WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORP Form 10-Q Quarterly Report Filed 2015-10-29

(Translated by https://www.hiragana.jp/)
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORP Form 10-Q Quarterly Report Filed 2015-10-29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________

FORM 10-Q

____________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 033-90866

____________________________________

WESTINGHOUSE AIR BRAKE TECHNOLOGIES
CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________



Delaware	25-1615902
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1001 Air Brake Avenue Wilmerding, PA	15148
(Address of principal executive offices)	(Zip code)

412-825-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

____________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at October 26, 2015
Common Stock, $.01 par value per share		96,478,074 shares

WESTINGHOUSE AIR BRAKE

TECHNOLOGIES CORPORATION

September 30, 2015

FORM 10-Q

TABLE OF CONTENTS



		Page
	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements - (Unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	3

	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014	4

	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	33

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 4.	Mine Safety Disclosures	34

Item 6.	Exhibits	34

	Signatures	35

PART I—FINANCIAL INFORMATION


Item 1.	FINANCIAL STATEMENTS

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS



	Unaudited
In thousands, except shares and par value	September 30, 2015			December 31, 2014
Assets
Current Assets
Cash and cash equivalents	$	208,241		$	425,849
Accounts receivable	474,213			443,464
Unbilled accounts receivable	151,131			187,762
Inventories	517,486			510,949
Deposit in escrow	209,128			—
Deferred income taxes	46,025			43,953
Other	43,867			25,887
Total current assets	1,650,091			1,637,864
Property, plant and equipment	707,925			683,034
Accumulated depreciation	(356,691		)	(343,923		)
Property, plant and equipment, net	351,234			339,111
Other Assets
Goodwill	852,995			862,338
Other intangibles, net	436,991			422,811
Other noncurrent assets	34,771			41,717
Total other assets	1,324,757			1,326,866
Total Assets	$	3,326,082		$	3,303,841

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	319,225		$	399,845
Customer deposits	106,889			111,797
Accrued compensation	71,478			70,857
Accrued warranty	72,693			68,031
Current portion of long-term debt	430			792
Other accrued liabilities	83,934			87,480
Total current liabilities	654,649			738,802
Long-term debt	450,589			520,403
Accrued postretirement and pension benefits	78,437			81,908
Deferred income taxes	113,758			112,915
Accrued warranty	22,257			19,818
Other long-term liabilities	20,951			21,697
Total liabilities	1,340,641			1,495,543
Shareholders’ Equity
Preferred stock, 1,000,000 shares authorized, no shares issued	—			—
Common stock, $.01 par value; 200,000,000 shares authorized:
132,349,534 shares issued and 96,478,074 and 96,274,395 outstanding
at September 30, 2015 and December 31, 2014, respectively	1,323			1,323
Additional paid-in capital	463,151			448,531
Treasury stock, at cost, 35,871,460 and 36,075,139 shares, at
at September 30, 2015 and December 31, 2014, respectively	(409,792		)	(392,262		)
Retained earnings	2,186,673			1,909,136
Accumulated other comprehensive loss	(257,208		)	(159,486		)
Total Westinghouse Air Brake Technologies Corporation shareholders' equity	1,984,147			1,807,242
Non-controlling interest (minority interest)	1,294			1,056
Total shareholders’ equity	1,985,441			1,808,298
Total Liabilities and Shareholders’ Equity	$	3,326,082		$	3,303,841

The accompanying notes are an integral part of these statements.

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



	Unaudited						Unaudited
	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands, except per share data	2015			2014			2015			2014

Net sales	$	809,527		$	797,271		$	2,475,149		$	2,223,588
Cost of sales	(552,458		)	(549,813		)	(1,694,961		)	(1,541,903		)
Gross profit	257,069			247,458			780,188			681,685
Selling, general and administrative expenses	(82,206		)	(88,359		)	(255,969		)	(231,422		)
Engineering expenses	(17,239		)	(16,391		)	(51,852		)	(43,558		)
Amortization expense	(5,546		)	(6,731		)	(16,009		)	(16,559		)
Total operating expenses	(104,991		)	(111,481		)	(323,830		)	(291,539		)
Income from operations	152,078			135,977			456,358			390,146
Other income and expenses
Interest expense, net	(4,351		)	(4,594		)	(12,698		)	(13,569		)
Other (expense) income, net	(2,937		)	(154		)	(7,690		)	72
Income from operations before income taxes	144,790			131,229			435,970			376,649
Income tax expense	(45,609		)	(41,074		)	(139,121		)	(117,655		)
Net income attributable to Wabtec shareholders	$	99,181		$	90,155		$	296,849		$	258,994

Earnings Per Common Share
Basic
Net income attributable to Wabtec shareholders	$	1.03		$	0.94		$	3.08		$	2.69
Diluted
Net income attributable to Wabtec shareholders	$	1.02		$	0.93		$	3.05		$	2.67

Weighted average shares outstanding
Basic	96,369			95,935			96,135			95,745
Diluted	97,368			97,004			97,162			96,834

The accompanying notes are an integral part of these statements.

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	Unaudited						Unaudited
	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands, except per share data	2015			2014			2015			2014

Net income attributable to Wabtec shareholders	$	99,181		$	90,155		$	296,849		$	258,994
Foreign currency translation loss	(48,474		)	(60,964		)	(100,323		)	(52,876		)
Unrealized (loss) gain on derivative contracts	(1,788		)	1,153			(2,544		)	560
Pension benefit plans and post-retirement benefit plans	2,586			2,553			5,586			4,335
Other comprehensive loss before tax	(47,676		)	(57,258		)	(97,281		)	(47,981		)
Income tax (expense) benefit related to components of
other comprehensive income (loss)	164			(1,067		)	(441		)	(1,448		)
Other comprehensive loss, net of tax	(47,512		)	(58,325		)	(97,722		)	(49,429		)
Comprehensive income attributable to Wabtec shareholders	$	51,669		$	31,830		$	199,127		$	209,565

The accompanying notes are an integral part of these statements.

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



	Unaudited
	Nine Months Ended September 30,
In thousands, except per share data	2015			2014

Operating Activities
Net income attributable to Wabtec shareholders	$	296,849		$	258,994
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	48,167			44,977
Stock-based compensation expense	20,092			19,107
Loss on disposal of property, plant and equipment	1,804			114
Excess income tax benefits from exercise of stock options	(2,683		)	(2,739		)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable and unbilled accounts receivable	(881		)	(89,359		)
Inventories	(15,847		)	(33,958		)
Accounts payable	(80,701		)	40,971
Accrued income taxes	20,964			16,355
Accrued liabilities and customer deposits	(12,911		)	8,342
Other assets and liabilities	(19,547		)	(32,640		)
Net cash provided by operating activities	255,306			230,164
Investing Activities
Purchase of property, plant and equipment	(33,079		)	(30,977		)
Proceeds from disposal of property, plant and equipment	354			340
Acquisitions of businesses, net of cash acquired	(100,108		)	(299,661		)
Deposit in escrow	(209,128		)	—
Net cash used for investing activities	(341,961		)	(330,298		)
Financing Activities
Proceeds from debt	390,300			433,400
Payments of debt	(460,308		)	(362,965		)
Purchase of treasury stock	(22,336		)	(26,757		)
Proceeds from exercise of stock options and other benefit plans	2,708			3,044
Excess income tax benefits from exercise of stock options	2,683			2,739
Payment of income tax withholding on share-based compensation	(14,565		)	—
Earn-out settlement	—			(4,429		)
Cash dividends ($0.20 and $0.14 per share for the nine months
ended September 30, 2015 and 2014, respectively)	(19,315		)	(13,471		)
Net cash (used for) provided by financing activities	(120,833		)	31,561
Effect of changes in currency exchange rates	(10,120		)	(4,646		)
Decrease in cash	(217,608		)	(73,219		)
Cash, beginning of period	425,849			285,760
Cash, end of period	$	208,241		$	212,541

The accompanying notes are an integral part of these statements.

WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015 (UNAUDITED)

1. BUSINESS

Westinghouse Air Brake Technologies Corporation (“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 more than 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 20 countries. In the first nine months of 2015, about 48% of the Company’s revenues came from customers outside the U.S.

2. PROPOSED TRANSACTION WITH FAIVELEY TRANSPORT S.A.

On July 27, 2015, the Company announced plans to acquire Faiveley Transport S.A. ("Faiveley Transport"), 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 valued-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 & Safety (braking systems and couplers).

The transaction has been structured in three steps:

•

Wabtec made an irrevocable offer to the owners of approximately 51% of Faiveley Transport’s shares for a purchase price of €100 per share, payable 25% in cash and 75% in Wabtec preferred stock. The preferred stock will have a 1% annual dividend or, if greater, the annual dividend assuming full conversion into common shares, and must be converted after three years into Wabtec common shares at an implied ratio of one Faiveley Transport common share for 1.125 Wabtec common shares. Shareholders owning 51% of Faiveley Transport have entered into exclusive discussions with Wabtec.


•	Upon completion of required labor group consultations, on October 6, 2015 the 51% shareholders entered into a definitive share purchase agreement and Faiveley Transport entered into an acquisition agreement with Wabtec.

•

Upon completing the share purchase, Wabtec will commence a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders will have the option to elect to receive €100 per share in cash or Wabtec preferred stock. The preferred stock portion of the consideration is subject to a cap of 75% of Faiveley Transport’s common shares. Wabtec intends to delist Faiveley Transport from Euronext after the tender offer if minority interests represent less than 5%.

The total purchase price offered is about $1.8 billion, including assumed debt. Wabtec plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing. Prior to September 30, 2015 Wabtec set aside $209.1 million as an escrow deposit for the Faiveley Transport purchase. The combination of Wabtec and Faiveley Transport would create one of the world’s largest public rail equipment companies, with revenues of about $4.5 billion and a presence in all key freight rail and passenger transit geographies worldwide.

Closing of the transaction is subject to various conditions, including completion of regulatory requirements. These steps are currently on-going and the timing of completion is unknown.

3. 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 consolidated 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 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, 2014. The December 31, 2014 information has been derived from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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.

In general, 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. Unbilled accounts receivables were $151.1 million and $187.8 million, customer deposits were $106.9 million and $111.8 million, and provisions for loss contracts were $8.9 million and $7.1 million at September 30, 2015 and December 31, 2014, respectively.

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 $30.1 million and $24.9 million at September 30, 2015 and December 31, 2014, 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.

Financial Derivatives and Hedging Activities The Company periodically enters 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.

To reduce the impact of interest rate changes on a portion of its variable-rate debt, the Company has entered into two forward starting interest rate swap agreements with notional values of $150.0 million. As of September 30, 2015, the Company has recorded a current liability of $5.8 million and a corresponding offset in accumulated other comprehensive loss of $3.5 million, net of tax, related to these agreements. For further information regarding the forward starting interest rate swap agreements, see Footnote 7.

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 average rates of exchange prevailing during the period. 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 accumulated other comprehensive loss. The effects of currency exchange rate changes on intercompany transactions that are denominated in a currency other than an entity’s functional currency are charged or credited to earnings.

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 September 30, 2015 and December 31, 2014. Net income attributable to non-controlling interests for the three and nine months ended September 30, 2015 and 2014 was not material.

Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update No. 2015-3, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-3”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-3 will become effective for public companies during interim and annual reporting periods beginning after December 15,

2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the financial statements. The Company will make the required changes in the first quarter of 2016.

In May 2014, the FASB issued ASU no. 2014-9, “Revenue from Contract with Customers.” The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Board voted to propose that the standard would take effect for reporting periods beginning after December 15, 2017 and that early adoption would be allowed as of the original effective date. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures.

Other Comprehensive Income Comprehensive income is defined as net income and all other non-owner changes in shareholders’ equity.

The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2015 are as follows:



In thousands	Foreign currency translation			Derivative contracts			Pension and post retirement benefit plans			Total
Balance at December 31, 2014	$	(94,450	)	$	(2,243	)	$	(62,793	)	$	(159,486	)
Other comprehensive (loss) income before reclassifications	(100,323		)	(2,503		)	2,783			(100,043		)
Amounts reclassified from accumulated other
comprehensive income	—			946			1,375			2,321
Net current period other comprehensive (loss) income	(100,323		)	(1,557		)	4,158			(97,722		)
Balance at September 30, 2015	$	(194,773	)	$	(3,800	)	$	(58,635	)	$	(257,208	)

Reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2015 are as follows:



In thousands	Amount reclassified from accumulated other comprehensive income			Affected line item in the Condensed Consolidated Statements of Operations
Amortization of defined pension and post retirement items
Amortization of initial net obligation and prior service cost	$	(522	)	Cost of sales
Amortization of net loss	1,191			Cost of sales
	669			Income from Operations
	(211		)	Income tax expense
	$	458		Net income

Derivative contracts
Realized loss on derivative contracts	$	467		Interest expense, net
	(147		)	Income tax expense
	$	320		Net income

Reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 are as follows:



In thousands	Amount reclassified from accumulated other comprehensive income			Affected line item in the Condensed Consolidated Statements of Operations
Amortization of defined pension and post retirement items
Amortization of initial net obligation and prior service cost	$	(1,565	)	Cost of sales
Amortization of net loss	3,585			Cost of sales
	2,020			Income from Operations
	(645		)	Income tax expense
	$	1,375		Net income

Derivative contracts
Realized loss on derivative contracts	$	1,390		Interest expense, net
	(444		)	Income tax expense
	$	946		Net income

4. ACQUISITIONS

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


•	On February 4, 2015, the Company acquired Railroad Controls L.P. (“RCL”), a provider of railway signal construction services, for a purchase price of approximately $76.4 million, net of cash acquired, resulting in preliminary goodwill of $12.8 million, none of which will be deductible for tax purposes.


•	On September 3, 2014, the Company acquired C2CE Pty Ltd. (“C2CE”), a provider of railway signal design services, for a purchase price of approximately $25.5 million, net of cash acquired, resulting in additional goodwill of $15.9 million, none of which will be deductible for tax purposes.

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


•	On June 17, 2015, the Company acquired Metalocaucho (“MTC”), a manufacturer of transit products, primarily rubber components for suspension and vibration control systems, for a purchase price of approximately $23.4 million, net of cash acquired, resulting in preliminary goodwill of $12.1 million, none of which will be deductible for tax purposes.


•	On August 21, 2014, the Company acquired Dia-Frag (“Dia-Frag”), a manufacturer of friction products for various markets with a focus on motorcycle braking, for a purchase price of approximately $70.6 million, net of cash acquired, resulting in additional goodwill of $35.9 million, none of which will be deductible for tax purposes.

•

On June 6, 2014, the Company acquired Fandstan Electric Group Ltd. (“Fandstan”), a leading rail and industrial equipment manufacturer for a variety of markets, including rail and tram transportation, industrial and energy, for a purchase price of approximately $199.4 million, net of cash acquired, resulting in additional goodwill of $64.7 million, none of which will be deductible for tax purposes.

The acquisitions listed above include escrow deposits of $40.8 million, which act as security for indemnity and other claims in accordance with the purchase and related escrow agreements.

For the MTC and RCL 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 C2CE, Dia-Frag, and Fandstan acquisitions, the following table summarizes the final fair values of the assets acquired and liabilities assumed at the date of acquisition.



	MTC			RCL			C2CE			Dia-Frag			Fandstan
In thousands	June 17, 2015			February 4, 2015			September 3, 2014			August 21, 2014			June 6, 2014
Current assets	$	10,906		$	16,445		$	9,812		$	12,158		$	124,280
Property, plant & equipment	1,510			11,983			1,853			13,749			67,948
Goodwill	12,141			12,840			15,896			35,850			64,713
Other intangible assets	7,649			40,403			3,654			26,150			50,598
Other assets	114			—			—			66			216
Total assets acquired	32,320			81,671			31,215			87,973			307,755
Total liabilities assumed	(8,960		)	(5,289		)	(5,736		)	(17,332		)	(108,351		)
Net assets acquired	$	23,360		$	76,382		$	25,479		$	70,641		$	199,404

Of the $128.5 million of total acquired intangible assets, $95.2 million was assigned to customer relationships, $25.6 million was assigned to trade names, $2.1 million was assigned to non-compete agreements and $5.6 million was assigned to customer backlog. The trade names were determined to have an indefinite useful life, while the customer relationships’ average useful life is 20 years, and the non-compete useful life is five years.

The following unaudited pro forma consolidated financial information presents income statement results as if the acquisitions listed above had occurred on January 1, 2014:



In thousands	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine Months Ended September 30, 2015		Nine Months Ended September 30, 2014
Net sales	$	809,527	$	835,231	$	2,499,388	$	2,358,518
Gross profit	257,069		260,669		787,198		726,388
Net income attributable to Wabtec shareholders	99,181		96,680		299,233		281,136
Diluted earnings per share
As Reported	$	1.02	$	0.93	$	3.05	$	2.67
Pro forma	$	1.02	$	0.99	$	3.08	$	2.89

5. INVENTORIES

The components of inventory, net of reserves, were:



In thousands	September 30, 2015		December 31, 2014
Raw materials	$	188,326	$	222,059
Work-in-progress	196,379		154,094
Finished goods	132,781		134,796
Total inventories	$	517,486	$	510,949

6. INTANGIBLES

The change in the carrying amount of goodwill by segment for the nine months ended September 30, 2015 is as follows:



In thousands	Freight Segment			Transit Segment			Total
Balance at December 31, 2014	$	515,067		$	347,271		$	862,338
Adjustment to preliminary purchase allocation	45			(4,140		)	(4,095		)
Acquisitions	12,840			12,141			24,981
Foreign currency impact	(9,006		)	(21,223		)	(30,229		)
Balance at September 30, 2015	$	518,946		$	334,049		$	852,995

As of September 30, 2015 and December 31, 2014, the Company’s trademarks had a net carrying amount of $167.6 million and $170.1 million, respectively, and the Company believes these intangibles have indefinite lives.

Intangible assets of the Company, other than goodwill and trademarks, consist of the following:



In thousands	September 30, 2015		December 31, 2014
Patents, non-compete and other intangibles, net of accumulated
amortization of $40,364 and $39,780	$	12,002	$	14,722
Customer relationships, net of accumulated amortization
of $67,285 and $56,684	257,384		237,983
Total	$	269,386	$	252,705

The weighted average remaining useful life of patents, customer relationships and intellectual property were 10 years, 16 years and 14 years, respectively. Amortization expense for intangible assets was $5.5 million and $16.0 million for the three and nine months ended September 30, 2015, and $6.7 million and $16.6 million for the three and nine months ended September 30, 2014.

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



Remainder of 2015	$	6,070
2016	21,005
2017	19,826
2018	18,848
2019	18,405

7. LONG-TERM DEBT

Long-term debt consisted of the following:



In thousands	September 30, 2015		December 31, 2014
4.375% Senior Notes, due 2023	$	250,000	$	250,000
Revolving Credit Facility	200,000		270,000
Capital Leases	1,019		1,195
Total	451,019		521,195
Less - current portion	430		792
Long-term portion	$	450,589	$	520,403

2013 Refinancing Credit Agreement

On December 19, 2013, the Company amended its existing revolving credit facility with a consortium of commercial banks. This “2013 Refinancing Credit Agreement” provides the Company with an $800.0 million, five-year revolving credit facility. The Company incurred approximately $1.0 million of deferred financing cost related to the 2013 Refinancing Credit Agreement. The facility expires on December 19, 2018. The 2013 Refinancing Credit Agreement borrowings bear variable interest rates indexed as described below. At September 30, 2015, the Company had available bank borrowing capacity, net of $27.1 million of letters of credit, of approximately $572.9 million, subject to certain financial covenant restrictions.

Under the 2013 Refinancing Credit Agreement, the Company may elect a Base Rate of interest for U.S. Dollar denominated loans or, for certain currencies, an interest rate based on the London Interbank Offered Rate (“LIBOR”) of interest, or other rates appropriate for such currencies (in any case, “the Alternate Rate”). The Base Rate adjusts on a daily basis and is the greater of the Federal Funds Effective Rate plus 0.5% per annum, the PNC, N.A. prime rate or the Daily LIBOR Rate plus 100 basis points, plus a margin that ranges from 0 to 75 basis points. The Alternate Rate is based on the quoted rates specific to the applicable currency, plus a margin that ranges from 75 to 175 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 0 basis points and the Alternate Rate margin is 75 basis points.

At September 30, 2015, the weighted average interest rate on the Company’s variable rate debt was 0.94%. On January 12, 2012, the Company entered into a forward starting interest rate swap agreement with a notional value of $150.0 million. The effective date of the interest rate swap agreement is July 31, 2013, and the termination date is November 7, 2016. The impact of the interest rate swap agreement converts a portion of the Company’s outstanding debt from a variable rate to a fixed-rate borrowing. During the term of the interest rate swap agreement the interest rate on the notional value will be fixed at 1.415% plus the Alternate Rate margin. The Company is exposed to credit risk in the event of nonperformance by the counterparty. However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount. The counterparty is a large financial institution with an excellent credit rating and history of performance. The Company currently believes the risk of nonperformance is negligible.

On June 5, 2014, the Company entered into a forward starting interest rate swap agreement with a notional value of $150.0 million. The effective date of the interest rate swap agreement is November 7, 2016, and the termination date is December 19, 2018. The impact of the interest rate swap agreement converts a portion of the Company’s outstanding debt from a variable rate to a fixed-rate borrowing. During the term of the interest rate swap agreement the interest rate on the notional value will be fixed at 2.56% plus the Alternate Rate margin. The Company is exposed to credit risk in the event of nonperformance by the counterparty. However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount. The counterparty is a large financial institution with an excellent credit rating and history of performance. The Company currently believes the risk of nonperformance is negligible.

