10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-31456

GENESEE & WYOMING INC.

(Exact name of registrant as specified in its charter)

Delaware	06-0984624
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
66 Field Point Road, Greenwich, Connecticut	06830
(Address of principal executive offices)	(Zip Code)

(203) 629-3722

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically or posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨  YES    ¨  NO

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer  x	Accelerated Filer  ¨	Non-Accelerated Filer  ¨	Smaller Reporting Company  ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):      ¨  YES    x  NO

Shares of common stock outstanding as of the close of business on July 31, 2009:

Class	Number of Shares Outstanding
Class A Common Stock	38,369,586
Class B Common Stock	2,558,790

INDEX

		Page
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited):
	Consolidated Balance Sheets - As of June 30, 2009 and December 31, 2008	3
	Consolidated Statements of Operations - For the Three and Six Months Ended June 30, 2009 and 2008	4
	Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 2009 and 2008	5
	Notes to Consolidated Financial Statements	6-16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
Part II.	Other Information	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Submission of Matters to a Vote of Security Holders	38
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		40
Index to Exhibits		41

2

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2009 and DECEMBER 31, 2008

(in thousands, except share amounts)

(Unaudited)

	June 30, 2009			December 31, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	62,417		$	31,693
Accounts receivable, net		105,974			120,874
Materials and supplies		7,949			7,708
Prepaid expenses and other		10,582			12,270
Current assets of discontinued operations		1,249			1,676
Deferred income tax assets, net		18,106			18,101
Total current assets		206,277			192,322
PROPERTY AND EQUIPMENT, net		994,339			998,995
INVESTMENT IN UNCONSOLIDATED AFFILIATES		5,104			4,986
GOODWILL		161,347			150,958
INTANGIBLE ASSETS, net		228,118			223,442
DEFERRED INCOME TAX ASSETS, net		3,118			—
OTHER ASSETS, net		16,286			16,578
Total assets	$	1,614,589		$	1,587,281
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	27,154		$	26,034
Accounts payable		101,137			124,162
Accrued expenses		36,084			37,903
Current liabilities of discontinued operations		1,021			1,121
Deferred income tax liabilities, net		—			192
Total current liabilities		165,396			189,412
LONG-TERM DEBT, less current portion		433,057			535,231
DEFERRED INCOME TAX LIABILITIES, net		238,450			234,979
DEFERRED ITEMS - grants from outside parties		122,354			113,302
OTHER LONG-TERM LIABILITIES		22,497			34,943
COMMITMENTS AND CONTINGENCIES		—			—
EQUITY:
Class A Common Stock, $0.01 par value, one vote per share; 90,000,000 shares authorized; 50,777,987 and 45,830,569 shares issued and 38,367,681 and 33,435,168 shares outstanding (net of 12,410,306 and 12,395,401 shares in treasury) on June 30, 2009 and December 31, 2008		508			458
Class B Common Stock, $0.01 par value, ten votes per share; 15,000,000 shares authorized; 2,558,790 and 2,585,152 shares issued and outstanding on June 30, 2009 and December 31, 2008, respectively		26			26
Additional paid-in capital		329,211			214,356
Retained earnings		500,960			479,598
Accumulated other comprehensive income/(loss)		3,487			(14,033	)
Less treasury stock, at cost		(202,776	)		(202,342	)
Total Genesee & Wyoming Inc. stockholders’ equity		631,416			478,063
Noncontrolling interest		1,419			1,351
Total equity		632,835			479,414
Total liabilities and equity	$	1,614,589		$	1,587,281

The accompanying notes are an integral part of these consolidated financial statements.

3

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 and 2008

(dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
OPERATING REVENUES	$	130,055		$	152,715		$	268,513		$	293,396
OPERATING EXPENSES:
Transportation		39,942			52,876			83,071			100,732
Maintenance of ways and structures		13,336			13,195			26,769			26,163
Maintenance of equipment		16,395			17,929			33,503			35,870
Diesel fuel sold to third parties		3,104			10,379			6,493			18,946
General and administrative		24,044			21,689			48,076			45,083
Net loss/(gain) on sale and impairment of assets		4,889			(2,082	)		4,650			(2,632	)
Gain on insurance recovery		(500	)		(399	)		(500	)		(399	)
Restructuring and related charges		2,288			—			2,288			—
Depreciation and amortization		11,917			9,453			23,423			18,652
Total operating expenses		115,415			123,040			227,773			242,415
INCOME FROM OPERATIONS		14,640			29,675			40,740			50,981
Interest income		243			571			425			1,156
Interest expense		(7,094	)		(4,044	)		(14,274	)		(7,953	)
Other income, net		1,202			561			1,244			659
Income from continuing operations before income taxes		8,991			26,763			28,135			44,843
Provision for income taxes		873			10,577			6,036			17,396
Income from continuing operations, net of tax		8,118			16,186			22,099			27,447
Loss from discontinued operations, net of tax		(636	)		(735	)		(669	)		(1,574	)
Net income		7,482			15,451			21,430			25,873
Less: Net income attributable to noncontrolling interest		(67	)		(60	)		(68	)		(85	)
Net income attributable to Genesee & Wyoming Inc.	$	7,415		$	15,391		$	21,362		$	25,788
Basic earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic earnings per common share from continuing operations	$	0.24		$	0.51		$	0.65		$	0.87
Basic loss per common share from discontinued operations		(0.02	)		(0.02	)		(0.02	)		(0.05	)
Basic earnings per common share	$	0.22		$	0.48		$	0.63		$	0.82
Weighted average shares - Basic		34,053			31,755			33,762			31,626
Diluted earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Diluted earnings per common share from continuing operations	$	0.22		$	0.44		$	0.60		$	0.76
Diluted loss per common share from discontinued operations		(0.02	)		(0.02	)		(0.02	)		(0.04	)
Diluted earnings per common share	$	0.20		$	0.42		$	0.58		$	0.71
Weighted average shares - Diluted		36,907			36,378			36,641			36,197

The accompanying notes are an integral part of these consolidated financial statements.

4

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2009 and 2008

(dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,430		$	25,873
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations		669			1,574
Depreciation and amortization		23,423			18,652
Compensation cost related to equity awards		2,826			2,598
Excess tax benefit from share-based compensation		(1,114	)		(1,598	)
Deferred income taxes		(872	)		8,268
Net loss/(gain) on sale and impairment of assets		4,650			(2,632	)
Gain on insurance recovery		(500	)		(399	)
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
Accounts receivable trade, net		10,178			(10,276	)
Materials and supplies		231			(678	)
Prepaid expenses and other		1,807			849
Accounts payable and accrued expenses		(18,232	)		(9,297	)
Other assets and liabilities, net		(391	)		4,698
Net cash provided by operating activities from continuing operations		44,105			37,632
Net cash used in operating activities from discontinued operations		(28	)		(1,166	)
Net cash provided by operating activities		44,077			36,466
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(37,670	)		(40,891	)
Grant proceeds from outside parties		8,895			16,786
Cash paid for acquisitions, net of cash acquired		(5,780	)		(97,616	)
Insurance proceeds for the replacement of assets		2,900			419
Proceeds from disposition of property and equipment		5,551			4,597
Net cash used in investing activities		(26,104	)		(116,705	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases		(200,450	)		(70,505	)
Proceeds from issuance of long-term debt		98,000			135,000
Net proceeds from employee stock purchases		4,437			8,057
Treasury stock purchases		(434	)		(2,355	)
Stock issuance proceeds, net of stock issuance costs		107,027			—
Excess tax benefit from share-based compensation		1,114			1,598
Net cash provided by financing activities		9,694			71,795
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		3,360			1,947
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS		(303	)		(6	)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		30,724			(6,503	)
CASH AND CASH EQUIVALENTS, beginning of period		31,693			46,684
CASH AND CASH EQUIVALENTS, end of period	$	62,417		$	40,181

The accompanying notes are an integral part of these consolidated financial statements.

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 (the Company). All references to currency amounts included in this Quarterly Report on Form 10-Q, including the consolidated financial statements, are in United States dollars unless specifically noted otherwise. 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 (SEC) and, accordingly, do not contain all disclosures which would be required in a full set of financial statements in accordance with accounting principles generally accepted in the United States of America (United States GAAP). In the opinion of management, the unaudited financial statements for the three and six months ended June 30, 2009 and 2008, are presented on a basis consistent with the audited financial statements (except as described below) and contain all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of the results for interim periods. The results of operations for interim periods are not necessarily indicative of results of operations for the full year. The consolidated balance sheet data for 2008 was derived from the audited financial statements in the Company’s 2008 Annual Report on Form 10-K (except as described below) but does not include all disclosures required by United States GAAP.

The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2008, included in the Company’s 2008 Annual Report on Form 10-K. Certain prior period balances have been reclassified to conform to the 2009 presentation.

