Welcome to the FreightCar America second quarter 2008 earnings conference call. (Operator Instructions) I’d now like to turn the conference over to Kevin P. Bagby, Vice President of Finance and Chief Financial Office of FreightCar America.

Before we begin we'd like to remind everyone that statements made during this conference call relating to the company's expected future performance or future business prospects, events and plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Certain risks and uncertainties may cause forward-looking statements to differ from actual results including, among other things, the cyclicality of our business, adverse economic and market conditions, fluctuating costs of raw materials including increased surcharges and additional risk factors described in our earnings release for the second quarter 2008 and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. Forward-looking statements represent our estimates and assumptions only as of the date of this call. We expressly disclaim any duty to provide updates to our forward-looking statements whether as a result of new information, future events or otherwise. Our earnings release for the second quarter 2008 is posted on the company's web site at www.FreightCarAmerica.com. I'd now like to turn the call over to Chris Ragot, our President and CEO.

Joining Kevin and me today is Ed Whalen, our Senior Vice President of Marketing and Sales. We would like to welcome you to FreightCar America’s second quarter 2008 earnings all. I’m going to discuss the highlights of the company’s performance in the second quarter and Kevin will provide a detailed review of our financial performance. The macro economic trends and specifically the performance of the rail car sector significantly impacted our financial results on both year-over-year and sequential comparison. Total sales revenues in the second quarter of 2008 were $141.3 million while we incurred a net loss of $900,000 or a net loss of $0.08 per diluted share. Our operating performance included a loss contingency reserve of $3.7 million related to the rapidly increasing surcharges the industry experienced during the second quarter of this year. In addition input costs continued to increase and adversely impacted financial performance. While we have certainly felt the pressure of this difficult operating environment our continued focus on strategic initiatives of improving our manufacturing footprint and enhancing our efforts towards cost reduction have positioned to weather the current industry cycle. Before addressing industry trends I’d like to spend a few minutes discussing the company’s efforts to mitigate the significant input cost increases. In the past few months we have worked diligently with our customers and suppliers to implement price adjustments and cost reduction initiatives to generate margin improvement. Management appreciates the cooperation we receive from both our vendors and customers as their efforts have been constructive. We have also continued to selectively forward purchase materials to secure prices and although the decision impacted our cash flow in the quarter we believe it has improved our competitive position in the current environment. More importantly since May, 2008 we have provided variable price quotations which provided for…

Order activity in the second quarter was 1,436 units which was a decrease from 2,396 units ordered in the first quarter of 2008. Our total backlog of unfilled orders was 4,917 rail cars at the end of the quarter compared with 6,785 units at the end of the first quarter of 2008 and 5,589 units at June 30th, 2007. Our backlog at June 30, 2008 includes 1,237 units under firm operating leases with independent third parties. The backlog of unfilled orders at June 30, 2008 was affected by cancellations for 970 units. We expect order activity to remain uneven for the remainder of the year although we are extremely encouraged by our order activity during the past five weeks as we received orders for new rail cars of 1,130. These new orders are placed under escalatable contracts. Our sales revenue for the second quarter of 2008 was $141.3 million and that compares with $195.4 million for the second quarter in 2007. The decrease attributed primarily to lower industry volume as well as lower demand for coal cars. In addition the rail car sector was affected by aggressive pricing competition as well as below market lease rate. Rail car deliveries totaled 2,326 units in the quarter including delivery of 1,853 cars sold and delivery of 473 leased cars. That compares to 2,679 units in the same period in 2007. Average selling prices decreased in the second quarter of 2008 as compared with the second quarter of 2007 reflecting a shift in product mix to car types with different material cost and pricing pressures dictated by the current market conditions. Our gross margin for the quarter was $6.6 million and that compares to $24.7 million for the second quarter of 2007 a decrease of $18.1 million. Corresponding margin rate was 4.7% compared…

We face a challenging macro economic environment and intensive competition. Our management team is focused on improving our cost structure and our competitive position which will benefit FCA as the market returns to normalized production levels. In closing I would like to thank you for your interest in our company and for participating on this call and we look forward to updating you again during the next conference phone call. We are now ready for questions.

(Operator Instructions) Our first question comes from Paul Bodnar – Longbow Research. Paul Bodnar – Longbow Research: A couple questions, one was just what to expect in the second half on the gross margin side? Are there are more fixed contracts that could also be written down that would impact that?

Based on the current facts and circumstances we’re comfortable with our current reserve and that reserve includes our entire backlog so at this point we don’t anticipate any additional write downs in the second half of the year. Paul Bodnar – Longbow Research: Where are gross margins? Is it a mid-single digit number? Where it should shake out or a little bit higher than that or where do you think?

I think we’re comfortable with that figure. Paul Bodnar – Longbow Research: Secondly, in terms of deliveries I think last quarter you’d said you’re looking at delivering 95% of your backlog and then obviously you had this order cancellation which I’d also like to get a little clarity on, does that impact what your second half delivery is for or was that an 09 order of what kind of [inaudible]?

