SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                           Commission File No. 0-21830

                       Johnstown America Industries, Inc.
             (Exact name of registrant as specified in its charter)

          Delaware                                     25-1672791
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)
                            980 North Michigan Avenue
                                   Suite 1000
                             Chicago, Illinois 60611
                    (Address of principal executive offices)

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

Securities registered  pursuant to Section 12 (b) of the Act:  None

Securities registered pursuant to Section 12 (g) of the Act:

        Common Stock, $.01 par value        NASDAQ National Market System

Indicate by checkmark  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________

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein,  and will not be contained,  to the best
of the registrant's  knowledge,  in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K.

                     ___________

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold,  or the average bid and asked  prices of such
stock,  as of a specified date within 60 days prior to the date of filing.  (See
definition of affiliate in Rule 405.)

                        $38,576,291 as of March 12, 1997.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

              Class                       Outstanding at March 12, 1997

   Common Stock, $.01 par value                      9,755,062




Portions of the following  documents are  incorporated  by reference in Parts II
and III of this Report:  (1) Registrant's  Annual Report to Shareholders for the
fiscal  year ended  December  31,  1996 (Part II);  and (2)  Registrant's  Proxy
Statement for the Annual Meeting of Shareholders to be held on May 1, 1997 (Part
III).




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                                     PART I

                                Item 1. Business

                                   The Company

        Johnstown  America  Industries,   Inc.  (the  "Company"),   through  its
subsidiaries,  designs and manufactures  railroad  freight cars,  components and
assemblies primarily for medium and heavy-duty trucks and high quality,  complex
iron castings for transportation-related and a variety of other markets.
The Company's principal business operations are:

        Railroad  Freight  Cars.  Johnstown  America  Corporation  ("JAC")  is a
leading manufacturer of railroad freight cars used principally for hauling coal,
agricultural  and  mining  products,  intermodal  containers  (which are used on
trucks and ships as well as on freight  cars) and highway  trailers.  JAC is the
largest North American  manufacturer of coal freight cars. JAC is recognized for
its expertise in the development  and manufacture of aluminum  freight cars that
increase load capacity and  consequently  reduce carrier  costs.  In addition to
manufacturing aluminum coal cars, the Company has introduced an aluminum covered
hopper car designed for high volume grain transport. As part of its full-service
business  strategy,  the Company through Freight Car Services,  Inc. ("FCS") has
established  a  presence  in the  growing  market  for  freight  car  repair and
rebuilding  services  and  through  JAIX  Leasing  Company  ("JAIX")  offers its
customers freight car leasing and fleet management alternatives.

        Truck Components and Assemblies.  Gunite  Corporation  ("Gunite") is the
leading North American  supplier of wheel-end  systems and  components,  such as
brake  drums,  disc wheel hubs,  spoke  wheels and rotors to original  equipment
manufacturers  ("OEMs") in the  heavy-duty  truck  industry.  Gunite is a market
leader in the production of automatic slack adjusters  (braking devices mandated
for all new trucks  produced  with air brakes since  October 1994) and wheel-end
components for anti-lock  braking systems ("ABS"),  which have been mandated for
all new trucks  beginning in March 1997 and all new trailers  beginning in March
1998.  In addition to serving  OEMs,  Gunite has  significant  sales to the less
cyclical   aftermarket.   Bostrom  Seating,   Inc.   ("Bostrom")  is  a  leading
manufacturer  of air suspension  and static  seating  systems for the medium and
heavy-duty truck industry.  Fabco Automotive  Corporation ("Fabco") is a leading
supplier of steerable drive axles, gear boxes and related parts for heavy on/off
highway trucks and utility vehicles.

        Iron Castings.  Brillion Iron Works, Inc.  ("Brillion")  operates one of
the  nation's  largest  and most  versatile  iron  foundries  and is  focused on
providing  high  quality  complex  castings  to  customers  in a wide  range  of
industries,   including  the  truck,   industrial   machinery,   automotive  and
construction  equipment markets.  A leader in ductile iron technology,  Brillion
specializes in the production of lightweight,  intricate thin wall castings.  In
addition to providing an important  source of high quality  castings for Gunite,
Brillion has  long-standing  relationships  with many of its over 225 customers.
Generally,  once a foundry begins  production of a product,  it will continue to
manufacture  the item for the product's life cycle.  Brillion also  manufactures
and sells a line of farm equipment products.

Corporate History of the Company

         An investor group led by Thomas M. Begel,  the Chairman,  President and
Chief Executive  Officer of the Company and the former  Chairman,  President and
Chief Executive  Officer of The Pullman  Company,  formed the Company in 1991 as
the holding  company for JAC to acquire  substantially  all of the assets of the
freight car manufacturing business of Bethlehem Steel Corporation ("Bethlehem"),
a business started in 1901 in Johnstown,  Pennsylvania and acquired by Bethlehem
in 1923. JAC acquired the freight car  manufacturing  business from Bethlehem in
October 1991 for approximately $53.3 million.


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        In July 1993, the Company  completed an initial  public  offering of its
common stock and in February 1994 the Company completed a secondary  offering of
its common stock.

        In January 1995, the Company purchased Bostrom,  a leading  manufacturer
of  heavy-duty  truck  seating  systems  located  in  Piedmont,   Alabama,   for
approximately  $32.4  million.   Bostrom  was  founded  in  1935  in  Milwaukee,
Wisconsin.

        In  January  1995,  the  Company  through  FCS  acquired  a freight  car
rebuilding  and repair  facility  in  Danville,  Illinois  for $2.5  million and
through 1996 has spent capital of $2.6 million for refurbishment.
FCS started operations in October 1995.

        In August 1995, the Company acquired Truck Components,  Inc. ("TCI"),  a
holding company for Gunite, Brillion and Fabco, for approximately $266.1 million
in cash, including the repayment of TCI's existing indebtedness.  TCI was formed
in 1987 in order to acquire Gunite and Fabco from Fruehauf Corporation now known
as K-H  Corporation  ("K-H").  In 1988,  TCI acquired  Brillion  from a group of
investors led by the Robins Group.  Gunite was founded in Rockford,  Illinois in
1854 as a custom  manufacturer of cast iron products.  Fabco was founded in 1918
in Oakland,  California  as a  manufacturer  of truck  components  and specialty
vehicles.  Brillion  was founded in 1890 as a farm  equipment  manufacturer  and
constructed its first iron foundry in 1933.

Freight Car Operations

        The  Company is a leading  manufacturer  of railroad  freight  cars used
principally  for hauling  coal,  agricultural  and mining  products,  intermodal
containers  (which are used on trucks and ships as well as on freight  cars) and
highway trailers. As part of its full-service business strategy, the Company has
expanded  its  presence  in the  growing  market  for  freight  car  repair  and
rebuilding  services  and offers its  customers  freight  car  leasing and fleet
management alternatives.

        Products and Services

        The Company  participates in the following  freight car market segments:
new car manufacturing; rebuilds, repairs and modifications; sales of freight car
kits and parts; and freight car leasing and fleet management.

        New Car  Manufacturing.  The Company's  freight car  operations  offer a
range of car types in an effort to take advantage of industry  trends and market
opportunities,  particularly in the development of aluminum freight cars used in
the  shipment  of  bulk  commodities.   The  Company's  freight  car  operations
manufacture the following types of freight cars:

               Gondolas.  The BethGon  Coalporter(R)  is a patented twin tub car
designed for the coal and utility industries.  The BethGon was designed to carry
more coal with  greater  stability  and  remains  the  dominant  type of car for
hauling coal,  particularly for hauling  low-sulfur coal from the western United
States.  Although the BethGon is made in either  steel or aluminum,  most of the
BethGons delivered in the last few years have been made of aluminum.  In 1994, a
new  smooth-sided  Aeroflo Aluminum BethGon was introduced which offers carriers
both fuel  savings and added cubic  carrying  capacity.  In 1996,  a new lighter
weight BethGon was introduced which weighs  approximately 3,500 pounds less than
a standard BethGon,  thereby enabling the car to carry  significantly  more coal
per trip.  This new car has been received by the  marketplace  with  significant
interest.

               Open  Hoppers.  To expand its product  line to service the entire
coal market, the Company's freight car operations began  manufacturing  aluminum
open hoppers in 1994. The Company's  freight car operations  have the capability
to produce both aluminum and steel open hoppers and recently

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developed and  introduced an aluminum  rapid  discharge  coal car (the AutoFlood
II(TM)) that  provides 18 tons more  capacity per load than  conventional  steel
automatic  discharge freight cars. The aluminum  AutoFlood II(TM) coal car, with
its patented  automatic  discharge  system providing a more efficient method for
the rapid  discharge of coal,  is being well  received in the  marketplace.  The
Company's freight car operations have been manufacturing an increasing  quantity
of open hopper cars and  believes  that demand for such cars will result in open
hopper cars representing a larger share of its product mix in the future.

        Covered  Hoppers.  Covered  hopper  cars are used to haul  agricultural,
chemical and mineral  products.  In 1994,  the Company's  freight car operations
introduced the Grainporter  2000(TM),  the first aluminum  covered hopper car in
its size range available in high volume  production,  that is designed primarily
for high volume  transportation  of grain. The Company's freight car operations'
first commercial production of the Grainporter 2000(TM) began in 1995.

        Intermodal   Cars.   Intermodal  cars  are  primarily  used  for  moving
intermodal  containers  and trailers.  As a result of a substantial  build-up of
intermodal  cars in the early  1990s,  the  market  for  intermodal  cars  began
declining in 1995 and continued to decline in 1996.  As a result,  there were no
sales of intermodal cars in 1996 and none are expected in 1997.

        Specialty Cars. The Company's  freight car operations  manufacture other
cars for the special  needs of a particular  industry or  customer,  including a
mill gondola car,  which is used to haul steel  slabs,  coils or scrap,  an open
hopper  or  gondola  wood chip car,  which is used to haul wood  chips,  a waste
hauling car, which is used to haul industrial  sludge,  and an ore car, which is
used by railroads to transport taconite pellets and iron ore.

        Rebuilds,  Modifications and Repairs. Freight cars are typically rebuilt
once between 15 and 20 years to extend their life. To pursue what it believes to
be growing  opportunities to service the aging North American freight car fleet,
and further expand its presence in the generally  fragmented  market for freight
car rebuilding,  maintenance and repair,  FCS purchased a freight car repair and
rebuilding  facility in Danville,  Illinois in January 1995.  Operations at this
new  facility,  which is  advantageously  located in the  Midwest,  commenced in
October of 1995. FCS performs total rebuilds,  modifications and repairs of used
freight cars and manufactures certain new cars.

        Car Kits and Parts.  JAC sells kits  containing  the parts  necessary to
build (or rebuild) a particular car to rebuilders and others including FCS, such
as railroads with car building but not fabrication capability.  JAC also markets
a  variety  of  fabricated  parts  to  freight  car  rebuilders  who do not have
fabrication capabilities.

