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S&P Revises Johnstown America Industries Outlook to Stable

25 June 1998

S&P Revises Johnstown America Industries Outlook to Stable

    NEW YORK, June 24 -- Standard & Poor's today revised its
outlook on Johnstown America Industries Inc. to stable from negative and
affirmed its ratings on the company (see list below).
    The outlook revision reflects an improved cost structure in rail car
manufacture.  Near-term rail car demand is healthy, and efficiency measures
position the company to better cope with future downturns.  Overall credit
quality reflects substantial market shares in niche areas of highly cyclical
industries and significant financial risk.  The balance sheet is highly
leveraged, with debt to total capital in the high-70% area.
    Chicago, Ill.-based Johnstown America is a holding company for
subsidiaries that manufacture railroad freight cars, components and assemblies
for heavy duty trucks, and iron castings for industrial and automotive
markets.  Operating units command substantial market presence in specific
product lines.  However, demand is subject to sharp swings, and price
competition is intense.  Sales of coal cars are recovering from steeply
depressed levels in early 1997.  Management has introduced new railcar types,
reduced Johnstown America's overall expense levels, and positioned operations
to better cope with volatile freight car market conditions.  Demand continues
to be healthy for the company's heavy truck components and for castings.
    Internal cash generation benefits from very manageable requirements for
working capital and for fixed asset outlays.  Nevertheless, the balance sheet
is highly leveraged.  Rising internal cash flow provides moderate financial
flexibility.
    OUTLOOK: STABLE
    Improved efficiency measures provide flexibility for weathering a brief
downturn in demand.  Substantial debt leverage precludes any improvement in
credit quality over the intermediate term, Standard & Poor's said. --
CreditWire

    OUTSTANDING RATINGS AFFIRMED
                                                       Rating
    Corporate credit rating                                 BB-
    $100 mil. 11.75% senior subordinated notes due 2005     B
    $80 mil. 11.75% series B senior sub notes due 2005      B
    Bank loan ratings:
    Revolving credit facility                               BB-
    $97 mil. tranche B term loan due 2003                   BB-