Wabash National
Annual Report 2010

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K (Mark One)xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2010OR ¨¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ______________Commission File Number: 1-10883WABASH NATIONAL CORPORATION(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization) 1000 Sagamore Parkway SouthLafayette, Indiana(Address of Principal Executive Offices)52-1375208(IRS EmployerIdentification Number) 47905(Zip Code)Registrant’s telephone number, including area code: (765) 771-5300Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, $.01 Par Value New York Stock ExchangeSeries D Preferred Share Purchase Rights New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No xIndicate 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 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ¨ No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No xThe aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2010 was $415,957,141 based upon the closing price ofthe Company's common stock as quoted on the New York Stock Exchange composite tape on such date.The number of shares outstanding of the registrant's common stock as of February 21, 2011 was 68,303,569.Part III of this Form 10-K incorporates by reference certain portions of the registrant’s Proxy Statement for its Annual Meeting of Stockholders to be filedwithin 120 days after December 31, 2010.  TABLE OF CONTENTSWABASH NATIONAL CORPORATIONFORM 10-K FOR THE FISCALYEAR ENDED DECEMBER 31, 2010 PagesPART I Item 1Business3 Item 1ARisk Factors12 Item 1BUnresolved Staff Comments17 Item 2Properties17 Item 3Legal Proceedings18 Item 4[Removed and Reserved]19 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities20 Item 6Selected Financial Data22 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations22 Item 7AQuantitative and Qualitative Disclosures about Market Risk38 Item 8Financial Statements and Supplementary Data39 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure66 Item 9AControls and Procedures66 Item 9BOther Information68 PART III Item 10Executive Officers of the Registrant68 Item 11Executive Compensation68 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters68 Item 13Certain Relationships and Related Transactions, and Director Independence68 Item 14Principal Accounting Fees and Services68 PART IV Item 15Exhibits and Financial Statement Schedules69 SIGNATURES71 2 FORWARD LOOKING STATEMENTSThis Annual Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of theSecurities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,”“believe,” “expect,” “plan” or “anticipate” and other similar words. Our “forward-looking statements” include, but are not limited to, statements regarding: ·our business plan; ·our expected revenues, income or loss and capital expenditures; ·plans for future operations; ·financing needs, plans and liquidity; ·our ability to achieve sustained profitability; ·reliance on certain customers and corporate relationships; ·availability and pricing of raw materials; ·availability of capital; ·dependence on industry trends; ·the outcome of any pending litigation; ·export sales and new markets; ·engineering and manufacturing capabilities and capacity; ·acceptance of new technology and products; ·government regulation; and ·assumptions relating to the foregoing.Actual results could differ materially from those projected or assumed in our forward-looking statements. Our future financial condition and results ofoperations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties, such as those disclosed in thisAnnual Report. Each forward-looking statement contained in this Annual Report reflects our management’s view only as of the date on which that forward-looking statement was made. We are not obligated to update forward-looking statements or publicly release the result of any revisions to them to reflectevents or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as required by law.Currently known risks and uncertainties that could cause actual results to differ materially from our expectations are described throughout thisAnnual Report, including in “Item 1A. Risk Factors”. We urge you to carefully review that section for a more complete discussion of the risks of aninvestment in our securities.PART IITEM 1—BUSINESSFounded in 1985 as a start-up company, Wabash National Corporation (“Wabash,” “Company,” “us,” “we” or “our”) is one of North America’sleaders in designing, manufacturing and marketing standard and customized truck trailers and related transportation equipment. We believe our position as aleader has been the result of our longstanding relationships with our core customers, our demonstrated ability to attract new customers, our broad andinnovative product lines, our technological leadership and our large distribution and service network. Our management team is focused on continuing tosize our manufacturing and retail operations to match the current demand environment, implementing our cost savings initiatives, strengthening our capitalstructure, developing innovative products, improving earnings and selective production introductions that meet the needs of our customers. 3 We seek to identify and produce proprietary products that offer exceptional value to customers with the potential to generate higher profit marginsthan those of standardized products. We believe that we have the engineering and manufacturing capability to produce these products efficiently. Weintroduced our proprietary composite product, DuraPlate, in 1996. According to the most recent A.C.T. Research Company, LLC (ACT) estimates on totaltrailer industry shipments, composite trailers have achieved widespread industry acceptance accounting for approximately one out of every three dry vantrailer shipments in 2010. Since 2002, sales of our DuraPlate trailers represented approximately 91% of our total new dry van trailer sales. We are also acompetitive producer of standardized sheet and post and refrigerated trailer products and we strive to become the low-cost producer of these products withinour industry. Through our Transcraft subsidiary we also manufacture steel flatbed and dropdeck trailers. As part of our commitment to expand our customerbase, diversify our revenues and extend our market leadership, Transcraft acquired in July 2008 certain operating assets of Benson International LLC, and itsaffiliates (Benson), a manufacturer of aluminum flatbeds, dump trailers and other truck bodies. In addition, in December 2008, the Company announced amulti-year agreement to build and service all of PODS®1 portable storage container requirements as part of our strategy to leverage our DuraPlate® paneltechnology into other industry segments. We expect to continue a program of product development and selective acquisitions of quality proprietaryproducts that further differentiate us from our competitors and increase shareholder value.We market our transportation equipment under the Wabash, DuraPlate, DuraPlateHD, FreightPro, ArcticLite®, RoadRailer®, Transcraft®, Eagle®,Eagle II®, D-Eagle® and Benson® trademarks directly to customers, through independent dealers and through our Company-owned retail branchnetwork. Historically, we have focused on our longstanding core customers representing many of the largest companies in the trucking industry. Ourrelationships with our core customers have been central to our growth since inception. We have also actively pursued the diversification of our customerbase by focusing on what we refer to as the mid-market. These carriers, which represent over 2,100 carriers, operate fleets of between 250 to 7,500 trailers,which we estimate in total account for approximately two million trailers.Longstanding core customers include – Averitt Express, Inc.; Crete Carrier Corporation; FedEx Corporation; Heartland Express, Inc.; KnightTransportation, Inc.; Old Dominion Freight Lines, Inc.; SAIA Motor Freightlines, Inc.; Safeway, Inc.; Schneider National, Inc.; Swift TransportationCorporation; U.S. Xpress Enterprises, Inc.; Werner Enterprises, Inc.; and YRC Worldwide, Inc.Mid-market customers include – Baylor Trucking; Barr-Nunn Transportation, Inc.; C&S Wholesale Grocers, Inc.; CR England, Inc.; CargoTransporters Inc; Celadon Group, Inc.; Con-way Truckload (formerly CFI); Cowan Systems, LLC; Dollar General Corporation; Frozen Food ExpressIndustries, Inc.; Gordon Trucking, Inc.; Landair Transport, Inc.; New Penn Motor Express, Inc.; Prime, Inc.; Roehl Transport, Inc.; Star Transport, Inc.; USALogistics; USF Corporation; and Xtra Lease, Inc.Our 11 Company-owned full service retail branches provide additional opportunities to distribute our products and also offer nationwide servicesand support capabilities for our customers. In addition, we maintain three used fleet sales centers to focus on selling both large and small fleet trade packagesto the wholesale market. Our retail branch network’s sale of new and used trailers, aftermarket parts and service generally provides enhanced marginopportunities. We also utilize a network of 30 independent dealers with approximately 65 locations throughout North America to distribute our vantrailers. In addition, we distribute our flatbed and dropdeck trailers through a network of 82 independent dealers with approximately 120 locationsthroughout North America.Wabash was incorporated in Delaware in 1991 and is the successor by merger to a Maryland corporation organized in 1985. We operate in tworeportable business segments: (1) manufacturing and (2) retail and distribution. Financial results by segment, including information about revenues fromcustomers, measures of profit and loss, total assets, and financial information regarding geographic areas and export sales are discussed in Note 14, Segmentsand Related Information, of the accompanying consolidated financial statements. Our internet website is www.wabashnational.com. We make our electronicfilings with the Securities Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and amendments to these reports available on our website free of charge as soon as practicable after we file or furnish them with theSEC. Information on the website is not part of this Form 10-K. 1 PODS® is a registered trademark of PODS, Inc. and Pods Enterprises, Inc. 4 StrategyWe are committed to a corporate strategy that seeks to maximize shareholder value by executing on the core elements of our strategic plan: ·Value Creation. We intend to continue our focus on improved earnings and cash flow. ·Operational Excellence. We are focused on maintaining a reduced cost structure by adhering to continuous improvement and leanmanufacturing initiatives. ·People. We recognize that in order to achieve our strategic goals we must continue to develop the organization’s skills to advance ourassociates capabilities and to attract talented people. ·Customer Focus. We have been successful in developing longstanding relationships with core customers and we intend to maintain theserelationships while expanding new customer relationships through the offering of tailored transportation solutions to create new revenueopportunities. ·Innovation. We intend to continue to be the technology leader by providing new differentiated products and services that generate enhancedprofit margins. ·Corporate Growth. We intend to expand our product offering and competitive advantage by increasing our focus on the diversification of theproducts through our DuraPlate® Product Group and leveraging our intellectual and physical assets for organic growth.Industry and CompetitionTrucking in the U.S., according to the American Trucking Association (ATA), was estimated to be a $660 billion industry in 2008. The ATA estimates thatapproximately 69% of all freight tonnage is carried by trucks at some point during its shipment. Trailer demand is a direct function of the amount of freightto be transported. As the economy improves, it is forecasted that truck carriers will need to expand and replace their fleets, which typically results inincreased trailer orders.Transportation in the U.S., including trucking, is a cyclical industry. Transportation has experienced three cycles over the last 20 years. Truckfreight tonnage, according to ATA statistics, started declining year-over-year in 2006 and remained at depressed levels through 2009. However, the mostrecent ATA data shows that in 2010 freight tonnage increased approximately 6% from 2009. Three U.S. economic downturns have occurred during the last20 years and in each instance the decline in freight tonnage preceded the general economic decline by approximately two and one-half years and its recoveryhas generally preceded that of the economy as a whole. The trailer industry generally follows the transportation industry, experiencing cycles in the earlyand late 90’s lasting approximately 58 and 67 months, respectively. The most recent cycle began in early 2001 and, based on current ACT estimates, reachedthe bottom in 2009. While the trailer industry in 2010 recovered significantly from the previous year’s low, the total trailer market for 2010 was still wellbelow replacement demand levels. In our view, the sustainability of a recovery within the trailer industry will require improvements in general freightdemand, improved credit markets and a recovery of the housing and construction markets. In addition, there are several different topics within state andfederal legislative processes that could have a favorable impact on the demand for trailers in the near term, specifically the bonus depreciation provision foreligible capital investments, comprehensive safety programs for carriers and drivers as well as proposed rule changes regarding hours of service restrictions.Wabash, and its two largest competitors, Great Dane and Utility, are generally viewed as the top three trailer manufacturers in the United States andhave accounted for greater than 50% of U.S. new trailer market share in recent years, including approximately 59% in 2010. Our market share of U.S. totaltrailer shipments in 2010 was approximately 21%. Trailer manufacturers compete primarily through the quality of their products, customer relationships,service availability and cost. Over the past several years, we have seen a number of our competitors follow our leadership in the development and use ofcomposite sidewalls that compete directly with our DuraPlate products. Our product development is focused on maintaining our leading position withrespect to these products. 5 The table below sets forth new trailer production for Wabash and, as provided by Trailer Body Builders Magazine, our largest competitors and the trailerindustry as a whole within North America. The data represents all segments of the market, except containers and chassis. For the years included below, wehave participated in the van, platform and dump trailer segments. Van production has declined from a high of approximately 198,000 trailers in 2006 to alow of approximately 50,000 trailers in 2009 while recovering to an estimated 89,000 trailers in 2010. Our market share for van trailers in 2010 wasapproximately 29%, an increase of approximately 8% from 2009 due to increased market demand in the dry van market, our largest segment, as compared tothe refrigerated trailer market. 2010 2009 2008 2007 2006 Wabash(1) 27,000 12,000 32,000 46,000 60,000(2)Great Dane 21,000 15,000 29,000 48,000 60,000 Utility 23,000 17,000 23,000 31,000 37,000 Hyundai Translead 8,000 5,000 7,000 13,000 14,000 Stoughton 5,000 3,000 5,000 11,000 19,000 Other principal producers 19,000 12,000 20,000 25,000 40,000 Total Industry 121,000 79,000(3) 143,000(3) 218,000(3) 283,000(3)(1)Does not include approximately 700 intermodal containers in 2006.(2)The 2006 production includes Transcraft volumes on a full-year pro forma basis.(3)Data revised by publisher in a subsequent year.Competitive StrengthsWe believe our core competitive strengths include: ··Long-Term Core Customer Relationships – We are the leading provider of trailers to a significant number of top tier trucking companies,generating a revenue base that has helped to sustain us as one of the market leaders. ··Innovative Product Offerings – Our DuraPlate proprietary technology offers what we believe to be a superior trailer, which commands premiumpricing. A DuraPlate trailer is a composite plate trailer using material that contains a high-density polyethylene core bonded between high-strength steel skins. We believe that the competitive advantages of our DuraPlate trailers compared to standard trailers include the following:- Extended Service Life – operate three to five years longer; - Lower Total Cost of Ownership – less costly to maintain; - Less Downtime – higher utilization for fleets; - Extended Warranty – warranty period for DuraPlate panels is ten years; and - Improved Resale – higher trade-in values. We have been manufacturing DuraPlate trailers for over 15 years and through December 2010 have sold over 400,000 trailers. This provenexperience, combined with ownership and knowledge of the DuraPlate panel technology, helps ensure continued industry leadership in thefuture. We have also successfully introduced innovations in our ArcticLite® refrigerated trailers and other product lines, including theDuraPlateHD® trailer and the FreightPro® sheet and post trailer. ··Significant Market Share and Brand Recognition – We have been one of the three largest manufacturers of trailers in North America since1994, with one of the most widely recognized brands in the industry. We are one of the largest producers of van trailers in NorthAmerica. According to Trailer Body Builders Magazine, our Transcraft subsidiary has been one of the top three leading producers of platformtrailers in each year since our acquisition in March 2006.. ··Committed Focus on Operational Excellence – Safety, quality, on-time delivery, productivity and cost reduction are the core elements of ourprogram of continuous improvement. We currently maintain an ISO 14001 registration of our Environmental Management System. 6 ··Technology – We are recognized by the trucking industry as a leader in developing technology to reduce trailer maintenance costs. In 2010, wewere selected to partner with Navistar International in a five year venture funded by the U.S. Department of Energy to develop a Class 8 SuperTruck (tractor-trailer combination) capable of a 50% improvement in fuel efficiency when compared to today’s best technology. As theexclusive trailer partner, we will be responsible for developing and building a proof-of-concept, scale model and full size test trailers for windtunnel and test track evaluation. The selection of Wabash as the exclusive trailer partner in this venture is a clear confirmation of ourrecognition as the market leader in innovative efforts with respect to over-the-highway trailer design and construction. In addition, over thepast couple of years we have had several industry innovations including the following: a revolutionary 35,000 pound concentrated floor loadrated dry van for heavy haul applications; a tire haul trailer to provide a cost effective transport of large tires; TrustLock®, a proprietary single-lock rear door mechanism; and, DuraPlate® Aeroskirt®, a durable aerodynamic solution that based on our testing provides improved fuelefficiencies of approximately 6%. ··Corporate Culture – We benefit from an experienced, value-driven management team and dedicated workforce focused on operationalexcellence. ··Extensive Distribution Network – Our 11 Company-owned retail branches and three used trailer locations extend our sales network throughoutNorth America, diversify our factory direct sales, provide an outlet for used trailer sales and support our national service contracts. Additionally,we utilize a network of 30 independent dealers with approximately 65 locations throughout North America to distribute our van trailers, and ourTranscraft distribution network consists of 82 independent dealers with approximately 120 locations throughout North America.RegulationTruck trailer length, height, width, maximum weight capacity and other specifications are regulated by individual states. The federal government alsoregulates certain safety features incorporated in the design and use of truck trailers. These regulations include, but are not limited to, requirements on anti-lock braking systems (ABS) and rear-impact guard standards as well as operator restrictions as to hours of service and minimum driver safety standards (see“Industry Trends”). Manufacturing operations are subject to environmental laws enforced by federal, state and local agencies (see "Environmental Matters").ProductsSince our inception, we have expanded our product offerings from a single truck trailer product to a broad range of trailer-related transportationequipment. Our manufacturing segment specializes in the development of innovative proprietary products for our key markets. Manufacturing segment salesrepresented approximately 85%, 79% and 83% of consolidated Wabash net sales in 2010, 2009 and 2008, respectively. Our current transportationequipment and DuraPlate® products primarily include the following: ·Dry Vans. The dry van market represents our largest product line and includes trailers sold under DuraPlate, DuraPlateHD, and FreightPro®trademarks. Our DuraPlate® trailers utilize a proprietary technology that consists of a composite plate wall for increased durability and greaterstrength. Our FreightPro® trailers provide us a competitive product within the smooth aluminum, or “sheet and post”, trailer segment. ·Platform Trailers. Platform trailers are sold under Transcraft®, Eagle® and Benson® trademarks. The acquisition of certain assets from Bensonin July 2008 provides us the ability to offer a premium all-aluminum platform trailer. Platform trailers consist of a trailer chassis with a flat or“drop” loading deck without permanent sides or a roof. These trailers are primarily utilized to haul steel coils, construction materials and largeequipment. 7 ·Refrigerated Trailers. Refrigerated trailers have insulating foam in the walls, roof and floor, which improves both the insulation capabilitiesand durability of the trailers. Our refrigerated trailers are sold under the ArticLite® trademark and use our proprietary SolarGuard® technology,coupled with our novel foaming process, which we believe enables customers to achieve lower costs through reduced operating hours ofrefrigeration equipment and therefore reduced fuel consumption. ·RoadRailer® Equipment. The RoadRailer® intermodal system is a patented bimodal technology consisting of a truck trailer and a detachablerail “bogie” that permits a trailer to run both over the highway and directly on railroad lines. ·Dump Equipment. The acquisition of certain assets from Benson in July 2008 provides the ability to offer premium aluminum and steel dumpequipment sold under the name of Benson®. This dump equipment is primarily used in the coal industry. ·DuraPlate® Products. The DuraPlate® Products Group was initiated in 2008 to expand the use of DuraPlate® composite panels, already aproven product in the semi-trailer market for over 15 years, into new product and market applications, including building and servicing all ofPODS® portable storage container requirements with our new DuraPlate® container. We are actively exploring new opportunities to leverageproprietary technology into new industries and applications and in 2009 introduced our EPA Smartway®2 approved DuraPlate® Aeroskirt®.Our retail and distribution segment offers products in three general categories: new trailers, used trailers and parts and service. The following is adescription of each product category: ·We sell new trailers produced by the manufacturing segment. Additionally, we sell specialty trailers produced by third parties that arepurchased in smaller quantities for local or regional transportation needs. New trailer sales through the retail branch network representedapproximately 6%, 6% and 8% of consolidated net sales in 2010, 2009 and 2008, respectively. ·We provide replacement parts and accessories and maintenance service for trailers and other related equipment. Parts and service salesrepresented approximately 6%, 10% and less than 5% of consolidated net sales in 2010, 2009 and 2008, respectively. ·We sell used trailers including units taken in trade from our customers upon the sale of new trailers. The ability to remarket used trailerspromotes new trailer sales by permitting trade-in allowances and offering customers an outlet for the disposal of used equipment. Used trailersales represented less than 6% of consolidated net sales in 2010, 2009 and 2008.CustomersOur customer base has historically included many of the nation’s largest truckload common carriers, leasing companies, private fleet carriers, less-than-truckload (LTL) common carriers and package carriers. We successfully diversified our customer base from approximately 60% of total trailers sold tolarge core customers in 2002 to approximately 30% in 2010 by continuing to expand our customer base and by diversifying into the broader trailer marketthrough the recent acquisitions of Transcraft and Benson assets. In addition, we continue to diversify our products by expanding the use of DuraPlate®composite panels through portable storage containers, DuraPlate® Aeroskirts® and truck bodies. All of these efforts have been accomplished whilemaintaining our relationships with our core customers. Our five largest customers together accounted for approximately 32%, 41% and 35% of our aggregatenet sales in 2010, 2009 and 2008, respectively, with two different customers representing approximately 10% and 14% of our net sales in 2010 and 2009,respectively. International sales, primarily to Canadian customers, accounted for less than 10% of net sales for each of the last three years.We have established relationships as a supplier to many large customers in the transportation industry, including the following:2 EPA Smartway® is a registered trademark of U.S. Environmental Protection Agency (EPA) 8 ·Truckload Carriers: Averitt Express, Inc.; Crete Carrier Corporation; Heartland Express, Inc.; Knight Transportation, Inc.; Schneider National,Inc.; Swift Transportation Corporation; U.S. Xpress Enterprises, Inc.; and Werner Enterprises, Inc. ·Leasing Companies: GE Trailer Fleet Services; and Xtra Lease, Inc. ·Private Fleets: C&S Wholesale Grocers, Inc.; Dillard’s, Inc.; Dollar General Corporation; and Safeway, Inc. ·Less-Than-Truckload Carriers: FedEx Corporation; Old Dominion Freight Lines, Inc.; SAIA Motor Freightlines, Inc.; Vitran Express, Inc.; andYRC Worldwide, Inc.Marketing and DistributionWe market and distribute our products through the following channels: ·factory direct accounts; ·Company-owned distribution network; and ·independent dealerships. Factory direct accounts are generally large fleets, with over 7,500 trailers, that are high volume purchasers. Historically, we have focused on thefactory direct market in which customers are highly knowledgeable of the life-cycle costs of trailer equipment and, therefore, are best equipped to appreciatethe design and value-added features of our products. We have also actively pursued through our Company-owned and independent dealer network thediversification of our customer base focusing on what we refer to as the mid-market. These approximately 2,100 carriers operate fleets of between 250 to7,500 trailers, which we estimate in total account for approximately two million trailers. Since implementing our mid-market sales strategy in late 2003, wehave added approximately 320 new mid-market customers accounting for approximately 22,000 new trailer orders.Our Company-owned distribution network generates retail sales of trailers to smaller fleets and independent operators located in geographic regionswhere our branches are located. This branch network enables us to provide maintenance and other services to customers. The branch network and our usedtrailer centers provide an outlet for used trailers taken in trade upon the sale of new trailers, which is a common practice with fleet customers.We also sell our van trailers through a network of 30 independent dealers with approximately 65 locations throughout North America. Our platformtrailers are sold through 82 independent dealers with approximately 120 locations throughout North America. The dealers primarily serve mid-market andsmaller sized carriers and private fleets in the geographic region where the dealer is located and occasionally may sell to large fleets. The dealers may alsoperform service work for our customers.Raw MaterialsWe utilize a variety of raw materials and components including specialty steel coil, plastic, aluminum, lumber, tires, landing gear, axles andsuspensions, which we purchase from a limited number of suppliers. Costs of raw materials and component parts represented approximately 75%, 75% and74% of our consolidated net sales in 2010, 2009 and 2008, respectively. Significant price fluctuations or shortages in raw materials or finished componentshas had, and could have further, adverse affects on our results of operations. In 2011 and for the foreseeable future, we expect that the raw materials used inthe greatest quantity will be steel, aluminum, plastic and wood. Our suppliers of raw material and components have advised us that they have adequatecapacity to meet our current and expected demands during 2011, but if the demand for their products increases then their lead-times may increase as well, orthey could place us on allocation, which has happened in the past. For 2011, we expect there to be continued price volatility for our primary commodity rawmaterials, including aluminum, steel and plastic along with significant component pricing, including tires. Our Harrison, Arkansas laminated hardwood floorfacility provides the majority of our requirements for trailer floors. 