<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
[X] THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1998
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
------------------- -----
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (765) 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 has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
The number of shares of common stock outstanding at January 20, 1999 was
22,965,090.
<PAGE> 2
WABASH NATIONAL CORPORATION
---------------------------
INDEX
-----
FORM 10-Q/A
-----------
Page
PART I - FINANCIAL INFORMATION ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 1998 and December 31, 1997 1
Condensed Consolidated Statements of Income
for the three and six months ended
June 30, 1998 and 1997 2
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1998
and 1997 3
Notes to Condensed Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk(Not Applicable)
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security-Holders 14
Item 5. Other information 15
Item 6. Exhibits and reports on Form 8-K 15
<PAGE> 3
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
----------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Restated (Note 2)
June 30, December 31,
1998 1997
--------- ------------
(Unaudited) (Note 1)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 47,238 $ 14,647
Accounts receivable, net 148,247 161,249
Current portion of finance contracts 6,896 7,697
Inventories 236,359 211,359
Prepaid expenses and other 12,691 12,962
-------- --------
Total current assets 451,431 407,914
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net 118,259 108,798
-------- --------
EQUIPMENT LEASED TO OTHERS, net 37,039 43,986
-------- --------
FINANCE CONTRACTS, net of current portion 65,463 51,539
-------- --------
OTHER ASSETS 17,914 17,633
-------- --------
$690,106 $629,870
======== ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,974 $ 4,148
Accounts payable 118,788 94,083
Accrued liabilities 34,009 29,471
-------- --------
Total current liabilities 155,771 127,702
-------- --------
LONG-TERM DEBT, net of current maturities 164,220 231,880
-------- --------
DEFERRED INCOME TAXES 29,970 26,440
-------- --------
OTHER NONCURRENT LIABILITIES AND
CONTINGENCIES 15,013 17,332
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock 4 4
Common stock, 22,962,245 and 19,954,874
shares issued and outstanding,
respectively 230 200
Additional paid-in capital 223,066 135,611
Retained earnings 103,111 91,980
Treasury stock at cost, 59,600 shares (1,279) (1,279)
-------- --------
325,132 226,516
-------- --------
$690,106 $629,870
======== ========
</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,
------------- --------------
Restated Restated
(Note 2) (Note 2)
1998 1997 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $337,733 $196,407 $631,345 $331,494
COST OF SALES 313,695 181,697 581,419 308,751
-------- -------- -------- --------
Gross Profit 24,038 14,710 49,926 22,743
GENERAL AND ADMINISTRATIVE
EXPENSES 6,968 4,438 13,364 6,592
SELLING EXPENSE 3,219 (2,083) 6,197 3,219
-------- -------- -------- --------
Income from operations 13,851 8,189 30,365 12,932
OTHER INCOME (EXPENSE):
Interest Expense (3,527) (3,736) (8,176) (7,105)
Other, net (53) 147 (293) 238
-------- -------- -------- --------
Income before income taxes 10,271 4,600 21,896 6,065
PROVISION FOR INCOME TAXES 4,068 1,758 8,735 2,354
-------- -------- -------- --------
Net Income $ 6,203 $ 2,842 $ 13,161 $ 3,711
-------- -------- -------- --------
PREFERRED STOCK DIVIDENDS 264 216 528 216
-------- -------- -------- --------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 5,939 $ 2,626 $ 12,633 $ 3,495
======== ======= ======== ========
Earnings per share:
Basic $ 0.27 $0.13 $ 0.60 $ 0.18
======== ======= ======== ========
Diluted $ 0.27 $ 0.13 $ 0.60 $ 0.18
======== ======= ======== ========
Cash dividends per share $ 0.035 $ .03 $ 0.07 $ .06
======== ======= ======== ========
</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)
Six Months
Ended June 30,
---------------------
Restated
(Note 2)
1998 1997
-------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 13,161 $ 3,711
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities-
Depreciation and amortization 8,062 8,955
Bad debt provision 395 221
Deferred income taxes 2,570 5,089
Equity in losses of unconsolidated affiliate 1,300 ---
Change in operating assets and liabilities,
