EX-99.1 2 v091828_ex99-1.htm
 
Genesee & Wyoming Reports Results for the Third Quarter of 2007
 
 
GREENWICH, Conn., November 1, 2007/PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the third quarter of 2007 of $16.2 million, compared with a net loss of $12.1 million in the third quarter of 2006. GWI's diluted earnings per share (EPS) in the third quarter of 2007 were $0.42 with 38.5 million shares outstanding, compared with a diluted loss per share of $0.29 with 42.4 million shares outstanding in the third quarter of 2006.
 
As previously reported, GWI initiated the liquidation of its hurricane-damaged operations in Mexico on June 25, 2007, and had no remaining employees in Mexico as of September 30, 2007. Results from GWI’s Mexican operations for the three and nine months ended September 30, 2007 and 2006, are now included in results from discontinued operations.
 
GWI’s income from continuing operations in the third quarter of 2007 was $23.0 million, or $0.60 per diluted share, compared with income from continuing operations of $24.0 million, or $0.56 per diluted share in the third quarter of 2006.
 
Results from continuing operations in the third quarter of 2007 included gains from the sale of assets of $5.5 million ($3.3 million after-tax, or $0.09 per diluted share) and a net tax benefit of $3.2 million ($0.08 per diluted share) associated with the sale of the Western Australia operations and certain other assets of the Australian Railroad Group (ARG) previously owned by GWI and its joint venture partner, Wesfarmers Limited (ARG Sale). Results from continuing operations in the third quarter of 2006 included a post closing adjustment from the ARG Sale of $10.4 million ($6.8 million after-tax, or $0.16 per diluted share).
 
GWI reported a loss from its discontinued operations in Mexico of $6.9 million after-tax, or $0.18 per diluted share, in the third quarter of 2007, compared with a loss of $36.1 million, or $0.85 per diluted share in the third quarter of 2006.
 
GWI also announced today that it repurchased 4.1 million shares in the third and fourth quarters of 2007 at an average price of $27.02 per share under previously authorized programs. In so doing, GWI has fully exhausted its existing authorizations to repurchase shares and currently has 36 million shares outstanding.
 
Continuing Operations
 
In the third quarter of 2007, GWI's revenues increased $10.2 million, or 8.4%, to $131.2 million, compared with $121.0 million in the third quarter of 2006. Freight revenues increased $2.5 million, or 3.1%, primarily due to an increase in average revenues per carload of 9.8%, partially offset by a 6.1% decrease in carloads. Average revenues per carload in the third quarter of 2007 benefited 2.0% from the appreciation of the Australian dollar and Canadian dollar relative to the U.S. dollar. Non-freight revenues increased $7.7 million, or 19.0%, in the third quarter of 2007, primarily due to higher revenues from iron ore services and crewing in South Australia.
 
 
GWI's operating income in the third quarter of 2007 was $29.7 million, compared with $23.1 million in the third quarter of 2006. The operating ratio was 77.4% in the third quarter of 2007, compared with an operating ratio of 80.9% in the third quarter of 2006. Operating income for the third quarter of 2007 included a pre-tax gain of $5.5 million on the disposition of assets. Operating income for the third quarter of 2006 included $1.1 million of pre-tax expense associated with a legal settlement. Excluding these items, the operating ratio would have been 81.6% and 80.0%, for the three months ended September 30, 2007 and 2006, respectively (1).
 
Free Cash Flow (2)

On June 1, 2006, GWI completed the ARG Sale and the acquisition of certain South Australian operations of ARG (GWA Purchase). The net proceeds from these transactions totaled $285.6 million in the nine months ended September 30, 2006. Although the ARG Sale occurred in 2006, the taxes to the Australian government related to the transaction of $95.6 million were paid in June 2007.
  
