RAIL 10-Q Quarter ended June 30, 2016

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended June 30, 2016

or

Commission file number: 000-51237

FREIGHTCAR AMERICA, INC.

(Exact name of registrant as specified in its charter)

(800) 458-2235

(Registrant’s telephone number, including area code)

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 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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

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

As of July 28, 2016, there were 12,731,678 shares of the registrant’s common stock outstanding.

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FREIGHTCAR AMERICA, INC.

INDEX TO FORM 10-Q

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FreightCar America, Inc.

(Unaudited)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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FreightCar America, Inc.

(Unaudited)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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FreightCar America, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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FreightCar America, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands, except for share data)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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FreightCar America, Inc.

(Unaudited)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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FreightCar America, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except for share and per share data)

FreightCar America, Inc. (“FreightCar”) operates primarily in North America through its direct and indirect subsidiaries, JAC Operations, Inc., Johnstown America, LLC, Freight Car Services, Inc., JAIX Leasing Company (“JAIX”), FreightCar Roanoke, LLC, FreightCar Alabama, LLC and FreightCar (Shanghai) Trading Co., Ltd. (herein collectively referred to as the “Company”), and manufactures a wide range of railroad freight cars, supplies railcar parts and leases freight cars. The Company designs and builds high-quality railcars, including coal cars, bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and boxcars. The Company is headquartered in Chicago, Illinois and has facilities in the following locations: Cherokee, Alabama; Danville, Illinois; Grand Island, Nebraska; Johnstown, Pennsylvania; Roanoke, Virginia; and Shanghai, People’s Republic of China.

The Company and its direct and indirect subsidiaries are all Delaware corporations or Delaware limited liability companies except FreightCar (Shanghai) Trading Co., Ltd., which is organized in the People’s Republic of China. The Company’s direct and indirect subsidiaries are all wholly owned.

The accompanying condensed consolidated financial statements include the accounts of FreightCar America, Inc. and subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The foregoing financial information has been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The 2015 year-end balance sheet data was derived from the audited financial statements as of December 31, 2015. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These interim financial statements should be read in conjunction with the audited financial statements contained in the Company’s annual report on Form 10-K for the year ended December 31, 2015.

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, to simplify the accounting for stock compensation. The ASU focuses on income tax accounting, award classification, estimating forfeitures and cash flow presentation. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to record a right-of-use asset and a lease liability for all leases with a term greater than twelve months regardless of whether the lease is classified as an operating lease or a financing lease. Leases with a term of twelve months or less will be accounted for in a similar manner to existing guidance for operating leases. This standard is effective for fiscal years

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beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently assessing the impact of this standard on the Company’s financial position, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. Under ASU 2015-11, inventory is measured at the lower of cost and net realizable value, which eliminates the need to determine replacement cost and evaluate whether it is above the ceiling (net realizable value) or below the floor (net realizable value less normal profit margin). ASU 2015-11 defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard is effective prospectively for annual reporting periods beginning after December 15, 2016 (early adoption is permitted). The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the debt issuance costs will continue to be reported as interest expense. This standard is effective retrospectively for annual reporting periods beginning after December 15, 2016 (early adoption is permitted). The adoption of these changes is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) Amendments to the Consolidation Analysis, which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The new guidance affects the following areas: (1) limited partnerships and similar legal entities; (2) evaluating fees paid to a decision maker or a service provider as a variable interest; (3) the effect of fee arrangements on the primary beneficiary determination; (4) the effect of related parties on the primary beneficiary determination; and (5) certain investment funds. This standard is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The adoption of these changes did not have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which was further clarified in March 2016. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The ASU is effective for annual reporting periods beginning after December 15, 2017 and early adoption as of December 15, 2016 is permitted. The Company is currently assessing the impact of this standard on the Company’s financial position, results of operations and cash flows.

On September 30, 2015, the Company sold its railcar repair and maintenance services business. Through September 30, 2015, the Company’s operations comprised two reportable segments, Manufacturing and Services. As of October 1, 2015, the Company’s operations comprise two operating segments, Manufacturing and Parts, and one reportable segment, Manufacturing. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. The Company’s Parts operating segment is not expected

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to be of continuing significance for separate reporting and has been combined with corporate and other non-operating activities as Corporate and Other. Prior period segment information has been recast to include general railcar repair and maintenance and inspections and parts sales in Corporate and Other.

