UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K/A







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
                    to

Commission File Number: 000-51728





American Railcar Industries, Inc.

(Exact name of Registrant as Specified in its Charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|North Dakota                                                   |  | 43-1481791                             
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification Number)

100 Clark Street

St. Charles, Missouri 63301

(Address of principal executive offices,
including zip code)

Telephone (636) 940-6000

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None





Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).    Yes  x    No   ̈

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.     ̈

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check One)



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈ |  | Accelerated Filer         |  | x
|                        |  |   | 
|Non-Accelerated Filer   |  |  ̈ |  | Smaller Reporting Company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day or the registrants most recently completed second fiscal quarter was approximately
$228 million, based on the closing sales price of $23.45 per share of such stock on The NASDAQ Global Select Market on June 30, 2011.

As
of March 2, 2012, as reported on the NASDAQ Global Select Market, there were 21,352,297 shares of common stock, par value $0.01 per share, of the Registrant outstanding.





DOCUMENTS INCORPORATED BY REFERENCE

Parts of the following document are incorporated by reference in Part III of this Form 10-K Report:

(1) Proxy Statement for the Registrants 2012 Annual Meeting of Stockholders  Items 10, 11, 12, 13 and 14.









---

EXPLANATORY NOTE



American Railcar Industries, Inc. (the Company) hereby amends, as set
forth below, its Annual Report on Form 10-K filed on March 2, 2012 (the Original Report) solely to correct a scriveners error in the auditor opinion contained in Item 8 Financial Statements and Supplementary Data of the Original
Report.

This amendment corrects the dates in the third paragraph of the report of the independent registered public accounting firm as to its
audit of the Companys financial statements so that it reads as follows: In our opinion the consolidated financial statements present fairly, in all material respects, the financial position of American Railcar Industries, Inc. and
Subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United
States of America. Item 8 of the Original Report is hereby amended and restated in its entirety, as set forth below.

In addition,
pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this amended report, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to
the Original Report have been re-executed as of the date hereof and are included as exhibits hereto.

Except as set forth in this explanatory
note, no other changes have been made to the Original Report. This amendment speaks as of the filing date of the Original Report, does not reflect events that may have occurred after the original filing date and does not modify or update in any way
disclosures made in the Original Report, except as set forth in this explanatory note.



2



---

Item 8: Financial Statements and Supplementary Data

American Railcar Industries, Inc.

Index to Consolidated Financial Statements



|                                                                                                             |  |      | September 30, | 
|------------------------------------------------------------------------------------------------------------ |  | ---- | ------------- | 
|                                                                                                             |  | Page |              
|Audited Consolidated Financial Statements of American Railcar Industries, Inc.                               |  |      |               | 
|Reports of Grant Thornton LLP Independent Registered Public Accounting Firm                                  |  |      | 41 - 42       | 
|Consolidated Balance Sheets as of December 31, 2011 and 2010                                                 |  |      | 43            | 
|Consolidated Statements of Operations for the Years Ended December 31, 2011, 2010 and
2009                   |  |      | 44            | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and
2009                   |  |      | 45            | 
|Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 
31, 2011, 2010 and 2009 |  |      | 46            | 
|Consolidated Statements of Stockholders Equity for the Years Ended December 
31, 2011, 2010 and 2009        |  |      | 47            | 
|Notes to Consolidated Financial Statements                                                                   |  |      | 48            | 



40



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

American Railcar Industries, Inc.

We have audited American Railcar Industries, Inc. and
Subsidiaries (a North Dakota Corporation) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). American Railcar Industries, Inc. and Subsidiaries management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Annual Report. Our responsibility is to express an opinion on American Railcar Industries, Inc. and Subsidiaries internal control over financial reporting based on our
audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, American Railcar Industries, and Subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Frameworkissued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets
of American Railcar Industries, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders equity, and cash flows for each of the three years in
the period ended December 31, 2011, and our report dated March 2, 2012 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

St. Louis, Missouri

March 2,
2012



41



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

American
Railcar Industries, Inc.

We have audited the accompanying consolidated balance sheets of American Railcar Industries, Inc. and Subsidiaries
(the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders equity, and cash flows for each of the three years in the period ended
December 31, 2011. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of American Railcar Industries, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with
accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the Companys internal control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 2, 2012 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

St. Louis, Missouri

March 2, 2012



42



---

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)



|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ------- | 
|                                                                                                                                                                 |  | As of December 31, |        
|                                                                                                                                                                 |  | 2011               |         |   | 2010 |  
|Assets                                                                                                                                                           |  |                    |         |   |      |   |         | 
|Current assets:                                                                                                                                                  |  |                    |         |   |      |   |         | 
|Cash and cash equivalents                                                                                                                                        |  | $                  | 307,172 |   |      | $ | 318,758 | 
|Accounts receivable, net                                                                                                                                         |  |                    | 33,626  |   |      |   | 21,002  | 
|Accounts receivable, due from related parties                                                                                                                    |  |                    | 6,106   |   |      |   | 4,981   | 
|Income taxes receivable                                                                                                                                          |  |                    | 4,074   |   |      |   | 14,939  | 
|Inventories, net                                                                                                                                                 |  |                    | 95,827  |   |      |   | 50,033  | 
|Deferred tax assets                                                                                                                                              |  |                    | 3,203   |   |      |   | 3,029   | 
|Prepaid expenses and other current assets                                                                                                                        |  |                    | 4,539   |   |      |   | 2,654   | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total current assets                                                                                                                                             |  |                    | 454,547 |   |      |   | 415,396 | 
|                                                                                                                                                                 |  |                   
|Property, plant and equipment, net                                                                                                                               |  |                    | 194,242 |   |      |   | 181,255 | 
|Deferred debt issuance costs                                                                                                                                     |  |                    | 1,335   |   |      |   | 1,951   | 
|Interest receivable, due from related parties                                                                                                                    |  |                    | 292     |   |      |   | 187     | 
|Goodwill                                                                                                                                                         |  |                    | 7,169   |   |      |   | 7,169   | 
|Investment in and loans to joint ventures                                                                                                                        |  |                    | 45,122  |   |      |   | 48,169  | 
|Other assets                                                                                                                                                     |  |                    | 1,063   |   |      |   | 240     | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total assets                                                                                                                                                     |  | $                  | 703,770 |   |      | $ | 654,367 | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|                                                                                                                                                                 |  |                   
|Liabilities and Stockholders Equity                                                                                                                             |  |                    |         |   |      |   |         | 
|Current liabilities:                                                                                                                                             |  |                    |         |   |      |   |         | 
|Accounts payable                                                                                                                                                 |  | $                  | 62,318  |   |      | $ | 29,334  | 
|Accounts payable, due to related parties                                                                                                                         |  |                    | 800     |   |      |   | 275     | 
|Accrued expenses and taxes                                                                                                                                       |  |                    | 5,879   |   |      |   | 5,095   | 
|Accrued compensation                                                                                                                                             |  |                    | 14,446  |   |      |   | 11,054  | 
|Accrued interest expense                                                                                                                                         |  |                    | 6,875   |   |      |   | 6,875   | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total current liabilities                                                                                                                                        |  |                    | 90,318  |   |      |   | 52,633  | 
|                                                                                                                                                                 |  |                   
|Senior unsecured notes                                                                                                                                           |  |                    | 275,000 |   |      |   | 275,000 | 
|Deferred tax liability                                                                                                                                           |  |                    | 14,923  |   |      |   | 7,938   | 
|Pension and post-retirement liabilities, net of current                                                                                                          |  |                    | 9,280   |   |      |   | 6,707   | 
|Other liabilities                                                                                                                                                |  |                    | 4,080   |   |      |   | 4,313   | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total liabilities                                                                                                                                                |  |                    | 393,601 |   |      |   | 346,591 | 
|                                                                                                                                                                 |  |                   
|Commitments and contingencies                                                                                                                                    |  |                    |         |   |      |   |         | 
|                                                                                                                                                                 |  |                   
|Stockholders equity:                                                                                                                                            |  |                    |         |   |      |   |         | 
|Common stock, $0.01 par value, 50,000,000 shares authorized, 21,352,297 and 21,316,296 shares issued and outstanding at
December 31, 2011 and 2010, respectively |  |                    | 213     |   |      |   | 213     | 
|Additional paid-in capital                                                                                                                                       |  |                    | 239,609 |   |      |   | 238,947 | 
|Retained earnings                                                                                                                                                |  |                    | 71,545  |   |      |   | 67,209  | 
|Accumulated other comprehensive (loss) income                                                                                                                    |  |                    | (1,198  | ) |      |   | 1,407   | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total stockholders equity                                                                                                                                       |  |                    | 310,169 |   |      |   | 307,776 | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 
|Total liabilities and stockholders equity                                                                                                                       |  | $                  | 703,770 |   |      | $ | 654,367 | 
|                                                                                                                                                                 |  |                    |         |   |      |   |         | 

See Notes to the Consolidated Financial Statements.



43



---

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)



|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                                                                       |  | For the Years Ended December 31, |         
|                                                                                                                                       |  | 2011                             |          |   | 2010 |   |          | 2009 | 
|Revenues:                                                                                                                              |  |                                  |          |   |      |   |          |      |  |   |          |  
|Manufacturing operations (including revenues from affiliates of $1,230, $81,905 and $105,216 in 2011, 2010 and 2009,
respectively)     |  | $                                | 454,167  |   |      | $ | 206,094  |      |  | $ | 365,329  |  
|                                                                                                                                       |  |                                  |         
|Railcar services (including revenues from affiliates of $24,730, $15,041 and $14,434 in 2011, 2010 and 2009,
respectively)             |  |                                  | 65,218   |   |      |   | 67,469   |      |  |   | 58,102   |  
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|Total revenues                                                                                                                         |  |                                  | 519,385  |   |      |   | 273,563  |      |  |   | 423,431  |  
|                                                                                                                                       |  |                                  |         
|Cost of revenues:                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|Manufacturing operations                                                                                                               |  |                                  | (410,990 | ) |      |   | (210,269 | )    |  |   | (329,025 | )
|Railcar services                                                                                                                       |  |                                  | (50,599  | ) |      |   | (54,353  | )    |  |   | (47,015  | )
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|Total cost of revenues                                                                                                                 |  |                                  | (461,589 | ) |      |   | (264,622 | )    |  |   | (376,040 | )
|                                                                                                                                       |  |                                  |         
|Gross profit                                                                                                                           |  |                                  | 57,796   |   |      |   | 8,941    |      |  |   | 47,391   |  
|                                                                                                                                       |  |                                  |         
|Selling, general and administrative (including costs from a related party of $582, $627 and $616 in 2011, 2010 and 2009,
respectively) |  |                                  | (25,047  | ) |      |   | (25,591  | )    |  |   | (25,141  | )
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|Earnings (loss) from operations                                                                                                        |  |                                  | 32,749   |   |      |   | (16,650  | )    |  |   | 22,250   |  
|                                                                                                                                       |  |                                  |         
|Interest income (including income from related parties of $2,839, $2,620 and $986 in 2011, 2010 and 2009,
respectively)                |  |                                  | 3,654    |   |      |   | 3,519    |      |  |   | 6,613    |  
|Interest expense                                                                                                                       |  |                                  | (20,291  | ) |      |   | (21,275  | )    |  |   | (20,909  | )
|Other (loss) income (including income from a related party of $16, $17 and $9 in 2011, 2010 and 2009,
respectively)                    |  |                                  | (10      | ) |      |   | 394      |      |  |   | 20,869   |  
|Loss from joint ventures                                                                                                               |  |                                  | (7,900   | ) |      |   | (7,789   | )    |  |   | (6,797   | )
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|Earnings (loss) before income taxes                                                                                                    |  |                                  | 8,202    |   |      |   | (41,801  | )    |  |   | 22,026   |  
|Income tax (expense) benefit                                                                                                           |  |                                  | (3,866   | ) |      |   | 14,795   |      |  |   | (6,568   | )
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net earnings (loss)                                                                                                                    |  | $                                | 4,336    |   |      | $ | (27,006  | )    |  | $ | 15,458   |  
|                                                                                                                                       |  |                                  |          |   |      |   |          |      |  |   |          |  
|                                                                                                                                       |  |                                  |         
|Net earnings (loss) per common sharebasic and diluted                                                                                 |  | $                                | 0.20     |   |      | $ | (1.27    | )    |  | $ | 0.73     |  
|Weighted average common shares outstandingbasic and diluted                                                                           |  |                                  | 21,352   |   |      |   | 21,302   |      |  |   | 21,302   |  

See Notes to the Consolidated Financial Statements.



44



---

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                     |  | For the Years Ended December 31, |        
|                                                                                                     |  | 2011                             |         |   | 2010 |   |         | 2009 | 
|Operating activities:                                                                                |  |                                  |         |   |      |   |         |      |  |   |         |  
|Net earnings (loss)                                                                                  |  | $                                | 4,336   |   |      | $ | (27,006 | )    |  | $ | 15,458  |  
|                                                                                                     |  |                                  |        
|Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |  |                                  |         |   |      |   |         |      |  |   |         |  
|Depreciation                                                                                         |  |                                  | 22,167  |   |      |   | 23,597  |      |  |   | 23,405  |  
|Amortization of deferred costs                                                                       |  |                                  | 699     |   |      |   | 699     |      |  |   | 718     |  
|Loss on disposal of property, plant and equipment                                                    |  |                                  | 171     |   |      |   | 33      |      |  |   | 222     |  
|Stock based compensation                                                                             |  |                                  | 3,537   |   |      |   | 5,358   |      |  |   | 1,174   |  
|Change in interest receivable, due from affiliates                                                   |  |                                  | (105    | ) |      |   | 796     |      |  |   | (982    | )
|Loss from joint ventures                                                                             |  |                                  | 7,900   |   |      |   | 7,789   |      |  |   | 6,797   |  
|Unrealized loss on derivative assets                                                                 |  |                                  |        |   |      |   |        |      |  |   | 88      |  
|Provision (benefit) for deferred income taxes                                                        |  |                                  | 6,533   |   |      |   | (438    | )    |  |   | 1,492   |  
|(Adjustment) provision for losses on accounts receivable                                             |  |                                  | (22     | ) |      |   | 113     |      |  |   | (101    | )
|Item related to investing activities:                                                                |  |                                  |         |   |      |   |         |      |  |   |         |  
|Realized loss on derivative assets                                                                   |  |                                  |        |   |      |   |        |      |  |   | 10      |  
|Realized gain on sale of short-term investments  available for sale securities                      |  |                                  |        |   |      |   | (379    | )    |  |   | (23,825 | )
|Impairment of short-term investments  available for sale securities                                 |  |                                  |        |   |      |   |        |      |  |   | 2,884   |  
|Changes in operating assets and liabilities:                                                         |  |                                  |         |   |      |   |         |      |  |   |         |  
|Accounts receivable, net                                                                             |  |                                  | (12,616 | ) |      |   | (9,664  | )    |  |   | 28,483  |  
|Accounts receivable, due from affiliates                                                             |  |                                  | (1,170  | ) |      |   | (3,625  | )    |  |   | 8,928   |  
|Income taxes receivable                                                                              |  |                                  | 10,590  |   |      |   | (13,171 | )    |  |   | (1,768  | )
|Inventories, net                                                                                     |  |                                  | (45,813 | ) |      |   | (9,925  | )    |  |   | 57,260  |  
|Prepaid expenses and other current assets                                                            |  |                                  | (1,885  | ) |      |   | 2,244   |      |  |   | 331     |  
|Accounts payable                                                                                     |  |                                  | 32,988  |   |      |   | 12,446  |      |  |   | (25,366 | )
|Accounts payable, due to affiliates                                                                  |  |                                  | 525     |   |      |   | (301    | )    |  |   | (4,617  | )
|Accrued expenses and taxes                                                                           |  |                                  | 207     |   |      |   | (486    | )    |  |   | (5,517  | )
|Other                                                                                                |  |                                  | 81      |   |      |   | (221    | )    |  |   | (931    | )
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities                                                  |  |                                  | 28,123  |   |      |   | (12,141 | )    |  |   | 84,143  |  
|Investing activities:                                                                                |  |                                  |         |   |      |   |         |      |  |   |         |  
|Purchases of property, plant and equipment                                                           |  |                                  | (35,646 | ) |      |   | (6,144  | )    |  |   | (15,047 | )
|Sale of property, plant and equipment                                                                |  |                                  | 122     |   |      |   | 163     |      |  |   | 71      |  
|Purchases of short-term investments  available for sale securities                                  |  |                                  |        |   |      |   |        |      |  |   | (36,841 | )
|Sales of short-term investments  available for sale securities                                      |  |                                  |        |   |      |   | 4,180   |      |  |   | 60,795  |  
|Realized loss on derivative assets                                                                   |  |                                  |        |   |      |   |        |      |  |   | (10     | )
|Investments in and loans to joint ventures                                                           |  |                                  | (4,936  | ) |      |   | (14,891 | )    |  |   | (35,810 | )
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Net cash used in investing activities                                                                |  |                                  | (40,460 | ) |      |   | (16,692 | )    |  |   | (26,842 | )
|Financing activities:                                                                                |  |                                  |         |   |      |   |         |      |  |   |         |  
|Common stock dividends                                                                               |  |                                  |        |   |      |   |        |      |  |   | (1,917  | )
|Proceeds from stock option exercises                                                                 |  |                                  | 756     |   |      |   | 294     |      |  |   |        |  
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) financing activities                                                  |  |                                  | 756     |   |      |   | 294     |      |  |   | (1,917  | )
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                                         |  |                                  | (5      | ) |      |   | 7       |      |  |   | 118     |  
|(Decrease) increase in cash and cash equivalents                                                     |  |                                  | (11,586 | ) |      |   | (28,532 | )    |  |   | 55,502  |  
|Cash and cash equivalents at beginning of year                                                       |  |                                  | 318,758 |   |      |   | 347,290 |      |  |   | 291,788 |  
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of year                                                             |  | $                                | 307,172 |   |      | $ | 318,758 |      |  | $ | 347,290 |  
|                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  

See Notes to the Consolidated Financial Statements.



45



---

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)



|                                                                                                                        |  |                                 |        |   |      |   |         |      |  |   |        | 
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | 
|                                                                                                                        |  | For the Years EndedDecember 31, |       
|                                                                                                                        |  | 2011                            |        |   | 2010 |   |         | 2009 | 
|Net earnings (loss)                                                                                                     |  | $                               | 4,336  |   |      | $ | (27,006 | )    |  | $ | 15,458 | 
|Currency translation adjustment                                                                                         |  |                                 | (285   | ) |      |   | 511     |      |  |   | 1,246  | 
|Effect of short-term investment activity, net of tax effect of $0, $0 and $478 in 2011, 2010 and 2009,
respectively     |  |                                 |       |   |      |   |        |      |  |   | 888    | 
|Impairment of short-term investments, net of tax effect of $0, $0 and $1,197 in 2011, 2010 and 2009, respectively       |  |                                 |       |   |      |   |        |      |  |   | 1,687  | 
|Minimum pension liability adjustment, net of tax effect of $1,285, $243 and $1,509 in 2011, 2010 and 2009,
respectively |  |                                 | (2,014 | ) |      |   | (393    | )    |  |   | 2,914  | 
|Amortization of postretirement adjustment, net of tax effect of $189, $189 and $0 in 2011, 2010 and 2009,
respectively  |  |                                 | (306   | ) |      |   | (306    | )    |  |   |       | 
|                                                                                                                        |  |                                 |        |   |      |   |         |      |  |   |        | 
|Comprehensive income (loss)                                                                                             |  | $                               | 1,731  |   |      | $ | (27,194 | )    |  | $ | 22,193 | 
|                                                                                                                        |  |                                 |        |   |      |   |         |      |  |   |        | 

See Notes to the Consolidated Financial Statements.



