1001 Air Brake Avenue Exhibit 99.1
[WABTEC LOGO] Wilmerding, PA 15148
Phone: 412.825.1543 PRESS
Fax: 412.825.1789 RELEASE
CONTACT: TIM WESLEY, WABTEC, (412) 825-1543
JEFF DEMARRAIS, GETS, (814) 875-3457
WABTEC SIGNS DEFINITIVE AGREEMENT TO SELL CERTAIN ASSETS TO GETS
FOR $240 MILLION; TRANSACTION EXPECTED TO REDUCE DEBT, IMPROVE
STRATEGIC POSITION
WILMERDING, Pa., July 26, 2001 -- Wabtec Corporation (NYSE:
WAB) has signed a definitive agreement to sell certain assets to GE
Transportation Systems (GETS) for $240 million in cash. The
transaction is expected to close at the end of the third quarter,
subject to regulatory approvals. Wabtec plans to use the net
after-tax proceeds from the sale, expected to exceed $200 million,
primarily to reduce debt. The transaction is expected to be
modestly accretive to Wabtec's earnings in 2002, including
incremental business from GETS and a reduction in interest expense.
At closing, the company expects to have the ability to reduce
debt to under $250 million, or less than 55 percent of total
capital. This compares to a high of $572 million, or about 75
percent of total capital, in 1999. This represents a reduction of
more than $300 million in less than two years, which equates to
more than $7 per diluted share of enterprise value.
The assets to be sold to GETS primarily include locomotive
aftermarket products and services for which Wabtec is not the
original equipment manufacturer (OEM). These assets, acquired as
part of the MotivePower Industries merger in November 1999,
include: Motor Coils Manufacturing, Wabtec Engine Systems, Wabtec
Distribution and MPI de Mexico. In addition, GETS will acquire
Wabtec's locomotive service contract businesses in Barstow, Calif.
and in Mexico.
"The MotivePower merger brought us many of the products and
services we needed to expand our relationships with the locomotive
OEMs, which has been a major corporate goal," said William E.
Kassling, Wabtec chairman. "In exploring various strategic
relationships, we determined that an outright sale of certain
locomotive aftermarket assets would be the best way to position the
company long-term to work with a variety of locomotive OEMs. In
addition, the proceeds from the sale will be used primarily for
debt reduction, another major corporate goal, which will strengthen
our balance sheet considerably in this uncertain market."
Wabtec would continue to own former MotivePower business units
that are OEMs for such products as heat exchangers, electronic
components, brake rigging and sanitation systems, as well as its
locomotive plant in Boise, Idaho, which builds new and
remanufactured, specialty locomotives for switcher and commuter
applications. Wabtec would also continue to develop its significant
base of operations in Mexico through continued ownership of a
modern, multi-product manufacturing facility, and a new foundry, in
San Luis Potosi.
1001 Air Brake Avenue Exhibit 99.1
[WABTEC LOGO] Wilmerding, PA 15148
Phone: 412.825.1543 PRESS
Fax: 412.825.1789 RELEASE
"This transaction would enable Wabtec to focus strategically
on our core OEM businesses where we have intellectual property,
proprietary know-how and technical expertise that combine to give
us a clear, competitive advantage in those market segments," said
Gregory T.H. Davies, president and chief executive officer of
Wabtec. "In doing so, we are striving to build even stronger Tier I
relationships with our key OEM customers, while continuing to offer
appropriate support to our end-user customers for these value-added
products and services."
"Our global railroad customers will now enjoy a wider range of
services from GE for their locomotives," said John Krenicki,
president and chief executive officer of GE Transportation Systems.
"Regardless of the original manufacturer, GETS can now provide
spare parts, repair traction and diesel engine components, and
perform full locomotive maintenance services for customers with
both GE and non-GE locomotives worldwide."
By purchasing Wabtec's locomotive services business, GE
Transportation Systems enhances its ability to provide its
customers with a full suite of technology-based locomotive service
offerings. In addition, GETS would acquire Motor Coils
Manufacturing, which rebuilds various locomotive components; Wabtec
Engine Systems, which manufactures and rebuilds turbochargers,
power assemblies and related components; Wabtec Distribution, which
repairs and manufactures electronics, molded cables and locomotive
control cabinets and components, and distributes locomotive parts
and components; and MPI de Mexico, which provides a full range of
locomotive and component remanufacturing and upgrade services.
GE Transportation Systems (http://www.getransportation.com/),
headquartered in Erie, Pa., is a global supplier of surface
transportation products and services including freight and
passenger locomotives and maintenance service, global railroad
services such as remote monitoring and diagnostics, railway control
and communications systems, propulsion and auxiliary power systems
for transit vehicles and motorized drive systems for mining trucks.
It employs approximately 8,000 employees worldwide and has sales in
excess of $2 billion.
Wabtec Corporation (www.wabtec.com) is one of North America's
largest providers of value-added, technology-based products and
services for the rail industry. Through its subsidiaries, the
company manufactures a full range of products for locomotives,
freight cars and passenger transit vehicles. The company also
builds new locomotives up to 4,000 horsepower and provides
aftermarket services, including locomotive and freight car fleet
maintenance. The company has facilities located throughout the
world. Wabtec's mission is to be judged by its stakeholders as the
world-class corporation focused on helping its global rail and
transit customers compete more effectively through higher levels of
quality, safety and productivity.
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TO LISTEN TO THE COMPANY'S CONFERENCE CALL WITH INVESTORS, LOG
ON TO www.wabtec.com. THE CALL WILL BE HELD TODAY AT 11:00 A.M.,
EASTERN TIME.