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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File No. 0-21830
---------------------
JOHNSTOWN AMERICA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Incorporated pursuant to the Laws of the 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 31, 1998 was 9,864,905.
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<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I FINANCIAL INFORMATION....................................... 3
Item 1 Condensed Consolidated Balance Sheets as
of June 30, 1998, and December 31, 1997..................... 4-5
Condensed Consolidated Statements of Income for
the Three and Six Months Ended June 30, 1998 and 1997....... 6
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1997............. 7-8
Notes to Condensed Consolidated Financial Statements........ 9-20
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 21-27
PART II OTHER INFORMATION ........................................ 28-29
2
<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.
3
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(In thousands)
June 30, December 31,
1998 1997
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents................... $ 27,910 $ 30,875
Accounts receivable, net.................... 94,126 60,484
Inventories................................. 59,938 58,674
Prepaid expenses and other.................. 20,790 17,568
-------- --------
Total current assets...................... 202,764 167,601
Property, plant and equipment, net.......... 116,185 118,063
Leasing business assets, net................ 17,264 38,430
Deferred financing costs, net............... 9,338 11,594
Intangible assets, net...................... 238,910 243,150
-------- --------
Total assets.............................. $ 584,461 $ 578,838
======== ========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(In thousands)
June 30, December 31,
1998 1997
---- ----
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable............................ $ 70,323 $ 55,246
Accrued expenses and other payables......... 67,982 58,633
Current maturities of long-term debt and
capital lease.............................. 824 4,783
-------- --------
Total current liabilities................. 139,129 118,662
Long-term debt and capital lease, less
current maturities.......................... 83,291 96,903
JAIX Leasing debt, less current maturities... 8,952 27,896
Senior subordinated notes.................... 182,515 182,691
Deferred income taxes........................ 35,788 36,373
Other long-term liabilities.................. 43,466 45,293
Shareholders' Equity:
Preferred stock, par $.01, 20,000 shares
authorized, none outstanding............... -- --
Common stock, par $.01, 201,000 shares
authorized, 9,861 and 9,768 issued and
outstanding as of June 30, 1998
and December 31, 1997,respectively......... 99 98
Paid-in capital............................. 55,171 55,066
Retained earnings........................... 36,080 15,886
Employee receivables for stock purchases.... (30) (30)
-------- --------
Total shareholders' equity ............ 91,320 71,020
Total liabilities and shareholders' equity $ 584,461 $ 578,838
======== ========
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
JUNE 30, JUNE 30,
--------- ---------
1998 1997 1998 1997
---- ---- ---- ----
Net manufacturing sales............. $ 236,442 $156,516 $ 465,256 $270,860
Leasing revenue..................... 1,772 1,724 4,151 3,102
-------- ------- -------- -------
Total revenue...................... 238,214 158,240 469,407 273,962
Cost of sales - manufacturing....... 203,849 135,153 403,010 231,031
Cost of leasing..................... 1,332 661 2,820 1,489
-------- ------- -------- -------
Gross profit....................... 33,033 22,426 63,577 41,442
Selling, general and administrative
expenses........................... 12,958 11,310 26,120 22,062
Amortization expense................ 2,138 2,146 4,276 4,248
Gain on sale of leased freight cars. -- (325) (1,223) (587)
Patent litigation settlement........ -- -- (16,750) --
Pension termination gain............ (1,688) -- (1,688) --
-------- ------- -------- -------
Operating income................... 19,625 9,295 52,842 15,719
Interest expense, net............... 7,452 8,066 15,505 16,335
Interest expense - leasing ........ 213 667 782 1,046
-------- ------- -------- -------
Income (loss) before income taxes
and extraordinary item............. 11,960 562 36,555 (1,662)
Provision for income taxes.......... 5,225 1,076 15,777 743
-------- ------- -------- -------
Net income (loss) before
extraordinary item................ 6,735 (514) 20,778 (2,405)
Extraordinary item, net of income tax (585) -- (585) --
-------- ------- -------- -------
Net income (loss)................... $ 6,150 $ (514) $ 20,193 $ (2,405)
======== ======= ======== =======
Weighted average common
shares outstanding................. 9,813 9,837 9,790 9,805
