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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 25049
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): October 14, 1999.
Westinghouse Air Brake Company
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(Exact name of registrant as specified in its charter)
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Delaware 1-13782 25-1615902
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(State or other jurisdiction (Commission file (IRS Employer Identification
of incorporation) number) Number)
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1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148 15222
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (412) 825-1000
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
The Registrant hereby incorporates by reference the information contained
in Exhibits 99.1 and 99.2 hereto in response to this Item 5.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) -- (b) Not applicable.
(c) Exhibits.
99.1 Text of press release dated October 14, 1999, issued by
Westinghouse Air Brake Company, regarding 1999 third quarter
earnings.
99.2 Text of press release dated October 14, 1999, issued by
Westinghouse Air Brake Company, regarding share repurchase
program.
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SIGNATURE
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.
WESTINGHOUSE AIR BRAKE COMPANY
Date: October 15, 1999 By: Robert J. Brooks
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Robert J. Brooks
Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
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99.1 Text of press release dated October 14, 1999, issued by
Westinghouse Air Brake Company, regarding 1999 third
quarter earnings.
99.2 Text of press release dated October 14, 1999, issued by
Westinghouse Air Brake Company, regarding share repurchase
program.
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Exhibit 99.1
WESTINGHOUSE AIR BRAKE COMPANY ANNOUNCES
A 14.3% INCREASE IN 3rd QUARTER EARNINGS PER SHARE,
FOR THE 13TH CONSECUTIVE QUARTER WITH YEAR-OVER-YEAR GROWTH
WILMERDING, Pa., October 14, 1999 - Westinghouse Air Brake Company (NYSE:
WAB) (WABCO) today reported a 14.3% increase in diluted earnings per share of
$0.48 for the third quarter ended September 30, 1999, compared to $0.42 per
diluted share in the third quarter of 1998.
THIRD QUARTER 1999 RESULTS
Revenues for the third quarter of 1999 increased $12.0 million, or 7.5%, to
$172.5 million compared with $160.5 million in the prior-year quarter. The
increase is primarily associated with the incremental revenues from the 1998
acquisitions and increased aftermarket sales, offsetting the return to more
normal freight car OE replacement levels.
Gross profit for the third quarter of 1999 was $58.2 million, or 33.7% of sales
compared with $51.3 million, or 32.0% of sales, in the same period in 1998, an
increase of $6.9 million. The improvement in margins is due to favorable changes
in product mix related almost entirely to increased aftermarket sales in all
major product lines. The reduction in freight OE sales has been more than offset
by higher aftermarket sales. Additionally, the entire increase in both transit
and molded products sales related to aftermarket sales.
Operating expenses increased $3.0 million in the quarter-to-quarter comparison,
with the increase relating to expenses associated with new businesses acquired
in the fourth quarter of 1998. Income from operations increased $3.8 million to
$29.0 million in the third quarter of 1999 compared with $25.2 million in the
same period of 1998. Interest expense in the third quarter of 1999 was $8.7
million compared to $7.4 million in the prior year quarter. The increase
reflects the incremental borrowing costs associated with the fourth quarter 1998
acquisitions of Rockwell Railroad Electronics and the Comet Industries service
centers, net of $26 million debt payments through September 30, 1999. Income tax
expense was $7.2 million for the third quarter of 1999, reflecting the benefit
of a lower effective-tax rate. This lower tax rate is primarily attributable to
increased benefits of the foreign sales corporation.
Net income was $12.5 million, compared to $10.8 million for the third quarter of
1998, and comparable diluted earnings per share increased 14.3% to $0.48,
compared to $0.42, for the prior year.
