##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 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
(State or other jurisdiction of incorporation or organization) 
Two North Riverside Plaza, Suite 1250, Chicago, Illinois
(Address of principal executive offices)
    
    25-1837219
(I.R.S. Employer Identification No.)
60606
(Zip Code)
 (800) 458-2235
(Registrants telephone number, including area code)
  Title of class
    
    Name of Each Exchange on Which RegisteredCommon stock, par value $0.01 per share
    
    Nasdaq Global Market
   o þ
 o þ
 þ o
 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
    Documents
    
    Part of Form 10-KPortions of the registrants definitive Proxy Statement 
for the 2008 annual meeting of stockholders to be filed 
pursuant to Regulation 14A within 120 days of the end of 
the registrants fiscal year ended December 31, 2007
    
    Part III




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##### 



FREIGHTCAR AMERICA, INC.
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    10Item 1B.
    
    Unresolved Staff Comments
    
    
    17Item 2.
    
    Properties
    
    
    18Item 3.
    
    Legal Proceedings
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19PART IIItem 5.
    
    Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    20Item 6.
    
    Selected Financial Data
    
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 8.
    
    Financial Statements and Supplementary Data
    
    
    40Item 9.
    
    Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
    
    
    70Item 9A.
    
    Controls and Procedures
    
    
    70Item 9B.
    
    Other Information
    
    
    71PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    71Item 11.
    
    Executive Compensation
    
    
    71Item 12.
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    71Item 13.
    
    Certain Relationships and Related Transactions, and
Director Independence
    
    
    71Item 14.
    
    Principal Accounting Fees and Services
    
    
    71PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    72SIGNATURES
    
    
    
    
    73
  2




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PART I
 
 Item 1. Business.
 OVERVIEW
  ®
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OUR PRODUCTS AND SERVICES
     
    
    BethGon Series. The BethGon is the leader in the aluminum-bodied
coal-carrying gondola railcar segment. We believe the BethGon railcar
can carry more coal than traditional gondola railcars. Since we
introduced the steel BethGon railcar in the late 1970s and the
aluminum BethGon railcar in 1986, the BethGon railcar has become the
most widely used coal-carrying railcar in North America. The BethGon
railcar represented 57%, 45% and 33% of all the railcars we delivered
in 2007, 2006 and 2005, respectively, and 52%, 41% and 28% of total
revenue in 2007, 2006 and 2005, respectively.
We have continuously improved the BethGons design since we began
making this railcar. The improvements have been aimed at increasing
carrying capacity and reducing weight while maintaining structural
integrity. In 1986, we introduced the use of aluminum construction.
The use of aluminum lowered each railcars weight from approximately
60,000 pounds to approximately 42,000 pounds. We believe the new
design increased hauling capacity by approximately nine tons per
railcar over traditional flat-bottomed gondolas and lowered the
railcars center of gravity, providing a smoother ride with less wear
on the railcar. In 1994, we introduced a higher payload aluminum
gondola coal-carrying railcar, called the AeroFlo BethGon, which had
redesigned sides for improved aerodynamics and greater fuel
efficiency. In 2001, we introduced a new gondola coal-carrying
railcar, the BethGon II, which has a lighter weight, higher capacity
and increased durability suitable for long-haul coal-carrying railcar
service. We have received several patents on the features of the
BethGon II and continue to explore ways to increase the BethGon IIs
capacity and improve its reliability.
    
    AutoFlood Series. Our aluminum open-top hopper railcar, the
AutoFlood, is a five-pocket coal-carrying railcar equipped with a
bottom discharge gate mechanism. We began manufacturing AutoFlood
railcars in 1984, and, in 1996, we introduced the AutoFlood II. The
AutoFlood II has smooth exterior sides that we believe maximize
loading capacity and increase efficiency by reducing wind drag. The
AutoFlood IIs automatic rapid discharge system, the MegaFlo door
system, incorporates a patented mechanism that uses an over-center
locking design, enabling the cargo door to close with tension rather
than by compression. The MegaFlo door system, which opens to its full
width in only two seconds, provides a door opening which we believe is
significantly wider than any competing door system and does not
require periodic door adjustments. In addition, the MegaFlo door
system design reduces wear on the railcar. In 2002, we introduced the
AutoFlood III, which has a smooth interior side that maintains the
features of the MegaFlo door system while improving the railcars flow
characteristics for coal types that are difficult to unload. AutoFlood
railcars can be equipped with rotary couplers to also permit rotary
unloading. In 2007, our production of the AutoFlood III represented
19% of the total deliveries in the coal-carrying railcar market and
33% of the coal-carrying railcars we produced. The AutoFlood series
represented 28%, 51% and 57% of all the railcars we delivered in 2007,
2006 and 2005, respectively, and 31%, 54% and 58% of total revenue in
2007, 2006 and 2005, respectively.
    
    Other Coal-Carrying Railcars.We also manufacture a variety of
other types of aluminum and steel-bodied coal-carrying railcars,
including triple hopper, hybrid aluminum/stainless steel and flat
bottom gondola railcars.
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
    
    Aluminum Vehicle Carrier. In 2000, we designed and introduced our
aluminum vehicle-carrying railcar, combining our expertise with
aluminum-bodied railcars and our experience in building flat railcars.
Our first aluminum vehicle carrier railcar design, the AVC, has a
lightweight, integrated design and is used to transport automobiles,
commercial and conversion vans, pickup trucks and sport utility
vehicles from assembly plants and ports to rail distribution centers.
An aluminum body eliminates the need to paint the railcar during its
expected lifetime. Our design helps to ensure that vehicles are
delivered damage-free. AVCs are purchased by financial institutions,
shippers and railroads. We had our first sale of the AVC in 2003.
 
    
    Articulated Bulk Container Railcar. Our articulated bulk container
railcar has high strength and capacity and is designed to carry dense
bulk products up to 59,000 pounds in 20 foot containers. We sell our
articulated bulk container railcars primarily to shippers of
high-density waste.
 
    
    Intermodal Double Stack Railcar.Our intermodal double stack
railcar is used to transport containers that may also be transported
by truck or ship, allowing cargo to be transported through different
modes without loading and unloading of the containers.
 
    
    Small Covered Hopper Railcar. Our small covered hopper railcar is
used to transport high-density products such as roofing granules, fly
ash, sand and cement. This railcar features our patented one-piece
cold-rolled center sill, 30-inch diameter hatch covers and
bottom-unloading outlets.
 
    
    Mill Gondola Railcar. Our mill gondola railcar is used to transport
steel products and scrap and features our patented one-piece
cold-rolled center sill, cast draft sills, pinned side-to-end
connections and a choice of welded or riveted sides.
 
    
    Slab Railcar. We believe that our slab railcar is the first railcar
manufactured specifically to transport steel slabs. The slab railcar
is a spine-type flat railcar that is approximately 20,000 pounds
lighter than a standard mill gondola railcar that is also used to
transport steel slabs, allowing customers to haul more steel slabs per
railcar and more railcars in a train.
 
    
    Coil Steel Railcar. Our coil steel railcar has a transverse trough
design that allows easy loading or unloading using overhead cranes or
forklifts. This feature allows railroads to compete with truck haulage
for the transportation of steel coils.
 
    
    Flat Railcar. We produce a variety of standard and heavy-duty flat
railcars that can carry a variety of products, including machinery and
equipment, steel and other bulky industrial products. Our high
capacity flat railcar is used to transport, among other things,
electrical transformers and generators.
 
    
    Bulkhead Flat Railcar. Our bulkhead flat railcar has end bulkheads
designed to retain the load, which can include forest products, steel
and structural components.
 
    
    Hybrid Center Beam Flat Railcar. Our FleXibeam center beam flat
railcar is used to haul forest products, such as plywood, oriented
strand board and dimensional lumber, and steel products, such as
structural steel and pipe. The FleXibeam hauls approximately 14,000
pounds of additional product than a conventional center beam flat
railcar, and its short high-strength center beam partition allows easy
loading of steel and other products with overhead cranes.
 
    
    Woodchip Gondola Railcar. Our woodchip gondola railcar is used to
haul woodchips and municipal waste or other high-volume, low-density
commodities. It has rotary couplers and incorporates our patented
one-piece cold-rolled center sill and tub design.
 
    
    Other Open-Top Hopper Railcars. We offer a variety of open-top
hopper railcar designs to carry aggregates, iron ore, taconite
pellets, petroleum coke and other bulk commodities. These railcars
represented 8% and 4% of our railcar deliveries and total revenue in
2007 and 2006, respectively.
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
    
    International Railcar Designs. We have established a licensing
arrangement with a railcar manufacturer in Brazil pursuant to which
our technology is used to produce various types of railcars in Brazil.
In addition, we manufacture coal-carrying railcars for export to Latin
America and have manufactured intermodal railcars for export to the
Middle East. Railroads outside of North America have a variety of
track gauges that are sized differently than in North America, which
requires us, in some cases, to alter manufacturing specifications for
foreign sales. We are also exploring opportunities in other
international markets.
 
