ABC-NACO Expects Solid Calendar 2000 Results; Modifies Earnings Estimates for Five Month Stub Year.

DOWNERS GROVE, Ill.--(BUSINESS WIRE)--Oct. 13, 1999--

ABC-NACO said today that sales and earnings for its five month stub year (August 1, 1999 through December 31, 1999), will be lower than anticipated. The Company had expressed caution at the start of the year, saying that several industry-related factors were at work which could cause sales during this timeframe to decline. These included the continued slowness of specialty track product orders from major railroads and uncertainty in the new freight car market through the end of calendar year 1999.

In addition to the industry-wide issues, the Company is foregoing sales, building wheel set inventories, and increasing wheel shop manpower levels in preparation for the previously announced long-term service agreement with Union Pacific Railroad. While all of these factors will negatively impact the five month stub year, the outlook for calendar year 2000 remains positive.

Orders from freight car builders, lessors and fleet management companies have dropped precipitously during the past several weeks. Chief Executive Officer, Joseph A. Seher said, "We began to see signs of this softening late in the fourth quarter of our last fiscal year. This trend has accelerated as the end of the calendar year approaches with customers cutting back orders and, in the short term, significantly reducing their inventory levels."

"This is a correction that we expected, but could not pinpoint the timing or the magnitude, as the industry moves back to more traditional new car production levels in the 50,000-55,000 per year range as compared to the 75,000-80,000 range of the past two years," said Seher. "While production levels may be lower, they are still very favorable and play to the strengths of our strategically located manufacturing facilities in all NAFTA countries."

The Track Products Division, which is a part of the Rail Products Group, continues to suffer from a falling level of orders. Seher stated, "Fortunately, our ability to swiftly streamline the division in response to this downward movement is allowing us to hold our market leadership position and minimize the negative impact on earnings. While we are still unable to exactly predict when this market will return to traditional levels, we do anticipate order activity to pick up during the next year."

"Calendar year 2000 promises to be a year of solid performance. It will benefit from the full $30 million of synergy savings from the merger. New freight car builds will be strong, we will achieve both revenue and earnings gains from the new services contracts and finally, we expect the order level for specialty trackwork to recover," concluded Seher.

ABC-NACO is one of the world's leading suppliers of technologically advanced products to the railroad and flow control industries through its three business segments or groups: Rail Products, Rail Services and Systems, and Flow and Specialty Products. With four technology centers around the world, ABC-NACO holds pre-eminent market positions in the design, engineering, and manufacture of high performance freight rail car, locomotive and passenger rail suspension and coupler systems, wheels and mounted wheel sets, and specialty track products. The company also supplies railroad and transit signaling systems and services, as well as highly engineered valve bodies and components for industrial flow control systems worldwide.

Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts, such as those concerning future financial performance, growth, plant start-ups, capabilities, Year 2000 impact and other statements, may be deemed to be forward-looking statements that are subject to change based on various factors which may be beyond the control of ABC-NACO Inc. Accordingly, actual results of the company could differ materially from those expressed or implied in any such forward-looking statement. Factors that could affect actual results are described more fully in the Company's Proxy Statement/Prospectus dated January 21, 1999, under the caption "Cautionary Statement Concerning Forward Looking Statements," and other risks described from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.