-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FDFbctEkNPp3ew2ctifjs6QTmu70776qi9nrSI+HbzHHJWj3KErztcVTOfK/UwyW yk1tVx3G435n+iy9ac1EhQ== 0000950130-99-003045.txt : 19990518 0000950130-99-003045.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950130-99-003045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESEE & WYOMING INC CENTRAL INDEX KEY: 0001012620 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 060984624 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20847 FILM NUMBER: 99624701 BUSINESS ADDRESS: STREET 1: 71 LEWIS ST CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036293722 MAIL ADDRESS: STREET 1: 71 LEWIS STREET STREET 2: 71 LEWIS STREET CITY: GREENWICH STATE: CT ZIP: 06830 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED MARCH 31,1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended March 31, 1999 Commission File No. 0-20847 GENESEE & WYOMING INC. (Exact name of registrant as specified in its charter) Delaware 06-0984624 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 71 Lewis Street, Greenwich, Connecticut 06830 - ---------------------------------------- --------------- (Address of principal executive offices) (Zip Code) (203) 629-3722 - -------------- (Telephone No.) Shares of common stock outstanding as of the close of business on May 13, 1999: Class Number of Shares Outstanding - ----- ---------------------------- Class A Common Stock 3,523,798 Class B Common Stock 845,539 Indicate by check mark 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. [X] YES [ ] NO INDEX Part I - Financial Information Item 1. Financial Statements: Page ------- Consolidated Statements of Income - For the Three Month Periods Ended March 31, 1999 and 1998....................................... 3 Consolidated Balance Sheets - March 31, 1999 and December 31, 1998.......................... 4 Consolidated Statements of Cash Flows - For the Three Month Periods Ended March 31, 1999 and 1998....................................... 5 Notes to Consolidated Financial Statements....... 6-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 11-20 Item 3. Quantitative and Qualitative Disclosures About Market Risk.................................... 20 Part II - Other Information................................ 21 Index to Exhibits.......................................... 22-23 Signatures................................................. 24 2 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, 1999 1998 ---------------------------------- OPERATING REVENUES $ 34,172 $ 37,740 ---------------------------------- OPERATING EXPENSES: Transportation 11,317 11,814 Maintenance of ways and structures 4,160 4,205 Maintenance of equipment 6,942 7,759 General and administrative 7,020 6,685 Depreciation and amortization 2,695 2,303 ---------------------------------- Total operating expenses 32,134 32,766 ---------------------------------- INCOME FROM OPERATIONS 2,038 4,974 Interest expense (1,394) (1,562) Other income (expense) (596) 394 ---------------------------------- Income before provision for income taxes 48 3,806 Provision for income tax 379 1,524 ---------------------------------- NET INCOME (LOSS) $ (331) $ 2,282 ================================== Earnings (loss) per common share - basic $ (0.07) $ 0.43 ================================== Weighted average number of shares of common stock - basic 4,933 5,293 ================================== Earnings (loss) per common share - diluted $ (0.07) $ 0.42 ================================== Weighted average number of shares of common stock - diluted 4,933 5,427 ==================================
3 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
March 31, Dec. 31, 1999 1998 ASSETS (Unaudited) ---------------------------------- CURRENTS ASSETS: Cash and cash equivalents $ 15,403 $ 14,396 Accounts receivable, net 24,922 31,723 Materials and supplies 3,590 3,502 Prepaid expenses and other 2,910 2,914 Deferred income tax assets, net 2,584 2,315 ---------------------------------- Total current assets 49,409 54,850 ---------------------------------- PROPERTY AND EQUIPMENT, net 127,225 125,562 ---------------------------------- SERVICE ASSURANCE AGREEMENT, net 12,626 12,814 ---------------------------------- INVESTMENT IN UNCONSOLIDATED AFFILIATES 12,402 13,215 ---------------------------------- OTHER ASSETS, net 10,338 10,319 ---------------------------------- Total assets $ 212,000 $ 216,760 ================================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 2,439 $ 2,591 Accounts payable 23,022 28,814 Accrued expenses 9,153 11,338 ---------------------------------- Total current liabilities 34,614 42,743 ---------------------------------- LONG-TERM DEBT 67,277 63,099 ---------------------------------- OTHER LIABILITIES 3,185 2,803 ---------------------------------- DEFERRED INCOME TAX LIABILITIES, net 12,275 12,006 ---------------------------------- DEFERRED ITEMS--grants from governmental agencies 17,568 17,607 ---------------------------------- DEFERRED GAIN--sale/leaseback 3,872 3,965 ---------------------------------- STOCKHOLDERS' EQUITY: Class A common stock, $0.01 par value, one vote per share; 12,000,000 shares authorized; 4,451,461 and 4,450,276 issued and outstanding on March 31, 1999 and December 31, 1998, respectively. 45 45 Class B common stock, $0.01 par value, 10 votes per share; 1,500,000 shares authorized; 845,539 issued and outstanding on March 31, 1999 and December 31, 1998. 8 8 Additional paid-in capital 46,743 46,730 Retained earnings 34,159 34,490 Foreign currency translation adjustment (1,700) (2,107) Less treasury stock, at cost, 475,000 and 345,000 Class A shares held on March 31, 1999 and December 31, 1998, respectively. (6,046) (4,629) ---------------------------------- Total stockholders' equity 73,209 74,537 ---------------------------------- Total liabilities and stockholders' equity $ 212,000 $ 216,760 ==================================
4 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Three Months Ended March 31, 1999 1998 --------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (331) $ 2,282 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 2,695 2,303 Deferred income taxes 282 969 Gain on disposition of property and equipment (16) --- Changes in assets and liabilities - Accounts receivable 6,879 3,833 Materials and supplies (53) (124) Prepaid expenses and other 12 (56) Accounts payable and accrued expenses (8,351) 1,130 Other assets and liabilities, net 825 (11) --------------------------- Net cash provided by operating activities 1,942 10,326 --------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (3,231) (3,986) Proceeds from disposition of property 38 1,261 --------------------------- Net cash used in investing activities (3,193) (2,725) --------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term borrowings, including capital leases (9,551) (482) Proceeds from issuance of long-term debt 13,000 --- Net proceeds on grants 225 --- Proceeds from issuance of common stock 14 17 Purchase of treasury stock (1,417) --- --------------------------- Net cash provided by (used in) financing activities 2,271 (465) --------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (13) 112 --------------------------- INCREASE IN CASH AND CASH EQUIVALENTS 1,007 7,248 CASH AND CASH EQUIVALENTS, beginning of period 14,396 11,434 --------------------------- CASH AND CASH EQUIVALENTS, end of period $ 15,403 $ 18,682 =========================== CASH PAID DURING PERIOD FOR: Interest $ 1,202 $ 1,721 Incomes taxes 1,900 47 ===========================
