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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2011	May 04, 2011
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q1
Trading Symbol	WAB
Entity Registrant Name	WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORP
Entity Central Index Key	0000943452
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		48,279,533

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2011	Dec. 31, 2010
Current Assets
Cash and cash equivalents	$ 200,687	$ 236,941
Accounts receivable	305,687	258,149
Inventories	284,964	253,491
Deferred income taxes	39,260	39,573
Other current assets	14,337	13,799
Total current assets	844,935	801,953
Property, plant and equipment	497,465	478,023
Accumulated depreciation	(281,040)	(271,798)
Property, plant and equipment, net	216,425	206,225
Other Assets
Goodwill	575,197	545,832
Other intangibles, net	227,883	216,913
Deferred income taxes	3,508	3,346
Other noncurrent assets	29,180	28,812
Total other assets	835,768	794,903
Total Assets	1,897,128	1,803,081
Current Liabilities
Accounts payable	174,542	170,504
Customer deposits and advanced billings	41,670	23,810
Accrued compensation	33,316	39,870
Accrued warranty	22,777	20,510
Current portion of long-term debt	40,068	40,068
Other accrued liabilities	69,098	53,612
Total current liabilities	381,471	348,374
Long-term debt	360,001	382,007
Accrued postretirement and pension benefits	60,180	60,508
Deferred income taxes	80,242	76,505
Accrued warranty	27,821	15,003
Other long-term liabilities	17,780	17,297
Total liabilities	927,495	899,694
Shareholders' Equity
Preferred stock, 1,000,000 shares authorized, no shares issued
Common stock, $.01 par value; 100,000,000 shares authorized: 66,174,767 shares issued and 48,172,163 and 47,954,085 outstanding at March 31, 2011 and December 31, 2010, respectively	662	662
Additional paid-in capital	341,708	339,861
Treasury stock, at cost, 18,002,604 and 18,220,682 shares, at March 31, 2011 and December 31, 2010, respectively	(286,609)	(290,081)
Retained earnings	927,877	887,406
Accumulated other comprehensive loss	(17,595)	(38,077)
Total Westinghouse Air Brake Technologies Corporation shareholders' equity	966,043	899,771
Non-controlling interest	3,590	3,616
Total shareholders' equity	969,633	903,387
Total Liabilities and Shareholders' Equity	$ 1,897,128	$ 1,803,081

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Condensed Consolidated Statements of Operations
Net sales	$ 455,259	$ 363,927
Cost of sales	(322,064)	(255,538)
Gross profit	133,195	108,389
Selling, general and administrative expense	(54,816)	(44,631)
Engineering expense	(8,888)	(10,695)
Amortization expense	(3,114)	(1,887)
Total operating expenses	(66,818)	(57,213)
Income from operations	66,377	51,176
Other income and expenses
Interest expense, net	(3,684)	(3,912)
Other income (expense), net	460	(721)
Income from operations before income taxes	63,153	46,543
Income tax expense	(22,201)	(16,179)
Net income attributable to Wabtec shareholders	$ 40,952	$ 30,364
Basic
Net income attributable to Wabtec shareholders	$ 0.85	$ 0.64
Diluted
Net income attributable to Wabtec shareholders	$ 0.85	$ 0.63
Weighted average shares outstanding
Basic	47,738	47,461
Diluted	48,251	47,895

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Operating Activities
Net income attributable to Wabtec shareholders	$ 40,952	$ 30,364
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	10,818	8,400
Stock-based compensation expense	3,419	2,491
Loss on disposal of property, plant and equipment	37	27
Excess income tax benefits from exercise of stock options	(716)	(1,374)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	(35,946)	(34,856)
Inventories	(21,441)	(3,810)
Accounts payable	(4,037)	2,541
Accrued income taxes	10,788	841
Accrued liabilities and customer deposits	10,888	1,227
Other assets and liabilities	1,724	6,516
Net cash provided by operating activities	16,486	12,367
Investing Activities
Purchase of property, plant and equipment	(7,401)	(3,601)
Proceeds from disposal of property, plant and equipment	16	1
Acquisitions of business, net of cash acquired	(31,047)	(39,943)
Acquisition purchase price adjustment	35	2,368
Net cash used for investing activities	(38,397)	(41,175)
Financing Activities
Proceeds from debt	45,000	111,000
Payments of debt	(67,008)	(83,333)
Proceeds from exercise of stock options and other benefit plans	1,184	1,596
Stock repurchase		(3,096)
Excess income tax benefits from exercise of stock options	716	1,374
Cash dividends ($0.01 per share for the three months ended March 31, 2011 and 2010)	(481)	(468)
Net cash (used for) provided by financing activities	(20,589)	27,073
Effect of changes in currency exchange rates	6,246	(8,024)
Decrease in cash	(36,254)	(9,759)
Cash, beginning of year	236,941	188,659
Cash, end of period	$ 200,687	$ 178,900

Accounting Policies

3 Months Ended

Mar. 31, 2011

Accounting Policies

Accounting Policies

2. ACCOUNTING POLICIES

Basis of Presentation The unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission and include the accounts of Wabtec and its majority owned subsidiaries. These condensed interim financial statements do not include all of the information and footnotes required for complete financial statements. In Management's opinion, these financial statements reflect all adjustments of a normal, recurring nature necessary for a fair presentation of the results for the interim periods presented. Results for these interim periods are not necessarily indicative of results to be expected for the full year.

The Company operates on a four-four-five week accounting quarter, and accordingly, the quarters end on or about March 31, June 30, September 30 and December 31.

The notes included herein should be read in conjunction with the audited consolidated financial statements included in Wabtec's Annual Report on Form 10-K for the year ended December 31, 2010. The December 31, 2010 information has been derived from the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

Reclassifications Certain prior year amounts have been reclassified where necessary to conform to the current year presentation.

Revenue Recognition Revenue is recognized in accordance with Accounting Standards Codification ("ASC") 605 "Revenue Recognition". Revenue is recognized when products have been shipped to the respective customers, title has passed and the price for the product has been determined.

The Company recognizes revenues on long-term contracts based on the percentage of completion method of accounting. The units-of-delivery method or other input-based or output-based measures, as appropriate, are used to measure the progress toward completion of individual contracts. Contract revenues and cost estimates are reviewed and revised at a minimum quarterly and adjustments are reflected in the accounting period as such amounts are determined. Provisions are made currently for estimated losses on uncompleted contracts.

