##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 000-51237
 FREIGHTCAR AMERICA, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of incorporation or organization)
    
    25-1837219
(I.R.S. Employer Identification No.)
 Two North Riverside Plaza, Suite 1250
Chicago, Illinois
(Address of principal executive offices)
    
    60606
(Zip Code)
 (800) 458-2235
(Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



FREIGHTCAR AMERICA, INC.
 INDEX TO FORM 10-Q
 Item
    
    PageNumber
    
    NumberPART I  FINANCIAL INFORMATION1. Financial Statements:Condensed Consolidated Balance Sheets (Unaudited) as of
June 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the
Three and Six Months Ended June 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Six Months Ended June 30, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    62. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    143. Quantitative and Qualitative Disclosures About Market Risk
    
    
    214. Controls and Procedures
    
    
    21PART II  OTHER INFORMATION1. Legal Proceedings
    
    
    221A. Risk Factors
    
    
    222. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    223. Defaults Upon Senior Securities
    
    
    224. Submission of Matters to a Vote of Security Holders
    
    
    225. Other Information
    
    
    236. Exhibits
    
    
    23Signatures
    
    
    24EX-31.1EX-31.2EX-32
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 FreightCar
America, Inc.
 
 Condensed Consolidated Balance Sheets
(Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    150,855
    
    
    $
    197,042Accounts receivable, net of allowance for
doubtful accounts of $351 and $223,
respectively
    
    
    6,806
    
    
    
    13,068Inventories
    
    
    95,158
    
    
    
    49,845Leased railcars held for sale
    
    
    46,380
    
    
    
    Other current assets
    
    
    12,744
    
    
    
    7,223Deferred income taxes
    
    
    16,390
    
    
    
    13,520Total current assets
    
    
    328,333
    
    
    
    280,698Property, plant and equipment, net
    
    
    27,717
    
    
    
    26,921Goodwill
    
    
    21,521
    
    
    
    21,521Deferred income taxes
    
    
    26,909
    
    
    
    21,035Other long-term assets
    
    
    5,373
    
    
    
    5,709Total assets
    
    $
    409,853
    
    
    $
    355,884Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    106,105
    
    
    $
    39,525Accrued payroll and employee benefits
    
    
    9,363
    
    
    
    13,320Accrued postretirement benefits
    
    
    5,188
    
    
    
    5,188Accrued warranty
    
    
    10,916
    
    
    
    10,551Customer deposits
    
    
    2,262
    
    
    
    19,836Other current liabilities
    
    
    6,772
    
    
    
    7,100Total current liabilities
    
    
    140,606
    
    
    
    95,520Accrued pension costs
    
    
    20,881
    
    
    
    10,685Accrued postretirement benefits, less current portion
    
    
    56,619
    
    
    
    47,890Other long-term liabilities
    
    
    3,843
    
    
    
    3,717Total liabilities
    
    
    221,949
    
    
    
    157,812Commitments and contingenciesStockholders equityPreferred stock, $0.01 par value; 2,500,000
shares authorized (100,000 shares each
designated as Series A voting and Series B
non-voting); 0 shares issued and outstanding
at June 30, 2008 and December 31, 2007
    
    
    
    
    
    
    Common stock, $0.01 par value; 50,000,000
shares authorized, 12,731,678 shares issued
at June 30, 2008 and December 31, 2007
    
    
    127
    
    
    
    127Additional paid in capital
    
    
    97,527
    
    
    
    99,270Treasury stock, at cost, 836,729 and 918,257
shares at June 30, 2008 and December 31,
2007, respectively
    
    
    (39,726
    )
    
    
    (43,597
    )Accumulated other comprehensive loss
    
    
    (9,627
    )
    
    
    (9,857
    )Retained earnings
    
    
    139,603
    
    
    
    152,129Total stockholders equity
    
    
    187,904
    
    
    
    198,072Total liabilities and stockholders equity
    
    $
    409,853
    
    
    $
    355,884
 See Notes to Condensed Consolidated Financial Statements.
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##### Table of Contents



FreightCar
America, Inc.
 
 Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except share and per share data)Sales
    
    $
    141,335
    
    
    $
    195,360
    
    
    $
    236,433
    
    
    $
    517,811Cost of sales
    
    
    134,706
    
    
    
    170,667
    
    
    
    220,521
    
    
    
    448,985Gross profit
    
    
    6,629
    
    
    
    24,693
    
    
    
    15,912
    
    
    
    68,826Selling, general and administrative expense
(including non-cash stock-based compensation
expense of $729, $687, $1,692 and $1,355,
respectively)
    
    
    7,283
    
    
    
    8,684
    
    
    
    15,869
    
    
    
    18,970Special charges
    
    
    1,602
    
    
    
    
    
    
    
    19,865
    
    
    
    Operating (loss) income
    
    
    (2,256
    )
    
    
    16,009
    
    
    
    (19,822
    )
    
    
    49,856Interest income
    
    
    746
    
    
    
    2,260
    
    
    
    2,090
    
    
    
    4,669Interest expense
    
    
    76
    
    
    
    108
    
    
    
    157
    
    
    
    214Amortization of deferred financing costs
    
    
    21
    
    
    
    76
    
    
    
    41
    
    
    
    153Operating (loss) income before income taxes
    
    
    (1,607
    )
    
    
    18,085
    
    
    
    (17,930
    )
    
    
    54,158Income tax (benefit) provision
    
    
    (721
    )
    
    
    6,632
    
    
    
    (6,829
    )
    
    
    19,753Net (loss) income
    
    $
    (886
    )
    
    $
    11,453
    
    
    $
    (11,101
    )
    
    $
    34,405Net (loss) income per common share  basic
    
    $
    (0.08
    )
    
    $
    0.94
    
    
    $
    (0.94
    )
    
    $
    2.77Net (loss) income per common share  diluted
    
    $
    (0.08
    )
    
    $
    0.93
    
    
    $
    (0.94
    )
    
    $
    2.75Weighted average common shares outstanding  basic
    
    
    11,780,327
    
    
    
    12,227,256
    
    
    
    11,760,063
    
    
    
    12,411,238Weighted average common shares outstanding  diluted
    
    
    11,780,327
    
    
    
    12,307,011
    
    
    
    11,760,063
    
    
    
    12,523,593Dividends declared per common share
    
    $
    
    
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.12
 See Notes to Condensed Consolidated Financial Statements.
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FreightCar
America, Inc.
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months EndedJune 30,2008
    
    
    2007(In thousands)Cash flows from operating activitiesNet (loss) income
    
    $
    (11,101
    )
    
    $
    34,405Adjustments to reconcile net (loss) income to net cash flows used in operating activitiesSpecial charges
    
    
    19,865
    
    
    
    Depreciation and amortization
    
    
    1,992
    
    
    
    1,872Other non-cash items
    
    
    (547
    )
    
    
    1,111Deferred income taxes
    
    
    (8,720
    )
    
    
    55Compensation expense under stock option and restricted share award agreements
    
    
    1,692
    
    
    
    1,355Changes in operating assets and liabilities:Accounts receivable
    
    
    6,262
    
    
    
    (4,959
    )Inventories
    
    
    (44,560
    )
    
    
    20,056Leased railcars held for sale
    
    
    (46,380
    )
    
    
    Other current assets
    
    
    (6,184
    )
    
    
    (1,198
    )Accounts payable
    
    
    65,998
    
    
    
    (44,988
    )Accrued payroll and employee benefits
    
    
    (4,257
    )
    
    
    (5,645
    )Income taxes receivable/payable
    
    
    793
    
    
    
    (5,345
    )Accrued warranty
    
    
    365
    
    
    
    566Customer deposits and other current liabilities
    
    
    (17,898
    )
    
    
    1,180Accrued pension costs and accrued postretirement benefits
    
    
    440
    
    
    
    (2,583
    )Net cash flows used in operating activities
    
    
    (42,240
    )
    
    
    (4,118
    )Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (2,943
    )
    
