a50464515ex99-1.htm

“Our financial results for the third quarter of 2012 were consistent with our expectations in both North America and Australia. In North America, despite continued weakness in our coal and overhead coal traffic, as well as lower salt shipments due to last year’s mild winter, we are managing our costs well and sustained an adjusted operating ratio of 74.7%. In Australia, our adjusted operating ratio of 75.7% was 1.4 percentage points higher than last year primarily due to hiring, training and start-up costs associated with a major new iron ore contract that commenced revenue shipments in late October. We expect our Australian iron ore shipments to increase in the fourth quarter of 2012 and into 2013, initially through the Port of Darwin and later through the Port of Whyalla, as soon as the necessary infrastructure construction has been completed.” (2)

GWI reported a net loss in the third quarter of 2012 of $19.6 million, compared with net income of $32.9 million in the third quarter of 2011. The net loss was primarily due to a previously disclosed, one-time, non-cash charge whereby GWI marked-to-market $350 million of Series A-1 Mandatorily Convertible Preferred Stock issued to Carlyle (Carlyle Convertible) pursuant to an Investment Agreement to partially fund the RailAmerica acquisition. As discussed below, the non-cash charge of $50.1 million for marking-to-market the Carlyle Convertible is a result of the significant increase in GWI’s share price between the execution of the RailAmerica Acquisition Agreement and the Investment Agreement on July 23, 2012 and the end of the third quarter of 2012. Excluding the impact of marking-to-market the Carlyle Convertible and certain other significant items discussed below, GWI's adjusted net income in the third quarter of 2012 was $32.0 million, compared with adjusted net income of $30.8 million in the third quarter of 2011 (1).


		(Loss)/Income Before Taxes Impact			After-Tax Net (Loss)/Income Impact			Diluted (Loss)/Earnings Per Share Impact
Q3 2012
	Mark-to-market loss on Carlyle Convertible	$	(50.1	)	$	(50.1	)	$	(1.16	)
	RailAmerica acquisition-related costs	$	(5.8	)	$	(3.5	)	$	(0.08	)
	Dilutive impact from September public offerings of common stock and TEUs prior to RailAmerica acquisition on October 1	$	-		$	-		$	(0.02	)
	Net gain on sale of assets	$	3.0		$	2.0		$	0.05

Q3 2011
	Acquisition-related costs	$	(1.3	)	$	(0.8	)	$	(0.02	)
	Refinancing-related costs	$	(0.9	)	$	(0.6	)	$	(0.01	)
	Net gain on sale of assets	$	0.6		$	0.4		$	0.01
	Short line tax credit	$	-		$	3.2		$	0.07

In conjunction with the execution of the Agreement and Plan of Merger for the acquisition of RailAmerica (RailAmerica Acquisition Agreement) on July 23, 2012, GWI entered into an Investment Agreement with Carlyle Partners V, L.P. (Carlyle). Pursuant to the Investment Agreement, GWI agreed to sell a minimum of $350 million in Series A-1 Mandatorily Convertible Preferred Stock, or the Carlyle Convertible, to partially fund the RailAmerica acquisition. The conversion price of the Carlyle Convertible into Class A Common Stock was set at approximately $58.49, which was a 4.5% premium to the market price of GWI’s Class A common stock prior to the announcement of the RailAmerica acquisition. As previously disclosed, for the period between July 23, 2012 and closing of the acquisition, this instrument was accounted for as a contingent forward sale contract resulting in mark-to-market non-cash income or expense based on changes in GWI’s share price, with the cumulative effect represented as an asset or liability included in our consolidated financial results. Over this period GWI’s share price increased 19.4% to $66.86 as of September 30, 2012, and, accordingly, with the acquisition closing on October 1, 2012, the Company recorded a one-time $50.1 million non-cash mark-to-market loss and corresponding liability on the forward sale contract in the third quarter of 2012. Simultaneous with the October 1, 2012 acquisition closing, this liability was reclassified to the Carlyle Convertible to reflect its total fair value, before issuance costs, of $400.1 million (i.e., to reflect the $350 million provided by Carlyle in cash and $50.1 million in stock price appreciation) on GWI’s balance sheet. In addition, GWI incurred $5.8 million of acquisition-related costs in the third quarter of 2012, primarily associated with the RailAmerica acquisition. Also in the third quarter of 2012, GWI recorded $3.0 million in net gains on the sale of assets, primarily associated with the sale of its third-party fueling operation in South Australia.

GWI's traffic in the third quarter of 2012 was 242,783 carloads, a decrease of 13,407 carloads, or 5.2%, compared with the third quarter of 2011. Traffic in the third quarter of 2012 included 7,184 carloads from new operations. Same railroad traffic decreased 20,591 carloads, or 8.0%, in the third quarter of 2012. The same railroad traffic decrease was principally due to decreases of 9,129 carloads of other commodity traffic, which was primarily related to a reduction in coal haulage traffic, 8,689 carloads of farm and food products traffic and 6,283 carloads of minerals and stone traffic. These decreases were partially offset by an increase of 1,932 carloads of lumber and forest products traffic, 1,921 carloads of intermodal traffic and 1,919 carloads of metallic ores traffic. All remaining traffic decreased by a net 2,262 carloads.