5 GENESEE & WYOMING INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION: The interim consolidated financial statements presented herein include the accounts of Genesee & Wyoming Inc. and its subsidiaries. References to "GWI" or the "Company" mean Genesee & Wyoming Inc. and, unless the context indicates otherwise, its consolidated subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. These interim consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of management, the unaudited financial statements for the three-month periods ended March 31, 1999 and 1998, are presented on a basis consistent with audited financial statements and contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1998 included in the Company's Form 10-K. The results of operations for interim periods are not necessarily indicative of results of operations for the full year. 2. CORPORATE DEVELOPMENTS: GW Mexico, S.A. de C.V. On July 29, 1998 the Company began serving as the operator of a 900-mile mineral railroad in northern Mexico. The Company's operations are being conducted by its new wholly-owned subsidiary, GW Mexico, S.A. de C.V. The railroad, known as Linea Coahuila Durango, is a concession awarded by the Mexican government in 1998 to two Mexican industrial firms, Grupo Acerero del Norte, S.A. de C.V. and Industrias Penoles, S.A. de C.V. The operating results of GW Mexico, S.A. de C.V. are not material and are reported in U.S. railroad operations. 3. JOINT VENTURE: During 1997, the Company formed a joint venture, Genesee Rail-One Inc. ("GRO") to acquire railroads in Canada. GRO was a joint venture with Rail-One Inc. ("Rail-One"), a subsidiary of The Cygnus Group which is an integrated transportation facilities, services and infrastructure provider in Canada. The Company's initial capital investment in GRO was approximately $4,913,000. On July 29, 1997, GRO commenced operations of the Huron Central Railway Inc. ("HCRY"), a 180-mile railroad located in Central Ontario. HCRY leases its rail line from the Canadian Pacific Railway for a 20 year term and is responsible for operation and maintenance of the leased line. On November 11, 1997, GRO commenced operations of the Quebec Gatineau Railway Inc. ("QGRY"), a 354-mile railroad linking Quebec City, Montreal and Hull in Southeastern Quebec. QGRY purchased and leased the assets for this railroad from St. Lawrence & Hudson Railway Company Limited which is a subsidiary of Canadian Pacific Railway Company. 6 In November, 1998, the Company recorded an additional investment of $875,000 for the purchase of a 10-mile segment of track that is contiguous to the QGRY. Additionally, the Company agreed to provide a $2.2 million letter of credit to GRO's primary lender in exchange for relief on certain financial covenants. Based on GWI's ownership portion, the Company has reported the results of operations of GRO under the equity method of accounting for investments. The results of operations of GRO are translated into U.S. dollars at a weighted average exchange rate for each period and are included in other income, net. An after-tax loss from GRO of $769,000 in the quarter ended March 31, 1999 and after-tax income of $92,000 in the quarter ended March 31, 1998 are recorded in other income, net. As of March 31, 1999 the Company's investment was recorded at $12.1 million, a reduction from December 31, 1998, of $769,000 due to GRO operating losses. The Company loaned Rail-One $4,613,000 under a promissory note denominated in Canadian currency to substantially finance Rail-One's initial investment in GRO. The note accrued interest at 7.5 percent per annum, earned a commitment fee equal to 4 percent of the principal amount of the note and was secured by Rail- One's 47.5 percent ownership in GRO. The principal of the note, all accrued interest on the principal amount and the commitment fee were due and payable on November 10, 1998. The principal, all accrued interest and the commitment fee were not paid on November 10, 1998, and the Company entered negotiations with Rail-One regarding the transfer of Rail-One's ownership interest in GRO to the Company. On April 15, 1999, the Company closed in escrow on an agreement to acquire Rail-One's 47.5% ownership interest in GRO thereby increasing the Company's ownership of GRO to 95%. Under the terms of the agreement, the Company will pay approximately $844,000 in cash to the owners of Rail-One in installments over a four year period and the Company granted an option to the owners of Rail-One to purchase 80,000 shares of the Company's Class A Common Stock at an exercise price of $8.62 per share. Exercise of the option to purchase 80,000 shares is contingent on the Company's recovery of its capital investment in GRO including debt assumed if the Company were to sell GRO, and upon certain GRO income performance measures. Effective with this agreement, the operating results of GRO will be consolidated within the financial statements of the Company, with a 5% minority interest due to another GRO shareholder. 4. LEASES: In March 1997, a subsidiary of the Company entered into a master capital lease agreement with a leasing company. The capital lease provided for the inclusion of up to $13.0 million in railroad rolling stock, of which $11.6 million was under commitment as of August, 1998. In September 1998, the Company completed an exchange of like-kind assets with the leasing company reducing its commitment under the master lease agreement by approximately $5.1 million. The remaining $6.5 million lease obligation was liquidated in February, 1999, through the purchase of the remaining assets held under the master lease agreement. In June 1998, a subsidiary of the Company entered into a sale leaseback agreement with a bank for railroad rolling stock valued at $5.7 million. The agreement was accounted for as an operating lease and requires monthly payments of $45,662 through July 2008. 