Segment operating income is an internal performance measure used by the Company’s Chief Operating Decision Maker to assess the performance of each segment in a given period. Segment operating income includes all external revenues attributable to the segments as well as operating costs and income that management believes are directly attributable to the current production of goods and services. The Company’s management reporting package does not include interest revenue, interest expense or income taxes allocated to individual segments and these items are not considered as a component of segment operating income. Segment assets represent operating assets and exclude intersegment accounts, deferred tax assets and income tax receivables. The Company does not allocate cash and cash equivalents to its operating segments as the Company’s treasury function is managed at the corporate level. Intersegment revenues were not material in any period presented.

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The following table sets forth by level within the fair value hierarchy the Company’s financial assets that were recorded at fair value on a recurring basis.

No non-financial assets were recorded at fair value on a non-recurring basis at each of June 30, 2016 and December 31, 2015.

The Company’s current investment policy is to invest in cash, certificates of deposit, U.S. treasury securities, U.S. government agency obligations and money market funds invested in U.S. government securities. Marketable securities as of June 30, 2016 and December 31, 2015 of $14,988 and $26,951, respectively, consisted of U.S. treasury securities held to maturity and certificates of deposit with original maturities of greater than 90 days and up to one year. Due to the short-term nature of these securities and their low interest rates, there is no material difference between their fair market values and amortized costs.

Inventories, net of reserve for excess and slow-moving items, consist of the following:

Inventory on the Company’s condensed consolidated balance sheets includes reserves of $4,513 and $3,793 relating to excess or slow-moving inventory for parts and work in process at June 30, 2016 and December 31, 2015, respectively.

Railcars available for lease, net at June 30, 2016 was $24,369 (cost of $27,954 and accumulated depreciation of $3,585) and at December 31, 2015 was $24,729 (cost of $27,954 and accumulated depreciation of $3,225). The Company’s lease utilization rate for railcars in its lease fleet was 73% as of each of June 30, 2016 and December 31, 2015.

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Leased railcars at June 30, 2016 are subject to lease agreements with external customers with terms of up to six years and are accounted for as operating leases.

Future minimum rental revenues on leased railcars at June 30, 2016 are as follows:

The Company records state and local incentives when there is reasonable assurance that the incentive will be received and the Company is able to comply with the conditions attached to the incentives received. State incentives related to assets are recorded as deferred income and recognized on a straight-line basis over the useful life of the related assets.

During the year ended December 31, 2015, the Company received cash payments of $15,733 for Alabama state and local incentives related to the Company’s capital investment and employment levels at its Cherokee, Alabama (“Shoals”) facility. Under the incentive agreements, a certain portion of the incentives may be repayable by the Company if targeted levels of employment are not maintained for a period of six years from the grant date of the incentive. The Company’s level of employment at its Shoals facility currently exceeds and is expected to continue to exceed the minimum targeted levels of employment. In the event that any portion of the incentives is required to be repaid by the Company, the amount of such repayment is unlikely to exceed the deferred liability balance at June 30, 2016.

The changes in deferred income from these incentives for the three and six months ended June 30, 2016 and 2015, are as follows:

On June 13, 2016, the Company entered into a First Amendment to Credit Agreement (the “First Amendment”) by and among FreightCar and certain of its subsidiaries, as borrowers and guarantors (together, the “Borrowers”), and Bank of America, N.A., as lender, administrative agent, swingline lender and letter of credit issuer (the “Bank”). The First Amendment amended the Credit Agreement, dated as of July 26, 2013 (the “Original Credit Agreement”), by and among the Borrowers and the Bank in order to, among other things: (1) extend the term of the Original Credit Agreement to July 26, 2019; and (2) replace the negative covenant requiring a minimum consolidated net liquidity of $35,000 with a negative covenant requiring a maximum consolidated net leverage ratio of 2.50:1.00.

