Westinghouse Air Brake Technologies (WAB) 10-K risk factor changes: FY2019 vs FY2018

[removed: Prolonged] [added: Prolonged] unfavorable economic and market conditions could adversely affect our [removed: business.][added: business.]

[removed: We] [added: We] are dependent upon key [removed: customers.][added: customers.]

[removed: Our] [added: Our] business operates in a highly competitive [removed: industry.][added: industry.]

[removed: We] [added: We] intend to pursue acquisitions, joint ventures and alliances that involve a number of inherent risks, any of which may cause us not to realize anticipated [removed: benefits.][added: benefits.]

[removed: | • |] [added: -] difficulties in achieving identified financial and operating synergies, including the integration of operations, services and products; [removed: |]

[removed: | • |] [added: -] diversion of management’s attention from other business concerns; [removed: |]

[removed: | • |] [added: -] the assumption of unknown liabilities; and [removed: |]

[removed: | • |] [added: -] unanticipated changes in the market conditions, business and economic factors affecting such an acquisition, joint venture or alliance. [removed: |]

[removed: A] [added: A] failure to predict and react to customer demand could adversely affect our [removed: business.][added: business.]

Decisions to develop and market new transportation products are typically made without firm indications of customer [added: acceptance.]

[removed: We] [added: We] may fail to respond adequately or in a timely manner to innovative changes in new [removed: technology.][added: technology.]

[removed: A] [added: A] portion of our sales are related to delivering products and services to help our U.S. railroad and transit customers meet the Positive Train Control [removed: ("PTC")] mandate from the U.S. federal [removed: government, which requires the use of on-board locomotive computers and software by the end of 2018.][added: government.]

In 2015, the [added: U.S. rail] industry's PTC deadline was extended by [added: Congress by] three years through December 31, 2018, which also included the ability of railroads to request an additional two years for compliance with the approval of the Department of Transportation if certain parameters are met.

[removed: This] [added: These extensions] could change the timing of our revenues and could cause us to reassess the staffing, resources and assets deployed in delivering PTC [removed: services.][added: services to our customers.]

[removed: Our] [added: Our] revenues are subject to cyclical variations in the railway and passenger transit markets and changes in government [removed: spending.][added: spending.]

[removed: In economic downturns,] railroads have deferred, and may defer, certain expenditures in order to conserve cash in the short term.

To the extent that future funding for proposed public projects is curtailed or withdrawn altogether as a result of changes in political, economic, fiscal or other conditions beyond our control, such projects may be delayed or [removed: cancelled,] [added: canceled,] resulting in a potential loss of business for us, including transit aftermarket and new transit car orders.

[removed: Our] [added: Our] backlog is not necessarily indicative of the level of our future [removed: revenues.][added: revenues.]

[removed: A] [added: A] growing portion of our sales may be derived from our international operations, which exposes us to certain risks inherent in doing business on an international [removed: level.][added: level.]

For the fiscal year ended December 31, [removed: 2018,] [added: 2019,] approximately [removed: 67%] [added: 60%] of our consolidated net sales were to customers outside of the United States.

Our global headquarters for the Transit group is located in France, and we conduct other international operations through a variety of wholly and majority-owned subsidiaries and joint ventures, including in Australia, Austria, Brazil, Canada, [added: China, Czech Republic, France, Germany, India, Italy, Macedonia, Mexico, the Netherlands, Poland, Russia, Spain, South Africa, Turkey, and the United Kingdom.]

[removed: | • |] [added: -] lack of complete operating control; [removed: |]

[removed: | • |] [added: -] lack of local business experience; [removed: |]

[removed: | • |] [added: -] currency exchange fluctuations and devaluations; [removed: |]

[removed: | • |] [added: -] restrictions on currency conversion or the transfer of funds or limitations on our ability to repatriate income or capital; [removed: |]

[removed: | • |] [added: -] the complexities of operating within multiple tax jurisdictions; [removed: |]

[removed: | • |] [added: -] foreign trade restrictions and exchange controls; [removed: |]

[removed: | • |] [added: -] adverse impacts of international trade policies, such as import quotas, capital controls or tariffs; [removed: |]

[removed: | • |] [added: -] difficulty enforcing agreements and intellectual property rights; [removed: |]

[removed: | • |] [added: -] the challenges of complying with complex and changing laws, regulations, and policies of foreign governments; [removed: |]

[removed: | • |] [added: -] the difficulties involved in staffing and managing widespread operations; [removed: |]

[removed: | • |] [added: -] the potential for nationalization of enterprises; [removed: |]

[removed: | • |] [added: -] economic, political and social instability; [removed: and |]

[removed: | • |] [added: -] possible terrorist attacks, conflicts and wars, including those against American interests. [removed: |]

[removed: We] [added: We] are subject to a variety of laws and regulations, including anti-corruption laws, in various [removed: jurisdictions.][added: jurisdictions.]

We are also subject to other laws and regulations governing our international operations, including regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Assets Control, and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries and persons, customs requirements, [removed: currency exchange regulations, and transfer pricing regulations.]

[removed: We] [added: We] are subject to a variety of environmental laws and [removed: regulations.][added: regulations.]

We have incurred, and will continue to incur, both operating and capital costs to comply with environmental laws and regulations, including costs associated with the clean-up and [added: investigation of some of our current and former properties and offsite disposal locations.]

In addition, certain of our products are subject to extensive, and increasingly stringent, statutory and regulatory requirements governing, [removed: e.g.,] [added: *e.g.*,] emissions and noise, including standards imposed by the U.S. Environmental Protection Agency, the European Union and other regulatory agencies around the world.

[removed: Future] [added: Future] climate change regulation could result in increased operating costs, affect the demand for our products or affect the ability of our critical suppliers to meet our [removed: needs.][added: needs.]

The Department of Transportation has largely granted the additional two years for compliance.

All freight railroads are required to have testing complete and Positive Train Control fully implemented across the required network by December 31, 2020.

In economic downturns,

- possible local catastrophes, such as natural disasters and epidemics; and

currency exchange regulations, and transfer pricing regulations.

In addition, although in some cases we may be indemnified by non-affiliated entities that retain liabilities in connection with specific

matters, there can be no assurance that these indemnitors will remain financially viable and capable of satisfying their obligations.

We rely extensively on information technology in our business.

We also collect, process, and retain sensitive and confidential customer information, including proprietary business information, personal data and other information that may be subject to privacy and security laws, regulations and/or customer-imposed data protection controls.

We also provide technological products integral to train operation.

Accordingly, our business may be adversely impacted by disruptions to our own or third-party information technology infrastructure, which could result from individual or highly-coordinated cyber attacks, including but not limited to data theft, system breaches, malfeasance or improper use or unauthorized access to IT systems.

Our business may also be adversely impacted by unintentional technology disruptions, including those resulting from programming errors, employee operational errors and software defects.

Changes to international trade policies, including tariffs and foreign trade restrictions, could adversely affect our business.

As a global transportation company, we generate export sales from our U.S. operations and also derive international sales through our foreign subsidiaries, licensees and joint ventures.

We also do business with industry suppliers located in various international markets.

A protectionist trade environment in either the United States or those foreign countries in which we do business, such as a change in the current tariff structures, export compliance or other trade policies, may adversely affect our business.

In particular, such policies may impact or delay our customers' investments in our products, reduce the competitiveness of our products in certain markets, and inhibit our ability to cost-effectively purchase necessary inputs from certain suppliers.

In addition, to the extent developments in international trade relations result in reduced global trade or slower growth in global trade, it is likely that this would result in reductions in investment in freight and transit rail.

International trade policies are affected by a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions.

Although we actively monitor developments in international trade and proactively engage in efforts to mitigate the effect of trade policies, there can be no guarantee that these efforts will be successful.

The loss of the services of

We have substantial operations located in emerging markets, such as Brazil, India, Kazakhstan, the Russian Federation and Ukraine.

These risks include economies that may be dependent on only a few products and are therefore subject to significant fluctuations, weak legal systems which may affect our ability to enforce contractual rights, possible exchange controls, unstable governments, nationalization or privatization actions or other government actions affecting the flow of goods and currency.

Significant changes in economic and regulatory policy in emerging countries as well as social or political uncertainties could significantly harm business and economic conditions in these markets generally and could disproportionately impact the rail industry, which could adversely affect our business and prospects in these markets.

At December 31, 2019, we had total debt of $4.4 billion, including $3.5 billion related to senior notes and $0.9 billion related to term loans and amounts drawn under our revolving loan facility, in each case, under the Senior Credit Facility.

The indentures under which our senior notes were issued contain covenants and restrictions which limit, subject to certain exceptions, certain sale and leaseback transactions with respect to principal properties, the incurrence of secured debt without equally and ratably securing the senior notes and certain merger and consolidation transactions.

In addition, the indentures require that we offer to repurchase our outstanding senior notes upon the occurrence of certain change of control triggering events.

improvements will be obtained or the timing of such improvements.

- diversion of management’s attention from business operations to integration matters;

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

acceptance.

For the fiscal year ended December 31, 2018, we had sales of about $395 million related to train control and signaling, which includes PTC.

China, Czech Republic, France, Germany, India, Italy, Macedonia, Mexico, the Netherlands, Poland, Russia, Spain, South Africa, Turkey, and the United Kingdom.

We may have liability arising from asbestos litigation.

Claims have been filed against us and certain of our affiliates in various jurisdictions across the United States by persons alleging bodily injury as a result of exposure to asbestos-containing products.

Most of these claims have been made against our wholly owned subsidiary, Railroad Friction Products Corporation ("RFPC"), and are based on a product sold by RFPC prior to the time that we acquired any interest in RFPC.

Most of these claims, including all of the RFPC claims, are submitted to insurance carriers for defense and indemnity or to non-affiliated companies that have retained the liabilities for the asbestos-containing products at issue.

We cannot, however, assure that all these claims will be fully covered by insurance or that the indemnitors or insurers will remain financially viable.

Our ultimate legal and financial liability with respect to these claims, as is the case with most other pending litigation, cannot be estimated.

investigation of some of our current and former properties and offsite disposal locations.

Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow and our business is at risk from and may be impacted by cybersecurity attacks.

We rely extensively on computer systems to process transactions and manage our business.

In addition, we collect, process, and retain sensitive and confidential customer information in the normal course of business.

Cybersecurity attacks could include attempts to gain unauthorized access to our data and computer systems.

Attacks can be both individual and/or highly organized attempts by very sophisticated hacking organizations.

We employ a number of measures to prevent, detect and mitigate these threats, which include employee education, password encryption, frequent password change events, firewall detection systems, anti-virus software in-place and frequent backups; however, there is no guarantee such efforts will be successful in preventing a cyber-attack.

A cybersecurity attack could compromise the confidential information of our employees, customers and suppliers, and potentially violate certain domestic and international privacy laws.

Furthermore, a cybersecurity attack on our customers and suppliers could compromise our confidential information in the possession of our customers and suppliers.

A successful attack could disrupt and otherwise adversely affect our business operations, including through lawsuits by third-parties.

In addition, the regulatory environment related to information security and privacy is constantly changing, and compliance with those requirements could result in additional costs.

protect us against losses.

Although we currently have operations in India, following the consummation of our acquisition of GE Transportation, these operations will be substantially more significant, including a large-scale project involving the construction of a factory in the state of Bihar, which includes a township to house employees.

The project also includes construction of two service sheds, in the states of Uttar Pradesh and Gujarat.

For example, in September 2017, several media outlets reported that the Indian government expressed a desire to switch the country's rail system from diesel to electric locomotives, which would threaten to interfere with the completion of the project and curtail the viability of our ongoing operations in India.

While no such actions have been taken to date, any change in policy with respect to India’s rail system could have a material adverse effect on the business of the combined company.

