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, 1997
                      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 of 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.)

            $102,669,822                    as of March 18, 1998.

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 18, 1998

      Common Stock, $01 par value                 9,774,094

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,  1997 (Part II);  and (2)  Registrant's  Proxy
Statement for the Annual Meeting of Shareholders to be held on May 7, 1998 (Part
III).






<PAGE>



                                 PART I

ITEM 1.  BUSINESS

                              THE COMPANY

      Johnstown   America   Industries,   Inc.  (the  "Company"),   through  its
subsidiaries, designs and manufactures:  components and assemblies primarily for
medium  and  heavy-duty  trucks;   high  quality,   complex  iron  castings  for
transportation-related  and a variety of other  markets;  and  railroad  freight
cars. For a definition of certain terms used in this Form 10-K, see "Glossary of
Certain  Terms"  at the end of  this  Item.  The  Company's  principal  business
operations are:

      TRUCK  COMPONENTS  AND  ASSEMBLIES.  Gunite  Corporation  ("Gunite")  is a
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 and bus industries. 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.

      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
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 Leasing")
offers its customers freight car leasing alternatives.

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.

      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.


                                       2


<PAGE>



In January 1995,  the Company  through FCS acquired a freight car rebuilding and
repair  facility in  Danville,  Illinois for $2.5 million and spent $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.

TRUCK COMPONENTS AND ASSEMBLIES OPERATIONS

GUNITE

      Gunite is a 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 with QS9000  certification.  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,
Volvo  and  Mack  Trucks.  For  the  twelve  months  ended  December  31,  1997,
approximately 68% 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  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.


                                       3



<PAGE>



      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
wheel-end  components are currently standard on certain Navistar,  Freightliner,
PACCAR, 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  wheel-end  components.  These  products  are made by Gunite  and
delivered to the customer  either as component  parts or in  assemblies.  Gunite
products are utilized in four basic systems:  (i) Disc Wheel Hub-and-Brake Drum;
(ii) Spoke Wheel-  and-Brake Drum; (iii) Spoke  Wheel-and-Brake  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.

      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  response  to growing  concerns  by truck  fleet  operators  over brake
adjustment,  Gunite  introduced its initial  automatic slack adjuster product in
1984. The use of 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.



                                       4



<PAGE>



      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 account managers to service OEMs and
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 1997
represented approximately 66% of Gunite's total net sales in 1997, with sales to
Navistar accounting for approximately 29% of Gunite's total net sales in 1997.

      Many truck manufacturers require quality certification of their suppliers,
and Gunite  undergoes  periodic  quality surveys by all of its major  customers.
Gunite is QS9000  certified and 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's  ISO  9000  equivalent.  The  primary  criteria  on which  such  quality
certifications  and  awards  are based  include  quality  of  product,  delivery
performance,  inventory  control,  operator  knowledge,  condition  of facility,
receiving inspection of incoming materials, record maintenance and retention and
equipment gauge controls.  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
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.

BOSTROM

      Bostrom  designs,  manufactures  and markets a full line of air suspension
and static seating systems primarily for the heavy-duty truck market. Bostrom is
ISO 9001 certified.

      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 and bus 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
83% of Bostrom's 1997 net sales.  Navistar  accounted for  approximately  30% of
such sales (including both OEM and aftermarket sales).


                                       5


<PAGE>



      MANUFACTURING

      Bostrom's  manufacturing  facility is located in Piedmont,  Alabama. For a
number of its OEM customers,  Bostrom ships its seats to line-setting facilities
which it has  established  near  certain  OEM  plants  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. Fabco is QS9000 certified.

      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.
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.

      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 1997 to Fabco's five largest customers accounted for
approximately  77% of Fabco's  total net sales,  with  Navistar  accounting  for
approximately 46% of such sales.

      MANUFACTURING

      Fabco has gained a strong  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.


                                       6


<PAGE>



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 32% of
Brillion's sales (including sales to Gunite) in 1997.

      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  1997,
ductile iron castings  represented  approximately  58% 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  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.



                                       7


<PAGE>



                            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 1997  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  17% of Brillion's  1997 total net sales.  Brillion
also serves as an important source of castings for Gunite,  with sales to Gunite
representing  approximately 15% of Brillion's total net sales in 1997.  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.

      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 9002 and QS 9000 quality standards
and Brillion  has received  Caterpillar's  "Certified  Supplier  Status" and was
approved by Ford's "Technical Service  Capability  Survey." The primary criteria
on which such quality  certifications  and awards are based  include  quality of
product, delivery performance,  inventory control, operator knowledge, condition
of facility,  receiving inspection of incoming materials, record maintenance and
retention and equipment gauge controls.  A quality  certification is required by
most sophisticated  purchasers,  thereby enhancing the competitive  advantage of
suppliers like Brillion that have achieved a quality certification.



                                       8


<PAGE>



      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.

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 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.

      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  can be 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.  In 1997,  61% of the new cars  manufactured  were BethGons vs. 57% in
1996.

      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 in  1996  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,  has  been  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.  In
1997, 35% of the new cars manufactured were open hopper cars vs. 3% in 1996.



                                       9


<PAGE>



      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.  There
were no Grainporters built in 1997.

      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  through  mid-1997.  As a result,  there were a very
limited  number  of  intermodal  cars  delivered  in 1996 and 1997.  Orders  for
intermodal  cars  began to  increase  in late 1997 and a  significant  number of
intermodal cars are expected to be delivered  industry wide in 1998. JAC did not
build any intermodal  cars in 1997;  however,  JAC has received orders for 1,500
89-foot flat intermodal cars for delivery in 1998.

      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 after 15 to 20 years in use in order to extend  their life.  To pursue what
the  Company  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 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  manufacturers  new cars and  performs  total  rebuilds,
modifications and repairs of used freight 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  design,  engineering  and  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  cars.  As of
December 31, 1997, the Company owned 643 railcars in its operating  lease fleet,
representing a total investment of approximately $38.4 million, $29.2 million of
which was provided through limited-recourse borrowings.