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The Original Credit Agreement, as amended by the First Amendment (the ”Credit Agreement”), contains a $50,000 senior secured revolving credit facility (the “Revolving Credit Facility”) and a sub-facility for letters of credit not to exceed the lesser of $30,000 and the amount of the senior secured revolving credit facility at such time. The Revolving Credit Facility can be used for general corporate purposes, including working capital. Under the Credit Agreement, revolving loans outstanding will bear interest at a rate of LIBOR plus an applicable margin of between 1.25% and 1.75% depending on the Company’s consolidated leverage ratio or at a base rate, as selected by the Company. Base rate loans will bear interest at the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) LIBOR plus 1.00%. The Company is required to pay a non-utilization fee of between 0.10% and 0.25% on the unused portion of the revolving loan commitment depending on the Company’s quarterly average balance of unrestricted cash and the Company’s consolidated leverage ratio. Borrowings under the Revolving Credit Facility are secured by a first priority perfected security interest in substantially all of the Borrowers’ assets excluding railcars held by the Company’s railcar leasing subsidiary, JAIX. The Borrowers also have pledged all of the equity interests in the Company’s direct and indirect domestic subsidiaries as security for the Revolving Credit Facility. The Credit Agreement has both affirmative and negative covenants, including, without limitation, the maximum consolidated net leverage ratio requirement and limitations on indebtedness, liens and investments. The Credit Agreement also provides for customary events of default.

The changes in accumulated other comprehensive income (loss) consist of the following:

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The components of accumulated other comprehensive loss consist of the following:

The Company recognizes stock-based compensation expense for stock option awards based on the fair value of the award on the grant date using the Black-Scholes option valuation model. Expected life in years for all stock options awards was determined using the simplified method. The Company believes that it is appropriate to use the simplified method in determining the expected life for options because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for stock options. Expected volatility was based on the historical volatility of the Company’s stock. The risk-free interest rate was based on the U.S. Treasury bond rate for the expected life of the option. The expected dividend yield was based on the latest annualized dividend rate and the current market price of the underlying common stock on the date of the grant. The Company recognizes stock-based compensation for restricted stock awards over the vesting period based on the fair market value of the stock on the date of the award, calculated as the average of the high and low trading prices for the Company’s common stock on the award date.

In January 2015 and January 2016, the Company granted performance shares with performance measurement periods of January 1, 2015 through December 31, 2017 and January 1, 2016 through December 31, 2018, respectively. The shares will vest and be earned at the end of each performance measurement period, if at all, based on the Company’s three-year cumulative basic earnings per share, provided that a minimum three-year average return on invested capital goal is also met or exceeded. The earnings per share thresholds and return on invested capital goals were established by the Company’s board of directors on the grant dates. The Company recognizes stock-based compensation cost for performance shares over the vesting period based on the fair market value of the Company’s stock on the award date multiplied by the estimated number of shares to be awarded based on the probable outcome of the performance conditions.

Total stock-based compensation was $445 and $575 for the three months ended June 30, 2016 and 2015, respectively, and $674 and $1,178 for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, there was $1,811 of unearned compensation expense related to stock options and restricted stock awards, which will be recognized over the remaining requisite service period of 32 months.

The Company has qualified, defined benefit pension plans that were established to provide benefits to certain employees. These plans are frozen and participants are no longer accruing benefits. Generally, contributions to the plans are not less than the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and not more than the maximum amount that can be deducted for federal income tax purposes. The plans’ assets are held by independent trustees and consist primarily of equity and fixed income securities.

The Company also historically provided certain postretirement health care benefits for certain of its salaried and hourly retired employees. Generally, employees may become eligible for health care benefits if they retire after attaining specified age and service requirements. These benefits are subject to deductibles, co-payment provisions and other limitations.

A substantial portion of the Company’s postretirement benefit plan obligation as of December 31, 2015 related to an expired settlement agreement with the Union representing employees at the Company’s and its predecessors’ Johnstown manufacturing facilities. The terms of that settlement agreement (the “2005 Settlement Agreement”) required the Company to pay until November 30, 2012 certain monthly amounts toward the cost of retiree health

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care coverage. The Company terminated, effective November 1, 2013, its contributions for medical coverage and life insurance benefits to affected retirees. On August 20, 2015, the Company reached a settlement agreement with the Union and the other plaintiffs in connection with the disputed retiree medical and life insurance benefits. The Company’s recorded postretirement benefit plan obligation through December 31, 2015 assumed for accounting purposes a continuation of those monthly payments after November 30, 2012 because the status of the settlement had not yet met the requirements for settlement accounting. A transaction meets the criteria to be accounted for as a settlement when a transaction is irrevocable, relieves the employer of primary responsibility for the benefit obligation, and eliminates significant risks related to the obligation and the assets used to effect the settlement. Settlement accounting was triggered when the Company made the cash settlement payment of $31,616 (including $166 of interest) on March 25, 2016. The settlement resulted in a pre-tax gain of $14,306 (net of plaintiffs’ attorneys’ fees of $1,300) and a reduction in the postretirement benefit obligation of approximately $68,806.