9 BacklogOrders that have been confirmed by customers in writing and can be produced during the next 18 months are included in our backlog. Orders that compriseour backlog may be subject to changes in quantities, delivery, specifications and terms or cancellation. Our backlog of orders at December 31, 2010 and2009 were approximately $480 million and $137 million, respectively. We expect to complete the majority of our existing backlog orders within the next 12months.Patents and Intellectual PropertyWe hold or have applied for 58 patents in the U.S. on various components and techniques utilized in our manufacture of transportationequipment. In addition, we hold or have applied for 68 patents in foreign countries. Our patents include intellectual property related to the manufacture oftrailers using our proprietary DuraPlate product, which we believe offers us a significant competitive advantage. The patents in our DuraPlate® portfoliohave expiration dates ranging from 2011 to 2024. In addition, we have applied for, or been granted, patents in the United States and foreign countriesrelating to innovative product designs or design improvements, which were first developed by Wabash National and have become highly desirable in ourindustry. In our view there are no meaningful patents having an expiration date prior to 2016.We also hold or have applied for 38 trademarks in the U.S., as well as 31 trademarks in foreign countries. These trademarks include the Wabash®,Wabash National®, Transcraft® and Benson® brand names as well as trademarks associated with our proprietary products such as DuraPlate, RoadRailer,Eagle® and Benson® trailers. We believe these trademarks are important for the identification of our products and the associated customer goodwill;however, our business is not materially dependent on such trademarks.Research and DevelopmentResearch and development expenses are charged to earnings as incurred and were $0.9 million, $1.2 million and $3.2 million in 2010, 2009 and2008, respectively.Environmental MattersOur facilities are subject to various environmental laws and regulations, including those relating to air emissions, wastewater discharges, the handling anddisposal of solid and hazardous wastes, and occupational safety and health. Our operations and facilities have been and in the future may become the subjectof enforcement actions or proceedings for non-compliance with such laws or for remediation of company-related releases of substances into theenvironment. Resolution of such matters with regulators can result in commitments to compliance abatement or remediation programs and in some cases thepayment of penalties (see Item 3 “Legal Proceedings”).We believe that our facilities are in substantial compliance with applicable environmental laws and regulations. Our facilities have incurred, andwill continue to incur, capital and operating expenditures and other costs in complying with these laws and regulations. However, we currently do notanticipate that the future costs of environmental compliance will have a material adverse effect on our business, financial condition or results of operations.EmployeesAs of December 31, 2010 and 2009, we had approximately 1,800 and 1,600 full-time associates, respectively. Throughout 2010, all of our activeassociates were non-union. As the demand for trailers increased throughout 2010, we also increased our temporary associates from approximately 5% of ourproduction workforce as of December 31, 2009 to approximately 50% throughout the second half of 2010 in order to meet our customer demand. We place astrong emphasis on employee relations through educational programs and quality improvement teams. We believe our employee relations are good. 10 Executive Officers of Wabash National CorporationThe following are the executive officers of the Company:Name Age PositionRichard J. Giromini 57 President and Chief Executive Officer, DirectorRodney P. Ehrlich 64 Senior Vice President – Chief Technology OfficerBruce N. Ewald 59 Senior Vice President – Sales and MarketingTimothy J. Monahan 58 Senior Vice President – Human ResourcesErin J. Roth 35 Senior Vice President – General Counsel and SecretaryMark J. Weber 39 Senior Vice President – Chief Financial OfficerRichard J. Giromini. Mr. Giromini was promoted to President and Chief Executive Officer on January 1, 2007. He had been Executive VicePresident and Chief Operating Officer from February 28, 2005 until December 2005 when he was appointed President and a Director of the Company. Prior tothat, he had been Senior Vice President - Chief Operating Officer since joining the Company on July 15, 2002. Mr. Giromini was with Accuride Corporationfrom April 1998 to July 2002, where he served in capacities as Senior Vice President - Technology and Continuous Improvement; Senior Vice President andGeneral Manager - Light Vehicle Operations; and President and CEO of AKW LP. Previously, Mr. Giromini was employed by ITT Automotive, Inc. from1996 to 1998 serving as the Director of Manufacturing. Mr. Giromini also serves on the board of directors of Robbins & Myers, Inc., a global supplier ofhighly engineered equipment and systems for critical applications in energy, industrial, chemical and pharmaceutical markets, which he joined in October2008. Mr. Giromini holds a Bachelor of Science degree in mechanical and industrial engineering and a Master of Science degree in industrial management,both from Clarkson University. He is a graduate of the Advanced Management Program at the Duke University Fuqua School of Management.Rodney P. Ehrlich. Mr. Ehrlich has been Senior Vice President – Chief Technology Officer of the Company since January 2004. From 2001 to2003, Mr. Ehrlich was Senior Vice President of Product Development. Mr. Ehrlich has been in charge of the Company's engineering operations since theCompany's founding. Prior to Wabash National, Mr. Ehrlich started with Monon Trailer Corporation in 1963 working various positions until becomingChief Engineer in 1973, Director of Engineering in 1978, and serving until joining the founders of Wabash National in 1985. Mr. Ehrlich has obtained over50 patents in trailer related design during his 47 year trailer career. Mr. Ehrlich holds a Bachelor of Science degree in Mechanical Engineering from PurdueUniversity.Bruce N. Ewald. Mr. Ewald’s original appointment was Vice President and General Manager of Wabash National Trailer Centers, Inc. when hejoined the Company in March 2005. In October 2005, he was promoted to Senior Vice President – Sales and Marketing. Mr. Ewald has nearly 30 yearsexperience in the transportation industry. Most recently, Mr. Ewald was with PACCAR from 1991 to February 2005 where he served in a number ofexecutive-level positions. Prior to PACCAR, Mr. Ewald spent 10 years with Genuine Parts Co. where he served in several positions, including President andGeneral Manager, Napa Auto Parts/Genuine Parts Co. Mr. Ewald holds a Bachelor of Science degree in Business from the University of Minnesota.Timothy J. Monahan. Mr. Monahan has been Senior Vice President – Human Resources since joining the Company in October 2003. Prior toWabash, Mr. Monahan was with Textron Fastening Systems from 1999 to October 2003 where he served as Vice President – Human Resources for theCommercial Solutions Group and later Global Vice President – Human Resources. Previously, Mr. Monahan served in a variety of key executive roles atBeloit Corporation, Ingersoll Cutting Tools and Regal Beloit Corporation, including Vice President – Human Resources at both Beloit’s Mill Pro and PaperMachinery Groups. Mr. Monahan serves on the board of directors of Global Specialty Solutions, a global producer of special cutting tools and toolingsolutions. He holds a Bachelor of Science degree from Milton College and has attended several executive management programs, including the DukeUniversity Fuqua School of Management where he completed the Advanced Executive Management Program.Erin J. Roth. Effective January 1, 2011, Ms. Roth was promoted to the position of Senior Vice President – General Counsel and Secretary, followingher appointment on March 1, 2010 to the position of Vice President – General Counsel and Secretary. Ms. Roth joined the Company in March 2007 asCorporate Counsel and was promoted in July 2009 to Senior Corporate Counsel. For the five years prior to joining the Company, Ms. Roth was engaged inthe private practice of law with Barnes & Thornburg, LLP, representing a number of private and public companies throughout the United States. Ms. Rothearned her Bachelor of Science degree in Accounting from Butler University and her Juris Doctorate from the Georgetown University Law Center. 11 Mark J. Weber. Mr. Weber was promoted to Senior Vice President – Chief Financial Officer on August 31, 2009. Mr. Weber joined the Company inAugust 2005 as Director of Internal Audit, was promoted in February 2007 to Director of Finance, and in November 2007 he was promoted to Vice Presidentand Corporate Controller. Prior to joining the Company, Mr. Weber was with Great Lakes Chemical Corporation from October 1995 through August 2005where he served in several positions of increasing responsibility within accounting and finance, including Vice President of Finance. Mr. Weber earned hisMaster’s of Business Administration and Bachelor of Science in Accounting from Purdue University’s Krannert School of Management.ITEM 1A—RISK FACTORSYou should carefully consider the risks described below in addition to other information contained or incorporated by reference in this AnnualReport before investing in our securities. 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 OperationsOur results of operations have declined significantly in recent periods, and the impact of the current global economic downturn and its effects on ourindustry could continue to harm our operations and financial performance. As of December 31, 2010, our stockholders' equity totaled $129.0 million. For the three years ending December 31, 2010 and excluding the impactof the goodwill impairment recorded in 2008, we have recorded net losses from operations totaling $119.0 million. These accumulated net operating lossesreflect the conditions in the markets we serve and the general condition of the global economy. We believe that the overall industry in which we operate hasbeen affected similarly during this period. The global economic downturn has caused demand for new trailers to decline and has led to, in some cases, thecyclical timeframe for trailer replacement to be delayed due to economic pressures. For example, according to a February 2011 report by ACT, total trailerindustry shipments for the years ending 2010, 2009 and 2008 were approximately 120,000 trailers, 79,000 trailers and 143,000 trailers, respectively. Bycomparison, each of these years are significantly below both the total trailer industry shipments in 2007 of 213,000 and the industry replacement demandlevels of approximately 185,000 trailers. ACT is estimating 2011 trailer volumes to be approximately 195,000, representing an increase of approximately63% from the previous year. Even with the forecasted recovery within the trailer manufacturing industry, we cannot make any assurances that we will beprofitable in future periods or, if we do become profitable, that we will be able to sustain or increase profitability in the future. Achieving profitability willbe dependant on several factors, including but not limited to our ability to increase our overall trailer volumes, improve our product diversification effortsand manage our expenses. If we are unable to generate profitability in the future, we may not be able to meet our requirements under our revolving creditfacility.We continue to be affected by the global economy, especially the credit markets, as well as the decline in the housing and construction-relatedmarkets in the U.S. The same general economic concerns faced by us are also faced by our customers. We believe that some of our customers are highlyleveraged, have limited access to capital, and may be reliant on liquidity from global credit markets and other sources of external financing. If the currentconditions impacting the credit markets and general economy are prolonged, we may be faced with unexpected delays in product purchases or the loss ofcustomers, which could further materially impact our financial position, results of operations and cash flow. Further, lack of liquidity by our customers couldimpact our ability to collect amounts owed to us. While we have taken steps to address these concerns through the implementation of our strategic plan, weare not immune to the pressures being faced by our industry or the global economy, and our results of operations may decline. 12 Our ability to fund operations is limited by our cash on hand and available borrowing capacity under our revolving credit facility.As of December 31, 2010, our liquidity position, defined as cash on hand and available borrowing capacity, amounted to $60.4 million. Our abilityto fund our working capital needs and capital expenditures is limited by the net cash provided by operations, cash on hand and available borrowings underour revolving credit facility. Additional declines in net cash provided by operations, further decreases in the availability under the revolving credit facilityor changes in the credit our suppliers provide to us, could rapidly exhaust our liquidity. However, we believe our liquidity on December 31, 2010 of $60.4million will be adequate to fund expected operating results, working capital requirements and capital expenditures throughout 2011, which we expect to be aperiod of economic recovery within the trailer manufacturing industry. However, if needed, our inability to increase liquidity would adversely impact ourfuture performance, operations and results of operations.Our revolving credit facility contains several restrictive covenants that, if breached, could limit our financial and operating flexibility and subject us toother risks.Our revolving credit facility includes certain financial covenants that, if not met, would trigger an event of default and our lenders may declare all amountsoutstanding under our debt agreement, together with any accrued interest, to be immediately due and payable.Our revolving credit facility requires that we maintain a certain minimum level of availability throughout the duration of the agreement. Pursuant tothe revolving credit facility, if the availability under our revolving credit facility is less than $15,000,000 at any time before the earlier of (i) August 14, 2011or (ii) the date that monthly financial statements are delivered for the month ending June 30, 2011, we are required to maintain a varying minimum EBITDAand are restricted in the amount of capital expenditures it can make during such period. If our availability is less than $20,000,000 thereafter, we are requiredto maintain a fixed charge coverage ratio for the 12 month period ending on the last day of the calendar month that ended most recently prior to such time ofnot less than 1.10 to 1.0, which could limit our ability to make capital expenditures.The revolving credit facility also contains customary events of default including, without limitation, failure to pay obligations when due under therevolving credit facility, false and misleading representations, breaches of covenants (subject in some instances to cure and grace periods), defaults by us oncertain other indebtedness, the occurrence of certain uninsured losses, business disruptions for a period of time that materially adversely affects the capacityto continue business on a profitable basis, changes of control and the incurrence of certain judgments that are not stayed, released or discharged within30 days.Due to the amount of our excess availability, as calculated under the revolving credit facility, we are currently in compliance will all covenants. Ourability to comply with our credit facility in the future may be affected by events beyond our control, including prevailing economic, financial and industryconditions.Our business is highly cyclical, which has had, and could have further, adverse affects on 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 economicconditions. Customers historically have replaced trailers in cycles that run from five to 12 years, depending on service and trailer type. Poor economicconditions can adversely affect demand for new trailers and have historically, and has currently, led to an overall aging of trailer fleets beyond this typicalreplacement cycle. Customers' buying patterns can also reflect regulatory changes, such as federal hours-of-service rules and federal emissions standards.While we have taken steps to diversify through the implementation of our strategic plan, we are subject to the cyclicality. As a result, duringdownturns, we operate with a lower level of backlog and have had to temporarily slow down or halt production at some or all of our facilities, includingextending normal shut down periods and reducing salaried headcount levels. We could be forced to further slow down or halt additional production. Aneconomic downturn may reduce, and in the past has reduced, demand for trailers, resulting in lower sales volumes, lower prices and decreased profits andlosses.A change in our customer relationships or in the financial condition of our customers has had, and could have further, adverse affects on our business.We have longstanding relationships with a number of large customers to whom we supply our products. We do not have long-term agreements withthese customers. Our success is dependent, to a significant extent, upon the continued strength of these relationships and the growth of our corecustomers. We often are unable to predict the level of demand for our products from these customers, or the timing of their orders. In addition, the sameeconomic conditions that adversely affect us also often adversely affect our customers and in the current environment have led to reduced demand. As someof our customers are highly leveraged and have limited access to capital, their continued existence may be uncertain. The loss of a significant customer orunexpected delays in product purchases could further adversely affect our business and results of operations. 13 Demand for new trailers has been and will continue to be sensitive to economic conditions over which we have no control and that may furtheradversely affect our revenues and profitability.Demand for trailers is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, new housingstarts, government regulations and the availability of financing and interest rates. The status of these economic conditions periodically have an adverseeffect on truck freight and the demand for and the pricing of our trailers, and have resulted in, and could lead to further, result in the inability of customers tomeet their contractual terms or payment obligations, which could further cause our operating revenues and profits to decline.Our backlog is not necessarily indicative of the level of our future revenues.Our backlog represents future production for which we have written orders from our customers that can be produced or sold in the next 18months. Orders that comprise our backlog may be subject to changes in quantities, delivery, specifications and terms, or cancellation, and our reportedbacklog may not be converted to revenue in any particular period and actual revenue from such orders may not equal our backlog revenues. Therefore, ourbacklog is not necessarily indicative of the level of our future revenues.Our technology and products may not achieve market acceptance or competing products could gain market share, which could adversely affect ourcompetitive position.We continue to optimize and expand our product offerings to meet our customer needs through our established brands, such as DuraPlate®,DuraPlateHD®, FreightPro®, ArcticLite®, Transcraft Eagle® and Benson®. While we target product development to meet customer needs, there is no assurancethat our product development efforts will be embraced and that we will meet our sales projections. Companies in the truck transportation industry, a veryfluid industry in which our customers primarily operate, make frequent changes to maximize their operations and profits.Over the past several years, we have seen a number of our competitors follow our leadership in the development and use of composite sidewalls thatcompete directly with our DuraPlate products. Our product development is focused on maintaining our leadership on these products but competitivepressures may erode our market share or margins. We continue to take steps to protect our proprietary rights in our products. However, the steps we havetaken to protect them may not be sufficient or may not be enforced by a court of law. If we are unable to protect our intellectual properties, other parties mayattempt to copy or otherwise obtain or use our products or technology. If competitors are able to use our technology, our ability to effectively compete couldbe harmed. In addition, litigation related to intellectual property could result in substantial costs and efforts which may not result in a successful outcome.We have a limited number of suppliers of raw materials and components; increases in the price of raw materials or the inability to obtain raw materialscould adversely affect our results of operations.We currently rely on a limited number of suppliers for certain key components and raw materials in the manufacturing of our products, such as tires,landing gear, axles, suspensions and specialty steel coil used in DuraPlate® panels. From time to time, there have been and may in the future be shortages ofsupplies of raw materials or components, or our suppliers may place us on allocation, which would have an adverse impact on our ability to meet demand forour products. Shortages and allocations may result in inefficient operations and a build-up of inventory, which can negatively affect our working capitalposition. In addition, any price volatility in commodity pricing has had and could continue to have negative impacts to our operating margins. The loss ofany of our suppliers or their inability to meet our price, quality, quantity and delivery requirements could have a significant impact on our results ofoperations. 14 Disruption of our manufacturing operations would have an adverse effect on our financial condition and results of operations.We manufacture our products at two van trailer manufacturing facilities in Lafayette, Indiana, a flatbed and dump-body trailer facility in Cadiz,Kentucky, and a hardwood floor facility in Harrison, Arkansas. An unexpected disruption in our production at any of these facilities for any length of timewould have an adverse effect on our business, financial condition and results of operations.The inability to attract and retain key personnel could adversely affect our results of operations.Our ability to operate our business and implement our strategies depends, in part, on the efforts of our executive officers and other key employees. Our futuresuccess depends, in large part, on our ability to attract and retain qualified personnel, including manufacturing personnel, sales professionals andengineers. The unexpected loss of services of any of our key personnel or the failure to attract or retain other qualified personnel could have a materialadverse effect on the operation of our business.We rely significantly on our integrated Enterprise Resource Planning (ERP) solution to support our operations.We rely on an ERP system and telecommunications infrastructure to integrate departments and functions, to enhance the ability to service customers, toimprove our control environment and to manage our cost reduction initiatives. Any issues involving our critical business applications and infrastructure mayadversely impact our ability to manage operations and the customers we serve.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 havesubstantial financial resources. Trailer manufacturers compete primarily on the quality of their products, customer relationships, service availability andcost. Barriers to entry in the standard truck trailer manufacturing industry are low. As a result, it is possible that additional competitors could enter the marketat any time. In the recent past, manufacturing over-capacity and high leverage of some of our competitors, along with bankruptcies and financial stresses thataffected 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 andresults 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 orfuture 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 federalgovernment also regulates certain truck trailer safety features, such as lamps, reflective devices, tires, air-brake systems and rear-impact guards. Changes oranticipation of changes in these regulations can have a material impact on our financial results, as our customers may defer purchasing decisions and we mayhave to re-engineer products. We are subject to various environmental laws and regulations dealing with the transportation, storage, presence, use, disposaland handling of hazardous materials, discharge of storm water and underground fuel storage tanks and may be subject to liability associated with operationsof prior owners of acquired property. In addition, we are subject to laws and regulations relating to the employment of our associates and labor-relatedpractices.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 conditionand results of operations. Our costs of complying with these or any other current or future regulations may be material. In addition, if we fail to comply withexisting or future laws and regulations, we may be subject to governmental or judicial fines or sanctions. 15 Product liability and other legal claims could have an adverse effect on our financial condition and results of operations.As a manufacturer of products widely used in commerce, we are subject to product liability claims and litigation, as well as warranty claims. Fromtime to time claims may involve material amounts and novel legal theories, and any insurance we carry may prove inadequate to insulate us from materialliabilities for these claims.In addition to product liability claims, we are subject to legal proceedings and claims that arise in the ordinary course of business, such as workers'compensation claims, OSHA investigations, employment disputes and customer and supplier disputes arising out of the conduct of our business. Litigationmay result in substantial costs and may divert management's attention and resources from the operation of our business, which could have a material adverseeffect on our business, results of operations or financial condition.Risks Related to an Investment in Our Common StockOur common stock has experienced, and may continue to experience, price volatility and a low trading volume.The trading price and volume of our common stock has been and may continue to be subject to large fluctuations. The market price and volume ofour common stock 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 by 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 capitalcommitments; ·changes in laws and regulations; ·general economic and competitive conditions; and ·changes in key management personnel. This volatility may adversely affect the prices of our common stock regardless of our operating performance. To the extent that the price of ourcommon stock declines, our ability to raise funds through the issuance of equity or otherwise use our common stock as consideration will be reduced. Thesefactors may limit our ability to implement our operating and growth plans.In connection with our issuance of preferred stock and the common stock warrant, certain provisions of the terms of our preferred stock maydiscourage third parties from seeking to acquire us.Certain provisions of the documents governing our preferred stock may discourage third parties from seeking to acquire the Company. In particular,in the event of a change of control, defined as more than 50% of the voting power is transferred or acquired by any person other than Trailer Investments or itsaffiliates, occurs within twelve months of the date of the preferred stock was redeemed (or on or before May 28, 2011) our preferred stock has a mandatoryredemption feature requiring us to offer to redeem the preferred stock at an additional premium of $74.6 million representing the difference between whatTrailer Investments received at the time of redemption and what it would have been entitled to receive on the date of redemption if a change of control hadoccurred on that date. As a result, this could discourage third parties from seeking to acquire us because any additional premium to our current commonstock equity value would need to take into account the premium on our preferred stock. This means that to offer the holders of our common stock a premium,a third party would have to pay an amount significantly in excess of the current value of our common stock. 