7 5. CONTINGENCIES: IMRR - On August 6, 1998, a lawsuit was commenced against the Company and its subsidiary, Illinois & Midland Railroad, Inc. ("IMRR"), by Commonwealth Edison Company ("ComEd") in the Circuit Court of Cook County, Illinois. The suit alleges that IMRR is in breach of certain provisions of a stock purchase agreement entered into by a prior unrelated owner of the IMRR rail line. The provisions pertain to limitations on rates received by IMRR and the unrelated predecessor for freight hauled for ComEd's Powerton plant. The suit seeks unspecified compensatory damages for alleged past and present rate overcharges. The Company believes the suit is without merit and intends to vigorously defend against the suit. The parent company of ComEd announced its decision to sell certain of ComEd's power facilities, one of which is the Powerton plant served by IMRR under the provisions of a 1987 Service Assurance Agreement, (the "SAA") entered into by a prior unrelated owner of the IMRR rail line. On April 6, 1999, a lawsuit was commenced by the Company and its subsidiary, IMRR, against ComEd in the Circuit Court of Sangamon County, Illinois, seeking declaration of certain rights regarding the SAA including declarations that the SAA is not terminable at will and that ComEd must assign its contractual obligations under the SAA to the purchaser of the Powerton plant. ComEd is IMRR's largest customer and in 1998 accounted for 8.5% of the consolidated revenues of the Company and its subsidiaries. Conrail Merger - On July 23, 1998, the Surface Transportation Board ("STB") issued its written order approving the petition of CSX Transportation, Inc. ("CSX") and Norfolk Southern Corp. ("NS") to control and divide the assets of Consolidated Rail Corporation ("Conrail"). Railroads in the Company's New York and Pennsylvania region interchange with, or participate in overhead traffic with, one or both of these railroads. Overhead traffic is defined as traffic that neither originates nor terminates on the Company's northeastern rail network. In their joint filing with the STB, CSX and NS estimated that approximately $8.3 million in freight revenue related to overhead traffic on one of the Company's subsidiaries may be diverted as a result of the proposed transactions. The Company substantially agrees with this estimate and is implementing operational changes aimed at minimizing this impact. On October 21, 1997, the Company and several of its railroads entered into a confidential Rate and Route Agreement with CSX that the Company believes will facilitate the operations' restructuring process. The STB's written order contains one or more conditions which also may minimize this impact. The division of Conrail's assets is expected to occur in the second or third quarters of 1999. While the Company believes that agreements reached with CSX and NS in regard to the Conrail breakup will ultimately benefit the Company, the transition will be uncertain until new operating patterns are established. Based on its initial studies, the Company believes that no impairment of its assets has or will occur. Stock Repurchase - On August 12, 1998, the Company's board of directors authorized management to repurchase up to one million shares of the Company's Class A common stock under SEC Rule 10b-18. At March 31, 1999 the Company had purchased 475,000 shares at a cost of $6,046,000 (including 130,000 shares at $1,417,000 purchased during the first quarter of 1999). After March 31, 1999, an additional 453,000 shares were purchased at a cost of $4,156,000 increasing the total shares repurchased as of May 13, 1999, to 928,000 at a total cost of $10,202,000. The repurchase program remains open and purchase of the remaining 72,000 shares is expected. 8 6. COMPREHENSIVE INCOME: Comprehensive income is the total of net income and all other non-owner changes in equity. The following table sets forth the Company's comprehensive income for the three months ended March 31, 1999 and 1998: Statement of Comprehensive Income Three Month Periods Ended March 31, 1999 and 1998 (in thousands)
Three Months Ended March 31, 1999 1998 -------------------- ------------------ Net income (loss) $(331) $2,282 Other comprehensive income - Foreign currency translation adjustments 407 284 ---------------------- ------------------ Comprehensive income $ 76 $2,566 ====================== ==================
7. BUSINESS SEGMENT INFORMATION: The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, in 1998, which changes the way the Company reports information about its operating segments. The information for 1998 has been restated from prior quarters' presentations in order to conform to the 1999 presentation. The Company operates in three business segments in two geographic areas: United States Railroad Operations, which includes operating short line and regional railroads, and buying, selling, leasing and managing railroad transportation equipment within the United States; Australian Railroad Operations, which includes operating a regional railroad and providing hook and pull (haulage) services to other railroads within Australia; and Industrial Switching, which includes providing freight car switching and related services to industries with extensive railroad facilities within their complexes in the United States. Corporate overhead expenses, including acquisition expense, are reported in United States Railroad Operations. The accounting policies of the reportable segments are the same as those described in Note 1. of Notes to Consolidated Financial Statements. The Company evaluates the performance of its operating segments based on operating income. Intersegment sales and transfers are not significant. Summarized financial information for each business segment for the quarters ended March 31, 1999 and 1998 are shown in the following tables: The remainder of this page is intentional left blank. 9
Business Segment (amounts in thousands) U.S. Australia Industrial Railroad Railroad Switching 1999 Operations Operations Operations Total - ------------------------- ---------- ---------- ---------- ---------- Revenues $ 19,939 $11,022 $ 3,211 $ 34,172 Operating income (loss) 417 1,922 (301) 2,038 Other expense, net (1,468) (411) (111) (1,990) Income before taxes (1,051) 1,511 (412) 48 Depreciation and amortization 1,992 496 207 2,695 Identifiable assets 159,447 42,513 10,040 212,000 Capital expenditures 1,796 1,403 32 3,231 - ------------------------- -------- ------- ------- -------- U.S. Australia Industrial Railroad Railroad Switching 1998 Operations Operations Operations Total - ------------------------- ---------- ---------- ---------- ---------- Revenues $ 22,390 $12,266 $ 3,084 $ 37,740 Operating income (loss) 3,809 1,678 (513) 4,974 Other expense, net (477) (613) (78) (1,168) Income before taxes 3,332 1,065 (591) 3,806 Depreciation and amortization 1,647 461 195 2,303 Identifiable assets 164,236 42,653 9,871 216,760 Capital expenditures 3,501 453 32 3,986 - ------------------------- -------- ------- ------- --------
