Income before income taxes was $1,790 and $3,214 during the nine months ended
September 30, 1996 and 1995 respectively. Included below is condensed balance
sheet information which segregates the assets and liabilities of the Finance
Company.
<TABLE>
<CAPTION>
September 30, 1996
------------------
(Unaudited) December 31,
Wabash Finance 1995
National Company Consolidated Consolidated
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets $242,898 $8,883 $251,781 $227,562
Property, plant
and equipment, net 78,607 57 78,664 76,192
Equipment leased to
others, net --- 60,377 60,377 35,362
Finance contracts,
net of current portion --- 25,864 25,864 35,123
Other assets 11,943 135 12,078 9,895
Due from subsidiary/
(to parent) 5,855 (5,855) --- ---
Investment in
subsidiary 26,934 --- --- ---
-------- -------- -------- --------
$366,237 $89,461 $428,764 $384,134
======== ======== ======== ========
LIABILITIES AND STOCK-
HOLDERS' EQUITY:
Current liabilities $82,648 $10,846 $93,494 $114,364
Long-term debt, net
current maturities 90,835 46,737 137,572 73,726
Other long-term
liabilities 15,105 4,944 20,049 18,413
-------- -------- -------- --------
188,588 62,527 251,115 206,503
Stockholders' equity 177,649 26,934 177,649 177,631
-------- -------- -------- --------
$366,237 $89,461 $428,764 $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. Also, on
September 30, 1996, the Company amended its $90 million revolving credit
facility to extend the maturity date to January 1, 1998 and to adjust certain
financial covenants.
In addition, during June, 1996, the Finance Company concluded a one-year
extension of its existing $50 million secured, revolving bank line of
<PAGE> 8
credit which now expires 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 three month period ended September 30, 1996, decreased
$14.8 million or 8% compared to the same period in 1995 and were $84.1 million
or 15% lower for the nine month period ended September 30, 1996 compared to the
corresponding period in 1995. The decreased sales for the three and nine month
periods were primarily attributable to a decrease in new trailer sales of $21.7
million and $103.5 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 $17 million, respectively.
The decreases in new trailer sales of $21.7 million and $103.5 million for
the three and nine month periods respectively, were caused by an 11% and 20%
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
third quarter of 1996 compared to the same period in 1995 were further impacted
by a 2.8% decrease in the average sales price per new trailer sold, reflecting
increased pricing pressure in the commodity trailer market which, due to the
decreased production on the Company's plate trailer line, comprised a higher
percentage of the Company's sales in 1996 compared to 1995. For the nine month
period ended September 30, 1996, the average sales price per new trailer sold
was approximately 1% lower compared with the same period in 1995.
The Company anticipates supply of the composite material to improve over
the next several quarters as its supplier increases manufacturing capacity;
however, this increased capacity is not expected to fulfill the Company's
long-term demand for this product and as a result the Company plans to
construct its own composite manufacturing facility in Lafayette, Indiana during
1997 at an estimated cost of approximately $20 million. Furthermore, the
Company expects pricing to improve in the commodity trailer market as overall
manufacturing capacity decreases in the domestic trailer market during this
period of consolidation as two of the top ten trailer manufacturers have filed
Chapter 11 bankruptcy. The foregoing paragraph contains forward-looking
information; actual results may differ materially due to such factors as the
Company's current dependence on a single supplier for composite material and
the unpredictability of that supplier's performance; low barriers to entry in
the commodity trailer market and the possibility that currently troubled
competitors may continue to cut prices to sustain demand; and the
unpredictability of overall market demand due to the cyclical nature of the
trucking industry.
The Finance Company's lease portfolio decreased from 7,500 trailers at
September 30, 1995 to 7,200 trailers at September 30, 1996,
<PAGE> 9
primarily due to the sale of certain trailers under lease to Finance Company
customers during the term of the respective leases. Lease revenues, for the
three and nine month periods ended September 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 52% and 29% for the
three and nine month periods ended September 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.