      MANUFACTURING

      JAC's  manufacturing   operations  are  conducted  primarily  through  two
facilities located in Johnstown,  Pennsylvania and FCS' manufacturing operations
are  conducted at its  Danville,  Illinois  facility.  JAC 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,
the Company's  freight car  operations  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 suppliers.  Cellular manufacturing concepts have been
implemented,  whereby  various  manufacturing  steps  are  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 the Company's  freight car operations 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.



                                       10



<PAGE>



      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 the  Company's  freight  car
operation's  revenues in a given year. In 1997, the top five customers accounted
for approximately 47% of the Company's revenues from its freight car operations.

GENERAL

      COMPETITION

      The Company operates in highly competitive markets. 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 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 Meritor Corporation (formerly 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.

      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 been granted a  preliminary  injunction  prohibiting
Trinity from marketing,  manufacturing, using, selling or leasing its infringing
Aluminator II coal gondola  freight car,  Trinity has competed,  and JAC expects
that it will continue to compete, with JAC in the sale of coal gondolas.

      BACKLOG

      As of December  31,  1997,  freight car  operations  had a backlog of firm
orders for 4,201 new and rebuilt  freight cars with an aggregate  sales price of
approximately $220 million,  as compared to a backlog of firm orders for 774 new
and rebuilt  freight cars with an  aggregate  sales price of  approximately  $35
million as of December 31, 1996. 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 significant  increase in backlog from December 31, 1996 to December 31, 1997
reflects an increase in industry  orders for car types produced by the Company's
freight car  operations,  such as coal cars and  intermodal  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.


                                       11


<PAGE>



      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, 1997, the Company had  approximately  3,700 employees.  Of
these,  approximately 650 are salaried  employees and the balance are paid on an
hourly basis.  Approximately  2,600 or about 70% 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 Gunite's current
three-year  union  contract  scheduled to expire April 22, 1998. A new four year
union  contract at JAC was entered  into in January 1998  replacing  JAC's prior
union  contract which expired in October 1997.  While the Company  considers its
relations  with its employees to be good at each of the Company's  subsidiaries,
there can be no  assurance  that the  Company  will  reach new  agreements  upon
expiration  of  such  union  contracts  (including  the  Gunite  union  contract
scheduled  to expire in April 1998) 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  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.


                                       12


<PAGE>



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 1997, 1996
and  1995,  TCI's  capital   expenditures  for  compliance  with   environmental
requirements were approximately $748,000,  $371,000 and $1,037,000 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  $5.3  million,  $4.1 million and $4.9  million in 1997,  1996 and
1995,   respectively.   TCI's   subsidiaries  have  budgeted  $2.1  million  for
environmentally  related  capital  expenditures  in 1998. The Company'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,  Piedmont, Alabama and Danville,  Illinois are not material. Other
than for certain immaterial expenditures, the Company's subsidiaries (other than
TCI) have not  budgeted  funds for capital  expenditures  in 1998 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 a
prior  owner of  Gunite  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 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 be  approximately  $0.2
million,  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 $0.3 million.

      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 the most recent state
inspection (November 1994) found Brillion to be in compliance with all Wisconsin
air  regulations,  it is likely  that as  Brillion  continues  its review of its
operations,  it may find that  certain  of its  emission  sources  will  require
further air pollution  controls.  In addition,  further controls may be required
under the Federal Clean Air Act regulations  that are currently  scheduled to be
promulgated in the year 2000.
                                       13

<PAGE>

      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.

      GUNITE.  With  respect  to  claims  involving  Gunite,  TCI and  Gunite in
September 1997 entered into a private- party  settlement (the  "Settlement")  of
certain pending litigation with a prior owner of Gunite,  pursuant to which each
of TCI and Gunite and the prior owner  withdrew their claims against each other.
As a result  of the  Settlement,  TCI and  Gunite  will not be  responsible  for
liabilities  and costs  related to certain  alleged  contamination  at  Gunite's
facilities  and at certain  off-site  properties  to the extent  arising  out of
operations  of Gunite  prior to the  acquisition  of Gunite by TCI in  September
1987.

      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 Ground water site located in Rockford, Illinois. Gunite's connection to
the IPC, the  M.I.G./Dewane  and Southeast  Rockford sites stem from  activities
that took place prior to the  acquisition of Gunite by TCI in 1987.  Pursuant to
the Settlement, TCI and Gunite will not be responsible for liabilities and costs
related to these sites to the extent arising from Gunite's waste disposals prior
to the acquisition of Gunite by TCI in 1987.

      As to the IPC site, the Company believes that the waste disposed of at the
IPC site was disposed of prior to the  acquisition of Gunite by TCI in 1987 and,
as a result of the  Settlement,  TCI and Gunite will not be responsible for such
liabilities and costs.

      As to the M.I.G./Dewane Landfill site, the Company believes that the waste
disposed  of at the  M.I.G./Dewane  Landfill  site was  disposed of prior to the
acquisition of Gunite by TCI in 1987 and, as a result of the Settlement, TCI and
Gunite will not be responsible for such liabilities and costs.


                                       14

<PAGE>

      The EPA and the City of Rockford have  reportedly  incurred  approximately
$11 million in response costs to date in connection with the Southeast  Rockford
Groundwater NPL Site,  which is alleged to be down-gradient of the IPC site, but
which Gunite believes,  based on data collected during the  investigation of the
IPC site, is cross- or up-gradient. Although no formal demand has been made that
Gunite  participate  in the funding of the cleanup of this site,  other than the
Ekberg Park area described below, it is possible that Gunite will be found to be
responsible  for a  portion  of  these  costs,  or be  required  to  participate
financially  in the cleanup  through an industrial  tax or other  mechanism.  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, based on
alleged  trans-shipment  of Gunite's  waste to the Ekberg Park area.  Gunite has
denied  liability to the City.  The Company  believes that, to the extent any of
the alleged contamination at these sites is attributable to Gunite, such alleged
contamination  would  be  attributable  to  operations  of  Gunite  prior to the
acquisition of Gunite by TCI in 1987 and, as a result of the Settlement, TCI and
Gunite will not be responsible for such liabilities and costs.