Basic earnings (loss) per common share
before extraordinary item.......... $ 0.69 $ (0.05) $ 2.13 $ (0.25)
Extraordinary item, net of income tax (0.06) -- (0.06) --
-------- ------- -------- -------
Basic earnings (loss) per common share $ 0.63 $ (0.05) $ 2.07 $ (0.25)
======== ======= ======== =======
Diluted weighted average
common and equivalent shares
outstanding....................... 10,165 9,837 10,114 9,805
Diluted earnings (loss) per common share
before extraordinary item.......... $ 0.66 $ (0.05) $ 2.06 $ (0.25)
Extraordinary item, net of income tax (0.05) -- (0.06) --
-------- ------- -------- ------
Diluted earnings (loss) per common
share............................. $ 0.61 $ (0.05) $ 2.00 $ (0.25)
======== ======= ======== ======
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands)
(Unaudited)
Six Months Ended
JUNE 30,
----------------------
1998 1997
--------- ---------
OPERATING ACTIVITIES:
Net income (loss).................................. $ 20,193 $ (2,405)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation..................................... 7,632 7,807
Amortization - deferred financing costs.......... 2,057 1,094
Amortization - other............................. 4,836 4,859
Provision for postretirement benefits............ 1,393 1,080
Pension termination gain......................... (1,688) --
Gain on sale of leased freight cars.............. (1,223) (587)
Deferred taxes................................... (585) (623)
Changes in operating assets and liabilities:
Accounts receivable, net......................... (33,642) (12,098)
Inventories...................................... (1,264) (4,846)
Accounts payable................................. 15,077 8,702
Other assets and liabilities..................... 3,983 2,886
-------- --------
Net cash provided by operating activities.......... 16,769 5,869
-------- --------
INVESTING ACTIVITIES:
Capital expenditures............................... (5,414) (2,405)
Leasing business asset additions................... (2,265) (25,682)
Proceeds from sale of leased freight cars ......... 24,320 7,487
Other.............................................. 42 13
-------- --------
Net cash provided by (used for) investing activities $ 16,683 $ (20,587)
-------- --------
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands)
(Unaudited)
Six Months Ended
JUNE 30,
---------------------
1998 1997
--------- ---------
FINANCING ACTIVITIES:
Payments of term loans and capital lease.......... $ (16,760) $ (8,415)
Net borrowings (payments) under
JAIX Leasing loans.............................. (19,755) 16,168
Payment of deferred financing costs............... (8) (259)
Other............................................. 106 --
-------- --------
Net cash provided by (used for) financing activities (36,417) 7,494
Net decrease in cash and cash equivalents......... (2,965) (7,224)
CASH AND CASH EQUIVALENTS,
beginning of period.............................. 30,875 24,535
-------- --------
CASH AND CASH EQUIVALENTS,
end of period.................................... $ 27,910 $ 17,311
======== ========
SUPPLEMENTAL CASH FLOWS DISCLOSURE
Cash paid for interest............................. $ 16,213 $ 16,256
Cash paid for income taxes......................... $ 11,817 $ 508
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1998
(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 included by reference in the registrant's Form 10-K for the year ended
December 31, 1997.
The condensed 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.
2. INVENTORIES
Inventories of the Company consist of the following (in thousands):
June 30, December 31,
1998 1997
---- ----
Raw materials and purchased
components $ 9,474 $ 10,894
Work-in-progress and finished goods 50,464 47,780
------- --------
$ 59,938 $ 58,674
======= ========
9
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1998
(Unaudited)
3. DEBT
Long-term debt of the Company consists of the following (in thousands):
June 30, December 31,
1998 1997
---- ----
Revolving loan $ -- $ --
Tranche B term loan 76,676 93,340
------- --------
Total senior bank facilities 76,676 93,340
Industrial revenue bond 5,300 5,300
Capital lease 1,688 1,783
JAIX Leasing debt 9,403 29,159
------- --------
Total debt 93,067 129,582
Less:
Current maturities (824) (4,783)
Long-term portion of JAIX Leasing debt (8,952) (27,896)
------- --------
Long-term debt $ 83,291 $ 96,903
======= ========
10
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1998
(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 credit line portion of the Senior Bank
Facilities provides for up to $75 million of outstanding borrowings and letters
of credit, limited by the level of eligible accounts receivable and inventories.
As of June 30, 1998, availability under the revolving credit line, after
consideration of outstanding letters of credit of $16.8 million, was $58.2
million.
