Orders Strong as Harmon Announces Record Third Quarter Results

BLUE SPRINGS, Mo. (Tuesday, October 29, 1996) -- Harmon Industries Inc. today announced record results for the third quarter ended September 30, 1996.

Sales in the third quarter were an all-time record $42 million, an increase of 10 percent from $38 million in the third quarter of 1995. Net earnings were $2.5 million for the three months ended September 30, compared with $2.3 million a year ago, an increase of more than nine percent. Earnings per share were $0.36 for the third quarter of 1996, compared with $0.33 for the third quarter of 1995.

For the nine months ended September 30, sales increased more than 19 percent to a record-setting $119 million from $100 million in 1995. Net earnings increased 43 percent to $7.2 million compared with $5 million in 1995. Earnings per share were $1.06 in the first nine months, compared with $0.74 in the same period last year.

Orders for the quarter were more than double those from the same period in 1995, and to date, 1996 orders exceed those of 1995 by nearly 30 percent. The freight and international market segments accounted for the greatest order growth in the third quarter, and included the largest turnkey signaling system and crossing upgrade in the Company's history.

"I am very pleased with our performance for the third quarter and year to date," said Björn Olsson, president and chief executive officer. "Our continued focus on providing customers with leading-edge technology and excellent customer service has allowed Harmon to grow at a time when much of the rail-supply industry is experiencing difficult times."

Acquisitions and a continued emphasis on international growth have contributed significantly to the success of Harmon Industries. The acquisition in July of Vaughan Systems Ltd., now Vaughan-Harmon Systems Ltd., has provided immediate results for Harmon in the international rail markets. The $8.4 million in orders received during the third quarter significantly exceeded the annual sales previously experienced by Vaughan Systems Ltd.

Acquisitions also continue to strengthen the Company's domestic position. On October 1, Harmon announced the acquisition of two Jacksonville, Fla.-based contract engineering companies, further solidifying the Company's already strong position as a leader in this growing segment of the rail-supply market.

Harmon reached another milestone recently with the installation and successful first test of its Incremental Train Control System (ITCS) on an Amtrak high-speed rail line along the Chicago-Detroit corridor. The project was funded by the Federal Railroad Administration and Michigan Department of Transportation and is a testing ground for the future of high-speed rail in America. The success of this test has resulted in inquiries from high-speed rail interests globally.

Harmon was also recently cited by Forbes magazine as one of the 200 best small companies in America for its financial success because of the Company's emphasis on a strong balance sheet and an excellent return on capital.

Harmon Industries, Inc., a leading supplier of signal and train control products to railroads and rail transit systems throughout North America and the world, is traded on the Nasdaq Stock Market under the symbol "HRMN." For further information, please contact Charles M. Foudree, executive vice president-finance and chief financial officer, Harmon Industries, Inc., 1300 Jefferson Court, Blue Springs, MO 64015. The telephone number is (816) 229-3345.

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