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FreightCar America, Inc. Announces Arbitration RulingFreightCar America, Inc. (NASDAQ:RAIL) today announced that an arbitrator had issued a ruling in a grievance proceeding brought by the United Steelworkers of America (USWA). The grievance proceeding, which was first filed by the USWA on April 1, 2007, surrounded the interpretation of provisions in the collective bargaining agreement (CBA) covering employees at the Company’s Johnstown, Pennsylvania plant. The Company announced in December 2007 that it planned to close the Johnstown facility. The CBA was entered into in February 2005 and is effective until May 15, 2008. The dispute involves the interpretation of language regarding the classification of employees’ years of service and the Company’s obligations to employees based on their years of service. The arbitrator’s ruling holds FreightCar America responsible for providing back pay and appropriate benefits to affected employees, a group that includes over one-half of the workers who were employed at the Johnstown plant at the time the grievance was filed. The Company continues to evaluate the ruling as well as its impact on its results of operations. The Company currently believes that it will incur a one-time charge relating to the ruling of between $20.0 million and $24.5 million with the corresponding impact on cash flow of between $13.0 million and $17.5 million. This would result in an adverse impact on earnings per share of between $1.11 and $1.32 for the quarter. Given the timing of the arbitration ruling, this charge will be recorded in the Company’s consolidated statement of income for the first quarter of 2008 and will be reflected in the Company’s quarterly report on Form 10-Q for the three months ended March 31, 2008. “We are disappointed with the ruling and the arbitrator’s interpretation of the language in the 2005 collective bargaining agreement,” said Chris Ragot, President and CEO. “Our decision to close the Johnstown plant was very carefully considered and was determined to be in the best interests of the Company and its shareholders. We believe that we acted fairly to our employees and in good faith, and that our decision was necessary for us to remain competitive in this challenging economic environment and build a more efficient and cost-effective production footprint. We aim to put this situation behind us and move ahead with our long-term plans and growth strategies.” For further information please refer to the company’s SEC filings. FreightCar America, Inc. manufactures railroad freight cars, with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds bulk commodity cars, 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. More information about FreightCar America is available on its website at www.freightcaramerica.com. 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. More information about FreightCar America is available on its website at www.freightcaramerica.com. # # # |
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