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

      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 site
remediation.  The Company  believes that, to the extent  on-site  remediation or
cleanup is required,  most of the alleged contamination would be attributable to
operations of Gunite prior to the acquisition of Gunite by TCI in 1987 and, as a
result of the  Settlement,  TCI and Gunite will not be  responsible  for most of
such liabilities and costs.

      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.

      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.  The Company  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


                                       15

<PAGE>


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
Hunt-Wesson,  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 mid-1998. 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.

      POTENTIAL  COSTS.  As of December 31, 1997,  based on all the  information
currently available,  the Company had an environmental  reserve in the amount of
$11.3  million for  estimated  future costs  related to potential  environmental
investigation  and  remediation  liabilities  with respect to certain  currently
known  matters.  As a result  of the  Settlement  and  following  review  by the
Company's management and environmental consultants,  the Company's environmental
reserve was decreased in September 1997 by $14.3 million to $11.6  million.  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  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.  The  Company  currently  anticipates
spending  approximately  $0.4 million per year in 1998 and 1999 and $0.5 million
per year in 2000, 2001 and 2002 for monitoring the various  environmental  sites
associated with the  environmental  reserve,  including  attorney and consultant
costs for 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.  In  addition,  it is  possible  that the  timing  of any  necessary
expenditures could be accelerated.


                                       16

<PAGE>



EXECUTIVE OFFICERS OF THE REGISTRANT

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

         NAME             AGE      POSITION
   Thomas M. Begel         55      Chairman of the Board, President and Chief
                                   Executive Officer of  the Company

   Andrew M.  Weller       51      Executive Vice President and Chief Financial
                                   Officer and Director of the Company

   James D. Cirar          51      Senior Vice President of the Company and
                                   president and Chief Executive Officer of 
                                   Johnstown America Corporation and 
                                   Freight Car Services, Inc.

   Thomas W. Cook          60      Senior Vice President of the Company and
                                   President and Chief Executive Officer of 
                                   Truck Components Inc. and President - 
                                   Gunite Corporation

   David W. Riesmeyer      40      Vice President and Treasurer of the Company

   Kenneth M. Tallering    36      Vice President, General Counsel and 
                                   Secretary of the Company

   Timothy A. Masek        33      Vice President - Corporate Development of the
                                   Company and President of Bostrom Seating,Inc.

   Edward J. Whalen        49      Vice President of the Company and President
                                   of JAIX Leasing Company

   John D. McClain         53      President - Brillion Iron Works, Inc.

   Mark A. Niemela         62      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
Chairman of, and a partner in, TMB Industries  ("TMB"), an investment firm which
is a partnership between himself and Mr. Weller, and is a director or officer of
certain TMB  companies.  Mr.  Begel has served as a director of Silgan  Holdings
Inc., a packaging company, since March 1997.

      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,  and is a director or
officer of certain TMB companies.

      JAMES D. CIRAR,  has served as President  and Chief  Executive  Officer of
Johnstown America  Corporation since September 1995, as Senior Vice President of
the Company  since July 1997 and as  President  and Chief  Executive  Officer of
Freight Car Services,  Inc. since March 1998. Prior to September 1995, Mr. Cirar
was the Plant  Manager of the Truck and Bus  Assembly  Group of  General  Motors
Corporation in Flint, Michigan.

      THOMAS W. COOK, has been the President and Chief Executive  Officer of TCI
since May 1994 and President of Gunite Corporation since 1991. Mr. Cook has been
Senior Vice President of the Company since July 1997. He was President and Chief
Executive Officer of Redlaw  Industries,  Inc., a holding company with interests
in foundries,


                                       17


<PAGE>



stamping  plants and textile  industries,  from 1986 to 1991. From 1967 to 1986,
Mr. Cook was with ITT Grinnell  Corporation,  a manufacturer  and distributor of
valves and related piping products, where he became President in 1983.

      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, a private label food
manufacturer,  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 the law firm of 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, a railcar and aviation manufacturer.

      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.  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,  as Vice  President of the Company  from October 1991 until  October
1995 and as President of Freight Car Services,  Inc. from March 1995 until March
1998. From 1989 to 1991, he was a financial and rail car industry consultant.

      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,  a
manufacturer of glass containers and television picture tubes, Emerson Electric,
a diverse  manufacturing company producing power transmission and electric motor
components, pumps, valves and hand tools, and Clow Valve Company, a manufacturer
of waste and water  system  valves,  fire  hydrants and fire  protection  system
valves.

      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.


                                       18


<PAGE>



                       GLOSSARY OF CERTAIN TERMS

      The  following  industry  terms  have the  meanings  set  forth  below for
purposes of the Form 10-K:

ABS:                          Anti-lock brake system.

Auto-Flood(TM):               The Company's product name for an aluminum,  rapid
                              discharge   open   hopper  car  that  offers  more
                              capacity   than   conventional   steel   automatic
                              discharge cars.

Automatic Slack Adjuster:      A  mechanism  that  reacts to, and  adjusts  for,
                               variations  in  brake  shoe-to-  drum  clearance,
                               maintains  the proper amount of space between the
                               shoe and drum and thereby eliminates the need for
                               manual adjustment.

Brake Drum:                    A metal  cylinder to which pressure is applied by
                               a braking  mechanism in order to arrest  rotation
                               of the wheel to which the cylinder is attached.

Brake Rotor:                   Device  which  works  with  a  vehicle's  braking
                               system to stop the vehicle.