Certain pre-production costs relating to long-term production and supply contracts have been deferred and will be recognized over the life of the contracts. Deferred pre-production costs were $12.8 million and $11.9 million at March 31, 2011 and December 31, 2010, respectively.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Stock-Based Compensation The Company recognizes compensation expense for stock-based compensation based on the grant date fair value ratably over the requisite service period following the date of grant.

Financial Derivatives and Hedging Activities The Company has periodically entered into foreign currency forward contracts to reduce the impact of changes in currency exchange rates. Forward contracts are agreements with a counter-party to exchange two distinct currencies at a set exchange rate for delivery on a set date at some point in the future. There is no exchange of funds until the delivery date. At the delivery date the Company can either take delivery of the currency or settle on a net basis.

At March 31, 2011, the Company had forward contracts for the sale of South African Rand (ZAR) and the purchase of U.S. Dollars (USD). The Company concluded that these foreign currency forward contracts qualify for cash flow hedge accounting which permits the recording of the fair value of the forward contract and corresponding adjustment to other comprehensive income (loss), net of tax, on the balance sheet. As of March 31, 2011, the Company had forward contracts with a notional value of 24.3 million ZAR (or $3.4 million U.S.) with an average exchange rate of 7.20 ZAR per $1 USD, resulting in the recording of a current liability of $155,000 and a corresponding offset in accumulated other comprehensive income of $99,000, net of tax.

To reduce the impact of interest rate changes on a portion of its variable-rate debt, the Company entered into interest rate swaps which effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contracts. The Company is exposed to credit risk in the event of nonperformance by the counterparties. However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount. The counterparties are large financial institutions with an excellent credit rating and history of performance. The Company currently believes the risk of nonperformance is negligible. The Company concluded that these interest rate swap agreements qualify for cash flow hedge accounting which permits the recording of the fair value of the interest rate swap agreements and corresponding adjustment to other comprehensive income (loss), net of tax, on the balance sheet. As of March 31, 2011, the Company had interest rate swap agreements with a notional value of $137.0 million and which effectively changed the Company's interest rate on bank debt at March 31, 2011 from a variable rate to a fixed rate of 2.26%. The interest rate swap agreements mature at various times through December 2012. As of March 31, 2011, the Company has recorded a current liability of $2.2 million and a corresponding offset in accumulated other comprehensive loss of $1.3 million, net of tax, related to these agreements.

Foreign Currency Translation Assets and liabilities of foreign subsidiaries, except for the Company's Mexican operations whose functional currency is the U.S. Dollar, are translated at the rate of exchange in effect on the balance sheet date while income and expenses are translated at the weighted average rates of exchange prevailing during the year. Foreign currency gains and losses resulting from transactions, and the translation of financial statements are recorded in the Company's consolidated financial statements based upon the provisions of ASC 830 "Foreign Currency Matters." The effects of currency exchange rate changes on intercompany transactions and balances of a long-term investment nature are accumulated and carried as a component of shareholders' equity. The effects of currency exchange rate changes on transactions that are denominated in a currency other than an entity's functional currency are charged or credited to earnings. Foreign exchange transaction gains recognized in other income (expense), net were $323,000 for the three months ended March 31, 2011. Foreign exchange transaction losses recognized in other (expense) income, net were $597,000 for the three months ended March 31, 2010.

Non-controlling Interests In accordance with ASC 810, the Company has classified non-controlling interests as equity on our condensed consolidated balance sheets as of March 31, 2011 and December 31, 2010. Net income attributable to non-controlling interests for the three months ended March 31, 2011 and 2010 was not material.

Other Comprehensive Income Comprehensive income is defined as net income and all other non-owner changes in shareholders' equity. The Company's accumulated other comprehensive income consists of foreign currency translation adjustments, foreign currency hedges, foreign exchange contracts, interest rate swaps, and pension and post retirement related adjustments. Total comprehensive income was:


	Three Months Ended March 31,
*In thousands*	2011			2010
Net income attributable to Wabtec shareholders	$	40,952		$	30,364
Foreign currency translation gain (loss)		20,420			(9,928	)
Unrealized gain on foreign exchange contracts, net of tax		23			34
Unrealized gain (loss) on interest rate swap contracts, net of tax		206			(451	)
Change in pension and post retirement benefit plans, net of tax		(167	)		295

Total comprehensive income	$	61,434		$	20,314

The components of accumulated other comprehensive loss were:


*In thousands*	March 31, 2011			December 31, 2010
Foreign currency translation gain	$	30,687		$	10,267
Unrealized loss on foreign exchange contracts, net of tax		(99	)		(122	)
Unrealized loss on interest rate swap contracts, net of tax		(1,327	)		(1,533	)
Pension benefit plans and post retirement benefit plans, net of tax		(46,856	)		(46,689	)

Total accumulated comprehensive loss	$	(17,595	)	$	(38,077	)

Acquisitions and Discontinued Operations

3 Months Ended

Mar. 31, 2011

Acquisitions and Discontinued Operations

Acquisitions and Discontinued Operations

3. ACQUISITIONS AND DISCONTINUED OPERATIONS

The Company made the following acquisitions operating as a business unit or component of a business unit in the Freight Group:

•

On August 20, 2010, the Company acquired Bach-Simpson Corporation ("Bach-Simpson"), a designer and manufacturer of electronic instrumentation devices for rail and transit markets, for a net purchase price of approximately $12.0 million, resulting in preliminary additional goodwill of $3.4 million, of which $2.6 million will be deductible for tax purposes.

•

On July 28, 2010, the Company acquired G&B Specialties, Inc. ("G&B"), a manufacturer of railroad track and signaling products, for a net purchase price of approximately $31.8 million, net of cash received, resulting in preliminary additional goodwill of $13.0 million, none of which will be deductible for tax purposes.

•

On March 12, 2010, the Company acquired Xorail LLC ("Xorail"), a leading provider of signal engineering and design services. The purchase price was $39.9 million, net of cash received, resulting in additional goodwill of $29.6 million, none of which will be deductible for tax purposes.

The Company made the following acquisitions operating as a business unit or component of a business unit in the Transit Group:

•

On February 25, 2011, the Company acquired Brush Traction Group ("Brush Traction"), a UK-based provider of locomotive overhauls, services and aftermarket components for a net purchase price of approximately $31.0 million, resulting in a preliminary additional goodwill of $22.8 million, of which all will be deductible for tax purposes.