The 2013 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 2013 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 does not expect that these measurements will limit the Company in executing our operating activities.

4.375% Senior Notes Due August 2023

In August 2013, the Company issued $250.0 million of Senior Notes due in 2023 (the “2013 Notes”). The 2013 Notes were issued at 99.879% of face value. Interest on the 2013 Notes accrues at a rate of 4.375% per annum and is payable semi-annually on February 15 and August 15 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 Company incurred $2.6 million of deferred financing costs related to the issuance.

The 2013 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 2013 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.

The Company is in compliance with the restrictions and covenants in the indenture under which the 2013 Notes were issued and expects that these restrictions and covenants will not be any type of limiting factor in executing our operating activities.

8. 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 September 30,				Three Months Ended September 30,
In thousands, except percentages	2015		2014		2015		2014
Net periodic benefit cost
Service cost	95		54		506		659
Interest cost	479		488		1,801		2,271
Expected return on plan assets	(542	)	(617	)	(2,434	)	(2,655	)
Net amortization/deferrals	266		355		655		766
Net periodic benefit cost	298		280		528		1,041



	U.S.						International
	Nine Months Ended September 30,						Nine Months Ended September 30,
In thousands, except percentages	2015			2014			2015			2014
Net periodic benefit cost
Service cost	$	285		$	250		$	1,518		$	1,511
Interest cost	1,437			1,552			5,391			5,936
Expected return on plan assets	(1,626		)	(1,857		)	(7,284		)	(7,116		)
Net amortization/deferrals	798			1,665			1,962			2,292
Net periodic benefit cost	$	894		$	1,610		$	1,587		$	2,623

The Company’s funding methods are based on governmental requirements and differ from those methods used to recognize pension expense. The Company expects to contribute $6.7 million to the international plans and does not expect to make a contribution to the U.S. plans during 2015.

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 postretirement benefit plans summarized by U.S. and international components.



	U.S.						International
	Three Months Ended September 30,						Three Months Ended September 30,
In thousands, except percentages	2015			2014			2015			2014
Net periodic benefit cost
Service cost	$	2		$	7		$	11		$	10
Interest cost	308			289			35			42
Net amortization/deferrals	(234		)	(350		)	(10		)	(16		)
Net periodic benefit (credit) cost	$	76		$	(54	)	$	36		$	36



	U.S.						International
	Nine Months Ended September 30,						Nine Months Ended September 30,
In thousands, except percentages	2015			2014			2015			2014
Net periodic benefit cost
Service cost	$	6		$	27		$	33		$	28
Interest cost	924			881			105			126
Net amortization/deferrals	(702		)	(1,003		)	(29		)	(46		)
Net periodic benefit (credit) cost	$	228		$	(95	)	$	109		$	108

9. STOCK-BASED COMPENSATION

As of September 30, 2015, the Company maintains employee stock-based compensation plans for stock options, restricted stock, restricted units and incentive stock awards as governed by the 2011 Stock Incentive Compensation Plan (the “2011 Plan”) and the 2000 Stock Incentive Plan, as amended (the “2000 Plan”). The 2011 Plan has a 10-year term through March 27, 2021 and provides a maximum of 3,800,000 shares for grants or awards. The 2011 Plan was approved by stockholders of Wabtec on May 11, 2011. The Company also maintains a Non-Employee Directors’ Fee and Stock Option Plan (“the Directors Plan”). No awards may be made under the Directors Plan subsequent to October 31, 2016.

Stock-based compensation expense was $20.1 million and $19.1 million for the nine months ended September 30, 2015 and 2014, respectively. Included in stock-based compensation expense for the nine months ended September 30, 2015 is $1.7 million of expense related to stock options, $4.8 million related to restricted stock, $2.6 million related to restricted units, $10.2 million related to incentive stock awards and $0.8 million related to awards issued for Directors’ fees. At September 30, 2015, unamortized compensation expense related to stock options, restricted stock, restricted units and incentive stock awards expected to vest totaled $30.2 million and will be recognized over a weighted average period of 1.3 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 2011 Plan and the 2000 Plan, options become exercisable over a four-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 the 2011 Plan, the 2000 Plan and the Directors Plan for the nine months ended September 30, 2015:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic value (in thousands)
Outstanding at December 31, 2014	1,147,558		$	28.33	5.5	$	67,205
Granted	84,675		87.35			141
Exercised	(112,156	)	26.10			7,057
Canceled	(8,751	)	65.24			208
Outstanding at September 30, 2015	1,111,326		32.76		5.1	62,525
Exercisable at September 30, 2015	875,157		23.83		4.3	57,051

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:



	Nine Months Ended September 30,
	2015		2014
Dividend yield	0.14	%	0.11	%
Risk-free interest rate	1.82	%	2.19	%
Stock price volatility	27.3	%	33.2	%
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, Restricted Units and Incentive Stock Beginning in 2006 the Company adopted a restricted stock program. As provided for under the 2011 and 2000 Plans, eligible employees are granted restricted stock or restricted units that generally vest 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. Based on the Company’s performance for each three-year period then ended, the incentive stock awards can vest and be awarded ranging from 0% to 200% of the initial incentive stock awards granted. The incentive stock awards included in the table below represent the number of shares that are expected to vest based on the Company’s estimate for meeting those established performance targets. As of September 30, 2015, the Company estimates that it will achieve 121%, 132% and 100% for the incentive stock awards expected to vest based on performance for the three-year periods ending December 31, 2015, 2016, and 2017, respectively, and has recorded incentive compensation expense accordingly. If our estimate of the number of these stock awards expected to vest changes in a future accounting period, cumulative compensation expense could increase or decrease and will be recognized in the current period for the elapsed portion of the vesting period and would change future expense for 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 and unit activity for the 2011 Plan, the 2000 Plan and the Directors Plan, and incentive stock awards activity for the 2011 Plan and the 2000 Plan with related information for the nine months ended September 30, 2015:



	Restricted Stock and Units		Incentive Stock Awards		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2014	438,543		791,608		$	47.97
Granted	110,945		125,650		87.74
Vested	(182,776	)	(433,932	)	37.76
Adjustment for incentive stock awards expected to vest	—		61,654		57.60
Canceled	(9,284	)	(6,196	)	66.30
Outstanding at September 30, 2015	357,428		538,784		65.82

10. INCOME TAXES

The overall effective income tax rate was 31.5% and 31.9% for the three and nine months ended September 30, 2015, respectively, and 31.3% and 31.2% for the three and nine months ended September 30, 2014, respectively. For the three and nine months ended September 30, 2015 the increase in the effective rate is primarily the result of a higher earnings mix in higher tax rate jurisdictions, partially offset by lower state income taxes.

As of September 30, 2015, the liability for income taxes associated with uncertain tax positions was $13.7 million, of which $5.5 million, if recognized, would favorably affect the Company’s effective tax rate. As of December 31, 2014 the liability associated with uncertain tax positions was $12.6 million, of which $5.5 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 September 30, 2015 the total accrued interest and penalties are $2.4 million and $1.7 million, respectively. As of December 31, 2014 the total accrued interest and penalties were $1.9 million and $1.3 million, respectively.

At this time, the Company believes that it is reasonably possible that unrecognized tax benefits of approximately $4.4 million may change within the next 12 months due to the expiration of statutory review periods and current examinations. The

Internal Revenue Service is currently auditing the 2012 tax year. With limited exception, the Company is no longer subject to examination by various U.S. and foreign taxing authorities for years before 2011.

11. 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 September 30,
In thousands, except per share data	2015			2014
Numerator
Numerator for basic and diluted earnings per common share - net income attributable
to Wabtec shareholders	$	99,181		$	90,155
Less: dividends declared - common shares and non-vested restricted stock	(7,735		)	(5,780		)
Undistributed earnings	91,446			84,375
Percentage allocated to common shareholders (1)	99.7		%	99.6		%
	91,172			84,038
Add: dividends declared - common shares	7,713			5,759
Numerator for basic and diluted earnings per common share	$	98,885		$	89,797
Denominator
Denominator for basic earnings per common share - weighted average shares	96,369			95,935
Effect of dilutive securities:
Assumed conversion of dilutive stock-based compensation plans	999			1,069
Denominator for diluted earnings per common share -
adjusted weighted average shares and assumed conversion	97,368			97,004
Net income per common share attributable to Wabtec shareholders
Basic	$	1.03		$	0.94
Diluted	$	1.02		$	0.93



(1) Basic weighted-average common shares outstanding	96,369		95,935
Basic weighted-average common shares outstanding and non-vested restricted stock expected to vest	96,647		96,285
Percentage allocated to common shareholders	99.7	%	99.6	%



	Nine Months Ended September 30,
In thousands, except per share data	2015			2014
Numerator
Numerator for basic and diluted earnings per common share - net income attributable
to Wabtec shareholders	$	296,849		$	258,994
Less: dividends declared - common shares and non-vested restricted stock	(19,315		)	(13,471		)
Undistributed earnings	277,534			245,523
Percentage allocated to common shareholders (1)	99.7		%	99.6		%
	276,701			244,541
Add: dividends declared - common shares	19,250			13,415
Numerator for basic and diluted earnings per common share	$	295,951		$	257,956
Denominator
Denominator for basic earnings per common share - weighted average shares	96,135			95,745
Effect of dilutive securities:
Assumed conversion of dilutive stock-based compensation plans	1,027			1,089
Denominator for diluted earnings per common share -
adjusted weighted average shares and assumed conversion	97,162			96,834
Net income per common share attributable to Wabtec shareholders
Basic	$	3.08		$	2.69
Diluted	$	3.05		$	2.67



(1) Basic weighted-average common shares outstanding	96,135		95,745
Basic weighted-average common shares outstanding and non-vested restricted stock expected to vest	96,462		96,146
Percentage allocated to common shareholders	99.7	%	99.6	%

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.

12. WARRANTIES

The following table reconciles the changes in the Company’s product warranty reserve as follows:



	Nine Months Ended September 30,
In thousands	2015			2014
Balance at December 31, 2014 and 2013 respectively	$	87,849		$	60,593
Warranty expense	21,615			22,104
Acquisitions	6,001			3,567
Warranty claim payments	(18,961		)	(14,572		)
Foreign currency impact/other	(1,554		)	(980		)
Balance at September 30, 2015 and 2014, respectively	$	94,950		$	70,712

13. FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS

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 September 30, 2015, which are included in other current liabilities on the Condensed Consolidated Balance sheet:



			Fair Value Measurements at September 30, 2015 Using
In thousands	Total Carrying Value at September 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swap agreements	$	5,798	$	—	$	5,798	$	—
Total	$	5,798	$	—	$	5,798	$	—

The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2014, which is included in other current liabilities on the Condensed Consolidated Balance sheet:



			Fair Value Measurements at December 31, 2014 Using
In thousands	Total Carrying Value at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swap agreements	$	3,351	$	—	$	3,351	$	—
Total	$	3,351	$	—	$	3,351	$	—

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. For certain derivative contracts whose fair values are based upon trades in liquid markets, such as interest rate swaps, valuation model inputs can generally be verified and valuation techniques do not involve significant management judgment. The fair values of such financial instruments are generally classified within Level 2 of the fair value hierarchy.

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.

The Company’s cash and cash equivalents are highly liquid investments purchased with an original maturity of three months or less and are considered Level 1 on the fair value valuation hierarchy. The fair value of cash and cash equivalents approximated the carrying value at September 30, 2015 and December 31, 2014. The Company’s defined benefit pension plan assets consist primarily of equity security funds, debt security funds and temporary cash and cash equivalent investments. Generally, all plan assets are considered Level 2 based on the fair value valuation hierarchy. These investments are comprised of a number of investment funds that invest in a diverse portfolio of assets including equity securities, corporate and governmental bonds, and money markets. Trusts are valued at the net asset value (“NAV”) as determined by their custodian. NAV represent the accumulation of the unadjusted quoted close prices on the reporting date for the underlying investments divided by the total shares outstanding at the reporting dates. The 2013 Notes are considered Level 2 based on the fair value valuation hierarchy.

The estimated fair values and related carrying values of the Company’s financial instruments are as follows:



	September 30, 2015				December 31, 2014
In thousands	Carry Value		Fair Value		Carry Value		Fair Value
Interest rate swap agreement	$	5,798	$	5,798	$	3,351	$	3,351
4.375% Senior Notes	250,000		257,503		250,000		260,000

The fair value of the Company’s interest rate swap agreements and the 2013 Notes were based on dealer quotes and represent the estimated amount the Company would pay to the counterparty to terminate the agreement.

14. 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. Further information and detail on these claims is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K.

The Company is also subject to litigation from time to time arising out of its operations in the ordinary course of business, including claims based on product liability, contracts, intellectual property, or other causes of action. Further information and detail on any potentially material litigation is as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K.

15. SEGMENT INFORMATION

Wabtec has two reportable segments—the Freight Segment and the Transit Segment. 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 Segment 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, friction products, 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 Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically subway cars and buses, builds new commuter locomotives, friction products, 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 September 30, 2015 is as follows:



In thousands	Freight Segment		Transit Segment		Corporate Activities and Elimination			Total
Sales to external customers	$	507,173	$	302,354	$	—		$	809,527
Intersegment sales/(elimination)	9,025		7,111		(16,136		)	—
Total sales	$	516,198	$	309,465	$	(16,136	)	$	809,527
Income (loss) from operations	$	119,930	$	38,772	$	(6,624	)	$	152,078
Interest expense and other, net	—		—		(7,288		)	(7,288		)
Income (loss) from operations before income taxes	$	119,930	$	38,772	$	(13,912	)	$	144,790

Segment financial information for the three months ended September 30, 2014 is as follows:



In thousands	Freight Segment		Transit Segment		Corporate Activities and Elimination			Total
Sales to external customers	$	453,329	$	343,942	$	—		$	797,271
Intersegment sales/(elimination)	9,781		1,822		(11,603		)	—
Total sales	$	463,110	$	345,764	$	(11,603	)	$	797,271
Income (loss) from operations	$	102,182	$	40,734	$	(6,939	)	$	135,977
Interest expense and other, net	—		—		(4,748		)	(4,748		)
Income (loss) from operations before income taxes	$	102,182	$	40,734	$	(11,687	)	$	131,229

Segment financial information for the nine months ended September 30, 2015 is as follows:



In thousands	Freight Segment		Transit Segment		Corporate Activities and Elimination			Total
Sales to external customers	$	1,553,734	$	921,415	$	—		$	2,475,149
Intersegment sales/(elimination)	26,982		8,227		(35,209		)	—
Total sales	$	1,580,716	$	929,642	$	(35,209	)	$	2,475,149
Income (loss) from operations	$	356,731	$	117,709	$	(18,082	)	$	456,358
Interest expense and other, net	—		—		(20,388		)	(20,388		)
Income (loss) from operations before income taxes	$	356,731	$	117,709	$	(38,470	)	$	435,970

Segment financial information for the nine months ended September 30, 2014 is as follows:



In thousands	Freight Segment		Transit Segment		Corporate Activities and Elimination			Total
Sales to external customers	$	1,250,337	$	973,251	$	—		$	2,223,588
Intersegment sales/(elimination)	27,074		6,096		(33,170		)	—
Total sales	$	1,277,411	$	979,347	$	(33,170	)	$	2,223,588
Income (loss) from operations	$	294,396	$	112,009	$	(16,259	)	$	390,146
Interest expense and other, net	—		—		(13,497		)	(13,497		)
Income (loss) from operations before income taxes	$	294,396	$	112,009	$	(29,756	)	$	376,649

Sales by product are as follows:



	Three Months Ended September 30,
In thousands	2015		2014
Specialty Products & Electronics	$	433,260	$	390,038
Brake Products	148,552		142,620
Remanufacturing, Overhaul & Build	146,424		170,826
Other Transit Products	45,547		51,607
Other	35,744		42,180
Total sales	$	809,527	$	797,271



	Nine Months Ended September 30,
In thousands	2015		2014
Specialty Products & Electronics	$	1,307,089	$	980,897
Brake Products	472,855		487,095
Remanufacturing, Overhaul & Build	437,101		474,444
Other Transit Products	143,214		155,144
Other	114,890		126,008
Total sales	$	2,475,149	$	2,223,588

16. OTHER INCOME (EXPENSE), NET

The components of other income (expense) are as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2015			2014			2015			2014
Foreign currency (loss)	$	(3,058	)	$	(455	)	$	(6,993	)	$	(554	)
Other miscellaneous income (expense)	121			301			(697		)	626
Total other (expense) income, net	$	(2,937	)	$	(154	)	$	(7,690	)	$	72


Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and Westinghouse Air Brake Technologies Corporation’s Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015.

OVERVIEW

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 more than 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 20 countries. In the first nine months of 2015, about 48% of the Company’s revenues came from customers outside the U.S.

Management Review and Future Outlook

Wabtec’s long-term financial goals are to generate cash flow from operations in excess of net income, maintain a strong credit profile while minimizing our overall cost of capital, increase margins through strict attention to cost controls and implementation of the Wabtec Performance System, and increase revenues through a focused growth strategy, including global and market expansion, new products and technologies, aftermarket products and services and acquisitions. In addition, management evaluates the Company’s current operational performance through measures such as quality and on-time delivery.

The Company monitors a variety of factors and statistics to gauge activity in key freight rail and passenger transit markets such as North and South America, Europe and Asia-Pacific. In these and other markets, the freight rail industry is largely driven by general economic conditions, which can cause fluctuations in rail traffic and the level of investment spending by railroads and governments to expand, upgrade, and modernize their networks. Based on those fluctuations, railroads and governments can increase or decrease purchases of new locomotives and freight cars, and spending on rail-related infrastructure. The passenger transit industry is driven mainly by the spending of government agencies and authorities as they maintain, expand and modernize their transit systems. In doing so, they will increase or decrease spending on new locomotives, transit/subway cars, buses and related infrastructure. Fare box revenues, the fees paid by riders to use public transit, also provide funding for maintaining and operating the systems. Many government entities at all levels are facing budget issues, which could have a negative effect on demand for the Company’s products and services.

In North America, the Association of American Railroads (AAR) compiles freight rail industry statistics such as carloadings, generally referred to as “rail traffic,” and the Railway Supply Institute (RSI) releases data on freight car orders, deliveries, and backlog. Through the third quarter of 2015, rail traffic in North America was about the same as in 2014, including a 3.5% increase in intermodal traffic. According to the RSI, at the end of the third quarter of 2015, the industry multi-year backlog of freight cars on order was about 123,000, slightly lower than at the end of the second quarter. In 2015, we expect deliveries of new locomotives to be lower and deliveries of new freight cars to be higher than in 2014. Future demand depends largely on the strength in the overall economy and in rail traffic volumes.

The American Public Transportation Association (APTA) provides quarterly transit ridership statistics for the U.S. and Canada. In the first quarter of 2015 ridership was flat. In 2012, the U.S. Congress passed a new, two-year transportation funding bill, which maintained transit spending at about the same level, about $10.7 billion, as in prior years. Subsequent extensions to the bill continued to fund transit spending at about the same level. The Company expects deliveries of new subway cars to increase in 2015, while bus deliveries are expected to be about the same compared to 2014.

In 2008, the U.S. federal government enacted a rail safety bill that mandates the use of Positive Train Control ("PTC") technology, which includes on-board locomotive computer and related software, on a majority of the locomotives and track in the U.S. With our Electronic Train Management System^®, we are the leading supplier of this on-board train control equipment, and we are working with the U.S. Class I railroads, commuter rail authorities and other industry suppliers to implement this technology by the December 31, 2015 deadline set in the rail safety bill. The railroads and commuter rail authorities have said they cannot complete full implementation by the deadline, and the U.S. Congress is considering an extension. An extension of the deadline could affect the rate of industry spending on this technology. Wabtec’s PTC revenue was about $290 million for the nine months ended September 30, 2015.

Wabtec continues to expand its presence in freight rail and passenger transit markets outside the U.S., particularly in Europe, Asia-Pacific and South America. In Europe, the majority of the rail system serves the passenger transit market, which is larger than the transit market in the U.S. Our presence in the U.K., Germany and Italy has positioned the Company to take advantage of this market. Asia-Pacific is a growth market and our various joint ventures and direct exports to China have positioned the Company to take advantage of this growth. Australia has also been an area of expansion for the Company as commodity suppliers use our products to meet the demands of their regional customers. In Brazil, the Company is completing a PTC contract, has expanded locations and has completed three acquisitions, allowing us to increase our sales in that market.

Current conditions in these international markets vary based on general economic factors and specific freight rail and passenger transit drivers, as mentioned above. In its most recent quarterly data, the Office of Rail Regulation in the U.K. reported an increase in passenger ridership of 4.7% and an 18% decrease in freight moved. In Germany, the government statistics bureau reported an increase of 0.1% for passenger rail and bus ridership, and a decrease in rail freight transport of 3.0% in the first half of 2015. Russian Railways announced a decrease of 4.7% in passenger ridership in the first eight months of 2015 compared to the year-ago period, and it said freight tons loaded were 1.4% lower than the year-ago period.

In 2015 and beyond, general economic and market conditions in our key markets could have an impact on our sales and operations. To the extent that these factors cause instability of capital markets, shortages of raw materials or component parts, longer sales cycles, deferral or delay of customer orders or an inability to market our products effectively, our business and results of operations could be materially adversely affected. In addition, we face risks associated with our four-point growth strategy including the level of investment that customers are willing to make in new technologies developed by the industry and the Company, and risks inherent in global expansion. When necessary, we will modify our financial and operating strategies to reflect changes in market conditions and risks.