In addition, the Indian government has exercised and continues to exercise significant influence over many aspects of the Indian economy.

Since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector.

Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue.

The rate of economic liberalization could change, and specific laws and policies affecting foreign investments in India could change as well, including exposure to possible expropriation, nationalization or other governmental actions.

Further, protests against privatizations and government corruption scandals, which have occurred in the past, could slow the pace of liberalization and deregulation.

A significant change in India’s policy of economic liberalization and deregulation or

any social or political uncertainties could significantly harm business and economic conditions in India generally and our business and prospects.

Any deterioration of India’s physical infrastructure would harm the national economy, disrupt the transportation of people, goods and supplies, and add costs to doing business in India.

At December 31, 2018, we had total debt of $3,856.9 million.

We entered into a Credit Agreement, as amended, dated June 8, 2018, by and among us, Wabtec Netherlands B.V, the other borrowing subsidiaries party thereto from time to time, PNC Bank, National Association, as administrative agent, and the other parties thereto, which includes (i) a $1.2 billion Revolving Credit Facility, (ii) a $350.0 million Refinancing Term Loan and (iii) a $400.0 million Delayed Draw Term Loan.

Our Credit Agreement contains customary representations and warranties by us and our subsidiaries, including customary use of materiality, material adverse effect, and knowledge qualifiers.

The indenture under which our senior notes were issued contain covenants and restrictions which limit among other things, the following: sale and leaseback transactions, sale of assets, change in control, mergers and consolidations and the incurrence of liens.

| • | diversion of management’s attention; |

[removed: OVERVIEW][added: OVERVIEW]

Wabtec is one of the world’s largest providers of [added: locomotives,] value-added, technology-based [removed: products] [added: equipment, systems,] and services for the global [added: freight] rail [removed: industry.][added: and passenger transit industries.]

Our products enhance safety, improve productivity and [added: efficiency and] reduce maintenance costs for customers, and many of our core products and services are essential in the safe and efficient operation of freight rail and passenger transit vehicles.

Wabtec is a global company with operations in [removed: 30] [added: over 50] countries.

[removed: Management] [added: Management] Review and Future [removed: Outlook][added: Outlook]

UNIFE estimated that the global installed base of [added: diesel and electric] locomotives was about [removed: 114,000] [added: 114,800] units, with about 33% in Asia Pacific, about 26% in North America and about 18% in Russia-CIS (Commonwealth of Independent States).

Wabtec estimates that about [removed: 2,500] [added: 2,900] new locomotives were delivered worldwide in [removed: 2018, and we expect deliveries of about 2,900 in] 2019.

Wabtec estimates that about [removed: 175,000] [added: 174,000] new freight cars were delivered worldwide in [removed: 2018, and we expect deliveries of about 174,000 in] 2019.

Wabtec estimates that about [removed: 30,000] [added: 35,000] new passenger transit vehicles were ordered worldwide in [removed: 2018, and we expect orders of about the same number in] 2019.

In Europe, the majority of the rail system serves the passenger transit market, which is expected to continue growing as energy and environmental [removed: factors] [added: policies] encourage continued investment in public mass [removed: transit.][added: transit and modal shift from car to rail.]

In [removed: 2019] [added: 2020] and beyond, general global economic and market conditions will have an impact on our sales and operations.

[removed: MERGER] [added: MERGER] OF WABTEC WITH GE [removed: TRANSPORTATION][added: TRANSPORTATION]

Wabtec, [removed: GE, SpinCo,] [added: General Electric Company ("GE"), GE Transportation, a Wabtec company formerly known as Transportation System Holdings Inc. ("SpinCo"),] which was a newly formed wholly owned subsidiary of GE, and [removed: Merger Sub,] [added: Wabtec US Rail Holdings, Inc. ("Merger Sub"),] which was a newly formed wholly owned subsidiary of the Company, entered into the Original Merger Agreement on May 20, 2018, and GE, SpinCo, Wabtec and Wabtec US [removed: Rail Holdings,] [added: Rail,] Inc. ("Direct Sale Purchaser") entered into the Original Separation Agreement on May 20, 2018, which together provided for the combination of Wabtec and GE Transportation.

[removed: In connection with] [added: As part of] the [removed: Direct Sale,] [added: Merger,] certain assets of GE Transportation, including the equity interests of certain pre-Transaction subsidiaries of GE that compose part of GE Transportation, were sold to Direct Sale Purchaser for a cash payment of $2.875 billion, and Direct Sale Purchaser assumed certain liabilities of GE Transportation in connection with this [removed: purchase.][added: purchase (the "Direct Sale").]

Thereafter, GE transferred the SpinCo [removed: Business] [added: business] to SpinCo and its subsidiaries (to the extent not already held by SpinCo and its subsidiaries), and SpinCo issued to GE shares of SpinCo Class A preferred stock, SpinCo Class B preferred stock, SpinCo Class C preferred stock and additional shares of SpinCo common [removed: stock in the SpinCo Transfer.][added: stock.]

Following this issuance of additional SpinCo common stock to GE, and immediately prior to the [removed: Distribution,] [added: Distribution (as defined below),] GE owned 8,700,000,000 shares of SpinCo common stock, 15,000 shares of SpinCo Class A preferred stock, 10,000 shares of SpinCo Class B preferred stock and one share of SpinCo Class C preferred stock, which constituted all of the outstanding stock of SpinCo.

Following the Direct Sale, GE distributed the [removed: Distribution Shares] [added: distribution shares] of SpinCo in a spin-off [removed: transaction.][added: transaction to its stockholder (the "Distribution").]

Immediately after the Distribution, Merger Sub merged with and into [removed: SpinCo,] [added: SpinCo (the "Merger"),] whereby the separate corporate existence of Merger Sub ceased and SpinCo continued as the surviving company and a wholly owned subsidiary of Wabtec (except with respect to shares of SpinCo Class A preferred stock held by GE).

[removed: Upon consummation of the Merger] [added: As a result] and calculated based on Wabtec’s outstanding common stock on a fully-diluted, as-converted and as-exercised basis, as of [removed: December 31, 2018,] [added: February 25, 2019,] approximately 49.2% of the outstanding shares of Wabtec common stock [removed: would be] [added: was] held collectively by GE and [removed: Spin-Off record date] holders of GE common stock (with 9.9% [removed: to be] held by GE directly in shares of Wabtec common stock and 15% underlying the shares of Wabtec convertible preferred stock [removed: to be] held by GE) and approximately 50.8% of the outstanding shares of Wabtec common stock [removed: would be] held by pre-Merger Wabtec [removed: stockholders.][added: stockholders, in each case calculated on a fully-diluted, as-converted and as-exercised basis.]

Following the [removed: effective time of the] Merger, GE [removed: will] also [removed: own] [added: retained] 15,000 shares of SpinCo Class A [added: non-voting] preferred stock, and Wabtec [removed: will hold] [added: held] 10,000 shares of SpinCo Class B [added: non-voting] preferred stock.

[removed: Using Wabtec’s closing stock price on the NYSE as of February 22, 2019, the] [added: The estimated] total value of the consideration [removed: for] [added: to be paid by Wabtec in] the [removed: Transactions was] [added: acquisition transaction is] approximately [removed: $10.2] [added: $10.3] billion, including the [added: cash paid for the] Direct [removed: Sale Purchase Price,] [added: Sales Assets, equity transferred for SpinCo,] contingent consideration, assumed debt and net of cash acquired.

After the Merger, SpinCo, which is Wabtec’s wholly owned subsidiary (except with respect to shares of SpinCo Class A preferred stock held by GE), [removed: holds the SpinCo Business] and Direct Sale Purchaser, which also is Wabtec’s wholly owned subsidiary, [removed: holds the assets purchased] [added: together own] and [removed: the liabilities assumed in connection with] [added: operate] the [removed: Direct Sale.][added: post-transaction GE Transportation.]

All shares of the Company’s common stock, including those issued in the Merger, are listed on the NYSE under the Company’s current trading symbol “WAB.” [added: On the date of the Distribution, GE and SpinCo, directly or through subsidiaries entered into additional agreements relating to, among other things, intellectual property, employee matters, tax matters, research and development and transition services.]

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

| | | [removed: For] [added: | | | | For] the year ended December [removed: 31,] [added: 31,] | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

[removed: | In thousands | | 2018 | | | | 2017 | | | | 2016 | | |][added: 2018 COMPARED TO 2017]

[removed: | Interest] [added: Interest] expense, [removed: net | | (112,235 | | ) | | (77,884 | | ) | | (50,298 | | ) |][added: net]

| [added: Less:] Net loss [removed: (income)] attributable to noncontrolling interest | | [removed: 3,241] | | | | [removed: (29] [added: 3.2] | | [removed: )] | | [removed: (8,517] | | [removed: )] [added: —] | [added: | | | | | 100.0 | | % | | | | | | | | | | | | |]

[removed: 2018] [added: 2019] COMPARED TO [removed: 2017][added: 2018]

| | | [removed: For] [added: | | | | For] the year ended December [removed: 31,] [added: 31,] | | | | | | | | | | [added: | | | | | | | | | | | | | | | | |]

| [removed: In thousands] [added: *In millions*] | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: Change] | | [added: 2017 | | | | | | Percent Change | | | | | | | | | | | | | | |]

| Income from operations | | [removed: 473,437] | | | | [removed: 421,079] [added: 473.4] | | | | [added: | | 421.1 | | | | | |] 12.4 | [added: |] % | [added: | | | | | | | | | | | |]

The following table shows the major components of the change in [added: net] sales in 2018 from 2017:

| | | [removed: Freight] | | | | [removed: Transit] [added: Freight] | | | | | | [added: Transit] | [added: | | | | | | | |]

| [removed: In thousands] [added: In millions] | | [removed: Segment] | | | | [removed: Segment] [added: Segment] | | | | [removed: Total] | | [added: Segment] | [added: | | | | | Total | | |]

| [removed: Change] [added: *Changes] in Sales by Product [removed: Line: | | | |] [added: Line:*] | | | | | | | | |

Net sales increased by [removed: $481.8] [added: $482] million to [removed: $4,363.5 million] [added: $4.4 billion] in 2018 from [removed: $3,881.8 million] [added: $3.9 billion] in 2017.

The increase is primarily due to an organic increase of [removed: $158.9] [added: $113] million [removed: for Specialty Products and Electronics] from higher demand for freight [removed: and transit original equipment] rail [removed: products and] [added: components, an increase of $76 million for] train control and signaling [removed: products and services] [added: products,] and [removed: a $126.2 million] [added: an] increase [removed: for Brake Products] [added: of $124 million] due to [removed: increased demand for] [added: transit] original equipment [removed: brakes from freight] and [removed: transit customers.][added: aftermarket brake and coupler products, partially offset by lower door and HVAC sales.]

Additionally, sales from acquisitions increased [added: net] sales by [removed: $134.7] [added: $135] million, and favorable foreign exchange increased [added: net] sales [removed: $62.3] [added: $62] million.

Freight Segment [added: net] sales increased by [removed: $167.7] [added: $228] million, or [removed: 12.0%, mostly from] [added: 14.8%, primarily due to] an organic increase of [removed: $85.1] [added: $113] million [removed: for Specialty Products and Electronics due to] [added: from] higher demand for freight [removed: original equipment] rail [removed: products] [added: components] and [added: an increase of $76 million for] train control and signaling [removed: products and services.][added: products.]

In 2019, net sales of aftermarket parts and services represented about 55% of total net sales, while 60% of the Company’s net sales came from customers outside the U.S.

Upon consummation of the Merger, Wabtec issued 46,763,975 shares of common stock to the holders of GE common stock, 19,018,207 shares of common stock to GE and 10,000 shares of preferred stock to GE and made a cash payment to GE of $2.885 billion.