•

On November 5, 2010, the Company acquired substantially all of the assets of Swiger Coil Systems ("Swiger"), a manufacturer of traction motors and electric coils for the rail and power generation markets for a net purchase price of approximately $43.0 million, resulting in a preliminary additional goodwill of $18.3 million, of which all will be deductible for tax purposes.

The 2011 and 2010 acquisitions listed above include escrow deposits of $21.8 million, which may be released to the Company for indemnity and other claims in accordance with the purchase and escrow agreements.

For the Brush Traction, Swiger, Bach-Simpson and G&B acquisitions, the following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition. For the Xorail acquisition, the following table summarizes the final fair value of the assets acquired and liabilities assumed at the date of acquisition.


	Brush Traction			Swiger			Bach-Simpson			G&B			Xorail
*In thousands*	February 25, 2011			November 5, 2010			August 20, 2010			July 28, 2010			March 12, 2010
Current assets	$	19,557		$	9,650		$	3,818		$	8,330		$	11,147
Property, plant & equipment		6,334			2,978			213			5,510			2,905
Goodwill and other intangible assets		33,715			33,102			8,494			28,947			35,545
Other assets		—			—			—			43			133

Total assets acquired		59,606			45,730			12,525			42,830			49,730
Total liabilities assumed		(28,559	)		(2,759	)		(532	)		(10,988	)		(9,787	)

Net assets acquired	$	31,047		$	42,971		$	11,993		$	31,842		$	39,943

Of the preliminary allocation of $10.9 million of acquired intangible assets for Brush Traction, exclusive of goodwill, $3.1 million was assigned to customer relationships, $5.5 million was assigned to trade names and $2.3 million was assigned to customer backlog. The trade names are considered to have an indefinite useful life while the customer relationships' average useful life is 10 years.

Of the preliminary allocation of $14.8 million of acquired intangible assets for Swiger, exclusive of goodwill, $6.2 million was assigned to customer relationships, $5.1 million was assigned to trade names, $2.4 million was assigned to long-term contracts, $560,000 was assigned to non-compete agreements and $510,000 was assigned to customer backlog. The trade names are considered to have an indefinite useful life while the customer relationships' average useful life is 15 years, the long term contracts' average useful life is four years and the non-compete agreements' average useful life is two years.

Of the preliminary allocation of $5.1 million of acquired intangible assets for Bach-Simpson, exclusive of goodwill, $2.9 million was assigned to customer relationships, $486,000 was assigned to long-term contracts, $914,000 was assigned to trade names and $752,000 was assigned to customer backlog. The trade names are considered to have an indefinite useful life while the customer relationships' average useful life is 15 years and the long term contracts' average useful life is two years.

Of the preliminary allocation of $15.9 million of acquired intangible assets for G&B, exclusive of goodwill, $12.3 million was assigned to customer relationships, $2.8 million was assigned to trade names and $850,000 was assigned to customer backlog. The trade names are considered to have an indefinite useful life while the customer relationships' average useful life is 15 years.

Of the allocation of $5.9 million of acquired intangible assets for Xorail, exclusive of goodwill, $4.3 million was assigned to customer relationships, $426,000 was assigned to intellectual property, $470,000 was assigned to non-compete agreements and $750,000 was assigned to customer backlog. The customer relationships' average useful life is 20 years, the intellectual property's average useful life is six years and the non-compete agreements' average useful life is six years.

In addition to the acquisitions listed above, the Company completed the following transactions:

•

On December 31, 2010, the Company acquired Adantech Industria e Comercio de Metal ("Adantech"), a manufacturer of a variety of brake shoes and pads for subway cars, locomotives and freight cars for a net purchase price of approximately $1.9 million, resulting in preliminary additional goodwill of $1.8 million, of which all will be deductible for tax purposes.

•

On September 15, 2010, the Company formed a joint venture in China to manufacture transformer oil coolers, generator coolers and related products for the power generation market. The Company invested $1.5 million for a 60% interest in Hubei Dengfeng Unifin Electrical Equipment Cooling System Co., Ltd. ("Unifin DF"). Operating results have been included in the consolidated statement of operations from the date of acquisition forward.

•

On December 31, 2008, the Company invested $2.8 million in Shenyang CNR Wabtec Railway Brake Technology Company, Ltd. ("Shenyang") for a minority interest in a joint venture Company. On September 9, 2010, the Company invested an additional $8.0 million in this joint venture. Shenyang manufactures braking equipment for the freight car market in China.

The following unaudited pro forma financial information presents income statement results as if the acquisitions listed above had occurred on January 1, 2010:


*In thousands*	Three Months Ended March 31, 2011		Three Months Ended March 31, 2010
Net sales	$	463,929	$	399,132
Gross profit		135,388		119,926
Net income attributable to Wabtec shareholders		41,848		33,035
Diluted earnings per share
As Reported	$	0.85	$	0.63
Pro forma	$	0.87	$	0.69

Intangibles

3 Months Ended

Mar. 31, 2011

Intangibles

Intangibles

5. INTANGIBLES

Goodwill was $575.2 million and $545.8 million at March 31, 2011 and December 31, 2010, respectively. The adjustment of $0.3 million to goodwill for preliminary purchase allocation is due to the Xorail, Adantech and Swiger acquisitions. The change in the carrying amount of goodwill by segment for the three months ended March 31, 2011 is as follows:


*In thousands*	Freight Group		Transit Group			Total
Balance at December 31, 2010	$	364,604	$	181,228		$	545,832
Adjustment to preliminary purchase allocation		341		(36	)		305
Acquisition		—		22,829			22,829
Foreign currency impact		216		6,015			6,231

Balance at March 31, 2011	$	365,161	$	210,036		$	575,197

As of March 31, 2011 and December 31, 2010, the Company's trademarks had a net carrying amount of $110.7 million and $103.5 million, respectively, and the Company believes these intangibles have an indefinite life. Intangible assets of the Company, other than goodwill and trademarks, consist of the following:


*In thousands*	March 31, 2011		December 31, 2010
Patents and other, net of accumulated amortization of $30,453 and $29,613	$	15,468	$	14,363
Customer relationships, net of accumulated amortization of $15,662 and $13,614		101,697		99,039

Total	$	117,165	$	113,402

The weighted average remaining useful life of patents, customer relationships and intellectual property were six years, 15 years and 17 years, respectively. Amortization expense for intangible assets was $3.1 million and $1.9 million for the three months ended March 31, 2011 and 2010, respectively.

