(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

TABLE OF CONTENTS

PROXY STATEMENT 2006 ANNUAL MEETING OF STOCKHOLDERS
PROPOSAL 1 — ELECTION OF DIRECTORS
	Nominees
	Board of Directors’ Meetings and Committees
	Director Compensation
	Report of the Audit Committee
	Independent Registered Public Accounting Firm
	Fees Billed by Independent Registered Public Accounting Firm
	Audit Committee Policy on Pre-Approval of Services
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
EXECUTIVE COMPENSATION
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH CARL C. ICAHN
CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC AND AMERICAN RAILCAR LEASING LLC
CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC
CERTAIN TRANSACTIONS INVOLVING AMERICAN RAILCAR LEASING LLC
CERTAIN TRANSACTIONS INVOLVING OHIO CASTINGS
CERTAIN TRANSACTIONS WITH MR. ICAHN AND OTHER RELATED ENTITIES
CERTAIN TRANSACTIONS INVOLVING JAMES J. UNGER
PERFORMANCE GRAPH
OTHER MATTERS
Appendix A

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Table of Contents

								Director
Name		Age				Position		Since
Carl C. Icahn			70			Chairman of the Board			1994
James J. Unger			58			President, Chief Executive Officer and Director			1995
Vincent J. Intrieri*,**			49			Director			2005
Jon F. Weber			47			Director			2005
Keith Meister**			33			Director			2005
James C. Pontious***			67			Director			2006
James M. Laisure***			54			Director			2006

*		Chair of the Audit Committee
**		Member of the Compensation Committee
***		Member of the Audit Committee

2

3

which Mr. Icahn has an interest through the ownership of securities. In addition, Mr. Intrieri has been a director of XO Holdings, Inc. since February 2006 and was a director of XO Communications, Inc. (XO Holdings’ predecessor) from January 2003 to February 2006. XO Holdings is a publicly traded telecommunications services provider controlled by Mr. Icahn. Mr. Intrieri received a B.S. in Accounting from The Pennsylvania State University.

 

Jon F. Weber.  Mr. Weber has served on our board of directors since August 2005. Since April 2005, Mr. Weber has served as the president of American Property Investors, Inc., which is the general partner of American Real Estate Partners, L.P., a public limited partnership controlled by Mr. Icahn that invests in real estate and holds various other interests, including the interests in its subsidiaries that are engaged, among other things, in the oil and gas business, the casino entertainment business and the textile business. Mr. Weber has, since April 2003, been head of portfolio company operations and chief financial officer at Icahn Associates Corp., an entity controlled by Mr. Icahn. Since May 2003, Mr. Weber has been a director of Viskase Companies, Inc. and was the chief executive officer of Viskase Companies, Inc. from May 2003 to October 2004. Mr. Weber also serves as a director of WestPoint International Inc., a subsidiary of American Real Estate Partners, L.P., engaged in the home textile business. He served as chief financial officer of venture-backed companies QuantumShift Inc. and Alchemedia Ltd. from October 2001 to July 2002, and November 2000 to October 2001, respectively. From May 1998 to November 2000, Mr. Weber served as managing director — investment banking for JP Morgan Chase and its predecessor, Chase Manhattan Bank, in São Paulo, Brazil. Mr. Weber has been a director of XO Holdings, Inc. since February 2006 and was a director of XO Communications, Inc. (XO Holdings’ predecessor) from May 2005 to February 2006. XO Holdings is a publicly traded telecommunications services provider controlled by Mr. Icahn. Previously, Mr. Weber was an investment banker at Morgan Stanley and Salomon Brothers. Mr. Weber began his career as a corporate lawyer following his graduation from Harvard Law School. He also holds an MBA and Bachelor’s degree from Babson College. He currently serves as an Overseer (previously a trustee) of Babson College.

