FreightCar America, Inc. Reports Quarterly Pro Forma Earnings Per Share of $0.90 and Net...

CHICAGO -- FreightCar America, Inc. (Nasdaq:RAIL) today reported financial results for the three months ended June 30, 2005. For the second quarter of 2005, sales were $230.7 million and net income attributable to common stockholders was $9.1 million, or $0.76 per diluted share. In comparison,

After giving effect to the Company's initial public offering and the related transactions, including the repayment in full of the Company's outstanding debt obligations, and the issuance of shares of common stock in the first quarter of 2005 upon the exercise of stock options, pro forma earnings per share was $0.90 on a fully diluted basis for the three months ended June 30, 2005, compared to a pro forma loss per share of $0.11 on a fully diluted basis for the same period in 2004. Pro forma earnings per share is a non-GAAP financial measure. A reconciliation of the Company's net income (loss) per common share attributable to common stockholders to pro forma earnings (loss) per share is set forth in the supplemental disclosure attached to this press release.

EBITDA was $18.4 million in the second quarter of 2005 compared with EBITDA loss of $0.1 million in the second quarter of 2004. Adjusted EBITDA was $18.4 million in the second quarter of 2005 compared with Adjusted EBITDA of $3.7 million in the second quarter of 2004. The improvement in EBITDA reflects increased sales volume, an improved market pricing environment, operating leverage attributed to higher volume and the impact of the pass-through of increases in raw material costs to our customers with respect to a majority of our railcar deliveries. EBITDA and Adjusted EBITDA are non-GAAP financial measures. A reconciliation of the Company's net income (loss) to EBITDA and Adjusted EBITDA is set forth in the supplemental disclosure attached to this press release.

"We are extremely pleased with the performance of our company in the second quarter, both in executing the orders on hand and replenishing our backlog of unfilled orders," said John E. Carroll, Jr., President and CEO. "We successfully increased our deliveries of new railcars during the quarter by raising the output rates in our existing and subcontract facilities and beginning production in our facility in Roanoke, Virginia. The Roanoke start-up has gone much better than planned; the facility achieved its production goals several weeks ahead of schedule, and our customers are very satisfied with our production quality.

"We believe business conditions in the North American coal railcar sector remained strong in the second quarter, and the Company retained its market share of new orders. The Company's orders for all types of new railcars totaled 5,104 units in the second quarter, a 60% increase over the order activity in the second quarter of 2004. In addition, the total backlog of unfilled orders reached 15,867 units at June 30, 2005, nearly double the backlog on June 30, 2004. We will continue to ramp up production output to deliver the increased backlog as scheduled and committed to our customers."

FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars and motor vehicle carriers. It is headquartered in Chicago, Illinois and has manufacturing facilities in Danville, Illinois, Roanoke, Virginia and Johnstown, Pennsylvania.

This press release may contain statements relating to our expected financial performance and/or future business prospects, events and plans that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. These potential risks and uncertainties include, among other things: the cyclical nature of our business; adverse economic and market conditions; fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials; our ability to maintain relationships with our suppliers of railcar components; our reliance upon a small number of customers that represent a large percentage of our sales; the variable purchase patterns of our customers and the timing of completion, delivery and acceptance of customer orders; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings by our customers; and the additional risk factors described in our filings with the Securities and Exchange Commission. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

FreightCar America, Inc.
                 Condensed Consolidated Balance Sheets

                                                June 30,  December 31,
                                                   2005      2004
                                                -------- -------------
                                               (Unaudited)
                                               (In thousands, except
                                                 share and per share
                                                        data)
  Assets
  Current assets
     Cash and cash equivalents                 $ 20,467 $      11,213
     Restricted cash                                 --         1,200
     Accounts receivable, net                     5,191         4,136
     Inventories                                 72,625        73,218
     Prepaid expenses and other current assets    1,279           983
     Deferred income taxes                        5,406        10,519
                                                -------- -------------
  Total current assets                          104,968       101,269

  Property, plant and equipment, net             26,136        24,199
  Restricted cash                                    --        11,755
  Deferred financing costs, net                     841           915
  Deferred offering costs                            --         2,013
  Intangible assets, net                         13,342        13,637
  Goodwill                                       21,521        21,521
  Deferred income taxes                          19,709        15,834
                                                -------- -------------
  Total assets                                 $186,517 $     191,143
                                                ======== =============