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 160, “Noncontrolling Interests in Consolidated Financial Statements (an amendment of ARB No. 51)” (SFAS 160), on January 1, 2009. SFAS 160 requires the reporting of noncontrolling (minority) interests as a component of equity, separately identifying net income attributable to the parent and noncontrolling interest in the income statement, accounting for changes in a parent’s ownership interest while it retains a controlling interest as equity transactions and initially measuring at fair value any retained noncontrolling equity investment upon the deconsolidation of a subsidiary. The Company’s subsidiary, Maryland Midland Railway, Inc. (Maryland Midland), has a 12.6% noncontrolling minority interest holder. Upon adoption of SFAS 160, the Company reclassified $1.4 million from minority interest liability to noncontrolling interest in equity in the consolidated balance sheets. Additionally, income attributable to the noncontrolling interest was reclassified from other income and presented separately in the consolidated income statements. While SFAS 160 requires reconciliation of equity from the beginning of the current fiscal year to the balance sheet date, as well as for the comparative periods presented in each quarterly and annual filing, the Company did not present an equity reconciliation in the consolidated statements as the noncontrolling interest is not material to the Company.

2. CHANGES IN OPERATIONS:

Canada

Huron Central Railway Inc: On June 15, 2009, the Company announced that its subsidiary Huron Central Railway Inc. (HCRY) intends to discontinue its operations. The recession has caused HCRY’s traffic to decline substantially over the last 12 months, to the point that the railroad is not economically viable to operate for the long term. HCRY expects to cease operations between McKerrow and Sault Ste. Marie on August 15, 2009, and plans to continue the operations of the eastern segment of the railroad from Sudbury to McKerrow and Espanola until October 31, 2009. In the second quarter of 2009, the Company recorded charges of $5.4 million after-tax, or $0.15 per share, reflecting a non-cash write-down of non-current assets of $6.7 million as well as restructuring and related charges of $2.3 million, partially offset by tax benefits totaling $3.6 million. The Company does not expect to incur any additional significant restructuring charges related to HCRY.

United States

Ohio Central Railroad System: On October 1, 2008, the Company acquired 100% of the equity interests of Summit View, Inc. (Summit View), the parent company of 10 short line railroads known as the Ohio Central Railroad System (OCR) for cash consideration of approximately $212.6 million (net of $2.8 million cash acquired). An additional $4.8 million was paid to the seller in

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the first quarter of 2009 to reflect adjustments for working capital. In addition, the Company placed $7.5 million of contingent consideration into escrow for payment to the seller by October 1, 2009, upon satisfaction of certain conditions. Any amounts paid will be recorded as an additional cost of the acquisition. The Company has included 100% of the value of OCR’s net assets in its consolidated balance sheet since October 1, 2008.

Georgia Southwestern Railroad, Inc.: On October 1, 2008, the Company acquired 100% of Georgia Southwestern, Inc. (Georgia Southwestern) for cash consideration of approximately $16.5 million (net of $0.4 million cash acquired). An additional $0.2 million was paid to the seller in the fourth quarter of 2008 to reflect adjustments for final working capital. The Company has included 100% of the value of Georgia Southwestern’s net assets in its consolidated balance sheet since October 1, 2008.

CAGY Industries, Inc.: On May 30, 2008, the Company acquired 100% of CAGY Industries, Inc. (CAGY) for cash consideration of approximately $71.9 million (net of $17.2 million cash acquired). An additional $2.9 million of purchase price was recorded in the second quarter of 2008 to reflect adjustments for working capital. During the third quarter of 2008, the Company also paid contingent consideration of $15.1 million due to the satisfaction of certain conditions. In addition, the Company agreed to pay additional contingent consideration to the seller of up to $3.5 million upon satisfaction of certain conditions by May 30, 2010, which will be recorded as additional cost of the acquisition in the event the contingency is resolved. The Company has included 100% of the value of CAGY’s net assets in its consolidated balance sheet since May 30, 2008.

Netherlands

Rotterdam Rail Feeding B.V.: On April 8, 2008, the Company acquired 100% of Rotterdam Rail Feeding B.V. (RRF) for cash consideration of approximately $22.6 million. In addition, the Company agreed to pay contingent consideration to the seller of up to €1.8 million (or $2.5 million at the June 30, 2009 exchange rate), of which €0.8 million (or $1.0 million) was accrued and recorded as additional cost of the acquisition at December 31, 2008, and was paid in the first quarter of 2009. In the event the contingencies are satisfied, the remaining €1.0 million (or $1.4 million at the June 30, 2009 exchange rate) will be paid to the seller over the next two years and will be recorded as additional cost of the acquisition. The Company has included 100% of the value of RRF’s net assets in its consolidated balance sheet since April 8, 2008.

Purchase Price Allocation

The allocation of purchase price to the assets acquired and liabilities assumed for CAGY and RRF was finalized during the fourth quarter of 2008. The allocation of purchase price to the assets acquired and liabilities assumed has not been finalized for OCR or Georgia Southwestern. The purchase price allocation for these acquisitions is expected to be finalized in the third quarter of 2009 upon the completion of fair value analyses. During the six months ended June 30, 2009, the Company made the following adjustments to its initial allocation of purchase price for OCR based on additional fair value analysis and $0.4 million of additional purchase price related to working capital adjustments: $17.1 million decrease in property and equipment, $7.4 million increase in intangible assets, $9.3 million increase in goodwill and a net increase in all other net assets of $0.8 million. During the six months ended June 30, 2009, there were no material adjustments made to the initial allocation of purchase price for Georgia Southwestern.

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The following table summarizes selected financial data for the opening balance sheets of the OCR and Georgia Southwestern acquisitions as of June 30, 2009 (dollars in thousands):

	OCR		Georgia Southwestern
Purchase Price Allocations:
Cash	$	2,757	$	325
Other current assets		6,845		771
Property and equipment		207,026		23,410
Intangible assets		39,906		—
Goodwill		68,476		5,363
Other assets		569		—
Total assets		325,579		29,869
Current liabilities		10,010		1,111
Long-term debt, including current portion		12,793		5,317
Deferred tax liabilities, net		82,500		6,377
Total liabilities		105,303		12,805
Net assets	$	220,276	$	17,064
Intangible Assets:
Track access agreements	$	39,906	$	—
Amortization Period		46 Years		—

The deferred tax liabilities in the purchase price allocations are primarily driven by differences between values assigned to non-current assets and the acquired tax basis in those assets. The amounts assigned to goodwill in the purchase price allocations will not be deductible for tax purposes.

Results of Operations

When comparing the Company’s results of operations from one reporting period to another, you should consider that the Company has historically experienced fluctuations in revenues and expenses due to economic conditions, competitive forces, one-time freight moves, customer plant expansions and shut-downs, sales of property and equipment, derailments and weather related conditions such as hurricanes, droughts, heavy snowfall, freezing and flooding. In periods when these events occur, results of operations are not easily comparable from one period to another. Also, the Company has completed and entered into a number of acquisitions and other transactions recently which have, and are expected to continue to have, an impact on its results of operations. Finally, certain of the Company’s railroads have commodity shipments that are sensitive to general economic conditions, including steel products, paper products and lumber and forest products. However, shipments of other commodities are relatively less affected by economic conditions and are more closely affected by other factors, such as inventory levels maintained at a customer power plant (coal), winter weather (salt) and seasonal rainfall (South Australia grain). As a result of these and other factors, the Company’s operating results in any reporting period may not be directly comparable to its operating results in other reporting periods.

Pro Forma Financial Results

The following table summarizes the Company’s unaudited pro forma operating results for the three and six months ended June 30, 2008, as if the CAGY and OCR acquisitions were consummated at the beginning of the year 2008. The following pro forma combined financial statements do not include adjustments for any potential operating efficiencies, cost savings from expected synergies, the impact of conforming to the Company’s accounting policies or the impact of derivative instruments that the Company may elect to use to mitigate interest rate risk with the incremental borrowings used to fund the acquisitions (dollars in thousands, except per share amounts):

	Three Months Ended June 30, 2008		Six Months Ended June 30, 2008
Operating revenues	$	173,721	$	333,068
Net income attributable to Genesee & Wyoming Inc.	$	13,291	$	24,619
Earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic earnings per common share from continuing operations	$	0.42	$	0.78
Diluted earnings per common share from continuing operations	$	0.37	$	0.68

8

The unaudited pro forma operating results include the acquisitions of OCR and CAGY adjusted, net of tax, for depreciation and amortization expense resulting from the property and equipment and intangible assets based on preliminary assigned values and the inclusion of interest expense related to borrowings used to fund the acquisitions.

In addition, CAGY’s results for the three and six months ended June 30, 2008, reflected in these pro forma operating results, include certain senior management compensation that the Company does not believe would have continued in future periods but which does not qualify for elimination under the treatment and presentation of pro forma financial results.

The pro forma financial information does not purport to be indicative of the results that actually would have been obtained had the transactions been completed as of the assumed dates and for the periods presented and are not intended to be a projection of future results or trends.