($ in millions)
 
Nine Months Ended
  
   
 September 30,
  
   
2007
  
2006
  
           
Net cash provided by operating activities
 
$
5.6
 (a)
$
64.0
Net cash (used in) provided by investing activities
   
( 31.6
)
  
255.8
(b)
Proceeds from divestitures/cash used for acquisitions
    
-
   
(285.6
)
Australian taxes on ARG Sale
    
95.6
 (c)  
-
  
Free cash flow
 
$
69.6
  
$
34.2
  
(a)
Includes Australian taxes on the ARG Sale totaling $95.6 million paid in 2007, as calculated using the U.S. Dollar/Australian Dollar exchange rate on the date of payment.
(b)
Includes net proceeds of $285.6 million from the ARG Sale and GWA Purchase in 2006.
(c)
The difference between the $95.6 million tax payment on the ARG Sale and the $92.7 million decrease in “Income taxes payable-Australia” in our cash flow statement for the nine months ended September 30, 2007, reflects primarily the effects of our ongoing operations in Australia.

GWI’s continuing operations generated free cash flow of $69.6 million in the nine months ended September 30, 2007. For the nine months ended September 30, 2006, GWI’s continuing operations generated $34.2 million in free cash flow.

Including the Australian tax payment, for the nine months ended September 30, 2007, GWI generated net cash from operating activities of $5.6 million. For the nine months ended September 30, 2006, GWI generated net cash from operating activities of $64.0 million. Net cash used in investing activities in the first nine months of 2007 included $41.4 million in purchases of property and equipment, net of $15.6 million received in current year government grants and $4.3 million in cash received from government grants for capital projects completed in 2006, partially offset by $1.7 million in insurance proceeds for capital projects completed in 2006 and $8.1 million in cash from asset dispositions in 2007. Net cash provided by investing activities in the first nine months of 2006 included $30.3 million in purchases of property and equipment, net of $0.7 million received in government grants.

 
Discontinued Operations in Mexico
 
During the second quarter of 2007, Ferrocarriles Chiapas-Mayab, S.A. de C.V. (FCCM) resigned its operating concession.  FCCM ceased operations and initiated formal liquidation proceedings in the third quarter 2007. The Ministry of Communications and Transportation (SCT) in Mexico has contested the resignation of the concession and has commenced an official action to seize substantially all of FCCM’s operating assets in response to the liquidation. As a result of these actions, GWI recorded a pre-tax loss in the third quarter of $18.5 million, including non-cash impairment and related effects of $14.4 million. This pre-tax loss was offset by a tax benefit of $11.6 million. GWI believes the SCT’s actions were unlawful and is pursuing all legal remedies to recover its operating assets. As of September 30, 2007, there is a net liability of $3.5 million remaining on GWI’s balance sheet associated with its Mexican operations.
 
In the third quarter of 2006, GWI recorded a pre-tax loss from its discontinued operations in Mexico of $36.0 million ($36.1 million after-tax, or $0.85 per diluted share). This net loss included a pre-tax charge of approximately $33.1 million ($34.1 million after-tax, or $0.80 per share) reflecting a non-cash write-down of its Mexican non-current assets and related effects.
 
Comments from the Chief Executive Officer

“In light of the difficult freight environment, we are generally pleased with our third quarter financial results,” said GWI Chief Executive Officer John C. Hellmann. “Shipments of lumber and paper products in North America and grain in Australia remain weak; however, the rest of our business is solid and we have been making necessary cost reductions. Meanwhile, the acquisition market remains active as illustrated by our recently announced agreement to acquire 87% of the Maryland Midland Railway. We continue to evaluate acquisition targets in both the United States and abroad.”
 
Conference Call and Webcast Details
 
As previously announced, GWI's conference call to discuss financial results for the third quarter will be held Thursday, November 1, 2007 at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is (888) 428-4479; outside U.S., call (612) 332-0923, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's website (http://www.gwrr.com), by selecting "Third Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's website starting at 2:30 p.m. Thursday, November 1, 2007.
 
 
About Genesee & Wyoming Inc.
 
GWI is a leading owner and operator of short line and regional freight railroads in the United States, Canada and Australia and owns a minority interest in a railroad in Bolivia. Operations currently include 47 railroads organized in nine regions, with more than 5,700 miles of owned and leased track and approximately 3,500 additional miles under track access arrangements. GWI provides rail service at 12 U.S. ports and also performs contract coal loading and railcar switching for industrial customers. Corporate headquarters is in Greenwich, Conn.
 