    
    (4,205
    )Proceeds from sale of property, plant and equipment
    
    
    18
    
    
    
    Net cash flows used in investing activities
    
    
    (2,925
    )
    
    
    (4,205
    )Cash flows from financing activitiesPayments on long-term debt
    
    
    (32
    )
    
    
    (30
    )Stock repurchases
    
    
    
    
    
    
    (29,622
    )Issuance of common stock
    
    
    627
    
    
    
    2,089Excess tax benefit from stock-based compensation
    
    
    (192
    )
    
    
    800Cash dividends paid to stockholders
    
    
    (1,425
    )
    
    
    (1,506
    )Net cash flows used in financing activities
    
    
    (1,022
    )
    
    
    (28,269
    )Net decrease in cash and cash equivalents
    
    
    (46,187
    )
    
    
    (36,592
    )Cash and cash equivalents at beginning of period
    
    
    197,042
    
    
    
    212,026Cash and cash equivalents at end of period
    
    $
    150,855
    
    
    $
    175,434Supplemental cash flow information:Income taxes paid
    
    $
    1,276
    
    
    $
    24,259
 See Notes to Condensed Consolidated Financial Statements.
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##### Table of Contents



FreightCar
America, Inc.
 
 Notes to Condensed Consolidated Financial Statements
(Unaudited)  (In thousands, except share and per share data)
 Note 1  Description of the Business
  Note 2  Basis of Presentation
  Note 3  Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 Business Combinations,
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##### Table of Contents



Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51 Consolidated Financial Statements
 Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133.
 Determination of the
Useful Life of Intangible Assets. Goodwill and Other Intangible Assets
 Accounting for Convertible Debt Instruments That May
Be Settled in Cash Upon Conversion (Including Partial Cash Settlement).
 Note 4  Inventories
  7




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June 30,
    
    
    December 31,2008
    
    
    2007Work in progress
    
    $
    82,818
    
    
    $
    48,088Finished new railcars
    
    
    12,340
    
    
    
    1,757Total inventories
    
    $
    95,158
    
    
    $
    49,845
  Note 5  Leased Railcars Held for Sale
    Six months ending December 31, 2008
    
    $
    1,926Year ending December 31, 2009
    
    
    1,665Year ending December 31, 2010
    
    
    246Thereafter
    
    
    $
    3,837
 Note 6  Property, Plant and Equipment
  June 30,
    
    
    December 31,2008
    
    
    2007Land
    
    $
    701
    
    
    $
    701Buildings and improvements
    
    
    20,717
    
    
    
    20,559Machinery and equipment
    
    
    39,284
    
    
    
    40,228Cost of buildings, improvements, machinery and equipment
    
    
    60,001
    
    
    
    60,787Less: Accumulated depreciation and amortization
    
    
    (36,228
    )
    
    
    (35,697
    )Buildings, improvements, machinery and equipment, net
of accumulated depreciation and amortization
    
    
    23,773
    
    
    
    25,090Construction in process
    
    
    3,243
    
    
    
    1,130Total property, plant and equipment, net
    
    $
    27,717
    
    
    $
    26,921
 Note 7  Goodwill and Intangible Assets
 Goodwill and Other
Intangible Assets
  8




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June 30,
    
    
    December 31,2008
    
    
    2007Patents
    
    $
    13,097
    
    
    $
    13,097Accumulated amortization
    
    
    (8,310
    )
    
    
    (8,014
    )Patents, net of accumulated amortization
    
    
    4,787
    
    
    
    5,083Goodwill
    
    
    21,521
    
    
    
    21,521Total goodwill and intangible assets
    
    $
    26,308
    
    
    $
    26,604
  Note 8  Product Warranties
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at the beginning of the period
    
    $
    10,173
    
    
    $
    12,798
    
    
    $
    10,551
    
    
    $
    12,051Warranties issued during the period
    
    
    1,223
    
    
    
    567
    
    
    
    1,721
    
    
    
    2,099Reductions for payments, cost of repairs and other
    
    
    (480
    )
    