        Leasing.  To meet the needs of its  customers,  the Company  entered the
freight car leasing business in 1994. Through JAIX Leasing, the Company provides
operating  lease  alternatives  to  customers  on new and rebuilt car as well as
fleet  management  services.  As of December 31, 1996,  the Company owned or had
under  management  1,067 railcars in its operating  lease fleet,  representing a
total  investment of  approximately  $22.6  million,  $13.6 million of which was
provided through limited-recourse borrowings.

        Manufacturing

        JAC's  manufacturing  operations  are  conducted  primarily  through two
facilities  located in  Johnstown,  Pennsylvania.  JAC has reduced the number of
freight car erection lines at its  facilities  during 1996 as demand for freight
cars declined.  This has resulted in significant cost  reductions.  In addition,
JAC has  focused on making  its  manufacturing  facilities  and  processes  more
flexible while at the same time reducing  change-over  times and inventories and
improving  product  quality.  Many  of  these  improvements  were  developed  by
involving  the   participation  of  manufacturing   employees,   management  and
customers. JAC has implemented cellular manufacturing concepts,  whereby various
manufacturing steps are

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accomplished  in one location  within the  facility,  to  eliminate  unnecessary
movement  of parts  within the  facility,  improve  production  rates and reduce
inventories.  These  improvements  are  intended to provide  JAC with  increased
flexibility  in scheduling  the  production of orders and to minimize  down-time
resulting from car type  change-overs,  thereby increasing the efficiency of its
manufacturing operations.

        FCS'  rebuilding  and repair  operations  are conducted at its Danville,
Illinois facility.

        Customers

        The Company has maintained long-term relationships with major purchasers
of freight cars.  Long-term customers are particularly  important in the freight
car  industry  given the limited  number of buyers and sellers of freight  cars.
Such customers include railroads,  utilities,  grain shippers, leasing companies
and major construction and industrial companies.

        The large  average  size of orders  often  results in a small  number of
customers  representing a significant portion of JAC's revenues in a given year.
In 1996, the top five customers accounted for approximately 52% of the Company's
revenues from its freight car operations.


Truck Components and Assemblies Operations

Gunite

        Gunite is the leading North American  supplier of wheel-end  components,
such as brake  drums,  disc wheel hubs,  spoke  wheels and rotors to OEMs in the
heavy-duty truck industry. Gunite also supplies such products to the aftermarket
as well as the medium-duty truck and trailer markets.

        OEMs have increasingly stressed product quality,  engineering capability
and  customer  service,  as well as price,  in awarding  business to  suppliers.
Gunite has  distinguished  itself among  wheel-end  component  manufacturers  by
providing its customers with dependable  design and testing support and reliable
customer  service.  Gunite works  closely with its  customers'  product  design,
marketing and purchasing  departments,  including  vendor quality  certification
personnel.  Gunite  has  received  top  quality  awards  from  all of its  major
customers.  Obtaining  quality  awards  is a  competitive  advantage  because  a
manufacturer  must  first go through  the OEM's  quality  certification  process
before it can become a qualified supplier.

        Markets

        The truck  components  industry in which Gunite  competes is composed of
two primary markets:  (i) the OEM market;  and (ii) the vehicle  maintenance and
repair sector, also called the replacement market or aftermarket. The OEM market
served by Gunite includes truck  manufacturers  such as Navistar,  Freightliner,
PACCAR, Ford, Volvo GM and Mack Trucks. For the twelve months ended December 31,
1996,  approximately  66% of  Gunite's  total  net  sales  were to OEMs  and the
remainder was to the aftermarket.

        OEMs use  independent  suppliers  for the  production  of most parts and
components.  The use of independent  suppliers,  also known as  outsourcing,  is
largely a result of the ability of independent suppliers to design, engineer and
manufacture  production parts and components at a more competitive cost than the
OEMs.  Outsourcing also enables the OEMs to be more responsive to changes in the
marketplace  and in  technology  and to  reduce  their  capital  investment.  In
general, OEMs increasingly have turned to suppliers to design products, engineer
prototypes and manufacture  parts and components for the life of their vehicles.
The OEMs also have sought to minimize the size of their  supplier  base in order
to  improve  quality,  efficiency  and their  ability to manage  their  supplier
network. The success of suppliers in obtaining

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and maintaining  supply  relationships has been a function of four factors:  (i)
consistent product quality; (ii) competitive pricing; (iii) technical expertise;
and (iv)  responsiveness to changes in the marketplace.  The net effect of these
changes has been to increase the  opportunities  for, as well as the competitive
pressures faced by, independent suppliers to the OEM market.

        Sales of Gunite's  products to OEMs are affected,  to a large extent, by
heavy-duty  truck  production  volume  which,  in turn,  is dependent on general
economic conditions. Historically, heavy-duty truck sales have been cyclical. In
general, Gunite's sales tend to follow the North American Class 8 truck build.

        Gunite  seeks  to  increase   sales  to  the  OEM  market   through  the
"standardization" process. In this process, Gunite sales representatives call on
OEM purchasers and Gunite's  engineers work with OEM engineering  departments to
attempt to have Gunite products  selected for the OEMs product lines as standard
equipment.  Once a product is chosen as standard on a line of trucks,  any order
of a truck in that line will come with the  standard  part  unless  the  end-use
customer  specifies a  different  type of  product.  If a  different  product is
specified  by an  end-user,  the  end-user  is  generally  required  to  pay  an
additional  fee to the OEM.  Selection of a Gunite product as standard on a line
of trucks will generally  create a steady demand for that product.  Because such
demand is a derivative of the sales of the particular truck line, being standard
on certain lines may be more advantageous than being standard on others.  Gunite
wheelend  components are currently  standard on certain Navistar,  Freightliner,
PACCAR, Ford and Mack Truck lines.

        Aftermarket  customers  include the service  organizations  of the OEMs,
parts  manufacturers and distributors.  Aftermarket sales principally consist of
the  sale  of  brake  drums.  Sales  of  Gunite's  products  to the  aftermarket
historically  have been less adversely  affected by general business  conditions
since vehicle  owners are more likely to repair  vehicles than purchase new ones
during  recessionary  periods.  Aftermarket  sales, which are tied to the age of
vehicles in service and the need for replacement  parts, have been increasing in
recent years due to Gunite's focus on the aftermarket and the fact that Gunite's
products  are offered as  standard  on more trucks than any of its  competitors'
products.  Gunite's  strategy is to  increase  sales to the  aftermarket,  where
margins are higher  when  compared to the OEM  market,  by  capitalizing  on its
reputation  as a  quality  leader in the  industry  and  continuing  to focus on
customer service.

        Products

        Gunite  supplies the medium- and  heavy-duty  truck and trailer  markets
with a full line of wheelend  components.  These products are made by Gunite and
delivered to the customer either as component parts or in assemblies  which have
been pre-balanced by Gunite. Gunite products are utilized in four basic systems:
(i) Disc Wheel Hub-and-Brake Drum; (ii) Spoke  Wheel-and-Brake Drum; (iii) Spoke
Wheel-andBrake Rotor; and (iv) Disc Wheel Hub-and-Brake Rotor. Generally,  brake
drums and rotors are the braking  devices that work with the  vehicle's  braking
system to stop the  vehicle.  Wheel  hubs and spoke  wheels  are the  connecting
pieces between the brake system and the axle and upon which the rim and tire are
mounted.

        Gunite offers a full line of brake drums and rotors for Class 6, 7 and 8
trucks and  trailers.  The  aftermarket  opportunities  in this product line are
substantial as all brake drums wear with use and eventually need to be replaced.
The timing of such replacement depends on the severity of service.

        Gunite  manufactures a full line of spoke wheels and disc wheel hubs for
Class 6, 7 and 8 trucks and trailers.  Truck builders have recently  purchased a
greater  percentage  of disc  wheel  hubs in place of spoke  wheels due to their
perceived better performance  characteristics and ease of maintenance.  However,
spoke wheels are still popular for severe duty due to their higher strength.

        In response to growing  concerns  by truck  fleet  operators  over brake
adjustment,  Gunite  introduced its initial  automatic slack adjuster product in
1984. Brake adjustment is vital to the operation of a truck for

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several reasons.  During use, the brake shoe and drum wear down, causing changes
in  the  gap  between  the  brake  shoe  and  drum.  These  changes  lessen  the
effectiveness  and  therefore  the safety of the  brakes.  Gunite's  approach to
"clearance-sensing"  technology allows its slack adjuster to react to and adjust
for variations in shoe-to-drum  clearance  automatically,  as compared to manual
slack  adjusters.   The  use  of  Gunite's  automatic  slack  adjusters  reduces
maintenance costs,  improves braking performance and minimizes  side-to-pull and
stopping  distance.  Slack adjusters were mandated for all new trucks in October
1994.  Gunite believes it is presently the second largest  supplier of automatic
slack adjusters to the heavy-duty trucking industry.

        Gunite's product line also includes  finely-machined hubs and wheels for
ABS, which enhance vehicle safety and have been mandated for all new trucks with
air  brakes,  beginning  in March  1997,  and all new  trailers  with air brakes
beginning in March 1998. The  production of ABS parts  constitutes a value-added
process,  and additional  components and machining are required.  As ABS becomes
more  prevalent  in the  trucking  industry,  Gunite,  through  its  production,
engineering  and machining  capabilities,  is  positioned  to take  advantage of
increasing demand for ABS.

        In July 1994,  Gunite introduced a new lightweight brake drum, a product
which Gunite did not previously produce.  This product has generated substantial
customer  interest  because its reduced weight enables carriers to increase load
capacity. Commercial production of this product began in 1996.

        Customers

        Gunite  markets its wheel-end  component  and assembly  products to more
than 400  customers,  including  most of the major  North  American  medium- and
heavy-duty truck and trailer manufacturers, relying on three account managers to
service  OEMs and nine  regional  sales  managers  and a  nationwide  network of
approximately 300 independent distributors to sell to the aftermarket.

        Gunite  has  established  close  relationships  with many of its  larger
customers,  many of whom have purchased  wheel-end  systems and components  from
Gunite  for  more  than 25  years.  Gunite's  top  five  OEM  customers  in 1996
represented approximately 64% of Gunite's total net sales in 1996, with sales to
Navistar accounting for approximately 29% of Gunite's total net sales in 1996.

        Many  truck  manufacturers   require  quality   certification  of  their
supplies,  and Gunite  undergoes  periodic  quality  surveys by all of its major
customers.  Gunite has  received  numerous  quality  awards from its  customers,
including Ford Motor Company's "Q1," Freightliner's  "Master of Quality" and ISO
9000 equivalent,  PACCAR's  "Supplier Quality  Certification" and Volvo GM's ISO
9000 equivalent.  Quality certification requirements tend to limit the number of
suppliers which can compete in the safety intensive  product lines  manufactured
by Gunite and benefits high-quality suppliers such as Gunite.

