ARII American Railcar Industries, Inc. (delisted)

American Railcar Industries, Inc. (ARI or the Company) (NASDAQ: ARII) today reported its third quarter 2010 financial results.

“The railcar industry has begun to see a modest improvement in demand during 2010. Railcar loadings have increased, railcars are being returned to service from storage and orders for new railcars have increased. We received orders for approximately 640 new railcars during the third quarter of 2010. Our railcar services segment continues to be strong, with revenues growing 17% year-over-year, to $51.0 million for the nine months ended September 30, 2010. This growth resulted from higher volumes driven by repair plant expansions and repair work performed at our railcar manufacturing plants,” said James Cowan, President and CEO of ARI.

For the three months ended September 30, 2010, revenues were $64.8 million and net losses were $6.3 million or $0.29 per share. In comparison, for the three months ended September 30, 2009, revenues were $78.1 million and net earnings were $1.1 million or $0.05 per share. Revenues were lower in the third quarter of 2010 when compared to the same period of 2009 primarily due to lower railcar shipments and a change in product mix. During the three months ended September 30, 2010, the Company shipped approximately 420 new railcars as compared to approximately 610 new railcars in the same period of 2009. Our new railcar order backlog increased to approximately 1,420 railcars as of September 30, 2010.

EBITDA, adjusted to exclude investment activity and stock based compensation expense (Adjusted EBITDA), was $1.5 million in the third quarter of 2010 compared to $6.6 million in the third quarter of 2009. This decrease was primarily due to a decrease in railcar shipments and lower gross profit margin, all partially offset by a decrease in selling, administrative and other costs, exclusive of stock based compensation, and a decrease in joint venture losses. The Company’s gross profit margin decline is primarily attributable to decreased railcar shipments, competitive pricing pressures and the impact of fixed costs in a low production environment. The decrease in selling, administrative and other costs was primarily attributable to decreased incentive compensation and outside services. The decrease in joint venture losses was primarily attributable to a decrease in losses from the Company’s axle joint venture due to increased shipments. A reconciliation of the Company’s net loss to EBITDA and Adjusted EBITDA (both non-GAAP financial measures) is set forth in the supplemental disclosure attached to this press release.

The Company’s net loss for the third quarter of 2010 was affected by the factors discussed above, an increase in net interest expense, a decrease in other income and an increase in income tax benefit.

For the nine months ended September 30, 2010, revenues were $178.3 million and net losses were $19.2 million or $0.90 per share. In comparison, for the nine months ended September 30, 2009, revenues were $345.0 million and net earnings were $5.0 million or $0.23 per share. Revenues were lower in the nine months ended September 30, 2010 when compared to the same period of 2009 primarily due to a decrease in railcar shipments, an overall decrease in average selling prices due to pricing pressures and a change in product mix. These decreases were partially offset by increased railcar repair volumes. During the nine months ended September 30, 2010, the Company shipped approximately 1,130 new railcars as compared to approximately 3,080 new railcars in the same period of 2009.

Adjusted EBITDA was $2.0 million for the nine months ended September 30, 2010 compared to $32.1 million in the nine months ended September 30, 2009. This decrease resulted primarily from decreased railcar shipment volume, a decrease in gross profit margin and an increase in joint venture losses, all partially offset by a decrease in selling, administrative and other costs, exclusive of stock based compensation. The Company’s gross profit margin decline is primarily attributable to decreased railcar shipments, decreased overall average selling prices due to competitive pricing pressures and the impact of fixed costs in a low production environment. The increase in joint venture losses was primarily driven by losses at the Company’s axle joint venture, which did not begin production until July 2009. The decrease in selling, administrative and other costs was primarily attributable to a decrease in incentive compensation and outside services along with a non-recurring legal settlement recorded in the first quarter of 2009.

The Company’s net loss for the nine months ended September 30, 2010 was affected by the factors discussed above, an increase in net interest expense, a decrease in other income and an increase in income tax benefit.

