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Johnstown America to Acquire Additional Foundry Capacity

3 May 1999

Johnstown America to Acquire Additional Foundry Capacity For Wheel-End Components

    CHICAGO--May 3, 1999--Johnstown America Industries, Inc. today announced that its Gunite Corporation subsidiary has signed a definitive agreement to acquire EMI Company, an iron foundry and machining company located in Erie, Pennsylvania, from Hitachi Metals America, Ltd. The transaction is expected to be completed within a month. Terms of the agreement were not disclosed. However, the company said no additional debt will be incurred because it will use cash on-hand to fund the acquisition.
    EMI has annual revenues of approximately $55 million, with its line of wheel-end components for medium and heavy-duty trucks and trailers currently representing approximately 40 percent of revenues. Through its acquisition of EMI, Gunite intends to substantially increase EMI’s production of wheel-end components.
    “Given the continued strength of the heavy-duty truck market, Gunite has been operating at capacity for some time,” said Thomas M. Begel, chairman, president and chief executive officer of Johnstown America Industries. “By utilizing capacity at EMI, Gunite will be able to better service original equipment manufacturers, improve operating efficiencies and recapture market share in the higher margin aftermarket business.”
    Added Thomas W. Cook, senior vice president of JAII and president of Gunite Corporation, “To meet customer needs, Gunite has had to schedule extensive overtime and purchase castings from outside vendors. The EMI acquisition solves Gunite’s capacity issues and provides us with an immediate and efficient way to grow the company at a very reasonable cost.”
    Gunite Corporation, with operations in Rockford, Illinois and Elkhart, Indiana, manufactures brake drums, rotors, slack adjustors, disc wheel hubs and spoke wheels for medium and heavy-duty trucks and trailers and the truck parts aftermarket. Its key customers include Freightliner, Mack, Navistar and PACCAR.
    EMI is the second acquisition announced by Johnstown America Industries during 1999. On April 29, the company completed its acquisition of Imperial Group, Inc., a leading supplier of body and chassis components to the heavy-duty truck industry.
    JAII, headquartered in Chicago, Illinois, has two operating segments. The Truck Components segment’s current product lines include Gunite wheel-end components, Brillion custom iron castings, Bostrom truck and bus seating systems, and Fabco steerable drive axles and gearboxes. JAII’s Freight Car segment, which includes Johnstown America Corporation, Freight Car Services, Inc. and JAIX Leasing Co., builds, rebuilds and leases freight cars used for hauling coal, autos, and agricultural and mining products.

    The statements herein, which are not historical facts, including statements about future expectations, are “forward-looking statements” that involve certain risks and uncertainties that could cause actual future results to differ materially from those stated. These risks are spelled out more fully in the company’s SEC filings. The company assumes no obligation to update its forward-looking statements.