At the Company's election, interest rates per annum for the revolving credit
line are fluctuating rates 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 0.50% 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 the Tranche B term loan are either (a) LIBOR plus 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. As of
June 30, 1998, the weighted average interest rate of all outstanding loans under
the Senior Bank Facilities was 8.94%. Borrowings under the Senior Bank
Facilities are guaranteed by each of the Company's subsidiaries other than JAIX
Leasing (the Guarantor Subsidiaries) and are secured by the assets and stock of
the Company and its Guarantor Subsidiaries. The Tranche A term loan was repaid
in full in the third quarter of 1997 in conjunction with the issuance of debt
described in Note 4. The revolving credit line matures on March 31, 2002 and the
Tranche B term loan matures on March 31, 2003.
On April 1, 1998, the Company received $16.8 million from the settlement of its
patent infringement lawsuit. The after-tax proceeds of $10.0 million and an
additional $5.0 million from operating activities were used to prepay
obligations on the Tranche B term loan in the second quarter of 1998. The
prepayment on this loan resulted in a $1.0 million ($0.6 million after tax)
extraordinary charge representing the noncash write off of unamortized deferred
financing costs related to this retired debt.
The Senior Bank Facilities contain various financial covenants including capital
expenditure limitations, minimum 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.
11
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1998
(Unaudited)
JAIX LEASING DEBT
On June 14, 1997, JAIX Leasing entered into a ten-year term loan which bears
interest at an average interest rate of 9.35%. At June 30, 1998, debt
outstanding under the facility was $9.4 million. The facility is secured by the
underlying leases and assets and contains various covenants.
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 (3.70% as of June 30, 1998) 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.
INTEREST RATE CONTRACTS
The Company has entered into various interest rate contracts to fix a portion of
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 $75 million at a 5.98% fixed rate of interest plus the
applicable borrowing margin. The contracts mature in August 1998.
12
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1998
(Unaudited)
4. SENIOR SUBORDINATED NOTES
In conjunction with the acquisition of TCI, the Company issued $100 million of
Senior Subordinated Notes which are due August 15, 2005. In 1997, the Company
issued $80 million of additional notes due August 15, 2005 (collectively, the
Notes) with substantially identical terms to the already outstanding notes at a
$3.6 million premium, for an effective rate of 10.8%. These Notes have an
interest rate of 11.75% per annum and are guaranteed on an unsecured, senior
subordinated joint and several basis by each of the Guarantor Subsidiaries.
Pursuant to the settlement of separate interest rate contracts in effect when
each portion of the Notes was issued, the Company realized a $0.8 million loss
and a $2.6 million gain upon the 1997 and 1995 issuances, respectively. The gain
and the loss are being amortized as an offset to interest expense over the term
of the Notes. The Notes have customary restrictive covenants including
restrictions on incurrence of additional indebtedness, 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's future operating performance and ability to service or refinance
the 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.
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. Such matters include five
situations in which the Company, through its TCI subsidiaries and their
predecessors, have been named or are believed to be potentially responsible
parties ("PRP") in the contamination of the sites. With respect to claims
involving Gunite Corporation ("Gunite"), TCI and Gunite in September 1997
entered into a private-party settlement (the "Settlement") of certain pending
litigation with a prior owner of Gunite, pursuant to which each of TCI and
Gunite and the prior owner withdrew their claims against the other. As a result
of the Settlement, TCI and Gunite will not be responsible for liabilities and
costs related to certain alleged contamination of Gunite's facilities and at
certain off-site properties to the extent arising
13
<PAGE>
JOHNSTOWN AMERICA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1998
(Unaudited)
out of operations of Gunite prior to the acquisition of Gunite by TCI in
September 1987. Accordingly, the Company reduced its environmental reserves by
$14.3 million in the third quarter of 1997. As of June 30, 1998, based on all of
the information currently available to the Company, the Company has an
environmental reserve of $11.1 million 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, 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. 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.