Amortization expense for the five succeeding years is as follows (in thousands):


2011	$	12,400
2012		10,700
2013		9,177
2014		8,962
2015		8,467

Long-Term Debt

3 Months Ended

Mar. 31, 2011

Long-Term Debt

Long-Term Debt

6. LONG-TERM DEBT

Long-term debt consisted of the following:


*In thousands*	March 31, 2011		December 31, 2010
6.875% Senior Notes, due 2013	$	150,000	$	150,000
Term Loan Facility		117,500		137,500
Revolving Credit Facility		132,000		134,000
Capital Leases		569		575

Total		400,069		422,075
Less—current portion		40,068		40,068

Long-term portion	$	360,001	$	382,007

2008 Refinancing Credit Agreement

On November 4, 2008, the Company refinanced its existing unsecured revolving credit agreement with a consortium of commercial banks. This "2008 Refinancing Credit Agreement" provides the company with a $300 million five-year revolving credit facility and a $200 million five-year term loan facility. The Company incurred $2.9 million of deferred financing cost related to the 2008 Refinancing Credit Agreement. Both facilities expire in January 2013. The 2008 Refinancing Credit Agreement borrowings bear variable interest rates indexed to the indices described below. At March 31, 2011, the Company had available bank borrowing capacity, net of $47.8 million of letters of credit, of approximately $120.2 million, subject to certain financial covenant restrictions.

Under the 2008 Refinancing Credit Agreement, the Company may elect a Base Rate of interest or an interest rate based on the London Interbank Offered Rate ("LIBOR") of interest ("the Alternate Rate"). The Base Rate adjusts on a daily basis and is the greater of the PNC, N.A. prime rate, 30-day LIBOR plus 150 basis points or the Federal Funds Effective Rate plus 0.5% per annum, plus a margin that ranges from 25 to 50 basis points. The Alternate rate is based on quoted LIBOR rates plus a margin that ranges from 125 to 200 basis points. Both the Base Rate and Alternate Rate margins are dependent on the Company's consolidated total indebtedness to cash flow ratios. The initial Base Rate margin is 25 basis points and the Alternate Rate margin is 125 basis points. At March 31, 2011 the weighted average interest rate on the Company's variable rate debt was 1.52%. To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into interest rate swaps which effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contracts. On March 31, 2011, the notional value of the interest rate swaps outstanding was $137.0 million and effectively changed the Company's interest rate on bank debt at March 31, 2011 from a variable rate to a fixed rate of 2.26%. The interest rate swap agreements mature at various times through December 2012. The Company is exposed to credit risk in the event of nonperformance by the counterparties. However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount. The counterparties are large financial institutions with an excellent credit rating and history of performance. The Company currently believes the risk of nonperformance is negligible.

The 2008 Refinancing Credit Agreement limits the Company's ability to declare or pay cash dividends and prohibits the Company from declaring or making other distributions, subject to certain exceptions. The 2008 Refinancing Credit Agreement contains various other covenants and restrictions including the following limitations: incurrence of additional indebtedness; mergers, consolidations, sales of assets and acquisitions; additional liens; sale and leasebacks; permissible investments, loans and advances; certain debt payments; and imposes a minimum interest expense coverage ratio of 3.0 and a maximum debt to cash flow ratio of 3.25. The Company is in compliance with these measurements and covenants and expects that these measurements will not be any type of limiting factor in executing our operating activities.

On January 28, 2011, the Company entered into Amendment No. 1 to the 2008 Refinancing Credit Agreement. The amendment increased the limit on surety bonds, performance bonds, bid bonds, or similar obligations arising in the ordinary course of business from $350 million to $500 million in the aggregate. The amendment also expanded the definition of Issuing Lender to allow additional banks to issue Letters of Credit.

6.875% Senior Notes Due August 2013

In August 2003, the Company issued $150 million of Senior Notes due in 2013 ("the Notes"). The Notes were issued at par. Interest on the Notes accrues at a rate of 6.875% per annum and is payable semi-annually on January 31 and July 31 of each year. The proceeds were used to repay debt outstanding under the Company's existing credit agreement, and for general corporate purposes. The principal balance is due in full at maturity.

The Notes are senior unsecured obligations of the Company and rank pari passu with all existing and future senior debt and senior to all existing and future subordinated indebtedness of the Company. The indenture under which the Notes were issued contains covenants and restrictions which limit among other things, the following: the incurrence of indebtedness, payment of dividends and certain distributions, sale of assets, change in control, mergers and consolidations and the incurrence of liens.

Employee Benefit Plans

3 Months Ended

Mar. 31, 2011

Employee Benefit Plans

Employee Benefit Plans

7. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans

The Company sponsors defined benefit pension plans that cover certain U.S., Canadian, German, and United Kingdom employees and which provide benefits of stated amounts for each year of service of the employee.

The Company uses a December 31 measurement date for the plans. The following tables provide information regarding the Company's defined benefit pension plans summarized by U.S. and international components.


	U.S.						International
	Three months ended March 31,						Three months ended March 31,
*In thousands, except percentages*	2011			2010			2011			2010
Net periodic benefit cost
Service cost	$	74		$	80		$	802		$	738
Interest cost		619			648			1,898			1,882
Expected return on plan assets		(851	)		(776	)		(2,128	)		(1,941	)
Net amortization/deferrals		606			479			505			453
Curtailment loss recognized		—			—			—			88
Settlement loss recognized		—			—			284			241

Net periodic benefit cost	$	448		$	431		$	1,361		$	1,461

Assumptions
Discount rate		5.20	%		5.75	%		5.43	%		6.11	%
Expected long-term rate of return		8.00	%		8.00	%		6.72	%		6.94	%
Rate of compensation increase		3.00	%		3.00	%		3.17	%		3.28	%

Post Retirement Benefit Plans

In addition to providing pension benefits, the Company has provided certain unfunded postretirement health care and life insurance benefits for a portion of North American employees. The Company is not obligated to pay health care and life insurance benefits to individuals who had retired prior to 1990.

The Company uses a December 31 measurement date for all post retirement plans. The following tables provide information regarding the Company's post retirement benefit plans summarized by U.S. and international components.


