ACQUISITIONS

12 Months Ended

Dec. 31, 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 credit and debt financing. Prior to December 31, 2015, Wabtec set aside €186.9 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 made the following acquisitions operating as a business unit or component of a business unit in the Freight Segment:

• On October 30, 2015, the Company acquired Relay Monitoring Systems PTY Ltd. (“RMS”), an Australian based manufacturer of electrical protection and control products for a purchase price of approximately $18.7 million, net of cash acquired, resulting in preliminary goodwill of $7.6 million, none of which will be deductible for tax purposes.  

• On October 8, 2015, the Company acquired Track IQ, an Australian based manufacturer of wayside censor systems for the global rail industry for a purchase price of approximately $9.1 million, net of cash acquired, resulting in preliminary goodwill of $6.4 million, all of which will be deductible for tax purposes. 

• On February 4, 2015, the Company acquired Railroad Controls L.P. (“RCL”), a U.S. based provider of railway signal construction services for a purchase price of approximately $78.0 million, net of cash acquired, resulting in preliminary goodwill of $14.9 million, all of which will be deductible for tax purposes. 

• On September 3, 2014, the Company acquired C2CE Pty Ltd. (“C2CE”), a leading provider of railway signal design services in Australia, 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.

For the RMS, Track IQ, and RCL acquisitions, the following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions.  For the C2CE acquisition, the following table summarizes the final fair value of assets acquired and liabilities assumed at the date of acquisition.  

	RMS			Track IQ			RCL			C2CE
	October 30,			October 8,			February 4,			September 3,
In thousands	2015			2015			2015			2014
Current assets	$	3,605		$	660		$	16,421		$	9,812
Property, plant & equipment	1,378			187			11,983			1,853
Goodwill	7,584			6,440			14,940			15,896
Other intangible assets	10,426			3,246			40,403			3,654
Total assets acquired	22,993			10,533			83,747			31,215
Total liabilities assumed	(4,283		)	(1,430		)	(5,736		)	(5,736		)
Net assets acquired	$	18,710		$	9,103		$	78,011		$	25,479

The Company 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, a leading manufacturer of friction products in Brazil, 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 $62.5 million, none of which will be deductible for tax purposes.

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

	MTC			Dia-Frag			Fandstan
	June 17,			August 19,			June 6,
In thousands	2015			2014			2014
Current assets	$	10,906		$	12,158		$	124,280
Property, plant & equipment	1,510			13,749			67,948
Goodwill	12,141			35,850			62,476
Other intangible assets	7,649			26,150			50,598
Other assets	114			66			216
Total assets acquired	32,320			87,973			305,518
Total liabilities assumed	(8,960		)	(17,332		)	(106,114		)
Net assets acquired	$	23,360		$	70,641		$	199,404

The 2015 acquisitions listed above include escrow deposits of $36.7 million, which may be released to the Company for indemnity and other claims in accordance with the purchase and escrow agreements.

The total goodwill and other intangible assets for acquisitions listed in the tables above was $297.4 million, of which $155.3 million and $142.1 million was related to goodwill and other intangible assets, respectively.  Of the allocation of $142.1 million of acquired intangible assets, $106.0 million was assigned to customer relationships, $27.4 million was assigned to trade names, $2.4 million was assigned to non-compete agreements and $6.3 million was assigned to customer backlog. The trade names are considered to have an indefinite useful life while the customer relationships’ useful life is 20 years and the non-compete agreements' useful life is five years.

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

	For the year ended December 31,
In thousands	2015		2014
Net sales	$	3,340,294	$	3,309,365
Gross profit	1,061,080		1,022,391
Net income attributable to Wabtec shareholders	400,692		380,076
Diluted earnings per share
As Reported	$	4.10	$	3.62
Pro forma	$	4.13	$	3.91