 

Keith Meister.  Mr. Meister has served on our board of directors since August 2005. Since June 2002, Mr. Meister has been a senior investment analyst of High River Limited Partnership, a company owned and controlled by Mr. Icahn that is primarily engaged in the business of holding and investing in securities. Mr. Meister is also a senior investment analyst of Icahn Partners LP and Icahn Partners Master Fund LP, private investment funds controlled by Mr. Icahn. He is also a director of Icahn Fund Ltd., which is the feeder fund of Icahn Partners Master Fund LP. Since August 2003, Mr. Meister has served as the chief executive officer of American Property Investors, Inc., (“API”), which is the general partner of American Real Estate Partners, L.P., a public limited partnership controlled by Mr. Icahn that invests in real estate and holds various other interests, including the interests in its subsidiaries that are engaged, among other things, in the oil and gas business, the casino entertainment business and the textile business. Mr. Meister served API as its president from August 2003 to April 2005. From March 2000 through the end of 2001, Mr. Meister co-founded and served as co-president of J Net Ventures, a venture capital fund focused on investments in information technology and enterprise software businesses. Mr. Meister also is a director of American Entertainment Properties Corp. and American Casino & Entertainment Properties Finance Corp., which are gaming companies, and Scientia Corporation, a private health care venture company, all of which are companies controlled by American Real Estate Partners, L.P., which is controlled by Mr. Icahn. Mr. Meister has been a director of XO Holdings, Inc. since February 2006 and was a director of XO Communications, Inc. (XO Holdings’ predecessor) from January 2003 to February 2006. XO Holdings is a publicly traded telecommunications services provider controlled by Mr. Icahn. In August 2005, Mr. Meister became a director of ADVENTRX Pharmaceuticals, Inc., a company, of which Mr. Icahn is a beneficial stockholder, that is primarily engaged in biomedical research and development. In addition, in January 2006, Mr. Meister became a director of BKF Capital Group Inc., a publicly traded investment firm. Mr. Meister received his A.B. in Government cum laude from Harvard College.

 

James C. Pontious.  Mr. Pontious has served on our board of directors since January 2006. Since May 2005, Mr. Pontious has been a consultant in the areas of business development and acquisitions to Wabtec Corporation, a public company that supplies air brakes and other equipment for locomotives, freight cars and passenger transit vehicles. In 2005, Mr. Pontious helped Wabtec found Intermodal Trailer Express Corp, an

intermodal operating company established to focus on hauling highway trailers over the nation’s railroads. Mr. Pontious is a principal of this newly founded company. Mr. Pontious served Wabtec as vice president of special projects from January 2003 through April 2005 and as vice president of sales and marketing from April 1990 to January 2003. Mr. Pontious also served as vice president of sales and marketing at New York Air Brake Company, a unit of General Signal Corporation, from 1977 to 1990. Prior to this, Mr. Pontious served the Pullman-Standard division of Pullman, Inc., a freight and passenger railcar manufacturer, from 1961 to 1977 in various management positions in the areas of sales, marketing and operations. Mr. Pontious currently serves as a director of the Intermodal Transportation Institute at the University of Denver. Mr. Pontious holds a B.B.A. from the University of Minnesota.

 

James M. Laisure.  Mr. Laisure has served on our board of directors since January 2006. Since May 2005, Mr. Laisure has been consulting as an independent contractor for the automotive and industrial manufacturing space. Prior to this, he spent 32 years in various corporate accounting, sales, engineering and operational positions with Dana Corporation, a publicly held corporation that designs, manufactures and supplies vehicle components and technology, and its predecessors. Mr. Laisure served as president of Dana’s Automotive Systems Group from March 2004 to May 2005. From December 2001 to February 2004, Mr. Laisure served as president of Dana’s engine and fluid management group and, from December 1999 to November 2001, he served as president of Dana’s fluid management group. In addition, he served on the board of directors of various Dana Corporation joint ventures, including joint ventures in Germany, Indonesia, Mexico and Turkey. Mr. Laisure served as director of finance of P.T. Spicer Indonesia, a manufacturer of axles and driveshafts, from 1982 to 1984. Also, he served as accountant, internal auditor and controller at Perfect Circle, a manufacturer of automotive engine components, from 1973 to 1981. Mr. Laisure received a B.A. degree in Accounting from Ball State University and an M.B.A. from Miami (Ohio) University, and has completed the Harvard Advanced Management Program.

 

Board of Directors’ Meetings and Committees

 

In anticipation of our initial public offering of our Common Stock, our predecessor company, American Railcar Industries, Inc., a Missouri corporation, formed us, American Railcar Industries, Inc., a Delaware corporation, in November 2005 and merged into us in January 2006. The Board of Directors of our predecessor company held three meetings and acted three times by unanimous written consent during the fiscal year ended December 31, 2005, and our Board of Directors held two meetings during the fiscal year ended December 31, 2005. All meetings of our predecessor’s Board of Directors and our Board of Directors were attended by each Director who was then a member of the applicable Board of Directors. All of our Directors are encouraged to attend our annual meetings of stockholders.

