-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LDQcp8+H5KmszmFbskKlNtOYzuF4G0jyCk1UF3IRr/8SKQ5e+TzxfrzqxJ0K42rm Bw/533DHsLWD7WDyckwuQw== 0000950137-04-009069.txt : 20041027 0000950137-04-009069.hdr.sgml : 20041027 20041027173014 ACCESSION NUMBER: 0000950137-04-009069 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041027 DATE AS OF CHANGE: 20041027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WABASH NATIONAL CORP /DE CENTRAL INDEX KEY: 0000879526 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK TRAILERS [3715] IRS NUMBER: 521375208 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10883 FILM NUMBER: 041100358 BUSINESS ADDRESS: STREET 1: P O BOX 6129 CITY: LAFAYETTE STATE: IN ZIP: 47905 BUSINESS PHONE: 7657715310 MAIL ADDRESS: STREET 1: 1000 SAGAMORE PARKWAY SOUTH STREET 2: P O BOX 6129 CITY: LAFAYETTE STATE: IN ZIP: 47905 10-Q 1 c89089e10vq.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF [X] THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004 OR TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF [ ] THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ___________ COMMISSION FILE NUMBER: 1-10883 WABASH NATIONAL CORPORATION --------------------------- (Exact name of registrant as specified in its charter) Delaware 52-1375208 -------- ---------- (State of Incorporation) (IRS Employer Identification Number) [WABASH NATIONAL LOGO] 1000 Sagamore Parkway South, Lafayette, Indiana 47905 ------------------ ----- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (765) 771-5300 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 and has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ] The number of shares of common stock outstanding at October 22, 2004 was 27,352,368. 1 WABASH NATIONAL CORPORATION INDEX FORM 10-Q
Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets at September 30, 2004 and December 31, 2003 3 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2004 and 2003 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk 19 Item 4. Controls and Procedures 19 PART II - OTHER INFORMATION Item 1. Legal Proceedings 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Defaults upon Senior Securities 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information 20 Item 6. Exhibits 25 Signatures 26
2 WABASH NATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
September 30, December 31, 2004 2003 ------------- ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,832 $ 12,552 Accounts receivable, net 134,041 66,641 Current portion of finance contracts 2,680 4,727 Inventories 113,120 84,996 Prepaid expenses and other 7,400 10,249 --------- --------- Total current assets 272,073 179,165 PROPERTY, PLANT AND EQUIPMENT, net 125,893 130,594 EQUIPMENT LEASED TO OTHERS, net 15,354 21,187 FINANCE CONTRACTS, net of current portion 3,785 6,155 GOODWILL, net 36,063 36,045 OTHER ASSETS 16,589 23,890 --------- --------- $ 469,757 $ 397,036 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 8,729 $ 7,337 Accounts payable 89,348 68,437 Other accrued liabilities 53,341 61,421 --------- --------- Total current liabilities 151,418 137,195 LONG-TERM DEBT, net of current maturities 234,234 219,979 OTHER NONCURRENT LIABILITIES AND CONTINGENCIES 9,476 17,700 STOCKHOLDERS' EQUITY: Preferred stock, 25,000,000 shares authorized, 0 shares issued and outstanding - - Common stock 75,000,000 shares authorized, $0.01 par value, 27,350,725 and 26,849,257 shares issued and outstanding, respectively 274 269 Additional paid-in capital 249,408 242,682 Retained deficit (175,087) (220,502) Accumulated other comprehensive income 1,313 992 Treasury stock at cost, 59,600 common shares (1,279) (1,279) --------- --------- Total stockholders' equity 74,629 22,162 --------- --------- $ 469,757 $ 397,036 ========= =========
See Notes to Condensed Consolidated Financial Statements. 3 WABASH NATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, ---------------------- ---------------------- 2004 2003 2004 2003 -------- -------- -------- -------- NET SALES $277,243 $215,450 $753,739 $668,189 COST OF SALES 240,321 198,438 657,060 603,366 LOSS ON ASSET IMPAIRMENT - - - 28,500 -------- -------- ------- -------- Gross profit 36,922 17,012 96,679 36,323 GENERAL AND ADMINISTRATIVE EXPENSES 10,389 11,792 31,073 32,318 SELLING EXPENSES 3,775 4,627 11,401 15,555 -------- -------- ------- -------- Income (loss) from operations 22,758 593 54,205 (11,550) OTHER INCOME (EXPENSE): Interest expense (2,944) (8,746) (8,610) (27,630) Foreign exchange gains and losses, net 486 (271) (59) 5,318 Loss on debt extinguishment - (18,940) - (18,940) Other, net 414 (2,277) 798 (2,677) -------- -------- ------- -------- Income (loss) before income taxes 20,714 (29,641) 46,334 (55,479) INCOME TAX PROVISION 420 - 919 - -------- -------- ------- -------- Net income (loss) 20,294 (29,641) 45,415 (55,479) PREFERRED STOCK DIVIDENDS - 264 - 792 -------- -------- ------- -------- NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ 20,294 $(29,905) $45,415 $(56,271) ======== ======== ======= ======== BASIC NET INCOME (LOSS) PER SHARE $ 0.74 $ (1.16) $ 1.67 $ (2.19) ======== ======== ======= ======== DILUTED NET INCOME (LOSS) PER SHARE $ 0.62 $ (1.16) $ 1.42 $ (2.19) ======== ======== ======= ======== COMPREHENSIVE INCOME (LOSS) Net income (loss) $ 20,294 $(29,641) $ 45,415 $(55,479) Foreign currency translation adjustment 1,143 (208) 321 236 -------- -------- ------- -------- NET COMPREHENSIVE INCOME (LOSS) $ 21,437 $(29,849) $ 45,736 $(55,243) ======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements. 4 WABASH NATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine Months Ended September 30, -------------------------- 2004 2003 ---------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 45,415 $ (55,479) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 14,745 19,115 Net (gain) loss on the sale of assets (405) 652 Provision for losses on accounts receivable and finance contracts (30) 1,011 Cash used for restructuring activities (2,993) (229) Trailer valuation charges 415 2,261 Loss on debt extinguishment - 18,940 Loss on asset impairment - 28,500 Changes in operating assets and liabilities: Accounts receivable (67,370) (53,771) Inventories (26,989) 22,732 Refundable income taxes 72 921 Prepaid expenses and other 1,202 4,328 Accounts payable and accrued liabilities 15,844 7,630 Other, net 1,145 1,526 --------- --------- Net cash used in operating activities (18,949) (1,863) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,760) (3,747) Proceeds from asset sales - 53,479 Proceeds from sale of leased equipment and finance contracts - 5,305 Principal payments received on finance contracts 4,039 5,969 Proceeds from the sale of property, plant and equipment 2,116 1,762 --------- --------- Net cash provided by investing activities 395 62,768 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of bank term loan and revolving credit facility - 135,309 Proceeds from issuance of convertible senior notes - 125,000 Proceeds from exercise of stock options 5,187 1,687 Borrowings under trade receivables and revolving credit facilities 534,916 109,618 Payments under trade receivables and revolving credit facilities (511,999) (109,618) Payments under long-term debt and capital lease obligations (7,270) (344,322) Preferred stock dividends - (1,584) Debt issuance costs paid - (10,077) --------- --------- Net cash provided by (used in) financing activities 20,834 (93,987) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,280 (33,082) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,552 35,659 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,832 $ 2,577 ========= =========
See Notes to Condensed Consolidated Financial Statements. 5 WABASH NATIONAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL The condensed consolidated financial statements of Wabash National Corporation (the Company) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company, its results of operations and cash flows. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's 2003 Annual Report on Form 10-K, as amended. Certain items previously reported in specific condensed consolidated financial statement captions have been reclassified to conform to the 2004 presentation. During the period ended September 30, 2004, there were no accounting pronouncements issued that would have an affect on the Company's financial position, results of operations, or cash flow. 2. INVENTORIES Inventories consisted of the following (in thousands):
September 30, December 31, 2004 2003 ------------ ----------- Raw material and components $ 35,977 $ 24,189 Work in process 4,912 4,364 Finished goods 53,294 38,198 After-market parts 6,210 5,953 Used trailers 12,727 12,292 -------- -------- $113,120 $ 84,996 ======== ========
3. RESTRUCTURING AND OTHER RELATED CHARGES In connection with the Company's exit from manufacturing product for export outside the North American market, international leasing and financing activities and the consolidation of certain domestic operations in 2000, charges totaling $48.2 million were recorded, of which $47.9 million has been utilized. During the third quarter of 2004, the Company reached a final settlement of $1.8 million related to certain of its financial and equipment guarantee obligations. At September 30, 2004, the remaining reserve balance amounted to $0.3 million. 4. DEBT The Company has $125 million of 3.25% senior unsecured convertible notes (Convertible Notes) due August 1, 2008, which are convertible into approximately 6.5 million shares of the Company's stock. The notes have a conversion price of $19.20 or a rate of 52.0833 shares per $1,000 principal amount of notes. Interest is payable semi-annually on February 1 and August 1. 6 The Company has an asset-based loan facility (ABL Facility) due September 23, 2006 that includes a $31.7 million term loan and a $175 million revolver. The revolver is secured by inventory and accounts receivable and the amount available to borrow varies in relation to the balances of those accounts. As of September 30, 2004, borrowing capacity under the revolver was $148.4 million, of which $83.3 million was outstanding. Interest on the revolver is at the London Interbank Offer Rate (LIBOR) plus 225 basis points, or the bank's prime rate plus 25 basis points. At September 30, 2004, the 30-day LIBOR rate was 1.8401%. The Company pays a commitment fee on the unused portion of the facility at a rate of 37.5 basis points per annum. For the quarter ended September 30, 2004, the weighted average interest rate was 4.43%. The term loan is secured by the Company's property, plant and equipment. Interest is variable, based on LIBOR plus 225 basis points, or the bank's prime rate plus 25 basis points. For the quarter ended September 30, 2004, the weighted average interest rate was 4.32%. Quarterly principal payments of $1.7 million commenced on January 1, 2004. On September 29, 2004, the Company amended its ABL Facility. Most notably, the amendment lowered the Company's interest rate by 25 basis points and up to 100 basis points depending upon the Company's fixed charge coverage ratio, eliminated the requirement to make excess cash flow payments beginning in April 2005 and increased capital expenditure limits from $15 million to $20 million in 2005. There were no changes in the maturity date or scheduled payments under the ABL Facility. The ABL Facility agreement contains covenants that require, among other things, minimum fixed charge coverage and maximum senior debt to EBITDA coverage. Also, the agreement places limits on capital expenditures and additional borrowings. As of September 30, 2004, the Company was in compliance with all loan covenants. Scheduled maturities for the remainder of 2004 and future years are as follows (in thousands): 2004 $ 2,182 2005 8,729 2006 107,052 2007 - 2008 125,000 ----------- 242,963 Less: Current maturities (8,729) ----------- $ 234,234 ===========
5. STOCK-BASED COMPENSATION The Company follows APB No. 25, Accounting for Stock Issued to Employees, in accounting for its stock options and, accordingly, no compensation cost has been recognized for stock options in the consolidated financial statements. In accordance with SFAS No. 148, Accounting for Stock Based Compensation Transition and Disclosure, the following table illustrates the effect on net income and net income per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation to stock-based employee compensation. 7
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2004 2003 2004 2003 ---------- ---------- ---------- ---------- (in thousands, except for per share amounts) Reported net income (loss) $ 20,294 $ (29,641) $ 45,415 $ (55,479) Pro forma stock-based compensation expense (net of tax) (588) (748) (1,710) (1,985) ---------- ---------- ---------- ---------- Proforma net income (loss) $ 19,706 $ (30,389) $ 43,705 $ (57,464) ========== ========== ========== ========== Basic earnings per share: Reported net income (loss) per share $ 0.74 $ (1.16) $ 1.67 $ (2.19) Proforma stock-based compensation expense (net of tax) per share (0.02) (0.03) (0.06) (0.07) ---------- ---------- ---------- ---------- Pro forma net income (loss) per share $ 0.72 $ (1.19) $ 1.61 $ (2.26) ========== ========== ========== ========== Diluted earnings per share: Reported net income (loss) per share $ 0.62 $ (1.16) $ 1.42 $ (2.19) Pro forma stock-based compensation expense (net of tax) per share (0.02) (0.03) (0.05) (0.07) ---------- ---------- ---------- ---------- Pro forma net income (loss) per share $ 0.60 $ (1.19) $ 1.37 $ (2.26) ========== ========== ========== ==========