14
<PAGE>
<TABLE>
Condensed Consolidating Balance Sheet
as of June 30, 1998
(In millions)
(Unaudited)
PAREMT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents................. $ 23.6 $ (0.2) $ 4.5 $ -- $ 27.9
Accounts receivable, net.................. -- 93.6 0.6 -- 94.2
Inventories............................... -- 59.9 -- -- 59.9
Prepaid expenses and other................ 1.7 17.3 1.8 -- 20.8
----------- ----------- ----------- ------------ -----------
Total current assets................. 25.3 170.6 6.9 -- 202.8
Property, plant and equipment, net........ 2.5 115.4 15.8 (0.3) 133.4
Other assets.............................. 138.1 249.0 0.5 (139.3) 248.3
----------- ----------- ----------- ------------ -----------
Total assets......................... $ 165.9 $ 535.0 $ 23.2 $ (139.6) $ 584.5
=========== =========== =========== ============ ===========
Accounts payable.......................... $ -- $ 70.0 $ 0.3 $ -- $ 70.3
Other current liabilities................. 0.2 68.0 0.6 -- 68.8
----------- ----------- ----------- ------------ -----------
Total current liabilities............ 0.2 138.0 0.9 -- 139.1
Noncurrent liabilities.................... -- 75.8 3.5 -- 79.3
Long-term debt, less current
maturities and intercompany
advances (receivables) ................. 74.4 191.5 8.9 -- 274.8
Total shareholders' equity................ 91.3 129.7 9.9 (139.6) 91.3
----------- ----------- ---------- ----------- ----------
Total liabilities and shareholders'
equity........................... $ 165.9 $ 535.0 $ 23.2 $ (139.6) $ 584.5
=========== =========== =========== ============ ==========
15
<PAGE>
Condensed Consolidating Statement of Income
For the Six Months Ended June 30, 1998
(In millions)
(Unaudited)
PARENT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
Total revenue............................. $ -- $ 465.3 $ 4.1 $ -- $ 469.4
Cost of sales............................. -- 403.0 2.8 -- 405.8
----------- ----------- ----------- ----------- ----------
Gross profit............................ -- 62.3 1.3 -- 63.6
Selling, general, administrative
and amortization expenses................ 1.3 29.1 0.1 -- 30.5
Gain on sale of leased freight cars....... -- -- (1.2) -- (1.2)
Patent litigation settlement.............. -- (16.8) -- -- (16.8)
Pension termination gain.................. -- (1.7) -- -- (1.7)
----------- ----------- ----------- ----------- ----------
Operating income (loss)................ (1.3) 51.7 2.4 -- 52.8
Interest expense, net..................... 6.5 9.2 0.6 -- 16.3
Equity (earnings) of subsidiaries......... (25.7) -- -- 25.7 --
Provision (benefit) for income
taxes................................... (2.9) 17.9 0.7 -- 15.7
----------- ----------- ----------- ----------- ----------
Net income (loss) before
extraordinary item..................... 20.8 24.6 1.1 (25.7) 20.8
Extraordinary item,
net of income tax........................ (0.6) -- -- -- (0.6)
----------- ----------- ---------- ----------- ----------
Net income (loss)......................... $ 20.2 $ 24.6 $ 1.1 $ (25.7) $ 20.2
=========== =========== =========== =========== ==========
16
<PAGE>
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 1998
(In millions)
(Unaudited)
PARENT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES..................... $ 7.9 $ 8.6 $ 0.3 $ -- $ 16.8
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures................... -- (5.4) -- -- (5.4)
Leasing business assets and
investments............................ 0.1 -- (2.3) -- (2.2)
Proceeds from sale of leased
freight cars........................... -- -- 24.3 -- 24.3
---------- ---------- ----------- ----------- ----------
Cash provided by (used for)
investing activities................... 0.1 (5.4) 22.0 -- 16.7
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments of term loans
and capital lease...................... (16.6) (0.1) -- -- (16.7)
Net payments under
JAIX Leasing debt...................... -- -- (19.8) -- (19.8)
Intercompany advances................... 7.1 (7.1) -- -- --
---------- ---------- ----------- ----------- ----------
Cash used for financing activities....... (9.5) (7.2) (19.8) -- (36.5)
Net increase (decrease) in cash
and cash equivalents..................... (1.5) (4.0) 2.5 -- (3.0)
CASH AND CASH
EQUIVALENTS,
beginning of period..................... 25.1 3.8 2.0 -- 30.9
---------- ----------- ----------- ----------- ----------
CASH AND CASH
EQUIVALENTS,
end of period........................... $ 23.6 $ (0.2) $ 4.5 $ -- $ 27.9
========== =========== =========== =========== ==========
17
<PAGE>
Condensed Consolidating Balance Sheet
as of December 31, 1997
(In millions)