 

Controlled Company

 

During 2005 and through the date of this Proxy Statement, Mr. Icahn, our principal beneficial stockholder and the Chairman of our Board of Directors, controlled more than 50% of the voting power of our Common Stock. See “Security Ownership Of Certain Beneficial Owners And Management,” below. Consequently, we are a “controlled company” under the corporate governance standards of the Nasdaq Global Market. Under these rules, a “controlled company” may elect not to comply with certain Nasdaq Global Market corporate governance requirements, including requirements that: (i) a majority of the board of directors consist of independent directors; (ii) director nominees be selected or recommended for selection by a majority of the independent directors or by a nominating committee composed solely of independent directors; and (iii) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors.

 

We have elected to use these exemptions. As a result, (i) we do not have a majority of independent directors, (ii) we do not have a nominating committee or a nominating committee charter, and (iii) our Compensation Committee does not satisfy the corporate governance requirements of the Nasdaq Global Market applicable to compensation committees of non-controlled companies and does not have a charter. Our standing committees are our Audit Committee and our Compensation Committee. We have in the past and may in the

future establish special committees under the direction of the Board of Directors when necessary to address specific issues.

 

Two of our current Directors, Messrs. Pontious and Laisure, are “independent directors” as defined in NASD Rule 4200(a)(15). Each of Mr. Weber, Mr. Intrieri, and Mr. Meister are employed by or otherwise affiliated with entities controlled by Mr. Icahn, and Mr. Unger is our President and Chief Executive Officer.

 

Director Nominations

 

We do not maintain a formal policy with respect to the review of potential nominees to our Board of Directors. All of the members of our Board of Directors participate in the review of potential nominees to our Board of Directors. The Board has determined that, given the small size of the Board and the importance of the director nomination process, the entire Board of Directors should participate in the evaluation of potential Board members. As a result of his control of a majority of our outstanding Common Stock, Mr. Icahn may control the election of all of the members of our Board of Directors. Our Board of Directors has therefore deemed it appropriate not to form a standing nominating committee because the influence exercisable by Mr. Icahn in the nomination and election process would make a separate process superfluous in light of Mr. Icahn’s and the Board’s review of potential nominees. The Board of Directors may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to recommend a candidate for director for election at the 2007 Annual Meeting of Stockholders, it must follow the procedures described below in “Stockholder Proposals and Recommendations For Director.”

 

Compensation Committee

 

We established our Compensation Committee in February 2006 to review and approve our compensation policies and arrangements. Our Compensation Committee did not have any meetings in the year ended December 31, 2005. Messrs. Intrieri and Meister are the members of our Compensation Committee.

 

Audit Committee

 

We established our Audit Committee in January 2006 in connection with our initial public offering of our Common Stock. Our Audit Committee did not have any meetings in the year ended December 31, 2005. Messrs. Intrieri, Pontious and Laisure are currently the members of our Audit Committee. Our Board of Directors has determined that Mr. Laisure qualifies as an “audit committee financial expert,” as defined by applicable SEC rules, and that he satisfies the financial sophistication standards of the Nasdaq Global Market. Our Board of Directors has also determined that Messrs. Laisure and Pontious are “independent” under applicable SEC rules and the current listing standards of the Nasdaq Global Market applicable to members of audit committees.

 

We are relying on the exemption provided by SEC Rule 10A-3, promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). This rule provides that a minority of the members of our Audit Committee may be exempt from the SEC’s independence requirements until January 19, 2007, the one year anniversary of the date of effectiveness of our registration statement under the Securities Act of 1933 (the “Securities Act”) covering the initial public offering of our Common Stock. We expect that all of the members of our Audit Committee will be “independent,” under applicable SEC rules, by such date. The Board of Directors has assessed our reliance on this exemption and has determined that it does not materially adversely affect the ability of the Audit Committee to act independently and to satisfy the other requirements of Rule 10A-3.

 

Our Audit Committee is responsible for oversight of the qualifications, independence, appointment, retention, compensation and performance of the Company’s independent registered public accounting firm and for assisting the board of directors in monitoring the Company’s financial reporting process, accounting functions and internal controls. It also is responsible for oversight of “whistle-blowing” procedures and certain other compliance matters.