6. CONTINGENCIES a. LITIGATION Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company arising in the ordinary course of business, including those pertaining to product liability, labor and health related matters, successor liability, environmental and possible tax assessments. While the amounts claimed could be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on facts currently available, management believes that the disposition of matters that are currently pending or asserted will not have a material adverse effect on the Company's financial position, liquidity or results of operations. Brazil Joint Venture In March 2001, Bernard Krone Industria e Comercio de Maquinas Agricolas Ltda. ("BK") filed suit against the Company in the Fourth Civil Court of Curitiba in the State of Parana, Brazil. This action seeks recovery of damages plus pain and suffering. Because of the bankruptcy of BK, this proceeding is now pending before the Second Civil Court of Bankruptcies and Creditors Reorganization of Curitiba, State of Parana (No. 232/99). This case grows out of a joint venture agreement between BK and the Company, which was generally intended to permit BK and the Company to market the RoadRailer(R) trailer in Brazil and other areas of South America. When BK was placed into the Brazilian equivalent of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuit against the Company alleging among other things that it was forced to terminate business with other companies because of the exclusivity and non-compete clauses purportedly found in the joint venture agreement. In its complaint, BK asserts that it has been damaged by these alleged wrongs by the Company in the approximate amount of $8.4 million. The Company answered the complaint in May 2001, denying any wrongdoing. The Company believes that the claims asserted against it by BK are without merit and intends to defend itself vigorously against those claims. The Company believes that the resolution of this lawsuit will not have a material adverse effect on its financial position, liquidity or future results of operations; however, at this early stage of the proceeding, no assurance can be given as to the ultimate outcome of the case. 8 Environmental In September 2003, the Company was noticed as a potentially responsible party (PRP) by the United States Environmental Protection Agency pertaining to the Motorola 52nd Street, Phoenix, Arizona Superfund Site pursuant to the Comprehensive Environmental Response, Compensation and Liability Act. PRPs include current and former owners and operators of facilities at which hazardous substances were disposed of. EPA's allegation that the Company was a PRP arises out of the operation of a former branch facility located approximately five miles from the original site. The Company does not expect that these proceedings will have a material adverse effect on the Company's financial condition or results of operations. On September 28, 2004, the Company entered a plea to two misdemeanor violations of the Clean Water Act and agreed to pay a $0.4 million fine pursuant to a plea agreement. In addition, the Company and the United States Environmental Protection Agency (EPA) have concluded negotiations regarding the terms and conditions of a compliance agreement that involves environmental training, auditing and similar activities by the Company. The compliance agreement is currently awaiting signature by the EPA. The Company does not believe that the entering into of the compliance agreement will have a material adverse impact on the results or operations of the Company. 7. NET INCOME PER SHARE Per share results have been computed based on the average number of common shares outstanding. The following table presents the number of incremental weighted average shares used in computing diluted per share amounts (in thousands, except per share amounts):
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2004 2003 2004 2003 ------- -------- ------- -------- Basic earnings (loss) per share: Net income (loss). applicable to common stockholders $20,294 $(29,905) $45,415 $(56,271) ======= ======== ======= ======== Weighted average common shares outstanding 27,314 25,802 27,150 25,721 ======= ======== ======= ======== Basic income (loss) per share $ 0.74 $ (1.16) $ 1.67 $ (2.19) ======= ======== ======= ======== Diluted earnings (loss) per share: Net income (loss) applicable to common stockholders $20,294 $(29,905) $45,415 $(56,271) After-tax equivalent of interest on convertible notes 1,210 - 3,618 - ------- -------- ------- -------- Diluted net income (loss) applicable to common stockholders $21,504 $(29,905) $49,033 $(56,271) ======= ======== ======= ======== Weighted average common shares outstanding 27,314 25,802 27,150 25,721 Dilutive stock options/shares 721 - 870 - Convertible notes equivalent shares 6,510 - 6,510 - ------- -------- ------- -------- Diluted weighted average common shares outstanding 34,545 25,802 34,530 25,721 ======= ======== ======= ======== Diluted income (loss) per share $ 0.62 $ (1.16) $ 1.42 $ (2.19) ======= ======== ======= ========
9 The 2003 diluted weighted average shares outstanding excluded the antidilutive effects of preferred stock convertible into 823,200 shares, and 356,787 shares and 179,671 shares of stock options for the three and nine months, respectively. 8. SEGMENTS The Company has two reportable segments: manufacturing and retail and distribution. The manufacturing segment produces and sells new trailers to the retail and distribution segment or to customers who purchase trailers direct or through independent dealers. The retail and distribution segment includes the sale, leasing and financing of new and used trailers, as well as the sale of after-market parts and service through its retail branch network. In addition, the retail and distribution segment in 2003 included the sale of after-market parts. Reportable segment information is as follows (in thousands):
Retail and Consolidated Manufacturing Distribution Eliminations Totals ------------- ------------ ------------ ------------ THREE MONTHS ENDED SEPTEMBER 30, 2004 Net Sales External customers $215,522 $ 61,721 $ - $ 277,243 Intersegment sales 24,849 - (24,849) - -------- --------- -------- --------- Total Net Sales $240,371 $ 61,721 $ (24,849) $ 277,243 ======== ========= ========= ========= Income (Loss) from Operations $ 20,599 $ 509 $ 1,650 $ 22,758 Assets $444,988 $ 187,165 $(162,396) $ 469,757 THREE MONTHS ENDED SEPTEMBER 30, 2003 Net Sales External customers $147,093 $ 68,357 $ - $ 215,450 Intersegment sales 5,707 265 (5,972) - -------- --------- -------- --------- Total Net Sales $152,800 $ 68,622 $ (5,972) $ 215,450 ======== ========= ========= ========= Income (Loss) from Operations $ 2,387 $ (1,815) $ 21 $ 593 Assets $393,449 $ 216,407 $(161,879) $ 447,977 NINE MONTHS ENDED SEPTEMBER 30, 2004 Net Sales External customers $575,266 $ 178,473 $ - $ 753,739 Intersegment sales 81,140 1,975 (83,115) - -------- --------- -------- --------- Total Net Sales $656,406 $ 180,448 $ (83,115) $ 753,739 ======== ========= ========= ========= Income (Loss) from Operations $ 56,402 $ (1,547) $ (650) $ 54,205 Assets $444,988 $ 187,165 $(162,396) $ 469,757 NINE MONTHS ENDED SEPTEMBER 30, 2003 Net Sales External customers $446,714 $ 221,475 $ - $ 668,189 Intersegment sales 40,226 878 (41,104) - -------- --------- -------- --------- Total Net Sales $486,940 $ 222,353 $ (41,104) $ 668,189 ======== ========= ========= ========= Income (Loss) from Operations $ 21,202 $ (33,072) $ 320 $ (11,550) Assets $393,449 $ 216,407 $(161,879) $ 447,977
10 Product Information The Company offers products primarily in three categories: new trailers, used trailers and parts and service. Other sales include leasing revenues, interest income from finance contracts and freight. The following table sets forth the major product categories and their percentage of total net sales (dollars in thousands):
Three Months Ended September 30, Nine Months Ended September 30, --------------------------------- --------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- $ % $ % $ % $ % ------- ----- ------- ----- ------- ----- ------- ----- New Trailers 243,047 87.7 162,374 75.4 657,571 87.2 499,813 74.8 Used Trailers 14,485 5.2 16,514 7.7 40,963 5.5 53,273 8.0 Parts & Service 15,654 5.6 27,071 12.6 43,988 5.8 85,805 12.8 Other 4,057 1.5 9,491 4.3 11,217 1.5 29,298 4.4 ------- ----- ------- ----- ------- ----- ------- ----- Total Net Sales 277,243 100.0 215,450 100.0 753,739 100.0 668,189 100.0 ======= ===== ======= ===== ======= ===== ======= =====
9. RECENT DEVELOPMENT On October 12, 2004, the Company filed a registration statement with the Securities and Exchange Commission in connection with its plan to sell up to 3,000,000 shares of common stock through an underwritten public offering to be managed by Merrill Lynch & Co., Bear, Stearns & Co. Inc. and BB&T Capital Markets. In addition, the Company may sell up to 450,000 shares to cover an underwriters over-allotment option. The Company intends to use all of the net proceeds from this public offering to repay a portion of its outstanding secured bank indebtedness. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. The words "believe," "expect," "anticipate," and "project" and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, information regarding revenues, income or loss, capital expenditures, acquisitions, number of retail branch openings, plans for future operations, financing needs or plans, the impact of inflation and plans relating to services of the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Statements in this report, including those set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could contribute to or cause such differences. Although we believe that our expectations that are expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations include the factors that are disclosed elsewhere herein, including, but not limited to, Item 5 of Part II hereof. 11 RESULTS OF OPERATIONS The following table sets forth certain operating data as a percentage of net sales for the periods indicated:
Percentage of Net Sales ---------------------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, ------------------------ -------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 86.7 92.1 87.2 90.3 Loss on asset impairment - - - 4.3 ----- ----- ----- ----- Gross profit 13.3 7.9 12.8 5.4 General and administrative expense 3.7 5.5 4.1 4.8 Selling expense 1.4 2.1 1.5 2.3 ----- ----- ----- ----- Income (loss) from operations 8.2 0.3 7.2 (1.7) Interest expense (1.1) (4.1) (1.1) (4.1) Foreign exchange gains and losses, net 0.2 (0.1) - 0.8 Loss on debt extinguishment - (8.8) - (2.8) Other, net 0.2 (1.1) - (0.5) ----- ----- ----- ----- Income (loss) before income taxes 7.5 (13.8) 6.1 (8.3) Income tax provision 0.2 - 0.1 - ----- ----- ----- ----- Net income (loss) 7.3% (13.8)% 6.0% (8.3)% ===== ===== ===== =====
The industry recovery that began in 2003 continued into the third quarter of 2004 and it is expected to continue over the balance of the year as production of trailers is anticipated to increase from approximately 183,000 units to approximately 230,000 units in 2004 according to ACT Research Company, LLC estimates. The expansion in production is predicated on a number of factors including improving general economic conditions and pent-up trucking industry demand for replacement units as the average age of trailer fleets increases. Regulations regarding driver hours (hours of service) that became effective January 2004 have had limited impact on business to date. The industry is enjoying a period of improvement and we expect to participate in the industry growth because our core customers are among the largest participants in the trucking industry, our DuraPlate(R) trailer continues to have increased market acceptance and penetration and we are expanding our presence into the middle market carriers - approximately 1,250 carriers with fleet sizes ranging from 250 to 5,000 units. We believe that Wabash is well positioned to benefit from any increased demand for trailers because of the improvements that have been made over the last three years. As a result of our continuous improvement initiatives, we have reduced our total cost of producing a trailer and effectively increased production capacity. Additionally, we have become more efficient in the use of working capital. Since January 2004, we have experienced significant price volatility in our principal raw materials: steel, aluminum and timber. More recently, availability of raw materials due to supplier capacity constraints and a constrained distribution system have become a more serious concern. We have experienced some intermittent shortages that we have been able to manage through. We expect the trend of rising material prices and constrained availability will continue near term. We believe that our long-term relationships with suppliers have been advantageous in mitigating raw material issues. We responded to increased raw material costs by implementing price increases on new trailers in March 2004 ranging from 4.5% to 6%, as contract terms allow. We continue to pass on raw material increases as competitive conditions allow. 12 While we have experienced some nominal order cancellations and postponements, we do not anticipate any significant impact on our overall market share. THREE MONTHS ENDED SEPTEMBER 30, 2004 NET SALES Net sales increased $61.7 million from the third quarter 2003, which included $18.0 million of sales associated with certain assets of our trailer rental and leasing and aftermarket parts distribution businesses which were sold in September 2003 (Asset Sales). By business segment, net sales to external customers and related units sold were as follows (in millions):