    
    (748
    )
    
    
    (1,356
    )
    
    
    (1,533
    )Balance at the end of the period
    
    $
    10,916
    
    
    $
    12,617
    
    
    $
    10,916
    
    
    $
    12,617
 Note 9  Revolving Credit Facility
   Note 10  Stock-Based Compensation
  9




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Note 11  Comprehensive (Loss) Income
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net operating (loss) income
    
    $
    (886
    )
    
    $
    11,453
    
    
    $
    (11,101
    )
    
    $
    34,405Other comprehensive income:Amortization of prior
service costs and
actuarial losses, net of
tax
    
    
    64
    
    
    
    948
    
    
    
    230
    
    
    
    1,042Total comprehensive (loss) income
    
    $
    (822
    )
    
    $
    12,401
    
    
    $
    (10,871
    )
    
    $
    35,447
 Note 12  Employee Benefit Plans
   10




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Pension Benefits
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    282
    
    
    $
    411
    
    
    $
    564
    
    
    $
    1,114Interest cost
    
    
    842
    
    
    
    686
    
    
    
    1,684
    
    
    
    1,385Cost included in special charges
    
    
    5,299
    
    
    
    
    
    
    
    9,826
    
    
    
    Expected return on plan assets
    
    
    (940
    )
    
    
    (923
    )
    
    
    (1,879
    )
    
    
    (1,758
    )Amortization of prior service cost
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    356Amortization of unrecognized net loss
    
    
    7
    
    
    
    2
    
    
    
    14
    
    
    
    221$
    5,490
    
    
    $
    354
    
    
    $
    10,209
    
    
    $
    1,318
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Postretirement Benefit Plan
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    17
    
    
    $
    144
    
    
    $
    34
    
    
    $
    342Interest cost
    
    
    808
    
    
    
    743
    
    
    
    1,616
    
    
    
    1,473Cost included in special charges
    
    
    4,784
    
    
    
    
    
    
    
    8,889
    
    
    
    Amortization of prior service cost
    
    
    56
    
    
    
    431
    
    
    
    112
    
    
    
    862Amortization of unrecognized net loss
    
    
    41
    
    
    
    24
    
    
    
    81
    
    
    
    187$
    5,706
    
    
    $
    1,342
    
    
    $
    10,732
    
    
    $
    2,864
    Note 13  Risks and Contingencies
   11




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Accounting for Contingencies
  Note
14  (Loss) Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Weighted average common shares outstanding
    
    
    11,780,327
    
    
    
    12,227,256
    
    
    
    11,760,063
    
    
    
    12,411,238Dilutive effect of employee stock options and nonvested share awards
    
    
    
    
    
    
    79,755
    
    
    
    
    
    
    
    112,355Weighted average diluted common shares outstanding
    
    
    11,780,327
    
    
    
    12,307,011
    
    
    
    11,760,063
    
    
    
    12,523,593
  12




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Note 15  Special Charges
    Total CostsIncurred to DateAs of June 30,2008Pension plan costs
    
    $
    24,304Postretirement plan costs
    
    
    22,093Employee termination benefits
    
    
    1,829Other related costs
    
    
    1,525Impairment charge for plant building and land
    
    
    950Total
    
    $
    50,701
 13




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 OVERVIEW
 You should read the following discussion in conjunction with our condensed consolidated financial
statements and related notes included elsewhere in this quarterly report on Form 10-Q . This
discussion contains forward-looking statements that are based on managements current expectations,
estimates and projections about our business and operations. Our actual results may differ
materially from those currently anticipated and expressed in such forward-looking statements. See
Cautionary Statement Regarding Forward-Looking Statements.
      RESULTS OF OPERATIONS
 Three Months Ended June 30, 2008 compared to Three Months Ended June 30, 2007
 Sales
  14




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Gross Profit
  Selling, General and Administrative Expenses
  Special Charges
  Interest Expense/Income
  Income Taxes
  Net (Loss) Income
  15