Our Audit Committee meets formally at least once every quarter, and more often if necessary. Our Board of Directors has adopted a written charter for our Audit Committee. That charter conforms to applicable rules and regulations of the SEC and the Nasdaq Global Market. A copy of the Audit Committee Charter is attached to this proxy statement as Appendix A and is publicly available on our website at www.americanrailcar.com under the heading “Investor Relations.”

 

Director Compensation

 

Each director is entitled to reimbursement for out-of-pocket expenses incurred for each meeting of the full board or a committee of the board attended. The annual compensation for our independent directors is $30,000. In addition, each independent director is entitled to receive $1,000 for each board or committee meeting attended and an annual stipend of $5,000 if he is a chairperson of a committee.

 

Report of the Audit Committee

 

In connection with the issuance of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, the Audit Committee:

 

1. Reviewed and discussed with management the Company’s audited financial statements as of and for the year ended December 31, 2005;

 

2. Discussed with Grant Thornton LLP (“Grant Thornton”), the Company’s independent registered public accounting firm, the matters required to be discussed by the Auditing Standards Board Statement of Auditing Standards (SAS) No. 61, as amended;

 

3. Requested and obtained from Grant Thornton the written disclosures and the letter required by Independence Standards Board (ISB) Standard No. 1, as amended, regarding Grant Thornton’s independence, and has discussed with Grant Thornton its independence; and

 

Based on the review and discussions referred to in paragraph numbers (1) — (3) above, the Audit Committee recommended to our Board of Directors that the audited financial statements as of and for the fiscal year ended December 31, 2005 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 for filing with the Securities and Exchange Commission.

 

Respectfully submitted by the Audit Committee,

 

Vincent J. Intrieri, Chairman

James M. Laisure

James C. Pontious

 

Independent Registered Public Accounting Firm

 

Our Board of Directors, effective August 11, 2004, terminated our previous independent registered public accounting firm, KPMG LLP (“KPMG”). KPMG’s report on our consolidated statements of operations, shareholders’ equity and comprehensive income (loss) and cash flows for the year ended December 31, 2003 contained no adverse opinion or disclaimer of opinion and was not otherwise qualified or modified as to uncertainty, audit scope or accounting principles. In connection with its audit of our financial statements for the year ended December 31, 2003, and through August 11, 2004 (i) there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference thereto in its report on such statements for such period, and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Exchange Act.

 

Following KPMG’s termination, we engaged Grant Thornton LLP (“Grant Thornton”) as our independent registered public accounting firm effective August 12, 2004. The decision to hire Grant Thornton was unanimously approved by our Board of Directors. We did not consult with Grant Thornton with respect to the

application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or a disagreement with KPMG and there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Exchange Act during this time frame. Grant Thornton has been given access to prior years work papers by KPMG without limitation in accordance with Statement on Auditing Standard No. 84, Communications Between Predecessor and Successor Auditors.

 

Grant Thornton has continuously served as our independent registered public accounting firm since its engagement, discussed above, on August 12, 2004. The Audit Committee has appointed Grant Thornton to audit our consolidated financial statements for our fiscal year ending December 31, 2006. A representative of Grant Thornton LLP is expected to attend our annual meeting, where he or she will have the opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions.

 

Fees Billed by Independent Registered Public Accounting Firm

 

Audit Fees.  We incurred $0.4 million in audit fees and expenses for the year ended December 31, 2004 and $1.5 million in audit fees and expenses for the year ended December 31, 2005 from Grant Thornton. We did not incur any audit fees or expenses for the years ended December 31, 2004 and 2005 from KPMG. We include in the category of audit fees those fees billed by our independent registered public accounting firm for professional services rendered for the audit of our consolidated financial statements and the review of our registration statement on Form S-1, as amended (the “Form S-1”), filed in connection with our initial public offering of our Common Stock, and other related services that are normally provided in connection with such statutory and regulatory filings. The amounts included for the year ended December 31, 2005 included $1.1 million relating to the review of our Form S-1.

 

Audit-Related Fees.  We did not incur any fees from Grant Thornton for audit-related services for the years ended December 31, 2004 and 2005. We did not incur any audit-related fees from KPMG for the year ended December 31, 2004. We incurred audit-related fees from KPMG of $0.9 million for the year ended December 31, 2005. We include in the category of audit-related fees those fees billed by our previous independent registered public accounting firm for professional services rendered in connection with its review of our Form S-1.

 

Tax Fees.  We did not incur any tax fees from KPMG or Grant Thornton in the years ended December 31, 2004 and 2005.