Average same railroad freight revenues per carload increased 8.8% in the third quarter of 2012. A change in the mix of commodities increased average same railroad freight revenues per carload by 3.7%, partially offset by lower fuel surcharges and the depreciation of the Australian and Canadian dollars versus the U.S. dollar, each of which decreased average same railroad freight revenues per carload by 0.5%. Other than these factors, average same railroad freight revenues per carload increased 6.1%. In addition to higher freight rates, same railroad average freight revenues per carload were positively impacted by changes in the mix of customers within certain commodity groups, primarily other commodities and by a decrease in Australian grain traffic which increased average revenues per carload due to the fixed/variable rate structure.

GWI's operating income in the third quarter of 2012 was $52.9 million, a decrease of $3.1 million, compared with $56.0 million in the third quarter of 2011. GWI’s operating ratio in the third quarter of 2012 was 76.3%, compared with an operating ratio of 74.2% in the third quarter of 2011. Operating income in the third quarter of 2012 included $5.8 million of acquisition-related expenses, primarily associated with the RailAmerica acquisition, partially offset by $3.0 million of net gains on the sale of assets. Operating income in the third quarter of 2011 included $1.2 million of acquisition and financing-related expenses, partially offset by $0.6 million of net gains on the sale of assets. Excluding these items, GWI’s adjusted operating ratio was 75.0% in the third quarter of 2012, compared with 73.9% in the third quarter of 2011 (2).

(in millions)	Nine Months Ended September 30,
	2012			2011
Net cash provided by operating activities	$	169.5		$	125.6
Net cash used in investing activities, excluding Australian new business investments		(52.1	)		(125.4	)
Net cash paid/(received) for acquisitions/divestitures (a)		0.8			88.6
Australian stamp duty (b)		-			13.0
Free cash flow before Australian new business investments	$	118.3		$	101.8
Australian new business investments		(80.3	)		(46.7	)
Free cash flow (4)	$	38.0		$	55.1


(a) The 2011 period included $89.5 million in net cash paid for the acquisition of Arizona Eastern Railway Company.
(b) The payment of the Australian stamp duty in the 2011 period related to the acquisition of FreightLink in Australia, which was accrued as of December 31, 2010.

As previously announced, GWI's conference call to discuss financial results for the third quarter will be held Monday, November 5, 2012, at 11 a.m. EST. The dial-in number for the teleconference in the U.S. is (800) 288-8976; outside the U.S. is (612) 332-0430, 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 Conference Call Webcast." Management will be referring to a slide presentation that will also be available under the “Investors” tab of GWI’s website prior to the conference call. An audio replay of the conference call will be accessible via the “Investors” tab of GWI's website starting at 1 p.m. EST on November 5, 2012, until the following quarter’s earnings press release. Telephone replay is available for 30 days beginning at 1 p.m. EST on November 5 by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 222300.

GWI owns and operates short line and regional freight railroads and provides railcar switching services in the United States, Australia, Canada, the Netherlands and Belgium. In addition, GWI operates the Tarcoola to Darwin rail line, which links the Port of Darwin with the Australian interstate rail network in South Australia. Operations currently include 66 railroads organized in 10 regions, with more than 7,600 miles of owned and leased track and approximately 1,400 additional miles under track access arrangements. We provide rail service at 23 ports in North America, Australia and Europe and perform contract coal loading and railcar switching for industrial customers.

This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that are based on current expectations, estimates and projections about our industry, management's beliefs, and assumptions made by management. Words such as "anticipates," "intends," "plans," "believes," "could," "should," "seeks," "expects," "estimates," "trends," "outlook," variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including the following risks applicable to all of our operations: risks related to the acquisition and integration of railroads; economic and competitive uncertainties and contingencies and third-party approvals; economic, political and industry conditions (including employee strikes or work stoppages); customer demand and changes in our operations, retention and contract continuation; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we are subject; increased competition in relevant markets; funding needs and financing sources, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to various legal claims and lawsuits; increase in, or volatility associated with expenses associated with estimated claims, self-insured retention amounts, and insurance coverage limits; consummation of new business opportunities; exposure to the credit risk of customers and counterparties; severe weather conditions and other natural occurrences, which could result in shutdowns, derailments or other substantial disruption of operations; susceptibility to the risks of doing business in foreign countries; uncertainties as to the timing or approval of our pending application with the U.S. Surface Transportation Board (STB) to control the railroads of RailAmerica, Inc.; the conditions, if any, that might be imposed by the STB in connection with any approval of our application to control the railroads of RailAmerica; our success integrating RailAmerica railroads into our operations and our ability to realize the expected synergies associated with the acquisition of RailAmerica; and others including but not limited to, those noted in our 2011 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this press release or as of the date they were made. GWI does not undertake, and expressly disclaims, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

2. The operating income and operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating income and operating ratios calculated using total operating expenses and operating revenue, calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to operating income and operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