	U.S.						International
	Three months ended March 31,						Three months ended March 31,
*In thousands, except percentages*	2011			2010			2011			2010
Net periodic benefit cost
Service cost	$	10		$	12		$	14		$	17
Interest cost		399			404			58			75
Net amortization/deferrals		(244	)		(263	)		(97	)		(61	)

Net periodic benefit cost	$	165		$	153		$	(25	)	$	31

Assumptions
Discount rate		5.20	%		5.75	%		5.50	%		6.40	%

Stock-Based Compensation

3 Months Ended

Mar. 31, 2011

Stock-Based Compensation

Stock-Based Compensation

8. STOCK-BASED COMPENSATION

As of March 31, 2011, the Company maintains employee stock-based compensation plans for stock options, restricted stock, and incentive stock awards as governed by the 2000 Stock Incentive Plan, as amended (the "2000 Plan"). The Company also maintains a Non-Employee Directors' Fee and Stock Option Plan ("Directors Plan"). No awards may be made under either plan subsequent to October 31, 2016.

Stock-based compensation expense was $3.4 million and $2.5 million for the three months ended March 31, 2011 and 2010, respectively. Included in the stock-based compensation expense for 2011 above is $609,000 of expense related to stock options, $1.0 million related to restricted stock, $1.6 million related to incentive stock awards and $225,000 related to awards issued for Directors' fees. At March 31, 2011, unamortized compensation expense related to stock options, restricted stock and incentive stock awards expected to vest totaled $25.7 million and will be recognized over a weighted average period of 1.8 years.

Stock Options Stock options are granted to eligible employees and directors at the fair market value, which is the average of the high and low Wabtec stock price on the date of grant. Under the 2000 Plan, options become exercisable over a four-year vesting period and expire 10 years from the date of grant. Under the Directors Plan, options become exercisable over a three-year vesting period and expire 10 years from the date of grant.

The following table summarizes the Company's stock option activity and related information for both the 2000 Plan and Directors Plan for the three months ended March 31, 2011:


	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2010		998,389		$	27.83		6.2	$	25,018
Granted		115,946			57.46				1,264
Exercised		(52,290	)		22.62				(2,392	)
Canceled		(6,750	)		30.30				(257	)

Outstanding at March 31, 2011		1,055,295		$	31.33		6.5	$	39,079

Exercisable at March 31, 2011		655,279		$	25.55		5.6	$	28,053

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	Three months ended March 31,
	2011			2010
Dividend yield		.07	%		.10	%
Risk-free interest rate		3.03	%		3.16	%
Stock price volatility		45.6	%		46.1	%
Expected life (years)		5.0			5.0

The dividend yield is based on the Company's dividend rate and the current market price of the underlying common stock at the date of grant. Expected life in years is determined from historical stock option exercise data. Expected volatility is based on the historical volatility of the Company's stock. The risk-free interest rate is based on the U.S. Treasury bond rates for the expected life of the option.

Restricted Stock and Incentive Stock Awards Under the 2000 Plan, the Company adopted a restricted stock plan in 2006. Eligible employees are granted restricted stock that generally vests over four years from the date of grant. Under the Directors Plan, restricted stock awards vest one year from the date of grant.

In addition, the Company has issued incentive stock awards to eligible employees that vest upon attainment of certain cumulative three year performance goals. The incentive stock awards included in the table below represent the number of shares that may ultimately vest. As of March 31, 2011, based on the Company's performance, we estimate that these stock awards will vest and have recorded compensation expense accordingly. If our estimate of the number of these stock awards expected to vest changes in a future accounting period, compensation expense could be reduced or increased and will be recognized over the remaining vesting period.

Compensation expense for the restricted stock and incentive stock awards is based on the average of the high and low Wabtec stock price on the date of grant and recognized over the applicable vesting period.

The following table summarizes the restricted stock activity for both the 2000 Plan and Directors Plan and incentive stock awards activity for the 2000 Plan with related information for the three months ended March 31, 2011:


	Restricted Stock			Incentive Stock Awards			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2010		276,627			356,327		$	35.90
Granted		98,446			117,150			57.43
Vested		(90,528	)		(67,342	)		34.81
Canceled		(2,500	)		(2,759	)		33.10

Outstanding at March 31, 2011		282,045			403,376		$	42.94

Earnings Per Share

3 Months Ended

Mar. 31, 2011

Earnings Per Share

Earnings Per Share

10. EARNINGS PER SHARE

The computation of basic and diluted earnings per share for net income attributable to Wabtec shareholders is as follows:


	Three Months Ended March 31,
*In thousands, except per share*	2011			2010
Numerator
Numerator for basic and diluted earnings per common share—net income attributable to Wabtec shareholders	$	40,952		$	30,364
Less: dividends declared—common shares and non-vested restricted stock		(481	)		(468	)

Undistributed earnings		40,471			29,896
Percentage allocated to common shareholders(1)		99.5	%		99.5	%

		40,269			29,747
Add: dividends declared—common shares		479			466

Numerator for basic and diluted earnings per common share	$	40,748		$	30,213

Denominator
Denominator for basic earnings per common share—weighted-average shares		47,738			47,461
Effect of dilutive securities:
Assumed conversion of dilutive stock-based compensation plans		513			434

Denominator for diluted earnings per common share—adjusted weighted-average shares and assumed conversion		48,251			47,895

Net income per common share attributable to Wabtec shareholders
Basic	$	0.85		$	0.64
Diluted	$	0.85		$	0.63
(1) Basic weighted-average common shares outstanding		47,738			47,461
Basic weighted-average common shares outstanding and non-vested restricted stock expected to vest		47,971			47,678
Percentage allocated to common shareholders		99.5	%		99.5	%

The Company's non-vested restricted stock contains rights to receive nonforfeitable dividends, and thus, are participating securities requiring the two-class method of computing earnings per share. The calculation of earnings per share for common stock shown above excludes the income attributable to the non-vested restricted stock from the numerator and excludes the dilutive impact of those shares from the denominator.

Fair Value Measurement

3 Months Ended

Mar. 31, 2011

Fair Value Measurement

Fair Value Measurement

12. FAIR VALUE MEASUREMENT

ASC 820 "Fair Value Measurements and Disclosures" defines fair value, establishes a framework for measuring fair value and explains the related disclosure requirements. ASC 820 indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.