Three Months Ended September 30, --------------------------------------- 2004 2003 % Change -------- -------- -------- Sales by segment: Manufacturing $ 215.5 $ 147.1 46% Retail and Distribution 61.7 68.4 (10%) -------- -------- Total $ 277.2 $ 215.5 29% ======== ======== New trailer units: Manufacturing 12,100 8,900 36% Retail and Distribution 1,600 1,000 60% -------- -------- Total 13,700 9,900 38% ======== ======== Used trailer units 1,700 3,100 (45%) ======== ========
Improving conditions in both the overall economy and the transportation industry drove a 36% increase in unit volume in the manufacturing segment. Average selling prices increased approximately 7.5% from the prior year period as material price increases were passed along to the end users. Third quarter 2004 sales in the retail and distribution segment were lower than the prior year period which included $18.0 million of sales associated with the aforementioned Assets Sales. The 2004 period saw a 60% increase in new trailer unit sales equal to $14.9 million in sales offset in part by reductions in used trailer sales. The decrease in used trailer sales resulted from constrained used equipment availability, as transportation companies retain equipment to meet requirements. Branch parts and service sales increased $1.2 million despite the closing of four full service branches during 2003. GROSS PROFIT Gross profit as a percent of sales was 13.3% in the third quarter of 2004 compared to 7.9% in the 2003 period. As discussed below, both of our segments contributed as follows (in millions):
Three Months Ended September 30, ----------------------------------------- 2004 2003 $ Change -------- -------- -------- Gross Profit by segment: Manufacturing $ 30.1 $ 10.9 $ 19.2 Retail and Distribution 5.2 6.1 (0.9) Eliminations 1.6 - 1.6 -------- -------- ------- Total Gross Profit $ 36.9 $ 17.0 $ 19.9 ======== ======== =======
The increase in the manufacturing segment's gross profit primarily resulted from increased volume of $6.3 million and improved labor and overhead utilization of $10.6 million, reflecting the 13 benefits of continuous improvement initiatives, reductions in cycle times and cost controls. Raw material cost increases were essentially offset by increases in selling prices. Gross profit in the retail and distribution segment in 2004 benefited from increased new trailer sales, improved margins on used trailers and higher parts and service sales. The 2003 period included $3.2 million of profit associated with the Asset Sales. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses during the third quarter of 2004 decreased $1.4 million from the 2003 period. The 2004 period included $0.6 million in increased technology costs and $0.4 million in higher employee related costs. The 2003 period included a charge of $0.9 million related to branch closings, $0.6 million in legal reserves and $0.6 million in costs from operations affected by the Asset Sales. SELLING EXPENSE Selling expenses decreased $0.8 million to $3.8 million for the third quarter of 2004, compared to $4.6 million in the prior year period due to the impact of the Asset Sales and the closing of 12 branch locations during the third quarter of 2003. OTHER INCOME (EXPENSE) Interest expense totaled $2.9 million for the 2004 quarter; a decrease of $5.8 million from the prior year period due to lower effective interest rates resulting from the debt refinancings completed in the third quarter of 2003 and reduced average borrowings. We recorded a foreign exchange gain of $0.5 million in the 2004 quarter compared to a loss of $0.3 million in the 2003 period, reflecting the relative weakness of the US dollar compared to the Canadian dollar in the 2004 quarter. Loss on debt extinguishment in 2003 of $18.9 million represents the additional costs associated with the early extinguishment of the Company's Senior Series Notes and Bank Debt. Other, net was income of $0.4 million for the three months ended September 30, 2004, compared to an expense of $2.3 million for the 2003 period. The 2003 expense included a $1.0 million loss on the sale of certain assets. INCOME TAXES We recognized income tax provision of $0.4 million related to Federal and State alternative minimum tax in the third quarter of 2004. No ordinary income tax provision was recognized in 2004 due to the utilization of net operating loss (NOL) carryforwards. No income tax provision was recognized in 2003. Because of uncertainty related to the realizability of NOLs in excess of those utilized, a full valuation allowance continues to be recorded against the related deferred tax assets at September 30, 2004. 14 NINE MONTHS ENDED SEPTEMBER 30, 2004 NET SALES Net sales increased $85.5 million compared to the 2003 period. The nine months ended September 30, 2003 included $58.9 million of sales associated with the Asset Sales. By business segment, net sales to external customers and related units sold were as follows (in millions):
Nine Months Ended September 30, -------------------------------------- 2004 2003 % Change ---- ---- -------- Net Sales by segment: Manufacturing $ 575.2 $ 446.7 29% Retail and Distribution 178.5 221.5 (19%) -------- -------- Total $ 753.7 $ 668.2 13% ======== ======== New trailer units: Manufacturing 32,800 26,600 23% Retail and Distribution 4,700 3,100 52% -------- -------- Total 37,500 29,700 26% ======== ======== Used trailer units 5,500 9,900 (44%) ======== ========
Improving conditions in both the overall economy and the transportation industry drove a 23% increase in unit volume in the manufacturing segment. To meet production requirements, we have increased headcount by approximately 400. Average selling prices increased approximately 4.2% from the prior year period primarily reflecting increases in raw materials. The 2004 sales in the retail and distribution segment were lower than the prior year period which included $58.9 million of sales associated with the aforementioned Assets Sales. A $34.5 million increase in new trailer sales caused by a 52% increase in units was offset by reductions in used trailer. The decrease in used trailer sales resulted from constrained used equipment availability, as transportation companies retain equipment to meet requirements. Branch parts and services sales were flat despite closing four full service locations in 2003. GROSS PROFIT Gross profit as a percent of sales was 12.8% for the nine months ended September 30, 2004 compared to 5.4% for same period in 2003, which included a $28.5 million asset impairment charge taken on certain assets of our rental and leasing and aftermarket parts assets. As discussed below, both of our segments contributed as follows (in millions):
Nine Months Ended September 30, --------------------------------------- 2004 2003 $ Change -------- ------- -------- Gross Profit (loss) by segment: Manufacturing $ 84.1 $ 45.6 $ 38.5 Retail and Distribution 13.2 (9.6) 22.8 Eliminations (0.6) 0.3 (0.9) -------- ------- ------ Total Gross Profit $ 96.7 $ 36.3 $ 60.4 ======== ======= ======
The manufacturing segment's gross profit as a percentage of sales was 14.6% in 2004, a 4.4 percentage point increase from the prior year period. Average per trailer raw material costs, including the effects of product mix, increased approximately 8% from the prior period due to increases in our key raw 15 materials - principally steel and wood, which we were able to partially offset through selling price increases. The shortfall from rising material costs was more than offset by the impact of higher volumes of $16.3 million, the continued improvement in our labor and overhead utilization of $20.0 million and a reduction in warranty expense. The 2004 gross profit in the retail and distribution segment was higher than the prior year. The first nine months of 2003 included a $28.5 million asset impairment charge and $10.3 million of gross profit associated with the Asset Sales. Gross profit in 2004 was positively impacted by higher new trailer volumes and margins and improved used trailer margins, offset by continued constraints on used trailer volumes. The 2004 period includes $1.1 million of profit related to RoadRailer(R) bogies from our finance and leasing business. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the nine months ended September 30, 2004 decreased $1.2 million from the prior year. The 2004 period included $2.8 million in higher employee related costs and $2.0 million in increased technology costs. The 2003 period included $2.6 million in debt refinancing costs, $2.0 million in costs from operations affected by the Asset Sales, $1.1 million in bad debt reserves related to our finance and leasing business, and $0.9 million related to branch closings, reduced in part by the recovery of $1.0 million in taxes. SELLING EXPENSE Selling expense decreased $4.2 million to $11.4 million in the first nine months of 2004, compared to $15.6 million in the prior year period due to the impact of the Asset Sales and the closing of 12 branch locations during the third quarter of 2003. OTHER INCOME (EXPENSE) Interest expense totaled $8.6 million for the nine months; a decrease of $19.0 million from the prior year period due to lower effective interest rates resulting from the debt refinancings completed in the third quarter of 2003 and reduced average borrowings. We incurred a foreign exchange loss of $0.1 million in the first nine months of 2004 compared to a gain of $5.3 million in the same period of 2003, reflecting the parity of the US dollar compared to the Canadian dollar in 2004 versus a significant weakening of the US dollar relative to the Canadian dollar in the first six months of 2003. Loss on debt extinguishment of $18.9 million in 2003 represents the additional costs associated with the early extinguishment of the Company's Senior Series Notes and Bank Debt. Other, net was income of $0.8 million for the nine months ended September 30, 2004, compared to an expense of $2.7 million for the 2003 period. The 2004 income includes gains on the sale of closed branch properties. The 2003 expense included a $1.3 million charge for the settlement of a legacy RoadRailer(R) transaction and a $1.0 million loss on the sale of certain assets. INCOME TAXES We recognized income tax provision of $0.9 million related to Federal and State alternative minimum tax in the first nine months of 2004. No ordinary tax provision was recognized in 2004 due to the utilization of net operating loss (NOL) carryforwards. No income tax expense was recognized in 2003. Because of uncertainty related to the realizability of NOLs in excess of those utilized, a full 16 valuation allowance continues to be recorded against the related deferred tax assets at September 30, 2004. LIQUIDITY AND CAPITAL RESOURCES CAPITAL STRUCTURE Our capital structure is primarily supported by debt as a result of the significant losses incurred during the years 2000 through 2003. Due to our financial and operational restructuring and the significant improvements in manufacturing made over the last two to three years, we were able to stabilize our financial footing. Our objective is to generate operating cash flows sufficient to satisfy normal requirements for working capital and capital expenditures and to better balance the mix of debt and equity in our capital structure. EQUITY OFFERING On October 12, 2004, we filed a registration statement with the Securities and Exchange Commission in connection with our plan to sell up to 3,000,000 shares of common stock through an underwritten public offering to be managed by Merrill Lynch & Co., Bear, Stearns & Co. Inc. and BB&T Capital Markets. In addition, we may sell up to 450,000 shares to cover an underwriters over-allotment option. We intend to use all of the net proceeds from this public offering to repay a portion of our outstanding secured bank indebtedness. DEBT AMENDMENT On September 29, 2004, we amended our ABL Facility. Most notably, the amendment lowered our interest rate by 25 basis points and up to 100 basis points depending upon our fixed charge coverage ratio, eliminated the requirement to make excess cash flow payments beginning in April 2005 and increased capital expenditure limits from $15 million to $20 million in 2005. There were no changes in the maturity date or scheduled payments under the ABL Facility. CASH FLOW Operating activities consumed $18.9 million in cash for the nine months ended September 30, 2004 compared to $1.9 million in the prior year period. Improved cash flows from net income (adjusted for non-cash items) of $45.1 million was not sufficient to fund increased working capital requirements as outlined below. - Accounts receivables increased $67.4 million during the first nine months of 2004 compared to $53.8 million in the comparable quarter of 2003 period. Accounts receivables were primarily impacted by an increase in days sales outstanding. Days sales outstanding, a measure of working capital efficiency that measures the amount of time a receivable is outstanding, was 45 days at September 30, 2004, which was up 10 days compared to the prior year period. - Inventory increased $27.0 million during the first nine months of 2004 compared to decreasing $22.7 million in the comparable period of 2003. This increase is reflective of the increased production levels, greater safety stock, increased raw material costs and the timing of customer pick-ups. The 2003 period was positively impacted by reductions in new and used trailer inventories. Inventory turns, a commonly used measure of working capital efficiency that measures how quickly inventory turns, improved to approximately eight times, a 35% improvement from the prior year. 17 - Accounts payable and accrued liabilities increased