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EXHIBIT 99.1
[MOTIVEPOWER [WABCO LOGO] PRESS
INDUSTRIES LOGO] RELEASE
CONTACT: TIM WESLEY AT (412) 201-2830 FOR MOTIVEPOWER INDUSTRIES
ALVARO GARCIA-TUNON AT (412) 825-1317 FOR WESTINGHOUSE AIR BRAKE
MOTIVEPOWER INDUSTRIES AND WESTINGHOUSE AIR BRAKE ANNOUNCE
MERGER OF EQUALS
TO CREATE PREMIER RAIL EQUIPMENT SUPPLY COMPANY
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ACCRETIVE COMBINATION OF COMPLEMENTARY MARKET LEADERS WILL OFFER
MOST COMPLETE RANGE OF LOCOMOTIVE AND FREIGHT CAR PRODUCTS AND SERVICES
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UNIQUELY POSITIONED TO CAPITALIZE ON INDUSTRY GROWTH,
CONSOLIDATION, AND OUTSOURCING TRENDS
PITTSBURGH and WILMERDING, PA, June 3, 1999 - MotivePower
Industries, Inc. (NYSE: MPO) and Westinghouse Air Brake Company (NYSE:
WAB) today announced the signing of a definitive merger of equals
agreement that will create the premier supplier of products and services
for the railroad industry, with combined revenues of $1.2 billion
projected in 1999 and an equity market capitalization in excess of $1
billion. The merger is subject to regulatory and shareholder approvals,
and is expected to be completed by the end of the third quarter.
The combined company will retain the name MotivePower Industries and
the New York Stock Exchange symbol "MPO." The prestigious Westinghouse
Air Brake name, which is recognized throughout the world, will also be
retained and will continue to be used as a division and product name. The
combined company will be based in the Pittsburgh area.
Management of the combined company will be as follows: John C.
(Jack) Pope, chairman of MotivePower Industries, will be chairman;
William E. Kassling, chairman and chief executive officer of Westinghouse
Air Brake, will be chief executive officer; Gregory T.H. Davies,
president and chief operating officer of Westinghouse Air Brake, will
hold the same position; and Robert J. Brooks, chief financial officer of
Westinghouse Air Brake, will hold the same position.
Under the terms of the definitive agreement, Westinghouse Air Brake
shareholders will receive 1.3 shares of MotivePower Industries stock for
each share they own, representing a 55 percent interest in the combined
company on a fully diluted basis. The transaction will be tax-free to
Westinghouse Air Brake shareholders and is expected to be accounted for
as a
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[MOTIVEPOWER [WABCO LOGO] PRESS
INDUSTRIES LOGO] RELEASE
pooling-of-interests. The merger agreement contains no collars, and each
company has granted to the other company a 19 percent stock option.
The merger is expected to be accretive to MotivePower Industries'
earnings per diluted share by about 10 percent in 1999, 2000 and 2001,
excluding synergies, transaction costs and a restructuring reserve to be
determined. In addition, the combined company is expected to achieve a
substantial combination of revenue growth opportunities, efficiency
improvements and cost savings through synergies. They include: marketing
Westinghouse Air Brake's products through MotivePower Industries'
existing distribution and service channels, and vice versa; offering an
integrated electronics package for locomotive overhauls; combining
efforts to penetrate growing international markets using bases of
operation established by each company in places such as Mexico, the
United Kingdom, Australia and Italy; jointly developing new products and
improving existing products; expanding use of the WABCO Quality and
Performance System (QPS); and improving the use of existing facilities.
These synergies are expected to result in operating income improvements
of $10 million pre-tax, or 10 cents per diluted share after-tax, in 2000.
By year-end 2000, these synergies are expected to reach an annual run
rate of $20 million pre-tax, or 20 cents per diluted share after-tax; and
they are expected to increase in future years.
The combined company is expected to have operating cash flow
(operating income plus depreciation and amortization) of more than $225
million in 1999. With debt of about $600 million, this level of operating
cash flow is expected to result in a coverage ratio of about 5.8-to-1
(earnings before interest, taxes, depreciation and amortization divided
by interest expense). While MotivePower Industries expects to reduce debt
with cash flow from operations, its financial structure will be a strong
base for future growth and acquisitions.
Pope said: "This merger is clearly a win-win for the shareholders of
both companies. We are taking two very strong, highly successful entities
with very little product overlap and combining them into one company,
with powerful earnings accretion in 1999 and beyond. The combined company
will have a highly talented and experienced management team capable of
generating superior growth opportunities and even stronger operating cash
flow. We fully expect to further enhance our position as a high-quality,
customer-focused, low-cost supplier, and to solidify the new MotivePower
Industries as the leading consolidator in the rail equipment supply
sector."
Kassling said: "The new MotivePower Industries will be uniquely
positioned to serve its global customers as a true `one-stop shop' for a
complete package of locomotive and freight car components and services.