        Manufacturing

        Gunite has a fully  integrated  manufacturing  operation  that  combines
high-quality castings from its Rockford,  Illinois foundry and from Brillion and
machining  capabilities  at  its  Elkhart,  Indiana  facilities.   Most  of  the
components produced by Gunite are high-volume  products that are critical to the
safe  operation  of the  vehicle.  As a result,  Gunite must  combine  efficient
production with  comprehensive  product testing.  Implementation  of statistical
process controls ("SPC") insures strict control of the manufacturing process and
is important in ensuring consistent quality.

        The  manufacturing  process  involves  melting  purchased scrap iron and
steel,  adding various  alloys,  and pouring the molten metal into molds made of
sand.  After the molten  metal is poured  into the  molds,  the  castings  cool,
solidify and are removed.  Once the rough  castings have been cleaned,  they are
transferred  to the Elkhart,  Indiana plant for  machining  through a variety of
automated  plant  techniques.  Both the casting  and  machining  operations  are
subject to statistical sampling and charting techniques.
Other manufacturing processes include painting, welding and assembly.

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Bostrom

        Bostrom designs,  manufactures and markets a full line of air suspension
and static seating systems primarily for the heavy-duty truck market.

        Markets

        Bostrom is a leading  manufacturer of seating systems for the heavy-duty
truck  industry.  Bostrom's  products are sold  primarily to the OEM  heavy-duty
truck market as well as to the  aftermarket.  Bostrom also  supplies its line of
seating systems to the medium-duty truck markets. Bostrom's seats are offered as
standard  or  as  an  option  by  all  major  North  American  heavy-duty  truck
manufacturers.

        Customers

        Bostrom's  customers include all of the major North American  heavy-duty
truck  manufacturers.  Bostrom's top five customers  accounted for approximately
85% of Bostrom's 1996 net sales, with Navistar  accounting for approximately 31%
of such sales.

        Manufacturing

        Bostrom's manufacturing facility is located in Piedmont,  Alabama. For a
number of its OEM customers,  Bostrom ships its seats to a line-setting facility
which it has established near the OEM's plant to provide just-in-time  inventory
of seats to the assembly line in the order that the seats will be used.

Fabco

        Fabco designs,  manufactures  and markets  steerable  drive axles,  gear
boxes  and  related  parts  for  the  North  American  on/off-road  medium-  and
heavy-duty truck markets.

        Markets

        Fabco's  products  are sold  primarily  to the OEM market for use in the
construction,  military, mining and municipal service markets. Fabco's axles and
gear boxes are offered as  standard or as an option by all major North  American
heavy-duty truck  manufacturers,  and Fabco is a leading supplier of these items
in the North American heavy-duty truck market.

        Products

        Fabco  supplies  a full  line of  steerable  drive  axles  for the North
American  on/off-road medium and heavy-duty truck and specialty vehicle markets.
Fabco's drive axles are rated at capacities ranging from 12,000 to 23,000 pounds
to serve Class 6, 7 and 8 trucks.  End users of Fabco's  axles  require  ease of
steering   and  high  speed   driving  for   on-highway   use  while   demanding
maneuverability  and  functionality  for  off-highway  use.  Fabco's  axles  are
designed to increase  durability and maintenance  accessibility.  Fabco believes
that the ease of  operating  and  servicing  Fabco's  products  are  competitive
advantages that lead to ongoing demand for steerable drive axles.

        Fabco also  manufactures  a wide range of medium-  and  heavy-duty  gear
boxes,  including  transfer  cases,  split shaft power take-offs and drop boxes.
Gear  boxes  are  used by  vehicles  that  operate  auxiliary  equipment  in the
construction, oil and gas field services and utility industries, among others.

        Fabco  also  sells  its  products  in  the   aftermarket.   It  supplies
replacement  parts for all of its products to OEMs and, in some cases,  directly
to end users.  Service parts are shipped directly from Fabco's plant in Oakland,
California to any domestic or international  location  directed by the customer.
Fabco's quick turnaround of parts orders minimizes the need for its customers to
maintain their own parts inventory.

                                           8

<PAGE>




        Customers

        Fabco's  customers  include most of the major North American on/off road
medium- and heavy-duty truck and specialty vehicle  manufacturers.  The majority
of Fabco's sales are made to OEM customers with which it enjoys relationships of
over 25 years. Sales during 1996 to Fabco's five largest customers accounted for
approximately  85% of Fabco's  total net sales,  with  Navistar  accounting  for
approximately 47% of such sales.

        Manufacturing

        Fabco has gained a positive reputation for its engineering  capabilities
in  designing  and  manufacturing  its  products for the on/off road medium- and
heavy-duty truck and specialty vehicle markets.  The Company believes that Fabco
is the only manufacturer which has products that are standard or available as an
option on all major OEMs Class 6, 7 and 8 all-wheel  drive truck models produced
for the commercial truck market,  and that, as a result,  Fabco's broad range of
adaptable  products are considered  the industry  standard due to the variety of
their   configurations  and  tolerances.   Fabco  believes  that  the  technical
backgrounds  of its sales and marketing  employees  contribute to the successful
marketing of Fabco's products to the heavy-duty vehicle manufacturers.

Iron Castings Operations

Brillion

        Brillion   operates  one  of  the  nation's  largest  job  casting  iron
foundries,  producing a wide variety of high-quality,  complex iron castings for
transportation-related and a wide variety of other markets. Sales to the medium-
and heavy-duty truck and trailer  industries  accounted for approximately 33% of
Brillion's  sales  (including  sales  to  Gunite)  in 1996,  while  sales to the
automotive industry accounted for approximately 11% of Brillion's sales in 1996.

        Brillion  also  designs,  manufactures  and  markets  a  range  of  farm
equipment  products  for the  "behind-the-tractor"  market.  These  pulverizers,
seeders,  mulchers,  deep tillers and cultivators are marketed  nationally under
the Brillion  trade name through a  nationwide  network of 1,050 farm  implement
dealers and distributors.

        Markets

        Brillion  markets  its  products  on a  job-by-job  basis to the  truck,
automotive and equipment  industries.  Brillion is one of the leaders in ductile
iron technology,  such as complex, thin wall and near net shape castings, in the
markets it serves.  In addition to being easily  machinable and  wear-resistant,
ductile iron has greater  strength (an important factor for customers who desire
a lighter finished  product) and elasticity than gray iron. As a result of these
superior properties,  management expects the demand for ductile iron castings to
increase.  This shift towards  ductile iron products may replace other  products
(such as  lighter-weight  aluminum  products)  that gray iron products could not
replace, and is not expected to adversely impact Brillion's business. Gray iron,
the oldest and most widely  used cast iron,  is readily  formed  into  intricate
shapes  which are  easily  machinable  and  wear-resistant.  For the year  1996,
ductile iron castings  represented  approximately  60% of  Brillion's  foundry's
total tons sold, while gray iron represented the balance.

        Products

        As  illustrated in the table below,  Brillion  produces a broad range of
gray and ductile iron castings  used in the  manufacture  of components  for the
trucking, automotive and a variety of light and heavy

                                           9

<PAGE>



equipment  industries.  Currently,  Brillion  utilizes  over 3,700  patterns  to
produce castings that range in weight from one pound to nearly 350 pounds,  with
the majority below 100 pounds. Castings are made to the specific requirements of
each  customer.  The customer  consults with Brillion to specify such  important
considerations as physical properties,  surface finish, dimensional accuracy and
methods of inspection for each casting.


                          Foundry Products

 *  Automotive and Truck Brackets   *  Hydraulic-Valve Bodies
 *  Bearing Caps                    *  Manifolds
 *  Brake Calipers and Adapters     *  Pressure Plates
 *  Clutch Housings                 *  Small Engine Camshafts and Crankshafts
 *  Farm Machinery Castings         *  Steering Housings
 *  Flywheel Housings               *  Transmission Cases
 *  Flywheels                       *  Wheel Hubs

        Brillion  markets its  castings,  directly  and  indirectly,  to OEMs in
various  industrial  markets.  the table below provides a list of representative
end products in which Brillion's castings are used.

            End Products in Which Brillion Castings Are Used

 *  Air-Cooled Engines              *  Industrial Lift Trucks
 *  Automobiles and Light Trucks    *  Lawn and Garden Equipment
 *  Construction Equipment          *  Locomotive Engines
 *  Diesel Engines                  *  Marine Engines
 *  Farm Equipment                  *  Medium- and Heavy-Duty Trucks
 *  Fluid Power Pumps and Motors    *  Oil and Gas Field Machinery and Equipment
 *  Hardware                        *  Pumps and Pumping Equipment
 *  High-speed Drives and Gears     *  Small Tools
 *  Home Shop Tools

        Customers

        Over  95% of  Brillion's  net  foundry  sales in 1996  were to  existing
customers, with the balance coming from new customers. Once production begins on
a product,  the same foundry  will  generally  manufacture  that product for the
product's life cycle.

        Brillion has over 225 foundry customers, a majority of which are located
in the Midwest, East and Southeast.  Brillion's top five unaffiliated  customers
accounted for  approximately  26% of Brillion's  1996 total net sales.  Brillion
also serves as an important source of castings for Gunite,  with sales to Gunite
representing  approximately 11% of Brillion's total net sales in 1996.  Brillion
works closely with  customers in order to insure that castings meet all required
specifications,   including  machinability,  dimensional  accuracy  and  overall
quality.  Brillion's  engineers  work with customers from concept to market with
respect  to new  products.  Brillion's  strategy  is to focus on the  market for
higher  margin  castings,  as well as for  products  requiring  new,  innovative
castings designs.  Unlike Gunite,  Brillion's products are primarily designed by
its customers, and thus the product designs are proprietary to the customers.


                                          10

<PAGE>




        Brillion has enjoyed long-term,  stable  relationships with the majority
of its  customers  and is  certified  as a  preferred  supplier  by  most of its
customers.  Brillion's  quality  system  is  certified  to ISO  9000 and QS 9000
quality  standards  and  Brillion  has  received  General  Motors'  "Targets for
Excellence   Award  in  Quality,   Management   and   Technology   Disciplines,"
Caterpillar's  "Certified Supplier Status" and was approved by Ford's "Technical
Service  Capability  Survey."  A  quality  certification  is  required  by  most
sophisticated  purchasers,   thereby  enhancing  the  competitive  advantage  of
suppliers like Brillion that have achieved a quality certification.

        Manufacturing

        In  general,  Brillion's  customers  specify  the  properties  of  their
castings, such as hardness, strength and dimensions, and Brillion determines how
best to meet those specifications. Brillion engineers work with its customers to
develop  an  efficient  manufacturing  process.  Brillion  constantly  tests and
monitors  the  manufacturing  process  in  order to  maintain  the  quality  and
consistency of its castings.  The  manufacturing  process  involves melting iron
(which has been internally  recycled),  steel scrap and pig iron, adding various
alloys and pouring the molten metal into molds made  primarily of sand.  Most of
the  castings  manufactured  by Brillion  must meet strict  dimensional  control
requirements specified by its customers. As a result, Brillion uses SPC in every
phase of the  production  process,  and all  employees  are given  extensive SPC
training.  The  Company  believes  that  Brillion  has the  most  advanced  core
capabilities  in  the  industry,  allowing  for  efficient  and  environmentally
superior  core  processes  that are  necessary  for the  production  of quality,
complex thin-wall and lighter weight products.  Production lines are designed to
accommodate  a wide  variety of products and  volumes.  In addition,  Brillion's
multiple  production  lines provide  flexibility to move production from line to
line to meet customer scheduling changes and requirements.