  Liabilities and Stockholders' Equity (Deficit)
  Current liabilities
     Accounts payable                          $ 58,625 $      69,631
     Current portion of long-term debt                8         2,000
     Accrued payroll and employee benefits       15,361         9,904
     Accrued warranty                             6,462         5,964
     Other current liabilities                    4,317         5,274
     Industrial revenue bonds                        --         5,200
                                                -------- -------------
  Total current liabilities                      84,773        97,973

  Long-term debt, less current portion               28        48,858
  Deferred revenue                                5,058         4,883
  Accrued pension costs, less current portion    17,548        16,767
  Accrued postretirement benefits                20,580        18,988
  Rights to additional acquisition
   consideration, including accumulated
   accretion of $0 and $20,408, respectively         --        28,581
                                                -------- -------------
  Total liabilities                             127,987       216,050
                                                -------- -------------

  Commitments and contingencies
  Redeemable preferred stock                         --        12,182

  Stockholders' equity (deficit)
       Common stock                                  57            --
       Additional paid in capital                93,714         8,900
       Accumulated other comprehensive loss      (5,055)       (5,055)
       Accumulated deficit                      (30,186)      (40,934)
                                             ----------- -------------
  Total stockholders' equity (deficit)           58,530       (37,089)
                                             ----------- -------------
  Total liabilities and stockholders' equity
   (deficit)                                   $186,517      $191,143
                                             =========== =============

                       FreightCar America, Inc.
            Condensed Consolidated Statements of Operations
                              (Unaudited)

                          Three Months Ended       Six Months Ended
                               June 30,                June 30,
                        ----------------------- ----------------------
                             2005       2004        2005       2004
                         ----------- ----------  ---------- ----------
                          (In thousands, except share and per share
                                             data)

  Sales                 $   230,714 $   94,867  $  396,519 $  183,813
  Cost of sales             206,539     92,982     358,976    181,294
                         ----------- ----------  ---------- ----------
  Gross profit               24,175      1,885      37,543      2,519

  Selling, general and
   administrative
   expense                    7,664      3,802      13,740      6,993
  Compensation expense
   under stock option
   agreements (selling,
   general and
   administrative
   expense)                      69         --          69         --
  Provision for
   settlement of labor
   disputes (selling,
   general and
   administrative
   expense)                      --         --         370         --
                         ----------- ----------  ---------- ----------
  Operating income
   (loss)                    16,442     (1,917)     23,364     (4,474)

  Interest income              (239)       (24)       (342)       (52)
  Related-party interest
   expense                    1,346      1,726       3,253      3,397
  Third-party interest
   expense                      690        396         964        531
  Interest expense and
   related accretion on
   rights to additional
   acquisition
   consideration              4,823      1,351       6,382      2,598
  Write-off of deferred
   financing costs              439         --         439         --
  Amortization of
   deferred financing
   costs                         89        135         184        270
                         ----------- ----------  ---------- ----------
  Income (loss) before
   income taxes               9,294     (5,501)     12,484    (11,218)
  Income tax provision
   (benefit)                    149     (1,455)      1,425     (3,197)
                         ----------- ----------  ---------- ----------

  Net income (loss)           9,145     (4,046)     11,059     (8,021)
  Redeemable preferred
   stock dividends
   accumulated                   31        266         311        532
                         ----------- ----------  ---------- ----------
  Net income (loss)
   attributable to
   common stockholders  $     9,114 $   (4,312) $   10,748 $   (8,553)
                         =========== ==========  ========== ==========

  Net income (loss) per
   common share
   attributable
   to common
   stockholders -
   basic and diluted    $      0.76 $    (0.63) $     1.11 $    (1.24)
                         =========== ==========  ========== ==========

  Weighted average
   common shares
   outstanding -
   basic                 11,972,260  6,875,000   9,715,020  6,875,000
                         =========== ==========  ========== ==========

  Weighted average
   common shares
   outstanding -
   diluted               11,988,740  6,875,000   9,723,306  6,875,000
                         =========== ==========  ========== ==========

                       FreightCar America, Inc.
            Condensed Consolidated Statements of Cash Flows
                              (Unaudited)