3. EARNINGS PER SHARE:

The following table sets forth the computation of basic and diluted earnings per share (EPS) (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Numerator:
Amounts attributable to Genesee & Wyoming Inc. common stockholders:
Income from continuing operations, net of tax	$	8,051		$	16,126		$	22,031		$	27,362
Loss from discontinued operations, net of tax		(636	)		(735	)		(669	)		(1,574	)
Net income	$	7,415		$	15,391		$	21,362		$	25,788
Denominators:
Weighted average Class A common shares outstanding - Basic		34,053			31,755			33,762			31,626
Weighted average Class B common shares outstanding		2,559			3,975			2,567			3,975
Dilutive effect of employee stock grants		295			648			312			596
Weighted average shares - Dilutive		36,907			36,378			36,641			36,197
Earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic:
Earnings per common share from continuing operations	$	0.24		$	0.51		$	0.65		$	0.87
Loss per common share from discontinued operations		(0.02	)		(0.02	)		(0.02	)		(0.05	)
Earnings per common share	$	0.22		$	0.48		$	0.63		$	0.82
Diluted:
Earnings per common share from continuing operations	$	0.22		$	0.44		$	0.60		$	0.76
Loss per common share from discontinued operations		(0.02	)		(0.02	)		(0.02	)		(0.04	)
Earnings per common share	$	0.20		$	0.42		$	0.58		$	0.71

For the three months ended June 30, 2009 and 2008, a total of 1,504,862 and 147,716 shares, respectively, and for the six months ended June 30, 2009 and 2008, a total of 1,505,104 and 92,347 shares, respectively, of Class A common stock issuable under the

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assumed exercises of stock options computed based on the treasury stock method, were excluded in the calculation of diluted earnings per common share, as the effect of including these shares would have been anti-dilutive, because the exercise prices for those stock options exceeded the average market price for the Company’s common stock for the respective period.

Stock Offering

On June 15, 2009, the Company completed a public offering of 4,600,000 shares of its Class A common stock at $24.50 per share, which included 600,000 shares of its Class A common stock issued as a result of the underwriters’ exercise of their over-allotment option. The Company received net proceeds of $107.0 million from the sale of its Class A common stock. The Company used a portion of the proceeds along with cash on hand to repay $108.0 million of its revolving credit facility, which represented the entire balance then outstanding. As of June 30, 2009, the Company’s $300.0 million revolving credit facility, which matures in 2013, had unused borrowing capacity of $299.9 million and outstanding letter of credit guarantees of $0.1 million. The Company intends to use its cash on hand and unused borrowing capacity for general corporate purposes, including strategic investments and acquisitions.

4. ACCOUNTS RECEIVABLE:

Accounts receivable consisted of the following as of June 30, 2009 and December 31, 2008 (dollars in thousands):

	June 30, 2009			December 31, 2008
Accounts receivable - trade	$	100,076		$	114,631
Accounts receivable - grants		9,126			9,150
Total accounts receivable		109,202			123,781
Less: allowance for doubtful accounts		(3,228	)		(2,907	)
Accounts receivable, net	$	105,974		$	120,874

5. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The Company applies the following three-level hierarchy of valuation inputs as a framework for measuring fair value:

• Level 1 – Quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

• Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data.

• Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) SFAS No. 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1). The FSP amends FASB Statement No. 107, “Disclosures about Fair Values of Financial Instruments,” to require disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. This FSP also amends APB Opinion No. 28, “Interim Financial Reporting,” to require the SFAS 107 disclosures in summarized financial information provided for interim reporting periods. This FSP is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for the periods ending after March 15, 2009. The Company adopted the disclosure requirements of FSP FAS 107-1 and APB 28-1 for the period ended March 31, 2009.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument held by the Company:

• Current assets and current liabilities: The carrying value approximates fair value due to the short maturity of these items.

• Long-term debt: Since the Company’s long-term debt is not quoted, fair value was estimated using a discounted cash flow analysis based on Level 2 valuation inputs, including borrowing rates the Company believes are currently available to it for loans with similar terms and maturities.

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• Derivative instruments: Derivative instruments are recorded on the balance sheet as either assets or liabilities measured at fair value. As of June 30, 2009, the Company’s derivative financial instruments consisted solely of interest rate swap agreements. The Company estimates the fair value of its interest rate swap agreements based on Level 2 valuation inputs. See Note 6, Derivative Financial Instruments, for a discussion of the fair value of the Company’s interest rate swap agreements.

The following table presents the Company’s financial instruments that are carried at fair value using Level 2 inputs (dollars in thousands):

	June 30, 2009 Fair Value		December 31, 2008 Fair Value
Financial liabilities carried at fair value
Interest rate swap agreements	$	7,563	$	12,885
Total financial liabilities carried at fair value	$	7,563	$	12,885

The following table presents the carrying value and fair value using Level 2 inputs of the Company’s financial instruments carried at historical cost (dollars in thousands):

	June 30, 2009				December 31, 2008
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities carried at historical cost
Senior Notes, Series 2004-A 4.85%	$	75,000	$	70,128	$	75,000	$	69,735
Senior Notes, Series 2005-B 5.36%		100,000		88,541		100,000		88,423
Senior Notes, Series 2005-C Libor + 0.7%		25,000		21,718		25,000		20,998
Revolving Credit Facility		—		—		89,000		76,653
United States Term Loan		228,000		206,656		240,000		212,385
Canadian Term Loan		25,450		21,860		25,458		22,529
Other Debt		6,761		6,097		6,807		6,807
Total	$	460,211	$	415,000	$	561,265	$	497,530

6. DERIVATIVE FINANCIAL INSTRUMENTS:

The Company actively monitors its exposure to interest rate and foreign currency exchange rate risks and uses derivative financial instruments to manage the impact of certain of these risks. The Company uses derivatives only for purposes of managing risk associated with underlying exposures. The Company designates derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). The portion of the changes in the fair value of the derivative that is designated as a cash flow hedge that is offset by changes in the expected cash flows related to a recognized asset or liability (the effective portion) is recorded in accumulated other comprehensive income. As the hedged item is realized, the gain or loss included in accumulated other comprehensive income is reported in the consolidated statements of operations on the same line as the hedged item. In addition, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion) is immediately recognized in earnings on the same line item as the hedged item.

The Company’s derivatives are recorded in the consolidated balance sheets at fair value in prepaid expenses and other assets, net, accrued expenses or other long-term liabilities. The Company matches the hedge instrument to the underlying hedged item (assets, liabilities, firm commitments or forecasted transactions). At hedge inception and at least quarterly thereafter, the Company assesses whether the derivatives used to hedge transactions are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. When it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting, and any gains or losses on the derivative instrument thereafter are recognized in earnings during the periods it no longer qualifies as a hedge.

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Interest Rate Risk Management

The Company uses interest rate swap agreements to manage its exposure to changes in interest rates of the Company’s variable rate debt. These swap agreements are recorded in the consolidated balance sheets at fair value. Changes in the fair value of the swap agreements are recorded in net income or other comprehensive income (loss), based on whether the agreements are designated as part of a hedge transaction and whether the agreements are effective in offsetting the change in the value of the future interest payments attributable to the underlying portion of the Company’s variable rate debt. Interest payments accrued each reporting period for these interest rate swaps are recognized in interest expense.

On October 2, 2008, the Company entered into two interest rate swap agreements to manage its exposure to interest rates on a portion of its outstanding borrowings. The first swap has a notional amount of $120.0 million and requires the Company to pay a fixed rate of 3.88% on the notional amount. This swap expires on September 30, 2013. The second swap has a notional amount of $100.0 million and requires the Company to pay a fixed rate of 3.07% on the notional amount. This swap expires on December 31, 2009. In return, the Company receives 1-month LIBOR on the notional amounts of the swaps, which is equivalent to the Company’s variable rate obligation on the notional amounts under its credit facilities. The fair value of these interest rate swap agreements was estimated based on Level 2 inputs. The Company’s effectiveness testing as of June 30, 2009, resulted in no amount of gain or loss reclassified from accumulated other comprehensive income into income.

The following table presents the impact of derivative instruments and their location within the unaudited consolidated balance sheets (dollars in thousands):

	Fair Value of Derivative Instruments
	June 30, 2009			December 31, 2008
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap agreement	Accrued expenses	$	1,338	Other long-term liabilities	$	2,240
Interest rate swap agreement	Other long-term liabilities		6,225	Other long-term liabilities		10,645
Total derivative financial instruments		$	7,563		$	12,885

7. INCOME TAXES:

The Company’s effective income tax rate in the three months ended June 30, 2009, was 9.7% compared with 39.5% in the three months ended June 30, 2008. The Company’s effective income tax rate in the six months ended June 30, 2009, was 21.5% compared with 38.8% in the six months ended June 30, 2008. The decrease in 2009 was primarily attributable to the extension of the United States railroad track maintenance credit, known as the Short Line Tax Credit, on October 3, 2008, and the HCRY-related tax benefit of $3.6 million.