Gross Profit
Gross profit as a percentage of sales totaled 3.8% for the third quarter
of 1996 compared to 7.8% for the same period in 1995. The gross profit margin
for the nine month period ended September 30, 1996 as a percentage of sales was
4.5% versus 8.4% 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 nine month periods ended September
30, 1996.
Income From Operations
Income from operations for the three months ended September 30, 1996 as a
percentage of sales was 1.6% versus 6.3% for the same period in 1995. Income
from operations for the nine month period ended September 30, 1996 as a
percentage of sales was 2.4% versus 6.9% for the same period in 1995. The
decrease in the percent of income from operations for the three and nine months
ended September 30, 1996 was a result of the decrease in the gross profit
margins previously discussed as well as increased SG&A costs as a percent of
sales resulting from decreased sales volume coupled with increased use of the
Company's receivables sale and servicing agreement which led to higher
discount costs.
Interest Expense
Interest expense for the three and nine month periods ended September 30,
1996 totaled $2.6 million and $7.6 million compared to $1.7 million and $4.1
million for the same periods 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, higher capital expenditures and increased
working capital requirements, primarily due to the increase in inventory.
Taxes
The provision for income taxes for the nine month period ended September
30, 1996 of $1.5 million represents 39.0% of pre-tax income for the period
compared to the provision of $13.6 million or 39.4% of pretax income for the
same period in 1995. The effective tax rates are higher than the Federal
statutory rates of 35% due primarily to state income taxes.
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Condensed Consolidated Statements of Cash Flows, net
cash used in operating activities was $27.7 million during the first nine
months of 1996 primarily as a result of changes in working capital resulting
from an increase in 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
expansion of its product line which requires initial up front investments in
working capital.
During the first nine months of 1996, the lease portfolio (finance
contracts and equipment leased to others) increased $15.7 million, as the
Company continued to expand its leasing operations. In addition, the Company
used $8.3 million of cash for capital expenditures during the first nine months
of 1996, principally for the purpose of achieving improved manufacturing
productivity.
At September 30, 1996, the Company's total debt was $148.5 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 with growth in the Finance Company's leasing operations as well as
increased working capital requirements. 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. In addition, the Company anticipates closing on a $100 million
Senior Note institutional private placement during the fourth quarter of 1996.
The proceeds are expected to be drawn down in several installments over the
next six months and will primarily be used to recapitalize the Finance Company
by repaying certain of the Finance Company's debt.
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. The Company believes that these funding sources will be adequate
for its anticipated requirements.
BACKLOG
The Company's backlog of orders was approximately $475 million at
September 30, 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. 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.
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) Exhibits: (Numbered in accordance with Item 601 of Regulation S-K)
10.43 Commercial Note and Security Agreements in the principal
amount of $5,000,000 between Wabash National Finance Company
and National City Bank of Indiana dated September 30, 1996.
10.44 Second Amendment, dated September 30, 1996, to Revolving
Credit Loan Agreement dated April 28, 1995, between NBD Bank,
N.A. and Wabash National Corporation.
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: November 13, 1996 By: /s/ Mark R. Holden
------------------
Mark R. Holden
Vice President - Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
<PAGE> 1
EXHIBIT 10.43
<TABLE>
<CAPTION>
COMMERCIAL NOTE: TIME SINGLE ADVANCE/FIXED
Amount City, State Date FOR BANK USE ONLY
<S> <C> <C> <C>
$5,000,000.00 Indianapolis, Indiana September 30 , 1996 Obligor #
Tax I. D. #
Obligation #
Office
</TABLE>
FOR VALUE RECEIVED, WABASH NATIONAL FINANCE CORPORATION ("BORROWER"), an Indiana
corporation, whose principal office address is 9 North Vail Avenue, Arlington
Heights, Illinois 60005, hereby promises to pay to the order of NATIONAL CITY
BANK OF INDIANA ("Bank"), a national banking association having its banking
office at 101 W. Washington Street, Indianapolis, Indiana 46255, at Bank's
banking office (or at such other place as Bank may from time to time designate
by written notice) in lawful money of the United States of America, the
principal sum of
FIVE MILLION AND NO/100 DOLLARS
$5,000,000.00
together with interest, all as provided below.