General

        Competition

        The Company operates in highly competitive  markets.  Competition in the
freight car manufacturing  business is based on type of product,  reputation for
quality,  price,  reliability of delivery and customer service and support.  The
Company's  freight car  operation's  principal  competitors  in this segment are
Trinity Industries, Inc. ("Trinity"), Thrall Car Manufacturing Co. and Gunderson
Inc.  Although  there are  presently  seven freight car  manufacturers  in North
America,  two of the seven  manufacture  only tank cars and plastic pellet cars,
market  segments  in which the  Company  does not  currently  participate.  Only
Trinity competes in all of the Company's  freight car market segments.  Although
JAC has filed suit against Trinity for infringement of its BethGon Coalporter(R)
patent,  Trinity has competed, and JAC expects that it will continue to compete,
with JAC in the sale of coal gondolas.

        No  single   manufacturer   competes   with   respect  to  all  products
manufactured  and sold by the Company in the  heavy-duty  truck market,  and the
degree of competition varies with different products. In this market the Company
competes on the basis of price, its manufacturing and distribution  capabilities
and product  quality.  Gunite's  primary  competitors in the wheel end component
market for Class 6, 7 and 8 trucks and trailers are Dayton  Walther  Corporation
and Webb  Wheel  Products.  Bostrom's  principal  competitors  include  National
Seating,  Sears  Manufacturing  and Seats,  Inc.  as well as a number of smaller
seating  manufacturers.  Fabco's primary  competitor in the steerable drive axle
market for the on/off-road  medium- and heavy-duty truck and specialty  vehicles
is Rockwell Corporation.

        Brillion's major competitors include 10 to 12 foundries operating in the
Midwest and Southern regions,  including Waupaca Foundry, Inc., Grede Foundries,
Inc., Western Foundry, Neenah Foundry Company, Intermet Corporation and Citation
Corporation.


                                          11

<PAGE>




        Backlog

        As of December 31, 1996,  freight car  operations  had a backlog of firm
orders for 774 new and rebuilt  freight  cars with an  aggregate  sales price of
approximately $35 million, as compared to a backlog of firm orders for 1,204 new
and rebuilt  freight cars with an  aggregate  sales price of  approximately  $63
million as of December 31, 1995. Due to the large size of freight car orders and
variations  in the mix of freight cars,  the size of the  Company's  freight car
operation's backlog at the end of any given period may fluctuate  significantly.
The decline in backlog  reflects a decrease in industry  orders  generally and a
sharper  decrease in industry  orders for car types  produced by the freight car
operations, such as coal cars. The Company expects sales of intermodal and other
flat cars to continue to represent a relatively  small percentage of its freight
car  shipments as the  Company's  freight car  operations  continue to focus its
product  development  and  marketing  efforts on gondolas,  open hopper cars and
covered  hopper cars.  Due to short  production  turnaround  times from order to
delivery  resulting from the just-in-time  inventory systems utilized by many of
its customers,  the Company's  truck  components and castings  operations do not
normally carry a material  amount of backlog  orders.  A number of the Company's
sales  contracts  in this  segment  are made  pursuant  to  purchase  orders and
releases which are subject to change or cancellation by the customer.

        Suppliers and Raw Materials

        Between  70%  and 80% of a  freight  car's  costs  relate  to  purchased
specialty  components such as wheels, axles and brakes and raw materials such as
aluminum and steel. Costs for specialty  components and raw materials  generally
are fixed at the time a freight car order is accepted.

        The major raw material for the  Company's  foundry  operations  is steel
scrap,  which is purchased  from various  sources.  The Company has no long-term
contractual  commitments with any scrap  suppliers,  and does not anticipate any
difficulty in obtaining scrap because of the large number of potential suppliers
and its  position as a major  purchaser.  Increases  in steel  scrap  prices are
passed  through  to  customers  by means of a  fluctuating  surcharge,  which is
calculated  and  adjusted  on a monthly  or  quarterly  basis.  Other  major raw
materials,  such as silicon sand,  binders,  sand additives and coated sand, are
purchased from multiple sources.  Electricity, coke and natural gas, the primary
energy  sources for melting  operations,  are in adequate  supply and reasonably
priced.

        Labor Relations and Employees

        At December 31, 1996, the Company had approximately 3,300 employees.  Of
these,  approximately 650 are salaried  employees and the balance are paid on an
hourly basis.  Approximately 2,260 or about 68% of all employees, are members of
unions.  The Company has collective  bargaining  agreements  with several unions
including  the United  Steelworkers  of  America,  the United  Autoworkers,  the
Brotherhood  of Teamsters,  the United  Paperworkers  International  Union,  the
Patternmakers  League of North  America  and the  International  Association  of
Machinists.  Each of the Company's unionized  facilities has a separate contract
with the union which  represents  the workers  employed at such  facility.  Such
contracts  expire at various  times over the next few years,  with JAC's current
three-year union contract scheduled to expire in October 1997. While the Company
considers its  relations  with its employees to be good at each of the Company's
subsidiaries  other than JAC and fair at JAC, there can be no assurance that the
Company  will reach new  agreements  upon  expiration  of such  union  contracts
(including the JAC union  contract  scheduled to expire in October 1997) or that
the failure to reach new agreements  will not have a material  adverse effect on
the financial condition or results of operations of the Company.

        Regulation

     The  Federal  Railroad  Administration  ("FRA")  administers  and  enforces
federal laws and

                                          12

<PAGE>



regulations  relating to railroad safety. These regulations govern equipment and
safety  appliance  standards for freight cars and other rail  equipment  used in
interstate  commerce.   The  Association  of  American  Railroads  ("AAR")  also
promulgates a wide variety of rules and regulations  governing safety and design
of  equipment,  relationships  among  railroads  with respect to freight cars in
interchange and other matters.  The AAR also certifies freight car buildings and
component  manufacturers  that  provide  equipment  for use on  railroads in the
United  States.  New  products  generally  must undergo AAR testing and approval
processes.  As a result of these regulations,  the Company must maintain certain
certifications with the AAR as a freight car manufacturer,  and products sold by
the Company must meet AAR and FRA standards.

        Patents and Trademarks

        The Company has numerous  United States and foreign  patents and pending
applications,  registered  trademarks and trade names.  While the existence of a
patent is prima facie  evidence of its validity,  the Company cannot assure that
any of its patents will not be challenged  nor can it predict the outcome of any
such challenge.  The Company is presently involved in litigation  concerning its
patent on the BethGon Coalporter(R). See " Legal Proceedings" in Item 3.

Environmental Matters

        Compliance Matters

        The Company's  subsidiaries are subject to comprehensive  and frequently
changing federal, state and local environmental laws and regulations,  including
those governing emissions of air pollutants,  discharges of wastewater and storm
waters,  and the disposal of non-hazardous  and hazardous  waste.  Many of these
laws authorize the imposition of civil and criminal  sanctions upon corporations
that fail to comply with the statutory or regulatory requirements. In 1996, 1995
and  1994,  TCI's  capital   expenditures  for  compliance  with   environmental
requirements   were   approximately   $371,000,    $1,037,000   and   $1,428,000
respectively. These figures do not include routine operational compliance costs,
such as the costs for the disposal of hazardous and  non-hazardous  solid waste,
which were  approximately  $4.1 million,  $4.9 million and $3.1 million in 1996,
1995 and 1994,  respectively.  TCI's subsidiaries have budgeted $0.5 million for
environmentally  related capital  expenditures in 1996. The Company acquired its
Piedmont,  Alabama  and  Danville,  Illinois  facilities  in  January  1995  and
therefore did not incur capital  expenditures for compliance with  environmental
requirements and for routine operational compliance costs, such as the costs for
the disposal of hazardous  and  non-hazardous  solid waste,  prior to 1995.  The
Company's  investigation  of  the  Piedmont,  Alabama  and  Danville,   Illinois
facilities'  historic capital  expenditures and routine  operational  compliance
costs  concluded  that such  expenditures  and costs  were not  material.  JAC's
capital  expenditures  for compliance with  environmental  requirements  and for
routine  operational  compliance  costs,  such as the costs for the  disposal of
hazardous  and  non-hazardous   solid  waste,  for  the  facilities  located  in
Johnstown,  Pennsylvania  are not  material.  Other than for certain  immaterial
expenditures,  the  Company's  subsidiaries  (other than TCI) have not  budgeted
funds for capital expenditures in 1996 to comply with environmental laws.

        Pursuant to a National Pollutant Discharge  Elimination System ("NPDES")
permit,  Gunite previously discharged noncontact cooling water from its Rockford
facility  to a pond (the  "Rockford  Pond"),  formerly  owned by  Gunite  and by
Gunite's prior owner,  K-H  Corporation  ("K-H"),  a subsidiary of Varity Corp.,
that is adjacent to the Gunite plant.  Gunite also  periodically had accidental,
unpermitted  discharges of process wastewater to the Rockford Pond, which Gunite
has  reported to the  Illinois  Environmental  Protection  Agency  ("IEPA").  In
addition,  Gunite had not  received  express  authorization  from the current or
immediately  preceding owner of the Rockford Pond for any of the discharges.  In
order for Gunite to eliminate all discharges,  the City of Rockford  obtained an
easement to allow Gunite to construct a conveyance  that directs  discharges  of
noncontact  cooling  water and storm water from the Gunite  facility to the Rock
River,  and the IEPA has issued a modified NPDES permit to Gunite,  substituting
the Rock  River as the  outfall  for  Gunite's  discharge.  The  conveyance  was
completed in

                                          13

<PAGE>



February  1995.  The modified  NPDES permit  contains a stringent  limit for the
discharge of total residual chlorine. Gunite estimates that the capital cost for
installing a treatment  system allowing its discharges to comply with this limit
could exceed $200,000,  although Gunite is exploring a less expensive  treatment
system. Gunite has appealed to the Illinois Pollution Control Board to remove or
modify  the  chlorine   limit  from  the  permit   (Gunite   Corp.  v.  Illinois
Environmental  Protection Agency, PCB 94-382, filed December 12, 1994). The cost
to  Gunite of  constructing  the  conveyance  to the river  (not  including  any
environmental  remediation  costs  that might be  incurred  in  connection  with
historical discharges to the Rockford Pond) was approximately $300,000.