The components of net periodic benefit cost (benefit) for the three and six months ended June 30, 2016 and 2015, are as follows:

The Company made no contributions to the Company’s defined benefit pension plans for each of the three months and six months ended June 30, 2016 and 2015. The Company expects to make no contributions to its pension plans in 2016.

The Company made contributions to the Company’s salaried postretirement benefit plan of $137 and $99 for the three months ended June 30, 2016 and 2015, respectively, and $228 and $195 for the six months ended June 30, 2016 and 2015, respectively, for salaried retirees. The Company expects to make $405 in contributions (including contributions already made) to its postretirement benefit plan in 2016 for salaried retirees. As a result of the settlement payment described above, the Company has no further postretirement benefit obligation for hourly retirees.

The Company also maintains qualified defined contribution plans, which provide benefits to employees based on employee contributions, employee earnings or certain subsidiary earnings, with discretionary contributions allowed. Expenses related to these plans were $359 and $761 for the three months ended June 30, 2016 and 2015, respectively, and $1,046 and $1,363 for the six months ended June 30, 2016 and 2015, respectively.

The Company is involved in various warranty and repair claims and, in certain cases, related pending and threatened legal proceedings with its customers in the normal course of business. In the opinion of management, the Company’s potential losses in excess of the accrued warranty and legal provisions, if any, are not expected to be material to the Company’s consolidated financial condition, results of operations or cash flows.

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On April 17, 2015 and September 30, 2015, National Steel Car Limited (“NSC”) filed Complaints for Patent Infringement against the Company in the United States District Court for the Northern District of Illinois (Eastern Division) in Chicago, Illinois. The complaints assert five United States patents against certain aggregate gondola freight cars sold to certain customers. The complaints seek injunctive relief and an unspecified amount of damages. On January 29, 2016, NSC amended the complaints, alleging that 18 offers to sell made by the Company also infringed NSC’s patents. The Company filed its answer to NSC’s amended complaint on February 16, 2016, responding to NSC’s newly raised allegations and adding new affirmative defenses as well as counterclaims for non-infringement and invalidity. The Company also filed Inter Partes Review petitions in March 2016 with the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board for two of the five asserted patents. In June, 2015 the parties began conducting the first phase of fact discovery, which is expected to conclude on August 9, 2016. The Company believes that the complaints are without merit and intends to vigorously defend against the allegations. While the ultimate outcome of these proceedings cannot be determined at this time, it is the opinion of management that the resolution of these actions will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In addition to the foregoing, the Company is involved in certain other pending and threatened legal proceedings, including commercial disputes and workers’ compensation and employee matters arising out of the conduct of its business. While the ultimate outcome of these other legal proceedings cannot be determined at this time, it is the opinion of management that the resolution of these other actions will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Shares used in the computation of the Company’s basic and diluted earnings per common share are reconciled as follows:

Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and the assumed vesting of nonvested share awards. For the three months ended June 30, 2016 and 2015, 540,526 and 289,102 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive. For the six months ended June 30, 2016 and 2015, 568,124 and 289,870 shares, respectively, were not included in the weighted average common shares outstanding calculation as they were anti-dilutive.

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On August 1, 2016, the Company announced a cost reduction program whereby approximately 15% of the Company’s salaried workforce will be eliminated, its Johnstown administrative facility will be closed and the reduction of certain discretionary spending. The total estimated costs of implementing this program are approximately $4 million, including approximately $2.5 million of employee related costs and approximately $1.3 million of asset impairments. The Company currently estimates that the full annualized cost savings resulting from this restructuring program will be approximately $5 million when fully implemented.

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OVERVIEW

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

We are a diversified manufacturer of railcars and railcar components. We design and manufacture a broad variety of railcar types for transportation of bulk commodities and containerized freight products primarily in North America, including open top hoppers, covered hoppers and gondolas along with intermodal and non-intermodal flat cars. We and our predecessors have been manufacturing railcars since 1901. Over the last several years, we have introduced a number of new or redesigned railcar types. We believe we are the leading manufacturer of aluminum-bodied railcars, including coal cars, in North America, based on the number of railcars delivered.