The Short Line Tax Credit, which had been in existence from 2005 through 2007, expired on December 31, 2007. The October 3, 2008, extension was made retroactive to January 1, 2008, and expires on December 31, 2009. The retroactive effect of the extension was recorded upon enactment in the fourth quarter of 2008. The Short Line Tax Credit represents 50% of qualified spending during each year, subject to a limitation of $3,500 per track mile owned or leased at the end of the year. Historically, the Company has incurred sufficient spending to meet the limitation.

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8. COMMITMENTS AND CONTINGENCIES:

Litigation

Mexico

On June 25, 2007, the Company’s wholly-owned subsidiary, Ferrocarriles Chiapas-Mayab, S.A. de C.V. (FCCM), formally notified the Secretaria de Comunicaciones y Transportes (SCT) of its intent to exercise its right to resign its 30-year concession from the Mexican government and to cease its rail operations. In response to this notification, on July 24, 2007, the SCT issued an official letter informing FCCM that the SCT did not accept the resignation of the concession. On August 8, 2007, the SCT issued another official letter to initiate a proceeding to impose sanctions on FCCM. The amount of the sanctions has not been specified. The proposed sanctions are based, in part, on allegations that FCCM has violated the Railroad Service Law in Mexico and the terms of its concession. On August 30, 2007, FCCM filed a brief with the SCT that challenged the proposed sanctions and introduced evidence supporting FCCM’s right to resign its concession. On September 21, 2007, FCCM also filed a proceeding in the Tax and Administrative Federal Court in Mexico seeking an annulment of the SCT’s July 24, 2007 official letter and recognition of FCCM’s right to resign its concession. As a result of SCT’s answer in this proceeding, on June 26, 2008, FCCM filed a brief with new arguments. The SCT also seized substantially all of FCCM’s operating assets in response to FCCM’s resignation of the concession. On September 19, 2007, FCCM filed a proceeding in the Second District Court in Merida (District Court) challenging the SCT’s seizure of its operating assets as unconstitutional. The District Court admitted the proceeding on October 11, 2007, and a hearing on the constitutional grounds for the seizure and the legality of the SCT’s actions took place on February 1, 2008. On April 30, 2008, the District Court issued a decision upholding the seizure without analyzing the merits of the case. On May 21, 2008, FCCM appealed the decision issued by the District Court, before the Circuit Court in Merida. On March 31, 2009, the Circuit Court confirmed the decision issued by the District Court. FCCM filed a new constitutional proceeding on June 13, 2009, challenging the Circuit Court’s decision. In addition to the allegations made by the SCT, FCCM is subject to claims and lawsuits from aggrieved customers as a result of its cessation of rail operations and the initiation of formal liquidation proceedings. The Company believes the SCT and customer actions are without merit and unlawful and the Company will continue to pursue appropriate legal remedies to support FCCM’s resignation of the concession and to recover FCCM’s operating assets. As of June 30, 2009, there was a net asset of $0.2 million remaining on the Company’s balance sheet associated with its Mexican operations.

M&B Arbitration

The Company’s subsidiary, Meridian & Bigbee Railroad LLC (M&B), CSX Transportation, Inc. (CSX) and Kansas City Southern (KCS) were parties to a Haulage Agreement governing the movement of traffic between Meridian, Mississippi and Burkeville, Alabama. On November 17, 2007, M&B initiated arbitration with the American Arbitration Association against CSX and KCS in an effort to collect on outstanding claims of approximately $6.8 million under the Haulage Agreement. On June 23, 2009, the parties resolved their differences and agreed to withdraw the request for arbitration. In connection with the resolution of the ongoing arbitration, the Company recorded $1.4 million in legal expenses during the second quarter of 2009.

Other

In addition to the lawsuits set forth above, from time to time the Company is a defendant in certain lawsuits resulting from its operations. Management believes there are adequate provisions in the financial statements for any expected liabilities that may result from disposition of the pending lawsuits. Nevertheless, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. Were an unfavorable ruling to occur, there would exist the possibility of a material adverse impact on the Company’s results of operations, financial position or liquidity as of and for the period in which the ruling occurs.

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9. 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 and six months ended June 30, 2009 and 2008 (dollars in thousands):

	Three Months Ended June 30,
	2009			2008
Net Income	$	7,482		$	15,451
Other comprehensive income:
Foreign currency translation adjustments		16,647			4,341
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $1,649		2,901			—
Changes in pension and other postretirement benefits, net of tax provisions of $21 and $24, respectively		37			45
Comprehensive income		27,067			19,837
Comprehensive income attributable to noncontrolling interest		(67	)		(60	)
Comprehensive income attributable to Genesee & Wyoming Inc.	$	27,000		$	19,777
	Six Months Ended June 30,
	2009			2008
Net Income	$	21,430		$	25,873
Other comprehensive income:
Foreign currency translation adjustments		14,076			5,093
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $1,929		3,392			—
Changes in pension and other postretirement benefits, net of tax provisions of $29 and $49, respectively		52			91
Comprehensive income		38,950			31,057
Comprehensive income attributable to noncontrolling interest		(68	)		(85	)
Comprehensive income attributable to Genesee & Wyoming Inc.	$	38,882		$	30,972

The following table sets forth accumulated other comprehensive income (loss), net of tax, included in the consolidated balance sheets as of June 30, 2009 and December 31, 2008 (dollars in thousands):

	Foreign Currency Translation Adjustment			Defined Benefit Plans, net of tax			Net Unrealized Gain/(Loss) on Cash Flow Hedges, net of tax			Accumulated Other Comprehensive Income/(Loss)
Balance, December 31, 2008	$	(5,350	)	$	(469	)	$	(8,214	)	$	(14,033	)
Current period change		14,076			52			3,392			17,520
Balance, June 30, 2009	$	8,726		$	(417	)	$	(4,822	)	$	3,487

The change in the foreign currency translation adjustment for the six months ended June 30, 2009, related to the Company’s operations with a functional currency in Australian and Canadian dollars and Euros.

10. SIGNIFICANT NON-CASH INVESTING ACTIVITIES:

The Company had outstanding grant receivables from outside parties for capital expenditures of $9.1 million and $7.5 million as of June 30, 2009 and 2008, respectively. The Company also had approximately $6.5 million and $3.5 million of purchases of property and equipment that were not paid as of June 30, 2009 and 2008, respectively, and accordingly, were accrued in accounts payable in the normal course of business.

11. DISCONTINUED OPERATIONS:

In October 2005, the Company’s wholly owned subsidiary, FCCM, was struck by Hurricane Stan and sustained significant damage. During the third quarter of 2007, FCCM ceased its operations and initiated formal liquidation proceedings. There were no remaining employees of FCCM as of September 30, 2007. The SCT contested FCCM’s resignation of its 30-year concession from the Mexican government and seized substantially all of FCCM’s operating assets in response to the resignation. Although the Company wrote off these assets in 2007, the Company believes the SCT’s actions were unlawful and is pursuing appropriate legal remedies. See Note 8 for additional information regarding these actions and legal remedies. As of June 30, 2009, there was a net asset of $0.2 million remaining on the Company’s balance sheet associated with its Mexican operations.

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In November 2008, the Company entered into an amended agreement to sell 100% of the share capital of FCCM to Viablis, S.A. de C.V. (Viablis). At that time, Viablis paid a deposit toward the purchase price of FCCM subject to certain conditions of the sale contract. Completion of the sale transaction is subject to customary closing conditions, as well as the final negotiation with Viablis and the SCT of a mutually acceptable transfer of the concession granted by the Mexican government to Viablis and related undertakings. It is not yet possible to determine when or if these closing conditions will be satisfied.

The assets and liabilities of FCCM and the Company’s Mexican subsidiary, GW Servicios S.A. (Servicios), were classified as discontinued operations in the Company’s Consolidated Balance Sheet at June 30, 2009 and December 31, 2008. The major classes of assets (at estimated fair value less cost to sell) and liabilities classified as discontinued operations in the consolidated balance sheets were as follows (dollars in thousands):

	June 30, 2009		December 31, 2008
Cash and cash equivalents	$	944	$	641
Prepaid expenses and other		263		994
Property and equipment, net		42		41
Current assets of discontinued operations	$	1,249	$	1,676
Accounts payable	$	173	$	227
Accrued expenses		848		894
Current liabilities of discontinued operations	$	1,021	$	1,121

The Company’s Mexican operations described above are presented as discontinued operations. Accordingly, its results of operations and cash flows are excluded from continuing operations. The operating results of the Mexican operations classified as discontinued operations in the Consolidated Statement of Operations were as follows (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Operating Revenues	$	—		$	—		$	—		$	—
Loss from discontinued operations before income taxes		(663	)		(837	)		(697	)		(1,688	)
Tax benefit		(27	)		(102	)		(28	)		(114	)
Loss from discontinued operations, net of tax	$	(636	)	$	(735	)	$	(669	)	$	(1,574	)

12. RECENTLY ISSUED ACCOUNTING STANDARDS:

In May 2009, the FASB issued Statement of Financial Accounting Position (SFAS) No. 165, “Subsequent Events” (SFAS 165), which incorporates guidance into accounting literature that was previously addressed only in auditing standards. This statement refers to subsequent events that provide additional evidence about conditions that existed at the balance-sheet date as “recognized subsequent events.” Subsequent events which provide evidence about conditions that arose after the balance-sheet date but prior to the issuance of the financial statements are referred to as “non-recognized subsequent events.” It also requires companies to disclose the date through which subsequent events have been evaluated and whether this date is the date the financial statements were issued. On April 1, 2009, the Company adopted SFAS 165 – refer to Note 12 for related disclosure.