46



---

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands)



|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|-------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------------ |  | ------ | ----------- |  | - | ------------------------ |  |  | ------------------------------------------ | ------- | - | ------------------------ | - | ------ | - |  | - | ------- | -
|                                                                     |  | Retainedearnings |         |   | CommonStock-Shares |  |        | Commonstock |  |   | Additionalpaid-incapital |  |  | Accumulatedothercomprehensive(loss) income |         |   | Totalstockholdersequity |  
|Balance December 31, 2008                                            |  | $                | 80,035  |   |                    |  | 21,302 |             |  | $ | 213                      |  |  | $                                          | 239,617 |   |                          | $ | (5,140 | ) |  | $ | 314,725 |  
|Net earnings                                                         |  |                  | 15,458  |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   | 15,458  |  
|Currency translation adjustment                                      |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | 1,246  |   |  |   | 1,246   |  
|Effect of short-term investment activity, net of tax effect of $478  |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | 888    |   |  |   | 888     |  
|Impairment of short-term investments, net of tax effect of $1,197    |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | 1,687  |   |  |   | 1,687   |  
|Minimum pension liability adjustment, net of tax effect of $1,509    |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | 2,914  |   |  |   | 2,914   |  
|Dividends on common stock                                            |  |                  | (1,278  | ) |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   | (1,278  | )
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|Balance December 31, 2009                                            |  | $                | 94,215  |   |                    |  | 21,302 |             |  | $ | 213                      |  |  | $                                          | 239,617 |   |                          | $ | 1,595  |   |  | $ | 335,640 |  
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|Net loss                                                             |  |                  | (27,006 | ) |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   | (27,006 | )
|Currency translation adjustment                                      |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | 511    |   |  |   | 511     |  
|Minimum pension liability adjustment, net of tax effect of $243      |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | (393   | ) |  |   | (393    | )
|Amortization of postretirement adjustment, net of tax effect of $189 |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | (306   | ) |  |   | (306    | )
|Proceeds from stock options exercises                                |  |                  |         |   |                    |  | 14     |             |  |   |                          |  |  |                                            | 294     |   |                          |   |        |   |  |   | 294     |  
|Tax deficiency related to stock option exercises                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            | (34     | ) |                          |   |        |   |  |   | (34     | )
|Purchase of fixed assets from affiliate                              |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            | (930    | ) |                          |   |        |   |  |   | (930    | )
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|Balance December 31, 2010                                            |  | $                | 67,209  |   |                    |  | 21,316 |             |  | $ | 213                      |  |  | $                                          | 238,947 |   |                          | $ | 1,407  |   |  | $ | 307,776 |  
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|Net earnings                                                         |  |                  | 4,336   |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   | 4,336   |  
|Currency translation adjustment                                      |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | (285   | ) |  |   | (285    | )
|Minimum pension liability adjustment, net of tax effect of $1,285    |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | (2,014 | ) |  |   | (2,014  | )
|Amortization of postretirement adjustment, net of tax effect of $189 |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   | (306   | ) |  |   | (306    | )
|Proceeds from stock options exercises                                |  |                  |         |   |                    |  | 36     |             |  |   |                          |  |  |                                            | 756     |   |                          |   |        |   |  |   | 756     |  
|Tax deficiency related to stock option exercises                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            | (94     | ) |                          |   |        |   |  |   | (94     | )
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  
|Balance December 31, 2011                                            |  | $                | 71,545  |   |                    |  | 21,352 |             |  | $ | 213                      |  |  | $                                          | 239,609 |   |                          | $ | (1,198 | ) |  | $ | 310,169 |  
|                                                                     |  |                  |         |   |                    |  |        |             |  |   |                          |  |  |                                            |         |   |                          |   |        |   |  |   |         |  

See Notes to the Consolidated Financial Statements.



47



---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2011, 2010 and 2009

Note 1  Description of the Business

American Railcar Industries, Inc. (a North Dakota corporation) and its wholly-owned subsidiaries (collectively the Company or ARI)
manufactures railcars, which are offered for sale or lease, custom designed railcar parts and other industrial products, primarily aluminum and special alloy steel castings. These products are sold to various types of companies including leasing
companies, railroads, industrial companies and other non-rail companies. ARI provides railcar repair and maintenance services for railcar fleets. In addition, ARI provides fleet management, maintenance, engineering and field services for railcars
owned by certain customers. Such services include maintenance planning, project management, tracking and tracing, regulatory compliance, mileage audit, rolling stock taxes and online service access.

The accompanying consolidated financial statements have been prepared by ARI and include the accounts of ARI and its direct and indirect wholly-owned
subsidiaries; Castings, LLC (Castings), ARI Component Venture, LLC (ARI Component), American Railcar Mauritius I (ARM I), American Railcar Mauritius II (ARM II) and ARI Longtrain, Inc. (Longtrain). From time to time, the Company makes investments
through Longtrain. All intercompany transactions and balances have been eliminated.

The Companys operations are located in the United
States and Canada. The Company operates a railcar repair facility in Sarnia, Ontario, Canada. Canadian revenues were 1.2%, 2.0% and 0.7% of total consolidated revenues for 2011, 2010 and 2009, respectively. Canadian assets were 1.7% of total
consolidated assets as of both December 31, 2011 and 2010. In addition, the Companys subsidiaries ARM I and ARM II are located in Mauritius, through which the Company holds a 50% interest in an Indian joint venture. Refer to Note 11 for
further information. Assets held by ARM I and ARM II were 1.2% and 1.5% of total consolidated assets as of December 31, 2011 and 2010, respectively.

Note 2  Summary of Accounting Policies

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

The Company maintains cash balances at financial institutions in the U.S. that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 or the Securities Investor Protection
Corporation (SIPC) up to $500,000, including a maximum of $100,000 for free cash balances. Effective December 31, 2010, the FDIC is providing unlimited coverage of noninterest-bearing checking or demand deposit accounts until December 31,
2012. The Companys cash balances on deposit exceeded the insured limits by $305.6 million as of December 31, 2011. The Company has not experienced any losses on such amounts and believes it is not subject to significant risks related to
cash.

Short-term investments

The Company has held investments in equity securities and classified them as available for sale, based upon whether it intended to hold the investment for
the foreseeable future. Available for sale securities are reported at fair value on the Companys consolidated balance sheets while unrealized holding gains and losses on available for sale securities are excluded from earnings and reported as
a separate component of stockholders equity and when the available for sale securities sold the unrealized gains and losses are realized in the consolidated statements of operations. For purposes of determining gains and losses, the cost of
securities was based on specific identification.

When applicable, the Company evaluates its investments in unrealized loss positions for
other-than-temporary impairment on an annual basis or whenever events or changes in circumstances indicated that the unit cost of the investment may not have been recoverable.

Derivative contracts or financial instruments

The Company has in the past entered into
derivative contracts, specifically total return swap contracts and a foreign currency option contract. The Company did not use hedge accounting and accordingly, all realized and unrealized gains and losses on derivative contracts were reflected in
its consolidated statements of operations.



48



---

Revenue recognition

Revenues from railcar sales are recognized following completion of manufacturing, inspection, customer acceptance and title transfer, which is when the risk for any damage or loss with respect to the
railcars passes to the customer. Revenues from railcar leasing are recognized on a straight-line basis per terms of the lease. Revenues from railcar and industrial components are recorded at the time of product shipment, in accordance with the
Companys contractual terms. Revenues for railcar maintenance services is recognized upon completion and shipment of railcars from ARIs plants. The Company does not currently bundle railcar service contracts with new railcar sales.
Revenues for fleet management services is recognized as performed.

Revenues related to consulting type contracts are accounted for under the
proportional performance method. Profits expected to be realized on these contracts are based on the total contract revenues and costs based on the estimate of the percentage of project completion. Revenues recognized in excess of amounts billed are
recorded to unbilled revenues and included in other current assets on the consolidated balance sheets. Billings in excess of revenues recognized on in-progress contracts are recorded to unbilled costs and included in other current liabilities on the
consolidated balance sheets. These estimates are reviewed and revised periodically throughout the term of the contracts and any adjustments are recorded on a cumulative basis in the period the revisions are made.

The Company records amounts billed to customers for shipping and handling as part of sales and records related costs in cost of revenues.

ARI presents any sales tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a
customer on a net basis.

Accounts receivable, net

On a routine basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on the history of past write-offs and collections and current credit conditions.
Accounts are placed for collection on a limited basis once all other methods of collection have been exhausted. Once it has been determined that the customer is no longer in business and/or refuses to pay, the accounts are written off.

Inventories

Inventories are stated at
the lower of cost or market on a first-in, first-out basis, and include the cost of materials, direct labor and manufacturing overhead. The Company allocates fixed production overheads to the costs of conversion based on the normal capacity of its
production facilities. If any of the Companys production facilities are not operating at normal capacity, unallocated production overheads are recognized as a current period charge.

Property, plant and equipment, net

Land, buildings, machinery and equipment are carried at
cost, which could include capitalized interest on borrowed funds. Maintenance and repair costs are charged directly to earnings. Tooling is generally capitalized and depreciated over a period of approximately five years. Internally developed
software is capitalized and amortized over a period of approximately five years.

Buildings are depreciated over estimated useful lives that
range from 15 to 39 years. The estimated useful lives of other depreciable assets, including machinery, equipment and leased railcars vary from three to 30 years. Depreciation is calculated using the straight-line method for financial reporting
purposes and on accelerated methods for tax purposes.

Long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. The criteria for determining impairment of
such long-lived assets to be held and used is determined by comparing the carrying value of these long-lived assets to be held and used to managements best estimate of future undiscounted cash flows expected to result from the use of the
long-lived assets. If the long-lived assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the long-lived assets exceeds the fair value of the long-lived assets. The estimated
fair value of long-lived assets is measured by estimating the present value of the future discounted cash flows to be generated. For further discussion of long-lived assets refer to Note 9.

Debt issuance costs

Debt issuance costs were incurred in connection with ARIs
issuance of long-term debt as described in Note 13, and are amortized over the term of the related debt. Debt issuance costs as of December 31, 2011 were $1.3 million related to the Companys unsecured senior notes and will be amortized
according to the following table (in thousands):



49



---

|      |  |   |       | 
|----- |  | - | ----- | 
|2012  |  | $ | 616   | 
|2013  |  |   | 616   | 
|2014  |  |   | 103   | 
|      |  |   |       | 
|Total |  | $ | 1,335 | 
|      |  |   |       | 

Goodwill

Goodwill and other intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually and more frequently if
indicators exist by comparing the fair value of the reporting unit to its carrying value. As of December 31, 2011 and 2010, the Company reported goodwill of $7.2 million related to the acquisition of Custom Steel Inc. (Custom Steel), as
described in Note 10.

Investment in and loans to joint ventures

The Company uses the equity method to account for its investment in various joint ventures that it is partner to as described in Note 11. Under the equity method, the Company recognizes its share of the
earnings and losses of the joint ventures as they accrue. Advances and distributions are charged and credited directly to the investment account. From time to time, the Company also makes loans to its joint ventures that are included in the
investment account.

Income taxes

ARI accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial reporting basis and the tax basis of ARIs assets and liabilities at enacted tax rates expected to be in effect when such amounts are recovered or settled. ARI regularly evaluates for recoverability of its deferred tax
assets and establishes a valuation allowance, if necessary, based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax-planning
strategies. The Company also records unrecognized tax positions, including potential interest and penalties. For further discussion of income taxes refer to Note 14.

Pension plans and other postretirement benefits

Certain ARI employees participate in
noncontributory, defined benefit pension plans and a supplemental executive retirement plan. Benefits for the salaried employees are based on salary and years of service, while those for hourly employees are based on negotiated rates and years of
service.

ARI also sponsors defined contribution retirement plans and health care plans covering certain employees. Benefit costs are accrued
during the years employees render service. For further discussion of employee benefit plans refer to Note 15.

Fair value of financial
instruments

The carrying amounts of cash and cash equivalents, accounts receivable, amounts due to/from affiliates and accounts payable
approximate fair values because of the short-term maturity of these instruments. The fair value of long-term debt is determined by the market close price. Fair value estimates are made at a specific point in time, based on relevant market
information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Foreign currency translation

Balance
sheet amounts from the Companys Canadian operations are translated at the exchange rate effective at year-end and the statement of operations amounts are translated at the average rate of exchange prevailing during the year. Currency
translation adjustments are included in stockholders equity as part of accumulated other comprehensive (loss) income.

Comprehensive
income (loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. Comprehensive income (loss) consists of net earnings, foreign currency translation adjustment and minimum pension liability adjustments, which are shown net of tax and changes resulting from
unrealized gains and losses on short-term investments. Accumulated other comprehensive (loss) income, after tax, as of December 31, 2011 and 2010, consisted of foreign currency translation gains of $1.3 million and $1.6 million, respectively,
and pension and postretirement charges of $2.2 million and $0.2 million, respectively.



50



---

Earnings (loss) per common share

Basic earnings (loss) per common share is calculated as net earnings (loss) attributable to common stockholders divided by the weighted-average number of common shares outstanding during the respective
period. Diluted earnings per common share is calculated by dividing net earnings (loss) attributable to common stockholders by the weighted-average common number of shares outstanding plus dilutive potential common shares outstanding during the
year.

Use of estimates

ARI
has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting
principles generally accepted in the United States of America. Significant items subject to estimates and assumptions include, but are not limited to, deferred taxes, workers compensation accrual, valuation allowances for accounts receivable and
inventory obsolescence, depreciable lives of assets, goodwill impairment, stock based compensation fair values, the reserve for warranty claims and revenues recognized under the proportional performance method. Actual results could differ from those
estimates.

Stock based compensation

The stock-based compensation cost recorded for stock options, restricted stock and stock appreciation rights (SARs) is based on their fair value. For further discussion of stock based compensation refer
to Note 18.

Reclassifications

Certain reclassifications of prior years presentations have been made to conform to the 2011 presentation.

Recent accounting pronouncements

In
September 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance related to intangibles  goodwill and other, which allows for companies to first consider qualitative factors as a basis for assessing impairment and
determining the necessity of a detailed impairment test. This guidance is effective for fiscal years beginning after December 15, 2011 with early adoption permitted. The Company plans on adopting the guidance for the first quarter of 2012. ARI
does not anticipate that the adoption of the new guidance will have an impact on the Companys consolidated financial statements.

In
June 2011, the FASB issued authoritative guidance to amend current comprehensive income guidance. The new guidance eliminates the option to present the components of other comprehensive income as part of the statement of stockholders
equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income, which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.
This guidance is effective for the interim and annual periods beginning after December 15, 2011 with early adoption permitted. The Company adopted the guidance for the fourth quarter of 2011. The adoption of the new guidance did not have an
impact on the Companys consolidated financial statements as it only required a change in the format of the current presentation.

Note 3  Short-term Investments  Available for Sale Securities

During January 2008, Longtrain purchased approximately 1.5 million shares of common stock in the open market for $27.9
million. Subsequently, Longtrain sold a majority of the shares it owned. During the year ended December 31, 2010, the remaining approximately 0.4 million shares of common stock were sold for proceeds of $4.1 million and realized gains
totaling $0.4 million. During the year ended December 31, 2009, approximately 7,000 shares of common stock were sold for proceeds of $0.1 million and a realized loss of less than $0.1 million. The cost basis of the shares sold was
determined through specific identification.

The Company performed a review of its investment in common stock as of December 31, 2009 to
determine if an other-than-temporary impairment existed. Factors considered in the assessment included but were not limited to the following: the Companys ability and intent to hold the security until loss recovery, the sale of shares at a
loss, the number of quarters in an unrealized loss position and other market conditions. Based on this analysis, the Company recorded an impairment charge of $2.9 million related to the investment.

As of December 31, 2009, the market value of the remaining approximately 0.4 million shares owned by the Company was $3.8 million. There
were no unrealized losses as of December 31, 2009, due to recognizing the other-than-temporary impairment charge in 2009. This investment was classified as a short-term investment available for sale security, as the Company did not intend on
holding this investment long-term.

During 2009, Longtrain purchased corporate bonds for a total of $36.8 million and subsequently sold
all of these bonds, resulting in proceeds of $60.7 million and a realized gain of $23.9 million.



51



---

Note 4  Derivative Contracts or Financial Instruments

The Company accounted for its derivative contracts by reporting derivatives as either assets or liabilities in the consolidated balance
sheets at their fair value. The accounting for changes in fair value depends on the intended use of the derivative and its resulting designation. As the derivates did not qualify for hedge accounting, all unrealized gains and losses were reflected
in the Companys consolidated statements of operations and the fair value was recorded on the consolidated balance sheets. During 2011 and 2010, the Company did not have any outstanding derivative contracts or financial instruments.

Foreign currency option

The Company
entered into a foreign currency option in October 2008, to purchase Canadian Dollars (CAD) for $5.3 million U.S. Dollars (USD) from October 2008 through April 2009, with fixed exchange rates and exchange limits each
month. ARI entered into this option agreement to reduce the exposure to foreign currency exchange risk related to capital expenditures for the expansion of the Companys Canadian repair facility.

In 2009, the Company expended $3.3 million USD to purchase CAD under this option resulting in a realized loss of less than $0.1 million for the
year ended December 31, 2009, based on the exchange spot rate on the various exercise dates.

Note 5  Fair Value Measurements

The fair value hierarchal disclosure framework prioritizes and ranks the level of market price observability used in measuring
investments and non-recurring nonfinancial assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment or nonfinancial
assets and liabilities. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment
used in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the
following categories:



| |  |  | Level 1  Quoted prices are available in active markets for identical financial assets and/or liabilities as of the reporting date. The type of
financial assets and/or liabilities included in Level 1 include listed equities and listed derivatives. The Company does not adjust the quoted price for these financial assets and/or liabilities, even in situations where they hold a large position
and a sale could reasonably impact the quoted price.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting
date, and fair value is determined through the use of models or other valuation methodologies. Financial assets and/or liabilities that are generally included in this category include corporate bonds and loans, less liquid and restricted equity
securities and certain over-the-counter derivatives.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Pricing inputs are unobservable for the financial assets and/or liabilities and include situations where there is little, if any, market
activity for the financial assets and/or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investments level within the fair value hierarchy is based on
the lowest level of input that is significant to the fair value measurement. ARIs assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the
investment.

The carrying amount of cash and cash equivalents, accounts receivable, other current assets and accounts payable approximate fair
value due to their short-term nature. For the fair value of the Companys senior unsecured notes refer to Note 13.