On May 6, 2019, GE completed the sale of approximately 8,780 shares of Wabtec's Series A Preferred stock which converted upon the sale to 25,300,000 shares of Wabtec's common stock.

On August 9, 2019, GE completed a sale of the remaining shares of Series A Preferred Stock outstanding which converted to approximately 3,515,500 shares of common stock, as well as 16,969,656 shares of common stock owned directly by GE.

Finally, on September 12, 2019, GE completed a sale of all of its remaining shares of common stock of Wabtec, approximately 2,048,515 shares.

In conjunction with these secondary offerings, the Company waived the requirements under the shareholders agreement for GE to maintain certain ownership levels of Wabtec's stock following the closing date of the Merger.

The Company did not receive any proceeds from the sale of any of these shares.

Total future consideration to be paid by Wabtec to GE includes a fixed payment of $470.0 million, which is directly related to the timing of tax benefits expected to be realized by Wabtec as a result of the acquisition of GE Transportation.

This payment is considered contingent consideration because the timing of cash payments to GE is directly related to the future timing of tax benefits received by the Company as a result of the acquisition of GE Transportation.

The estimated consideration is based on the Company’s closing share price of $73.36 on February 22, 2019 and the preliminary fair value of the contingent consideration.

The value of the preliminary purchase price consideration could change when the Company has completed the detailed valuation of the contingent consideration and other necessary calculations.

Consolidated Results

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| *In millions* | | | | | | 2019 | | | | | | 2018 | | | | | | Percent Change | | | | | | | | | | | | | | |

| Net sales | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Sales of goods | | | | | | $ | 6,907.9 | | | | | $ | 4,178.0 | | | | | 65.3 | | % | | | | | | | | | | | | |

| Sales of services | | | | | | 1,292.1 | | | | | | 185.5 | | | | | | 596.5 | | % | | | | | | | | | | | | |

| Total net sales | | | | | | 8,200.0 | | | | | | 4,363.5 | | | | | | 87.9 | | % | | | | | | | | | | | | |

| Cost of goods | | | | | | (5,128.4) | | | | | | (2,973.5) | | | | | | 72.5 | | % | | | | | | | | | | | | |

| Cost of services | | | | | | (793.6) | | | | | | (156.1) | | | | | | 408.4 | | % | | | | | | | | | | | | |

| Total cost of sales | | | | | | (5,922.0) | | | | | | (3,129.6) | | | | | | 89.2 | | % | | | | | | | | | | | | |

| Gross profit | | | | | | 2,278.0 | | | | | | 1,233.9 | | | | | | 84.6 | | % | | | | | | | | | | | | |

| Selling, general and administrative expenses | | | | | | (1,166.6) | | | | | | (633.2) | | | | | | 84.2 | | % | | | | | | | | | | | | |

| Engineering expenses | | | | | | (209.9) | | | | | | (87.5) | | | | | | 139.9 | | % | | | | | | | | | | | | |

| Amortization expense | | | | | | (238.4) | | | | | | (39.8) | | | | | | 499.0 | | % | | | | | | | | | | | | |

| Total operating expenses | | | | | | (1,614.9) | | | | | | (760.5) | | | | | | 112.3 | | % | | | | | | | | | | | | |

| Income from operations | | | | | | 663.1 | | | | | | 473.4 | | | | | | 40.1 | | % | | | | | | | | | | | | |

| Other income and expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Interest expense, net | | | | | | (219.1) | | | | | | (112.2) | | | | | | 95.3 | | % | | | | | | | | | | | | |

| Other income, net | | | | | | 2.8 | | | | | | 6.4 | | | | | | (56.3) | | % | | | | | | | | | | | | |

| Income from operations before income taxes | | | | | | 446.8 | | | | | | 367.6 | | | | | | 21.5 | | % | | | | | | | | | | | | |

| Income tax expense | | | | | | (120.3) | | | | | | (75.9) | | | | | | 58.5 | | % | | | | | | | | | | | | |

| Net income | | | | | | 326.5 | | | | | | 291.7 | | | | | | 11.9 | | % | | | | | | | | | | | | |

| Less: Net loss attributable to noncontrolling interest | | | | | | 0.2 | | | | | | 3.2 | | | | | | (93.8) | | % | | | | | | | | | | | | |

| Net income attributable to Wabtec shareholders | | | | | | $ | 326.7 | | | | | $ | 294.9 | | | | | 10.8 | | % | | | | | | | | | | | | |

Segment change

The Company has two reportable segments—the Freight Segment and the Transit Segment.

Initiatives to integrate GE Transportation operations into Wabtec including recent restructuring programs announced in late 2019 resulted in changes to the Company's organizational structure and the financial reporting utilized by the Company's chief operating decision maker to assess performance and allocate resources; as a result, certain asset groups were reorganized from the Freight Segment to the Transit Segment and vice versa.

The change in the Company’s reportable segments was effective in the fourth quarter of 2019 and is reflected below in 2019 and through the retrospective revision of 2018 and 2017 segment information.

In 2018, about 67% of the Company’s revenues came from customers outside the U.S.

The shares of Wabtec common stock and Wabtec convertible preferred stock held by GE will be subject to GE’s obligations under the Shareholders Agreement, including, among other things, and in each case subject to certain exceptions, (i) restrictions on the ability to sell, transfer or otherwise divest such shares for a period of 30 days and (ii) an obligation to sell, transfer or otherwise divest (A) by no later than 120 days following the closing date of the Merger, GE’s (and its affiliates’) ownership of Wabtec common stock and/or Wabtec convertible preferred stock so that GE (together with its affiliates) beneficially owns not less than 14.9% and not more than 19.9% of the number of shares of Wabtec common stock that were outstanding immediately after the closing of the Merger, (B) by no later than one year following the closing date of the Merger, GE’s (and its affiliates’) ownership of Wabtec common stock and/or Wabtec convertible preferred stock so that GE (together with its affiliates) beneficially owns not more than 18.5% of the number of shares of Wabtec common stock that were outstanding immediately after the closing of the Merger, in each case of clauses (A) and (B) treating the Wabtec convertible preferred stock as the Wabtec common stock into which it is convertible both for purposes of determining the number of shares of Wabtec common stock owned and for purposes of determining the number of shares of Wabtec common stock outstanding and (C) by no later than the third anniversary of the closing date of the Merger, all of the subject shares that GE (together with its affiliates) beneficially owns, and (iii) an obligation to vote all of such shares of Wabtec common stock in the proportion required under the Shareholders Agreement.

The estimated total value of the consideration to be paid by Wabtec in the Transactions was subject to the market price of shares of Wabtec common stock at the date of closing.

On September 14, 2018, Wabtec completed a public offering and sale of (i) $500 million aggregate principal amount of floating rate senior notes, (ii) $750 million aggregate principal amount of 2024 Senior Notes and (iii) $1.25 billion aggregate principal amount of 2028 Senior Notes.

The Company used the net proceeds from the offering and sale of these notes combined with the proceeds from a $400 million delayed draw term loan that was entered into on June 8, 2018 to finance the $2.875 billion Direct Sale.

Wabtec used a portion of the proceeds from the September 14, 2018 notes to pay debt associated with its revolving credit facility.

The remaining proceeds are classified as Restricted Cash on the consolidated balance sheet, as the Company used these cash amounts to finance the Direct Sale.

Refer to Footnote 10 for further information regarding debt.

Together, SpinCo and Direct Sale Purchaser own and operate the post-Transaction GE Transportation.

On the date of the Distribution, GE or its subsidiaries and SpinCo or the SpinCo Transferred Subsidiaries entered into additional agreements relating to, among other things, intellectual property, employee matters, tax matters, research and development and transition services.

ACQUISITION OF FAIVELEY TRANSPORT S.A.

On November 30, 2016, the Company acquired majority ownership of Faiveley Transport under the terms of the Share Purchase Agreement.

Faiveley Transport is a leading global provider of value-added, integrated systems and services for the railway industry with annual sales of about $1.2 billion and more than 5,700 employees in 24 countries.

Faiveley Transport supplies railway manufacturers, operators and maintenance providers with a range of value-added, technology-based systems and services in Energy & Comfort (air conditioning, power collectors and converters, and passenger information), Access & Mobility (passenger access systems and platform doors), and Brakes and Safety (braking systems and couplers).

The transaction was structured as a step acquisition as follows:

| | |

| --- | --- |

| • | On November 30, 2016, the Company acquired majority ownership of Faiveley Transport, after completing the purchase of the Faiveley family’s ownership interest under the terms of the Share Purchase Agreement, which directed the Company to pay €100 per share of Faiveley Transport, payable between 25% and 45% in cash at the election of those shareholders and the remainder payable in Wabtec stock. The Faiveley family’s ownership interest acquired by the Company represented approximately 51% of outstanding share capital and approximately 49% of the outstanding voting shares of Faiveley Transport. Upon completion of the share purchase under the Share Purchase Agreement, Wabtec commenced a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders had the option to elect to receive €100 per share in cash or 1.1538 shares of Wabtec common stock per share of Faiveley Transport. The common stock portion of the consideration was subject to a cap on issuance of Wabtec common shares that was equivalent to the rates of cash and stock elected by the 51% owners. |

| • | On February 3, 2017, the initial cash tender offer was closed, which resulted in the Company acquiring approximately 27% of additional outstanding share capital and voting rights of Faiveley Transport for approximately $411.8 million in cash and $25.2 million in Wabtec stock. After the initial cash tender offer, the Company owned approximately 78% of outstanding share capital and 76% of voting rights. |

| • | On March 6, 2017, the final cash tender offer was closed, which resulted in the Company acquiring approximately 21% of additional outstanding share capital and 22% of additional outstanding voting rights of Faiveley Transport for approximately $303.2 million in cash and $0.3 million in Wabtec stock. After the final cash tender offer, the Company owned approximately 99% of the share capital and 98% of the voting rights of Faiveley Transport. |

| • | On March 21, 2017, a mandatory squeeze-out procedure was finalized, which resulted in the Company acquiring the Faiveley Transport shares not tendered in the offers for approximately $17.5 million in cash. This resulted in the Company owning 100% of the share capital and voting rights of Faiveley Transport. |

As of November 30, 2016, the date the Company acquired 51% of the share capital and 49% of the voting interest in Faiveley Transport, Faiveley Transport was consolidated under the variable interest entity model as the Company concluded that it was the primary beneficiary of Faiveley Transport as it then possessed the power to direct the activities of Faiveley Transport that most significantly impact its economic performance and it then possessed the obligation and right to absorb losses and benefits from Faiveley Transport.

The purchase price paid for 100% ownership of Faiveley Transport was $1,507 million.

The $744.7 million included as deposits in escrow on the consolidated balance sheet at December 31, 2016 was cash designated for use as consideration for the tender offers.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net sales | | $ | 4,363,547 | | | $ | 3,881,756 | | | $ | 2,931,188 | |

| Cost of sales | | (3,129,662 | | ) | | (2,816,443 | | ) | | (2,006,949 | | ) |

| Gross profit | | 1,233,885 | | | | 1,065,313 | | | | 924,239 | | |

| Selling, general and administrative expenses | | (633,244 | | ) | | (512,552 | | ) | | (373,559 | | ) |

| Engineering expenses | | (87,450 | | ) | | (95,166 | | ) | | (71,375 | | ) |

| Amortization expense | | (39,754 | | ) | | (36,516 | | ) | | (22,698 | | ) |

| Total operating expenses | | (760,448 | | ) | | (644,234 | | ) | | (467,632 | | ) |

| Income from operations | | 473,437 | | | | 421,079 | | | | 456,607 | | |

| Other income, net | | 6,380 | | | | 8,868 | | | | 6,528 | | |

| Income from operations before income taxes | | 367,582 | | | | 352,063 | | | | 412,837 | | |

| Income tax expense | | (75,879 | | ) | | (89,773 | | ) | | (99,433 | | ) |

| Net income | | 291,703 | | | | 262,290 | | | | 313,404 | | |

| Net income attributable to Wabtec shareholders | | $ | 294,944 | | | $ | 262,261 | | | $ | 304,887 | |

The following table summarizes the results of operations for the period:

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

The Company’s variable rate debt represents [removed: 22%] [added: 32%] and [removed: 38%] [added: 22%] of total [removed: long-term] debt at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

[removed: Refer to “Financial Derivatives and Hedging Activities” in] [added: (See] Note [removed: 2] [added: 21] of “Notes [removed: to] [added: in] Consolidated Financial Statements” included in Part IV, Item 15 of this [removed: report for additional information regarding interest rate risk.][added: report).]