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In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (SFAS 166). This statement removes the concept of a qualifying special-purpose entity from SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities” and removes the exception from applying FASB Interpretation No. 46 “Consolidation of Variable Interest Entities,” to qualifying special-purpose entities. This statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company will adopt SFAS 166 on January 1, 2010, and is currently evaluating the impact of the provisions of this standard on the Company’s consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). This statement is a revision to Interpretation 46(R) “Consolidation of Variable Interest Entities” and requires entities to perform an analysis to determine whether their variable interests give them a controlling interest in a variable interest entity and requires ongoing reassessment of whether an entity is the primary beneficiary of a variable interest entity. This statement is effective for the first annual reporting period beginning after November 15, 2009, and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 on January 1, 2010, and is currently evaluating the impact of the provisions of this standard on the Company’s consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.” The FASB Accounting Standards Codification will become the source of authoritative United States GAAP recognized by the FASB to be applied by nongovernmental entities. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The codification does not change or alter existing GAAP and there is no expected impact on the Company’s consolidated financial statements.

13. SUBSEQUENT EVENTS:

The Company has evaluated all subsequent events through August 7, 2009, which represents the filing date of this Form 10-Q with the Securities and Exchange Commission.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our 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 our 2008 Annual Report on Form 10-K.

Forward-Looking Statements

This report and other documents referred to in this report may contain forward-looking statements 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,” “seeks,” “expects,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions, including the following risks applicable to all of our operations: risks related to the acquisition and integration of railroads; difficulties associated with customers, competition, connecting carriers, employees and partners; derailments; adverse weather conditions; unpredictability of fuel costs; changes in environmental and other laws and regulations to which we are subject; general economic and business conditions; and additional risks associated with our foreign operations. Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Such risks and uncertainties include, in addition to those set forth in this Item 2 and Part II, Item 1A, those noted in our 2008 Annual Report on Form 10-K under “Risk Factors.” Forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We own and operate short line and regional freight railroads and provide railcar switching services in the United States, Canada, Australia and the Netherlands and own a minority interest in a railroad in Bolivia. Our operations currently include 63 railroads organized in nine regions, with more than 6,800 miles of owned and leased track and approximately 3,100 additional miles under track access arrangements. In addition, we provide rail service at 16 ports in North America and Europe and perform contract coal loading and railcar switching for industrial customers.

In June 2009, we announced that our subsidiary, Huron Central Railway Inc. (HCRY), intends to discontinue operations in October 2009. As a result, our operating results in the three months ended June 30, 2009, included a non-cash write-down of HCRY’s non-current assets of $6.7 million as well as restructuring and related charges of $2.3 million for aggregate pre-tax charges of $9.0 million, partially offset by tax benefits totaling $3.6 million, resulting in a net after-tax charge of $5.4 million, or $0.15 per diluted share. We do not expect to incur any additional significant restructuring charges related to HCRY.

Net income attributable to Genesee & Wyoming Inc. (GWI) in the three months ended June 30, 2009, was $7.4 million, compared with net income attributable to GWI of $15.4 million in the three months ended June 30, 2008. Our diluted earnings per share (EPS) attributable to our common stockholders in the three months ended June 30, 2009, were $0.20 with 36.9 million weighted average shares outstanding, compared with diluted EPS attributable to our common stockholders of $0.42 with 36.4 million weighted average shares outstanding in the three months ended June 30, 2008. Our Mexican operations are reported as discontinued operations.

Income from continuing operations attributable to our common shareholders in the three months ended June 30, 2009, was $8.1 million, compared with income from continuing operations attributable to our common shareholders of $16.1 million in the three months ended June 30, 2008. Our diluted EPS from continuing operations attributable to our common stockholders in the three months ended June 30, 2009, were $0.22 with 36.9 million weighted average shares outstanding, compared with diluted EPS from continuing operations attributable to our common stockholders of $0.44 with 36.4 million weighted average shares outstanding in the three months ended June 30, 2008.

Operating revenues in the three months ended June 30, 2009, were $130.1 million, compared with $152.7 million in the three months ended June 30, 2008. The decrease in our revenues was due to a decrease of $37.7 million, or 24.7%, in revenues from existing operations, partially offset by $15.1 million in revenues from our acquisitions of CAGY Industries, Inc. (CAGY), Ohio Central Railroad System (OCR) and Georgia Southwestern Railroad, Inc. (Georgia Southwestern). The decrease in revenues from existing operations included a $7.8 million decrease due to a decline in third-party fuel sales and a $6.8 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

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When we discuss revenues from existing operations, we are referring to the change in our revenues, period-over-period, from operations we managed in both periods (i.e., excluding the impact of acquisitions). Freight revenues from existing operations decreased $24.8 million, or 27.1%, in the three months ended June 30, 2009, compared with the three months ended June 30, 2008. Freight revenues from existing operations were reduced by $3.3 million due to the depreciation of the Australian and Canadian dollars relative to the United States dollar, a decrease in average freight revenues per carload of 5.4% and a 20.0% decrease in carloads. Non-freight revenues from existing operations decreased $13.0 million, or 21.1%, in the three months ended June 30, 2009, compared with the three months ended June 30, 2008, primarily due to a decline in third-party fuel sales and the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Operating income in the three months ended June 30, 2009, decreased $15.0 million to $14.6 million, compared with $29.7 million in the three months ended June 30, 2008. Our operating income for the three months ended June 30, 2009, decreased $9.0 million due to the HCRY impairment and related charges and $1.4 million due to legal expenses associated with the resolution of the arbitration associated with the Meridian and Bigbee LLC (M&B) Haulage Agreement, partially offset by $2.3 million in gains on the sale of assets and insurance recovery. Our operating income in the three months ended June 30, 2008, included $2.5 million in gains on the sale of assets and insurance recovery. Operating expenses were $115.4 million in the three months ended June 30, 2009, compared with $123.0 million in the three months ended June 30, 2008, a decrease of $7.6 million, or 6.2%. The decrease in operating expenses was attributable to a decrease of $18.1 million from existing operations, partially offset by $10.5 million from new operations.

Net income attributable to GWI in the six months ended June 30, 2009, was $21.4 million, compared with net income attributable to GWI of $25.8 million in the six months ended June 30, 2008. Our results in the six months ended June 30, 2009, benefited $0.12 per diluted share from the positive impact of the United States railroad track maintenance credit, known as the Short Line Tax Credit, which is in effect through 2009. Primarily as a result of the Short Line Tax Credit and the HCRY-related tax benefit, our effective income tax rate decreased from 38.8% in the six months ended June 30, 2008, to 21.5% in the six months ended June 30, 2009. Our diluted EPS attributable to our common stockholders in the six months ended June 30, 2009, were $0.58 with 36.6 million weighted average shares outstanding, compared with diluted EPS attributable to our common stockholders of $0.71 with 36.2 million weighted average shares outstanding in the six months ended June 30, 2008.

During the six months ended June 30, 2009, we generated $44.1 million in cash from operating activities from continuing operations, which included $6.4 million used for working capital. We purchased $37.7 million of property and equipment, received $3.0 million in cash from outside parties for capital spending completed in 2009 and $5.9 million in cash from grants from outside parties for capital spending completed in prior years. We paid $4.8 million for the final working capital adjustment related to the October 2008 acquisition of OCR and $1.0 million (or €0.8 million) of contingent consideration related to our April 2008 acquisition of RRF. We received $5.6 million in cash from the sale of assets, $2.9 million in insurance proceeds for the replacement of assets and $107.0 million of stock issuance proceeds, partially offset by net payments on long-term borrowing of $102.5 million.

Changes in Operations

Canada

Huron Central Railway Inc: On June 15, 2009, we announced that our subsidiary, Huron Central Railway Inc. (HCRY), intends to discontinue its operations. The recession has caused HCRY’s traffic to decline substantially over the last 12 months, to the point that the railroad is not economically viable to operate for the long term. HCRY expects to cease operations between McKerrow and Sault Ste. Marie on August 15, 2009, and plans to continue the operations of the eastern segment of the railroad from Sudbury to McKerrow and Espanola until October 31, 2009. In the second quarter of 2009, we recorded charges of $5.4 million after-tax, or $0.15 per diluted share, reflecting a non-cash write-down of non-current assets of $6.7 million as well as restructuring and related charges of $2.3 million, partially offset by tax benefits of $3.6 million.