Cautionary Statement Concerning Forward-Looking Statements
 
This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments; increased competition in relevant markets; funding needs and financial sources; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurances; and others. Words such as “anticipates,” “intends,” “plans,” “believes,” “seeks,” “expects,” “estimates,” variations of these words and similar expressions are intended to identify these forward-looking statements. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI's Forms 10-Q and 10-K which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. GWI disclaims any intention to update the current expectations or forward looking statements contained in this press release.
 
(1) The operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating ratios calculated using total operating expenses and total revenues, calculated on a basis consistent with GAAP. The information required by Regulation G under the Securities Exchange Act of 1934, including reconciliation to the operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

(2) Free Cash Flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including reconciliation to net cash provided by operating activities is included in the tables attached to this press release.
 
SOURCE Genesee & Wyoming Inc.
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com
 
 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(In thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended
  
Nine Months Ended
  
   
September 30,
  
September 30,
  
   
2007
  
2006
  
2007
  
2006
  
                   
OPERATING REVENUES
  
$
131,224
  
$
121,019
  
$
381,625
  
$
332,981
  
                           
OPERATING EXPENSES
    
101,563
   
97,915
   
307,264
   
270,178
 
INCOME FROM OPERATIONS
    
29,661
   
23,104
   
74,361
   
62,803
 
                           
GAIN ON SALE OF EQUITY INVESTMENT IN ARG
    
-
   
10,421
   
-
   
218,845
 
INVESTMENT LOSS - BOLIVIA
    
-
   
-
   
-
   
(5,878
)
EQUITY LOSS OF UNCONSOLIDATED
                          
INTERNATIONAL AFFILIATES
    
-
   
-
   
-
   
(10,752
)
INTEREST INCOME
    
1,107
   
3,300
   
7,069
   
4,467
 
INTEREST EXPENSE
    
(3,613
)
  
(3,532
)
  
(10,626
)
  
(12,507
)
OTHER (EXPENSE) INCOME, NET
    
(47
)
  
28
   
846
   
111
 
                           
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
27,108
   
33,321
   
71,650
   
257,089
 
                           
PROVISION FOR INCOME TAXES
    
4,069
    
9,337
    
16,927
   
100,250
 
                           
INCOME FROM CONTINUING OPERATIONS
    
23,038
   
23,984
   
54,723
   
156,839
 
                           
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
    
(6,873
)
  
(36,090
)
  
(13,494
)
  
(37,182
)
                           
NET INCOME (LOSS)
  
$
16,166
  
$
(12,106
)
$
41,229
  
$
119,657
  
                           
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
  
$
0.68
  
$
0.64
  
$
1.53
  
$
4.17
  
BASIC LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS
    
(0.20
)
  
(0.96
)
  
(0.38
)
  
(0.99
)
BASIC EARNINGS (LOSS) PER COMMON SHARE
  
$
0.48
  
$
(0.32
)
$
1.15
  
$
3.18
  
                           
WEIGHTED AVERAGE SHARES - BASIC
    
34,026
   
37,739
   
35,702
   
37,600
 
                   
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
  
$
0.60
  
$
0.56
  
$
1.36
  
$
3.69
  
DILUTED LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS
    
(0.18
)
  
(0.85
)
  
(0.34
)
  
(0.87
)
DILUTED EARNINGS (LOSS) PER COMMON SHARE
  
$
0.42
  
$
(0.29
)
$
1.02
  
$
2.82
  
                           
WEIGHTED AVERAGE SHARES - DILUTED
    
38,515
   
42,366
   
40,233
   
42,488
 



GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
(In thousands)
(unaudited)
 