Covered Hopper Car:            A totally  contained bottom discharge freight car
                               used to haul  agricultural,  chemical and mineral
                               products.

Gondola Car:                   Open-top freight car principally used for hauling
                               coal  which  discharges  through  a  rotary  dump
                               mechanism.   Gondolas   are  also  used  to  haul
                               products  such  as ore,  scrap  metal  and  other
                               items.

Intermodal Car:                Freight car used primarily for moving  containers
                               and  trailers  that can be placed  on trucks  and
                               ships as well as freight cars.

OEM:                           Original equipment manufacturer.

Open Hopper Car:               Freight  car which  discharges  its load from the
                               bottom of the car.

Quad Hopper Car:               A  type  of  open  hopper  car  which  discharges
                               through  four doors on the bottom of the  freight
                               car.

Spoke Wheels:                  Along  with the wheel hub,  it is the  connecting
                               piece  between the brake system and the axle upon
                               which the rim and tire are mounted.

Wheel Hubs:                    Along with the spoke wheel,  it is the connecting
                               piece  between the brake system and the axle upon
                               which the rim and tire are mounted.



                                       19


<PAGE>



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 facilites.

                                                      Owned/   Covered Space
   FACILITIES           BUSINESS FUNCTION             LEASED      SQ. FT.

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

   Franklin Plant       Freight car erection and      Owned       619,000
                        fabrication

   Offices              Administrative Offices        Owned        87,000

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

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

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

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

   Brillion (2)
   Plant I              Melting; Molding;             Leased      180,000
                        Administrative 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;                Leased      196,000
                        Administrative Offices


     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.

                                       20

<PAGE>

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.

     In December  1992,  JAC  commenced a patent  infringement  lawsuit  against
Trinity Industries, Inc. ("Trinity") in the United States District Court for the
Western District of Pennsylvania, alleging infringements of JAC's patent for its
BethGon Coalporter(R) freight car. The suit involved Trinity's manufacture, sale
and offering for sale of its Aluminator II coal freight car in competition  with
JAC's BethGon  Coalporter(R) freight car, the tubs of which are covered by JAC's
patent.  In such suit,  JAC seeks  monetary  damages and an  injunction  against
Trinity to prohibit Trinity from making, using, selling or offering for sale the
Aluminator  II. The lawsuit  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 appealed the case to
the United  States  Court of Appeals for the  Federal  Circuit.  Following  oral
argument,  the Court of Appeals for the Federal Circuit issued its opinion dated
May 28,  1997 in which the Court held that  Trinity's  Aluminator  II  literally
infringed   JAC's   patent,   reversed   the  1996  trial   court   judgment  of
non-infringement   and  remanded  the  case  back  to  the  trial  court  for  a
determination  as to damages  and for  consideration  of JAC's  contention  that
Trinity's infringement was willful.  Following receipt of such opinion, JAC made
a motion to the trial court for a permanent  injunction to prohibit  Trinity for
making,  selling or offering to sell its  infringing  Aluminator  II until JAC's
patent  expires in November  1999.  Trinity  therafter  petitioned  the Court of
Appeals for a rehearing.  The trial court temporarily  denied JAC's motion for a
permanent  injunction until the Court of Appeals decided Trinity's  petition for
rehearing. The Court of Appeals issued its opinion dated July 30, 1997 and Order
dated August 11, 1997 denying  Trinity's  petition for  rehearing  and Trinity's
suggestion  for a rehearing  in banc.  Trinity  thereafter  made a motion to the
Court of Appeals to stay the issuance of its mandate  pending  Trinity  filing a
petition for certiorari to the United States Supreme Court. In January 1998, the
United States Supreme Court denied  Trinity's  petition for certiorari.  Also in
January  1998,  the  District   Court  granted  JAC  a  preliminary   injunction
prohibiting Trinity from marketing, manufacturing, using, selling or leasing its
infringing  Aluminator II coal gondola freight car or any imitation therof.  JAC
expects the damage  trial to occur in mid-1998  and at this time cannot  predict
the amount of damages that may be awarded.

     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. 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.   TCI  added
Hunt-Wesson,  Inc., a corporate successor to Beatrice that may be a successor to
Beatrice's liability in these matters, as a defendant on June 10, 1994. 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 mid-1998.  In September  1997, TCI and
Gunite entered into the Settlement which settled its pending  litigation against
a prior owner of Gunite and pursuant to which TCI and Gunite and the prior owner
withdrew their claims against the other. As a result of the Settlement,  TCI and
Gunite will not be responsible (through a contractual  undertaking by the former
owner) for certain  environmental  liabilities and costs resulting from Gunite's
waste  disposals  prior to the  acquisition of Gunite by TCI in September  1987,
including  at  the  IPC,   M.I.G./Dewant  and  Southeast   Rockford  sites.  See
"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 STOCKHOLDER 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
1996                  HIGH    LOW

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

1997

First Quarter        $4.75  $3.25
Second Quarter        6.63   3.00
Third Quarter         9.25   5.75
Fourth Quarter       15.50   8.50


      The number of record holders of the Company's common stock on December 31,
1997 was 183.