excluding effects of the acquisition--
Accounts receivable 12,607 (21,658)
Inventories (25,000) (34,721)
Prepaid expenses and other 1,231 (5,534)
Accounts payable and accrued liabilities 29,137 31,645
Other, net (926) 839
Net cash provided by (used in) --------- ---------
operating activities 42,537 (11,453)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,889) (12,536)
Investment in equipment leased to others (5,674) (18,482)
Proceeds from sale of leased equipment and
finance contracts 10,074 2,315
Investment in finance contracts (19,041) (11,671)
Principal payments on finance contracts 3,166 2,513
Payments for RoadRailer technology --- (1,086)
Payment for purchase of Fruehauf,
net of cash acquired (Note 6) --- (15,129)
Investment in unconsolidated affiliate (1,397) ---
Other, net 89 69
----------- ---------
Net cash used in investing activities (26,672) (54,007)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Long-term debt --- 25,000
Long-term revolver 140,600 157,500
Common stock, net of expenses 87,485 443
Payments:
Long term debt (8,834) (2,352)
Long-term revolver (200,600) (118,000)
Common stock dividends (1,397) (1,135)
Preferred stock dividends (528) (173)
Net cash provided by ---------- ---------
financing activities 16,726 61,283
---------- ---------
NET INCREASE (DECREASE) IN CASH 32,591 (4,177)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,647 5,514
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 47,238 $ 1,337
========== =========
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 6
WABASH NATIONAL CORPORATION
---------------------------
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 1997 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, 1998 and December 31, 1997 and its results of operations
and cash flows for the six months ended June 30, 1998 and 1997.
NOTE 2. RESTATEMENT
-----------
On January 19, 1999, the Company announced that it would restate the previously
reported financial statements for the quarters ended March 31, June 30 and
September 30, 1998. In late 1997, the Company converted its manufacturing
information systems which adversely impacted its ability to accurately determine
its inventory costs on an interim basis in 1998. In connection with the
conversion, the Company lost its ability to generate automated bills of material
for purposes of relieving inventory and instead used estimates of material costs
as a percent of sales prices. Following the Company's annual physical inventory
count, the Company identified adjustments necessary to properly state inventory
and cost of sales for these periods.
4
<PAGE> 7
The Company's financial statements at and for the three and six month
periods ended June 30, 1998 have been restated to reflect these adjustments.
The results of the Company's physical inventory identified only immaterial
adjustments in 1997; therefore, no adjustments were necessary for any periods
prior to 1998. A summary of the effect of the adjustments at and for the three
and six month periods ended June 30, 1998 on certain previously reported amounts
is as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Previously Previously
Reported Restated Reported Restated
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $337,733 $337,733 $631,345 $631,345
Cost of sales 309,495 313,695 576,419 581,419
Gross Profit 28,238 24,038 54,926 49,926
Income Before Income Taxes 14,471 10,271 26,896 21,896
Net Income 8,723 6,203 16,161 13,161
Earnings Per Share:
Basic $ 0.38 $ 0.27 $0.74 $0.60
Diluted $ 0.38 $ 0.27 $0.74 $0.60
June 30, 1998
-------------
Inventories $241,359 $236,359
Accrued Liabilities 36,009 34,009
Retained Earnings 106,111 103,111
</TABLE>
NOTE 3. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
Restated
(Note 2)
June 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Raw material and components $ 114,903 $ 75,629
Work in progress 23,233 16,892
Finished goods 38,485 68,164
Aftermarket parts 26,883 25,386
Used trailers 32,855 25,288
--------- ---------
$ 236,359 $ 211,359
========= =========
</TABLE>
NOTE 4. EARNINGS PER SHARE
------------------
The Company adopted Statement of Financial Accounting Standards (SFAS
No. 128, "Earnings Per Share") during 1997. SFAS No. 128 simplifies the
computation of earnings per share (EPS) and requires the presentation of two new
amounts: basic and diluted EPS. As required, all prior period EPS data has
been restated to conform with the provisions of this statement.