3. RailAmerica’s operating income and operating ratio that exclude certain items are non-GAAP financial measures and are not intended to replace the operating income and operating ratios calculated using total operating expenses and operating revenue, calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to operating income and operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011

OPERATING REVENUES	$	222,745		$	217,210		$	647,600		$	618,710

OPERATING EXPENSES		169,870			161,187			490,938			472,319
INCOME FROM OPERATIONS		52,875			56,023			156,662			146,391

INTEREST INCOME		928			853			2,759			2,486
INTEREST EXPENSE		(8,814	)		(10,573	)		(26,052	)		(30,765	)
GAIN ON SALE OF INVESTMENTS		-			-			-			894
CONTINGENT FORWARD SALE CONTRACT MARK-TO-MARKET EXPENSE		(50,106	)		-			(50,106	)		-
OTHER INCOME/(EXPENSE), NET		853			(1,064	)		1,852			(595	)

(LOSS)/INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(4,264	)		45,239			85,115			118,411

PROVISION FOR INCOME TAXES		15,303			12,287			46,051			32,192

(LOSS)/INCOME FROM CONTINUING OPERATIONS		(19,567	)		32,952			39,064			86,219

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		-			(10	)		(27	)		(10	)

NET (LOSS)/ INCOME	$	(19,567	)		32,942		$	39,037			86,209

BASIC (LOSS)/EARNINGS PER SHARE:
BASIC (LOSS)/EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	(0.47	)	$	0.82		$	0.96		$	2.16
BASIC LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			-
BASIC (LOSS)/EARNINGS PER COMMON SHARE	$	(0.47	)	$	0.82		$	0.95		$	2.16

WEIGHTED AVERAGE SHARES - BASIC		41,682			40,078			40,888			39,825

DILUTED (LOSS)/EARNINGS PER SHARE:
DILUTED (LOSS)/EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	(0.47	)	$	0.77		$	0.90		$	2.02
DILUTED LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			-
DILUTED (LOSS)/EARNINGS PER COMMON SHARE	$	(0.47	)	$	0.77		$	0.90		$	2.02

WEIGHTED AVERAGE SHARES - DILUTED	41,682			42,821				43,471			42,711


GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011 (in thousands) (unaudited)

	September 30,		December 31,
ASSETS	2012		2011

CURRENT ASSETS:
Cash and cash equivalents	$	516,031	$	27,269
Accounts receivable, net		173,408		165,768
Materials and supplies		15,713		14,445
Prepaid expenses and other		16,651		13,332
Deferred income tax assets, net		19,232		19,385
Total current assets		741,035		240,199

PROPERTY AND EQUIPMENT, net		1,769,467		1,643,589
GOODWILL		160,533		160,277
INTANGIBLE ASSETS, net		225,495		230,628
DEFERRED INCOME TAX ASSETS, net		2,462		2,342
OTHER ASSETS, net		21,723		17,122
Total assets	$	2,920,715	$	2,294,157

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt	$	48,626	$	57,168
Accounts payable		140,429		134,081
Accrued expenses		73,347		69,097
Deferred income tax liabilities, net		138		925
Total current liabilities		262,540		261,271

LONG-TERM DEBT, less current portion		594,480		569,026
DEFERRED INCOME TAX LIABILITIES, net		315,809		285,780
DEFERRED ITEMS - grants from outside parties		221,502		198,824
CONTINGENT FORWARD SALE CONTRACT		50,106		-
OTHER LONG-TERM LIABILITIES		22,393		18,622

TOTAL STOCKHOLDERS' EQUITY		1,453,885		960,634
Total liabilities and stockholders' equity	$	2,920,715	$	2,294,157

GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (in thousands) (unaudited)

	Nine Months Ended September 30,
	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	39,037		$	86,209
Adjustments to reconcile net income to net cash provided
by operating activities:
Loss from discontinued operations, net of tax		27			10
Depreciation and amortization		54,947			48,781
Compensation cost related to equity awards		5,763			5,584
Excess tax benefits from share-based compensation		(2,842	)		(2,090	)
Deferred income taxes		29,735			20,063
Net gain on sale of assets		(10,447	)		(2,708	)
Gain on sale of investments		-			(894	)
Gain on insurance recoveries		(5,157	)		(1,043	)
Insurance proceeds received		21,479			24
Contingent forward sale contract mark-to-market expense		50,106			-
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
Accounts receivable, net		(2,110	)		(13,650	)
Materials and supplies		(1,063	)		(531	)
Prepaid expenses and other		(3,081	)		243
Accounts payable and accrued expenses		(10,232	)		(14,204	)
Other assets and liabilities, net		3,376			(179	)
Net cash provided by operating activities from continuing operations		169,538			125,615
Net cash used in operating activities from discontinued operations		(27	)		(15	)
Net cash provided by operating activities		169,511			125,600