 

All Other Fees.  We did not incur any other fees from KPMG or Grant Thornton in the years ended December 31, 2004 and 2005.

 

The Audit Committee has considered whether the provision of non-audit services by its independent registered public accounting firm is compatible with maintaining auditor independence, and has determined that the provision of such services is compatible.

 

Audit Committee Policy on Pre-Approval of Services

 

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year. The Audit Committee may also pre-approve particular services on a case-by-case basis.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following tables sets forth information, as of April 21, 2006, with respect to the beneficial ownership of our Common Stock by (i) each director or nominee for director, (ii) our Chief Executive Officer and each of our other most highly compensated executive officers during the fiscal year ended December 31, 2005, (iii) all of our directors and executive officers as a group, and (iv) each person who is known to us to be the beneficial owner of more than five percent of our Common Stock. This information is based upon information

		Shares of Common Stock
		Beneficially Owned
Name		Number				Percent of Class
Carl C. Icahn(1)(2)			11,170,859				52.7	%
James J. Unger(3)			333,314				1.6	%
James A. Cowan			9,500				*
William P. Benac			—				—
Alan C. Lullman			—				—
Vincent J. Intrieri			—				—
Jon F. Weber			—				—
Keith Meister			—				—
James C. Pontious			2,300				*
James M. Laisure			—				—
All executive officers and directors as a group (10 persons)			11,515,973				54.3	%

*		Less than one percent
(1)		The following information is based on a Schedule 13D filed with the Securities and Exchange Commission on January 31, 2006 by Mr. Icahn and certain other parties (the “Icahn 13D”): Mr. Icahn beneficially owns 5,037,165 of these shares directly and an additional 6,133,694 of these shares (the “Additional Shares”) are owned as follows: (i) 4,290,918 of these shares are owned by Modal LLC, a Delaware limited liability company (“Modal”); (ii) 1,818,976 of these shares are owned by Hopper Investments, LLC, a Delaware limited liability company (“Hopper”); and (iii) 23,800 of these shares are owned by Ms. Gail Golden, Mr. Icahn’s spouse. Hopper is wholly owned by Barberry Corp., a Delaware corporation (“Barberry”). Each of Barberry and Modal is wholly owned by Mr. Icahn. Mr. Icahn may be deemed to have shared voting power and shared investment power with regard to the Additional Shares. Mr. Icahn has sole voting power and sole investment power with regard to the 5,037,165 shares he owns directly. Mr. Icahn, by virtue of his relationships to Hopper, Modal and Ms. Golden, may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Exchange Act) the Additional Shares. Mr. Icahn disclaims beneficial ownership of such Additional Shares for all other purposes.
(2)		The following information is based on the Icahn 13D: In connection with the Company’s initial public offering, on January 20, 2006, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”) dated December 7, 2005, among Modal, High Coast Limited Partnership, a Delaware limited partnership (“High Coast”) and The Foundation for a Greater Opportunity, a Delaware not-for-profit corporation (the “Foundation”), Modal purchased 4,290,918 shares of Common Stock of the Company (the “Modal Shares”) from the Foundation. The aggregate purchase price for the Modal Shares was $100,000,000. Modal paid the purchase price with $10,000,000 in cash and the balance in a five-year interest-only secured promissory note (the “Note”). The Note is secured by the Modal Shares and was guaranteed by High Coast, an affiliate of Mr. Icahn. In connection with the purchase by Modal of the Modal Shares, Modal and the Foundation entered into a pledge security agreement (the “Pledge Security Agreement”), dated January 20, 2006. After an event of default (as defined in the Pledge Security Agreement) and upon notice, the Modal Shares may be transferred to the Foundation. Assuming no other changes to Mr. Icahn’s beneficial ownership of our Common Stock, as reported in the table above, such a transfer may constitute a change in control of the Company.
(3)		Includes 23,800 shares held by the Unger Family Limited Partnership, of which Mr. Unger is the general partner.