PARENT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
Cash and cash equivalents................. $ 25.1 $ 3.8 $ 2.0 $ -- $ 30.9
Accounts receivable, net.................. -- 60.5 -- -- 60.5
Inventories............................... -- 58.7 -- -- 58.7
Prepaid expenses and other................ 2.6 13.9 1.0 -- 17.5
--------- --------- ----------- --------- ----------
Total current assets................. 27.7 136.9 3.0 -- 167.6
Property, plant and equipment, net 2.6 117.3 36.9 (0.3) 156.5
Other assets.............................. 124.7 242.8 0.8 (113.6) 254.7
--------- --------- ----------- --------- ----------
Total assets......................... $ 155.0 $ 497.0 $ 40.7 $ (113.9) $ 578.8
========= ========= =========== ========= ==========
Accounts payable.......................... $ 0.5 $ 54.7 $ -- $ -- $ 55.2
Other current liabilities................. 2.7 60.2 0.5 -- 63.4
--------- --------- ----------- --------- ----------
Total current liabilities............ 3.2 114.9 0.5 -- 118.6
Noncurrent liabilities.................... -- 78.2 3.5 -- 81.7
Long-term debt, less current
maturities and intercompany
advances (receivables).................. 80.8 198.8 27.9 -- 307.5
Total shareholders' equity................ 71.0 105.1 8.8 (113.9) 71.0
--------- --------- ---------- --------- ----------
Total liabilities and shareholders'
equity.......................... $ 155.0 $ 497.0 $ 40.7 $ (113.9) $ 578.8
========= ========= =========== ========= ==========
18
<PAGE>
Condensed Consolidating Statement of Income
For the Six Months Ended June 30, 1997
(In millions)
(Unaudited)
PARENT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
Total revenue............................. $ 0.2 $ 270.9 $ 2.9 $ -- $ 274.0
Cost of sales............................. -- 231.1 1.5 -- 232.6
---------- ------------ ----------- ---------- ----------
Gross profit ........................... 0.2 39.8 1.4 -- 41.4
Selling, general, administrative
and amortization expenses................ (0.2) 26.1 (0.2) -- 25.7
---------- ------------ ----------- ---------- ----------
Operating income ....................... 0.4 13.7 1.6 -- 15.7
Interest expense, net..................... 6.0 10.4 1.0 -- 17.4
Equity (earnings) of subsidiaries......... (1.0) -- -- 1.0 --
Provision (benefit) for income
taxes................................... (2.2) 2.7 0.2 -- 0.7
---------- ------------ ----------- ---------- ----------
Net income (loss)....................... $ (2.4) $ 0.6 $ 0.4 $ (1.0) $ (2.4)
========== ============ =========== ========== ==========
19
<PAGE>
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 1997
(In millions)
(Unaudited)
PARENT GUARANTOR
COMPANY SUBSIDIARIES JAIX LEASING ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
CASH FLOWS FROM
OPERATING ACTIVITIES..................... $ (2.2) $ 5.2 $ 2.9 $ -- $ 5.9
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures ................... (0.1) (2.3) -- -- (2.4)
Leasing business assets
and investments........................ -- -- (25.7) -- (25.7)
Proceeds from sale of leased
freight cars........................... 3.0 -- 4.5 -- 7.5
----------- ----------- ----------- ----------- ----------
Cash provided by (used for)
investing activities................... 2.9 (2.3) (21.2) -- (20.6)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments of term loans and
capital leases......................... (8.3) (0.1) -- -- (8.4)
Net borrowings under
JAIX Leasing debt...................... -- -- 16.2 -- 16.2
Intercompany advances................... 5.9 (5.9) -- -- --
Deferred financing costs paid........... -- -- (0.3) -- (0.3)
----------- ----------- ----------- ----------- ----------
Cash provided by (used for)
financing activities.................. (2.4) (6.0) 15.9 -- 7.5
Net decrease in cash and
cash equivalents......................... (1.7) (3.1) (2.4) -- (7.2)
CASH AND CASH
EQUIVALENTS,
beginning of period..................... 18.1 1.4 5.0 -- 24.5
----------- ----------- ---------- ----------- ----------
CASH AND CASH
EQUIVALENTS,
end of period........................... $ 16.4 $ (1.7) $ 2.6 $ -- $ 17.3
=========== =========== ========== =========== ==========
</TABLE>
20
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
GENERAL
The Company's sales are affected to a significant degree by the freight car and
Class 8 truck markets. Both the freight car and the Class 8 truck 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.
The operating results of Johnstown America Corporation (JAC) and Freight Car
Services (FCS), the Company's freight car manufacturing subsidiaries, 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.