   
September 30,
  
December 31,
  
ASSETS
  
2007
  
2006
  
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
52,662
  
$
240,206
  
Accounts receivable, net
    
122,977
   
117,099
 
Materials and supplies
    
7,732
   
11,302
 
Prepaid expenses and other
    
11,973
   
14,695
 
Current assets of discontinued operations
    
4,992
   
-
 
Deferred income tax assets, net
    
7,802
   
7,617
 
Total current assets
    
208,138
   
390,919
 
               
PROPERTY AND EQUIPMENT, net
    
622,493
   
573,292
 
INVESTMENT IN UNCONSOLIDATED AFFILIATES
    
4,653
   
4,644
 
GOODWILL
    
39,272
   
37,788
 
INTANGIBLE ASSETS, net
    
117,996
   
120,669
 
OTHER ASSETS, net
    
9,446
   
11,055
 
DEFERRED INCOME TAX ASSETS, net
    
2,777
   
2,697
 
Total assets
  
$
1,004,775
  
$
1,141,064
  
           
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Current portion of long-term debt
  
$
2,607
  
$
4,372
  
Accounts payable
    
111,061
   
98,186
 
Accrued expenses
    
27,091
   
38,364
 
Income tax payable - Australia
    
4,233
   
91,925
 
Current liabilities of discontinued operations
    
8,464
   
-
 
Deferred income tax liabilities, net
    
516
   
291
 
Total current liabilities
    
153,972
   
233,138
 
               
LONG-TERM DEBT, less current portion
    
258,352
   
241,313
 
DEFERRED INCOME TAX LIABILITIES, net
    
72,960
   
72,876
 
DEFERRED ITEMS - grants from external parties
    
82,647
   
56,588
 
OTHER LONG-TERM LIABILITIES
    
17,535
   
16,962
 
               
TOTAL STOCKHOLDERS' EQUITY
    
419,309
   
520,187
 
Total liabilities and stockholders' equity
  
$
1,004,775
  
$
1,141,064
  


GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 
   
Nine Months Ended
 
   
September 30,
  
   
2007
2006
  
       
CASH FLOWS FROM OPERATING ACTIVITIES:
      
Net income
 
$
41,229
  
$
119,657
  
Adjustments to reconcile net income to net cash (used in) provided
              
by operating activities:
              
Loss from discontinued operations, net of tax
    
13,494
   
37,182
 
Depreciation and amortization
    
23,515
   
20,405
 
Compensation cost related to equity awards
    
4,068
   
6,172
 
Excess tax benefits from share-based compensation
    
(847
)
  
(4,368
)
Deferred income taxes
    
9,271
   
15,337
 
Gain on insurance recovery
    
-
   
(1,937
)
Gain on sale of equity investment in ARG
    
-
   
(218,845
)
Net gain on sale of assets
   
(5,914
)
  
(243
)
Decrease/(increase) in cash surrender value of split dollar life insurance
   
39
   
(337
)
Investment loss - Bolivia
    
-
   
5,878
 
Equity loss of unconsolidated international affiliates, net of tax
    
-
   
7,500
 
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
              
Accounts receivable, net
    
(4,514
)
  
(12,538
)
Materials and supplies
    
2,197
   
(2,255
)
Prepaid expenses and other
    
(144
)
  
(1,622
)
Accounts payable and accrued expenses
    
15,844
   
9,103
 
Income tax payable - Australia
    
(92,737
)
  
86,216
 
Other assets and liabilities, net
   
118
   
(1,348
)
Net cash provided by operating activities from continuing operations
    
5,619
   
63,957
 
Net cash used in operating activities from discontinued operations
    
(10,677
)
  
(314
)
Net cash (used in) provided by operating activities
    
(5,058
)
  
63,643
 
           
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Purchase of property and equipment, net of grants from external parties
    
(41,358
)
  
(30,306
)
Proceeds from ARG Sale
    
-
   
306,746
 
Cash paid for acquisitions, net
    
-
   
(21,189
)
Insurance proceeds for the replacement of assets
    
1,747
   
-
 
Premiums paid on split dollar life insurance
    
(99
)
  
(130
)
Cash received from cash surrender of split dollar life insurance
    
-
   
366
 
Proceeds from disposition of property and equipment
    
8,106
   
278
 
Net cash (used in) provided by investing activities from continuing operations
    
(31,604
)
  
255,765
 
Net cash used in investing activities from discontinued operations
    
(517
)
  