      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 developing 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 have been audited by Arthur Anderson
LLP,  independent  public  accountants.  This  information  should  be  read  in
conjunction  with the financial  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>



                       SELECTED FINANCIAL DATA


                            YEAR ENDED DECEMBER 31,
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                    ----------------------------------------
<TABLE>
<S>                                 <C>        <C>       <C>       <C>      <C>

                                         1993      1994  1995 (1)      1996      1997
                                         ----      ----  --------      ----      ----
INCOME STATEMENT DATA:

Total revenues                       $329,122  $468,525  $668,601  $559,972  $650,347
Cost of goods                         301,629   442,153   608,982   474,158   556,365
                                      -------   -------   -------   -------   -------
  Gross profit                         27,493    26,372    59,619    85,814    93,982


Selling, general & administrative      11,340    13,144    28,117    46,605    46,187
Amortization expense                    3,721     3,573     6,478    10,174     8,554
Gain on sale of leased freight cars       ---       ---       ---    (1,354)     (824)
Reduction of environmental reserves       ---       ---       ---       ---   (14,300) 
                                      -------   -------   -------   -------   -------
  Operating income                     12,432     9,655    25,024    30,389    54,365
Interest expense, net                   2,968       266    14,702    35,836    35,380
Provision (benefit) for
  income taxes                          4,083     3,692     4,737       (76)    9,511
                                      -------   -------   -------   -------   -------
  Income (loss) before
  extraordinary items                   5,381     5,697     5,585    (5,371)    7,466
Extraordinary items, net of taxes      (2,918)      ---       ---       ---    (2,008)
                                      -------   -------   -------   -------   -------

Net income (loss)                    $  2,463  $  5,697  $  5,585  $ (5,371) $  9,474
                                      =======   =======   =======   =======   =======
Diluted and Basic Earnings Per Share:
Income (loss) before
  extraordinary items                $    .66  $    .58  $    .57  $  (0.55) $   0.96
Extraordinary items                     (0.36)      ---       ---       ---     (0.20)
                                      -------   -------   -------   -------   -------
Net income (loss)                    $    .30  $    .58  $    .57  $  (0.55) $   0.76
                                      -------   -------   -------  --------   -------

                                                       As of December 31,
                                                       ------------------
                                                          (in thousands)
     BALANCE SHEET DATA:
                                         1993      1994  1995 (1)      1996      1997
                                         ----      ----  --------      ----      ----

Total assets                         $107,966  $143,354  $578,825  $555,283  $578,838
Long-term debt, including
  current maturities                      ---     7,600   329,786   304,175   312,273
Total shareholders' equity             57,235    63,234    68,874    63,537    71,020

</TABLE>

(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, 1997.


                                       23
<PAGE>


ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

GENERAL 
The company  conducts its business  through  three  operating  groups within the
transportation  industry:  truck components and assemblies operations, a leading
manufacturer  of wheel end components,  seating,  steerable drive axles and gear
boxes for the heavy  duty  truck  industry;  iron  casting  operations,  a major
producer of complex iron  castings for a wide range of  industries;  and freight
car  operations,  a leading  manufacturer  and lessor of new and rebuilt freight
cars  used  for  hauling  coal,   intermodal   containers,   highway   trailers,
agricultural  and mining  products.  During 1997, the Company's truck components
and assemblies,  iron castings and freight car operations generated net sales of
$284.7 million,  $130.9 million and $234.7 million,  respectively.  During 1996,
the Company's  truck  components and  assemblies,  iron castings and freight car
operations  generated  net sales of $237.0  million,  $125.1  million and $197.8
million, respectively. The significant decline in demand experienced in 1996 and
early 1997 in freight car operations produced significant operating losses that,
coupled with the Company's significant debt service requirements,  offset strong
operating  income from its truck  components  and  assemblies  and iron castings
operations.  Although  demand for freight cars has improved,  the market remains
subject to pricing  competitiveness  in a freight  car market  characterized  by
uneven demand and production overcapacity.

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

Freight car  operations  sales are driven  principally by the number and type of
freight cars  delivered in any given  period.  Due to the large size of customer
orders,  the  specific  time frame for  delivery  of freight  cars  ordered  and
variations in the mix of cars  ordered,  the number and type of cars produced in
any given period may fluctuate greatly.  As a result, the Company's revenues and
results of operations and cash flows from operations may fluctuate as well.

The Company completed the acquisition of Truck Components Inc. ("TCI") on August
23,  1995 and Bostrom  Seating,  Inc.  ("Bostrom")  on January  13,  1995.  Both
acquisitions  were  accounted for under the purchase  method of  accounting  and
accordingly,  their  operating  results were included in the Company's  reported
results from their respective acquisition dates. Such results have a significant
impact on the comparative discussions below. Additionally,  the Company, through
it's wholly owned subsidiary Freight Car Services,  Inc. ("FCS"),  completed the
purchase of the  Danville,  Illinois,  facility and began  operations in October
1995.

The Company  and its  subsidiaries  utilize  software  and related  technologies
throughout its  businesses  that will be affected by the date change in the year
2000. In 1997, the Company initiated a comprehensive  program to insure that its
various  business  systems  continue to function  properly in the year 2000. The
cost of  becoming  "Year  2000"  compliant  is not  expected  to be  material in
relation to the consolidated financial statements.

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997 AND 1996

TOTAL REVENUE
Total revenue in 1997  increased  16.1% to $650.3 million from $560.0 million in
1996.  The  revenue  increase  of $90.3  million was due to an increase in truck
component  revenues of $47.7 million,  an increase in iron castings  revenues of
$5.8 million and an increase in freight car revenues of $36.8  million.  For the
year 1997,  shipments of freight cars were 4,507 (including 290 cars sold to the
Company's  lease fleet),  compared to 3,470 freight cars (including 98 cars sold
to the Company's  lease fleet) in 1996.  As of December 31, 1997,  the Company's
backlog of new and  rebuilt  cars was 4,201  compared  with 774 new and  rebuilt
freight cars as of December 31, 1996.


                                       24
<PAGE>


At December  31,  1997,  the Company had 1,673  freight  cars on lease,  and the
leasing  business for the year 1997  generated  $7.6 million in revenue and $3.6
million in  operating  income  before an $0.8 million gain on the sale of leased
freight cars.  The leasing  business  generated $4.5 million in revenue and $2.4
million in  operating  income  before a $1.4  million gain on the sale of leased
freight cars in the prior year.