16 An ownership change could result in a limitation on the use of our net operating losses. As of December 31, 2010, we had approximately $180 million of remaining U.S. federal income tax net operating loss carryforwards (“NOLs”),which will begin to expire in 2022, if unused, and which may be subject to other limitations under Internal Revenue Service (the “IRS”) rules. We havevarious, multistate income tax net operating loss carryforwards, which have been recorded as a deferred income tax asset, of approximately $18 million,before valuation allowances. We also have various U.S. federal income tax credit carryforwards, which will expire beginning in 2013, if unused. Our NOLs,including any future NOLs that may arise, are subject to limitations on use under the IRS rules, including Section 382 of the Internal Revenue Code of 1986,as revised. Section 382 limits the ability of a company to utilize NOLs in the event of an ownership change. We would undergo an ownership change if,among other things, the stockholders, or group of stockholders, who own or have owned, directly or indirectly, 5% or more of the value of our stock or areotherwise treated as 5% stockholders under Section 382 and the regulations promulgated thereunder increase their aggregate percentage ownership of ourstock by more than 50 percentage points over the lowest percentage of our stock owned by these stockholders at any time during the testing period, which isgenerally the three-year period preceding the potential ownership change. In the event of an ownership change, Section 382 imposes an annual limitation on the amount of post-ownership change taxable income acorporation may offset with pre-ownership change NOLs and certain recognized built-in losses. The limitation imposed by Section 382 for any post-changeyear would be determined by multiplying the value of our stock immediately before the ownership change (subject to certain adjustments) by the applicablelong-term tax-exempt rate in effect at the time of the ownership change. Any unused annual limitation may be carried over to later years, and the limitationmay under certain circumstances be increased by built-in gains that may be present in assets held by us at the time of the ownership change that arerecognized in the five-year period after the ownership change. It is expected that any loss of our NOLs would cause our effective tax rate to go upsignificantly when we return to profitability, excluding impacts of valuation allowance. On May 28, 2010 a change of ownership did occur resulting from the issuance of 11,750,000 shares of common stock, which invoked a limitation onthe utilization of pre-ownership change NOLs under Section 382. Pre-ownership change NOLs are $177 million. Management has estimated the annual NOLlimitations under IRC Section 382 through 2014 are $70 million for 2011; $42 million for 2012; $40 million for 2013; and, $25 million for 2014. To theextent the limitation in any year is not reached, any remaining limitation can be carried forward indefinitely to future years. Post-ownership change NOLs atDecember 31, 2010 are $3 million, which is currently not subject to utilization limits. In 2009, we undertook a study to ensure that the change in ownership related to the issuance of the Warrant (see “Liquidity and Capital Resources”)in August 2009 did not result in a Section 382 limitation and believe that such a limitation was not triggered. However, there can be no assurance that such achange was not triggered at that time, due to the lack of authoritative guidance.ITEM 1B—UNRESOLVED STAFF COMMENTSNone.ITEM 2—PROPERTIESManufacturing FacilitiesWe own or lease, and operate trailer manufacturing facilities in Lafayette, Indiana and Cadiz, Kentucky, as well as a trailer floor manufacturingfacility in Harrison, Arkansas. During 2010 we consolidated our Anna, Illinois, steel flatbed operation into our Cadiz facility to further our leanmanufacturing efforts and subsequently sold the Anna facility. In addition, we sold our Mt. Sterling, Kentucky facility that was idled in 2007. Our mainLafayette facility is a 1.2 million square foot facility that houses truck trailer and composite material production, tool and die operations, researchlaboratories and offices. The second Lafayette facility is 0.6 million square feet, primarily used for the production of refrigerated trailers. In total, ourfacilities have the capacity to produce approximately 80,000 trailers annually on a three shift, five-day workweek schedule, dependent on mix of product. 17 Retail and Distribution FacilitiesRetail and distribution facilities include 11 full service branches and three used trailer centers. Each sales and service branch consists of an office,parts warehouse and service space, and ranges in size from 20,000 to 50,000 square feet per facility. The 14 facilities are located in 10 states with three of thefacilities being leased.Properties owned by Wabash are subject to security interests held by our lenders.ITEM 3—LEGAL PROCEEDINGSVarious 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 matters and possible taxassessments. While the amounts claimed could be substantial, the ultimate liability cannot now be determined because of the considerable uncertainties thatexist. 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 other than the matters below,which are addressed individually, will not have a material adverse effect on the Company's financial position, liquidity or results of operations. Costsassociated with the litigation and settlements of legal matters are reported within General and Administrative Expenses in the Consolidated Statements ofOperations.Brazil Joint VentureIn March 2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. ("BK") filed suit against the Company in the Fourth Civil Court ofCuritiba in the State of Paraná, Brazil. Because of the bankruptcy of BK, this proceeding is now pending before the Second Civil Court of Bankruptcies andCreditors Reorganization of Curitiba, State of Paraná (No. 232/99).The case grows out of a joint venture agreement between BK and the Company related to marketing of RoadRailer trailers in Brazil and other areasof South America. When BK was placed into the Brazilian equivalent of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed itslawsuit against the Company alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete clausespurportedly found in the joint venture agreement. BK asserts damages of approximately R$20.8 million (Brazilian Reais) which is approximately $12.5million U.S. dollars using current exchange rates. The amount of damages asserted in local currency has not changed since 2001.We answered the complaint in May 2001, denying any wrongdoing. We believe that the claims asserted by BK are without merit and intend tovigorously defend our position. A bench (non-jury) trial was held on March 30, 2010 in Curitiba, Paraná, Brazil. A ruling on the evidence presented at thetrial is not expected for several months. We believe that the resolution of this lawsuit will not have a material adverse effect on our financial position,liquidity or future results of operations; however, at this stage of the proceeding no assurances can be given as to the ultimate outcome of the case.Intellectual PropertyIn October 2006, the Company filed a patent infringement suit against Vanguard National Corporation (“Vanguard”) regarding Wabash National’sU.S. Patent Nos. 6,986,546 and 6,220,651 in the U.S. District Court for the Northern District of Indiana (Civil Action No. 4:06-cv-135). The Companyamended the Complaint in April 2007. In May 2007, Vanguard filed its Answer to the Amended Complaint, along with Counterclaims seeking findings ofnon-infringement, invalidity, and unenforceability of the subject patents. The Company filed a reply to Vanguard’s counterclaims in May 2007, denyingany wrongdoing or merit to the allegations as set forth in the counterclaims. The case has currently been stayed by agreement of the parties while the U.S.Patent and Trademark Office (“Patent Office”) undertakes a reexamination of U.S. Patent Nos. 6,986,546. The Patent Office recently notified the Companythat the reexamination is complete and the Patent Office has reissued U.S. Patent No. 6,986,546 without cancelling any claims of the patent. The parties planto petition the Court to lift the stay; however, it is unknown at this time when the petition to lift the stay may be granted. 18 The Company believes that its claims against Vanguard have merit, that the claims asserted by Vanguard are without merit, and intends tovigorously defend its position and intellectual property. The Company believes that the resolution of this lawsuit will not have a material adverse effect onits financial position, liquidity or future results of operations; however, at this stage of the proceeding, no assurance can be given as to the ultimate outcomeof the case.Environmental DisputesIn September 2003, we were noticed as a potentially responsible party (PRP) by the U.S. Environmental Protection Agency (“EPA”) pertaining to theMotorola 52nd Street, Phoenix, Arizona Superfund Site (the “Superfund Site”) pursuant to the Comprehensive Environmental Response, Compensation andLiability Act (“CERCLA”). PRPs include current and former owners and operators of facilities at which hazardous substances were allegedly disposed. TheEPA’s allegation that we were a PRP arises out of our acquisition of a former branch facility located approximately five miles from the original SuperfundSite. We acquired this facility in 1997, operated the facility until 2000, and sold the facility to a third party in 2002. In June 2010, we were contacted by theRoosevelt Irrigation District (“RID”) informing it that the Arizona Department of Environmental Quality (“ADEQ”) had approved a remediation plan inexcess of $100 million for the RID portion of the Superfund Site, and demanded that we contribute to the cost of the plan or be named as a defendant in aCERCLA action to be filed in July 2010. We initiated settlement discussions with the RID and the ADEQ in July 2010 to provide a full release from the RID,and a covenant not-to-sue and contribution protection regarding the former branch property from the ADEQ, in exchange for payment from us. If thesettlement is approved by all parties, it will prevent any third party from successfully bringing claims against us for environmental contamination relating tothis former branch property. We are awaiting approval from the ADEQ for the settlement we proposed in July 2010; we do not expect to receive a responsefrom the ADEQ for several more months. Based upon our limited period of ownership of the former branch property, and the fact that we no longer own theformer branch property, we do not anticipate that the ADEQ will reject the proposed settlement, but no assurance can be given at this time as to the ADEQ’sresponse to the settlement proposal. The proposed settlement terms have been accrued and did not have a material adverse effect on our financial conditionor results of operations, and we believe that any ongoing proceedings will not have a material adverse effect on the Company’s financial condition or resultsof operations.In January 2006, the Company received a letter from the North Carolina Department of Environment and Natural Resources indicating that a sitethat the Company formerly owned near Charlotte, North Carolina has been included on the state's October 2005 Inactive Hazardous Waste Sites PriorityList. The letter states that the Company was being notified in fulfillment of the state's “statutory duty” to notify those who own and those who at present areknown to be responsible for each Site on the Priority List. No action is being requested from the Company at this time. The Company does not expect thatthis designation will have a material adverse effect on its financial condition or results of operations.ITEM 4—[REMOVED AND RESERVED] 19 PART IIITEM 5—MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESInformation Regarding our Common StockOur common stock is traded on the New York Stock Exchange (ticker symbol: WNC). The number of record holders of our common stock atFebruary 21, 2011 was 878.We declared quarterly dividends of $0.045 per share on our common stock from the first quarter of 2005 through the third quarter of 2008. In December2008, we suspended the payment of our quarterly dividend due to the continued weak economic environment and the uncertainty as to the timing of arecovery as well as our effort to enhance liquidity. No dividends on our common stock were declared or paid in 2010. In accordance with our ThirdAmended and Restated Loan and Security Agreement, effective August 3, 2009 and as amended on May 28, 2010, we are restricted from the payment of cashdividends to holders of our common stock for a period of two years. At any time after our second anniversary of our credit facility, or August 3, 2011, we arelimited to the amount of cash dividends of $20 million per year unless otherwise approved by a majority of our lenders, so long as no default or event ofdefault is continuing or would be caused by the distribution and only if our available borrowing capacity is in excess of $40 million after distribution ofdividend. The reinstatement of quarterly cash dividends on our common stock will depend on our future earnings, capital availability, financial conditionand the discretion of our Board of Directors.On May 13, 2010, our stockholders approved an amendment to our Certificate of Incorporation, as amended, to increase the number of authorized shares ofcommon stock, par value $0.01 per share, from 75 million shares to 200 million shares and correspondingly, to increase the total number of authorized sharesof all classes of capital stock from 100 million shares to 225 million shares, which includes 25 million shares of preferred stock, par value $0.01 per share.High and low stock prices as reported on the New York Stock Exchange for the last two years were: High Low 2009 First Quarter $5.07 $0.51 Second Quarter $2.71 $0.68 Third Quarter $3.25 $0.50 Fourth Quarter $3.05 $1.36 2010 First Quarter $7.84 $1.82 Second Quarter $10.85 $5.86 Third Quarter $8.94 $5.96 Fourth Quarter $13.00 $7.51 20 Performance GraphThe following graph shows a comparison of cumulative total returns for an investment in our common stock, the S&P 500 Composite Index and the DowJones Transportation Index. It covers the period commencing December 31, 2005 and ending December 31, 2010. The graph assumes that the value for theinvestment in our common stock and in each index was $100 on December 31, 2005 and that all dividends were reinvested.Comparative of Cumulative Total ReturnDecember 31, 2005 through December 31, 2010among Wabash National Corporation, the S&P 500 Indexand the Dow Jones Transportation IndexPurchases of Our Equity SecuritiesFor the quarter ending December 31, 2010, we repurchased a total of 5,445 shares to cover minimum employee tax withholding obligations upon the vestingof restricted stock awards. During this period, there were no repurchases made pursuant to any repurchase programsPeriod Total Number ofSharesPurchased Average Price Paidper Share Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs Maximum Numberof Shares that MayYet Be PurchasedUnder the Plans orPrograms October 2010 622 $7.11 — — November 2010 — $— — — December 2010 4,823 $12.32 — — Total 5,445 $11.72 — — 21 ITEM 6—SELECTED FINANCIAL DATAThe following selected consolidated financial data with respect to Wabash for each of the five years in the period ended December 31, 2010, havebeen derived from our consolidated financial statements. The following information should be read in conjunction with Management's Discussion andAnalysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere in this AnnualReport. Years Ended December 31, 2010 2009 2008 2007 2006 (Dollars in thousands, except per share data) Statement of Operations Data: Net sales $640,372 $337,840 $836,213 $1,102,544 $1,312,180 Cost of sales 612,289 360,750 815,289 1,010,823 1,207,687 Gross profit $28,083 $(22,910) $20,924 $91,721 $104,493 Selling, general and administrative expenses 43,500 43,164 58,384 65,255 66,227 Impairment of goodwill - - 66,317 - 15,373 (Loss) Income from operations $(15,417) $(66,074) $(103,777) $26,466 $22,893 Increase in fair value of warrant (121,587) (33,447) - - - Interest expense (4,140) (4,379) (4,657) (5,755) (6,921)Other, net (667) (866) (328) 3,977 330 (Loss) Income before income taxes $(141,811) $(104,766) $(108,762) $24,688 $16,302 Income tax (benefit) expense (51) (3,001) 17,064 8,403 6,882 Net (loss) income $(141,760) $(101,765) $(125,826) $16,285 $9,420 Preferred stock dividends and early extinguishment 25,454 3,320 - - - Net (loss) income applicable to common stockholders $(167,214) $(105,085) $(125,826) $16,285 $9,420 Basic net (loss) income per common share $(3.36) $(3.48) $(4.21) $0.53 $0.30 Diluted net (loss) income per common share $(3.36) $(3.48) $(4.21) $0.52 $0.30 Common stock dividends declared $- $- $0.135 $0.180 $0.180 Balance Sheet Data: Working capital $61,427 $(34,927) $(2,698) $146,616 $154,880 Total assets $302,834 $223,777 $331,974 $483,582 $556,483 Total debt and capital leases $59,554 $33,243 $85,148 $104,500 $125,000 Stockholders' equity $129,025 $53,485 $153,437 $279,929 $277,955 ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) describes the matters that we consider to be important tounderstanding the results of our operations for each of the three years in the period ended December 31, 2010, and our capital resources and liquidity as ofDecember 31, 2010. Our discussion begins with our assessment of the condition of the North American trailer industry along with a summary of the actionswe have taken to strengthen the Company. We then analyze the results of our operations for the last three years, including the trends in the overall businessand our operations segments, followed by a discussion of our cash flows and liquidity, capital markets events and transactions, our credit facility andcontractual commitments. We also provide a review of the critical accounting judgments and estimates that we have made that we believe are most importantto an understanding of our MD&A and our consolidated financial statements. These are the critical accounting policies that affect the recognition andmeasurement of our transactions and the balances in our consolidated financial statements. We conclude our MD&A with information on recent accountingpronouncements that we adopted during the year, as well as those not yet adopted that are expected to have an impact on our financial accounting practices. 22 We have two reportable segments: manufacturing and retail and distribution. The manufacturing segment produces trailers that are sold tocustomers who purchase trailers directly or through independent dealers and to the retail and distribution segment. The retail and distribution segmentincludes the sale of new and used trailers, as well as the sale of aftermarket parts and service through our retail branch network.Executive SummaryThe year ending December 31, 2009 was extremely challenging for the trailer industry as the factors negatively impacting demand for new trailersbecame more intense and pervasive across the United States. According to the A.C.T. Research Company, LLC (“ACT”) estimates, total trailer industryshipments in 2009 were approximately 79,000, or a decline of 45% from the 143,000 trailers shipped in 2008 and more than 62% lower than the 213,000trailers shipped for the year ended December 31, 2007. Total demand for trailers in 2009 dropped to levels the industry has not seen since 1975 with dry vandemand at its lowest levels since 1963. This reflected the weakness of truck freight, which trended down since the latter part of 2006 as a result of generaleconomic conditions and, more particularly, declines in new home construction and the automotive industry. As a result of these significant declines withinthe trailer industry, the Company’s revenues, gross profits, financial position and liquidity for 2009 were all negatively impacted. In light of these economicconditions and the decline in the our operating results and financial condition, in July 2009, we issued $35 million of preferred stock and warrants to TrailerInvestments, LLC (“Trailer Investments”) and amended our revolving credit facility (as discussed in further details under the Liquidity and Capital Resourcessection below).While the Company has experienced historically low demand for trailers in 2010, the overall trailer market has significantly improved from 2009,reflecting the beginning of a recovery within the trailer industry. As the year progressed, several of the economic indicators within the broader manufacturingenvironment and, more specifically, the trailer and freight industry showed signs of improvement. According to the most recent ACT estimates, total trailerindustry shipments for 2010 were up 52% from 2009 to approximately 120,000 trailers in 2010. By product line, ACT estimates that the demand for dryvans, the largest segment within the trailer industry, doubled from 2009 to approximately 60,000 trailers in 2010. Furthermore, our backlog of orders atDecember 31, 2010 was $480 million, up 250% from our backlog at December 31, 2009. These positive trends, coupled with our previously enacted costactions and operational enhancement initiatives, yielded significant improvements to both revenue and gross profit as compared to the previous years. Grossprofit levels showed continuous improvements throughout 2010 due primarily to increases in new trailer volumes and lower overhead costs per unit ascompared to the previous year.As the outlook within the trailer industry continued to show signs of a recovery, in May 2010 we were able to successfully close on a public offeringof our common stock consisting of 11,750,000 shares sold by us and 16,137,500 shares sold by Trailer Investments. Net proceeds from this offering wereused to redeem all of the preferred stock and to repay a portion of our outstanding indebtedness under our revolving credit facility. Furthermore, in September2010 Trailer Investments exercised in full the remaining 9,349,032 warrants in an underwritten public offering. As a result of these successful offerings, animproved trailer market and the various cash management actions implemented during the economic downturn, we were able to make significantimprovements to our liquidity position, defined as cash on hand and available borrowing capacity. As of December 31, 2011, our liquidity position totaled$60.4 million, an increase of over $39.4 million from the previous year.We expect continued improvements in the overall trailer market for 2011 as compared to 2010. In fact, recent estimates from industry forecasters,ACT and FTR Associates (FTR), indicate shipment levels to increase in each of the next three years and exceeding 220,000 trailers for each of the years 2012through 2015. Furthermore, ACT is currently estimating 2011 levels to be approximately 195,000 trailers, or an increase of 63% while FTR anticipates a33% increase in new trailers for 2011 as compared to 2010. This healthier demand environment reinforces our belief that the recovery of the industry is wellunder way and we believe we are well positioned to capitalize on the expected improvement in overall demand. In addition, while 2011 will remain a veryprice competitive environment, we do anticipate seeing pricing power improve as trailer order demand and confidence increases throughout the year and into2012. We are also not relying solely on volume recovery within the trailer industry to improve operations and profitability. We intend to continue focus onthe diversification of the product offering through our DuraPlate® Product Group and leveraging our intellectual and physical assets for opportunities oforganic growth. We will also continue to try to optimize our cost structure to improve results, including the consolidation of our flatbed manufacturingfacilities completed in 2010. 23 Operating PerformanceWe measure our operating performance in four key areas – Safety/Environmental, Quality, Productivity and Continuous Improvement. Our objective ofbeing better today than yesterday and better tomorrow than we are today is simple, straightforward and easily understood by all our associates. ·Safety/Environmental. We continually focus on reducing the severity and frequency of workplace injuries in order to minimize our workerscompensation costs. In addition, we maintain ISO 14001 registration of our Environmental Management System at our Lafayette operations. Webelieve that our improved environmental, health and safety management translates into higher labor productivity and lower costs as a result of lesstime away from work and improved system management. ·Quality. We monitor product quality on a continual basis through a number of means for both internal and external performance as follows: -Internal performance. Our primary internal quality measurement is Process Yield. Process Yield is a performance metric that measures theimpact of all aspects of the business on our ability to ship trailers at the end of the production process. As with previous years, theexpectations of the highest quality product continue to increase while maintaining Process Yield performance and reducing rework. -External performance. We actively measure and track our warranty claims and costs. Early life cycle warranty claims are trended forperformance monitoring and have shown a steady improvement from an average of approximately 6 claims per 100 trailers in 2005 to 3claims per 100 trailers in 2010. This information is utilized, along with other data, to drive continuous improvement initiatives relative toproduct quality and reliability. Through these efforts we continue to realize improved quality which has resulted in sustained decreases inwarranty payments over the past eight years. ·Productivity. We measure productivity on many fronts. Some key indicators include production line cycle-time speed, man-hours per trailer andinventory levels. Improvements over the last several years in these areas have translated into significant improvements in our ability to bettermanage inventory flow and control costs. During the past couple of years, we focused on productivity enhancements within manufacturingassembly and sub-assembly areas through developing the capability for mixed model production. We also established a central warehousing anddistribution center to improve material flow, inventory levels and inventory accuracy within our supply chain. The successful implementation ofthese productivity enhancements supported our ability to effectively manage the increases in trailer volumes realized in 2010 and anticipated in thefuture as compared to the previous year. ·Cost Reduction. We believe continuous improvement is a fundamental component of our operational excellence focus. In 2010, we trained anddeployed several team-focused groups through the successful integration of a Wabash Integrated Network (WIN) program which empowered themanufacturing workforce to improve their departments through continuous improvement activities in the areas throughout our company, includingsafety, quality, inventory management, maintenance and cost reduction. In addition, we were able to successfully complete the consolidation of ourplatform and dump manufacturing facilities into one location. These cost reductions, coupled with holding other costs relatively stable throughout2010, enabled us to significantly lower our overall manufacturing cost per unit. 24 Industry TrendsTruck transportation in the U.S., according to the ATA, was estimated to be a $660 billion industry in 2008. ATA estimates that approximately 69%of all freight tonnage is carried by trucks at some point during its shipment. Trailer demand is a direct function of the amount of freight to be transported. Tomonitor the state of the industry, we evaluate a number of indicators related to trailer manufacturing and the transportation industry. Recent trends we haveobserved include the following: ·Transportation / Trailer Cycle. Transportation, including trucking, is a cyclical industry that has experienced three cycles over the last 20years. Truck freight tonnage, according to ATA statistics, started declining year-over-year in 2006 and remained at depressed levels through2009. However, 2010 data shows that freight tonnage increased approximately 6% from 2009. The trailer industry generally precedestransportation industry cycles. The most recently completed cycle began in early 2001 when industry shipments totaled approximately140,000, reached a peak in 2006 with shipments of approximately 280,000 and reached the bottom in 2009 with shipments of approximately79,000 trailers. According to ACT, shipments in 2010 amounted to approximately 120,000 trailers. As the trailer industry continues to recover,ACT is estimating demand within the trailer industry to increase in each of the next 3 years to approximately 195,000, 236,000 and 252,000 in2011, 2012 and 2013, respectively. Furthermore, these increases in demand for trailers are being driven by improvements within the dry vansegment, our largest product line. ACT is forecasting total dry van market to grow from approximately 60,000 trailers in 2010 to 112,000,135,000 and 153,000 trailers in 2011, 2012 and 2013, respectively, representing year over year increases of 87%, 21% and 13%,respectively. Our view is generally consistent with that of ACT. ·Age of Trailer Fleets. The average age of fleets has increased during the recent industry downturn. According to ACT, the average age of dryand refrigerated vans has continued to increase and has reached historic highs in 2010 of approximately 8.5 years and 6 years, respectively. Theincrease in age of trailers suggests an increase in replacement demand over the next several years. ·New Trailer Orders. According to ACT, quarterly industry order placements ranged from approximately 34,000 to 62,000 trailers in eachquarter of 2010, a significant improvement from approximately 15,000 to 25,000 trailers in each quarter in 2009. Total orders in 2010 wereapproximately 166,000 trailers, a 105% increase from approximately 81,000 trailers ordered in 2009, driven by dry van orders, the largestsegment of the trailer industry, increasing year-over-year by approximately 192%. ·Transportation Regulations and Legislation. There are several different topics within both federal and state government regulations andlegislation that are expected to have an impact on trailer demand, including: -The Federal Motor Carrier Safety Administration (the “FMCSA”) is currently looking at ways to improve the overall truck safety standards,particularly by implementing Comprehensive Safety Analysis 2010 (“CSA2010”) in December 2010. CSA2010 is considered acomprehensive driver and fleet rating system that will measure both the freight carriers and its drivers on several safety related criteria,including driver safety, equipment maintenance and overall condition of trailers. This system is expected to drive increased awareness andaction by carriers as government enforcement is expected to begin by midyear 2011. Current industry estimates indicate CSA2010 couldmake 5% to 10% of drivers ineligible to operate commercial equipment due to not meeting minimum safety standards. -The FMCSA issued in December 2010 a preliminary proposal for rule changes in regard to truck driver hours-of-service rules with finalrules to be published in February 2011 and enforcement currently scheduled to begin by July 2011. The proposed rule changes includereductions in the driver hours per day requirement from the current 11 hours to 10 hours. Additionally, driver “re-start” requirements areexpected to be lengthened from the current 34 hours to as much as 48 hours. Current estimates indicate these actions could lead toproductivity losses of approximately 5% to 7%. This ruling increases the potential that a carrier’s drop-and-hook activities will increaseand, therefore, require an increase in trailer to truck ratios across the industry. 