##### 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 September 30, 2007
 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
  o þ o
  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
September 30, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the
Three and Nine Months Ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    62.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    113.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    194.
    
    Controls and Procedures
    
    
    19PART II  OTHER INFORMATION1.
    
    Legal Proceedings
    
    
    191A.
    
    Risk Factors
    
    
    202.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    203.
    
    Defaults Upon Senior Securities
    
    
    204.
    
    Submission of Matters to a Vote of Security Holders
    
    
    205.
    
    Other Information
    
    
    206.
    
    Exhibits
    
    
    20Signatures
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 FreightCar America, Inc.
 
 Condensed Consolidated Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    175,338
    
    
    $
    212,026Accounts receivable, net of allowance for doubtful accounts of $175 and $191, respectively
    
    
    14,290
    
    
    
    11,369Inventories
    
    
    64,144
    
    
    
    106,643Deferred income taxes and other current assets
    
    
    15,542
    
    
    
    13,507Total current assets
    
    
    269,314
    
    
    
    343,545Property, plant and equipment, net
    
    
    27,732
    
    
    
    25,905Goodwill and intangible assets, net
    
    
    26,751
    
    
    
    27,194Deferred income taxes and other assets
    
    
    22,863
    
    
    
    23,337Total assets
    
    $
    346,660
    
    
    $
    419,981Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    44,528
    
    
    $
    103,038Income taxes payable
    
    
    6,095
    
    
    
    9,816Accrued warranty
    
    
    11,778
    
    
    
    12,051Other current liabilities
    
    
    26,883
    
    
    
    32,083Total current liabilities
    
    
    89,284
    
    
    
    156,988Accrued postretirement benefits, less current portion
    
    
    50,075
    
    
    
    49,455Other long-term liabilities
    
    
    7,982
    
    
    
    9,669Total liabilities
    
    
    147,341
    
    
    
    216,112Commitments 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 September 30,
2007 and December 31, 2006
    
    
    
    
    
    
    Common stock, $0.01 par value; 50,000,000 shares authorized, 12,731,678 and 12,681,511 shares
issued at September 30, 2007 and December 31, 2006, respectively
    
    
    127
    
    
    
    127Additional paid in capital
    
    
    98,547
    
    
    
    99,981Treasury stock, at cost, 918,257 shares at September 30, 2007
    
    
    (43,597
    )
    
    
    Accumulated other comprehensive loss
    
    
    (25,214
    )
    
    
    (26,774
    )Retained earnings
    
    
    169,456
    
    
    
    130,535Total stockholders equity
    
    
    199,319
    
    
    
    203,869Total liabilities and stockholders equity
    
    $
    346,660
    
    
    $
    419,981
 See Notes to Condensed Consolidated Financial Statements.
 3




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##### Table of Contents



FreightCar America, Inc.
 
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except share and per share data)Sales
    
    $
    162,112
    
    
    $
    395,759
    
    
    $
    679,923
    
    
    $
    1,053,969Cost of sales
    
    
    142,714
    
    
    
    330,542
    
    
    
    591,699
    
    
    
    882,025Gross profit
    
    
    19,398
    
    
    
    65,217
    
    
    
    88,224
    
    
    
    171,944Selling, general and administrative expense
(including non-cash stock-based compensation
expense of $725, $457, $2,080 and $1,674,
respectively)
    
    
    7,565
    
    
    
    8,585
    
    
    
    26,535
    
    
    
    25,113Operating income
    
    
    11,833
    
    
    
    56,632
    
    
    
    61,689
    
    
    
    146,831Interest income
    
    
    (1,899
    )
    
    
    (1,720
    )
    
    
    (6,568
    )
    
    
    (3,652
    )Interest expense
    
    
    138
    
    
    
    94
    
    
    
    352
    
    
    
    262Amortization of deferred financing costs
    
    
    57
    
    
    
    76
    
    
    
    210
    
    
    
    229Income before income taxes
    
    
    13,537
    
    
    
    58,182
    
    
    
    67,695
    
    
    
    149,992Income tax provision
    
    
    4,856
    
    
    