                                                     Six Months Ended
                                                         June 30,
                                                    ------------------
                                                       2005     2004
                                                     -------- --------
                                                      (In thousands)
Cash flows from operating activities
Net income (loss)                                   $ 11,059 $ (8,021)
Adjustments to reconcile net income (loss) to net
 cash flows provided by operating activities:
 Depreciation                                          3,432    3,366
 Amortization of intangible assets                       295      295
 Amortization of deferred financing costs                184      270
 Write-off of deferred financing costs                   439       --
 Accretion of Senior Notes                             1,012      357
 Accretion of deferred revenue                           513      190
 PIK Notes issued for interest                         2,241    3,041
 Interest expense and related accretion on rights to
  additional acquisition consideration                 6,382    2,598
 Deferred income taxes                                 1,238   (3,198)
 Compensation expense under stock option agreements       69       --
 Changes in operating assets and liabilities:
    Restricted cash                                      (45)     (25)
    Accounts receivable                               (1,055)  (1,016)
    Inventories                                          593  (20,722)
    Prepaid expenses and other current assets           (296)  (1,647)
    Income taxes receivable                               --      815
    Accounts payable                                 (11,906)  23,147
    Accrued payroll and employee benefits              5,457    1,309
    Accrued warranty                                     498      403
    Other current liabilities                           (957)    (622)
    Deferred revenue                                    (337)    (114)
    Accrued pension costs and accrued postretirement
     benefits                                          2,373     (150)
                                                     -------- --------
Net cash flows provided by operating activities       21,189      276
                                                     -------- --------
Cash flows from investing activities
Restricted cash withdrawals                           13,000       --
Purchases of property, plant and equipment            (5,330)    (728)
                                                     -------- --------
Net cash provided by (used in) investing activities    7,670     (728)
                                                     -------- --------
Cash flows from financing activities
Issuance of common stock                              85,309       --
Payments on long-term debt                           (58,963)  (1,750)
Redemption of preferred stock                        (13,000)      --
Payment of rights to additional acquisition
 consideration                                       (34,964)      --
Deferred offering costs                                2,013       --
                                                     -------- --------
Net cash flows used in financing activities          (19,605)  (1,750)
                                                     -------- --------

                                                     -------- --------
Net increase (decrease) in cash and cash equivalents   9,254   (2,202)
Cash and cash equivalents at beginning of period      11,213   20,008
                                                     -------- --------
Cash and cash equivalents at end of period          $ 20,467 $ 17,806
                                                     ======== ========
Supplemental cash flow information
Cash paid for:
 Interest                                           $    474 $    366
                                                     ======== ========
 Capital lease obligations incurred for equipment   $     39 $     --
                                                     ======== ========



                       FreightCar America, Inc.
                       Supplemental Disclosure I

         Reconciliation of net income (loss) per common share
                attributable to common stockholders to
                pro forma earnings (loss) per share(1)

                              (Unaudited)

                                       Three Months   Six Months Ended
                                           Ended          June 30,
                                          June 30,
                                     ---------------- ----------------
                                        2005    2004     2005    2004
                                      ------- -------  ------- -------
                                     (In thousands, except share and
                                              per share data)


  Net income (loss) per common share
   attributable to common
   stockholders - basic and diluted  $  0.76 $ (0.63) $  1.11 $ (1.24)
                                      ======= =======  ======= =======

  Net income (loss) attributable to
   common stockholders               $ 9,114 $(4,312) $10,748 $(8,553)
  Related-party interest expense       1,346   1,726    3,253   3,397
  Third-party interest expense           690     396      964     531
  Write-off of deferred financing
   costs                                 439      --      439      --
  Fees for termination of management
   services agreements (selling,
   general and administrative
   expense)                              900      --      900      --
  Tax effects of related-party
   interest expense, third-party
   interest expense, write-off  of
   deferred financing costs and fees
   for termination of management
   services agreements                (1,229)   (772)  (2,022) (1,430)
  Interest expense and related
   accretion on rights to additional
   acquisition consideration           4,823   1,351    6,382   2,598
  Tax effect of interest expense and
   related accretion on rights to
   additional acquisition
   consideration                      (4,820)     --   (5,326)     --
  Redeemable preferred stock
   dividends accumulated                  31     266      311     532
                                      ------- -------  ------- -------
  Adjusted net income (loss)
   attributable to common
   stockholders                      $11,294 $(1,345) $15,649 $(2,925)
                                      ======= =======  ======= =======

  Pro forma earnings (loss) per share
   - basic and diluted               $  0.90 $ (0.11) $  1.25 $ (0.23)
                                      ======= =======  ======= =======