COST OF SALES-MANUFACTURING AND GROSS PROFIT
Cost of  sales-manufacturing  for 1997 as a percent of  manufacturing  sales was
85.9%,  compared with 85.0% in 1996. Related gross profits were 14.1% and 15.0%,
respectively. The decrease in gross profit margins resulted primarily from lower
gross  profit  margins in freight car  operations  due to reduced  volume in the
first half of the year and pricing pressure throughout the year offset partially
by increased profit margins in the truck component  operations and iron castings
business.


SELLING, GENERAL, ADMINISTRATIVE AND AMORTIZATION EXPENSES
Selling,  general and  administrative  expense as a percentage  of total revenue
were 7.1% and 8.3% in 1997 and 1996,  respectively.  Actual selling, general and
administrative  expenses  declined  $0.4 million from 1996 levels as a result of
cost  reduction  measures  undertaken at the Company's  freight car  operations.
Amortization  expense as a percentage of total revenue was 1.3% and 1.8% for the
years 1997 and 1996. Actual amortization  expense decreased by $1.6 million from
1996 levels due primarily to a decrease in  amortization  expense at freight car
operations of $1.5 million to certain  intangible items being fully amortized in
late 1996.

OPERATING INCOME
Operating income was $54.4 million in 1997, compared with $30.4 million in 1996,
an increase of $24.0  million.  The Company  increased its  operating  income by
increasing  gross profits by $8.2 million,  a reduction in selling,  general and
administrative  expenses of $0.4 million, a reduction in amortization expense of
$1.6 million, a reduction of environmental reserves of $14.3 million offset by a
decline in gain on sale of leased freight cars of $0.5 million.

During the third  quarter of 1997,  the Company  settled  two  pending  lawsuits
related to indemnification of environmental cleanup costs from a former owner of
Gunite, which reduced outstanding environmental liabilities by $14.3 million

OTHER
Interest  expense,  net,  was $35.4  million in 1997  compared to $35.8 in 1996.
Interest expense in 1997 and 1996 resulted from borrowings under the Senior Bank
Facilities and the Senior  Subordinated  Notes, as well as from the JAIX Leasing
loans  which were used to finance  the  addition  of freight  cars for the lease
fleet.

In conjunction with the issuance of $80 million of Senior Subordinated Notes and
to  refinance  $80.0  million of Tranche A term debt,  the  Company  recorded an
extraordinary  charge  of $2.0  million  after  tax,  primarily  related  to the
write-off of $3.4 million of deferred financing costs.

Net income and diluted  earnings per share for 1997 were $7.5 million and $0.76,
respectively,  compared to net loss and diluted  loss per share of $5.4  million
and $0.55, for 1996.

YEARS ENDED DECEMBER 31, 1996 AND 1995

TOTAL REVENUE
Total revenue in 1996  decreased  16.2% to $560.0 million from $668.6 million in
1995.  The revenue  decrease of $108.6 million was primarily due to the decrease
in freight car sales of $294.7  million  (3,470 new and rebuilt  cars in 1996 vs
9,157 new and rebuilt cars in 1995) and a $9.6 million decrease in truck related
sales volume at Bostrom.  The decreases  were offset in part by the inclusion of
TCI for all of 1996 versus  inclusion  for the partial year of 1995, an increase
of $195.7  million.  As of December 31, 1996,  the Company's  backlog of new and
rebuilt  freight cars was 774 compared to 1,204 new and rebuilt  freight cars at
December 31, 1995.


                                       25

<PAGE>

COST OF SALES-MANUFACTURING AND GROSS PROFIT
Cost of  sales-manufacturing  for 1996 as a percent of  manufacturing  sales was
85.0%,  compared to 91.3% in 1995.  Related  gross  profits were 15.0% and 8.7%,
respectively.  The  improvement  in gross  profit  resulted  primarily  from the
acquisition of TCI in August 1995. TCI has  historically  generated higher gross
profits than the freight car business.  Partially  offsetting  this increase was
the decrease of gross profit at JAC. JAC's gross profit  percentage for 1996 was
down from the prior year  approximately  1 percentage  point,  and the aggregate
dollar  gross  profit was down due to the  significant  decrease  in freight car
revenues mentioned above.

SELLING,  GENERAL,  ADMINISTRATIVE AND AMORTIZATION  EXPENSES 
Selling,  general,  administrative  and amortization  expense as a percentage of
total revenue was 8.3% and 4.2% in 1996 and 1995, respectively.  The increase in
selling,  general and administrative  expenses is related to the acquisition and
the  integration  of TCI which has higher  selling,  general and  administrative
expense levels as a percent of revenue  compared to freight car operations,  and
to increased  MIS and product  development  cost at the freight car  operations.
Amortization  expense as a percentage of total revenue was 1.8% and 1.0% for the
years ended 1996 and 1995, respectively. The increase in amortization expense as
a percentage of total revenue is related to amortization  of certain  intangible
assets and the excess cost over net assets acquired in the TCI acquisition.

OPERATING INCOME
Operating income was $30.4 million in 1996, compared with $25.0 million in 1995.
The increase was primarily due to including the operating  income of TCI for all
of 1996 versus  inclusion for the partial year of 1995 more than  offsetting the
drop in operating income at JAC.

OTHER
Interest  expense,  net was $35.8  million in 1996  compared to $14.7 million in
1995.  Higher interest expense in 1996 resulted from borrowings under the Senior
Bank  Facilities  and the issuance of Notes to finance the  acquisition  of TCI,
which were  outstanding for all of 1996 versus four months of 1995. In addition,
JAIX Leasing had increased  debt levels to finance  additional  freight cars for
the lease fleet.

Net loss and  diluted  loss per  share for 1996 were  $5.4  million  and  $0.55,
respectively,  compared  to net income and  diluted  earnings  per share of $5.6
million and $0.57, respectively, for 1995.