52



---

Note 6  Accounts Receivable, net

Accounts receivable, net, consists of the following:



|                                     |  |                |        |   |      |   |        |  
|------------------------------------ |  | -------------- | ------ | - | ---- | - | ------ | -
|                                     |  | December 31,   |       
|                                     |  | 2011           |        |   | 2010 |  
|                                     |  | (in thousands) |       
|Accounts receivable, gross           |  | $              | 34,272 |   |      | $ | 21,770 |  
|Less allowance for doubtful accounts |  |                | (646   | ) |      |   | (768   | )
|                                     |  |                |        |   |      |   |        |  
|Total accounts receivable, net       |  | $              | 33,626 |   |      | $ | 21,002 |  
|                                     |  |                |        |   |      |   |        |  

The allowance for doubtful accounts consists of the following:



|                       |  |                         |      |   |      |   |     |      |  |   |      |  
|---------------------- |  | ----------------------- | ---- | - | ---- | - | --- | ---- |  | - | ---- | -
|                       |  | Years EndedDecember 31, |     
|                       |  | 2011                    |      |   | 2010 |   |     | 2009 | 
|                       |  | (in thousands)          |     
|Beginning balance      |  | $                       | 768  |   |      | $ | 677 |      |  | $ | 815  |  
|(Adjustment) provision |  |                         | (22  | ) |      |   | 113 |      |  |   | (101 | )
|Write-offs             |  |                         | (100 | ) |      |   | (22 | )    |  |   | (43  | )
|Recoveries             |  |                         |     |   |      |   |    |      |  |   | 6    |  
|                       |  |                         |      |   |      |   |     |      |  |   |      |  
|Ending balance         |  | $                       | 646  |   |      | $ | 768 |      |  | $ | 677  |  
|                       |  |                         |      |   |      |   |     |      |  |   |      |  

Note 7  Inventories

Inventories consist of the following:



|                       |  |                |        |   |      |   |        |  
|---------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                       |  | December 31,   |       
|                       |  | 2011           |        |   | 2010 |  
|                       |  | (in thousands) |       
|Raw materials          |  | $              | 62,141 |   |      | $ | 30,676 |  
|Work-in-process        |  |                | 26,731 |   |      |   | 14,270 |  
|Finished products      |  |                | 8,967  |   |      |   | 7,183  |  
|                       |  |                |        |   |      |   |        |  
|Total inventories      |  |                | 97,839 |   |      |   | 52,129 |  
|Less reserves          |  |                | (2,012 | ) |      |   | (2,096 | )
|                       |  |                |        |   |      |   |        |  
|Total inventories, net |  | $              | 95,827 |   |      | $ | 50,033 |  
|                       |  |                |        |   |      |   |        |  

Inventory reserves consist of the following:



|                  |  |                |       |   |      |   |        |  
|----------------- |  | -------------- | ----- | - | ---- | - | ------ | -
|                  |  | December 31,   |      
|                  |  | 2011           |       |   | 2010 |  
|                  |  | (in thousands) |      
|Beginning Balance |  | $              | 2,096 |   |      | $ | 1,926  |  
|Provision         |  |                | 47    |   |      |   | 1,254  |  
|Write-offs        |  |                | (131  | ) |      |   | (1,084 | )
|                  |  |                |       |   |      |   |        |  
|Ending Balance    |  | $              | 2,012 |   |      | $ | 2,096  |  
|                  |  |                |       |   |      |   |        |  



53



---

Note 8  Property, Plant and Equipment, net

The following table summarizes the components of property, plant and equipment, net:



|                                         |  |                |          |   |      |   |          |  
|---------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | -
|                                         |  | December 31,   |         
|                                         |  | 2011           |          |   | 2010 |  
|                                         |  | (in thousands) |         
|Buildings                                |  | $              | 149,597  |   |      | $ | 149,021  |  
|Machinery and equipment                  |  |                | 205,521  |   |      |   | 177,217  |  
|                                         |  |                |          |   |      |   |          |  
|                                         |  |                | 355,118  |   |      |   | 326,238  |  
|Less accumulated depreciation            |  |                | (168,686 | ) |      |   | (149,304 | )
|                                         |  |                |          |   |      |   |          |  
|Net plant and equipment                  |  |                | 186,432  |   |      |   | 176,934  |  
|Land                                     |  |                | 3,335    |   |      |   | 3,335    |  
|Construction in process                  |  |                | 4,475    |   |      |   | 986      |  
|                                         |  |                |          |   |      |   |          |  
|Total property, plant and equipment, net |  | $              | 194,242  |   |      | $ | 181,255  |  
|                                         |  |                |          |   |      |   |          |  

Depreciation expense

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $22.2 million, $23.6 million and $23.4 million, respectively.

Capitalized interest

In conjunction with the interest costs incurred related to the
unsecured senior notes offering described in Note 13, the Company began recording capitalized interest on certain property, plant and equipment capital projects. ARI also capitalizes interest related to the unsecured senior notes for investments
made in equity method joint ventures but only for those investments made while the joint venture is in the development phase.

Lease
agreements

The Company leases railcars to third parties under multiple year agreements. One of the leases includes a provision that allows
the lessee to purchase any portion of the leased railcars at any time during the lease term for a stated market price, which approximates fair value. These agreements have been classified as operating leases and the leased railcars have been
included in machinery and equipment and will be depreciated in accordance with the Companys depreciation policy.

Note 9  Long-Lived Asset Impairment Charges

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
the long-lived assets may not be recoverable. The Company has determined that there were no triggering events that required an assessment for impairment of long-lived assets, therefore no impairment charges were recognized on any long-lived assets
during the years ended December 31, 2011, 2010 or 2009.

The North American railcar market has been, and the Company expects it to
continue to be highly cyclical, generally fluctuating in correlation with the U.S. economy. The railcar industry recovered in 2011, which was reflected in the Companys railcar orders increasing. This portrayed that the recent economic downturn
had a temporary effect on the Companys business driving the railcar market to weak levels throughout 2009 and 2010, demonstrating the cyclical nature of the industry. ARI continually monitors its long-lived assets for impairment in response to
events or changes in circumstances.

Note 10  Goodwill

On March 31, 2006, the Company acquired all of the common stock of Custom Steel, a subsidiary of Steel Technologies, Inc. Custom
Steel operated a facility located adjacent to the Companys component manufacturing facility in Kennett, Missouri, which produces value-added fabricated parts that primarily support the Companys railcar manufacturing operations. Prior to
the acquisition, ARI was Custom Steels primary customer. The acquisition resulted in goodwill of $7.2 million. The results of Custom Steel are included in the manufacturing operations segment.

Goodwill and other intangible assets with indefinite useful lives are not amortized but are tested for impairment annually and when a triggering event
occurs by comparing the fair value of the asset to its carrying value. The Company performs the annual goodwill impairment test as of March 1 of each year. There were no triggering events since the March 1, 2011 goodwill impairment test.
The valuation uses a combination of methods to determine the fair value of the reporting unit including prices of comparable businesses, a present value technique and recent transactions involving businesses similar to the Company. ARI performed the
annual impairment test as of March 1, 2011 and 2010 noting no adjustment was required.

The Company utilized the market and income
approaches and significant assumptions, discussed below, in the March 1 impairment tests.



54



---

Market Approach

The market approach produces indications of value by applying multiples of enterprise value to revenue as well as enterprise value to earnings before depreciation, amortization, interest and taxes. The
multiples indicate what investors are willing to pay for comparable publicly held companies. When adjusted for the risk level and growth potential of the subject company relative to the guideline companies, these multiples are a reasonable
indication of the value an investor would attribute to the subject company.

Income Approach

The income approach considers the subject companys future sales and earnings growth potential as the primary source of future cash flow. The Company
prepared a five year financial projection for the reporting unit and used a discounted net cash flow method to determine the fair value. Net cash flow consists of after-tax operating income, plus depreciation, less capital expenditures and working
capital needs. The discounted net cash flow method considers a five-year projection of net cash flow and adds to those cash flows a residual value at the end of the projection period.

Significant estimates and assumptions used in the evaluation were forecasted revenues and profits, the weighted average cost of capital and tax rates. Forecasted revenues of the reporting unit were
estimated based on historical trends of ARIs plants that the reporting unit supplies parts to, which are driven by the railcar market forecast. Forecasted margins were based on historical experience. The reporting unit does not have a selling,
administrative or executive staff, therefore, an estimate of salaries and benefits for key employees was added to selling, general and administrative costs. The weighted average cost of capital was calculated using ARIs estimated cost of
equity and debt.

All of the above estimates and assumptions were determined by management to be reasonable based on the knowledge and
information at the time of the evaluation. As such, this carries a risk of uncertainty. There could be significant fluctuations in the cost of raw materials, unionization of the Companys workforce or other factors that might significantly
affect the reporting units cost structure and negatively impact the projection of financial performance. If the railcar industry forecasts or the Companys market share were to change significantly, the fair value of the reporting unit
would be materially adversely impacted. Other events that might occur that could have a negative effect would be a natural disaster that would render the facility unusable, a significant litigation settlement, a significant workers
compensation claim or other event that would result in a production shut down or significant expense to the reporting unit.

The March 1,
2011 evaluation equally weighted the values derived from each approach to arrive at the fair value of the reporting unit. The reporting unit with a goodwill balance passed Step 1 of the March 1, 2011 goodwill impairment analysis.
All Step 1 results had fair values in excess of carrying values by at least 60%, resulting in no impairment of goodwill.

Note 11  Investments in and Loans to Joint Ventures

As of December 31, 2011, the Company was party to three joint ventures: Ohio Castings LLC (Ohio Castings), Axis LLC (Axis) and
Amtek Railcar Industries Private Limited (Amtek Railcar). Through its wholly-owned subsidiary, Castings, the Company has a one-third ownership interest in Ohio Castings, a limited liability company formed to produce various steel railcar parts for
use or sale by the ownership group. Through its wholly-owned subsidiary, ARI Component, the Company has a 41.9% ownership interest in Axis, a limited liability company formed to produce railcar axles for use or sale by the ownership group. The
Company has a wholly-owned subsidiary, ARM I that wholly-owns ARM II. Through ARM II, the Company has a 50.0% ownership interest in Amtek Railcar, a joint venture that was formed to produce railcars and railcar components in India for sale by the
joint venture.

The Company accounts for these joint ventures using the equity method. Under this method, the Company recognizes its share of
the earnings and losses of the joint ventures as they accrue. Advances and distributions are charged and credited directly to the investment accounts. From time to time, the Company also makes loans to its joint ventures that are included in the
investment account.



55



---

The carrying amount of investments in and loans to joint ventures are as follows:



|                                                              |  |                |        |  |      |   |        | 
|------------------------------------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                                              |  | December 31,   |       
|                                                              |  | 2011           |        |  | 2010 |  
|                                                              |  | (in thousands) |       
|Carrying amount of investments in and loans to joint ventures |  |                |        |  |      |   |        | 
|Ohio Castings                                                 |  | $              | 6,236  |  |      | $ | 5,232  | 
|Axis                                                          |  |                | 29,362 |  |      |   | 33,436 | 
|Amtek Railcar                                                 |  |                | 9,524  |  |      |   | 9,501  | 
|                                                              |  |                |        |  |      |   |        | 
|Total investments in and loans to joint ventures              |  | $              | 45,122 |  |      | $ | 48,169 | 
|                                                              |  |                |        |  |      |   |        | 

The maximum exposure to loss as a result of investments in and loans to joint ventures are as follows:



|                                                                |  |                |        | 
|--------------------------------------------------------------- |  | -------------- | ------ | 
|                                                                |  | December 31,   |       
|                                                                |  | 2011           |       
|                                                                |  | (in thousands) |       
|Maximum exposure to loss by joint venture                       |  |                |        | 
|Ohio Castings                                                   |  |                |        | 
|Investment                                                      |  | $              | 5,741  | 
|Note and accrued interest receivable1                           |  |                | 550    | 
|                                                                |  |                |        | 
|Total Ohio Castings exposure                                    |  |                | 6,291  | 
|Axis                                                            |  |                |        | 
|Investment                                                      |  |                |       | 
|Loans, accrued interest receivable and accrued unused line fee1 |  |                | 29,626 | 
|                                                                |  |                |        | 
|Total Axis exposure                                             |  |                | 29,626 | 
|                                                                |  |                |        | 
|Amtek Railcar exposure                                          |  |                | 9,524  | 
|                                                                |  |                |        | 
|Total maximum exposure to loss due to joint ventures            |  | $              | 45,441 | 
|                                                                |  |                |        | 



|1 | Accrued interest
receivable is included in interest receivable, due from affiliates and accrued unused line fee is included in accounts receivable, due from related parties on the consolidated balance sheets.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Ohio Castings

Ohio Castings produces
railcar parts that are sold to one of the joint venture partners. The joint venture partner sells these parts to outside third parties at current market prices and sells them to the Company and the other joint venture partner at cost plus a
licensing fee. The Company has been involved with this joint venture since 2003.

In June 2009, Ohio Castings temporarily idled its
manufacturing facility due to the decline in the railcar industry. Due to the facility remaining temporarily idle, as of August 31, 2010, Ohio Castings performed an analysis of its long-lived assets and concluded that no impairment existed.

Ohio Castings first reported a loss in the first quarter of 2009 and continued to report losses due to its temporarily idled state. ARI
obtained Ohio Castings long-lived asset impairment analysis and reviewed it for reasonableness. The assumptions used in the impairment analysis are consistent with the market data reported by an independent third party analyst and historical
financial results. The decline in earnings capacity is consistent with industry forecasts, as reported by an independent third party analyst, and is considered temporary. The Company and Ohio Castings will continue to monitor for impairment. During
the second quarter of 2011, ARI and the other joint venture partners agreed to restart production at Ohio Castings and Ohio Castings began shipping product in the third quarter of 2011.

Ohio Castings has notes payable to ARI and the other two partners, with a current balance of $0.5 million, each, that were due February 2012. Interest continued to accrue but interest payments had
been deferred until August 2011. Accrued interest for this note as of both December 31, 2011 and 2010 was less than $0.1 million. Ohio Castings and the joint venture partners renegotiated the terms during the third quarter of 2011 and
the notes are now due November 2012. Interest will continue to accrue but interest payments have been deferred until May 2012.

During the
year ended December 31, 2011, ARI made capital contributions totaling $2.1 million to Ohio Castings to fund the restart of production. The other two partners made matching contributions. In 2010, ARI made capital contributions to Ohio
Castings totaling $0.6 million to fund expenses including debt payments during the temporary plant idling. The other two partners made matching contributions.



56



---

The Company, along with the other members of Ohio Castings, guaranteed a state loan issued to Ohio Castings
by the state of Ohio and bonds payable to the state of Ohio. The state loan and bonds payable were paid off in June 2011 and December 2010, respectively, and ARI was released from the respective guarantees. The value of the guarantee of the
state loan was less than $0.1 million as of December 31, 2010.

The Company accounts for its investment in Ohio Castings using the
equity method. The Company has determined that, although the joint venture is a VIE, this method is appropriate given that the Company is not the primary beneficiary, does not have a controlling financial interest and does not have the ability to
individually direct the activities of Ohio Castings that most significantly impact its economic performance. The significant factors in this determination were that neither the Company nor Castings, has rights to the majority of returns, losses or
votes, all major and strategic decisions are decided between the partners, and the risk of loss to Castings and the Company is limited to the Companys investment through Castings, the note and related accrued interest due to ARI.

See Note 20 for information regarding financial transactions among the Company, Ohio Castings and Castings.

Summary combined financial position information for Ohio Castings, the investee company, in total, is as follows:



|                                      |  |                |        |  |      |   |        | 
|------------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                      |  | December 31,   |       
|                                      |  | 2011           |        |  | 2010 |  
|                                      |  | (in thousands) |       
|Financial position:                   |  |                |        |  |      |   |        | 
|Current assets                        |  | $              | 12,800 |  |      | $ | 1,882  | 
|Property, plant and equipment, net    |  |                | 10,214 |  |      |   | 11,219 | 
|                                      |  |                |        |  |      |   |        | 
|Total assets                          |  |                | 23,014 |  |      |   | 13,101 | 
|                                      |  |                |        |  |      |   |        | 
|                                      |  |               
|Current liabilities                   |  |                | 8,148  |  |      |   | 492    | 
|Long-term debt                        |  |                | 494    |  |      |   | 1,482  | 
|                                      |  |                |        |  |      |   |        | 
|Total liabilities                     |  |                | 8,642  |  |      |   | 1,974  | 
|                                      |  |               
|Members equity                       |  |                | 14,372 |  |      |   | 11,127 | 
|                                      |  |                |        |  |      |   |        | 
|Total liabilities and members equity |  | $              | 23,014 |  |      | $ | 13,101 | 
|                                      |  |                |        |  |      |   |        | 

Summary combined financial results of operations for Ohio Castings, the investee company, in total, are as follows:



|                       |  |                          |        |   |      |   |        |      |  |   |        |  
|---------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                       |  | Years Ended December 31, |       
|                       |  | 2011                     |        |   | 2010 |   |        | 2009 | 
|                       |  | (in thousands)           |       
|Results of operations: |  |                          |        |   |      |   |        |      |  |   |        |  
|Revenues               |  | $                        | 31,007 |   |      | $ |       |      |  | $ | 10,898 |  
|                       |  |                          |        |   |      |   |        |      |  |   |        |  
|Gross loss             |  |                          | (3,099 | ) |      |   |       |      |  |   | (3,335 | )
|                       |  |                          |        |   |      |   |        |      |  |   |        |  
|Loss before interest   |  |                          | (3,011 | ) |      |   | (2,925 | )    |  |   | (5,399 | )
|                       |  |                          |        |   |      |   |        |      |  |   |        |  
|Net loss               |  | $                        | (3,054 | ) |      | $ | (3,025 | )    |  | $ | (5,455 | )
|                       |  |                          |        |   |      |   |        |      |  |   |        |  

Axis

In
June 2007, ARI, through a wholly-owned subsidiary, entered into an agreement with another partner to form a joint venture, Axis, to manufacture and sell railcar axles. In February 2008, the two original partners sold equal equity interests
in Axis to two new minority partners. During 2010, one of the minority partners sold its interest to the other initial partner. Although the other initial partners interest in Axis is greater than ARIs as a result of the sale, the sale
did not result in the other initial partner gaining a controlling interest in Axis.

Under the terms of the joint venture agreement, ARI and
the other initial partner are required, and the other member is entitled, to contribute additional capital to the joint venture, on a pro rata basis, of any amounts approved by the joint ventures executive committee, as and when called by the
executive committee. Further, until 2016, the seventh anniversary of completion of the axle manufacturing facility, and subject to other terms, conditions and limitations of the joint venture agreement, ARI and the other initial partner are also
required, in the event production at the facility has been curtailed, to contribute capital to the joint venture, on a pro rata basis, in order to maintain adequate working capital.



57



---

During 2010, the executive committee of Axis issued a capital call. The minority partners elected not to
participate in the capital call and ARI and the other initial partner equally contributed the necessary capital, which amounted to $0.5 million for each as of December 31, 2010. The capital contributions were utilized to provide working
capital. The partners ownership percentages have been adjusted accordingly. As a result, as of December 31, 2011, ARIs ownership interest has been adjusted to 41.9%.

Effective August 5, 2009, ARI Component and a wholly-owned subsidiary of the other initial partner acquired a loan to Axis from its initial lenders (the Axis Credit Agreement), with each party
acquiring a 50.0% interest in the loan. Under the Axis Credit Agreement, the original lenders made financing available to Axis in an aggregate amount of up to $70.0 million, consisting of up to $60.0 million in term loans and up to
$10.0 million in revolving loans. The purchase price paid by the Company for its 50.0% interest was $29.5 million, which equaled the then outstanding principal amount of the portion of the loan acquired by the Company.