Valuation Hierarchy. ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the liabilities carried at fair value measured on a recurring basis as of March 31, 2011, which are included in other current liabilities on the Condensed Consolidated Balance sheet:


	Total Carrying Value at March 31, 2011			Fair Value Measurements at March 31, 2011 Using
*In thousands*	Total Carrying Value at March 31, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Foreign currency forward contracts		(155	)		—		(155	)		—
Interest rate swap agreements		(2,199	)		—		(2,199	)		—

Total	$	(2,354	)	$	—	$	(2,354	)	$	—

The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2010, which is included in other current liabilities on the Condensed Consolidated Balance sheet:


	Total Carrying Value at December 31, 2010			Fair Value Measurements at December 31, 2010 Using
*In thousands*	Total Carrying Value at December 31, 2010			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Foreign currency forward contracts	$	(192	)	$	—	$	(192	)	$	—
Interest rate swap agreements		(2,538	)		—		(2,538	)		—

Total	$	(2,730	)	$	—	$	(2,730	)	$	—

As a result of our global operating activities, the Company is exposed to market risks from changes in foreign currency exchange rates, which may adversely affect our operating results and financial position. When deemed appropriate, the Company minimizes these risks through entering into foreign currency forward contracts. The foreign currency forward contracts are valued using broker quotations, or market transactions in either the listed or over-the counter markets. As such, these derivative instruments are classified within level 2.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2011
Commitments and Contingencies
Commitments and Contingencies	13. COMMITMENTS AND CONTINGENCIES Claims have been filed against the Company and certain of its 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 the Company 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 retain 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 other pending litigation, cannot be estimated. It is Management's belief that the potential range of loss for asbestos-related bodily injury cases is not reasonably determinable at present due to a variety of factors, including: (1) the asbestos case settlement history of the Company's wholly owned subsidiary, RFPC; (2) the unpredictable nature of personal injury litigation in general; and (3) the uncertainty of asbestos litigation in particular. Despite this uncertainty, and although the results of the Company's operations and cash flows for any given period could be adversely affected by asbestos-related lawsuits, Management believes that the final resolution of the Company's asbestos-related cases will not be material to the Company's overall financial position, results of operations and cash flows. In general, this belief is based upon: (1) Wabtec's and RFPC's history of settlements and dismissals of asbestos-related cases to date; (2) the inability of many plaintiffs to establish any exposure or causal relationship to RFPC's product; and (3) the inability of many plaintiffs to demonstrate any identifiable injury or compensable loss. More specifically, as to RFPC, Management's belief that any losses due to asbestos-related cases would not be material is also based on the fact that RFPC owns insurance which provides coverage for asbestos-related bodily injury claims. To date, RFPC's insurers have provided RFPC with defense and indemnity in these actions. The overall number of new claims being filed against RFPC has dropped significantly in recent years; however, these new claims, and all previously filed claims, may take a significant period of time to resolve. As to Wabtec and its divisions, Management's belief that asbestos-related cases will not have a material impact is also based on its position that it has no legal liability for asbestos-related bodily injury claims, and that the former owners of Wabtec's assets retained asbestos liabilities for the products at issue. To date, Wabtec has been able to successfully defend itself on this basis, including two arbitration decisions and a judicial opinion, all of which confirmed Wabtec's position that it did not assume any asbestos liabilities from the former owners of certain Wabtec assets. Although Wabtec has incurred defense and administrative costs in connection with asbestos bodily injury actions, these costs have not been material, and the Company has no information that would suggest these costs would become material in the foreseeable future. On October 18, 2007, Faiveley Transport Malmo AB ("Faiveley Malmo") filed a request for arbitration with the International Chamber of Commerce alleging breach of contract and trade secret violations relating to the Company's manufacture and sale of certain components. The components at issue are limited in number and used in the transit industry. On that same day, Faiveley Malmo also filed a related proceeding against the Company in the United States District Court for the Southern District of New York ("Federal Court"), requesting a preliminary injunction in aid of the arbitration. In both forums, Faiveley sought to prevent the Company from manufacturing and selling the subject components until the arbitration panel decides Faiveley's claim. In the arbitration, Faiveley also sought monetary damages. In the Federal Court action, Faiveley Malmo's request for a preliminary injunction was initially granted, in part, on August 22, 2008. That injunction was vacated by the appellate court on March 9, 2009, and the case was remanded to the District Court for further proceedings. On remand, Faiveley Malmo renewed its request for injunctive relief. The District Court denied that request on August 31, 2009, and Faiveley Malmo appealed that denial to the appellate court. Faiveley Malmo later voluntarily dismissed that appeal. In the international arbitration proceeding, Faiveley Malmo originally alleged $128 million in damages, but later reduced its claim to $91 million in damages. The Company has stated that Faiveley Malmo's claims were grossly overstated, not supported by the facts or circumstances surrounding the case, and frivolous in most respects. An ICC International Court of Arbitration Arbitral Tribunal heard the case during the first half of 2009 and issued an award dated December 21, 2009. Pursuant to the Award, the Company was required to make a $3.9 million royalty payment to Faiveley Malmo, with respect to Faiveley Malmo's claims against the Company alleging breach of contract and trade secret violations. Faiveley Malmo's parent company, Faiveley Transport, stated that other Faiveley entities were considering filing claims against the Company arising from the same allegations. On May 14, 2010, Faiveley Transport USA, Inc., Faiveley Transport Nordic AB, Faiveley Transport Amiens S.A.S, and Ellcon National, Inc. filed a complaint against Wabtec Corporation in the U.S. District Court for the Southern District of New York. That complaint was amended on June 8, 2010. The claims in the amended complaint include misappropriation of trade secrets, unfair competition, tortious interference with prospective business relations, tortious interference with prospective economic advantage, and unjust enrichment. On June 25, 2010, the Company filed a motion to dismiss the Faiveley entities' amended complaint in its entirety. That motion to dismiss was denied. In November 2010, the plaintiffs asserted a claim for $17.2 million in compensatory and other unspecified damages. On December 10, 2010 the Company filed a motion for summary judgment and the plaintiffs filed a motion for partial summary judgment. Briefing on those motions was completed on December 29, 2010 and oral argument was heard on January 7, 2011. On April 13, 2011, a judge issued an order, without an opinion, that granted the Plaintiffs' motion for partial summary judgment on three of their four claims and denied Wabtec's motion for summary judgment. The judge indicated that he would issue an opinion in due course explaining the reasons for the order. The Company will continue to vigorously contest liability on all claims both in the trial court and on appeal, and does not believe that the outcome of this litigation would result in any material legal liability. The trial is currently scheduled to begin in June, 2011. The Company is subject to a number of other commitments and contingencies as described in its Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 25, 2011. During the first three months of 2011, there were no material changes to the information described in Note 18 therein.