8. RECENTLY ISSUED ACCOUNTING STANDARDS: The Financial Accounting Standards Board recently issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and hedging activities. The new standard requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value with changes in fair value reported in income. This statement will require the Company to provide separate disclosure of derivative instruments either on the face of the balance sheet or within the footnotes to the financial statements. Adoption of this statement is required no later than with the third quarter of 1999, which is when the Company expects to adopt it. The impact will not be material. The remainder of this page is intentionally left blank. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements, related notes and other financial information included in the Company's 1998 Form 10-K. General The Company is a holding company whose subsidiaries own and/or operate short line and regional freight railroads and provide related rail services in the United States, Australia and Mexico. The Company, through its U.S. industrial switching subsidiary, also provides freight car switching and related services to United States industries with extensive railroad facilities within their complexes. The Company generates revenues primarily from the movement of freight over track owned or operated by its railroads. The Company also generates non-freight revenues primarily by providing freight car switching and related rail services such as railcar leasing, railcar repair and storage to industries with extensive railroad facilities within their complexes, to shippers along its lines, and to the Class I railroads that connect with its U.S. lines. The Company's operating expenses include wages and benefits, equipment rents (including car hire), purchased services, depreciation and amortization, diesel fuel, casualties and insurance, materials and other expenses. Car hire is a charge paid by a railroad to the owners of railcars used by that railroad in moving freight. Other expenses generally include property and other non-income taxes, professional services, communication and data processing costs and general overhead expense. When comparing the Company's results of operations from one reporting period to another, the following factors should be taken into consideration. The Company has historically experienced fluctuations in revenues and expenses such as one-time freight moves, customer plant expansions and shut-downs, railcar sales, accidents and derailments. In periods when these events occur, results of operations are not easily comparable to other periods. Also, much of the Company's growth to date has resulted from acquisitions. The Company completed two acquisitions during the first four months of 1996, one in November 1996, and another in November 1997. Because of variations in the structure, timing and size of these acquisitions and differences in economics among the Company's railroads resulting from differences in the rates and other material terms established through negotiation, the Company's results of operations in any reporting period may not be directly comparable to its results of operations in other reporting periods. Joint Venture - Genesee Rail-One Inc. ("GRO") During 1997, the Company formed a joint venture, Genesee Rail-One Inc. ("GRO") to acquire railroads in Canada. GRO was a joint venture with Rail-One Inc. ("Rail-One"), a subsidiary of The Cygnus Group which is an integrated transportation facilities, services and infrastructure provider in Canada. The Company's initial capital investment in GRO was approximately $4,913,000. As of March 31, 1999, the Company's investment was recorded at $12.1 million (see Note 3. To the consolidated financial statements). Based on GWI's ownership portion, the Company has reported the results of operations of GRO under the equity method of accounting for investments. The 11 results of operations of GRO are translated into U.S. dollars at a weighted average exchange rate for each period and are included in other income, net. An after-tax loss from GRO of $769,000 in the quarter ended March 31, 1999 and after-tax income of $92,000 in the quarter ended March 31, 1998 are recorded in other income, net. On April 15, 1999, the Company closed in escrow on an agreement to acquire Rail-One's 47.5% ownership interest in GRO thereby increasing the Company's ownership of GRO to 95%. Under the terms of the agreement, the Company will pay approximately $844,000 in cash to the owners of Rail-One in installments over a four year period and the Company granted an option to the owners of Rail-One to purchase 80,000 shares of the Company's Class A Common Stock at an exercise price of $8.62 per share. Exercise of the option to purchase 80,000 shares is contingent on the Company's recovery of its capital investment in GRO including debt assumed if the Company were to sell GRO, and upon certain GRO income performance measures. Effective with this agreement, the operating results of GRO will be consolidated within the financial statements of the Company, with a 5% minority interest due to another GRO shareholder. Year 2000 Compliance In late 1997, the Company began a comprehensive initiative to address and resolve potential exposure associated with the functioning of its information systems and non-information technology systems that include embedded technology with respect to dates in the Year 2000 and beyond. This initiative led to the development of the GWI Year 2000 Project Handbook. The Handbook was developed to report industry Year 2000 methods and standards, and document "best practices" for each of the Company's subsidiaries. Its purpose is to promote consistent implementation of the Year 2000 Project and encourage cost-effective practices and efficient use of resources. The Year 2000 Project Handbook contains information useful to managers, system analysts, and other technical staff members, including consultants and business partners. It is meant to be used as a reference throughout the Year 2000 design, modification, testing, and implementation phases. The Handbook addresses most of the obstacles the Company may face and their potential solutions, including project management issues, contracting and staffing, interface and data exchange standards, and test and development methodologies. Three major categories of systems addressed by the Company's Year 2000 Initiative are railroad operations/management systems, business systems and non- information technology systems. All of the Company's railroad operations and management processes are supported through licensed third party development and contracted operations. These systems are third party certified Year 2000 compliant. With respect to electronic commerce transmissions, the Company is currently capable of supporting certain Year 2000 compliant EDI (4010) transactions. Remaining Year 2000 compliant EDI transactions will be implemented according to industry-wide schedules. Full EDI compliance is expected during the second quarter of 1999. Because the potential exists that not all of the Company's trading partners will achieve Year 2000 compliance, the Company's operational systems will accommodate non-Year 2000 electronic commerce transmissions as well as Year 2000 ready transmissions. All of the Company's financial, purchasing, inventory, asset management, payroll and human resource systems supporting business operations are third party systems. The third party vendors have certified all packages to be Year 2000 compliant. 