    21,388
    
    
    
    24,609
    
    
    
    55,224Net income
    
    $
    8,681
    
    
    $
    36,794
    
    
    $
    43,086
    
    
    $
    94,768Net income per common share  basic
    
    $
    0.73
    
    
    $
    2.92
    
    
    $
    3.52
    
    
    $
    7.54Net income per common share  diluted
    
    $
    0.73
    
    
    $
    2.88
    
    
    $
    3.49
    
    
    $
    7.41Weighted average common shares outstanding  basic
    
    
    11,918,890
    
    
    
    12,601,522
    
    
    
    12,245,504
    
    
    
    12,570,279Weighted average common shares outstanding  diluted
    
    
    11,955,827
    
    
    
    12,782,562
    
    
    
    12,332,345
    
    
    
    12,780,828Dividends declared per common share
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.18
    
    
    $
    0.09
 See Notes to Condensed Consolidated Financial Statements.
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FreightCar America, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,2007
    
    
    2006(In thousands)Cash flows from operating activitiesNet income
    
    $
    43,086
    
    
    $
    94,768Adjustments to reconcile net income to net cash flows provided by operating activitiesDepreciation and amortization
    
    
    2,890
    
    
    
    4,583Other non-cash items
    
    
    1,908
    
    
    
    3,030Stock-based compensation expense
    
    
    2,080
    
    
    
    1,674Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,921
    )
    
    
    (9,499
    )Inventories
    
    
    39,877
    
    
    
    (49,180
    )Accounts payable
    
    
    (57,603
    )
    
    
    79,571Income tax payable
    
    
    (4,215
    )
    
    
    5,339Other accrued liabilities
    
    
    (7,013
    )
    
    
    (5,692
    )Net cash flows provided by operating activities
    
    
    18,089
    
    
    
    124,594Cash flows from investing activitiesProceeds from sale of property, plant and equipment
    
    
    
    
    
    
    1,082Purchases of property, plant and equipment
    
    
    (5,181
    )
    
    
    (3,760
    )Net cash flows used in investing activities
    
    
    (5,181
    )
    
    
    (2,678
    )Cash flows from financing activitiesPayments on long-term debt
    
    
    (45
    )
    
    
    (53
    )Deferred financing costs paid
    
    
    (211
    )
    
    
    Stock repurchases
    
    
    (50,000
    )
    
    
    Issuance of common stock
    
    
    2,089
    
    
    
    1,044Excess tax benefit from stock-based compensation
    
    
    800
    
    
    
    1,196Cash dividends paid to stockholders
    
    
    (2,229
    )
    
    
    (1,135
    )Net cash flows (used in) provided by financing activities
    
    
    (49,596
    )
    
    
    1,052Net (decrease) increase in cash and cash equivalents
    
    
    (36,688
    )
    
    
    122,968Cash and cash equivalents at beginning of period
    
    
    212,026
    
    
    
    61,737Cash and cash equivalents at end of period
    
    $
    175,338
    
    
    $
    184,705Supplemental cash flow informationIncome taxes paid
    
    $
    28,984
    
    
    $
    45,771
 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
 Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Standard No.
109
 Fair Value Measurements
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The Fair Value Option for Financial Assets and
Financial Liabilities.
 Note 4  Inventories
  September 30,
    
    
    December 31,2007
    
    
    2006Raw materials and purchased components
    
    $
    5,839
    
    
    $
    70Work in process
    
    
    53,309
    
    
    
    102,445Finished new railcars
    
    
    4,996
    
    
    
    4,128Total inventories
    
    $
    64,144
    
    
    $
    106,643
 Note 5  Property, Plant and Equipment
  September 30,
    
    
    December 31,2007
    
    
    2006Land
    
    $
    722
    
    
    $
    722Buildings and improvements
    
    
    28,222
    
    
    
    24,743Machinery and equipment
    
    
    39,918
    
    
    
    36,098Cost of buildings, improvements, machinery and equipment
    
    
    68,140
    
    
    
    60,841Less: Accumulated depreciation and amortization
    
    
    (42,817
    )
    