ARI will host a webcast and conference call on Thursday, October 28, 2010 at 10:00 am (Eastern Time) to discuss the Company’s third quarter 2010 financial results. To participate in the webcast, please log on to ARI’s investor relations page through the ARI website at www.americanrailcar.com. To participate in the conference call, please dial 888-771-4371 and use participant code 28207349. Participants are asked to logon to the ARI website or dial in to the conference call approximately 10 to 15 minutes prior to the start time.

An audio replay of the call will also be available on the Company’s website promptly following the earnings call.

About American Railcar Industries, Inc.

American Railcar Industries, Inc. is a leading North American designer and manufacturer of hopper and tank railcars. ARI also repairs and refurbishes railcars, provides fleet management services and designs and manufactures certain railcar and industrial components. ARI provides its railcar customers with integrated solutions through a comprehensive set of high quality products and related services.

Forward Looking Statement Disclaimer

This press release contains statements relating to our expected financial performance and/or future business prospects, events and plans that are forward-looking statements. Forward-looking statements represent the Company’s estimates and assumptions only as of the date of this press release. Such statements include, without limitation, statements regarding potential improvements in the railcar industry, the potential for increased order activity, anticipated future production rates, the Company’s backlog and any implication that the Company’s backlog may be indicative of future sales. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results described in or anticipated by our forward-looking statements. Other potential risks and uncertainties include, among other things: the impact of the current economic downturn, adverse market conditions and restricted credit markets, and the impact of the continuation of these conditions; our reliance upon a small number of customers that represent a large percentage of our revenues and backlog; the health of and prospects for the overall railcar industry; our prospects in light of the cyclical nature of the railcar manufacturing business and the current economic environment; anticipated trends relating to our shipments, revenues, financial condition or results of operations; our ability to manage overhead and production slowdowns; the highly competitive nature of the railcar manufacturing industry; fluctuating costs of raw materials, including steel and railcar components and delays in the delivery of such raw materials and components; fluctuations in the supply of components and raw materials ARI uses in railcar manufacturing; anticipated production schedules for our products and the anticipated financing needs, construction and production schedules of our joint ventures; risks associated with potential joint ventures or potential acquisitions; the international economic and political risks related to our joint ventures’ current and potential international operations; the risk of the lack of acceptance of new railcar offerings by our customers and the risk of initial production costs for our new railcar offerings being significantly higher than expected; the sufficiency of our liquidity and capital resources; the conversion of our railcar backlog into revenues; compliance with covenants contained in our unsecured senior notes; the impact and anticipated benefits of any acquisitions we may complete; the impact and costs and expenses of any litigation we may be subject to now or in the future; the ongoing benefits and risks related to our relationship with Mr. Carl C. Icahn (the chairman of our board of directors and, through his holdings of Icahn Enterprises LP, our principal beneficial stockholder) and certain of his affiliates; 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.