[removed: Foreign] [added: Foreign] Currency Exchange Rate [removed: Risk][added: Risk]

The Company is [removed: subject] [added: exposed] to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. dollar.

For the year ended December 31, [removed: 2018,] [added: 2019,] approximately [removed: 33%] [added: 41%] of Wabtec’s net sales were in the United States, 9% in [removed: the United Kingdom, 7% in Germany, 6% in] Canada, 6% in [removed: France,] [added: India,] 5% in [added: the United Kingdom, 4% in] Mexico, 4% in [removed: China,] [added: Germany,] 4% in Australia, 4% in [removed: India,] [added: France,] 4% in [removed: Italy, 2% in Brazil,] [added: China,] and [removed: 16%] [added: 19%] in other international locations.

Our market risk exposure is not substantially different from our exposure at December 31, [removed: 2018.][added: 2019.]

On an annual basis, a 1% change in the interest rate for variable rate debt at December 31, 2019, would increase or decrease interest expense by about $14 million.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into interest rate swap agreements which effectively converted a portion of the debt from a variable to a fixed-rate borrowing during the term of the swap contracts.

(See Note 22 of “Notes in Consolidated Financial Statements” included in Part IV, Item 15 of this report).

| | |

| --- | --- |

[removed: General][added: General]

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, is a Delaware corporation with headquarters at [removed: 1001 Air Brake Avenue] [added: 30 Isabella Street] in [removed: Wilmerding,] [added: Pittsburgh,] Pennsylvania.

Our telephone number is 412-825-1000, and our website is located at [removed: www.wabtec.com.][added: *www.wabteccorp.com*.]

[removed: On May 20, 2018, the Company entered into a transaction that resulted in] [added: -] the [added: 2019] merger [removed: of Wabtec and] [added: with] GE Transportation, a business unit of General Electric Company.

[removed: GE Transportation (www.getransportation.com) is] [added: This brought] a global technology leader and supplier of locomotives, equipment, services and digital solutions to the rail, mining, marine, stationary power and drilling [removed: industries.][added: industries into Wabtec.]

[removed: | • | Complementary Digital Technologies. GE Transportation will contribute] [added: Wabtec now has] a comprehensive digital portfolio and leading engineering and technical intellectual [removed: property to Wabtec, providing] [added: property, which provides] electronics and digital technologies [removed: that position the combined company] to meet growing demand for train intelligence and network optimization. [removed: |]

[removed: | • | Enhanced Aftermarket and Services Opportunities. The combined entity will have] [added: Wabtec has] an installed base of more than [removed: 23,000] [added: 22,500] locomotives and content on virtually all North American locomotives and freight cars, [added: as well as a diverse offering of Transit locomotives and cars both internationally and domestically,] which enables significant opportunities in the [removed: high-margin] [added: higher-margin] aftermarket parts and services business and mitigates the [removed: combined company’s] exposure to cycles. [removed: |]

[removed: | • | Significant Operating Synergies. The consummation of the transactions is expected] [added: As a result, we expect] to generate [added: approximately] $250 million [added: in] annual run-rate operating synergies, driven by cost and revenue opportunities, [removed: within four years after closing. |][added: before 2022.]

[removed: | • | Improved Financial Profile. The consummation of the transactions] [added: This] will enhance Wabtec’s margins and revenue growth opportunities with strong free cash flow generation to enable strategic deleveraging through debt reduction and earnings growth. [removed: |]

[removed: In 2017, Wabtec completed] [added: -] the [added: 2017] acquisition of Faiveley Transport, S.A. (“Faiveley Transport”), a leading provider of value-added, integrated systems and services, primarily for the global transit rail [removed: market, for a purchase price of approximately $1.5 billion.][added: market.]

Based in France, [added: the] Faiveley Transport [added: business] has roots to 1919 and [removed: became] [added: made Wabtec] a leader in manufacturing pantographs, automatic door [removed: mechanisms and] [added: mechanisms,] air conditioning [removed: systems.][added: systems, railway braking systems and couplers; and]

[removed: | • | Increased] [added: - *Increased] technical and engineering [removed: expertise.] [added: expertise.* Particularly with the onboarding of] Faiveley Transport [removed: strengthens] [added: and GE Transportation,] Wabtec's technical capabilities and product development [removed: efforts. |][added: efforts are strengthened.]

[removed: Today, we are] [added: Wabtec is now] one of the world’s largest providers of [removed: value-added, technology-based] [added: locomotives, freight car components, technology-enabled] equipment, systems and services for the [removed: global passenger transit] [added: locomotive] and freight rail industries.

Our highly engineered products, which are intended to enhance safety, improve productivity and [added: efficiency, and] reduce maintenance costs for customers, can be found on [removed: most] [added: a large percentage of] locomotives, freight cars, passenger transit cars and buses around the world.

In [removed: 2018,] [added: 2019,] the Company had [added: net] sales of approximately [removed: $4.4] [added: $8.2] billion and net income attributable to our shareholders of about [removed: $294.9] [added: $327] million.

In [removed: 2018,] [added: 2019, net] sales of aftermarket parts and services represented about [removed: 57%] [added: 55%] of total [added: net] sales, while [added: net] sales to customers outside of the U.S. accounted for about [removed: 67%] [added: 60%] of total [added: net] sales.

[removed: Industry Overview][added: Industry Overview]

The Company primarily serves the global [removed: passenger transit and] freight rail [added: and passenger transit] industries.

As such, our operating results are largely dependent on the level of activity, financial condition and capital spending plans of [added: freight railroads and] passenger transit agencies [removed: and freight railroads] around the world, and transportation equipment manufacturers who serve those markets.

In general, trends such as increasing urbanization and growth in developing markets, a focus on sustainability and environmental awareness, increasing investment in technology solutions, an aging equipment fleet, and growth in global trade are expected to drive continued investment in [removed: passenger transit and] freight [removed: rail.][added: rail and passenger transit.]

UNIFE estimated that the global installed base of [added: diesel and electric] locomotives was about [removed: 114,000] [added: 114,800] units, with about 33% in Asia Pacific, about 26% in North America and about 18% in Russia-CIS (Commonwealth of Independent States).

Wabtec estimates that about [removed: 2,500] [added: 2,900] new locomotives were delivered worldwide in [removed: 2018, and we expect deliveries of about 2,900 in] 2019.

Wabtec estimates that about [removed: 175,000] [added: 174,000] new freight cars were delivered worldwide in [removed: 2018, and we expect deliveries of about 174,000 in] 2019.

Wabtec estimates that about [removed: 30,000] [added: 35,000] new passenger transit vehicles were ordered worldwide in [removed: 2018, and we expect orders of about the same number in] 2019.

In Europe, the majority of the rail system serves the passenger transit market, which is expected to continue growing as energy and environmental [removed: factors] [added: policies] encourage continued investment in public mass [removed: transit.][added: transit, and modal shift from car to rail.]

In the U.S., the passenger transit industry is dependent largely on funding from federal, state and local governments, and from fare [added: box revenues.]

[removed: India is] making significant investments in rolling stock and infrastructure to modernize its rail system; for example, the country has awarded a 1,000-unit locomotive order to GE [removed: Transportation][added: Transportation.]

[removed: Business] [added: Business] Segments and [removed: Products][added: Products]

We provide our products and services through two principal business segments, the [removed: Transit] [added: Freight] Segment and the [removed: Freight] [added: Transit] Segment, both of which have different market characteristics and business drivers.

The [removed: acquisition] [added: acquisitions] of [added: GE Transportation and] Faiveley Transport significantly strengthened our capabilities and presence in the worldwide [added: freight and] transit [removed: market.][added: markets, respectively, for all of our products and services, including electronic and digital products.]

The Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses; supplies rail control and infrastructure products including electronics, [removed: positive train control equipment, and] signal design and engineering services; [removed: builds new commuter locomotives;] and refurbishes passenger transit vehicles.

In [removed: 2018,] [added: 2019,] the Transit Segment accounted for [removed: 64%] [added: approximately 35%] of our total [added: net] sales, with about [removed: 22%] [added: 15%] of its [added: net] sales in the U.S. Approximately [removed: two-thirds] [added: half] of the Transit Segment’s [added: net] sales are in the aftermarket with the remainder in the original equipment market.

The addition of Faiveley Transport’s key products strengthened Wabtec's presence in the following [added: Transit product] areas: high-speed braking and door systems; heating, ventilation and air conditioning systems; pantographs and power collection; information systems; platform screen doors and gates; couplers; and aftermarket services, maintenance and spare parts.

The Freight Segment primarily manufactures and [added: provides aftermarket parts and] services [added: for new locomotives; provides] components for new and existing locomotives and freight cars; [added: builds new commuter locomotives;] supplies rail control and infrastructure products including electronics, positive train control equipment, [removed: and] signal design and engineering services; [added: provides a comprehensive suite of software-enabled solutions designed to improve customer efficiency and productivity in the transportation and mining industries;] overhauls locomotives; and provides heat exchangers and cooling systems for rail and other industrial markets.

In [removed: 2018,] [added: 2019,] the Freight Segment accounted for [removed: 36%] [added: approximately 65%] of [removed: our] [added: Wabtec’s] total [added: net] sales, with about [removed: 54%] [added: 55%] of its [added: net] sales in the U.S. In [removed: 2018, slightly more than half] [added: 2019, about 60%] of the Freight Segment’s [added: net] sales were in the aftermarket.

Following is a summary of our leading [removed: product lines] [added: products] in both aftermarket and original equipment across both of our business segments in [removed: 2018:][added: 2019:]

[removed: | • |] [added: -] Positive Train Control equipment and electronically controlled pneumatic braking products [removed: |]

[removed: | • |] [added: -] Railway electronics, including event recorders, monitoring equipment and end of train devices [removed: |]

[removed: | • |] [added: -] Signal design and engineering services [removed: |]

[removed: | • |] [added: -] Draft gears, couplers and slack adjusters [removed: |]

Throughout the years, the Company has made a number of strategic acquisitions leading the Company to where it is today.

These have primarily included:

- the 1999 merger with MotivePower Industries, Inc. whereby the Company adopted its current name of Westinghouse Air Brake Technologies Corporation, or Wabtec;

As a result of the aforementioned acquisitions, as well as other smaller acquisitions, and organic growth, Wabtec is now one of the world’s largest providers of locomotives, value-added, technology-based equipment, systems and services for the global freight rail and passenger transit industries with over 27,500 employees and operations in over 50 countries.

Through both internal growth as well as acquisitions, Wabtec has positioned itself with the following strategic benefits:

- *Increased diversity of revenues by product, geography and market.* Comprehensive product offerings spanning the freight rail and passenger transit industries, as well as products in the bus, mining and marine, and discrete industrial markets help Wabtec to balance the cyclical nature of the global rail business.

- *Significant Operating Synergies and Improved Financial Profile*.

The consummation of the GE Transportation transaction is leading to operating synergies across all of Wabtec.