(3,036
)
Net cash (used in) provided by investing activities
   
(32,121
)
  
252,729
 
           
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Principal payments on long-term borrowings, including capital leases
    
(1,451
)
  
(182,207
)
Proceeds from issuance of long-term debt
    
25,000
   
92,500
 
Net proceeds from employee stock purchases
    
2,978
   
6,345
 
Treasury stock purchases
    
(171,018
)
  
(11,188
)
Excess tax benefits from share-based compensation
    
847
   
4,368
 
Net cash used in financing activities from continuing operations
    
(143,644
)
  
(90,182
)
Net cash used in financing activities from discontinued operations
    
(13,301
)
  
(1,239
)
Net cash used in financing activities
    
(156,945
)
  
(91,421
)
           
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
    
7,838
   
(1,254
)
               
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS
    
(1,258
)
  
-
 
           
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
(187,544
)
  
223,697
 
CASH AND CASH EQUIVALENTS, beginning of period
    
240,206
   
18,669
 
CASH AND CASH EQUIVALENTS, end of period
  
$
52,662
  
$
242,366
  



GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
   
Three Months Ended
   
September 30,
   
2007
  
2006
  
   
Amount
  
% of Revenue
  
Amount
  
% of Revenue
  
Revenues:
                  
Freight
  
$
83,173
    
63.4
%
$
80,643
    
66.6
%
Non-freight
   
48,051
   
36.6
%
  
40,376
   
33.4
%
                           
Total revenues
  
$
131,224
    
100.0
%
$
121,019
    
100.0
%
                           
Operating Expense Comparison:
                          
Natural Classification
                          
Labor and benefits
 
$
41,318
    
31.5
%
$
37,227
    
30.8
%
Equipment rents
   
8,652
   
6.6
%
  
9,029
   
7.5
%
Purchased services
   
11,057
   
8.4
%
  
10,076
   
8.3
%
Depreciation and amortization
   
7,969
   
6.1
%
  
7,307
   
6.0
%
Diesel fuel used in operations
    
10,815
   
8.2
%
  
10,239
   
8.5
%
Diesel fuel sold to third parties
    
6,482
   
4.9
%
  
5,458
   
4.5
%
Casualties and insurance
   
4,589
   
3.5
%
  
3,750
   
3.1
%
Materials
   
6,445
   
4.9
%
  
5,720
   
4.7
%
Net gain on sale of assets
    
(5,450
)
  
-4.1
%
  
(197
)
  
-0.2
%
Other expenses
   
9,686
   
7.4
%
  
9,306
   
7.7
%
                           
Total operating expenses
  
$
101,563
    
77.4
%
$
97,915
    
80.9
%
                           
Functional Classification
                          
Transportation
 
$
42,164
    
32.1
%
$
38,916
    
32.2
%
Maintenance of ways and structures
   
11,783
   
9.0
%
  
10,930
   
9.1
%
Maintenance of equipment
   
17,426
   
13.3
%
  
16,357
   
13.5
%
Diesel fuel sold to third parties
    
6,482
   
4.9
%
  
5,458
   
4.5
%
General and administrative
   
21,189
   
16.1
%
  
19,144
   
15.8
%
Net gain on sale of assets
    
(5,450
)
  
-4.1
%
  
(197
)
  
-0.2
%
Depreciation and amortization
   
7,969
   
6.1
%
  
7,307
   
6.0
%
                           
Total operating expenses
  
$
101,563
    
77.4
%
$
97,915
    
80.9
%
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
   
Nine Months Ended
  
   
September 30,
  
   
2007
  
2006
  
       
% of
      
% of
  
   
Amount
  
Revenue
  
Amount
  
Revenue
  
Revenues:
                  
Freight
  
$
247,047
    
64.7
%
$
236,162
    
70.9
%
Non-freight
   
134,578
   
35.3
%
  
96,819
   
29.1
%
                           
Total revenues
  
$
381,625
    
100.0
%
$
332,981
    
100.0
%
                           
Operating Expense Comparison:
                          
