##### 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 March 31, 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
    
    25-1837219(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)Two North Riverside Plaza, Suite 1250Chicago, Illinois
    
    60606(Address of principal executive offices)
    
    (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
March 31, 2008 and
December 31, 2007
    
    
    3Condensed Consolidated
Statements of Operations
(Unaudited) for the
Three Months Ended March
31, 2008 and 2007
    
    
    4Condensed Consolidated
Statements of Cash Flows
(Unaudited) for the
Three Months Ended March
31, 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
    
    
    204.
    
    Controls and Procedures
    
    
    20PART II  OTHER INFORMATION1.
    
    Legal Proceedings
    
    
    211A.
    
    Risk Factors
    
    
    212.
    
    Unregistered Sales of
Equity Securities and Use
of Proceeds
    
    
    213.
    
    Defaults Upon Senior
Securities
    
    
    214.
    
    Submission of Matters to a
Vote of Security Holders
    
    
    225.
    
    Other Information
    
    
    226.
    
    Exhibits
    
    
    22Signatures
    
    
    23EX-10.1EX-31.1EX-31.2Exhibit 32
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 FreightCar America, Inc.
 
 Condensed Consolidated Balance Sheets
 (Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    161,747
    
    
    $
    197,042Accounts receivable, net of allowance for
doubtful accounts of $274 and $223,
respectively
    
    
    6,295
    
    
    
    13,068Inventories
    
    
    84,141
    
    
    
    49,845Leased railcars held for sale
    
    
    7,723
    
    
    
    Other current assets
    
    
    11,331
    
    
    
    7,223Deferred income taxes
    
    
    10,863
    
    
    
    13,520Total current assets
    
    
    282,100
    
    
    
    280,698Property, plant and equipment, net
    
    
    27,292
    
    
    
    26,921Goodwill
    
    
    21,521
    
    
    
    21,521Deferred income taxes
    
    
    25,838
    
    
    
    21,035Other long-term assets
    
    
    5,541
    
    
    
    5,709Total assets
    
    $
    362,292
    
    
    $
    355,884Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    60,851
    
    
    $
    39,525Accrued payroll and employee benefits
    
    
    19,286
    
    
    
    13,320Accrued postretirement benefits
    
    
    5,188
    
    
    
    5,188Accrued warranty
    
    
    10,173
    
    
    
    10,551Customer deposits
    
    
    
    
    
    
    19,836Other current liabilities
    
    
    8,222
    
    
    
    7,100Total current liabilities
    
    
    103,720
    
    
    
    95,520Accrued pension costs
    
    
    15,367
    
    
    
    10,685Accrued postretirement benefits, less current portion
    
    
    51,941
    
    
    
    47,890Other long-term liabilities
    
    
    3,700
    
    
    
    3,717Total liabilities
    
    
    174,728
    
    
    
    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 March 31, 2008 and December 31, 2007
    
    
    
    
    
    
    Common stock, $0.01 par value; 50,000,000
shares authorized, 12,731,678 shares issued
at March 31, 2008 and December 31, 2007
    
    
    127
    
    
    
    127Additional paid in capital
    
    
    98,268
    
    
    
    99,270Treasury stock, at cost, 876,832 and 918,257
shares at March 31, 2008 and December 31,
2007, respectively
    
    
    (41,630
    )
    
    
    (43.597
    )Accumulated other comprehensive loss
    
    
    (9,691
    )
    
    
    (9,857
    )Retained earnings
    
    
    140,490
    
    
    
    152,129Total stockholders equity
    
    
    187,564
    
    
    
    198,072Total liabilities and stockholders equity
    
    $
    362,292
    
    
    $
    355,884
 See Notes to Condensed Consolidated Financial Statements.
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FreightCar America, Inc.
 
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007(In thousands, except share and per share data)Sales
    
    $
    95,098
    
    
    $
    322,451Cost of sales
    
    
    85,815
    
    
    
    278,318Gross profit
    
    
    9,283
    
    
    
    44,133Selling, general and administrative expense
(including non-cash stock-based compensation
expense of $964 and $668, respectively)
    
    
    8,586
    
    
    
    10,286Charges related to labor arbitration ruling
    
    
    18,263
    
    
    
    Operating (loss) income
    
    
    (17,566
    )
    
    
    33,847Interest income
    
    
    1,344
    
    
    
    2,409Interest expense
    
    
    82
    
    
    
    106Amortization of deferred financing costs
    
    
    20
    
    
    
    77Operating (loss) income before income taxes
    
    
    (16,324
    )
    
    
    36,073Income tax (benefit) provision
    
    
    (6,108
    )
    
    
    13,121Net (loss) income
    
    $
    (10,216
    )
    
    $
    22,952Net (loss) income per common share  basic
    
    $
    (0.87
    )
    
    $
    1.82Net (loss) income per common share  diluted
    
    $
    (0.87
    )
    
    $
    1.80Weighted average common shares outstanding  basic
    
    
    11,739,799
    
    
    