CONDENSED CONSOLIDATED BALANCE SHEETS   (In thousands, except share amounts)   As of September 30, December 31, 2010 2009 (unaudited) Assets Current assets: Cash and cash equivalents $ 310,588 $ 347,290 Short-term investments - available-for-sale securities - 3,802 Accounts receivable, net 19,025 11,409 Accounts receivable, due from affiliates 5,957 1,356 Income taxes receivable 937 1,768 Inventories, net 58,124 40,063 Deferred tax assets 2,855 2,018 Prepaid expenses and other current assets   3,866   4,898 Total current assets 401,352 412,604   Property, plant and equipment, net 185,509 199,349 Deferred debt issuance costs 2,105 2,568 Interest receivable, due from affiliates 145 982 Goodwill 7,169 7,169 Investments in and loans to joint ventures 49,390 41,155 Deferred tax assets 3,950 - Other assets   201   537 Total assets $ 649,821 $ 664,364   Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 32,343 $ 16,874 Accounts payable, due to affiliates 380 576 Accrued expenses and taxes 6,184 4,515 Accrued compensation 9,307 8,799 Accrued interest expense   1,719   6,875 Total current liabilities 49,933 37,639   Senior unsecured notes 275,000 275,000 Deferred tax liability - 7,120 Pension and post-retirement liabilities 6,197 6,279 Other liabilities   3,223   2,686 Total liabilities 334,353 328,724   Commitments and contingencies   Stockholders' equity: Common stock, $.01 par value, 50,000,000 shares authorized, 21,302,296 shares issued and outstanding at September 30, 2010 and December 31, 2009 213 213 Additional paid-in capital 238,687 239,617 Retained earnings 75,058 94,215 Accumulated other comprehensive income   1,510   1,595 Total stockholders' equity   315,468   335,640 Total liabilities and stockholders' equity $ 649,821 $ 664,364 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited)   For the Three Months Ended September 30,   2010       2009     Revenues: Manufacturing operations (including revenues from affiliates of $19,274 and $8,011 for the three months ended September 30, 2010 and 2009, respectively) $ 48,404 $ 62,047   Railcar services (including revenues from affiliates of $4,263 and $3,563 for the three months ended September 30, 2010 and 2009, respectively)   16,393     16,051   Total revenues 64,797 78,098   Cost of revenue: Manufacturing operations (49,366 ) (56,348 ) Railcar services   (13,141 )   (12,940 ) Total cost of revenue (62,507 ) (69,288 ) Gross profit 2,290 8,810   Selling, administrative and other (including costs related to affiliates of $154 for both the three months ended September 30, 2010 and 2009)   (6,232 )   (6,484 ) (Loss) earnings from operations (3,942 ) 2,326   Interest income (including income related to affiliates of $717 and $366 for the three months ended September 30, 2010 and 2009, respectively) 1,058 1,925 Interest expense (5,316 ) (5,286 ) Other income (including income related to affiliates of $4 for both the three months ended September 30, 2010 and 2009) 4 3,121 Loss from joint ventures   (1,946 )   (2,217 ) Loss before income taxes (10,142 ) (131 ) Income tax benefit   3,890     1,223   Net (loss) earnings $ (6,252 ) $ 1,092     Net (loss) earnings per common share - basic and diluted $ (0.29 ) $ 0.05 Weighted average common shares outstanding - basic and diluted 21,302 21,302   Dividends declared per common share $ - $ - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited)   For the Nine Months Ended September 30,   2010       2009     Revenues: Manufacturing operations (including revenues from affiliates of $65,401 and $93,770 for the nine months ended September 30, 2010 and 2009, respectively) $ 127,262 $ 301,325   Railcar services (including revenues from affiliates of $10,283 and $11,548 for the nine months ended September 30, 2010 and 2009, respectively)   51,011     43,646   Total revenues 178,273 344,971   Cost of revenue: Manufacturing operations (131,643 ) (271,552 ) Railcar services   (40,814 )   (35,423 ) Total cost of revenue (172,457 ) (306,975 ) Gross profit 5,816 37,996   Selling, administrative and other (including costs related to affiliates of $462 for both the nine months ended September 30, 2010 and 2009)   (17,925 )   (19,158 ) (Loss) earnings from operations (12,109 ) 18,838   Interest income (including income related to affiliates of $1,938 and $376 for the nine months ended September 30, 2010 and 2009, respectively) 2,557 4,910 Interest expense (15,956 ) (15,562 ) Other income (including income related to affiliates of $12 and $4 for the nine months ended September 30, 2010 and 2009, respectively) 381 3,038 Loss from joint ventures   (5,999 )   (5,030 ) (Loss) earnings before income taxes (31,126 ) 6,194 Income tax benefit (expense)   11,969     (1,244 ) Net (loss) earnings $ (19,157 ) $ 4,950     Net (loss) earnings per common share - basic and diluted $ (0.90 ) $ 0.23 Weighted average common shares outstanding - basic and diluted 21,302 21,302   Dividends declared per common share $ - $ 0.06 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     (In thousands, unaudited)     For the Nine Months Ended September 30,   2010     2009     Operating activities: Net (loss) earnings $ (19,157 ) $ 4,950 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation 17,777 17,477 Amortization of deferred costs 524 513 Loss on disposal of property, plant and equipment 34 223 Stock based compensation 2,353 852 Change in interest receivable, due from affiliates 837 - Change in investments in joint ventures as a result of loss 5,999 5,030 Unrealized loss on derivatives - 88 (Benefit) provision for deferred income taxes (12,320 ) 1,626 Provision (recovery) for doubtful accounts receivable 68 (117 ) Investing activities reclassified from operating activities: Interest income on short-term investments - available-for-sale securities - (3,653 ) Realized loss on derivatives - 10 Realized gain on short-term investments - available-for-sale securities (379 ) (3,115 ) Dividends received from short-term investments - available-for-sale securities - (15 ) Changes in operating assets and liabilities: Accounts receivable, net (7,663 ) 23,068 Accounts receivable, due from affiliate (4,601 ) 8,268 Income taxes receivable 831 - Inventories, net (18,049 ) 40,638 Prepaid expenses and other current assets 1,032 1,211 Accounts payable 15,462 (19,548 ) Accounts payable, due to affiliate (196 ) (4,867 ) Accrued expenses and taxes (4,408 ) (9,767 ) Other   19     (820 ) Net cash (used in) provided by operating activities (21,837 ) 62,052 Investing activities: Purchases of property, plant and equipment (4,852 ) (13,170 ) Proceeds from sale of property, plant and equipment 104 69 Sale (purchase) of short-term investments - available-for-sale securities 4,180 (36,841 ) Sales of short-term investments - available-for-sale securities - 15,450 Interest income on short-term investments - available-for-sale securities - 3,653 Realized loss on derivatives - (10 ) Dividends received from short-term investments - available-for-sale securities - 15 Investments in and loans to joint ventures   (14,298 )   (34,115 ) Net cash used in investing activities (14,866 ) (64,949 ) Financing activities: Common stock dividends   -     (1,917 ) Net cash used in financing activities   -     (1,917 ) Effect of exchange rate changes on cash and cash equivalents   1     117   Decrease in cash and cash equivalents (36,702 ) (4,697 ) Cash and cash equivalents at beginning of period   347,290     291,788   Cash and cash equivalents at end of period $ 310,588   $ 287,091  