We will also have increased financial strength to continue to invest in
new products and new technologies. In particular, we expect to capitalize
on the growth of locomotive and freight car electronics in the rail
industry. We will also look for opportunities to expand our very
successful WABCO QPS, which has led to dramatic improvements in quality,
productivity and efficiency during the past several years. We are
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[MOTIVEPOWER [WABCO LOGO] PRESS
INDUSTRIES LOGO] RELEASE
very excited by the opportunities created from this merger and are
anxious to put our plans into motion."
The merger will combine two complementary companies with leading
shares of their respective rail market segments and minimal product
overlap. MotivePower Industries is a leading provider of power-related
locomotive components and services for the aftermarket, and a leading
manufacturer of new low-horsepower locomotives. Westinghouse Air Brake is
a leader in both the aftermarket and the original equipment market for
its locomotive and freight car components, and has a leading position in
the growing public transit segment of the rail market. The companies also
have complementary market shares for international business, with
MotivePower Industries' leading position in the Mexican rail industry,
and Westinghouse Air Brake's presence in Canada, Europe, Asia and the
Pacific Rim. The combined company will also have improved diversity of
sales by customer, by region and by product line.
The combined company's Board of Directors will have seven members
from each company.
The new MotivePower Industries will have nearly 7,500 employees,
with 50 manufacturing, distribution and service facilities throughout the
U.S., Mexico, Canada, Europe, Asia and the Pacific Rim.
The Board of Directors of Westinghouse Air Brake also announced that
it has terminated its previously adopted, open-market, stock purchase
plan.
Wasserstein Perella served as financial adviser to MotivePower
Industries, and Credit Suisse First Boston served as financial adviser to
Westinghouse Air Brake.
MotivePower Industries (www.motivepower.com) is a leader in the
manufacturing of products for rail and other power-related industries.
Through its subsidiaries, the company manufactures and distributes
engineered locomotive components; provides locomotive and freight car
fleet maintenance; overhauls locomotives, freight cars and diesel
engines; manufactures new, environmentally friendly, switcher, commuter
and mid-range locomotives up to 4,000 horsepower; and manufactures
components for power, marine and industrial markets.
Westinghouse Air Brake Company (www.wabco-rail.com) is North
America's largest manufacturer of value-added equipment for locomotives,
railway freight cars and passenger transit vehicles. The company's
mission is to be the leading supplier of world-class products and
services to the railroad freight and transit industries, helping its
customers to achieve higher levels of safety and productivity so they can
compete more effectively.
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[MOTIVEPOWER [WABCO LOGO] PRESS
INDUSTRIES LOGO] RELEASE
This press release contains forward-looking statements, such as the
statements regarding the benefits and cost savings that can be achieved
through the merger of equals transaction. The company's actual results
could differ materially from the results suggested in any forward-looking
statement. Factors that could cause or contribute to these material
differences include, but are not limited to, the following: the company's
inability to achieve planned synergies; a slowdown in the U.S. or Mexican
economy; a decrease in NAFTA rail traffic; continued consolidation by
U.S. and Canadian railroads, which could cause them to reduce purchases
of goods and services; a strengthening or a weakening of the U.S. dollar
and/or a change in the availability of letters of credit in targeted
foreign markets; the company's ability to timely and efficiently
implement productivity improvement plans; the company's ability to
maintain current favorable relations with its labor unions; the company's
ability to successfully complete its information technology upgrade and
business improvement project, including "Year 2000" compliance; and other
factors contained in each company's regulatory filings, which are herein
incorporated by reference. The company assumes no obligation to update
these forward-looking statements or advise of changes in the assumptions
on which they were based.
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MOTIVEPOWER INDUSTRIES AND WESTINGHOUSE AIR BRAKE COMPANY
UNAUDITED PRO FORMA FINANCIAL SUMMARIES
FOR THE YEAR ENDED DECEMBER 31, 1998
($ in millions, except per share data) Combined
MotivePower Westinghouse Company
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Net sales $ 365.2 $ 670.9 $ 1,036.1
Gross profit 81.3 219.2 300.5
Operating income 40.4 104.7 145.1
Net income 32.2 41.6 73.8
Average shares outstanding 27.9 25.7 61.3
Earnings per diluted share 1.15 1.62 1.20
Depreciation & Amortization 11.4 25.2 36.6
Capital expenditures 28.9 29.0 57.9
Total assets 371.2 596.2 967.4
Total net debt 100.1 464.5 564.6
Total stockholders' equity 177.9 (33.8) 144.1
FOR THE QUARTER ENDED MARCH 31, 1999
($ in millions, except per share data) Combined
MotivePower Westinghouse Company
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Net sales $ 107.3 $ 191.2 $ 298.5
Gross profit 27.5 61.5 89.0
Operating income 14.8 28.9 43.7
Net income 7.9 11.9 19.8
Average shares outstanding 28.1 25.8 61.7
Earnings per diluted share 0.28 0.46 0.32
Depreciation & Amortization 3.8 6.8 10.6
Capital expenditures 3.8 6.5 10.3
Total assets 407.8 609.5 1,017.3
Total net debt 123.0 465.9 588.9
Total stockholders' equity 186.6 (19.4) 167.2