5
<PAGE> 8
A reconciliation of the numerators and denominators of the basic and
diluted EPS computations, as required by SFAS No. 128, is presented below:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------- ---------------
1998 1997 1998 1997
---- ---- ---- ----
Restated(Note 2) Restated(Note 2)
<S> <C> <C> <C> <C>
BASIC:
Net income 6,203 2,842 13,161 3,711
Preferred stock dividends (264) (216) (528) (216)
-------- ------- ------- -------
Net income, basic 5,939 2,626 12,633 3,495
-------- ------- ------- -----
Common shares, basic 22,036 19,745 21,002 19,330
-------- ------- ------- -------
Basic EPS $ 0.27 $ 0.13 $ 0.60 $ 0.18
======== ======= ======= =======
DILUTED:
Net income, basic 5,939 2,626 12,633 3,495
Effect of dilutive securities:
Convertible preferred stock --- --- --- ---
======== ======= ======= =======
Net income, assuming full dilution 5,939 2,626 12,633 3,495
======== ======= ======= =======
Common shares, basic 22,036 19,745 21,002 19,330
Effect of dilutive securities:
Convertible preferred stock --- --- --- ---
Stock Options 124 37 134 81
-------- ------- ------- -------
Common shares, assuming full dilution 22,160 19,782 21,136 19,411
-------- ------- ------- -------
Diluted EPS $ 0.27 $ 0.13 $ 0.60 $ 0.18
======== ======= ======= =======
</TABLE>
NOTE 5. 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 lease revenues, excluding
revenue from the sale of leased trailers of $1.3 million and $2.4 million, were
$10.8 million and $10.3 million during the six months ended June 30, 1998 and
1997, respectively. Income before income taxes was $1.2 million and $0.2
million during the six months ended June 30, 1998 and 1997, respectively.
At June 30, 1998 and December 31, 1997 respectively, the Finance Company
had $62.2 million and $54.9 million in long-term debt, comprised of $54 million
and $39.0 million in intercompany debt to the Company and $8.2 million and $15.9
million in debt due to third parties, of which $7.4 and $8.4 million was
guaranteed by the Company. Also at June 30, 1998 and December 31, 1997
respectively, the Finance Company had total assets of $112.7 million and $107.1
million, consisting primarily of Equipment Leased to Others of $37.0 million and
$44.0 million and Finance Contracts, net of current portion, of $65.5 million
and $51.5 million.
6
<PAGE> 9
NOTE 6. ACQUISITION
-----------
The following unaudited pro forma consolidated results of operations of
the Company and the acquired assets of Fruehauf assume the acquisition occurred
as of January 1, 1997 (in millions, except per share data):
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1998 1997
Restated
(Note 2)
====================================================================
<S> <C> <C>
Net Sales $631.3 $361.2
Net Income $ 13.2 $ 3.2
Net Income per common share $ 0.60 $ 0.14
====================================================================
</TABLE>
In management's opinion, the unaudited pro forma combined results of operations
are not indicative of the actual results that would have occurred had the
acquisition been consummated at the beginning of 1997 or of future operations of
the combined companies under the ownership and management of the Company.