RECONCILIATION OF NET (LOSS) EARNINGS TO EBITDA AND ADJUSTED EBITDA

(In thousands, unaudited)

  Three months ended   Nine months ended September 30, September 30,   2010   2009 2010   2009       Net (loss) earnings $ (6,252) $ 1,092 $ (19,157) $ 4,950 Income tax (benefit) expense (3,890) (1,223) (11,969) 1,244 Interest expense 5,316 5,286 15,956 15,562 Interest income (1,058) (1,925) (2,557) (4,910) Depreciation 5,876 5,864 17,777 17,477 EBITDA $ (8) $ 9,094 $ 50 $ 34,323 Expense related to stock appreciation rights compensation 1 1,532 651 2,353 852 Other (income) loss on short-term investment activity - (3,115) (379) (3,032) Adjusted EBITDA $ 1,524 $ 6,630 $ 2,024 $ 32,143   1 SARs are cash settled at time of exercise

EBITDA represents net (loss) earnings before income tax (benefit) expense, interest expense (income), net of depreciation of property, plant and equipment. The Company believes EBITDA is useful to investors in evaluating ARI’s operating performance compared to that of other companies in the same industry. In addition, ARI’s management uses EBITDA to evaluate operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company’s business. EBITDA is not a financial measure presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Accordingly, when analyzing the Company’s operating performance, investors should not consider EBITDA in isolation or as a substitute for net (loss) earnings, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.

Adjusted EBITDA represents EBITDA before share based compensation expense related to stock appreciation rights (SARs), and before gains or losses on investments and derivative instruments. We believe that Adjusted EBITDA is useful to investors evaluating our operating performance, and management also uses Adjusted EBITDA for that purpose. Our SARs (which settle in cash) are revalued each quarter based primarily upon changes in our stock price. Management believes that eliminating the expense associated with our stock based compensation, investments and derivates allows us and our investors to understand better our operating results independent of financial changes caused by the fluctuating price and value of our common stock, investments and derivative instruments. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net (loss) earnings, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.