25 -The FMCSA also issued in January 2011 a proposed rule change requiring the installation and use of Electronic On-Board Recorders forover-the-road trucks and buses which would be used to monitor and enforce the driver hour-of-service rules. A final ruling on this proposalis scheduled for June 2012. -The federal government put forth bills in 2010 that would increase the allowable gross vehicle weight of a semi-trailer combo from thecurrent 80,000 pounds to 97,000 pounds. This gross vehicle weight increase would require the addition of a third axle to existingequipment with the likelihood that many fleets may elect to replace older trailers as opposed to investing in upgrading them with the thirdaxle. -The Tax Relief Act of 2010 extended bonus depreciation provisions for 2011 and 2012. More specifically, corporations can expense 100%and 50% of certain capital investments made during 2011 and 2012, respectively. This extension will be an incentive for many fleets toincrease or accelerate their purchase decisions to maximize the tax benefits available. -The California Air Resource Board (CARB) regulations mandate that refrigeration units older than 7 years may no longer operate inCalifornia. As refrigeration units become obsolete, capacity in the refrigerated segment will tighten and the increase in demand for newrefrigerated trailers is likely. ·Other Developments. Other developments and potential impacts on the industry include: -Miniaturization of electronic products resulting in increased density of loads could further decrease demand for dry van trailers. -Packaging optimization of bulk goods and the efficiency of the packaging around goods may contribute to further decreases in demand fordry van trailers. -Trucking company profitability, which can be influenced by factors such as fuel prices, freight tonnage volumes, and governmentregulations, is highly correlated with the overall economy of the U.S. Carrier profitability significantly impacts demand for, and thefinancial ability to purchase, new trailers. -Although truck driver shortages have not been a significant problem in the past year, constraints are expected to exacerbate as freightdemand increases. As a result, trucking companies are under increased pressure to look for alternative ways to move freight, leading tomore intermodal freight movement. We believe that railroads are at or near capacity, which will limit their ability to respond to freightdemand pressures. We therefore expect that the majority of freight will still be moved by truck. 26 Results of OperationsThe following table sets forth certain operating data as a percentage of net sales for the periods indicated: Years Ended December 31, 2010 2009 2008 Net sales 100.0% 100.0% 100.0%Cost of sales 95.6 106.8 97.5 Gross profit 4.4 (6.8) 2.5 General and administrative expenses 5.1 9.5 5.3 Selling expenses 1.7 3.3 1.7 Impairment of goodwill - - 7.9 Loss from operations (2.4) (19.6) (12.4) Increase in fair value of warrant (19.0) (9.9) - Interest expense (0.6) (1.3) (0.6)Other, net (0.1) (0.2) - Loss before income taxes (22.1) (31.0) (13.0) Income tax (benefit) expense - (0.9) 2.0 Net loss (22.1) % (30.1) % (15.0) %2010 Compared to 2009Net SalesNet sales in 2010 were $640.4 million, an increase of $302.6 million, or 89.6%, compared to 2009. By business segment, net external sales and relatedtrailers sold were as follows (dollars in millions): Year Ended December 31, 2010 2009 % Change Sales by Segment Manufacturing $542.0 $265.5 104.1 Retail and Distribution 98.4 72.3 36.1 Total $640.4 $337.8 89.6 New Trailers (units) Manufacturing 23,400 12,000 95.0 Retail and Distribution 1,500 800 87.5 Total 24,900 12,800 94.5 Used Trailers 2,700 3,200 (15.6)Manufacturing segment sales were $542.0 million for 2010, up $276.5 million, or 104.1%, compared to 2009. The increase in sales is due primarily to a95.0% increase in new trailer shipments with approximately 23,400 trailers shipped in 2010 compared to 12,000 trailers shipped in the prior year as a resultof the overall strengthening in market demand. This increase in unit volume is coupled with a 5.0% increase in average selling prices as compared to theprevious year due to customer and product mix and higher prices necessary to cover commodity cost increases. Non-trailer related net sales increased $16.5million as compared to the prior year due to increased demand for our DuraPlate® composite products. 27 Retail and distribution segment sales were $98.4 million in 2010, up $26.1 million, or 36.1%, compared to the prior year. New trailer sales increased$17.8 million, or 86.5%, due to an 87.5% increase in shipments. Used trailer sales were up $3.5 million, or 18.4%, as increases in the average selling price perunit resulting from higher priced late model trailers more than offset the 500 unit decline in used trailer shipments. Parts and service sales were up $4.7million, or 14.5%, due to increased market demand.Cost of SalesCost of sales for 2010 was $612.3 million, an increase of $251.5 million, or 69.7%, compared to 2009. As a percentage of net sales, cost of sales was95.6% for 2010 compared to 106.8% for 2009.Manufacturing segment cost of sales, as detailed in the following table, was $521.9 million for 2010, an increase of $233.6 million, or 81.0%,compared to 2009. As a percentage of net sales, cost of sales was 96.3% for 2010 compared to 108.6% in 2009. Year Ended December 31, Manufacturing Segment 2010 2009 (dollars in millions) % of NetSales % of NetSales Material Costs $406.4 75.0% $202.5 76.3%Other Manufacturing Costs 115.5 21.3% 85.8 32.3% $521.9 96.3% $288.3 108.6%Cost of sales is composed of material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses,including direct and indirect labor, outbound freight and overhead expenses. Material costs were 75.0% of net sales in 2010 compared to 76.3% in2009. The 1.3% decrease was the result of utilization of unfavorable fixed price aluminum contracts that we were obligated to fulfill in the prior year,favorable customer and product mix as well as increased production volume, which resulted in favorable quantity discounts. These decreases were offset byincreases in commodity costs during 2010. In addition, other manufacturing costs decreased from 32.3% of net sales in 2009 to 21.3% in 2010. The 11.0%decrease is primarily the result of an 11,400 unit increase in new trailer sales as compared to the prior year, which resulted in allocating our fixed overheadcosts over more trailers, and the benefit of favorable experience on trailer warranties which expired of $3.2 million.Retail and distribution segment cost of sales was $90.2 million in 2010, an increase of $17.5 million, or 24.1%, compared to 2009. As a percentageof net sales, cost of sales was 91.7% in 2010 compared to 100.6% in 2009. The 8.9% improvement as a percentage of sales was primarily the result ofincreased new trailer and parts and service volumes coupled with inventory valuation reserves on both new and used trailers recognized in the prior year notrepeated in the current year.Gross ProfitGross profit for 2010 was $28.1 million, an increase of $51.0 million compared to 2009. Gross profit as a percent of sales was 4.4% compared tonegative 6.8% for 2009. Gross profit by segment was as follows (in millions): Year Ended December 31, 2010 2009 Gross Profit by Segment: Manufacturing $20.1 $(22.7)Retail and Distribution 8.2 (0.4)Intercompany Profit Eliminations (0.2) 0.2 Total $28.1 $(22.9)Manufacturing segment gross profit was $20.1 million for 2010 compared to negative $22.7 million in 2009. Gross profit as a percentage of sales was 3.7%in 2010 as compared to a negative 8.5% in 2009. The increase in gross profit and gross profit margin was driven by a 95.0% increase in new trailer volumesand favorable customer and product mix. 28 Retail and distribution segment gross profit was $8.2 million for 2010, an increase of $8.6 million compared to 2009. Gross profit as a percentage ofsales was 8.3% compared to negative 0.6% for the prior year. This increase is primarily due to increased new trailer and parts and service volumes coupledwith inventory valuation reserves on both new and used trailers recognized in the prior year not repeated in the current year.General and Administrative ExpensesGeneral and administrative expenses increased $0.8 million, or 2.6%, to $32.8 million in 2010 compared to 2009 as a $1.9 million reduction insalaries and other employee related costs achieved through the implementation of various cost cutting initiatives made during 2009 to adjust our coststructure to match market demand were fully realized during the current year. This decrease was more than offset by expenses related to annual employeeincentive plans not incurred in the previous year period and higher professional services primarily related to legal defense costs.Selling ExpensesSelling expenses decreased $0.5 million, or 4.5%, to $10.7 million in 2010 compared to 2009. This decrease, the result of our cost cuttinginitiatives to adjust our cost structure to match market demand, provided a $0.8 million reduction in salaries and other employee related costs in the currentyear and was offset by increases in expenses related to annual employee incentive plans not incurred in the previous year period.Other Income (Expense)Increase in fair value of warrant of $121.6 million represents the expense recognized as a result of the fair value adjustment for the warrant issued toTrailer Investments as a part of the Securities Purchase Agreement entered into in July 2009. The increase results from the $74.6 million and $47.0 millionincreases, respectively, in fair value of the warrant recorded prior to the exercise of 16,137,500 warrant shares on May 28, 2010 and 9,349,032 warrant shareson September 17, 2010. As a result, the warrant shares were fully exercised and were no longer outstanding as of December 31, 2010.Income TaxesIn 2010, we recognized an income tax benefit of less than $0.1 million compared to a benefit of $3.0 million in 2009. The effective rate for 2010 was lessthan 0.1%. This rate differs from the U.S. federal statutory rate of 35% primarily due to the recognition of a full valuation allowance against our net deferredtax asset and the effect of a non-deductible adjustment to the fair market value of the warrant we issued in 2009. As of December 31, 2010, we had $180million of remaining U.S. federal income tax net operating loss carryforwards, which will begin to expire in 2022 if unused, and which may be subject toother limitations under IRS rules. We have various multi-state income tax net operating loss carryforwards, which have been recorded as a deferred incometax asset, of approximately $18 million, before valuation allowances. We also have various U.S. federal income tax credit carryforwards of approximately $1million, which will expire beginning in 2013, if unused. 29 2009 Compared to 2008Net SalesNet sales in 2009 were $337.8 million, a decrease of $498.4 million, or 59.6%, compared to 2008. By business segment, net external sales and related trailerssold were as follows (dollars in millions): Year Ended December 31, 2009 2008 % Change Sales by Segment Manufacturing $265.5 $694.2 (61.8)Retail and Distribution 72.3 142.0 (49.1)Total $337.8 $836.2 (59.6) New Trailers (units) Manufacturing 12,000 30,800 (61.0)Retail and Distribution 800 2,500 (68.0)Total 12,800 33,300 (61.6) Used Trailers 3,200 6,600 (51.5)Manufacturing segment sales for 2009 were $265.5 million, a decrease of $428.7 million, or 61.8%, compared to 2008. The reduction in sales isprimarily due to the continued weak market demand as new trailer sales volumes decreased approximately 18,800 trailers, or 61.0%. Average selling pricesdeclined slightly in 2009 as compared to the prior year due to customer demand and product mix.Retail and distribution segment sales were $72.3 million in 2009, a decrease of $69.7 million, or 49.1%, compared to 2008. Weak market demandacross all product lines yielded reduced volumes as compared to 2008. New trailer sales decreased $47.6 million, or 69.7%, due to a 68.0% reduction involumes. Used trailer sales were down $17.4 million, or 47.7%, primarily due to a 51.5% reduction in volumes. Parts and service sales were down $4.6million, or 12.5%.Cost of SalesCost of sales for 2009 was $360.8 million, a decrease of $454.5 million, or 55.8% compared to 2008. As a percentage of net sales, cost of sales was 106.8% in2009 compared to 97.5% in 2008.Manufacturing segment cost of sales, as detailed in the following table, was $288.3 million for 2009, a decrease of $392.1 million, or 57.6%,compared to 2008. As a percentage of net sales, cost of sales was 108.6% in 2009 compared to 98.0% in 2008. Year Ended December 31, Manufacturing Segment 2009 2008 (dollars in millions) % of NetSales % of NetSales Material Costs $202.5 76.3% $517.9 74.6%Other Manufacturing Costs 85.8 32.3% 162.5 23.4% $288.3 108.6% $680.4 98.0%As shown in the table above, cost of sales is composed of material costs, a variable expense, and other manufacturing costs, comprised of both fixedand variable expenses, including direct and indirect labor, outbound freight, and overhead expenses. Material costs were 76.3% of net sales in 2009compared to 74.6% in 2008. The 1.7% increase is primarily the result of increased raw material commodity and component costs driven by unfavorable fixedprice aluminum contracts as compared to market pricing which could not be offset by increases in selling prices. In addition, our other manufacturing costsincreased from 23.4% of net sales to 32.3% in 2009. The 8.9% increase is primarily the result of the inability to reduce fixed costs in proportion to the 61.0%decrease in new trailer volumes. 30 Retail and distribution segment cost of sales was $72.7 million in 2009, a decrease of $63.2 million, or 46.5%, compared to the 2008 period. As apercentage of net sales, cost of sales was 100.6% in 2009 compared to 95.7% in 2008. The 4.9% increase was primarily the result of a 9.9% increase as apercent of net sales in direct and indirect labor and overhead expenses due to the inability to reduce these costs in proportion to the 68.0% and 51.5%reductions in new and used trailer volumes, respectively. This increase in cost of sales as a percentage of net sales compared to the prior year was furthermagnified by valuation reserves required due to the depressed market conditions for both new and used trailers.Gross ProfitGross profit in 2009 was negative $22.9 million, down $43.8 million compared to 2008. Gross profit as a percent of sales was negative 6.8% in 2009compared to 2.5% in 2008. Gross profit by segment was as follows (in millions): Year Ended December 31, 2009 2008 Gross Profit by Segment: Manufacturing $(22.7) $13.8 Retail and Distribution (0.4) 6.1 Intercompany Profit Eliminations 0.2 1.0 Total $(22.9) $20.9 Manufacturing segment gross profit was negative $22.7 million in 2009, a decrease of $36.5 million compared to 2008. Gross profit as a percentage of saleswas negative 8.5% in 2009 compared to 2.0% in 2008. The decrease in gross profit and gross profit margin percentage was primarily driven by the 61.0%decline in new trailer volumes coupled with higher raw material and component part costs that outpaced increases in selling prices.Retail and distribution segment gross profit was negative $0.4 million in 2009, a decrease of $6.5 million compared to 2008. Gross profit as apercentage of sales was negative 0.6% compared to 4.3% in 2008 due to reduced trailer and parts and service volumes as well as continued pricing pressureson new and used trailers.General and Administrative ExpensesGeneral and administrative expenses were $32.0 million in 2009, a decrease of $12.1 million, or 27.5%, compared to the prior year. The decreasewas the result of our cost cutting initiatives to adjust our cost structure to match the current market demand. These initiatives resulted in an $8.2 millionreduction in salaries and employee related costs, net of severances, due to headcount and base pay reductions made in the current year as well as a reductionof approximately $3.9 million in other various discretionary costs.Selling ExpensesSelling expenses were $11.2 million in 2009, a decrease of $3.1 million, or 21.8%, compared to the prior year. The decrease was the result of ourcost cutting initiatives and efforts to adjust our cost structure to match the current market demand. These initiatives resulted in a $2.3 million reduction insalaries and other employee related costs, net of severances, due to headcount and base pay reductions as well as reductions in advertising and promotionalactivities of $0.6 million.Other Income (Expense)Increase in fair value of warrant of $33.4 million represents the expense recognized as a result of the fair value adjustment for the warrant issued toTrailer Investments as a part of the Securities Purchase Agreement entered into on July 17, 2009. 31 Other, net includes an expense of $0.9 million relating to the termination of our interest rate swaps previously designated as cash flow hedges. Thecurrent period ending December 31, 2009 includes the acceleration of amounts previously reported through Other Comprehensive Income (Loss) as thedesignated hedged transaction was considered no longer probable. The 2009 period also includes an expense of $0.3 million for the proportionate write-offof deferred debt issuance costs recognized on the amendment and reduction in capacity of our Revolving Credit Facility, which was effective on August 3,2009.Income TaxesIn 2009, we recognized income tax benefit of $3.0 million compared to income tax expense of $17.1 million in 2008. The effective rate for 2009 was(2.9%). This rate differs from the U.S. federal statutory rate of 35% primarily due to the recognition of a full valuation allowance against our net deferred taxasset, the effect of a non-deductible adjustment to the fair market value of our warrant and the reduction in valuation allowance of $2.9 million whereby, inJanuary 2010, we filed a claim with the IRS for a refund of $2.9 million for U.S. federal alternative minimum taxes previously paid during the years 2004through 2006 as provided under the provisions of the Worker, Homeownership, and Business Assistance Act of 2009, which was signed into law in November2009.As of December 31, 2009, we had a U.S. federal tax net operating loss carryforward of approximately $167 million, which will expire beginning in2022, if unused, and which may be subject to other limitations under IRS rules. We have various multi-state income tax net operating loss carryforwards,which have been recorded as a deferred income tax asset, of approximately $17 million, before valuation allowances. We also have various U.S. federalincome tax credit carryforwards, which will expire beginning in 2013, if unused.Liquidity and Capital ResourcesCapital StructureIn July 2009, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Trailer Investments pursuant to which TrailerInvestments purchased 20,000 shares of Series E redeemable preferred stock (“Series E Preferred”), 5,000 shares of Series F redeemable preferred stock (“SeriesF Preferred”), and 10,000 shares of Series G redeemable preferred stock (“Series G Preferred”, and together with the Series E Preferred and the Series FPreferred, the “Series E-G Preferred Stock”) for an aggregate purchase price of $35.0 million. Trailer Investments also received a warrant that was exercisableat $0.01 per share for 24,762,636 newly issued shares of our common stock (the “Warrant”) representing, on August 3, 2009, the date the Warrant wasdelivered, 44.21% of our issued and outstanding common stock after giving effect to the issuance of the shares underlying the Warrant, subject to upwardadjustment to maintain that percentage if currently outstanding options were exercised.On May 28, 2010, we closed on a public offering of our common stock, par value $0.01 per share (the “Initial Offering”), which consisted of11,750,000 shares of common stock sold by us and 16,137,500 shares of common stock sold by Trailer Investments as a selling stockholder, each at apurchase price of $6.50 per share. The shares of common stock sold in the Initial Offering by Trailer Investments included 3,637,500 shares sold pursuant tothe underwriters’ exercise in full of their option to purchase additional shares to cover over-allotments. All shares sold by Trailer Investments were issuedupon the partial exercise of the Warrant it held and the Replacement Warrant, as defined below, was issued to Trailer Investments on May 28, 2010. We didnot receive any proceeds from the sale of the shares by Trailer Investments. We generated proceeds from the Initial Offering, net of underwriting discountsand commissions, of $71.9 million and used the net proceeds to redeem all of our outstanding preferred stock and to repay a portion of our outstandingindebtedness under our revolving credit facility.From the net proceeds of the Initial Offering, we redeemed (the “Redemption”) all outstanding shares of our Series E-G Preferred Stock at a liquidation valueof $1,000 per share, or $35.0 million, plus accrued and unpaid dividends and a premium adjustment of 20% as required under the Securities PurchaseAgreement for any redemption made prior to August 2014. The Series E Preferred, Series F Preferred and Series G Preferred paid an annual dividend rate of15%, 16% and 18%, respectively, based on liquidation value. Through the date of the Redemption, accrued and unpaid dividends totaled approximately$4.8 million. The premium adjustment for early redemption of $8.0 million was applied to the sum of the liquidation value and accrued and unpaiddividends. The total redemption price of the Series E-G Preferred Stock including all accrued and unpaid dividends was approximately $47.8 million.Certificates of elimination were filed on September 21, 2010 with the Secretary of State of the State of Delaware to eliminate from the Company’s Certificateof Incorporation all provisions that were set forth in the certificates of designation for the Series E-G Preferred Stock. 32 If a change of control, meaning if more than 50% of the voting power is transferred or acquired by any person other than Trailer Investments and its affiliates,occurs within 12 months of the date of the Redemption (by or before May 28, 2011), Trailer Investments will be entitled to receive an aggregate paymentequal to $74.6 million, representing the difference between what it received in the Redemption and what it would have been entitled to receive on the date ofthe Redemption if a change of control had occurred on that date.Also in connection with our Initial Offering of common stock, we amended the warrant originally issued to Trailer Investments on August 3, 2009 (the“Warrant,” and, as amended, the “Replacement Warrant”). The Warrant was modified so that (i) the Warrant would no longer adjust or increase based uponany limitation on our ability to fully utilize our net operating loss (“NOL”) carryforwards and (ii) the Warrant was increased by a fixed number of 750,000warrant shares in lieu of the market price anti-dilution adjustment that would have otherwise applied as a result of the Initial Offering. The Initial Offering ofcommon stock included 16,137,500 shares sold by Trailer Investments pursuant to a partial exercise of the Warrant. The partial net exercise of the Warrantwas made by Trailer Investments via the forfeiture of 22,812 shares of common stock under the Warrant. On September 17, 2010, Trailer Investments sold the Replacement Warrant to the several underwriters, who exercised the Replacement Warrant in full andsold the 9,349,032 shares underlying the Replacement Warrant in an underwritten public offering at a price per share of $6.75 (the “Second Offering”). Wedid not offer or sell any shares in the Second Offering nor did we receive any proceeds from the Second Offering. The exercise of the Replacement Warrantwas made via the forfeiture of 13,549 shares of common stock. As a result of this offering and the related cashless exercise, the Replacement Warrant wasfully exercised and is no longer outstanding. Pursuant to the terms of the Investors Rights Agreement, Trailer Investments had significant rights that nolonger exist as a result of the consummation of the offering effective September 17, 2010. These rights included the ability to designate five persons forelection to the board of directors for so long as Trailer Investments and its affiliates beneficially owned at least 10% of our outstanding common stock. OnSeptember 21, 2010, we received resignation letters from each of the four board members designated by Trailer Investments.As a result of the Initial Offering and our ability to use the net proceeds to redeem all of our outstanding preferred stock and repay a portion of ouroutstanding indebtedness under the revolving credit facility, we have been able to reduce our total debt and significantly improve our overall capitalstructure providing us the additional liquidity necessary to meet working capital requirements as the overall demand in our industry grows.As of December 31, 2010, our debt to equity ratio was approximately 0.5:1.0. Our long-term objective is to generate operating cash flows sufficientto fund normal working capital requirements, to fund capital expenditures and to be positioned to take advantage of market opportunities. For 2011 weexpect to fund operating results, working capital requirements and capital expenditures through cash flows from operations as well as available borrowings.Debt Agreements and Related AmendmentsConcurrent with entering into the Securities Purchase Agreement, in July 2009, we entered into a Third Amended and Restated Loan and Security Agreement(the “Facility”) with our lenders, effective August 3, 2009, with a maturity date of August 3, 2012. The Facility is guaranteed by certain subsidiaries of oursand secured by substantially all of our assets. The Facility has a capacity of $100 million, subject to a borrowing base and other discretionary reserves. TheFacility amends and restates our previous revolving credit facility, and our lenders waived certain events of default that had occurred under the previousrevolving credit facility and waived the right to receive default interest during the time the events of default had continued.In May 2010, we entered into the Consent and Amendment No. 1 to the Third Amended and Restated Loan and Security Agreement (the “Amended Facility”)with our lenders. The Amended Facility amends and restates the Facility. The Amended Facility was entered into to permit the early redemption of our SeriesE-G Preferred Stock and required us to pay down our revolving credit facility by at least $23.0 million. The repayment did not reduce our revolving loancommitments. Pursuant to the Amended Facility, if the availability under our revolving credit facility is less than $15.0 million at any time before the earlierof August 14, 2011 or the date that monthly financial statements are delivered for the month ending June 30, 2011, we would be required to maintain avarying minimum EBITDA and would be restricted in the amount of capital expenditures we could make during such period. If our availability is less than$20.0 million thereafter, we would be required to maintain a fixed charge coverage ratio for the 12 month period ending on the last day of the calendar monththat ended most recently prior to such time of not less than 1.1 to 1.0. In addition, the Amended Facility modifies our borrowing base by eliminating a $12.5million facility reserve while reducing the fixed assets sub-limit by $12.5 million. 