        The  Wisconsin  Department  of Natural  Resources  ("WDNR") has notified
Brillion  that it is deemed to be in  compliance  with the  Wisconsin air toxics
program,  pending  a review  of a  compliance  plan  submitted  by  Brillion  in
September 1993, although Brillion is currently exceeding Wisconsin air emissions
limits for benzene and other air toxic compounds.  Brillion's submittal included
a plan for compliance with the emission limitations for arsenic, barium, cadmium
and formaldehyde,  and a request for a variance with respect to its emissions of
benzene.  The Company  believes  that  compliance  with  Wisconsin's  air toxics
regulations  apparently  is an  industry-wide  problem,  and WDNR is  developing
compliance  standards  for the  industry  as a whole.  Although  a recent  state
inspection   found  Brillion  to  be  in  compliance   with  all  Wisconsin  air
regulations,  it is  likely  that  as  Brillion  continues  its  review  of  its
operations,  it will find that  certain of its  emission  sources  will  require
further air pollution controls.

        The Company's  subsidiaries'  manufacturing plants are large and complex
facilities.  The environmental regulations to which these facilities are subject
are numerous,  complicated,  often  ambiguous  and  constantly  changing.  It is
possible,  therefore,  that  in  addition  to  the  instances  of  noncompliance
discussed above, there are other areas in which the facilities are not currently
in compliance  with  environmental  laws and  regulations.  The Company does not
currently  believe  that any such  noncompliance  is likely  to have a  material
adverse effect on the Company's  business or financial results.  However,  there
can be no guarantee  that the Company  will not be required to make  substantial
additional expenditures to remain in or achieve compliance in the future.

        Remediation Matters

        In  addition  to   environmental   laws  that   regulate  the  Company's
subsidiaries'   ongoing  operations,   the  subsidiaries  also  are  subject  to
environmental  remediation  liability.  Under  the  Comprehensive  Environmental
Response,  Compensation  and Liability Act ("CERCLA") and analogous  state laws,
certain  persons may be liable as a result of the release or threatened  release
of hazardous  substances into the environment.  Such persons include the current
owner or operator of property  where such release or  threatened  releases  have
occurred,  any  persons  who owned or  operated  such  property  during the time
hazardous substances were disposed of at such property, and persons who arranged
for the disposal of  hazardous  substances  at such  property.  Liability  under
CERCLA  is strict  and,  in most  cases,  joint and  several,  meaning  that any
responsible  party could be held  liable for all of the costs  incurred or to be
incurred in  investigating  and  remediating a release or threatened  release of
hazardous  substances,  although liability at most CERCLA (and similar) sites is
shared among all of the solvent potentially  responsible  parties ("PRPs").  The
liability of PRPs is typically  determined by the cost of the  investigation and
remediation, the amount and toxicity of hazardous substances contributed by each
PRP and the number of solvent PRPs.

         Under CERCLA,  sites may be listed for priority cleanup by being placed
on the  National  Priorities  List  ("NPL").  NPL  sites  are sites at which the
federal   government  may  spend  monies  from  the  "Superfund"  for  long-term
remediation  and then  seek  reimbursement  from  liable  parties.  A much  more
extensive  list  compiled  pursuant  to  CERCLA,   known  as  the  Comprehensive
Environmental  Response,  Compensation,  and  Liability Act  Information  System
("CERCLIS"), includes sites that have been, or are to be, evaluated and "scored"
by the EPA for possible future inclusion on the NPL.


                                          14

<PAGE>



        Gunite.  Gunite is a PRP at three NPL sites,  the  Interstate  Pollution
Control  ("IPC")  site (which is adjacent to Gunite's  Rockford  facility),  the
M.I.G./Dewane  Landfill  located in Boone  County,  Illinois,  and the Southeast
Rockford Groundwater site located in Rockford,  Illinois. Gunite's connection to
the  IPC,  M.I.G./Dewane  and  Southeast  Rockford  sites  stem  primarily  from
activities that took place during the period that Gunite was a division of K-H.

        As to the IPC site,  K-H,  on behalf of Gunite,  entered  into a partial
consent decree with the IEPA in 1991 (State of Illinois v. Interstate  Pollution
Control,  Inc.,  et al.,  Northern  District of  Illinois,  filed in 1991).  K-H
entered  into  this  partial  consent  decree  pursuant  to  an  indemnification
agreement  contained  in the purchase  and sale  agreement  between K-H and TCI,
dated  September 4, 1987 (the "K-H Sale").  The consent decree covers an ongoing
remedial  investigation/feasibility  study ("RI/FS") for the site. In connection
with the  consent  decree  and an  emergency  removal  order,  K-H agreed to pay
approximately  14% of such RI/FS and removal  costs,  which is expected to total
approximately  $1.0  million.  K-H  has  not  agreed  to  indemnify  Gunite  for
remediation  costs  to be  incurred  at  this  site  and,  as  discussed  below,
remediation costs that would be payable by K-H or Gunite with respect to the IPC
site have not yet been determined.

        The RI/FS for the IPC site includes the Rockford Pond, which is adjacent
to the Gunite Property,  was transferred to K-H at the time of the K-H Sale, and
was used by  Gunite  both  before  and after  the K-H Sale for the  disposal  of
foundry process  wastewater and possibly other wastes; a landfill (the "Rockford
Landfill")  transferred to K-H at the time of the K-H Sale,  which was used as a
landfill  by K-H prior to the K-H  Sale,  and  certain  portions  of the  Gunite
property  itself.  The results of the RI/FS may lead to the inclusion of some or
all  of  these  areas  within  the  IPC  site  boundaries  for  the  purpose  of
remediation.  Any such  redefinition  of the  boundaries  of the IPC site  could
result in a  reallocation  of  responsibility  for  remediation  costs among the
entities that are PRP's with respect to the larger site and could also result in
an increase in K-H's and/or Gunite's share of any such costs. Although it is not
possible to predict the exact timing or amount of the expenditures  that will be
made in future years to remediate  the IPC site, it is possible that Gunite will
be required to contribute substantial funds to remediate the IPC site.

        As to the  M.I.G./Dewane  Landfill  site,  Gunite was added in 1994 as a
third-party  defendant in a private cost recovery  action filed by the companies
comprising the MIG/Dewane  Landfill Task Force,  the steering  committee of PRPs
for this site (Browning-Ferris  Industries of Illinois,  Inc., et al. v. Richard
Ter Maat, et al,  Northern  District of Illinois).  The plaintiffs  have alleged
that the Gunite  division of K-H arranged for the disposal of waste at this site
from approximately 1972 to 1987.  Approximately $10 million has been expended to
conduct an RI/FS at this site. A remedy has not yet been  proposed for the site.
Gunite filed a motion to dismiss this matter, which was granted, in part, by the
district  court;  the remainder of the action is still pending  against  Gunite,
however.  Although it is not  possible to predict the exact  timing or amount of
expenditures  that will be made in future years to remediate  the  M.I.G./Dewane
Landfill  site,  it is possible  that  Gunite  will be  required  to  contribute
substantial  funds towards the  investigation  and  remediation  of this site if
Gunite is judged to have  disposed of materials  at this site.  K-H has denied a
claim for indemnification with respect to this site.

        The Southeast Rockford  Groundwater NPL Site is reportedly down gradient
from the IPC site.  The EPA and the City of Rockford  have  reportedly  incurred
approximately  $11 million in  response  costs to date in  connection  with this
site.  In 1996,  the City of  Rockford  demanded  that  Gunite pay $1 million in
response  costs  which  the City  allegedly  has  incurred  at the site  area 7,
commonly known as the Ekberg Park area within the Southeast Rockford Groundwater
NPL site.  Gunite has denied that it is liable to the City for these costs of $1
million.  K-H has also denied a claim for  indemnification  with respect to this
site.  Gunite believes that the EPA will also seek to recover some or all of its
costs at the site from Gunite, although Gunite has not to date received a formal
request for reimbursement from the EPA for this matter.

        Gunite  also may be subject to  liabilities  at other NPL sites or other
locations as a result of its past disposal of hazardous substances.

                                          15

<PAGE>



        As a result of  historical  operations  at the Gunite plant in Rockford,
there are areas  on-site that have been  affected by the disposal or spillage of
raw  materials or wastes.  Gunite does not know at this time whether any cleanup
or  remediation  of such areas will be required  by any state,  local or federal
agency,  although  it is  possible  that such areas may be  included  in the IPC
remediation.

        The  Company  believes  that  Gunite has valid  claims  for  contractual
indemnification against K-H with respect to most of the matters described above,
subject to an aggregate  deductible  for certain  matters  which,  under various
theories,  could range from $300,000 to $1.8 million, and other limitations.  As
of  October  28,  1993,  however,   K-H  has  formally  denied  all  claims  for
indemnification for environmental  matters on, appurtenant to, or emanating from
the Gunite foundry plant site in Rockford, Illinois. The specific scope of K-H's
denial is  ambiguous,  but it might be  interpreted  to include  all pending and
future  claims  from  Gunite for  indemnity.  In 1994,  K-H filed a  declaratory
judgment action against TCI and Gunite for certain  specific matters in dispute,
including any costs related to the  construction of the conveyance  structure to
the Rock River, reducing particulate emissions from the cupola charge doors, and
remediating  conditions  related to  certain  underground  storage  tanks on the
Gunite property (K-H Corp. v. Truck  Components,  Inc., et al. Circuit Court for
the  County of Wayne,  Michigan).  K-H's  complaint  also  included  a claim for
trespass (for unspecified  damages) related to Gunite's  post-December  31, 1990
discharges to the Rockford  Pond.  On August 5, 1994,  TCI and Gunite filed suit
against  K-H and  certain of its  affiliates  for the  recovery of costs and for
declaratory and injunctive relief with respect to various  environmental matters
pursuant to the  indemnification  provisions of the K-H Sale purchase  agreement
and other causes of action, including CERCLA (Truck Components,  Inc., et al. v.
K-H Corp., et al., Northern District of Illinois).  No trial dates have been set
in either of the actions.  There can be no assurance  concerning the amounts, if
any, that Gunite will be able to recover on its indemnity claims against K-H nor
any assurance as to the timing of any such recoveries.  It is also probable that
Gunite has incurred  some  liability for  activities  following the K-H Sale for
which it would not be covered by the K-H indemnity.

        Brillion.  Brillion is likely to incur investigation  and/or remediation
costs in  connection  with two  landfills  that it used to  dispose  of  foundry
wastes. These landfills are the Brillion Iron Works Landfill, where Brillion was
the  operator  and sole  generator  of waste  from 1980  through  1989,  and the
adjacent  City  of  Brillion  Landfill,  where  Brillion  may  be a  significant
generator of waste.  Brillion  disposed of plant trash at the City landfill from
1970 to 1975 and also  disposed of foundry  wastes in this landfill from 1976 to
1980.  Both of these  landfills  are on the CERCLIS and the  Wisconsin  Remedial
Response  Site  list,  and both have been  scored by the WDNR and both have been
listed on the  State's  Hazard  Ranking  List as being above the  threshold  for
potential  State  remedial  action.  Although it is not  possible to predict the
exact timing or amount of the expenditures  that will be made in future years to
remediate these sites, TCI expects that investigation and/or remediation will be
required and that such expenditures could be substantial.