PROPOSED TRANSACTION WITH FAIVELEY TRANSPORT S.A.

The transaction has been structured in three steps:

•


•	Upon completion of required labor group consultations, on October 6, 2015 the 51% shareholders entered into a definitive share purchase agreement and Faiveley Transport entered into an acquisition agreement with Wabtec.

•

The total purchase price offered is about $1.8 billion, including assumed debt. Wabtec plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing. Prior to September 30, 2015, Wabtec set aside $209.1 million as an escrow deposit for the Faiveley Transport purchase. The combination of Wabtec and Faiveley Transport would create one of the world’s largest public rail equipment companies, with revenues of about $4.5 billion and a presence in all key freight rail and passenger transit geographies worldwide.

Closing of the transaction is subject to various conditions, including completion of regulatory requirements. These steps are currently on-going and the timinig of completion is unknown.

RESULTS OF OPERATIONS

The following table shows our Consolidated Statements of Operations for the periods indicated.



	Three Months Ended September 30,						Nine Months Ended September 30,
In millions	2015			2014			2015			2014
Net sales	$	809,527		$	797,271		$	2,475,149		$	2,223,588
Cost of sales	(552,458		)	(549,813		)	(1,694,961		)	(1,541,903		)
Gross profit	257,069			247,458			780,188			681,685
Selling, general and administrative expenses	(82,206		)	(88,359		)	(255,969		)	(231,422		)
Engineering expenses	(17,239		)	(16,391		)	(51,852		)	(43,558		)
Amortization expense	(5,546		)	(6,731		)	(16,009		)	(16,559		)
Total operating expenses	(104,991		)	(111,481		)	(323,830		)	(291,539		)
Income from operations	152,078			135,977			456,358			390,146
Interest expense, net	(4,351		)	(4,594		)	(12,698		)	(13,569		)
Other income (expense), net	(2,937		)	(154		)	(7,690		)	72
Income from operations before income taxes	144,790			131,229			435,970			376,649
Income tax expense	(45,609		)	(41,074		)	(139,121		)	(117,655		)
Net income attributable to Wabtec shareholders	$	99,181		$	90,155		$	296,849		$	258,994

THIRD QUARTER 2015 COMPARED TO THIRD QUARTER 2014

The following table summarizes our results of operations for the periods indicated:



	Three Months Ended September 30,
In thousands	2015		2014		Percent Change
Freight Segment	$	507,173	$	453,329	11.9	%
Transit Segment	302,354		343,942		(12.1	)%
Net sales	809,527		797,271		1.5	%
Income from operations	152,078		135,977		11.8	%
Net income attributable to Wabtec shareholders	$	99,181	$	90,155	10.0	%

The following table shows the major components of the change in sales in the third quarter of 2015 from the third quarter of 2014:



In thousands	Freight Segment			Transit Segment			Total
Third Quarter 2014 Net Sales	$	453,329		$	343,942		$	797,271
Acquisitions	34,009			8,740			42,749
Change in Sales by Product Line:
Specialty Products & Electronics	23,588			32			23,620
Brake Products	(1,326		)	(15,027		)	(16,353		)
Remanufacturing, Overhaul & Build	21,214			(6,195		)	15,019
Other Transit Products	—			(5,687		)	(5,687		)
Other	(9,454		)	1,167			(8,287		)
Foreign exchange	(14,187		)	(24,618		)	(38,805		)
Third Quarter 2015 Net Sales	$	507,173		$	302,354		$	809,527

Net sales for the three months ended September 30, 2015 increased by $12.2 million or 1.5% to $809.5 million from $797.3 million. The increase is primarily due to sales from acquisitions of $42.7 million, $23.6 million for Specialty Products and Electronics sales from higher demand for freight original equipment products, aftermarket electronic and PTC products, and $15.0 million for Remanufacturing, Overhaul & Build sales from higher demand for aftermarket freight locomotive rebuilds. These increases were partially offset by unfavorable foreign exchange rates which decreased sales $38.8 million and a decrease in sales from Brake Products of $16.4 million due to lower demand for original equipment and aftermarket braking equipment.

Freight Segment sales increased by $53.8 million, or 11.9%, primarily due to an increase of $23.6 million for Specialty Products and Electronics sales from higher demand for freight original equipment rail products, PTC electronics, and aftermarket rail products, and $21.2 million for Remanufacturing, Overhaul and Build products due to higher sales for aftermarket freight locomotive rebuilds. Acquisitions increased sales by $34.0 million, while unfavorable foreign exchange decreased sales by $14.2 million.

Transit Segment sales decreased by $41.6 million, or 12.1%, primarily due to unfavorable foreign exchange rates of $24.6 million and a decrease of $15.0 million for Brake Products from lower demand for braking products in Europe and braking systems in the U.S. These decreases were partially offset by $8.7 million of sales from acquisitions.

Cost of Sales and Gross Profit. The following table shows the major components of cost of sales for the periods indicated:



	Three Months Ended September 30, 2015
In thousands	Freight		Percentage of Sales		Transit		Percentage of Sales		Total		Percentage of Sales
Material	$	212,341	41.9	%	$	125,387	41.5	%	$	337,728	41.7	%
Labor	53,111		10.5	%	38,080		12.6	%	91,191		11.3	%
Overhead	71,948		14.2	%	43,227		14.3	%	115,175		14.2	%
Other/Warranty	22		0.0	%	8,342		2.8	%	8,364		1.0	%
Total cost of sales	$	337,422	66.6	%	$	215,036	71.2	%	$	552,458	68.2	%



	Three Months Ended September 30, 2014
In thousands	Freight		Percentage of Sales		Transit		Percentage of Sales		Total		Percentage of Sales
Material	$	189,607	41.8	%	$	149,704	43.5	%	$	339,311	42.6	%
Labor	49,593		10.9	%	42,471		12.3	%	92,064		11.5	%
Overhead	58,758		13.0	%	51,664		15.0	%	110,422		13.8	%
Other/Warranty	3,832		0.8	%	4,184		1.2	%	8,016		1.0	%
Total cost of sales	$	301,790	66.5	%	$	248,023	72.0	%	$	549,813	68.9	%

Cost of Sales increased by $2.7 million to $552.5 million in the third quarter of 2015 compared to $549.8 million in the same period of 2014. In the third quarter of 2015, cost of sales as a percentage of sales was 68.2% compared to 68.9% in the same period of 2014. The decrease as a percentage of sales is due to lower raw material costs primarily due to reduced demand for original equipment and aftermarket braking products which carry a higher raw material component.

Freight Segment cost of sales remained consistent as a percentage of sales in the third quarter of 2015 compared to the third quarter of 2014. Transit Segment cost of sales decreased 0.8% as a percentage of sales to approximately 71.2% in the third quarter of 2015 from 72.0% in the third quarter of 2014. The primary reason for the decrease is a 2.0% reduction in raw material as a percentage of sales due to lower original equipment and aftermarket braking products which have higher raw material content.

Included in cost of sales is warranty expense. The provision for warranty expense is generally established for specific losses, along with historical estimates of customer claims as a percentage of sales, which can cause variability in warranty expense between quarters. Warranty expense was $7.6 million in the third quarter of 2015 compared to $6.6 million in the third quarter of 2014.

Gross profit for the three months ended September 30, 2015 increased $9.6 million to $257.1 million from $247.5 million in the previous year's quarter and the gross profit margin increased 80 basis points to 31.8% from 31.0% at September 30, 2014. These increases are due to higher sales volume, favorable sales mix, and the reasons discussed above.

Operating expenses The following table shows our operating expenses for the periods indicated:



	Three Months Ended September 30,
In thousands	2015		Percentage of Sales		2014		Percentage of Sales
Selling, general and administrative expenses	$	82,206	10.2	%	$	88,359	11.1	%
Engineering expenses	17,239		2.1	%	16,391		2.1	%
Amortization expense	5,546		0.7	%	6,731		0.8	%
Total operating expenses	$	104,991	13.0	%	$	111,481	14.0	%

Total operating expenses were 13.0% and 14.0% of sales for the third quarters of 2015 and 2014, respectively. Selling, general, and administrative expenses decreased $6.2 million, or 7.0%, primarily due to lower benefit and incentive compensation, initiatives to reduce costs, and foreign exchange rates. Engineering expense remained consistent period over period at 2.1% as a percentage of sales. Amortization expense of intangibles associated with acquisitions decreased $1.2 million from the third quarter of 2014 to the third quarter of 2015 due to one-time acquisition related charges in 2014.

The following table shows our segment operating expense for the periods indicated:



	Three Months Ended September 30,
In thousands	2015		2014		Percent Change
Freight Segment	$	49,375	$	49,462	(0.2	)%
Transit Segment	48,993		55,080		(11.1	)%
Corporate	6,623		6,939		(4.6	)%
Total operating expenses	104,991		111,481		(5.8	)%

Freight Segment operating expenses remained consistent period over period, however, decreased as a percentage of sales to 9.7% from 10.9%. This decrease relates primarily to lower benefit and compensation expense. Transit Segment operating expenses decreased 11.1% from the third quarter of 2014 to the third quarter of 2015 largely due to foreign exchange. Transit Segment operating expenses as a percentage of sales stayed consistent at 16.0% of sales.

Income from operations Income from operations totaled $152.1 million or 18.8% of sales in the third quarter of 2015 compared to $136.0 million or 17.1% of sales in the same period of 2014. Income from operations increased due to higher sales volume coupled with lower operating expenses as discussed above.

Interest expense, net Interest expense, net, remained consistent at roughly $4.5 million for both the third quarter of 2015 and the third quarter of 2014.

Other (expense)/income, net Other (Expense)/Income, net, increased primarily due to $2.8 million due to currency losses.

Income taxes The effective income tax rate was 31.5% and 31.3% for the third quarter of 2015 and 2014, respectively. The increase in the effective rate is primarily the result of a higher earnings mix in higher tax rate jurisdictions.

Net income Net income for the third quarter of 2015 was $99.2 million or $1.02 per diluted share compared to $90.2 million or $0.93 per diluted share in the prior year quarter. The increase in net income is due to higher income from operations partially offset by a higher effective tax rate discussed above.

FIRST NINE MONTHS OF 2015 COMPARED TO FIRST NINE MONTHS OF 2014

The following table summarizes our results of operations for the periods indicated:



	Nine months ended September 30,
In thousands	2015		2014		Percent Change
Freight Segment	$	1,553,734	$	1,250,337	24.3	%
Transit Segment	921,415		973,251		(5.3	)%
Net sales	2,475,149		2,223,588		11.3	%
Income from operations	456,358		390,146		17.0	%
Net income attributable to Wabtec shareholders	$	296,849	$	258,994	14.6	%

The following table shows the major components of the change in sales in the first nine months of 2015 from the first nine months of 2014:



In thousands	Freight Segment			Transit Segment			Total
First Nine Months of 2014 Net Sales	$	1,250,337		$	973,251		$	2,223,588
Acquisitions	106,768			110,766			217,534
Change in Sales by Product Line:
Specialty Products & Electronics	162,699			10,238			172,937
Brake Products	21,050			(13,549		)	7,501
Remanufacturing, Overhaul & Build	59,501			(64,889		)	(5,388		)
Other Transit Products	—			(11,930		)	(11,930		)
Other	(7,513		)	338			(7,175		)
Foreign exchange	(39,108		)	(82,810		)	(121,918		)
First Nine Months of 2015 Net Sales	$	1,553,734		$	921,415		$	2,475,149

Net sales for the nine months ended September 30, 2015 increased by $251.5 million to $2,475.1 million from $2,223.6 million. The increase is primarily due to a $172.9 million increase for Specialty Products and Electronics sales from higher demand for freight original equipment products, aftermarket electronic and PTC electronic products. Acquisitions increased sales $217.5 million and unfavorable foreign exchange decreased sales $121.9 million.

Freight Segment sales increased by $303.4 million, or 24.3%, primarily due to an increase of $162.7 million for Specialty Products and Electronics sales from higher demand for freight original equipment rail products, PTC electronics, and aftermarket rail products, $59.5 million for Remanufacturing, Overhaul and Build products due to higher demand for aftermarket locomotive builds, and $21.1 million for Brake Products due to higher demand for original equipment brakes. Acquisitions increased sales by $106.8 million, while unfavorable foreign exchange decreased sales by $39.1 million.

Transit Segment sales decreased by $51.8 million, or 5.3%, due to a $64.9 million decrease in Remanufacturing, Overhaul and Build from lower demand for original transit locomotives primarily related to a multi-year project which was substantially completed in 2014 and a decrease of $82.8 million related to unfavorable foreign exchange. These decreases were partially offset by $110.8 million in sales from acquisitions.

Cost of Sales and Gross Profit.

The following table shows the major components of cost of sales for the periods indicated:



	Nine months ended September 30, 2015
In thousands	Freight		Percentage of Sales		Transit		Percentage of Sales		Total		Percentage of Sales
Material	$	652,858	42.0	%	$	385,895	41.9	%	$	1,038,753	42.0	%
Labor	165,553		10.7	%	115,870		12.6	%	281,423		11.4	%
Overhead	214,178		13.8	%	131,932		14.3	%	346,110		14.0	%
Other/Warranty	9,638		0.6	%	19,037		2.1	%	28,675		1.2	%
Total cost of sales	$	1,042,227	67.1	%	$	652,734	70.9	%	$	1,694,961	68.6	%



	Nine months ended September 30, 2014
In thousands	Freight		Percentage of Sales		Transit		Percentage of Sales		Total		Percentage of Sales
Material	$	521,322	41.7	%	$	435,558	44.8	%	$	956,880	43.0	%
Labor	130,871		10.5	%	121,831		12.5	%	252,702		11.4	%
Overhead	165,930		13.3	%	145,250		14.9	%	311,180		14.0	%
Other/Warranty	2,207		0.2	%	18,934		1.9	%	21,141		1.0	%
Total cost of sales	$	820,330	65.7	%	$	721,573	74.1	%	$	1,541,903	69.4	%

Cost of Sales increased by $153.1 million to $1,695.0 million in the first nine months of 2015 compared to $1,541.9 million in the same period of 2014. In the first nine months of 2015, cost of sales as a percentage of sales was 68.6% compared to 69.4% in the same period of 2014. The decrease as a percentage of sales is due to lower material costs primarily due to lower original equipment transit locomotive sales which carry a higher raw material component.

Freight Segment cost of sales increased 1.4% as a percentage of sales to 67.1% in the first nine months of 2015 from 65.7% in the first nine months of 2014. The increase is primarily due to higher material and overhead costs caused by higher aftermarket freight locomotive sales and original equipment products which carry a higher material component.

Transit Segment cost of sales decreased 3.2% as a percentage of sales to 70.9% in the first nine months of 2015 from 74.1% in the first nine months of 2014. The decrease is primarily due to lower raw material costs caused by lower original equipment locomotive sales and lower original equipment and aftermarket brake product sales which carry a higher raw material component.

Included in cost of sales is warranty expense. The provision for warranty expense is generally established for specific losses, along with historical estimates of customer claims as a percentage of sales, which can cause variability in warranty expense between quarters. Warranty expense was $21.6 million in the first nine months of 2015 compared to $22.1 million in the first nine months of 2014.

Gross profit for the nine months ended September 30, 2015 increased $98.5 million to $780.2 million from $681.7 million and the gross profit margin increased 80 basis points to 31.5%. These increases are due to higher sales volume, favorable sales mix, and the reasons discussed above.

Operating expenses The following table shows our operating expenses for the periods indicated:



	Nine months ended September 30,
In thousands	2015		Percentage of Sales		2014		Percentage of Sales
Selling, general and administrative expenses	$	255,969	10.3	%	$	231,422	10.4	%
Engineering expenses	51,852		2.1	%	43,558		2.0	%
Amortization expense	16,009		0.6	%	16,559		0.7	%
Total operating expenses	$	323,830	13.0	%	$	291,539	13.1	%

Total operating expenses were 13.0% of sales for the first nine months of 2015 compared to 13.1% for the same period in the previous year. Selling, general, and administrative expenses increased $24.5 million, or 10.6%, primarily due to $22.4 million of additional expenses from acquisitions. Engineering expense increased by $8.3 million primarily due to a $5.4 million increase related to new product development and $2.8 million related to acquisitions, partially offset by lower discretionary spending. Costs related to engineering for specific customer contracts are included in cost of sales. Amortization expense decreased $0.6 million or 3.3%, due to one-time amortization charges taken in 2014 for acquisitions.

The following table shows our segment operating expense for the periods indicated:



	Nine months ended September 30,
In thousands	2015		2014		Percent Change
Freight Segment	$	154,015	$	135,703	13.5	%
Transit Segment	151,733		139,578		8.7	%
Corporate	18,082		16,258		11.2	%
Total operating expenses	$	323,830	$	291,539	11.1	%

Segment operating expenses consist of specific segment costs such as, sales and marketing, information technology, insurance, and audit and tax fees, allocated corporate costs, and other segment specific discrete charges. Certain corporate costs are allocated to the Freight and Transit Segments based on segment revenues.

Freight Segment operating expenses increased $18.3 million, or 13.5%, in the first nine months of 2015 and were 9.9% of sales. The increase primarily relates to $6.5 million of incremental selling, general and administrative expense and $0.5 million of incremental engineering expense from acquisitions, and an increase of $5.2 million in expenses allocated to the operating segments primarily related to business development activities.

Transit Segment operating expenses increased $12.2 million, or 8.7%, in the first nine months of 2015 and was 8.7% of sales. The increase is primarily related to incremental selling, general, and administrative expense and incremental engineering expense from acquisitions.

Corporate non-allocated operating expenses increased $1.8 million in the first nine months of 2015 compared to the same period of 2014.

Income from operations Income from operations totaled $436.0 million or 18.4% of sales in the first nine months of 2015 compared to $390.1 million or 17.5% of sales in the same period of 2014. Income from operations increased due to higher sales volume and as a percentage of sales, income from operations has increased due to the reasons discussed above.

Interest expense, net Interest expense, net, decreased $0.9 million in the first nine months of 2015 compared to the same period of 2014 due to lower debt balances.

Other (expense)/income, net Other (Expense)/Income, net, increased $7.8 million primarily due to currency losses.

Income taxes The effective income tax rate was 31.9% and 31.2% for the first nine months of 2015 and 2014, respectively. The increase in the effective rate is primarily due to a higher earnings mix in higher tax jurisdictions.

Net income Net income for the first nine months of 2015 was $296.8 million or $3.05 per diluted share compared to $259.0 million or $2.67 per diluted share in the first nine months of 2014. The increase in net income is due to higher income from operations, partially offset by a higher effective tax rate discussed above.

Liquidity and Capital Resources

Liquidity is provided primarily by operating cash flow and borrowings under the Company’s unsecured credit facility with a consortium of commercial banks. The following is a summary of selected cash flow information and other relevant data:



	Nine Months Ended September 30,
In thousands	2015			2014
Cash provided by (used for):
Operating activities	$	255,306		$	230,164
Investing activities	(341,961		)	(330,298		)
Financing activities	(120,833		)	31,561
(Decrease) in cash	$	(217,608	)	$	(73,219	)

Operating activities In the first nine months of 2015 and 2014, cash provided by operations was $255.3 million and $230.2 million, respectively. In comparison to the first nine months of 2014, cash provided by operations in 2015 increased due to higher operating results, partially offset by unfavorable working capital requirements. The unfavorable working capital requirements primarily related to an unfavorable change in accounts payable and accrued liabilities of $121.7 million and $21.3 million, respectively. These cash outflows were partially offset by a favorable change in accounts receivable of $88.5 million driven by collections due to achieving certain project related milestones and a favorable change in inventory of $18.1 million due to successful efforts to control the amount of inventory on hand.

Investing activities In the first nine months of 2015 and 2014, cash used in investing activities was $342.0 million and $330.3 million, respectively. The major components of the cash outflow in 2015 were $100.1 million in net cash paid for acquisitions, planned additions to property, plant and equipment of $33.1 million for continued investments in our facilities and manufacturing processes, and $209.1 million for an escrow deposit related to the proposed Faiveley Transport transaction. Refer to Note 2 of the "Notes to Condensed Consolidated Financial Statements" for further information on this subject. This compares to $299.7 million in net cash paid for acquisitions and $31.0 million in property, plant, and equipment for investments in the first nine months of 2014. Refer to Note 4 of the “Notes to Condensed Consolidated Financial Statements” for additional information on acquisitions.

Financing activities In the first nine months of 2015, cash used for financing activities was $120.8 million which included $390.3 million in proceeds from the revolving credit facility, $460.3 million in repayments of debt on the revolving credit facility, $19.3 million of dividend payments, $22.3 million for the repurchase of 237,027 shares of stock, and $14.6 million related to payment of income tax withholding on share based compensation. In the first nine months of 2014, cash provided by for financing activities was $31.6 million, which included $433.4 million in proceeds from the revolving credit facility, $363.0 million in repayments of debt on the revolving credit facility, $4.4 million for the settlement of contingent purchase price obligations related to a prior year acquisition, $26.8 million for the repurchase of 346,800 shares of stock, and $13.5 million of dividend payments.

Company Stock Repurchase Plan

On December 11, 2013, the Board of Directors amended its stock repurchase authorization to $200.0 million of the Company’s outstanding shares. During the first nine months of 2015, the Company repurchased 237,027 shares, leaving $151.0 million under the authorization.