Segment Information

3 Months Ended

Mar. 31, 2011

Segment Information

Segment Information

14. SEGMENT INFORMATION

Wabtec has two reportable segments—the Freight Group and the Transit Group. The key factors used to identify these reportable segments are the organization and alignment of the Company's internal operations, the nature of the products and services, and customer type. The business segments are:

Freight Group primarily manufactures and services components for new and existing freight cars and locomotives, builds new switcher locomotives, rebuilds freight locomotives, supplies railway electronics, positive train control equipment, signal design and engineering services, and provides related heat exchange and cooling systems. Customers include large, publicly traded railroads, leasing companies, manufacturers of original equipment such as locomotives and freight cars, and utilities.

Transit Group primarily manufactures and services components for new and existing passenger transit vehicles, typically subway cars and buses, builds new commuter locomotives and refurbishes subway cars. Customers include public transit authorities and municipalities, leasing companies, and manufacturers of subway cars and buses around the world.

The Company evaluates its business segments' operating results based on income from operations. Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense and other unallocated charges. Since certain administrative and other operating expenses and other items have not been allocated to business segments, the results in the following tables are not necessarily a measure computed in accordance with generally accepted accounting principles and may not be comparable to other companies.

Segment financial information for the three months ended March 31, 2011 is as follows:


*In thousands*	Freight Group		Transit Group		Corporate Activities and Elimination			Total
Sales to external customers	$	264,856	$	190,403	$	—		$	455,259
Intersegment sales/(elimination)		4,291		395		(4,686	)		—

Total sales	$	269,147	$	190,798	$	(4,686	)	$	455,259

Income (loss) from operations	$	47,577	$	24,121	$	(5,321	)	$	66,377
Interest expense and other, net		—		—		(3,224	)		(3,224	)

Income (loss) from operations before income taxes	$	47,577	$	24,121	$	(8,545	)	$	63,153

Segment financial information for the three months ended March 31, 2010 is as follows:


*In thousands*	Freight Group		Transit Group		Corporate Activities and Elimination			Total
Sales to external customers	$	165,144	$	198,783	$	—		$	363,927
Intersegment sales/(elimination)		6,900		540		(7,440	)		—

Total sales	$	172,044	$	199,323	$	(7,440	)	$	363,927

Income (loss) from operations	$	21,374	$	33,231	$	(3,429	)	$	51,176
Interest expense and other, net		—		—		(4,633	)		(4,633	)

Income (loss) from operations before income taxes	$	21,374	$	33,231	$	(8,062	)	$	46,543

Sales by product are as follows:


	Three Months Ended March 31,
*In thousands*	2011		2010
Brake products	$	125,870	$	122,034
Electronics and other freight related products		185,177		97,488
Remanufacturing, overhaul & build		79,434		72,361
Transit products		50,890		59,474
Other		13,888		12,570

Total sales	$	455,259	$	363,927

Guarantor Subsidiaries Financial Information

3 Months Ended

Mar. 31, 2011

Guarantor Subsidiaries Financial Information

Guarantor Subsidiaries Financial Information

15. GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION

Effective August 2003, the Company issued $150 million of Senior Notes due in 2013 ("the Notes"). The obligations under the Notes are fully and unconditionally guaranteed by all U.S. subsidiaries as guarantors. In accordance with positions established by the Securities and Exchange Commission, the following shows separate financial information with respect to the parent, the guarantor subsidiaries and the non-guarantor subsidiaries. The principal elimination entries eliminate investment in subsidiaries and certain intercompany balances and transactions.

Balance Sheet as of March 31, 2011:


*In thousands*	Parent			Guarantors			Non-Guarantors		Elimination			Consolidated
Cash and cash equivalents	$	9,886		$	7,354		$	183,447	$	—		$	200,687
Accounts receivable		1,043			182,566			122,078		—			305,687
Inventories		—			197,675			87,289		—			284,964
Other current assets		40,811			4,267			8,519		—			53,597

Total current assets		51,740			391,862			401,333		—			844,935
Property, plant and equipment		2,849			121,634			91,942		—			216,425
Goodwill		7,980			396,339			170,878		—			575,197
Investment in subsidiaries		2,469,441			533,213			440,421		(3,443,075	)		—
Other intangibles		—			153,495			74,388		—			227,883
Other long term assets		(5,679	)		(1,964	)		40,331		—			32,688

Total Assets	$	2,526,331		$	1,594,579		$	1,219,293	$	(3,443,075	)	$	1,897,128

Current liabilities	$	62,758		$	173,345		$	145,368	$	—		$	381,471
Intercompany		1,056,910			(1,119,911	)		63,001		—			—
Long-term debt		359,500			244			257		—			360,001
Other long term liabilities		77,530			45,792			62,701		—			186,023

Total liabilities		1,556,698			(900,530	)		271,327		—			927,495
Stockholders' equity		969,633			2,495,109			947,966		(3,443,075	)		969,633

Total Liabilities and Stockholders' Equity	$	2,526,331		$	1,594,579		$	1,219,293	$	(3,443,075	)	$	1,897,128

Balance Sheet as of December 31, 2010:


*In thousands*	Parent			Guarantors			Non-Guarantors		Elimination			Consolidated
Cash and cash equivalents	$	42,714		$	13,226		$	181,001	$	—		$	236,941
Accounts receivable		371			149,015			108,763		—			258,149
Inventories		—			183,607			69,884		—			253,491
Other current assets		41,600			2,700			9,072		—			53,372

Total current assets		84,685			348,548			368,720		—			801,953
Property, plant and equipment, net		2,614			122,467			81,144		—			206,225
Goodwill		7,980			395,902			141,950		—			545,832
Investment in Subsidiaries		2,380,766			533,249			403,412		(3,317,427	)		—
Other intangibles, net		—			155,475			61,438		—			216,913
Other long term assets		(5,279	)		(1,928	)		39,365		—			32,158

Total assets	$	2,470,766		$	1,553,713		$	1,096,029	$	(3,317,427	)	$	1,803,081

Current liabilities	$	66,722		$	174,188		$	107,464	$	—		$	348,374
Intercompany		1,043,791			(1,097,899	)		54,108		—			—
Long-term debt		381,500			258			249		—			382,007
Other long term liabilities		75,366			33,570			60,377		—			169,313

