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Westinghouse Air Brake Technologies Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed March 1, 2007
Period End
December 31, 2006
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 1, 2007. Cited figures are marked; the original filing is the authoritative source.

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, reported 2006 net sales of $1,087.6 milliona, up from $1,034.0 million in 2005, and net income of $84.8 million, or $1.73 per diluted share, compared with $55.8 million, or $1.17 per diluted share, in 2005.

Income from operations rose to $129.6 millionb (11.9% of sales) from $101.3 million (9.8% of sales). The filing attributes the improvement mainly to higher sales, better operating performance, lower interest expense of $7.1 million, and a lower effective tax rate of 31.7% versus 35.6%, which reflected the reversal of valuation allowances on deferred state tax assets. Results were partly offset by a $6.8 million pre-tax restructuring charge tied to downsizing two Canadian plants and by $5.9 million of higher stock-based compensation expense.

The Freight Group generated $709.4 millionc of 2006 sales (65% of the total) and the Transit Group $378.3 million (35%). Aftermarket sales represented over 50% of total sales, and about 22% of sales came from outside North America. Cash provided by operating activities rose to $151.0 million from $84.3 million, and cash ended the year at $188.0 million.

The company repurchased 673,900 shares for $18.9 milliond under a $50 million authorization approved in July 2006, and it acquired Schaefer Equipment and Becorit GmbH in the fourth quarter for a combined $87.2 million net of cash received. Total debt remained $150 million of 6 7/8% senior notes due 2013, and the company reported $151.1 million of available bank borrowing capacity at year-end. The filing also discloses risk items investors should weigh, including asbestos claims against subsidiary Railroad Friction Products Corporation, which management does not believe will be material, and a dispute over Acela Express brake disc cracks in which Bombardier has alleged about $38 million of damages with assigned claims of about $17 million and $10 million.

Management believes Wabtec does not have material legal liability in that matter. Backlog at December 31, 2006 was $1,041.2 million, of which $539.7 million was expected to deliver in 2007.

02—Key points

Key Highlights

  1. Net sales rose 5.2% to $1,087.6 million in 2006 from $1,034.0 million in 2005, with income from operations up 28.0% to $129.6 million.
  2. Net income increased 52.0% to $84.8 million, or $1.73 per diluted share, versus $1.17 in 2005.
  3. Aftermarket sales were over 50% of total sales, and the Freight Group (65%) and Transit Group (35%) made up the segment mix.
  4. Operating cash flow more than tripled from prior year levels? No: operating cash flow increased to $151.0 million from $84.3 million.
  5. Year-end cash of $188.0 million against $150 million of 6 7/8% senior notes due 2013; $151.1 million of bank borrowing capacity was available at December 31, 2006.
  6. Acquired Schaefer Equipment and Becorit GmbH for a combined $87.2 million net of cash received, and repurchased $18.9 million of stock under a $50 million authorization.
  7. Backlog of $1,041.2 million at December 31, 2006, with $539.7 million expected to be delivered in 2007.

03—Questions

Frequently Asked Questions

  1. How did Wabtec perform financially in 2006?

    Net sales were $1,087.6 million, up from $1,034.0 million in 2005. Income from operations was $129.6 million, or 11.9% of sales, compared with $101.3 million, or 9.8% of sales, in 2005. Net income was $84.8 million, or $1.73 per diluted share.

  2. What drove the increase in 2006 results?

    The filing cites increased sales from services, radiator and electronics business units of about $41 million, higher locomotive contract sales of about $27 million, and higher freight car deliveries of about $22 million. Lower interest expense of $7.1 million and a lower effective tax rate of 31.7% also contributed.

  3. What risks does the filing highlight?

    Key risks include dependence on key customers, with the top five accounting for 26% of 2006 net sales; cyclical rail and transit markets; asbestos claims against subsidiary RFPC; labor disputes with about 41% of employees unionized; and the Acela Express brake disc matter, in which Bombardier has alleged about $38 million of damages.

  4. What did the company do with its capital in 2006?

    Wabtec acquired Schaefer Equipment for $36.3 million and Becorit for $50.9 million, both net of cash received. It repurchased 673,900 shares for $18.9 million under a $50 million program and paid cash dividends of $1.9 million. Capital expenditures were $20.9 million.

  5. What is the company's debt and liquidity position?

    Total debt was $150 million of 6 7/8% senior notes due 2013, with no borrowings under the $175 million Refinancing Credit Agreement during 2006. Available bank borrowing capacity was about $151.1 million at December 31, 2006, and cash was $188.0 million.

04—Continue

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