LIQUIDITY AND CAPITAL RESOURCES

For the year ended December 31, 1997, the Company  provided cash from operations
of $26.7 million  compared  with $36.4 million for 1996.  The Company used $25.1
million of net cash in investing  activities during 1997; primarily $8.2 million
used for capital  expenditures,  and $17.5 million used for net additions to the
leased fleet.  Cash provided by financing  activities was $4.7 million for 1997,
which included $82.8 million in proceeds from the issuance of additional  Senior
Subordinated  Notes on August 12, 1997, and increase in the JAIX Leasing debt of
$15.6 million to fund the leasing fleet  additions.  Offsetting this increase is
the  refinancing  of $80.0  million  of Tranche A senior  term  debt,  scheduled
payments  of $10.2  million  of debt and  payment of $3.6  million  of  deferred
financing costs.

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

On  August  23,  1995,  in  conjunction  with  the  acquisition  of TCI  and the
refinancing  of the existing debt of the Company,  the Company and the Guarantor
Subsidiaries  entered into the $300 million  Senior Bank  Facilities  and issued
$100  million  of  Notes.  See  Notes  6 and  7 of  the  Consolidated  Financial
Statements  for a description of the Senior Bank  Facilities  and the Notes.  On
August 12,  1997,  the Company  issued $80  million of  additional  Notes,  with
substantially  the same terms as the  original  Notes.  As of December 31, 1997,
there was $93.3 million of Tranche B term loan outstanding under the Senior Bank
Facilities, $182.7 million of Notes outstanding, and no borrowings under the $75
million  revolving  credit line under the Senior Bank  Facilities.  Availability
under the revolving credit line after  consideration  of outstanding  letters of
credit of $17.0 million, was $58.0 million.


                                       26

<PAGE>


Interest  payments on the Notes and interest and  principal  payments  under the
Senior Bank Facilities represent  significant cash requirements for the Company.
The Notes require semiannual  interest payments of approximately  $10.6 million.
Borrowings  under the Senior Bank Facilities bear interest at floating rates and
require  interest  payments on varying  dates  depending  upon the interest rate
option selected by the Company.  The $93.3 million of outstanding term tranche B
loans requires periodic principal payments through their maturities.
See Note 6 of the Consolidated Financial Statements.

At December 31, 1997,  JAIX Leasing  owned or leased 1,673  freight  cars.  JAIX
Leasing  financed its 643 owned freight cars with a 10-year term loan  facility,
which as of December 31, 1997, had a balance of $29.2 million  outstanding.  See
Note 6 of the  Consolidated  Financial  Statements  for a  description  of  this
facility.  As of December 31, 1997,  there was $29.2 million  outstanding  under
this facility.

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

As of December 31, 1997,  the  Company's  balance  sheet  included cash of $30.9
million.

ENVIRONMENTAL AND LEGAL MATTERS

The Company is subject to comprehensive and frequently  changing federal,  state
and local environmental laws and regulations,  and will incur additional capital
and  operating  costs in the future to comply with  currently  existing laws and
regulations,  new regulatory requirements arising from recently enacted statutes
and possible new statutory  enactments.  In addition to environmental  laws that
regulate the Company's  subsidiaries' ongoing operations,  the subsidiaries also
are  subject  to  environmental   remediation   liability.   Under  the  federal
Comprehensive  Environmental  Response,  Compensation and Liability Act (CERCLA)
and analogous state laws, the Company's  subsidiaries  may be liable as a result
of  the  release  or  threatened  release  of  hazardous   substances  into  the
environment.  The  Company's  subsidiaries  are  currently  involved  in several
matters relating to the investigation  and/or remediation of locations where the
subsidiaries have arranged for the disposal of foundry and other wastes.

Such matters  include  five  situations  in which the  Company,  through its TCI
subsidiaries  and their  predecessors,  have been  named or are  believed  to be
potentially  responsible  parties  (PRPs)  in the  contamination  of the  sites.
Additionally,  environmental  remediation  may be  required  at  two of the  TCI
facilities at which soil and ground water contamination has been identified.

The Company  believes that it has valid claims for  contractual  indemnification
against prior owners for certain of the investigatory and remedial costs at each
of the above mentioned sites. As a result of the Settlement, TCI and Gunite will
not be responsible  (through a contractual  undertaking by the former owner) for
certain  liabilities  and costs  resulting from Gunite's waste disposal prior to
the acquisition of Gunite by TCI in September 1987 at certain of such sites. The
Company has been notified,  however,  by certain other  contractual  indemnitors
that they will not honor claims for indemnification. Accordingly, the Company is
litigating certain indemnification claims and there is no assurance that even if
successful  in any such  claims,  any  judgments  against the  indemnitors  will
ultimately be recoverable.  In addition,  the Company believes it is likely that
it has incurred  some  liability at various  sites for  activities  and disposal
following acquisition which would not in any event be covered by indemnification
by prior owners.


                                       27
<PAGE>

As of December 31, 1997, the Company has a $11.3 million environmental  reserve.
This reserve is based on current cost  estimates  and does not reduce  estimated
expenditures to net present value. The Company  currently  anticipates  spending
approximately  $0.4 million in 1998 and 1999 and $0.5 million in 2000,  2001 and
2002  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 Loans. 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. Any
cash  expenditures  required by the Company or its  subsidiaries  to comply with
applicable environmental laws and/or to pay for any remediation efforts will not
be reduced or otherwise affected by the existence of the environmental  reserve.
Due to the early  stage of  investigation  of many of the  sites  and  potential
remediations referred to above, there are significant  uncertainties as to waste
quantities  involved,  the extent and  timing of the  remediation  which will be
required, the range of acceptable solutions, costs of remediation and the number
of PRPs  contributing to such costs.  Based on all of the information  presently
available to it, the Company  believes  that the  environmental  reserve will be
adequate  to cover its future  costs  related to the sites  associated  with the
environmental  reserve,  and that any additional  costs will not have a material
adverse  effect on the  financial  condition  or  results of  operations  of the
Company.  However,  the  discovery of  additional  sites,  the  modification  of
existing laws or  regulations,  the  imposition  of joint and several  liability
under  CERCLA or the  uncertainties  referred  to above  could  result in such a
material adverse effect.