                           Three Months Ended      Six Months Ended
                                June 30,               June 30,
                         ---------------------- ----------------------
                            2005       2004        2005       2004
                         ---------------------- ----------------------
                          (In thousands, except share and per share
                                             data)

  Weighted average common
   shares outstanding -
   basic (prior to
   adjustments)          11,972,260  6,875,000   9,715,020  6,875,000
                         ====================== ======================

  Common shares issued
   upon full exercise of
   the options granted in
   2004 under the
   Company's stock option
   plan                          --    557,700          --    557,700

  Effect of common shares
   issued in the initial
   public offering, as if
   the transaction
   occurred on the first
   day of the respective
   period                   560,440  5,100,000   2,817,680  5,100,000

                         ---------------------- ----------------------
  Weighted average common
   shares outstanding -
   basic (following
   adjustments)          12,532,700 12,532,700  12,532,700 12,532,700
                         ====================== ======================
  Dilutive effect of
   options granted under
   the 2005 Long-Term
   Incentive Plan, as if
   the options were
   granted on the first
   day of the respective
   period                    18,514     18,514      18,514     18,514
                         ---------------------- ----------------------
  Weighted average common
   shares outstanding -
   diluted (following
   adjustments)          12,551,214 12,551,214  12,551,214 12,551,214
                         ====================== ======================

(1) Pro forma earnings per share represents the Company's net income
    (loss) per common share attributable to common shareholders as
    adjusted to give effect to: (1) with respect to the three months
    and six months ended June 30, 2004, the shares of common stock
    (the "2004 Option Shares") issued in the first quarter of 2005 as
    a result of the full exercise of the options granted in 2004 (the
    "2004 Options") under the Company's stock option plan; (2) the
    issuance of stock options under the 2005 Long-Term Incentive Plan;
    (3) the completion of the Company's initial public offering on
    April 11, 2005; and (4) the related transactions involving uses of
    the offering proceeds. The adjustments relating to the Company's
    initial public offering and the related transactions reflect: (i)
    the increase in the number of weighted average shares as a result
    of the issuance of the new shares sold in the offering; (ii) the
    removal from the calculation of net income (loss) of interest
    expense relating to the Company's term loan, senior notes and PIK
    notes, rights to additional acquisition consideration and
    industrial revenue bonds that the Company is no longer obligated
    to pay as a result of the repayment in full of such obligations
    with the proceeds from the offering; (iii) the removal from the
    calculation of net income (loss) of the write-off of deferred
    financing costs and fees for termination of management services
    agreements in connection with the offering; (iv) the redemption of
    the Company's preferred stock with the proceeds from the offering;
    (v) the tax effects of the removal of related-party interest
    expense third-party interest expense, write-off of deferred
    financing costs and fees for termination of management services
    agreements from the calculation of net income (loss); and (vi) the
    tax effect of interest expense and related accretion on rights to
    additional acquisition consideration, which expense became
    deductible for tax purposes upon payment of the additional
    acquisition consideration with the proceeds from the offering. The
    Company believes that pro forma earnings per share information is
    useful to investors because it illustrates the effect on the
    Company's financial results of the completion of the Company's
    initial public offering and the related transactions. Since the
    offering and the related transactions involved changes to the
    Company's capital structure and the repayment of all of the
    Company's outstanding debt obligations (eliminating for future
    periods certain expenses that the Company historically has been
    obligated to pay), the Company believes that pro forma earnings
    per share will allow investors to more effectively compare the
    Company's financial results prior to and after the offering. In
    addition, the Company believes that giving effect to the 2004
    Option Shares with respect to the results for the three months and
    six months ended June 30, 2004 provides a more consistent basis
    for comparison of the financial results between the periods. Pro
    forma earnings per share is not a financial measure presented in
    accordance with U.S. generally accepted accounting principles, or
    U.S. GAAP. Accordingly, when analyzing our operating performance,
    investors should not consider pro forma earnings per share in
    isolation or as a substitute for earnings per share calculated in
    accordance with U.S. GAAP. Our calculation of pro forma earnings
    per share is not necessarily comparable to that of other similarly
    titled measures reported by other companies.