    12,597,791Weighted average common shares outstanding  diluted
    
    
    11,739,799
    
    
    
    12,744,575Dividends declared per common share
    
    $
    0.12
    
    
    $
    0.06
 See Notes to Condensed Consolidated Financial Statements.
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FreightCar America, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007(In thousands)Cash flows from operating activitiesNet (loss) income
    
    $
    (10,216
    )
    
    $
    22,952Adjustments to reconcile net (loss) income to net cash flows used in operating activitiesCharges related to labor arbitration ruling
    
    
    18,263
    
    
    
    Depreciation and amortization
    
    
    993
    
    
    
    868Other non-cash items
    
    
    (507
    )
    
    
    77Deferred income taxes
    
    
    (2,085
    )
    
    
    558Compensation expense under stock option and restricted share award agreements
    
    
    964
    
    
    
    668Changes in operating assets and liabilities:Accounts receivable
    
    
    6,773
    
    
    
    (56,306
    )Inventories
    
    
    (33,599
    )
    
    
    27,362Leased railcars held for sale
    
    
    (7,723
    )
    
    
    Other current assets
    
    
    15
    
    
    
    (1,165
    )Accounts payable
    
    
    20,635
    
    
    
    741Accrued payroll and employee benefits
    
    
    (3,665
    )
    
    
    (4,258
    )Income taxes receivable/payable
    
    
    (4,184
    )
    
    
    7,005Accrued warranty
    
    
    (378
    )
    
    
    747Customer deposits and other current liabilities
    
    
    (18,715
    )
    
    
    109Accrued pension costs and accrued postretirement benefits
    
    
    267
    
    
    
    (71
    )Net cash flows used in operating activities
    
    
    (33,162
    )
    
    
    (713
    )Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (1,424
    )
    
    
    (2,621
    )Proceeds from sale of property, plant and equipment
    
    
    18
    
    
    
    Net cash flows used in investing activities
    
    
    (1,406
    )
    
    
    (2,621
    )Cash flows from financing activitiesPayments on long-term debt
    
    
    (16
    )
    
    
    (16
    )Stock repurchases
    
    
    
    
    
    
    (23,457
    )Cash dividends paid to stockholders
    
    
    (711
    )
    
    
    (764
    )Net cash flows used in financing activities
    
    
    (727
    )
    
    
    (24,237
    )Net decrease in cash and cash equivalents
    
    
    (35,295
    )
    
    
    (27,571
    )Cash and cash equivalents at beginning of period
    
    
    197,042
    
    
    
    212,026Cash and cash equivalents at end of period
    
    $
    161,747
    
    
    $
    184,455Supplemental cash flow information:Income taxes paid
    
    $
    105
    
    
    $
    5,566
 See Notes to Condensed Consolidated Financial Statements.
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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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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.
 Note 4  Charges Related to Labor Arbitration Ruling
   7




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Pension plan costs
    
    $
    4,527Postretirement plan costs
    
    
    4,105Employee salary and benefit costs
    
    
    9,631Total charges related to labor arbitration ruling, pre-tax
    
    $
    18,263
 Note 5  Inventories
  March 31,
    
    
    December 31,2008
    
    
    2007Work in progress
    
    $
    64,862
    
    
    $
    48,088Finished new railcars
    
    
    19,279
    
    
    
    1,757Total inventories
    
    $
    84,141
    
    
    $
    49,845
  Note 6  Leased Railcars Held for Sale
    Nine months ending December 31, 2008
    
    $
    369Year ending December 31, 2009
    
    
    491Year ending December 31, 2010
    
    
    246Thereafter
    
    
    $
    1,106
 Note 7  Property, Plant and Equipment
  March 31,
    
    
    December 31,2008
    
    
    2007Land
    
    $
    701
    
    
    $
    701Buildings and improvements
    
    
    20,507
    
    
    
    20,559Machinery and equipment
    
    
    39,546
    
    
    
    40,228Cost of buildings, improvements, machinery and equipment
    
    
    60,053
    
    
    
    60,787Less: Accumulated depreciation and amortization
    
    
    (35,854
    )
    
    
    (35,697
    )Buildings, improvements, machinery and equipment, net
of accumulated depreciation and amortization
    
    
    24,199
    
    
    
    25,090Construction in process
    
    
    2,392
    
    
    
    1,130Total property, plant and equipment, net
    
    $
    27,292
    
    
    $
    26,921
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Note 8  Goodwill and Intangible Assets
 Goodwill and Other
Intangible Assets
  March 31,
    
    
    December 31,2008
    
    
    2007Patents
    
    $
    13,097
    
    
    $
    13,097Accumulated amortization
    
    
    (8,163
    )
    
    
    (8,014
    )Patents, net of accumulated amortization
    
    
    4,934
    
    
    
    5,083Goodwill
    
    
    21,521
    
    
    