NOTE 7. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
<TABLE>
<CAPTION>
Six Months
Ended June 30,
(In thousands) 1998 1997
========================================================================
<S> <C> <C>
Cash paid during the period for:
Interest $7,868 $ 6,138
Income taxes 7,553 507
========================================================================
Noncash investing and financing activities:
Preferred stock issued for acquisition --- 17,600
Common stock issued for acquisition --- 17,750
========================================================================
Purchase of Fruehauf assets, net of cash acquired:
Accounts receivable, net $ --- $ 13,955
Inventory, net --- 20,163
Prepaid expenses and other --- 4,072
Property, plant and equipment --- 25,269
Current liabilities --- (8,980)
Non-current liabilities --- (4,000)
Stock issued --- (35,350)
========================================================================
Net cash paid to acquire Fruehauf $ --- $(15,129)
========================================================================
</TABLE>
7
<PAGE> 10
NOTE 8. ACCOUNTS RECEIVABLE SECURITIZATION
----------------------------------
On March 31, 1998, Wabash National Corporation replaced its existing
$40 million receivable sale and servicing agreement with a new three-year trade
receivable securitization facility. The new facility allows the Company to
sell, without recourse on an ongoing basis, all of their accounts receivable to
Wabash Funding Corporation (Funding Corp.), a wholly-owned unconsolidated
subsidiary of the Company. Simultaneously, the Funding Corp. has sold and,
subject to certain conditions, may from time to time sell an undivided interest
in those receivables to a large financial institution. At June 30, 1998, $83
million of proceeds have been received under the new facility. No gain or loss
was recorded during the first quarter of 1998 as a result of this transaction.
Amounts reflected as Accounts Receivable in the accompanying Condensed
Consolidated Balance Sheets as of June 30, 1998 include an interest in
receivables sold to the Funding Corp. in excess of proceeds received.
Proceeds from the sale were used to reduce outstanding borrowings under
the Company's Revolving Credit Agreement and are reflected as operating cash
flows in the accompanying Condensed Consolidated Statement of Cash Flows. Costs
associated with this facility will be classified as Selling, General and
Administrative Expenses in the consolidated statement of income.
In order to operate this facility on an on-going basis, the Funding
Corp. is required to meet certain covenants primarily related to the performance
of the accounts receivable portfolio. Servicing responsibility for these
receivables resides with the Company.
NOTE 9. COMMON STOCK OFFERING
---------------------
On April 28, 1998, the Company sold three million shares of its common
stock in a registered public offering at a public-offering price of $30.75 per
share. The Company expects to use the net proceeds from the sale to expand its
retail branch network, to fund certain capital improvements related to its
manufacturing facilities, to repay debt, and for other general corporate
purposes.
NOTE 10. SUBSEQUENT EVENT
----------------
On July 14, 1998, the Company acquired Cloud Corporation of Harrison,
AR (Cloud) and Cloud Oak Flooring Co., Inc. of Sheridan, AR (Cloud Oak),
manufacturers of laminated hardwood floors for the truck body and trailer
industry. These companies had combined revenues of approximately $40 million in
1997.
Aggregate consideration for this transaction included approximately $10
million in cash, $13 million in convertible preferred stock and the assumption
of certain indebtedness. This transaction will be accounted for as a purchase
with the excess purchase price above the net assets acquired being recorded as
goodwill.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
- ---------------------
NOTE: This discussion contains various forward-looking comments. These
- ----- comments should be viewed in connection with the risk factors disclosed
in the Company's Registration Statement on Form S-3 (SEC File No.
333-48589).
RESTATEMENT
- -----------
As described in Note 2 of the Notes to Condensed Consolidated Financial
Statements, on January 19, 1999, the Company announced that it would restate the
previously reported financial statements for the quarters ended March 31, June
30 and September 30, 1998. In late 1997, the Company converted its
manufacturing information systems which adversely impacted its ability to
accurately determine its inventory costs on an interim basis in 1998. In
connection with the conversion, the Company lost its ability to generate
automated bills of material for purposes of relieving inventory and instead used
estimates of material costs as a percent of sales prices. Following the
Company's annual physical inventory count, the Company identified adjustments
necessary to properly state inventory and cost of sales for these periods.
The Company's financial statements at and for the three and six month
periods ended June 30, 1998 have been restated to reflect these adjustments. The
results of the Company's physical inventory identified only immaterial
adjustments in 1997; therefore, no adjustments were necessary for any periods
prior to 1998. The effect of the restatement was to reduce net income for the
three and six months ended June 30, 1998 by $2.5 million and $3.0 million,
respectively. The restated net income for the three and six months ended June
30, 1998 is $6.2 million and $13.2 million compared to $2.8 million and $3.7
million, respectively, for the same periods in 1997.