Natural Classification
                          
Labor and benefits
 
$
122,978
    
32.2
%
$
112,682
    
33.8
%
Equipment rents
   
27,122
   
7.1
%
  
26,478
   
8.0
%
Purchased services
   
31,702
   
8.3
%
  
23,691
   
7.1
%
Depreciation and amortization
   
23,515
   
6.2
%
  
20,405
   
6.1
%
Diesel fuel used in operations
    
31,917
   
8.4
%
  
30,267
   
9.1
%
Diesel fuel sold to third parties
    
16,680
   
4.4
%
  
7,089
   
2.1
%
Casualties and insurance
   
12,485
   
3.3
%
  
9,406
   
2.8
%
Materials
   
18,283
   
4.8
%
  
15,775
   
4.7
%
Net gain on sale of assets
    
(5,914
)
  
-1.6
%
  
(243
)
  
-0.1
%
Gain on insurance recovery
    
-
   
0.0
%
  
(1,937
)
  
-0.6
%
Other expenses
   
28,496
   
7.4
%
  
26,565
   
8.0
%
                   
Total operating expenses
  
$
307,264
    
80.5
%
$
270,178
    
81.0
%
                   
Functional Classification
                          
Transportation
 
$
121,732
    
31.9
%
$
108,336
    
32.5
%
Maintenance of ways and structures
   
34,830
   
9.1
%
  
30,088
   
9.0
%
Maintenance of equipment
   
52,622
   
13.8
%
  
45,724
   
13.7
%
Diesel fuel sold to third parties
    
16,680
   
4.4
%
  
7,089
   
2.1
%
General and administrative
   
63,799
   
16.7
%
  
60,716
   
18.3
%
Net gain on sale of assets
    
(5,914
)
  
-1.6
%
  
(243
)
  
-0.1
%
Gain on insurance recovery
    
-
   
0.0
%
  
(1,937
)
  
-0.6
%
Depreciation and amortization
   
23,515
   
6.2
%
  
20,405
   
6.1
%
                   
Total operating expenses
  
$
307,264
    
80.5
%
$
270,178
    
81.0
%
 
 
 
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUE, CARLOADS AND AVERAGE REVENUE PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)
 
   
Three Months Ended
  
Three Months Ended
  
   
September 30, 2007
  
September 30, 2006
  
Commodity Group
  
Freight Revenues
  
Carloads
  
Average Revenue
Per Carload
  
Freight Revenues
  
Carloads
  
Average Revenue
Per Carload
  
   
 
  
 
  
 
  
 
  
 
  
 
  
Pulp & Paper
  
$
17,244
    
29,712
 
$
580
  
$
17,524
    
34,421
 
$
509
  
Coal, Coke & Ores
    
15,551
   
52,307
   
297
   
15,053
   
51,796
   
291
 
Farm & Food Products
    
9,239
   
18,793
   
492
   
8,555
   
23,832
   
359
 
Lumber & Forest Products
    
9,151
   
21,519
   
425
   
8,485
   
21,328
   
398
 
Metals
    
8,721
   
18,796
   
464
   
9,142
   
21,355
   
428
 
Minerals & Stone
    
8,426
   
32,494
   
259
   
7,392
   
30,473
   
243
 
Chemicals-Plastics
    
6,675
   
10,320
   
647
   
6,400
   
10,848
   
590
 
Petroleum Products
    
3,755
   
5,982
   
628
   
3,138
   
5,697
   
551
 
Autos & Auto Parts
    
1,553
   
2,990
   
519
   
1,526
   
2,954
   
517
 
Intermodal
    
295
   
580
   
509
   
455
   
1,103
   
413
 
Other
    
2,563
   
11,367
   
225
   
2,973
   
14,354
   
207
 
                               
Totals
  
$
83,173
    
204,860
   
406
 
$
80,643
    
218,161
   
370
 



GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUE, CARLOADS AND AVERAGE REVENUE PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)
 
   
Nine Months Ended
  
Nine Months Ended
  
   
September 30, 2007
  
September 30, 2006
  
Commodity Group
  
Freight Revenues
  
Carloads
  
Average Revenue
Per Carload
  
Revenues
  
Carloads
  
Average Revenue
Per Carload
  
   
 