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##### Table of Contents



Six Months Ended June 30, 2008 compared to Six Months Ended June 30, 2007
 Sales
  Gross Profit
  Selling, General and Administrative Expenses
  Special Charges
  Interest Expense/Income
  Income Taxes
  16




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Net (Loss) Income
  LIQUIDITY AND CAPITAL RESOURCES
      17




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Contractual Obligations
  Payments Due by PeriodMoreLess than
    
    
    1-3
    
    
    3-5
    
    
    thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(In thousands)Capital leases from long-term debt
    
    $
    61
    
    
    $
    61
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    15,941
    
    
    
    2,131
    
    
    
    4,503
    
    
    
    4,744
    
    
    
    4,563Material and component purchases
    
    
    117,667
    
    
    
    39,095
    
    
    
    68,595
    
    
    
    9,977
    
    
    
    Total
    
    $
    133,669
    
    
    $
    41,287
    
    
    $
    73,098
    
    
    $
    14,721
    
    
    $
    4,563
   Cash Flows
  Six Months EndedJune 30,2008
    
    
    2007(In thousands)Net cash used in:Operating activities
    
    $
    (42,240
    )
    
    $
    (4,118
    )Investing activities
    
    
    (2,925
    )
    
    
    (4,205
    )Financing activities
    
    
    (1,022
    )
    
    
    (28,269
    )Total
    
    $
    (46,187
    )
    
    $
    (36,592
    )
 18




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##### Table of Contents



Operating Activities.
  Investing Activities.
 Financing Activities.
 Capital Expenditures
   CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
   
    
    the cyclical nature of our business;
 
    
    adverse economic and market conditions;
 
    
    fluctuating costs of raw materials, including steel and aluminum, and delays in the
delivery of raw materials;
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
    
    our ability to maintain relationships with our suppliers of railcar components;
 
    
    our reliance upon a small number of customers that represent a large percentage of our
sales;
 
    
    the variable purchase patterns of our customers and the timing of completion, delivery and
acceptance of customer orders;
 
    
    the highly competitive nature of our industry;
 
    
    risks relating to our relationship with our unionized employees and their unions;
 
    
    our ability to manage our health care and pension costs;
 
    
    our reliance on the sales of our aluminum-bodied coal-carrying railcars;
 
    
    shortages of skilled labor;
 
    
    the risk of lack of acceptance of our new railcar offerings by our customers;
 
    
    the cost of complying with environmental laws and regulations;
 
    
    the costs associated with being a public company;
 
    
    potential significant warranty claims; and
 
    
    various covenants in the agreement governing our indebtedness that limit our managements
discretion in the operation of our businesses.
  20




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
      
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes In Internal Controls
  21




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
   
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  1.
    
    To elect two directors who were nominated for election as Class III directors to three-year terms:
 VotesVotes For
    
    WithheldThomas M. Fitzpatrick
    
    
    10,363,039
    
    
    
    162,268Thomas A. Madden
    
    
    10,321,689
    
    
    
    203,618
 2.
    
    To approve an amendment to the FreightCar
America, Inc. 2005 Long Term Incentive Plan that,
among other things, increased the number of
 shares authorized to be issued under the plan
from 659,616 to 1,659,616:
 Votes
    
    
    
    BrokerVotes For
    
    Against
    
    Abstentions
    
    Non-Votes6,989,997
    
    747,814
    
    90,576
    
    2,696,922
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3.
    
    To ratify the appointment of Deloitte & Touche LLP
as our independent registered public accounting
firm for fiscal year 2008:
 VotesVotes For
    
    Against
    
    Abstentions10,436,764
    
    29,339
    
    59,206
 
 Item 5.     Other Information.
  
 Item 6.     Exhibits.
 (a)
    
    Exhibits filed as part of this Form 10-Q:
 31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  FREIGHTCAR AMERICA, INC.Date: August 11, 2008
    By:

/s/
Christian RagotChristian Ragot, President andChief Executive OfficerBy:
    /s/    Kevin P. BagbyKevin P. Bagby, Vice President, Finance andChief Financial Officer 24




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 25