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United States

Ohio Central Railroad System: On October 1, 2008, we acquired 100% of the equity interests of Summit View, Inc. (Summit View), the parent company of 10 short line railroads known as OCR, for cash consideration of approximately $212.6 million (net of $2.8 million cash acquired). An additional $4.8 million was paid to the seller in the first quarter of 2009 to reflect adjustments for working capital. In addition, we placed $7.5 million of contingent consideration into escrow for payment to the seller on October 1, 2009, upon satisfaction of certain conditions. Any amounts paid will be recorded as an additional cost of the acquisition. We have included 100% of the value of OCR’s net assets in our consolidated balance sheet since October 1, 2008.

Georgia Southwestern Railroad, Inc.: On October 1, 2008, we acquired 100% of Georgia Southwestern for cash consideration of approximately $16.5 million (net of $0.4 million cash acquired). An additional $0.2 million was paid to the seller in the fourth quarter of 2008 to reflect adjustments for final working capital. We have included 100% of the value of Georgia Southwestern’s net assets in our consolidated balance sheet since October 1, 2008.

CAGY Industries, Inc.: On May 30, 2008, we acquired 100% of CAGY for cash consideration of approximately $71.9 million (net of $17.2 million cash acquired). An additional $2.9 million was recorded in the second quarter of 2008 to reflect adjustments for working capital. During the third quarter of 2008, we paid to the seller contingent consideration of $15.1 million due to the satisfaction of certain conditions. In addition, we agreed to pay contingent consideration of up to $3.5 million upon satisfaction of certain conditions by May 30, 2010, which will be recorded as additional cost of the acquisition in the event the contingency is satisfied. We have included 100% of the value of CAGY’s net assets in our consolidated balance sheet since May 30, 2008.

Netherlands

Rotterdam Rail Feeding B.V.: On April 8, 2008, we acquired 100% of Rotterdam Rail Feeding B.V. (RRF) for cash consideration of approximately $22.6 million. In addition, we agreed to pay to the seller contingent consideration of up to €1.8 million (or $2.5 million at the June 30, 2009, exchange rate), of which €0.8 million (or $1.0 million) was accrued and recorded as additional cost of the acquisition at December 31, 2008, and was paid in the first quarter of 2009. In the event the contingencies are satisfied, the remaining €1.0 million (or $1.4 million at the June 30, 2009, exchange rate) will be paid to the seller over the next two years and will be recorded as additional cost of the acquisition. We have included 100% of the value of RRF’s net assets in our consolidated balance sheet since April 8, 2008.

Purchase Price Allocation

The allocation of purchase price to the assets acquired and liabilities assumed for CAGY and RRF was finalized during the fourth quarter of 2008. The allocation of purchase price to the assets acquired and liabilities assumed has not been finalized for OCR or Georgia Southwestern. The purchase price allocations for these acquisitions are expected to be finalized in the third quarter of 2009 upon the completion of fair value analyses. During the six months ended June 30, 2009, we made the following adjustments to our initial allocation of purchase price for OCR based on additional fair value analysis and $0.4 million of additional purchase price related to working capital adjustments: $17.1 million decrease in property and equipment, $7.4 million increase in intangible assets, $9.3 million increase in goodwill and a net increase in all other net assets of $0.8 million. During the six months ended June 30, 2009, there were no material adjustments made to the initial allocation of purchase price for Georgia Southwestern.

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The following table summarizes selected financial data for the opening balance sheets of the OCR and Georgia Southwestern acquisitions as of June 30, 2009 (dollars in thousands):

	OCR		Georgia Southwestern
Purchase Price Allocations:
Cash	$	2,757	$	325
Other current assets		6,845		771
Property and equipment		207,026		23,410
Intangible assets		39,906		—
Goodwill		68,476		5,363
Other assets		569		—
Total assets		325,579		29,869
Current liabilities		10,010		1,111
Long-term debt, including current portion		12,793		5,317
Deferred tax liabilities, net		82,500		6,377
Total liabilities		105,303		12,805
Net assets	$	220,276	$	17,064
Intangible Assets:
Track access agreements	$	39,906	$	—
Amortization Period		46 Years		—

The deferred tax liabilities in the purchase price allocations are primarily driven by differences between values assigned to non-current assets and the acquired tax basis in those assets. The amounts assigned to goodwill in the purchase price allocations will not be deductible for tax purposes.

Results from Continuing Operations

When comparing our results from continuing operations from one reporting period to another, consider that we have historically experienced fluctuations in revenues and expenses due to economic conditions, competitive forces, one-time freight moves, customer plant expansions and shut-downs, sales of property and equipment, derailments and weather related conditions such as hurricanes, droughts, heavy snowfall, freezing and flooding. In periods when these events occur, results of operations are not easily comparable from one period to another. Also, we have completed and entered into a number of acquisitions and other transactions recently that have changed and will change our results of operations. Finally, certain of our railroads have commodity shipments that are sensitive to general economic conditions, including steel products, paper products and lumber and forest products. However, shipments of other commodities are relatively less affected by economic conditions and are more closely affected by other factors, such as inventory levels maintained at a customer power plant (coal), winter weather (salt) and seasonal rainfall (South Australian grain). As a result of these and other factors, our operating results in any reporting period may not be directly comparable to our operating results in other reporting periods.

Three Months Ended June 30, 2009 Compared with Three Months Ended June 30, 2008

Operating Revenues

Overview

Operating revenues were $130.1 million in the three months ended June 30, 2009, compared with $152.7 million in the three months ended June 30, 2008, a decrease of $22.7 million, or 14.8%. The $22.7 million decrease in operating revenues consisted of a $37.7 million, or 24.7%, decrease in revenues from existing operations, partially offset by $15.1 million in revenues from new operations. The $37.7 million decrease in revenues from existing operations included decreases of $24.8 million in freight revenues and $13.0 million in non-freight revenues. The depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar resulted in a $6.8 million decrease in operating revenues from existing operations. New operations are those that did not exist in our consolidated financial results for a comparable period in the prior year. The following table breaks down our operating revenues into new operations and existing operations for the three months ended June 30, 2009 and 2008 (dollars in thousands):

	2009						2008		2009-2008 Variance Information
	Total Operations		New Operations		Existing Operations		Total Operations		Decrease in Total Operations					Decrease in Existing Operations
Freight revenues	$	79,296	$	12,652	$	66,644	$	91,419	$	(12,123	)	(13.3	%)	$	(24,775	)	(27.1	%)
Non-freight revenues		50,759		2,415		48,344		61,296		(10,537	)	(17.2	%)		(12,952	)	(21.1	%)
Total operating revenues	$	130,055	$	15,067	$	114,988	$	152,715	$	(22,660	)	(14.8	%)	$	(37,727	)	(24.7	%)

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Freight Revenues

The following table compares freight revenues, carloads and average freight revenues per carload for the three months ended June 30, 2009 and 2008 (in thousands, except average freight revenues per carload):

	Freight Revenues and Carloads Comparison by Commodity Group Three Months Ended June 30, 2009 and 2008
	Freight Revenues								Carloads						Average Freight Revenues Per Carload
Commodity Group	2009		% of Total		2008		% of Total		2009	% of Total		2008	% of Total		2009		2008
Coal, Coke & Ores	$	15,729	19.9	%	$	15,488	16.9	%	42,606	22.6	%	41,474	21.1	%	$	369	$	373
Pulp & Paper		12,147	15.3	%		18,798	20.6	%	21,877	11.6	%	30,994	15.8	%		555		607
Minerals and Stone		10,172	12.8	%		11,743	12.8	%	35,321	18.8	%	37,041	18.8	%		288		317
Farm & Food Products		9,225	11.6	%		10,157	11.1	%	22,316	11.9	%	18,436	9.4	%		413		551
Chemicals-Plastics		7,878	9.9	%		8,049	8.8	%	12,230	6.5	%	12,147	6.2	%		644		663
Metals		7,746	9.8	%		10,675	11.7	%	15,500	8.2	%	21,154	10.8	%		500		505
Lumber & Forest Products		6,910	8.7	%		8,667	9.5	%	15,199	8.1	%	19,503	9.9	%		455		444
Petroleum Products		4,599	5.8	%		4,241	4.6	%	6,911	3.7	%	6,336	3.2	%		665		669
Autos & Auto Parts		1,188	1.5	%		2,148	2.4	%	2,055	1.1	%	3,433	1.7	%		578		626
Other		3,702	4.7	%		1,453	1.6	%	14,174	7.5	%	6,038	3.1	%		261		241
Total freight revenues	$	79,296	100.0	%	$	91,419	100.0	%	188,189	100.0	%	196,556	100.0	%		421		465

Total carloads decreased by 8,367 carloads, or 4.3%, in the three months ended June 30, 2009, compared with the same period in 2008. The decrease consisted of a 39,272 carload decrease, or 20.0%, from existing operations, offset by 30,905 carloads from new operations.