During the first six months of 1998, net income of $20.2 million included three
non-recurring items: an extraordinary charge (net of income tax) of $0.6 million
related to early debt retirement, a patent lawsuit settlement of $16.8 million
($10.0 million after tax) and a pension termination gain of $1.7 million ($1.0
million after tax). Net income for the first six months of 1998 excluding the
three non-recurring items was $9.8 million.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
TOTAL REVENUE
Total revenue for the three months ended June 30, 1998 increased by 50.6% to
$238.2 million from $158.2 million in the second quarter of 1997. The revenue
increase of $80.0 million was due primarily to the increase in freight car sales
of $80.4 million (2,163 new and rebuilt cars sold in 1998 versus 1,043 new and
rebuilt cars sold in 1997). Iron castings operations revenues increased $1.2
million, offset by a $1.3 million decrease in revenue from the truck components
operations which was primarily due to a three week labor strike in May 1998 at
Gunite Corporation.
21
<PAGE>
COST OF SALES - MANUFACTURING AND GROSS PROFITS
Cost of Sales - Manufacturing for the three months ended June 30, 1998 as a
percent of manufacturing sales was 86.2%, compared to 86.4% in 1997. Related
gross profit margins were 13.8% and 13.6%, respectively. Freight car operations
gross profit margins as a percentage of sales substantially improved versus the
second quarter of 1997, offsetting the impact of a higher mix of freight car
business relative to the truck component and iron casting operations which
historically generate higher gross profit margins as a percentage of sales. The
aggregate gross profits increased $10.6 million and was a result of increased
sales and margins, primarily from the freight car business.
SELLING, GENERAL, ADMINISTRATIVE AND AMORTIZATION
Selling, general, and administrative expenses as a percentage of total revenue
were 5.4% and 7.1% for the three months ended June 30, 1998 and 1997,
respectively. The decrease in selling, general, and administrative expense as a
percent of total revenue was primarily caused by the significant increase in
total revenue of $80.0 million, without a similar increase in costs needed to
achieve such revenues. Amortization expense as a percentage of total revenue was
0.9% and 1.4% for the three months ended June 30, 1998 and 1997, respectively,
although actual amortization expense remained consistent period to period.
OPERATING INCOME
Operating income was $19.6 million in the second quarter of 1998, compared to
$9.3 million in the second quarter of 1997. Increased sales and margins
accounted for $10.6 million of the increase. The Company also recognized a $1.7
million gain on the termination of a former pension plan, versus a $0.3 million
gain in the second quarter of 1997 from the sale of leased freight cars. These
increases to operating income were offset by an increase in selling, general,
and administrative expenses of $1.6 million.
OTHER
Interest expense, net, was $7.7 million in the second quarter of 1998 compared
to $8.7 in the second quarter of 1997. A decrease of $0.7 million in leasing
business and term debt interest expense, as a result of reduced levels of
related debt, and a $0.3 million increase in interest income in the second
quarter of 1998 resulted in a decrease in net interest expense of $1.0 from 1997
levels.
During the second quarter, related to early debt retirement, the Company
recorded a $1.0 million ($0.6 million after tax) extraordinary charge
representing the noncash write-off of unamortized deferred financing costs
related to this debt.
22
<PAGE>
Net income and diluted earnings per share before the extraordinary item for the
second quarter of 1998 were $6.7 million and $0.66, respectively, compared to a
net loss and loss per share of $0.5 million and $0.05, respectively, for the
second quarter of 1997.
Net income and diluted earnings per share for the second quarter of 1998 were
$6.2 million and $0.61, respectively compared to a net loss and loss per share
of $0.5 million and $0.05, respectively, for the second quarter of 1997.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
TOTAL REVENUE
Total revenue for the six months ended June 30, 1998 increased by 71.3% to
$469.4 million from $274.0 million in the first six months of 1997. The revenue
increase of $195.4 million was due primarily to the increase in freight car
sales of $183.1 million (4,250 new and rebuilt cars sold in 1998 versus 1,575
new and rebuilt cars in 1997). Truck components and assemblies operations
revenues, which were negatively effected by the Gunite labor strike in May 1998,
increased $7.2 million and iron casting operations revenues increased $5.1
million over the first six months of 1997. As of June 30, 1998 the Company's
backlog of new and rebuilt freight cars was 5,194 as compared to 1,949 new and
rebuilt freight cars on June 30, 1997.