- *Increased Scale and Diversification of Wabtec’s Freight Product Portfolio*.

- *Broadened product line and international presence in the transit market.* Wabtec now offers a comprehensive, broad and diversified portfolio of products to the transit rail industries throughout the world.

- *Complementary Digital and Electronics Technologies*.

- *Enhanced Aftermarket and Services Opportunities*.

India is

Upon our acquisition of GE Transportation, we are the largest global manufacturer of diesel-electric locomotives for freight railroads producing mission-critical products and solutions that help railroads reduce operating costs, decrease fuel use, minimize downtime and comply with emissions standards.

As a result of the large base of approximately 22,500 locomotives currently in use, Wabtec's services product lines of rebuilding, remanufacturing, maintaining, and exchanging locomotives and components in the aftermarkets provides a significant, recurring revenue stream.

Equipment:

- Diesel-electric locomotives for freight railroads

- Engines, electric motors and premium propulsion systems used in locomotives, mining, marine, stationary power and drilling applications

- Marine and mining products

Digital & Electronic Products:

- Train performance such as distributed locomotive power, train 'cruise control', and train remote control

- Transport intelligence such as Industrial/mobile Internet of Things (IoT) hardware & software, edge-to-cloud, on and off-board analytics & rules, asset performance management

- Transport logistics such as rail transportation management, shipper transportation management, port visibility and optimization

- Network optimization such as rail network scheduling, dispatch, and optimization, intermodal, terminal management and optimization, rail yard management and optimization

Components:

- Freight car trucks and braking equipment and related components for Freight applications

Services:

- Freight locomotive overhaul and refurbishment

- Master service agreements for locomotive and car maintenance

- Unit exchange of locomotive components

part through data analytics solutions.

In addition, we are continuing to develop Energy Management Solutions for railroads to further reduce fuel consumption and emissions.

These developments include the design of a battery electric locomotive that will be integrated with other diesel electric locomotives in a train.

This hybrid train consist, under the control of our Trip Optimizer software, will significantly reduce fuel consumption as well as having the ability to operate in a low emission state while in populated areas.

We are also considering development of locomotives for transit services to operate in a zero emissions environment (such as a tunnel) for extended periods of time.

- Iconic Legacy and Strong Reputation with a History of over 150 Years of Innovation. The rail industry has been in operation for over 150 years and we have been at the forefront of shaping and transforming the rail landscape through various innovations and technologies.

Dating back to 1869 and George Westinghouse’s invention of the air brake, we are an established leader in the rail industry for freight and passenger transit vehicles.

For over 110 years, GE Transportation has served the worldwide rail industry, which is a critical component of the global transportation system and the global economy, with an installed base of more than 22,500 locomotives worldwide.

Faiveley Transport, founded in 1919, has a long history and is a market leader for its core products, including pantographs, automatic door mechanisms and air conditioning systems.

We have leveraged our leading positions by focusing on research and engineering to expand beyond pneumatic braking components to supplying integrated parts and assemblies from a full locomotive through the end of the train.

In 1999, WABCO merged with MotivePower Industries, Inc. and adopted the name Wabtec.

The merger of Wabtec and GE Transportation was completed on February 25, 2019.

To effect the transaction, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with General Electric Company (“GE”), Transportation Systems Holdings Inc. (“SpinCo”), which was a newly formed wholly owned subsidiary of GE, and Wabtec US Rail Holdings, Inc. (“Merger Sub”), which is a newly formed wholly owned subsidiary of the Company.

In addition, on May 20, 2018, GE, SpinCo, the Company and Wabtec US Rail Holdings, Inc. (“Direct Sale Purchaser”), entered into the Separation, Distribution and Sale Agreement (the “Separation Agreement”).

Together, the Merger Agreement and the Separation Agreement provided for the combination of the Company and GE’s realigned transportation business (“GE Transportation”).

GE Transportation employs approximately 9,000 employees worldwide and had 2018 sales of about $3.9 billion.

Wabtec expects the transactions to have the following strategic benefits:

| | |

| --- | --- |

| • | Increased Scale and Diversification of Wabtec’s Product Portfolio. As a result of the Transactions, Wabtec expects the combined business to be one of the world’s largest providers of technology-enabled equipment, systems and services for the locomotive, freight and passenger rail industries with approximately $8.0 billion in revenue and 25,000 employees in 52 countries. |

Faiveley Transport was listed on the Paris Stock Exchange in 1994 and during the next 20 years acquired a number of rail industry leaders including Sab Wabco, a specialist in railway braking systems and couplers.

Wabtec believes that the acquisition of Faiveley Transport provided the following strategic benefits:

| • | Increased diversity of revenues by product, geography and market. A majority of Faiveley Transport’s revenues are outside the U.S. and in the transit market, which helps to balance the cyclicality of our North American freight business. |

| • | Broadened product line. Faiveley Transport provides many products that we did not previously offer, including braking and door systems for high-speed trains and air conditioning systems. |

| • | Expanded international presence in the transit market. A majority of Faiveley Transport’s revenues come from transit markets outside the U.S., where we previously did not have a strong presence. |

box revenues.

Specialty Products & Electronics:

| • | Freight car trucks and couplers |

Brake Products:

Remanufacturing, Overhaul and Build:

| • | Leading market positions in core products. Dating back to 1869 and George Westinghouse’s invention of the air brake, we are an established leader in the development and manufacture of pneumatic braking equipment for freight and passenger transit vehicles. Faiveley Transport, founded 100 years ago, has a long history and is a market leader for its core products, including pantographs, automatic door mechanisms and air conditioning systems. We have leveraged our leading positions by focusing on research and engineering to expand beyond pneumatic braking components to supplying integrated parts and assemblies for the locomotive through the end of the train. We are a recognized leader in the development and production of electronic recording, measuring and communications systems, positive train control equipment, highly engineered compressors and heat exchangers for locomotives, and a leading manufacturer of freight car components, including electronic braking equipment, draft gears, trucks, brake shoes and electronic end-of-train devices. We are also a leading provider of braking equipment; heating, ventilation and air conditioning equipment; door assemblies and platform screen doors; lifts and ramps; couplers and current collection equipment, such as pantographs, for passenger transit vehicles. |

| • | Leading design and engineering capabilities. We believe a hallmark of our relationship with our customers has been our leading design and engineering practice, which has assisted in the improvement and modernization of global railway equipment. We believe both our customers and the government authorities value our technological capabilities and commitment to innovation, as we seek not only to enhance the efficiency and profitability of our customers, but also to improve the overall safety of the railways through continuous improvement of product performance. The Company has an established record of product improvements and new product development. We have assembled a wide range of patented products, which we believe provides us with a competitive advantage. Wabtec currently owns 3,333 active patents worldwide. During the last three years, we have filed for approximately 443 patents worldwide in support of our new and evolving product lines. |

| • | Product innovation and new technologies. We continue to emphasize innovation and development funding to create new products and capabilities, such as vehicle monitoring and data analytics. WabtecONE is a multi-year initiative to build on our existing expertise and technologies in electronics. In addition, we invest in developing enhancements and new features to existing products, such as brake discs and heat exchangers. We are focusing on technological advances, especially in the areas of electronics, braking products and other on-board equipment, as a means to deliver new product growth. We seek to provide customers with incremental technological advances that offer immediate benefits with cost-effective investments. |

| • | Aftermarket products and services. Historically, aftermarket sales are less cyclical than OEM sales because a certain level of aftermarket maintenance and service work must be performed, even during an industry slowdown. In 2018, Wabtec’s aftermarket sales and services represented approximately 57% of the Company’s total sales across both of our business segments. As a long time supplier of original equipment, we have an extensive installed base of equipment in the field, which generates recurring aftermarket sales. Wabtec provides aftermarket parts and services for its components, and we seek to expand this business with customers who currently perform the work in-house. In this way, we expect to benefit as transit authorities and railroads outsource certain maintenance and overhaul functions. |

See Note 3 of the Notes to Consolidated Financial Statements

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| Freight Segment | | $ | 664,657 | | | $ | 503,528 | | | $ | 161,129 | | | $ | 549,188 | | | $ | 423,805 | | | $ | 125,383 | |

| Transit Segment | | 3,816,925 | | | | 1,954,573 | | | | 1,862,352 | | | | 4,050,460 | | | | 1,891,079 | | | | 2,159,381 | | |

| Total | | $ | 4,481,582 | | | $ | 2,458,101 | | | $ | 2,023,481 | | | $ | 4,599,648 | | | $ | 2,314,884 | | | $ | 2,284,764 | |

The engineering resources of the Company are allocated between research and development activities and the execution of original equipment customer contracts.

Under certain conditions, the deadline could be extended through 2019 and 2020.

In 2018, Wabtec recorded about $395 million of revenue from freight and transit train control and signaling projects, which includes PTC.

Additional information with respect to legal proceedings is included in Note [removed: 21] [added: 20] of “Notes to Consolidated Financial Statements” included in Part IV, Item 15 of this report and incorporate by reference herein.

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[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: ý] [added: ☒] | [removed: Annual] [added: | | Annual] Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of [removed: 1934] [added: 1934] | [added: | |]

[removed: For] [added: For] the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | [removed: Transition] [added: | | Transition] Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of [removed: 1934] [added: 1934] | [added: | |]

[removed: For] [added: For] the transition period [removed: from to][added: from to]

[removed: Commission] [added: Commission] file number [removed: 033-90866][added: 033-90866]

[removed: WESTINGHOUSE] [added: WESTINGHOUSE] AIR BRAKE TECHNOLOGIES [removed: CORPORATION][added: CORPORATION]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] [added: Delaware] | [removed: 25-1615902] | [added: | 25-1615902 | | |]

| [removed: (State] [added: (State] or other jurisdiction of incorporation or [removed: organization)] [added: organization)] | [removed: (IRS] [added: | | (IRS] Employer Identification [removed: No.)] [added: No.)] | [added: | |]

| [removed: (Address] [added: (Address] of principal executive offices, including zip [removed: code)] [added: code)] | [removed: (Registrant’s] [added: | | (Registrant’s] telephone [removed: number)] [added: number)] | [added: | |]

| [removed: Title of Class] [added: Class] | [removed: Name] [added: | | Trading Symbol | | | Name] of Exchange on which [removed: registered] [added: registered] | [added: | |]

| Common Stock, par value $.01 per share | [added: | | WAB | | |] New York Stock Exchange | [added: | |]

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: ý] [added: ☒] No ¨.

Yes [removed: ¨] [added: ý] No [removed: ý.][added: ☐.]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ý No ¨.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [removed: company”] [added: company,” and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | [added: | |] x | [added: | |] Accelerated filer | [added: | |] ¨ | [added: | |] Non-accelerated filer | [added: | |] ¨ | | | [added: | | | | | | | | |]

| Emerging growth company | [removed: ¨] | [added: | ☐ | | |] Smaller reporting company | [removed: ¨] | | [added: ☐] | | | [added: | | | | | | | | | | | | | | |]

The registrant estimates that as of June 30, [removed: 2018,] [added: 2019,] the aggregate market value of the voting shares held by non-affiliates of the registrant was approximately [removed: $8.5] [added: $12.7] billion based on the closing price on the New York Stock Exchange for such stock.

As of February [removed: 20, 2019, 96,613,310] [added: 14, 2020, 191,711,224] shares of Common Stock of the registrant were issued and outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE:][added: REFERENCE:]

Portions of the Proxy Statement for the registrant’s Annual Meeting of Stockholders to be held on May [removed: 17, 2019] [added: 15, 2020] are incorporated by reference into Part III of this Form 10-K.