        Brillion has also disposed of foundry  wastes at many other sites in the
Brillion  area,  a few of which are on the  CERCLIS and the  Wisconsin  Remedial
Response Site list. It is possible  that Brillion will incur  remedial  response
costs at some or all of these  sites,  although  at this date,  Brillion  is not
aware of any  action by  federal  or state  regulators  or  private  parties  to
investigate or remediate any of these other sites.

        In 1992,  Brillion  excavated two underground  diesel fuel storage tanks
which were  discovered  to have leaked  diesel fuel into  surrounding  soil as a
result of a 1978 spill.  Brillion has removed  approximately  300 cubic yards of
contaminated fill in connection with this incident.  Although the WDNR initially
indicated that a deed  restriction  would be sufficient for managing this issue,
Brillion has not at this date been able to reach a satisfactory arrangement with
the owners of the Brillion property. Accordingly,  Brillion expects to undertake
additional soil and groundwater analysis in connection with this matter.

        As the Brillion  facility has been in  operation  for many years,  it is
possible  that  there are areas at this  facility,  other  than the  underground
storage  tanks,  that have been  adversely  affected by the  handling of foundry
process  materials  and wastes.  Brillion does not know at this time whether any
remediation  of any such areas will be required  by any state,  local or federal
agency.

                                          16

<PAGE>



        Brillion was the Robins Group  (consisting  of the Robins  Family Trust,
Karl F.  Gabler  and First  City  Securities)  entity  that  acquired a Beatrice
subsidiary  (also named  Brillion) from Beatrice in 1984. That purchase and sale
agreement  obligates  Beatrice  to  indemnify  Brillion  for any and all claims,
liabilities,  losses and expenses  resulting from loss of life, bodily injury or
property  damage  which  arise  out of  accidents  or injury  causing  incidents
occurring  prior to  December  31,  1984,  for  which  Brillion  may be  liable,
regardless  of when  the  claims  alleging  such  liability  may be  filed,  but
excluding obligations arising from the design, formulation,  manufacture or sale
of a product  prior to December 31, 1984.  TCI believes that it has valid claims
for indemnification  against Beatrice with respect to most of its disposal sites
to the extent that liabilities arise from incidents  occurring prior to December
31, 1984.  Beatrice has disputed this  interpretation and notified Brillion that
it will not honor  any  claims  for  indemnification  (apart  from one claim for
breach of  representation  made within two years after the sale).  Brillion  has
also been notified by the Robins Group (which sold Brillion to TCI) that it will
not honor any claims for  indemnification.  On May 25,  1994,  TCI and  Brillion
filed suit against  Beatrice and the Robins Group for recovery of costs expended
and for declaratory and injunctive relief with respect to various  environmental
matters  pursuant to the  indemnification  provisions  of the  respective  stock
purchase  agreements  and  other  causes  of  action,  including  CERCLA  (Truck
Components,  Inc.,  et al. v.  Beatrice  Company et al.,  Northern  District  of
Illinois). On June 10, 1994, TCI and Brillion filed a first amended complaint in
this lawsuit to add HuntWesson, Inc., a corporate successor of Beatrice that may
be a successor to Beatrice's liabilities in these matters. In 1996, the district
court entered  judgment against  Brillion,  holding that Beatrice and the Robins
Group did not owe any indemnity for Brillion's  expenses at the sites,  and that
Brillion owed Karl F. Gabler $0.2 million pursuant to a 1987 indemnity contract.
Brillion has appealed this adverse judgment;  the appellate court is expected to
rule on  Brillion's  appeal in late 1997.  Given the  adverse  judgment  and the
pending appeal therefrom,  there can be no assurance  concerning the amounts, if
any,  that  Brillion  will be able to recover on its  indemnity  or other claims
against Beatrice or the Robins Group, nor any assurances as to the timing of any
such recoveries.

        JAC. Pursuant to an indemnification agreement between JAC and Bethlehem,
Bethlehem  conducted  investigations  and remediations at several areas of JAC's
plants in Johnstown,  Pennsylvania.  In addition,  under the purchase  agreement
with Bethlehem,  Bethlehem has  indemnified  JAC against  certain  environmental
liabilities relating to periods prior to the acquisition in October 1991.

        Bostrom.   Subsurface  investigations  at  Bostrom's  Piedmont,  Alabama
facility detected low  concentrations  of certain  contaminants in the soil in a
limited area around a formerly used waste water  underground  storage tank.  The
Alabama Department of Environmental  Management  ("ADEM") requested that Bostrom
install a monitoring well to obtain  monitoring  results on a semi-annual  basis
for a two year period.  Bostrom installed the well in March 1995 and will submit
semi-annual  monitoring  results to ADEM until March 1997.  It is not known what
remediation, if any, ADEM will require after March 1997. In addition, Bostrom is
a PRP at the  Muskego  Landfill  site in  Wisconsin  and the PRPs have signed an
allocation  agreement  pursuant to which Bostrom's  allocated share of the costs
are not material.

        Freight Car Services. FCS has reached an agreement in principle with its
adjacent  property  owner for each party to share in the costs of  completing an
investigation and implementing a corrective action plan to remediate diesel fuel
contamination  detected in the soil and  groundwater on the affected  properties
located in Danville, Illinois. The investigation and corrective action plan were
implemented on a voluntary basis and not pursuant to any regulatory requirement,
and FCS' share of the costs was not material.

        Potential  Costs. As of December 31, 1996,  based on all the information
currently  available,  the Company  maintained its environmental  reserve in the
amount  of $26.4  million  for  estimated  future  costs  related  to  potential
environmental  investigation and remediation liabilities with respect to certain
currently known matters.  The  environmental  reserve is principally  related to
potential  remediation  liability at various off-site locations and, to a lesser
degree, to potential remediation liability at Gunite's,  Rockford, Illinois, and
Brillion's,  Brillion, Wisconsin manufacturing facilities. This reserve is based
on current cost  estimates  and does not reduce  estimated  expenditures  to net
present value. Further, the estimated reserve

                                          17

<PAGE>



takes into  consideration  the number of other  PRPs at each site,  the  alleged
volume of waste  contributed  by other PRPs at each site,  and the  identity and
financial  position of such parties in light of the joint and several  nature of
the liability,  but it does not take into account possible insurance coverage or
other  similar  indemnification  or  reimbursement.  Based  upon  all  currently
available information, no reserve has been established with respect to potential
environmental  obligations of JAC or Bostrom and an immaterial  reserve has been
established at FCS. Because many of the matters described above, however, are at
the early stages in their respective  investigations,  there can be no assurance
that the  amounts  ultimately  expended  to address  all of these  matters or to
address  other  matters  not yet known to be in  existence  will not  exceed the
amounts allocated in the environmental reserve. Accordingly, it may be necessary
to establish additional reserves for environmental liabilities in the future.

        Any cash expenditures  required by the Company 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.  Management
believes,  based on its  evaluation  of the  various  matters  described  above,
including its  experience  with such matters to date, the time period over which
it believes costs for such matters are likely to be incurred by the Company, and
the existence of the various  indemnifications  described above,  that any costs
the Company  ultimately will incur for such matters are not reasonably likely to
have a material adverse effect on the Company's  business or financial  results.
However, given the early stage of many of the matters, there can be no assurance
that  one or  more of  these  matters  (or  matters  which  have  not  yet  been
identified)  will  not have  such an  effect.  See  Note 11 to the  Consolidated
Financial Statements of the Company. The Company currently  anticipates spending
approximately $500,000 per year for the next three years and $1 million per year
in years 2000 and 2001 for monitoring the various environmental sites associated
with the  environmental  reserve,  including  attorney and consultant  costs for
strategic  planning and negotiations with regulators and other PRPs, and payment
of remedial  investigation  costs. The Company expects to fund such expenditures
with the cash flow generated from its operations and amounts available under its
revolving credit facility.  These sites are generally in the early investigatory
stages of the remediation  process and thus it is anticipated  that  significant
cash payments for  remediation  will not be incurred for at least several years.
After the evaluation and investigation period, the investigation and remediation
costs will  likely  increase  because  the  actual  remediation  of the  various
environmental  sites  associated with the  environmental  reserve will likely be
under way.

Executive Officers of the Registrant

          Set  forth  below is  certain  information  concerning  the  executive
officers of the Company:

              Name             Age         Position
        Thomas  M. Begel       54   Chairman of the Board, President and Chief
                                    Executive Officer of  the Company

        Andrew M.  Weller      50   Executive Vice President and Chief Financial
                                    Officer and Director of the Company

        David W. Riesmeyer     39   Vice President and Treasurer of the Company

        Kenneth M. Tallering   35   Vice President, General Counsel and 
                                    Secretary of the Company

        Timothy A. Masek       31   Vice President - Corporate Development of 
                                    the Company and President of 
                                    Bostrom Seating, Inc.


                                          18

<PAGE>




        Edward J. Whalen      48    Vice President of the Company and President
                                    of Freight Car Services, Inc. and 
                                    JAIX Leasing Company

        James D. Cirar        50    President and Chief Executive Officer of 
                                    Johnstown America Corporation

        Thomas W. Cook        59    President and Chief Executive Officer of 
                                    Truck Components, Inc. and 
                                    President - Gunite Corporation

        John D. McClain       52    President - Brillion Iron Works, Inc.

        Mark A. Niemela       61    President - Fabco Automotive Corporation


        Thomas M. Begel,  Chairman of the Board,  President and Chief  Executive
Officer  of the  Company,  has served as  President  since  October  1991 and as
Chairman of the Board and Chief  Executive  Officer  since May 1993.  He is also
President of, and a partner in, TMB Industries ("TMB"), an investment firm which
is a partnership  between himself and Mr. Weller.  Mr. Begel was also a director
of Uniroyal Chemical Corporation from 1990 to 1996.

        Andrew  M.  Weller,  has  served  as  Executive  Vice  President,  Chief
Financial  Officer  and a Director of the Company  since  September  1994 and as
Secretary from March 1995 to November 1995.  From April 1988 to September  1994,
he was Vice  President and Treasurer of Bethlehem  Steel  Corporation  and prior
thereto held various other positions with Bethlehem.  He has also been Executive
Vice President of, and a partner in TMB since September 1994.

        David W.  Riesmeyer,  has served as Vice  President and Treasurer  since
September  1995 and  previously as Treasurer and Controller of the Company since
March 1995. Mr. Riesmeyer served as Director of Financial Reporting and Planning
from January 1994 through March 1995. From 1991 to 1993, Mr.  Riesmeyer was Vice
President  of Corporate  Development  at the Park  Corporation  and from 1988 to
August 1992, he was Vice President of Finance of the Park Corporation.

        Kenneth M. Tallering, has served as Vice President,  General Counsel and
Secretary of the Company since  November  1995.  From  September 1987 to October
1995, Mr. Tallering was an attorney with Skadden, Arps, Slate, Meagher & Flom.