1. Interest. The unpaid principal balance of this Note shall at all times bear
interest at a fixed rate equal to Six and one half percent ( 6 1/2%) per annum,
provided, that so long as any principal of or accrued interest on this Note is
overdue, all unpaid principal of this Note and all overdue interest on that
principal (but not interest on overdue interest) shall bear interest at a
fluctuating rate equal to two percent (2%) per annum above the rate that would
otherwise be applicable, but in no case less than two percent (2%) per annum
above the Prime Rate; provided further, that in no event shall any principal
of or interest on this Note bear interest at any time after Maturity at a
lesser rate than the rate applicable thereto immediately after Maturity.
2. Repayment. Subject to section 5, the total outstanding balance of principal
and interest under this Note is due and payable on December 2, 1996.
This Note may not be prepaid. If however for any reason the principal of this
Note is paid (whether by way of a prepayment or a payment following any
acceleration of the due date thereof) in whole or in part before the original
due date of that principal, then, and in each such case, Borrower shall,
concurrently with the payment, pay to Bank a premium based on the principal
amount paid and computed for the period from the date of payment to the
original due date of the principal paid, at a rate equal to the excess, if any,
of the interest rate theretofore applicable over the Reinvestment Rate.
"Reinvestment Rate" means, when used with respect to any period, a per annum
rate of interest equal to the "bond equivalent yield" for the most actively
traded issues of U. S. Treasury Bills, U. S. Treasury Notes, or U. S. Treasury
Bonds for a term similar to the period in question.
3. Definitions. As used in this Note, except where the context clearly requires
otherwise, "Affiliate" means, when used with reference to any Person (the
"subject"), a Person that is in control of, under the control of, or under
common control with, the subject, the term "control" meaning the possession,
directly or indirectly, of the power to direct the management or policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise; "Bank Debt" means, collectively, all Debt to Bank, whether incurred
directly to Bank or acquired by it by purchase, pledge, or otherwise, and
whether participated to or from Bank in whole or in part; "Banking Day" means
any day (other than any Saturday, Sunday or legal holiday) on
<PAGE> 2
which Bank's banking office is open to the public for carrying on substantially
all of its banking functions; "Debt" means, collectively, all obligations of
the Person or Persons in question, including, without limitation, every such
obligation whether owing by one such Person alone or with one or more other
Persons in a joint, several, or joint and several capacity, whether now owing
or hereafter arising, whether owing absolutely or contingently, whether created
by lease, loan, overdraft, guaranty of payment, or other contract, or by
quasi-contract, tort, statute, other operation of law, or otherwise; "MATURITY"
means the date (whether occurring by lapse of time, acceleration, or
otherwise) upon which the last scheduled principal payment under this note is
due; "Note" means this promissory note (including, without limitation, each
addendum, allonge, or amendment, if any, hereto); "Obligor" means any Person
who, or any of whose property, shall at the time in question be obligated in
respect of all or any part of the Bank Debt of Borrower and (in addition to
Borrower) includes, without limitation, co-makers, indorsers, guarantors,
pledgors, hypothecators, mortgagors, and any other Person who agrees,
conditionally or otherwise, to make any loan to, purchase from, or investment
in, any other Obligor or otherwise assure such other Obligor's creditors or any
of them against loss; "Person" means an individual or entity of any kind,
including, without limitation, any association, company, cooperative,
corporation, partnership, trust, governmental body, or any other form or kind
of entity; "Prime Rate" means the fluctuating rate per annum which is publicly
announced from time to time by Bank as being its so-called "prime rate" or
"base rate" thereafter in effect, with each change in the Prime Rate
automatically, immediately, and without notice changing the Prime Rate
thereafter applicable hereunder, it being acknowledged that the Prime Rate is
not necessarily the lowest rate of interest then available from Bank on
fluctuating-rate loans; "Proceeding" means any assignment for the benefit of
creditors, any case in bankruptcy, any marshalling of any Obligor's assets for
the benefit of creditors, any moratorium on the payment of debts, or any
proceeding under any law relating to conservatorship, insolvency, liquidation,