    
    (40,397
    )Buildings, improvements, machinery and equipment, net
of accumulated depreciation and amortization
    
    
    25,323
    
    
    
    20,444Construction in process
    
    
    1,687
    
    
    
    4,739Total property, plant and equipment, net
    
    $
    27,732
    
    
    $
    25,905
 Note 6  Goodwill and Intangible Assets
 Goodwill and Other Intangible Assets,
  7




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September 30,
    
    
    December 31,2007
    
    
    2006Patents
    
    $
    13,097
    
    
    $
    13,097Accumulated amortization
    
    
    (7,867
    )
    
    
    (7,424
    )Patents, net of accumulated amortization
    
    
    5,230
    
    
    
    5,673Goodwill
    
    
    21,521
    
    
    
    21,521Total intangible assets
    
    $
    26,751
    
    
    $
    27,194
  Note 7  Product Warranties
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at the beginning of the period
    
    $
    12,617
    
    
    $
    10,551
    
    
    $
    12,051
    
    
    $
    7,878Warranties issued during the period
    
    
    680
    
    
    
    1,422
    
    
    
    2,779
    
    
    
    4,499Reductions for payments, cost of repairs and other
    
    
    (1,519
    )
    
    
    (402
    )
    
    
    (3,052
    )
    
    
    (806
    )Balance at the end of the period
    
    $
    11,778
    
    
    $
    11,571
    
    
    $
    11,778
    
    
    $
    11,571
 Note 8  Revolving Credit Facility
   8




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Note 9  Stock Repurchase Program
  Note 10  Comprehensive Income
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    8,681
    
    
    $
    36,794
    
    
    $
    43,086
    
    
    $
    94,768Other comprehensive income:Amortization of
prior service costs
and actuarial
losses, net of tax
    
    
    518
    
    
    
    
    
    
    
    1,560
    
    
    
    Total comprehensive income
    
    $
    9,199
    
    
    $
    36,794
    
    
    $
    44,646
    
    
    $
    94,768
 Note 11  Employee Benefit Plans
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Pension Benefits
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    557
    
    
    $
    625
    
    
    $
    1,671
    
    
    $
    1,876Interest cost
    
    
    693
    
    
    
    658
    
    
    
    2,078
    
    
    
    1,973Expected return on plan assets
    
    
    (879
    )
    
    
    (493
    )
    
    
    (2,637
    )
    
    
    (1,479
    )Amortization of prior service cost
    
    
    178
    
    
    
    177
    
    
    
    534
    
    
    
    531Amortization of unrecognized net loss
    
    
    110
    
    
    
    169
    
    
    
    331
    
    
    
    508$
    659
    
    
    $
    1,136
    
    
    $
    1,977
    
    
    $
    3,409
 9




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,Postretirement Benefit Plan
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    170
    
    
    $
    173
    
    
    $
    512
    
    
    $
    520Interest cost
    
    
    737
    
    
    
    716
    
    
    
    2,210
    
    
    
    2,148Amortization of prior service cost
    
    
    431
    
    
    
    409
    
    
    
    1,293
    
    
    
    1,226Amortization of unrecognized net loss
    
    
    94
    
    
    
    126
    
    
    
    281
    
    
    
    379$
    1,432
    
    
    $
    1,424
    
    
    $
    4,296
    
    
    $
    4,273
   Note 12  Risks and Contingencies
     10




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Note 13  Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Weighted average common shares outstanding
    
    
    11,918,890
    
    
    
    12,601,522
    
    
    
    12,245,504
    
    
    
    12,570,279Dilutive effect of employee stock options and
nonvested share awards
    
    
    36,937
    
    
    
    181,040
    
    
    
    86,841
    
    
    
    210,549Weighted average diluted common shares outstanding
    
    
    11,955,827
    
    
    
    12,782,562
    
    
    
    12,332,345
    
    
    
    12,780,828
  
 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.
      11




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RESULTS OF OPERATIONS
 Three Months Ended September 30, 2007 compared to Three Months Ended September 30, 2006
 Sales
 ®
 Gross Profit
  Selling, General and Administrative Expenses
  Interest Expense/Income
  12