12 With respect to non-information technology systems (e.g. fire and security, HVAC, etc.) that may impact operations and/or business processes, the Company has conducted initial assessments of its rail yard and office facilities and found no major Year 2000 problems or obstacles. As part of its Year 2000 initiative, the Company is in communication with its interline carriers, significant suppliers, large customers and financial institutions to assess their Year 2000 readiness and expects to conduct interface tests with its external trading partners in 1999 upon completion of internal testing of remediated applications. To date, the Company has expended less than $50,000 on its Year 2000 initiative and remaining costs are expected to be minimal. Overall, the Company's Year 2000 initiative is proceeding on schedule with completion of all areas expected by mid-1999. Failure to achieve Year-2000 compliance by the Company, other railroads, its suppliers, and its customers could negatively affect the Company's ability to conduct business for an extended period. Management believes that the Company will be successful in its Year 2000 conversion; however, there can be no assurance that other companies on which the Company's systems and operations rely will be converted on a timely basis, and such failure could have a material effect on the Company's financial position, results of operations, or liquidity. The remainder of this page is intentionally left blank. 13 Results of Operations Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998 Consolidated Operating Revenues Operating revenues were $34.2 million in the quarter ended March 31, 1999 compared to $37.7 million in the quarter ended March 31, 1998, a decrease of $3.5 million or 9.5%. The decrease was attributable to $1.2 million decline in revenues from the Australia operation and a $2.4 million decrease in United States railroad revenues, offset by a $127,000 increase in industrial switching revenues. The following three sections provide information on railroad revenues in the United States and Australia, and industrial switching revenues in the United States. United States Railroad Operating Revenues Operating revenues were $19.9 million in the quarter ended March 31, 1999 compared to $22.4 million in the quarter ended March 31, 1998, a decrease of $2.5 million or 10.9%. The decrease was attributable to a $2.1 million decline in freight revenues and a $344,000 decrease in non-freight revenues. The following table compares United States freight revenues, carloads and average freight revenues per carload for the quarters ended March 31, 1999 and 1998: United States Freight Revenues and Carloads Comparison by Commodity Group Quarters Ended March 31, 1999 and 1998 (dollars in thousands, except average per carload)
Average Freight Revenues Per Freight Revenues Carloads Carload -------------------- -------- ------- % of % of % of % of Commodity Group 1999 Total 1998 Total 1999 Total 1998 Total 1999 1998 - --------------- ---- ----- ---- ----- ---- ----- ---- ----- ---- ---- Coal, Coke & Ores $ 3,674 24.7% $ 5,151 30.3% 14,972 30.5% 20,877 35.4% $ 245 $ 247 Pulp & Paper 2,011 13.5% 2,346 13.8% 5,706 11.7% 6,109 10.4% 352 384 Petroleum Products 1,897 12.7% 2,206 13.0% 4,175 8.5% 5,273 8.9% 454 418 Chemicals & Plastics 1,809 12.2% 1,316 7.7% 3,471 7.1% 2,448 4.1% 521 538 Lumber & Forest Products 1,659 11.1% 1,315 7.7% 5,801 11.8% 4,342 7.4% 286 303 Metals 1,046 7.0% 1,510 8.9% 4,259 8.7% 5,947 10.1% 246 254 Farm & Food Products 1,018 6.8% 943 5.5% 3,591 7.3% 3,756 6.4% 283 251 Other 700 4.7% 899 5.3% 4,169 8.5% 6,105 10.4% 168 147 Autos & Auto Parts 600 4.0% 451 2.6% 1,182 2.4% 894 1.5% 508 504 Minerals & Stone 494 3.3% 878 5.2% 1,722 3.5% 3,185 5.4% 287 276 ----------------------------------------------------------------------------------- Total $14,908 100.0% $17,015 100.0% 49,048 100.0% 58,936 100.0% 304 289 ======================================================================================================
The decrease of $2.1 million in United States freight revenues was primarily attributable to the decline in freight revenues from the shipment of Coal which decreased by $1.5 million or 28.7% due to reduced shipments resulting from scheduled inventory reductions and maintenance projects at a key customer's facilities. 14 Freight revenues from all remaining commodities reflected a net decrease of $630,000. Total United States carloads were 49,048 in the quarter ended March 31, 1999 compared to 58,936 in the quarter ended March 31, 1998, a decrease of 9,888 or 16.8% of which 5,905 were from reduced coal shipments. However, the overall average revenue per carload increased to $304 in the quarter ended March 31, 1999, compared to $289 per carload in the quarter ended March 31, 1998, an increase of 5.2% due to changes in commodity mix and traffic patterns. United States non-freight railroad revenues were $5.0 million in the quarter ended March 31, 1999 compared to $5.4 million in the quarter ended March 31, 1998, a decrease of $344,000 or 6.4%. Australia Operating Revenues (U.S. Dollars) Operating revenues were $11.0 million in the quarter ended March 31, 1999, compared to $12.2 million in the quarter ended March 31, 1998, a decrease of $1.2 million or 10.1%. The decrease was attributable to a $874,000 drop in freight revenues and a $370,000 decrease in non-freight revenues. The following table outlines Australian freight revenues for the quarters ended March 31, 1999 and 1998: Australian Freight Revenue by Commodity Quarters Ended March 31, 1999 and 1998 (in thousands)
Commodity Group 1999 1998 - --------------- ---------------------------- Hook and Pull (Haulage) $4,224 $ 3,940 Grain 3,663 2,874 Coal 654 2,064 Gypsum 653 757 Marble 472 508 Lime 255 356 Other 6 302 ---------------------------- Total $9,927 $10,801 ============================