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | [removed: Page] | [added: PART I | | | Page | | |]

| | [removed: PART I] | | [added: PART II | | | | | |]

| Item 1. | [removed: [Business](#s54C97CFB4B28C88393A008A2F905028C)] | [removed: [3](#s54C97CFB4B28C88393A008A2F905028C)] | [added: [Business](#i_0_13) | | | [3](#i_0_13) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#s67576FCA380AFF98C5B508A2F9283642)] [added: Factors](#i_0_16)] | [removed: [11](#s67576FCA380AFF98C5B508A2F9283642)] | [added: | [11](#i_0_16) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#s77680F022AD31925DAA708A2F959602E)] [added: Comments](#i_0_19)] | [removed: [18](#s77680F022AD31925DAA708A2F959602E)] | [added: | [18](#i_0_19) | | |]

| Item 2. | [removed: [Properties](#sB862E043D6181E655D3208A2F97AFCAB)] | [removed: [19](#sB862E043D6181E655D3208A2F97AFCAB)] | [added: [Properties](#i_0_22) | | | [19](#i_0_22) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#s341A35D8F8A9BFC4968108A2F9AD9D9A)] [added: Proceedings](#i_0_25)] | [removed: [20](#s341A35D8F8A9BFC4968108A2F9AD9D9A)] | [added: | [19](#i_0_25) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#s908F56C493763F8F4B0708A2F9CE8CE0)] [added: Disclosures](#i_0_28)] | [removed: [20](#s908F56C493763F8F4B0708A2F9CE8CE0)] | [added: | [19](#i_0_28) | | |]

| | [removed: PART II] | | [added: PART IV | | | | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sEB6644B04975EFFC0B9808A2FA556159)] [added: Securities](#i_0_37)] | [removed: [23](#sEB6644B04975EFFC0B9808A2FA556159)] | [added: | [22](#i_0_37) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#sE46B8D6794834F28A6B408A2FA965087)] [added: Data](#i_0_40)] | [removed: [24](#sE46B8D6794834F28A6B408A2FA965087)] | [added: | [24](#i_0_40) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s6FC889381B1F34A308FA08A2FAC3FE2B)] [added: Operations](#i_0_43)] | [removed: [25](#s6FC889381B1F34A308FA08A2FAC3FE2B)] | [added: | [25](#i_0_43) | | |]

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OR

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| 30 Isabella Street Pittsburgh, Pennsylvania 15212 | | | (412) 825-1000 | | |

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Yes ☐ No ý.

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| | | | [I](#i_0_31)[n](#i_0_31)[fo](#i_0_31)[r](#i_0_31)[m](#i_0_31)[atio](#i_0_31)[n](#i_0_31) [About Our](#i_0_31) [Executive Officers](#i_0_31) | | | [20](#i_0_31) | | |

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10-K 1 wab1231201810k.htm 10-K

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OR

| 1001 Air Brake Avenue Wilmerding, Pennsylvania 15148 | (412) 825-1000 |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

ý.

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| | [Executive Officers of the Registrant](#s0D3943417D9375D4FDB808A2F9FF4452) | [21](#s0D3943417D9375D4FDB808A2F9FF4452) |

PART I

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[removed: Facilities][added: Facilities]

The following table provides certain summary information about the principal facilities owned or leased by the Company as of December 31, [removed: 2018.][added: 2019.]

Leases on the facilities are [added: mainly] long-term and generally include options to renew.

| [removed: Location] [added: Location] | | [removed: Primary Use] | | [removed: Segment] | | [removed: Own/Lease] [added: Primary Use] | | [removed: Approximate Square Feet] | | | | [added: Segment] | [added: | | | | | Own/Lease | | | | | | Approximate Square Feet | | | | | | | | | | | | | | |]

| [removed: Domestic] [added: Domestic] | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Rothbury, MI | | [added: | | | |] Manufacturing/Warehouse/Office | | [added: | | | |] Freight | | [added: | | | |] Own | | [added: | | | |] 500,000 | | | | | [added: | | | | | | | | | |]

| Wilmerding, PA | | [added: | | | |] Manufacturing/Service | | [added: | | | |] Freight | | [added: | | | |] Own | | [added: | | | |] 365,000 | | | [removed: (1] | [removed: )] | [added: | (1) | | | | | | | | |]

| [removed: Lexington, TN] [added: Boise, ID] | | [added: | | | |] Manufacturing | | [added: | | | |] Freight | | [added: | | | |] Own | | [removed: 170,000] | | | | [added: 326,000] | [added: | | | | | | | | | | | | | |]

| [removed: Jackson, TN] [added: Salem, VA] | | [added: | | | |] Manufacturing | | [added: | | | |] Freight | | [added: | | | |] Own | | [removed: 150,000] | | | | [added: 320,000] | [added: | | | | | | | | | | | | | |]

| [removed: Berwick,] [added: Erie,] PA | | [removed: Manufacturing/Warehouse] | | [added: | | Manufacturing/Warehouse/Office | | | | | |] Freight | | [added: | | | |] Own | | [removed: 150,000] | | | | [added: 3,800,000] | [added: | | | | | | | | | | | | | |]

| [removed: Chicago, IL] [added: Houston, Texas] | | [added: | | | |] Manufacturing/Service | | [added: | | | |] Freight | | [added: | | | |] Own | | [removed: 123,000] | | | | [added: 280,000] | [added: | | | | | | | | | | | | | |]

| [removed: Greensburg,] [added: Grove City,] PA | | [removed: Manufacturing] | | [added: | | Manufacturing/Warehouse | | | | | |] Freight | | [added: | | | |] Own | | [removed: 113,000] | | | | [added: 486,000] | [added: | | | | | | | | | | | | | |]

| [removed: Warren, OH] [added: Justin, Texas] | | [removed: Manufacturing] | | [added: | | Manufacturing/Warehouse | | | | | |] Freight | | [added: | | | |] Own | | [removed: 103,000] | | | | [added: 305,000] | [added: | | | | | | | | | | | | | |]

| [removed: Boise, ID] [added: Doncaster, UK] | | [added: | | | |] Manufacturing | | [removed: Freight/Transit] | | [added: | | Transit | | | | | |] Own | | [removed: 326,000] | | | | [added: 330,000] | [added: | | | | | | | | | | | | | |]

| [removed: Maxton, NC] [added: Changzhou, China] | | [added: | | | |] Manufacturing | | [removed: Freight/Transit] | | [added: | | Transit | | | | | |] Own | | [removed: 105,000] | | | | [added: 316,000] | [added: | | | | | | | | | | | | | |]

| [removed: Salem, VA] [added: Piossasco, Italy] | | [added: | | | |] Manufacturing | | [added: | | | |] Transit | | [added: | | | |] Own | | [removed: 320,000] | | | | [added: 301,000] | [added: | | | | | | | | | | | | | |]

| [removed: Brenham, TX] [added: Shenyang, China] | | [removed: Manufacturing/Office] | | [added: | | Manufacturing/Warehouse/Office | | | | | |] Transit | | [added: | | | |] Own | | [removed: 145,000] | | | | [added: 336,000] | [added: | | | | | | | | | | | | | |]

| [removed: International] [added: International] | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Northampton, UK | | [added: | | | |] Manufacturing | | [added: | | | |] Freight | | [added: | | | |] Lease | | [added: | | | |] 300,000 | | | | | [added: | | | | | | | | | |]

| Shenyang City, [removed: Liaoning Province,] China | | [added: | | | |] Manufacturing | | [removed: Freight] | | [added: | | Transit | | | | | |] Lease | | [added: | | | |] 291,000 | | | | | [added: | | | | | | | | | |]

| Burton on Trent, UK | | [added: | | | |] Manufacturing/Office | | [added: | | | |] Transit | | [added: | | | |] Lease | | [removed: 253,000] | | | | [added: 260,000] | [added: | | | | | | | | | | | | | |]

[removed: | (1) | Approximately] [added: (1)Approximately] 250,000 square feet are currently used in connection with the Company’s [removed: corporate and] manufacturing operations. [removed: The remainder is leased to a third party. |]

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| Fort Worth, Texas | | | | | | Manufacturing/Warehouse | | | | | | Freight | | | | | | Own | | | | | | 304,000 | | | | | | | | | | | | | | |

| Hanover Park, Illinois | | | | | | Manufacturing | | | | | | Freight | | | | | | Lease | | | | | | 250,000 | | | | | | | | | | | | | | |

| Pittsburgh, PA | | | | | | Office | | | | | | Global HQ | | | | | | Lease | | | | | | 84,000 | | | | | | | | | | | | | | |

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The remainder is leased to a third party.

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The Company’s corporate headquarters are located at the Wilmerding, PA site.

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| Greenville, SC | | Manufacturing | | Transit | | Own | | 154,000 | | | | |

| Spartanburg, SC | | Manufacturing/Service | | Transit | | Lease | | 184,000 | | | | |

| Buffalo Grove, IL | | Manufacturing | | Transit | | Lease | | 116,000 | | | | |

| Sao Paulo, Brazil | | Manufacturing/Office | | Freight | | Own | | 177,000 | | | | |

| Wallaceburg (Ontario), Canada | | Manufacturing | | Freight | | Own | | 126,000 | | | | |

| Lincolnshire, UK | | Manufacturing/Office | | Freight | | Lease | | 149,000 | | | | |

| London (Ontario), Canada | | Manufacturing | | Freight | | Lease | | 104,000 | | | | |

| Doncaster, UK | | Manufacturing/Service | | Freight/Transit | | Own | | 330,000 | | | | |

| Kilmarnock, UK | | Manufacturing | | Freight/Transit | | Own | | 108,000 | | | | |

| Loughborough, UK | | Manufacturing | | Freight/Transit | | Lease | | 245,000 | | | | |

| Kempton Park, South Africa | | Manufacturing | | Freight/Transit | | Lease | | 156,000 | | | | |

| Piossasco, Italy | | Manufacturing | | Transit | | Own | | 301,000 | | | | |

| Monte Alto, Brazil | | Manufacturing/Office | | Transit | | Own | | 244,000 | | | | |

| Tamil Nadu, India | | Manufacturing | | Transit | | Own | | 220,000 | | | | |

| Schkeuditz, Germany | | Manufacturing | | Transit | | Own | | 219,000 | | | | |

| Schuttorf, Germany | | Manufacturing/Office | | Transit | | Own | | 189,000 | | | | |

| Amiens, France | | Manufacturing | | Transit | | Own | | 142,000 | | | | |

| Chard, UK | | Manufacturing/Office | | Transit | | Own | | 142,000 | | | | |

| St Pierre Des Corps, France | | Manufacturing | | Transit | | Own | | 133,000 | | | | |

| Avellino, Italy | | Manufacturing/Office | | Transit | | Own | | 132,000 | | | | |

| Blovice, Czech Republic | | Manufacturing | | Transit | | Lease | | 235,000 | | | | |

| Nyrany, Czech Republic | | Manufacturing/Office | | Transit | | Lease | | 223,000 | | | | |

| Witten, Germany | | Manufacturing | | Transit | | Lease | | 209,000 | | | | |

| Verviers, Belgium | | Manufacturing/Office | | Transit | | Lease | | 137,000 | | | | |

| Camisano, Italy | | Manufacturing/Office | | Transit | | Lease | | 136,000 | | | | |

| San Luis Potosi, Mexico | | Manufacturing/Office | | Transit | | Lease | | 113,000 | | | | |

| Birkenhead, UK | | Overhaul/Manufacturing | | Transit | | Lease | | 109,000 | | | | |

| Shanghai, China | | Manufacturing | | Transit | | Lease | | 104,000 | | | | |

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The following table provides information on our executive officers as of February 25, [removed: 2019.][added: 2020.]

| [removed: Officers] [added: Officers] | | [removed: Age] | | [removed: Position] | [added: | Age | | | | | | Position | | |]

| Albert J. Neupaver | | [removed: 68] | | [added: | | 69 | | | | | |] Executive Chairman of the Board | [added: | |]

| [removed: Raymond T. Betler] [added: Rafael Santana] | | [removed: 63] | | [added: | | 48 | | | | | |] President and Chief Executive Officer | [added: | |]

| [removed: Rafael Santana] [added: Patrick D. Dugan] | | [removed: 47] | | [added: | | 53 | | | | | |] Executive Vice [removed: President,] President [added: Finance,] and Chief [removed: Executive Officer, Freight Segment] [added: Financial Officer] | [added: | |]

| David L. DeNinno | | [removed: 63] | | [added: | | 64 | | | | | |] Executive Vice President, General Counsel and Secretary | [added: | |]

[removed: | Patrick D. Dugan | | 52 | |] [added: Dugan* was named] Executive Vice President [removed: Finance,] and Chief Financial Officer [removed: |][added: effective December 2016.]

| Scott E. Wahlstrom | | [removed: 55] | | [added: | | 56 | | | | | |] Executive Vice [removed: President,] [added: President and Chief] Human Resources [added: Officer] | [added: | |]

| Dominique [removed: Malefant] [added: Malenfant] | | [removed: 57] | | [added: | | 58 | | | | | |] Senior Vice President and Global Technology Officer | [added: | |]

| John A. Mastalerz | | [removed: 52] | | [added: | | 53 | | | | | |] Senior Vice President of [removed: Finance, Corporate Controller] [added: Finance] and [removed: Principal] [added: Chief] Accounting Officer | [added: | |]

| Greg Sbrocco | | [removed: 50] | | [added: | | 51 | | | | | |] Senior Vice President, [removed: Wabtec Excellence Program] [added: Global Operations] | [added: | |]

[removed: Albert] [added: *Albert] J.

