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September 4, 2018
Albert Neupaver
Executive Chairman
Westinghouse Air Brake Technologies Corporation
1001 Air Brake Avenue
Wilmerding, PA 15148
Re: Westinghouse Air Brake Technologies Corporation
Preliminary Proxy Statement on Schedule 14A
Filed August 8, 2018
File No. 033-90866
Dear Mr. Neupaver:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Schedule 14A filed August 8, 2018
General
1. Please provide us copies of the board books and any other materials,
including
presentations made by the financial advisor, provided to the board and
management in
connection with the proposed transaction.
Questions and Answers About the Transaction, page 5
2. Please add a question and answer describing what a "modified Reverse
Morris Trust"
transaction is and briefly discuss the reasons for structuring a separate
sale of assets
and why the parties chose this structure over others.
Albert Neupaver
FirstName LastNameAlbert Neupaver Corporation
Westinghouse Air Brake Technologies
Comapany 4, 2018
September NameWestinghouse Air Brake Technologies Corporation
September 4, 2018 Page 2
Page 2
FirstName LastName
Summary Historical, Pro Forma and Supplemental Financial Data
Summary Historical Combined Financial Data of GE Transportation, page 21
3. Please include information as of and for the most recently completed
interim period in
2018 consistent with that presented for Wabtec. Refer to Item 14 of
Schedule 14A.
Conform the presentation in "Selected Historical Combined Financial
Data of GE
Transportation" to the presentation here.
Summary Unaudited Pro Forma Condensed Combined Financial Data, page 23
4. Please include information as of and for the most recently completed
interim period in
2018 consistent with the historical information presented. Refer to
Item 14 of Schedule
14A.
The Transactions, page 26
5. Refer to the last paragraph on page 27. Please briefly describe the
"other factors" GE may
consider in determining whether to effect a spin-off or split-off.
Background of the Transactions, page 31
6. Please disclose whether the Wabtec board considered strategic
alternatives to the proposed
transaction and if so, why those alternatives were rejected.
7. Refer to the third full and last paragraphs on page 32. Please clarify
which party proposed
the cash payment to GE from SpinCo and briefly discuss why the parties
determined to
pursue the Direct Sale in lieu of a cash payment.
Wabtec's Reasons for the Transactions
Potential Risks and Negative Considerations, page 34
8. In the first bullet point on page 35, please quantify the
transaction-related fees and costs
and transition and integration-related costs. We note your disclosure
in the last full
paragraph on page 134.
Opinion of Wabtec's Financial Advisor
Financial Analyses of GE Transportation, page 38
9. Refer to the Selected Companies Analysis. Please briefly discuss the
significance of the
"Through the Cycle" analysis and of adjusting or not adjusting to take
into account the tax
attributes of the transaction.
10. Refer to the Selected Transactions Analysis. Please discuss whether
there were any
transactions which met the criteria but were excluded for either the
Rail Industry Selected
Transactions or the High Quality Industrial Selected Transactions
analyses.
11. Refer to the table of Rail Industry Selected Transactions. Please
briefly discuss whether
Albert Neupaver
FirstName LastNameAlbert Neupaver Corporation
Westinghouse Air Brake Technologies
Comapany 4, 2018
September NameWestinghouse Air Brake Technologies Corporation
September 4, 2018 Page 3
Page 3
FirstName LastName
the age of the precedent transactions affects comparability. We note
in this regard that
five of the precedent transactions closed more than ten years ago.
Certain Unaudited Financial Projections, page 45
12. Investors are entitled to rely on the disclosure in the proxy
statement. Please revise the
last sentence of the carryover paragraph at the top of page 47
accordingly.
13. Please disclose the material assumptions and estimates underlying each
of The Wabtec
Adjusted GE Transportation Financial Projections and the Wabtec
Financial Projections.
Information on GE Transportation
GE Transportation's Business Transformation, page 142
14. Please quantify the expenditures and disclose the anticipated
timeframes to complete the
material components of the variable cost reduction initiatives you
discuss here.
Customers, page 144
15. Please identify each ten percent or greater customer and the
percentage of revenues
attributable to each respective customer for each of the fiscal years
included here. We
note the disclosure in Note 19 to the Combined Financial Statements.
Management's Discussion and Analysis of Financial Condition and Results of
Operations for GE
Transportation
Factors Impacting GE Transportation's Performance , page 149
16. We note that the Wabtec-adjusted GE Transportation projections on page
47 project
increased revenues between 2018 to 2022 and your discussion of the
"significant
headwinds in 2016 and 2017" and transformation and restructuring
initiatives. Please
discuss the particular factors and specific steps that management is
taking to reverse the
negative trend in revenues that provides the reasonable basis for the
projections on page
47.