The Axis Credit Agreement was amended on March 31, 2011. Under the amendment, the commitment to make term loans expired on December 31, 2011.
The first payment on the term loans will become due and payable on March 31, 2012. Thereafter payments are due each fiscal quarter in equal installments, with the last payment due on December 31, 2016. The commitment to make revolving
loans under the amended Axis Credit Agreement will expire and the revolving loans will become due and payable on December 28, 2012. Axis may borrow revolving loans up to $10.0 million, subject to borrowing base availability.

Subject to certain limitations, at the election of Axis, the interest rate for the loans under the Axis Credit Agreement is based on LIBOR or the prime
rate. For LIBOR-based loans, the interest rate is equal to the greater of 7.75% or adjusted LIBOR plus 4.75%. For prime-based loans, the interest rate is equal to the greater of 7.75% or the prime rate plus 2.5%. Interest on LIBOR-based loans is due
and payable, at the election of Axis, every one, two, three or six months, and interest on prime-based loans is due and payable monthly. In accordance with the terms of the Axis Credit Agreement as amended, Axis elected to satisfy interest on the
term loan by increasing the outstanding principal by the amount of interest that was otherwise due and payable in cash. As of December 31, 2010, all outstanding term loan interest was added to the outstanding principal balance.

The balance outstanding on these loans, due to ARI Component, was $31.4 million in principal and $5.7 million of accrued interest as of
December 31, 2011 and was $31.9 million in principal and $3.6 million of accrued interest as of December 31, 2010. ARI Component is responsible for funding 50.0% of the loan commitments. ARI Components share of the
remaining commitment on these loans, term and revolving, was $3.6 million as of December 31, 2011.

ARI currently intends to fund
the cash needs of Axis through loans and capital contributions through at least March 31, 2013. The other initial joint venture partner has indicated its intent to also fund the cash needs of Axis through loans and capital contributions through
at least March 31, 2013.

The Company accounts for its investment in Axis using the equity method. The Company has determined that,
although the joint venture is a VIE, this method is appropriate given that the Company is not the primary beneficiary, does not have a controlling financial interest and does not have the ability to individually direct the activities of Axis that
most significantly impact its economic performance. The significant factors in this determination were that the Company and its wholly-owned subsidiary do not have the rights to the majority of votes or the rights to the majority of returns or
losses, the executive committee and board of directors of the joint venture are comprised of one representative from each initial partner with equal voting rights and the risk of loss to the Company and subsidiary is limited to its investment in
Axis and the loans, related accrued interest and related accrued unused line fee due to the Company under the Axis Credit Agreement. The Company also considered the factors that most significantly impact Axis economic performance and
determined that ARI does not have the power to individually direct the majority of those activities.

See Note 20 for information regarding
financial transactions among the Company, ARI Component and Axis.



58



---

Summary combined financial position information for Axis, the investee company, in total, is as follows:



|                                      |  |                |         |   |      |   |        |  
|------------------------------------- |  | -------------- | ------- | - | ---- | - | ------ | -
|                                      |  | December 31,   |        
|                                      |  | 2011           |         |   | 2010 |  
|                                      |  | (in thousands) |        
|Financial position:                   |  |                |         |   |      |   |        |  
|Current assets                        |  | $              | 14,619  |   |      | $ | 7,359  |  
|Property, plant and equipment, net    |  |                | 52,421  |   |      |   | 60,308 |  
|Long-term assets                      |  |                | 44      |   |      |   | 183    |  
|                                      |  |                |         |   |      |   |        |  
|Total assets                          |  |                | 67,084  |   |      |   | 67,850 |  
|                                      |  |                |         |   |      |   |        |  
|                                      |  |               
|Current liabilities                   |  |                | 31,319  |   |      |   | 16,470 |  
|Long-term debt                        |  |                | 56,624  |   |      |   | 58,430 |  
|                                      |  |                |         |   |      |   |        |  
|Total liabilities                     |  |                | 87,943  |   |      |   | 74,900 |  
|                                      |  |               
|Members deficit                      |  |                | (20,859 | ) |      |   | (7,050 | )
|                                      |  |                |         |   |      |   |        |  
|Total liabilities and members equity |  | $              | 67,084  |   |      | $ | 67,850 |  
|                                      |  |                |         |   |      |   |        |  

Summary combined financial results for Axis, the investee company, in total, are as follows:



|                       |  |                          |         |   |      |   |         |      |  |   |         |  
|---------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                       |  | Years Ended December 31, |        
|                       |  | 2011                     |         |   | 2010 |   |         | 2009 | 
|                       |  | (in thousands)           |        
|Results of operations: |  |                          |         |   |      |   |         |      |  |   |         |  
|Revenues               |  | $                        | 40,217  |   |      | $ | 18,926  |      |  | $ | 1,927   |  
|                       |  |                          |         |   |      |   |         |      |  |   |         |  
|Gross loss             |  |                          | (7,249  | ) |      |   | (8,808  | )    |  |   | (8,339  | )
|                       |  |                          |         |   |      |   |         |      |  |   |         |  
|Loss before interest   |  |                          | (8,184  | ) |      |   | (9,772  | )    |  |   | (9,140  | )
|                       |  |                          |         |   |      |   |         |      |  |   |         |  
|Net loss               |  | $                        | (13,809 | ) |      | $ | (15,022 | )    |  | $ | (12,361 | )
|                       |  |                          |         |   |      |   |         |      |  |   |         |  

Revenues and net loss for Axis have improved as production volumes have increased and inefficiencies from the ramp up of
production have decreased. The new railcar axle market is directly related to the new railcar market. The new railcar market has begun to improve consistent with industry forecasts, as reported by an independent third party analyst. As such, Axis
has not performed a long-lived asset impairment analysis.

As of December 31, 2011, the investment in Axis was comprised entirely of
ARIs term loan, revolver, related accrued interest and related accrued unused line fees due from Axis. Based on the discussion above, this loan has been evaluated to currently be fully recoverable. The Company will continue to monitor its
investment in Axis for impairment.

Amtek Railcar

In June 2008, the Company, through ARM I and ARM II, entered into an agreement with a partner in India to form a joint venture company to manufacture, sell and supply freight railcars and their
components in India and other countries to be agreed upon at a facility to be constructed in India by the joint venture. In March 2010, the Company made a $9.8 million equity contribution to Amtek Railcar. ARIs ownership in this
joint venture is 50.0%. Amtek Railcar is considered a development stage enterprise as it has not completed construction of its manufacturing facility nor started production.

The Company accounts for its investment in Amtek Railcar using the equity method. The Company has determined that, although the joint venture is a VIE, this method is appropriate given that the Company is
not the primary beneficiary, does not have a controlling financial interest and does not have the ability to individually direct the activities of Amtek Railcar that most significantly impact its economic performance. The significant factors in this
determination were that Amtek Railcar is a development stage enterprise, the Company and its wholly-owned subsidiaries do not have the rights to the majority of returns, losses or votes and the risk of loss to the Company and subsidiaries is limited
to its investment in Amtek Railcar.



59



---

Summary financial results for Amtek Railcar, the investee company, in total, are as follows:



|                                           |  |                |        |  |      |   |        | 
|------------------------------------------ |  | -------------- | ------ |  | ---- | - | ------ | 
|                                           |  | December 31,   |       
|                                           |  | 2011           |        |  | 2010 |  
|                                           |  | (in thousands) |       
|Financial position:                        |  |                |        |  |      |   |        | 
|Current assets                             |  | $              | 4,061  |  |      | $ | 9,475  | 
|Property, plant, and equipment, net        |  |                | 35,414 |  |      |   | 20,149 | 
|Long-term assets                           |  |                | 192    |  |      |   | 40     | 
|                                           |  |                |        |  |      |   |        | 
|Total assets                               |  |                | 39,667 |  |      |   | 29,664 | 
|                                           |  |                |        |  |      |   |        | 
|                                           |  |               
|Current liabilities                        |  |                | 6,635  |  |      |   | 6,521  | 
|Long-term debt                             |  |                | 19,066 |  |      |   | 4,319  | 
|Long-term liabilities                      |  |                | 29     |  |      |   | 21     | 
|                                           |  |                |        |  |      |   |        | 
|Total liabilities                          |  |                | 25,730 |  |      |   | 10,861 | 
|                                           |  |               
|Stockholders equity                       |  |                | 13,937 |  |      |   | 18,803 | 
|                                           |  |                |        |  |      |   |        | 
|Total liabilities and stockholders equity |  | $              | 39,667 |  |      | $ | 29,664 | 
|                                           |  |                |        |  |      |   |        | 

Summary combined financial results for Amtek Railcar, the investee company, in total, are as follows:



|                               |  |                          |        |   |      |   |      |  
|------------------------------ |  | ------------------------ | ------ | - | ---- | - | ---- | -
|                               |  | Years Ended December 31, |       
|                               |  | 2011                     |        |   | 2010 |  
|                               |  | (in thousands)           |       
|Results of operations:         |  |                          |        |   |      |   |      |  
|Revenues                       |  | $                        |       |   |      | $ |     |  
|                               |  |                          |        |   |      |   |      |  
|Gross loss                     |  |                          |       |   |      |   |     |  
|                               |  |                          |        |   |      |   |      |  
|Loss before interest and taxes |  |                          | (1,713 | ) |      |   | (789 | )
|                               |  |                          |        |   |      |   |      |  
|Net loss                       |  | $                        | (1,905 | ) |      | $ | (619 | )
|                               |  |                          |        |   |      |   |      |  

The change in ARIs investment in joint venture consists of interest capitalized as a result of the joint venture
currently constructing its facility and being considered a development stage enterprise, offset by its 50.0% share in the net loss of the entity.

USRC

In February 2010, ARI, through its wholly-owned subsidiary, ARI DMU LLC, formed
USRC, a joint venture with two other partners that the Company expected would design, manufacture and sell DMUs to public transit authorities and communities upon order. DMUs are self-propelled passenger railcars in both single- and bi-level
configurations. During the fourth quarter of 2010, ARI dissolved USRC due to market conditions. The Company made equity contributions totaling $0.3 million throughout 2010 and those contributions were fully offset by losses.

Note 12  Warranties

The Companys standard warranty is up to one year for parts and services and five years for new railcars. Factors affecting the
Companys warranty liability include the number of units sold, historical and anticipated rates of claims and historical and anticipated costs per claim. Fluctuations in the Companys warranty provision and experience of warranty claims
are the result of variations in these factors. The Company assesses the adequacy of its warranty liability based on changes in these factors.



60



---

The overall change in the Companys warranty reserve is reflected on the consolidated balance sheets
in accrued expenses and taxes and is detailed as follows:



|                                                                      |  |                          |       |   |      |   |       |      |  |   |        |  
|--------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                      |  | Years Ended December 31, |      
|                                                                      |  | 2011                     |       |   | 2010 |   |       | 2009 | 
|                                                                      |  | (in thousands)           |      
|Liability, beginning of year                                          |  | $                        | 1,151 |   |      | $ | 1,094 |      |  | $ | 2,595  |  
|Provision for warranties issued during the year, net of adjustments   |  |                          | 1,098 |   |      |   | 1,003 |      |  |   | 1,160  |  
|Provision for warranties issued in previous years, net of adjustments |  |                          | (466  | ) |      |   | (208  | )    |  |   | (1,182 | )
|Warranty claims                                                       |  |                          | (853  | ) |      |   | (738  | )    |  |   | (1,479 | )
|                                                                      |  |                          |       |   |      |   |       |      |  |   |        |  
|Liability, end of year                                                |  | $                        | 930   |   |      | $ | 1,151 |      |  | $ | 1,094  |  
|                                                                      |  |                          |       |   |      |   |       |      |  |   |        |  

Note 13  Long-term Debt

In February 2007, the Company completed the offering of $275.0 million unsecured senior fixed rate notes, which were subsequently
exchanged for registered notes in March 2007 (Notes). The fair value of these Notes was $275.0 million and $281.5 million as of December 31, 2011 and 2010, respectively, based on the closing market price as of that date which is a Level 1
input. For definition and discussion of a Level 1 input for fair value measurement, refer to Note 5.

The Notes bear a fixed interest rate
that is set at 7.5% and are due in 2014. Interest on the Notes is payable semi-annually in arrears on March 1 and September 1. The terms of the Notes contain restrictive covenants that limit the Companys ability to, among other
things, incur additional debt, issue disqualified or preferred stock, make certain restricted payments and enter into certain significant transactions with stockholders and affiliates. The Company was in compliance with all of its covenants under
the Notes as of December 31, 2011.

As of March 1, 2012, the Company has been able to redeem the Notes in whole or in part at a
redemption price equal to 101.88% of the principal amount of the Notes plus accrued and unpaid interest. The redemption price will decline to 100.0% of the principal amount of the Notes plus accrued and unpaid interest beginning on March 1,
2013. The Notes are due in full plus accrued and unpaid interest on March 1, 2014.

Note 14  Income Taxes

Income tax expense (benefit) consists of:



|                                   |  |                                 |        |   |      |   |         |      |  |   |       |  
|---------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ----- | -
|                                   |  | For the Years EndedDecember 31, |       
|                                   |  | 2011                            |        |   | 2010 |   |         | 2009 | 
|                                   |  | (in thousands)                  |       
|Current:                           |  |                                 |        |   |      |   |         |      |  |   |       |  
|Federal                            |  | $                               | (3,556 | ) |      | $ | (14,651 | )    |  | $ | 4,739 |  
|State and local                    |  |                                 | 803    |   |      |   | 213     |      |  |   | 327   |  
|Foreign                            |  |                                 | 86     |   |      |   | 81      |      |  |   | 10    |  
|                                   |  |                                 |        |   |      |   |         |      |  |   |       |  
|Total current                      |  |                                 | (2,667 | ) |      |   | (14,357 | )    |  |   | 5,076 |  
|Deferred                           |  |                                 |        |   |      |   |         |      |  |   |       |  
|Federal                            |  |                                 | 5,761  |   |      |   | 1,209   |      |  |   | 1,612 |  
|State and local                    |  |                                 | 734    |   |      |   | (1,675  | )    |  |   | (159  | )
|Foreign                            |  |                                 | 38     |   |      |   | 28      |      |  |   | 39    |  
|                                   |  |                                 |        |   |      |   |         |      |  |   |       |  
|Total deferred                     |  |                                 | 6,533  |   |      |   | (438    | )    |  |   | 1,492 |  
|                                   |  |                                 |        |   |      |   |         |      |  |   |       |  
|Total income tax expense (benefit) |  | $                               | 3,866  |   |      | $ | (14,795 | )    |  | $ | 6,568 |  
|                                   |  |                                 |        |   |      |   |         |      |  |   |       |  



61



---

Income tax expense (benefit) attributable to earnings (loss) from operations differed from the amounts
computed by applying the U.S. Federal statutory income tax rate of 35.0% to earnings (loss) from operations by the following amounts:



|                                                                                      |  |                                 |       |   |      |   |         |      |  |   |       |  
|------------------------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ---- | - | ------- | ---- |  | - | ----- | -
|                                                                                      |  | For the Years EndedDecember 31, |      
|                                                                                      |  | 2011                            |       |   | 2010 |   |         | 2009 | 
|                                                                                      |  | (in thousands)                  |      
|Computed income tax expense (benefit)                                                 |  | $                               | 2,871 |   |      | $ | (14,626 | )    |  | $ | 7,709 |  
|State and local tax expense (benefit)                                                 |  |                                 | 525   |   |      |   | (1,357  | )    |  |   | 27    |  
|Expiration of stock options                                                           |  |                                 | 756   |   |      |   |        |      |  |   |      |  
|Valuation allowance  stock options                                                   |  |                                 | (756  | ) |      |   | 756     |      |  |   |      |  
|Excludable loss from foreign joint venture                                            |  |                                 | 354   |   |      |   | 87      |      |  |   |      |  
|Tax credits, federal and state                                                        |  |                                 | (228  | ) |      |   | (278    | )    |  |   | (258  | )
|Loss of domestic production activities deduction due to net operating loss carry back |  |                                 |      |   |      |   | 641     |      |  |   |      |  
|Non-deductible items                                                                  |  |                                 | (43   | ) |      |   | (107    | )    |  |   | (128  | )
|Adjustments for uncertain tax positions                                               |  |                                 | 162   |   |      |   | 70      |      |  |   | (589  | )
|Other, net                                                                            |  |                                 | 225   |   |      |   | 19      |      |  |   | (193  | )
|                                                                                      |  |                                 |       |   |      |   |         |      |  |   |       |  
|Total income tax expense (benefit)                                                    |  | $                               | 3,866 |   |      | $ | (14,795 | )    |  | $ | 6,568 |  
|                                                                                      |  |                                 |       |   |      |   |         |      |  |   |       |  



|                                                                                      |  |                                  |      |    |      |  |       |      |  |  |      |   
|------------------------------------------------------------------------------------- |  | -------------------------------- | ---- | -- | ---- |  | ----- | ---- |  |  | ---- | --
|                                                                                      |  | For the Years Ended December 31, |     
|                                                                                      |  | 2011                             |      |    | 2010 |  |       | 2009 | 
|Computed income tax expense (benefit)                                                 |  |                                  | 35.0 | %  |      |  | (35.0 | %)   |  |  | 35.0 | % 
|State and local tax expense (benefit)                                                 |  |                                  | 6.4  | %  |      |  | (3.2  | %)   |  |  | 0.1  | % 
|Expiration of stock options                                                           |  |                                  | 9.2  | %  |      |  |      |      |  |  |     |   
|Valuation allowance  stock options                                                   |  |                                  | (9.2 | %) |      |  | 1.8   | %    |  |  |     |   
|Excludable loss from foreign joint venture                                            |  |                                  | 4.3  | %  |      |  | 0.2   | %    |  |  |     |   
|Tax credits, federal and state                                                        |  |                                  | (2.8 | %) |      |  | (0.7  | %)   |  |  | (1.2 | %)
|Loss of domestic production activities deduction due to net operating loss carry back |  |                                  |     |    |      |  | 1.5   | %    |  |  |     |   
|Non-deductible items                                                                  |  |                                  | (0.5 | %) |      |  | (0.3  | %)   |  |  | (0.6 | %)
|Adjustments for uncertain tax positions                                               |  |                                  | 2.0  | %  |      |  | 0.2   | %    |  |  | (2.7 | %)
|Other, net                                                                            |  |                                  | 2.7  | %  |      |  | 0.1   | %    |  |  | (0.8 | %)
|                                                                                      |  |                                  |      |    |      |  |       |      |  |  |      |   
|Effective income tax rate                                                             |  |                                  | 47.1 | %  |      |  | (35.4 | %)   |  |  | 29.8 | % 
|                                                                                      |  |                                  |      |    |      |  |       |      |  |  |      |   