[removed: Neupaver] [added: Neupaver*] was re-named Executive Chairman of the Board of Directors in May 2018, having previously served as Executive Chairman from May 2014 to May 2017.

[removed: Betler] [added: *Rafael Santana*] was named President and Chief Executive Officer [removed: in May 2014.][added: of the Company effective July 1, 2019.]

[removed: Rafael Santana] [added: Wahlstrom*] was named Executive Vice [removed: President,] President and Chief [removed: Executive] [added: Human Resources] Officer [removed: of Wabtec's Freight Segment] effective February [removed: 25,] 2019.

[removed: Previously] Mr. Santana was President and Chief Executive Officer of GE Transportation since November 2017.

[removed: David] [added: *David] L.

[removed: DeNinno] [added: DeNinno*] was named Executive Vice President, General Counsel and Secretary of the Company effective December 2016.

Previously, Mr. DeNinno served as [removed: Sr.] [added: Senior] Vice President, General Counsel and Secretary since February 2012.

[removed: Patrick] [added: *Patrick] D.

[removed: Scott] [added: *Scott] E.

Previously, Mr. Wahlstrom served as [added: Executive Vice President - Human Resources from December 2016 to February 2019 and served as] Senior Vice President, Human Resources since January 2012.

Prior to that, Mr. Wahlstrom [removed: has] [added: had] been Vice President, Human Resources, since November 1999.

[removed: Dominique Malefant] [added: *Dominique Malenfant*] was named Senior Vice President, Global Technology effective February 25, 2019.

Previously, Mr. [removed: Malefant] [added: Malenfant] was the Vice President of Global Technology of GE Transportation.

Prior to that, Mr. [removed: Malefant] [added: Malenfant] served as Vice President of product and engineering for the Transport and Propulsion and Control business at Bombardier Transport.

[removed: John] [added: *John] A.

[removed: Mastalerz] [added: Mastalerz*] was named Senior Vice President of [removed: Finance, Corporate Controller] [added: Finance] and [removed: Principal] [added: Chief] Accounting Officer in [removed: July 2017.][added: February 2020.]

Previously, Mr. Mastalerz served as [added: Senior] Vice [added: President, Corporate Controller and Principal Accounting Officer from July 2017 to February 2020 and as Vice] President and Corporate Controller from January 2014 to July 2017.

[removed: Greg Sbrocco] [added: *Greg Sbrocco*] was named Senior Vice President, [removed: Wabtec Excellence Program,] [added: Global Operations,] effective February 25, 2019.

[removed: PART II][added: PART II]

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Michael E. Fetsko | | | | | | 55 | | | | | | President, Freight and Industrial Components | | |

| Pascal Schweitzer | | | | | | 43 | | | | | | President, Global Freight Services | | |

| Nalin Jain | | | | | | 50 | | | | | | President, Equipment | | |

| Lillian Leroux | | | | | | 48 | | | | | | President, Transit | | |

Previously, he served as Executive Vice President from February 2019 to July 2019.

*Michael E.

Fetsko* was named President, Freight and Industrial Components effective January 2017.

Previously, Mr. Fetsko served as Vice President and Group Executive from January 2014.

He joined Wabtec in July of 2011 as Vice President, Freight Pneumatics.

Prior to joining Wabtec, Mr. Fetsko served in various executive management roles with Bombardier Transportation.

Prior to Bombardier, Mr. Fetsko served in various management roles with two different environmental engineering firms.

*Nalin Jain* was named President, Global Equipment business effective May 2019.

Previously, Mr. Jain served as President & CEO, International markets since Aug 2017 for GE Transportation.

Prior to that, Mr. Jain had multiple leadership roles of increasing responsibility with GE Aviation and GE Transportation, since September 2005.

Mr. Jain served as Director Global Partnerships with Bombardier Inc since July 2002 and prior to that he worked for Saint Gobain.

*Lilian Leroux* was named President, Transit effective March 2019.

Previously he served as Group President—Brakes & Safety from January 2017 to October 2019.

Prior to that, Mr. Leroux held various executive management roles with Faiveley Transport, starting in January 2001.

*Pascal Schweitzer* was named President, Global Freight Services on February 25, 2019.

Previously Mr. Schweitzer was the Vice President—Services of GE Transportation since April 2017.

He served as General Manger – Europe – Power Services for GE Power from November 2015 through April 2017 and prior to that several positions with Alstom Power.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

EXECUTIVE OFFICERS OF THE REGISTRANT

They are elected periodically by our Board of Directors and serve at its discretion.

| | | | | |

| --- | --- | --- | --- | --- |

| Timothy R. Wesley | | 57 | | Vice President, Investor Relations and Corporate Communications |

Raymond T.

Previously, Mr. Betler was President and Chief Operating Officer since May 2013 and the Company’s Chief Operating Officer since December 2010.

Prior to that, he served as Vice President, Group Executive of the Company since August 2008.

Prior to joining Wabtec, Mr. Betler served in various positions of increasing responsibility at Bombardier Transportation since 1979.

Most recently, Mr. Betler served as President, Total Transit Systems from 2004 until 2008 and before that as President, London Underground Projects from 2002 to 2004.

Dugan was named Executive Vice President and Chief Financial Officer effective December 2016.

Wahlstrom was named Executive Vice President, Human Resources effective December 2016.

Timothy R.

Wesley was named Vice President, Investor Relations and Corporate Communications in November 1999.

Previously, Mr. Wesley was Vice President, Investor and Public Relations of MotivePower Industries, Inc. from August 1996 until November 1999.

| | |

| --- | --- |

The graph below compares the total stockholder return through December 31, [removed: 2018,] [added: 2019,] of Wabtec’s common stock to (i) the S&P [removed: 500 and] [added: 500,] (ii) our [added: new] peer group of manufacturing companies which consists of the following publicly traded companies: AGCO, [added: American Axle & Manufacturing Holdings,] AMETEK, [added: Arconic, CSX, Dana, Dover, Flowserve, Fortive, Illinois Tool Works, Navistar International, Norfolk Southern, Oshkosh, Parker-Hannifin, Rockwell Automation, Tenneco, Terex, Textron, WABCO, and Xylem, and (iii) our old peer group of manufacturing companies which consist of the following publicly traded companies: AGCO, AMETEK,] Colfax, Dana, Dover, Flowserve, The Greenbrier Companies, Navistar, Oshkosh, Regal Beloit, Rockwell Automation, Rockwell Collins, Terex, Trinity Industries, Snap-On, WABCO and Xylem.

[removed: ][added: ]

| [removed: Month] [added: Month] | | [removed: Total] [added: | | | | Total] Number of Shares [removed: Purchased] [added: Purchased] | | | [removed: Average] [added: | | | Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: | | Total] Number of Shares Purchased as Part of Publicly Announced Programs [removed: (1)] [added: (1)] | | | [removed: Maximum] [added: | | | Maximum] Dollar Value of Shares That May Yet Be Purchased Under the Programs [removed: (1)] [added: (1)] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| Total quarter ended December 31, [removed: 2018] [added: 2019] | | [added: | | | |] — | | | [added: | | |] $ | — | | | [added: | |] — | | | [added: | | |] $ | [removed: 137,824,347] [added: 137.8] | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

The Common Stock of the Company is listed on the New York Stock Exchange under the symbol “WAB.” As of February 14, 2020, there were 191,711,224 shares of Common Stock outstanding held by 126,748 holders of record.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Issuer Purchases of Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| October 2019 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 137.8 | | | | | | | | | | | | | | | | | | | | | | | | | |

| November 2019 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 137.8 | | | | | | | | | | | | | | | | | | | | | | | | | |

| December 2019 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 137.8 | | | | | | | | | | | | | | | | | | | | | | | | | |

(1) On February 7, 2020, the Board of Directors amended its stock repurchase authorization to $500 million of the Company’s outstanding shares.

This new stock repurchase authorization supersedes the previous authorization of $350 million, of which $137.8 million remained.

During 2019, the Company did not repurchase any shares.

The Company intends to purchase shares on the open market or in negotiated block trades from time to time depending on market conditions.

No time limit was set for the completion of the programs which conforms to the requirements under the Senior Credit Facility, as well as the Senior Notes currently outstanding.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

The Common Stock of the Company is listed on the New York Stock Exchange under the symbol “WAB”.

As of February 20, 2019, there were 96,613,310 shares of Common Stock outstanding held by 452 holders of record.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 2018 | | — | | | — | | | | — | | | $ | 137,824,347 | |

| November 2018 | | — | | | $ | — | | | — | | | $ | 137,824,347 | |

| December 2018 | | — | | | $ | — | | | — | | | $ | 137,824,347 | |

| | |

| --- | --- |

| (1) | On February 9, 2016, the Board of Directors amended its stock repurchase authorization to $350 million of the Company’s outstanding shares. During 2018, the Company did not repurchase any shares, leaving $137.8 million remaining under the authorization. The Company intends to purchase shares on the open market or in negotiated block trades from time to time depending on market conditions. No time limit was set for the completion of the programs which conforms to the requirements under the 2016 and 2018 Refinancing Credit Agreements, as well as the senior notes currently outstanding. |

| | | [removed: Year] [added: | | | | Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: In thousands,] [added: In millions,] except per share [removed: amounts] [added: amounts] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | | [removed: 2016] | | [added: 2018] | | [removed: 2015] | | | | [removed: 2014] [added: 2017] | | | [added: | | | 2016 | | | | | | 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Income] [added: Income] Statement [removed: Data] [added: Data] | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Diluted] [added: Diluted] Earnings per Common [removed: Share] [added: Share] | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income attributable to Wabtec shareholders | | [added: | | | |] $ | [added: 1.84 | | | | | $ |] 3.05 | | | [added: | |] $ | 2.72 | | | [added: | |] $ | 3.34 | | | [added: | |] $ | 4.10 | | | [removed: $] | [removed: 3.62] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Cash dividends declared per share | | [added: | | | |] $ | 0.48 | | | [added: | |] $ | [added: 0.48 | | | | | $ |] 0.44 | | | [added: | |] $ | 0.36 | | | [added: | |] $ | 0.28 | | | [removed: $] | [removed: 0.20] | | [added: | | | | | | | | | | | | | | | | | | | |]

