Accounting review points to overstatement of accounts payable and understatement of net income

FreightCar America, Inc. (NASDAQ: RAIL) today announced that it has recently identified historical accounting errors in accounts payable. The Company currently estimates that this account was overstated in a range of $10 million to $14 million as of March 31, 2009. The Company is also reviewing the extent to which the historical accounting errors have resulted in the understatement of net earnings since the fourth quarter of 2007.

On July 27, 2009, the audit committee of the board of directors of FreightCar America, Inc. concluded that the Company’s previously issued audited consolidated financial statements as of and for the fiscal years ended December 31, 2008 and December 31, 2007, and related auditors’ report, and unaudited interim consolidated financial statements as of and for the quarterly periods ended March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, and December 31, 2007 should no longer be relied upon because of these errors in the financial statements. The Company intends to restate these financial statements. The Company’s board of directors agreed with the audit committee’s conclusions.

The Company will host a conference call today at 9:00 a.m. ET to discuss the situation (details below).

Important factors:

• After initial analysis the Company estimates the overstatement of accounts payable will be in the range of $10 million to $14 million
• As a result of these errors, the Company has understated net income since the fourth quarter of 2007
• The errors were attributable to flaws in the design of an internal IT and accounting process to properly account for receipt of certain goods
• The Company will likely not file its quarterly 10-Q report for the second quarter of 2009 on time as it completes its analysis and financial restatement

Review of accounting errors

The Company’s review of these accounting errors and their impact on the Company’s consolidated financial statements for each period is continuing. The accounting errors did not result from any changes in the Company’s accounting policies, and the Company has no evidence that the errors resulted from any fraud or intentional misconduct.

The Company’s review indicates that the errors were attributable to flaws in the design of an internal IT and accounting process to account for receipt of certain goods that was implemented in the fourth quarter of 2007.