CHICAGO--(BUSINESS WIRE)--
FreightCar America, Inc. (NASDAQ: RAIL) announced that it has reached a
preliminary settlement agreement with the United Steel Workers
International Union and other plaintiffs in connection with the pending
litigation relating to certain disputed retiree medical coverage and
life insurance benefits. Under the terms of the preliminary settlement
agreement, FreightCar America will make a one-time cash payment of
$32,750,000 in exchange for full and final resolution of the matter. The
preliminary settlement is subject to the execution of definitive
documentation and court approval.
All parties have agreed to use their best efforts to obtain a fairness
hearing within 90 days of filing the motion for preliminary approval and
to secure final approval of the settlement terms, which final approval
is anticipated to be granted by the court by early 2016. Upon payment of
the settlement amount, the Company expects to realize an after-tax gain
of approximately $11 million, based on associated recorded liabilities
of approximately $67 million at June 30, 2015.
The current pre-tax expense associated with these postretirement
benefits is approximately $3.3 million annually, which will be
eliminated upon payment of the settlement amount.
FreightCar America’s President and Chief Executive Officer, Joe McNeely,
commented, “We are pleased to have reached this preliminary settlement,
which will allow us to put this matter behind us and keep us focused on
the continued execution of our strategic priorities, including railcar
diversification and further productivity improvements across the
organization.”
The Company has filed a Form 8-K with the Securities and Exchange
Commission that provides additional details.
FreightCar America, Inc. manufactures a wide range of railroad freight
cars, supplies railcar parts, leases freight cars through its JAIX
Leasing Company subsidiary and provides railcar maintenance and repairs
through its FreightCar Rail Services, LLC subsidiary. FreightCar America
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. It is
headquartered in Chicago, Illinois and has facilities in the following
locations: Cherokee, Alabama; Danville, Illinois; Grand Island,
Nebraska; Hastings, Nebraska; Johnstown, Pennsylvania; and Roanoke,
Virginia. 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
customer acceptance of 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.
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FreightCar America, Inc.
Charles F. Avery, Jr., 800-458-2235
Source: FreightCar America, Inc.