receivership, trusteeship, or any similar event, condition, or other thing;
"Related Writing" means this Note and any indenture, note, guaranty,
assignment, mortgage, security agreement, subordination agreement, notice,
financial statement, legal opinion, certificate, or other writing of any kind
pursuant to which all or any part of the Bank Debt of Borrower is issued, which
evidences or secures all or any part of the Bank Debt of Borrower, which
governs the relative rights and priorities of Bank and one or more other
Persons to payments made by, or the property of, any Obligor, which is
delivered to Bank pursuant to another such writing, or which is otherwise
delivered to Bank by or on behalf of any Person (or any employee, officer,
auditor, counsel, or agent of any Person) in respect of or in connection with
all or any part of the Bank Debt of Borrower; "Reporting Person" means each
Obligor and each member of any "Reporting Group" as defined in any addendum to
this Note; and the foregoing definitions shall be applicable to the respective
plurals of the foregoing defined terms.
4. Events of Default. It shall be an "Event of Default" if (a) all or any part
of the Bank Debt of any Obligor shall not be paid in full promptly when due
(whether by lapse of time, acceleration, or otherwise); (b) any
representation, warranty, or other statement made by any Person (other than
Bank) in any Related Writing shall be untrue or incomplete in any respect when
made; (c) any Person (other than Bank) shall repudiate or shall fail or omit to
perform or observe any agreement contained in this Note or in any other Related
Writing that is on that Person's part to be complied with; (d) any indebtedness
(other than any evidenced by this Note) of any Obligor shall not be paid when
due, or there shall occur any event, condition, or other thing which gives (or
which with the lapse of any applicable grace period, the giving of notice, or
both would give) any creditor the right to accelerate or which automatically
accelerates the maturity of any such indebtedness; (e) Bank shall not receive
(in addition to any information described in any addendum to this Note) without
expense to Bank, (i) forthwith upon each request of Bank made upon Borrower
therefor, (A) such information in writing regarding each Reporting Person's
financial condition, properties, business operations, if any, and pension
plans, if any, prepared, in the case of financial information, in accordance
with generally accepted accounting principles consistently applied and
otherwise in form and detail satisfactory to Bank or (B) written permission,
in form and substance satisfactory to Bank, from each Reporting Person to
inspect (or to have inspected by one or more Persons selected by Bank) the
properties and records of that Reporting Person and to
<PAGE> 3
make copies and extracts from those records or (ii) prompt written notice
whenever Borrower (or any director, employee, officer, or agent of Borrower)
knows or has reason to know that any Event of Default has occurred; (f) any
judgment shall be entered against any Obligor in any judicial or administrative
tribunal or before any arbitrator or mediator, (g) any Obligor shall fail or
omit to comply with any applicable law, rule, regulation, or order in any
material respect; (h) any proceeds of the loan evidenced by this Note shall be
used for any purpose that is not in the ordinary course of Borrower's business;
(i) any property in which any obligor now has or hereafter acquires any rights
or which now or hereafter secures any Bank Debt shall be or become encumbered by
any mortgage, security interest, or other lien, except any mortgage, security
interest, or other lien consented to by Bank; (j) any Obligor shall at any time
or over any period of time sell, lease, or otherwise dispose of all or any
material part of that Obligor's assets, except for inventory sold in the
ordinary course of business and other assets sold, leased, or otherwise
disposed of with the consent of Bank; (k) any Obligor shall cease to exist or
shall be dissolved, become legally incapacitated, or die; (l) any Proceeding
shall be commenced with respect to any Obligor; (m) there shall occur or
commence to exist any event, condition, or other thing that constitutes an
"Event of Default" as defined in any addendum to this Note; (n) there shall
occur any event, condition, or other thing that has, or, in Bank's judgment, is
likely to have, a material adverse effect on the financial condition,
properties, or business operations of any Obligor or on Bank's ability to
enforce or exercise any agreement or right arising under, out of, or in
connection with any Related Writing; or (o) the holder of this Note shall, in
good faith, believe that the prospect of payment or performance of any
obligation evidenced by this Note is impaired.