approximately $8.2 million over the prior year in line with increased production as well as the Company no longer being subjected to vendor payment term restrictions that were in place in 2003. Investing activities provided $0.4 million for the nine months ended September 30, 2004, a decrease of $62.4 million from the prior year period resulting primarily from proceeds of $58.8 million from the sale of assets. Financing activities provided $20.8 million during the nine months ended September 30, 2004 resulting from $22.9 million in borrowings under its revolving credit facilities to fund working capital requirements and $5.2 million from stock options exercised, offset by debt payments of $7.3 million, including $1.7 million from proceeds on the sale of closed branch properties. Capital Expenditures Capital spending amounted to $5.8 million thus far in 2004 and is anticipated to be approximately $10 million for the full year. Spending is focused on productivity improvement and capacity maintenance. Outlook As of September 30, 2004, our liquidity position, cash on hand and available borrowing capacity amounted to approximately $79.8 million and debt and lease obligations, both on and off the balance sheet, amounted to approximately $252 million (including $9 million off-balance sheet). We expect that in 2004, Wabash will be able to generate sufficient cash flow from operations to fund working capital and capital spending requirements and to further reduce indebtedness. However, it is possible that we may not generate sufficient cash flow or secure additional funds for these purposes. Because we must use a portion of our cash from operations to pay our debt service obligations, our high level of debt means we have less funds available for working capital, capital spending requirements and other purposes than we would otherwise have. Further, we may be more highly leveraged than our competitors, which would be a competitive disadvantage in the event of a downturn in the general economic condition of our business. OFF-BALANCE SHEET TRANSACTIONS As of September 30, 2004, we had approximately $9 million in off-balance sheet debt. We did not enter into any material off-balance sheet debt or operating lease transactions during the quarter. BACKLOG Orders that have been confirmed by the customer in writing and can be produced during the next 18 months are included in backlog. Orders that comprise the backlog may be subject to changes in quantities, delivery, specifications and terms. Our backlog of orders was approximately $283 million at September 30, 2004 compared to $200 million at December 31, 2003. We expect to complete the majority of our existing backlog orders within the next 12 months. CUSTOMER CREDIT RISK We sublease certain highly specialized RoadRailer(R) equipment to Grupo Transportation Marititma Mexicana SA (TMM), who is experiencing financial difficulties. On August 5, 2004, TMM completed the restructuring of its existing debt agreements. Customer payments, which have historically been timely, are behind schedule. The customer owes us $7.4 million secured by highly specialized RoadRailer(R) equipment, which due to the nature of the equipment, has a minimal recovery value. 18 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS In addition to the risks inherent in our operations, we have exposure to financial and market risk resulting from volatility in commodity prices, interest rates and foreign exchange rates. The following discussion provides additional detail regarding our exposure to these risks. a. COMMODITY PRICE RISKS We are exposed to fluctuation in commodity prices through the purchase of raw materials that are processed from commodities such as aluminum, steel, wood and virgin plastic pellets. Given the historical volatility of certain commodity prices, this exposure can significantly impact product costs. We may manage aluminum price changes by entering into fixed price contracts with our suppliers. As of September 30, 2004, we had outstanding purchase commitments of approximately $42.2 million through December 2005 for materials that will be used in the production process. Because we typically do not set prices for our products more than 45-90 days in advance of our commodity purchases, we can take into account the cost of the commodity in setting our prices for each order. To the extent that we are unable to offset the increased commodity costs in our product prices, our results would be materially and adversely affected. b. INTEREST RATES As of September 30, 2004, we had approximately $115 million of floating rate debt outstanding under our various financing agreements. A hypothetical 100 basis-point increase in the floating interest rate from the current level would correspond to approximately a $1.1 million increase in interest expense over a one-year period. This sensitivity analysis does not account for the change in our competitive environment indirectly related to the change in interest rates and the potential managerial action taken in response to these changes. c. FOREIGN EXCHANGE RATES We are subject to fluctuations in the Canadian dollar exchange rate that impact intercompany transactions with our Canadian subsidiary, as well as U.S. denominated transactions between the Canadian subsidiaries and unrelated parties. A five cent change in the Canadian exchange rate would result in an approximately $0.7 million impact on results of operations. We have Canadian dollar foreign currency forward contracts in an effort to mitigate potential Canadian currency fluctuation impact on working capital requirements. As of September 30, 2004, we had outstanding $2.8 million in forward contracts to be settled in various increments over the next five months. The contracts are marked-to-market and not subject to hedge accounting. We do not hold or issue derivative financial instruments for speculative purposes. ITEM 4. CONTROLS AND PROCEDURES The principal executive officer and principal financial officer of the Company have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company's periodic filings under the Exchange Act. 19 Since the Evaluation Date, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect such controls. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On September 28, 2004, the Company entered a plea to two misdemeanor violations of the Clean Water Act and agreed to pay a $0.4 million fine pursuant to a plea agreement. In addition, the Company and the United States Environmental Protection Agency (EPA) have concluded negotiations regarding the terms and conditions of a compliance agreement that involves environmental training, auditing and similar activities by the Company. The compliance agreement is currently awaiting signature by the EPA. The Company does not believe that the entering into of the compliance agreement will have a material adverse impact on the results or operations of the Company. ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION RISK FACTORS You should carefully consider the risks described below. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations. RISKS RELATED TO OUR BUSINESS, STRATEGY AND OPERATIONS WE HAVE GENERATED SIGNIFICANT LOSSES IN RECENT PERIODS. We incurred significant net losses during the last three years. While in the first nine months of 2004, ended September 30, 2004, we reported net income of $45.4 million, we have reported net losses of $232.2 million, $56.2 million and $57.2 million for the years ended December 31, 2001, 2002 and 2003, respectively. Our ability to achieve and sustain profitability in the future will depend on the successful continued implementation of measures to reduce costs and achieve sales goals. While we have taken steps to lower operating costs and reduce interest expense, and have seen our sales improve in recent periods, we cannot assure you that our cost-reduction measures will be successful, sales will be sustained or increased or that we will achieve a sustained return to profitability. OUR INVENTORIES ARE NOT MANAGED BY PERPETUAL INVENTORY CONTROL SYSTEMS. The systems and processes we use to manage and value our inventories require significant manual intervention and the verification of actual quantities requires physical inventories, which we take several times a year. Breakdowns of these systems and processes, and errors in inventory estimates derived from these systems and processes, could go undetected until the next physical inventory and adversely affect our operations and financial results. 20 WE ARE SUBJECT TO NEW CORPORATE GOVERNANCE AND INTERNAL CONTROLS REPORTING REQUIREMENTS, AND OUR COSTS RELATED TO COMPLIANCE WITH, OR OUR FAILURE TO COMPLY WITH, EXISTING AND FUTURE REQUIREMENTS COULD ADVERSELY AFFECT OUR BUSINESS. We face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently adopted by the SEC, the Public Company Accounting Oversight Board and the NYSE. These laws, rules and regulations continue to evolve and may become increasingly stringent in the future. In particular, we will be required to include management and auditor reports on internal controls as part of our annual report for the year ended December 31, 2004 pursuant to Section 404 of the Sarbanes-Oxley Act. We are in the process of evaluating our control structure to help ensure that we will be able to comply with Section 404 of the Sarbanes-Oxley Act. We cannot assure you that we will be able to fully comply with these laws, rules and regulations that address corporate governance, internal control reporting and similar matters. Our failure to comply with these laws, rules and regulations may materially adversely affect our reputation, financial condition and the value of our securities. AN ADVERSE CHANGE IN OUR CUSTOMER RELATIONSHIPS OR IN THE FINANCIAL CONDITION OF OUR CUSTOMERS COULD ADVERSELY AFFECT OUR BUSINESS. We have corporate partnering relationships with a number of customers where we supply the requirements of these customers. We do not have binding agreements with these customers. Our success is dependent, to a significant extent, upon the continued strength of these relationships and the growth of our corporate partners. We often are unable to predict the level of demand for our products from these partners, or the timing of their orders. In addition, the same economic conditions that adversely affect us also often adversely affect our customers. As some of our customers are highly leveraged and have limited access to capital, their continued existence may be uncertain. One of our customers, Grupo Transportation Marititma Mexicana SA (TMM), which is located in Mexico, has been experiencing financial difficulties and on August 5, 2004, announced that it had completed the restructuring of its existing debt agreements. Payments from TMM to us are currently behind schedule. The customer owes us $7.4 million as of September 30, 2004 secured by highly specialized RoadRailer(R) equipment, which due to the nature of the equipment, has a minimal recovery value. The loss of a significant customer or unexpected delays in product purchases could adversely affect our business and results of operations. OUR TECHNOLOGY AND PRODUCTS MAY NOT ACHIEVE MARKET ACCEPTANCE, WHICH COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION. We continue to introduce new products, such as the DuraPlate(R) HD and the Freight-Pro(R) trailer. We cannot assure you that these or other new products or technologies will achieve sustained market acceptance. In addition, new technologies or products that our competitors introduce may render our products obsolete or uncompetitive. We have taken steps to protect our proprietary rights in our new products. However, the steps we have taken to protect them may not be sufficient or may not be enforced by a court of law. If we are unable to protect our proprietary rights, other parties may attempt to copy or otherwise obtain or use our products or technology. If competitors are able to use our technology, our ability to compete effectively could be harmed. WE HAVE A LIMITED NUMBER OF SUPPLIERS OF RAW MATERIALS; AN INCREASE IN THE PRICE OF RAW MATERIALS OR THE INABILITY TO OBTAIN RAW MATERIALS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. We currently rely on a limited number of suppliers for certain key components in the manufacturing of truck trailers, such as tires, landing gear, axles and specialty steel coil used in DuraPlate(R) panels. From time to time, there have been and may in the future continue to be shortages of supplies of raw materials or our suppliers may place us on allocation, which would have an adverse impact on our ability to meet demand for our products. Raw material shortages and allocations may result 21 in inefficient operations and a build-up of inventory, which can negatively affect our working capital position. In addition, if the price of raw materials were to increase and we were unable to increase our selling prices or reduce our operating costs to offset the price increases, our operating margins would be adversely affected. The loss of any of our suppliers or their inability to meet our price, quality, quantity and delivery requirements could have a significant impact on our results of operations. DISRUPTION OF OUR MANUFACTURING OPERATIONS OR MANAGEMENT INFORMATION SYSTEMS WOULD HAVE AN ADVERSE EFFECT ON OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS. We manufacture our products at two trailer manufacturing facilities in Lafayette, Indiana, and one hardwood floor facility in Harrison, Arkansas. Our primary manufacturing facility accounts for approximately 85% of our manufacturing output. An unexpected disruption in our production at either of these facilities or in our management