Our railcar manufacturing facilities are located in Cherokee, Alabama (“Shoals”), Danville, Illinois and Roanoke, Virginia. Our Shoals facility is an important part of our long-term growth strategy as we continue to expand our railcar product and service offerings outside of our traditional coal car market. We will continue to adjust salaried and hourly labor personnel levels at all of our facilities to coincide with production requirements. Given the challenged coal market and the completion of our recent rebuild program, operations at our Danville facility have been significantly curtailed in 2016.

We also refurbish and rebuild railcars and sell forged, cast and fabricated parts for all of the railcars we produce, as well as those manufactured by others. Between November 2010, when we acquired the business assets of DTE Rail Services, Inc., and September 2015, when we sold our repair and maintenance services business, we provided railcar repair and maintenance for all types of freight railcars through our FCRS subsidiary. We also lease freight cars through our JAIX Leasing Company subsidiary.

Through September 30, 2015, the Company’s operations comprised two reportable segments, Manufacturing and Services. As of October 1, 2015, the Company’s operations comprise two operating segments, Manufacturing and Parts, and one reportable segment, Manufacturing. The Company’s Manufacturing segment includes new railcar manufacturing, used railcar sales, railcar leasing and major railcar rebuilds. The Company’s Parts operating segment is not expected to be of continuing significance for separate reporting and has been combined with corporate and other non-operating activities as Corporate and Other.

Total orders for railcars in the second quarter of 2016 were 426 units, offset by cancellations of previously recorded orders of 582 units, compared to 1,618 units ordered in the second quarter of 2015. Orders for the second quarter of 2016 included 227 rebuilt railcars while all of the orders for the second quarter of 2015 were for new railcars. Railcar deliveries totaled 1,372 units, all of which were new railcars, in the second quarter of 2016 compared to 2,611 units, consisting of 1,861 new railcars and 750 rebuilt railcars, in the second quarter of 2015. Total backlog of unfilled orders was 6,207 units at June 30, 2016, compared to 9,840 units at December 31, 2015. Our backlog as of June 30, 2016 and December 31, 2015 included a variety of railcar types almost all of which were orders for non-coal cars. The estimated sales value of the backlog was $612 million and $926 million, respectively, as of June 30, 2016 and December 31, 2015.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2016 compared to Three Months Ended June 30, 2015

Revenues

Our consolidated revenues for the three months ended June 30, 2016 were $126.2 million compared to $235.6 million for the three months ended June 30, 2015. Manufacturing segment revenues for the second quarter of 2016 were $124.2 million compared to $227.0 million for the second quarter of 2015. The decrease in Manufacturing

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segment revenues for the 2016 period compared to the 2015 period reflects the decrease in the number of railcars delivered, partially offset by a higher mix of new versus rebuilt railcars. Railcar deliveries for the second quarter of 2016 were impacted by production inefficiencies and supply chain delays. Corporate and Other revenues for the three months ended June 30, 2016 were $1.9 million compared to $8.6 million for the three months ended June 30, 2015, which included revenue from our sold repair and maintenance business.

Gross Profit

Our consolidated gross profit margin was 6.4% for the three months ended June 30, 2016 compared to 9.3% for the three months ended June 30, 2015. Our consolidated gross profit for the three months ended June 30, 2016 was $8.1 million compared to $21.8 million for the three months ended June 30, 2015, reflecting decreases in gross profit from our Manufacturing segment of $12.9 million and decreases in gross profit from Corporate and Other of $0.9 million. The decrease in gross profit for our Manufacturing segment for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 reflects the decrease in deliveries and higher production costs related to certain new railcar types. These were partially offset by a decrease in warranty costs. The decrease in gross profit for Corporate and Other for the second quarter of 2016 compared to the second quarter of 2015 reflects the sale of the Company’s repair and maintenance business.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the three months ended June 30, 2016 were $8.7 million compared to $10.9 million for the three months ended June 30, 2015. Consolidated selling, general and administrative expenses for the three months ended June 30, 2016 included decreases in compensation expenses, third-party sales commissions and legal costs, which were partially offset by increases in state franchise taxes. Manufacturing segment selling, general and administrative expenses for the three months ended June 30, 2016 were $2.4 million compared to $3.5 million for the three months ended June 30, 2015 primarily due to lower third-party sales commissions. Corporate and Other selling, general and administrative expenses were $6.3 million for the three months ended June 30, 2016 compared to $7.5 million for the three months ended June 30, 2015. The decrease in Corporate and Other selling, general and administrative expenses reflected decreases in compensation expenses and legal costs, which were partially offset by increases in state franchise taxes.