5. Effects of Default. If any Event of Default (other than the commencement of
any Proceeding with respect to Borrower) shall occur, then, and in each such
case, notwithstanding any provision or inference to the contrary, Bank shall
have the right in its discretion, by giving written notice to Borrower, to
declare this Note to be due, whereupon the entire unpaid principal balance of
this Note (if not already due) shall immediately become due and payable in
full. If any Proceeding shall be commenced with respect to Borrower, then,
notwithstanding any provision or inference to the contrary, automatically,
without presentment, protest, or notice of dishonor, all of which are waived by
all makers and all indorsers of this Note, now or hereafter existing, the
entire unpaid principal balance of this Note (if not already due) shall
immediately become due and payable in full.
6. Late Charges. If any principal of or interest on this Note is not paid within
ten (10) days after its due date, then, and in each such case, Bank shall have
the right to assess a late charge, payable by Borrower on demand, in an amount
equal to the greater of twenty dollars ($20.00) or five percent (5%) of the
amount not timely paid.
7. No Setoff. Borrower hereby waives any and all now existing or hereafter
arising rights to recoup or offset any obligation of Borrower under or in
connection with this Note or any Related Writing against any claim or right of
Borrower against Bank.
8. Indemnity, Administration and Enforcement. Borrower will reimburse Bank, on
Bank's demand from time to time, for any and all fees, costs, and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred by Bank in administering this Note or in protecting, enforcing, or
attempting to protect or enforce its rights under this Note. If any amount
(other than any principal of this Note and any interest and late charges) owing
under this Note is not paid when due, then, and in each such case, Borrower
shall pay, on Bank's demand, interest on that amount from the due date thereof
until paid in full at a fluctuating rate equal to four percent (4%) per annum
plus the Prime Rate.
9. Waivers; Remedies; Application of Payments. Bank may from time to time in
its discretion grant waivers and consents in respect of this Note or any other
Related Writing or assent to amendments thereof, but no such
<PAGE> 4
waiver, consent, or amendment shall be binding upon Bank unless set forth in a
writing (which writing shall be narrowly construed) signed by Bank. No course
of dealing in respect of, nor any omission or delay in the exercise of, any
right, power, or privilege by Bank shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any further or other exercise
thereof or of any other, as each such right, power, or privilege may be
exercised either independently or concurrently with others and as often and in
such order as Bank may deem expedient. Without limiting the generality of the
foregoing, neither Bank's acceptance of one or more late payments or charges
nor Bank's acceptance of interest on overdue amounts at the respective rates
applicable thereto shall constitute a waiver of any right of Bank. Each right,
power, or privilege specified or referred to in this Note is in addition to and
not in limitation of any other rights, powers, and privileges that Bank may
otherwise have or acquire by operation of law, by other contract, or otherwise.
Bank shall be entitled to equitable remedies with respect to each breach or
anticipatory repudiation of any provision of this Note, and Borrower hereby
waives any defense which might be asserted to bar any such equitable remedy.
Bank shall have the right to apply payments in respect of the indebtedness
evidenced by this Note with such allocation to the respective parts thereof and
the respective due dates thereof as Bank in its sole discretion may from time
to time deem advisable.