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(170,529	)		(106,386	)
Grant proceeds from outside parties		24,929			18,773
Cash paid for acquisitions, net of cash acquired		(837	)		(89,935	)
Proceeds from sale of investments		-			1,369
Insurance proceeds for the replacement of assets		370			-
Proceeds from disposition of property and equipment		13,673			4,054
Net cash used in investing activities from continuing operations		(132,394	)		(172,125	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases		(215,439	)		(418,907	)
Proceeds from issuance of long-term debt		196,480			445,424
Debt amendment/issuance costs		-			(4,742	)
Proceeds from employee stock purchases		12,088			13,238
Treasury stock purchases		(1,770	)		(1,292	)
Net proceeds from TEU issuance		222,856			-
Net proceeds from Class A common stock issuance		234,361			-
Excess tax benefits from share-based compensation		2,842			2,090
Net cash provided by financing activities from continuing operations		451,418			35,811

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		227			(1,083	)

CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS		-			1

INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS		488,762			(11,796	)
CASH AND CASH EQUIVALENTS, beginning of period		27,269			27,417
CASH AND CASH EQUIVALENTS, end of period	$	516,031		$	15,621


GENESEE & WYOMING INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION (dollars in thousands) (unaudited)

	Three Months Ended September 30,
	2012					2011
	Amount			% of Revenue		Amount			% of Revenue
Revenues:
Freight	$	160,639		72.1	%	$	154,561		71.2	%
Non-freight		62,106		27.9	%		62,649		28.8	%

Total revenues	$	222,745		100.0	%	$	217,210		100.0	%

Operating Expense Comparison:
Natural Classification
Labor and benefits	$	64,022		28.8	%	$	58,986		27.1	%
Equipment rents		9,289		4.2	%		11,357		5.2	%
Purchased services		20,962		9.4	%		20,316		9.3	%
Depreciation and amortization		18,980		8.5	%		16,623		7.7	%
Diesel fuel used in operations		21,511		9.7	%		21,441		9.9	%
Diesel fuel sold to third parties		1,359		0.6	%		3,662		1.7	%
Casualties and insurance		6,237		2.8	%		5,020		2.3	%
Materials		6,241		2.8	%		6,844		3.2	%
Net gain on sale of assets		( 3,018	)	(1.4	%)		( 610	)	(0.3	%)
Gain on insurance recoveries		-		0.0	%		-		0.0	%
Other expenses		24,287		10.9	%		17,548		8.1	%

Total operating expenses	$	169,870		76.3	%	$	161,187		74.2	%

Functional Classification
Transportation	$	68,979		31.0	%	$	65,781		30.3	%
Maintenance of ways and structures		22,292		10.0	%		21,386		9.8	%
Maintenance of equipment		23,151		10.4	%		24,650		11.3	%
Diesel fuel sold to third parties		1,359		0.6	%		3,662		1.7	%
General and administrative		38,127		17.2	%		29,695		13.7	%
Net gain on sale of assets		( 3,018	)	(1.4	%)		( 610	)	(0.3	%)
Gain on insurance recoveries		-		0.0	%		-		0.0	%
Depreciation and amortization		18,980		8.5	%		16,623		7.7	%

Total operating expenses	$	169,870		76.3	%	$	161,187		74.2	%


GENESEE & WYOMING INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION (dollars in thousands) (unaudited)

Three Months Ended September 30, 2012	North American & European Operations					Australian Operations					Total Operations
Revenues:	Amount			% of Total Revenues		Amount			% of Total Revenues		Amount			% of Total Revenues
Freight	$	107,567		71.6	%	$	53,072		73.3	%	$	160,639		72.1	%
Non-freight (excluding fuel sales)		42,756		28.4	%		18,011		24.9	%		60,767		27.3	%
Fuel sales to third parties		-		0.0	%		1,339		1.8	%		1,339		0.6	%
Total revenues		150,323		100.0	%		72,422		100.0	%		222,745		100.0	%

Operating expenses
Labor and benefits		48,880		32.5	%		15,142		20.9	%		64,022		28.8	%
Equipment rents		6,716		4.5	%		2,573		3.5	%		9,289		4.2	%
Purchased services		6,734		4.5	%		14,228		19.6	%		20,962		9.4	%
Depreciation and amortization		12,495		8.3	%		6,485		9.0	%		18,980		8.5	%
Diesel fuel used in operations		13,632		9.1	%		7,879		10.9	%		21,511		9.7	%
Diesel fuel sold to third parties		-		0.0	%		1,359		1.9	%		1,359		0.6	%
Casualties and insurance		4,295		2.8	%		1,942		2.7	%		6,237		2.8	%
Materials		5,706		3.8	%		535		0.7	%		6,241		2.8	%
Net gain on sale of assets		(1,081	)	(0.7	%)		(1,937	)	(2.7	%)		(3,018	)	(1.4	%)
Gain on insurance recoveries		-		0.0	%		-		0.0	%		-		0.0	%
Other expenses		19,375		12.9	%		4,912		6.8	%		24,287		10.9	%
Total operating expenses		116,752		77.7	%		53,118		73.3	%		169,870		76.3	%

Income from Operations	$	33,571				$	19,304				$	52,875

Carloads		192,168					50,615					242,783

Net expenditures for additions to property & equipment	$	24,023				$	33,320				$	57,343