9

Name		Age				Position
James A. Cowan			48			Executive Vice President and Chief Operating Officer
William P. Benac			59			Senior Vice President, Chief Financial Officer and Treasurer
Alan C. Lullman			50			Senior Vice President Sales, Marketing and Services

10

						Annual Compensation
														Other Annual				All Other
		Fiscal												Compensation				Compensation
Name and Principal Position		Year				Salary				Bonus				(3)				(4)
James J. Unger			2005			$	350,000				—			$	32,828			$	13,578
President and Chief Executive Officer			2004			$	350,000							$	48,532			$	13,918
James A. Cowan(1)			2005			$	22,727				—				—				—
Executive Vice President			2004				—				—				—				—
and Chief Operating Officer
William P. Benac(2)			2005			$	229,167			$	150,000				—			$	1,935
Senior Vice President and			2004				—				—				—				—
Chief Financial Officer
Alan C. Lullman			2005			$	158,333			$	80,000			$	21,572			$	4,315
Senior Vice President Sales,			2004			$	140,000			$	45,000			$	9,431			$	574
Marketing and Services

(1)		Mr. Cowan started his employment with us on December 5, 2005.
(2)		Mr. Benac started his employment with us on January 31, 2005.
(3)		Includes the following payments we made on behalf of Messrs. Unger and Lullman:

										Country
						Car				Club
		Fiscal Year				Allowances				Dues
Mr. Unger			2005			$	24,053			$	8,775
			2004				39,651				8,881
Mr. Lullman			2005				21,572				—
			2004				8,820				611

11

(4)		Includes the following payments we made on behalf of Messrs. Unger, Benac and Lullman:

						Life
						Insurance				401(k) Matching
		Fiscal Year				Premiums*				Contributions**
Mr. Unger			2005			$	7,278			$	6,300
			2004				7,768				6,150
Mr. Benac			2005				1,935				—
			2004				—				—
Mr. Lullman			2005				1,075				3,240
			2004				574				—

*		These amounts represent the taxable income related to payment of premiums for group term life insurance and executive survivor insurance for the benefit of the employee.
**		These amounts represent matching contributions to each employee’s 401(k) plan equal to 50% of the employee’s deferrals up to a maximum of 6% of each employee’s compensation.

		Estimated
		Number of
Named Executive Officer		Shares
James A. Cowan			249,160
Alan C. Lullman			42,857

12

Number of securities

Number of

remaining

securities to

available For

be issued

future issuance

upon

Weighted-average

under equity

exercise of

exercise price of

compensation

outstanding

outstanding

plans (excluding

options, warrants

options, warrants

securities reflected

and rights

and rights

in column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

—

—

1,000,000

Equity compensation plans not approved by security holders

—

—

—

Total

—

1,000,000

(1)

(1)	As of April 21, 2006, 440,124 shares of our Common Stock remain available for issuance under our 2005 Equity Incentive Plan.

13

14

15

16

Report Of The Board of Directors On Executive Compensation

 

The following report is provided by our Board of Directors. The compensation of our executive officers, including our named executive officers, for the fiscal year ending December 31, 2005 was decided upon by our entire Board of Directors prior to the formation of our Compensation Committee in February 2006.

 

Executive Compensation Philosophy.  The Board of Directors believes that compensation paid to executive officers should be aligned with our efforts to attract, motivate and retain superior talent to enable us to achieve our business objectives and to align the financial interests of our executive officers with our stockholders. Based on this philosophy, it is the view of the Board of Directors that compensation for executive officers should consist of a combination of salary, cash bonuses, equity awards and other employment benefits. In addition, we have employment agreements with our President and Chief Executive Officer, our Executive Vice President and Chief Operating Officer and our Senior Vice President and Chief Financial Officer, which are discussed above.

 

Salary and Bonus Compensation.  The Board of Directors has in the past reviewed, and the Compensation Committee will in the future review, base salaries and target bonuses for executive officers on an annual basis, subject to the terms of applicable employment agreements. Any increases will, subject to the terms of applicable employment agreements, be based upon achievement of quantitative and qualitative performance targets, individual performance and level of responsibility. The Board of Directors set 2005 executive salaries and bonus targets at levels consistent with these criteria.

 

We established our 2005 Executive Incentive Plan to provide additional compensation to eligible participants for their contribution to the achievement of our objectives, to encourage and stimulate superior performance, and to assist in attracting and retaining highly qualified key employees. Our key managers, other than Messrs. Unger, Cowan and Benac, are eligible to participate in the 2005 Executive Incentive Plan. In 2005, bonuses for Messrs. Unger, Cowan and Benac were determined pursuant to their employment agreements described above. The 2005 Executive Incentive Plan permits us to make cash awards to participants based upon a percentage of each participant’s base salary, as measured against each participant’s personal performance and our financial performance. Personal performance goals are established by each participant and his or her supervisor at the beginning of each fiscal year. Our financial performance goals are based on certain EBITDA targets relating to our performance at each of our facilities, our joint venture, Ohio Castings Company, LLC, in which we own a one-third interest, and us as a whole, as established by our Board of Directors based on our annual business plan. Participants are entitled to payment of a partial award if, during a fiscal year, a participant, among other things, dies, retires or becomes permanently disabled, provided that the participant was an active employee for a minimum of 30 consecutive calendar days during such fiscal year. The plan is subject to the control and supervision of our Chief Executive Officer and our Board of Directors.