Our backlog is about 4,900 units. We expect to deliver that in the second half of the year. Paul Bodnar – Longbow Research: Any details on the cancelled contract, exactly what happened there?

Not really, that’s a competitive issue.

Next we’ll go to Bob Schenosky – Jefferies & Co. Bob Schenosky – Jefferies & Co.: First question in regard to the pick up in orders over the last five weeks, somewhat surprising given that the new orders have variable pricing, any color as to what led to the pick up and does that offer any optimism as we get into the back half?

Remember our orders tend to be a little lumpy and they’re generally related to specific planned additions or train modifications. I think in the macro environment coal loadings have remained strong as Chris has pointed out. Also we’ve seen the surplus of existing cars decline during the quarter so I think that as well as coal stockpiles decline I think the overall environment is still very positive and that has contributed to the increases we see and that we expect going forward.

Bob, I also would add that the international activities for coal continues to remain strong and we also feel pretty confident that during the next 30 to 60 days there’ll be some additional orders that’ll be made available. Bob Schenosky – Jefferies & Co.: I know you don’t want to speak about a specific competitor but given that you’ve moved in variable pricing and we’re seeing some near term orders, do you believe that the competition could ease up on some of the loss making contracts that they’ve been buying into?

We’re not sure. At the end of the day I can’t speak for the competition. I would hope that there is a rationalization process going throughout the sector. Bob Schenosky – Jefferies & Co.: I may have missed this but can you comment on the balance sheet, the leased assets held for sale?

The total amount is $46.4 million. Bob Schenosky – Jefferies & Co.: Those are rail cars?

Yes, they are. Bob Schenosky – Jefferies & Co.: In terms of the cancellations is it fair to say that these may have been some built up delays which now you’ve just basically taken the combination of those and put them into a cancelled file, if you will as opposed to a single customer coming in and just cancelling an order?

No I don’t believe it’s an accumulation of events.

It’s really, when it comes down to it, one customer, one order. Bob Schenosky – Jefferies & Co.: You mentioned that you anticipate the pick up in 09, is that effectively based upon the new utilities that are being constructed as of today or are you anticipating either like Norfolk or a CSX or somebody else coming into the market in 09?

That’s a combination of all of those and a general improvement in market conditions for coal. The continuing increase in coal loadings both for domestic and international use. Bob Schenosky – Jefferies & Co.: One final one, it appears that the, and I know you mentioned earlier that you can’t comment specifically on the labor agreement, but in terms of the dollar value of the agreement is it unchanged and when do you anticipate that being paid out?

The cash component of that is going to be paid out over time so we don’t expect any major cash changes in the near term. The complete adjustment or settlement has been reflected in the balance sheet and income statement. So it’s a total of what was done in the fourth quarter of 2007 as well as what occurred in the first half of the year.

Next we’ll go to Steve Barger – Keybanc Capital Markets. Steve Barger – Keybanc Capital Markets: Just to follow up on that last question, when I look at the first six months income statement I see that special charge which looks like it’s $17 million that wasn’t there when you reported the first quarter, that’s related to Johnstown and you’re saying that everything has been accrued for and the major amount of cash that has to go with that has been paid already?

You have to look really at the balance sheet because the total accumulation of the charge we took in the fourth quarter of 2007 and again charges that occurred during the first half of 2008 and the cash component of that is paid out over time. Steve Barger – Keybanc Capital Markets: Just so I understand there will not be significant, let’s say more than $1 million cash outflow in any one given quarter related to the settlement going forward?

We tend to stay away from that because as you know the settlement has not been approved by the court. We’d like to, on the advice of our attorneys, try to minimize our comments related to the settlement. Steve Barger – Keybanc Capital Markets: In the prepared remarks you said you’re buying material forward which is helping your competitive position, on the last call however you talked about some inventory that you had bought forward, I think it was $20 million in raw material, you had another $19 million in finished cars, that doesn’t appear to have necessarily helped in this quarter, was that prior inventory already purchased for the fixed price contracts or where are you now for material and finished cars and how will that help from a competitive standpoint?

It’s an ongoing program that we’ve engaged in and we believe that that will reduce the materials costs going forward so as we deliver rail cars the costs related to those cars are fixed at this point in time. That’s the thought process behind buying forward. Steve Barger – Keybanc Capital Markets: I understand that, the $19 million in finished cars that you referenced on the last call, are they gone, have you shipped those out physically?

For the most part, right. Steve Barger – Keybanc Capital Markets: And the $20 million in raw material that you had bought forward did you use that in your manufacturing process in the last quarter?

Not in the first quarter, no. They’ll be used predominantly in the third quarter. Steve Barger – Keybanc Capital Markets: Are you shipping more steel cars? Because aluminum is not up nearly as much as steel is so should I be thinking about the mix as it relates to your increased costs?

There are a large number of steel components also on the aluminum cars that are affected by these surcharges. It’s something that applies to both steel and aluminum cars. Steve Barger – Keybanc Capital Markets: So your mix hasn’t significantly changed?