YEAR TO DATE RESULTS
Revenues for the nine months ended September 30, 1999 were $557.7 million,
compared to $490.7 million for the same period in 1998, a 13.6 % increase. The
increase was primarily due to additional revenues from acquisitions, as well as
increased demand for the Company's products. Gross profit was
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$183.1 million for the first nine months of 1999, compared to $158.2 million in
the first nine months of 1998. Gross profit increased $24.9 million, with
improved margins resulting from a favorable sales mix of increased aftermarket
sales in 1999 as compared to 1998. Operating expenses as a percentage of
revenues increased to 17.0% for the nine months ended September 30, 1999,
compared to 16.7% for the prior period, due to costs associated with the
integration of our 1998 acquisitions. Interest expense was $26.6 million,
compared with $22.3 million in 1998. Income before extraordinary item increased
to $38.1 million, compared with $33.4 million for 1998, and diluted earnings per
share before the extraordinary item increased 13.1 % to $1.47, compared to $1.30
for the prior year. During the first nine months of 1999, the Company issued
additional senior notes and wrote-off certain costs associated with the early
extinguishment of other debt. In the prior year, the Company refinanced its
credit agreement and wrote-off costs related to the old agreement. The effect of
these transactions was an extraordinary charge, net of tax, of $0.5 million, or
$0.02 per diluted share for the period ended September 30, 1999, compared to an
extraordinary charge, net of tax, of $2.7 million, or $0.11 per diluted share
for the period ended September 30, 1998.
OUTLOOK
In terms of the rail industry, the overall long-term outlook for both the
industry and WABCO products remains positive. The freight car market OEM appears
to be leveling off from record highs in 1998 and 1999, and has adjusted to
anticipated demand levels for 2000. Our operating plan currently reflects new
freight car builds in the 55,000 range for 2000, representing a normal
replacement year. Locomotive OEM builds will remain at favorable levels, in
light of the recent order placed by the Union Pacific for 1,000 new locomotives
over the next three to four years. The transit market is prepared for increased
growth in 2000, as additional orders are placed and as delivery begins on
previously awarded contracts. Our molded products segment continues to produce
very positive results, as demand for value-added aftermarket components remains
high.
WABCO Chairman and CEO William E. Kassling stated: "Our goal continues to be
double-digit bottom-line growth in the coming year. Our revenue diversification
strategy continues to benefit WABCO by providing growth opportunities for our
company as changes in the various business cycles occur. As freight car
production levels come down from record highs seen in 1998 and 1999, WABCO is
uniquely positioned to benefit by the growth in the transit sector.
Additionally, our continued emphasis on aftermarket products and services
remains another solid building block of our success. Assuming market conditions
remain favorable, we anticipate that 2000 will provide another year of continued
growth for WABCO."
MERGER WITH MOTIVEPOWER INDUSTRIES
During the third quarter of 1999, WABCO and MotivePower Industries announced the
signing of a revised merger agreement that will create the premier supplier of
products and services for the railroad industry. The original transaction was
postponed in August 1999. Under the revised agreement, shareholders of
MotivePower Industries will receive .66 shares of Westinghouse Air Brake stock
in exchange for each share of MotivePower Industries. The merger is expected to
be completed by year-end, subject to shareholder approvals. Both companies have
set a record date of October 20,
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1999 for notice of and the right to vote at each company's special meeting of
shareholders. The date of such meetings will be November 19, 1999. At that time,
the shareholders will consider and vote upon the proposed merger.
FORWARD LOOKING STATEMENTS
This news release contains various forward-looking statements and includes
assumptions about future market conditions, operations and results. These
statements are based on current expectations and are subject to risks and
uncertainties. They are made pursuant to safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Among the many factors that could
cause actual results to differ materially from the forward-looking statements
are: changes in the competitive environment for the Company's products, changes
in market conditions and other factors included in the Company's filings with
the Securities and Exchange Commission, incorporated by reference herein. The
Company assumes no obligation to update these forward-looking statements or
advise of changes in the assumptions on which they were based.
Westinghouse Air Brake Company is North America's largest manufacturer of value
added equipment for locomotives, railway freight cars and passenger transit
vehicles. The Company's mission is to be the leading supplier of world class
products and services to the railroad freight and transit industries, helping
its customers to achieve higher levels of safety and productivity so they can
compete more effectively.