Operating (Loss) Income

Our consolidated operating loss for the three months ended June 30, 2016 was $0.6 million compared to operating income of $10.9 million for the three months ended June 30, 2015. Operating income for the Manufacturing segment was $5.4 million for the three months ended June 30, 2016 compared to $17.2 million for the three months ended June 30, 2015, reflecting the decrease in Manufacturing segment gross profit, which was partially offset by the decrease in Manufacturing segment selling, general and administrative expenses. Corporate and Other operating loss was $6.0 million for the three months ended June 30, 2016 compared to $6.4 million for the three months ended June 30, 2015, reflecting the decrease in Corporate and Other selling, general and administrative expense, which was partially offset by the decrease in Corporate and Other gross profit.

Income Taxes

Our income tax benefit was $0.2 million for the three months ended June 30, 2016 compared to an income tax provision of $3.5 million for the three months ended June 30, 2015. Our effective tax rate for the three months ended June 30, 2016 was 27.1% compared to 31.9% for the three months ended June 30, 2015.

Net (Loss) Income

As a result of the foregoing, our net loss was $0.5 million for the three months ended June 30, 2016 compared to net income of $7.4 million for the three months ended June 30, 2015. For the three months ended June 30, 2016, our diluted loss per share was $0.04 compared to diluted earnings per share of $0.60 for the three months ended June 30, 2015.

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Six Months Ended June 30, 2016 compared to Six Months Ended June 30, 2015

Revenues

Our consolidated revenues for the six months ended June 30, 2016 were $274.7 million compared to $328.4 million for the six months ended June 30, 2015. Manufacturing segment revenues for the six months ended June 30, 2016 were $270.3 million compared to $312.1 million for the comparable period of 2015. The decrease in Manufacturing segment revenues for the 2016 period compared to the 2015 period reflects a decrease in the number of railcars delivered, partially offset by a higher mix of new versus rebuilt railcars. Our Manufacturing segment delivered 2,981 units, all of which were new railcars, for the six months ended June 30, 2016, compared to 3,670 units, consisting of 2,512 new railcars and 1,158 rebuilt railcars, for the six months ended June 30, 2015. Railcar deliveries for the 2016 period were impacted by production inefficiencies and supply chain delays. Corporate and Other revenues for the six months ended June 30, 2016 were $4.5 million compared to $16.3 million for the six months ended June 30, 2015, which included revenue from our sold repair and maintenance business.

Gross Profit

Our consolidated gross profit margin was 8.7% for the six months ended June 30, 2016 compared to 8.0% for the six months ended June 30, 2015. Our consolidated gross profit for the six months ended June 30, 2016 was $24.0 million compared to $26.4 million for the six months ended June 30, 2015, reflecting a decrease in gross profit from our Manufacturing segment of $0.4 million and a decrease in gross profit from Corporate and Other of $2.0 million. The decrease in gross profit for our Manufacturing segment for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 reflects the decrease in deliveries and higher production costs related to certain new railcar types. These were partially offset by a decrease in warranty costs. Gross profit for our Manufacturing segment for the six months ended June 30, 2016 included the recognition of higher levels of state and local capital improvement and training incentives than recognized for the six months ended June 30, 2015. The decrease in gross profit for Corporate and Other for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 reflects the sale of our repair and maintenance business.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses for the six months ended June 30, 2016 were $19.3 million compared to $19.8 million for the six months ended June 30, 2015. Consolidated selling, general and administrative expenses for the six months ended June 30, 2016 included decreases in compensation expenses and third-party sales commissions, which were partially offset by increases in legal costs, professional services costs and state franchise taxes. Manufacturing segment selling, general and administrative expenses for the six months ended June 30, 2016 were $5.8 million compared to $6.5 million for the six months ended June 30, 2016 primarily due to lower third-party sales commissions. Corporate and Other selling, general and administrative expenses were $13.4 million for the six months ended June 30, 2016 compared to $13.3 million for the six months ended June 30, 2015, reflecting increases in legal costs, professional services costs and state franchise taxes, which were partially offset by decreases in compensation expenses.