information systems for any length of time would have an adverse effect on our business, financial condition and results of operations. THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. Many of our executive officers, including our CEO William P. Greubel and COO Richard J. Giromini, are critical to the management and direction of our business. Our future success depends, in large part, on our ability to retain these officers and other capable management personnel. The unexpected loss of the services of any of our key personnel could have an adverse effect on the operation of our business, as we may be unable to find suitable management to replace departing executives on a timely basis. THE INABILITY TO REALIZE ADDITIONAL COSTS SAVINGS COULD WEAKEN OUR COMPETITIVE POSITION. If we are unable to continue to successfully implement our program of cost reduction and continuous improvement, we may not realize additional anticipated cost savings, which could weaken our competitive position. WE ARE SUBJECT TO CURRENCY EXCHANGE RATE FLUCTUATIONS, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE. We are subject to currency exchange rate risk related to sales through our factory-owned retail distribution centers in Canada. For the nine months ended September 30, 2004 and the year ended December 31, 2003, currency exchange rate fluctuations had an unfavorable impact of $0.1 million and a favorable impact of $5.3 million, respectively, on our results of operations. We cannot assure you that future currency exchange rate fluctuations will not have an adverse affect on our results of operations equivalent to or more severe than that for the nine months ended September 30, 2004. RISKS RELATED TO OUR SUBSTANTIAL INDEBTEDNESS OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. We are currently highly leveraged and have substantial debt in relation to our stockholders' equity. As of September 30, 2004, we had an aggregate of $243 million of outstanding indebtedness. [Although we are in registration for a common stock offering that is intended to reduce our debt, if we were to close that offering we would continue to have substantial debt after applying the proceeds from that offering.] 22 Our high level of debt could have important consequences to our investors, including: - we may not be able to secure additional funds for working capital, capital expenditures, debt service requirements or general corporate purposes; - we will need to use a portion of our cash flow from operations to pay principal of and interest on our debt, which will reduce the amount of funds available to us for other purposes; - we may be more highly leveraged than our competitors, which could put us at a competitive disadvantage; and - we may not be able to adjust rapidly to changing market conditions, which may make us more vulnerable in the event of a downturn in the general economic conditions of our business. RESTRICTIVE COVENANTS IN OUR DEBT INSTRUMENTS COULD LIMIT OUR FINANCIAL AND OPERATING FLEXIBILITY AND SUBJECT US TO OTHER RISKS. The agreements governing our indebtedness include certain covenants that restrict, among other things, our ability to: - incur additional debt; - pay dividends on our equity or repurchase our equity; - make certain investments; - create certain liens; and - consolidate, merge or transfer all or substantially all of our assets. Our ability to comply with such agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. In addition, upon the occurrence of an event of default under our debt agreements, the lenders could elect to declare all amounts outstanding under our debt agreements, together with accrued interest, to be immediately due and payable. RISKS PARTICULAR TO THE INDUSTRY IN WHICH WE OPERATE OUR BUSINESS IS HIGHLY CYCLICAL, WHICH COULD ADVERSELY AFFECT OUR SALES AND RESULTS OF OPERATIONS. The truck trailer manufacturing industry historically has been and is expected to continue to be cyclical, as well as affected by overall economic conditions. New trailer production for the trailer industry as a whole was approximately 140,000 in both 2001 and 2002 and approximately 183,000 in 2003. Customers historically have replaced trailers in cycles that run from five to twelve years, depending on service and trailer type. Poor economic conditions can adversely affect demand for new trailers and in the past have led to an overall aging of trailer fleets beyond this typical replacement cycle. Customers' buying patterns can also reflect regulatory changes, such as the new federal hours-of-service rules and anticipated 2007 federal emissions standards. Our business is likely to continue to be highly cyclical based on current and expected economic conditions and regulatory factors. 23 SIGNIFICANT COMPETITION IN THE INDUSTRY IN WHICH WE OPERATE MAY RESULT IN OUR COMPETITORS OFFERING NEW OR BETTER PRODUCTS AND SERVICES OR LOWER PRICES, WHICH COULD RESULT IN A LOSS OF CUSTOMERS AND A DECREASE IN OUR REVENUES. The truck trailer manufacturing industry is highly competitive. We compete with other manufacturers of varying sizes, some of which may have greater financial resources than we do. Barriers to entry in the standard truck trailer manufacturing industry are low. As a result, it is possible that additional competitors could enter the market at any time. In the recent past, the manufacturing over-capacity and high leverage of some of our competitors, along with the bankruptcies and financial stresses that affected the industry, contributed to significant pricing pressures. If we are unable to compete successfully with other trailer manufacturers, we could lose customers and our revenues may decline. In addition, competitive pressures in the industry may affect the market prices of our new and used equipment, which, in turn, may adversely affect our sales margins and results of operations. WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL LAWS AND REGULATIONS, AND OUR COSTS RELATED TO COMPLIANCE WITH, OR OUR FAILURE TO COMPLY WITH, EXISTING OR FUTURE LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS. The length, height, width, maximum weight capacity and other specifications of truck trailers are regulated by individual states. The Federal government also regulates certain truck trailer safety features, such as lamps, reflective devices, tires, air-brake systems and rear-impact guards. Changes or anticipation of changes in these regulations can have a material impact on our financial results, as our customers may defer purchasing decisions and we may have to reengineer products. In addition, we are subject to various environmental laws and regulations dealing with the transportation, storage, presence, use, disposal and handling of hazardous materials, discharge of storm water and underground fuel storage tanks and may be subject to liability associated with operations of prior owners of acquired property. On September 28, 2004, we entered a plea to two misdemeanor violations of the federal Clean Water Act and agreed to pay a $400,000 fine pursuant to a plea agreement resulting from a federal environmental investigation into our former Huntsville, Tennessee facility. If we are found to be in violation of applicable laws or regulations in the future, it could have an adverse effect on our business, financial condition and results of operations. Our costs of complying with these or any other current or future environmental regulations may be significant. In addition, if we fail to comply with existing or future laws and regulations, we may be subject to governmental or judicial fines or sanctions. A DECLINE IN THE VALUE OF USED TRAILERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. General economic and industry conditions, as well as the supply of used trailers, influence the value of used trailers. As part of our normal business practices, we maintain used trailer inventories and have entered into finance contracts secured by used trailers, as well as residual guarantees and purchase commitments for used trailers. Declines in the market value for used trailers or the need to dispose of excess inventories has had, and could in the future have, an adverse effect on our business, financial condition and results of operations. PRODUCT LIABILITY AND OTHER CLAIMS. As a manufacturer of products widely used in commerce, we are subject to regular product liability claims as well as warranty and similar claims alleging defective products. From time to time claims may involve material amounts and novel legal theories, and any insurance we carry may prove inadequate to insulate us from material liabilities for these claims. 24 RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK OUR COMMON STOCK HAS EXPERIENCED, AND MAY CONTINUE TO EXPERIENCE, PRICE VOLATILITY AND A LOW TRADING VOLUME. The trading price of our common stock has been and may continue to be subject to large fluctuations. Our common stock price may increase or decrease in response to a number of events and factors, including: - trends in our industry and the markets in which we operate; - changes in the market price of the products we sell; - the introduction of new technologies or products by us or our competitors; - changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors; - operating results that vary from the expectations of securities analysts and investors; - announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, financings or capital commitments; - changes in laws and regulations; and - general economic and competitive conditions. This volatility may adversely affect the prices of our common stock regardless of our operating performance. The price of our common stock also may be adversely affected by the amount of common stock issuable upon conversion of our 3 1/4% convertible senior notes due 2008. Assuming $125 million in aggregate principal amount of these notes are converted at a conversion price of $19.20, the number of shares of our common stock outstanding would increase by approximately 6.5 million, or approximately 21.5%, after giving effect to the shares we expect to issue in our pending common stock offering. In addition, our common stock has experienced low trading volume in the past. WE ARE NOT CURRENTLY ABLE TO PAY CASH DIVIDENDS. Since December 2001, we have not declared or paid cash or other dividends on our common stock. In addition, the terms of our existing debt agreements prohibit the payment of cash dividends on our common stock. ITEM 6. EXHIBITS (a) Exhibits: 10.20 Waiver and Amendment No. 4 to Loan and Security Agreement dated September 29, 2004, incorporated by reference to the Registrant's Form 8-K/A filed on September 30, 2004. 10.21 Form of Associate Stock Option Agreements under the Wabash National 2004 Stock Incentive Plan. 10.22 Form of Associate Restricted Stock Agreements dated under the Wabash National 2004 Stock Incentive Plan. 25 10.23 Form of Executive Stock Option Agreements dated under the Wabash National 2004 Stock Incentive Plan. 10.24 Form of Executive Restricted Stock Agreements dated under the Wabash National 2004 Stock Incentive Plan. 31.01 Certification of Principal Executive Officer 31.02 Certification of Principal Financial Officer 32.01 Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WABASH NATIONAL CORPORATION Date: October 27, 2004 By: /s/ Robert J. Smith ------------------------------------ Robert J. Smith Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 26 EX-10.21 2 c89089exv10w21.txt FORM OF ASSOCIATE STOCK OPTION AGREEMENTS EXHIBIT 10.21 WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN NONQUALIFIED STOCK OPTION AGREEMENT Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants an option to purchase shares of its common stock, $.01 par value, (the "Stock") to the optionee named below. The terms and conditions of the option are set forth in this cover sheet, in the attachment, and in the Company's 2004 Stock Incentive Plan (the "Plan"). Grant Date: -------------------------------------------------------------------- Name of Optionee: ---------------------------------------------------- Optionee's Social Security Number: - - _ (please fill in) ----- ---- ----- Number of Shares Covered by Option: ---------------- Option Price per Share: $ ----------- Vesting Start Date: ------------------------------------------------------------ BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS AVAILABLE ON REQUEST. YOU AGREE THAT THE PLAN WILL CONTROL IN THE EVENT ANY PROVISION OF THIS AGREEMENT SHOULD APPEAR TO BE INCONSISTENT. Optionee: -------------------------------------------------------------- (Signature) Company: -------------------------------------------------------------- (Signature) Printed: ------------------------------------------------------- Title: ------------------------------------------------------- Attachment This is not a stock certificate or a negotiable instrument. WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN NONQUALIFIED STOCK OPTION AGREEMENT NONQUALIFIED STOCK This option is not intended to be an incentive stock OPTION option under Section 422 of the Internal Revenue Code, and it will be interpreted accordingly. VESTING This option is only exercisable before it expires and then only with respect to the vested portion of the option. Subject to the preceding sentence, you may exercise this option, in whole or in part, to purchase a whole number of vested shares not less than 100 shares, unless the number of shares purchased is the total number available for purchase under the option, by following the procedures set forth in the Plan and below in this Agreement. Your right to purchase shares of Stock under this option vests as to: -- one-third (1/3) of the total number of shares covered by this option, as shown on the cover sheet (the "Option Shares"), on the first anniversary of the Vesting Start Date ("Anniversary Date"), provided you then continue in Service. -- provided you then continue in Service, one-third (1/3) of the Option Shares shall vest on the second Anniversary Date. -- provided you then continue in Service, one-third (1/3) of the Option Shares shall vest on the third Anniversary Date. The resulting aggregate number of vested shares will be rounded to the nearest whole number, and you cannot vest in more than the number of shares covered by this option. TERM Your option will expire in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. Your option will expire earlier if your Service terminates, as described below. REGULAR TERMINATION If your Service terminates for any reason, other than Death, Disability, Retirement, a Change in Control or Termination by the Company with or without Cause, then your option will expire at the close of business at Company headquarters on the 90th day after your termination date. Any and all unvested options are forfeited as of your date of termination. TERMINATION WITHOUT If your service is terminated by the Company without CAUSE Cause, then your vested options shall expire at the close of business one (1) year