 

Stock Options.  The Board of Directors believes that equity-based compensation causes our executives to have an ongoing stake in our long-term success. Our 2005 Equity Incentive Plan, described above, was designed, in part, to optimize our profitability and growth over the longer term.

 

Compensation of our Chief Executive Officer.  In recognition of the exceptional service rendered by Mr. Unger during 2005, in particular with regard to his performance during 2005 related to our initial public offering of our Common Stock, which we consummated in January 2006, the Board of Directors approved Mr. Unger’s new employment agreement and the letter agreement pursuant to which he was granted 285,714 shares of our Common Stock, each of which is described above. Mr Unger was not awarded a bonus for 2005 because the Board of Directors believed that Mr. Unger’s new employment agreement and the letter agreement, together with his other compensation and benefits, adequately compensated Mr. Unger.

 

Section 162(m).  Section 162(m) of the Internal Revenue Code of 1986, as amended, provides that compensation in excess of $1,000,000 paid to the Chief Executive Officer or to any of the other four most highly compensated executive officers of a publicly held corporation will not be deductible for federal income tax purposes unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Section 162(m), including transition rules for newly public companies. In general, stock options granted under

our 2005 Equity Incentive Plan are intended to qualify under and comply with the “performance based compensation” exemption provided under Section 162(m), thus excluding from the Section 162(m) compensation limitation any income recognized by executives pursuant to such stock options. The Board of Directors has elected, at this time, to retain discretion over bonus payments, rather than to ensure that payments of salary and bonus in excess of $1,000,000 are deductible. The Board of Directors intends to review periodically the potential impacts of Section 162(m) in structuring and administering our compensation programs.

 

Summary.  The Board of Directors has concluded that our performance and the competitive market warrant the total compensation packages approved for Mr. Unger and our other executive officers for 2005. Through the design and management of our executive compensation policies, as described above, the Board of Directors believes total compensation of our executives is linked directly to our financial performance and stockholder return. In the future, the Board of Directors, through the Compensation Committee, anticipates that it will continue to emphasize performance-based and stock-based compensation that is consistent with individual executive performance and that links management and stockholder interests.

 

Respectfully submitted by the Board of Directors,

 

Carl C. Icahn

James J. Unger

Vincent J. Intrieri

Jon F. Weber

Keith Meister

James C. Pontious

James M. Laisure

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

TRANSACTIONS WITH CARL C. ICAHN AND ENTITIES AFFILIATED WITH CARL C. ICAHN

 

Overview

 

Our company was formed in 1988 as a company beneficially owned by Carl C. Icahn. Mr. Icahn is our principal beneficial stockholder and is the chairman of our board of directors. We grew our company through the transfer of certain assets to us from ACF Industries, Incorporated (now known as ACF Industries, LLC) (“ACF”), a company also beneficially owned by Mr. Icahn. Since our formation, we have entered into agreements relating to the acquisition of assets from and disposition of assets to entities controlled by Mr. Icahn, the provision of goods and services to us by entities controlled by Mr. Icahn, the provision of goods and services by us to entities affiliated with Mr. Icahn and other matters involving entities controlled by Mr. Icahn. We have received substantial benefit from these agreements and we expect that in the future, we will continue to conduct business with entities affiliated with or controlled by Mr. Icahn. In addition, we receive other benefits from our affiliation with Mr. Icahn and companies controlled by Mr. Icahn, such as financial and advisory support, sales support and our participation in buying groups and other arrangements with entities controlled by Mr. Icahn. Until our initial public offering, most of our capital needs had been provided by entities controlled by Mr. Icahn. Lease sales agents of American Railcar Leasing LLC (“ARL”), a company beneficially owned by Mr. Icahn, and ACF, in connection with their own leasing sales activities, have, from time to time, referred their customers or contacts to us that prefer to purchase rather than lease railcars, which has, in some cases, led to us selling railcars to these customers or contacts. At this time there is no formal arrangement under which these referrals are provided and we do not compensate ARL, ACF or any of their leasing sales agents for any railcar sales that we make as a result of these referrals. As an accommodation to some of their customers and contacts that they referred to us, ARL and ACF from time to time accepted orders to purchase our railcars and then assigned those orders to us. ARL and ACF have discontinued accepting orders to sell railcars on our behalf.

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	•	an amount payable to ACF of $3.1 million;
	•	an amount payable of $7.6 million to Arnos Corp., a company beneficially owned and controlled by Mr. Icahn, representing the principal and interest due under a demand note in the principal amount of $7.0 million that we issued in connection with a working capital loan from Arnos Corp.; and
	•	an amount payable of $12.8 million to ACF Industries Holding Corp., a company beneficially owned and controlled by Mr. Icahn, representing the principal and interest due under a demand note in the principal amount of $12.0 million that we issued in connection with our purchase of Castings LLC from ACF Industries Holding Corp.

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		Component Manufacturing
Repair Plants		Plant and Warehouse		Mobile Units
Bude, Mississippi		Jackson, Missouri		Addis, Louisiana
Milton, Pennsylvania				Convent, Louisiana
Tennille, Georgia				Ingleside, Texas
North Kansas City, Missouri				Deer Park, Texas
Longview, Texas				Taft, Louisiana

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	•	manufacturing services agreement;
	•	license agreement from ACF;
	•	license agreement to ACF;
	•	administration agreement;
	•	railcar servicing agreement; and
	•	supply agreement.

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	•	we were issued all of the common interests in ARL;
	•	ACF and its subsidiaries were issued all of ARL’s B-1 preferred interests;
	•	Vegas Financial Subsidiary Corp., a company beneficially owned and controlled by Mr. Icahn, was issued all of ARL’s B-2 preferred interests in exchange for an investment of $40 million;
	•	we issued 34,500 shares of our new preferred stock to ACF and its subsidiaries; and
	•	our $57.2 million loan to ACF was repaid in full.

	•	railcar management agreements with ARI First LLC and ARI Third LLC;
	•	ACF administration agreement;
	•	ARL railcar services agreement;
	•	ARL railcar servicing agreement;
	•	ARL services agreement;

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	•	guarantee of ARI Second LLC loan agreement; and
	•	ARL trademark license agreement.

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			1/20/2006					1/31/2006					2/28/2006					3/31/2006
ARII			$	100.00				$	130.14				$	146.34				$	152.87
Nasdaq Composite Index			$	100.00				$	102.59				$	101.50				$	104.10
DJ Transportation Index			$	100.00				$	105.03				$	106.68				$	109.85

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I.	PURPOSE

II.	EFFECTIVE DATE, COMPOSITION AND INDEPENDENCE

III.	MEETINGS AND PROCEDURES

A-1

IV.	RESPONSIBILITIES AND DUTIES

A.	General Matters

B.	Oversight of the Company’s Relationship with the Auditors

A-2

C.	Financial Statements and Disclosure Matters

A-3

D.	Internal Controls and Compliance Matters

E.	Other Miscellaneous Matters

A-4

A-5

 

 

ANNUAL MEETING OF STOCKHOLDERS OF

AMERICAN RAILCAR INDUSTRIES, INC.

June 8, 2006

 

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

 

â Please detach along perforated line and mail in the envelope provided. â

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE   x

The Board of Directors recommends a vote FOR the election of the nominees as directors.

1.  The election as directors of all nominees listed below:

2.    The transaction of such other business as may properly come before the Annual Meeting or adjournment thereof.

NOMINEES:

o

FOR ALL NOMINEES

¡ ¡

Carl C. Icahn James J. Unger

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

¡

Vincent J. Intrieri

o

WITHHOLD AUTHORITY

¡

Keith Meister

This proxy will be voted as specified or, where no direction is given, will be voted FOR all nominees listed in Proposal No. 1.

FOR ALL NOMINEES

¡

Jon F. Weber

¡

James M. Laisure

o

FOR ALL EXCEPT (See instructions below)

¡

James C. Pontious

The undersigned stockholder hereby acknowledges receipt of a copy of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement and hereby revokes any proxy or proxies previously given. This proxy may be revoked at anytime prior to its exercise.

INSTRUCTION:     To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:  l

Please complete, date, sign and mail this proxy promptly in the enclosed postage-prepaid envelope.

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

o

Signature of Stockholder		Date:		Signature of Stockholder		Date:

n		Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.		n