COST OF SALES - MANUFACTURING AND GROSS PROFITS
Cost of Sales - Manufacturing for the six months ended June 30, 1998 as a
percent of manufacturing sales was 86.7%, compared to 85.3% in 1997. Related
gross profit percentages were 13.3% and 14.7%, respectively. The decline in
gross profit percent resulted primarily from increased sales from the freight
car business which have historically generated lower gross profit margins than
the truck components and iron castings operations. The aggregate gross profit
increased $22.1 million and was a result of increased sales, primarily from the
freight car business.
SELLING, GENERAL, ADMINISTRATIVE AND AMORTIZATION
Selling, general, and administrative expenses as a percentage of total revenue
were 5.6% and 8.1% for the six months of 1998 and 1997, respectively. The
decrease in selling, general, and administrative expense as a percentage of
total revenue is primarily due to the significant increase in total revenues of
$195.4 million. Amortization expense as a percentage of total revenue was 0.9%
and 1.6% for the six months of 1998 and 1997, respectively, although actual
amortization expense remained constant period to period.
23
<PAGE>
OPERATING INCOME
Operating income was $52.8 million in the first six months of 1998, compared to
$15.7 million in the first six months of 1997. Increased sales and margins
accounted for $22.1 million of the increase. In addition, during the first six
months of 1998 the Company settled a patent infringement lawsuit for $16.8
million and recognized a gain of $1.7 on the settlement of a former pension plan
at Gunite, the latter of which was generally offset by the impact of the three
week strike at Gunite in the second quarter of 1998. The Company also recognized
a $1.2 million gain in the first six months of 1998 versus a $0.6 million gain
in the first half of 1997 from the sale of leased freight cars. These increases
to operating income were offset by an increase in selling, general and
administrative expense of $4.1 million.
OTHER
Interest expense, net, was $16.3 million in the first half of 1998 compared to
$17.4 million in the first half of 1997. A decrease of $0.9 million on leasing
business and term debt interest expense, as a result of reduced levels of
related debt and a $0.4 million increase in interest income was offset by the
one time write-off of $0.2 million of non-cash deferred financing costs, in
connection with reductions in leasing business debt in the first half of 1998.
Net income and diluted earnings per share before the extraordinary item for the
first six months of 1998 were $20.8 million and $2.06, respectively, compared to
a net loss and loss per basic share of $2.4 million and $0.25, respectively, for
the first six months of 1997.
Net income and diluted earnings per share for the first six months of 1998 were
$20.2 million and $2.00, respectively, compared to a net loss and loss per
diluted share of $2.4 million and $0.25, respectively, for the first six months
of 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1998, the Company provided net cash from
operations of $16.8 million compared with providing net cash of $5.9 million for
the first six months of 1997. The Company provided $16.7 million of net cash
from investing activities for the first half of 1998, which was generated by
proceeds from the sale of leased freight cars of $24.3 million, offset by $5.4
million used for capital expenditures and $2.3 million for leased business asset
additions. Cash used for financing activities was $36.4 million for the first
six months of 1998 and represents senior debt and leasing business debt pay
downs. JAIX Leasing loans were paid down by $19.8 million with the proceeds from
the sale of 380 cars from the lease fleet in the first quarter of 1998. The
Company also made $1.8 million in scheduled term debt and capital lease payments
and $15.0 in term loan prepayments in the second quarter. The prepayments were
funded by proceeds from the patent lawsuit settlement and cash provided by
operating activities.
24
<PAGE>
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, 1998, there was $76.7 million of term loans outstanding under the
Senior Bank Facilities, $182.5 million of Notes outstanding, and no borrowings
under the $75 million revolving credit line under the Senior Bank Facilities.
Availability under the revolving credit line, after consideration of outstanding
letters of credit of $16.8 million, was $58.2 million.
Interest payments on the Notes and the Senior Bank Facilities represent
significant liquidity requirements for the Company. The Notes require semiannual
interest payments of approximately $10.6 million. Borrowings under the Senior
Bank Facilities bear interest at floating rates and requires interest payments
on varying dates depending upon the interest rate option selected by the
Company. The term loan under the Senior Bank Facilities does not require any
material periodic principal payments until March, 2000.
In June 1997, JAIX Leasing Company entered into a term loan facility to finance
its freight car leasing activities. See footnote 3 of the Condensed Consolidated
Financial Statements for the six months ended June 30, 1998, for a description
of this loan. As of June 30, 1998, there was $9.4 million outstanding under this
facility.