after your termination date. Any and all unvested options are forfeited as of your date of termination. TERMINATION FOR If your Service is terminated by the Company for CAUSE Cause, then you shall immediately forfeit all rights to your option and the option shall immediately expire. DEATH If your Service terminates because of your death, then your option will expire at the close of business at Company headquarters on the date 36 months after the date of death. During that 36 month period, your estate or heirs may exercise the vested portion of your option. DISABILITY If your Service terminates because of your permanent and total disability, then your option will continue to vest as if your Service had not terminated and will expire at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. LEAVES OF ABSENCE For purposes of this option, your Service does not terminate when you go on a bona fide employee leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, your Service will be treated as terminating 90 days after you went on employee leave, unless your right to return to active work is guaranteed by law or by a contract. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work. The Company determines, in its sole discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan. RETIREMENT If your service terminates due to Normal Retirement, defined as retirement at or after age 65, or Early Retirement, defined as retirement at age 55 through 64 with at least three (3) years of service with the Company, your option will expire at the close of business at Company headquarters on the date that is the earlier of three (3) years from your date of retirement and the 10th Anniversary of the Grant Date, as shown on the cover sheet. Any and all unvested options as of your date of retirement are forfeited. NOTICE OF EXERCISE When you wish to exercise this option, you must notify the Company's designated agent filing in the manner and form permitted by the designated agent. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is
entitled to do so. FORM OF PAYMENT When you submit your notice of exercise, you must include payment of the option price for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms: - Cash, your personal check, a cashier's check, a money order or another cash equivalent acceptable to the Company. - Shares of Stock which have already been owned by you for more than six (6) months and which are surrendered to the Company. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option price. - By delivery (on a form prescribed by the Company or the designated agent) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate option price and any withholding taxes (if approved in advance by the Compensation Committee of the Board if you are either an executive officer or a director of the Company). WITHHOLDING TAXES You will not be allowed to exercise this option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the option exercise or sale of Stock acquired under this option. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the exercise or sale of shares arising from this grant, the Company shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate. TRANSFER OF OPTION Except as provided in this section, during your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise this option and the option shall not be assignable or transferable by you, other than by designation of beneficiary, will or the laws of descent and distribution. You may transfer all or part of this option, not for value, to any Family Member, provided that you provide prior written notice to the Company, in a form satisfactory to the Company, of such transfer. For the purpose of this section, a "not for value" transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights, or (iii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or you) in exchange for an interest in that entity. Subsequent transfers of transferred options are prohibited except to your Family Members in accordance with this section or by will or
the laws of descent and distribution. The events of termination of the Service this Agreement shall continue to be applied with respect to you, following which the option shall be exercisable by the transferee only to the extent, and for the periods specified in herein. RETENTION RIGHT Neither your option nor this Agreement gives you the right to be retained by the Company (or any Parent, Subsidiaries or Affiliates) in any capacity. The Company (and any Parent, Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS You, or your designated beneficiary, estate or heirs, have no rights as a shareholder of the Company until a certificate for your option's shares has been issued (or an appropriate book entry has been made). No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued (or an appropriate book entry has been made), except as described in the Plan. FORFEITURE OF RIGHTS The Company at any time shall have the right to cause a forfeiture of your rights on account of you taking actions in competition with the Company. Unless otherwise specified in an employment or other agreement between the Company and you, you take actions in competition with the Company if you directly or indirectly own any interest in, operates, joins, controls or participates as a partner, director, principal, officer, or agent of, enters into the employment of, acts as a consultant to, or performs any services for, any entity which has material operations which compete with any business in which the Company or any of its Subsidiaries is engaged during your employment with the Company or any of its Affiliates or at the time of your termination of Service. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Stock, the number of shares covered by this option and the option price per share shall be adjusted (and rounded down to the nearest whole number) if required pursuant to the Plan. Your option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Indiana, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. THE PLAN The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the
Plan, and have the meaning set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. DATA PRIVACY In order to administer the Plan, the Company may process personal data about you. Such data includes but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this option, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Optionees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan. CONSENT TO ELECTRONIC The Company may choose to deliver certain statutory DELIVERY materials relating to the Plan in electronic form. By accepting this option grant you agree that the Company may deliver the Plan prospectus and the Company's annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Company's Human Resources Department to request paper copies of these documents. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. EX-10.22 3 c89089exv10w22.txt FORM OF ASSOCIATE RESTRICTED STOCK AGREEMENTS EXHIBIT 10.22 WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN RESTRICTED STOCK AGREEMENT Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants shares of its common stock, $.01 par value, (the "Stock") to the Grantee named below, subject to the vesting conditions set forth in the attachment. Additional terms and conditions of the grant are set forth in this cover sheet, in the attachment and in the Company's 2004 Stock Incentive Plan (the "Plan"). Grant Date: ------------------------------------------------ Name of Grantee: ------------------------------------- Grantee's Social Security Number: - - (please fill in) ------- ---- ------- Number of Shares of Stock Covered by Grant: ---------- Purchase Price per Share of Stock: $ ---------------- BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO ATTACHED. YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY REVIEWED THE PLAN, AND AGREE THAT THE PLAN WILL CONTROL IN THE EVENT ANY PROVISION OF THIS AGREEMENT SHOULD APPEAR TO BE INCONSISTENT. Grantee: ------------------------------------------------------ (Signature) Company: ------------------------------------------------------ (Signature) Printed: ----------------------------------------------- Title: ------------------------------------------------ Attachment This is not a stock certificate or a negotiable instrument. WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN RESTRICTED STOCK AGREEMENT RESTRICTED STOCK/ This grant is an award of Stock in the number of NONTRANSFERABILITY shares set forth on the cover sheet, at the purchase price set forth on the cover sheet, and subject to the vesting conditions described below ("Restricted Stock"). The purchase price for the Restricted Stock is deemed paid by your services to the Company. To the extent not yet vested, your Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process. ISSUANCE AND VESTING The Company will issue your Restricted Stock in your name as of the Grant Date. Your rights to the shares of Stock under this grant vest as to: -- one-third (1/3) of the total number of shares covered by this grant, as shown on the cover sheet (the "Shares"), on the third anniversary of the Grant Date ("Anniversary Date"), provided you then continue in Service. -- provided you then continue in Service, one-third (1/3) of the Shares shall vest on the fourth Anniversary Date. -- provided you then continue in Service, one-third (1/3) of the Shares shall vest on the fifth Anniversary Date. The resulting aggregate number of vested shares will be rounded to the nearest whole number, and you cannot vest in more than the number of shares covered by this grant. No additional shares of Stock will vest after your Service has terminated for any reason. FORFEITURE OF UNVESTED In the event that your Service terminates for any STOCK reason, you will forfeit to the Company all of the shares of Stock subject to this grant that have not yet vested. ESCROW The certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form attached hereto as Exhibit A. The deposited certificates shall remain in escrow until such time or times as the certificates are to be released or otherwise surrendered for cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of shares
2 of Stock delivered in escrow to the Secretary of the Company. All regular cash dividends on the Stock (or other securities at the time held in escrow) shall be paid directly to you and shall not be held in escrow. However, in the event of any stock dividend, stock split, recapitalization or other change affecting the Company's outstanding common stock as a class effected without receipt of consideration or in the event of a stock split, a stock dividend or a similar change in the Company Stock, any new, substituted or additional securities or other property which is by reason of such transaction distributed with respect to the Stock shall be immediately delivered to the Secretary of the Company to be held in escrow hereunder, but only to the extent the Stock is at the time subject to the escrow requirements hereof. As your interest in the shares vests, as described above, the certificates for such vested shares shall be released from escrow and delivered to you, at your request, within 30 days of their vesting. WITHHOLDING TAXES You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting of Stock acquired under this grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate. SECTION 83(b) ELECTION Under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), the difference between the purchase price paid for the shares of Stock and their fair market value on the date any forfeiture restrictions applicable to such shares lapse will be reportable as ordinary income at that time. For this purpose, "forfeiture restrictions" include the forfeiture of unvested Stock that is described above. You may elect to be taxed at the time the shares are acquired, rather than when such shares cease to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date. You will have to make a tax payment to the extent the purchase price is less than the fair market value of the shares on the Grant Date. No tax payment will have to be made to the extent the purchase price is at least equal to the fair market value of the shares on the Grant Date. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the shares as of the vesting date exceeds the purchase price) as the forfeiture restrictions lapse.
3 YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(B) ELECTION. RETENTION RIGHTS This Agreement does not give you the right to be retained by the Company (or any Parent, Subsidiaries or Affiliates) in any capacity. The Company (and any Parent, Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS You have the right to vote the Restricted Stock and to receive any dividends declared or paid on such stock. Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. The Company may in its sole discretion require any dividends paid on the Restricted Stock to be reinvested in shares of Stock, which the Company may in its sole discretion deem to be a part of the shares of Restricted Stock and subject to the same conditions and restrictions applicable thereto. Except as described in the Plan, no adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued. FORFEITURE OF RIGHTS If you should take actions in competition with the Company, the Company shall have the right to cause a forfeiture of your unvested Restricted Stock, and with respect to those shares of Restricted Stock vesting during the period commencing twelve (12) months prior to your termination of Service with the Company due to taking actions in competition with the Company, the right to cause a forfeiture of those vested shares of Stock (but the Company will pay you the purchase price without interest). Unless otherwise specified in an employment or other agreement between the Company and you, you take actions in competition with the Company if you directly or indirectly, own, manage, operate, join or control, or participate in the ownership, management, operation or control of, or are a proprietor, director, officer, stockholder, member, partner or an employee or agent of, or a consultant to any business, firm, corporation, partnership or other entity which competes with any business in which the Company or any of its Affiliates is engaged during your employment or other relationship with the Company or its Affiliates or at the time of your termination of Service. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of shares covered by this grant may be
4 adjusted (and rounded down to the nearest whole number) pursuant to the Plan. Your Restricted Stock shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. LEGENDS All certificates representing the Stock issued in connection with this grant shall, where applicable, have endorsed thereon the following legends: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE." APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Indiana, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. THE PLAN The text of the Plan is incorporated in this Agreement by reference. CERTAIN CAPITALIZED TERMS USED IN THIS AGREEMENT ARE DEFINED IN THE PLAN, AND HAVE THE MEANING SET FORTH IN THE PLAN. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant of Restricted Stock. Any prior agreements, commitments or negotiations concerning this grant are superseded. DATA PRIVACY In order to administer the Plan, the Company may process personal data about you. Such data includes but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-US. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the
5 Company to administer the Plan. CONSENT TO ELECTRONIC The Company may choose to deliver certain statutory DELIVERY materials relating to the Plan in electronic form. By accepting this grant you agree that the Company may deliver the Plan prospectus and the Company's annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Human Resources Department to request paper copies of these documents.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. 6 EXHIBIT A ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _____________ sells, assigns and transfers to Wabash National Corporation, a Delaware corporation (the "Company"), ____________ (__________) shares of common stock of the Company represented by Certificate No. ___ and does hereby irrevocable constitute and appoint ______________ Attorney to transfer the said stock on the books of the Company with full power of substitution in the premises. Dated:____________, 200__ __________________________________________ Print Name __________________________________________ Signature Spouse Consent (if applicable) ___________________ (Purchaser's spouse) indicates by the execution of this Assignment his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the shares of common stock of the Company. __________________________________________ Signature INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO CAUSE THE FORFEITURE OF YOUR UNVESTED SHARES AS SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON THE PART OF PURCHASER. EXHIBIT B ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder: 1. The name, address and social security number of the undersigned: Name: _________________________________________________ Address: ______________________________________________ Social Security No. : _______________________________________ 2. Description of property with respect to which the election is being made: shares of common stock, par value $.10 per share, Wabash National Corporation, a Delaware corporation, (the "Company"). 3. The date on which the property was transferred is ____________ __, 200__. 4. The taxable year to which this election relates is calendar year 200__. 5. Nature of restrictions to which the property is subject: The shares of stock are subject to the provisions of a Restricted Stock Agreement between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement. 6. The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $__________ per share, for a total of $__________. 7. The amount paid by taxpayer for the property was $__________. 8. A copy of this statement has been furnished to the Company. Dated: _____________, 200__ ____________________________________________ Taxpayer's Signature ____________________________________________ Taxpayer's Printed Name PROCEDURES FOR MAKING ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b) The following procedures MUST be followed with respect to the attached form for making an election under Internal Revenue Code section 83(b) in order for the election to be effective:1 1. You must file one copy of the completed election form with the IRS Service Center where you file your federal income tax returns within 30 days after the Grant Date of your Restricted Stock. 2. At the same time you file the election form with the IRS, you must also give a copy of the election form to the Secretary of the Company. 3. YOU MUST FILE ANOTHER COPY OF THE ELECTION FORM WITH YOUR FEDERAL INCOME TAX RETURN (GENERALLY, FORM 1040) FOR THE TAXABLE YEAR IN WHICH THE STOCK IS TRANSFERRED TO YOU. - ---------- (1) Whether or not to make the election is your decision and may create tax consequences for you. You are advised to consult your tax advisor if you are unsure whether or not to make the election. EX-10.23 4 c89089exv10w23.txt FORM OF EXECUTIVE STOCK OPTION AGREEMENTS EXHIBIT 10.23 WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN EXECUTIVE NONQUALIFIED STOCK OPTION AGREEMENT Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants an option to purchase shares of its common stock, $.01 par value, (the "Stock") to the optionee named below. The terms and conditions of the option are set forth in this cover sheet, in the attachment, and in the Company's 2004 Stock Incentive Plan (the "Plan"). Grant Date:_____________________________________________________________________ Name of Optionee:_______________________________________________________________ Optionee's Social Security Number: _____-____-_____ (please fill in) Number of Shares Covered by Option:_____________________________________________ Option Price per Share: $___________________ Vesting Start Date:_____________________________________________________________ BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS AVAILABLE ON REQUEST. YOU AGREE THAT THE PLAN WILL CONTROL IN THE EVENT ANY PROVISION OF THIS AGREEMENT SHOULD APPEAR TO BE INCONSISTENT. Optionee:_______________________________________________________________________ (Signature) Company:________________________________________________________________________ (Signature) Printed:________________________________________________________________ Title:__________________________________________________________________ Attachment This is not a stock certificate or a negotiable instrument. WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN EXECUTIVE NONQUALIFIED STOCK OPTION AGREEMENT NONQUALIFIED STOCK This option is not intended to be an incentive stock OPTION option under Section 422 of the Internal Revenue Code, and it will be interpreted accordingly. VESTING This option is only exercisable before it expires and then only with respect to the vested portion of the option. Subject to the preceding sentence, you may exercise this option, in whole or in part, to purchase a whole number of vested shares not less than 100 shares, unless the number of shares purchased is the total number available for purchase under the option, by following the procedures set forth in the Plan and below in this Agreement. Your right to purchase shares of Stock under this option vests as to: -- one-third (1/3) of the total number of shares covered by this option, as shown on the cover sheet (the "Option Shares"), on the first anniversary of the Vesting Start Date ("Anniversary Date"), provided you then continue in Service. -- provided you then continue in Service, one-third (1/3) of the Option Shares shall vest on the second Anniversary Date. -- provided you then continue in Service, one-third (1/3) of the Option Shares shall vest on the third Anniversary Date. Notwithstanding the vesting schedules set forth in the preceding three subparagraphs, 100% of the Option Shares shall become vested upon your termination by the Company without cause (as defined in Section ___ of your Employment Agreement ("Cause")) or for good reason (as defined in Section ___ of your Employment Agreement ("Good Reason")) within 180 days following a change of control pursuant to Section ___ of your employment agreement with the Company dated ___________________ (the "Employment Agreement"). The resulting aggregate number of vested shares will be rounded to the nearest whole number, and you cannot vest in more than the number of shares covered by this option. TERM Your option will expire in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. Your option will expire earlier if your Service terminates, as described below. REGULAR TERMINATION If your Service terminates for any reason, other than Death, Disability, Retirement, a Change in Control or Termination by the Company with or without Cause, then your option will expire at the close of business at Company headquarters on the 90th day after your termination date. Any and all unvested options are forfeited as of your date of termination. TERMINATION WITHOUT If your service is terminated by the Company without CAUSE OR FOR GOOD REASON Cause or because you terminate your employment with the Company for Good Reason, then your vested options shall expire at the close of business thirty six (36) months after your termination date. Any and all unvested options are forfeited as of your date of termination. TERMINATION FOR CAUSE If your Service is terminated by the Company for Cause, then you shall immediately forfeit all rights to your option and the option shall immediately expire. DEATH If your Service terminates because of your death, then your option will expire at the close of business at Company headquarters on the date 36 months after the date of death. During that 36 month period, your estate or heirs may exercise the vested portion of your option. IN ADDITION, IF YOU DIE DURING THE 90 DAY PERIOD DESCRIBED IN CONNECTION WITH ANY TERMINATION OF YOUR EMPLOYMENT OTHER THAN FOR CAUSE, AND A VESTED PORTION OF YOUR OPTION HAS NOT YET BEEN EXERCISED, THEN YOUR OPTION WILL INSTEAD EXPIRE ON THE DATE THIRTY SIX (36) MONTHS AFTER YOUR TERMINATION DATE. IN SUCH A CASE, DURING THE PERIOD FOLLOWING YOUR DEATH UP TO THE DATE THIRTY SIX (36) MONTHS AFTER YOUR TERMINATION DATE, YOUR ESTATE OR HEIRS MAY EXERCISE THE VESTED PORTION OF YOUR OPTION. DISABILITY If your Service terminates because of your permanent and total disability, then your option will continue to vest as if your Service had not terminated and will expire at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. LEAVES OF ABSENCE For purposes of this option, your Service does not terminate when you go on a bona fide employee leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, your Service will be treated as terminating 90 days after you went on employee leave, unless your right to return to active work is guaranteed by law or by a contract. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work. The Company determines, in its sole discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan. RETIREMENT If your service terminates due to Normal Retirement, defined as retirement at or after age 65, or Early Retirement, defined as retirement at age 55 through 64 with at least three (3) years of service with the Company, your option will expire at the close of business at Company headquarters on the date that is the earlier of three (3) years from your date of retirement and the 10th Anniversary of the Grant Date, as shown on the cover sheet. Any and all unvested options as of your date of retirement are forfeited. NOTICE OF EXERCISE When you wish to exercise this option, you must notify the Company's designated agent filing in the manner and form permitted by the designated agent. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. FORM OF PAYMENT When you submit your notice of exercise, you must include payment of the option price for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms: - Cash, your personal check, a cashier's check, a money order or another cash equivalent acceptable to the Company. - Shares of Stock which have already been owned by you for more than six (6) months and which are surrendered to the Company. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option price. - By delivery (on a form prescribed by the Company or the designated agent) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate option price and any withholding taxes (if approved in advance by the Compensation Committee of the Board if you are either an executive officer or a director of the Company). WITHHOLDING TAXES You will not be allowed to exercise this option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the option exercise or sale of Stock acquired under this option. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the exercise or sale of shares arising from this grant, the Company shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate. TRANSFER OF OPTION Except as provided in this section, during your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise this option and the option shall not be assignable or transferable by you, other than by designation of beneficiary, will or the laws of descent and distribution. You may transfer all or part of this option, not for value, to any Family Member, provided that you provide prior written notice to the Company, in a form satisfactory to the Company, of such transfer. For the purpose of this section, a "not for value" transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights, or (iii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or you) in exchange for an interest in that entity. Subsequent transfers of transferred options are prohibited except to your Family Members in accordance with this section or by will or the laws of descent and distribution. The events of termination of the Service this Agreement shall continue to be applied with respect to you, following which the option shall be exercisable by the transferee only to the extent, and for the periods specified in herein. RETENTION RIGHTS Neither your option nor this Agreement gives you the right to be retained by the Company (or any Parent, Subsidiaries or Affiliates) in any capacity. The Company (and any Parent, Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS You, or your designated beneficiary, estate or heirs, have no rights as a shareholder of the Company until a certificate for your option's shares has been issued (or an appropriate book entry has been made). No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued (or an appropriate book entry has been made), except as described in the Plan. FORFEITURE OF RIGHTS The Company at any time shall have the right to cause a forfeiture of your rights on account of you taking actions in competition with the Company. Unless otherwise specified in an employment or other agreement between the Company and you, you take actions in competition with the Company if you directly or indirectly own any interest in, operates, joins, controls or participates as a partner, director, principal, officer, or agent of, enters into the employment of, acts as a consultant to, or performs any services for, any entity which has material operations which compete with any business in which the Company or any of its Subsidiaries is engaged during your employment with the Company or any of its Affiliates or at the time of your termination of Service. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Stock, the number of shares covered by this option and the option price per share shall be adjusted (and rounded down to the nearest whole number) if required pursuant to the Plan. Your option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Indiana, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. THE PLAN The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement, unless otherwise defined herein, are defined in the Plan, and have the meaning set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. DATA PRIVACY In order to administer the Plan, the Company may process personal data about you. Such data includes but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this option, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Optionees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan. CONSENT TO ELECTRONIC The Company may choose to deliver certain statutory DELIVERY materials relating to the Plan in electronic form. By accepting this option grant you agree that the Company may deliver the Plan prospectus and the Company's annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Company's Human Resources Department to request paper copies of these documents. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. EX-10.24 5 c89089exv10w24.txt FORM OF EXECUTIVE RESTRICTED STOCK AGREEMENTS EXHIBIT 10.24 WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN EXECUTIVE RESTRICTED STOCK AGREEMENT Wabash National Corporation, a Delaware corporation (the "Company"), hereby grants shares of its common stock, $.01 par value, (the "Stock") to the Grantee named below, subject to the vesting conditions set forth in the attachment. Additional terms and conditions of the grant are set forth in this cover sheet, in the attachment and in the Company's 2004 Stock Incentive Plan (the "Plan"). Grant Date:_____________________________________________________________________ Name of Grantee:________________________________________________________________ Grantee's Social Security Number: _______-____-_______ (please fill in) Number of Shares of Stock Covered by Grant:_____________________________________ Purchase Price per Share of Stock: $______________________________ BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO ATTACHED. YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY REVIEWED THE PLAN, AND AGREE THAT THE PLAN WILL CONTROL IN THE EVENT ANY PROVISION OF THIS AGREEMENT SHOULD APPEAR TO BE INCONSISTENT. Grantee:________________________________________________________________________ (Signature) Company:________________________________________________________________________ (Signature) Printed:________________________________________________________________ Title:__________________________________________________________________ Attachment This is not a stock certificate or a negotiable instrument. WABASH NATIONAL CORPORATION 2004 STOCK INCENTIVE PLAN EXECUTIVE RESTRICTED STOCK AGREEMENT RESTRICTED STOCK/ This grant is an award of Stock in the number of NONTRANSFERABILITY shares set forth on the cover sheet, at the purchase price set forth on the cover sheet, and subject to the vesting conditions described below ("Restricted Stock"). The purchase price for the Restricted Stock is deemed paid by your services to the Company. To the extent not yet vested, your Restricted Stock may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process. ISSUANCE AND VESTING The Company will issue your Restricted Stock in your name as of the Grant Date. Your rights to the shares of Stock under this grant vest as to: -- one-third (1/3) of the total number of shares covered by this grant, as shown on the cover sheet (the "Shares"), on the third anniversary of the Grant Date ("Anniversary Date"), provided you then continue in Service. -- provided you then continue in Service, one-third (1/3) of the Shares shall vest on the fourth Anniversary Date. -- provided you then continue in Service, one-third (1/3) of the Shares shall vest on the fifth Anniversary Date. Notwithstanding the vesting schedule set forth in the preceding three subparagraphs, 100% of the shares shall become vested upon your termination by the Company with Cause or for good reason, as defined in Section ___ of your Employment Agreement, within 180 days following a change in control pursuant to Section ___ of your employment agreement with the Company dated __________(the "Employment Agreement"). No additional shares of Stock will vest after your Service has terminated for any reason. The resulting aggregate number of vested shares will be rounded to the nearest whole number, and you cannot vest in more than the number of shares covered by this grant. FORFEITURE OF UNVESTED Except as expressly provided herein, in the event STOCK that your Service terminates for any reason, you will forfeit to the Company all of the shares of Stock subject to this grant that have not yet vested. ESCROW The certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate 2 in the form attached hereto as Exhibit A. The deposited certificates shall remain in escrow until such time or times as the certificates are to be released or otherwise surrendered for cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of shares of Stock delivered in escrow to the Secretary of the Company. All regular cash dividends on the Stock (or other securities at the time held in escrow) shall be paid directly to you and shall not be held in escrow. However, in the event of any stock dividend, stock split, recapitalization or other change affecting the Company's outstanding common stock as a class effected without receipt of consideration or in the event of a stock split, a stock dividend or a similar change in the Company Stock, any new, substituted or additional securities or other property which is by reason of such transaction distributed with respect to the Stock shall be immediately delivered to the Secretary of the Company to be held in escrow hereunder, but only to the extent the Stock is at the time subject to the escrow requirements hereof. As your interest in the shares vests, as described above, the certificates for such vested shares shall be released from escrow and delivered to you, at your request, within 30 days of their vesting. WITHHOLDING TAXES You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting of Stock acquired under this grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate. SECTION 83(b) ELECTION Under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), the difference between the purchase price paid for the shares of Stock and their fair market value on the date any forfeiture restrictions applicable to such shares lapse will be reportable as ordinary income at that time. For this purpose, "forfeiture restrictions" include the forfeiture of unvested Stock that is described above. You may elect to be taxed at the time the shares are acquired, rather than when such shares cease to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date. You will have to make a tax payment to the extent the purchase price is less than the fair market value of the shares on the Grant Date. No tax payment will have to be made to the extent the purchase price is at least equal to the fair market value of the shares on the Grant Date. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within 3 the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the shares as of the vesting date exceeds the purchase price) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE ANY 83(B) ELECTION. RETENTION RIGHTS This Agreement does not give you the right to be retained by the Company (or any Parent, Subsidiaries or Affiliates) in any capacity. The Company (and any Parent, Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS You have the right to vote the Restricted Stock and to receive any dividends declared or paid on such stock. Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. The Company may in its sole discretion require any dividends paid on the Restricted Stock to be reinvested in shares of Stock, which the Company may in its sole discretion deem to be a part of the shares of Restricted Stock and subject to the same conditions and restrictions applicable thereto. Except as described in the Plan, no adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued. FORFEITURE OF RIGHTS If you should take actions in competition with the Company, the Company shall have the right to cause a forfeiture of your unvested Restricted Stock, and with respect to those shares of Restricted Stock vesting during the period commencing twelve (12) months prior to your termination of Service with the Company due to taking actions in competition with the Company, the right to cause a forfeiture of those vested shares of Stock (but the Company will pay you the purchase price without interest). Unless otherwise specified in an employment or other agreement between the Company and you, you take actions in competition with the Company if you directly or indirectly, own, manage, operate, join or control, or participate in the ownership, management, operation or control of, or are a proprietor, director, officer, stockholder, member, partner or an employee or agent of, or a consultant to any business, firm, corporation, partnership or other entity which competes with any business in which the Company or any of its Affiliates is engaged 4 during your employment or other relationship with the Company or its Affiliates or at the time of your termination of Service. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of shares covered by this grant may be adjusted (and rounded down to the nearest whole number) pursuant to the Plan. Your Restricted Stock shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. LEGENDS All certificates representing the Stock issued in connection with this grant shall, where applicable, have endorsed thereon the following legends: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE." APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Indiana, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. THE PLAN The text of the Plan is incorporated in this Agreement by reference. CERTAIN CAPITALIZED TERMS USED IN THIS AGREEMENT AND NOT OTHERWISE DEFINED HEREIN ARE DEFINED IN THE PLAN, AND HAVE THE MEANING SET FORTH IN THE PLAN. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant of Restricted Stock. Any prior agreements, commitments or negotiations concerning this grant are superseded. DATA PRIVACY In order to administer the Plan, the Company may process personal data about you. Such data includes but is not limited to the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, you give explicit consent to the Company to 5 process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-US. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan. CONSENT TO ELECTRONIC The Company may choose to deliver certain statutory DELIVERY materials relating to the Plan in electronic form. By accepting this grant you agree that the Company may deliver the Plan prospectus and the Company's annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Human Resources Department to request paper copies of these documents. BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. 6 EXHIBIT A ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, _____________ sells, assigns and transfers to Wabash National Corporation, a Delaware corporation (the "Company"), ____________ (__________) shares of common stock of the Company represented by Certificate No. ___ and does hereby irrevocable constitute and appoint ______________ Attorney to transfer the said stock on the books of the Company with full power of substitution in the premises. Dated:____________, 200__ ____________________________________ Print Name ____________________________________ Signature Spouse Consent (if applicable) ___________________ (Purchaser's spouse) indicates by the execution of this Assignment his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the shares of common stock of the Company. ____________________________________ Signature INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO CAUSE THE FORFEITURE OF YOUR UNVESTED SHARES AS SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON THE PART OF PURCHASER. EXHIBIT B ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder: 1. The name, address and social security number of the undersigned: Name:_________________________________________________________ Address:______________________________________________________ Social Security No.:__________________________________________ 2. Description of property with respect to which the election is being made: _________ shares of common stock, par value $.10 per share, Wabash National Corporation, a Delaware corporation, (the "Company"). 3. The date on which the property was transferred is ____________ __, 200__. 4. The taxable year to which this election relates is calendar year 200__. 5. Nature of restrictions to which the property is subject: The shares of stock are subject to the provisions of a Restricted Stock Agreement between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement. 6. The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $__________ per share, for a total of $__________. 7. The amount paid by taxpayer for the property was $__________. 8. A copy of this statement has been furnished to the Company. Dated: _____________, 200__ ____________________________________ Taxpayer's Signature ____________________________________ Taxpayer's Printed Name PROCEDURES FOR MAKING ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b) The following procedures MUST be followed with respect to the attached form for making an election under Internal Revenue Code section 83(b) in order for the election to be effective:(1) 1. You must file one copy of the completed election form with the IRS Service Center where you file your federal income tax returns within 30 days after the Grant Date of your Restricted Stock. 2. At the same time you file the election form with the IRS, you must also give a copy of the election form to the Secretary of the Company. 3. YOU MUST FILE ANOTHER COPY OF THE ELECTION FORM WITH YOUR FEDERAL INCOME TAX RETURN (GENERALLY, FORM 1040) FOR THE TAXABLE YEAR IN WHICH THE STOCK IS TRANSFERRED TO YOU. - -------------- (1) Whether or not to make the election is your decision and may create tax consequences for you. You are advised to consult your tax advisor if you are unsure whether or not to make the election. EX-31.01 6 c89089exv31w01.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER EXHIBIT 31.01 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, William P. Greubel, certify that: 1. I have reviewed this Quarterly Report of Wabash National Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) 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 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 report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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 officer(s) 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 the 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 27, 2004 By: /s/ William P. Greubel -------------------------- William P. Greubel President and Chief Executive Officer (Principal Executive Officer) EX-31.02 7 c89089exv31w02.txt CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER EXHIBIT 31.02 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Robert J. Smith, certify that: 1. I have reviewed this Quarterly Report of Wabash National Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) 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 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 report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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 officer(s) 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 the 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 27, 2004 By: /s/ Robert J. Smith --------------------------- Robert J. Smith Senior Vice President and Chief Financial Officer (Principal Financial Officer) EX-32.01 8 c89089exv32w01.txt WRITTEN STATEMENT OF CEO AND CFO PURSUANT TO SECTION 906 EXHIBIT 32.01 WRITTEN STATEMENT OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) The undersigned, the Chief Executive Officer and the Senior Vice President, Chief Financial Officer of Wabash National Corporation (the "Company"), each hereby certifies that, to his knowledge, on October 27, 2004: (a) the Form 10Q, Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 of the Company for the quarter ended September 30, 2004 filed on October 27, 2004 with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ William P. Greubel --------------------------------------------- William P. Greubel Chief Executive Officer October 27, 2004 /s/ Robert J. Smith --------------------------------------------- Robert J. Smith Senior Vice President, Chief Financial Officer October 27, 2004 -----END PRIVACY-ENHANCED MESSAGE-----