Gain on Sale of Railcars Available for Lease

Gain on sale of railcars available for lease for the six months ended June 30, 2015 was $1.2 million and represented the gain on sale of leased railcars with a net book value of $6.4 million.

Gain on Settlement of Postretirement Benefit Obligation

On March 25, 2016, we made a one-time payment of $31.7 million to settle our postretirement benefit obligation for our hourly retirees resulting in a pre-tax gain of $14.3 million (net of plaintiffs’ attorneys’ fees of $1.3 million) and a reduction in our postretirement benefit obligation of approximately $68.8 million. See Note 13 to the condensed consolidated financial statements.

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Operating Income

Our consolidated operating income for the six months ended June 30, 2016 was $19.0 million compared to $7.8 million for the six months ended June 30, 2015. Operating income for the Manufacturing segment was $18.2 million for the six months ended June 30, 2016 compared to $19.1 million for the six months ended June 30, 2015, reflecting the decrease in Manufacturing segment gross profit and decrease in Manufacturing segment gain on sale of railcars available for lease, which were partially offset by the decrease in Manufacturing segment selling, general and administrative expenses. Corporate and Other operating income was $0.8 million for the six months ended June 30, 2016 compared to an operating loss of $11.3 million for the six months ended June 30, 2015, reflecting the gain on settlement of postretirement benefit obligation, which was partially offset by the decrease in Corporate and Other gross profit and the increase in Corporate and Other selling, general and administrative expenses.

Income Taxes

Our income tax provision was $6.8 million for the six months ended June 30, 2016 compared to $2.4 million for the six months ended June 30, 2015. Our effective tax rate for the six months ended June 30, 2016 was 35.8% compared to 31.2% for the six months ended June 30, 2015. The increase in the effective tax rate was due to certain tax credits not expected to recur at the same level in 2016, partially offset by a lower state blended rate in the 2016 period.

Net Income

As a result of the foregoing, our net income was $12.2 million for the six months ended June 30, 2016 compared to $5.3 million for the six months ended June 30, 2015. For the six months ended June 30, 2016, our diluted earnings per share was $0.99 compared to $0.43 for the six months ended June 30, 2015.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity for the six months ended June 30, 2016 and 2015, were our cash and cash equivalent balances on hand, our securities held to maturity and our revolving credit facility.

On June 13, 2016, we entered into a First Amendment to Credit Agreement (the “First Amendment”) by and among FreightCar and certain of its subsidiaries, as borrowers and guarantors (together, the “Borrowers”), and Bank of America, N.A., as lender, administrative agent, swingline lender and letter of credit issuer (the “Bank”). The First Amendment amended the Credit Agreement, dated as of July 26, 2013 (the “Original Credit Agreement”), by and among the Borrowers and the Bank in order to, among other things: (1) extend the term of the Original Credit Agreement to July 26, 2019; and (2) replace the negative covenant requiring a minimum consolidated net liquidity of $35.0 million with a negative covenant requiring a maximum consolidated net leverage ratio of 2.50:1.00.

The Original Credit Agreement, as amended by the First Amendment (the”Credit Agreement”), contains a $50.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) and a sub-facility for letters of credit not to exceed the lesser of $30.0 million and the amount of the senior secured revolving credit facility at such time. The Revolving Credit Facility can be used for general corporate purposes, including working capital. As of June 30, 2016, we had no borrowings under the Revolving Credit Facility. As of June 30, 2016 we had $5.2 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $44.8 million available for borrowing under the Revolving Credit Facility. Under the Credit Agreement, revolving loans outstanding will bear interest at a rate of LIBOR plus an applicable margin of between 1.25% and 1.75% depending on our consolidated leverage ratio or at a base rate, as selected by us. Base rate loans will bear interest at the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) LIBOR plus 1.00%. We are required to pay a non-utilization fee of between 0.10% and 0.25% on the unused portion of the revolving loan commitment depending on our quarterly average balance of unrestricted cash and our consolidated leverage ratio. Borrowings under the Revolving Credit Facility are secured by a first priority perfected security interest in substantially all of our and our subsidiaries’

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assets excluding railcars held by our railcar leasing subsidiary, JAIX. We also have pledged all of the equity interests in our direct and indirect domestic subsidiaries as security for the Revolving Credit Facility. The Credit Agreement has both affirmative and negative covenants, including, without limitation, the maximum consolidated net leverage ratio requirement and limitations on indebtedness, liens and investments. The Credit Agreement also provides for customary events of default.