33 The interest rate on borrowings under our revolving credit facility from the date of effectiveness through July 31, 2010 was LIBOR plus 4.25% or the primerate of Bank of America, N.A. (the “Prime Rate”) plus 2.75%. After July 31, 2010, the interest rate is based upon average unused availability and will rangebetween LIBOR plus 3.75% to 4.25% or the Prime Rate plus 2.25% to 2.75%. We are required to pay a monthly unused line fee equal to 0.375% times theaverage daily unused availability along with other customary fees and expenses of our agent and lenders. All interest and fees are paid monthly.Our revolving credit facility contains customary representations, warranties, affirmative and negative covenants, including, without limitation, restrictions onmergers, dissolutions, acquisitions, indebtedness, affiliate transactions, the occurrence of liens, payments of subordinated indebtedness, disposition of assets,leases and changes to organizational documents.Our revolving credit facility contains customary events of default including, without limitation, failure to pay obligations when due under the facility, falseand misleading representations, breaches of covenants (subject in some instances to cure and grace periods), defaults on certain other indebtedness, theoccurrence of certain uninsured losses, business disruptions for a period of time that materially adversely affects the capacity to continue business on aprofitable basis, changes of control and the incurrence of certain judgments that are not stayed, released or discharged within 30 days.As of December 31, 2010, we were in compliance with all covenants of the Amended Facility.Cash FlowCash used in operating activities amounted to $30.7 million in 2010 compared to $7.0 million in 2009. The use of cash from operating activities forthe current year was primarily the result of a $31.3 million increase in our working capital offset slightly by $0.6 million of net income, adjusted for variousnon-cash activities, including depreciation, amortization, stock-based compensation and changes in the fair value of our warrant. Changes in working capitalfor the current year can be attributed to the increased production levels in comparison to the previous year and the related increases in purchasing activitieshave resulted in higher working capital requirements. Changes in key working capital accounts for 2010 compared to the prior year are summarized below(in millions): 2010 2009 Change Accounts receivable $(20.8) $20.8 $(41.6)Inventories (59.1) 41.1 (100.2)Accounts payable and accrued liabilities 45.3 (22.7) 68.0 Accounts receivable increased by $20.8 million in 2010 as compared to a $20.8 million decrease in 2009. Days sales outstanding, a measure ofworking capital efficiency that measures the amount of time a receivable is outstanding, improved to approximately 14 days in 2010 compared to 21 days in2009 due to timing of collections. The increase in accounts receivable for 2010 was primarily the result of the timing of shipments as trailer demandsincreased throughout the current year resulting in an 89.5% increase in our consolidated net sales as compared to the prior year. Inventory increased $59.1million during 2010 compared to a decrease of $41.1 million in 2009. The increase in inventory for 2010 was due to higher new trailer inventories and rawmaterials resulting from increased order levels for 2010 as compared to 2009. Despite the increased inventory levels, our inventory turns, a commonly usedmeasure of working capital efficiency that measures how quickly inventory turns per year, improved to approximately 7 times in 2010 as compared to 5 timesin 2009 due to our ability to manage inventory levels as the overall demand for trailers increased. Accounts payable and accrued liabilities increased $45.3million in 2010 compared to a decrease of $22.7 million in 2009. The increase in the current year was also due primarily to higher production levelsthroughout 2010 as compared to the previous year. Days payable outstanding, a measure of working capital efficiency that measures the amount of time apayable is outstanding, was reduced to 29 days for 2010 compared to 31 days for 2009 due primarily to the timing of shipments relative to our productionlevels. 34 Investing activities provided less than $0.1 million during 2010 compared to $0.7 million used in 2009. The uses of cash from investing activitiesfor both the 2010 and 2009 periods have been limited to capital spending for required replacement projects and other cost reduction initiatives. The currentyear period uses were offset by the proceeds received from the sale of our Transcraft production facilities located in Anna, Illinois and Mt. Sterling, Kentucky.Financing activities provided $50.8 million during 2010 primarily as a result of closing the Initial Offering of our common stock on May 28, 2010as well as an increase in our borrowings against our revolving credit facility due to higher working capital requirements necessary to fund operationalactivities. We generated proceeds, net of underwriting discounts and commissions, of $71.9 million from the Initial Offering and used it to redeem all of ouroutstanding preferred stock and repay a portion of our outstanding indebtedness on our revolving credit facility.As of December 31, 2010, our liquidity position, defined as cash on hand and available borrowing capacity, amounted to $60.4 million, animprovement of $39.4 million from December 31, 2009. Total debt and capital lease obligations amounted to approximately $59.6 million as of December31, 2010. As a result of closing on the Initial Offering of our common stock on May 28, 2010 and concurrent with our redemption of all outstanding Series E-G Preferred Stock, as described in the Capital Structure section above, we believe our liquidity is adequate to meet our expected operating results, workingcapital needs and capital expenditures for 2011.In light of the uncertain market and economic conditions, we aggressively managed our cost structure, capital expenditures and cash positionthroughout the past several years. During 2008 and 2009, we implemented various cost reduction actions resulting in decreases of overhead and operatingcosts, including: reductions in hourly and salary headcount and temporary reductions in compensation and benefits. In addition, we have optimized ouroperations through plant, assembly line and warehouse consolidation projects. As we continue to see improvements to both the overall the trailer industry aswell as our operating performance metrics during 2011, management expects to begin to reinstate some of the temporary cost reduction initiatives previouslyimplemented.Capital ExpendituresCapital spending for 2010 amounted to approximately $1.8 million as our efforts to manage cash flows and enhance liquidity limited our capitalexpenditures to required replacement projects and cost reduction initiatives. We anticipate increasing our capital expenditures to approximately $5 millionin 2011in order to support growth and improvement initiatives within our facilities.Off-Balance Sheet TransactionsAs of December 31, 2010, we had approximately $1.6 million in operating lease commitments. We did not enter into any material off-balance sheetdebt or operating lease transactions during the year.OutlookThe demand environment for trailers is improving, as evidenced by the increases in our new trailer shipments and backlog as well as trailer industryforecasts for the upcoming years. According to the most recent ACT estimates, total trailer industry shipments for 2011 are expected to be up 63% from 2010to approximately 195,000 trailers. By product type, ACT is expecting the dry van market to lead the industry with increases of approximately 87% in 2011compared to 2010 and total van trailer shipments will be up approximately 71% in 2011 compared to 2010. ACT is forecasting that platform trailershipments will increase approximately 60% and dump trailer shipments will increase approximately 57% in 2011. For 2012, ACT estimates that shipmentswill grow approximately 21% to a total of 236,000 trailers with the dry van segment leading the industry with shipments increasing approximately 21% to atotal of 135,000 dry van trailers. Downside concerns for 2011 relate to continued issues with the global economy, unemployment, tight credit markets, aswell as depressed housing and construction-related markets in the U.S. Taking into consideration recent economic and industry forecasts, as well asdiscussions with customers and suppliers, management expects demand for new trailers to improve as we move through 2011 and the economy continues toimprove.We believe we are well-positioned for long-term growth in the industry because: (1) our core customers are among the dominant participants in thetrucking industry; (2) our DuraPlate® trailer continues to have increased market acceptance; (3) our focus is on developing solutions that reduce ourcustomers’ trailer maintenance costs; and (4) we expect some expansion of our presence into the mid-market carriers. 35 While our expectations for industry volumes are generally in line with those of ACT, our challenges as we proceed into 2011, a period of higherdemand, will primarily relate to pricing of new trailers and rising commodity costs. Raw material and component costs have risen and remain volatile asoverall demand will drive an increase in prices as the economy improves. As has been our policy, we will endeavor to pass along raw material andcomponent price increases to our customers. We have a focus on continuing to develop innovative new products that both add value to our customers’operations and allow us to continue to differentiate our products from the competition in order to return to profitability.Based on industry forecasts, conversations with our customers regarding their current requirements and our existing backlog of orders, we estimatethat for the full year 2011 our total new trailers sold will be between 38,000 and 42,000, an increase from 2010 of approximately 53% to 69%.Contractual Obligations and Commercial CommitmentsA summary of payments of our contractual obligations and commercial commitments, both on and off balance sheet, as of December 31, 2010 are asfollows (in millions): 2011 2012 2013 2014 2015 Thereafter Total DEBT: Revolving Facility (due 2012) $- $55.0 $- $- $- $- $55.0 Capital Leases (including principal and interest) 0.8 3.7 0.2 - - - 4.7 TOTAL DEBT $0.8 $58.7 $0.2 $- $- $- $59.7 OTHER: Operating Leases $0.5 $0.3 $0.3 $0.2 $0.1 $0.2 $1.6 TOTAL OTHER $0.5 $0.3 $0.3 $0.2 $0.1 $0.2 $1.6 OTHER COMMERCIAL COMMITMENTS: Letters of Credit $5.8 $- $- $- $- $- $5.8 Purchase Commitments 34.3 - - - - - 34.3 TOTAL OTHER COMMERCIALCOMMITMENTS $40.1 $- $- $- $- $- $40.1 TOTAL OBLIGATIONS $41.4 $59.0 $0.5 $0.2 $0.1 $0.2 $101.4 Scheduled payments for our Amended Facility exclude interest payments as rates are variable. Borrowings under the Amended Facility bear interestat a variable rate based on the London Interbank Offer Rate (LIBOR) or a base rate determined by the lender’s prime rate plus an applicable margin, as definedin the agreement. The interest rate on borrowings under our revolving credit facility from the date of effectiveness through July 31, 2010 was LIBOR plus4.25% or the prime rate of Bank of America, N.A. (the “Prime Rate”) plus 2.75%. After July 31, 2010, the interest rate is based upon average unusedavailability and will range between LIBOR plus 3.75% to 4.25% or the Prime Rate plus 2.25% to 2.75%. We are required to pay a monthly unused line feeequal to 0.375% times the average daily unused availability along with other customary fees and expenses of our agent and lenders. All interest and fees arepaid monthly.Capital leases represent the present value of future minimum lease payments. Operating leases represent the total future minimum lease payments.We have $34.3 million in purchase commitments through December 2010 for aluminum, which is within normal production requirements.We have standby letters of credit totaling $5.8 million issued in connection with workers compensation claims and surety bonds. 36 Significant Accounting Policies and Critical Accounting EstimatesOur significant accounting policies are more fully described in Note 2 to our consolidated financial statements. Certain of our accounting policiesrequire the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature,these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, ourevaluation of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate.We consider an accounting estimate to be critical if it requires us to make assumptions about matters that were uncertain at the time we were makingthe estimate or changes in the estimate or different estimates that we could have selected would have had a material impact on our financial condition orresults of operations. The table below presents information about the nature and rationale for our critical accounting estimates:Balance SheetCaption Critical EstimateItem Nature of EstimatesRequired Assumptions/Approaches Used Key Factors Other accrued liabilities andother non-current liabilities Warranty Estimating warrantyrequires us to forecast theresolution of existingclaims and expected futureclaims on products sold. We base our estimate onhistorical trends of trailerssold and payment amounts,combined with our currentunderstanding of the status ofexisting claims, recallcampaigns and discussionswith our customers. Failure rates and estimatedrepair costs Accounts receivable Allowance for doubtfulaccounts Estimating the allowancefor doubtful accountsrequires us to estimate thefinancial capability ofcustomers to pay forproducts. We base our estimates onhistorical experience, thetime an account isoutstanding, customer’sfinancial condition andinformation from credit ratingservices. Customer financialcondition Inventories Lower of cost or market write-downs We evaluate future demandfor products, marketconditions and incentiveprograms. Estimates are based on recentsales data, historicalexperience, external marketanalysis and third partyappraisal services. Market conditions Product type Property, plant andequipment, intangibleassets, and other assets Valuation of long- livedassets We are requiredperiodically to review therecoverability of certain ofour assets based onprojections of anticipatedfuture cash flows, includingfuture profitabilityassessments of variousproduct lines. We estimate cash flows usinginternal budgets based onrecent sales data, andindependent trailerproduction volume estimates. Future production estimates Deferred income taxes Recoverability of deferredtax assets - in particular, netoperating loss carry-forwards We are required to estimatewhether recoverability ofour deferred tax assets ismore likely than not basedon forecasts of taxableearnings. We use projected futureoperating results, based uponour business plans, includinga review of the eligible carry-forward period, tax planningopportunities and otherrelevant considerations. Variances in futureprojected profitability,including by taxing entity Tax law changes Additional paid-in capital Stock-based compensation We are required to estimatethe fair value of all stockawards we grant. We use a binomial valuationmodel to estimate the fairvalue of stock awards. Wefeel the binomial modelprovides the most accurateestimate of fair value. Risk-free interest rate Historical volatility Dividend yield Expected term 37 In addition, there are other items within our financial statements that require estimation, but are not as critical as those discussed above. Changes inestimates used in these and other items could have a significant effect on our consolidated financial statements. The determination of the fair market value ofnew and used trailers is subject to variation, particularly in times of rapidly changing market conditions. A 5% change in the valuation of our new and usedinventories would be approximately $4 million.OtherInflationWe have historically been able to offset the impact of rising costs through productivity improvements as well as selective price increases. As a result,inflation has not had, and is not expected to have, a significant impact on our business.New Accounting PronouncementsDuring 2010, there were no new accounting pronouncements that had or are expected to have a material impact to our financial position, results ofoperations or cash flows.ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKIn addition to the risks inherent in our operations, we have exposure to financial and market risk resulting from volatility in commodity prices and interestrates. The following discussion provides additional detail regarding our exposure to these risks. a.Commodity Price RisksWe are exposed to fluctuation in commodity prices through the purchase of raw materials that are processed from commodities such as aluminum,steel, wood and polyethylene. Given the historical volatility of certain commodity prices, this exposure can significantly impact product costs. Historically,we have managed aluminum price changes by entering into fixed price contracts with our suppliers. As of December 31, 2010, we had $34.3 million in rawmaterial purchase commitments through December 2011 for materials that will be used in the production process. We typically do not set prices for ourproducts more than 45-90 days in advance of our commodity purchases and can, subject to competitive market conditions, take into account the cost of thecommodity 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 resultswould be materially and adversely affected. b.Interest RatesAs of December 31, 2010, we had $55.0 million of floating rate debt outstanding under our revolving facility. A hypothetical 100 basis-pointchange in the floating interest rate from the current level would result in a corresponding $0.6 million change in interest expense over a one-yearperiod. This sensitivity analysis does not account for the change in the competitive environment indirectly related to the change in interest rates and thepotential managerial action taken in response to these changes. 38 ITEM 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Pages Report of Independent Registered Public Accounting Firm40 Consolidated Balance Sheets as of December 31, 2010 and 200941 Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 200842 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010, 2009 and 200843 Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 200844 Notes to Consolidated Financial Statements45 39 Report of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Wabash National Corporation:We have audited the accompanying consolidated balance sheets of Wabash National Corporation as of December 31, 2010 and 2009, and therelated consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2010. Thesefinancial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based onour audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of WabashNational Corporation at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the periodended December 31, 2010, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Wabash NationalCorporation’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2011 expressed an unqualifiedopinion thereon. ERNST & YOUNG LLPIndianapolis, IndianaFebruary 25, 2011 40 WABASH NATIONAL CORPORATIONCONSOLIDATED BALANCE SHEETS(Dollars in thousands) December 31, 2010 2009 ASSETS CURRENT ASSETS Cash $21,200 $1,108 Accounts receivable 37,853 17,081 Inventories 110,850 51,801 Prepaid expenses and other 2,155 6,877 Total current assets $172,058 $76,867 PROPERTY, PLANT AND EQUIPMENT 98,834 108,802 INTANGIBLE ASSETS 22,863 25,952 OTHER ASSETS 9,079 12,156 $302,834 $223,777 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of capital lease obligations $590 $337 Accounts payable 71,145 30,201 Other accrued liabilities 38,896 34,583 Warrant - 46,673 Total current liabilities $110,631 $111,794 LONG-TERM DEBT 55,000 28,437 CAPITAL LEASE OBLIGATIONS 3,964 4,469 OTHER NONCURRENT LIABILITIES AND CONTINGENCIES 4,214 3,258 PREFERRED STOCK, net of discount, 25,000,000 shares authorized, $0.01 par value,0 and 35,000 shares issued and outstanding, respectively - 22,334 STOCKHOLDERS' EQUITY Common stock 200,000,000 shares authorized, $0.01 par value, 67,930,814and 30,376,374 shares issued and outstanding, respectively 703 331 Additional paid-in capital 598,671 355,747 Accumulated deficit (444,330) (277,116)Treasury stock at cost, 1,764,823 and 1,713,468 common shares, respectively (26,019) (25,477)Total stockholders' equity $129,025 $53,485 $302,834 $223,777 The accompanying notes are an integral part of these Consolidated Statements. 41 WABASH NATIONAL CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts) Years Ended December 31, 2010 2009 2008 NET SALES $640,372 $337,840 $836,213 COST OF SALES 612,289 360,750 815,289 Gross profit $28,083 $(22,910) $20,924 GENERAL AND ADMINISTRATIVE EXPENSES 32,831 31,988 44,094 SELLING EXPENSES 10,669 11,176 14,290 IMPAIRMENT OF GOODWILL - - 66,317 Loss from operations $(15,417) $(66,074) $(103,777) OTHER INCOME (EXPENSE) Increase in fair value of warrant (121,587) (33,447) - Interest expense (4,140) (4,379) (4,657)Other, net (667) (866) (328) Loss before income taxes $(141,811) $(104,766) $(108,762) INCOME TAX (BENEFIT) EXPENSE (51) (3,001) 17,064 Net loss $(141,760) $(101,765) $(125,826) PREFERRED STOCK DIVIDENDS AND EARLY EXTINGUISHMENT 25,454 3,320 - NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(167,214) $(105,085) $(125,826) COMMON STOCK DIVIDENDS DECLARED $- $- $0.135 BASIC AND DILUTED NET LOSS PER SHARE $(3.36) $(3.48) $(4.21) COMPREHENSIVE LOSS Net loss $(141,760) $(101,765) $(125,826)Changes in fair value of derivatives, net of tax - 118 (1,516)Reclassification adjustment for interest rate swaps included in net loss - 1,398 - NET COMPREHENSIVE LOSS $(141,760) $(100,249) $(127,342)The accompanying notes are an integral part of these Consolidated Statements. 42 WABASH NATIONAL CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Dollars in thousands) Additional Other Common Stock Paid-In Accumulated Comprehensive Treasury Shares Amount Capital Deficit Income (Loss) Stock Total BALANCES, December 31, 2007 29,842,945 $321 $347,143 $(42,058) $- $(25,477) $279,929 Net loss for the year - - - (125,826) - - (125,826)Stock-based compensation 155,852 3 4,987 - - - 4,990 Stock repurchase (17,714) - (138) - - - (138)Common stock dividends - - - (4,147) - - (4,147)Tax benefit from stock-based compensation - - (222) - - - (222)Interest rate swap - - - - (1,516) - (1,516)Common stock issued in connection with: Stock option plan 11,267 - 97 - - - 97 Outside directors' plan 33,660 - 270 - - - 270 BALANCES, December 31, 2008 30,026,010 $324 $352,137 $(172,031) $(1,516) $(25,477) $153,437 Net loss for the year - - - (101,765) - - (101,765)Stock-based compensation 178,172 5 3,377 - - - 3,382 Stock repurchase (22,052) - (35) - - - (35)Preferred stock dividends - - - (3,320) - - (3,320)Interest rate swap - - - - 1,516 - 1,516 Common stock issued in connection with: Outside directors' plan 194,244 2 268 - - - 270 BALANCES, December 31, 2009 30,376,374 $331 $355,747 $(277,116) $- $(25,477) $53,485 Net loss for the year - - - (141,760) - - (141,760)Stock-based compensation 293,389 (2) 2,433 - - - 2,431 Stock repurchase (51,355) 1 157 - - (542) (384)Preferred stock dividends and early extinguishment - - - (25,454) - - (25,454)Common stock issued in connection with: Public offering 11,750,000 118 71,825 - - - 71,943 Exercise of warrant 25,486,532 254 168,006 - - - 168,260 Stock option plan 75,874 1 503 - - - 504 BALANCES, December 31, 2010 67,930,814 $703 $598,671 $(444,330) $- $(26,019) $129,025 The accompanying notes are an integral part of these Consolidated Statements. 43 WABASH NATIONAL CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) Years Ended December 31, 2010 2009 2008 Cash flows from operating activities Net loss $(141,760) $(101,765) $(125,826)Adjustments to reconcile net loss to net cash (used in) provided by operating activities Depreciation and amortization 16,855 19,585 21,467 Net loss (gain) on sale of assets 431 (55) 606 Loss (Gain) on early debt extinguishment - 303 (151)Deferred income taxes - - 17,286 Excess tax benefits from stock-based compensation - - (6)Increase in fair value of warrant 121,587 33,447 - Stock-based compensation 3,489 3,382 4,990 Impairment of goodwill - - 66,317 Changes in operating assets and liabilities Accounts receivable (20,772) 20,845 30,827 Inventories (59,062) 41,095 20,229 Prepaid expenses and other 3,024 (1,570) 436 Accounts payable and accrued liabilities 45,251 (22,666) (5,657)Other, net 266 385 153 Net cash (used in) provided by operating activities $(30,691) $(7,014) $30,671 Cash flows from investing activities Capital expenditures (1,782) (981) (12,613)Proceeds from the sale of property, plant and equipment 1,813 300 213 Net cash provided by (used in) investing activities $31 $(681) $(12,400) Cash flows from financing activities Proceeds from exercise of stock options 504 - 97 Excess tax benefits from stock-based compensation - - 6 Borrowings under revolving credit facilities 712,491 276,853 202,908 Payments under revolving credit facilities (685,928) (328,424) (122,900)Payments under long-term debt obligations - - (104,133)Principal payments under capital lease obligations (352) (334) (193)Debt issuance costs paid - (1,420) (4)Payments under redemption of preferred stock (47,791) - - Proceeds from issuance of preferred stock and warrant - 35,000 - Preferred stock issuance costs paid (120) (2,638) - Proceeds from issuance of common stock, net of expenses 71,948 - - Common stock dividends paid - - (5,510)Net cash provided by (used in) financing activities $50,752 $(20,963) $(29,729) Net increase (decrease) in cash $20,092 $(28,658) $(11,458)Cash at beginning of year 1,108 29,766 41,224 Cash at end of year $21,200 $1,108 $29,766 Supplemental disclosures of cash flow information Cash paid (received) during the period for Interest $3,474 $5,055 $5,247 Income taxes $(3,084) $(865) $(4)The accompanying notes are an integral part of these Consolidated Statements. 44 WABASH NATIONAL CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.DESCRIPTION OF THE BUSINESSWabash National Corporation (the “Company”) designs, manufactures and markets standard and customized truck trailers and intermodal equipmentunder the Wabash, DuraPlate, DuraPlateHD, FreightPro, ArcticLite®, RoadRailer, Transcraft, Eagle, Eagle II, D-Eagle and Benson® trademarks. TheCompany’s wholly-owned subsidiary, Wabash National Trailer Centers, Inc., sells new and used trailers through its retail network and provides aftermarketparts and service for the Company’s and competitors’ trailers and related equipment.2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Basis of ConsolidationThe consolidated financial statements reflect the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significantintercompany profits, transactions and balances have been eliminated in consolidation.b. Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management tomake estimates and assumptions that directly affect the amounts reported in its consolidated financial statements and accompanying notes. Actual resultscould differ from these estimates.c. Revenue RecognitionThe Company recognizes revenue from the sale of trailers and aftermarket parts when the customer has made a fixed commitment to purchase thetrailers for a fixed or determinable price, collection is reasonably assured under the Company’s billing and credit terms and ownership and all risk of loss hasbeen transferred to the buyer, which is normally upon shipment to or pick up by the customer. Revenues exclude all taxes collected from the customer.d. Used Trailer Trade Commitments and Residual Value GuaranteesThe Company has commitments with certain customers to accept used trailers on trade for new trailer purchases. These commitments arise in thenormal course of business related to future new trailer orders at the time a new trailer order is placed by the customer. The Company acquired used trailers ontrade of approximately $8.1 million, $2.9 million and $20.7 million in 2010, 2009 and 2008, respectively. As of December 31, 2010 and 2009, the Companyhad approximately $8.2 million and $6.1 million, respectively, of outstanding trade commitments. On occasion, the amount of the trade allowance providedfor in the used trailer commitments, or cost, may exceed the net realizable value of the underlying used trailer. In these instances, the Company’s policy is torecognize the loss related to these commitments at the time the new trailer revenue is recognized. Net realizable value of used trailers is measuredconsidering market sales data for comparable types of trailers. The net realizable value of the used trailers subject to the remaining outstanding tradecommitments was estimated by the Company to be approximately $7.7 million and $5.7 million as of December 31, 2010 and 2009, respectively.e. Accounts ReceivableAccounts receivable are shown net of allowance for doubtful accounts and primarily include trade receivables. The Company records and maintainsa provision for doubtful accounts for customers based upon a variety of factors including the Company’s historical experience, the length of time the accounthas been outstanding and the financial condition of the customer. If the circumstances related to specific customers were to change, the Company’s estimateswith respect to the collectability of the related accounts could be further adjusted. The Company’s policy is to write-off receivables when it has beendetermined to be uncollectible. Provisions to the allowance for doubtful accounts are charged to both General and Administrative Expenses and SellingExpenses in the Consolidated Statements of Operations. The activity in the allowance for doubtful accounts was as follows (in thousands): 45 Years Ended December 31, 2010 2009 2008 Balance at beginning of year $2,790 $2,183 $1,770 Expense 60 680 689 Write-offs, net (609) (73) (276)Balance at end of year $2,241 $2,790 $2,183 f. InventoriesInventories are stated at the lower of cost, primarily determined on the first-in, first-out (FIFO) method, or market. The cost of manufacturedinventory includes raw material, labor and overhead. Inventories consist of the following (in thousands): December 31, 2010 2009 Raw materials and components $27,970 $15,280 Work in progress 4,025 386 Finished goods 70,371 26,920 Aftermarket parts 4,486 4,072 Used trailers 3,998 5,143 $110,850 $51,801 g. Prepaid Expenses and OtherPrepaid expenses and other as of December 31, 2010 and 2009 were $2.2 million and $6.9 million, respectively. Prepaid expenses and other primarilyincludes items such as insurance premiums, computer software maintenance agreements and assets held for sale. Assets held for sale, which consisted of aclosed manufacturing facility in Mt. Sterling, Kentucky, was $1.7 million as of December 31, 2009. In August 2010, the Company sold this facility andrecorded a loss on the sale of approximately $0.4 million to Other Expense in the Consolidated Statements of Operations.h. Property, Plant and EquipmentProperty, plant and equipment are recorded at cost, net of accumulated depreciation. Maintenance and repairs are charged to expense as incurred,while expenditures that extend the useful life of an asset are capitalized. Depreciation is recorded using the straight-line method over the estimated usefullives of the depreciable assets. The estimated useful lives are up to 33 years for buildings and building improvements and range from three to ten years formachinery and equipment. Depreciation expense, which is recorded in Cost of Sales and General and Administrative Expenses in the ConsolidatedStatements of Operations, as appropriate, on property, plant and equipment was $11.3 million, $13.8 million and $15.3 million for 2010, 2009 and 2008,respectively. In July 2008, the Company entered into a non-cash capital lease obligation for its manufacturing facility in Cadiz, Kentucky totaling $5.3million. In 2010, the Company renegotiated the terms of the lease to reflect the current market value of the facility, reducing the total lease obligation to$4.7 million. As of December 31, 2010 and 2009, the assets related to the Company’s capital lease agreements are recorded within Property, Plant andEquipment in the Consolidated Balance Sheet for the amount of $5.2 million and $5.1 million, respectively, net of accumulated depreciation of $0.4 millionand $0.2 million, respectively. 46 Property, plant and equipment consist of the following (in thousands): December 31, 2010 2009 Land $21,392 $21,614 Buildings and building improvements 91,998 92,992 Machinery and equipment 157,066 159,179 Construction in progress 1,338 295 $ 271,794 $ 274,080 Less: accumulated depreciation (172,960) (165,278) $98,834 $108,802 i. GoodwillThe changes in the carrying amount of goodwill in the manufacturing reportable segment are as follows (in thousands): Total Balance as of January 1, 2008: Goodwill $66,317 Accumulated impairment losses - $ 66,317 Impairment charge recorded in 2008 (66,317) $ - Balances as of December 31, 2008, 2009 and 2010: Goodwill 66,317 Accumulated impairment losses (66,317) $- The Company tests goodwill for impairment on an annual basis or more frequently if an event occurs or circumstances change that could more likelythan not reduce the fair value of a reporting unit below its carrying amount. The Company estimates fair value based upon the present value of future cashflows as well as considering the estimated market value of the Company and its reporting units. In estimating the future cash flows, the Company takes intoconsideration the overall and industry economic conditions and trends, market risk of the Company and historical information.During the fourth quarter of 2008, the Company reviewed its goodwill for impairment and, based on a combination of factors, including thesignificant decline in the Company’s market capitalization as well as the current decline in the U.S. economy, the Company concluded that indicators ofpotential impairment were present. The measurement of impairment of goodwill consists of two steps. The first step requires the Company to compare thefair value of the reporting unit to its carrying value. During the fourth quarter of 2008, the Company completed a valuation of the fair value of its reportingunits which incorporated existing market based considerations as well as discounted cash flows based on current and projected results. Based on thisevaluation, it was determined that the carrying value of both the Company’s platform trailer and wood product manufacturing operations exceeded its fairvalue. The second step involves determining the implied fair value of each reporting unit’s goodwill as compared to its carrying value. After calculating theimplied fair value of the goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reportingunit, it was determined that the recorded goodwill of $66.3 million was fully impaired. Based on these facts and circumstances, the Company recorded a non-cash goodwill impairment of $66.3 million.j. Intangible AssetsThe Company has intangible assets including patents, licenses, trade names, trademarks and customer relationships, which are being amortized on astraight-line basis over periods ranging up to 20 years. As of December 31, 2010 and 2009, the Company had gross intangible assets of $54.0million. Amortization expense for 2010, 2009 and 2008 was $3.1 million, $3.1 million and $3.4 million, respectively, and is estimated to be $3.0 million peryear for the years 2011 through 2015. 47 k. Other AssetsThe Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software is amortized using the straight-line method over three to seven years. As of December 31, 2010 and 2009, the Company had software costs, net of amortization, of $5.2 million and $7.7million, respectively. Amortization expense for 2010, 2009 and 2008 was $2.4 million, $2.6 million and $2.5 million, respectively.l. Long-Lived AssetsLong-lived assets, consisting primarily of intangible assets and property, plant and equipment, are reviewed for impairment whenever facts andcircumstances indicate that the carrying amount may not be recoverable. Specifically, this process involves comparing an asset’s carrying value to theestimated undiscounted future cash flows the asset is expected to generate over its remaining life. If this process were to result in the conclusion that thecarrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations. Fairvalue is determined based upon discounted cash flows or appraisals as appropriate. During 2010, 2009 and 2008, the Company noted indicators of potentialimpairment on its long-lived assets and, therefore, conducted an analysis that indicated the estimated future undiscounted cash flows exceeded the carryingvalue of its long-lived assets as of December 31, 2010, 2009 and 2008, and no impairment was recognized for these periods.m. Other Accrued LiabilitiesThe following table presents the major components of Other Accrued Liabilities (in thousands): Years Ended December 31, 2010 2009 Warranty $11,936 $14,782 Payroll and related taxes 8,667 5,405 Self-insurance 5,403 6,838 Accrued taxes 6,255 4,403 Customer deposits 2,689 1,246 All other 3,946 1,909 $38,896 $34,583 The following table presents the changes in the product warranty accrual included in Other Accrued Liabilities (in thousands): 2010 2009 Balance as of January 1 $14,782 $17,027 Provision for warranties issued in current year 2,341 1,162 Recovery of pre-existing warranties (3,160) (40)Payments (2,027) (3,367)Balance as of December 31 $11,936 $14,782 The Company offers a limited warranty for its products. With respect to Company products manufactured prior to 2005, the limited warrantycoverage period is five years. Beginning in 2005, the coverage period for DuraPlate® trailer panels was extended to ten years, with all other productcomponents remaining at five years. The Company passes through component manufacturers’ warranties to our customers. The Company’s policy is toaccrue the estimated cost of warranty coverage at the time of the sale. 48 The following table presents the changes in the self-insurance accrual included in Other Accrued Liabilities (in thousands): Self-InsuranceAccrual Balance as of January 1, 2009 $7,555 Expense 21,589 Payments (22,306)Balance as of December 31, 2009 $6,838 Expense 16,305 Payments (17,740)Balance as of December 31, 2010 $5,403 The Company is self-insured up to specified limits for medical and workers’ compensation coverage. The self-insurance reserves have been recordedto reflect the undiscounted estimated liabilities, including claims incurred but not reported, as well as catastrophic claims as appropriate.n. Income TaxesThe Company determines its provision or benefit for income taxes under the asset and liability method. The asset and liability method measures theexpected tax impact at current enacted rates of future taxable income or deductions resulting from differences in the tax and financial reporting basis of assetsand liabilities reflected in the Consolidated Balance Sheets. Future tax benefits of tax losses and credit carryforwards are recognized as deferred taxassets. Deferred tax assets are reduced by a valuation allowance to the extent the Company concludes there is uncertainty as to their realization.The Company accounts for income tax contingencies by prescribing a minimum recognition threshold that a tax position is required to meet beforebeing recognized in the financial statements.o. New Accounting PronouncementsDuring 2010, there were no new accounting pronouncements that had or are expected to have a material impact to the Company’s financial position,results of operations or cash flows.3.DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES During 2008, the Company entered into two-year interest rate swap agreements (Swaps) whereby the Company pays a fixed interest rate andreceives a variable interest rate. The Company had designated these Swaps as cash flow hedges in an effort to reduce its exposure to fluctuations in interestrates by converting a portion of its variable rate borrowings to a fixed rate for a specific period of time. The effective portion of the change in the fair value ofa derivative designated as a cash flow hedge is recorded in accumulated other comprehensive income (loss) (OCI) and is recognized in the statement ofoperations when the hedged item affects net income. If and when a derivative is determined not to be highly effective as a hedge or the underlying hedgedtransaction is no longer likely to occur, hedge accounting is discontinued. Any past or future changes in the derivative’s fair value, which will not beeffective as an offset to the income effects of the item being hedged, are recognized currently in the income statement.In April 2009, the Company and its counterparty mutually agreed to terminate the existing Swaps and settle based on the fair value of the Swapcontracts of approximately $1.4 million. These contracts were originally set to mature through October 2010. The total amounts paid under the terms ofthese contracts have been charged to interest or other expense and totaled $1.6 million in 2009. The cash flows from these contracts were recorded asoperating activities in the consolidated statement of cash flows. 49 4.FAIR VALUE MEASUREMENTSThe Company’s fair value measurements are based upon a three-level valuation hierarchy. These valuation techniques are based upon thetransparency of inputs (observable and unobservable) to the valuation of an asset or liability as of the measurement date. Observable inputs reflect marketdata obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create thefollowing fair value hierarchy: ·Level 1 — Valuation is based on quoted prices for identical assets or liabilities in active markets; ·Level 2 — Valuation is based on quoted prices for similar assets or liabilities in active markets, or other inputs that are observable for the assetor liability, either directly or indirectly, for the full term of the financial instrument; and ·Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement.The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fairvalue on a recurring basis (in thousands): December 31, 2010 December 31, 2009 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Liabilities Incentive awards $- $1,058 $- $1,058 $- $- $- $- Warrant - - - - - 46,673 - 46,673 $- $1,058 $- $1,058 $- $46,673 $- $46,673 The following methods and assumptions were used to estimate the fair value of each class of financial instrument:Incentive awards: The fair value of the Company’s cash-settled stock appreciation rights and performance units is valued on a market approachusing a binomial option-pricing model in which the significant inputs can be derived from observable market data such as volatility, interest rates, andexpected terms.Warrant: The fair value of the warrant was estimated based on a market approach using a binomial valuation pricing model. This approach wassensitive to changes in the trading market price of the Company’s common stock which has a high historical volatility. As discussed in Note 8, the Warrantwas fully exercised in 2010 and was no longer outstanding as of December 31, 2010.The carrying amounts of accounts receivable and accounts payable reported in the Consolidated Balance Sheets approximate fair value.The fair value of total borrowings is estimated based on current quoted market prices for similar issues or debt with the same maturities. The interestrates on the Company’s bank borrowings under its Revolving Facility are adjusted regularly to reflect current market rates and thus carrying valueapproximates fair value. 50 5. PER SHARE OF COMMON STOCKPer share results have been computed based on the average number of common shares outstanding. The computation of basic and diluted net loss pershare is determined using net loss applicable to common stockholders as the numerator and the number of shares included in the denominator as follows (inthousands, except per share amounts): Years Ended December 31, 2010 2009 2008 Basic and diluted net loss per share Net loss applicable to common stockholders $(167,214) $(105,085) $(125,826)Dividends paid and undistributed earnings allocated to participating securities - - (132)Net loss applicable to common stockholders excluding amounts applicable to participating securities $(167,214) $(105,085) $(125,958)Weighted average common shares outstanding 49,819 30,237 29,954 Basic and dluted net loss per share $(3.36) $(3.48) $(4.21)The computation of diluted net loss per share for the period ending December 31, 2008 excludes the after-tax equivalent of interest on theCompany’s Senior Convertible Notes (the “Convertible Notes”) of $0.8 million. Due to the losses reported in 2010, 2009 and 2008, average diluted sharesoutstanding exclude the antidilutive effects of the following potential common shares (in thousands): Years Ended December 31, 2010 2009 2008 Convertible Notes equivalent shares - - 1,708 Stock options and restricted stock 336 11 87 Redeemable warrants 12,890 11,336 - Options to purchase common shares 1,437 2,133 1,713 Options to purchase common shares are considered potentially dilutive and excluded from computations of diluted net loss per share as the exercise priceswere greater than the average market price of the common shares.6. OTHER LEASE ARRANGEMENTSThe Company leases office space, manufacturing, warehouse and service facilities and equipment under operating leases, the majority of which expirethrough 2013. Future minimum lease payments required under these lease commitments as of December 31, 2010 are as follows (in thousands): Payments 2011 $513 2012 316 2013 312 2014 168 2015 95 Thereafter 156 $1,560 Total rental expense was $2.7 million for 2010 and 2009 and $3.8 million for 2008. As of December 31, 2010 the total minimum rentals to bereceived in future periods under these lease commitments was approximately $0.5 million. 51 7. DEBTIn May 2010, the Company entered into the Consent and Amendment No. 1 to the Third Amended and Restated Loan and Security Agreement (the“Amended Facility”) with the Company’s lenders. The Amended Facility amended and restated the Company’s previous revolving credit facility entered intoin July 2009 (the “Original Facility”). The Amended Facility is guaranteed by certain subsidiaries of the Company and secured by substantially all of itsassets. The Amended Facility has a maturity date of August 3, 2012 and a capacity of $100 million, subject to a borrowing base and other discretionaryreserves. The Amended Facility modified the Company’s borrowing base by eliminating a $12.5 million availability reserve while reducing the amountswhich can be borrowed under the fixed assets sub-limit by $12.5 million from $30.3 million to $17.8 million.The Amended Facility was entered into to permit the early redemption of the Company’s Series E-G Preferred Stock and required the Company topay down its revolving credit facility by at least $23.0 million. The repayment did not reduce the Company’s revolving loan commitments. Pursuant to theAmended Facility, if the availability under the Company’s revolving credit facility is less than $15.0 million at any time before the earlier of August 14,2011 or the date that monthly financial statements are delivered for the month ending June 30, 2011, the Company would be required to maintain a varyingminimum EBITDA and would be restricted in the amount of capital expenditures the Company can make during such period. If the Company’s availability isless than $20.0 million thereafter, it would be required to maintain a fixed charge coverage ratio for the 12 month period ending on the last day of thecalendar month that ended most recently prior to such time of not less than 1.1 to 1.0.Under the Amended Facility, the Company may not repurchase or redeem its common stock and may not pay cash dividends to the Company’scommon stockholders until the second anniversary of the effectiveness of the Original Facility, or August 3, 2011, and then only if (i) no default or events ofdefault are in existence or would be caused by such purchase, redemption or payment, (ii) immediately after such purchase, redemption or payment, theCompany has unused availability of at least $40 million, (iii) the amount of all cash dividends paid by the Company does not exceed $20 million in anyfiscal year and (iv) at least 5 business days prior to the purchase, redemption or payment, an officer of the Company delivers a certificate to its lenderscertifying that the conditions precedent in clauses (i)-(iii) have been satisfied. The Company is, however, permitted to repurchase stock from employees upontermination of their employment so long as no default or event of default exists at the time or would be caused by such repurchase and such repurchases donot exceed $2.5 million in any fiscal year.Under the Original Facility the Company could not repurchase or redeem the Preferred Stock and could not pay cash dividends to the holders of thePreferred Stock until July 1, 2010. At any time after July 1, 2010 until the second anniversary of the effectiveness of the Amended Facility, the Companycould pay cash dividends or redeem or repurchase the Preferred Stock if (i) no default or events of default were then in existence or would be caused by suchpurchase, redemption or payment, (ii) immediately after such purchase, redemption or payment, the Company had unused availability of at least $25 millionand (iii) at least 5 business days prior to the purchase, redemption or payment, an officer of the Company had delivered a certificate to its lenders certifyingthat the conditions precedent in clauses (i)-(iii) had been satisfied. After the second anniversary of the effectiveness of the Amended Facility, the unusedavailability condition precedent was to be reduced to $12.5 million.The interest rate on borrowings under the Amended Facility through July 31, 2010 was LIBOR plus 4.25% or the prime rate of Bank of America,N.A. (the “Prime Rate”) plus 2.75%. After July 31, 2010, the interest rate is based upon average unused availability and will range between LIBOR plus3.75% to 4.25% or the Prime Rate plus 2.25% to 2.75%. The Company is required to pay a monthly unused line fee equal to 0.375% times the average dailyunused availability along with other customary fees and expenses of the Company’s agent and lenders. All interest and fees are paid monthly.The Amended Facility contains customary representations, warranties, affirmative and negative covenants, including, without limitation, restrictions onmergers, dissolutions, acquisitions, indebtedness, affiliate transactions, the occurrence of liens, payments of subordinated indebtedness, disposition of assets,leases and changes to organizational documents.The Amended Facility also contains customary events of default including, without limitation, failure to pay obligations when due under the facility, falseand misleading representations, breaches of covenants (subject in some instances to cure and grace periods), defaults on certain other indebtedness, theoccurrence of certain uninsured losses, business disruptions for a period of time that materially adversely affects the capacity to continue business on aprofitable basis, changes of control and the incurrence of certain judgments that are not stayed, released or discharged within 30 days. 52 The Company’s previous loan and security agreement, as amended, had a capacity of $200 million, subject to a borrowing base, with a maturity date ofMarch 6, 2012. On April 1, 2009, events of default occurred which permitted the lenders to increase the interest on the outstanding principal by 2%, to causean acceleration of the maturity of borrowings, to restrict advances and to terminate the agreement. The events of default included: the Company’s failure todeliver audited financial statements for fiscal year 2008 by March 31, 2009; that the report of the Company’s independent registered public accounting firmaccompanying the Company’s audited financial statements for fiscal year 2008 included an explanatory paragraph with respect to the Company’s ability tocontinue as a going concern; the Company’s failure to deliver prompt written notification of name changes of subsidiaries; the Company’s failure to have aminimum fixed charge coverage ratio of 1.1:1.0 when the available borrowing capacity is below $30 million; and, the Company requesting loans under thefacility during the existence of a default or events of default. In accordance with the terms of the facility, on April 1, 2009, the agent increased the interest onthe outstanding principal by 2% and implemented availability reserves that result in a reduction of the Company’s borrowing base under the facility by $25million.In April 2009, the Company entered into a Forbearance Agreement with the lenders. Pursuant to the Forbearance Agreement, the lenders agreed torefrain from accelerating maturity of the facility due to specified existing or anticipated events of default, as described above, through the earlier of May 29,2009 or the occurrence or existence of any event of default other than the existing or anticipated events of default.In May 2009, the Company entered into a First Amendment to Forbearance Agreement and Fourth Amendment to Second Amended and RestatedLoan and Security Agreement (the “Amendment”) with the lenders. Pursuant to the Amendment, the lenders agreed to continue to refrain from acceleratingmaturity of the facility due to specified existing or anticipated events of default, as described above, through the earlier of July 31, 2009 or the occurrence orexistence of any event of default other than the existing or anticipated events of default. In addition to the extension of the forbearance period, theAmendment reduced the availability reserve to $17.5 million through July 31, 2009 and decreased the borrowing availability of eligible accounts receivablefrom 90% to 85%.As of December 31, 2010 and 2009, the Company’s liquidity position, defined as cash on hand and available borrowing capacity on the Amended Facility,amounted to $60.4 and $21.0 million, respectively. As of December 31, 2010, the Company was in compliance with all covenants of the Amended Facility.In July 2008, the Company entered into a three-year, non-cash capital lease obligation for its manufacturing facility in Cadiz, Kentucky totaling $5.3million. The lease includes a bargain purchase option. In November 2010, the Company renegotiated the terms of the lease to reflect the current market valueof the facility, which resulted in a six month extension and a reduction in the total lease obligation to $4.7 million. As of December 31, 2010 and 2009, thepresent value of future minimum lease payments totaled $3.8 million and $4.8 million, respectively. Annual remaining minimum lease payments as ofDecember 31, 2010 were $0.8 million, $3.7 million and $0.2 million for the years ending 2011, 2012 and 2013, respectively, including interest ofapproximately $0.3 million.8. ISSUANCE OF PREFERRED STOCK AND WARRANTIn July 2009, the Company entered into a Securities Purchase Agreement with Trailer Investments pursuant to which Trailer Investments purchased 20,000shares of Series E redeemable preferred stock (“Series E Preferred”), 5,000 shares of Series F redeemable preferred stock (“Series F Preferred”), and 10,000shares of Series G redeemable preferred stock (“Series G Preferred”, and together with the Series E Preferred and the Series F Preferred, the “Series E-GPreferred Stock”) for an aggregate purchase price of $35.0 million. Trailer Investments also received a warrant that was exercisable at $0.01 per share for24,762,636 newly issued shares of the Company’s common stock (the “Warrant”) representing, on August 3, 2009, the date the Warrant was delivered,44.21% of the Company’s issued and outstanding common stock after giving effect to the issuance of the shares underlying the Warrant, subject to upwardadjustment to maintain that percentage if currently outstanding options were exercised. The number of shares of common stock subject to the Warrant wasalso subject to upward adjustment to an amount equivalent to 49.99% of the issued and outstanding common stock of the Company outstandingimmediately after the closing after giving effect to the issuance of the shares underlying the Warrant in specified circumstances where the Company wouldlose its ability to utilize its net operating loss carryforwards, including as a result of a stockholder of the Company acquiring greater than 5% of theoutstanding common stock of the Company. 53 Trailer Investments’ ownership of the Series E-G Preferred Stock included significant rights pursuant to the applicable certificates of designation for theSeries E-G Preferred Stock and pursuant to the Investor Rights Agreement dated August 3, 2009 between the Company and Trailer Investments (the “InvestorRights Agreement”). As a result of the Redemption (as defined and further described below), except for the payment in connection with a change of controldescribed below, the principal rights that previously existed but are no longer held by Trailer Investments are (i) the right to receive the preferred dividend,(ii) veto rights over certain significant aspects of the Company’s operations and business, including payments of dividends, issuance of the Company’ssecurities, incurrence of indebtedness, liquidation and sale of assets, changes in the size of the Company’s board of directors, amendments to the Company’sorganizational documents (including those of its subsidiaries), and other material actions by the Company, subject to certain thresholds and limitations, and(iii) a right of first refusal to participate in any future private financings.The Warrant contained several conditions, including, among other things, an upward adjustment of shares upon the occurrence of certain contingent events,and the holder had an option pursuant to the terms of the Investor Rights Agreement to settle the Warrant for cash in event of a specific default. Theseprovisions resulted in the classification of the Warrant as a liability that was adjusted to fair value at each balance sheet date. The warrant liability wasrecorded initially at fair value with subsequent changes in fair value reflected in earnings. Estimating fair value of the Warrant required the use ofassumptions and inputs that were observable, either directly or indirectly, were likely to change over the duration of the Warrant with related changes ininternal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of theCompany’s common stock, which has a high historical volatility. Because the Warrant was initially and subsequently carried at fair value, the Company’sStatements of Operations reflected the volatility in these estimate and assumption changes.In May 2010, in connection with the Initial Offering (as discussed in Note 9), the Company redeemed (the “Redemption”) all outstanding shares of theCompany’s Series E-G Preferred Stock at a liquidation value of $1,000 per share, or $35.0 million, plus accrued and unpaid dividends and a premiumadjustment of 20% as required under the Securities Purchase Agreement for any redemption made prior to August 2014. The Series E Preferred, Series FPreferred and Series G Preferred paid an annual dividend rate of 15%, 16% and 18%, respectively, based on liquidation value. The Company accrued alldividend payments on the Series E-G Preferred Stock totaling approximately $4.8 million through the Redemption date. The premium adjustment for earlyredemption of $8.0 million was applied to the sum of the liquidation value and accrued and unpaid dividends. The total redemption price of the Series E-GPreferred Stock, including accrued and unpaid dividends, was approximately $47.8 million. Certificates of elimination were filed on September 21, 2010with the Secretary of State of the State of Delaware to eliminate from the Company’s Certificate of Incorporation all provisions that were set forth in thecertificates of designation for the Series E-G Preferred Stock.If a change of control, meaning more than 50% of the voting power is transferred or acquired by any person other than Trailer Investments and its affiliates,occurs within 12 months of the date of the Redemption (on or before May 28, 2011), Trailer Investments will be entitled to receive an aggregate payment of$74.6 million representing the difference between what it received in the Redemption and what it would have been entitled to receive on the date of theRedemption if a change of control had occurred on that date. 54 The following table presents the activity for the Series E-G Preferred Stock (in thousands): Series E Series F Series G Total Preferred Preferred Preferred Preferred Stock Balance as of January 1, 2009 $- $- $- $- Original proceeds from issuance of preferred stock and warrant 20,000 5,000 10,000 35,000 Fair value of warrant (7,283) (1,890) (4,053) (13,226)Issuance costs (1,520) (394) (846) (2,760)Accretion 536 140 306 982 Accrued and unpaid dividends 1,251 334 753 2,338 Balance as of December 31, 2009 $12,984 $3,190 $6,160 $22,334 Accretion 483 123 247 853 Accrued and unpaid dividends 1,328 355 808 2,491 Early extinguishment of preferred stock 12,297 3,159 6,657 22,113 Payments under redemption of preferred stock (27,092) (6,827) (13,872) (47,791)Balance as of December 31, 2010 $- $- $- $- Also in connection with the Initial Offering, the Company amended the Warrant on May 28, 2010 (as amended, the “Replacement Warrant”). TheWarrant was modified so that (i) the Warrant would no longer adjust or increase based upon any limitation on the Company’s ability to fully utilize its netoperating loss (“NOL”) carryforwards and (ii) the Warrant was increased by a fixed number of 750,000 warrant shares in lieu of the market price anti-dilutionadjustment that would have otherwise applied as a result of the Initial Offering. The Initial Offering included 16,137,500 shares sold by Trailer Investments(the “Warrant Shares”) pursuant to a partial exercise of the Warrant. The partial net exercise of the Warrant was made by Trailer Investments via the forfeitureof 22,812 shares of common stock under the Warrant. In anticipation of the Second Offering (as discussed in Note 9), the Replacement Warrant was amended on September 13, 2010 to modify its cashlessexercise provision to facilitate determination of the number of shares required to be withheld to pay the exercise price of the Replacement Warrant whenexercised in connection with the Second Offering. On September 17, 2010, Trailer Investments sold the Replacement Warrant to the several underwriters, who exercised the Replacement Warrant infull and sold the 9,349,032 shares of common stock underlying the Replacement Warrant in the Second Offering. The exercise of the Replacement Warrantwas made via the forfeiture of 13,549 shares of common stock. As a result of the Second Offering and related cashless exercise, the Replacement Warrant wasfully exercised and was no longer outstanding as of December 31, 2010. Pursuant to the terms of the Investor Rights Agreement between the Company andTrailer Investments dated August 3, 2009, Trailer Investments had significant rights that no longer exist as a result of the consummation of the SecondOffering. These rights included the ability to designate five persons for election to the Company’s board of directors for so long as Trailer Investments and itsaffiliates beneficially owned at least 10% of the Company’s outstanding common stock. As a result, on September 21, 2010, the Company receivedresignation notices from each of the existing four Trailer Investments board members, notifying the Company of each member’s intent to resign from theCompany’s board of directors with immediate effect.9. STOCKHOLDERS’ EQUITYa. Common StockOn May 13, 2010, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the numberof authorized shares of common stock, par value $0.01 per share, from 75 million shares to 200 million shares and correspondingly, to increase the totalnumber of authorized shares of all classes of capital stock from 100 million shares to 225 million shares, which includes 25 million shares of preferred stock,par value $0.01 per share. 55 On May 28, 2010, the Company closed on a public offering of the Company’s common stock, par value $0.01 per share (the “Initial Offering”),which consisted of 11,750,000 shares of common stock sold by the Company and 16,137,500 shares of common stock sold by Trailer Investments as sellingstockholder, each at a purchase price of $6.50 per share. The shares of common stock sold in the Initial Offering by Trailer Investments included 3,637,500shares sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares to cover over-allotments. All shares sold by TrailerInvestments were issued upon the partial exercise of the Warrant it held and the Replacement Warrant was issued to Trailer Investments on May 28, 2010 (asdiscussed in Note 8). The Company did not receive any proceeds from the sale of the shares by Trailer Investments. The Company generated proceeds from itssale of 11,750,000 shares of common stock of $76.4 million and used the net proceeds to redeem all of its outstanding preferred stock and to repay a portionof its outstanding indebtedness under its revolving credit facility.On September 17, 2010, Trailer Investments sold the Replacement Warrant to the several underwriters, who exercised the Replacement Warrant infull and sold the 9,349,032 shares of common stock underlying the Replacement Warrant at a price per share of $6.75 (the “Second Offering”). Pursuant to theunderwriting agreement between the Company, Trailer Investments and Morgan Stanley & Co. Incorporated, as underwriter (the “Underwriter”), upon theclosing of the Second Offering, Trailer Investments transferred the Replacement Warrant to the Underwriter and the Company issued 9,349,032 shares of thecommon stock to the Underwriter upon the net exercise of the Replacement Warrant and the Second Offering was consummated. The net exercise of theReplacement Warrant was made by the Underwriter via the forfeiture of 13,549 shares of common stock issuable under the Replacement Warrant. As a result,the Replacement Warrant was fully exercised and is no longer outstanding as of December 31, 2010. The Company did not receive any proceeds from the saleof these shares in the Second Offering by Trailer Investments.b. Preferred StockAs discussed in Note 8, all outstanding shares of the Company’s Series E-G Preferred Stock, which were issued pursuant to the Securities Purchase Agreementin July 2009, were redeemed in May 2010. Additionally, the Company has a series of 300,000 shares of preferred stock designated as Series D JuniorParticipating Preferred Stock, par value $0.01 per share. As of December 31, 2010 and 2009, the Company had no Series D Junior Participating shares issuedor outstanding.The board of directors has the authority to issue up to 25 million shares of unclassified preferred stock and to fix dividends, voting and conversionrights, redemption provisions, liquidation preferences and other rights and restrictions. c.Stockholders’ Rights PlanThe Company has a Stockholders’ Rights Plan (the “Rights Plan”) that is designed to deter coercive or unfair takeover tactics in the event of anunsolicited takeover attempt. It is not intended to prevent a takeover on terms that are favorable and fair to all stockholders and will not interfere with amerger approved by our board of directors. Each right entitles stockholders to buy one one-thousandth of a share of Series D Junior Participating PreferredStock at an exercise price of $120. The rights will be exercisable only if a person or a group acquires or announces a tender or exchange offer to acquire 20%or more of our common stock or if we enter into other business combination transactions not approved by our board of directors. As part of our transactionwith Trailer Investments in 2009, Trailer Investments was exempted from the application of the Rights Plan to the acquisition of our shares by them. In theevent the rights become exercisable, the Rights Plan allows for our stockholders to acquire our stock or the stock of the surviving corporation, whether or notwe are the surviving corporation, having a value twice that of the exercise price of the rights. These rights pursuant to the Rights Plan will expire December28, 2015 or are redeemable for $0.01 per right by the board under certain circumstances.10. STOCK-BASED COMPENSATIONIn May 2007, the Company adopted the 2007 Omnibus Incentive Plan (the “Omnibus Plan”). This plan provides for the issuance of common stockoptions, restricted stock, stock appreciation rights and performance units to directors, officers and other eligible employees. This plan makes availableapproximately 3.5 million shares for issuance, subject to adjustment for stock dividends, recapitalizations and the like. 56 The Company recognizes all share-based payments to eligible employees based upon their fair value. Total stock-based compensation expense was$3.5 million, $3.4 million and $5.0 million in 2010, 2009 and 2008, respectively. The amount of compensation costs related to nonvested common stockoptions, restricted stock, stock appreciation rights and performance units not yet recognized was $4.1 million at December 31, 2010, for which the weightedaverage remaining life was 1.9 years.Stock OptionsStock options are awarded with an exercise price equal to the market price on the date of grant, become exercisable three years after the date of grantand expire ten years after the date of grant. The fair value of stock option awards is estimated on the date of grant using a binomial option-pricing model thatuses the assumptions noted in the following table:Valuation Assumptions 2010 2009 2008 Risk-free interest rate 3.77% 2.76% 3.61%Expected volatility 70.1% 56.3% 53.4%Expected dividend yield 0.00% 0.00% 2.10%Expected term 6 yrs. 6 yrs. 6 yrs. The expected volatility is based upon the Company’s historical experience. The expected term represents the period of time that options granted areexpected to be outstanding. The risk-free interest rate utilized for periods throughout the contractual life of the options are based on U.S. Treasury securityyields at the time of grant.A summary of all stock option activity during 2010 is as follows: Number ofOptions WeightedAverageExercisePrice WeightedAverageRemainingContractualLife AggregateIntrinsicValue ($ inmillions) Options Outstanding at December 31, 2009 1,997,074 $12.42 6.3 $- Granted 10,000 $2.06 Exercised (75,874) $6.64 $0.3 Forfeited (42,232) $8.14 Expired (229,711) $16.35 Options Outstanding at December 31, 2010 1,659,257 $12.19 5.2 $3.9 Options Exercisable at December 31, 2010 1,397,400 $13.49 4.7 $2.2 The estimated fair value of the options granted in 2010, 2009 and 2008 were $1.35, $2.10 and $3.98 per option, respectively. The total intrinsicvalue of stock options exercised during 2010 and 2008 was $0.3 million and less than $0.1 million, respectively. No stock options were exercised during2009.Restricted stockRestricted stock awards vest over a period of three years and may be based on achievement of specific financial performance metrics. These sharesare valued at the market price on the date of grant, are forfeitable in the event of terminated employment prior to vesting and include the right to vote andreceive dividends. 57 A summary of all restricted stock activity during 2010 is as follows: Number ofShares WeightedAverageGrant DateFair Value Restricted Stock Outstanding at December 31, 2009 731,464 $7.64 Granted 10,000 $2.06 Vested (293,389) $10.74 Forfeited (67,815) $6.44 Restricted Stock Outstanding at December 31, 2010 380,260 $5.68 During 2010, 2009 and 2008, the Company granted 10,000, 500,544 and 448,900 shares of restricted stock with aggregate fair values on the date ofgrant of less than $0.1 million, $1.8 million and $3.9 million, respectively. The total fair value of restricted stock that vested during 2010, 2009 and 2008was $2.2 million, $0.3 million and $1.2 million, respectively.Cash-Settled Performance Units and Stock Appreciation RightsIn March 2010, the Company awarded eligible employees cash-settled stock appreciation rights and performance units. The stock appreciationrights vest over a three year period and provide each participant with the right to receive payment in cash representing the appreciation in the market value ofthe Company’s common stock from the grant date to the award’s vesting date. The per share exercise price of a stock appreciation right is equal to the closingmarket price of the Company’s stock on the date of grant. As of December 31, 2010, the weighted average fair market value of each remaining right was $8.70and will be remeasured at each reporting period using a binomial option-pricing model. The performance units vest over a three year period and provide eachparticipant with the right to receive payments in cash, upon vesting, for the lesser of the market value of the Company’s stock on the date of grant or thevesting date. As of December 31, 2010, the weighted average fair market value of each performance unit was $7.44 and will be remeasured at each reportingperiod using a binomial option-pricing model. The number of performance units actually awarded to eligible employees was based on the achievement ofspecific financial performance metrics.11. EMPLOYEE SAVINGS PLANSSubstantially all of the Company’s employees are eligible to participate in a defined contribution plan under Section 401(k) of the Internal RevenueCode. The Company also provides a non-qualified defined contribution plan for senior management and certain key employees. Both plans provide for theCompany to match, in cash, a percentage of each employee’s contributions up to certain limits. As of September 1, 2008, the Company reduced the matchingcontribution for its 401(k) plan and suspended all matching contributions to the non-qualified plan. Subsequently, as of April 1, 2009, the Companytemporarily suspended all matching contributions for its 401(k) plan. The temporary suspension of all matching contributions was effective throughout 2010and, therefore, no matching expenses were incurred. The Company’s matching contribution and related expense for these plans for the previous years of 2009and 2008 totaled approximately $0.3 million and $3.2 million, respectively.12. INCOME TAXES a.Income Before Income TaxesThe consolidated loss before income taxes for 2010, 2009 and 2008 consists of the following (in thousands): 2010 2009 2008 Domestic $(141,867) $(104,769) $(108,437)Foreign 56 3 (325)Total loss before income taxes $(141,811) $(104,766) $(108,762) 58 b.Income Tax (Benefit) ExpenseThe consolidated income tax (benefit) expense for 2010, 2009 and 2008 consists of the following components (in thousands): 2010 2009 2008 Current U.S. Federal $(163) $(127) $13 Foreign - - 14 State 112 32 (27)Deferred - (2,906) 17,064 Total consolidated (benefit) expense $(51) $(3,001) $17,064 The Company’s following table provides a reconciliation of differences from the U.S. Federal statutory rate of 35% as follows (in thousands): 2010 2009 2008 Pretax book loss $(141,811) $(104,766) $(108,762) Federal tax benefit at 35% statutory rate (49,634) (36,668) (38,067)State and local income taxes (6,981) (5,205) (4,650)Provisions for valuation allowance for net operating losses and credit carrryforwards - U.S. and states 7,604 23,944 48,272 Effect of non-deductible impairment of goodwill - - 10,212 Effect of non-deductible adjustment to fair market value of warrants 48,635 13,379 - Effect of non-deductible stock-based compensation 395 868 403 Other (70) 681 894 Total income tax (benefit) expense $(51) $(3,001) $17,064 The $3.0 million income tax benefit for the year ended December 31, 2009 was substantially associated with a change in the tax law whichpermitted the Company to recover U.S. federal alternative minimum taxes paid in 2004, 2005 and 2006 of $2.9 million against which the Companypreviously had recorded a full valuation allowance.c. Deferred TaxesThe Company’s deferred income taxes are primarily due to temporary differences between financial and income tax reporting for the depreciation of property,plant and equipment, amortization of intangibles, compensation adjustments, other accrued liabilities and tax credits and losses carried forward.Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all ofthe deferred tax assets will not be realized. During 2010, the Company recorded an additional $7.6 million net valuation allowance. Companies are requiredto assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence, bothpositive and negative, using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectivelyverified.The Company assesses, on a quarterly basis, the realizability of its deferred tax assets by evaluating all available evidence, both positive andnegative, including: (1) the cumulative results of operations in recent years, (2) the nature of recent losses, (3) estimates of future taxable income, (4) thelength of operating loss carryforward periods and (5) the uncertainty associated with a possible change in ownership, which imposes an annual limitation onthe use of these carryforwards. The Company has been in a cumulative three-year pre-tax loss position since the quarter ended December 31, 2008. Thecumulative three-year loss is considered significant negative evidence which is objective and verifiable. Additional negative evidence considered includedthe uncertainty regarding the magnitude and length of the current economic recession and the highly competitive nature of the transportation market.Positive evidence considered by the Company in its assessment included lengthy operating loss carryforward periods, a lack of unused expired operating losscarryforwards in the Company’s history and estimates of future taxable income. However, there is uncertainty as to the Company’s ability to meet itsestimates of future taxable income in order to recover its deferred tax assets in the United States. 59 After considering both the positive and negative evidence management determined that it was no longer more-likely-than-not that it would realizethe value of its deferred tax assets. As a result, the Company established a full valuation allowance against its net deferred tax assets as of December 31, 2010,2009 and 2008. In subsequent periods, the Company will continue to evaluate the deferred income tax asset valuation allowance and adjust the allowancewhen management has determined that it is more-likely than not, after considering both the positive and negative evidence, that the realizability of therelated deferred tax assets, or a portion thereof, has changed.As of December 31, 2010, the Company has U.S. federal tax net operating loss carryforwards (“NOLs”) of approximately $180 million, which willexpire beginning in 2022, if unused, and which may be subject to other limitations under Internal Revenue Service (the “IRS”) rules. The Company hasvarious multistate income tax net operating loss carryforwards, which have been recorded as a deferred income tax asset, of approximately $18 million, beforevaluation allowances. The Company also has various U.S. federal income tax credit carryforwards, which will expire beginning in 2013, if unused. TheCompany’s NOLs, including any future NOLs that may arise, are subject to limitations on use under the IRS rules, including Section 382 of the InternalRevenue Code of 1986 (“Section 382”), as revised. Section 382 limits the ability of a company to utilize NOLs in the event of an ownership change. TheCompany would undergo an ownership change if, among other things, the stockholders, or group of stockholders, who own or have owned, directly orindirectly, 5% or more of the value of the Company’s stock or are otherwise treated as 5% stockholders under Section 382 and the regulations promulgatedthereunder increase their aggregate percentage ownership of the Company’s stock by more than 50 percentage points over the lowest percentage of its stockowned by these stockholders at any time during the testing period, which is generally the three-year period preceding the potential ownership change.In the event of an ownership change, Section 382 imposes an annual limitation on the amount of post-ownership change taxable income a corporation mayoffset with pre-ownership change NOLs and certain recognized built-in losses. The limitation imposed by Section 382 for any post-change year would bedetermined by multiplying the value of our stock immediately before the ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate in effect at the time of the ownership change. Any unused annual limitation may be carried over to later years, and the limitation may undercertain circumstances be increased by built-in gains that may be present in assets held by us at the time of the ownership change that are recognized in thefive-year period after the ownership change. It is expected that any loss of the Company’s NOLs would cause its effective tax rate to go up significantly if theCompany returns to profitability, excluding impacts of valuation allowance.On May 28, 2010 a change of ownership did occur resulting from the issuance of 11,750,000 shares of common stock, which invoked a limitation on theutilization of pre-ownership change NOLs under Section 382. Pre-ownership change NOLs are $177 million. Management has estimated the annual NOLlimitations under Section 382 through 2014 to be the following: $70 million for 2011; $42 million for 2012; $40 million for 2013; and $25 million for2014. To the extent the limitation in any year is not reached, any remaining limitation can be carried forward indefinitely to future years. Post-ownershipchange NOLs at December 31, 2010 are $3 million, which is currently not subject to utilization limits.In 2009 the Company undertook a study to ensure that the change in ownership related to the issuance of the warrant in August 2009 did not result in aSection 382 limitation and believes that such a limitation was not triggered. However, there can be no assurance that such a change was not triggered at thattime due to lack of authoritative guidance. 60 The components of deferred tax assets and deferred tax liabilities as of December 31, 2010 and 2009 were as follows (in thousands): 2010 2009 Deferred tax assets Tax credits and loss carryforwards $81,808 $75,776 Accrued liabilities 5,518 6,174 Incentive compensation 7,439 7,983 Other 7,097 4,698 $101,862 $94,631 Deferred tax liabilities Property, plant and equipment (1,687) (2,550)Intangibles (2,766) (2,111)Other (525) (690) $(4,978) $(5,351)Net deferred tax asset before valuation allowances and reserves $96,884 $89,280 Valuation allowances (87,479) (79,875)Uncertain tax positions (9,405) (9,405)Net deferred tax asset $- $- d. Tax ReservesThe Company’s policy with respect to interest and penalties associated with reserves or allowances for uncertain tax positions is to classify suchinterest and penalties in income tax expense in the Statements of Operations. As of December 31, 2010 and 2009, the total amount of unrecognized incometax benefits was approximately $10.1 million, all of which, if recognized, would impact the effective income tax rate of the Company. As of December 31,2010 and 2009, the Company had recorded a total of $0.5 million and $0.4 million, respectively, of accrued interest and penalties related to uncertain taxpositions. The Company foresees no significant changes to the facts and circumstances underlying its reserves and allowances for uncertain income taxpositions as reasonably possible during the next 12 months. As of December 31, 2010, the Company is subject to unexpired statutes of limitation for U.S.federal income taxes for the years 2001 through 2010. The Company is also subject to unexpired statutes of limitation for Indiana state income taxes for theyears 2001 through 2010.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):Balance at January 1, 2009 $10,080 Balance at December 31, 2009 $10,080 Increase in prior year tax positions 15 Balance at December 31, 2010 $10,095 13. COMMITMENTS AND CONTINGENCIESa. LitigationVarious 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 matters 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 onfacts currently available, management believes that the disposition of matters that are currently pending or asserted other than the matters below, which areaddressed individually, will not have a material adverse effect on the Company's financial position, liquidity or results of operations. Costs associated withthe litigation and settlements of legal matters are reported within General and Administrative Expenses in the Consolidated Statements of Operations. 61 Brazil Joint VentureIn March 2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. ("BK") filed suit against the Company in the Fourth Civil Court ofCuritiba in the State of Paraná, Brazil. Because of the bankruptcy of BK, this proceeding is now pending before the Second Civil Court of Bankruptcies andCreditors Reorganization of Curitiba, State of Paraná (No. 232/99).The case grows out of a joint venture agreement between BK and the Company related to marketing of RoadRailer trailers in Brazil and other areas of SouthAmerica. When BK was placed into the Brazilian equivalent of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuitagainst the Company alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete clauses purportedlyfound in the joint venture agreement. BK asserts damages of approximately R$20.8 million (Brazilian Reais) which is approximately $12.5 million U.S.dollars using current exchange rates. The amount of damages asserted in local currency has not changed since 2001.We answered the complaint in May 2001, denying any wrongdoing. We believe that the claims asserted by BK are without merit and intend to vigorouslydefend our position. A bench (non-jury) trial was held on March 30, 2010 in Curitiba, Paraná, Brazil. A ruling on the evidence presented at the trial is notexpected for several months. We believe that the resolution of this lawsuit will not have a material adverse effect on our financial position, liquidity or futureresults of operations; however, at this stage of the proceeding no assurances can be given as to the ultimate outcome of the case.Intellectual PropertyIn October 2006, the Company filed a patent infringement suit against Vanguard National Corporation (“Vanguard”) regarding Wabash National’sU.S. Patent Nos. 6,986,546 and 6,220,651 in the U.S. District Court for the Northern District of Indiana (Civil Action No. 4:06-cv-135). The Companyamended the Complaint in April 2007. In May 2007, Vanguard filed its Answer to the Amended Complaint, along with Counterclaims seeking findings ofnon-infringement, invalidity, and unenforceability of the subject patents. The Company filed a reply to Vanguard’s counterclaims in May 2007, denying anywrongdoing or merit to the allegations as set forth in the counterclaims. The case has currently been stayed by agreement of the parties while the U.S. Patentand Trademark Office (“Patent Office”) undertakes a reexamination of U.S. Patent Nos. 6,986,546. The Patent Office recently notified the Company that thereexamination is complete and the Patent Office has reissued U.S. Patent No. 6,986,546 without cancelling any claims of the patent. The parties plan topetition the Court to lift the stay; however, it is unknown at this time when the petition to lift the stay may be granted. The Company believes that its claims against Vanguard have merit, that the claims asserted by Vanguard are without merit, and intends tovigorously defend its position and intellectual property. The Company believes that the resolution of this lawsuit will not have a material adverse effect onits financial position, liquidity or future results of operations; however, at this stage of the proceeding, no assurance can be given as to the ultimate outcomeof the case.Environmental DisputesIn September 2003, we were noticed as a potentially responsible party (PRP) by the U.S. Environmental Protection Agency (“EPA”) pertaining to theMotorola 52nd Street, Phoenix, Arizona Superfund Site (the “Superfund Site”) pursuant to the Comprehensive Environmental Response, Compensation andLiability Act (“CERCLA”). PRPs include current and former owners and operators of facilities at which hazardous substances were allegedly disposed. TheEPA’s allegation that we were a PRP arises out of our acquisition of a former branch facility located approximately five miles from the original SuperfundSite. We acquired this facility in 1997, operated the facility until 2000, and sold the facility to a third party in 2002. In June 2010, we were contacted by theRoosevelt Irrigation District (“RID”) informing it that the Arizona Department of Environmental Quality (“ADEQ”) had approved a remediation plan inexcess of $100 million for the RID portion of the Superfund Site, and demanded that we contribute to the cost of the plan or be named as a defendant in aCERCLA action to be filed in July 2010. We initiated settlement discussions with the RID and the ADEQ in July 2010 to provide a full release from the RID,and a covenant not-to-sue and contribution protection regarding the former branch property from the ADEQ, in exchange for payment from us. If thesettlement is approved by all parties, it will prevent any third party from successfully bringing claims against us for environmental contamination relating tothis former branch property. We are awaiting approval from the ADEQ for the settlement we proposed in July 2010; we do not expect to receive a responsefrom the ADEQ for several more months. Based upon our limited period of ownership of the former branch property, and the fact that we no longer own theformer branch property, we do not anticipate that the ADEQ will reject the proposed settlement, but no assurance can be given at this time as to the ADEQ’sresponse to the settlement proposal. The proposed settlement terms have been accrued and did not have a material adverse effect on our financial condition orresults of operations, and we believe that any ongoing proceedings will not have a material adverse effect on the Company’s financial condition or results ofoperations. 62 In January 2006, the Company received a letter from the North Carolina Department of Environment and Natural Resources indicating that a sitethat the Company formerly owned near Charlotte, North Carolina has been included on the state's October 2005 Inactive Hazardous Waste Sites Priority List.The letter states that the Company was being notified in fulfillment of the state's “statutory duty” to notify those who own and those who at present areknown to be responsible for each Site on the Priority List. No action is being requested from the Company at this time. The Company does not expect thatthis designation will have a material adverse effect on its financial condition or results of operations.b. Environmental Litigation Commitments and ContingenciesThe Company generates and handles certain material, wastes and emissions in the normal course of operations that are subject to various andevolving federal, state and local environmental laws and regulations.The Company assesses its environmental liabilities on an on-going basis by evaluating currently available facts, existing technology, presentlyenacted laws and regulations as well as experience in past treatment and remediation efforts. Based on these evaluations, the Company estimates a lower andupper range for treatment and remediation efforts and recognizes a liability for such probable costs based on the information available at the time. As ofDecember 31, 2010, in addition to a reserve of $0.2 million relating to the ADEQ proposed settlement discussed above, the Company had reserved estimatedremediation costs of $0.2 million for activities at a former branch property.c. Letters of CreditAs of December 31, 2010, the Company had standby letters of credit totaling $5.8 million issued in connection with workers compensation claims and suretybonds.d. Purchase CommitmentsThe Company has $34.3 million in purchase commitments through December 2011 for aluminum, which is within normal production requirements.14. SEGMENTS AND RELATED INFORMATION a.Segment ReportingThe Company has two reportable segments: manufacturing and retail and distribution. The manufacturing segment produces and sells new trailers tothe retail and distribution segment or to customers who purchase trailers directly from the Company or through independent dealers. The retail anddistribution segment includes the sale of new and used trailers, as well as the sale of after-market parts and service, through its retail branch network.The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that the Companyevaluates segment performance based on income from operations. The Company has not allocated certain corporate related administrative costs, interest andincome taxes included in the manufacturing segment to the Company’s other reportable segment. The Company accounts for intersegment sales and transfersat cost plus a specified mark-up. Reportable segment information is as follows (in thousands): 63 Retail and Combined Consolidated Manufacturing Distribution Segments Eliminations Total 2010 Net sales External customers $542,016 $98,356 $640,372 $- $640,372 Intersegment sales 33,787 - 33,787 (33,787) $- Total net sales $575,803 $98,356 $674,159 $(33,787) $640,372 Depreciation and amortization 16,172 683 16,855 - 16,855 (Loss) Income from operations (15,532) 297 (15,235) (182) (15,417)Reconciling items to net loss Increase in fair value of warrant 121,587 Interest expense 4,140 Other, net 667 Income tax benefit (51)Net loss $(141,760)Capital expenditures $1,616 $166 $1,782 $- $1,782 Assets $436,015 $96,821 $532,836 $(230,002) $302,834 2009 Net sales External customers $265,541 $72,299 $337,840 $- $337,840 Intersegment sales 13,977 - 13,977 (13,977) $- Total net sales $279,518 $72,299 $351,817 $(13,977) $337,840 Depreciation and amortization 18,728 857 19,585 - 19,585 (Loss) Income from operations (57,459) (8,827) (66,286) 212 (66,074)Reconciling items to net loss Increase in fair value of warrant 33,447 Interest expense 4,379 Other, net 866 Income tax benefit (3,001)Net loss $(101,765)Capital expenditures $837 $144 $981 $- $981 Assets $358,351 $95,246 $453,597 $(229,820) $223,777 2008 Net sales External customers $694,187 $142,026 $836,213 $- $836,213 Intersegment sales 50,712 32 50,744 (50,744) $- Total net sales $744,899 $142,058 $886,957 $(50,744) $836,213 Depreciation and amortization 20,356 1,111 21,467 - 21,467 Impairment of goodwill 66,317 - 66,317 - 66,317 (Loss) Income from operations (98,840) (5,991) (104,831) 1,054 (103,777)Reconciling items to net loss Interest expense 4,657 Other, net 328 Income tax expense 17,064 Net loss $(125,826)Capital expenditures $12,221 $392 $12,613 $- $12,613 Assets $442,614 $119,647 $562,261 $(230,287) $331,974 b. Customer ConcentrationFor 2010 and 2009, the Company had one manufacturing segment customer which represented approximately 10% and 14%, respectively, of ourconsolidated net sales. For 2008, no customer represented more than 10% of consolidated net sales. International sales, primarily to Canadian customers,accounted for less than 10% in each of the last three years. 64 c. Product InformationThe Company offers products primarily in three general categories: new trailers, used trailers and parts, service and other. The following table setsforth the major product categories and their percentage of consolidated net sales (dollars in thousands): 2010 2009 2008 New Trailers $550,470 86.0% $272,678 80.7% $741,011 88.6%Used Trailers 22,619 3.5 19,109 5.7 36,512 4.4 Parts, service and other 67,283 10.5 46,053 13.6 58,690 7.0 Total Sales $640,372 100.0% $337,840 100.0% $836,213 100.0%15. CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)The following is a summary of the unaudited quarterly results of operations for fiscal years 2010, 2009 and 2008 (dollars in thousands except pershare amounts): First Second Third Fourth Quarter Quarter Quarter Quarter 2010 Net sales $78,274 $149,699 $170,848 $241,551 Gross profit (976) 5,301 6,467 17,291 Net (loss) income(1) (139,079) (5,602) (1,938) 4,859 Basic and diluted net (loss) income per share(2)(3) (4.64) (0.72) (0.03) 0.07 2009 Net sales $77,937 $86,206 $88,324 $85,373 Gross profit (15,476) (5,231) (321) (1,882)Net (loss) income(1) (28,284) (17,935) (66,404) 10,858 Basic and diluted net (loss) income per share(2)(3) (0.94) (0.59) (2.23) 0.15 2008 Net sales $161,061 $201,484 $242,953 $230,715 Gross profit 5,905 10,773 8,988 (4,742)Net loss(4)(5) (6,387) (3,203) (4,330) (111,906)Basic and diluted net loss per share(3) (0.21) (0.11) (0.15) (3.73) (1)Net (loss) income includes a non-cash benefit (charge) of ($54.0) million, $20.5 million, ($126.8) million, $1.9 million and $3.3 million related tothe change in the fair value of the Company’s warrant for the third and fourth quarters of 2009 and the first, second and third quarters of 2010,respectively. (2)Basic and diluted net income (loss) per share includes $1.1 million, $2.2 million, $2.0 million and $1.3 million of preferred stock dividends forthe third and fourth quarters of 2009 and the first and second quarters of 2010, respectively. The second quarter of 2010 also includes a $22.1million loss on early extinguishment of preferred stock. (3)Net income (loss) per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net income (loss) pershare may differ from annual net income (loss) per share due to rounding. (4)The fourth quarter of 2008 included $66.3 million of expense related to the impairment of goodwill. (5)The fourth quarter of 2008 included $23.1 million of expense related to establishing a full tax valuation allowance.ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone 65 ITEM 9A—CONTROLS AND PROCEDURESDisclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance to our management and board of directors thatinformation required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed,summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information isaccumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timelydecisions regarding required disclosure. Based on an evaluation conducted under the supervision and with the participation of the Company’s management,including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls andprocedures as of December 31, 2010, including those procedures described below, we, including our Chief Executive Officer and our Chief Financial Officer,determined that those controls and procedures were effective.Changes in Internal ControlsThere were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, duringthe fourth quarter of fiscal 2010 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.Report of Management on Internal Control over Financial ReportingThe management of Wabash National Corporation (the Company), is responsible for establishing and maintaining adequate internal control overfinancial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of the financial statements in accordance with U.S. generally accepted accounting principles; (3) provide reasonableassurance that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of theCompany; and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’sassets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies and procedures may deteriorate.Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010, based on criteria foreffective internal control over financial reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO). Based on this assessment, we have concluded that internal control over financial reporting is effective as of December31, 2010.Ernst & Young LLP, an Independent Registered Public Accounting Firm, has audited the Company’s consolidated financial statements as of and forthe year ended December 31, 2010, and its report on internal controls over financial reporting as of December 31, 2010 appears on the following page.Richard J. GirominiPresident and Chief Executive OfficerMark J. WeberSenior Vice President and Chief Financial OfficerFebruary 25, 2011 66 Report of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Wabash National Corporation:We have audited Wabash National Corporation’s internal control over financial reporting as of December 31, 2010, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). WabashNational Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over FinancialReporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained inall material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.In our opinion, Wabash National Corporation maintained, in all material respects, effective internal control over financial reporting as of December31, 2010, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidatedbalance sheets of Wabash National Corporation as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholder’sequity, and cash flows for each of the three years in the period ended December 31, 2010 and our report dated February 25, 2011 expressed an unqualifiedopinion thereon. Ernst & Young LLPIndianapolis, IndianaFebruary 25, 2011 67 ITEM 9B—OTHER INFORMATIONNone.PART IIIITEM 10—EXECUTIVE OFFICERS OF THE REGISTRANTThe Company hereby incorporates by reference the information contained under the heading “Executive Officers of Wabash National Corporation”from Item 1 Part I of this Annual Report.The Company hereby incorporates by reference the information contained under the headings “Section 16(a) Beneficial Ownership ReportingCompliance” or “Election of Directors” from its definitive Proxy Statement to be delivered to stockholders of the Company in connection with the 2011Annual Meeting of Stockholders to be held May 19, 2011.Code of EthicsAs part of our system of corporate governance, our Board of Directors has adopted a Code of Business Conduct and Ethics (Code of Ethics) that is specificallyapplicable to our Chief Executive Officer and Senior Financial Officers. This Code of Ethics is available on the Investors page of the Company Info section ofour website at www.wabashnational.com/investors/index.htm. We will disclose any waivers for our Chief Executive Officer or Senior Financial Officersunder, or any amendments to, our Code of Ethics by posting such information on our website at the address above.ITEM 11—EXECUTIVE COMPENSATIONThe Company hereby incorporates by reference the information contained under the headings “Executive Compensation" and “DirectorCompensation” from its definitive Proxy Statement to be delivered to the stockholders of the Company in connection with the 2011 Annual Meeting ofStockholders to be held May 19, 2011.ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe Company hereby incorporates by reference the information contained under the headings "Beneficial Ownership of Common Stock" and“Equity Compensation Plan Information” from its definitive Proxy Statement to be delivered to the stockholders of the Company in connection with the2011 Annual Meeting of Stockholders to be held on May 19, 2011.ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe Company hereby incorporates by reference the information contained under the headings “Election of Directors” and "Related PartyTransactions" from its definitive Proxy Statement to be delivered to the stockholders of the Company in connection with the 2011 Annual Meeting ofStockholders to be held on May 19, 2011.ITEM 14—PRINCIPAL ACCOUNTING FEES AND SERVICESInformation required by Item 14 of this form and the audit committee’s pre-approval policies and procedures regarding the engagement of theprincipal accountant are incorporated herein by reference to the information contained under the heading “Ratification of the Appointment of IndependentRegistered Public Accounting Firm” from the Company’s definitive Proxy Statement to be delivered to the stockholders of the Company in connection withthe 2011 Annual Meeting of Stockholders to be held on May 19, 2011. 68 PART IVITEM 15—EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a)Financial Statements: The Company has included all required financial statements in Item 8 of this Form 10-K. The financial statement scheduleshave been omitted as they are not applicable or the required information is included in the Notes to the consolidated financial statements.(b)Exhibits: The following exhibits are filed with this Form 10-K or incorporated herein by reference to the document set forth next to the exhibit listedbelow:2.01Stock Purchase Agreement by and among the Company, Transcraft Corporation and Transcraft Investment Partners, L.P. dated as of March 3,2006 (12)3.01Certificate of Incorporation of the Company (1)3.02Certificate of Designations of Series D Junior Participating Preferred Stock (10)3.03Certificate of Designations, Preferences and Rights of Series E Redeemable Preferred Stock (18)3.04Certificate of Designations, Preferences and Rights of Series F Redeemable Preferred Stock (18)3.05Certificate of Designations, Preferences and Rights of Series G Redeemable Preferred Stock (18)3.06Amended and Restated Bylaws of the Company, as amended (18)3.07Certificate of Elimination of Series E Redeemable Preferred Stock (23)3.08Certificate of Elimination of Series F Redeemable Preferred Stock (23)3.09Certificate of Elimination of Series G Redeemable Preferred Stock (23)4.01Specimen Stock Certificate (2)4.02Rights Agreement between the Company and National City Bank as Rights Agent dated December 28, 2005 (11)4.03Amendment No. 1 to the Rights Agreement dated July 17, 2009 (17)10.01#1992 Stock Option Plan (1)10.02#2000 Stock Option Plan (3)10.03#Executive Employment Agreement dated June 28, 2002 between the Company and Richard J. Giromini (4)10.04#Non-qualified Stock Option Agreement dated July 15, 2002 between the Company and Richard J. Giromini (4)10.05#Non-qualified Stock Option Agreement between the Company and William P. Greubel (4)10.06Asset Purchase Agreement dated July 22, 2003 (5)10.07Amendment No. 1 to the Asset Purchase Agreement dated September 19, 2003 (5)10.08#2004 Stock Incentive Plan (6)10.09#Form of Associate Stock Option Agreements under the 2004 Stock Incentive Plan (7)10.10#Form of Associate Restricted Stock Agreements under the 2004 Stock Incentive Plan (7)10.11#Form of Executive Stock Option Agreements under the 2004 Stock Incentive Plan (7)10.12#Form of Executive Restricted Stock Agreements under the 2004 Stock Incentive Plan (7)10.13#Restricted Stock Unit Agreement between the Company and William P. Greubel dated March 7, 2005 (8)10.14#Stock Option Agreement between the Company and William P. Greubel dated March 7, 2005 (8)10.15#Corporate Plan for Retirement – Executive Plan (9)10.16#Change in Control Policy (15)10.17#Executive Severance Policy (15)10.18#Form of Restricted Stock Unit Agreement under the 2004 Stock Incentive Plan (13)10.19#Form of Restricted Stock Agreement under the 2004 Stock Incentive Plan (13)10.20#Form of CEO and President Restricted Stock Agreement under the 2004 Stock Incentive Plan (13)10.21#Form of Stock Option Agreement under the 2004 Stock Incentive Plan (13)10.22#Form of CEO and President Stock Option Agreement under the 2004 Stock Incentive Plan (13)10.23#Executive Director Agreement dated January 1, 2007 between the Company and William P. Greubel (14)10.24#Amendment to Executive Employment Agreement dated January 1, 2007 between the Company and Richard J. Giromini (14)10.25#Form of Non-Qualified Stock Option Agreement under the 2007 Omnibus Incentive Plan (15)10.26#Form of Restricted Stock Agreement under the 2007 Omnibus Incentive Plan (15)10.27#2007 Omnibus Incentive Plan, as amended (16)10.28Securities Purchase Agreement by and between the Company and Trailer Investments, LLC, dated July 17, 2009 (17) 69 10.29Third Amended and Restated Loan and Security Agreement by and among the Company and certain of its subsidiaries identified on thesignature page thereto, Bank of America, N.A., and the other lender parties thereto, dated July 17, 2009 (17)10.30Investor Rights Agreement by and between the Company and Trailer Investments, LLC dated August 3, 2009 (18)10.31Warrant to Purchase Shares of Common Stock issued August 3, 2009 (18)10.32Form of Indemnification Agreement with investor directors (18)10.33Consent and Amendment No. 1 to the Third Amended and Restated Loan and Security Agreement, by and among the Company and certain of itssubsidiaries identified on the signature page thereto, Bank of America, N.A. , as a Lender and as Agent, as the other Lender parties thereto (19)10.34Consent and Waiver dated May 24, 2010 between the Company and Trailer Investments, Inc. (20)10.35Replacement Warrant to Purchase Shares of Common Stock issued on May 28, 2010 (21)10.36Amendment to Warrant to Purchase Shares of Common Stock issued on May 28, 2010 (22)21.00List of Significant Subsidiaries (24)23.01Consent of Ernst & Young LLP (24)31.01Certification of Principal Executive Officer (24)31.02Certification of Principal Financial Officer (24)32.01Written 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) (24) #Management contract or compensatory plan. (1)Incorporated by reference to the Registrant's Registration Statement on Form S-1 (No. 33-42810) or the Registrant’s Registration Statement onForm 8-A filed December 6, 1995 (item 3.02 and 4.02) (2)Incorporated by reference to the Registrant’s registration statement Form S-3 (Registration No. 333-27317) filed on May 16, 1997 (3)Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended March 31, 2001 (File No. 1-10883) (4)Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2002 (File No. 1-10883) (5)Incorporated by reference to the Registrant’s Form 8-K filed on September 29, 2003 (File No. 1-10883) (6)Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2004 (File No. 1-10883) (7)Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2004 (File No. 1-10883) (8)Incorporated by reference to the Registrant’s Form 8-K filed on March 11, 2005 (File No. 1-10883) (9)Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended March 31, 2005 (File No. 1-10883) (10)Incorporated by reference to the Registrant’s Form 8-K filed on December 28, 2005 (File No. 1-10883) (11)Incorporated by reference to the Registrant’s registration statement on Form 8-A12B filed on December 28, 2005 (File No. 1-10883) (12)Incorporated by reference to the Registrant’s Form 8-K filed on March 8, 2006 (File No. 1-10883) (13)Incorporated by reference to the Registrant’s Form 8-K filed on May 18, 2006 (File No. 1-10883) (14)Incorporated by reference to the Registrant’s Form 8-K filed on January 8, 2007 (File No. 1-10883) (15)Incorporated by reference to the Registrant’s Form 8-K filed on May 24, 2007 (File No. 1-10883) (16)Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2007 (File No. 1-10883) (17)Incorporated by reference to the Registrant’s Form 8-K filed on July 20, 2009 (File No. 1-10883) (18)Incorporated by reference to the Registrant’s Form 8-K filed on August 4, 2009 (File No. 1-10883) (19)Incorporated by reference to the Registrant’s Form 8-K filed on May 21, 2010 (File No. 1-10883) (20)Incorporated by reference to the Registrant’s Form 8-K filed on May 26, 2010 (File No. 1-10883) (21)Incorporated by reference to the Registrant’s Form 8-K filed on June 3, 2010 (File No. 1-10883) (22)Incorporated by reference to the Registrant’s Form 8-K filed on September 17, 2010 (File No. 1-10883) (23)Incorporated by reference to the Registrant’s Form 8-K filed on September 23, 2010 (File No. 1-10883) (24)Filed herewith 70 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.WABASH NATIONAL CORPORATIONFebruary 25, 2011By:/s/ Mark J. Weber Mark J. Weber Senior Vice President and Chief Financial Officer(Principal Financial Officer and Principal AccountingOfficer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant inthe capacities and on the date indicated.Date Signature and Title February 25, 2011 By:/s/ Richard J. Giromini Richard J. Giromini President and Chief Executive Officer, Director (Principal Executive Officer) February 25, 2011 By:/s/ Mark J. Weber Mark J. Weber Senior Vice President and Chief Financial Officer(Principal Financial Officer and Principal AccountingOfficer) February 25, 2011 By:/s/ Martin C. Jischke Dr. Martin C. Jischke Chairman of the Board of Directors February 25, 2011 By:/s/ James D. Kelly James D. Kelly Director February 25, 2011 By:/s/ Larry J. Magee Larry J. Magee Director February 25, 2011 By:/s/ Scott K. Sorensen Scott K. Sorensen Director February 25, 2011 By:/s/ Ronald L. Stewart Ronald L. Stewart Director 71  Exhibit 21.00SUBSIDIARIES OF THE COMPANY ANDOWNERSHIP OF SUBSIDIARY STOCK STATE OF % OF SHARES OWNEDNAME OF SUBSIDIARY INCORPORATION BY THE CORPORATION* Wabash National Trailer Centers, Inc. Delaware 100% Wabash Wood Products, Inc. Arkansas 100% Wabash National, L.P. Delaware 100% Wabash National Manufacturing, L.P. Delaware 100% Wabash National Services, L.P. Delaware 100% Continental Transit Corporation Indiana 100% Transcraft Corporation Delaware 100%*Includes both direct and indirect ownership by the parent, Wabash National Corporation  Exhibit 23.01Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-3 No. 333-109375) of Wabash National Corporation(2)Registration Statement (Form S-3 No. 333-166406) of Wabash National Corporation(3)Registration Statement (Form S-3 No. 333-168944) of Wabash National Corporation(4)Registration Statement (Form S-8 No. 333-54714) pertaining to the 2000 Stock Option and Incentive Plan of Wabash National Corporation(5)Registration Statement (Form S-8 No. 333-29309) pertaining to the 1992 Stock Option Plan and Stock Bonus Plan of Wabash National Corporation(6)Registration Statement (Form S-8 No. 33-49256) pertaining to the 1992 Stock Option Plan of Wabash National Corporation(7)Registration Statement (Form S-8 No. 33-65698) pertaining to the 1993 Employee Stock Purchase Plan of Wabash National Corporation(8)Registration Statement (Form S-8 No. 33-90826) pertaining to the Directors and Executives Deferred Compensation Plan of Wabash NationalCorporation(9)Registration Statement (Form S-8 No. 333-115682) pertaining to the 2004 Stock Incentive Plan of Wabash National Corporation(10)Registration Statement (Forms S-8 No. 333-113157) pertaining to the Non-Qualified Stock Option Agreements for William P. Greubel, Richard J.Giromini and Timothy J. Monahan of Wabash National Corporationof our reports dated February 25, 2011, with respect to the consolidated financial statements of Wabash National Corporation and internal control overfinancial reporting of Wabash National Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2010./s/ Ernst & Young LLPIndianapolis, IndianaFebruary 25, 2011  Exhibit 31.01CERTIFICATIONSI, Richard J. Giromini, certify that: 1. I have reviewed this report on Form 10-K 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 thestatements 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 annual report, fairly present in all material respectsthe 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant'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 reasonablylikely 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 controlover financial reporting.Date: February 25, 2011 /s/Richard J. Giromini Richard J. Giromini President and Chief Executive Officer (Principal Executive Officer)  Exhibit 31.02CERTIFICATIONSI, Mark J. Weber, certify that: 1. I have reviewed this report on Form 10-K 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 thestatements 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 annual report, fairly present in all material respectsthe 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely 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 controlover financial reporting. Date: February 25, 2011 /s/ Mark J. Weber Mark J. Weber Senior Vice President and Chief Financial Officer (Principal Financial Officer)  Exhibit 32.01 Written Statement of Chief Executive Officer and Chief Financial OfficerPursuant to Section 906of 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"), eachhereby certifies that, to his knowledge, on February 25, 2011:(a)the Form 10K Annual Report of the Company for the year ended December 31, 2010 filed on February 25, 2011, with the Securities and ExchangeCommission (the “Report”) fully complies with the requirements of Section 13(a) of 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/ Richard J. Giromini Richard J. Giromini President and Chief Executive Officer February 25, 2011 /s/ Mark J. Weber Mark J. Weber Senior Vice President and Chief Financial Officer February 25, 2011 

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