    21,521Total goodwill and intangible assets
    
    $
    26,455
    
    
    $
    26,604
  Note 9  Product Warranties
  Three Months EndedMarch 31,2008
    
    
    2007Balance at the beginning of the period
    
    $
    10,551
    
    
    $
    12,051Warranties issued during the period
    
    
    498
    
    
    
    1,532Reductions for payments, cost of repairs and other
    
    
    (876
    )
    
    
    (785
    )Balance at the end of the period
    
    $
    10,173
    
    
    $
    12,798
 Note 10  Revolving Credit Facility
   9




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Note 11  Stock-Based Compensation
   Note 12  Comprehensive (Loss) Income
   Three Months EndedMarch 31,2008
    
    
    2007Net operating (loss) income
    
    $
    (10,216
    )
    
    $
    22,952Other comprehensive income:Amortization of prior
service costs and actuarial
losses, net of tax
    
    
    166
    
    
    
    94Total comprehensive (loss) income
    
    $
    (10,050
    )
    
    $
    23,046
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Note 13  Employee Benefit Plans
    Three Months EndedMarch 31,2008
    
    
    2007Pension BenefitsService cost
    
    $
    282
    
    
    $
    703Interest cost
    
    
    842
    
    
    
    699Labor arbitration ruling cost
    
    
    4,527
    
    
    
    Expected return on plan assets
    
    
    (939
    )
    
    
    (835
    )Amortization of prior service cost
    
    
    
    
    
    
    178Amortization of unrecognized net loss
    
    
    7
    
    
    
    219$
    4,719
    
    
    $
    964
 Three Months EndedMarch 31,2008
    
    
    2007Postretirement Benefit PlanService cost
    
    $
    17
    
    
    $
    198Interest cost
    
    
    808
    
    
    
    730Labor arbitration ruling cost
    
    
    4,105
    
    
    
    Amortization of prior service cost
    
    
    56
    
    
    
    431Amortization of unrecognized net loss
    
    
    41
    
    
    
    163$
    5,027
    
    
    $
    1,522
    11




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Note 14  Risks and Contingencies
     Accounting for Contingencies
 Note
15  (Loss) Earnings Per Share
  Three Months EndedMarch 31,2008
    
    
    2007Weighted average common shares outstanding
    
    
    11,739,799
    
    
    
    12,597,791Dilutive effect of employee stock options and
nonvested share awards
    
    
    
    
    
    
    146,784Weighted average diluted common shares outstanding
    
    
    11,739,799
    
    
    
    12,744,575
 12




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13




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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.
         14




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RESULTS OF OPERATIONS
 Three Months Ended March 31, 2008 compared to Three Months Ended March 31, 2007
 Sales
  Gross Profit
  Selling, General and Administrative Expenses
  Charges Related To Labor Arbitration Ruling
  Interest Expense/Income
  15




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Income Taxes
  Net (Loss) Income
  LIQUIDITY AND CAPITAL RESOURCES
    16




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Contractual Obligations
  Payments Due by Period2-3
    
    
    4-5
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(In thousands)Capital leases from long-term debt
    
    $
    77
    
    
    $
    66
    
    
    $
    11
    
    
    $
    
    
    
    $
    Operating leases
    
    
    16,531
    
    
    
    2,202
    
    
    
    4,439
    
    
    
    4,725
    
    
    
    5,165Material and component purchases
    
    
    124,830
    
    
    
    36,021
    
    
    
    75,741
    
    
    
    13,068
    
    
    
    Total
    
    $
    141,438
    
    
    $
    38,289
    
    
    $
    80,191
    
    
    $
    17,793
    
    
    $
    5,165
  17




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Cash Flows
  Three Months EndedMarch 31,2008
    
    
    2007(In thousands)Net cash used in:Operating activities
    
    $
    (33,162
    )
    
    $
    (713
    )Investing activities
    
    
    (1,406
    )
    
    
    (2,621
    )Financing activities
    
    
    (727
    )
    
    
    (24,237
    )Total
    
    $
    (35,295
    )
    
    $
    (27,571
    )
 Operating Activities.
  Investing Activities.
 Financing Activities.
 Capital Expenditures
   18




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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;
    
    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.
  19




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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
  20




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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.
  21




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Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 (a)
    
    Exhibits filed as part of this Form 10-Q:
 10.1
    
    Second Amendment to the Lease Agreement, dated as of February 1,
2008, by and between Norfolk Southern Railway Company and Johnstown
America Corporation31.1
    
    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.
 22




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SIGNATURES
  FREIGHTCAR AMERICA, INC.Date: May 12, 2008
    By:
    /s/    Christian RagotChristian Ragot, President andChief Executive OfficerBy:
    /s/   Kevin P. BagbyKevin P. Bagby, Vice President, Finance andChief Financial Officer 23




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EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    Second Amendment to the Lease Agreement, dated as of February 1, 2008, by and between Norfolk
Southern Railway Company and Johnstown America Corporation (the Lease Agreement).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.
 24