It has not. Steve Barger – Keybanc Capital Markets: One last question, in one of your focus points you talked about using more flexible manufacturing techniques to lower costs, what does that really mean? How have you changed how you manufacture a rail car to take the costs out?

We’re basically applying more and more lean activities at the factories in Roanoke and Danville. They’ve always done a good job of being a very cost effective production facility and we’ve been spending more and more time identifying areas of waste in the process they use there. We’re not expecting huge changes there but we challenge our organization all the time to identify ways and define ways of eliminating it or at least minimizing it.

Next we’ll move to David Engle – Morgan Stanley. David Engle – Morgan Stanley: Steve actually asked most of my questions so I’m down to just one and that has to do with the after market business and I’m really just looking for some narrative color on how you’re doing in terms of margins and market share there.

The after market piece is something we continue to explore. We think we can enhance the coal car after market services to enhance the life cycle of the cars themselves. We have he majority of the markets out of River Basin, the cars coming in and going out and we would like to see us playing a more significant role in the after market services for those cars. I’m pretty excited about the opportunities and we’re in the midst right now of finalizing some analyses we’re doing in that area. David Engle – Morgan Stanley: It’s probably too much to ask but what kind of margins are you hoping to get out of that business?

Typical after market margins on parts and services. Obviously in this market probably those margins two things, there’s less cyclicality in that particular type of sector and also the margins generally are good.

We’ll move to Zack Turnage – Harbert Management . Zack Turnage – Harbert Management: I have a couple of questions, the first one would just be, I’d like an explanation with regards to your outlook as far as the leasing market. The first two quarters you’ve stated that the leasing market does not appear rational yet you continue to grow there. My second question just relates to pricing, backing into the numbers it appears that pricing is down more along the lines of a mid-teens number. Am I missing something there? It looks like the first quarter pricing was down less and you guys are talking about a 10% number. What’s the outlook or pricing?

I’ll take the second one. Zack, really what you’re seeing is a shift n product mix and that’s been the majority of what’s impacted the pricing. As we say we think we’re about a 9% maybe a 10% reduction year-over-year on some of the existing car pricing but you’ll also see a shift in mix which is accounting for the remainder of that.

Does that answer the second half of your question, Zack? Zack Turnage – Harbert Management: Yes.

Can you repeat the first part of your question, Zack? Zack Turnage – Harbert Management: The first part of the question was I just wanted you guys to comment on the leasing business. You guys have said several times that you don’t feel like the leasing market is rational right now and you’re growing into that business and it’s creating a drain on cash flow. I just wanted to see why you’re growing there.

We’re basically using leasing very selectively to try to maintain and improve our market share.

We’ll move on to Jeff Camp – JCM Capital. Jeff Camp – JCM Capital: Just a couple of questions, first a clarification, the lease cars that you have, the 1,237 lease cars, are those in the 4,900 backlog or were those removed from the backlog in the first quarter when you put them into leases?

They’re in the backlog today. Jeff Camp – JCM Capital: On the backlog, you mentioned that you feel comfortable with the reserve that you have now, can you just explain that a little bit? How does that work? Of the 4,900 cars in backlog how many are fixed price and is it just simply that you’ve taken a reserve against where current market prices are? Have you somehow hedged that so that there’s no additional exposure?

You base it on current facts and circumstances but you do look out to the future to determine whether you think those costs are going to be increasing or not. So it should reflect and it does reflect in this case costs going forward. Jeff Camp – JCM Capital: Essentially it’s an open ended hedge for the cost escalation. You haven’t closed that with your supplier, you haven’t gone back and said okay we’ll take this reserve and we’ll pay off our suppliers so that there aren’t any further cost escalations, you’ve locked it in. It’s just where it stands now?

I think that’s really two different issues. The reserve is a non-cash reserve so it doesn’t have any cash related to it. The pre-buys that we’re doing, yes in effect does support fixing the cost today. Jeff Camp – JCM Capital: One last question on orders if you don’t mind, on the cancellations, the $970, are there are other orders that could be cancelled in the book or how does that work? Is there a penalty fee for that cancellation? What’s the ramification for the buyer if they decide to cancel and how is the 4,900 that’s in the backlog exposed to that?

In that particular case we negotiated to a cancellation with that the supplier and I don’t think we care to discuss the settlement for that. Jeff Camp – JCM Capital: Could you maybe just address in the rest of the book?

What was the question on the rest of the book? Jeff Camp – JCM Capital: I’m just trying to understand what the.

We don’t see a significant risk to the existing backlog regarding cancellations. Wit this environment obviously there could be some, there could always be some. But right now we don’t see a significant risk.

Our next question comes from Dennis Salvo – Jodocus Capital. Dennis Salvo – Jodocus Capital: Just one question, the 1,200 cars that are in backlog designated for leasing, are those already under leasing contracts or are those, let’s go out there and see what’s the market’s like? Are there customers currently lined up for those cars?

Those are under contract.

We have no further questions in queue at this time presenters.

I want to thank everyone for joining us today and have a nice day everyone.