62



---

The tax effects of temporary differences that have given rise to deferred tax assets and liabilities are
presented below:



|                                                     |  |                |         |   |      |   |         |  
|---------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                                     |  | December 31,   |        
|                                                     |  | 2011           |         |   | 2010 |  
|                                                     |  | (in thousands) |        
|                                                     |  |               
|Current deferred tax assets                          |  |                |         |   |      |   |         |  
|Provisions not currently deductible                  |  | $              | 3,002   |   |      | $ | 2,667   |  
|Tax credits and deferred revenues                    |  |                | 39      |   |      |   | 536     |  
|Net operating loss  state                           |  |                | 162     |   |      |   |        |  
|                                                     |  |                |         |   |      |   |         |  
|Total gross current deferred tax asset               |  |                | 3,203   |   |      |   | 3,203   |  
|Valuation allowance                                  |  |                |        |   |      |   | (174    | )
|                                                     |  |                |         |   |      |   |         |  
|Total current deferred tax asset                     |  |                | 3,203   |   |      |   | 3,029   |  
|                                                     |  |                |         |   |      |   |         |  
|                                                     |  |               
|Non-current deferred tax assets                      |  |                |         |   |      |   |         |  
|Provisions not currently deductible                  |  |                | 3,206   |   |      |   | 3,294   |  
|Stock based compensation                             |  |                | 3,138   |   |      |   | 2,505   |  
|Net operating loss carryforwards  federal and state |  |                | 1,628   |   |      |   | 1,736   |  
|Tax credits  federal and state                      |  |                | 1,480   |   |      |   |        |  
|Pensions and post retirement                         |  |                | 4,084   |   |      |   | 3,220   |  
|                                                     |  |                |         |   |      |   |         |  
|Total gross non-current deferred tax asset           |  |                | 13,536  |   |      |   | 10,755  |  
|Valuation allowance                                  |  |                | (2      | ) |      |   | (582    | )
|                                                     |  |                |         |   |      |   |         |  
|Total non-current deferred tax asset                 |  |                | 13,534  |   |      |   | 10,173  |  
|                                                     |  |                |         |   |      |   |         |  
|Total deferred tax asset                             |  | $              | 16,737  |   |      | $ | 13,202  |  
|                                                     |  |                |         |   |      |   |         |  
|                                                     |  |               
|Non-current deferred tax liabilities                 |  |                |         |   |      |   |         |  
|Investment in joint ventures                         |  | $              | (3,043  | ) |      | $ | (1,827  | )
|Property, plant and equipment                        |  |                | (25,363 | ) |      |   | (16,189 | )
|Other                                                |  |                | (50     | ) |      |   | (95     | )
|                                                     |  |                |         |   |      |   |         |  
|Total deferred tax liability                         |  | $              | (28,456 | ) |      | $ | (18,111 | )
|                                                     |  |                |         |   |      |   |         |  

The net deferred tax asset (liability) is classified in the consolidated balance sheets as follows:



|                                        |  |                |         |   |      |   |         |  
|--------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                        |  | December 31,   |        
|                                        |  | 2011           |         |   | 2010 |  
|                                        |  | (in thousands) |        
|Current deferred tax assets             |  | $              | 3,203   |   |      | $ | 3,029   |  
|                                        |  |               
|Non-current deferred tax assets         |  |                | 13,534  |   |      |   | 10,173  |  
|Non-current deferred tax liability      |  |                | (28,456 | ) |      |   | (18,111 | )
|                                        |  |                |         |   |      |   |         |  
|Non-current deferred tax liability, net |  |                | (14,922 | ) |      |   | (7,938  | )
|                                        |  |               
|Current deferred tax asset              |  |                | 3,203   |   |      |   | 3,029   |  
|Non-current deferred tax liability, net |  |                | (14,922 | ) |      |   | (7,938  | )
|                                        |  |                |         |   |      |   |         |  
|Net deferred tax liability              |  | $              | (11,719 | ) |      | $ | (4,909  | )
|                                        |  |                |         |   |      |   |         |  

In the consolidated balance sheets, these deferred tax assets and liabilities are classified as either current or
non-current based on the classification of the related asset or liability for financial reporting. A deferred tax asset or liability that is not related to an asset or liability for financial reporting, including deferred taxes related to
carryforwards, is classified according to the expected reversal date of the temporary differences as of the end of the year.

ARI considers
its Canadian earnings to be permanently reinvested, and therefore has not recorded a provision for U.S. income tax or foreign withholding taxes on the cumulative undistributed earnings of its Canadian subsidiary. Such undistributed earnings from
ARIs Canadian subsidiary have been included in consolidated retained earnings in the amount of $1.5 million and $1.2 million as of December 31, 2011 and 2010, respectively. If ARI were to change its intentions and such earnings were
remitted to the U.S., these earnings would be subject to U.S. income taxes. However, as of December 31, 2011 and 2010 foreign tax credits would be available to offset these taxes such that the U.S. tax impact would be insignificant. ARIs
other foreign entity has losses and no positive earnings yet. However, ARI considers all of its foreign entities earnings to be permanently reinvested.



63



---

As of December 31, 2011, the Company had state net operating losses in the amount of $27.5 million,
which expire between 2014 and 2031. The Company also had federal net operating losses of $16.7 million, of which $15.6 million will be carried back to prior years taxable income. The federal net operating loss carry forward, $1.1 million
expires in 2031. The Company has federal tax credits of $0.2 million to be carried forward as a general business credit until 2031. In 2010, ARI had state net operating loss carry forwards of $40.0 million and state tax credits of $0.5 million. In
addition, no tax benefit has been provided on the losses associated with the Companys Indian joint venture.

As of December 31,
2011, the Companys gross unrecognized tax benefits were $1.8 million, of which $1.3 million, net of federal benefit on state matters, would impact the effective tax rate if reversed. As of December 31, 2010, the Companys gross
unrecognized tax benefits were $1.6 million, of which $1.2 million, net of federal benefit on state matters, would impact the effective tax rate if reversed.

The aggregate changes in the balance of unrecognized tax benefits were as follows (in thousands):



|                                                     |  |   | September 30, |  
|---------------------------------------------------- |  | - | ------------- | -
|Gross unrecognized tax benefits at January 1, 2010   |  | $ | (2,024        | )
|                                                     | 
|Increases in tax positions for prior years           |  |   | (110          | )
|Decreases in tax positions for prior years           |  |   | 536           |  
|Increases in tax positions for current years         |  |   | (9            | )
|                                                     |  |   |               |  
|                                                     | 
|Liability activity, net                              |  |   | 417           |  
|                                                     |  |   |               |  
|                                                     | 
|Gross unrecognized tax benefits at December 31, 2010 |  | $ | (1,607        | )
|                                                     |  |   |               |  
|                                                     | 
|Increases in tax positions for prior years           |  |   | (154          | )
|Increases in tax positions for current years         |  |   | (52           | )
|                                                     |  |   |               |  
|                                                     | 
|Liability activity, net                              |  |   | (206          | )
|                                                     |  |   |               |  
|                                                     | 
|Gross unrecognized tax benefits at December 31, 2011 |  | $ | (1,813        | )
|                                                     |  |   |               |  

The Company accounts for interest expense and penalties related to income tax issues as income tax expense. The total
amount of accrued interest included in the tax provision for both years ended December 31, 2011 and 2010 was $0.1 million and included less than $0.1 million of federal income tax benefits and penalties. The Company believes it is reasonably
possible that within the next twelve months its unrecognized tax benefits could change up to $1.0 million as a result of the Companys analysis of state tax filing requirements.

The statute of limitation on the Companys 2008 through 2011 federal income tax returns will expire on September 15, 2012, 2013, 2014 and 2015, respectively. The Companys state income tax
returns for the 2007 through 2011 tax years remain open to examination by various state authorities with the latest closing period on November 15, 2016. The Companys foreign subsidiarys income tax returns for the 2008 through 2011
tax years remain open to examination by foreign tax authorities.

Note 15  Employee Benefit Plans

The Company is the sponsor of two defined benefit pension plans that cover certain employees at designated repair facilities. One plan,
which covers certain salaried and hourly employees, is frozen and no additional benefits are accruing thereunder. The second plan, which covers only certain union employees of the Company, was frozen effective as of January 1, 2012 and no
additional benefits will accrue thereunder. The assets of the defined benefit pension plans are held by independent trustees and consist primarily of equity and fixed income securities. The Company is also the sponsor of an unfunded, non-qualified
supplemental executive retirement plan (SERP) in which several of its current and former employees are participants. The SERP is frozen and no additional benefits are accruing thereunder.

The Company also provides postretirement healthcare benefits for certain of its retired employees and life insurance benefits for certain of its union employees. Employees may become eligible for
healthcare benefits, and union employees may become eligible for life insurance benefits, only if they retire after attaining specified age and service requirements. These benefits are subject to deductibles, co-payment provisions and other
limitations. During 2009, postretirement healthcare premium rates for retirees were increased. This change resulted in a decrease to the postretirement benefit liability of $2.8 million that was recorded to accumulated other comprehensive income
(loss) as of December 31, 2009. This adjustment is being recognized over the remaining weighted-average service period of active plan participants.



64



---

The Companys measurement date is December 31 and costs of benefits relating to current service
for those employees to whom the Company is responsible to provide benefits are currently expensed.

The change in benefit obligation, change
in plan assets and the funded status is as follows:



|                                                           |  |                  | September 30, |   |                         |   | September 30, |      |  |   | September 30, |   |  |   | September 30, |  
|---------------------------------------------------------- |  | ---------------- | ------------- | - | ----------------------- | - | ------------- | ---- |  | - | ------------- | - |  | - | ------------- | -
|                                                           |  | Pension Benefits |               |   | Postretirement Benefits |  
|                                                           |  | 2011             |               |   | 2010                    |   |               | 2011 |  |   | 2010          |  
|                                                           |  | (in thousands)   |              
|                                                           |  |                  |               |  
|Change in benefit obligation                               |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|Benefit obligation at January 1                            |  | $                | 19,922        |   |                         | $ | 18,414        |      |  | $ | 90            |   |  | $ | 83            |  
|Service cost                                               |  |                  | 317           |   |                         |   | 267           |      |  |   | 1             |   |  |   | 1             |  
|Interest cost                                              |  |                  | 1,015         |   |                         |   | 1,025         |      |  |   | 5             |   |  |   | 5             |  
|Actuarial loss                                             |  |                  | 2,552         |   |                         |   | 1,427         |      |  |   | 19            |   |  |   | 1             |  
|Assumed administrative expenses                            |  |                  | (180          | ) |                         |   | (147          | )    |  |   |              |   |  |   |              |  
|Benefits paid                                              |  |                  | (1,058        | ) |                         |   | (1,064        | )    |  |   | (9            | ) |  |   |              |  
|                                                           |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|                                                           |  |                  |               |  
|Benefit obligation at December 31                          |  | $                | 22,568        |   |                         | $ | 19,922        |      |  | $ | 106           |   |  | $ | 90            |  
|                                                           |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|                                                           |  |                  |               |  
|Change in plan assets                                      |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|Plan assets at January 1                                   |  | $                | 13,194        |   |                         | $ | 12,105        |      |  | $ |              |   |  | $ |              |  
|Actual return on plan assets                               |  |                  | 122           |   |                         |   | 1,639         |      |  |   |              |   |  |   |              |  
|Administrative expenses                                    |  |                  | (183          | ) |                         |   | (170          | )    |  |   |              |   |  |   |              |  
|Employer contributions                                     |  |                  | 1,203         |   |                         |   | 684           |      |  |   |              |   |  |   |              |  
|Benefits paid                                              |  |                  | (1,058        | ) |                         |   | (1,064        | )    |  |   |              |   |  |   |              |  
|                                                           |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|                                                           |  |                  |               |  
|Plan assets at fair value at December 31                   |  | $                | 13,278        |   |                         | $ | 13,194        |      |  | $ |              |   |  | $ |              |  
|                                                           |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|                                                           |  |                  |               |  
|Funded status                                              |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  
|Benefit obligation in excess of plan assets at December 31 |  | $                | (9,291        | ) |                         | $ | (6,728        | )    |  | $ | (106          | ) |  | $ | (90           | )
|                                                           |  |                  |               |   |                         |   |               |      |  |   |               |   |  |   |               |  

Amounts recognized in the consolidated balance sheets are as follows:



|                                                                     |  |                  |        |   |                         |   |        |      |  |   |       |   |  |   |       |  
|-------------------------------------------------------------------- |  | ---------------- | ------ | - | ----------------------- | - | ------ | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                     |  | Pension Benefits |        |   | Postretirement Benefits |  
|                                                                     |  | 2011             |        |   | 2010                    |   |        | 2011 |  |   | 2010  |  
|                                                                     |  | (in thousands)   |       
|Accrued benefit liability  short term                               |  | $                | (114   | ) |                         | $ | (108   | )    |  | $ | (3    | ) |  | $ | (3    | )
|Accrued benefit liability  long term                                |  |                  | (9,177 | ) |                         |   | (6,620 | )    |  |   | (103  | ) |  |   | (87   | )
|                                                                     |  |                  |        |   |                         |   |        |      |  |   |       |   |  |   |       |  
|                                                                     |  |                  |        |  
|Net liability recognized at December 31                              |  | $                | (9,291 | ) |                         | $ | (6,728 | )    |  | $ | (106  | ) |  | $ | (90   | )
|                                                                     |  |                  |        |   |                         |   |        |      |  |   |       |   |  |   |       |  
|                                                                     |  |                  |        |  
|Net actuarial (loss) gain                                            |  | $                | (8,584 | ) |                         | $ | (5,530 | )    |  | $ | 894   |   |  | $ | 1,003 |  
|Net prior service (cost) credit                                      |  |                  | (50    | ) |                         |   | (57    | )    |  |   | 2,480 |   |  |   | 2,871 |  
|                                                                     |  |                  |        |   |                         |   |        |      |  |   |       |   |  |   |       |  
|                                                                     |  |                  |        |  
|Accumulated other comprehensive (loss) income pre-tax at December 31 |  | $                | (8,634 | ) |                         | $ | (5,587 | )    |  | $ | 3,374 |   |  | $ | 3,874 |  
|                                                                     |  |                  |        |   |                         |   |        |      |  |   |       |   |  |   |       |  



65



---

The short-term liability has been reported on the consolidated balance sheets in accrued expenses and
taxes.

The components of net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 are as follows:



|                                          |  |                  |       |   |                         |   |       |      |  |   |       |   |  |      |      |   |      |   |      |   |  |   |     |  
|----------------------------------------- |  | ---------------- | ----- | - | ----------------------- | - | ----- | ---- |  | - | ----- | - |  | ---- | ---- | - | ---- | - | ---- | - |  | - | --- | -
|                                          |  | Pension Benefits |       |   | Postretirement Benefits |  
|                                          |  | 2011             |       |   | 2010                    |   |       | 2009 |  |   | 2011  |   |  | 2010 |      |   | 2009 |  
|                                          |  | (in thousands)   |      
|                                          |  |                  |       |   |                         |  
|Components of net periodic benefit cost   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |      |      |   |      |   |      |   |  |   |     |  
|Service cost                              |  | $                | 316   |   |                         | $ | 267   |      |  | $ | 235   |   |  | $    | 1    |   |      | $ | 1    |   |  | $ | 47  |  
|Interest cost                             |  |                  | 1,015 |   |                         |   | 1,025 |      |  |   | 1,034 |   |  |      | 5    |   |      |   | 5    |   |  |   | 151 |  
|Expected return on plan assets            |  |                  | (997  | ) |                         |   | (885  | )    |  |   | (757  | ) |  |      |     |   |      |   |     |   |  |   |    |  
|Curtailment loss                          |  |                  |      |   |                         |   | 57    |      |  |   |      |   |  |      |     |   |      |   |     |   |  |   |    |  
|Recognized actuarial loss (gain)          |  |                  | 377   |   |                         |   | 345   |      |  |   | 368   |   |  |      | (90  | ) |      |   | (100 | ) |  |   | (92 | )
|Amortization of prior service cost (gain) |  |                  | 7     |   |                         |   | 7     |      |  |   | 14    |   |  |      | (391 | ) |      |   | (391 | ) |  |   | (85 | )
|                                          |  |                  |       |   |                         |   |       |      |  |   |       |   |  |      |      |   |      |   |      |   |  |   |     |  
|                                          |  |                  |       |   |                         |  
|Total net periodic benefit cost           |  | $                | 718   |   |                         | $ | 816   |      |  | $ | 894   |   |  | $    | (475 | ) |      | $ | (485 | ) |  | $ | 21  |  
|                                          |  |                  |       |   |                         |   |       |      |  |   |       |   |  |      |      |   |      |   |      |   |  |   |     |  

Additional information

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:



|                    |  |                  |        |  |                        |   |    | 
|------------------- |  | ---------------- | ------ |  | ---------------------- | - | -- | 
|                    |  | Pension Benefits |        |  | PostretirementBenefits |  
|                    |  | (in thousands)   |       
|2012                |  | $                | 1,076  |  |                        | $ | 3  | 
|2013                |  |                  | 1,086  |  |                        |   | 4  | 
|2014                |  |                  | 1,121  |  |                        |   | 4  | 
|2015                |  |                  | 1,145  |  |                        |   | 5  | 
|2016                |  |                  | 1,163  |  |                        |   | 5  | 
|2017 and thereafter |  |                  | 6,583  |  |                        |   | 31 | 
|                    |  |                  |        |  |                        |   |    | 
|Total               |  | $                | 12,174 |  |                        | $ | 52 | 
|                    |  |                  |        |  |                        |   |    | 

The Company expects to contribute $1.4 million to its pension and postretirement plans in 2012.

Pension and other postretirement benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions
include factors such as discount rates, expected return on plan assets, mortality rates and retirement rates, as discussed below:

Discount rates

The Company
reviews these rates annually and adjusts them to reflect current conditions. The Company deemed these rates appropriate based on the Citigroup Pension Discount curve analysis along with expected payments to retirees.

Expected return on plan assets

The Companys expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies,
anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans asset mix. While the studies give appropriate consideration to recent
plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return.

Mortality and retirement
rates

Mortality and retirement rates are based on actual and anticipated plan experience.