The net decrease of $874,000 in Australia freight revenues was primarily attributable to the decline in freight revenues from the shipment of Coal which was offset by an increase in freight revenues from Grain and Hook and Pull. Freight revenues from Coal were $654,000 in the quarter ended March 31, 1999, compared to $2.1 million in the quarter ended March 31, 1998, a decrease of $1.5 million or 28.7% due to the loss of a Coal contract which was a short-term haulage contract with a low margin of operating return entered into as an accommodation to a government utility as part of the purchase process. Due to this low margin of return, additional costs that would need to be incurred to secure a long-term haulage contract, and the competitive nature of the contract bidding, the Company has determined it would be more beneficial to allocate the crews and locomotives handling the Coal haulage to other areas of the business. Freight revenues from Grain were $3.7 million in the quarter ended March 31, 1999, compared to $2.9 million in the quarter ended March 31, 1998, an increase of $789,000 or 27.5% and freight revenues from Hook and Pull were $4.2 million in the quarter ended March 31, 15 1999, compared to $3.9 million in the quarter ended March 31, 1998, an increase of $284,000 or 7.2%. Freight revenues from all remaining commodities reflected a net decrease of $537,000 or 27.9%. Australia non-freight revenues were $1.1 million in the quarter ended March 31, 1999, compared to $1.5 million in the quarter ended March 31, 1998, a decrease of $370,000 or 25.3% due primarily to a reduction in car hire and rental income. Industrial Switching Revenues Revenues from U.S. industrial switching activities were $3.2 million in the quarter ended March 31, 1999 compared to $3.1 million in the quarter ended March 31, 1998, an increase of $127,000 or 4.1%. Consolidated Operating Expenses Operating expenses for all operations combined were $32.1 million in the quarter ended March 31, 1999, compared to $32.8 million in the quarter ended March 31, 1998, a net decrease of $ 632,000 or 1.9%. Expenses attributable to U.S. railroad operations were $19.5 million in the quarter ended March 31, 1999, compared to $18.6 million in the quarter ended March 31, 1998, an increase of $941,000 or 5.1%. Expenses attributable to operations in Australia were $9.1 million in the quarter ended March 31, 1999, compared to $10.6 million in the quarter ended March 31, 1998, a decrease of $ 1.5 million or 14.1%. Expenses attributable to U.S. industrial switching were $3.5 million in the quarter ended March 31, 1999, compared to $3.6 million in the quarter ended March 31, 1998, a decrease of $ 85,000 or 2.4%. The following three sections provide information on railroad expenses in the United States and Australia, and industrial switching expenses in the United States. United States Railroad Operating Expenses The following table sets forth a comparison of the Company's United States railroad operating expenses in the quarters ended March 31, 1999 and 1998: United States Railroad Operating Expense Comparison Quarters Ended March 31, 1999 and 1998 (dollars in thousands)
1999 1998 ---- ---- % of % of Operating Operating $ Revenue $ Revenue Labor and benefits $ 7,164 35.9% $ 7,409 33.1% Equipment rents 2,720 13.6% 2,891 12.9% Purchased services 994 5.0% 1,094 4.9% Depreciation and amortization 1,992 10.0% 1,647 7.4% Diesel fuel 572 2.9% 937 4.2% Casualties and insurance 588 2.9% 901 4.0% Materials 1,621 8.1% 936 4.2% Other 3,871 19.5% 2,766 12.3% ------- ----- ------- ----- Total $19,522 97.9% $18,581 83.0% ======= ===== ======= ====
16 Labor and benefits expense was $7.2 million in the quarter ended March 31, 1999 compared to $7.4 million in the quarter ended March 31, 1998, a decrease of $245,000 or 3.3%, due primarily to reduced railroad operations due to lower carloadings. Depreciation and amortization expense was $2.0 million in the quarter ended March 31, 1999 compared to $1.6 million in the quarter ended March 31, 1998, an increase of $345,000 or 20.9%, due primarily to increased capital spending in 1999 and 1998. Diesel fuel was $572,000 in the quarter ended March 31, 1999 compared to $937,000 in the quarter ended March 31, 1998, a decrease of $365,000 or 39.0%, due primarily to declines in diesel fuel prices and reduced volumes due to lower carloadings. Casualties and insurance expense, including claims brought under the Federal Employers' Liability Act, was $588,000 in the quarter ended March 31, 1999 compared to $901,000 in the quarter ended March 31, 1998, a decrease of $313,000 or 34.7%, due primarily to a decreases in derailment and claims expense. Materials expense was $1.6 million in the quarter ended March 31, 1999 compared to $936,000 in the quarter ended March 31, 1998, an increase of $685,000 or 73.2%, due primarily to increases in maintenance of equipment repairs for locomotives and freight cars. Other expense was $3.9 million in the quarter ended March 31, 1999 compared to $2.8 million in the quarter ended March 31, 1998, an increase of $1.1 million or 39.9%, due primarily to an increase in acquisition expense of $1.2 million which was offset by a net decrease of approximately $100,000 in other expenses. Australia Railroad Operating Expenses (U.S. Dollars) The following table sets forth a comparison of the Company's Australia railroad operating expenses in the quarters ended March 31, 1999 and 1998: Australia Railroad Operating Expense Comparison Quarters Ended March 31, 1999 and 1998 (dollars in thousands)
1999 1998 ---- ---- % of % of Operating Operating $ Revenue $ Revenue Labor and benefits $1,373 12.5% $ 1,394 11.4% Equipment rents 29 0.3% 353 2.9% Purchased services 2,953 26.8% 4,001 32.6% Depreciation and amortization 496 4.5% 461 3.8% Diesel fuel 1,978 17.9% 2,464 20.1% Casualties and insurance 621 5.6% 308 2.5% Materials 481 4.4% 341 2.8% Other 1,169 10.6% 1,266 10.3% ------ ---- ------- ---- Total $9,100 82.6% $10,588 86.4% ====== ==== ======= ====
Equipment rent was $29,000 in the quarter ended March 31, 1999 compared to $353,000 in the quarter ended March 31, 1998, a decrease of $324,000 or 91.8%, due 17 primarily to a decline in locomotive rental because of the improved availability of the owned locomotives fleet. Purchased services were $3.0 million in the quarter ended March 31, 1999 compared to $4.0 million in the quarter ended March 31, 1998, a decrease of $1.0 million or 26.2%, due primarily to the loss of the coal haulage contract discussed earlier in the Australia revenue section. Diesel fuel was $2.0 million in the quarter ended March 31, 1999 compared to $2.5 million in the quarter ended March 31, 1998, a decrease of $486,000 or 19.7%, due primarily to a combination of price reductions and reduced fuel consumption resulting from lower freight volumes. Casualties and insurance was $621,000 in the quarter ended March 31, 1999 compared to $308,000 in the quarter ended March 31, 1998, an increase of $313,000 or 101.6%, due primarily to an increase in derailment expense. U. S. Industrial Switching Operating Expenses The following table sets forth a comparison of the Company's U.S. industrial switching operating expenses in the quarters ended March 31, 1999 and 1998: U.S. Industrial Switching Operating Expense Comparison Quarters Ended March 31, 1999 and 1998 (dollars in thousands)