Three Months Ended September 30, 2011	North American & European Operations					Australian Operations					Total Operations
Revenues:	Amount			% of Total Revenues		Amount			% of Total Revenues		Amount			% of Total Revenues
Freight	$	102,827		70.5	%	$	51,734		72.5	%	$	154,561		71.2	%
Non-freight (excluding fuel sales)		42,980		29.5	%		15,732		22.0	%		58,712		27.0	%
Fuel sales to third parties		-		0.0	%		3,937		5.5	%		3,937		1.8	%
Total revenues		145,807		100.0	%		71,403		100.0	%		217,210		100.0	%

Operating expenses
Labor and benefits		46,474		31.9	%		12,512		17.5	%		58,986		27.1	%
Equipment rents		6,845		4.7	%		4,512		6.3	%		11,357		5.2	%
Purchased services		6,920		4.7	%		13,396		18.8	%		20,316		9.3	%
Depreciation and amortization		11,932		8.2	%		4,691		6.6	%		16,623		7.7	%
Diesel fuel used in operations		13,377		9.2	%		8,064		11.3	%		21,441		9.9	%
Diesel fuel sold to third parties		-		0.0	%		3,662		5.1	%		3,662		1.7	%
Casualties and insurance		3,361		2.3	%		1,659		2.3	%		5,020		2.3	%
Materials		6,166		4.2	%		678		0.9	%		6,844		3.2	%
Net gain on sale of assets		(610	)	(0.4	%)		-		0.0	%		(610	)	(0.3	%)
Gain on insurance recoveries		-		0.0	%		-		0.0	%		-		0.0	%
Other expenses		13,379		9.2	%		4,169		5.9	%		17,548		8.1	%
Total operating expenses		107,844		74.0	%		53,343		74.7	%		161,187		74.2	%

Income from Operations	$	37,963				$	18,060				$	56,023

Carloads		201,253					54,937					256,190

Net expenditures for additions to property & equipment	$	12,054				$	25,194				$	37,248

GENESEE & WYOMING INC. AND SUBSIDIARIES RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD COMPARISON BY COMMODITY GROUP (dollars in thousands, except average revenues per carload) (unaudited)

Three Months Ended September 30, 2012

	North American & European Operations					Australian Operations					Total Operations
Commodity Group	Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload

Intermodal*	$	120	1,056	$	114	$	25,386	16,698	$	1,520	$	25,506	17,754	$	1,437
Coal & Coke		21,561	52,990		407		-	-		-		21,561	52,990		407
Farm & Food Products		5,582	11,919		468		9,058	10,450		867		14,640	22,369		654
Pulp & Paper		17,063	27,042		631		-	-		-		17,063	27,042		631
Metallic Ores **		3,130	3,119		1,004		14,986	8,588		1,745		18,116	11,707		1,547
Metals		14,593	22,182		658		-	-		-		14,593	22,182		658
Minerals & Stone		8,570	17,933		478		3,069	14,780		208		11,639	32,713		356
Chemicals & Plastics		13,612	16,665		817		-	-		-		13,612	16,665		817
Lumber & Forest Products		9,230	18,708		493		-	-		-		9,230	18,708		493
Petroleum Products		6,227	7,939		784		573	99		5,788		6,800	8,038		846
Autos & Auto Parts		2,131	2,574		828		-	-		-		2,131	2,574		828
Other		5,748	10,041		572		-	-		-		5,748	10,041		572

Totals	$	107,567	192,168	$	560	$	53,072	50,615	$	1,049	$	160,639	242,783	$	662

* Represents intermodal units
** Includes carload and intermodal units

Three Months Ended September 30, 2011

	North American & European Operations					Australian Operations					Total Operations
Commodity Group	Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload

Intermodal*	$	70	582	$	120	$	23,259	15,251	$	1,525	$	23,329	15,833	$	1,473
Coal & Coke		20,831	53,553		389		-	-		-		20,831	53,553		389
Farm & Food Products		5,581	13,192		423		11,242	17,651		637		16,823	30,843		545
Pulp & Paper		16,139	24,893		648		-	-		-		16,139	24,893		648
Metallic Ores		2,068	2,670		775		13,026	6,247		2,085		15,094	8,917		1,693
Metals		14,040	22,748		617		-	-		-		14,040	22,748		617
Minerals & Stone		10,478	22,591		464		3,397	15,651		217		13,875	38,242		363
Chemicals & Plastics		12,015	15,449		778		-	-		-		12,015	15,449		778
Lumber & Forest Products		8,120	16,614		489		-	-		-		8,120	16,614		489
Petroleum Products		5,773	7,439		776		810	137		5,912		6,583	7,576		869
Autos & Auto Parts		1,830	2,408		760		-	-		-		1,830	2,408		760
Other		5,882	19,114		308		-	-		-		5,882	19,114		308

Totals	$	102,827	201,253	$	511	$	51,734	54,937	$	942	$	154,561	256,190	$	603

* Represents intermodal units

GENESEE & WYOMING INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION (dollars in thousands) (unaudited)

	Nine Months Ended September 30,
	2012					2011
	Amount			% of Revenue		Amount			% of Revenue
Revenues:
Freight	$	459,399		70.9	%	$	434,154		70.2	%
Non-freight		188,201		29.1	%		184,556		29.8	%

