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Westinghouse Air Brake Technologies Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed March 16, 2006
Period End
December 31, 2005
Security
WAB
In the record · 2016–202610-K1110-Q338-K132

WAB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 132 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Mar ’17Mar ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Aug ’21Aug ’21
  4. Material agreement8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-K filed March 16, 2006. Cited figures are marked; the original filing is the authoritative source.

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported record-level results for 2005, with net sales rising to $1.034 billiona from $822.0 million in 2004, an increase of 25.8%.

Income from operations reached $101.3 millionb (9.8% of sales) versus $55.4 million (6.7% of sales) in 2004, and net income was $55.8 million, or $1.17 per diluted share, compared with $32.4 million, or $0.71 per diluted share, a year earlier. Management attributed the growth to higher freight car deliveries, strong locomotive component demand, the acquisition of Rutgers Rail's friction products business (CoFren), and a locomotive module contract ramp-up. Freight Group sales were $798.4 million and Transit Group sales were $235.6 million, and aftermarket sales represented about 50% of total sales.

Balance sheet and cash flow strengthened over the year. Cash rose to $141.4 millionc, operating cash flow was $84.1 million, and total debt was steady at $150 million in 6 7/8% senior notes due 2013, with the revolving credit facility undrawn and roughly $148.6 million of available borrowing capacity. Shareholders' equity increased to $379.2 million.

The company stated that 2006 demand for locomotives, freight cars and transit vehicles should be about the same as 2005, while aftermarket demand should remain strong. The filing also highlights risks that investors should weigh. Key customers accounted for 24%d of net sales, 41% of employees are unionized with contracts running through 2006, 2007 and 2009, and asbestos claims against subsidiary Railroad Friction Products Corporation continue to rise in number.

The company disclosed an internal investigation, begun in March 2006, into disbursements by its Indian subsidiary Pioneer Friction Limited that may violate applicable laws; management described the amounts as inconsequential and not material, and no reserve was recorded. The new CEO, Albert J. Neupaver, joined on February 1, 2006.

02—Key points

Key Highlights

  1. Net sales increased 25.8% to $1,034.0 million in 2005 from $822.0 million in 2004.
  2. Net income rose to $55.8 million, or $1.17 per diluted share, from $32.4 million, or $0.71 per diluted share, in 2004.
  3. Income from operations was $101.3 million (9.8% of sales), up from $55.4 million (6.7% of sales) in 2004.
  4. Aftermarket sales were about 50% of total sales, and international sales were $368.7 million, or 35.7% of net sales.
  5. Year-end cash was $141.4 million, up $46.1 million, and operating cash flow was $84.1 million.
  6. Total debt remained $150 million in 6 7/8% senior notes due 2013, with $148.6 million of available bank borrowing capacity at December 31, 2005.
  7. Backlog at December 31, 2005 was $826.5 million, up from $574.0 million a year earlier.

03—Questions

Frequently Asked Questions

  1. What drove the increase in Wabtec's 2005 sales?

    The filing attributes the $212 million sales increase primarily to higher freight car deliveries, strong demand for locomotive components, the acquisition of Rutgers Rail's friction product assets (CoFren), and the ramp-up of a locomotive module contract. Industry freight car deliveries rose to 68,657 units from 46,292 in 2004.

  2. How is Wabtec's debt position and liquidity?

    Total debt was $150 million, consisting of 6 7/8% senior notes due 2013, and the revolving credit agreement was undrawn at year-end. Cash was $141.4 million, and the company had about $148.6 million of available borrowing capacity under its Refinancing Credit Agreement, which was extended to December 2010.

  3. What outlook does management give for 2006?

    Management expects demand for locomotives, freight cars and transit vehicles in 2006 to remain at about the same levels as 2005, and expects aftermarket demand to stay strong due to continued growth in rail traffic and passenger transit ridership. It also cited risks including higher steel and raw material costs, medical and insurance costs, and foreign currency fluctuations.

  4. What legal and compliance risks does the filing disclose?

    The filing discloses asbestos-related bodily injury claims that have increased since 2000, mostly against subsidiary Railroad Friction Products Corporation. It also reports an internal investigation begun in March 2006 into disbursements by subsidiary Pioneer Friction Limited in India that may violate applicable laws; management considers the transactions inconsequential and not material, and no reserve has been recorded. The Acela Express brake disc matter carries a claim of approximately $30 million by Amtrak, which the company does not believe is material to it.

04—Continue

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