        Timothy A. Masek,  has served as Vice President - Corporate  Development
of the Company since December 1995 and President of Bostrom Seating,  Inc. since
June 1996. From September 1992 to December 1995, Mr. Masek  performed  marketing
and corporate  development  functions for the Company.  Prior to September 1992,
Mr.  Masek  was a  Market  Analyst  for the  Transportation  Equipment  Group of
Bombardier Corporation.

        Edward J.  Whalen,  has served as Vice  President  of the Company  since
January  1997.  He has also  served  as  President  of JAIX  Leasing  since  its
inception in December 1994 and as President of Freight Car Services,  Inc. since
March 1995.  Mr.  Whalen  served as  Secretary  of the Company from October 1991
until March 1995, as Treasurer of the Company from May 1993 until March 1995 and
as Vice President of the Company from October 1991 until October 1995. From 1989
to 1991, he was a financial and rail car industry consultant.

        James D. Cirar,  has served as President and Chief Executive  Officer of
Johnstown America Corporation since September 1995. Prior to September 1995, Mr.
Cirar was the Plant  Manager  of the Truck  and Bus  Assembly  Group of  General
Motors Corporation in Flint, Michigan.


                                          19

<PAGE>



        Thomas W. Cook,  has been the President and Chief  Executive  Officer of
TCI since May 1994.  Mr. Cook has been  President  of Gunite  Corporation  since
1991. He was President and Chief Executive  Officer of Redlaw  Industries,  Inc.
from 1986 to 1991. From 1967 to 1986, Mr. Cook was with ITT Grinnell Corporation
where he became President in 1983.

        John D. McClain, joined Brillion as Manager of Manufacturing in 1988 and
was appointed Vice President of  Manufacturing in 1989. Mr. McClain was promoted
to his present  position of President in 1994.  Prior to joining  Brillion,  Mr.
McClain held  metallurgical  and foundry manager  positions at Owens-  Illinois,
Emerson Electric and Clow Valve Company.

        Mark  A.  Niemela,  joined  Fabco  Automotive  Corporation  in  1966  as
Production Control Manager.  He held the positions of Material Manager and Plant
Manager before his appointment to the position of General Manger in 1975 and was
appointed President in 1986.


Item 2.  Facilities

        The  Company's  headquarters  are located in leased  offices in Chicago,
Illinois.  The following  table provides a summary  description of the Company's
other principal facilities.

<TABLE>
<S>     <C>                   <C>                                               <C>              <C>
                                                                                Owned/           Covered Space
        Facilities            Business Function                                 Leased              sq. ft.

        JAC (1)
        Shell Plant           Freight car erection and fabrication              Owned               153,000

        Franklin Plant        Freight car erection and fabrication              Owned               619,000

        Offices               Administrative Offices                            Owned                87,000

        (1)  All JAC facilities are located in Johnstown, Pennsylvania.

        FCS
        Danville, Illinois    Freight car rebuild and repair                    Owned               297,000

        Gunite
        Rockford, Illinois    Administrative Offices: Specialty                 Owned               619,000
                              Foundry, Aftermarket Distribution Warehouse

        Elkhart, Indiana      Machining- Wheel End Components                   Owned               258,000
        (Plant 1) 
        Elkhart, Indiana      Machining and Assembling- Automatic               Leased              115,000
        (Plant 2)             Slack Adjusters

        Brillion (2)
        Plant I               Melting; Molding; Administrative                  Leased              180,000
                              Offices
        Plant II              Melting; Molding                                  Leased              165,000
        Plant III             Farm Machinery                                    Owned               150,000
        Plant IV              Finishing; Shipping                               Leased               85,000

        (2)  All Brillion facilities are located in Brillion, Wisconsin.

        Fabco
        Oakland, California   Manufacturing; Warehouse;                         Owned                65,000
                              Administrative Offices

        Bostrom
        Piedmont, Alabama     Manufacturing; Administrative                     Leased              196,000
                              Offices


</TABLE>

                                          20

<PAGE>



   The Company  believes that its facilities and equipment are in good condition
and, together with scheduled capital improvements,  are adequate for its present
and immediately projected needs.

 Item 3. Legal Proceedings

   The Company is involved in certain  threatened and pending legal  proceedings
 including  worker's  compensation  claims  arising  out of the  conduct  of its
 businesses.  In the opinion of management,  the ultimate  outcome of such legal
 proceedings will not have a material  adverse effect on the financial  position
 or results of operations of the Company.

   The patent  infringement  lawsuit  commenced by JAC in December  1992 against
 Trinity Industries, Inc. ("Trinity") alleging infringements of JAC's patent for
 its  BethGon  Coalporter(R)  freight car was tried in 1996 with the trial court
 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 judgement in favor of JAC
 or,  alternatively,  to order a new trial,  which motions were denied.  JAC has
 appealed  the case to the  United  States  Court  of  Appeals  for the  Federal
 Circuit. JAC expects the appeal to be decided in mid to late 1997. Although the
 chances of success of the appeal cannot be predicted,  the Company continues to
 believe that the order entered by the trial court  upholding the jury's verdict
 and several prior orders are not consistent  with the facts or the law and that
 the trial court erred in applying the law in this case. In any event,  although
 neither  the  outcome  of the  action  nor the  effect of such  outcome  can be
 predicted  with  certainty,  in the opinion of management  of the Company,  the
 outcome of the action will not have a material  adverse effect on the financial
 condition or results of operations of the Company.

   The  Company  may be  subject to  liability  as a result of the  disposal  of
 hazardous  substances  on and off  the  properties  owned  or  operated  by its
 subsidiaries, including Brillion, Gunite and Fabco. See "Business-Environmental
 Matters." TCI and Brillion filed suit on May 25, 1994 against  Beatrice and the
 Robins  Group for certain  causes of action,  including  indemnification  under
 purchase   agreements.   See   "Business-Environmental   Matters."   TCI  added
 Hunt-Wesson, Inc., a corporate successor to Beatrice that may be a successor to
 Beatrice's  liability in theses  matters,  as a defendant on June 10, 1994. TCI
 and  Gunite  filed  suit on August  5,  1994  against  K-H and  certain  of its
 affiliates  for  certain  causes of  action,  including  claims  related to the
 indemnification  provisions  of the K-H  sale  stock  purchase  agreement.  See
 "Business-Environmental  Matters." K-H filed a separate  declaratory  judgement
 action  against  TCI  and  Gunite  asserting  that  it had  no  indemnification
 obligation    for    certain    disputed     environmental     matters.     See
 "Business-Environmental Matters" in Item 1.

 Item 4. Submission of Matters to a Vote of Security Holders.
        None.

                                           21

<PAGE>



                                    PART II

Item 5. Market for Registrant's Common Equity and related Stockhlder Matters

        Price range of Common Stock

        The Company's  common stock is listed and traded on the NASDAQ  National
Market System under the symbol  "JAII." The following  table sets forth the high
and low sales  prices of the common  stock as  reported  by the NASDAQ  National
Market System.


                                  Sales Prices

                 1995                    High       Low
                    First Quarter      $16.75    $11.25
                    Second Quarter      13.75     10.13
                    Third Quarter       11.00      7.38
                    Fourth Quarter       8.13      4.25

                 1996                   
                    First Quarter       $5.63     $3.25
                    Second Quarter       5.25      3.25
                    Third Quarter        3.75      2.44
                    First Quarter        4.50      3.13


        The number of record  holders of the Company's  common stock on December
31, 1996 was 207

        Dividend Policy

        The Company has never paid any dividends on its common stock and expects
for the foreseeable future to retain all of its earnings from operations for use
in expanding and developings its business. Any future decision as to the payment
of dividends will be at the  discretion of the Company's  Board of Directors and
will  depend  upon  the  company's   earnings,   financial   position,   capital
requirements and such other factors as the Board of Directors deems relevant. In
addition,  the Credit Facility (as defined herein) contains  covenants  limiting
dividends that may be paid to holders of shares of common stock

Item 6.  Selected Financial Data

     The following table sets forth selected financial data with respect to the
Company for the periods and at the dates indicated.  All selected financial data
is derived from financial statements which habe been audited by Arthur Anderson
LLP, independent public accountants.  This information should be read in
conjunction with the fiancial statements of the Company and the notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations," both of which are incorporated by reference herein.





                                       22
<PAGE>

<TABLE>
<S>                             <C>             <C>            <C>             <C>           <C>    

                                      SELECTED FINANCIAL DATA

                                                            Year Ended December 31,
                                                    (in thousands, except per share amounts)

                                    1992           1993           1994         1995(1)          1996
                                    ----           ----           ----         ------           ----
INCOME STATEMENT DATA:

Total revenues                    $204,500       $329,122       $468,525       $668,601       $559,972
Cost of goods                      187,174        301,629        442,153        608,982        474,158
                                   -------        -------        -------        -------        -------
   Gross Profit                     17,326         27,493         26,372         59,619         85,814


Selling, general & administrative    9,108         11,340         13,144         28,117         46,605
Amortization expense                 3,843          3,721          3,573          6,478         10,174
Gain on sale of leased freight cars     --             --             --             --         (1,354)
                                   -------        -------        -------        -------        -------
   Operating income                  4,375         12,432          9,655         25,024         30,389
Interest expense, net                5,360          2,968            266         14,702         35,836
Provision (benefit) for
  income taxes                        (254)         4,083          3,692          4,737            (76)
                                   -------        -------        -------        -------        -------
     extraordinary items              (731)         5,381          5,697          5,585         (5,371)
Extraordinary items, net of taxes       --          2,918             --             --             --
                                   -------        -------        -------        -------        -------


Net income (loss)                 $   (731)      $  2,463       $  5,697       $  5,585       $ (5,371) 
                                   =======        =======        =======        =======        =======  
Income (loss) per share before
  extraordinary items             $   (.13)      $    .66       $    .58       $    .57       $   (.55)
Extraordinary items per share           --          (0.36)            --             --             --
                                   -------        -------        -------        -------        -------
Net income (loss) per share       $   (.13)      $    .30       $    .58       $    .57       $   (.55)
                                   =======        =======        =======        =======        =======

                                                          As of December 31,
BALANCE SHEET DATA:                                         (in thousands)
                                                          ------------------
                                    1992           1993           1994         1995(1)          1996
                                    ----           ----           ----         ------           ----
Total assets                      $ 95,570       $107,966       $143,354       $578,825       $555,283
Long-term debt, including
  current maturities                34,847             --          7,600        329,786        304,175
Total shareholders' equity          16,300         57,235         63,234         68,874         63,537

(1)   Acquired bostrom in January, 1995 and TCI in August, 1995. See Note 3 to
      the Consolidated Financial Statements of the Company and the notes thereto
      for the year ended December 31, 1996.
</TABLE>

      Item 7.  Management's Discussion and Analysis of Financial Condition 
               and Results of Operations

        The  information  required by this Item is  incorporated by reference to
pages 8-11 of the Company's  Annual Report to  Shareholders  for the fiscal year
ended December 31, 1996.