    
    Spare Parts. We sell replacement parts for our railcars and railcars built by others.
  MANUFACTURING
     CUSTOMERS
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SALES AND MARKETING
  RESEARCH AND DEVELOPMENT
  BACKLOG
   Year Ended December 31,2007
    
    
    2006
    
    
    2005Railcar backlog at start of period
    
    
    9,315
    
    
    
    20,729
    
    
    
    11,397New railcars delivered
    
    
    (10,282
    )
    
    
    (18,764
    )
    
    
    (13,031
    )New railcar orders
    
    
    6,366
    
    
    
    7,350
    
    
    
    22,363Railcar backlog at end of period
    
    
    5,399
    
    
    
    9,315
    
    
    
    20,729Estimated backlog at end of
period (in thousands)(1)
    
    $
    422,054
    
    
    $
    697,054
    
    
    $
    1,412,424
 
 (1)
    
    Estimated backlog reflects the total sales attributable to the backlog
reported at the end of the particular period as if such backlog were
converted to actual sales. Estimated backlog does not reflect
potential price increases and decreases under customer contracts that
provide for variable pricing based on changes in the cost of raw
materials.  7




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SUPPLIERS AND MATERIALS
     COMPETITION
    INTELLECTUAL PROPERTY
  8




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EMPLOYEES
   REGULATION
   ENVIRONMENTAL MATTERS
    9




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Item 1A. Risk Factors.
  RISKS RELATED TO THE RAILCAR INDUSTRY
 We operate in a highly cyclical industry, and our industry and markets are influenced by factors
that are beyond our control, including U.S. economic conditions. Such factors could adversely
affect demand for our railcar offerings.
  The current high cost of the raw materials that we use to manufacture railcars, especially aluminum
and steel, and delivery delays associated with these raw materials may adversely affect our
financial condition and results of operations.
  We depend upon a small number of customers that represent a large percentage of our sales. The loss
of any single customer, or a reduction in sales to any such customer, could have a material adverse
effect on our business, financial condition and results of operations.
  10




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The variable purchase patterns of our customers and the timing of completion, delivery and
acceptance of customer orders may cause our sales and income from operations to vary substantially
each quarter, which will result in significant fluctuations in our quarterly results.
  Limitations on the supply of wheels and other railcar components could adversely affect our
business because they may limit the number of railcars we can manufacture.
  We operate in a highly competitive industry and we may be unable to compete successfully against
other railcar manufacturers.
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Further consolidation of the railroad industry may adversely affect our business.
  RISKS RELATED TO OUR BUSINESS
 We rely significantly on the sales of our coal-carrying railcars. Future demand for coal could
decrease, which could adversely affect our business, financial condition and results of operations.
   We rely upon a single supplier to supply us with all of our cold-rolled center sills for our
railcars, and any disruption of our relationship with this supplier could adversely affect our
business.
  12




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Equipment failures, delays in deliveries or extensive damage to our facilities could lead to
production or service curtailments or shutdowns.
  An increase in health care costs could adversely affect our results of operations.
  Our pension obligations are currently underfunded. We may have to make significant cash payments to
our pension plans, which would reduce the cash available for our business.
  The level of our reported backlog may not necessarily indicate what our future sales will be and
our actual sales may fall short of the estimated sales value attributed to our backlog.
  13




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As a public company, we are required to comply with the reporting obligations of the Exchange Act
and Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to comply with the reporting
obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act or if we fail to maintain
adequate internal controls over financial reporting, our business, results of operations and
financial condition could be materially adversely affected.
   If we lose key personnel, our operations and ability to manage the day-to-day aspects of our
business will be adversely affected.
   Labor disputes could disrupt our operations and divert the attention of our management and may have
a material adverse effect on our operations and profitability.
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total
  Shortages of skilled labor may adversely impact our operations.
  Lack of acceptance of our new railcar offerings by our customers could adversely affect our
business.
  Our production of new railcar product lines may not be initially profitable and may result in
financial losses.
  We may pursue acquisitions that involve inherent risks, any of which may cause us not to realize
anticipated benefits.
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We might fail to adequately protect our intellectual property, which may result in our loss of
market share, or third parties might assert that our intellectual property infringes on their
intellectual property, which would be costly to defend and divert the attention of our management.
  We are subject to a variety of environmental laws and regulations and the cost of complying with
environmental requirements or any failure by us to comply with such requirements may have a
material adverse effect on our business, financial condition and results of operations.
  Our warranties may expose us to potentially significant claims, which may damage our reputation and
adversely affect our business, financial condition and results of operations.
  We use and rely significantly on a proprietary software system to manage our accounting and
production systems, the failure of which may lead to data loss, significant business interruption
and financial loss.
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The agreement governing our revolving credit facility contains various covenants that, among other
things, limit our discretion in operating our business and provide for certain minimum financial
requirements.
  To the extent we expand our sales of products and services internationally, we will increase our
exposure to international economic and political risks.
   The market price of our securities may fluctuate significantly, which may make it difficult for
stockholders to sell shares of our common stock when desired or at attractive prices.
  
 Item 1B. Unresolved Staff Comments.
  17




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Item 2. Properties.
  Leased or
    
    LeaseUse
    
    Location
    
    Size
    
    Owned
    
    Expiration DateCorporate headquarters
    
    Chicago, Illinois
    
    8,574 square feet
    
    Leased
    
    September 30, 2013Railcar assembly and
    
    Danville, Illinois
    
    308,665 square feet
    
    Owned
    
    component
    
    
    
    on 36.5 acres of landmanufacturingRailcar assembly and
    
    Roanoke, Virginia
    
    383,709 square feet
    
    Leased
    
    November 30, 2014*component
    
    
    
    on 15.5 acres of landmanufacturingRailcar assembly and
    
    Johnstown, Pennsylvania
    
    564,983 square feet
    
    Owned
    
    component
    
    
    
    on 31.9 acres of landmanufacturingAdministrative
    
    Johnstown, Pennsylvania
    
    29,500 square feet
    
    Owned
    
    on 1.02 acres oflandLight storage
    
    Johnstown, Pennsylvania
    
    1,633 square feet on
    
    Owned
    
    14.26 acres of landParts warehouse
    
    Johnstown, Pennsylvania
    
    86,000 square feet
    
    Leased
    
    December 31, 2016
 
 *
    
    The lease agreement provides that we or Norfolk Southern, the lessor,
can terminate this lease at any time after December 31, 2009.   
 Item 3. Legal Proceedings.
  18




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total
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  19




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
  Common stock priceHigh
    
    Low2007Fourth quarter
    
    $
    43.20
    
    
    $
    32.29Third quarter
    
    $
    54.60
    
    
    $
    38.20Second quarter
    
    $
    51.80
    
    
    $
    45.14First quarter
    
    $
    58.87
    
    
    $
    46.852006Fourth quarter
    
    $
    57.07
    
    
    $
    48.79Third quarter
    
    $
    60.05
    
    
    $
    45.10Second quarter
    
    $
    76.57
    
    
    $
    46.60First quarter
    
    $
    72.10
    
    
    $
    47.062005Fourth quarter
    
    $
    49.55
    
    
    $
    35.45Third quarter
    
    $
    40.87
    
    
    $
    19.01Second quarter (from April 6, 2005)
    
    $
    22.00
    
    
    $
    17.55
 Dividend Policy
    20




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Performance Graph
 The following performance graph and related information shall not be deemed soliciting material
or to be filed with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically
incorporates it by reference into such filing.
  COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FREIGHTCAR AMERICA,
NASDAQ COMPOSITE INDEX AND DJ TRANSPORTATION INDEX
 
 
 Dollar Value of $100 Invested on April 6, 2005April 6,
    
    June 30,
    
    Dec. 31,
    
    June 30,
    
    Dec. 31,
    
    June 30,
    
    Dec. 31,2005
    
    2005
    
    2005
    
    2006
    
    2006
    
    2007
    
    2007FreightCar America,
Inc.
    
    $
    100.00
    
    
    $
    94.29
    
    
    $
    228.96
    
    
    $
    264.59
    
    
    $
    264.72
    
    
    $
    228.94
    
    
    $
    168.02Nasdaq Composite
Index
    
    $
    100.00
    
    
    $
    103.48
    
    
    $
    111.17
    
    
    $
    110.07
    
    
    $
    122.69
    
    
    $
    132.37
    
    
    $
    134.89DJ Transportation
Index
    
    $
    100.00
    
    
    $
    94.18
    
    
    $
    113.89
    
    
    $
    134.44
    
    
    $
    125.07
    
    
    $
    140.61
    
    
    $
    126.85
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Item 6. Selected Financial Data.
  Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in thousands, except share and per share data and railcar amounts)Statements of operations data:Sales
    
    $
    817,025
    
    
    $
    1,444,800
    
    
    $
    927,187
    
    
    $
    482,180
    
    
    $
    244,349Cost of sales
    
    
    713,661
    
    
    
    1,211,349
    
    
    
    820,638
    
    
    
    468,309
    
    
    
    225,216Gross profit
    
    
    103,364
    
    
    
    233,451
    
    
    
    106,549
    
    
    
    13,871
    
    
    
    19,133Selling, general and administrative expense(1)(2)
    
    
    38,914
    
    
    
    34,390
    
    
    
    28,461
    
    
    
    32,660
    
    
    
    14,318Curtailment and impairment charges(8)
    
    
    30,836
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    33,614
    
    
    
    199,061
    
    
    
    78,088
    
    
    
    (18,789
    )
    
    
    4,815Interest income
    
    
    8,349
    
    
    
    5,860
    
    
    
    1,225
    
    
    
    282
    
    
    
    128Interest expense
    
    
    420
    
    
    
    352
    
    
    
    11,082
    
    
    
    13,856
    
    
    
    12,704Amortization and write-off of deferred financing costs
    
    
    232
    
    
    
    306
    
    
    
    776
    
    
    
    459
    
    
    
    977Income (loss) before income taxes
    
    
    41,311
    
    
    
    204,263
    
    
    
    67,455
    
    
    
    (32,822
    )
    
    
    (8,738
    )Income tax provision (benefit)
    
    
    14,843
    
    
    
    75,530
    
    
    
    21,762
    
    
    
    (7,962
    )
    
    
    (1,318
    )Net income (loss)
    
    
    26,468
    
    
    
    128,733
    
    
    
    45,693
    
    
    
    (24,860
    )
    
    
    (7,420
    )Redeemable preferred stock dividends accumulated
    
    
    
    
    
    
    
    
    
    
    311
    
    
    
    1,062
    
    
    
    1,063Net income (loss) attributable to common stockholders
    
    $
    26,468
    
    
    $
    128,733
    
    
    $
    45,382
    
    
    $
    (25,922
    )
    
    $
    (8,483
    )Weighted average common shares outstanding  basic
    
    
    12,115,712
    
    
    
    12,586,889
    
    
    
    11,135,440
    
    
    
    6,888,750
    
    
    
    6,875,000Weighted average common shares outstandingdiluted
    
    
    12,188,901
    
    
    
    12,785,015
    
    
    
    11,234,075
    
    
    
    6,888,750
    
    
    
    6,875,000Per share data:Net income (loss) per share attributable to common
stockholders  basic
    
    $
    2.18
    
    
    $
    10.23
    
    
    $
    4.08
    
    
    $
    (3.76
    )
    
    $
    (1.23
    )Net income (loss) per share attributable to common
stockholders  diluted
    
    $
    2.17
    
    
    $
    10.07
    
    
    $
    4.04
    
    
    $
    (3.76
    )
    
    $
    (1.23
    )Dividends declared per common share
    
    $
    0.24
    
    
    $
    0.15
    
    
    $
    0.06
    
    
    $
    0.00
    
    
    $
    0.00Other financial and operating data:Capital expenditures
    
    $
    6,073
    
    
    $
    6,903
    
    
    $
    7,520
    
    
    $
    2,215
    
    
    $
    369New railcars delivered
    
    
    10,282
    
    
    
    18,764
    
    
    
    13,031
    
    
    
    7,484
    
    
    
    4,550New railcar orders
    
    
    6,366
    
    
    
    7,350
    
    
    
    22,363
    
    
    
    12,437
    
    
    
    9,927New railcar backlog
    
    
    5,399
    
    
    
    9,315
    
    
    
    20,729
    
    
    
    11,397
    
    
    
    6,444Estimated backlog(4)
    
    $
    422,054
    
    
    $
    697,054
    
    
    $
    1,412,424
    
    
    $
    747,842
    
    
    $
    365,876Balance sheet data (at period end):Cash and cash equivalents
    
    $
    197,042
    
    
    $
    212,026
    
    
    $
    61,737
    
    
    $
    11,213
    
    
    $
    20,008Restricted cash(5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,955
    
    
    
    11,698Total assets
    
    
    355,884
    
    
    
    419,981
    
    
    
    225,282
    
    
    
    191,143
    
    
    
    140,052Total debt(6)
    
    
    93
    
    
    
    154
    
    
    
    224
    
    
    
    56,058
    
    
    
    51,778Rights to additional acquisition consideration, including
accumulated accretion(3)(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,581
    
    
    
    22,865Total redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,182
    
    
    
    11,120Total stockholders equity (deficit)
    
    
    198,072
    
    
    
    203,869
    
    
    
    92,199
    
    
    
    (37,089
    )
    
    
    (19,710
    )
 
 (1)
    
    On December 7, 2004, in accordance with our then-existing shareholders agreement, our board
of directors approved the grant of certain options to purchase an aggregate of 1,014 Units to
certain of our directors and officers at an exercise price of $0.01 per Unit. The grant became
effective on December 23, 2004. Each Unit consisted of 550 shares of our common stock and one share of our
Series A voting preferred stock. We recorded a non-cash expense of $8.9 million based on the
estimated value per Unit as of December 23, 2004. All of these options were exercised prior to
April 11, 2005, pursuant to which we issued 557,700 shares of our common stock and 1,014 shares
of our Series A voting preferred stock, and all of our Series A voting preferred stock was
redeemed with the net proceeds from our initial public offering. On April 11, 2005, immediately
following the 22




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##### Table of Contents



completion of our initial public offering, we granted to certain of our executive
officers certain options to purchase an aggregate of 329,808 shares of our common stock under
the 2005 Long Term Incentive Plan. On December 6, 2005, our board of directors approved the
award of 37,500 shares of restricted stock to certain of our employees pursuant to our 2005 Long
Term Incentive Plan. In addition, on December 6, 2005, one of our officers was granted stock
options pursuant to the 2005 Long Term Incentive Plan. We recorded a non-cash charge of $358,000
in the aggregate for the year ended December 31, 2005 in connection with the issuance of the
foregoing stock options and restricted share awards. We recorded a non-cash charge of $2.1
million for the year ended December 31, 2006 in connection with the issuance of the foregoing
options and restricted share awards and the issuance of additional restricted share awards in
2006. We recorded a non-cash charge of $2.8 million for the year ended December 31, 2007 in
connection with the issuance of the foregoing options and restricted share awards and the
issuance of additional restricted share awards in 2007.(2)
    
    On November 15, 2004, we entered into the Johnstown settlement and recorded a $9.2 million
charge with respect to the year ended December 31, 2004. As part of the Johnstown settlement,
we agreed to pay back wages equal to $1.4 million to the covered employees and recorded a $0.8
million cash charge for expenses related to the Johnstown settlement in the year ended
December 31, 2004. We also recorded $7.0 million of non-cash expense in the year ended
December 31, 2004 related to pension and postretirement termination benefits accrued with
respect to retired unionized employees at our Johnstown facility. For the year ended December
31, 2005, we recorded a charge of $370,000 relating to a change in estimate of the charge
resulting from the Johnstown settlement consisting of a retroactive payment to unionized
Johnstown employees for certain previously unpaid work hours. For the year ended December 31,
2007 we recorded a contingent liability accrual of $3.9 million.(3)
    
    Rights to additional acquisition consideration refers to the additional acquisition
consideration related to the acquisition of our business in 1999 that became due, and was
paid, upon the completion of our initial public offering in April 2005.(4)
    
    Estimated backlog reflects the total sales attributable to the backlog reported at the end of
the particular period as if such backlog were converted to actual sales. Estimated backlog
does not reflect potential price increases or decreases under most of our customer contracts
that provide for variable pricing based on changes in the cost of raw materials or the
possibility that contracts may be canceled or railcar delivery dates delayed and does not
reflect the effects of any cancellation or delay of railcar orders that may occur. See Item 1.
BusinessBacklog.(5)
    
    Our restricted cash for the years ended December 31, 2004 and 2003 included cash collateral
of $3.8 million plus interest held in escrow for our participation in a residual support
guarantee agreement with respect to railcars that we sold to a customer that are presently
leased by the customer to a third party. Our restricted cash for the years ended December 31,
2004 and 2003 also included $7.5 million held in a restricted cash account as additional
collateral for our former revolving credit facility, which was released to us after we entered
into our revolving credit facility agreement. Our restricted cash balance for the year ended
December 31, 2004 also included $1.2 million in escrow, representing security for workers
compensation insurance. As of December 31, 2005, we no longer had any remaining restricted
cash. Restricted cash in the amount of $13.0 million was released during the year ended
December 31, 2005 as follows: the $7.5 million attributable to cash held as additional
collateral under the former revolving credit facility was released upon signing the new credit
facility agreement; $1.2 million held in escrow as security for workers compensation
insurance was replaced by a letter of credit; and $4.3 million held in escrow for a residual
support guaranty relating to railcars we sold to a financial institution that are leased by a
third-party customer was released by the financial institution.(6)
    
    Our total debt includes current maturities of long-term debt and our variable rate demand
industrial revenue bonds due 2010, which are classified as short-term debt. We repaid all of
our debt that existed prior to the initial public offering with the net proceeds of the
initial public offering and available cash.(7)
    
    Our recorded liability under the rights to additional acquisition consideration was based on
the fair value of the rights to additional acquisition consideration at the time that we
acquired our business from TTII in 1999, using a discount rate of 25% and an expected
redemption period of seven years. As a result of our initial public offering, we were required
to pay the additional acquisition consideration in the aggregate amount of $35.0 million.8)
    
    For the year ended December 31, 2007, we recorded curtailment and impairment charges of $30.8
million relating to the planned closure of our Johnstown facility, which included curtailment
and special termination benefits for our pension and postretirement benefit plans of $27.7
million, one-time employee termination benefits of $2.2 million and fixed asset impairment
charges of $950,000. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 OVERVIEW
 You should read the following discussion in conjunction with our consolidated financial statements
and related notes included elsewhere in this annual report on Form 10-K . 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     Forward-Looking
Statements.
    23




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##### Table of Contents



FINANCIAL STATEMENT PRESENTATION
 Sales
  24




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##### Table of Contents



Cost of sales
    25




---



##### Table of Contents



Operating income
  RESULTS OF OPERATIONS
 Year Ended December 31, 2007 compared to Year Ended December 31, 2006
 Sales
 ®
 Gross Profit
  Selling, General and Administrative Expenses
  Curtailment and Impairment Charges
  Interest Expense/Income
  26




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##### Table of Contents



Income Taxes
   Net Income
  Year Ended December 31, 2006 compared to Year Ended December 31, 2005
 Sales
 ®
 Gross Profit
  Selling, General and Administrative Expenses
  27




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##### Table of Contents



Interest Expense/Income
  Income Taxes
  Net Income
  LIQUIDITY AND CAPITAL RESOURCES
   28




---



##### Table of Contents



29




---



##### 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
    
    $
    93
    
    
    $
    65
    
    
    $
    28
    
    
    $
    
    
    
    $
    Operating leases
    
    
    14,187
    
    
    
    1,856
    
    
    
    3,761
    
    
    
    4,122
    
    
    
    4,448Material and component purchases
    
    
    131,852
    
    
    
    32,806
    
    
    
    82,887
    
    
    
    16,159
    
    
    
    Total
    
    $
    146,132
    
    
    $
    34,727
    
    
    $
    86,676
    
    
    $
    20,281
    
    
    $
    4,448
       30




---



##### Table of Contents



Cash Flows
  2007
    
    
    2006
    
    
    2005Net cash provided by (used in):Operating activities
    
    $
    41,398
    
    
    $
    154,156
    
    
    $
    65,814Investing activities
    
    
    (6,062
    )
    
    
    (5,821
    )
    
    
    5,435Financing activities
    
    
    (50,320
    )
    
    
    1,954
    
    
    
    (20,725
    )Total
    
    $
    (14,984
    )
    
    $
    150,289
    
    
    $
    50,524
 Operating Activities.
   Investing Activities.
  Financing Activities.
 31




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##### Table of Contents



Capital Expenditures
    CRITICAL ACCOUNTING POLICIES
   Long-lived assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
  32




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##### Table of Contents



Impairment of goodwill and intangible assets
 Goodwill and Other Intangible Assets
    
    
    volume projections based on an industry-specific outlook for railcar demand and
specifically coal railcar demand;
    
    estimated margins on railcar sales; and
    
    weighted-average cost of capital (or WACC) used to discount future performance of our
company.
   33




---



##### Table of Contents



Pensions and postretirement benefits
   1% Increase
    
    1% Decrease(in thousands)Effect on net periodic benefit cost
    
    $
    (425
    )
    
    $
    425
  1% Increase
    
    1% Decrease(in thousands)Effect on net periodic benefit cost
    
    $
    (1,051
    )
    
    $
    1,200
  34




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##### Table of Contents



Income taxes
 Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Standard
No. 109
     35




---



##### Table of Contents



Product warranties
  Revenue recognition
 Accounting for Non-Monetary Transactions Interpretations of APB No-29
 Compensation expense under stock option agreements and restricted stock awards
  Contingencies and litigation
  RECENT ACCOUNTING PRONOUNCEMENTS
 Share-Based Payment,
 36




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes  An
Interpretation of FASB Standard No. 109
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  An amendment of FASB Statements No. 87, 88, 106 and 132(R)
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 Business Combinations,
 Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51 Consolidated Financial Statements
 37




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##### Table of Contents



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.
  38




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
     39




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Internal Control Integrated Framework
  Inherent Limitations on Effectiveness of Controls
   40




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control 
Integrated Framework
    Internal Control  Integrated Framework .
 41




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##### Table of Contents



Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans.
  
 42




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##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents
    
    $
    197,042
    
    
    $
    212,026Accounts receivable, net of allowance for doubtful accounts of $223 and $191, respectively
    
    
    13,068
    
    
    
    11,369Inventories
    
    
    49,845
    
    
    
    106,643Other current assets
    
    
    7,223
    
    
    
    5,045Deferred income taxes
    
    
    13,520
    
    
    
    8,462Total current assets
    
    
    280,698
    
    
    
    343,545Property, plant and equipment, net
    
    
    26,921
    
    
    
    25,905Goodwill
    
    
    21,521
    
    
    
    21,521Deferred income taxes
    
    
    21,035
    
    
    
    22,955Other long-term assets
    
    
    5,709
    
    
    
    6,055Total assets
    
    $
    355,884
    
    
    $
    419,981Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    39,525
    
    
    $
    103,038Accrued payroll and employee benefits
    
    
    13,320
    
    
    
    13,120Accrued postretirement benefits
    
    
    5,188
    
    
    
    3,480Income taxes payable
    
    
    
    
    
    
    9,816Accrued warranty
    
    
    10,551
    
    
    
    12,051Customer deposits
    
    
    19,836
    
    
    
    11,652Other current liabilities
    
    
    7,100
    
    
    
    3,831Total current liabilities
    
    
    95,520
    
    
    
    156,988Accrued pension costs
    
    
    10,685
    
    
    
    9,576Accrued postretirement benefits, less current portion
    
    
    47,890
    
    
    
    49,455Other long-term liabilities
    
    
    3,717
    
    
    
    93Total liabilities
    
    
    157,812
    
    
    
    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 December 31, 2007 and 2006)
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000,000 shares authorized, 12,731,678 and 12,681,511
shares issued at December 31, 2007 and 2006, respectively
    
    
    127
    
    
    
    127Additional paid in capital
    
    
    99,270
    
    
    
    99,981Treasury stock, at cost, 918,257 shares at December 31, 2007
    
    
    (43,597
    )
    
    
    Accumulated other comprehensive loss
    
    
    (9,857
    )
    
    
    (26,774
    )Retained earnings
    
    
    152,129
    
    
    
    130,535Total stockholders equity
    
    
    198,072
    
    
    
    203,869Total liabilities and stockholders equity
    
    $
    355,884
    
    
    $
    419,981
 See notes to the consolidated financial statements.
 43




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##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF INCOME
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Sales
    
    $
    817,025
    
    
    $
    1,444,800
    
    
    $
    927,187Cost of sales
    
    
    713,661
    
    
    
    1,211,349
    
    
    
    820,638Gross profit
    
    
    103,364
    
    
    
    233,451
    
    
    
    106,549Selling, general and administrative expense
(including non-cash stock-based compensation expense
of $2,804, $2,130 and $358, respectively)
    
    
    38,914
    
    
    
    34,390
    
    
    
    28,461Curtailment and impairment charges
    
    
    30,836
    
    
    
    
    
    
    
    Operating income
    
    
    33,614
    
    
    
    199,061
    
    
    
    78,088Interest income
    
    
    8,349
    
    
    
    5,860
    
    
    
    1,225Interest expense
    
    
    420
    
    
    
    352
    
    
    
    11,082Amortization and write-off of deferred financing costs
    
    
    232
    
    
    
    306
    
    
    
    776Income before income taxes
    
    
    41,311
    
    
    
    204,263
    
    
    
    67,455Income tax provision
    
    
    14,843
    
    
    
    75,530
    
    
    
    21,762Net income
    
    
    26,468
    
    
    
    128,733
    
    
    
    45,693Redeemable preferred stock dividends accumulated
    
    
    
    
    
    
    
    
    
    
    311Net income attributable to common stockholders
    
    $
    26,468
    
    
    $
    128,733
    
    
    $
    45,382Net income per common share attributable to common
stockholdersbasic
    
    $
    2.18
    
    
    $
    10.23
    
    
    $
    4.08Net income per common share attributable to common
stockholdersdiluted
    
    $
    2.17
    
    
    $
    10.07
    
    
    $
    4.04Weighted average common shares outstandingbasic
    
    
    12,115,712
    
    
    
    12,586,889
    
    
    
    11,135,440Weighted average common shares outstandingdiluted
    
    
    12,188,901
    
    
    
    12,785,015
    
    
    
    11,234,075Dividends declared per common share
    
    $
    0.24
    
    
    $
    0.15
    
    
    $
    0.06
 See notes to the consolidated financial statements.
 44




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##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated(Pre-merger Company)
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Retained
    
    
    TotalClass A
    
    
    Class B
    
    
    Common Stock
    
    Paid In
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    Earnings
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    (Deficit)
    
    
    Equity (Deficit)Balance, January 1, 2005
    
    
    6,138,000
    
    
    $
    
    
    
    
    737,000
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    8,900
    
    
    
    
    
    
    $
    
    
    
    $
    (5,055
    )
    
    $
    (40,934
    )
    
    $
    (37,089
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,693
    
    
    
    45,693Additional minimum pension
liability (see Note 10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (501
    )
    
    
    
    
    
    
    (501
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,192Stock options exercised
    
    
    557,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares exchanged in merger
(see Note 12)
    
    
    (6,695,700
    )
    
    
    
    
    
    
    (737,000
    )
    
    
    
    
    
    
    7,432,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Redeemable preferred stock
dividends accumulated, but
undeclared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (311
    )
    
    
    (311
    )Redemption of preferred stock
with liquidation preference in
excess of par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (507
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (507
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,100,000
    
    
    
    125
    
    
    
    85,181
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,306Restricted stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,500
    
    
    
    1
    
    
    
    1,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,871Unvested restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,746
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,746
    )Stock-based compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (751
    )
    
    
    (751
    )Balance, December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,570,200
    
    
    
    126
    
    
    
    93,932
    
    
    
    
    
    
    
    
    
    
    
    (5,556
    )
    
    
    3,697
    
    
    
    92,199Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,733
    
    
    
    128,733Additional minimum pension
liability, net of tax (see
Notes 10 and 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,950
    
    
    
    
    
    
    
    1,950Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,683Adjustment related to initial
application of SFAS No. 158 
pension liability, net of tax
(see Notes 10 and 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,599
    )
    
    
    
    
    
    
    (7,599
    )Adjustment related to initial
application of SFAS No. 158 
postretirement liability, net
of tax (see Notes 10 and 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,569
    )
    
    
    
    
    
    
    (15,569
    )Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,936
    
    
    
    1
    
    
    
    2,088
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,089Restricted stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,542
    
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221Forfeiture of restricted stock
awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,167
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unvested restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )Stock-based compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,034
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,034Excess tax benefit from
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,831
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,831Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,895
    )
    
    
    (1,895
    )Balance, December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,681,511
    
    
    
    127
    
    
    
    99,981
    
    
    
    
    
    
    
    
    
    
    
    (26,774
    )
    
    
    130,535
    
    
    
    203,869Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,468
    
    
    
    26,468Pension liability activity, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,868
    
    
    
    
    
    
    
    6,868Postretirement liability
activity, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,049
    
    
    
    
    
    
    
    10,049Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,385Adjustment for adoption of
FIN No. 48 (see Note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,936
    )
    
    
    (1,936
    )Stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,048,300
    )
    
    
    (50,000
    )
    
    
    
    
    
    
    
    
    
    
    (50,000
    )Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,322
    )
    
    
    109,936
    
    
    
    5,410
    
    
    
    
    
    
    
    
    
    
    
    2,088Restricted stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,000
    
    
    
    
    
    
    
    (1,030
    )
    
    
    20,940
    
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    Forfeiture of restricted stock
awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,833
    )
    
    
    
    
    
    
    37
    
    
    
    (833
    )
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,804Excess tax benefit from
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,938
    )
    
    
    (2,938
    )Balance, December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    12,731,678
    
    
    $
    127
    
    
    $
    99,270
    
    
    
    (918,257
    )
    
    $
    (43,597
    )
    
    $
    (9,857
    )
    
    $
    152,129
    
    
    $
    198,072
 See notes to the consolidated financial statements.
 45




---



##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    26,468
    
    
    $
    128,733
    
    
    $
    45,693Adjustments to reconcile net income to net cash flows provided by operating activities
Curtailment and impairment charges
    
    
    30,836
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    3,910
    
    
    
    5,442
    
    
    
    7,810Non-cash interest expense related to Senior Notes and rights to additional
acquisition consideration
    
    
    
    
    
    
    
    
    
    
    9,635Other non-cash items
    
    
    2,160
    
    
    
    259
    
    
    
    1,569Deferred income taxes
    
    
    (11,911
    )
    
    
    2,568
    
    
    
    4,817Provision for settlement of labor disputes
    
    
    
    
    
    
    
    
    
    
    370Compensation expense under stock option and restricted share award agreements
    
    
    2,804
    
    
    
    2,130
    
    
    
    358Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,699
    )
    
    
    (7,515
    )
    
    
    282Inventories
    
    
    54,875
    
    
    
    (31,554
    )
    
    
    (1,871
    )Other current assets
    
    
    (312
    )
    
    
    (1,012
    )
    
    
    (3,599
    )Accounts payable
    
    
    (62,742
    )
    
    
    42,448
    
    
    
    (10,487
    )Accrued payroll and employee benefits
    
    
    (2,004
    )
    
    
    3,414
    
    
    
    6,812Income taxes receivable/payable
    
    
    (11,922
    )
    
    
    5,581
    
    
    
    4,235Accrued warranty
    
    
    (1,500
    )
    
    
    4,173
    
    
    
    1,914Customer deposits and other current liabilities
    
    
    11,448
    
    
    
    11,614
    
    
    
    (6,211
    )Accrued pension costs and accrued postretirement benefits
    
    
    987
    
    
    
    (12,125
    )
    
    
    4,487Net cash flows provided by operating activities
    
    
    41,398
    
    
    
    154,156
    
    
    
    65,814Cash flows from investing activitiesRestricted cash withdrawals, net
    
    
    
    
    
    
    
    
    
    
    12,955Proceeds from sale of property, plant and equipment
    
    
    11
    
    
    
    1,082
    
    
    
    Purchases of property, plant and equipment
    
    
    (6,073
    )
    
    
    (6,903
    )
    
    
    (7,520
    )Net cash flows (used in) provided by investing activities
    
    
    (6,062
    )
    
    
    (5,821
    )
    
    
    5,435Cash flows from financing activitiesPayments on long-term debt
    
    
    (60
    )
    
    
    (71
    )
    
    
    (59,331
    )Deferred financing costs paid
    
    
    (211
    )
    
    
    
    
    
    
    Stock repurchases
    
    
    (50,000
    )
    
    
    
    
    
    
    Issuance of common stock (net of issuance costs and deferred offering costs)
    
    
    2,089
    
    
    
    2,089
    
    
    
    87,320Excess tax benefit from stock-based compensation
    
    
    800
    
    
    
    1,831
    
    
    
    Redemption of preferred stock and payment of accumulated dividends
    
    
    
    
    
    
    
    
    
    
    (13,000
    )Payments of additional acquisition consideration
    
    
    
    
    
    
    
    
    
    
    (34,963
    )Cash dividends paid to stockholders
    
    
    (2,938
    )
    
    
    (1,895
    )
    
    
    (751
    )Net cash flows (used in) provided by financing activities
    
    
    (50,320
    )
    
    
    1,954
    
    
    
    (20,725
    )Net (decrease) increase in cash and cash equivalents
    
    
    (14,984
    )
    
    
    150,289
    
    
    
    50,524Cash and cash equivalents at beginning of year
    
    
    212,026
    
    
    
    61,737
    
    
    
    11,213Cash and cash equivalents at end of year
    
    $
    197,042
    
    
    $
    212,026
    
    
    $
    61,737Supplemental cash flow informationCash paid for:Interest (includes, for the year ended December 31, 2005, $26,790 related to
additional acquisition consideration and $28,361 relating to Senior Notes and
previously accrued but unpaid PIK Notes)
    
    $
    515
    
    
    $
    360
    
    
    $
    56,506Income tax refunds received
    
    $
    70
    
    
    $
    
    
    
    $
    Income taxes paid
    
    $
    37,147
    
    
    $
    65,581
    
    
    $
    12,718Non-cash transactions:(Decrease) increase in balance of property, plant and equipment on account
    
    $
    (771
    )
    
    $
    1,076
    
    
    $
    Capital lease obligations incurred for equipment
    
    $
    
    
    
    $
    
    
    
    $
    244
 See notes to the consolidated financial statements.
 46




---



##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005
 Note 1  Description of the Business
  Note 2  Summary of Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Cash Equivalents
   Inventories
  47




---



##### Table of Contents



Property, Plant and Equipment
  Description of Assets
    
    LifeBuildings and improvements
    
    10-40 yearsMachinery and equipment
    
    3-12 years
  Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
  Research and Development
  Goodwill and Intangible Assets
 Goodwill and Other
Intangible Assets
  48




---



##### Table of Contents



Income Taxes
 Accounting for Income Taxes,
   Product Warranties
  Revenue Recognition
 Accounting for Non-Monetary Transactions, Interpretations of APB No. 29,
   Accounting for Shipping and Handling Fees and Costs
 49




---



##### Table of Contents



Financial Instruments
  Comprehensive Income (Loss)
  Earnings Per Share
  Stock-Based Compensation
 Accounting for Stock Issued to
Employees Share-Based Payment,
  Year EndedDecember 31,2005Net income attributable to common stockholders, as reported
    
    $
    45,382Add: Stock-based employee compensation expense determined under the
intrinsic value method, net of tax
    
    
    228Deduct: Stock-based employee compensation expense determined under the
fair value method, net of tax
    
    
    (567
    )Net income attributable to common stockholders, pro forma
    
    $
    45,043Net income per common share attributable to common stockholders  basicAs reported
    
    $
    4.08Pro forma
    
    $
    4.05Net income per common share attributable to common stockholders  dilutedAs reported
    
    $
    4.04Pro forma
    
    $
    4.01
 50




---



##### Table of Contents



Recent Accounting Pronouncements
 Share-Based Payment,
 Accounting for Uncertainty in Income Taxes  An
Interpretation of FASB Standard No. 109
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  An amendment of FASB Statements No. 87, 88, 106 and 132(R)
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 Business Combinations
 51




---



##### Table of Contents



Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51 Consolidated Financial Statements
 Note 3  Curtailment and Impairment Charges
   Pension plan curtailment loss and special termination benefit costs
    
    $
    14,478Postretirement plan curtailment loss and contractual benefit charges
    
    
    13,204Contractual employee termination benefits  severance
    
    
    2,126Contractual employee termination benefits  medical insurance
    
    
    78Impairment charge for plant building and land
    
    
    950Total curtailment and impairment charges
    
    $
    30,836
 Note 4  Initial and Secondary Public Offerings
  52




---



##### Table of Contents



Note 5  Inventories
  December 31,2007
    
    
    2006Work in progress
    
    $
    48,088
    
    
    $
    102,515Finished new railcars
    
    
    1,757
    
    
    
    4,128Total inventories
    
    $
    49,845
    
    
    $
    106,643
 53




---



##### Table of Contents



Note 6  Property, Plant and Equipment
  December 31,2007
    
    
    2006Land
    
    $
    701
    
    
    $
    722Buildings and improvements
    
    
    20,559
    
    
    
    24,743Machinery and equipment
    
    
    40,228
    
    
    
    36,098Cost of buildings, improvements, machinery and equipment
    
    
    60,787
    
    
    
    60,841Less: Accumulated depreciation and amortization
    
    
    (35,697
    )
    
    
    (40,397
    )Buildings, improvements, machinery and equipment net of
accumulated depreciation and amortization
    
    
    25,090
    
    
    
    20,444Construction in process
    
    
    1,130
    
    
    
    4,739Total property, plant and equipment
    
    $
    26,921
    
    
    $
    25,905
   Note 7  Intangible Assets
  December 31,2007
    
    
    2006Patents
    
    $
    13,097
    
    
    $
    13,097Accumulated amortization
    
    
    (8,014
    )
    
    
    (7,424
    )Patents, net of accumulated amortization
    
    $
    5,083
    
    
    $
    5,673
  54




---



##### Table of Contents



Note 8  Product Warranties
  December 31,2007
    
    
    2006
    
    
    2005Balance at the beginning of the year
    
    $
    12,051
    
    
    $
    7,878
    
    
    $
    5,964Warranties issued during the year
    
    
    3,353
    
    
    
    6,056
    
    
    
    4,887Reductions for payments, costs of repairs and other
    
    
    (4,853
    )
    
    
    (1,883
    )
    
    
    (2,973
    )Balance at the end of the year
    
    $
    10,551
    
    
    $
    12,051
    
    
    $
    7,878
 Note 9  Revolving Credit Facility
   55




---



##### Table of Contents



Note 10  Accumulated Other Comprehensive Income (Loss)
  Pre-Tax
    
    
    Tax
    
    
    After-TaxYear ended December 31, 2005Additional minimum pension liability
    
    $
    (602
    )
    
    $
    101
    
    
    $
    (501
    )Year ended December 31, 2006Additional minimum pension liability
    
    $
    3,168
    
    
    $
    (1,218
    )
    
    $
    1,950Adjustment related to initial
application of SFAS No. 158 
pension liability (See Note 13)
    
    
    (12,049
    )
    
    
    4,450
    
    
    
    (7,599
    )Adjustment related to initial
application of SFAS No. 158 
postretirement liability (See Note
13)
    
    
    (24,685
    )
    
    
    9,116
    
    
    
    (15,569
    )$
    (33,566
    )
    
    $
    12,348
    
    
    $
    (21,218
    )Year ended December 31, 2007Pension liability activity
    
    $
    10,905
    
    
    $
    (4,037
    )
    
    $
    6,868Postretirement liability activity
    
    
    15,954
    
    
    
    (5,905
    )
    
    
    10,049$
    26,859
    
    
    $
    (9,942
    )
    
    $
    16,917
  December 31,2007
    
    
    2006Unrecognized pension cost, net of tax of $2,524 and $6,561
    
    $
    4,337
    
    
    $
    11,205Unrecognized postretirement cost, net of tax of $3,211 and $9,116
    
    
    5,520
    
    
    
    15,569$
    9,857
    
    
    $
    26,774
 Note 11  Rights to Additional Acquisition Consideration
  Note 12  Stockholders Equity
  56




---



##### Table of Contents



Note 13  Employee Benefit Plans
     Decrease in prepaid pension benefit cost
    
    $
    (266
    )Decrease in intangible asset
    
    
    (6,099
    )Increase in accrued pension benefits
    
    
    (5,684
    )Increase in accrued postretirement benefits
    
    
    (24,685
    )Increase in accumulated other comprehensive loss, pretax
    
    
    (36,734
    )Increase in deferred tax assets
    
    
    13,566Increase in accumulated other comprehensive loss, net of tax
    
    $
    (23,168
    )
 57




---



##### Table of Contents



PostretirementPension Benefits
    
    
    Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006Change in benefit obligationBenefit obligationBeginning of year
    
    $
    49,065
    
    
    $
    46,590
    
    
    $
    52,936
    
    
    $
    51,433Service cost
    
    
    2,229
    
    
    
    2,386
    
    
    
    683
    
    
    
    683Interest cost
    
    
    2,771
    
    
    
    2,511
    
    
    
    2,946
    
    
    
    2,843Plan amendment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106Plan curtailment
    
    
    (54
    )
    
    
    
    
    
    
    40
    
    
    
    Actuarial loss (gain)
    
    
    (4,930
    )
    
    
    67
    
    
    
    (3,719
    )
    
    
    969Special termination benefit loss
    
    
    8,952
    
    
    
    
    
    
    
    3,028
    
    
    
    Benefits paid
    
    
    (2,640
    )
    
    
    (2,489
    )
    
    
    (2,836
    )
    
    
    (3,098
    )Benefit obligationEnd of year
    
    
    55,393
    
    
    
    49,065
    
    
    
    53,078
    
    
    
    52,936Change in plan assetsPlan assetsBeginning of year
    
    
    39,489
    
    
    
    19,437
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    2,750
    
    
    
    3,934
    
    
    
    
    
    
    
    Employer contributions
    
    
    5,373
    
    
    
    18,607
    
    
    
    2,836
    
    
    
    3,098Benefits paid
    
    
    (2,639
    )
    
    
    (2,489
    )
    
    
    (2,836
    )
    
    
    (3,098
    )Plan assets at fair valueEnd of year
    
    
    44,973
    
    
    
    39,489
    
    
    
    
    
    
    
    Funded status of plansEnd of year
    
    $
    (10,420
    )
    
    $
    (9,576
    )
    
    $
    (53,078
    )
    
    $
    (52,936
    )
 PostretirementPension Benefits
    
    
    Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006Amounts recognized in the
Consolidated Balance SheetsNoncurrent assets
    
    $
    265
    
    
    $
    
    
    
    $
    
    
    
    $
    Current liabilities
    
    
    
    
    
    
    
    
    
    
    (5,188
    )
    
    
    (3,481
    )Noncurrent liabilities
    
    
    (10,685
    )
    
    
    (9,576
    )
    
    
    (47,890
    )
    
    
    (49,455
    )Net amount recognized at December 31
    
    $
    (10,420
    )
    
    $
    (9,576
    )
    
    $
    (53,078
    )
    
    $
    (52,936
    )
   PostretirementPension Benefits
    
    
    Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006Net actuarial loss
    
    $
    5,972
    
    
    $
    10,708
    
    
    $
    7,142
    
    
    $
    11,235Prior service cost
    
    
    889
    
    
    
    7,058
    
    
    
    1,589
    
    
    
    13,450$
    6,861
    
    
    $
    17,766
    
    
    $
    8,731
    
    
    $
    24,685
  58




---



##### Table of Contents



Pension Benefits
    
    
    Postretirement Benefits2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Components of net periodic benefit costService cost
    
    $
    2,229
    
    
    $
    2,386
    
    
    $
    2,243
    
    
    $
    683
    
    
    $
    683
    
    
    $
    729Interest cost
    
    
    2,771
    
    
    
    2,511
    
    
    
    2,392
    
    
    
    2,946
    
    
    
    2,843
    
    
    
    2,974Settlement of labor dispute
    
    
    
    
    
    
    
    
    
    
    388
    
    
    
    
    
    
    
    
    
    
    
    Expected return on plan assets
    
    
    (3,508
    )
    
    
    (2,161
    )
    
    
    (1,500
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of unrecognized prior service cost
    
    
    712
    
    
    
    712
    
    
    
    662
    
    
    
    1,725
    
    
    
    1,648
    
    
    
    1,809Amortization of unrecognized net loss
    
    
    441
    
    
    
    558
    
    
    
    525
    
    
    
    374
    
    
    
    400
    
    
    
    338Curtailment recognition
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    10,176
    
    
    
    
    
    
    
    Contractual benefit charge
    
    
    8,952
    
    
    
    
    
    
    
    
    
    
    
    3,028
    
    
    
    
    
    
    
    Total net periodic benefit cost
    
    $
    17,123
    
    
    $
    4,006
    
    
    $
    4,710
    
    
    $
    18,932
    
    
    $
    5,574
    
    
    $
    5,850
  PostretirementPension Benefits
    
    
    BenefitsNet actuarial gain
    
    $
    (4,173
    )
    
    $
    (3,718
    )Amortization of net actuarial gain
    
    
    (441
    )
    
    
    (374
    )Amortization of prior service cost
    
    
    (712
    )
    
    
    (1,725
    )Curtailment  prior service cost
    
    
    (5,457
    )
    
    
    (10,137
    )Curtailment  net actuarial gain
    
    
    (122
    )
    
    
    Total recognized in accumulated
other comprehensive loss
    
    $
    (10,905
    )
    
    $
    (15,954
    )
  Pension
    
    PostretirementBenefits
    
    Benefits2008
    
    $
    5,478
    
    
    $
    5,1882009
    
    
    4,997
    
    
    
    5,3352010
    
    
    4,859
    
    
    
    5,2712011
    
    
    4,696
    
    
    
    5,1762012
    
    
    4,531
    
    
    
    5,005
  59




---



##### Table of Contents



PostretirementPension Benefits
    
    Benefits2007
    
    2006
    
    2007
    
    2006Discount rate
    
    
    6.40
    %
    
    
    5.90
    %
    
    
    6.40
    %
    
    
    5.90
    %Rate of compensation increase
    
    
    3.00%-4.00
    %
    
    
    3.00%-4.00
    %
  Pension Benefits
    
    Postretirement Benefits2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005Discount rate
    
    
    5.90
    %
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    5.90
    %
    
    
    5.75
    %
    
    
    6.00
    %Expected return on
plan assets
    
    
    8.25
    %
    
    
    8.25
    %
    
    
    8.50
    %
    
    
    
    
    
    
    
    
    
    
    Rate of
compensation
increase
    
    
    3.00%-4.00
    %
    
    
    3.00%-4.00
    %
    
    
    3.00%-4.00
    %
    
    
    
    
    
    
    
    
    
    
    
  2007
    
    2006
    
    2005Health care cost trend rate assigned for next year
    
    
    9.00
    %
    
    
    10.00
    %
    
    
    11.00
    %Rate to which cost trend is assumed to decline
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    5.00
    %Year the rate reaches the ultimate trend rate
    
    
    2014
    
    
    
    2014
    
    
    
    2011
   Plan Assets at
    
    TargetDecember 31,
    
    Allocation2007
    
    2006
    
    2008Asset CategoryEquity securities
    
    
    72
    %
    
    
    72
    %
    
    
    70
    %Debt securities
    
    
    28
    %
    
    
    28
    %
    
    
    30
    %100
    %
    
    
    100
    %
    
    
    100
    %
    60




---



##### Table of Contents



Note 14  Income Taxes
  Year Ended December 31,2007
    
    
    2006
    
    
    2005Current taxesFederal
    
    $
    21,772
    
    
    $
    62,433
    
    
    $
    15,472State
    
    
    4,789
    
    
    
    10,529
    
    
    
    1,47326,561
    
    
    
    72,962
    
    
    
    16,945Deferred taxesFederal
    
    
    (10,377
    )
    
    
    1,935
    
    
    
    4,715State
    
    
    (1,534
    )
    
    
    633
    
    
    
    102(11,911
    )
    
    
    2,568
    
    
    
    4,817Interest expense, gross of related tax effects
    
    
    193Total
    
    $
    14,843
    
    
    $
    75,530
    
    
    $
    21,762
  Year Ended December 31,2007
    
    2006
    
    2005Statutory U.S. federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal tax benefit
    
    
    1.9
    %
    
    
    4.2
    %
    
    
    2.1
    %Valuation allowance
    
    
    2.8
    %
    
    
    (0.7
    )%
    
    
    (0.5
    )%Goodwill amortization for tax reporting purposes
    
    
    (1.4
    )%
    
    
    (0.3
    )%
    
    
    (0.6
    )%Deductible interest expense on rights to
additional acquisition consideration
    
    
    
    
    
    
    
    
    
    
    (4.5
    )%Manufacturing deduction
    
    
    (3.4
    )%
    
    
    (1.0
    )%
    
    
    Nondeductible expenses
    
    
    
    
    
    
    
    
    
    
    0.5
    %Other
    
    
    1.0
    %
    
    
    (0.2
    )%
    
    
    0.3
    %Effective income tax rate
    
    
    35.9
    %
    
    
    37.0
    %
    
    
    32.3
    %
 61




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##### Table of Contents



December 31, 2007
    
    
    December 31, 2006Description
    
    Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesAccrued post-retirement and pension benefits-long term
    
    $
    22,338
    
    
    $
    
    
    
    $
    23,534
    
    
    $
    Intangible assets
    
    
    1,137
    
    
    
    
    
    
    
    1,817
    
    
    
    Accrued workers compensation costs
    
    
    1,083
    
    
    
    
    
    
    
    988
    
    
    
    Accrued warranty costs
    
    
    5,003
    
    
    
    
    
    
    
    4,567
    
    
    
    Accrued bonuses
    
    
    57
    
    
    
    
    
    
    
    195
    
    
    
    Accrued vacation
    
    
    915
    
    
    
    
    
    
    
    1,165
    
    
    
    Accrued contingencies
    
    
    2,784
    
    
    
    
    
    
    
    
    
    
    
    Accrued severance
    
    
    787
    
    
    
    
    
    
    
    
    
    
    
    Inventory valuation
    
    
    1,637
    
    
    
    
    
    
    
    766
    
    
    
    Property, plant and equipment
    
    
    
    
    
    
    (984
    )
    
    
    
    
    
    
    (939
    )State net operating loss carryforwards
    
    
    1,875
    
    
    
    
    
    
    
    1,478
    
    
    
    Reserve on loss contract
    
    
    
    
    
    
    
    
    
    
    711
    
    
    
    Stock compensation expense
    
    
    920
    
    
    
    
    
    
    
    497
    
    
    
    Other
    
    
    588
    
    
    
    
    
    
    
    
    
    
    
    (441
    )39,124
    
    
    
    (984
    )
    
    
    35,718
    
    
    
    (1,380
    )Valuation allowance
    
    
    (3,585
    )
    
    
    
    
    
    
    (2,921
    )
    
    
    Deferred tax assets (liabilities)
    
    $
    35,539
    
    
    $
    (984
    )
    
    $
    32,797
    
    
    $
    (1,380
    )Increase (decrease) in valuation allowance
    
    $
    664
    
    
    
    
    
    
    $
    (770
    )
   2007Beginning of year balance
    
    $
    2,638Increases in prior period tax positions
    
    
    Decreases in prior period tax positions
    
    
    (80
    )Increases in current period tax positions
    
    
    263Settlements
    
    
    End of year balance
    
    $
    2,821
  62




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##### Table of Contents



Earliest YearOpen ToJurisdiction
    
    ExaminationU.S. Federal
    
    
    2003States:Pennsylvania
    
    
    2003Virginia
    
    
    2005Illinois
    
    
    2003
 Note 15  Stock-Based Compensation
 Share-Based Payment,
 Accounting for Stock Issued to Employees
   63




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##### Table of Contents



Stock Option Activity
  December 31,2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    ExerciseOptions
    
    Price
    
    Options
    
    PriceOutstanding
    
    (per share)
    
    Outstanding
    
    (per share)Outstanding at the beginning of the year
    
    
    229,872
    
    
    $
    20.34
    
    
    
    339,808
    
    
    $
    19.91Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (109,936
    )
    
    
    19.00
    
    
    
    (109,936
    )
    
    
    19.00Forfeited or expired
    
    
    (54,968
    )
    
    
    19.00
    
    
    
    Outstanding at the end of the
year
    
    
    64,968
    
    
    $
    23.76
    
    
    
    229,872
    
    
    $
    20.34Exercisable at the end of the year
    
    
    6,666
    
    
    $
    49.90
    
    
    
    3,333
    
    
    $
    49.90
  Weighted-Average
    
    Weighted-Remaining
    
    AverageContractual
    
    Exercise
    
    AggregateOptions
    
    Term
    
    Price
    
    IntrinsicOutstanding
    
    (in years)
    
    (per share)
    
    ValueOptions outstanding
    
    
    64,968
    
    
    
    7.4
    
    
    $
    23.76
    
    
    $
    892Vested or expected to vest
    
    
    64,968
    
    
    
    7.4
    
    
    $
    23.76
    
    
    $
    892Options exercisable
    
    
    6,666
    
    
    
    7.9
    
    
    $
    49.90
    
    
    
    
  64




---



##### Table of Contents



Nonvested Stock Activity
  December 31,2007
    
    2006Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    Grant DateFair Value
    
    
    
    
    
    Fair ValueShares
    
    (per share)
    
    Shares
    
    (per share)Nonvested at the beginning of the
year
    
    
    25,021
    
    
    $
    51.53
    
    
    
    37,500
    
    
    $
    49.90Granted
    
    
    72,940
    
    
    
    53.85
    
    
    
    3,542
    
    
    
    62.31Vested
    
    
    (12,442
    )
    
    
    53.18
    
    
    
    (13,854
    )
    
    
    50.13Forfeited or expired
    
    
    (2,666
    )
    
    
    49.90
    
    
    
    (2,167
    )
    
    
    49.90Nonvested at the end of the year
    
    
    82,853
    
    
    $
    53.38
    
    
    
    25,021
    
    
    $
    51.53Expected to vest
    
    
    82,853
    
    
    $
    53.38
    
    
    
    24,021
    
    
    $
    51.60
  Note 16  Risks and Contingencies
    65




---



##### Table of Contents



total
  Accounting for Contingencies
 66




---



##### Table of Contents



Note 17  Other Commitments
   2008
    
    $
    1,8562009
    
    
    1,7582010
    
    
    2,0032011
    
    
    2,0402012
    
    
    2,082Thereafter
    
    
    4,448$
    14,187
      67




---



##### Table of Contents



Note 18  Earnings Per Share
  Year Ended December 31,2007
    
    2006
    
    2005Weighted average common shares
outstanding
    
    
    12,115,712
    
    
    
    12,586,889
    
    
    
    11,135,440Dilutive effect of employee
stock options and restricted
share awards
    
    
    73,189
    
    
    
    198,126
    
    
    
    98,635Weighted average diluted common
shares outstanding
    
    
    12,188,901
    
    
    
    12,785,015
    
    
    
    11,234,075
  Note 19  Operating Segment and Concentration of Sales
  Year ended December 31,2007
    
    
    2006
    
    
    2005New railcar sales
    
    $
    800,542
    
    
    $
    1,435,391
    
    
    $
    911,139Used railcar sales
    
    
    5,928
    
    
    
    
    
    
    
    6,884Leasing revenues
    
    
    39
    
    
    
    222
    
    
    
    55Other sales
    
    
    10,516
    
    
    
    9,187
    
    
    
    9,109$
    817,025
    
    
    $
    1,444,800
    
    
    $
    927,187
  Note 20  Labor Agreements
    68




---



##### Table of Contents



Note 21  Related Party Transactions
    Note 22  Subsequent Events
  69




---



##### Table of Contents



Note 23  Selected Quarterly Financial Data (Unaudited)
  First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter(in thousands except for share and per share data)2007Sales
    
    $
    322,451
    
    
    $
    195,360
    
    
    $
    162,112
    
    
    $
    137,102Gross profit
    
    
    44,133
    
    
    
    24,693
    
    
    
    19,398
    
    
    
    15,140Net income
(loss)
attributable
to common
stockholders
(1)
    
    
    22,952
    
    
    
    11,453
    
    
    
    8,681
    
    
    
    (16,618
    )Net income
(loss) per
common
share
attributable
to common
stockholders
basic(1)
    
    
    1.82
    
    
    
    0.94
    
    
    
    0.73
    
    
    
    (1.42
    )Net income
(loss) per
common
share
attributable
to common
stockholders
diluted
(1)
    
    $
    1.80
    
    
    $
    0.93
    
    
    $
    0.73
    
    
    $
    (1.42
    )2006Sales
    
    $
    292,793
    
    
    $
    365,417
    
    
    $
    395,759
    
    
    $
    390,831Gross profit
    
    
    41,134
    
    
    
    65,593
    
    
    
    65,217
    
    
    
    61,507Net income
attributable
to common
stockholders
    
    
    21,373
    
    
    
    36,601
    
    
    
    36,794
    
    
    
    33,965Net income
per common
share
attributable
to common
stockholders
basic
    
    
    1.71
    
    
    
    2.91
    
    
    
    2.92
    
    
    
    2.69Net income
per common
share
attributable
to common
stockholders
diluted
    
    $
    1.67
    
    
    $
    2.86
    
    
    $
    2.88
    
    
    $
    2.65
 
 (1)
    
    Results for the fourth quarter 2007 include curtailment and impairment charges of $30.8
million (See Note 3 Curtailment and Impairment Charges for a description of these actions). 
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  70




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##### Table of Contents



Changes In Internal Controls
    
 Item 9B. Other Information.
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
  71




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 Exhibits
 (a)
    
    Documents filed as part of this report:
               (b)
    