The overall average revenues per carload decreased 9.4% to $421, in the three months ended June 30, 2009, compared with the same period in 2008. Average freight revenues per carload from existing operations decreased 8.9% to $424. The decrease in same railroad average revenues per carload of 8.9% was impacted by four factors: lower fuel surcharges, the depreciation of the Canadian and Australian dollars relative to the United States dollar, changes in commodity mix and changes in the rail cost adjustment factor (RCAF) which reduced average revenues per carload by 6.0%, 3.5%, 1.3% and 0.9%, respectively. Excluding these four factors, same railroad average revenues per carload increased 2.8% in total and 4.8% in North America.

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The following table sets forth freight revenues by new operations and existing operations for the three months ended June 30, 2009 and 2008 (dollars in thousands):

	Freight Revenues by Commodity Group From Existing and New Operations Three Months Ended June 30, 2009 and 2008
	2009						2008		2009-2008 Variance Information
Freight revenues	Total Operations		New Operations		Existing Operations		Total Operations		Increase (Decrease) in Total Operations					Increase (Decrease) in Existing Operations
Coal, Coke & Ores	$	15,729	$	4,370	$	11,359	$	15,488	$	241		1.6	%	$	(4,129	)	(26.7	%)
Pulp & Paper		12,147		574		11,573		18,798		(6,651	)	(35.4	%)		(7,225	)	(38.4	%)
Minerals and Stone		10,172		1,337		8,835		11,743		(1,571	)	(13.4	%)		(2,908	)	(24.8	%)
Farm & Food Products		9,225		1,245		7,980		10,157		(932	)	(9.2	%)		(2,177	)	(21.4	%)
Chemicals-Plastics		7,878		1,225		6,653		8,049		(171	)	(2.1	%)		(1,396	)	(17.3	%)
Metals		7,746		1,172		6,574		10,675		(2,929	)	(27.4	%)		(4,101	)	(38.4	%)
Lumber & Forest Products		6,910		69		6,841		8,667		(1,757	)	(20.3	%)		(1,826	)	(21.1	%)
Petroleum Products		4,599		166		4,433		4,241		358		8.4	%		192		4.5	%
Autos & Auto Parts		1,188		3		1,185		2,148		(960	)	(44.7	%)		(963	)	(44.8	%)
Other		3,702		2,491		1,211		1,453		2,249		154.8	%		(242	)	(16.7	%)
Total freight revenues	$	79,296	$	12,652	$	66,644	$	91,419	$	(12,123	)	(13.3	%)	$	(24,775	)	(27.1	%)

The following information discusses the significant changes in freight revenues by commodity group from existing operations. The decrease in average freight revenues per carload in a commodity group is generally related to lower fuel surcharges, the depreciation of the Canadian and Australian dollars relative to the United States dollar, the impact of lower fuel prices on rates that are indirectly indexed to fuel prices (e.g., RCAF indexed contracts) and changes in mix of business.

Coal, coke and ores revenues decreased by $4.1 million, or 26.7%. The decrease consisted of $2.5 million due to a 7,556, or 18.2%, carload decrease and $1.6 million due to a 10.3% decrease in average revenues per carload. The carload decrease was primarily due to extended maintenance outages at a mine in Utah and at power plants in the United Sates as well as decreased demand.

Pulp and paper revenues decreased $7.2 million, or 38.4%. Excluding a $0.7 million decrease due to the depreciation of the Canadian dollar relative to the United States dollar, pulp and paper revenues decreased $6.5 million. The decrease of $6.5 million consisted of $5.6 million due to a 10,156, or 32.8%, carload decrease and $0.9 million due to a 4.9% decrease in average revenues per carload. The carload decrease was primarily due to a decline in paper exports and temporary shut-downs of several plants served by us as a result of the recession.

Minerals and stone revenues decreased by $2.9 million, or 24.8%. Excluding a $0.7 million decrease due to the depreciation of the Canadian and Australian dollars relative to the United States dollar, minerals and stone revenues decreased $2.2 million. The decrease of $2.2 million consisted of $1.6 million due to a 5,678, or 15.3%, carload decrease and $0.6 million due to a 5.2% decrease in average revenues per carload primarily due to reduced demand as a result of the recession.

Farm and food products revenues decreased by $2.2 million, or 21.4%. Excluding a $1.1 million decrease due to the depreciation of the Canadian and Australian dollars relative to the United States dollar, farm and food products revenues decreased by $1.1 million. The decrease of $1.1 million consisted of $1.7 million due to an 18.3% decrease in average revenues per carload, partially offset by $0.6 million due to a carload increase of 1,520, or 8.2%. The carload increase was primarily due to increased grain shipments in Australia due to a better grain harvest, partially offset by a shorter winter wheat season and loss of business to barge transportation in Canada. Because rates for Australia grain traffic have both a fixed and variable component, the increase in Australian grain traffic results in lower average revenues per carload.

Chemicals and plastics revenues decreased $1.4 million, or 17.3%. The decrease consisted of $1.1 million due to a carload decrease of 1,661, or 13.7%, and $0.3 million due to a 4.2% decrease in average revenues per carload. The carload decrease was primarily due to the temporary shut-down of a customer in the Northeastern United States and reduced production at paper mills.

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Metals revenues decreased $4.1 million, or 38.4%. The decrease consisted of $4.5 million due to an 8,625, or 40.8%, carloads decrease, partially offset by $0.4 million due to a 4.0% increase in average revenues per carload. The carload decrease was primarily due to the severe weakness in the steel market, reduced construction activity and the permanent closure of a plant served by us.

Lumber and forest products revenues decreased $1.8 million, or 21.1%. The decrease consisted of $2.0 million due to a carload decrease of 4,428, or 22.7%, partially offset by $0.2 million due to a 2.1% increase in average revenues per carload. The carload decrease was primarily due to weaker product demand attributable to the decline in the housing market in the United States and the shut-down of a lumber mill in the Northwestern United States served by us.

Autos and auto parts decreased $1.0 million, or 44.8%. The decrease consisted of $0.8 million due to a carload decrease of 1,386, or 40.4%, and $0.2 million due to a 7.4% decrease in average revenues per carload. The decrease in carloads is primarily due to the decrease in production from the auto industry.

Freight revenues from all remaining commodities decreased by $0.1 million, or 0.9%. The decrease consisted of $0.3 million due to a carload decrease of 1,302, or 10.5%, partially offset by $0.2 million due to a 10.6% increase in average revenues per carload.

Non-Freight Revenues

Non-freight revenues were $50.8 million in the three months ended June 30, 2009, compared with $61.3 million in the three months ended June 30, 2008, a decrease of $10.5 million, or 17.2%. The $10.5 million decrease in non-freight revenues consisted of a decrease of $13.0 million, or 21.1%, in non-freight revenues from existing operations, partially offset by $2.4 million in non-freight revenues from new operations. The decrease in non-freight revenues from existing operations included a $7.8 million decline in fuel sales to third parties in Australia.

The following table compares non-freight revenues for the three months ended June 30, 2009 and 2008 (dollars in thousands):

	Non-Freight Revenues Comparison Three Months Ended June 30, 2009 and 2008
	2009		% of Total		2008		% of Total
Railcar switching	$	23,133	45.5	%	$	25,571	41.7	%
Car hire and rental income		5,562	10.9	%		7,731	12.6	%
Fuel sales to third parties		3,130	6.2	%		10,968	17.9	%
Demurrage and storage		6,275	12.4	%		4,643	7.6	%
Car repair services		2,126	4.2	%		1,921	3.1	%
Other operating income		10,533	20.8	%		10,462	17.1	%
Total non-freight revenues	$	50,759	100.0	%	$	61,296	100.0	%

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The following table sets forth non-freight revenues from new operations and existing operations for the three months ended June 30, 2009 and 2008 (dollars in thousands):

	Non-Freight Revenues from New Operations and Existing Operations Three Months Ended June 30, 2009 and 2008
	2009						2008		2009-2008 Variance Information
Non-freight revenues	Total Operations		New Operations		Existing Operations		Total Operations		Increase (Decrease) in Total Operations					Increase (Decrease) in Existing Operations
Railcar switching	$	23,133	$	493	$	22,640	$	25,571	$	(2,438	)	(9.5	%)	$	(2,931	)	(11.5	%)
Car hire and rental income		5,562		902		4,660		7,731		(2,169	)	(28.1	%)		(3,071	)	(39.7	%)
Fuel sales to third parties		3,130		—		3,130		10,968		(7,838	)	(71.5	%)		(7,838	)	(71.5	%)
Demurrage and storage		6,275		749		5,526		4,643		1,632		35.1	%		883		19.0	%
Car repair services		2,126		173		1,953		1,921		205		10.7	%		32		1.7	%
Other operating income		10,533		98		10,435		10,462		71		0.7	%		(27	)	(0.3	%)
Total non-freight revenues	$	50,759	$	2,415	$	48,344	$	61,296	$	(10,537	)	(17.2	%)	$	(12,952	)	(21.1	%)

The following information discusses the significant changes in non-freight revenues from existing operations.