1999 1998 ---- ---- % of % of Operating Operating $ Revenue $ Revenue Labor and benefits $2,297 71.5% $2,382 77.2% Equipment rents 47 1.5% 36 1.2% Purchased services 106 3.3% 79 2.6% Depreciation and amortization 207 6.4% 195 6.3% Diesel fuel 120 3.7% 133 4.3% Casualties and insurance 393 12.2% 94 3.0% Materials 201 6.3% 170 5.5% Other 141 4.4% 508 16.5% ------ ----- ------ ----- Total $3,512 109.3% $3,597 116.6% ====== ===== ====== =====
Casualties and insurance expense was $393,000 in the quarter ended March 31, 1999 compared to $94,000 in the quarter ended March 31, 1998, an increase of $299,000 or 318.1%, due primarily to an increase in claims expense. Operating Ratios The Company's combined operating ratio increased to 94.0% in the quarter ended March 31, 1999 from 86.8% in the quarter ended March 31, 1998. The operating ratio for U.S. railroad operations increased to 97.9% in the quarter ended March 31, 1999 from 83.0% in the quarter ended March 31, 1998. The operating ratio for Australia railroad operations decreased to 82.6% in the quarter ended March 31, 1999 from 86.4% in the quarter ended March 31, 1998. The operating ratio for U.S. industrial 18 switching operations decreased to 109.3% in the quarter ended March 31, 1999 from 116.6% in the quarter ended March 31, 1998. Interest Expense and Income Taxes Interest expense in the quarter ended March 31, 1999 was $1.4 million compared to $1.6 million in the quarter ended March 31, 1998, a decrease of $168,000 or 10.8%. The Company's effective income tax rate in the quarter ended March 31, 1999, after adjustment for losses in unconsolidated affiliate GRO, was 46.4% which compared to 40.0% in the quarter ended March 31, 1998. The increase is primarily attributable to state income tax treatment of operating losses. Net Income (Loss) The Company's net loss in the quarter ended March 31, 1999 was $331,000 compared to net income of $2.3 million in the quarter ended March 31, 1998, a decrease of $2.6 million or 114.5%. The decrease in net income is the net result a decrease in net income from United States railroad operations of $3.0 million offset by an increase in net income from operations in Australia of $294,000 and a decrease in the net loss of industrial switching of $113,000. Liquidity and Capital Resources Stock Repurchase - On August 12, 1998, the Company's board of directors authorized management to repurchase up to one million shares of the Company's Class A common stock under SEC Rule 10b-18. At March 31, 1999 the Company had purchased 475,000 shares at a cost of $6,046,000 (including 130,000 shares at $1,417,000 purchased during the first quarter of 1999). After March 31, 1999, an additional 453,000 shares were purchased at a cost of $4,156,000 increasing the total shares repurchased as of May 13, 1999, to 928,000 at a total cost of $10,202,000. The repurchase program remains open and purchase of the remaining 72,000 shares is expected. During the three months ended March 31, 1999 the Company generated cash from operations of $1.9 million, invested $3.2 million in capital assets, had a net increase in debt of $3.5 million and received $225,000 in proceeds from the disposition of property. During the three months ended March 31, 1998 the company generated cash from operations of $10.3 million, invested $4.0 million in capital assets and received $1.3 million in proceeds from disposition of property. The Company has budgeted approximately $16.5 million in capital expenditures in 1999, of which $11.5 million is planned for track rehabilitation and $5.0 is planned for equipment. Of these amounts, $3.7 million is planned for track rehabilitation in Australia and $2.5 million is planned for equipment in Australia. Approximately $3.2 million of the budgeted capital expenditures of $16.5 million were completed as of March 31, 1999. At March 31, 1999 the Company had long-term debt (including current portion) totaling $69.7 million, which comprised 48.8% of its total capitalization. This compares to long-term debt, including current portion, of $65.7 million at December 31, 1998, comprising 46.8% of total capitalization. The Company has historically relied primarily on cash generated from operations to fund working capital and capital expenditures relating to ongoing operations, while relying on borrowed funds to finance acquisitions and equipment needs (primarily rolling stock) related to acquisitions. The Company believes that its cash flow from operations together with amounts available under its credit facilities will 19 enable the Company to meet its liquidity and capital expenditure requirements relating to ongoing operations for at least the duration of its credit facilities. Forward-Looking Statements This Report and the documents incorporated herein by reference may contain forward-looking statements based on current expectations, estimates and projections about the Company's industry, management's beliefs and assumptions made by management. Words such as "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are no guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast. Therefore, actual results may differ materially from those expressed or forecast in any such forward-looking statements. Such risks and uncertainties include, in addition to those set forth in this Item 2, those noted in the documents incorporated by reference. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to the impact of interest rate changes. The Company's exposure to changes in interest rates applies to its borrowings under a credit facility and a capital lease arrangement, both of which have variable interest rates tied to the LIBOR rate. In addition, the Company's Australian subsidiary has a variable rate loan, one-half of which fluctuates with market changes in interest rates and one-half of which is fixed at 6.24%. The Australian loan is denominated in Australia dollars. The Company estimates that the fair value of these debt instruments approximated their market values and carrying values at March 31, 1999. The Company invests excess cash in overnight money market accounts. The remainder of this page is intentionally left blank. 