Total liabilities		1,567,379			(889,883	)		222,198		—			899,694
Stockholders' equity		903,387			2,443,596			873,831		(3,317,427	)		903,387

Total Liabilities and Stockholders' Equity	$	2,470,766		$	1,553,713		$	1,096,029	$	(3,317,427	)	$	1,803,081

Income Statement for the Three Months Ended March 31, 2011:


*In thousands*	Parent			Guarantors			Non-Guarantors			Elimination(1)			Consolidated
Net sales	$	—		$	327,259		$	153,756		$	(25,756	)	$	455,259
Cost of sales		1			(217,544	)		(119,267	)		14,746			(322,064	)

Gross profit (loss)		1			109,715			34,489			(11,010	)		133,195
Operating expenses		(14,082	)		(35,994	)		(16,742	)		—			(66,818	)

Operating (loss) profit		(14,081	)		73,721			17,747			(11,010	)		66,377
Interest (expense) income, net		(5,370	)		1,153			533			—			(3,684	)
Other income (expense), net		7,221			(1,241	)		(5,520	)		—			460
Equity earnings		68,784			6,409			—			(75,193	)		—

Income (loss) from operations before income tax		56,554			80,042			12,760			(86,203	)		63,153
Income tax expense		(15,602	)		(3,650	)		(2,949	)		—			(22,201	)

Net income (loss) attributable to Wabtec shareholders	$	40,952		$	76,392		$	9,811		$	(86,203	)	$	40,952

(1)	Includes elimination of gross profit realized with certain intercompany transactions between Guarantor and Non-Guarantor subsidiaries.

Income Statement for the Three Months Ended March 31, 2010:


*In thousands*	Parent			Guarantors			Non-Guarantors			Elimination(1)			Consolidated
Net sales	$	—		$	262,678		$	119,508		$	(18,259	)	$	363,927
Cost of sales		180			(177,132	)		(92,221	)		13,635			(255,538	)

Gross profit (loss)		180			85,546			27,287			(4,624	)		108,389
Operating expenses		(8,691	)		(33,370	)		(15,152	)		—			(57,213	)

Operating (loss) profit		(8,511	)		52,176			12,135			(4,624	)		51,176
Interest (expense) income, net		(5,645	)		1,605			128			—			(3,912	)
Other income (expense), net		1,089			979			(2,789	)		—			(721	)
Equity earnings		54,041			4,826			—			(58,867	)		—

Income (loss) from operations before income tax		40,974			59,586			9,474			(63,491	)		46,543
Income tax expense		(10,610	)		(3,590	)		(1,979	)		—			(16,179	)

Net income (loss) attributable to Wabtec shareholders	$	30,364		$	55,996		$	7,495		$	(63,491	)	$	30,364

(1)	Includes elimination of gross profit realized with certain intercompany transactions between Guarantor and Non-Guarantor subsidiaries.

Condensed Statement of Cash Flows for the Three Months Ended March 31, 2011:


*In thousands*	Parent			Guarantors			Non-Guarantors			Elimination			Consolidated
Net cash (used for) provided by operating activities	$	(11,854	)	$	73,602		$	40,941		$	(86,203	)	$	16,486
Net cash used for investing activities		(393	)		(3,074	)		(34,930	)		—			(38,397	)
Net cash (used for) provided by financing activities		(20,581	)		(76,400	)		(9,811	)		86,203			(20,589	)
Effect of changes in currency exchange rates		—			—			6,246			—			6,246

(Decrease) increase in cash		(32,828	)		(5,872	)		2,446			—			(36,254	)
Cash, beginning of year		42,714			13,226			181,001			—			236,941

Cash, end of period	$	9,886		$	7,354		$	183,447		$	—		$	200,687

Condensed Statement of Cash Flows for the Three Months Ended March 31, 2010:


*In thousands*	Parent			Guarantors			Non-Guarantors			Elimination			Consolidated
Net cash (used for) provided by operating activities	$	(30,443	)	$	84,358		$	21,943		$	(63,491	)	$	12,367
Net cash used for investing activities		(45	)		(39,917	)		(1,213	)		—			(41,175	)
Net cash provided by (used for) financing activities		27,156			(56,017	)		(7,557	)		63,491			27,073
Effect of changes in currency exchange rates		—			—			(8,024	)		—			(8,024	)

(Decrease) increase in cash		(3,332	)		(11,576	)		5,149			—			(9,759	)
Cash, beginning of year		12,026			12,124			164,509			—			188,659

Cash, end of period	$	8,694		$	548		$	169,658		$	—		$	178,900

Condensed Consolidated Statements of Cash Flows (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Condensed Consolidated Statements of Cash Flows
Cash dividends, per share	$ 0.01	$ 0.01

Business	3 Months Ended
Business	Mar. 31, 2011
Business
Business	1. BUSINESS Wabtec is one of the world's largest providers of value-added, technology-based products and services for the global rail industry. Our products are found on virtually all U.S. locomotives, freight cars and passenger transit vehicles, as well as in approximately 100 countries throughout the world. Our products enhance safety, improve productivity 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 17 countries. In the first three months of 2011, about 44% of the Company's revenues came from customers outside the U.S.

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2011
Income Taxes
Income Taxes	9. INCOME TAXES The overall effective income tax rate was 35.2% and 34.8% for the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011, the liability for income taxes associated with uncertain tax positions is $10.0 million, of which $3.1 million, if recognized would favorably affect the Company's effective tax rate. As of December 31, 2010 the liability associated with uncertain tax positions was $10.0 million, of which $3.1 million, if recognized, would favorably affect the Company's effective tax rate. The Company includes interest and penalties related to uncertain tax positions in income tax expense. As of March 31, 2011 the total accrued interest and penalties are $3.1 million and $1.7 million, respectively. As of December 31, 2010 the total accrued interest and penalties were $3.1 million and $1.7 million, respectively. The Internal Revenue Service is currently auditing the 2008 and 2009 tax years. With limited exception, the Company is no longer subject to examination by various U.S. and foreign taxing authorities for the years before 2007. At this time, the Company believes that it is reasonably possible that unrecognized tax benefits of approximately $3.4 million may change within the next twelve months due to the expiration of statutory review periods and current examinations.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	66,174,767	66,174,767
Common stock, shares outstanding	48,172,163	47,954,085
Treasury stock, shares	18,002,604	18,220,682