                       FreightCar America, Inc.
                      Supplemental Disclosure II

     Reconciliation of net income (loss) to EBITDA(1) and Adjusted
                               EBITDA(2)

                              (Unaudited)

                                      Three Months    Six Months Ended
                                           Ended          June 30,
                                         June 30,
                                     ---------------- ----------------
                                        2005    2004     2005    2004
                                      ------- -------  ------- -------
                                              (In thousands)

  Net income (loss)                  $ 9,145 $(4,046) $11,059 $(8,021)
  Income tax provision (benefit)         149  (1,455)   1,425  (3,197)
  Related-party interest expense       1,346   1,726    3,253   3,397
  Third-party interest expense           690     396      964     531
  Interest expense and related
   accretion on rights to additional
   acquisition consideration           4,823   1,351    6,382   2,598
  Interest income                       (239)    (24)    (342)    (52)
  Amortization of deferred financing
   costs                                  89     135      184     270
  Write-off of deferred financing
   costs                                 439      --      439      --
  Amortization of intangible assets      148     148      295     295
  Depreciation                         1,767   1,628    3,432   3,366
                                      ------- -------  ------- -------
  EBITDA                              18,357    (141)  27,091    (813)

  Provision for settlement of labor
   disputes                               --      --      370      --
  Loss on customer contract for box
   railcars                               --   3,813    1,500   6,492
  Non-cash expense relating to stock
   options                                69      --       69      --
                                      ------- -------  ------- -------
  Adjusted EBITDA                    $18,426 $ 3,672  $29,030 $ 5,679
                                      ======= =======  ======= =======

(1) EBITDA represents net income (loss) before income tax expense,
    interest expense, net, amortization and depreciation of property
    and equipment. We believe EBITDA is useful to investors in
    evaluating our operating performance compared to that of other
    companies in our industry. In addition, our management uses EBITDA
    to evaluate our operating performance. The calculation of EBITDA
    eliminates the effects of financing, income taxes and the
    accounting effects of capital spending. These items may vary for
    different companies for reasons unrelated to the overall operating
    performance of a company's business. EBITDA is not a financial
    measure presented in accordance with U.S. GAAP. Accordingly, when
    analyzing our operating performance, investors should not consider
    EBITDA in isolation or as a substitute for net income, cash flows
    from operating activities or other statements of operations or
    statements of cash flow data prepared in accordance with U.S.
    GAAP. Our calculation of EBITDA is not necessarily comparable to
    that of other similarly titled measures reported by other
    companies.

(2) Adjusted EBITDA represents EBITDA before the following charges:

        (a) charges in connection with our settlement with the union
            representing the unionized employees in our Johnstown,
            Pennsylvania manufacturing facility, also referred to as
            the Johnstown settlement. On November 15, 2004, we entered
            into the Johnstown settlement and recorded a $9.2 million
            charge with respect to the year ended December 31, 2004.
            For the three months ended March 31, 2005, we recorded an
            additional charge of $370,000 relating to the Johnstown
            settlement consisting of a retroactive payment to
            unionized Johnstown employees for certain previously
            unpaid work hours. We recorded no charges relating to the
            Johnstown settlement for the three months ended June 30,
            2005;

        (b) charges of $3.8 million for the three months ended June
            30, 2004 and charges of $6.5 million and $1.5 million for
            the six months ended June 30, 2004 and 2005, respectively,
            in connection with losses on a customer contract for box
            railcars, which reflects increased raw material, labor and
            other costs that exceeded the fixed purchase price under
            this contract. We recorded no charges relating to the
            customer contract for box railcars for the three months
            ended June 30, 2005. This customer contract was our first
            contract for the manufacture of box railcars. We delivered
            all of the box railcars under this contract, and we do not
            plan to produce any box railcars in the future; and

        (c) non-cash charges reflecting the grant of the 2004 Options
            that were recorded in the fourth quarter of 2004 and the
            issuance of stock options under the 2005 Long-Term
            Incentive Plan.

We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the effects of the Johnstown settlement, the losses on a customer contract for box railcars and non-cash expenses relating to the grant of the 2004 Options and stock options under the 2005 Long-Term Incentive Plan. We also believe that Adjusted EBITDA is useful to investors in assessing our ability to comply as of the relevant balance sheet dates with the financial covenants under our former revolving credit facility and the senior notes. In addition, Adjusted EBITDA is equivalent to the measure that was used to determine our eligibility to enter into our new revolving credit agreement upon the closing of our initial public offering. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.