The information in the discussion which follows is presented after
restatement of the financial statements.
Net Sales
---------
Net sales for the three month period ended June 30, 1998 increased
$141.3 million or 72% compared to the same period in 1997 and were $299.9
million or 90% higher for the six month period ended June 30, 1998 compared to
the same period in 1997. The increase in net sales for the three and six month
periods were primarily attributable to an increase in new trailer sales of
$120.9 million and $244.4 million, respectively, and an increase in aftermarket
parts and service revenues of $9.7 million and $35.3 million, respectively.
9
<PAGE> 12
The increases in new trailer sales of $120.9 million and $244.4 million
for the three and six month periods, respectively, were caused by a 53% and 67%
increase in units sold, along with an increase of 16% and 13% in the average
sales price per unit during the same periods. These favorable conditions are
the result of continued sales growth at the Company's retail outlets, increased
production capabilities, increased production of the Company's composite trailer
and a continued strong demand for the Company's products.
The increase in aftermarket parts and service revenues reflects an
increase in aftermarket parts sales through the Company's existing parts
distribution business as well as the aftermarket parts distribution business and
31 retail outlets acquired. Beginning in 1998, the Company plans to begin the
expansion of its retail distribution network from its current level of 31 retail
outlets to approximately 50 retail outlets within 24 months.
Gross Profit
------------
Gross profit as a percentage of net sales totaled 7.1% for the three
month period ended June 30, 1998 compared to 7.5% for the same period in 1997.
The gross profit margin for the six-month period ended June 30, 1998 as a
percentage of sales was 7.9% versus 6.9% for the same period in 1997. The
slight decrease in the gross profit margin for the second quarter reflects the
effect of the Company's conversion of its manufacturing information systems on
its production costs during the quarter. The increase in the gross profit
margin for the year reflects the impact of higher margin sales of new and used
trailers and aftermarket parts and service revenues generated from the retail
branch outlets acquired in 1997. In addition, the improvement in product mix
resulting from the completion of the Company's composite material facility in
the third quarter of 1997 has allowed the Company to increase its production
rates, thereby improving production efficiencies at the Company's manufacturing
facilities.
Income From Operations
----------------------
Income from operations for the three and six month periods ended June
30, 1998 as a percentage of net sales was 4.1% and 4.8% compared to 4.2% and
3.9% for the same periods in 1997. Income from operations in 1998 was impacted
primarily by the changes in the gross profit margin previously discussed offset
somewhat by increased selling, general and administrative expenses. The
increase in selling, general and administrative expenses primarily reflects
higher levels of expense associated with the retail outlets acquired in April,
1997 as well as costs associated with the Company's new accounts receivable
securitization facility.
10
<PAGE> 13
Interest Expense
----------------
Interest expense for the three and six month periods ended June 30,
1998 totaled $3.5 million and $8.2 million compared to $3.7 million and $7.1
million for the same periods in 1997. The decrease in interest expense during
the second quarter of 1998 is attributable to the pay down of approximately
$67.7 million in long-term debt during the six months ended June 30, 1998 using
proceeds from the Company's new trade receivable securitization facility which
closed on March 31, 1998 coupled with proceeds from the Company's April, 1998
common stock offering.
Taxes
-----
The provision for income taxes for the three and six month periods
ended June 30, 1998 of $4.1 million and $8.7 million, respectively, represents
39.6% and 39.9% of pre-tax income for the periods compared to the provision of
$1.8 million and $2.4 million, or 38.2% and 38.8% of pretax income,
respectively, for the same periods in 1997. The effective tax rates are higher
than the Federal statutory rates of 35% due primarily to state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Operating Activities
--------------------
For the six months ended June 30, 1998, cash provided by operating
activities amounted to $42.5 million primarily due to net income and changes in
working capital. Increased inventory levels resulting from higher new trailer
production and the establishment of inventory at the retail outlets was more
than offset by related increases in accounts payable and accrued liabilities. In
addition, as discussed in more detail below, the Company received proceeds
totaling $83 million from the sale of accounts receivable which favorably
impacted cash flow from operations.