66



---

The decrease in the discount rates resulted in an increase in the benefit obligation, which will be
amortized through actuarial losses. The assumptions used to determine end of year benefit obligations are shown in the following table:



|              |  |                  |      |   |                         |  |      |      |  |  |      |   |  |  |      |  
|------------- |  | ---------------- | ---- | - | ----------------------- |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|              |  | Pension Benefits |      |   | Postretirement Benefits | 
|              |  | 2011             |      |   | 2010                    |  |      | 2011 |  |  | 2010 |  
|Discount rate |  |                  | 4.25 | % |                         |  | 5.25 | %    |  |  | 4.18 | % |  |  | 5.31 | %

The assumptions used in the measurement of net periodic cost are shown in the following table:



|                               |  |                  |      |   |                        |  |      |      |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|------------------------------ |  | ---------------- | ---- | - | ---------------------- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                               |  | Pension Benefits |      |   | PostretirementBenefits | 
|                               |  | 2011             |      |   | 2010                   |  |      | 2009 |  |  | 2011 |   |  | 2010 |      |   | 2009 | 
|Discount rate                  |  |                  | 5.25 | % |                        |  | 5.75 | %    |  |  | 6.25 | % |  |      | 5.31 | % |      |  | 5.31 | % |  |  | 5.83 | %
|Expected return on plan assets |  |                  | 7.50 | % |                        |  | 7.50 | %    |  |  | 7.25 | % |  |      | N/A  |   |      |  | N/A  |   |  |  | N/A  |  

The Companys pension plans asset valuation in the fair value hierarchy levels, discussed in detail in Note 5,
along with the weighted average asset allocations as of December 31, 2011, by asset category, are as follows:



|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|--------------------------------- |  | -------------- | ----- |  | ------- | - | ----- | ------- |  | - | ----- |  |  | ------------------ | ------ |  |  |  | --- | -
|                                  |  | Level 1        |       |  | Level 2 |   |       | Level 3 |  |   | Total |  |  | Percentageof Total |       
|                                  |  | (in thousands) |       |  |         |  
|                                  |  |                |       |  |        
|Asset Category                    |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Cash and cash equivalents         |  | $              | 570   |  |         | $ |      |         |  | $ |      |  |  | $                  | 570    |  |  |  | 4   | %
|Equities                          |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Large cap value equity            |  |                | 1,062 |  |         |   |      |         |  |   |      |  |  |                    | 1,062  |  |  |  | 8   | %
|Mid cap growth equity             |  |                | 307   |  |         |   |      |         |  |   |      |  |  |                    | 307    |  |  |  | 2   | %
|Mid cap value equity              |  |                | 286   |  |         |   |      |         |  |   |      |  |  |                    | 286    |  |  |  | 2   | %
|Small cap value equity            |  |                | 322   |  |         |   |      |         |  |   |      |  |  |                    | 322    |  |  |  | 2   | %
|International growth equity       |  |                | 501   |  |         |   |      |         |  |   |      |  |  |                    | 501    |  |  |  | 4   | %
|Funds                             |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Large cap growth equity           |  |                |      |  |         |   | 1,655 |         |  |   |      |  |  |                    | 1,655  |  |  |  | 12  | %
|Small cap growth equity           |  |                |      |  |         |   | 416   |         |  |   |      |  |  |                    | 416    |  |  |  | 3   | %
|International value equity        |  |                | 536   |  |         |   |      |         |  |   |      |  |  |                    | 536    |  |  |  | 4   | %
|International markets core equity |  |                | 815   |  |         |   |      |         |  |   |      |  |  |                    | 815    |  |  |  | 6   | %
|International small to mid cap    |  |                | 265   |  |         |   |      |         |  |   |      |  |  |                    | 265    |  |  |  | 2   | %
|Large cap enhanced core equity    |  |                |      |  |         |   | 1,939 |         |  |   |      |  |  |                    | 1,939  |  |  |  | 15  | %
|High yield                        |  |                | 387   |  |         |   |      |         |  |   |      |  |  |                    | 387    |  |  |  | 3   | %
|Core bond                         |  |                |      |  |         |   | 1,754 |         |  |   |      |  |  |                    | 1,754  |  |  |  | 13  | %
|International bond                |  |                | 265   |  |         |   |      |         |  |   |      |  |  |                    | 265    |  |  |  | 2   | %
|Fixed income                      |  |                | 760   |  |         |   |      |         |  |   |      |  |  |                    | 760    |  |  |  | 6   | %
|Commodity                         |  |                | 602   |  |         |   |      |         |  |   |      |  |  |                    | 602    |  |  |  | 5   | %
|Debt securities                   |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|US Treasury bonds                 |  |                | 397   |  |         |   |      |         |  |   |      |  |  |                    | 397    |  |  |  | 3   | %
|Asset backed securities           |  |                |      |  |         |   | 439   |         |  |   |      |  |  |                    | 439    |  |  |  | 4   | %
|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|                                  |  |                |       |  |        
|                                  |  | $              | 7,075 |  |         | $ | 6,203 |         |  | $ |      |  |  | $                  | 13,278 |  |  |  | 100 | %
|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  



67



---

The Companys pension plans asset valuation in the fair value hierarchy levels along with the
weighted average asset allocations as of December 31, 2010, by asset category, are as follows:



|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|--------------------------------- |  | -------------- | ----- |  | ------- | - | ----- | ------- |  | - | ----- |  |  | ------------------ | ------ |  |  |  | --- | -
|                                  |  | Level 1        |       |  | Level 2 |   |       | Level 3 |  |   | Total |  |  | Percentageof Total |       
|                                  |  | (in thousands) |       |  |         |  
|                                  |  |                |       |  |        
|Asset Category                    |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Cash and cash equivalents         |  | $              | 355   |  |         | $ |      |         |  | $ |      |  |  | $                  | 355    |  |  |  | 3   | %
|Equities                          |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Large cap value equity            |  |                | 1,109 |  |         |   |      |         |  |   |      |  |  |                    | 1,109  |  |  |  | 8   | %
|Mid cap growth equity             |  |                | 237   |  |         |   |      |         |  |   |      |  |  |                    | 237    |  |  |  | 2   | %
|Mid cap value equity              |  |                | 173   |  |         |   |      |         |  |   |      |  |  |                    | 173    |  |  |  | 1   | %
|Small cap value equity            |  |                | 294   |  |         |   |      |         |  |   |      |  |  |                    | 294    |  |  |  | 2   | %
|International growth equity       |  |                | 620   |  |         |   |      |         |  |   |      |  |  |                    | 620    |  |  |  | 5   | %
|Funds                             |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|Large cap growth equity           |  |                |      |  |         |   | 1,228 |         |  |   |      |  |  |                    | 1,228  |  |  |  | 9   | %
|Small cap growth equity           |  |                |      |  |         |   | 327   |         |  |   |      |  |  |                    | 327    |  |  |  | 2   | %
|International value equity        |  |                | 658   |  |         |   |      |         |  |   |      |  |  |                    | 658    |  |  |  | 5   | %
|International markets core equity |  |                | 547   |  |         |   |      |         |  |   |      |  |  |                    | 547    |  |  |  | 4   | %
|Large cap enhanced core equity    |  |                |      |  |         |   | 2,200 |         |  |   |      |  |  |                    | 2,200  |  |  |  | 17  | %
|High yield                        |  |                | 532   |  |         |   |      |         |  |   |      |  |  |                    | 532    |  |  |  | 4   | %
|Core bond                         |  |                |      |  |         |   | 1,895 |         |  |   |      |  |  |                    | 1,895  |  |  |  | 14  | %
|International bond                |  |                | 518   |  |         |   |      |         |  |   |      |  |  |                    | 518    |  |  |  | 4   | %
|Fixed income                      |  |                | 736   |  |         |   |      |         |  |   |      |  |  |                    | 736    |  |  |  | 6   | %
|Commodity                         |  |                | 681   |  |         |   |      |         |  |   |      |  |  |                    | 681    |  |  |  | 5   | %
|Debt securities                   |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|US Treasury bonds                 |  |                | 693   |  |         |   |      |         |  |   |      |  |  |                    | 693    |  |  |  | 5   | %
|Asset backed securities           |  |                |      |  |         |   | 391   |         |  |   |      |  |  |                    | 391    |  |  |  | 3   | %
|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  
|                                  |  | $              | 7,153 |  |         | $ | 6,041 |         |  | $ |      |  |  | $                  | 13,194 |  |  |  | 100 | %
|                                  |  |                |       |  |         |   |       |         |  |   |       |  |  |                    |        |  |  |  |     |  

The Company invests in a balanced portfolio of individual equity securities, collective funds, mutual funds and
individual debt securities to maintain a diversified portfolio structure with distinguishable investment objectives. The objective of the total portfolio is long-term growth and appreciation along with capital preservation, to maintain the value of
plan assets over time in real terms net of fees, distributions and liquidity obligations. The objective in value equities and funds is to provide a competitive rate of return through investment in attractively valued companies relative to their
underlying fundamentals. The objective of investments in growth equities and funds is to benefit from earnings growth potential. The objective of investments in core equities is to produce consistent, market-like return with relatively low tracking
error to the broader equity market. The high yield, bond funds, fixed income, U.S. Treasury bonds and asset backed securities objective is to provide fixed-income exposure that adds diversification and contributes to total return through both
appreciation and income generation. The commodity funds objective is to provide a competitive rate of return. Asset classes and securities are diversified by market capitalization (large cap, mid cap, small cap), by geographic orientation
(domestic versus international) and by style (core, growth, value). All conventional investments are traded on major exchanges and are readily marketable.

The overall objective of the pension plans investments is to grow plan assets in relation to liabilities, while prudently managing the risk of a decrease in the pension plans assets. The
pension plans investment committee has established a target investment mix with upper and lower limits for investments in equities, fixed-income and other appropriate investments. Assets will be re-allocated among asset classes from
time-to-time to maintain an investment mix as established for each plan. The investment committee has established an average target investment mix of approximately 65% equities and approximately 35% fixed-income for the plans.

The Company also maintains qualified defined contribution plans, which provide benefits to its eligible employees based on employee contributions, years
of service and employee earnings with discretionary contributions allowed. Expenses related to these plans were $0.8 million for all years ended December 31, 2011, 2010 and 2009, respectively.



68



---

Note 16  Commitments and Contingencies

As of December 31, 2011, future minimum rental payments required under noncancellable operating leases for property and equipment
leased by the Company with lease terms longer than one year are as follows (in thousands):



|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2012                |  | $ | 1,410  | 
|2013                |  |   | 1,473  | 
|2014                |  |   | 1,556  | 
|2015                |  |   | 1,541  | 
|2016                |  |   | 1,161  | 
|2017 and thereafter |  |   | 6,427  | 
|                    |  |   |        | 
|Total               |  | $ | 13,568 | 
|                    |  |   |        | 

Total rent expense for the years ended December 31, 2011, 2010 and 2009 was $2.3 million, $2.1 million and $2.3
million, respectively.

On October 29, 2010, ARI entered into a lease agreement with a term of eleven years and total base rent of
$6.4 million, over the term of the agreement and expensed on a straight-line basis, with an entity owned by the vice chairman of the Companys board of directors. The lease is for ARIs headquarters location in St. Charles, Missouri,
that it previously leased through American Railcar Leasing LLC (ARL), a company controlled by Mr. Carl Icahn, chairman of the Companys board of directors and, through Icahn Enterprises L.P. (IELP), the Companys principal beneficial
stockholder, under a services agreement with ARL, which expired December 31, 2010. The term under the new lease agreement commences January 1, 2011 at the time the previous lease under the services agreement with ARL expired. The Company
is required to pay monthly rent and a portion of all tax increases assessed or levied upon the property and increases to the cost of the utilities and other services it used.

The Companys Axis joint venture entered into a credit agreement in December 2007. Effective August 5, 2009, the Company and the other initial partner acquired this loan from the lenders party
thereto, with each party acquiring a 50.0% interest in the loan. The total commitment under the term loan is $60.0 million with an additional $10.0 million commitment under the revolving loan. ARI Component is responsible to fund 50.0% of the
loan commitments. The balance outstanding on these loans, due to ARI Component, was $31.4 million of principal and $5.7 million of accrued interest, both as of December 31, 2011. ARI Components share of the remaining commitment on these
loans was $3.6 million as of December 31, 2011. See Note 11 for further information regarding this transaction and the terms of the underlying loan.

The Company is subject to comprehensive federal, state, local and international environmental laws and regulations relating to the release or discharge of materials into the environment, the management,
use, processing, handling, storage, transport or disposal of hazardous materials and wastes, or otherwise relating to the protection of human health and the environment. These laws and regulations not only expose ARI to liability for the
environmental condition of its current or formerly owned or operated facilities, and its own negligent acts, but also may expose ARI to liability for the conduct of others or for ARIs actions that were in compliance with all applicable laws at
the time these actions were taken. In addition, these laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations. Civil and criminal fines and penalties and other sanctions may
be imposed for non-compliance with these environmental laws and regulations. ARIs operations that involve hazardous materials also raise potential risks of liability under common law. Management believes that there are no current environmental
issues identified that would have a material adverse effect on the Company. Certain real property ARI acquired from ACF Industries LLC (ACF) in 1994 has been involved in investigation and remediation activities to address contamination. ACF is an
affiliate of Mr. Carl Icahn, the chairman of ARIs board of directors and, through IELP, its principal beneficial stockholder. Substantially all of the issues identified relate to the use of this property prior to its transfer to ARI by
ACF and for which ACF has retained liability for environmental contamination that may have existed at the time of transfer to ARI. ACF has also agreed to indemnify ARI for any cost that might be incurred with those existing issues. As of the date of
this report, ARI does not believe it will incur material costs in connection with any investigation or remediation activities relating to these properties, but it cannot assure that this will be the case. If ACF fails to honor its obligations to
ARI, ARI could be responsible for the cost of such remediation. The Company believes that its operations and facilities are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material
adverse effect on its financial condition or results of operations.

ARI is a party to collective bargaining agreements with labor unions at
two repair facilities that expire in January 2013 and September 2013. ARI is also party to a collective bargaining agreement with a labor union at a parts manufacturing facility that expires in April 2014.

On December 16, 2010, a complaint was filed by Steve Garvin, Deloris Garvin, and Garvin Enterprise, Inc. (the Plaintiffs) against the Companys
subsidiaries Southwest Steel I, LLC, Southwest Steel II, LLC and Southwest Steel III, LLC, d/b/a Southwest Steel Casting Co., in the District Court of Harris County, Texas, 295th Judicial District. On July 25, 2011, the complaint was amended to
include us as a party to the litigation. The Plaintiffs alleged that we improperly used their former



69



---

employees to source components from Chinese suppliers in violation of contractual arrangements among the parties and in a manner that compromised the Plaintiffs relationships with the
Chinese suppliers. The case was settled and a related charge was included in our financial results as of December 31, 2011.

Certain
claims, suits and complaints arising in the ordinary course of business have been filed or are pending against ARI. In the opinion of management, all such claims, suits, and complaints arising in the ordinary course of business are without merit or
would not have a significant effect on the future liquidity, results of operations or financial position of ARI if disposed of unfavorably.

In July 2007, ARI entered into an agreement with its joint venture, Axis, to purchase new railcar axles from the joint venture. The Company has no
minimum volume purchase requirements under this agreement.

Note 17  Earnings (Loss) per Share

The shares used in the computation of the Companys basic and diluted earnings (loss) per common share are reconciled as follows:



|                                                      |  |                          | September 30, |     |      |  | September 30, |      |  |  | September 30, |    
|----------------------------------------------------- |  | ------------------------ | ------------- | --- | ---- |  | ------------- | ---- |  |  | ------------- | ---
|                                                      |  | Years Ended December 31, |              
|                                                      |  | 2011                     |               |     | 2010 |  |               | 2009 | 
|Weighted average common shares outstanding  basic    |  |                          | 21,351,570    |     |      |  | 21,302,488    |      |  |  | 21,302,296    |    
|Dilutive effect of employee stock options             |  |                          | 85            | (1) |      |  |              | (2)  |  |  |              | (3)
|                                                      |  |                          |               |     |      |  |               |      |  |  |               |    
|Weighted average common shares outstanding  dilutive |  |                          | 21,351,655    |     |      |  | 21,302,488    |      |  |  | 21,302,296    |    
|                                                      |  |                          |               |     |      |  |               |      |  |  |               |    



|(1) | Stock options to purchase 340,352 shares of common stock expired unexercised on January 19, 2011. Refer to Note 18 for further discussion of these stock options.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Stock options to purchase 376,353 shares of common stock were not included in the calculation for diluted loss per share for the year ended December 31, 2010.
These options were excluded as the exercise price exceeded the average market price and because ARI reported a net loss for 2010. Refer to Note 18 for further discussion of these stock options.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Stock options to purchase 390,353 shares of common stock were not included in the calculation for diluted earnings per share for the year ended December 31, 2009.
These options were excluded as the exercise price exceeded the average market price for 2009. Refer to Note 18 for further discussion of these stock options.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 18  Stock Based Compensation

The Company accounts for stock based compensation granted under the 2005 Equity Incentive Plan, as amended (the 2005 Plan) based on the
fair values calculated using the Black-Scholes-Merton (Black-Scholes) option-pricing formula. Stock based compensation is expensed using a graded vesting method over the vesting period of the instrument.

The 2005 Plan permits the Company to issue stock and grant stock options, restricted stock, stock units and other equity interests to purchase or acquire
up to 1,000,000 shares of the Companys common stock. Awards covering no more than 300,000 shares may be granted to any person during any fiscal year. Options and SARs are subject to certain vesting provisions as designated by the board of
directors and may have an expiration period that ranges from 5 to 10 years. Options and SARs granted under the 2005 Plan must have an exercise price at or above the fair market value on the date of grant. If any award expires, or is terminated,
surrendered or forfeited, then shares of common stock covered by the award will again be available for grant under the 2005 Plan. The 2005 Plan is administered by the Companys board of directors or a committee of the board. Options and SARs
granted are expensed on a graded vesting method over the vesting period of the instrument.



70



---

The following table presents the amounts for stock based compensation expense incurred by ARI and the
corresponding line items on the consolidated statements of operations that they are classified within:



|                                           |  |                          |       |  |      |   |       |      |  |   |       | 
|------------------------------------------ |  | ------------------------ | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                           |  | Years Ended December 31, |      
|                                           |  | 2011                     |       |  | 2010 |   |       | 2009 | 
|                                           |  | (in thousands)           |      
|                                           |  |                          |      
|Stock based compensation expense:          |  |                          |       |  |      |   |       |      |  |   |       | 
|Cost of revenues: manufacturing operations |  | $                        | 697   |  |      | $ | 1,190 |      |  | $ | 237   | 
|Cost of revenues: railcar services         |  |                          | 105   |  |      |   | 202   |      |  |   | 42    | 
|Selling, general and administrative        |  |                          | 2,736 |  |      |   | 3,966 |      |  |   | 895   | 
|                                           |  |                          |       |  |      |   |       |      |  |   |       | 
|Total stock based compensation expense     |  | $                        | 3,537 |  |      | $ | 5,358 |      |  | $ | 1,174 | 
|                                           |  |                          |       |  |      |   |       |      |  |   |       | 

Income tax benefits related to stock based compensation arrangements were $1.3 million, $2.1 million and $0.5 million for
the years ended December 31, 2011, 2010 and 2009, respectively.

Stock options

In January 2006, on the date of the initial public offering, the Company granted options to purchase 484,876 shares of common stock under the 2005 Plan.
These options were granted at an exercise price equal to the initial public offering price of $21.00 per share. The options have an expiration term of five years and vest in equal annual installments over a three-year period. The Company determined
the fair value of these options using a Black-Scholes calculation based on the following assumptions: stock volatility of 35.0%; 5 year term; interest rate of 4.35%; and dividend yield of 1.0%. As there was no history with the stock prices of the
Company, the stock volatility rate was determined using volatility rates for several other similar companies within the railcar industry. The five year term represents the expiration of each option. The interest rate used was the five year
government Treasury bill rate on the date of grant. Dividend yield was determined from an average of other companies in the industry, as the Company did not have a history of dividend rates. In January 2011, 340,352 stock options expired
unexercised. A valuation allowance of $0.8 million was recorded as of December 31, 2010 related to the expiration of these options in January 2011.

No stock options were granted in 2011, 2010 or 2009.

Options to purchase 36,001 shares and 14,000
shares of the Companys common stock were exercised during the years ended December 31, 2011 and 2010, respectively. The total intrinsic value of options exercised during both years ended December 31, 2011 and 2010, was less than
$0.1 million. The Company realized tax expense of less than $0.1 million related to these option exercises. No stock options were exercised during the year ended December 31, 2009. All stock options fully vested in January 2009 and
expired in January 2011. As such, the Company did not recognize any compensation expense related to stock options during the years ended December 31, 2011, 2010 and 2009.

The following is a summary of option activity under the 2005 Plan:



|                                                                        |  |                         |          |   |                              |   |       |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|----------------------------------------------------------------------- |  | ----------------------- | -------- | - | ---------------------------- | - | ----- | --------------------------------------- |  |  | ---------------------------------------------------- |  |  | ----------------------------- | - |  |  | - | - | 
|                                                                        |  | SharesCovered byOptions |          |   | WeightedAverageExercisePrice |   |       | WeightedAverageRemainingContractualLife |  |  | WeightedAverageGrant-dateFair Valueof OptionsGranted |  |  | AggregateIntrinsicValue($000) |  
|                                                                        |  |                         |          |   |                             
|Outstanding and exercisable at the end of the period, December 31, 2009 |  |                         | 390,353  |   |                              | $ | 21.00 |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|Exercised                                                               |  |                         | (14,000  | ) |                              |   |       |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|                                                                        |  |                         |          |   |                              |   |       |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|Outstanding and exercisable at the end of the period, December 31, 2010 |  |                         | 376,353  |   |                              | $ | 21.00 |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|Exercised                                                               |  |                         | (36,001  | ) |                              | $ | 21.00 |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|Expired                                                                 |  |                         | (340,352 | ) |                              | $ | 21.00 |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|                                                                        |  |                         |          |   |                              |   |       |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 
|Outstanding and exercisable at the end of the period, December 31, 2011 |  |                         |         |   |                              | $ |      |                                         |  |  |                                                     |  |  | $                             |  |  |  | $ |  | 
|                                                                        |  |                         |          |   |                              |   |       |                                         |  |  |                                                      |  |  |                               |   |  |  |   |   | 

As of December 31, 2011, an aggregate of 855,476 shares were available for issuance in connection with future equity
instrument grants under the Companys 2005 Plan. Shares issued under the 2005 Plan may consist in whole or in part of authorized but unissued shares or treasury shares. The 1,000,000 shares covered by the Plan were registered for issuance to
the public with the Securities Exchange Commission (SEC) on a Form S-8 on August 16, 2006.



71



---

Stock appreciation rights

The compensation committee of the Companys board of directors granted awards of SARs to certain employees pursuant to the 2005 Plan during April 2007, April 2008, September 2008,
March 2009, March 2010 and May 2011. On May 14, 2010, ARI completed an exchange offer and exchanged 190,200 eligible SARs granted on April 4, 2007 at an exercise price per SAR of $29.49 for 95,100 SARs granted on
May 14, 2010 at an exercise price per SAR of $14.12.

All of the SARs granted in 2007, 196,900 of the SARs granted in 2008 and 212,850 of
the SARs granted in 2009 vest in 25.0% increments on the first, second, third and fourth anniversaries of the grant date. The SARs granted in March and May 2010 vest in three equal increments on the first, second and third anniversaries of the
grant date. Each holder must remain employed by the Company through each such date in order to vest in the corresponding number of SARs.

Additionally, 77,500 of the SARs granted in 2008 and 93,250 of the SARs granted in 2009 similarly vest in 25.0% increments on the first, second, third
and fourth anniversaries of the grant date, but only if the closing price of the Companys common stock achieves a specified price target during the applicable twelve month period for twenty trading days during any sixty day trading day period.
If the Companys common stock does not achieve the specified price target during the applicable twelve-month period, the related portion of these market-based SARs will not vest. Further, each holder must remain employed by the Company through
each anniversary of the grant date in order to vest in the corresponding number of SARs.

All of the SARs granted in 2011 vest in three equal
increments on the first, second and third anniversaries of the grant date, but only if the Company achieves a specified adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) target for the fiscal year preceding
the applicable anniversary date. Each holder must further remain employed by the Company through each such date in order to vest in the corresponding number of SARs.

The SARs have exercise prices that represent the closing price of the Companys common stock on the date of grant. Upon the exercise of any SAR, the Company shall pay the holder, in cash, an amount
equal to the excess of (A) the aggregate fair market value (as defined in the 2005 Plan) in respect of which the SARs are being exercised, over (B) the aggregate exercise price of the SARs being exercised, in accordance with the terms of
the Stock Appreciation Rights Agreement (the SARs Agreement). The SARs are subject in all respects to the terms and conditions of the 2005 Plan and the SARs Agreement, which contain non-solicitation, non-competition and confidentiality provisions.

The following table provides an analysis of SARs granted in 2011, 2010, 2009, 2008 and 2007:



|                                                      |  |                 |  |                       |  |                 |  |                       |  |           
|----------------------------------------------------- |  | --------------- |  | --------------------- |  | --------------- |  | --------------------- |  | ----------
|                                                      |  | 2011 Grant      |  | 2010 Grants           |  | 2009 Grant      |  | 2008 Grants           |  | 2007 Grant
|Grant date                                            |  | 5/9/2011        |  | 3/31/2010 & 5/14/2010 |  | 3/3/2009        |  | 4/28/2008 & 9/12/2008 |  | 4/4/2007  
|# outstanding at December 31, 2011                    |  | 237,594         |  | 209,196               |  | 207,440         |  | 140,580               |  | 11,100    
|Weighted average exercise price                       |  | $24.45          |  | $12.95                |  | $6.71           |  | $20.80                |  | $29.49    
|Contractual term                                      |  | 7 years         |  | 7 years               |  | 7 years         |  | 7 years               |  | 7 years   
|                                                      |  |                 |  |                       | 
|December 31, 2011 Black-Scholes valuation components: |  |                 |  |                       |  |                 |  |                       |  |           
|Stock volatility range                                |  | 72.0% -74.4%    |  | 64.5% - 74.4%         |  | 64.5% -66.9%    |  | 66.9%                 |  | 65.5%     
|Expected life range                                   |  | 3.3 - 4.3 years |  | 2.6 - 3.3 years       |  | 2.1 - 2.7 years |  | 1.7 - 2.2 years       |  | 1.1 years 
|Risk free interest rate range                         |  | 0.4% - 0.9%     |  | 0.4%                  |  | 0.3%            |  | 0.3%                  |  | 0.1%      
|Dividend yield                                        |  | 0.0%            |  | 0.0%                  |  | 0.0%            |  | 0.0%                  |  | 0.0%      
|Forfeiture rate                                       |  | 2.0%            |  | 2.0%                  |  | 2.0%            |  | 2.0%                  |  | 0.0%      

The stock volatility rate was determined using the historical volatility rates of the Companys common stock. The
expected life ranges represent the use of the simplified method prescribed by the SEC, which uses the average of the vesting period and expiration period of each group of SARs that vest equally over a three or four-year period. The interest rates
used were the government Treasury bill rate on the date of valuation. Dividend yield was based on the indefinite suspension of dividends by the Company. The forfeiture rate was based on a Company estimate of expected forfeitures over the contractual
life of each grant of SARs for each period.



72



---

The following is a summary of SARs activity under the 2005 Plan:



|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|-------------------------------- |  | ----------------------------- | -------- | - | ---------------------------- | - | ----- | --------------------------------------- |  |  | --------------------------------- |  |  | ----------------------------- | ----- |  |  | - | ----- | ---
|                                 |  | StockAppreciationRights(SARs) |          |   | WeightedAverageExercisePrice |   |       | WeightedAverageRemainingContractualLife |  |  | WeightedAverage FairValue of SARs |  |  | AggregateIntrinsicValue($000) |      
|January 1, 2009                  |  |                               | 506,026  |   |                              | $ | 25.18 |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Granted                          |  |                               | 306,100  |   |                              | $ | 6.71  |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Cancelled/Forfeited (1)          |  |                               | (23,576  | ) |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Outstanding at December 31, 2009 |  |                               | 788,550  |   |                              | $ | 18.13 |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Granted                          |  |                               | 236,750  |   |                              | $ | 12.95 |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Cancelled/Forfeited (1)          |  |                               | (295,022 | ) |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Exercised                        |  |                               | (18,925  | ) |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Outstanding at December 31, 2010 |  |                               | 711,353  |   |                              | $ | 12.68 |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Granted                          |  |                               | 242,041  |   |                              | $ | 24.45 |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Cancelled/Forfeited (1)          |  |                               | (22,720  | ) |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Exercised                        |  |                               | (124,764 | ) |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|Outstanding at December 31, 2011 |  |                               | 805,910  |   |                              | $ | 16.35 |                                         |  |  | 59 months                         |  |  | $                             | 13.75 |  |  | $ | 6,296 | (2)
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    
|                                 |  |                               |          |   |                             
|Exercisable at December 31, 2011 |  |                               | 272,102  |   |                              | $ | 14.06 |                                         |  |  | 48 months                         |  |  | $                             | 13.50 |  |  | $ | 2,747 | (2)
|                                 |  |                               |          |   |                              |   |       |                                         |  |  |                                   |  |  |                               |       |  |  |   |       |    



|(1) | Of the SARs granted in 2008, 13,123, 13,122 and 19,376 were forfeited in 2011, 2010 and 2009, respectively, due to the closing price of the Companys common stock
not achieving a specified price target for twenty trading days during any sixty day trading day period.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Based on the closing market price of $23.93 per share of the Companys common stock on December 31, 2011, SARs granted in 2007 and 2011 have no intrinsic
value and the SARs granted in 2008, 2009 and 2010 have a total intrinsic value of $6.3 million, of which $2.7 million relates to SARs that are exercisable.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation expense of $3.5 million, $5.4 million and $1.2 million was incurred for the years ended December 31, 2011, 2010 and 2009, respectively, related to SARs granted under the 2005 Plan.

As of December 31, 2011, unrecognized compensation costs related to the unvested portion of SARs were $2.8 million and were expected to
be recognized over a period of 23 months.

Note 19  Common Stock

The Company declared cash dividends of $0.03 per share of common stock in the first two quarters of 2009 and paid cash dividends the
first three quarters of 2009 to stockholders of record as of a given date. Subsequently, in August 2009, the board of directors indefinitely suspended its quarterly dividend payments.

During the years ended December 31, 2011 and 2010, the Company issued 36,001 shares and 14,000 shares, respectively, of its common stock as certain holders of stock options exercised options to
purchase the Companys common stock.

Note 20  Related Party Transactions

Agreements with ACF

The Company has or had the following agreements with ACF, a company controlled by Mr. Carl Icahn, chairman of the Companys board of directors
and, through IELP, the Companys principal beneficial stockholder:

Manufacturing services agreement

Under the manufacturing services agreement entered into in 1994 and amended in 2005, ACF agreed to manufacture and distribute, at the Companys
instruction, various railcar components. In consideration for these services, the Company agreed to pay ACF based on agreed upon rates. For the years ended December 31, 2011, 2010 and 2009, ARI purchased inventory of less than $0.1 million,
$1.1 million and $13.5 million, respectively, of components from ACF. The agreement automatically renews unless written notice is provided by the Company.



73



---

Supply agreement

Under a supply agreement entered into in 1994, the Company agreed to manufacture and sell to ACF specified components at cost plus mark-up or on terms not less favorable than the terms on which the
Company sold the same products to third parties. No revenue was recorded from ACF for both the years ended December 31, 2011 and 2010. Revenue recorded under this arrangement was less than $0.1 million for the year ended December 31, 2009.
Such amounts are included under manufacturing operations revenues from affiliates on the consolidated statements of operations. Profit margins on sales to related parties approximate the margins on sales to other customers.

Railcar manufacturing agreement

In May 2007, the Company entered into a manufacturing agreement with ACF, pursuant to which the Company agreed to purchase approximately 1,390 tank
railcars from ACF, supported by a new customer order received at the same time. The profit realized by ARI upon sale of the tank railcars to ARI customers was first paid to ACF to reimburse it for the start-up costs involved in implementing the
manufacturing arrangements evidenced by the agreement and thereafter, the profit was split evenly between ARI and ACF. In September 2008, a termination letter was received from ACF terminating this agreement effective the later of the completion of
approximately 1,390 tank railcars or March 2009. The commitment under this agreement was satisfied in March 2009 and the agreement was terminated at that time.

For the year ended December 31, 2009, ARI incurred costs under this agreement of $4.1 million in connection with railcars that were manufactured and delivered to customers during that period, which
includes payments made to ACF for its share of the profits along with ARI costs and such amount is included under cost of goods sold on the consolidated statements of operations. The Company recognized revenues of $19.0 million related to railcars
shipped under this agreement for the year ended December 31, 2009. No revenues or costs were incurred under this agreement for both the years ended December 31, 2011 and 2010.

Asset Purchase Agreement

On January 29, 2010, ARI entered into an agreement to
purchase certain assets from ACF for $0.9 million that will allow the Company to manufacture railcar components previously purchased from ACF.

The purchase price of $0.9 million was determined using various factors, including but not limited to, independent appraisals that assessed fair market value for the purchased assets, each
assets remaining useful life and the replacement cost of each asset. Given that ACF and ARI have the same majority stockholder, the assets purchased were recorded at ACFs net book value and the remaining portion of the purchase price was
recorded as a reduction to stockholders equity. As of December 31, 2010, all of the assets had been received and paid for in accordance with the agreement.

Agreements with ARL

The Company has or had the following agreements with ARL, a company
controlled by Mr. Carl Icahn, chairman of the Companys board of directors and, through IELP, the Companys principal beneficial stockholder:

Railcar servicing agreement and fleet services agreement

Effective January 1,
2008, the Company entered into a fleet services agreement with ARL, which replaced the 2005 railcar servicing agreement. Under the agreement, ARI provided ARL fleet management services for a fixed monthly fee and railcar repair and maintenance
services for a charge of labor, components and materials. The Company provided such repair and maintenance services for approximately 28,000 railcars for ARL. The agreement extended through December 31, 2010.

This agreement was replaced by a new agreement that was effective April 16, 2011 (the Railcar Services Agreement). Under the Railcar Services
Agreement, ARI will provide ARL railcar repair, engineering, administrative and other services, on an as needed basis, for ARLs lease fleet at mutually agreed upon prices. The Railcar Services Agreement has a term of three years and will
automatically renew for additional one year periods unless either party provides at least sixty days prior written notice of termination. There is no termination fee if the Company elects to terminate the agreement prior to the end of the term.



74



---

For the years ended December 31, 2011, 2010 and 2009, revenues of $24.7 million,
$15.0 million and $14.4 million were recorded under these agreements, respectively. Such amounts are included under railcar services revenues from affiliates on the consolidated statements of operations. The terms and pricing on services
provided to related parties are not less favorable to ARI than the terms and pricing on services provided to unaffiliated third parties.

Services agreement, separation agreement and rent and building services extension agreement

Under the Companys services agreement with ARL, ARL agreed to provide the Company certain information technology services, rent and building
services and limited administrative services. The rent and building services includes the use of certain facilities owned by the Companys vice chairman of the board of directors, which is further described later in this footnote. Under this
agreement, the Company agreed to provide purchasing and engineering services to ARL. Consideration exchanged between the companies was based on an agreed upon fixed annual fee.

On March 30, 2007, ARI and ARL agreed, pursuant to a separation agreement to terminate, effective December 31, 2006, all services provided to ARL by the Company under the services agreement.
Additionally, the separation agreement provided that all services provided to the Company by ARL under the services agreement would be terminated except for rent and building services. Under the separation agreement, ARL agreed to waive the six
month notice requirement for termination required by the services agreement.

In February 2008, ARI and ARL agreed, pursuant to an extension
agreement, that effective December 31, 2007, all rent and building services would continue unless otherwise terminated by either party upon six months prior notice or by mutual agreement between the parties. This agreement terminated on
December 31, 2010 by mutual agreement.

Total fees paid to ARL were $0.6 million for both the years ended December 31, 2010 and
2009. The fees paid to ARL are included in selling, general and administrative costs to affiliates on the consolidated statements of operations.

Trademark license agreement

Under this agreement, which was effective June 30,
2005, ARI granted a nonexclusive, perpetual, worldwide license to ARL to use ARIs common law trademarks American Railcar and the diamond shape logo. ARL may only use the licensed trademarks in connection with the
railcar leasing business. ARI is entitled to annual fees of $1,000 in exchange for this license.

Railcar orders

The Company has from time to time manufactured and sold railcars to ARL under long-term agreements as well as on a purchase order basis. Revenues for
railcars sold to ARL were $1.2 million, $81.8 million and $105.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. Revenues for railcars sold to ARL are included in manufacturing operations revenues from
affiliates on the consolidated statements of operations. The terms and pricing on sales to related parties are not less favorable to ARI than the terms and pricing on sales to unaffiliated third parties. Any related party sales of railcars under an
agreement or purchase order have been and will be subject to the approval or review by the Companys audit committee.

Effective January
1, 2011, ARL markets the Companys railcars for sale or lease and acts as its manager to lease railcars on ARIs behalf for a fee. Refer to Note 25 for further information.

Agreements with other related parties

In September 2003, Castings loaned Ohio Castings
$3.0 million under a promissory note, which was due in January 2004. The note was renegotiated resulting in a new principal amount of $2.2 million, bearing interest at a rate of 4.0% with a maturity date of August 2009. Due to the temporary idling
of the facility, Ohio Castings advised the partners that it was unable to pay the notes when due. The notes were renegotiated and as a result were due February 2012. Interest continued to accrue but interest payments were deferred until
August 2011. Due to the continued need to use existing funds to restart the facility, the joint venture partners and Ohio Castings renegotiated the terms of the notes during 2011 and the notes are now due November 2012 with interest continuing
to accrue and payments now deferred until May 2012. Total amounts due from Ohio Castings under this note were $0.5 million as of both December 31, 2011 and 2010. Accrued interest on this note as of both December 31, 2011 and 2010 was
less than $0.1 million. The other partners in the joint venture have made identical loans to Ohio Castings. The Company, along with the other members of Ohio Castings, had guaranteed both a state loan issued to Ohio Castings by the state of
Ohio and bonds payable to the state of Ohio. The state loan and bonds payable were paid off in June 2011 and December 2010, respectively, and ARI was released from the respective guarantees. The value of the guarantee of the state loan was less
than $0.1 million as of December 31, 2010.

The Companys Axis joint venture entered into a credit agreement in
December 2007. Effective August 5, 2009, the Company and the other initial partner acquired this loan from the lenders party thereto, with each party acquiring a 50.0% interest in the loan. The total commitment under the term loan is
$60.0 million with an additional $10.0 million commitment under the



75



---

revolving loan. ARI Component is responsible to fund 50.0% of the loan commitments. The balance outstanding on these loans, due to ARI Component, was $31.4 million of principal and
$5.7 million of accrued interest, as of December 31, 2011. ARI Components share of the remaining commitment on these loans was $3.6 million as of December 31, 2011. See Note 11 for further information regarding this
transaction and the terms of the underlying loan.

Effective January 1, 2009, ARI entered into a services agreement with a term of one
year to provide Axis accounting, tax, human resources and information technology assistance for an annual fee of $0.2 million. Effective January 1, 2010, this agreement was replaced by a new services agreement for ARI to provide Axis
accounting, tax, human resources and purchasing assistance for an annual fee of $0.3 million, payable in equal monthly installments. This agreement had an initial term of one year and automatically renews for additional one-year periods unless
written notice is received from either party.

Effective April 1, 2009, Mr. James J. Unger, the Companys former chief
executive officer, assumed the role of vice chairman of the board of directors and became a consultant to the Company. In exchange for these services, Mr. Unger received an annual consulting fee of $135,000 and an annual director fee of $65,000
that were both payable quarterly, in advance. The Company also agreed to provide Mr. Unger with an automobile allowance related to his role as vice chairman. Mr. Ungers consulting agreement terminated in accordance with its terms as
of April 1, 2010. In his role as consultant, Mr. Unger reported to and served at the discretion of the Companys board of directors. Mr. Unger continues in his role as vice chairman in connection with which he is provided an
annual director fee of $65,000 and an automobile allowance.