Total revenues	$	647,600		100.0	%	$	618,710		100.0	%

Operating Expense Comparison:
Natural Classification
Labor and benefits	$	191,145		29.5	%	$	176,034		28.4	%
Equipment rents		28,073		4.3	%		32,887		5.3	%
Purchased services		58,297		9.0	%		57,463		9.3	%
Depreciation and amortization		54,947		8.5	%		48,781		7.9	%
Diesel fuel used in operations		64,643		10.0	%		65,516		10.6	%
Diesel fuel sold to third parties		10,460		1.6	%		12,241		2.0	%
Casualties and insurance		17,727		2.7	%		16,686		2.7	%
Materials		19,131		3.0	%		19,517		3.2	%
Net gain on sale of assets		( 10,447	)	(1.6	%)		( 2,708	)	(0.4	%)
Gain on insurance recoveries		( 5,186	)	(0.8	%)		( 1,043	)	(0.2	%)
Other expenses		62,148		9.6	%		46,945		7.5	%

Total operating expenses	$	490,938		75.8	%	$	472,319		76.3	%

Functional Classification
Transportation	$	203,371		31.4	%	$	195,801		31.6	%
Maintenance of ways and structures		66,096		10.2	%		58,886		9.5	%
Maintenance of equipment		68,611		10.6	%		72,209		11.7	%
Diesel fuel sold to third parties		10,460		1.6	%		12,241		2.0	%
General and administrative		103,086		15.9	%		88,152		14.2	%
Net gain on sale of assets		( 10,447	)	(1.6	%)		( 2,708	)	(0.4	%)
Gain on insurance recoveries		( 5,186	)	(0.8	%)		( 1,043	)	(0.2	%)
Depreciation and amortization		54,947		8.5	%		48,781		7.9	%

Total operating expenses	$	490,938		75.8	%	$	472,319		76.3	%

GENESEE & WYOMING INC. AND SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION (dollars in thousands) (unaudited)

Nine Months Ended September 30, 2012	North American & European Operations					Australian Operations					Total Operations
Revenues:	Amount			% of Total Revenues		Amount			% of Total Revenues		Amount			% of Total Revenues
Freight	$	311,611		70.9	%	$	147,788		71.0	%	$	459,399		70.9	%
Non-freight (excluding fuel sales)		127,840		29.1	%		49,398		23.7	%		177,238		27.4	%
Fuel sales to third parties		-		0.0	%		10,963		5.3	%		10,963		1.7	%
Total revenues		439,451		100.0	%		208,149		100.0	%		647,600		100.0	%

Operating expenses
Labor and benefits		147,251		33.5	%		43,894		21.1	%		191,145		29.5	%
Equipment rents		19,744		4.5	%		8,329		4.1	%		28,073		4.3	%
Purchased services		19,455		4.4	%		38,842		18.7	%		58,297		9.0	%
Depreciation and amortization		37,354		8.5	%		17,593		8.5	%		54,947		8.5	%
Diesel fuel used in operations		41,858		9.5	%		22,785		10.9	%		64,643		10.0	%
Diesel fuel sold to third parties		-		0.0	%		10,460		5.0	%		10,460		1.6	%
Casualties and insurance		11,657		2.7	%		6,070		2.9	%		17,727		2.7	%
Materials		17,858		4.1	%		1,273		0.6	%		19,131		3.0	%
Net gain on sale of assets		(8,376	)	(1.9	%)		(2,071	)	(1.0	%)		(10,447	)	(1.6	%)
Gain on insurance recoveries		-		0.0	%		(5,186	)	(2.5	%)		(5,186	)	(0.8	%)
Other expenses		47,868		10.9	%		14,280		6.9	%		62,148		9.6	%
Total operating expenses		334,669		76.2	%		156,269		75.2	%		490,938		75.8	%

Income from Operations	$	104,782				$	51,880				$	156,662

Carloads		543,021					154,255					697,276

Net expenditures for additions to property & equipment	$	50,761				$	94,839				$	145,600

Nine Months Ended September 30, 2011	North American & European Operations					Australian Operations					Total Operations
Revenues:	Amount			% of Total Revenues		Amount			% of Total Revenues		Amount			% of Total Revenues
Freight	$	290,154		69.5	%	$	144,000		71.5	%	$	434,154		70.2	%
Non-freight (excluding fuel sales)		127,295		30.5	%		44,313		22.0	%		171,608		27.7	%
Fuel sales to third parties		-		0.0	%		12,948		6.5	%		12,948		2.1	%
Total revenues		417,449		100.0	%		201,261		100.0	%		618,710		100.0	%