The Company intends to purchase shares on the open market or in negotiated or block trades. No time limit was set for the completion of the programs which conforms to the requirements under the 2013 Refinancing Credit Agreement, as well as the 2013 Notes currently outstanding.

Contractual Obligations and Off-Balance Sheet Arrangements

As of September 30, 2015, the Company has recognized a total liability of $13.7 million for unrecognized tax benefits related to uncertain tax positions. At this time, the Company is unable to make a reasonably reliable estimate of the timing of cash settlement for any of the unrecognized tax benefits due to the uncertainty of the timing and outcome of its audits and other factors.

Since December 31, 2014, there have been no other significant changes in the total amount of the Company’s contractual obligations or the timing of cash flows in accordance with those obligations, as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Forward Looking Statements

We believe that all statements other than statements of historical facts included in this report, including certain statements under “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure that our assumptions and expectations are correct.

These forward-looking statements are subject to various risks, uncertainties and assumptions about us, including, among other things:

Economic and industry conditions


•	prolonged unfavorable economic and industry conditions in the markets served by us, including North America, South America, Europe, Australia, Asia and South Africa;


•	decline in demand for freight cars, locomotives, passenger transit cars, buses, power generation equipment and related products and services;


•	reliance on major original equipment manufacturer customers;


•	original equipment manufacturers’ program delays;


•	demand for services in the freight and passenger rail industry;


•	demand for our products and services;


•	orders either being delayed, cancelled, not returning to historical levels, or reduced or any combination of the foregoing;


•	consolidations in the rail industry;


•	continued outsourcing by our customers; industry demand for faster and more efficient braking equipment;


•	fluctuations in interest rates and foreign currency exchange rates; or


•	availability of credit.

Operating factors


•	supply disruptions;


•	technical difficulties;


•	changes in operating conditions and costs;


•	increases in raw material costs;


•	successful introduction of new products;


•	performance under material long-term contracts;


•	labor relations;


•	completion and integration of acquisitions; or


•	the development and use of new technology.

Competitive factors


•	the actions of competitors.

Political/governmental factors


•	political stability in relevant areas of the world;


•	future regulation/deregulation of our customers and/or the rail industry;


•	levels of governmental funding on transit projects, including for some of our customers;


•	political developments and laws and regulations, including those related to PTC;


•	federal and state income tax legislation;


•	the outcome of our existing or any future legal proceedings, including litigation involving our principal customers and any litigation with respect to environmental, asbestos-related matters and pension liabilities; or


•	the outcome of negotiations with partners, governments, suppliers, customers or others.

Statements in this 10-Q apply only as of the date on which such statements are made, and we undertake no obligation to update any statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Reference is also made to the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Critical Accounting Policies

A summary of critical accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In particular, judgment is used in areas such as accounts receivable and the allowance for doubtful accounts, inventories, goodwill and indefinite-lived intangibles, warranty reserves, pensions and postretirement benefits, income taxes and revenue recognition. There have been no significant changes in accounting policies since December 31, 2014.


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

In the ordinary course of business, Wabtec is exposed to risks that increases in interest rates may adversely affect funding costs associated with its variable-rate debt. The Company’s variable rate debt represents 11% and 23% of total long-term debt at September 30, 2015 and December 31, 2014, respectively. To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into forward interest rate swap agreements which convert a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. Refer to Note 6 – Long Term Debt of “Notes to Condensed Consolidated Financial Statements” for additional information regarding interest rate risk.

Foreign Currency Exchange Risk

The Company is subject 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 first nine months of 2015, approximately 52% of Wabtec’s net sales were to customers in the United States, 11% in the United Kingdom, 6% in Canada, 6% in Mexico, 3% in Australia, 3% in Brazil, 3% in Germany, 3% in China, and 13% in other international locations. To reduce the impact of changes in currency exchange rates, the Company has periodically entered into foreign currency forward contracts. Refer to “Financial Derivatives and Hedging Activities” in Note 2 of “Notes to Condensed Consolidated Financial Statements” for more information regarding foreign currency exchange risk.


Item 4.	CONTROLS AND 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 September 30, 2015. Based upon their evaluation, the principal executive officer and principal financial officer concluded that Wabtec’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by Wabtec in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by Wabtec in such reports is accumulated and communicated to Wabtec’s Management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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 September 30, 2015, that has materially affected, or is reasonably likely to materially affect, Wabtec’s internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.	LEGAL PROCEEDINGS

There have been no material changes regarding the Company’s commitments and contingencies as described in Note 18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.


Item 1A.	RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.


Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Item 4.	MINE SAFETY DISCLOSURES

Not Applicable


Item 6.	EXHIBITS

The following exhibits are being filed with this report:



31.1	Rule 13a-14(a) Certification of Chief Executive Officer.

31.2	Rule 13a-14(a) Certification of Chief Financial Officer.

32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema Document.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION

By:	/s/ PATRICK D. DUGAN
	Patrick D. Dugan,
	Senior Vice President Finance and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

DATE:	October 29, 2015

EXHIBIT INDEX



31.1	Rule 13a-14(a) Certification of Chief Executive Officer.

31.2	Rule 13a-14(a) Certification of Chief Financial Officer.

32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema Document.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 31.1

CERTIFICATION

I, Raymond T. Betler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Westinghouse Air Brake Technologies Corporation.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2015



By:		/s/ RAYMOND T. BETLER
Name:		Raymond T. Betler
Title:		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Patrick D. Dugan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Westinghouse Air Brake Technologies Corporation.

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2015



By:		/S/ PATRICK D. DUGAN
Name:		Patrick D. Dugan
Title:		Senior Vice President Finance and Chief Financial Officer

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, the undersigned officers of Westinghouse Air Brake Technologies Corporation (the “Company”), hereby certify, to the best of their knowledge, that the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



By:		/s/ RAYMOND T. BETLER
		Raymond T. Betler President and Chief Executive Officer

Date:		October 29, 2015

By:		/s/ PATRICK D. DUGAN
		Patrick D. Dugan, Senior Vice President Finance and Chief Financial Officer
Date:		October 29, 2015

v3.3.0.814

Accounting Policies - Additional Information (Detail)
$ in Thousands

Sep. 30, 2015

USD ($)

derivative_contract

Dec. 31, 2014

USD ($)

Jun. 05, 2014

USD ($)

Jan. 12, 2012

USD ($)

Summary Of Significant Accounting Policies [Line Items]

Unbilled accounts receivable $ 151,131 $ 187,762

Customer deposits 106,889 111,797

Provisions for loss contracts 8,900 7,100

Deferred pre-production costs 30,100 24,900

Interest rate swap agreement, current liability $ 5,798 3,351

Forward Starting Interest Rate Swap Agreement

Summary Of Significant Accounting Policies [Line Items]

Derivative number of instruments held | derivative_contract 2

Interest rate swap agreements, notional amount $ 150,000 $ 150,000 $ 150,000

Interest rate swap agreement, current liability 5,798 $ 3,351

Interest rate swap, accumulated other comprehensive loss $ 3,500

v3.3.0.814

Intangibles - Intangible Assets Other Than Goodwill and Trademarks (Detail) - USD ($)
$ in Thousands

Sep. 30, 2015

Dec. 31, 2014

Finite Lived Intangible Assets [Line Items]

Intangible assets, net of accumulated amortization $ 269,386 $ 252,705

Patents And Other

Finite Lived Intangible Assets [Line Items]

Intangible assets, net of accumulated amortization 12,002 14,722

Intangible assets, accumulated amortization 40,364 39,780

Customer Relationships

Finite Lived Intangible Assets [Line Items]

Intangible assets, net of accumulated amortization 257,384 237,983

Intangible assets, accumulated amortization $ 67,285 $ 56,684

v3.3.0.814

Stock-Based Compensation - Stock Option Activity (Detail) - USD ($)
$ / shares in Units, $ in Thousands
9 Months Ended 12 Months Ended

Sep. 30, 2015

Dec. 31, 2014

Options Outstanding

December 31, 2014 (in shares) 1,147,558

Granted (in shares) 84,675

Exercised (in shares) (112,156)

Canceled (in shares) (8,751)

September 30, 2015 (in shares) 1,111,326 1,147,558

Exercisable at September 30, 2015 (in shares) 875,157

Weighted-Average Exercise Price per Share

December 31, 2014 (in dollars per share) $ 28.33

Granted (in dollars per share) 87.35

Exercised (in dollars per share) 26.10

Canceled (in dollars per share) 65.24

September 30, 2015 (in dollars per share) 32.76 $ 28.33

Exercisable at September 30, 2015 (in dollars per share) $ 23.83

Weighted-Average Remaining Contractual Life

Outstanding, Weighted Average Remaining Contractual Life 5 years 1 month 6 days 5 years 6 months

Exercisable at September 30, 2015 4 years 3 months 18 days

Aggregate Intrinsic Value

December 31, 2014 $ 67,205

Granted 141

Exercised 7,057

Canceled 208

September 30, 2015 62,525 $ 67,205

Exercisable at September 30, 2015 $ 57,051

v3.3.0.814

Intangibles - Change in the Carrying Amount of Goodwill by Segment (Detail)
$ in Thousands
9 Months Ended

Sep. 30, 2015

USD ($)

Goodwill [Roll Forward]

December 31, 2014 $ 862,338

Adjustment to preliminary purchase allocation (4,095)

Acquisitions 24,981

Foreign currency impact (30,229)

September 30, 2015 852,995

Freight Segment

Goodwill [Roll Forward]

December 31, 2014 515,067

Adjustment to preliminary purchase allocation 45

Acquisitions 12,840

Foreign currency impact (9,006)

September 30, 2015 518,946

Transit Segment

Goodwill [Roll Forward]

December 31, 2014 347,271

Adjustment to preliminary purchase allocation (4,140)

Acquisitions 12,141

Foreign currency impact (21,223)

September 30, 2015 $ 334,049

v3.3.0.814

Warranties (Tables)
9 Months Ended

Sep. 30, 2015

Disclosure Changes In Product Warranty Reserve [Abstract]

Changes in Product Warranty Reserve
The following table reconciles the changes in the Company’s product warranty reserve as follows:

Nine Months Ended
September 30,
In thousands
2015

2014
Balance at December 31, 2014 and 2013 respectively
$
87,849

$
60,593

Warranty expense
21,615

22,104

Acquisitions
6,001

3,567

Warranty claim payments
(18,961
)

(14,572
)
Foreign currency impact/other
(1,554
)

(980
)
Balance at September 30, 2015 and 2014, respectively
$
94,950

$
70,712

v3.3.0.814

Stock-Based Compensation - Restricted Stock Activity and Incentive Stock Awards Activity (Detail)
9 Months Ended

Sep. 30, 2015

$ / shares

shares

Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]

Outstanding, beginning of period (in dollars per share) | $ / shares $ 47.97

Granted (in dollars per share) | $ / shares 87.74

Vested (in dollars per share) | $ / shares 37.76

Adjustment for incentive stock awards expected to vest (in dollars per share) | $ / shares 57.60

Canceled (in dollars per share) | $ / shares 66.30

Outstanding, end of period (in dollars per share) | $ / shares $ 65.82

Restricted Stock and Units

Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]

Outstanding, beginning of period (in shares) 438,543

Granted (in shares) 110,945

Vested (in shares) (182,776)

Canceled (in shares) (9,284)

Outstanding, end of period (in shares) 357,428

Incentive Stock Awards

Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]

Outstanding, beginning of period (in shares) 791,608

Granted (in shares) 125,650

Vested (in shares) (433,932)

Adjustment for incentive stock awards expected to vest (in shares) 61,654

Canceled (in shares) (6,196)

Outstanding, end of period (in shares) 538,784

v3.3.0.814

Accounting Policies (Tables)
9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Changes in Accumulated Other Comprehensive Loss by Component, Net of Tax
The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2015 are as follows:
In thousands
Foreign
currency
translation

Derivative
contracts

Pension and
post
retirement
benefit plans

Total
Balance at December 31, 2014
$
(94,450
)

$
(2,243
)

$
(62,793
)

$
(159,486
)
Other comprehensive (loss) income before reclassifications
(100,323
)

(2,503
)

2,783

(100,043
)
Amounts reclassified from accumulated other

comprehensive income
—

946

1,375

2,321

Net current period other comprehensive (loss) income
(100,323
)

(1,557
)

4,158

(97,722
)
Balance at September 30, 2015
$
(194,773
)

$
(3,800
)

$
(58,635
)

$
(257,208
)

Reclassifications Out of Accumulated Other Comprehensive Loss
Reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2015 are as follows:
In thousands
Amount reclassified from
accumulated other
comprehensive income

Affected line item in the
Condensed Consolidated
Statements of Operations
Amortization of defined pension and post retirement items

Amortization of initial net obligation and prior service cost
$
(522
)

Cost of sales
Amortization of net loss
1,191

Cost of sales

669

Income from Operations

(211
)

Income tax expense

$
458

Net income

Derivative contracts

Realized loss on derivative contracts
$
467

Interest expense, net

(147
)

Income tax expense

$
320

Net income

Reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 are as follows:
In thousands
Amount reclassified from
accumulated other
comprehensive income

Affected line item in the
Condensed Consolidated
Statements of Operations
Amortization of defined pension and post retirement items

Amortization of initial net obligation and prior service cost
$
(1,565
)

Cost of sales
Amortization of net loss
3,585

Cost of sales

2,020

Income from Operations

(645
)

Income tax expense

$
1,375

Net income

Derivative contracts

Realized loss on derivative contracts
$
1,390

Interest expense, net

(444
)

Income tax expense

$
946

Net income

v3.3.0.814

Business - Additional Information (Detail)
9 Months Ended

Sep. 30, 2015

country

Product Information [Line Items]

Number of countries company operates 20

Sales Revenue Outside United States | Customer Concentration Risk

Product Information [Line Items]

Percent of revenue from customers outside the U.S. 48.00%

Minimum

Product Information [Line Items]

Number of countries where product is found (more than) 100

v3.3.0.814

Employee Benefit Plans - Components of Net Periodic Benefit Cost (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

U.S. Defined Benefit Pension Plans

Defined Benefit Plan Disclosure [Line Items]

Service cost $ 95 $ 54 $ 285 $ 250

Interest cost 479 488 1,437 1,552

Expected return on plan assets (542) (617) (1,626) (1,857)

Net amortization/deferrals 266 355 798 1,665

Net periodic benefit cost 298 280 894 1,610

International Defined Benefit Pension Plans

Defined Benefit Plan Disclosure [Line Items]

Service cost 506 659 1,518 1,511

Interest cost 1,801 2,271 5,391 5,936

Expected return on plan assets (2,434) (2,655) (7,284) (7,116)

Net amortization/deferrals 655 766 1,962 2,292

Net periodic benefit cost 528 1,041 1,587 2,623

U.S. Post Retirement

Defined Benefit Plan Disclosure [Line Items]

Service cost 2 7 6 27

Interest cost 308 289 924 881

Net amortization/deferrals (234) (350) (702) (1,003)

Net periodic benefit cost 76 (54) 228 (95)

International Post Retirement

Defined Benefit Plan Disclosure [Line Items]

Service cost 11 10 33 28

Interest cost 35 42 105 126

Net amortization/deferrals (10) (16) (29) (46)

Net periodic benefit cost $ 36 $ 36 $ 109 $ 108

v3.3.0.814

Other Income (Expense), Net - Components of Other Income Expense (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Other Income and Expenses [Abstract]

Foreign currency (loss) $ (3,058) $ (455) $ (6,993) $ (554)

Other miscellaneous income (expense) 121 301 (697) 626

Total other (expense) income, net $ (2,937) $ (154) $ (7,690) $ 72

v3.3.0.814

Warranties - Changes in Product Warranty Reserve (Detail) - USD ($)
$ in Thousands
9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]

Balance at beginning of period $ 87,849 $ 60,593

Warranty expense 21,615 22,104

Acquisitions 6,001 3,567

Warranty claim payments (18,961) (14,572)

Foreign currency impact/other (1,554) (980)

Balance at end of period $ 94,950 $ 70,712

v3.3.0.814

Intangibles - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Dec. 31, 2014

Intangible Assets Disclosure [Line Items]

Trademarks $ 167,600 $ 167,600 $ 170,100

Intangible assets, amortization expense $ 5,546 $ 6,731 $ 16,009 $ 16,559

Patents

Intangible Assets Disclosure [Line Items]

Intangible assets, weighted average useful life (years) 10 years

Customer Relationships

Intangible Assets Disclosure [Line Items]

Intangible assets, weighted average useful life (years) 16 years

Intellectual Property

Intangible Assets Disclosure [Line Items]

Intangible assets, weighted average useful life (years) 14 years

v3.3.0.814

Proposed Transaction with Faiveley Transport S.A.
9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Proposed Transaction with Faiveley Transport S.A.
PROPOSED TRANSACTION WITH FAIVELEY TRANSPORT S.A.
On July 27, 2015, the Company announced plans to acquire Faiveley Transport S.A. ("Faiveley Transport"), 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 valued-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 & Safety (braking systems and couplers).
The transaction has been structured in three steps:
•
Wabtec made an irrevocable offer to the owners of approximately 51% of Faiveley Transport’s shares for a purchase price of €100 per share, payable 25% in cash and 75% in Wabtec preferred stock.  The preferred stock will have a 1% annual dividend or, if greater, the annual dividend assuming full conversion into common shares, and must be converted after three years into Wabtec common shares at an implied ratio of one Faiveley Transport common share for 1.125 Wabtec common shares. Shareholders owning 51% of Faiveley Transport have entered into exclusive discussions with Wabtec.
•
Upon completion of required labor group consultations, on October 6, 2015 the 51% shareholders entered into a definitive share purchase agreement and Faiveley Transport entered into an acquisition agreement with Wabtec.
•
Upon completing the share purchase, Wabtec will commence a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders will have the option to elect to receive €100 per share in cash or Wabtec preferred stock. The preferred stock portion of the consideration is subject to a cap of 75% of Faiveley Transport’s common shares.  Wabtec intends to delist Faiveley Transport from Euronext after the tender offer if minority interests represent less than 5%.
The total purchase price offered is about $1.8 billion, including assumed debt.  Wabtec plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing.  Prior to September 30, 2015 Wabtec set aside $209.1 million as an escrow deposit for the Faiveley Transport purchase. The combination of Wabtec and Faiveley Transport would create one of the world’s largest public rail equipment companies, with revenues of about $4.5 billion and a presence in all key freight rail and passenger transit geographies worldwide.
Closing of the transaction is subject to various conditions, including completion of regulatory requirements. These steps are currently on-going and the timing of completion is unknown.
ACQUISITIONS
The Company has made the following acquisitions operating as a business unit or component of a business unit in the Freight Segment:
•
On February 4, 2015, the Company acquired Railroad Controls L.P. (“RCL”), a provider of railway signal construction services, for a purchase price of approximately $76.4 million, net of cash acquired, resulting in preliminary goodwill of $12.8 million, none of which will be deductible for tax purposes.
•
On September 3, 2014, the Company acquired C2CE Pty Ltd. (“C2CE”), a provider of railway signal design services, for a purchase price of approximately $25.5 million, net of cash acquired, resulting in additional goodwill of $15.9 million, none of which will be deductible for tax purposes.
The Company has made the following acquisitions operating as a business unit or component of a business unit in the Transit Segment:
•
On June 17, 2015, the Company acquired Metalocaucho (“MTC”), a manufacturer of transit products, primarily rubber components for suspension and vibration control systems, for a purchase price of approximately $23.4 million, net of cash acquired, resulting in preliminary goodwill of $12.1 million, none of which will be deductible for tax purposes.
•
On August 21, 2014, the Company acquired Dia-Frag (“Dia-Frag”), a manufacturer of friction products for various markets with a focus on motorcycle braking, for a purchase price of approximately $70.6 million, net of cash acquired, resulting in additional goodwill of $35.9 million, none of which will be deductible for tax purposes.
•
On June 6, 2014, the Company acquired Fandstan Electric Group Ltd. (“Fandstan”), a leading rail and industrial equipment manufacturer for a variety of markets, including rail and tram transportation, industrial and energy, for a purchase price of approximately $199.4 million, net of cash acquired, resulting in additional goodwill of $64.7 million, none of which will be deductible for tax purposes.
The acquisitions listed above include escrow deposits of $40.8 million, which act as security for indemnity and other claims in accordance with the purchase and related escrow agreements.

For the MTC and RCL 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 C2CE, Dia-Frag, and Fandstan acquisitions, the following table summarizes the final fair values of the assets acquired and liabilities assumed at the date of acquisition.