      Item 8.  Consolidated Financial Statements and Supplemental Data

        The  information  required by this Item is  incorporated by reference to
pages 12-35 of the Company's  Annual Report to Shareholders  for the fiscal year
ended December 31, 1996.

      Item 9.  Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure

        None.

                                       23
<PAGE>


                                    PART III


 Item 10.Directors and Executive Officers of the Registrant

         The  information  required by this Item is incorporated by reference to
 pages  2-3  of  the  Company's  Proxy  Statement  for  the  Annual  Meeting  of
 Shareholders  of the  Company  to be  held  on  May 1,  1997,  except  for  the
 information  regarding the Company's  executive  officers which is set forth in
 "Business" in Item 1 under the heading "Executive Officers of the Registrant."

         Section 16 (A) Beneficial Ownership Reporting Compliance

         The  information  required by this Item is incorporated by reference to
 page 12 of the Company's Proxy Statement for the Annual Meeting of Shareholders
 of the Company to be held on May 1, 1997.

 Item 11.  Executive Compensation

         The  information  required by this Item is incorporated by reference to
 pages  4-10  of the  Company's  Proxy  Statement  for  the  Annual  Meeting  of
 Shareholders of the Company to be held on May 1, 1997.

 Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The  information  required by this Item is incorporated by reference to
 pages  11-12  of the  Company's  Proxy  Statement  for the  Annual  Meeting  of
 Shareholders of the Company to be held on May 1, 1997.

 Item 13.  Certain Transactions and Related Transactions

         The  information  required by this Item is incorporated by reference to
 pages  4-10  of the  Company's  Proxy  Statement  for  the  Annual  Meeting  of
 Shareholders of the Company to be held on May 1, 1997.


                                         PART IV

 Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K

 (a)(1) and (a)(2)   List of Financial Statements and Financial Statement 
                     Schedules.

        The following  documents are included in the Company's  Annual report to
 Shareholders  for the fiscal year ended December 31, 1996, pages 12 through 35,
 and are incorporated herein by reference:

   Report of Independent Public Accountants.
   Consolidated Balance Sheets as of December 31, 1996 and 1995.
   Consolidated Statements of Income for the Years Ended December 31, 1996, 1995
   and 1994.  Consolidated Statements of Cash Flows for the Years Ended December
   31, 1996, 1995 and 1994.
   Notes to Consolidated Financial Statements.

 (a)(3)               List of Exhibits:

       3.1   Form of Restated Certificate of Incorporation of the Company 
             (incorporated by reference  to  Exhibit  3.3 to  Form  S-1,  
             Registration  Statement 33-63132 (the "Initial S- 1")).


                                           24


<PAGE>



       3.2   Form of Restated By-laws of the Company  (incorporated by reference
             to Exhibit 3.4 to the Initial S-1).
       4.1   Form of certificate for the Company's  common stock, par value $.01
             per share  (incorporated by reference to Exhibit 4.1 to the Initial
             S-1).
       4.2   Form of  certificate  for the Company's  Class B common stock,  par
             value $.01 per share  (incorporated  by reference to Exhibit 4.2 to
             the Initial S-1).
       4.3   Indenture  relating to the 11.75% Senior  Subordinated Notes of the
             Company due 2005,  dated as of August 23, 1995,  including  form of
             note  (incorporated  by reference  to Exhibit 4.1 to the  Company's
             Current Report on Form 8-K dated August 30, 1995).
       4.4   Rights Agreement,  dated as of October 4, 1995, between the Company
             and BancBoston State Street Investor Services,  L.P.  (incorporated
             by reference to Exhibit 1 to the Company's  Registration  Statement
             on Form 8-A dated October 5, 1995).
       10.1  Agreement  of  Purchase  and  Sale,  dated  as of May 3,  1991,  as
             amended,  between Bethlehem Steel Corporation and Johnstown America
             Industries,  Inc.  (incorporated by reference to Exhibit 2.1 to the
             Initial S-1).
       10.2  Agreement  and Plan of  Merger,  dated as of June 13,  1995,  among
             Johnstown America Industries, Inc., JTN Acquisition Corp. and Truck
             Components  Inc.  (incorporated  by reference to Exhibit 2.1 to the
             Company's Current Report on Form 8-K dated June 13, 1995).
       10.3  Stockholders Agreement,  dated as of June 13, 1995, among Johnstown
             America   Industries,   Inc.,   JTN   Acquisition   Corp.  and  the
             stockholders  party thereto  (incorporated  by reference to Exhibit
             2.2 to the  Company's  Current  Report on Form 8-K  dated  June 13,
             1995),  and Amendment No.1 to Stockholders  Agreement,  dated as of
             June 23,  1995,  among  Johnstown  America  Industries,  Inc.,  JTN
             Acquisition Corp., and the stockholders party thereto (incorporated
             by  reference  to Exhibit 2.3 to  Amendment  No.1 to the  Company's
             Current Report on Form 8-K dated June 13, 1995).
       10.4  Stock  Purchase  Agreement,  dated as of December 21, 1994, and the
             First Amendment  thereto,  dated as of January 13, 1995, each among
             the  sellers,   Bostrom   Seating,   Inc.  and  Johnstown   America
             Industries,  Inc.  (incorporated  by  reference to Exhibit 2 to the
             Company's Current Report on Form 8-K dated January 24, 1995).
       10.5  Credit  Agreement,  dated as of August 23,  1995,  among  Johnstown
             America Industries, Inc., the financial institutions named therein,
             Chemical  Bank,  as  Administrative  Agent,  Collateral  Agent  and
             Swingline Lender,  Chemical Bank Delaware, as Issuing Bank, and The
             First  National  Bank of  Boston  and The  First  National  Bank of
             Chicago, as Co-Agents (incorporated by reference to Exhibit 99.1 to
             the Company's Current Report on Form 8-K dated August 30, 1995).
       10.6  Amendment to Credit Agreement, dated as of December 31, 1995, among
             Johnstown  America  Industries,  Inc.,  the financial  institutions
             named therein,  Chemical Bank, as Administrative Agent,  Collateral
             Agent and  Swingline  Lender,  Chemical Bank  Delaware,  as Issuing
             Bank,  and The First National Bank of Boston and The First National
             Bank of Chicago, as Co-Agents (incorporated by reference to Exhibit
             10.6 to the Company's  Form 10-K for the fiscal year ended December
             31, 1995 (the "1995 Form 10-K")).
       10.7  Second Amendment to Credit Agreement, dated as of December 31, 1996
             among   Johnstown   America   Industries,   Inc.,   the   financial
             institutions named therein, Chemical Bank, as Administrative Agent,
             Collateral Agent and Swingline Lender,  Chemical Bank Delaware,  as
             Issuing Bank,  and The First  National Bank of Boston and The First
             National Bank of Chicago, as Co-Agents.
       10.8  Term  Loan  Agreement,  dated as of June  14,  1996,  between  JAIX
             Leasing  Company  and  NationsBanc  Leasing  Corporation  of  North
             Carolina   (incorporated  by  reference  to  Exhibit  10.1  to  the
             Company's Form 10-Q for the Quarter ended June 30, 1996).
       10.9  Loan Agreement,  dated as of December 1, 1995,  between Freight Car
             Services,  Inc.  and  the  City  of  Danville,  Vermillion  County,
             Illinois  relating to $5.3  million of City of  Danville,  Illinois
             Variable  Rate  Demand   Industrial   Revenue  Bonds  (Freight  Car
             Services, Inc. Project),  Series 1995 (incorporated by reference to
             Exhibit 10.7 to the 1995 Form 10-K).
       10.10 1993 Stock Option Plan  (incorporated  by reference to Exhibit 10.8
             to the Initial S-1).

                                           25

<PAGE>


       10.11 Johnstown America  Corporation  Salaried Pension Plan (incorporated
             by reference to Exhibit 10.11 to the Initial S-1).
       10.12 Amended  and  Restated  Stockholder  and  Warrantholder   Agreement
             (incorporated by reference to Exhibit 10.14 to the Initial S-1).
       10.13 Employment  Agreement of Thomas M. Begel (incorporated by reference
             to Exhibit 10.11 to the 1995 Form 10-K).
       10.14 Employment Agreement of Andrew M. Weller (incorporated by reference
             to Exhibit 10.12 to the 1995 Form 10-K).
       10.15 Employment  Agreement of Thomas W. Cook  (incorporated by reference
             to Exhibit 10.13 to the 1995 Form 10-K).
       10.16 Employment  Agreement of James D. Cirar  (incorporated by reference
             to Exhibit 10.14 to the 1995 Form 10-K).
       10.17 Form of Employment Agreement.
       10.18 Form of Severance  Agreement  (incorporated by reference to Exhibit
             10.15 to the 1995 Form 10-K).
       10.19 Form of Stay Bonus Agreement  (incorporated by reference to Exhibit
             10.16 to the 1995 Form 10-K).
       10.20 Form of  Stock  Option  Agreement  (incorporated  by  reference  to
             Exhibit 10.17 to the 1995 Form 10-K).
       10.21 Form of Supplemental Life Insurance Agreement.
       10.22 Gunite Corporation Salaried Employees Retirement Plan (incorporated
             by reference to Exhibit 10.18 to the 1995 Form 10-K).
       10.23 Gunite  Corporation  Profit Sharing Plan (incorporated by reference
             to Exhibit 10.19 to the 1995 Form 10-K).
       13.1  Selected portions of the Registrant's Annual Report to Shareholders
             for the fiscal year ended December 31, 1996 which are  incorporated
             by reference herein.
       21.1  Subsidiaries of the Company
       23.1  Consent of Arthur Andersen LLP

 (b)       Financial Statement Schedules:

       All schedules have been omitted since the required  information is either
       not significant, included in the consolidated financial statements of the
       Company or the notes thereto or not applicable.

  (c)       Reports on Form 8-K

             The Company filed the following current report on Form 8-K:

         None



                                           26

<PAGE>




                                       SIGNATURES

 Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
 Act of 1994,  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/Thomas M. Begel
                                       -------------------------- 
                                          Thomas M. Begel
                                           Chairman of the Board, President and
                                                 Chief Executive Officer


 Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this
 report  has been  signed  below  by the  following  persons  on  behalf  of the
 registrant and in the capacities and on the dates indicated.


 Signature                   Title                               Date


 /s/Thomas M. Begel          Chairman of the Board, President    March 13, 1997
 --------------------        and Chief Executive Officer
 Thomas M. Begel             (Principal Executive Officer)

 /s/Andrew M. Weller         Executive Vice President, Chief     March 13, 1997
---------------------        Financial Officer and Director
 Andrew M. Weller            (Principal Financial Officer and
                             Principal Accounting Officer)

 /s/Camillo Santomero        Director                            March 13, 1997
---------------------
 Camillo Santomero

 /s/R. Philip Silver         Director                            March 13, 1997
---------------------
 R. Philip Silver

 /s/Francis S. Stroble       Director                            March 13, 1997
---------------------
 Francis S. Stroble




                                           27