As of December 31, 2015, we had $6.9 million in outstanding letters of credit under the Revolving Credit Facility and therefore had $43.1 million available for borrowing under the Revolving Credit Facility. As of December 31, 2015, we had no borrowings under the Revolving Credit Facility.

Our restricted cash and restricted certificates of deposit balance was $5.2 million as of June 30, 2016 and $6.9 million as of December 31, 2015, and consisted of cash and certificates of deposit used to collateralize standby letters of credit with respect to performance guarantees and to support our worker’s compensation insurance claims. The decrease in restricted cash and restricted certificates of deposit balance as of June 30, 2016 compared to December 31, 2015 was a result of decreases in standby letters of credit with respect to performance guarantees and our corresponding obligation to collateralize them. The standby letters of credit outstanding as of June 30, 2016 are scheduled to expire at various dates through January 31, 2018. We expect to establish restricted cash balances and restricted certificates of deposit in future periods to minimize bank fees related to standby letters of credit.

Based on our current level of operations and known changes in planned volume based on our backlog, we believe that our operating cash flows, our marketable securities and our cash balances, together with amounts available under our revolving credit facility, will be sufficient to meet our expected liquidity needs. Our long-term liquidity is contingent upon future operating performance and our ability to continue to meet financial covenants under our revolving credit facility and any other indebtedness. We may also require additional capital in the future to fund working capital as demand for railcars increases, payments for contractual obligations, organic growth opportunities, including new plant and equipment and development of railcars, joint ventures, international expansion and acquisitions, and these capital requirements could be substantial.

We historically provided pension and retiree welfare benefits to certain salaried and hourly employees upon their retirement. Benefits under our pension plans are now frozen and will not be impacted by increases due to future service. The most significant assumptions used in determining our net periodic benefit costs are the discount rate used on our pension and postretirement welfare obligations and expected return on pension plan assets. As of December 31, 2015, our benefit obligation under our defined benefit pension plans was $53.4 million, which exceeded the fair value of plan assets by $6.7 million. We made no contributions to our defined benefit pension plans during 2015 and we do not expect to make any contributions to our defined benefit pension plans in 2016. The Pension Protection Act of 2006 provides for changes to the method of valuing pension plan assets and liabilities for funding purposes as well as minimum funding levels. Our defined benefit pension plans are in compliance with the minimum funding levels established in the Pension Protection Act. Funding levels will be affected by future contributions, investment returns on plan assets, growth in plan liabilities and interest rates. Assuming that the plans are fully funded as that term is defined in the Pension Protection Act, we will be required to fund the ongoing growth in plan liabilities on an annual basis.

As of December 31, 2015, our benefit obligation under our postretirement benefit plan was $72.9 million, which exceeded the fair value of plan assets by $72.9 million. We made contributions to our postretirement benefit plan of $0.2 million for salaried retirees for the six months ended June 30, 2016 and expect to make $0.4 million in contributions (including contributions already made) to our postretirement benefit plan in 2016 for salaried retirees. As a result of the previously described $31.6 million settlement payment, we have no further postretirement benefit obligation for hourly retirees. As of June 30, 2016, our benefit obligation under our postretirement benefit plan was $6.4 million for salaried retirees.

On August 1, 2016, we announced a cost reduction program whereby approximately 15% of our salaried workforce will be eliminated, our Johnstown administrative facility will be closed and the reduction of certain discretionary spending. The total estimated costs of implementing this program are approximately $4 million, including approximately $2.5 million of employee related costs and approximately $1.3 million of asset impairments. We currently estimate that the full annualized cost savings resulting from this restructuring program will be approximately $5 million when fully implemented. We expect to fund the required cash needs from cash flow from operations.

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Based upon our operating performance and capital requirements, we may, from time to time, be required to raise additional funds through additional offerings of our common stock and through long-term borrowings. There can be no assurance that long-term debt, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Our failure to raise capital if and when needed could have a material adverse effect on our results of operations and financial condition.

Contractual Obligations

The following table summarizes our contractual obligations as of June 30, 2016 and the effect that these obligations and commitments would be expected to have on our liquidity and cash flow in future periods: