JOHNSTOWN AMERICA INDUSTRIES INC, 10-Q, 1997-07-24

JOHNSTOWN AMERICA INDUSTRIES INC
10-Q, 1997-07-24
RAILROAD EQUIPMENT

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

FORM 10-Q
---------------------

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997
Commission File No. 0-21830

---------------------

Johnstown America Industries, Inc.
(Exact name of registrant as specified in its charter)
Incorporated pursuant to the Laws of State of Delaware
---------------------

Internal Revenue Service - Employer Identification No. 25-1672791

980 N. Michigan Avenue
Suite 1000
Chicago, IL 60611
(Address of principal executive offices)

(312) 280-8844
Registrant's telephone number, including area code
---------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

The total number of shares of the registrant's Common Stock, $.01 par value,
outstanding on July 14, 1997 was 9,755,062.

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<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

PART I FINANCIAL INFORMATION....................................... 2

Item 1 Condensed Consolidated Balance Sheets as
of June 30, 1997, and December 31, 1996..................... 3-4

Condensed Consolidated Statements of Income for
the Three and Six Months Ended June 30, 1997 and 1996....... 5

Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1997 and 1996............. 6-7

Notes to Condensed Consolidated Financial Statements........ 8-20

Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 21-28

PART II OTHER INFORMATION ........................................ 29-31

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

In the opinion of the registrant's management, the unaudited condensed
consolidated financial statements included in this filing on Form 10-Q reflect
all adjustments (which consist of normal recurring adjustments) which are
considered necessary for a fair presentation of financial information for the
periods presented.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 1997 AND DECEMBER 31, 1996

June 30, December 31,
(In thousands) 1997 1996
----------------------------
(Unaudited) (Audited)

ASSETS

Current Assets:
Cash and cash equivalents..................... $ 17,311 $ 24,535
Accounts receivable, net...................... 61,444 49,346
Inventories................................... 54,435 49,589
Prepaid expenses and other.................... 18,730 19,360
-------- --------
Total current assets........................ 151,920 142,830

Property, plant and equipment, net............ 118,922 123,859
Leasing business assets, net.................. 39,530 23,255
Restricted cash............................... 578 578
Deferred financing costs, net................. 12,268 13,450
Intangible assets, net........................ 247,422 251,311
-------- --------
Total assets................................ $ 570,640 $ 555,283
======== ========

See accompanying notes to condensed consolidated financial statements.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

AS OF JUNE 30, 1997 AND DECEMBER 31, 1996

June 30, December 31,
(In thousands) 1997 1996
---------------------------
(Unaudited) (Audited)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Accounts payable.................................$ 52,028 $ 43,325
Accrued expenses and other payables.............. 56,066 55,050
Current maturities of long-term debt,
capital lease and JAIX Leasing debt.............. 18,916 17,236

------- -------
Total current liabilities...................... 127,010 115,611

Long-term debt and capital lease,
less current maturities........................... 163,668 173,763
JAIX Leasing debt, less current maturities........ 29,344 13,176
Other long-term liabilities....................... 60,895 59,982
Senior subordinated notes......................... 100,000 100,000
Deferred income taxes............................. 28,591 29,214

Shareholders' Equity:
Preferred stock, par $.01, 20,000 shares
authorized, none outstanding.................... -- --
Common stock, par $.01, 201,000 shares authorized
9,755 and 9,754 issued and outstanding
as of June 30, 1997 and December 31, 1996,
respectively.................................... 98 98
Paid-in capital.................................. 55,049 55,049
Retained earnings................................ 6,015 8,420
Employee receivables for stock purchases......... (30) (30)
------- -------
Total shareholders' equity..................... 61,132 63,537
------- -------
Total liabilities and shareholders' equity.....$ 570,640 $ 555,283
======= =======

See accompanying notes to condensed consolidated financial statements.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996

(Unaudited)

(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----

Net manufacturing sales....... $ 156,516 $ 132,308 $ 270,860 $ 283,626
Leasing revenue............... 1,724 982 3,102 2,003
-------- -------- -------- --------
Total revenue................ 158,240 133,290 273,962 285,629

Cost of sales - manufacturing. 135,153 111,460 231,031 240,180
Cost of leasing............... 661 348 1,489 679
-------- -------- -------- --------
Gross profit................. 22,426 21,482 41,442 44,770

Selling, general and administrative
expenses..................... 11,310 11,529 22,062 23,808
Amortization expense.......... 2,146 2,562 4,248 5,133
Gain on sale of
leased freight cars (325) -- (587) --
-------- -------- -------- --------
Operating income............. 9,295 7,391 15,719 15,829

Interest expense, net......... 8,066 8,147 16,335 16,323
Interest expense - leasing .. 667 743 1,046 1,263
-------- -------- -------- --------

Income (loss) before income
taxes...................... 562 (1,499) (1,662) (1,757)

Provision (benefit)for
income taxes 1,076 (275) 743 195
-------- -------- -------- --------

Net loss..................... $ (514) $ (1,224) $ (2,405) $ (1,952)
========= ======== ======== ========

Net loss per common
and common equivalent
shares outstanding........... $ (0.05) $ (0.13) $ (0.25) $ (0.20)
========= ========= ========= ========

Weighted average common and
common equivalent shares .... 9,837 9,760 9,805 9,757
======= ======= ======= =======

See accompanying notes to condensed consolidated financial statements.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996

(Unaudited)

(In thousands) Six Months Ended
June 30,
1997 1996
---- ----

OPERATING ACTIVITIES:
Net loss.................................... $ (2,405) $ (1,952)

Adjustments for items not affecting cash from operating activities:

Depreciation............................... 7,807 7,655
Amortization - other....................... 4,859 5,590
Amortization - deferred financing costs.... 1,094 1,575
Gain on sale of leased freight cars........ (587) --
Deferred tax expense (benefit)............. (623) 786
Postretirement benefits.................... 1,080 1,273
-------- -------
11,225 14,927

Changes in operating assets and liabilities

Accounts receivable, net.................... (12,098) (2,927)
Inventories................................. (4,846) (710)
Accounts payable............................ 8,702 386
Other assets and liabilities................ 2,886 1,988
-------- -------

Net cash provided by operating activities... 5,869 13,664
-------- -------

INVESTING ACTIVITIES:
Capital expenditures....................... (2,405) (4,914)
Leasing business asset additions........... (25,682) (15)
Proceeds from sales of leased freight cars 7,487 --
Other...................................... 13 663
-------- -------

Net cash used for investing activities...... (20,587) (4,266)
--------- -------

See accompanying notes to condensed consolidated financial statements.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996

(Unaudited)

(In thousands) Six Months Ended
June 30,
1997 1996
---- ----
FINANCING ACTIVITIES:
Payments of term loans and capital lease...... (8,415) (8,406)
Net borrowings under JAIX Leasing loans....... 16,168 5,329
Payment of deferred financing costs........... (259) (855)
-------- -------

Net cash provided by (used for)
financing activities......................... 7,494 (3,932)
-------- -------

Net increase (decrease) in cash and
cash equivalents............................. (7,224) 5,466

CASH AND CASH EQUIVALENTS,
beginning of period.......................... 24,535 11,639
-------- -------

CASH AND CASH EQUIVALENTS,
end of period................................$ 17,311 $ 17,105
======== =========

SUPPLEMENTAL CASH FLOWS DISCLOSURE

(In thousands)

Cash paid for interest - other.................$ 15,219 $ 14,733
Cash paid for interest - JAIX Leasing.......... 1,037 1,263
Cash paid for income taxes..................... 508 587

See accompanying notes to condensed consolidated financial statements.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 1997
(Unaudited)

1. BASIS OF PRESENTATION

The financial statements presented herein and these notes are unaudited. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the registrant believes that all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation have been made, interim periods are not necessarily indicative
of the results of operations for a full year. As such, these financial
statements should be read in conjunction with the financial statements and notes
thereto incorporated by reference in the registrant's Form 10-K for the year
ended December 31, 1996.

The consolidated financial statements include the accounts of Johnstown America
Industries, Inc. and its wholly owned subsidiaries (the "Company"). All
significant intercompany transactions and accounts have been eliminated in the
accompanying consolidated financial statements.

2. INVENTORIES

Inventories of the Company consist of the following (in thousands):

June 30, December 31,
1997 1996
Raw materials and purchased
components $ 7,408 $ 10,289
Work-in-progress and finished goods 47,027 39,300
--------- ---------
$ 54,435 $ 49,589
========= =========

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

3. DEBT
(in thousands)

Long-term debt of the Company (excluding JAIX Leasing) consisted of the
following:

June 30, December 31,
1997 1996

Revolving Loans $ -- $ --
Tranche A Term Loans 80,005 86,670
Tranche B Term Loans 95,005 96,670
-------- --------
Total Senior Bank Facilities 175,010 183,340

Industrial Revenue Bonds 5,300 5,300
Capital lease 1,868 1,953
-------- --------
Total debt 182,178 190,593
Less: Current maturities (18,510) (16,830)
-------- --------
Long-term debt $ 163,668 $ 173,763
======== ========

Long term debt of JAIX Leasing:

JAIX Leasing debt $ 29,750 $ 13,582
Less: Current maturities (406) (406)
-------- --------
Long-term debt $ 29,344 $ 13,176
======== ========

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

Senior Bank Facilities

The Company entered into a credit facility ("Senior Bank Facilities") on August
23, 1995, in conjunction with the acquisition of Truck Components Inc. ("TCI")
and the related transactions. The Revolving Loans portion of the Senior Bank
Facilities provides for up to $100 million of outstanding borrowings and letters
of credit, limited by the level of eligible accounts receivable and inventories.
As of June 30, 1997, availability under the Revolving Loans, after consideration
of outstanding letters of credit of $17.1 million, was $50.5 million.

At the Company's election, interest rates per annum applicable to the Revolving
Loans and Tranche A Term Loans will be a fluctuating rate of interest measured
by reference to either (a) an adjusted London inter-bank offered rate ("LIBOR")
plus a borrowing margin or (b) an alternate base rate ("ABR") plus a borrowing
margin. Such borrowing margins range between 1.50% and 2.50% for LIBOR loans and
between .50% and 1.50% for ABR loans, fluctuating within each range in 0.25%
increments based on the Company achieving certain financial results. Interest
rates per annum applicable to Tranche B Term Loans are either (a) LIBOR plus a
margin of 3.00% or (b) ABR plus 2.00%. Additionally, various fees related to
unused commitments, letters of credit and administration of the facility are
incurred by the Company.

The term loans under the Senior Bank Facilities amortize quarterly, which
commenced on March 31, 1996. The Tranche A Term Loans and the Revolving Loans
mature on March 31, 2002 and the Tranche B Term Loans mature on March 31, 2003.

The Senior Bank Facilities contain various financial covenants including capital
expenditure limitations, leverage and interest coverage ratios and minimum net
worth, and also restrict the Company from paying dividends, repurchasing common
stock and making other distributions in certain circumstances. At June 30, 1997,
the Company was in compliance with these and all other debt covenants.

JAIX Leasing Debt

On June 14, 1996, JAIX Leasing entered into a ten-year term loan facility which
bears interest at an average interest rate of 8.78%. At June 30, 1997 the
facility had debt outstanding of $29.8 million. The facility, which is non
recourse to the Company, is secured by the underlying leases and assets and
contains various covenants.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

Industrial Revenue Bonds

The Company, through its wholly owned subsidiary, Freight Car Services, Inc.,
issued the Industrial Revenue Bonds for $5.3 million which bear interest at a
variable rate (4.25% as of June 30, 1997) and can be redeemed by the Company at
any time. The bonds are secured by a letter of credit issued by Johnstown
America Industries, Inc. The bonds have no amortization and mature on December
1, 2010. The bonds are also subject to a weekly "put" provision by the holders
of the bonds. In the event that any or all of the bonds are put to the Company
under this provision, the Company would effectively refinance such bonds with
additional borrowings under the Revolving Loans portion of the Senior Bank
Facilities.

In connection with the Industrial Revenue Bonds, the Company has restricted cash
at June 30, 1997 of $0.6 million from the initial proceeds of $5.3 million. The
restricted cash is held in trust and will be used for additional improvements
and expansion of the Freight Car Services' Danville facility.

Interest Rate Contracts

The Company has entered into various interest rate contracts to fix the cost of
its variable rate Senior Bank Facilities. These contracts limit the effect of
market fluctuations on the interest cost of floating rate debt. The notional
principal amounts outstanding on the interest rate contracts covering the
current period is $125 million and the fixed rates of interest on these
contracts range from 5.98% to 6.32% plus the applicable borrowing margin. The
maturities on all contracts range from August 1997 through August 1998.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

4. SENIOR SUBORDINATED DEBT

In conjunction with the acquisition of TCI, the Company issued $100 million of
Senior Subordinated Notes (the "Notes") which are due August 15, 2005 and have
an interest rate of 11.75% per annum and are guaranteed on a unsecured, senior
subordinated joint and several basis by the Guarantor Subsidiaries. The Notes
have customary restrictive covenants including restrictions on incurrence of
additional indebtedness, and payment of dividends and redemption of capital
stock. The Notes are subordinated to all indebtedness under the Senior Bank
Facilities and cross-default provisions do exist. Except in certain limited
circumstances, the Notes are not subject to optional redemption by the Company
prior to August 15, 2000, and thereafter are subject to optional redemption by
the Company at declining redemption premiums. Upon the occurrence of a change in
control (as defined), the Company is required to offer to repurchase the Notes
at a price equal to 101% of the principal amount thereof plus accrued interest.

The Company anticipates issuing $75 million of additional 11.75% senior
subordinated debt at a premium in August 1997. The debt will have the same terms
and conditions as the original senior subordinated debt. The proceeds will be
used to pay down debt outstanding under the Senior Bank Facilities. At the time
of the issuance the Company expects to write off about $2.8 million (pretax) or
$1.7 million (after tax) of deferred financing costs. Based on current interest
rates the Company expects that it will incur additional interest expense of
approximately $1.5 million, annually. Under the terms of the Senior Bank
Facilities the Tranche B holders may elect or not elect to be prepaid. The
Company can apply the proceeds towards the next two term payments and the
remainder of the proceeds would be applied pro-rata against the outstanding term
loans. Assuming the Tranche B holders elect to be prepaid then the annual future
term loan payments after the prepayment of the Senior Bank Facilities would be
as follows: 1997 $0.0 million, 1998 $12.3 million, 1999 $16.5 million, 2000
$19.9 million, 2001 $19.8 million, 2002 $21.8 million, 2003 $9.7 million. If the
Tranche B holders elect not to be prepaid, the future term loan payments would
be: 1997 $1.7 million, 1998 $4.5 million, 1999 $4.9 million, 2000 $20.9 million,
2001 $24.0 million, 2002 $27.3 million, 2003 $16.7 million. No assurance,
however, can be given that such issuance of notes will be consummated.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

term of the agreement and to reduce the Revolving Facility from $100 million to
$75 million. The Company also will seek the consent of the banks to the issuance
of the additional Notes. Based upon current market conditions, the Company's
prior dealings with the banks participating in the Senior Bank Facilities and
the Company's commitment to repay a portion of the outstanding indebtedness
under the Senior Bank Facilities with the net proceeds from the offering, it
believes that the banks will agree to enter such an amendment to the Senior Bank
Facilities. The offering is conditioned upon the banks agreeing to enter in to
such amendment; however, no assurance can be made that the banks will enter such
amendment.

5. ENVIRONMENTAL MATTERS

The Company's subsidiaries are currently involved in several matters relating to
the investigation and/or remediation of locations where the subsidiaries have
arranged for the disposal of foundry and other wastes. As of June 30, 1997,
based on all of the information currently available to the Company, the Company
has an environmental reserve which management believes is adequate to cover
future expenditures. This reserve is based on current cost estimates and does
not reduce estimated expenditures to net present value, although the Company's
subsidiaries are not likely to incur costs for most of the reserved matters
until several years in the future. Any cash expenditures required by the Company
or its subsidiaries to comply with applicable environmental laws and/or to pay
for any remediation efforts will not be reduced or otherwise affected by the
existence of the environmental reserve. Due to the early stage of investigation
of many of the sites and potential remediations referred to above, there are
significant uncertainties as to waste quantities involved, the extent and timing
of the remediation which will be required, the range of acceptable solutions,
costs of remediation and the number of potentially responsible parties
contributing to such costs. Based on all of the information presently available
to it, the Company believes that the environmental reserve will be adequate to
cover its future costs related to the sites associated with the environmental
reserve, and that any additional costs will not have a material adverse effect
on the financial condition or results of operations of the Company. However, the
discovery of additional sites, the modification of existing laws or regulations,
the imposition of joint and several liability or the uncertainties referred to
above could result in such a material adverse effect.

6. NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standard No. 128, "Earnings Per Share" was
issued in February, 1997 and will be adopted by the Company effective January 1,
1998. This new pronouncement establishes revised methods for computing and
reporting earnings per share.

<PAGE>

JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended June 30, 1997
(Unaudited)

Adoption of this standard will not materially impact previously reported
earnings per share, including the per share amount reported for the six months
ended June 30, 1997.

SFAS No. 130, "Reporting Comprehensive Income" was issued in July 1997 and will
be adopted by the Company effective January 1, 1998. This new pronouncements
establishes standards for reporting and display of comprehensive income and its
components. As the standard will only effect required note disclosures, the
adoption of this standard is not expected to have an effect on the Company's
financial position or results of operations.

7. GUARANTOR SUBSIDIARIES

The Notes and the obligations under the Senior Bank Facilities are fully and
unconditionally guaranteed on an unsecured, senior subordinated, joint and
several basis by each of the Guarantor Subsidiaries. The following condensed
consolidating financial data illustrates the composition of the Parent Company,
the Guarantor Subsidiaries, and JAIX Leasing as of and for certain dates and
periods. Separate complete financial statements of the respective Guarantor
Subsidiaries would not provide additional information which would be useful in
assessing the financial composition of the Guarantor Subsidiaries and thus, are
not presented.

Investments in subsidiaries are accounted for by the Parent Company on the
equity method for purposes of the supplemental consolidating presentation.
Earnings of subsidiaries are therefore reflected in the Parent Company's
investment accounts and earnings. The principle elimination entries eliminate
the Parent Company's investment in subsidiaries and intercompany balances and
transactions.

<PAGE>

<TABLE>

Condensed Consolidating Balance Sheet
as of June 30, 1997
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C> <C>

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

Cash and cash equivalents.... $ 16,371 $ (1,645) $ 2,585 $ -- $ 17,311
Accounts receivable, net..... 33 61,281 130 -- 61,444
Inventories.................. -- 54,435 -- -- 54,435
Prepaid expenses and other... 2,465 17,756 (1,491) -- 18,730
------- ------- ------- ------- -------

Total current assets.... 18,869 131,827 1,224 -- 151,920
Property, plant and equipment,
net........................ 2,641 118,139 38,014 (342) 158,452
Other assets................. 108,826 248,088 625 (97,271) 260,268
------- ------- ------- ------- -------

Total assets............ $130,336 $498,054 $ 39,863 $(97,613) $570,640
======= ======= ======== ======= =======

Accounts payable............. $ -- $ 52,028 $ -- $ -- $ 52,028
Other current liabilities.... 17,942 58,231 (1,162) (29) 74,982
------- ------- -------- ------- -------
Total current liabilities 17,942 110,259 (1,162) (29) 127,010

Noncurrent liabilities....... -- 86,006 3,480 -- 89,486
Long-term debt and
intercompany advances, less
current maturities......... 51,262 212,406 29,344 -- 293,012

Total shareholders' equity... 61,132 89,383 8,201 (97,584) 61,132
------- -------- -------- -------- -------

Total liabilities and shareholders'
equity.............. $130,336 $498,054 $ 39,863 $ (97,613) $570,640
======= ======= ======== ======== =======

<PAGE>

Condensed Consolidating Statement of Income
For the Six Months Ended June 30, 1997
(In thousands)
(Unaudited)

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

Total revenue................ $ 220 $270,860 $ 2,882 $ -- $273,962
Cost of sales................ 40 231,032 1,448 -- 232,520
------- ------- ------- ------- -------
Gross profit................ 180 39,828 1,434 -- 41,442
Selling, general, administrative
and amortization expenses... (193) 26,062 (146) -- 25,723
------- ------- ------- ------- -------
Operating income........... 373 13,766 1,580 -- 15,719
Interest expense, net........ 6,001 10,429 951 -- 17,381
Equity (earnings) of
subsidiaries............... (1,047) -- -- 1,047 --
Provision (benefit) for
income taxes............... (2,176) 2,668 251 -- 743
------- ------- ------- ------- -------
Net income (loss).......... $ (2,405) $ 669 $ 378 $ (1,047) $ (2,405)
------- -------- ------- ------- -------

<PAGE>

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 1997
(In thousands)
(Unaudited)

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

CASH FLOWS FROM
OPERATING ACTIVITIES........ $ (2,210) $ 5,187 $ 2,892 $ -- $ 5,869

CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures...... (98) (2,307) -- -- (2,405)
Leasing business assets
and investments............ 13 -- (25,682) -- (25,669)
Proceeds from sale of leased
freight cars............... 3,024 -- 4,463 -- 7,487
------- ------- -------- ------- --------
Cash provided by (used for)
investing activities...... 2,939 (2,307) (21,219) -- (20,587)

CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments of term loans and
capital lease............. (8,330) (85) -- -- (8,415)
Loan facility of
leasing business......... -- -- 16,168 -- 16,168
Intercompany advances..... 5,923 (5,923) -- -- --
Deferred financing costs paid (11) -- (248) -- (259)
------- ------- ------- ------- --------
Cash provided by (used for)
financing activities..... (2,418) (6,008) 15,920 -- 7,494

Net increase (decrease) in cash
and cash equivalents....... (1,689) (3,128) (2,407) -- (7,224)
CASH AND CASH
EQUIVALENTS,
beginning of period........ 18,060 1,483 4,992 -- 24,535
------- ------- ------- ------- --------

CASH AND CASH
EQUIVALENTS,
end of period.............. $ 16,371 $ (1,645) $ 2,585 $ -- $ 17,311
======== ========= ========= ======== ========

<PAGE>

Condensed Consolidating Balance Sheet
as of December 31, 1996
(In thousands)
(Unaudited)

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

Cash and cash equivalents.... $ 18,060 $ 1,484 $ 4,991 $ -- $ 24,535
Accounts receivable, net..... 28 49,161 157 -- 49,346
Inventories.................. -- 49,589 -- -- 49,589
Prepaid expenses and other... 2,979 16,008 373 -- 19,360
------- -------- --------- -------- -------

Total current assets.... 21,067 116,242 5,521 -- 142,830

Property, plant and
equipment, net............. 7,577 123,128 16,960 (551) 147,114
Other assets................. 108,822 255,913 401 (99,797) 265,339
------- -------- --------- -------- -------

Total assets............ $137,466 $ 495,283 $ 22,882 $(100,348) $ 555,283
======= ======== ========= ======== ========

Accounts payable............. $ 201 $ 42,993 $ 131 $ -- $ 43,325
Other current liabilities.... 18,390 55,835 (1,728) (211) 72,286
------- -------- --------- -------- --------

Total current liabilities 18,591 98,828 (1,597) (211) 115,611

Noncurrent liabilities....... -- 85,716 3,480 -- 89,196
Long-term debt, less current
maturities and intercompany
advances (receivables)..... 55,338 218,425 13,176 -- 286,939

Total shareholders' equity... 63,537 92,314 7,823 (100,137) 63,537
------- -------- --------- -------- --------

Total liabilities and
shareholders' equity... $137,466 $ 495,283 $ 22,882 $ (100,348) $ 555,283
======= ======== ========= ========= ========

<PAGE>

Condensed Consolidating Statement of Income
For the Six Months Ended June 30, 1996
(In thousands)
(Unaudited)

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

Total revenue................ $ 20 $ 283,626 $ 1,983 $ -- $ 285,629
Cost of sales................ (5) 240,180 684 -- 240,859
------- -------- --------- -------- --------
Gross profit............... 25 43,446 1,299 -- 44,770
Selling, general, administrative
and amortization expenses... (3) 28,944 -- -- 28,941
------- -------- --------- -------- --------
Operating income.......... 28 14,502 1,299 -- 15,829
Interest expense, net........ 5,550 10,816 1,220 -- 17,586
Equity (earnings) of
subsidiaries............... (2,343) -- -- 2,343 --
Provision (benefit) for
income taxes............... (1,227) 1,389 33 -- 195
------- -------- --------- -------- --------
Net income (loss)......... $ (1,952) $ 2,297 $ 46 $ (2,343) $ (1,952)
======= ======== ========= ======== ========

<PAGE>

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 1996
(In thousands)
(Unaudited)

Parent Guarantor
Company Subsidiaries JAIX Leasing Eliminations Consolidated

CASH FLOWS FROM
OPERATING ACTIVITIES........ $ (6,902) $ 19,643 $ 923 $ -- $ 13,664

CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures...... (204) (4,710) -- -- (4,914)
Leased assets and investments -- -- (15) -- (15)
Changes in restricted cash. -- 663 -- -- 663
-------- --------- --------- -------- ----------
Cash provided by (used for)
investing activities...... (204) (4,047) (15) -- (4,266)

CASH FLOWS FROM
FINANCING ACTIVITIES:
Net payments under term loans (8,330) (76) -- -- (8,406)
Loan facility of
leasing business......... -- -- 5,329 -- 5,329
Change in intercompany
advances................. 14,038 (10,601) (3,437) -- --
Dividends received/ (paid). 500 -- (500) -- --
Deferred financing costs paid (421) (14) (420) -- (855)
------- -------- --------- -------- ---------
Cash provided by (used for)
financing activities..... 5,787 (10,691) 972 -- (3,932)

Net increase (decrease) in cash
and cash equivalents........ (1,319) 4,905 1,880 -- 5,466
CASH AND CASH
EQUIVALENTS,
beginning of period........ 16,896 (6,156) 899 -- 11,639
-------- -------- --------- -------- ---------

CASH AND CASH
EQUIVALENTS,
end of period.............. $ 15,577 $ (1,251) $ 2,779 $ -- $ 17,105
======= ======== ========= ======== =========

</TABLE>

<PAGE>

Management's Discussion and Analysis of
Financial Condition and Results of Operations

For the Three and Six Months Ended June 30, 1997

Item 2.

General

The Company conducts its business through three operating groups within the
transportation industry: truck components and assemblies operations, a leading
manufacturer of wheel end components, seating, steerable drive axles and gear
boxes for the heavy duty truck industry; iron castings operations, a major
producer of complex iron castings for a wide range of industries; and freight
car operations, a leading manufacturer and lessor of new and rebuilt freight
cars used for hauling coal, intermodal containers, highway trailers,
agricultural and mining products. During 1996, the Company's truck components
and assemblies, iron castings and freight car operations generated net sales of
$237.0 million, $125.1 million and $197.8 million, respectively. During the six
months ended June 30, 1997, the Company's truck components and assemblies, iron
castings and freight car operations generated net sales of $141.4 million, $69.0
million and $63.5 million, respectively. The Company reported net losses in the
year ended December 31, 1996 and the six months ended June 30, 1997. The
significant decline in demand experienced in 1996 and early 1997 by JAC produced
significant operating losses that, coupled with the Company's significant debt
service requirements, offset strong operating income for its truck components
and assemblies and iron castings operations. Although demand for freight cars
has improved slightly, the market remains subject to intense pricing
competitiveness in a freight car market characterized by depressed demand and
production overcapacity and, as a result, the Company expects to report a net
loss for the year ended December 31, 1997. Given the cyclicality of the freight
car and heavy-duty truck industries and other market factors, there can be no
assurance that the Company will achieve or sustain profitability in the future.

The Company completed the acquisition of TCI on August 23, 1995 and Bostrom on
January 13, 1995. Both acquisitions were accounted for under the purchase method
of accounting and, accordingly, their operating results were included in the
Company's reported results from their respective acquisition dates. Such results
have a significant impact on the comparative discussions below. Additionally,
the Company, through its wholly owned subsidiary, FCS, completed the purchase of
the Danville, Illinois facility which began operations in October 1995. The
Company formed its leasing subsidiary, JAIX Leasing, in January 1995 and
currently leases 1,526 freight cars to various lessees under operating leases.
Of these freight cars, 595 are owend by JAIX Leasing, representing an investment
of $37.7 million, and the remainder are leased.

<PAGE>

The Company's sales are affected to a significant degree by the North American
Class 8 truck and freight car markets. Both the North American Class 8 truck and
the freight car markets are subject to significant fluctuations due to economic
conditions in these particular markets, changes in the alternative methods of
transportation and other factors. There can be no assurance that fluctuations in
such markets will not have a material adverse effect on the results of
operations or financial condition of the Company.

Johnstown America Corporation ("JAC") and Freight Car Services ("FCS"), the
Company's freight car manufacturing subsidiaries, sales are driven principally
by the number and type of new and rebuilt freight cars delivered in any given
period. Due to the large size of customer orders, the specific time frame for
delivery of freight cars ordered and variations in the mix of cars ordered, the
number and type of cars produced in any given quarter may fluctuate greatly. As
a result, the Company's revenues and results of operations and cash flows from
operations may fluctuate as well.

The following table sets forth for the periods indicated certain historical
financial data of the Company expressed as a percentage of total revenue:

Year Ended Six Months Ended
December 31, June 30,
1995 1996 1996 1997
---- ---- ---- ----

Total revenue.................... 100.0% 100.0% 100.0% 100.0%
Gross margins.................... 8.9 15.3 15.7 15.1
Selling, general and administrative 4.2 8.3 8.3 8.1
Amortization................... 1.0 1.8 1.8 1.6
Gain on sale of lease freight cars -- .2 -- .2
------- ------- ------- -------
Operating Income............. 3.7% 5.4% 5.5% 5.7%

Results of Operations

Three Months Ended June 30, 1997 and 1996
Total Revenue

Total revenue for the three months ended June 30, 1997 increased 18.7% to $158.2
million from $133.3 million 1996. Revenue from the truck component and iron
casting operations increased 24.1% ($14.6 million) and 10.4% ($3.2 million),
respectively, for the second quarter of 1997 due to continued strong demand for
their products. Revenues in the freight car operations increased 16.7% ($7.0
million). Second quarter 1997 shipments of new and rebuilt cars increased to
1,043 from 760 new and rebuilt cars in the same period of 1996. Of the cars
produced in the second quarter of 1997, 35 were sold to JAIX Leasing.

<PAGE>

Cost of Sales - Manufacturing and Gross Profits

Cost of Sales - Manufacturing for the three months ended June 30, 1997 as a
percent of manufacturing sales was 86.4%, compared to 84.2% in 1996. Related
gross profit margins were 13.6% and 15.8%, respectively. Aggregate gross profits
increased by $0.9 million while the gross margin percent declined reflecting a
greater mix of lower margin freight car business and lower gross margins in the
freight car business in the second quarter 1997 compared to the second quarter
of last year. The increase in gross profits of $0.9 million resulted primarily
from increased revenues and profits in the truck components and iron casting
businesses.

Selling, General, Administrative and Amortization

Selling, general, and administrative expenses as a percentage of total revenue
were 7.1% and 8.6% for the three months ended June 30, 1997 and 1996,
respectively. The decrease in selling, general, and administrative expense as a
percent of total revenue is due to increased revenue and reduced selling,
general and administrative expenses of $0.2 million. Amortization expense as a
percentage of total revenue was 1.4% and 1.9% for the three months ended June
30, 1997 and 1996, respectively.

Operating Income

Operating income was $9.3 million in the second quarter of 1997, compared to
$7.4 million in the second quarter of 1996. The increase in operating income was
due to increased revenues of $24.9 million for the quarter resulting in a $0.9
increase in gross profits, a reduction in selling, general, administrative
expense of $0.2 million, a $0.4 million decline in amortization expense and a
$0.3 million gain on the sale of leased freight cars.

Other

Interest expense, net, was $8.7 million in the second quarter of 1997 compared
to $8.9 in the second quarter of 1996. Interest expense in 1997 and 1996
resulted from borrowings under the Senior Bank Facilities and the issuance of
the original Notes to finance the acquisition of TCI and the refinancing of
TCI's and the Company's debt in August 1995, as well as from the JAIX Leasing
loans which were used to finance the addition of freight cars for the lease
fleet.

Net loss and loss per share for the second quarter of 1997 were $0.5 million and
$0.05 respectively, compared to a net loss and loss per share of $1.2 million
and $0.13, respectively, for the second quarter of 1996.

<PAGE>

Results of Operations

Six Months Ended June 30, 1997 and 1996
Total Revenue

Total revenue for the six months ended June 30, 1997 decreased 4.1% to $274.0
million from $285.6 million in the first six months of 1996. The total revenue
decrease of $11.7 million was due to the decrease in freight car shipments and a
reduction in shipments of freight car kits and parts. The Company shipped 1,575
new and rebuilt freight cars in the first half of 1997 including 325 cars sold
to JAIX Leasing (which were eliminated from consolidated sales), compared to
1,632 new and rebuilt cars shipped in the first half of 1996. This decrease in
production resulted in a 35.9% reduction in revenue of $34.0 million, which has
been partially offset by increased revenues generated by the truck component and
iron casting operations. Revenues for the six months ended June 30, 1997 at
truck component operations increased $17.2 million (13.9%), while iron casting
revenues increased $4.5 million (7.0%) over the same period in 1996. As of June
30, 1997, the Company's backlog of new and rebuilt freight cars was 1,949 as
compared to 1,376 new and rebuilt freight cars on June 30, 1996.

Cost of Sales - Manufacturing and Gross Profits

Cost of Sales - Manufacturing for the six months ended June 30, 1997 as a
percentage of manufacturing sales was 85.3%, compared to 84.7% for the same
period in 1996. Related gross margins were 14.7% and 15.3%, respectively. The
decrease in gross profits resulted primarily from lower gross profits of $3.4
million in the freight car business due to reduced revenues and lower gross
margins as a percentage of sales.

Selling, General, Administrative and Amortization

Selling, general, and administrative expenses as a percentage of total revenue
was 8.1% and 8.3% for the six months ended 1997 and 1996, respectively. Actual
selling, general and administrative expenses declined $1.7 million from 1996
levels as a result of cost reduction measures undertaken at the Company's
freight car operations. Amortization expense as a percentage of total revenue
was 1.6% and 1.8% for the six months ended June 30, 1997 and 1996, respectively.

Operating Income

Operating income remained relatively constant for the six months ended June 10,
1997 compared to the same period in 1996, even though total revenues declined by
$11.7 million and gross profit declined by $3.3. Operating income was $15.7
million for the first six months of 1997, compared to $15.8 million in the same
period of 1996. The Company maintained its operating income by reduction in
selling, general and administrative expenses of $1.7 million, a reduction in
amortization expense of $0.9 million and the gain on sale of leased freight cars
of $0.6 million.

<PAGE>

At June 30, 1997, the Company had 1,526 freight cars on lease and the leasing
business generated $3.1 million in revenue and $1.6 million in operating income
before a $0.6 million gain on the sale of leased freight cars for the first six
months of 1997 compared with $2.0 million revenue and $1.3 million operating
income in the prior period.

Other

Interest expense, net, was $17.4 million for the first six months of 1997
compared to $17.6 in the same period of 1996. Interest expense in 1997 and 1996
resulted from borrowings under the Senior Bank Facilities and the issuance of
the original Notes to finance the acquisition of TCI and the refinancing of its
debt in August 1995, as well as from the JAIX Leasing loans which were used to
finance the addition of freight cars for the lease fleet.

Net loss and loss per share for the first six months of 1997 were $2.4 million
and $0.25, respectively, compared to net loss and loss per share of $2.0 million
and $0.20, respectively for the same period of 1996.

Liquidity and Capital Resources

For the six months ended June 30, 1997, the Company provided net cash from
operations of $5.9 million compared with providing net cash of $13.7 million for
the first six months of 1996. Due to increased business activities, accounts
receivable and inventories increased by $12.1 million and $4.8 million,
respectively, partially offset by increases in accounts payable of $8.7 million.
The Company used $20.6 million of cash in investing activities, which included
net investments in the leasing fleet of $18.2 million and capital expenditures
of $2.4 million. Cash provided by financing activities was $7.5 million for the
first six months of 1997, which included an increase in the JAIX Leasing debt of
$16.2 million, to fund the leasing fleet additions offset in part by term loan
principal payments of $8.4 million. The Company anticipates that capital
expenditures for the balance of 1997 will be approximately $7.6 million.

The Company's freight car sales are characterized by large order sizes, specific
customer delivery schedules and related vendor receipts and payment schedules,
all of which can combine to create significant fluctuations in working capital
accounts when comparing end of period balances. Such fluctuations tend to be of
short duration, and the Company considers this to be a normal part of its
operating cycle which does not significantly impact its financial flexibility
and liquidity.

As of June 30, 1997, there was $175.0 million of term loans outstanding under
the Senior Bank Facilities, $100 million of the original Notes outstanding, and
no borrowings under the $100 million revolving credit line under the Senior Bank
Facilities. Availability under the Revolving Loans, after consideration of
outstanding letters of credit of $17.1 million, was $50.5 million after giving
effect to the applicable borrowing base.

<PAGE>

Interest payments on the original Notes and interest and principal payments
under the Senior Bank Facilities represent significant cash requirements for the
Company. The original Notes require semiannual interest payments of
approximately $5.9 million. Borrowings under the Senior Bank Facilities bear
interest at floating rates and require interest payments on varying dates
depending upon the interest rate option selected by the Company. The term loans
under the Senior Bank Facilities require periodic principal payments through
their maturities.

Effective December 31, 1995 and 1996, the Company entered agreements with the
banks participating in the Senior Bank Facilities to reset certain of the
financial covenants for the following year. As a result of the most recent
agreement, the Company is in compliance with the covenants and restrictions
contained in the Senior Bank Facilities. In connection with the offering, the
Company has commenced discussions with the banks participating in the Senior
Bank Facilities to amend the agreement to reset the financial covenants for the
remaining term of the agreement and to reduce the Revolving Facility from $100
million to $75 million. The Company also will seek the consent of the banks to
the issuance of the additional Notes. Based upon current market conditions, the
Company's prior dealings with the banks participating in the Senior Bank
Facilities and the Company's commitment to repay a portion of the outstanding
indebtedness under the Senior Bank Facilities with the net proceeds from the
offering, it believes that the banks will agree to enter such an amendment to
the Senior Bank Facilities. The offering is conditioned upon the banks agreeing
to enter into such amendment; however, no assurance can be made that the banks
will enter such amendment.

The Company formed a leasing business in 1994 to provide operating lease
financing for freight cars. This leasing division was formed into a wholly owned
subsidiary, JAIX Leasing, in January 1995 and currently leases 1,526 freight
cars to various lessees under operating leases. Of these

<PAGE>

freight cars, 595 are owned by JAIX Leasing representing an investment of $37.7
million, and the remainder are leased. JAIX Leasing, which is not a Guarantor
Subsidiary, finances its freight car leasing activities through its own term
loan and leasing facility. This term loan facility was entered into in June 1996
by JAIX Leasing to finance its freight car leasing activities and repay its
existing credit facility. This facility is secured by underlying leases and
assets of JAIX Leasing and the borrowings thereunder are non-recourse against
the Company. See footnote 3 of the Condensed Consolidated Financial Statements
for the six months ended June 30, 1997, for a description of this loan. As of
June 30, 1997, there was $29.8 million outstanding under this facility. In June
1997, JAIX Leasing entered into an operating lease facility whereby JAIX Leasing
will sell freight cars to a lessor and then lease back the cars (on a
non-recourse basis to the company) for periods of up to two years. JAIX Leasing
will then lease the freight cars to various sub- lessees.