Operating expenses
Labor and benefits		139,100		33.3	%		36,934		18.4	%		176,034		28.4	%
Equipment rents		19,851		4.8	%		13,036		6.5	%		32,887		5.3	%
Purchased services		20,402		4.9	%		37,061		18.4	%		57,463		9.3	%
Depreciation and amortization		34,843		8.3	%		13,938		6.9	%		48,781		7.9	%
Diesel fuel used in operations		42,410		10.2	%		23,106		11.5	%		65,516		10.6	%
Diesel fuel sold to third parties		-		0.0	%		12,241		6.1	%		12,241		2.0	%
Casualties and insurance		11,417		2.7	%		5,269		2.6	%		16,686		2.7	%
Materials		18,078		4.3	%		1,439		0.7	%		19,517		3.2	%
Net gain on sale of assets		(2,694	)	(0.6	%)		(14	)	0.0	%		(2,708	)	(0.4	%)
Gain on insurance recoveries		(25	)	0.0	%		(1,018	)	(0.5	%)		(1,043	)	(0.2	%)
Other expenses		35,432		8.5	%		11,513		5.7	%		46,945		7.5	%
Total operating expenses		318,814		76.4	%		153,505		76.3	%		472,319		76.3	%

Income from Operations	$	98,635				$	47,756				$	146,391

Carloads		591,160					159,094					750,254

Net expenditures for additions to property & equipment	$	33,865				$	53,748				$	87,613

GENESEE & WYOMING INC. AND SUBSIDIARIES RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD COMPARISON BY COMMODITY GROUP (dollars in thousands, except average revenues per carload) (unaudited)

Nine Months Ended September 30, 2012

	North American & European Operations					Australian Operations					Total Operations
Commodity Group	Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload

Intermodal*	$	382	3,400	$	112	$	66,913	44,520	$	1,503	$	67,295	47,920	$	1,404
Coal & Coke		53,085	124,686		426		-	-		-		53,085	124,686		426
Farm & Food Products		19,754	39,969		494		31,671	43,426		729		51,425	83,395		617
Pulp & Paper		48,811	75,299		648		-	-		-		48,811	75,299		648
Metallic Ores **		8,076	8,531		947		38,346	21,411		1,791		46,422	29,942		1,550
Metals		46,880	72,867		643		-	-		-		46,880	72,867		643
Minerals & Stone		26,686	53,657		497		8,884	44,575		199		35,570	98,232		362
Chemicals & Plastics		41,693	50,269		829		-	-		-		41,693	50,269		829
Lumber & Forest Products		25,758	52,302		492		-	-		-		25,758	52,302		492
Petroleum Products		19,136	23,195		825		1,974	323		6,111		21,110	23,518		898
Autos & Auto Parts		6,306	7,526		838		-	-		-		6,306	7,526		838
Other		15,044	31,320		480		-	-		-		15,044	31,320		480

Totals	$	311,611	543,021	$	574	$	147,788	154,255	$	958	$	459,399	697,276	$	659

* Represents intermodal units
** Includes carload and intermodal units

Nine Months Ended September 30, 2011

	North American & European Operations					Australian Operations					Total Operations
Commodity Group	Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload		Freight Revenues		Carloads	Average Revenues Per Carload

Intermodal*	$	288	2,438	$	118	$	63,021	42,336	$	1,489	$	63,309	44,774	$	1,414
Coal & Coke		59,824	155,288		385		-	-		-		59,824	155,288		385
Farm & Food Products		18,302	41,353		443		32,615	52,687		619		50,917	94,040		541
Pulp & Paper		46,398	73,025		635		-	-		-		46,398	73,025		635
Metallic Ores		4,913	7,544		651		36,297	16,293		2,228		41,210	23,837		1,729
Metals		37,063	67,486		549		-	-		-		37,063	67,486		549
Minerals & Stone		25,877	56,867		455		10,177	47,432		215		36,054	104,299		346
Chemicals & Plastics		33,855	44,933		753		-	-		-		33,855	44,933		753
Lumber & Forest Products		23,733	49,150		483		-	-		-		23,733	49,150		483
Petroleum Products		17,075	22,059		774		1,890	346		5,462		18,965	22,405		846
Autos & Auto Parts		6,179	8,179		755		-	-		-		6,179	8,179		755
Other		16,647	62,838		265		-	-		-		16,647	62,838		265

Totals	$	290,154	591,160	$	491	$	144,000	159,094	$	905	$	434,154	750,254	$	579

* Represents intermodal units

Management views its Net (Loss)/Income and Diluted (Loss)/Earnings Per Share as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results, the Net (Loss)/Income and Diluted (Loss)/Earnings Per Share for the three months ended September 30, 2012, used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Share, are presented excluding the contingent forward sale contract mark-to-market expense, acquisition-related expenses, net gain on sale of assets and the weighted average impact of the increased diluted share count as a result of the September Class A common stock and Tangible Equity Unit (TEU) offerings. The Net Income and Diluted Earnings Per Share for the three months ended September 30, 2011, used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Share, are presented excluding acquisition-related costs, refinancing-related costs, net gain on sale of assets and the impact from the short line tax credit. The Adjusted Net Income and Adjusted Diluted Earnings Per Share presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, Net (Loss)/Income or Diluted (Loss)/Earnings Per Share calculated using amounts in accordance with GAAP. Adjusted Net Income and Adjusted Diluted Earnings Per Share amounts may be different from similarly-titled non-GAAP financial measures used by other companies.