  
 
  
 
  
 
  
 
  
 
  
Pulp & Paper
  
$
51,749
    
92,604
 
$
559
  
$
51,976
    
104,267
 
$
498
  
Coal, Coke & Ores
    
44,303
   
143,850
   
308
   
47,075
   
150,826
   
312
 
Lumber & Forest Products
    
27,704
   
65,354
   
424
   
27,288
   
70,574
   
387
 
Farm & Food Products
    
27,561
   
57,424
   
480
   
19,206
   
54,236
   
354
 
Metals
    
27,456
   
59,857
   
459
   
27,340
   
64,328
   
425
 
Minerals & Stone
    
23,269
   
92,173
   
252
   
19,196
   
67,993
   
282
 
Chemicals-Plastics
    
19,297
   
31,037
   
622
   
18,825
   
32,310
   
583
 
Petroleum Products
    
11,751
   
18,715
   
628
   
10,426
   
18,150
   
574
 
Autos & Auto Parts
    
5,317
   
10,552
   
504
   
4,935
   
10,120
   
488
 
Intermodal
    
856
   
1,680
   
510
   
1,310
   
3,058
   
428
 
Other
    
7,784
   
36,164
   
215
   
8,585
   
41,929
   
205
 
                               
Totals
  
$
247,047
    
609,410
   
405
 
$
236,162
    
617,791
   
382
 
 
 
Reconciliation of non-GAAP Financial Measures
 
This earnings release contains free cash flow and adjusted operating ratios, which are "non-GAAP financial measures" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to their most directly comparable U.S. GAAP measures.
 
Operating Ratio Description and Discussion

Management views the Operating Ratio, calculated as total Operating Expenses divided by total Revenues, as an important measure of GWI’s operating performance. Because management believes it is useful for investors in assessing GWI's financial results compared to the same period in the prior year, Adjusted Operating Ratios for the three months ended September 30, 2007, are presented excluding the impact of gains from the disposition of assets. The Adjusted Operating Ratios for the three months ended September 30, 2006, are presented excluding the effects of an expense associated with a legal settlement. The Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Ratios calculated using amounts determined in accordance with GAAP.
 
The following table sets forth a reconciliation of GWI's Operating Ratio calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratios described above for the three months ended September 30, 2007 and 2006 ($ in millions):
 
   
 For the Three Months Ended September 30, 2007
  
 
  
Total
Revenues
  
Total Operating Expenses
  
Operating
Ratio
  
 
  
 
  
 
  
 
  
As Reported
  
$
131.2
  
$
101.6
    
77.4
%
Gain on Disposition of Assets
    
-
    
5.5
      
                     
Excluding Above Items
  
$
131.2
  
$
107.1
    
81.6
%

 
   
For the Three Months Ended September 30, 2006
  
 
  
Total
Revenues
  
Total Operating Expenses
  
Operating
Ratio
  
 
  
 
  
 
  
 
  
As Reported
  
$
121.0
  
$
97.9
    
80.9
%
Legal Settlement Expense
    
-
    
(1.1
)
      
                     
Excluding Above Items
  
$
121.0
  
$
96.8
    
80.0
%

 

 
Free Cash Flow Description and Discussion

Management views Free Cash Flow as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities from Continuing Operations less Net Cash Used in/Provided by Investing Activities from Continuing Operations, excluding the Cost of Acquisitions/Proceeds from Divestitures and directly related tax effects. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with GAAP.

The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities from Continuing Operations to GWI's Free Cash Flow ($ in millions):

   
Nine Months Ended
  
   
September 30,
  
   
2007
  
2006
  
Net cash provided by operating activities from continuing operations
  
$
5.6
  
$
64.0
  
Net cash (used in) provided by investing activities from continuing operations
     (31.6 )   255.8  
Proceeds from divestitures/cash used for acquisitions
     -     (285.6 )
Australian taxes on ARG Sale
     95.6     -  
Free cash flow
  
$
69.6
  
$
34.2