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Income Taxes
  Net Income
  Nine Months Ended September 30, 2007 compared to Nine Months Ended September 30, 2006
 Sales
  Gross Profit
  Selling, General and Administrative Expenses
  Interest Expense/Income
  13




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Income Taxes
  Net Income
  LIQUIDITY AND CAPITAL RESOURCES
     14




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15




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##### Table of Contents



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
    
    $
    108
    
    
    $
    53
    
    
    $
    55
    
    
    $
    
    
    
    $
    Operating leases
    
    
    13,285
    
    
    
    1,737
    
    
    
    3,240
    
    
    
    3,597
    
    
    
    4,711Wheels and axles
    
    
    101,313
    
    
    
    23,987
    
    
    
    68,106
    
    
    
    9,220
    
    
    
    Aluminum purchases
    
    
    5,110
    
    
    
    5,110
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    119,816
    
    
    $
    30,887
    
    
    $
    71,401
    
    
    $
    12,817
    
    
    $
    4,711
    Cash Flows
  Nine Months EndedSeptember 30,2007
    
    2006(In thousands)Net cash provided by (used in):Operating activities
    
    $
    18,089
    
    
    $
    124,594Investing activities
    
    
    (5,181
    )
    
    
    (2,678
    )Financing activities
    
    
    (49,596
    )
    
    
    1,052Total
    
    $
    (36,688
    )
    
    $
    122,968
 Operating Activities.
  16




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Investing Activities.
 Financing Activities.
 Capital Expenditures
   17




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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.
  18




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     
 Item 4. Controls and Procedures.
  Changes In Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  19




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Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Total
    
    MaximumNumber of
    
    NumberShares
    
    (or ApproximatePurchased
    
    Dollar Value)as Part of
    
    of Shares thatTotal
    
    Average
    
    Publicly
    
    May Yet BeNumber of
    
    Price
    
    Announced
    
    PurchasedShares
    
    Paid
    
    Plans or
    
    Under the PlansPeriod
    
    Purchased
    
    Per Share
    
    Programs
    
    or Programs (1)January 1 - January 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February 1 - February 28, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1 - March 31, 2007
    
    
    476,599
    
    
    $
    49.22
    
    
    
    476,599
    
    
    $
    26,543,352Total for quarter ended March 31, 2007
    
    
    476,599
    
    
    $
    49.22
    
    
    
    476,599
    
    
    $
    26,543,352April 1 - April 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    26,543,352May 1 - May 31, 2007
    
    
    11,446
    
    
    $
    47.49
    
    
    
    11,446
    
    
    $
    25,999,782June 1 - June 30, 2007
    
    
    111,684
    
    
    $
    50.33
    
    
    
    111,684
    
    
    $
    20,378,199Total for quarter ended June 30, 2007
    
    
    123,130
    
    
    $
    50.07
    
    
    
    123,130
    
    
    $
    20,378,199July 1 - July 31, 2007
    
    
    99,124
    
    
    $
    51.51
    
    
    
    99,124
    
    
    $
    15,272,407August 1 - August 31, 2007
    
    
    349,447
    
    
    $
    43.70
    
    
    
    349,447
    
    
    
    September 1 - September 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total for quarter ended September 30,
2007
    
    
    448,571
    
    
    $
    45.43
    
    
    
    448,571
    
    
    
    
 
 (1)
    
    The Companys stock repurchase program was approved by the Companys Board of Directors
and publicly announced on January 24, 2007. The program authorized the repurchase of up
to $50 million in shares of the Companys common stock in open market purchases at
prevailing prices. 
 Item 3. Defaults Upon Senior Securities.
  
 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:
 20




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##### Table of Contents



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.
 21




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##### Table of Contents



SIGNATURES
  FREIGHTCAR AMERICA, INC.Date: November 8, 2007
    By:
    /s/    CHRISTIAN RAGOTChristian Ragot, President andChief Executive OfficerBy:
    /s/    KEVIN P. BAGBYKevin P. Bagby, Vice President, Finance andChief Financial Officer 22




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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.