The Company and its subsidiaries utilize software and related technologies
throughout its businesses that will be affected by the date change in the year
2000. In 1997 the Company initiated a comprehensive program to ensure that its
various business systems continue to function properly in the year 2000. The
cost of becoming "Year 2000" compliant is not expected to be material in
relation to the consolidated financial statements.
The Company believes that the cash flow generated from its operations, together
with amounts available under its revolving credit line, 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 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, 1998, the Company's balance sheet included cash of $27.9 million.
ENVIRONMENTAL MATTERS
The Company's subsidiaries are currently involved in several matters relating to
the investigation
25
<PAGE>
and/or remediation of locations where the subsidiaries have arranged for the
disposal of foundry and other wastes. Such matters include five situations in
which the Company, through its TCI subsidiaries and their predecessors, have
been named or are believed to be potentially responsible parties ("PRP") in the
contamination of the sites. With respect to claims involving Gunite Corporation
("Gunite"), TCI and Gunite in September 1997 entered into a private-party
settlement (the "Settlement") of certain pending litigation with a prior owner
of Gunite, pursuant to which each of TCI and Gunite and the prior owner withdrew
their claims against the other. As of result of the Settlement, TCI and Gunite
will not be responsible for liabilities and costs related to certain alleged
contamination of Gunite's facilities and at certain off-site properties to the
extent arising out of operations of Gunite prior to the acquisition of Gunite by
TCI in September 1987. As of June 30, 1998, based on all of the information
currently available to the Company, the Company has an environmental reserve of
$11.1 million 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,
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.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" introduces a new model for segment reporting, called the
"management approach." The management approach is based on the way that the
chief operating decision maker organizes segments within the company for making
operating decisions and assessing performance. Management of the Company is
evaluating this new pronouncement to determine its impact upon current
reporting. Adoption of this new standard is scheduled for late 1998.
SFAS No. 130, "Reporting Comprehensive Income" was issued in July 1997 and was
adopted by the Company effective January 1, 1998. This new pronouncement
establishes standards for reporting and display of comprehensive income and its
components. During the first six months of 1998 there were no comprehensive
items to report.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was
issued in
26
<PAGE>
June 1998 and must be adopted by the Company in year 2000. This new
pronouncement will require the Company to record derivatives on the balance
sheet as assets or liabilities, measured at fair value and gains or losses
resulting from the changes in the values of those derivatives would be accounted
for depending on the use of the derivative and whether it qualifies for hedge
accounting. The Company is evaluating the standard and does not expect it to
have a material impact on the financial results or condition of the Company
because the use of derivatives at the Company is not significant.
SOP 98-5, "Reporting on Costs of Start-Up Activities" was issued in April 1998
and is required to be adopted by the Company no later than 1999. The new
pronouncement requires that companies expense the costs of start-up activities
as those costs are incurred. Previously, such costs could have been capitalized
and amortized and any such unamortized capitalized costs must be expensed upon
adoption of the new standard. Management does not expect that adoption of this
standard will have a material impact on the Company's financial position or
results of operations.
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.
27
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the lawsuit commenced by Truck Components Inc. and Brillion Iron Works, Inc.
("Brillion") against Beatrice and the Robins Group seeking, among other things,
indemnification from prior owners of Brillion for certain environmental costs,
the United States Court of Appeals for the Seventh Circuit on May 7, 1998
affirmed the 1996 judgment of the district court which held that the defendants
did not owe any indemnity obligation to Brillion for the sites at issue and that
Brillion owes Karl F. Gabler $0.2 million pursuant to a 1987 indemnity contract.
In June 1998, the Court denied Brillion's petition for rehearing. Another
lawsuit by Brillion against Beatrice and its parent, ConAgra, Inc., for, among
other things, indemnification and recovery of costs at another site, the
Lemberger Landfill, was commenced in December 1997 and remains pending. Such
case is in the early stages of discovery with oral agreements set for September
1998 on a motion to dismiss filed by Beatrice and ConAgra.
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 SECURITY HOLDERS.
The Company's Annual Meeting of Shareholders was held on May 7, 1998. At the
meeting, shareholders voted on the election of two directors. The results were
as follows:
1. Election of Directors
VOTES FOR VOTES WITHHELD
--------- --------------
R. Philip Silver 9,007,009 43,525
Francis A. Stroble 9,007,209 43,325
28
<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, 1998:
Form 8-K filed by the Company on April 6, 1998 regarding the settlement of the
patent infringement lawsuit with Trinity Industries, Inc.
29
<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: August 6, 1998
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