MTC

RCL

C2CE

Dia-Frag

Fandstan
In thousands
June 17,
2015

February 4,
2015

September 3,
2014

August 21,
2014

June 6,
2014
Current assets
$
10,906

$
16,445

$
9,812

$
12,158

$
124,280

Property, plant & equipment
1,510

11,983

1,853

13,749

67,948

Goodwill
12,141

12,840

15,896

35,850

64,713

Other intangible assets
7,649

40,403

3,654

26,150

50,598

Other assets
114

—

—

66

216

Total assets acquired
32,320

81,671

31,215

87,973

307,755

Total liabilities assumed
(8,960
)

(5,289
)

(5,736
)

(17,332
)

(108,351
)
Net assets acquired
$
23,360

$
76,382

$
25,479

$
70,641

$
199,404

Of the $128.5 million of total acquired intangible assets, $95.2 million was assigned to customer relationships, $25.6 million was assigned to trade names, $2.1 million was assigned to non-compete agreements and $5.6 million was assigned to customer backlog. The trade names were determined to have an indefinite useful life, while the customer relationships’ average useful life is 20 years, and the non-compete useful life is five years.
The following unaudited pro forma consolidated financial information presents income statement results as if the acquisitions listed above had occurred on January 1, 2014:
In thousands
Three Months Ended
September 30, 2015

Three Months Ended
September 30, 2014

Nine Months Ended
September 30, 2015

Nine Months Ended
September 30, 2014
Net sales
$
809,527

$
835,231

$
2,499,388

$
2,358,518

Gross profit
257,069

260,669

787,198

726,388

Net income attributable to Wabtec shareholders
99,181

96,680

299,233

281,136

Diluted earnings per share

As Reported
$
1.02

$
0.93

$
3.05

$
2.67

Pro forma
$
1.02

$
0.99

$
3.08

$
2.89

v3.3.0.814

Fair Value Measurement and Fair Value of Financial Instruments - Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($)
$ in Thousands

Sep. 30, 2015

Dec. 31, 2014

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Interest rate swap agreement, current liability $ 5,798 $ 3,351

Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Liabilities at fair value 5,798 3,351

Interest rate swap agreements

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Interest rate swap agreement, current liability 5,798 3,351

Liabilities at fair value 5,798 3,351

Interest rate swap agreements | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Liabilities at fair value $ 5,798 $ 3,351

v3.3.0.814

Acquisitions - Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed (Detail) - USD ($)
$ in Thousands

Sep. 30, 2015

Jun. 17, 2015

Feb. 04, 2015

Dec. 31, 2014

Sep. 03, 2014

Aug. 21, 2014

Jun. 06, 2014

Business Acquisition [Line Items]

Goodwill $ 852,995 $ 862,338

MTC

Business Acquisition [Line Items]

Current assets $ 10,906

Property, plant & equipment 1,510

Goodwill 12,141

Other intangible assets 7,649

Other assets 114

Total assets acquired 32,320

Total liabilities assumed (8,960)

Net assets acquired $ 23,360

RCL

Business Acquisition [Line Items]

Current assets $ 16,445

Property, plant & equipment 11,983

Goodwill 12,840

Other intangible assets 40,403

Total assets acquired 81,671

Total liabilities assumed (5,289)

Net assets acquired $ 76,382

C2CE

Business Acquisition [Line Items]

Current assets $ 9,812

Property, plant & equipment 1,853

Goodwill 15,896

Other intangible assets 3,654

Total assets acquired 31,215

Total liabilities assumed (5,736)

Net assets acquired $ 25,479

Dia-Frag

Business Acquisition [Line Items]

Current assets $ 12,158

Property, plant & equipment 13,749

Goodwill 35,850

Other intangible assets 26,150

Other assets 66

Total assets acquired 87,973

Total liabilities assumed (17,332)

Net assets acquired $ 70,641

Fandstan Electric Group Ltd

Business Acquisition [Line Items]

Current assets $ 124,280

Property, plant & equipment 67,948

Goodwill 64,713

Other intangible assets 50,598

Other assets 216

Total assets acquired 307,755

Total liabilities assumed (108,351)

Net assets acquired $ 199,404

v3.3.0.814

Long-Term Debt (Tables)
9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Long-term Debt
Long-term debt consisted of the following:
In thousands
September 30,
2015

December 31,
2014
4.375% Senior Notes, due 2023
$
250,000

$
250,000

Revolving Credit Facility
200,000

270,000

Capital Leases
1,019

1,195

Total
451,019

521,195

Less - current portion
430

792

Long-term portion
$
450,589

$
520,403

v3.3.0.814

Intangibles (Tables)
9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Change in the Carrying Amount of Goodwill by Segment
The change in the carrying amount of goodwill by segment for the nine months ended September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Total
Balance at December 31, 2014
$
515,067

$
347,271

$
862,338

Adjustment to preliminary purchase allocation
45

(4,140
)

(4,095
)
Acquisitions
12,840

12,141

24,981

Foreign currency impact
(9,006
)

(21,223
)

(30,229
)
Balance at September 30, 2015
$
518,946

$
334,049

$
852,995

Intangible Assets of the Company, Other Than Goodwill and Trademarks
Intangible assets of the Company, other than goodwill and trademarks, consist of the following:
In thousands
September 30,
2015

December 31,
2014
Patents, non-compete and other intangibles, net of accumulated

amortization of $40,364 and $39,780
$
12,002

$
14,722

Customer relationships, net of accumulated amortization

of $67,285 and $56,684
257,384

237,983

Total
$
269,386

$
252,705

Amortization Expense
Amortization expense for the five succeeding years is estimated to be as follows (in thousands):
Remainder of 2015
$
6,070

2016
21,005

2017
19,826

2018
18,848

2019
18,405

v3.3.0.814

Stock-Based Compensation - Fair Value of Each Option Grant Weighted Average Assumptions (Detail)
9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Dividend yield 0.14% 0.11%

Risk-free interest rate 1.82% 2.19%

Stock price volatility 27.30% 33.20%

Expected life (years) 5 years 5 years

v3.3.0.814

Acquisitions - Pro Forma Financial Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Business Combinations [Abstract]

Net sales $ 809,527 $ 835,231 $ 2,499,388 $ 2,358,518

Gross profit 257,069 260,669 787,198 726,388

Net income attributable to Wabtec shareholders $ 99,181 $ 96,680 $ 299,233 $ 281,136

Diluted earnings per share, as reported (in dollars per share) $ 1.02 $ 0.93 $ 3.05 $ 2.67

Diluted earnings per share, pro forma (in dollars per share) $ 1.02 $ 0.99 $ 3.08 $ 2.89

v3.3.0.814

Employee Benefit Plans (Tables)
9 Months Ended

Sep. 30, 2015

Defined Benefit Pension Plans

Components of Net Periodic Benefit Cost
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
September 30,

Three Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
95

54

506

659

Interest cost
479

488

1,801

2,271

Expected return on plan assets
(542
)

(617
)

(2,434
)

(2,655
)
Net amortization/deferrals
266

355

655

766

Net periodic benefit cost
298

280

528

1,041

U.S.

International

Nine Months Ended
September 30,

Nine Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
285

$
250

$
1,518

$
1,511

Interest cost
1,437

1,552

5,391

5,936

Expected return on plan assets
(1,626
)

(1,857
)

(7,284
)

(7,116
)
Net amortization/deferrals
798

1,665

1,962

2,292

Net periodic benefit cost
$
894

$
1,610

$
1,587

$
2,623

Postretirement Benefit Plans

Components of Net Periodic Benefit Cost
The following tables provide information regarding the Company’s postretirement benefit plans summarized by U.S. and international components.

U.S.

International

Three Months Ended
September 30,

Three Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
2

$
7

$
11

$
10

Interest cost
308

289

35

42

Net amortization/deferrals
(234
)

(350
)

(10
)

(16
)
Net periodic benefit (credit) cost
$
76

$
(54
)

$
36

$
36

U.S.

International

Nine Months Ended
September 30,

Nine Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
6

$
27

$
33

$
28

Interest cost
924

881

105

126

Net amortization/deferrals
(702
)

(1,003
)

(29
)

(46
)
Net periodic benefit (credit) cost
$
228

$
(95
)

$
109

$
108

v3.3.0.814

Stock-Based Compensation (Tables)
9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option Activity
The following table summarizes the Company’s stock option activity and related information for the 2011 Plan, the 2000 Plan and the Directors Plan for the nine months ended September 30, 2015:

Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic value
(in thousands)
Outstanding at December 31, 2014
1,147,558

$
28.33

5.5

$
67,205

Granted
84,675

87.35

141

Exercised
(112,156
)

26.10

7,057

Canceled
(8,751
)

65.24

208

Outstanding at September 30, 2015
1,111,326

32.76

5.1

62,525

Exercisable at September 30, 2015
875,157

23.83

4.3

57,051

Share-Based Fair Value of Each Option Grant Weighted-Average Assumptions
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:

Nine Months Ended
September 30,

2015

2014
Dividend yield
0.14
%

0.11
%
Risk-free interest rate
1.82
%

2.19
%
Stock price volatility
27.3
%

33.2
%
Expected life (years)
5.0

5.0

Restricted Stock Activity and Incentive Stock Awards Activity
The following table summarizes the restricted stock and unit activity for the 2011 Plan, the 2000 Plan and the Directors Plan, and incentive stock awards activity for the 2011 Plan and the 2000 Plan with related information for the nine months ended September 30, 2015:

Restricted
Stock
and Units

Incentive
Stock
Awards

Weighted
Average Grant
Date Fair
Value
Outstanding at December 31, 2014
438,543

791,608

$
47.97

Granted
110,945

125,650

87.74

Vested
(182,776
)

(433,932
)

37.76

Adjustment for incentive stock awards expected to vest
—

61,654

57.60

Canceled
(9,284
)

(6,196
)

66.30

Outstanding at September 30, 2015
357,428

538,784

65.82

v3.3.0.814

Business
9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business
BUSINESS
Westinghouse Air Brake Technologies Corporation (“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 more than 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 20 countries. In the first nine months of 2015, about 48% of the Company’s revenues came from customers outside the U.S.

v3.3.0.814

Earnings Per Share (Tables)
9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Computation of 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
September 30,
In thousands, except per share data
2015

2014
Numerator

Numerator for basic and diluted earnings per common
   share - net income attributable

to Wabtec shareholders
$
99,181

$
90,155

Less: dividends declared - common shares
   and non-vested restricted stock
(7,735
)

(5,780
)
Undistributed earnings
91,446

84,375

Percentage allocated to common shareholders (1)
99.7
%

99.6
%

91,172

84,038

Add: dividends declared - common shares
7,713

5,759

Numerator for basic and diluted earnings per
   common share
$
98,885

$
89,797

Denominator

Denominator for basic earnings per common
   share - weighted average shares
96,369

95,935

Effect of dilutive securities:

Assumed conversion of dilutive stock-based
   compensation plans
999

1,069

Denominator for diluted earnings per common share -

adjusted weighted average shares and assumed conversion
97,368

97,004

Net income per common share attributable to
   Wabtec shareholders

Basic
$
1.03

$
0.94

Diluted
$
1.02

$
0.93

(1) Basic weighted-average common shares outstanding
96,369

95,935

Basic weighted-average common shares outstanding and
   non-vested restricted stock expected to vest
96,647

96,285

Percentage allocated to common shareholders
99.7
%

99.6
%

Nine Months Ended
September 30,
In thousands, except per share data
2015

2014
Numerator

Numerator for basic and diluted earnings per common
   share - net income attributable

to Wabtec shareholders
$
296,849

$
258,994

Less: dividends declared - common shares
   and non-vested restricted stock
(19,315
)

(13,471
)
Undistributed earnings
277,534

245,523

Percentage allocated to common shareholders (1)
99.7
%

99.6
%

276,701

244,541

Add: dividends declared - common shares
19,250

13,415

Numerator for basic and diluted earnings per
   common share
$
295,951

$
257,956

Denominator

Denominator for basic earnings per common
   share - weighted average shares
96,135

95,745

Effect of dilutive securities:

Assumed conversion of dilutive stock-based
   compensation plans
1,027

1,089

Denominator for diluted earnings per common share -

adjusted weighted average shares and assumed conversion
97,162

96,834

Net income per common share attributable to
   Wabtec shareholders

Basic
$
3.08

$
2.69

Diluted
$
3.05

$
2.67

(1) Basic weighted-average common shares outstanding
96,135

95,745

Basic weighted-average common shares outstanding and
   non-vested restricted stock expected to vest
96,462

96,146

Percentage allocated to common shareholders
99.7
%

99.6
%

v3.3.0.814

Employee Benefit Plans - Additional Information (Detail)
9 Months Ended

Sep. 30, 2015

USD ($)

International Defined Benefit Pension Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Contribution to the plan $ 6,700,000

U.S. Defined Benefit Pension Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Contribution to the plan $ 0

v3.3.0.814

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands

Sep. 30, 2015

Dec. 31, 2014

Current Assets

Cash and cash equivalents $ 208,241 $ 425,849

Accounts receivable 474,213 443,464

Unbilled accounts receivable 151,131 187,762

Inventories 517,486 510,949

Deposit in escrow 209,128 0

Deferred income taxes 46,025 43,953

Other 43,867 25,887

Total current assets 1,650,091 1,637,864

Property, plant and equipment 707,925 683,034

Accumulated depreciation (356,691) (343,923)

Property, plant and equipment, net 351,234 339,111

Other Assets

Goodwill 852,995 862,338

Other intangibles, net 436,991 422,811

Other noncurrent assets 34,771 41,717

Total other assets 1,324,757 1,326,866

Total Assets 3,326,082 3,303,841

Current Liabilities

Accounts payable 319,225 399,845

Customer deposits 106,889 111,797

Accrued compensation 71,478 70,857

Accrued warranty 72,693 68,031

Current portion of long-term debt 430 792

Other accrued liabilities 83,934 87,480

Total current liabilities 654,649 738,802

Long-term debt 450,589 520,403

Accrued postretirement and pension benefits 78,437 81,908

Deferred income taxes 113,758 112,915

Accrued warranty 22,257 19,818

Other long-term liabilities 20,951 21,697

Total liabilities 1,340,641 1,495,543

Shareholders’ Equity

Preferred stock 0 0

Common stock 1,323 1,323

Additional paid-in capital 463,151 448,531

Treasury stock (409,792) (392,262)

Retained earnings 2,186,673 1,909,136

Accumulated other comprehensive loss (257,208) (159,486)

Total Westinghouse Air Brake Technologies Corporation shareholders' equity 1,984,147 1,807,242

Non-controlling interest (minority interest) 1,294 1,056

Total shareholders’ equity 1,985,441 1,808,298

Total Liabilities and Shareholders’ Equity $ 3,326,082 $ 3,303,841

v3.3.0.814

Inventories (Details) - USD ($)
$ in Thousands

Sep. 30, 2015

Dec. 31, 2014

Inventory Disclosure [Abstract]

Raw materials $ 188,326 $ 222,059

Work-in-progress 196,379 154,094

Finished goods 132,781 134,796

Total inventories $ 517,486 $ 510,949

v3.3.0.814

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Operating Activities

Net income attributable to Wabtec shareholders $ 296,849 $ 258,994

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 48,167 44,977

Stock-based compensation expense 20,092 19,107

Loss on disposal of property, plant and equipment 1,804 114

Excess income tax benefits from exercise of stock options (2,683) (2,739)

Changes in operating assets and liabilities, net of acquisitions

Accounts receivable and unbilled accounts receivable (881) (89,359)

Inventories (15,847) (33,958)

Accounts payable (80,701) 40,971

Accrued income taxes 20,964 16,355

Accrued liabilities and customer deposits (12,911) 8,342

Other assets and liabilities (19,547) (32,640)

Net cash provided by operating activities 255,306 230,164

Investing Activities

Purchase of property, plant and equipment (33,079) (30,977)

Proceeds from disposal of property, plant and equipment 354 340

Acquisitions of businesses, net of cash acquired (100,108) (299,661)

Deposit in escrow (209,128) 0

Net cash used for investing activities (341,961) (330,298)

Financing Activities

Proceeds from debt 390,300 433,400

Payments of debt (460,308) (362,965)

Purchase of treasury stock (22,336) (26,757)

Proceeds from exercise of stock options and other benefit plans 2,708 3,044

Excess income tax benefits from exercise of stock options 2,683 2,739

Payment of income tax withholding on share-based compensation (14,565) 0

Earn-out settlement 0 (4,429)

Cash dividends (19,315) (13,471)

Net cash (used for) provided by financing activities (120,833) 31,561

Effect of changes in currency exchange rates (10,120) (4,646)

Decrease in cash (217,608) (73,219)

Cash, beginning of period 425,849 285,760

Cash, end of period $ 208,241 $ 212,541

v3.3.0.814

Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Earnings Per Share [Abstract]

Net income attributable to Wabtec shareholders $ 99,181 $ 90,155 $ 296,849 $ 258,994

Less: dividends declared - common shares and non-vested restricted stock (7,735) (5,780) (19,315) (13,471)

Undistributed earnings $ 91,446 $ 84,375 $ 277,534 $ 245,523

Percentage allocated to common shareholders 99.70% 99.60% 99.70% 99.60%

Undistributed earnings allocated to common shareholders $ 91,172 $ 84,038 $ 276,701 $ 244,541

Add: dividends declared - common shares 7,713 5,759 19,250 13,415

Numerator for basic and diluted earnings per common share $ 98,885 $ 89,797 $ 295,951 $ 257,956

Basic weighted average common shares outstanding (in shares) 96,369 95,935 96,135 95,745

Assumed conversion of dilutive stock-based compensation plans (in shares) 999 1,069 1,027 1,089

Denominator for diluted earnings per common share - adjusted weighted average shares and assumed conversion (in shares) 97,368 97,004 97,162 96,834

Basic earnings per share (in dollars per share) $ 1.03 $ 0.94 $ 3.08 $ 2.69

Diluted earnings per share, as reported (in dollars per share) $ 1.02 $ 0.93 $ 3.05 $ 2.67

v3.3.0.814

Segment Information (Tables)
9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Financial Information
Segment financial information for the three months ended September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
507,173

$
302,354

$
—

$
809,527

Intersegment sales/(elimination)
9,025

7,111

(16,136
)

—

Total sales
$
516,198

$
309,465

$
(16,136
)

$
809,527

Income (loss) from operations
$
119,930

$
38,772

$
(6,624
)

$
152,078

Interest expense and other, net
—

—

(7,288
)

(7,288
)
Income (loss) from operations before income taxes
$
119,930

$
38,772

$
(13,912
)

$
144,790

Segment financial information for the three months ended September 30, 2014 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
453,329

$
343,942

$
—

$
797,271

Intersegment sales/(elimination)
9,781

1,822

(11,603
)

—

Total sales
$
463,110

$
345,764

$
(11,603
)

$
797,271

Income (loss) from operations
$
102,182

$
40,734

$
(6,939
)

$
135,977

Interest expense and other, net
—

—

(4,748
)

(4,748
)
Income (loss) from operations before income taxes
$
102,182

$
40,734

$
(11,687
)

$
131,229

Segment financial information for the nine months ended September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
1,553,734

$
921,415

$
—

$
2,475,149

Intersegment sales/(elimination)
26,982

8,227

(35,209
)

—

Total sales
$
1,580,716

$
929,642

$
(35,209
)

$
2,475,149

Income (loss) from operations
$
356,731

$
117,709

$
(18,082
)

$
456,358

Interest expense and other, net
—

—

(20,388
)

(20,388
)
Income (loss) from operations before income taxes
$
356,731

$
117,709

$
(38,470
)

$
435,970

Segment financial information for the nine months ended September 30, 2014 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
1,250,337

$
973,251

$
—

$
2,223,588

Intersegment sales/(elimination)
27,074

6,096

(33,170
)

—

Total sales
$
1,277,411

$
979,347

$
(33,170
)

$
2,223,588

Income (loss) from operations
$
294,396

$
112,009

$
(16,259
)

$
390,146

Interest expense and other, net
—

—

(13,497
)

(13,497
)
Income (loss) from operations before income taxes
$
294,396

$
112,009

$
(29,756
)

$
376,649

Sales by Product
Sales by product are as follows:

Three Months Ended
September 30,
In thousands
2015

2014
Specialty Products & Electronics
$
433,260

$
390,038

Brake Products
148,552

142,620

Remanufacturing, Overhaul & Build
146,424

170,826

Other Transit Products
45,547

51,607

Other
35,744

42,180

Total sales
$
809,527

$
797,271

Nine Months Ended
September 30,
In thousands
2015

2014
Specialty Products & Electronics
$
1,307,089

$
980,897

Brake Products
472,855

487,095

Remanufacturing, Overhaul & Build
437,101

474,444

Other Transit Products
143,214

155,144

Other
114,890

126,008

Total sales
$
2,475,149

$
2,223,588

v3.3.0.814

Segment Information
9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information
SEGMENT INFORMATION
Wabtec has two reportable segments—the Freight Segment and the Transit Segment. 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 Segment 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, friction products, 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 Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically subway cars and buses, builds new commuter locomotives, friction products, 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 September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
507,173

$
302,354

$
—

$
809,527

Intersegment sales/(elimination)
9,025

7,111

(16,136
)

—

Total sales
$
516,198

$
309,465

$
(16,136
)

$
809,527

Income (loss) from operations
$
119,930

$
38,772

$
(6,624
)

$
152,078

Interest expense and other, net
—

—

(7,288
)

(7,288
)
Income (loss) from operations before income taxes
$
119,930

$
38,772

$
(13,912
)

$
144,790

Segment financial information for the three months ended September 30, 2014 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
453,329

$
343,942

$
—

$
797,271

Intersegment sales/(elimination)
9,781

1,822

(11,603
)

—

Total sales
$
463,110

$
345,764

$
(11,603
)

$
797,271

Income (loss) from operations
$
102,182

$
40,734

$
(6,939
)

$
135,977

Interest expense and other, net
—

—

(4,748
)

(4,748
)
Income (loss) from operations before income taxes
$
102,182

$
40,734

$
(11,687
)

$
131,229

Segment financial information for the nine months ended September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
1,553,734

$
921,415

$
—

$
2,475,149

Intersegment sales/(elimination)
26,982

8,227

(35,209
)

—

Total sales
$
1,580,716

$
929,642

$
(35,209
)

$
2,475,149

Income (loss) from operations
$
356,731

$
117,709

$
(18,082
)

$
456,358

Interest expense and other, net
—

—

(20,388
)

(20,388
)
Income (loss) from operations before income taxes
$
356,731

$
117,709

$
(38,470
)

$
435,970

Segment financial information for the nine months ended September 30, 2014 is as follows:
In thousands
Freight
Segment

Transit
Segment

Corporate
Activities and
Elimination

Total
Sales to external customers
$
1,250,337

$
973,251

$
—

$
2,223,588

Intersegment sales/(elimination)
27,074

6,096

(33,170
)

—

Total sales
$
1,277,411

$
979,347

$
(33,170
)

$
2,223,588

Income (loss) from operations
$
294,396

$
112,009

$
(16,259
)

$
390,146

Interest expense and other, net
—

—

(13,497
)

(13,497
)
Income (loss) from operations before income taxes
$
294,396

$
112,009

$
(29,756
)

$
376,649

Sales by product are as follows:

Three Months Ended
September 30,
In thousands
2015

2014
Specialty Products & Electronics
$
433,260

$
390,038

Brake Products
148,552

142,620

Remanufacturing, Overhaul & Build
146,424

170,826

Other Transit Products
45,547

51,607

Other
35,744

42,180

Total sales
$
809,527

$
797,271

Nine Months Ended
September 30,
In thousands
2015

2014
Specialty Products & Electronics
$
1,307,089

$
980,897

Brake Products
472,855

487,095

Remanufacturing, Overhaul & Build
437,101

474,444

Other Transit Products
143,214

155,144

Other
114,890

126,008

Total sales
$
2,475,149

$
2,223,588

v3.3.0.814

Other Income (Expense), Net (Tables)
9 Months Ended

Sep. 30, 2015

Other Income and Expenses [Abstract]

Components of Other Income (Expense)
The components of other income (expense) are as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,
In thousands
2015

2014

2015

2014
Foreign currency (loss)
$
(3,058
)

$
(455
)

$
(6,993
)

$
(554
)
Other miscellaneous income (expense)
121

301

(697
)

626

Total other (expense) income, net
$
(2,937
)

$
(154
)

$
(7,690
)

$
72

v3.3.0.814

Accounting Policies (Policies)
9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation
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 consolidated 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 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, 2014. The December 31, 2014 information has been derived from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Revenue Recognition
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.
In general, 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.