10. Other Provisions. The provisions of this Note shall bind Borrower and
Borrower's successors and assigns and benefit Bank and its successors and
assigns, including each subsequent holder, if any, of this Note. Except for
Borrower and Bank and their respective successors and assigns, there are no
intended beneficiaries of this Note or the loan evidenced by this Note. The
provisions of sections 6 through 13, both inclusive, shall survive the payment
in full of the principal of and interest on this Note. The captions to the
sections and subsections of this Note are inserted for convenience only and
shall be ignored in interpreting the provisions thereof. Each reference to a
section includes a reference to all subsections thereof (i.e., those having the
same character or characters to the left of the decimal point) except where the
context clearly does not so permit. If any provision in this Note shall be or
become illegal or unenforceable in any case, then that provision shall be
deemed modified in that case so as to be legal and enforceable to the maximum
extent permitted by law while most nearly preserving its original intent, and
in any case the illegality or unenforceability of that provision shall affect
neither that provision in any other case nor any other provision. All fees,
interest, and premiums for any given period shall accrue on the first day
thereof but not on the last day thereof (unless the last day is the first day)
and in each case shall be computed on the basis of a 360-day year and the actual
number of days in the period. In no event shall interest accrue at a higher
rate than the maximum rate, if any, permitted by law. Bank shall have the right
to furnish to its Affiliates, and to such other Persons as Bank shall deem
advisable for the conduct of its business, information concerning the business,
financial condition, and property of Borrower, the amount of the Bank Debt of
Borrower, and the terms, conditions, and other provisions applicable to the
respective parts thereof. This Note shall be governed by the law (excluding
conflict of laws rules) of the jurisdiction in which Bank's banking office is
located.
11. Integration. This Note and, to the extent consistent with this Note, the
other Related Writings, set forth the entire agreement of Borrower and Bank as
to the subject matter of this Note, and may not be contradicted by evidence of
any agreement or statement unless made in a writing (which writing shall be
narrowly construed) signed by Bank contemporaneously with or after the
execution and delivery of this Note. Without limiting the generality of the
foregoing, Borrower hereby acknowledges that Bank has not based, conditioned,
or offered to base or condition the credit hereby evidenced or any charges,
fees, interest rates, or premiums applicable thereto upon Borrower's agreement
to obtain any other credit, property, or service other than any loan, discount,
deposit, or trust service from Bank.
12. Notices and Other Communications. Each notice, demand, or other
communication, whether or not received, shall be deemed to have been given to
Borrower whenever Bank shall have mailed a writing to that effect by certified
or registered mail to Borrower at Borrower's mailing address (or any other
address of which
<PAGE> 5
Borrower shall have given Bank notice after the execution and delivery of this
Note); however, no other method of giving actual notice to Borrower is hereby
precluded. Borrower hereby irrevocably accepts Borrower's appointment as each
Obligor's agent for the purpose of receiving any notice, demand, or other
communication to be given by Bank to each such Obligor pursuant to any
Related Writing. Bank shall be entitled to assume that any knowledge possessed
by any Obligor other than Borrower is possessed by Borrower. Each communication
to be given to Bank shall be in writing unless this Note expressly permits that
communication to be made orally, and in any case shall be given to Rafe
Boldrick, Senior Vice President at Bank's Corporate Banking Division, Suite
200E at Bank's banking office (or any other address of which Bank shall have
given notice to Borrower after the execution and delivery of this Note).
Borrower hereby assumes all risk arising out of or in connection with each oral
communication given by Borrower and each communication given or attempted by
Borrower in contravention of this section. Bank shall be entitled to rely on
each communication believed in good faith by Bank to be genuine.
13. Jurisdiction and Venue; Waiver of Jury Trial. Any action, claim,
counterclaim, crossclaim, proceeding, or suit, whether at law or in equity,
whether sounding in tort, contract, or otherwise at any time arising under or
in connection with this Note or any other Related Writing, the administration,
enforcement, or negotiation of this Note or any other Related Writing or the
performance of any obligation in respect of this Note or any other Related
Writing (each such action, claim, counterclaim, crossclaim, proceeding, or
suit, an "Action") may be brought in any federal or state court located in the
city in which Bank's banking office is located. Borrower hereby unconditionally
submits to the jurisdiction of any such court with respect to each such Action
and hereby waives any objection Borrower may now or hereafter have to the venue
of any such Action brought in any such court. BORROWER HEREBY, AND EACH HOLDER
OF THIS NOTE, BY TAKING POSSESSION THEREOF, KNOWINGLY AND VOLUNTARILY WAIVES
JURY TRIAL IN RESPECT OF ANY ACTION.