20 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS IMRR - On August 6, 1998, a lawsuit was commenced against the Company and its subsidiary, Illinois & Midland Railroad, Inc. ("IMRR"), by Commonwealth Edison Company ("ComEd") in the Circuit Court of Cook County, Illinois. The suit alleges that IMRR is in breach of certain provisions of a stock purchase agreement entered into by a prior unrelated owner of the IMRR rail line. The provisions pertain to limitations on rates received by IMRR and the unrelated predecessor for freight hauled for ComEd's Powerton plant. The suit seeks unspecified compensatory damages for alleged past and present rate overcharges. The Company believes the suit is without merit and intends to vigorously defend against the suit. The parent company of ComEd announced its decision to sell certain of ComEd's power facilities, one of which is the Powerton plant served by IMRR under the provisions of a 1987 Service Assurance Agreement, ("SAA") entered into by a prior unrelated owner of the IMRR rail line. On April 6, 1999 a lawsuit was commenced by the Company and its subsidiary, IMRR, against ComEd in the Circuit Court of Sangamon County, Illinois, seeking declaration of certain rights regarding the SAA including declarations that the SAA is not terminable at will and that ComEd must assign its contractual obligations under the SAA to the purchaser of the Powerton plant. ComEd is IMRR's largest customer and in 1998 accounted for 8.5% of the consolidated revenues of the Company and its subsidiaries. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE ITEM 5. OTHER INFORMATION - NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A). EXHIBITS - SEE INDEX TO EXHIBITS (B) REPORTS ON FORM 8-K: No Reports on Form 8-K were filed by the Registrant during the period covered by this Report. The remainder of this page is intentionally left blank. 21 INDEX TO EXHIBITS (2) Plan of acquisition, reorganization, arrangement, liquidation or succession Not applicable. (3) (i) Articles of Incorporation The Form of Restated Certificate of Incorporation referenced under (4)(a) hereof is incorporated herein by reference. (ii) By-laws The By-laws referenced under (4)(b) hereof are incorporated herein by reference. (4) Instruments defining the rights of security holders, including indentures (a) Form of Restated Certificate of Incorporation (Exhibit 3.2)2 (b) By-laws (Exhibit 3.3)1 (c) Specimen stock certificate representing shares of Class A Common Stock (Exhibit 4.1)3 (d) Form of Class B Stockholders' Agreement dated as of May 20, 1996, among the Registrant, its executive officers and its Class B stockholders (Exhibit 4.2)2 (e) Promissory Note dated October 7, 1991 of Buffalo & Pittsburgh Railroad, Inc. in favor of CSX Transportation, Inc. (Exhibit 4.6)1 (f) Second Amended and Restated Revolving Credit Agreement dated as of October 31, 1997 among the Registrant, its subsidiaries, BankBoston, N.A. and the banks named therein (Exhibit 4.1)4 (g) First Amendment to Promissory Note dated as of March 19, 1999 between Buffalo & Pittsburgh Railroad, Inc. and CSX Transportation, Inc. (Exhibit 4.1)5 (10) Material Contracts Not applicable. *(11.1) Statement re computation of per share earnings (15) Letter re unaudited interim financial information Not applicable. (18) Letter re change in accounting principles Not applicable. 22 (19) Report furnished to security holders Not applicable. (22) Published report regarding matters submitted to vote of security holders Not applicable. (23) Consents of experts and counsel Not applicable. (24) Power of attorney Not applicable. *(27) Financial Data Schedule (99) Additional Exhibits Not applicable. ____________________________ *Exhibit filed with this Report. 1Exhibit previously filed as part of, and incorporated herein by reference to, the Registrant's Registration Statement on Form S-1 (Registration No. 333-3972). The exhibit number contained in parenthesis refers to the exhibit number in such Registration Statement. 2Exhibit previously filed as part of, and incorporated herein by reference to, Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Registration No. 333-3972). The exhibit number contained in parenthesis refers to the exhibit number in such Amendment. 3Exhibit previously filed as part of, and incorporated herein by reference to, Amendment No. 2 to the Registrant's Registration Statement on Form S-1 (Registration No. 333-3972). The exhibit number contained in parenthesis refers to the exhibit number in such Amendment. 4Exhibit previously filed as part of, and incorporated herein by reference to, the Registrant's Report on Form 10-K for the fiscal year ended December 31, 1997. The exhibit number contained in parenthesis refers to the exhibit number in such Report. 5Exhibit previously filed as part of, and incorporated herein by reference to, the Registrant's Report on Form 10-K for the fiscal year ended December 31, 1998. The exhibit number contained in parenthesis refers to the exhibit number in such Report. The remainder of this page is intentionally left blank. 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GENESEE & WYOMING INC. Date: May 14, 1999 By: /s/ Mortimer B. Fuller, III --------------------------- Name: Mortimer B. Fuller, III Title: Chairman of the Board and CEO Date: May 14, 1999 By: /s/ Alan R. Harris --------------------------- Name: Alan R. Harris Title: Senior Vice President and Chief Accounting Officer The remainder of this page is intentionally left blank. 24 EX-11.1 2 COMPUTATION OF EARNINGS PER COMMON SHARE Exhibit 11.1 GENESEE & WYOMING INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (in thousands, except per share amounts)
Three Months Three Months Ended Ended March 31, 1999 March 31, 1998 -------------- -------------- BASIC EARNINGS (LOSS) PER SHARE CALCULATION: Net Income (loss) $ (331) $ 2,282 Weighted average number of shares of common stock 4,933 5,293 Earnings (loss) per share - basic $(0.07) $ 0.43 DILUTED EARNINGS (LOSS) PER SHARE CALCULATION: Net Income (loss) $ (331) $ 2,282 Weighted average number of shares of common stock and common stock equivalents outstanding: Weighted average number of shares of common stock 4,933 5,293 Common stock equivalents issuable under stock option plans -0- 134 Weighted average number of shares of common stock and common stock equivalents - diluted 4,933 5,427 Earnings (loss) per share - diluted $(0.07) $ 0.42
25 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE SHEET INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 15,403 0 24,922 0 3,590 49,409 158,444 31,219 212,000 34,614 67,277 0 0 53 73,156 212,000 34,172 34,172 32,134 32,134 596 0 1,394 48 379 (331) 0 0 0 (331) (0.07) (0.07)
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