Use of Estimates
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.

Financial Derivatives and Hedging Activities
Financial Derivatives and Hedging Activities The Company periodically enters 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.

Foreign Currency Translation
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 average rates of exchange prevailing during the period. 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 accumulated other comprehensive loss. The effects of currency exchange rate changes on intercompany transactions that are denominated in a currency other than an entity’s functional currency are charged or credited to earnings.

Non-controlling Interests
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 September 30, 2015 and December 31, 2014.

Recent Accounting Pronouncements
Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update No. 2015-3, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-3”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-3 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the financial statements. The Company will make the required changes in the first quarter of 2016.
In May 2014, the FASB issued ASU no. 2014-9, “Revenue from Contract with Customers.” The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Board voted to propose that the standard would take effect for reporting periods beginning after December 15, 2017 and that early adoption would be allowed as of the original effective date. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures.

Other Comprehensive Income
Other Comprehensive Income Comprehensive income is defined as net income and all other non-owner changes in shareholders’ equity.

v3.3.0.814

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - $ / shares
9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Statement of Cash Flows [Abstract]

Cash dividends, per share (in dollars per share) $ 0.20 $ 0.14

v3.3.0.814

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares

Sep. 30, 2015

Dec. 31, 2014

Statement of Financial Position [Abstract]

Preferred stock, shares authorized (in shares) 1,000,000 1,000,000

Preferred stock, shares issued (in shares) 0 0

Common stock, par value (in dollars per share) $ 0.01 $ 0.01

Common stock, shares authorized (in shares) 200,000,000 200,000,000

Common stock, shares issued (in shares) 132,349,534 132,349,534

Common stock, shares outstanding (in shares) 96,478,084 96,274,395

Treasury stock, shares (in shares) 35,871,460 36,075,139

v3.3.0.814

Income Taxes
9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes
INCOME TAXES
The overall effective income tax rate was 31.5% and 31.9% for the three and nine months ended September 30, 2015, respectively, and 31.3% and 31.2% for the three and nine months ended September 30, 2014, respectively.  For the three and nine months ended September 30, 2015 the increase in the effective rate is primarily the result of a higher earnings mix in higher tax rate jurisdictions, partially offset by lower state income taxes.
As of September 30, 2015, the liability for income taxes associated with uncertain tax positions was $13.7 million, of which $5.5 million, if recognized, would favorably affect the Company’s effective tax rate. As of December 31, 2014 the liability associated with uncertain tax positions was $12.6 million, of which $5.5 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 September 30, 2015 the total accrued interest and penalties are $2.4 million and $1.7 million, respectively.  As of December 31, 2014 the total accrued interest and penalties were $1.9 million and $1.3 million, respectively.
At this time, the Company believes that it is reasonably possible that unrecognized tax benefits of approximately $4.4 million may change within the next 12 months due to the expiration of statutory review periods and current examinations.   The Internal Revenue Service is currently auditing the 2012 tax year.  With limited exception, the Company is no longer subject to examination by various U.S. and foreign taxing authorities for years before 2011.

v3.3.0.814

Document and Entity Information - shares
9 Months Ended

Sep. 30, 2015

Oct. 26, 2015

Document And Entity Information [Abstract]

Document Type 10-Q

Amendment Flag false

Document Period End Date Sep. 30, 2015

Document Fiscal Year Focus 2015

Document Fiscal Period Focus Q3

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 96,478,074

v3.3.0.814

Earnings Per Share
9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share
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
September 30,
In thousands, except per share data
2015

2014
Numerator

Numerator for basic and diluted earnings per common
   share - net income attributable

to Wabtec shareholders
$
99,181

$
90,155

Less: dividends declared - common shares
   and non-vested restricted stock
(7,735
)

(5,780
)
Undistributed earnings
91,446

84,375

Percentage allocated to common shareholders (1)
99.7
%

99.6
%

91,172

84,038

Add: dividends declared - common shares
7,713

5,759

Numerator for basic and diluted earnings per
   common share
$
98,885

$
89,797

Denominator

Denominator for basic earnings per common
   share - weighted average shares
96,369

95,935

Effect of dilutive securities:

Assumed conversion of dilutive stock-based
   compensation plans
999

1,069

Denominator for diluted earnings per common share -

adjusted weighted average shares and assumed conversion
97,368

97,004

Net income per common share attributable to
   Wabtec shareholders

Basic
$
1.03

$
0.94

Diluted
$
1.02

$
0.93

(1) Basic weighted-average common shares outstanding
96,369

95,935

Basic weighted-average common shares outstanding and
   non-vested restricted stock expected to vest
96,647

96,285

Percentage allocated to common shareholders
99.7
%

99.6
%

Nine Months Ended
September 30,
In thousands, except per share data
2015

2014
Numerator

Numerator for basic and diluted earnings per common
   share - net income attributable

to Wabtec shareholders
$
296,849

$
258,994

Less: dividends declared - common shares
   and non-vested restricted stock
(19,315
)

(13,471
)
Undistributed earnings
277,534

245,523

Percentage allocated to common shareholders (1)
99.7
%

99.6
%

276,701

244,541

Add: dividends declared - common shares
19,250

13,415

Numerator for basic and diluted earnings per
   common share
$
295,951

$
257,956

Denominator

Denominator for basic earnings per common
   share - weighted average shares
96,135

95,745

Effect of dilutive securities:

Assumed conversion of dilutive stock-based
   compensation plans
1,027

1,089

Denominator for diluted earnings per common share -

adjusted weighted average shares and assumed conversion
97,162

96,834

Net income per common share attributable to
   Wabtec shareholders

Basic
$
3.08

$
2.69

Diluted
$
3.05

$
2.67

(1) Basic weighted-average common shares outstanding
96,135

95,745

Basic weighted-average common shares outstanding and
   non-vested restricted stock expected to vest
96,462

96,146

Percentage allocated to common shareholders
99.7
%

99.6
%

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.

v3.3.0.814

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Income Statement [Abstract]

Net sales $ 809,527 $ 797,271 $ 2,475,149 $ 2,223,588

Cost of sales (552,458) (549,813) (1,694,961) (1,541,903)

Gross profit 257,069 247,458 780,188 681,685

Selling, general and administrative expenses (82,206) (88,359) (255,969) (231,422)

Engineering expenses (17,239) (16,391) (51,852) (43,558)

Amortization expense (5,546) (6,731) (16,009) (16,559)

Total operating expenses (104,991) (111,481) (323,830) (291,539)

Income from operations 152,078 135,977 456,358 390,146

Other income and expenses

Interest expense, net (4,351) (4,594) (12,698) (13,569)

Other (expense) income, net (2,937) (154) (7,690) 72

Income from operations before income taxes 144,790 131,229 435,970 376,649

Income tax expense (45,609) (41,074) (139,121) (117,655)

Net income attributable to Wabtec shareholders $ 99,181 $ 90,155 $ 296,849 $ 258,994

Basic

Net income attributable to Wabtec shareholders (in dollars per share) $ 1.03 $ 0.94 $ 3.08 $ 2.69

Diluted

Net income attributable to Wabtec shareholders (in dollars per share) $ 1.02 $ 0.93 $ 3.05 $ 2.67

Weighted average shares outstanding

Basic shares outstanding (in shares) 96,369 95,935 96,135 95,745

Diluted shares outstanding (in shares) 97,368 97,004 97,162 96,834

v3.3.0.814

Inventories
9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Inventories
INVENTORIES
The components of inventory, net of reserves, were:
In thousands
September 30,
2015

December 31,
2014
Raw materials
$
188,326

$
222,059

Work-in-progress
196,379

154,094

Finished goods
132,781

134,796

Total inventories
$
517,486

$
510,949

v3.3.0.814

Acquisitions
9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Acquisitions
PROPOSED TRANSACTION WITH FAIVELEY TRANSPORT S.A.
On July 27, 2015, the Company announced plans to acquire Faiveley Transport S.A. ("Faiveley Transport"), 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 valued-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 & Safety (braking systems and couplers).
The transaction has been structured in three steps:
•
Wabtec made an irrevocable offer to the owners of approximately 51% of Faiveley Transport’s shares for a purchase price of €100 per share, payable 25% in cash and 75% in Wabtec preferred stock.  The preferred stock will have a 1% annual dividend or, if greater, the annual dividend assuming full conversion into common shares, and must be converted after three years into Wabtec common shares at an implied ratio of one Faiveley Transport common share for 1.125 Wabtec common shares. Shareholders owning 51% of Faiveley Transport have entered into exclusive discussions with Wabtec.
•
Upon completion of required labor group consultations, on October 6, 2015 the 51% shareholders entered into a definitive share purchase agreement and Faiveley Transport entered into an acquisition agreement with Wabtec.
•
Upon completing the share purchase, Wabtec will commence a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders will have the option to elect to receive €100 per share in cash or Wabtec preferred stock. The preferred stock portion of the consideration is subject to a cap of 75% of Faiveley Transport’s common shares.  Wabtec intends to delist Faiveley Transport from Euronext after the tender offer if minority interests represent less than 5%.
The total purchase price offered is about $1.8 billion, including assumed debt.  Wabtec plans to fund the cash portion of the transaction with cash on hand, existing credit facilities and potentially other debt financing.  Prior to September 30, 2015 Wabtec set aside $209.1 million as an escrow deposit for the Faiveley Transport purchase. The combination of Wabtec and Faiveley Transport would create one of the world’s largest public rail equipment companies, with revenues of about $4.5 billion and a presence in all key freight rail and passenger transit geographies worldwide.
Closing of the transaction is subject to various conditions, including completion of regulatory requirements. These steps are currently on-going and the timing of completion is unknown.
ACQUISITIONS
The Company has made the following acquisitions operating as a business unit or component of a business unit in the Freight Segment:
•
On February 4, 2015, the Company acquired Railroad Controls L.P. (“RCL”), a provider of railway signal construction services, for a purchase price of approximately $76.4 million, net of cash acquired, resulting in preliminary goodwill of $12.8 million, none of which will be deductible for tax purposes.
•
On September 3, 2014, the Company acquired C2CE Pty Ltd. (“C2CE”), a provider of railway signal design services, for a purchase price of approximately $25.5 million, net of cash acquired, resulting in additional goodwill of $15.9 million, none of which will be deductible for tax purposes.
The Company has made the following acquisitions operating as a business unit or component of a business unit in the Transit Segment:
•
On June 17, 2015, the Company acquired Metalocaucho (“MTC”), a manufacturer of transit products, primarily rubber components for suspension and vibration control systems, for a purchase price of approximately $23.4 million, net of cash acquired, resulting in preliminary goodwill of $12.1 million, none of which will be deductible for tax purposes.
•
On August 21, 2014, the Company acquired Dia-Frag (“Dia-Frag”), a manufacturer of friction products for various markets with a focus on motorcycle braking, for a purchase price of approximately $70.6 million, net of cash acquired, resulting in additional goodwill of $35.9 million, none of which will be deductible for tax purposes.
•
On June 6, 2014, the Company acquired Fandstan Electric Group Ltd. (“Fandstan”), a leading rail and industrial equipment manufacturer for a variety of markets, including rail and tram transportation, industrial and energy, for a purchase price of approximately $199.4 million, net of cash acquired, resulting in additional goodwill of $64.7 million, none of which will be deductible for tax purposes.
The acquisitions listed above include escrow deposits of $40.8 million, which act as security for indemnity and other claims in accordance with the purchase and related escrow agreements.

For the MTC and RCL 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 C2CE, Dia-Frag, and Fandstan acquisitions, the following table summarizes the final fair values of the assets acquired and liabilities assumed at the date of acquisition.

MTC

RCL

C2CE

Dia-Frag

Fandstan
In thousands
June 17,
2015

February 4,
2015

September 3,
2014

August 21,
2014

June 6,
2014
Current assets
$
10,906

$
16,445

$
9,812

$
12,158

$
124,280

Property, plant & equipment
1,510

11,983

1,853

13,749

67,948

Goodwill
12,141

12,840

15,896

35,850

64,713

Other intangible assets
7,649

40,403

3,654

26,150

50,598

Other assets
114

—

—

66

216

Total assets acquired
32,320

81,671

31,215

87,973

307,755

Total liabilities assumed
(8,960
)

(5,289
)

(5,736
)

(17,332
)

(108,351
)
Net assets acquired
$
23,360

$
76,382

$
25,479

$
70,641

$
199,404

Of the $128.5 million of total acquired intangible assets, $95.2 million was assigned to customer relationships, $25.6 million was assigned to trade names, $2.1 million was assigned to non-compete agreements and $5.6 million was assigned to customer backlog. The trade names were determined to have an indefinite useful life, while the customer relationships’ average useful life is 20 years, and the non-compete useful life is five years.
The following unaudited pro forma consolidated financial information presents income statement results as if the acquisitions listed above had occurred on January 1, 2014:
In thousands
Three Months Ended
September 30, 2015

Three Months Ended
September 30, 2014

Nine Months Ended
September 30, 2015

Nine Months Ended
September 30, 2014
Net sales
$
809,527

$
835,231

$
2,499,388

$
2,358,518

Gross profit
257,069

260,669

787,198

726,388

Net income attributable to Wabtec shareholders
99,181

96,680

299,233

281,136

Diluted earnings per share

As Reported
$
1.02

$
0.93

$
3.05

$
2.67

Pro forma
$
1.02

$
0.99

$
3.08

$
2.89

v3.3.0.814

Other Income (Expense), Net
9 Months Ended

Sep. 30, 2015

Other Income and Expenses [Abstract]

Other Income (Expense), Net
OTHER INCOME (EXPENSE), NET
The components of other income (expense) are as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,
In thousands
2015

2014

2015

2014
Foreign currency (loss)
$
(3,058
)

$
(455
)

$
(6,993
)

$
(554
)
Other miscellaneous income (expense)
121

301

(697
)

626

Total other (expense) income, net
$
(2,937
)

$
(154
)

$
(7,690
)

$
72

v3.3.0.814

Warranties
9 Months Ended

Sep. 30, 2015

Disclosure Changes In Product Warranty Reserve [Abstract]

Warranties
WARRANTIES
The following table reconciles the changes in the Company’s product warranty reserve as follows:

Nine Months Ended
September 30,
In thousands
2015

2014
Balance at December 31, 2014 and 2013 respectively
$
87,849

$
60,593

Warranty expense
21,615

22,104

Acquisitions
6,001

3,567

Warranty claim payments
(18,961
)

(14,572
)
Foreign currency impact/other
(1,554
)

(980
)
Balance at September 30, 2015 and 2014, respectively
$
94,950

$
70,712

v3.3.0.814

Employee Benefit Plans
9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans
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
September 30,

Three Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
95

54

506

659

Interest cost
479

488

1,801

2,271

Expected return on plan assets
(542
)

(617
)

(2,434
)

(2,655
)
Net amortization/deferrals
266

355

655

766

Net periodic benefit cost
298

280

528

1,041

U.S.

International

Nine Months Ended
September 30,

Nine Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
285

$
250

$
1,518

$
1,511

Interest cost
1,437

1,552

5,391

5,936

Expected return on plan assets
(1,626
)

(1,857
)

(7,284
)

(7,116
)
Net amortization/deferrals
798

1,665

1,962

2,292

Net periodic benefit cost
$
894

$
1,610

$
1,587

$
2,623

The Company’s funding methods are based on governmental requirements and differ from those methods used to recognize pension expense. The Company expects to contribute $6.7 million to the international plans and does not expect to make a contribution to the U.S. plans during 2015.

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 postretirement benefit plans summarized by U.S. and international components.

U.S.

International

Three Months Ended
September 30,

Three Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
2

$
7

$
11

$
10

Interest cost
308

289

35

42

Net amortization/deferrals
(234
)

(350
)

(10
)

(16
)
Net periodic benefit (credit) cost
$
76

$
(54
)

$
36

$
36

U.S.

International

Nine Months Ended
September 30,

Nine Months Ended
September 30,
In thousands, except percentages
2015

2014

2015

2014
Net periodic benefit cost

Service cost
$
6

$
27

$
33

$
28

Interest cost
924

881

105

126

Net amortization/deferrals
(702
)

(1,003
)

(29
)

(46
)
Net periodic benefit (credit) cost
$
228

$
(95
)

$
109

$
108

v3.3.0.814

Computation of Basic and Diluted Earnings Per Share (Detail) - shares
shares in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Earnings Per Share [Abstract]

Basic weighted average common shares outstanding (in shares) 96,369 95,935 96,135 95,745

Basic weighted-average common shares outstanding and non-vested restricted stock expected to vest (in shares) 96,647 96,285 96,462 96,146

Percentage allocated to common shareholders 99.70% 99.60% 99.70% 99.60%

v3.3.0.814

Intangibles
9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangibles
INTANGIBLES
The change in the carrying amount of goodwill by segment for the nine months ended September 30, 2015 is as follows:
In thousands
Freight
Segment

Transit
Segment

Total
Balance at December 31, 2014
$
515,067

$
347,271

$
862,338

Adjustment to preliminary purchase allocation
45

(4,140
)

(4,095
)
Acquisitions
12,840

12,141

24,981

Foreign currency impact
(9,006
)

(21,223
)

(30,229
)
Balance at September 30, 2015
$
518,946

$
334,049

$
852,995

As of September 30, 2015 and December 31, 2014, the Company’s trademarks had a net carrying amount of $167.6 million and $170.1 million, respectively, and the Company believes these intangibles have indefinite lives.
Intangible assets of the Company, other than goodwill and trademarks, consist of the following:
In thousands
September 30,
2015

December 31,
2014
Patents, non-compete and other intangibles, net of accumulated

amortization of $40,364 and $39,780
$
12,002

$
14,722

Customer relationships, net of accumulated amortization

of $67,285 and $56,684
257,384

237,983

Total
$
269,386

$
252,705

The weighted average remaining useful life of patents, customer relationships and intellectual property were 10 years, 16 years and 14 years, respectively. Amortization expense for intangible assets was $5.5 million and $16.0 million for the three and nine months ended September 30, 2015, and $6.7 million and $16.6 million for the three and nine months ended September 30, 2014.
Amortization expense for the five succeeding years is estimated to be as follows (in thousands):
Remainder of 2015
$
6,070

2016
21,005

2017
19,826

2018
18,848

2019
18,405

v3.3.0.814

Long-Term Debt
9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Long-term Debt
LONG-TERM DEBT
Long-term debt consisted of the following:
In thousands
September 30,
2015