Results of Operations, page 152
17. Please quantify each component you identify which contributed to
year-over-year changes
in sales of goods and services, cost of goods and services sold, and
gross profit.
Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016
Selling, general and administrative expense, page 153
18. We note restructuring costs are reflected in selling, general and
administrative expenses
and costs of revenues. You disclose in note 18 to the financial
statements total
restructuring costs decreased in 2017 compared to 2016. Please confirm
your disclosure
here that the increase in selling, general and administrative expense
was due to an increase
Albert Neupaver
FirstName LastNameAlbert Neupaver Corporation
Westinghouse Air Brake Technologies
Comapany 4, 2018
September NameWestinghouse Air Brake Technologies Corporation
September 4, 2018 Page 4
Page 4
FirstName LastName
in restructuring charges in 2017.
Cash Flows
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
Operating Activities, page 156
19. Please provide a more robust analysis of the significant decrease in
operating cash flow in
2017 compared to 2016. For example, expand the disclosure in regard to
working capital
to discuss the specific working capital items that materially changed
and the underlying
reason for the change. Also note citing noncash items (such as
deferred income taxes) and
net earnings may not provide a sufficient basis to understand how
actual operating cash
was impacted. Refer to section IV.B.1 of SEC Release No. 33-8350 for
guidance.
Unaudited Pro Forma Condensed Combined Financial Statements, page 163
20. Please revise your pro forma presentation to present a balance sheet
for the most recent
interim period of Wabtec completed of June 30, 2018 and to include a
statement of
income for this interim period. The information for GE Transportation
also should be as
of and for this interim period ended. Refer to Item 14 of Schedule 14A
and Article
11(c)(1) and (2)(i) of Regulation S-X for guidance.
Unaudited Pro Forma Condensed Combined Financial Statements as of and for the
Year Ended
December 31, 2017
Pro Forma Condensed Combined Statements of Income (Unaudited), page 164
21. Please clarify why the pro forma combined effective income tax rate of
16.2% is
representative of the continuing combined entity and is not that of or
close to that of
Wabtec's historical rate.
Combined Financial Statements, page F-1
22. Please revise your filing to include financial statements for the most
recently completed
interim period. Refer to Item 14 of Schedule 14A and Article 3-05(a)
of Regulation S-X.
Notes to Combined Financial Statements
Note 1. Description of Business and Basis of Presentation
Basis of Presentation, page F-9
23. We note in connection with the "Direct Sale," certain assets of GE
Transportation,
potentially including the equity interests of certain pre-Transaction
subsidiaries of GE that
compose part of GE Transportation, will be sold to, and certain
liabilities of GE
Transportation will be assumed by, Wabtec. Please confirm all assets
and liabilities
associated with the Direct Sale are included in GE Transportation's
financial statements.
24. If material equity interests of certain pre-Transaction subsidiaries
of GE that compose part
Albert Neupaver
Westinghouse Air Brake Technologies Corporation
September 4, 2018
Page 5
of GE Transportation are not in the financial statements but potentially
may be, please
provide in an appropriate section of the filing summarized information of
these interests
and the material factors associated with a decision to include such in
the Direct Sale.
Note 7. Property, Plant and Equipment, Net, page F-25
25. Please explain the reason why depreciation expense disclosed herein
decreased to
$112,283 thousand in 2017 from $171,776 thousand in 2016.
Note 13. Income Taxes, page F-29
26. In the reconciliation of U.S. federal statutory income tax rate to actual
income tax rate
table, please explain why the amount of foreign operations and foreign
tax credits for
2016 is significantly larger than the amounts in the surrounding years.
Note 19. Segment Information and Major Customers, page F-36
27. The segment profit for the equipment segment decreased significantly in
2017 to
$(25,907) thousand from $142,508 thousand in 2016. This decrease appears
to be a
material driver in the variance in results between 2017 and 2016 but
there appears not to
be any analysis of it. Please discuss the reason for the decrease.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Patrick Kuhn at (202) 551-3308 or Doug Jones at (202)
551-3309 if you
have questions regarding comments on the financial statements and related
matters. Please
contact J. Nolan McWilliams at (202) 551-3217 or John Dana Brown at (202)
551-3859 with any
other questions.
Sincerely,
FirstName LastNameAlbert Neupaver
Division of Corporation
Finance
Comapany NameWestinghouse Air Brake Technologies Corporation
Office of Transportation
and Leisure
September 4, 2018 Page 5
cc: Peter E. Devlin, Esq.
FirstName LastName