| [removed: Balance] [added: Balance] Sheet [removed: Data] [added: Data] | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net sales | | | | | | $ | 8,200.0 | | | | | $ | 4,363.5 | | | | | $ | 3,881.7 | | | | | $ | 2,931.2 | | | | | $ | 3,308.0 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Gross profit | | | | | | 2,278.0 | | | | | | 1,233.9 | | | | | | 1,065.3 | | | | | | 924.2 | | | | | | 1,047.8 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Operating expenses | | | | | | (1,614.9) | | | | | | (760.5) | | | | | | (644.2) | | | | | | (467.6) | | | | | | (439.0) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Income from operations | | | | | | $ | 663.1 | | | | | $ | 473.4 | | | | | $ | 421.1 | | | | | $ | 456.6 | | | | | $ | 608.8 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Interest expense, net | | | | | | $ | (219.1) | | | | | $ | (112.2) | | | | | $ | (77.9) | | | | | $ | (50.3) | | | | | $ | (27.3) | | | | | | | | | | | | | | | | | | | | | | | | | |

| Other income, net | | | | | | 2.8 | | | | | | 6.4 | | | | | | 8.9 | | | | | | 6.5 | | | | | | 3.8 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income attributable to Wabtec shareholders | | | | | | $ | 326.7 | | | | | $ | 294.9 | | | | | $ | 262.3 | | | | | $ | 304.9 | | | | | $ | 398.6 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fully diluted shares outstanding | | | | | | 177.3 | | | | | | 96.5 | | | | | | 96.1 | | | | | | 91.1 | | | | | | 97.0 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | | | | $ | 18,944.2 | | | | | $ | 8,649.2 | | | | | $ | 6,580.0 | | | | | $ | 6,581.0 | | | | | $ | 3,229.5 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash, cash equivalents, and restricted cash | | | | | | 604.2 | | | | | | 2,342.3 | | | | | | 233.4 | | | | | | 398.5 | | | | | | 226.2 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total debt | | | | | | 4,429.3 | | | | | | 3,856.9 | | | | | | 1,870.5 | | | | | | 1,892.8 | | | | | | 692.2 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total equity | | | | | | 9,993.6 | | | | | | 2,869.1 | | | | | | 2,828.6 | | | | | | 2,976.8 | | | | | | 1,701.3 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net sales | | $ | 4,363,547 | | | $ | 3,881,756 | | | $ | 2,931,188 | | | $ | 3,307,998 | | | $ | 3,044,454 | |

| Gross profit | | 1,233,885 | | | | 1,065,313 | | | | 924,239 | | | | 1,047,816 | | | | 935,982 | | |

| Operating expenses | | (760,448 | | ) | | (644,234 | | ) | | (467,632 | | ) | | (438,962 | | ) | | (406,198 | | ) |

| Income from operations | | $ | 473,437 | | | $ | 421,079 | | | $ | 456,607 | | | $ | 608,854 | | | $ | 529,784 | |

| Interest expense, net | | $ | (112,235 | ) | | $ | (77,884 | ) | | $ | (50,298 | ) | | $ | (27,254 | ) | | $ | (29,074 | ) |

| Other income, net | | 6,380 | | | | 8,868 | | | | 6,528 | | | | 3,768 | | | | 7,145 | | |

| Net income attributable to Wabtec shareholders | | $ | 294,944 | | | $ | 262,261 | | | $ | 304,887 | | | $ | 398,628 | | | $ | 351,680 | |

| Fully diluted shares outstanding | | 96,464 | | | | 96,125 | | | | 91,141 | | | | 97,006 | | | | 96,885 | | |

| Total assets | | $ | 8,649,234 | | | $ | 6,579,980 | | | $ | 6,581,018 | | | $ | 3,229,513 | | | $ | 3,303,841 | |

| Cash, cash equivalents, and restricted cash | | 2,342,354 | | | | 233,401 | | | | 398,484 | | | | 226,191 | | | | 425,849 | | |

| Total debt | | 3,856,873 | | | | 1,870,528 | | | | 1,892,776 | | | | 692,238 | | | | 521,195 | | |

| Total equity | | 2,869,075 | | | | 2,828,532 | | | | 2,976,825 | | | | 1,701,339 | | | | 1,808,298 | | |

| | |

| --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

[removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

Wabtec’s principal executive officer and its principal financial officer have evaluated the effectiveness of Wabtec’s “disclosure controls and procedures,” (as defined in Exchange Act Rule 13a-15(e)) as of December 31, [removed: 2018.][added: 2019.]

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

There was no change in Wabtec’s “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended December 31, [removed: 2018,] [added: 2019,] that has materially affected, or is reasonably likely to materially affect, Wabtec’s internal control over financial reporting.

[removed: Management’s] [added: Management’s] Report on Internal Control over Financial [removed: Reporting][added: Reporting]

[removed: Report] [added: Report] of Independent Registered Public Accounting Firm on Internal Control over Financial [removed: Reporting][added: Reporting]

Ernst & Young LLP's attestation report on internal control over financial reporting appears on page [removed: 55] [added: 56] and is incorporated herein by reference.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

[removed: PART III][added: PART III]

[removed: Items] [added: Items] 10 through [removed: 14.][added: 14.]

In accordance with the provisions of General Instruction G(3) to Form 10-K, the information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence) and Item 14 (Principal Accounting Fees and Services) is incorporated herein by reference from the Company’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on May [removed: 17, 2019,] [added: 15, 2020,] except for the Equity Compensation Plan Information required by Item 12, which is set forth in the table below.

The definitive Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2018.][added: 2019.]

As described in Item 1 of this [removed: report] [added: report,] the Code of Ethics for Senior Officers is posted on our website at [removed: www.wabtec.com.][added: *www.wabteccorp.com*.]

This table provides aggregate information as of December 31, [removed: 2018] [added: 2019] concerning equity awards under Wabtec’s compensation plans and arrangements.

| | | [removed: (a)] [added: | | | | (a)] Number of securities to be issued upon exercise of outstanding [removed: options,] [added: options,] | | | [removed: (b)] [added: | | | (b)] Weighted-average exercise price of outstanding options [removed: warrants] [added: warrants] | | | | [removed: (c)] [added: | | (c)] Number of securities remaining available for future issuance under equity compensation plans (excluding [removed: securities] [added: securities] | | [added: |]

| [removed: Plan Category] [added: Plan Category] | | [removed: warrants and rights] | | | [added: | warrants] and [removed: rights] [added: rights] | | | | [removed: reflected] [added: | | and rights | | | | | | reflected] in column [removed: (a))] [added: (a))] | | [added: |]

| Equity compensation plans [added: not] approved by shareholders | | [removed: 466,677] | | | [removed: $] | [removed: 61.04] [added: —] | | | [removed: 2,800,836] | | [added: | — | | | | | | — | | |]

| Equity compensation plans [removed: not] approved by shareholders | | [removed: —] | | | [removed: —] | [added: 588,024] | | | [removed: —] | | [added: | $ | 63.36 | | | | | 1,870,396 | | |]

[removed: PART IV][added: PART IV]

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total | | | | | | 588,024 | | | | | | $ | 63.36 | | | | | 1,870,396 | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total | | 466,677 | | | $ | 61.04 | | | 2,800,836 | |

| | |

| --- | --- |

| | | [removed: Page] | | [added: | | Page | | |]

| (1) | [removed: Financial] [added: | | Financial] Statements and Reports on Internal [removed: Control] [added: Control] | | | [added: | | |]

| | [added: | |] [Management’s Reports to Westinghouse Air Brake Technologies Corporation [removed: Shareholders](#sB98183EE0A1A44F649C808A2FD64BC95)] [added: Shareholders](#i_0_88)] | [removed: [52](#sB98183EE0A1A44F649C808A2FD64BC95)] | | [added: [52](#i_0_88) | | |]

| | [added: | |] [Report of Independent Registered Public Accounting [removed: Firm](#sF8729B3D53AAC9B2884D08A2FD965EDB)] [added: Firm](#i_0_91)] | [removed: [53](#sF8729B3D53AAC9B2884D08A2FD965EDB)] | | [added: [53](#i_0_91) | | |]

[removed: | | [Report of Independent Registered Public Accounting Firm](#sC71A1C5B7F160B38622B08A2FDB7B1CC) | [54](#sC71A1C5B7F160B38622B08A2FDB7B1CC) | |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

| | [added: | |] [Report of Independent Registered Public Accounting Firm on Internal Control Over Financial [removed: Reporting](#sAF129617C05451B508ED08A2FDE8BCD4)] [added: Reporting](#i_0_97)] | [removed: [55](#sAF129617C05451B508ED08A2FDE8BCD4)] | | [added: [56](#i_0_97) | | |]

| | [added: | |] [Consolidated Balance Sheets as of December 31, [removed: 2018 and 2017](#s944668370A7E5E04BA1808A2B879B309)] [added: 201](#i_0_100)[9](#i_0_100) [and 201](#i_0_100)[8](#i_0_100)] | [removed: [56](#s944668370A7E5E04BA1808A2B879B309)] | | [added: [57](#i_0_100) | | |]

| | [added: | |] [Consolidated Statements of Income for the three years ended December 31, [removed: 2018, 2017 and 2016](#sDF0FD547C1A418AAC7E108A2BA47AC31)] [added: 201](#i_0_106)[9](#i_0_106)[, 201](#i_0_106)[8](#i_0_106) [and 201](#i_0_106)[7](#i_0_106)] | [removed: [57](#sDF0FD547C1A418AAC7E108A2BA47AC31)] | | [added: [58](#i_0_106) | | |]

| | [added: | |] [Consolidated Statements of Comprehensive Income for the three years ended December 31, [removed: 2018, 2017 and 2016](#s52EEFF75D4BD3D9901B008A2BA200BDE)] [added: 201](#i_0_109)[9](#i_0_109)[, 201](#i_0_109)[8](#i_0_109) [and 201](#i_0_109)7] | [removed: [58](#s52EEFF75D4BD3D9901B008A2BA200BDE)] | | [added: [59](#i_0_109) | | |]

| | [added: | |] [Consolidated Statements of Cash Flows for the three years ended December 31, [removed: 2018, 2017 and 2016](#s0541C14D0155A38FCCE708A2B9D5536C)] [added: 201](#i_0_112)[9](#i_0_112)[, 201](#i_0_112)[8](#i_0_112) [and 201](#i_0_112)7] | [removed: [59](#s0541C14D0155A38FCCE708A2B9D5536C)] | | [added: [60](#i_0_112) | | |]

| | [added: | |] [Consolidated Statements of Shareholders’ Equity for the three years ended December 31, [removed: 2018, 2017 and 2016](#sC5ED17CF678D6E9AEE6808A2B8D06ABD)] [added: 201](#i_0_118)[9](#i_0_118)[, 201](#i_0_118)[8](#i_0_118) [and 201](#i_0_118)7] | [removed: [60](#sC5ED17CF678D6E9AEE6808A2B8D06ABD)] | | [added: [61](#i_0_118) | | |]

[removed: | | [Notes to Consolidated Financial Statements](#s636FFE861882B3CA169708A2FFEC2111) | [61](#s636FFE861882B3CA169708A2FFEC2111) | |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

| (2) | [removed: Financial] [added: | | Financial] Statement [removed: Schedules] [added: Schedules] | | | [added: | | |]

| | [added: | |] [Schedule II—Valuation and Qualifying [removed: Accounts](#sEA03F9326E56EB4CE0F108A2BD5BF622)] [added: Accounts](#i_0_232)] | [removed: [101](#sEA03F9326E56EB4CE0F108A2BD5BF622)] | | [added: [99](#i_0_232) | | |]