December 31,
2014
4.375% Senior Notes, due 2023
$
250,000

$
250,000

Revolving Credit Facility
200,000

270,000

Capital Leases
1,019

1,195

Total
451,019

521,195

Less - current portion
430

792

Long-term portion
$
450,589

$
520,403

2013 Refinancing Credit Agreement
On December 19, 2013, the Company amended its existing revolving credit facility with a consortium of commercial banks. This “2013 Refinancing Credit Agreement” provides the Company with an $800.0 million, five-year revolving credit facility. The Company incurred approximately $1.0 million of deferred financing cost related to the 2013 Refinancing Credit Agreement. The facility expires on December 19, 2018. The 2013 Refinancing Credit Agreement borrowings bear variable interest rates indexed as described below. At September 30, 2015, the Company had available bank borrowing capacity, net of $27.1 million of letters of credit, of approximately $572.9 million, subject to certain financial covenant restrictions.
Under the 2013 Refinancing Credit Agreement, the Company may elect a Base Rate of interest for U.S. Dollar denominated loans or, for certain currencies, an interest rate based on the London Interbank Offered Rate (“LIBOR”) of interest, or other rates appropriate for such currencies (in any case, “the Alternate Rate”). The Base Rate adjusts on a daily basis and is the greater of the Federal Funds Effective Rate plus 0.5% per annum, the PNC, N.A. prime rate or the Daily LIBOR Rate plus 100 basis points, plus a margin that ranges from 0 to 75 basis points. The Alternate Rate is based on the quoted rates specific to the applicable currency, plus a margin that ranges from 75 to 175 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 0 basis points and the Alternate Rate margin is 75 basis points.
At September 30, 2015, the weighted average interest rate on the Company’s variable rate debt was 0.94%.  On January 12, 2012, the Company entered into a forward starting interest rate swap agreement with a notional value of $150.0 million. The effective date of the interest rate swap agreement is July 31, 2013, and the termination date is November 7, 2016. The impact of the interest rate swap agreement converts a portion of the Company’s outstanding debt from a variable rate to a fixed-rate borrowing. During the term of the interest rate swap agreement the interest rate on the notional value will be fixed at 1.415% plus the Alternate Rate margin. The Company is exposed to credit risk in the event of nonperformance by the counterparty. However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount. The counterparty is a large financial institution with an excellent credit rating and history of performance. The Company currently believes the risk of nonperformance is negligible.
On June 5, 2014, the Company entered into a forward starting interest rate swap agreement with a notional value of $150.0 million.  The effective date of the interest rate swap agreement is November 7, 2016, and the termination date is December 19, 2018.  The impact of the interest rate swap agreement converts a portion of the Company’s outstanding debt from a variable rate to a fixed-rate borrowing.  During the term of the interest rate swap agreement the interest rate on the notional value will be fixed at 2.56% plus the Alternate Rate margin.  The Company is exposed to credit risk in the event of nonperformance by the counterparty.  However, since only the cash interest payments are exchanged, exposure is significantly less than the notional amount.  The counterparty is a large financial institution with an excellent credit rating and history of performance.  The Company currently believes the risk of nonperformance is negligible.
The 2013 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 2013 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 does not expect that these measurements will limit the Company in executing our operating activities.
4.375% Senior Notes Due August 2023
In August 2013, the Company issued $250.0 million of Senior Notes due in 2023 (the “2013 Notes”).  The 2013 Notes were issued at 99.879% of face value.  Interest on the 2013 Notes accrues at a rate of 4.375% per annum and is payable semi-annually on February 15 and August 15 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 Company incurred $2.6 million of deferred financing costs related to the issuance.
The 2013 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 2013 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.
The Company is in compliance with the restrictions and covenants in the indenture under which the 2013 Notes were issued and expects that these restrictions and covenants will not be any type of limiting factor in executing our operating activities.

v3.3.0.814

Stock-Based Compensation
9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation
STOCK-BASED COMPENSATION
As of September 30, 2015, the Company maintains employee stock-based compensation plans for stock options, restricted stock, restricted units and incentive stock awards as governed by the 2011 Stock Incentive Compensation Plan (the “2011 Plan”) and the 2000 Stock Incentive Plan, as amended (the “2000 Plan”). The 2011 Plan has a 10-year term through March 27, 2021 and provides a maximum of 3,800,000 shares for grants or awards. The 2011 Plan was approved by stockholders of Wabtec on May 11, 2011. The Company also maintains a Non-Employee Directors’ Fee and Stock Option Plan (“the Directors Plan”). No awards may be made under the Directors Plan subsequent to October 31, 2016.
Stock-based compensation expense was $20.1 million and $19.1 million for the nine months ended September 30, 2015 and 2014, respectively. Included in stock-based compensation expense for the nine months ended September 30, 2015 is $1.7 million of expense related to stock options, $4.8 million related to restricted stock, $2.6 million related to restricted units, $10.2 million related to incentive stock awards and $0.8 million related to awards issued for Directors’ fees. At September 30, 2015, unamortized compensation expense related to stock options, restricted stock, restricted units and incentive stock awards expected to vest totaled $30.2 million and will be recognized over a weighted average period of 1.3 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 2011 Plan and the 2000 Plan, options become exercisable over a four-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 the 2011 Plan, the 2000 Plan and the Directors Plan for the nine months ended September 30, 2015:

Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic value
(in thousands)
Outstanding at December 31, 2014
1,147,558

$
28.33

5.5

$
67,205

Granted
84,675

87.35

141

Exercised
(112,156
)

26.10

7,057

Canceled
(8,751
)

65.24

208

Outstanding at September 30, 2015
1,111,326

32.76

5.1

62,525

Exercisable at September 30, 2015
875,157

23.83

4.3

57,051

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:

Nine Months Ended
September 30,

2015

2014
Dividend yield
0.14
%

0.11
%
Risk-free interest rate
1.82
%

2.19
%
Stock price volatility
27.3
%

33.2
%
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, Restricted Units and Incentive Stock Beginning in 2006 the Company adopted a restricted stock program. As provided for under the 2011 and 2000 Plans, eligible employees are granted restricted stock or restricted units that generally vest 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. Based on the Company’s performance for each three-year period then ended, the incentive stock awards can vest and be awarded ranging from 0% to 200% of the initial incentive stock awards granted. The incentive stock awards included in the table below represent the number of shares that are expected to vest based on the Company’s estimate for meeting those established performance targets. As of September 30, 2015, the Company estimates that it will achieve 121%, 132% and 100% for the incentive stock awards expected to vest based on performance for the three-year periods ending December 31, 2015, 2016, and 2017, respectively, and has recorded incentive compensation expense accordingly. If our estimate of the number of these stock awards expected to vest changes in a future accounting period, cumulative compensation expense could increase or decrease and will be recognized in the current period for the elapsed portion of the vesting period and would change future expense for 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 and unit activity for the 2011 Plan, the 2000 Plan and the Directors Plan, and incentive stock awards activity for the 2011 Plan and the 2000 Plan with related information for the nine months ended September 30, 2015:

Restricted
Stock
and Units

Incentive
Stock
Awards

Weighted
Average Grant
Date Fair
Value
Outstanding at December 31, 2014
438,543

791,608

$
47.97

Granted
110,945

125,650

87.74

Vested
(182,776
)

(433,932
)

37.76

Adjustment for incentive stock awards expected to vest
—

61,654

57.60

Canceled
(9,284
)

(6,196
)

66.30

Outstanding at September 30, 2015
357,428

538,784

65.82

v3.3.0.814

Segment Information - Additional Information (Detail)
9 Months Ended

Sep. 30, 2015

segment

Segment Reporting [Abstract]

Number of reportable segments 2

v3.3.0.814

Segment Information - Sales by Product (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Segment Reporting Information [Line Items]

Total sales $ 809,527 $ 797,271 $ 2,475,149 $ 2,223,588

Specialty Products & Electronics

Segment Reporting Information [Line Items]

Total sales 433,260 390,038 1,307,089 980,897

Brake Products

Segment Reporting Information [Line Items]

Total sales 148,552 142,620 472,855 487,095

Remanufacturing, Overhaul & Build

Segment Reporting Information [Line Items]

Total sales 146,424 170,826 437,101 474,444

Other Transit Products

Segment Reporting Information [Line Items]

Total sales 45,547 51,607 143,214 155,144

Other

Segment Reporting Information [Line Items]

Total sales $ 35,744 $ 42,180 $ 114,890 $ 126,008

v3.3.0.814

Fair Value Measurement and Fair Value of Financial Instruments - Estimated Fair Values and Related Carrying Values of Financial Instruments (Detail) - USD ($)
$ in Thousands

Sep. 30, 2015

Dec. 31, 2014

Aug. 31, 2013

Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]

Carry value $ 5,798 $ 3,351

Interest rate swap agreements

Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]

Carry value 5,798 3,351

Fair value 5,798 3,351

4.375% Senior Notes

Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]

Carry value 250,000 250,000 $ 250,000

Fair value $ 257,503 $ 260,000

v3.3.0.814

Fair Value Measurement and Fair Value of Financial Instruments (Tables)
9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Liabilities Carried at Fair Value Measured on Recurring Basis
The following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2015, which are included in other current liabilities on the Condensed Consolidated Balance sheet:

Fair Value Measurements at September 30, 2015 Using
In thousands
Total Carrying
Value at
September 30,
2015

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Interest rate swap agreements
$
5,798

$
—

$
5,798

$
—

Total
$
5,798

$
—

$
5,798

$
—

The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2014, which is included in other current liabilities on the Condensed Consolidated Balance sheet:

Fair Value Measurements at December 31, 2014 Using
In thousands
Total Carrying
Value at
December 31,
2014

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Interest rate swap agreements
$
3,351

$
—

$
3,351

$
—

Total
$
3,351

$
—

$
3,351

$
—

Estimated Fair Values and Related Carrying Values of Financial Instruments
The estimated fair values and related carrying values of the Company’s financial instruments are as follows:

September 30, 2015

December 31, 2014
In thousands
Carry
Value

Fair
Value

Carry
Value

Fair
Value
Interest rate swap agreement
$
5,798

$
5,798

$
3,351

$
3,351

4.375% Senior Notes
250,000

257,503

250,000

260,000

v3.3.0.814

Long-Term Debt (Details 2)
9 Months Ended

Sep. 30, 2015

Dec. 31, 2014

Aug. 31, 2013

Alternative Rate

Debt Instrument [Line Items]

Debt instrument, basis spread on variable rate 0.75%

4.375% Senior Notes, due 2023

Debt Instrument [Line Items]

Stated interest percentage 4.375% 4.375% 4.375%

v3.3.0.814

Commitments and Contingencies
9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies
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. Further information and detail on these claims is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K.
The Company is also subject to litigation from time to time arising out of its operations in the ordinary course of business, including claims based on product liability, contracts, intellectual property, or other causes of action. Further information and detail on any potentially material litigation is as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K.

v3.3.0.814

Acquisitions (Tables)
9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Summary of Preliminary Estimated Fair Values of the Assets Acquired and Liabilities Assumed at the Date of the Acquisition
For the MTC and RCL 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 C2CE, Dia-Frag, and Fandstan acquisitions, the following table summarizes the final fair values of the assets acquired and liabilities assumed at the date of acquisition.

MTC

RCL

C2CE

Dia-Frag

Fandstan
In thousands
June 17,
2015

February 4,
2015

September 3,
2014

August 21,
2014

June 6,
2014
Current assets
$
10,906

$
16,445

$
9,812

$
12,158

$
124,280

Property, plant & equipment
1,510

11,983

1,853

13,749

67,948

Goodwill
12,141

12,840

15,896

35,850

64,713

Other intangible assets
7,649

40,403

3,654

26,150

50,598

Other assets
114

—

—

66

216

Total assets acquired
32,320

81,671

31,215

87,973

307,755

Total liabilities assumed
(8,960
)

(5,289
)

(5,736
)

(17,332
)

(108,351
)
Net assets acquired
$
23,360

$
76,382

$
25,479

$
70,641

$
199,404

Pro Forma Financial Information
The following unaudited pro forma consolidated financial information presents income statement results as if the acquisitions listed above had occurred on January 1, 2014:
In thousands
Three Months Ended
September 30, 2015

Three Months Ended
September 30, 2014

Nine Months Ended
September 30, 2015

Nine Months Ended
September 30, 2014
Net sales
$
809,527

$
835,231

$
2,499,388

$
2,358,518

Gross profit
257,069

260,669

787,198

726,388

Net income attributable to Wabtec shareholders
99,181

96,680

299,233

281,136

Diluted earnings per share

As Reported
$
1.02

$
0.93

$
3.05

$
2.67

Pro forma
$
1.02

$
0.99

$
3.08

$
2.89

v3.3.0.814

Intangibles - Amortization Expense (Detail)
$ in Thousands

Sep. 30, 2015

USD ($)

Goodwill and Intangible Assets Disclosure [Abstract]

Remainder of 2015 $ 6,070

2016 21,005

2017 19,826

2018 18,848

2019 $ 18,405

v3.3.0.814

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Statement of Comprehensive Income [Abstract]

Net income attributable to Wabtec shareholders $ 99,181 $ 90,155 $ 296,849 $ 258,994

Foreign currency translation loss (48,474) (60,964) (100,323) (52,876)

Unrealized (loss) gain on derivative contracts (1,788) 1,153 (2,544) 560

Pension benefit plans and post-retirement benefit plans 2,586 2,553 5,586 4,335

Other comprehensive loss before tax (47,676) (57,258) (97,281) (47,981)

Income tax (expense) benefit related to components of other comprehensive income (loss) 164 (1,067) (441) (1,448)

Other comprehensive loss, net of tax (47,512) (58,325) (97,722) (49,429)

Comprehensive income attributable to Wabtec shareholders $ 51,669 $ 31,830 $ 199,127 $ 209,565

v3.3.0.814

Accounting Policies
9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Accounting Policies
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 consolidated 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 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, 2014. The December 31, 2014 information has been derived from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
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.
In general, 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. Unbilled accounts receivables were $151.1 million and $187.8 million, customer deposits were $106.9 million and $111.8 million, and provisions for loss contracts were $8.9 million and $7.1 million at September 30, 2015 and December 31, 2014, respectively.
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 $30.1 million and $24.9 million at September 30, 2015 and December 31, 2014, 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.
Financial Derivatives and Hedging Activities The Company periodically enters 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.
To reduce the impact of interest rate changes on a portion of its variable-rate debt, the Company has entered into two forward starting interest rate swap agreements with notional values of $150.0 million. As of September 30, 2015, the Company has recorded a current liability of $5.8 million and a corresponding offset in accumulated other comprehensive loss of $3.5 million, net of tax, related to these agreements. For further information regarding the forward starting interest rate swap agreements, see Footnote 7.
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 average rates of exchange prevailing during the period. 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 accumulated other comprehensive loss. The effects of currency exchange rate changes on intercompany transactions that are denominated in a currency other than an entity’s functional currency are charged or credited to earnings.
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 September 30, 2015 and December 31, 2014. Net income attributable to non-controlling interests for the three and nine months ended September 30, 2015 and 2014 was not material.
Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update No. 2015-3, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-3”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-3 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the financial statements. The Company will make the required changes in the first quarter of 2016.
In May 2014, the FASB issued ASU no. 2014-9, “Revenue from Contract with Customers.” The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Board voted to propose that the standard would take effect for reporting periods beginning after December 15, 2017 and that early adoption would be allowed as of the original effective date. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures.
Other Comprehensive Income Comprehensive income is defined as net income and all other non-owner changes in shareholders’ equity.
The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2015 are as follows:
In thousands
Foreign
currency
translation

Derivative
contracts

Pension and
post
retirement
benefit plans

Total
Balance at December 31, 2014
$
(94,450
)

$
(2,243
)

$
(62,793
)

$
(159,486
)
Other comprehensive (loss) income before reclassifications
(100,323
)

(2,503
)

2,783

(100,043
)
Amounts reclassified from accumulated other

comprehensive income
—

946

1,375

2,321

Net current period other comprehensive (loss) income
(100,323
)

(1,557
)

4,158

(97,722
)
Balance at September 30, 2015
$
(194,773
)

$
(3,800
)

$
(58,635
)

$
(257,208
)

Reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2015 are as follows:
In thousands
Amount reclassified from
accumulated other
comprehensive income

Affected line item in the
Condensed Consolidated
Statements of Operations
Amortization of defined pension and post retirement items

Amortization of initial net obligation and prior service cost
$
(522
)

Cost of sales
Amortization of net loss
1,191

Cost of sales

669

Income from Operations

(211
)

Income tax expense

$
458

Net income

Derivative contracts

Realized loss on derivative contracts
$
467

Interest expense, net

(147
)

Income tax expense

$
320

Net income

Reclassifications out of accumulated other comprehensive loss for the nine months ended September 30, 2015 are as follows:
In thousands
Amount reclassified from
accumulated other
comprehensive income

Affected line item in the
Condensed Consolidated
Statements of Operations
Amortization of defined pension and post retirement items

Amortization of initial net obligation and prior service cost
$
(1,565
)

Cost of sales
Amortization of net loss
3,585

Cost of sales

2,020

Income from Operations

(645
)

Income tax expense

$
1,375

Net income

Derivative contracts

Realized loss on derivative contracts
$
1,390

Interest expense, net

(444
)

Income tax expense

$
946

Net income

v3.3.0.814

Income Taxes - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Effective income tax rate 31.50% 31.30% 31.90% 31.20%

Liability for uncertain tax positions $ 13.7 $ 13.7 $ 12.6

Unrecognized tax benefits if recognized that would affect effective tax rate 5.5 5.5 5.5

Accrued interest related to uncertain tax positions 2.4 2.4 1.9

Accrued penalties related to uncertain tax positions 1.7 1.7 $ 1.3

Unrecognized tax benefits subject to change within the next 12 months $ 4.4 $ 4.4

v3.3.0.814

Inventories (Tables)
9 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Components of Inventory, Net of Reserves
The components of inventory, net of reserves, were:
In thousands
September 30,
2015

December 31,
2014
Raw materials
$
188,326

$
222,059

Work-in-progress
196,379

154,094

Finished goods
132,781

134,796

Total inventories
$
517,486

$
510,949

v3.3.0.814

Proposed Transaction with Faiveley Transport S.A. (Details)
$ in Thousands

Jul. 27, 2015

USD ($)

employee

country

Jul. 27, 2015

USD ($)

Oct. 06, 2015

Sep. 30, 2015

USD ($)

Sep. 29, 2015

USD ($)

Jul. 27, 2015

€ / shares

shares

Dec. 31, 2014

USD ($)

Business Acquisition [Line Items]

Convertible preferred stock, conversion period 3 years

Deposit in escrow $ 209,128 $ 0

Business acquisition consolidated revenue after acquisition $ 4,500,000

Faiveley Transport

Business Acquisition [Line Items]

Annual sales of Faiveley $ 1,200,000

Number of employees (more than) | employee 5,700

Number of countries Faiveley operates in | country 24

Purchase price per share (in euros per share) | € / shares € 100

Percentage of business acquisition consideration payable in cash 25.00%

Percentage of business acquisition consideration payable in preferred stock 75.00%

Preferred stock annual dividend rate 1.00%

Number of common shares issued for conversion of one acquiree common share | shares 1.125

Minority interests percentage for delisting of acquiree company (less than) 5.00%

Business combination, consideration transferred $ 1,800,000

Deposit in escrow $ 209,100

Subsequent Event | Faiveley Transport

Business Acquisition [Line Items]

Percentage of voting interests in Faiveley 51.00%

v3.3.0.814

Fair Value Measurement and Fair Value of Financial Instruments
9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement and Fair Value of Financial Instruments
FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS
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 September 30, 2015, which are included in other current liabilities on the Condensed Consolidated Balance sheet:

Fair Value Measurements at September 30, 2015 Using
In thousands
Total Carrying
Value at
September 30,
2015

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Interest rate swap agreements
$
5,798

$
—

$
5,798

$
—

Total
$
5,798

$
—

$
5,798

$
—

The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2014, which is included in other current liabilities on the Condensed Consolidated Balance sheet:

Fair Value Measurements at December 31, 2014 Using
In thousands
Total Carrying
Value at
December 31,
2014

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Interest rate swap agreements
$
3,351

$
—

$
3,351

$
—

Total
$
3,351

$
—

$
3,351

$
—

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. For certain derivative contracts whose fair values are based upon trades in liquid markets, such as interest rate swaps, valuation model inputs can generally be verified and valuation techniques do not involve significant management judgment. The fair values of such financial instruments are generally classified within Level 2 of the fair value hierarchy.
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.
The Company’s cash and cash equivalents are highly liquid investments purchased with an original maturity of three months or less and are considered Level 1 on the fair value valuation hierarchy. The fair value of cash and cash equivalents approximated the carrying value at September 30, 2015 and December 31, 2014. The Company’s defined benefit pension plan assets consist primarily of equity security funds, debt security funds and temporary cash and cash equivalent investments. Generally, all plan assets are considered Level 2 based on the fair value valuation hierarchy. These investments are comprised of a number of investment funds that invest in a diverse portfolio of assets including equity securities, corporate and governmental bonds, and money markets. Trusts are valued at the net asset value (“NAV”) as determined by their custodian. NAV represent the accumulation of the unadjusted quoted close prices on the reporting date for the underlying investments divided by the total shares outstanding at the reporting dates. The 2013 Notes are considered Level 2 based on the fair value valuation hierarchy.
The estimated fair values and related carrying values of the Company’s financial instruments are as follows:

September 30, 2015

December 31, 2014
In thousands
Carry
Value

Fair
Value

Carry
Value

Fair
Value
Interest rate swap agreement
$
5,798

$
5,798

$
3,351

$
3,351

4.375% Senior Notes
250,000

257,503

250,000

260,000

The fair value of the Company’s interest rate swap agreements and the 2013 Notes were based on dealer quotes and represent the estimated amount the Company would pay to the counterparty to terminate the agreement.