The Company believes that the cash flow generated from its operations, together
with amounts available under the Revolving Loans, should be sufficient to fund
its debt service requirements, working capital needs, anticipated capital
expenditures and other operating expenses (including expenditures required by
applicable environmental laws and regulations). The Company's future operating
performance and ability to service or refinance the original Notes and the
proposed additional Notes and to extend or refinance the Senior Bank Facilities
will be subject to future economic conditions and to financial, business and
other factors, many of which are beyond the Company's control.

As of June 30, 1997, the Company's balance sheet included cash of $17.3 million.

Environmental Matters

The Company's subsidiaries are currently involved in several matters relating to
the investigation and/or remediation of locations where the subsidiaries have
arranged for the disposal of foundry and other wastes. As of June 30, 1997, the
Company has an environmental reserve which management believes is adequate to
cover future expenditures. This reserve is based on current cost estimates and
does not reduce estimated expenditures to net present value, although the
Company's subsidiaries are not likely to incur costs for most of the reserved
matters until several years in the future. Any cash expenditures required by the
Company or its subsidiaries to comply with applicable environmental laws and/or
to pay for any remediation efforts will not be reduced or otherwise affected by
the existence of the environmental reserve. Due to the early stage of
investigation of many of the sites and potential remediations referred to above,
there are significant uncertainties as to waste quantities involved, the extent
and timing of the remediation which will be required, the range of acceptable
solutions, costs of remediation and the number of potentially responsible
parties contributing to such costs. Based on all of the information presently
available to it, the Company believes that the environmental reserve will be
adequate to cover its future costs related to the sites associated with the
environmental reserve, and that any additional costs will not have a material
adverse effect on the financial condition or results of

<PAGE>

operations of the Company. However, the discovery of additional sites, the
modification of existing laws or regulations, the imposition of joint and
several liability or the uncertainties referred to above could result in such a
material adverse effect.

New Accounting Pronouncements

Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share" was issued in February, 1997 and will be adopted by the Company effective
January 1, 1998. This new pronouncement establishes revised methods for
computing and reporting earnings per share. Adoption of this standard will not
materially impact previously reported earnings per share, including the per
share amount reported for the six months ended June 30, 1997.

Forward-Looking Statements

The foregoing outlook contains forward-looking statements that are based on
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from current expectations due to a number
of factors, including general economic conditions; competitive factors and
pricing pressures; shifts in market demand, the performance and needs of
industries served by the Company's businesses; and the risks described from time
to time in the Company's Securities and Exchange Commission reports.

Effects of Inflation

General price inflation has not had a material impact on the Company's results
of operations.

<PAGE>

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The patent infringement lawsuit commenced by Johnstown America Corporation
("JAC") in December 1992 against Trinity Industries, Inc. ("Trinity") alleging
infringement of JAC's patent for its BethGon Coalporter freight car was tried in
1996 with the United States District Court for the Western District of
Pennsylvania entering an order upholding a jury verdict that the patent, though
valid, was not infringed by Trinity's Aluminator II freight car. In addition,
JAC was not held to be liable for any of the counterclaims alleged by Trinity.
JAC thereafter made motions to the trial court to set aside the verdict as not
being consistent with the facts or the law and enter judgment in favor of JAC
or, alternatively, to order a new trial, which motions were denied. JAC appealed
the case to the United States Court of Appeals for the Federal Circuit.
Following oral argument, the Court of Appeals for the Federal Circuit issued its
opinion dated May 28, 1997 in which the Court held that Trinity's Aluminator II
literally infringed JAC's patent, reversed the 1996 trial court judgment of
noninfringement and remanded the case back to the trial court for a
determination as to damages and for consideration of JAC's contention that
Trinity's infringement was willful. Following receipt of such opinion, JAC made
a motion to the trial court for a permanent injunction to prohibit Trinity from
making, selling or offering to sell its infringing Aluminator II until JAC's
patent expires in November 1999. Trinity thereafter petitioned the Court of
Appeals for a rehearing, which has yet to be decided. The trial court
temporarily denied JAC's motion for a permanent injunction until the Court of
Appeals decides Trinity's petition for rehearing, at which time the trial court
will reconsider JAC's motion. JAC expects the damage trial to occur in late 1997
or early 1998 and at this time cannot predict the amount of damages that may be
awarded.

The Company is involved in various lawsuits and warranty claims in the normal
course of business.

In the opinion of management of the Company, the outcome of these lawsuits and
claims will not have a material adverse effect on the financial condition or
results of operations of the Company.

Item 4. Submission of Matters to a Vote of Securities Holders.

The Company's Annual Meeting of Shareholders was held on May 1, 1997. At the
meeting, shareholders voted on the election of two directors. The results were
as follows:

1. Election of Directors
Withheld/ Broker
Votes For Votes Against Abstentions Non-Votes
--------- ------------- ----------- ---------

Camillo Santomero 8,189,327 437,974 -- --
Andrew M. Weller 8,238,319 389,224 -- --

<PAGE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

None

(b) Reports

The Company filed the following reports on Form 8-K during the three months
ended June 30, 1997:

None

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

JOHNSTOWN AMERICA INDUSTRIES, INC.

By /s/ Andrew M. Weller
-----------------------------------
Andrew M. Weller
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

Dated: July 24, 1997

<ARTICLE> 5

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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
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0
<COMMON> 98
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</TABLE>