Tim Wesley (412) 237-2250 x161

                  MK RAIL COMPLETES DEBT-REDUCTION TRANSACTION
                  BY REPAYING MORRISON KNUDSEN NOTE AT DISCOUNT

         PITTSBURGH,  September 10, 1996 -- MK Rail Corporation  (Nasdaq:  MKRL)
today completed a debt-reduction transaction by repaying a note owed to Morrison
Knudsen Corporation (NYSE: MRN) at a discount to face value. In the transaction,
MK Rail repaid $57.3  million of debt,  including  accrued  interest,  for $34.6
million.
         As a result of this debt repayment,  non-core asset sales and MK Rail's
improved cash flow from  operations in 1996, the company will have reduced total
debt from about $120  million at the  beginning of the year to about $65 million
by the end of the third quarter.  During the same period,  stockholders'  equity
will have  increased from $94.5 million to about $115 million and book value per
share of  common  stock  will  have  increased  from  $5.38 to about  $6.55.  In
addition,  through  the note  repayment  the  company  expects to reduce  annual
interest expense by about $1 million.
         "This  debt-reduction  transaction  represents  the  final  step in the
turnaround plan that we articulated at the beginning of this year," said John C.
(Jack) Pope, the company's  chairman.  "MK Rail is now profitable and has a very
strong  balance  sheet which should  enable us to invest in the future growth of
our businesses."
         In  conjunction  with the  Morrison  Knudsen note  repayment,  Morrison
Knudsen expects to emerge from bankruptcy and merge with Washington Construction
Inc.  (NYSE:  WAS). As part of its bankruptcy  plan,  Morrison  Knudsen plans to
distribute its 63 percent ownership of MK Rail stock, about 11.1 million shares,
to its creditors and, in certain circumstances, its current stockholders.
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MK RAIL COMPLETES DEBT-REDUCTION TRANSACTION...
         The stock  distribution  is expected to occur  during the first week of
October  1996,  at which  time  Morrison  Knudsen  will no  longer be an MK Rail
stockholder.
         Also,  Robert S.  Miller  Jr.  will  resign  from the MK Rail  Board of
Directors,  effective Sept. 11. Miller had been the chairman of Morrison Knudsen
and will be the vice  chairman of  Morrison  Knudsen  following  its merger with
Washington Construction.
         MK Rail is a leader in the manufacturing and distribution of engineered
locomotive components;  provides locomotive fleet maintenance and overhauls; and
manufactures switcher locomotives.
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