Three Months Ended September 30, 2012	Net (Loss)/Income			Diluted Shares			Diluted (Loss)/Earnings Per Share Impact
As reported	$	(19.6	)	41.7			$	(0.47	)
Add back certain items, net of tax:
Contingent forward sale contract mark-to-market expense		50.1		2.5		(a)		1.16
Acquisition-related costs		3.5		-				0.08
Net gain on sale of assets		(2.0	)	-				(0.05	)
Weighted average impact of increased share count from
Class A common stock and TEU offering		-		(0.9	)			0.02

Adjusted	$	32.0		43.3			$	0.74

(a) - There is no effect of Class B shares outstanding or unvested equity awards in the calculation of loss per diluted share. Amount represents effect of Class B shares outstanding and unvested equity awards in the calculation of earnings per diluted share.


Three Months Ended September 30, 2011	Net Income			Diluted Shares			Diluted Earnings Per Share Impact
As reported	$	32.9		42.8			$	0.77
Add back certain items, net of tax:
Acquisition-related costs		0.8		-				0.02
Refinancing-related costs		0.6		-				0.01
Net gain on sale of assets		(0.4	)	-				(0.01	)
Short line tax credit		(3.2	)	-				(0.07	)

Adjusted	$	30.8		42.8			$	0.72

Management views its Operating Income, calculated as Operating Revenues less Operating Expenses and Operating Ratio, calculated as Operating Expenses divided by Operating Revenues, as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results compared with the same period in the prior year, the Operating Income and Operating Ratio for the three months ended September 30, 2012, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding acquisition-related costs and net gain on sale of assets. The Operating Income and Operating Ratio for the three months ended September 30, 2011, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding acquisition-related costs, refinancing-related costs and net gain on sale of assets. The Adjusted Operating Income and 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 Income and Operating Ratios calculated using amounts in accordance with GAAP. Adjusted Operating Income and Adjusted Operating Ratios may be different from similarly-titled non-GAAP financial measures used by other companies.

Three months ended September 30, 2012
	North American & European Operations			Australian Operations			Total Operations
Operating revenues	$	150.3		$	72.4		$	222.7
Operating expenses		116.8			53.1			169.9
Operating income	$	33.6		$	19.3		$	52.9
Operating ratio		77.7	%		73.3	%		76.3	%

Operating expenses	$	116.8		$	53.1		$	169.9
Acquisition-related costs		(5.5	)		(0.2	)		(5.8	)
Net gain on sale of assets		1.1			1.9			3.0
Adjusted operating expenses	$	112.3		$	54.8		$	167.1

Adjusted operating income	$	38.0		$	17.6		$	55.6
Adjusted operating ratio		74.7	%		75.7	%		75.0	%


Three months ended September 30, 2011
	North American & European Operations			Australian Operations			Total Operations
Operating revenues	$	145.8		$	71.4		$	217.2
Operating expenses		107.8			53.3			161.2
Operating income	$	38.0		$	18.1		$	56.0
Operating ratio		74.0	%		74.7	%		74.2	%

Operating expenses	$	107.8		$	53.3		$	161.2
Acquisition-related costs		(0.8	)		(0.3	)		(1.1	)
Refinancing-related costs		(0.1	)		-			(0.1	)
Net gain on sale of assets		0.6			-			0.6
Adjusted operating expenses	$	107.5		$	53.0		$	160.6

Adjusted operating income	$	38.3		$	18.4		$	56.6
Adjusted operating ratio		73.8	%		74.3	%		73.9	%

RailAmerica’s management views its Operating Income, calculated as Operating Revenue less Operating Expenses and Operating Ratio, calculated as Operating Expenses divided by Operating Revenue, as important measures of RailAmerica’s operating performance. Because RailAmerica’s management believes this information is useful for investors in assessing RailAmerica’s financial results, the Operating Income and Operating Ratio for the three months ended September 30, 2012, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding strategic alternatives expense (generally, RailAmerica sale expenses) and net gain on sale of assets. The Operating Income and Operating Ratio for the three months ended September 30, 2011, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding impairment of assets and 45G benefit. The Adjusted Operating Income and 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 Income and Operating Ratios calculated using amounts in accordance with GAAP. Adjusted Operating Income and Operating Ratios may be different from similarly-titled non-GAAP financial measures used by other companies.

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 Investing Activities from Continuing Operations, excluding net cash paid/(received) for acquisitions/divestitures and the cash paid for Australian stamp duty. 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. Free Cash Flow may be different from similarly-titled non-GAAP financial measures used by other companies.


	Three Months Ended September 30,
	2012			2011
Operating revenue	$	155.4		$	139.7
Operating expenses		133.7			108.2
Operating income	$	21.7		$	31.5
Operating ratio		86.0	%		77.5	%

Operating expenses	$	133.7		$	108.2
Strategic alternatives expense		(16.6	)		-
Net gain on sale of assets		1.3			-
Impairment of assets		-			(1.9	)
45G benefit		-			3.9
Adjusted operating expenses	$	118.4		$	110.1

Adjusted operating income	$	37.0		$	29.6
Adjusted operating ratio		76.2	%		78.9	%