"BORROWER"
WABASH NATIONAL FINANCE CORPORATION
By: Richard Dessimoz
________________________________
Richard Dessimoz
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.44
SECOND AMENDMENT TO LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT ("Second Amendment") made as of
this 30th day of September, 1996, by and between WABASH NATIONAL CORPORATION, a
Delaware corporation with its principal place of business at 1000 Sagamore
Parkway South, Lafayette, Indiana 47905 ("Borrower") and NBD BANK, N.A.
("Bank"), a national banking association with its principal banking offices at
One Indiana Square, Indianapolis, Indiana 46266.
WHEREAS, the Borrower and the Bank entered into that certain Loan
Agreement dated April 28, 1995, as amended by that certain Amendment to Loan
Agreement dated November 9, 1995 (collectively, the "Agreement") pursuant to
which the Bank agreed to extend a Revolving Line of Credit to the Borrower
with a Loan Maturity Date of July 1, 1997; and
WHEREAS, the Borrower wishes to extend the Loan Maturity Date to
January 1, 1998 and also seeks to amend certain of the financial covenants
contained in the Agreement; and
WHEREAS, the Bank is willing to extend the Loan Maturity Date and to
make certain amendments to the financial covenants, on the terms and conditions
set forth herein:
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
Section 1. Definitions. The following definitions in the Agreement
are hereby amended or added to the Agreement to read in their entirety as
follows:
"Applicable Commitment Fee" means that percentage of the unused portion
of the Commitment to be paid to the Bank pursuant to Section 2.7 hereunder,
determined by reference to the ratio of the Borrower's Funded Debt to Total
Capitalization, in accordance with the following table:
<TABLE>
<CAPTION>
Ratio Application Fee
----- ---------------
<S> <C>
15% or less .10%
16% through 30% .125%
31% through 40% .15%
41% through 50% .175%
51% through 55% .225%
56% through 60% .275%
</TABLE>
The Applicable Commitment Fee shall be determined and adjusted, if
appropriate, quarterly on the basis of the financial statements of the Borrower
for the fiscal quarter immediately preceding the date of determination of the
Applicable Commitment Fee.
<PAGE> 2
"Applicable Margin" means that percentage to be added to each of the CD
Rate, LIBOR Rate or Federal Funds Rate at which interest will accrue on the
Advances, determined by reference to the ratio of the Borrower's Funded Debt
to Total Capitalization, all in accordance with the following table:
<TABLE>
<CAPTION>
LIBOR OR Federal Funds
Ratio CD Margin Margin
----- --------- ------
<S> <C> <C>
15% or less 25% .35%
16% through 30% .30% .40%
31% through 40% .40% .50%
41% through 50% .50% .60%
51% through 55% .625% .725%
56% through 60% .75% .85%
</TABLE>
Each Applicable Margin shall be determined, and adjusted if
appropriate, quarterly on the basis of the financial statements of the Borrower
for the fiscal quarter of the Borrower immediately preceding the date of
determination furnished to the Bank pursuant to the requirements of Section
5.3, with prospective effect for the following fiscal quarter. Interest will
accrue and be payable in any fiscal quarter on the basis of the Applicable
Margin in effect during the preceding fiscal quarter until the Borrower's
financial statements for the preceding fiscal quarter are delivered to the
Bank. On the first interest payment date which follows delivery of such
financial statements in any fiscal quarter, an appropriate adjustment shall be
made for interest accrued and paid on prior interest payment dates in that
quarter, any overpayment being credited against the interest payment then due
from the Borrower to the Bank and any deficiency being payment then due and
payable by the Borrower to the Bank. In the event the Borrower fails to
provide the quarterly financial statements pursuant to the requirements of
Section 5.3, the Ratio of Funded Debt to Total Capitalization will be presumed
to be the highest ratio set forth in the above table.