WESTINGHOUSE AIR BRAKE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
For the Three and Nine Months Ended September 30, 1999 and 1998
(Dollars in Thousands Except Per Share Data)
(Unaudited)
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
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Net Sales $172,471 $160,476 $557,656 $490,664
Cost of Sales 114,297 109,142 374,605 332,487
Gross Profit 58,174 51,334 183,051 158,117
Selling & Marketing
Expenses 7,325 7,747 23,435 21,815
General & Administrative
Expenses 10,188 9,713 36,438 34,016
Engineering Expenses 8,796 6,999 27,332 20,453
Amortization Expense 2,887 1,694 7,724 5,873
Total Operating
Expenses 29,196 26,153 94,929 82,157
Income From Operations 28,978 25,181 88,122 76,020
Other Income and Expenses:
Interest expense 8,748 7,386 26,612 22,284
Other (Income)
expense, net 520 302 1,000 (141)
Income before
income taxes
and extraordinary
item 19,710 17,493 60,510 53,877
Income Tax Expense 7,191 6,647 22,389 20,473
Income Before
Extraordinary Item 12,519 10,846 38,121 33,404
Loss On Early
Extinguishment of
Debt, Net of Tax -- -- 469 2,730
Net Income $12,519 $10,846 $37,652 $30,674
Diluted Earnings Per
Common Share:
Income before
extraordinary item $ 0.48 $ 0.42 $ 1.47 $ 1.30
Extraordinary item,
net of tax -- -- (0.02) (0.11)
Net Income $ 0.48 $ 0.42 $ 1.45 $ 1.19
Weighted Average Number of
Shares Outstanding 26,129 25,696 25,960 25,696
Notes:
Depreciation And
Amortization
Expense $ 6,964 $ 6,636 $19,622 $19,294
Capital Expenditures $ 6,023 $10,662 $17,694 $22,333
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WESTINGHOUSE AIR BRAKE COMPANY AND SUBSIDIARIES
Additional Sales Information
(Dollars In Thousands)
(Unaudited)
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Three Months Ended Nine Months Ended
9/30/99 9/30/98 9/30/99 9/30/98
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Railroad Group $ 95,866 $ 92,294 $327,068 $282,501
Transit Group 57,711 51,679 174,058 154,314
Molded Products Group 18,894 16,503 56,530 53,849
Total $172,471 $160,476 $557,656 $490,664
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WESTINGHOUSE AIR BRAKE COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
(Unaudited)
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9/30/99 12/31/98
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Assets:
Current assets $267,029 $262,961
Property, plant and equipment, net 132,948 124,981
Other assets, net 205,635 208,242
Total Assets $605,612 $596,184
Liabilities & Shareholders' Equity:
Current liabilities, excluding current
portion of long-term debt $122,491 $136,971
Total debt 441,394 467,817
Other liabilities 28,851 25,249
Shareholders' Equity 12,876 (33,853)
Total Liabilities and Shareholders'
Equity $605,612 $596,184
Notes: Current portion of long-term debt $ 27,666 $ 30,579
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SOURCE Westinghouse Air Brake Co.
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\Contact: Alvaro Garcia-Tunon or Kristen L. Backo, both of Westinghouse Air
Brake Company, 412 825-1000/
Web-site: http://www.wabco-rail.com/(WAB)
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Exhibit 99.2
WESTINGHOUSE AIR BRAKE COMPANY ANNOUNCES
SHARE REPURCHASE PROGRAM
WILMERDING, Pa., October 14, 1999 - Westinghouse Air Brake Company (NYSE: WAB)
(WABCO) today announced that its board has authorized a stock repurchase program
of up to $13 million of the company's common stock. The timing and extent of
purchases will depend upon market conditions, may be made by way of open market
or privately negotiated purchases and will be made in accordance with applicable
Securities and Exchange Commission regulations. The company will have no
obligation to purchase any shares and may cancel or suspend the purchase of
shares at any time. Repurchased common shares, if any, will be added to the
company's treasury shares and will be used for general corporate purposes.
WABCO also announced the filing yesterday with the Securities and Exchange
Commission of its Registration Statement on Form S-4 relating to its previously
announced merger with MotivePower Industries, Inc. The shareholders meeting for
each company is expected to be held on November 19th. WABCO's meeting will be
held at the Westin William Penn in Pittsburgh at 10:00 a.m., local time.
Westinghouse Air Brake Company is North America's largest manufacturer of value
added equipment for locomotives, railway freight cars and passenger transit
vehicles. The Company's mission is to be the leading supplier of world class
products and services to the railroad freight and transit industries, helping
its customers to achieve higher levels of safety and productivity so they can
compete more effectively.
\Contact: Alvaro Garcia-Tunon or Kristen L. Backo, Westinghouse Air Brake
Company, 412 825-1000/
Additional information on the Company is available by contacting our web-site at
(www.wabco-rail.com)
(WAB) -0-