Investing Activities
--------------------
For the six months ended June 30, 1998, cash used in investing
activities amounted to $26.7 million primarily due to the expansion of the
Finance Company's leasing operation ($24.7 million), capital expenditures ($13.9
million) offset somewhat by the sale of leased equipment and finance contracts
($10.1 million).
11
<PAGE> 14
Capital expenditures during the period were associated with increasing
the Company's manufacturing operations, the acquisition of a new consolidated
parts center in Lafayette, Indiana and other operating purposes. The Company
continues to pursue its branch expansion strategy although no firm commitments
have been entered into to date. In addition, the Company anticipates future
capital expenditures related to increasing capacity and manufacturing
productivity at its recently acquired flooring operation in Harrison, Arkansas
and at its trailer manufacturing facility in Huntsville, Tennessee. Expenditures
related to these, and other activities, are expected to be $80-$100 million over
the next 12 to 24 months.
During March, 1998, the Finance Company sold and leased back
approximately $8.8 million of its Equipment Leased to Others with a large
financial institution.
Financing Activities
--------------------
For the six months ended June 30, 1998, cash provided by financing
activities amounted to $16.7 million primarily due to the issuance of common
stock ($87.5 million)and borrowings under the Company's long-term revolver
($140.6 million) offset somewhat by the paydown of the Company's long-term
revolver ($201 million).
On March 31, 1998, the Company replaced its existing $40 million
receivable sale and servicing agreement with a new three-year trade receivable
securitization facility. The new facility allows the Company to sell, without
recourse on an ongoing basis, all of its accounts receivable to Wabash Funding
Corporation (Funding Corp.), a wholly-owned unconsolidated subsidiary of the
Company. Simultaneously, the Funding Corp. has sold and, subject to certain
conditions, may from time to time sell an undivided interest in those
receivables to a large financial institution. At June 30, 1998, $83 million of
proceeds were received by the Company related to this new facility. Proceeds
from the sale were used to reduce outstanding borrowings under the Company's
Revolving Credit Agreement and are reflected as operating cash flows in the
accompanying Consolidated Statement of Cash Flows.
On April 28, 1998, the Company sold three million shares of its common
stock in a registered public offering at a public-offering price of $30.75 per
share. The Company expects to use the proceeds from the sale to expand its
retail branch network, to fund certain capital improvements related to its
manufacturing facilities, to repay debt, and for other general purposes.
12
<PAGE> 15
Other
-----
Other sources of funds for capital expenditures, continued expansion of
businesses, 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 and equity offerings.
The Company believes that these funding sources will be adequate for its
anticipated requirements.
BACKLOG
-------
The Company's backlog of orders was approximately $894 million at June
30, 1998 and $832 million at December 31, 1997. 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.
NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
The Company adopted Statement of Financial Accounting Standards (SFAS
No. 128, "Earnings Per Share"), during 1997. SFAS No. 128 simplifies the
computation of earnings per share (EPS) and requires the presentation of two new
amounts, basic and diluted EPS. As required by SFAS No. 128, all prior period
EPS data have been restated to conform with the provisions of this Statement.
The adoption of Statement resulted in an immaterial difference in its
computation of basic and dilutive EPS.
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", on
January 1, 1998. SFAS No. 130 was effective for fiscal years beginning after
December 15, 1997. SFAS No. 130 established standards for reporting and display
of "comprehensive income" and its components. Comprehensive income is not
reported in the accompanying Condensed Consolidated Financial Statements as the
Company had no items of Other Comprehensive Income for the periods presented.