"Closing Date" shall mean September 30, 1996.
Section 2. Amendments to Section 2 and Section 8.13 of the Agreement.
The following amendments are hereby made to Section 2 and Section 8.13 of the
Agreement:
A. Section 2.1(A) of the Agreement is amended to replace the
reference to July 1, 1997 to January 1, 1998.
B. Section 2.1(E) of the Agreement is hereby amended to change the
Loan Maturity Date to read "January 1, 1998."
C. Section 8.13 is hereby amended to replace the date "July 1,
1997" with "January 1, 1998."
Section 3. Amendment of Financial Covenants. Sections 5.2(L)(ii) and
(iii) of the Agreement are hereby amended to read in their entirety as follows:
-2-
<PAGE> 3
(ii) Funded Debt to Total Capitalization. The Borrower, on a consolidated
basis, will maintain a ratio of Funded Debt to Total Capitalization
not to exceed 60% at September 30, 1996 through March 30, 1997; and
not to exceed 55% at March 31, 1997 and at all times thereafter,
calculated on a quarterly basis.
(iii) Fixed Charge Coverage Ratio. The Borrower, on a consolidated basis,
will maintain a Fixed Charge Coverage Ratio of not less than 1.9 to
1.0 at September 30, 1996 through March 30, 1997, and at 2.0 to 1.0
at March 31, 1997 through June 29, 1997; and at 2.25 to 1.0 at June
30, 1997 through December 30, 1997; and at 2.5 to 1.0 at December 31,
1997 and at all times thereafter; calculated quarterly on a four
quarter trailing basis commencing from the most recent quarter end.
Section 4. Conditions Precedent. On or prior to the date of execution of
this Second Amendment, the Borrower shall deliver to the Bank the following
documents, the receipt and sufficiency of which are conditions precedent to the
Bank's obligation to increase the Revolving Line of Credit and to extend the
Loan Maturity Date:
(A) the executed replacement Revolving Line of Credit Promissory Note;
(B) a Secretary's Certificate and Borrowing Resolutions of the Executive
Committee of the Board of Directors of the Borrower;
(C) a Borrower's Counsel Opinion in form and substance acceptable to the
Bank and its counsel; and
(D) the most recent financial statements of the Borrower, together with a
Certificate of Compliance with Financial Covenants, in form and
substance acceptable to the Bank.
Section 5. Effect of Amendment. Except as specifically amended in this
Second Amendment, the Agreement shall continue in full force and effect as
therein stated and the Borrower certifies that all representations and
warranties contained therein are true and correct as if made as of the date
hereof.
-3 -
<PAGE> 1
EXHIBIT 15.01
[ARTHUR ANDERSEN LLP LGO]
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 September 30, 1996,
and the related condensed consolidated statements of income for the
three-month and nine-month periods ended September 30, 1996 and 1995, and the
condensed consolidated statements of cash flows for the nine-month periods
ended September 30, 1996 and 1995. These financial statements are the
responsiblity 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 19, 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.
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
Indianapolis, Indiana
October 11, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 6,283
<SECURITIES> 0
<RECEIVABLES> 78,017
<ALLOWANCES> 0
<INVENTORY> 148,842
<CURRENT-ASSETS> 251,781
<PP&E> 78,664
<DEPRECIATION> 0
<TOTAL-ASSETS> 428,764
<CURRENT-LIABILITIES> 93,494
<BONDS> 137,572
0
0
<COMMON> 189
<OTHER-SE> 177,460
<TOTAL-LIABILITY-AND-EQUITY> 428,764
<SALES> 463,131
<TOTAL-REVENUES> 463,131
<CGS> 442,075
<TOTAL-COSTS> 442,075
<OTHER-EXPENSES> 11,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,561
<INCOME-PRETAX> 3,934
<INCOME-TAX> 1,533
<INCOME-CONTINUING> 2,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,401
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