Accounting Policies - Additional Information (Detail) $ in Thousands	Sep. 30, 2015 USD ($) derivative_contract	Dec. 31, 2014 USD ($)	Jun. 05, 2014 USD ($)	Jan. 12, 2012 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Unbilled accounts receivable	$ 151,131	$ 187,762
Customer deposits	106,889	111,797
Provisions for loss contracts	8,900	7,100
Deferred pre-production costs	30,100	24,900
Interest rate swap agreement, current liability	$ 5,798	3,351
Forward Starting Interest Rate Swap Agreement
Summary Of Significant Accounting Policies [Line Items]
Derivative number of instruments held \| derivative_contract	2
Interest rate swap agreements, notional amount	$ 150,000		$ 150,000	$ 150,000
Interest rate swap agreement, current liability	5,798	$ 3,351
Interest rate swap, accumulated other comprehensive loss	$ 3,500

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions		9 Months Ended		12 Months Ended
	Oct. 31, 2016	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 20.1	$ 19.1
Unamortized compensation expense expected to be vested		$ 30.2
Recognized weighted average period, years		1 year 3 months 18 days
Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 1.7
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		4.8
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		2.6
Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 10.2
Award vesting period		3 years
Performance Shares \| Scenario Forecast
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of incentive stock awards expected to be vested and awarded of stocks granted				100.00%	132.00%	121.00%
Performance Shares \| Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of incentive stock awards expected to be vested and awarded of stocks granted		0.00%
Performance Shares \| Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of incentive stock awards expected to be vested and awarded of stocks granted		200.00%
2011 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Plan term		10 years
Number of shares available for grant		3,800,000
2011 Plan \| Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Plan term		10 years
Award vesting period		4 years
2011 Plan \| Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period		4 years
2011 Plan \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period		4 years
Directors Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 0.8
Directors Plan \| Scenario Forecast
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of additional shares authorized	0
Directors Plan \| Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period		1 year
Plan Two Thousand \| Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Plan term		10 years
Award vesting period		4 years
Plan Two Thousand \| Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period		4 years
Plan Two Thousand \| Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Award vesting period		4 years

Intangibles - Intangible Assets Other Than Goodwill and Trademarks (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Finite Lived Intangible Assets [Line Items]
Intangible assets, net of accumulated amortization	$ 269,386	$ 252,705
Patents And Other
Finite Lived Intangible Assets [Line Items]
Intangible assets, net of accumulated amortization	12,002	14,722
Intangible assets, accumulated amortization	40,364	39,780
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Intangible assets, net of accumulated amortization	257,384	237,983
Intangible assets, accumulated amortization	$ 67,285	$ 56,684

Stock-Based Compensation - Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Options Outstanding
December 31, 2014 (in shares)	1,147,558
Granted (in shares)	84,675
Exercised (in shares)	(112,156)
Canceled (in shares)	(8,751)
September 30, 2015 (in shares)	1,111,326	1,147,558
Exercisable at September 30, 2015 (in shares)	875,157
Weighted-Average Exercise Price per Share
December 31, 2014 (in dollars per share)	$ 28.33
Granted (in dollars per share)	87.35
Exercised (in dollars per share)	26.10
Canceled (in dollars per share)	65.24
September 30, 2015 (in dollars per share)	32.76	$ 28.33
Exercisable at September 30, 2015 (in dollars per share)	$ 23.83
Weighted-Average Remaining Contractual Life
Outstanding, Weighted Average Remaining Contractual Life	5 years 1 month 6 days	5 years 6 months
Exercisable at September 30, 2015	4 years 3 months 18 days
Aggregate Intrinsic Value
December 31, 2014	$ 67,205
Granted	141
Exercised	7,057
Canceled	208
September 30, 2015	62,525	$ 67,205
Exercisable at September 30, 2015	$ 57,051

Intangibles - Change in the Carrying Amount of Goodwill by Segment (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Goodwill [Roll Forward]
December 31, 2014	$ 862,338
Adjustment to preliminary purchase allocation	(4,095)
Acquisitions	24,981
Foreign currency impact	(30,229)
September 30, 2015	852,995
Freight Segment
Goodwill [Roll Forward]
December 31, 2014	515,067
Adjustment to preliminary purchase allocation	45
Acquisitions	12,840
Foreign currency impact	(9,006)
September 30, 2015	518,946
Transit Segment
Goodwill [Roll Forward]
December 31, 2014	347,271
Adjustment to preliminary purchase allocation	(4,140)
Acquisitions	12,141
Foreign currency impact	(21,223)
September 30, 2015	$ 334,049

Stock-Based Compensation - Restricted Stock Activity and Incentive Stock Awards Activity (Detail)	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 47.97
Granted (in dollars per share) \| $ / shares	87.74
Vested (in dollars per share) \| $ / shares	37.76
Adjustment for incentive stock awards expected to vest (in dollars per share) \| $ / shares	57.60
Canceled (in dollars per share) \| $ / shares	66.30
Outstanding, end of period (in dollars per share) \| $ / shares	$ 65.82
Restricted Stock and Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding, beginning of period (in shares)	438,543
Granted (in shares)	110,945
Vested (in shares)	(182,776)
Canceled (in shares)	(9,284)
Outstanding, end of period (in shares)	357,428
Incentive Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding, beginning of period (in shares)	791,608
Granted (in shares)	125,650
Vested (in shares)	(433,932)
Adjustment for incentive stock awards expected to vest (in shares)	61,654
Canceled (in shares)	(6,196)
Outstanding, end of period (in shares)	538,784

Long-Term Debt (Details) - USD ($)		9 Months Ended
Long-Term Debt (Details) - USD ($)	Dec. 19, 2013	Sep. 30, 2015	Dec. 31, 2014	Jun. 05, 2014	Aug. 31, 2013	Jan. 12, 2012
Debt Instrument [Line Items]
Capital Leases		$ 1,019,000	$ 1,195,000
Total		451,019,000	521,195,000
Less - current portion		430,000	792,000
Long-term portion		$ 450,589,000	520,403,000
Weighted average interest rate on variable rate debt		0.94%
Forward Starting Interest Rate Swap Agreement
Debt Instrument [Line Items]
Interest rate swap agreements, notional amount		$ 150,000,000		$ 150,000,000		$ 150,000,000
Interest rate on notional value		1.415%		2.56%
4.375% Senior Notes, due 2023
Debt Instrument [Line Items]
Long-term debt		$ 250,000,000	$ 250,000,000		$ 250,000,000
Deferred financing cost					$ 2,600,000
Senior notes coupon rate					99.879%
Stated interest percentage		4.375%	4.375%		4.375%
2013 Refinancing Credit Agreement
Debt Instrument [Line Items]
Deferred financing cost	$ 1,000,000
Debt instrument, interest rate, effective percentage		0.50%
Debt instrument, basis spread on variable rate		1.00%
Minimum interest expense coverage ratio		300.00%
Maximum debt to cash flow ratio		325.00%
2013 Refinancing Credit Agreement \| Base Rate \| Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.00%
2013 Refinancing Credit Agreement \| Base Rate \| Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.75%
2013 Refinancing Credit Agreement \| Alternative Rate \| Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.75%
2013 Refinancing Credit Agreement \| Alternative Rate \| Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.75%
Alternative Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.75%
Alternative Rate \| Base Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.00%
Letter of Credit \| 2013 Refinancing Credit Agreement
Debt Instrument [Line Items]
Line of credit facility, current borrowing capacity		$ 27,100,000
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt		200,000,000	$ 270,000,000
Revolving Credit Facility \| 2013 Refinancing Credit Agreement
Debt Instrument [Line Items]
Revolving credit facility, amount	$ 800,000,000
Credit facility loan term, years	5 years
Line of credit facility, amount currently available		$ 572,900,000

Acquisitions - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2015	Jun. 17, 2015	Feb. 04, 2015	Dec. 31, 2014	Sep. 03, 2014	Aug. 21, 2014	Jun. 06, 2014
Business Acquisition [Line Items]
Goodwill	$ 852,995,000			$ 862,338,000
Escrow deposits	209,128,000			$ 0
Acquired indefinite-lived intangible assets	128,500,000
Trade Names
Business Acquisition [Line Items]
Acquired indefinite-lived intangible assets	25,600,000
Customer Relationships
Business Acquisition [Line Items]
Acquired indefinite-lived intangible assets	$ 95,200,000
Average useful life, years	20 years
Noncompete Agreements
Business Acquisition [Line Items]
Acquired indefinite-lived intangible assets	$ 2,100,000
Average useful life, years	5 years
Customer Backlog
Business Acquisition [Line Items]
Acquired indefinite-lived intangible assets	$ 5,600,000
Acquisitions other than Faiveley
Business Acquisition [Line Items]
Escrow deposits	$ 40,800,000
RCL
Business Acquisition [Line Items]
Purchase price, net of cash acquired			$ 76,382,000
Goodwill			12,840,000
Goodwill tax deduction			$ 0
C2CE
Business Acquisition [Line Items]
Purchase price, net of cash acquired					$ 25,479,000
Goodwill					15,896,000
Goodwill tax deduction					$ 0
MTC
Business Acquisition [Line Items]
Purchase price, net of cash acquired		$ 23,360,000
Goodwill		12,141,000
Goodwill tax deduction		$ 0
Dia-Frag
Business Acquisition [Line Items]
Purchase price, net of cash acquired						$ 70,641,000
Goodwill						35,850,000
Goodwill tax deduction						$ 0
Fandstan Electric Group Ltd
Business Acquisition [Line Items]
Purchase price, net of cash acquired							$ 199,404,000
Goodwill							64,713,000
Goodwill tax deduction							$ 0

Business - Additional Information (Detail)	9 Months Ended
Business - Additional Information (Detail)	Sep. 30, 2015 country
Product Information [Line Items]
Number of countries company operates	20
Sales Revenue Outside United States \| Customer Concentration Risk
Product Information [Line Items]
Percent of revenue from customers outside the U.S.	48.00%
Minimum
Product Information [Line Items]
Number of countries where product is found (more than)	100

Warranties - Changes in Product Warranty Reserve (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 87,849	$ 60,593
Warranty expense	21,615	22,104
Acquisitions	6,001	3,567
Warranty claim payments	(18,961)	(14,572)
Foreign currency impact/other	(1,554)	(980)
Balance at end of period	$ 94,950	$ 70,712

Fair Value Measurement and Fair Value of Financial Instruments - Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement, current liability	$ 5,798	$ 3,351
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Liabilities at fair value	5,798	3,351
Interest rate swap agreements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap agreement, current liability	5,798	3,351
Liabilities at fair value	5,798	3,351
Interest rate swap agreements \| Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Liabilities at fair value	$ 5,798	$ 3,351

Acquisitions - Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 17, 2015	Feb. 04, 2015	Dec. 31, 2014	Sep. 03, 2014	Aug. 21, 2014	Jun. 06, 2014
Business Acquisition [Line Items]
Goodwill	$ 852,995			$ 862,338
MTC
Business Acquisition [Line Items]
Current assets		$ 10,906
Property, plant & equipment		1,510
Goodwill		12,141
Other intangible assets		7,649
Other assets		114
Total assets acquired		32,320
Total liabilities assumed		(8,960)
Net assets acquired		$ 23,360
RCL
Business Acquisition [Line Items]
Current assets			$ 16,445
Property, plant & equipment			11,983
Goodwill			12,840
Other intangible assets			40,403
Total assets acquired			81,671
Total liabilities assumed			(5,289)
Net assets acquired			$ 76,382
C2CE
Business Acquisition [Line Items]
Current assets					$ 9,812
Property, plant & equipment					1,853
Goodwill					15,896
Other intangible assets					3,654
Total assets acquired					31,215
Total liabilities assumed					(5,736)
Net assets acquired					$ 25,479
Dia-Frag
Business Acquisition [Line Items]
Current assets						$ 12,158
Property, plant & equipment						13,749
Goodwill						35,850
Other intangible assets						26,150
Other assets						66
Total assets acquired						87,973
Total liabilities assumed						(17,332)
Net assets acquired						$ 70,641
Fandstan Electric Group Ltd
Business Acquisition [Line Items]
Current assets							$ 124,280
Property, plant & equipment							67,948
Goodwill							64,713
Other intangible assets							50,598
Other assets							216
Total assets acquired							307,755
Total liabilities assumed							(108,351)
Net assets acquired							$ 199,404

Stock-Based Compensation - Fair Value of Each Option Grant Weighted Average Assumptions (Detail)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Dividend yield	0.14%	0.11%
Risk-free interest rate	1.82%	2.19%
Stock price volatility	27.30%	33.20%
Expected life (years)	5 years	5 years

Business	9 Months Ended
Business	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business	BUSINESS Westinghouse Air Brake Technologies Corporation (“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 more than 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 20 countries. In the first nine months of 2015, about 48% of the Company’s revenues came from customers outside the U.S.

Employee Benefit Plans - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2015 USD ($)
International Defined Benefit Pension Plans
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution to the plan	$ 6,700,000
U.S. Defined Benefit Pension Plans
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution to the plan	$ 0

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 208,241	$ 425,849
Accounts receivable	474,213	443,464
Unbilled accounts receivable	151,131	187,762
Inventories	517,486	510,949
Deposit in escrow	209,128	0
Deferred income taxes	46,025	43,953
Other	43,867	25,887
Total current assets	1,650,091	1,637,864
Property, plant and equipment	707,925	683,034
Accumulated depreciation	(356,691)	(343,923)
Property, plant and equipment, net	351,234	339,111
Other Assets
Goodwill	852,995	862,338
Other intangibles, net	436,991	422,811
Other noncurrent assets	34,771	41,717
Total other assets	1,324,757	1,326,866
Total Assets	3,326,082	3,303,841
Current Liabilities
Accounts payable	319,225	399,845
Customer deposits	106,889	111,797
Accrued compensation	71,478	70,857
Accrued warranty	72,693	68,031
Current portion of long-term debt	430	792
Other accrued liabilities	83,934	87,480
Total current liabilities	654,649	738,802
Long-term debt	450,589	520,403
Accrued postretirement and pension benefits	78,437	81,908
Deferred income taxes	113,758	112,915
Accrued warranty	22,257	19,818
Other long-term liabilities	20,951	21,697
Total liabilities	1,340,641	1,495,543
Shareholders’ Equity
Preferred stock	0	0
Common stock	1,323	1,323
Additional paid-in capital	463,151	448,531
Treasury stock	(409,792)	(392,262)
Retained earnings	2,186,673	1,909,136
Accumulated other comprehensive loss	(257,208)	(159,486)
Total Westinghouse Air Brake Technologies Corporation shareholders' equity	1,984,147	1,807,242
Non-controlling interest (minority interest)	1,294	1,056
Total shareholders’ equity	1,985,441	1,808,298
Total Liabilities and Shareholders’ Equity	$ 3,326,082	$ 3,303,841

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 188,326	$ 222,059
Work-in-progress	196,379	154,094
Finished goods	132,781	134,796
Total inventories	$ 517,486	$ 510,949

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating Activities
Net income attributable to Wabtec shareholders	$ 296,849	$ 258,994
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	48,167	44,977
Stock-based compensation expense	20,092	19,107
Loss on disposal of property, plant and equipment	1,804	114
Excess income tax benefits from exercise of stock options	(2,683)	(2,739)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable and unbilled accounts receivable	(881)	(89,359)
Inventories	(15,847)	(33,958)
Accounts payable	(80,701)	40,971
Accrued income taxes	20,964	16,355
Accrued liabilities and customer deposits	(12,911)	8,342
Other assets and liabilities	(19,547)	(32,640)
Net cash provided by operating activities	255,306	230,164
Investing Activities
Purchase of property, plant and equipment	(33,079)	(30,977)
Proceeds from disposal of property, plant and equipment	354	340
Acquisitions of businesses, net of cash acquired	(100,108)	(299,661)
Deposit in escrow	(209,128)	0
Net cash used for investing activities	(341,961)	(330,298)
Financing Activities
Proceeds from debt	390,300	433,400
Payments of debt	(460,308)	(362,965)
Purchase of treasury stock	(22,336)	(26,757)
Proceeds from exercise of stock options and other benefit plans	2,708	3,044
Excess income tax benefits from exercise of stock options	2,683	2,739
Payment of income tax withholding on share-based compensation	(14,565)	0
Earn-out settlement	0	(4,429)
Cash dividends	(19,315)	(13,471)
Net cash (used for) provided by financing activities	(120,833)	31,561
Effect of changes in currency exchange rates	(10,120)	(4,646)
Decrease in cash	(217,608)	(73,219)
Cash, beginning of period	425,849	285,760
Cash, end of period	$ 208,241	$ 212,541

Accounting Policies (Policies)	9 Months Ended
Accounting Policies (Policies)	Sep. 30, 2015
Accounting Policies [Abstract]
Basis of Presentation	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 consolidated 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 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, 2014. The December 31, 2014 information has been derived from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Revenue Recognition	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. In general, 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.
Use of Estimates	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.
Financial Derivatives and Hedging Activities	Financial Derivatives and Hedging Activities The Company periodically enters 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.
Foreign Currency Translation	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 average rates of exchange prevailing during the period. 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 accumulated other comprehensive loss. The effects of currency exchange rate changes on intercompany transactions that are denominated in a currency other than an entity’s functional currency are charged or credited to earnings.
Non-controlling Interests	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 September 30, 2015 and December 31, 2014.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update No. 2015-3, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-3”) which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-3 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact to the financial statements. The Company will make the required changes in the first quarter of 2016. In May 2014, the FASB issued ASU no. 2014-9, “Revenue from Contract with Customers.” The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Board voted to propose that the standard would take effect for reporting periods beginning after December 15, 2017 and that early adoption would be allowed as of the original effective date. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures.
Other Comprehensive Income	Other Comprehensive Income Comprehensive income is defined as net income and all other non-owner changes in shareholders’ equity.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Cash Flows [Abstract]
Cash dividends, per share (in dollars per share)	$ 0.20	$ 0.14

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	132,349,534	132,349,534
Common stock, shares outstanding (in shares)	96,478,084	96,274,395
Treasury stock, shares (in shares)	35,871,460	36,075,139

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES The overall effective income tax rate was 31.5% and 31.9% for the three and nine months ended September 30, 2015, respectively, and 31.3% and 31.2% for the three and nine months ended September 30, 2014, respectively. For the three and nine months ended September 30, 2015 the increase in the effective rate is primarily the result of a higher earnings mix in higher tax rate jurisdictions, partially offset by lower state income taxes. As of September 30, 2015, the liability for income taxes associated with uncertain tax positions was $13.7 million, of which $5.5 million, if recognized, would favorably affect the Company’s effective tax rate. As of December 31, 2014 the liability associated with uncertain tax positions was $12.6 million, of which $5.5 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 September 30, 2015 the total accrued interest and penalties are $2.4 million and $1.7 million, respectively. As of December 31, 2014 the total accrued interest and penalties were $1.9 million and $1.3 million, respectively. At this time, the Company believes that it is reasonably possible that unrecognized tax benefits of approximately $4.4 million may change within the next 12 months due to the expiration of statutory review periods and current examinations. The Internal Revenue Service is currently auditing the 2012 tax year. With limited exception, the Company is no longer subject to examination by various U.S. and foreign taxing authorities for years before 2011.

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2015	Oct. 26, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
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		96,478,074

Segment Information - Additional Information (Detail)	9 Months Ended
Segment Information - Additional Information (Detail)	Sep. 30, 2015 segment
Segment Reporting [Abstract]
Number of reportable segments	2

Fair Value Measurement and Fair Value of Financial Instruments - Estimated Fair Values and Related Carrying Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Aug. 31, 2013
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Carry value	$ 5,798	$ 3,351
Interest rate swap agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Carry value	5,798	3,351
Fair value	5,798	3,351
4.375% Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Carry value	250,000	250,000	$ 250,000
Fair value	$ 257,503	$ 260,000

Long-Term Debt (Details 2)	9 Months Ended
Long-Term Debt (Details 2)	Sep. 30, 2015	Dec. 31, 2014	Aug. 31, 2013
Alternative Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	0.75%
4.375% Senior Notes, due 2023
Debt Instrument [Line Items]
Stated interest percentage	4.375%	4.375%	4.375%

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	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. Further information and detail on these claims is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K. The Company is also subject to litigation from time to time arising out of its operations in the ordinary course of business, including claims based on product liability, contracts, intellectual property, or other causes of action. Further information and detail on any potentially material litigation is as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, in Note 18 therein, filed on February 20, 2015. During the first nine months of 2015, there were no material changes to the information described in the Form 10-K.

Intangibles - Amortization Expense (Detail) $ in Thousands	Sep. 30, 2015 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2015	$ 6,070
2016	21,005
2017	19,826
2018	18,848
2019	$ 18,405

Proposed Transaction with Faiveley Transport S.A. (Details) $ in Thousands	Jul. 27, 2015 USD ($) employee country	Jul. 27, 2015 USD ($)	Oct. 06, 2015	Sep. 30, 2015 USD ($)	Sep. 29, 2015 USD ($)	Jul. 27, 2015 € / shares shares	Dec. 31, 2014 USD ($)
Business Acquisition [Line Items]
Convertible preferred stock, conversion period		3 years
Deposit in escrow				$ 209,128			$ 0
Business acquisition consolidated revenue after acquisition	$ 4,500,000
Faiveley Transport
Business Acquisition [Line Items]
Annual sales of Faiveley	$ 1,200,000
Number of employees (more than) \| employee	5,700
Number of countries Faiveley operates in \| country	24
Purchase price per share (in euros per share) \| € / shares						€ 100
Percentage of business acquisition consideration payable in cash						25.00%
Percentage of business acquisition consideration payable in preferred stock						75.00%
Preferred stock annual dividend rate		1.00%
Number of common shares issued for conversion of one acquiree common share \| shares						1.125
Minority interests percentage for delisting of acquiree company (less than)	5.00%
Business combination, consideration transferred		$ 1,800,000
Deposit in escrow					$ 209,100
Subsequent Event \| Faiveley Transport
Business Acquisition [Line Items]
Percentage of voting interests in Faiveley			51.00%