EFFECTS OF INFLATION

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

SAFE HARBOR STATEMENT

This report contains  various forward  looking  statements  which are offered to
provide management's  perspective on the year ahead and are made pursuant to the
Safe Harbor provisions of the Private Securities  Litigation Reform Act of 1995.
The  statements  included  in this  report  which are not  historical  facts are
"forward  looking  statements"  that  involve  certain  risks and  uncertainties
including changes in economic  conditions,  market conditions  (specifically the
heavy-duty  truck and freight car  markets),  labor  relations and other factors
outside of the Company's control,  including factors discussed from time to time
in the Company's filings with the Securities and Exchange Commission, that could
cause actual future results to differ materially from those stated.

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     The information required by this Item is incorporated by reference to pages
12-36 of the Company's  Annual Report to Shareholders  for the fiscal year ended
December 31, 1997.

ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

               None.


                                       28


<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  7,  1998,  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 7, 1998.

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 7, 1998.

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 7, 1998.

ITEM 13.  CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS

       None



                                       29

<PAGE>



                                 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, 1997,  pages 12 through 36,
and are incorporated herein by reference:

   Consolidated Balance Sheets as of December 31, 1997 and 1996.
   Consolidated Statements of Income for the Years Ended December 31, 1997, 1996
   and 1995.  
   Consolidated Statements of Cash Flows for the Years Ended December 31, 1997,
   1996 and 1995.
   Notes to Consolidated Financial Statements.
   Report of Independent Public Accountants.

(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")).
      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).
      4.5  Indenture  relating to the 11.75% Series C Subordinated  Notes of the
           Company due 2005, dated as of August 11, 1997, including form of note
           (incorporated  by reference to Exhibit 4.2 to Form S-4,  Registration
           Statement 333-35277 (the "Form S-4")).
      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


                                       30


<PAGE>



           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.  (incorporated by reference to Exhibit 10.7 to
           the Company's  Form 10-K for the fiscal year ended  December 31, 1996
           (the "1996 Form 10-K")).
      10.8 Amendment  No. 3,  Consent  and Waiver  dated as of August 4, 1997 to
           Credit  Agreement,  among the Company,  The Chase  Manhattan Bank, as
           Administrative,  Collateral  Agent and  Swingline  Lender,  the First
           National Bank of Boston and the First  National  Bank of Chicago,  as
           Co-Agents,  and the Chase Manhatten Bank of Delaware, as Issuing Bank
           (incorporated by reference to Exhibit 10.22 to the Form S-4).
      10.9 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).
     10.10 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).
     10.11 1993 Stock Option Plan  (incorporated by reference to Exhibit 10.8 to
           the Initial S-1).
     10.12 Johnstown America Corporation  Salaried Pension Plan (incorporated by
           reference to Exhibit 10.11 to the Initial S-1).
     10.13 Amended  and  Restated   Stockholder  and   Warrantholder   Agreement
           (incorporated by reference to Exhibit 10.14 to the Initial S-1).
     10.14 Employment Agreement of Thomas M. Begel (incorporated by reference to
           Exhibit 10.11 to the 1995 Form 10-K).
     10.15 Employment  Agreement of Andrew M. Weller  (incorporated by reference
           to Exhibit 10.12 to the 1995 Form 10-K).
     10.16 Employment  Agreement of Thomas W. Cook (incorporated by reference to
           Exhibit 10.13 to the 1995 Form 10-K).
     10.17 Employment  Agreement of James D. Cirar (incorporated by reference to
           Exhibit 10.14 to the 1995 Form 10-K).
     10.18 Form of Employment  Agreement  (incorporated  by reference to Exhibit
           10.17 to the 1996 Form 10-K).
     10.19 Form of  Severance  Agreement  (incorporated  by reference to Exhibit
           10.15 to the 1995 Form 10- K).
     10.20 Form of Stay Bonus  Agreement  (incorporated  by reference to Exhibit
           10.16 to the 1995 Form 10-K).
     10.21 Form of Stock Option Agreement  (incorporated by reference to Exhibit
           10.17 to the 1995 Form 10-K).
     10.22 Form  of  Supplemental  Life  Insurance  Agreement  (incorporated  by
           reference to Exhibit 10.21 to the 1996 Form 10-K.)
     10.23 Gunite Corporation  Salaried Employees  Retirement Plan (incorporated
           by reference to Exhibit 10.18 to the 1995 Form 10-K).
     10.24 Form of  Deferred  Compensation  Agreement.
     10.25 Gunite  Corporation Profit Sharing Plan (incorporated by reference to
           Exhibit 10.19 to the 1995 Form 10-K).


                                       31


<PAGE>



     13.1  Selected  portions of the Registrant's  Annual Report to Shareholders
           for the fiscal year ended December 31, 1997 which are incorporated by
           reference herein.
     21.1  Subsidiaries of the Company
     23.1  Consent of Arthur Andersen LLP
     27.1  Finacial Data Schedule

(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



                                       32


<PAGE>





                                SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                              JOHNSTOWN AMERICA INDUSTRIES, INC.


                              By:/S/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, 1998
---------------------   and Chief Executive Officer
Thomas M. Begel         (Principal Executive Officer)
                        

/S/ANDREW M. WELLER     Executive Vice President, Chief    March 13, 1998
---------------------   Financial Officer and Director
Andrew M. Weller        (Principal Financial Officer and
                        Principal Accounting Officer)

/S/CAMILLO SANTOMERO    Director                           March 13, 1998
---------------------
Camillo Santomero

/S/R. PHILIP SILVER     Director                           March 13, 1998
---------------------
R. Philip Silver

/S/FRANCIS S. STROBLE   Director                           March 13, 1998
---------------------
Francis S. Stroble