The Company leases one of its parts manufacturing facilities from an entity owned
by its vice chairman of the board of directors. Expenses paid for this facility were $0.4 million for all the years ended December 31, 2011, 2010 and 2009. These costs are included in manufacturing operations cost of revenues on the
consolidated statements of operations.

On October 29, 2010, ARI entered into a lease agreement with a term of eleven years with an
entity owned by the vice chairman of the board of directors. The lease is for ARIs headquarters location in St. Charles, Missouri, that it previously leased through ARL under a services agreement with ARL, which expired December 31, 2010.
The term under the new lease agreement commenced January 1, 2011. The Company is required to pay monthly rent and a portion of all tax increases assessed or levied upon the property and increases to the cost of the utilities and other services
it uses. The expenses recorded for this facility were $0.6 million for the year ended December 31, 2011. These fees are included in selling, general and administrative expenses on the consolidated statements of operations as costs to a
related party.

In June 2011, ARI entered into a scrap agreement with M. W. Recycling (MWR), a company controlled by Mr. Carl Icahn,
chairman of the Companys board of directors and, through IELP the Companys principal beneficial stockholder. Under the agreement, ARI sells and MWR purchases scrap metal from several plant locations. This agreement was approved by the
Companys audit committee on the basis that the terms of the agreement were no less favorable than those that would have been obtained from an independent third party. For the year ended December 31, 2011, MWR collected scrap material
totaling $3.3 million. As of December 31, 2011, accounts receivable of $1.3 million were due from MWR.

Icahn Sourcing, LLC
(Icahn Sourcing) is an entity formed and controlled by Mr. Carl Icahn in order to maximize the potential buying power of a group of entities with which Mr. Carl Icahn has a relationship in negotiating with a wide range of suppliers of
goods, services and tangible and intangible property. The Company is a member of the buying group and, as such, is afforded the opportunity to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and
terms. Icahn Sourcing does not guarantee that ARI will purchase any goods, services or property from any such vendors, and is under no obligation to do so. The Company does not pay Icahn Sourcing any fees or other amounts with respect to the buying
group arrangement. The Company has purchased a variety of goods and services as members of the buying group at prices and on terms that it believes are more favorable than those that would be achieved on a stand-alone basis. The Companys
purchases under these arrangements totaled $7.1 million in 2011.

Financial information for transactions with related parties

As of December 31, 2011 and 2010, accounts receivable of $6.1 million and $5.0 million, respectively, were due from related parties.

As of December 31, 2011 and 2010, interest receivable of $0.3 million and $0.2 million, respectively, was due from related parties.

As of December 31, 2011 and 2010, accounts payable of $0.8 million and $0.3 million, respectively, were due to related parties.

Cost of revenues for manufacturing operations for the years ended December 31, 2011, 2010 and 2009 included $24.7 million, $5.2 million
and $7.5 million, respectively, in railcar products produced by joint ventures.



76



---

Inventory as of December 31, 2011 and 2010, included $1.7 million and $0.4 million of materials
produced by joint ventures. As of December 31, 2011 and 2010, all profit from related parties for inventory still on hand was eliminated.

Note 21  Operating Segments and Sales and Credit Concentrations

ARI operates in two reportable segments: manufacturing operations and railcar services. Manufacturing operations consist of railcar
manufacturing, railcar leasing and railcar and industrial component manufacturing. Railcar services consist of railcar repair services, engineering and field services, and fleet management services. Performance is evaluated based on revenues and
operating profit. Intersegment sales and transfers are accounted for as if sales or transfers were to third parties. The information in the following tables is derived from the segments internal financial reports used for corporate management
purposes:



77



---

|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|---------------------------------------------- |  | ----------------------- | -------- | - | --------------- | - | ------- | -------------------- |  | - | ------------ | - |  | ------ | ------ | - |  | - | -------- | -
|As of and For the Year Ended
December 31, 2011 |  | ManufacturingOperations |          |   | RailcarServices |   |         | Corporate& all other |  |   | Eliminations |   |  | Totals |       
|                                               |  | (in thousands)          |         
|                                               |  |                         |          |   |                
|Revenues from external customers               |  | $                       | 454,167  |   |                 | $ | 65,218  |                      |  | $ |             |   |  | $      |       |   |  | $ | 519,385  |  
|Intersegment revenues                          |  |                         | 914      |   |                 |   | 285     |                      |  |   |             |   |  |        | (1,199 | ) |  |   |         |  
|Cost of revenues  external customers          |  |                         | (410,990 | ) |                 |   | (50,599 | )                    |  |   |             |   |  |        |       |   |  |   | (461,589 | )
|Cost of intersegment revenues                  |  |                         | (978     | ) |                 |   | (304    | )                    |  |   |             |   |  |        | 1,282  |   |  |   |         |  
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Gross profit                                   |  |                         | 43,113   |   |                 |   | 14,600  |                      |  |   |             |   |  |        | 83     |   |  |   | 57,796   |  
|Selling, general and administrative            |  |                         | (6,748   | ) |                 |   | (2,124  | )                    |  |   | (16,175      | ) |  |        |       |   |  |   | (25,047  | )
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Earnings (loss) from operations                |  | $                       | 36,365   |   |                 | $ | 12,476  |                      |  | $ | (16,175      | ) |  | $      | 83     |   |  | $ | 32,749   |  
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Total assets                                   |  | $                       | 357,729  |   |                 | $ | 47,408  |                      |  | $ | 298,633      |   |  | $      |       |   |  | $ | 703,770  |  
|Capital expenditures                           |  |                         | 32,187   |   |                 |   | 987     |                      |  |   | 2,472        |   |  |        |       |   |  |   | 35,646   |  
|Depreciation and amortization                  |  |                         | 18,165   |   |                 |   | 2,851   |                      |  |   | 1,850        |   |  |        |       |   |  |   | 22,866   |  



|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|---------------------------------------------- |  | ----------------------- | -------- | - | --------------- | - | ------- | -------------------- |  | - | ------------ | - |  | ------ | ------ | - |  | - | -------- | -
|As of and For the Year Ended
December 31, 2010 |  | ManufacturingOperations |          |   | RailcarServices |   |         | Corporate& all other |  |   | Eliminations |   |  | Totals |       
|                                               |  | (in thousands)          |         
|                                               |  |                         |          |   |                
|Revenues from external customers               |  | $                       | 206,094  |   |                 | $ | 67,469  |                      |  | $ |             |   |  | $      |       |   |  | $ | 273,563  |  
|Intersegment revenues                          |  |                         | 998      |   |                 |   | 281     |                      |  |   |             |   |  |        | (1,279 | ) |  |   |         |  
|Cost of revenues  external customers          |  |                         | (210,269 | ) |                 |   | (54,353 | )                    |  |   |             |   |  |        |       |   |  |   | (264,622 | )
|Cost of intersegment revenues                  |  |                         | (748     | ) |                 |   | (255    | )                    |  |   |             |   |  |        | 1,003  |   |  |   |         |  
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Gross profit (loss)                            |  |                         | (3,925   | ) |                 |   | 13,142  |                      |  |   |             |   |  |        | (276   | ) |  |   | 8,941    |  
|Selling, general and administrative            |  |                         | (5,610   | ) |                 |   | (2,207  | )                    |  |   | (17,774      | ) |  |        |       |   |  |   | (25,591  | )
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Earnings (loss) from operations                |  | $                       | (9,535   | ) |                 | $ | 10,935  |                      |  | $ | (17,774      | ) |  | $      | (276   | ) |  | $ | (16,650  | )
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Total assets                                   |  | $                       | 281,779  |   |                 | $ | 49,133  |                      |  | $ | 323,455      |   |  | $      |       |   |  | $ | 654,367  |  
|Capital expenditures                           |  |                         | 3,753    |   |                 |   | 2,084   |                      |  |   | 307          |   |  |        |       |   |  |   | 6,144    |  
|Depreciation and amortization                  |  |                         | 19,603   |   |                 |   | 2,816   |                      |  |   | 1,877        |   |  |        |       |   |  |   | 24,296   |  



|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|---------------------------------------------- |  | ----------------------- | -------- | - | --------------- | - | ------- | -------------------- |  | - | ------------ | - |  | ------ | ------ | - |  | - | -------- | -
|As of and For the Year Ended
December 31, 2009 |  | ManufacturingOperations |          |   | RailcarServices |   |         | Corporate& all other |  |   | Eliminations |   |  | Totals |       
|                                               |  | (in thousands)          |         
|                                               |  |                         |          |   |                
|Revenues from external customers               |  | $                       | 365,329  |   |                 | $ | 58,102  |                      |  | $ |             |   |  | $      |       |   |  | $ | 423,431  |  
|Intersegment revenues                          |  |                         | 1,303    |   |                 |   | 109     |                      |  |   |             |   |  |        | (1,412 | ) |  |   |         |  
|Cost of revenues  external customers          |  |                         | (329,025 | ) |                 |   | (47,015 | )                    |  |   |             |   |  |        |       |   |  |   | (376,040 | )
|Cost of intersegment revenues                  |  |                         | (1,066   | ) |                 |   | (102    | )                    |  |   |             |   |  |        | 1,168  |   |  |   |         |  
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Gross profit (loss)                            |  |                         | 36,541   |   |                 |   | 11,094  |                      |  |   |             |   |  |        | (244   | ) |  |   | 47,391   |  
|Selling, general and administrative            |  |                         | (7,051   | ) |                 |   | (2,177  | )                    |  |   | (15,913      | ) |  |        |       |   |  |   | (25,141  | )
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Earnings (loss) from operations                |  | $                       | 29,490   |   |                 | $ | 8,917   |                      |  | $ | (15,913      | ) |  | $      | (244   | ) |  | $ | 22,250   |  
|                                               |  |                         |          |   |                 |   |         |                      |  |   |              |   |  |        |        |   |  |   |          |  
|Total assets                                   |  | $                       | 271,862  |   |                 | $ | 47,283  |                      |  | $ | 345,219      |   |  | $      |       |   |  | $ | 664,364  |  
|Capital expenditures                           |  |                         | 3,823    |   |                 |   | 10,711  |                      |  |   | 513          |   |  |        |       |   |  |   | 15,047   |  
|Depreciation and amortization                  |  |                         | 19,929   |   |                 |   | 2,395   |                      |  |   | 1,799        |   |  |        |       |   |  |   | 24,123   |  



78



---

Manufacturing Operations

Manufacturing revenues from affiliates were 0.2%, 29.9% and 24.8% of total consolidated revenues for the years ended December 31, 2011, 2010 and 2009, respectively.

Manufacturing revenues from the most significant customer totaled 33.9% of total consolidated revenues for the year ended December 31, 2011.
Manufacturing revenues from the most significant customer, an affiliate, totaled 29.9% of total consolidated revenues for the year ended December 31, 2010. Manufacturing revenues from the most significant customer totaled 35.6% of total
consolidated revenues for the year ended December 31, 2009.

Manufacturing revenues from the two most significant customers were 45.7% of
total consolidated revenues for the year ended December 31, 2011. Manufacturing revenues from the two most significant customers (including an affiliate) were 41.8% and 60.4% of total consolidated revenues for the years ended December 31,
2010 and 2009, respectively.

Manufacturing receivables from the most significant customer were 31.0% of total consolidated accounts
receivable including due from related parties as of December 31, 2011. Manufacturing receivables from an affiliated significant customer totaled 12.0% of total consolidated accounts receivable including due from related parties as of
December 31, 2010. No other customer accounted for more than 10.0% of total consolidated accounts receivable as of December 31, 2011 and 2010.

Railcar Services

Railcar services revenues from affiliates were 4.8%, 5.5% and 3.4% of
total consolidated revenues for the years ended December 31, 2011, 2010 and 2009, respectively. No single railcar services customer accounted for more than 10.0% of total consolidated revenues for the years ended December 31, 2011, 2010
and 2009. No single railcar services customer accounted for more than 10.0% of total consolidated accounts receivable as of December 31, 2011 and 2010.

Note 22  Consulting Contracts

During the first quarter of 2011, the Company entered into a technology services consulting agreement with SDS-Altaiwagon, a Russian
railcar builder, to design a railcar for general service in Russia for a total contract price of $1.5 million. The technology services consulting agreement is expected to be completed in the first quarter of 2012.

During the second quarter of 2011, the Company entered into a consulting agreement with the Indian Railways Research Designs and Standards Organization
to design and develop certain railcars for service in India for a total contract price of $9.6 million. The consulting agreement is expected to continue through 2016.

For the year ended December 31, 2011, revenues of $2.7 million were recorded under these two consulting agreements. As of December 31, 2011, unbilled revenues of $1.3 million were due from
one of the consulting agreements and deferred revenues of $0.1 million were remaining from the other consulting agreement.

Note 23  Supplemental Cash Flow Information

ARI received interest income of $3.5 million, $4.3 million and $5.6 million for the years ended December 31, 2011, 2010 and 2009,
respectively.

ARI paid interest expense, net of capitalized interest, of $20.6 million, $20.6 million and $20.2 million for the years ended
December 31, 2011, 2010 and 2009, respectively.

ARI paid taxes of $0.3 million and $7.3 million for the years ended December 31,
2011 and 2009, respectively. ARI received net tax refunds of $1.1 million for the year ended December 31, 2010.

ARI paid
$2.0 million and $0.2 million to employees related to SARs exercises during the years ended December 31, 2011 and 2010, respectively.

On October 30, 2008, the board of directors of the Company declared a cash dividend of $0.03 per share of common stock of the Company to stockholders of record as of January 9, 2009 that was
paid on January 23, 2009.



79



---

Note 24  Selected Quarterly Financial Data (unaudited)



|                                                       |  |                                       |        |   |               |   |         |              |  |   |               |   |  |             |         |   |  |   |         |  
|------------------------------------------------------ |  | ------------------------------------- | ------ | - | ------------- | - | ------- | ------------ |  | - | ------------- | - |  | ----------- | ------- | - |  | - | ------- | -
|                                                       |  | Firstquarter                          |        |   | Secondquarter |   |         | Thirdquarter |  |   | Fourthquarter |   |  | Year toDate |        
|                                                       |  | (in thousands, except per share data) |       
|                                                       |  |                                       |        |   |              
|2011                                                   |  |                                       |        |   |               |   |         |              |  |   |               |   |  |             |         |   |  |   |         |  
|Revenues                                               |  | $                                     | 84,843 |   |               | $ | 111,913 |              |  | $ | 125,784       |   |  | $           | 196,845 |   |  | $ | 519,385 |  
|Gross profit                                           |  |                                       | 4,944  |   |               |   | 13,256  |              |  |   | 14,955        |   |  |             | 24,641  |   |  |   | 57,796  |  
|Net (loss) earnings                                    |  |                                       | (5,329 | ) |               |   | 569     |              |  |   | 4,026         |   |  |             | 5,070   |   |  |   | 4,336   |  
|Net (loss) earnings per common share-basic and diluted |  | $                                     | (0.25  | ) |               | $ | 0.03    |              |  | $ | 0.19          |   |  | $           | 0.24    |   |  | $ | 0.20    |  
|                                                       |  |                                       |        |   |              
|                                                       |  | Firstquarter                          |        |   | Secondquarter |   |         | Thirdquarter |  |   | Fourthquarter |   |  | Year toDate |        
|                                                       |  | (in thousands, except per share data) |       
|                                                       |  |                                       |        |   |              
|2010                                                   |  |                                       |        |   |               |   |         |              |  |   |               |   |  |             |         |   |  |   |         |  
|Revenues                                               |  | $                                     | 52,311 |   |               | $ | 61,165  |              |  | $ | 64,797        |   |  | $           | 95,290  |   |  | $ | 273,563 |  
|Gross profit                                           |  |                                       | 956    |   |               |   | 2,570   |              |  |   | 2,290         |   |  |             | 3,125   |   |  |   | 8,941   |  
|Net loss                                               |  |                                       | (7,023 | ) |               |   | (5,882  | )            |  |   | (6,252        | ) |  |             | (7,849  | ) |  |   | (27,006 | )
|Net loss per common share-basic and diluted            |  | $                                     | (0.33  | ) |               | $ | (0.28   | )            |  | $ | (0.29         | ) |  | $           | (0.37   | ) |  | $ | (1.27   | )

Note 25  Subsequent Events

All subsequent events have been evaluated through the date these financial statements were available to be issued, March 2, 2012.

On February 24, 2012, the Compensation Committee of the Board of Directors of the Company granted awards of SARs to certain Company
employees pursuant to the Companys 2005 Plan. The Committee granted an aggregate of 204,500 SARs. The SARs will be settled in cash and have an exercise price of $29.31, which was the closing price of the Companys common stock on the date
of grant. 89,600 SARs vest equally in 33% increments on the first, second and third anniversaries of the grant date. 114,900 SARs vest equally in 33% increments on the first, second and third anniversaries of the grant date, but only if the amount
of the Companys Adjusted EBITDA, as defined in the SARs Agreement, achieves a specified target for the fiscal year preceding the applicable anniversary date. Each holder must further remain employed by the Company through each anniversary of
the grant date in order to vest in the corresponding number of SARs. The SARs have a term of seven years.

On February 29, 2012, the
Company entered into a Railcar Management Agreement (the Railcar Management Agreement) with ARL, pursuant to which the Company engaged ARL to market ARIs railcars for sale or lease, subject to the terms and conditions of the Railcar Management
Agreement. The Railcar Management Agreement was effective as of January 1, 2011, will continue through December 31, 2015 and may be renewed upon written agreement by both parties.

The Railcar Management Agreement also provides that ARL will manage the Companys leased railcars including arranging for services, such as repairs or maintenance, as deemed necessary. Subject to the
terms and conditions of the agreement, ARL will receive, in respect of leased railcars, a fee consisting of a lease origination fee and a management fee based on the lease revenues, and, in respect of railcars sold by ARL, sales commissions. The
Railcar Management Agreement was unanimously approved by the independent directors of the Companys audit committee on the basis that the terms of the Railcar Management Agreement were no less favorable than those that would have been obtained
from an independent third party.



80



---

Part IV

Item 15: Exhibits and Financial Statement Schedules

(a)
(1) Financial Statements.

See Item 8.

(2) Exhibits

See Exhibits Index for a listing of exhibits, which are filed herewith or
incorporated herein by reference to the location indicated.



82



---

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|                    |  |                                   |  |                                                             
|------------------- |  | --------------------------------- |  | ------------------------------------------------------------
|                    |  | American Railcar Industries, Inc.
|                    |  |                                  
|Date: March 6, 2012 |  | By:                               |  | /s/ Dale C. Davies                                          
|                    |  | Name:                             |  | Dale C. Davies                                              
|                    |  | Title:                            |  | Senior Vice President, Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.





83



---

|            |  |                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                     
|            | 
|23.1        |  | Consent of Grant Thornton LLP.*                                                                                            
|            | 
|31.1        |  | Rule 13a-15(e) and 15d-15(e) Certification of the Chief Executive Officer.*                                                
|            | 
|31.2        |  | Rule 13a-15(e) and 15d-15(e) Certification of the Chief Financial Officer.*                                                
|            | 
|32.1        |  | Certification pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* *







|* | Filed herewith
|- | --------------



|** | Furnished herewith
|-- | ------------------





87