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information" was issued. The statement must be adopted by the
Company on December 31, 1998. Under provisions of this statement, the Company
will be required to modify or expand the financial statement disclosures for
operating segments, products and services, and geographic areas. Implementation
of this disclosure standard will not affect the Company's financial position or
results of operations.
13
<PAGE> 16
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (beginning of fiscal
year 2000 for the Company). This statement requires that all derivative
instruments be recorded on the balance sheet at their fair value. Management of
the Company has not yet determined the impact that the adoption of SFAS 133 will
have on its earnings or statement of financial position. However, management
anticipates that, due to its limited use of derivative instruments, the adoption
of SFAS 133 will not have a significant effect on the Company's results of
operations or its financial position.
YEAR 2000 COMPLIANCE
--------------------
The Company has assessed and continues to assess the impact of the Year
2000 issue on its reporting systems, operations and interfaces with outside
parties and determined that although many of its applications are already
compliant, the Company will have to modify or replace other applications.
Specifically, the systems in place within the Company's retail and distribution
network and certain of its manufacturing operations are not Year 2000 compliant.
As a result, during 1998 and 1999, the Company will install new application
systems within this distribution network and will replace non-compliant systems
within its manufacturing operations which will be Year 2000 compliant. The
Company believes that, with modifications to existing software and conversions
to new software, the Year 2000 problem will not pose a significant operational
problem for the Company. However, because most computer systems are, by their
very nature, interdependent, there is no assurance that the systems of other
companies on which the Company's systems rely will be timely converted and would
not have an adverse effect on the Company's systems. Expenditures related to
the Year 2000 initiatives have not been and are not expected to be material to
the Company's results of operations or financial position.
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 4, 1998,
at which time the following nominees were elected to the Board of Directors:
WITHHOLD AUTHORITY
NOMINEES FOR TO VOTE
-------- --- -------
Richard E. Dessimoz 16,925,064 183,439
Donald J. Ehrlich 16,928,128 180,375
John T. Hackett 16,925,411 183,092
E. Hunter Harrison 16,923,595 184,908
Mark R. Holden 16,924,061 184,442
Ludvik F. Koci 16,925,758 182,745
14
<PAGE> 17
ITEM 5. OTHER INFORMATION
-----------------
The Company will use proxy authorization at the next annual meeting of
stockholders to vote in its discretion on those stockholder proposals presented
at the meeting that were received after February 15, 1999.
ITEM 6. EXIBITS AND REPORTS ON FORM 8-K
-------------------------------
(a) Exhibits:
15.01: Previously Filed Accountant's Review Report has been withdrawn.
(b) Reports on Form 8-K:
1. Form 8-K filed April 14, 1998 reporting under Item 10:
Receivables Sales Agreement between the Company and Wabash National
Funding Corporation and the Receivables Purchase Agreement between
Wabash Funding Corporation and Falcon Asset Securitization
Corporation.
15
<PAGE> 18
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: January 20, 1999 By: /s/ Rick B. Davis
---------------- ------------------
Rick B. Davis
Corporate Controller
and
Executive Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED BALANCE SHEET, STATEMENT OF INCOME AND STATEMENT OF CASH FLOWS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 47,238
<SECURITIES> 0
<RECEIVABLES> 148,247
<ALLOWANCES> 0
<INVENTORY> 236,359
<CURRENT-ASSETS> 451,431
<PP&E> 118,259
<DEPRECIATION> 0
<TOTAL-ASSETS> 690,106
<CURRENT-LIABILITIES> 155,771
<BONDS> 164,220
0
4
<COMMON> 230
<OTHER-SE> 324,898
<TOTAL-LIABILITY-AND-EQUITY> 690,106
<SALES> 631,345
<TOTAL-REVENUES> 631,345
<CGS> 581,419
<TOTAL-COSTS> 581,419
<OTHER-EXPENSES> 19,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,176
<INCOME-PRETAX> 21,896
<INCOME-TAX> 8,735
<INCOME-CONTINUING> 13,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,161
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