    The exhibits listed on the Exhibit Index to this Form 10-K are filed with this Form 10-K or
incorporated by reference as set forth below.(c)
    
    Additional Financial Statement Schedules
  72




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##### Table of Contents



SIGNATURES
  FREIGHTCAR AMERICA, INC.Date: March 12, 2008
    By:
    /s/
Christian RagotChristian Ragot, President andChief Executive Officer  Signature
    
    Title
    
    Date/s/Christian Ragot

Christian Ragot
    
    President and Chief
Executive Officer
(principal executive
officer) and Director
    
    March 12, 2008/s/ Kevin P. Bagby

Kevin P. Bagby
    
    Vice President, Finance
and Chief Financial
Officer (principal
financial officer and
principal accounting
officer)
    
    March 12, 2008/s/ Thomas M. Fitzpatrick

Thomas M. Fitzpatrick
    
    Chairman of the Board and
Director
    
    March 12, 2008/s/ James D. Cirar

James D. Cirar
    
    Director
    
    March 12, 2008/s/William D. Gehl

William D. Gehl
    
    Director
    
    March 12, 2008/s/ Thomas A. Madden

Thomas A. Madden
    
    Director
    
    March 12, 2008/s/ S. Carl Soderstrom

S. Carl Soderstrom
    
    Director
    
    March 12, 2008/s/Robert N. Tidball

Robert N. Tidball
    
    Director
    
    March 12, 2008
 73




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##### Table of Contents



FreightCar America, Inc. and Subsidiaries
 Schedule II  Valuation and Qualifying Accounts
For the Years Ended December 31, 2007, 2006 and 2005
 Accounts Charged Offand Recoveries ofBalance at
    
    Additions Charged to
    
    Amounts PreviouslyBeginning of Period
    
    Costs and Expenses
    
    Written Off
    
    Balance at End of PeriodYear Ended December 31,
2007Allowance for
doubtful
accounts
    
    $
    191
    
    
    $
    47
    
    
    $
    (15
    )
    
    $
    223Deferred tax
assets valuation
allowance
    
    
    2,921
    
    
    
    664
    
    
    
    
    
    
    
    3,585Inventory reserve
    
    
    
    
    
    
    1,951
    
    
    $
    (774
    )
    
    
    1,177Year Ended December 31,
2006Allowance for
doubtful
accounts
    
    $
    115
    
    
    $
    79
    
    
    $
    (3
    )
    
    $
    191Deferred tax
assets valuation
allowance
    
    
    3,691
    
    
    
    
    
    
    
    (770
    )
    
    
    2,921Year Ended December 31,
2005Allowance for
doubtful
accounts
    
    $
    116
    
    
    $
    36
    
    
    $
    (37
    )
    
    $
    115Deferred tax
assets valuation
allowance
    
    
    3,795
    
    
    
    
    
    
    
    (104
    )
    
    
    3,691
 74




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##### Table of Contents



EXHIBIT INDEX
 3.1
    
    
    Certificate of Ownership and Merger of FreightCar America, Inc. into
FCA Acquisition Corp., as amended (incorporated by reference to
Exhibit 3.1 to the Companys Current Report on Form 8-K filed with
the Commission on September 7, 2006).3.2

    
    
    Third Amended and Restated By-laws of FreightCar America, Inc.
(incorporated by reference to Exhibit 3.1 to the Companys Current
Report filed on Form 8-K filed with the Commission on September 28,
2007).4.1
    
    
    Form of Registration Rights Agreement, by and among FreightCar
America, Inc., Hancock Mezzanine Partners, L.P., John Hancock Life
Insurance Company, Caravelle Investment Fund, L.L.C., Trimaran
Investments II, L.L.C., Camillo M. Santomero, III, and the investors
listed on Exhibit A attached thereto (incorporated by reference to
Exhibit 4.3 to Registration Statement Nos. 333-123384 and 333-123875
filed with the Commission on April 4, 2005).10.1
    
    
    Employment Agreement, dated as of November 22, 2004, between JAC
Holdings International, Inc. and Kevin P. Bagby (incorporated by
reference to Exhibit 10.2 to Registration Statement Nos. 333-123384
and 333-123875 filed with the Commission on March 17, 2005).10.2
    
    
    Amendment to Employment Agreement, dated as of December 21, 2004,
between FreightCar America, Inc. and Kevin P. Bagby (incorporated by
reference to Exhibit 10.3 to Registration Statement Nos. 333-123384
and 333-123875 filed with the Commission on March 17, 2005).10.3
    
    
    Employment Agreement, dated as of December 20, 2004, between
FreightCar America, Inc. and Edward J. Whalen (incorporated by
reference to Exhibit 10.4 to Registration Statement Nos. 333-123384
and 333-123875 filed with the Commission on March 17, 2005).10.4
    
    
    Employment Agreement, dated as of December 20, 2004, between
FreightCar America, Inc. and Glen T. Karan (incorporated by reference
to Exhibit 10.5 to Registration Statement Nos. 333-123384 and
333-123875 filed with the Commission on March 17, 2005).10.5
    
    
    Employment Agreement, dated as of January 3, 2007, between FreightCar
America, Inc. and Christian Ragot (incorporated by reference to
Exhibit 10.9 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2006 filed with the Commission on March 13, 2007).10.6
    
    
    Employment Agreement, dated as of May 1, 2007, between FreightCar
America, Inc. and Charles Magolske.10.7
    
    
    2005 Long-Term Incentive Plan and Form of Option Agreement
(incorporated by reference to Exhibit 10.6 to Registration Statement
Nos. 333-123384 and 333-123875 filed with the Commission on March
17, 2005).10.8
    
    
    First Amendment to the FreightCar America, Inc. 2005 Long-Term
Incentive Plan (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K filed with the Commission on
December 19, 2006).10.9
    
    
    Second Amendment to the FreightCar America, Inc. 2005 Long-Term
Incentive Plan (incorporated by reference to Exhibit 10.1 to the
Companys Quarterly Report on Form 10Q for the quarterly period
ended March 31, 2007 filed with the Commission on May 9, 2007).10.10
    
    
    Form of Restricted Share Award Agreement for the Companys employees
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed with the Commission on December 12, 2005).
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##### Table of Contents



10.11
    
    
    Form of Restricted Share Award Agreement for the Companys
independent directors (incorporated by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K filed with the Commission
on January 27, 2006).10.12
    
    
    Form of Restricted Share Award Agreement for the Companys employees
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed with the Commission on January 15, 2008).10.13
    
    
    Form of Stock Option Award Agreement for the Companys employees
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed with the Commission on January 15, 2008).10.14
    
    
    Lease Agreement, dated as of December 20, 2004, by and between
Norfolk Southern Railway Company and Johnstown America Corporation
(the Lease Agreement) (incorporated by reference to Exhibit 10.27
to Registration Statement Nos. 333-123384 and 333-123875 filed with
the Commission on April 4, 2005).*10.15
    
    
    Amendment to the Lease Agreement, dated as of December 1, 2005
(incorporated by reference to Exhibit 10.11 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2005).*10.16
    
    
    Second Amended and Restated Credit Agreement, dated as of August 24,
2007, by and among Johnstown America Corporation, Freight Car
Services, Inc., JAC Operations, Inc., JAIX Leasing Company and
FreightCar Roanoke, Inc. as the Co-Borrowers, the lenders party
thereto, LaSalle Bank National Association, as Administrative Agent
and Arranger, and National City Business Credit, Inc., as Collateral
Agent (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed with the Commission on August 28,
2007).10.17
    
    
    Management Incentive Plan of Johnstown America Corporation
(incorporated by reference to Exhibit 10.29 to Registration
Statement Nos. 333-123384 and 333-123875 filed with the Commission
on March 17, 2005).10.18
    
    
    Consulting Agreement, dated as of June 3, 1999, between Rabbit Hill
Holdings, Inc., Johnstown America Corporation, Freight Car Services,
Inc., JAIX Leasing Company and JAC Patent Company and James D. Cirar
(incorporated by reference to Exhibit 10.10 to Registration
Statement Nos. 333-123384 and 333-123875 filed with the Commission
on March 17, 2005).10.19
    
    
    Amendment to Consulting Agreement, dated March 7, 2005, between
FreightCar America, Inc. and James D. Cirar (incorporated by
reference to Exhibit 10.10.1 to Registration Statement Nos.
333-123384 and 333-123875 filed with the Commission on March 17,
2005).10.20
    
    
    Form of Letter of Resignation (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed with the
Commission on December 19, 2006).10.21
    
    
    Letter of Resignation (incorporated by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K filed with the Commission
on January 29, 2007).10.22
    
    
    Agreement, dated as of January 25, 2007 between FreightCar America,
Inc. and Edward J. Whalen (incorporated by reference to Exhibit 10.1
to the Companys Current Report on Form 8-K filed with the
Commission on January 25, 2007).10.23
    
    
    Agreement, dated as of January 25, 2007 between FreightCar America,
Inc. and Kevin P. Bagby (incorporated by reference to Exhibit 10.2
to the Companys Current Report on Form 8-K filed with the
Commission on January 25, 2007).
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##### Table of Contents



10.24
    
    
    Agreement, dated as of March 8, 2007 between FreightCar America,
Inc. and Kenneth D. Bridges (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed with the
Commission on March 12, 2007).21
    
    
    Subsidiaries of FreightCar America, Inc. (incorporated by reference
to Exhibit 21.1 to Registration Statement Nos. 333-123384 and
333-123875 filed with the Commission on March 17, 2005).23
    
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32
    
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Confidential treatment has been granted for the redacted portions of this exhibit.
A complete copy of the exhibit, including the redacted portions, has been filed
separately with the Securities and Exchange Commission. 77