Railcar switching revenues decreased $2.9 million, or 11.5%. Excluding a $1.4 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar, railcar switching decreased $1.5 million, or 5.8%. The decrease of $1.5 million was primarily due to lower industrial switching revenues and reduced shipments at two of our United States ports.

Car hire and rental income decreased $3.1 million, or 39.7%. Excluding an $0.8 million decrease due to the depreciation of the Australian and Canadian dollars relative to the United States dollar, car hire and rental income decreased $2.3 million, or 29.9%. The decrease of $2.3 million was primarily due to fewer off-line car moves, the return of leased rail cars in the United States that earned car hire income in the three months ended June 30, 2008, and lower demand for equipment rentals in Australia.

Fuel sales to third parties decreased $7.8 million, or 71.5%, primarily due to a $4.8 million decrease resulting from a 44.2% decrease in revenue per gallon and a $3.0 million decrease resulting from a 48.8% decrease in gallons sold.

All other non-freight revenues increased $0.9 million, or 5.2%. Excluding a $1.3 million decrease due to the depreciation of the Australian and Canadian dollars relative to the United States dollar, all other non-freight revenues increased $2.2 million, or 12.7%. The increase of $2.2 million was primarily due to higher storage revenues.

Operating Expenses

Overview

Operating expenses were $115.4 million in the three months ended June 30, 2009, compared with $123.0 million in the three months ended June 30, 2008, a decrease of $7.6 million, or 6.2%. The decrease in operating expenses was attributable to a decrease of $18.1 million from existing operations, partially offset by $10.5 million from new operations. Our operating expenses for the three months ended June 30, 2009, included $9.0 million due to the HCRY impairment and related charges and $1.4 million of legal expenses associated with the resolution of the arbitration associated with the M&B Haulage Agreement, partially offset by $1.8 million in gains on the sale of assets and a $0.5 million insurance recovery. Operating expenses for the three months ended June 30, 2008, included $2.1 million in gains on the sale of assets and $0.4 million in gains from insurance recovery.

Operating Ratios

Our operating ratio, defined as total operating expenses divided by total operating revenues, increased to 88.7% in the three months ended June 30, 2009, from 80.6% in the three months ended June 30, 2008. The increase was primarily driven by the HCRY impairment and related charges in the three months ended June 30, 2009, of $9.0 million, or 7.8% of total operating expenses.

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The following table sets forth a comparison of our operating expenses for the three months ended June 30, 2009 and 2008 (dollars in thousands):

	Operating Expense Comparison Three Months Ended June 30, 2009 and 2008
	2009					2008
	$			Percentage of Operating Revenues		$			Percentage of Operating Revenues
Labor and benefits	$	47,968		36.9	%	$	46,294		30.3	%
Equipment rents		6,903		5.3	%		8,760		5.7	%
Purchased services		10,006		7.7	%		12,790		8.4	%
Depreciation and amortization		11,917		9.2	%		9,453		6.2	%
Diesel fuel used in operations		7,351		5.6	%		17,578		11.5	%
Diesel fuel sold to third parties		3,104		2.4	%		10,379		6.8	%
Casualties and insurance		2,880		2.2	%		3,804		2.5	%
Materials		5,748		4.4	%		6,492		4.3	%
Net loss/(gain) on sale and impairment of assets		4,889		3.8	%		(2,082	)	(1.4	%)
Gain on insurance recovery		(500	)	(0.4	%)		(399	)	(0.2	%)
Restructuring and related charges		2,288		1.8	%		—		0.0	%
Other expenses		12,861		9.8	%		9,971		6.5	%
Total operating expenses	$	115,415		88.7	%	$	123,040		80.6	%

Labor and benefits expense was $48.0 million in the three months ended June 30, 2009, compared with $46.3 million in the three months ended June 30, 2008, an increase of $1.7 million, or 3.6%. The increase was attributable to $3.7 million from new operations, partially offset by a $2.0 million decrease from existing operations. The decrease from existing operations consisted primarily of a decrease of $2.9 million attributable to cost cutting measures such as furloughed employees and decreased overtime and $2.2 million due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar, partially offset by $1.7 million attributable to new business in the United States and Australia and $1.4 million attributable to wage and benefit cost increases.

Equipment rents were $6.9 million in the three months ended June 30, 2009, compared with $8.8 million in the three months ended June 30, 2008, a decrease of $1.9 million, or 21.2%. The decrease was attributable to a $2.8 million decrease from existing operations partially offset by $0.9 million from new operations. The decrease from existing operations was primarily due to a decrease in locomotive and railcar leases as a result of the recession and $0.4 million from the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Purchased services expense was $10.0 million in the three months ended June 30, 2009, compared with $12.8 million in the three months ended June 30, 2008, a decrease of $2.8 million, or 21.8%. The decrease was attributable to a $3.5 million decrease from existing operations, partially offset by $0.7 million from new operations. The decrease from existing operations was primarily due to a decrease of $1.3 million from the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar, cost cutting measures implemented at each of our regions and the in-sourcing of locomotive repair work in one of our regions.

Depreciation and amortization expense was $11.9 million in the three months ended June 30, 2009, compared with $9.5 million in the three months ended June 30, 2008, an increase of $2.5 million, or 26.1%. The increase was attributable to $2.3 million from new operations and an increase of $0.5 million from existing operations, partially offset by $0.4 million due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Diesel fuel expense was $7.4 million in the three months ended June 30, 2009, compared with $17.6 million in the three months ended June 30, 2008, a decrease of $10.2 million, or 58.2%. The decrease was attributable to an $11.0 million decrease from existing operations, partially offset by $0.8 million from new operations. The decrease from existing operations was due to a $9.4 million decrease resulting from a 53.4% decrease in fuel cost per gallon and $1.6 million due to a 20.1% decrease in diesel fuel consumption.

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Diesel fuel sold to third parties was $3.1 million in the three months ended June 30, 2009, compared with $10.4 million in the three months ended June 30, 2008, a decrease of $7.3 million, or 70.1%. Of this decrease, $4.3 million resulted from a 41.6% decrease in diesel fuel cost per gallon and $3.0 million resulted from a 48.8% decrease in diesel fuel gallons sold.

Net loss/(gain) on sale and impairment of assets was a $4.9 million net loss in the three months ended June 30, 2009, compared with a $2.1 million net gain in the three months ended June 30, 2008. The $4.9 million net loss in 2009 included a $6.7 million non-cash write-down of HCRY’s non-current assets, partially offset by gains from the sale of certain track related assets. The $2.1 million net gain in 2008 included gains resulting from the sale of certain land in the United States and freight cars in Canada.

Restructuring and related charges of $2.3 million in the three months ended June 30, 2009, resulted from the planned shutdown of HCRY’s operations.

The remaining expenses combined were $21.0 million in the three months ended June 30, 2009, compared with $19.9 million in the three months ended June 30, 2008, an increase of $1.1 million, or 5.6%. The increase was attributable to $2.0 million from new operations, partially offset by a $0.9 million decrease from existing operations.

Other Income (Expense) Items

Interest Income

Interest income was $0.2 million in the three months ended June 30, 2009, compared with $0.6 million in the three months ended June 30, 2008, a decrease of $0.4 million.

Interest Expense

Interest expense was $7.1 million in the three months ended June 30, 2009, compared with $4.0 million in the three months ended June 30, 2008, an increase of $3.1 million, or 77.5%, primarily due to the increase in debt resulting from the purchases of RRF, CAGY, OCR and Georgia Southwestern.

Provision for Income Taxes

Our effective income tax rate in the three months ended June 30, 2009, was 9.7% compared with 39.5% in the three months ended June 30, 2008. The decrease in 2009 was primarily attributable to the HCRY-related tax benefit of $3.6 million and approximately $2.5 million resulting from the extension of the Short Line Tax Credit on October 3, 2008.

The Short Line Tax Credit, which had been in existence from 2005 through 2007, expired on December 31, 2007. The extension was made retroactive to January 1, 2008 and expires on December 31, 2009. The retroactive effect of the extension was recorded upon enactment in the fourth quarter of 2008. The Short Line Tax Credit represents 50% of qualified track spending during each year, subject to a limitation of $3,500 per track mile owned or leased at the end of the year. Historically, we have incurred sufficient spending to meet the limitation.

Income and Earnings Per Share from Continuing Operations

Income from continuing operations attributable to our common stockholders in the three months ended June 30, 2009, was $8.1 million, compared with income from continuing operations attributable to our common stockholders of $16.1 million in the three months ended June 30, 2008. Our diluted EPS from continuing operations attributable to our common stockholders in the three months ended June 30, 2009, were $0.22 with 36.9 million weighted average shares outstanding, compared with diluted EPS from continuing operations attributable to our common stockholders of $0.44 with 36.4 million weighted average shares outstanding in the three months ended June 30, 2008. Our diluted EPS from continuing operations attributable to our common stockholders for the six months ended June 30, 2009, included after-tax charges of $5.4 million, or $0.15 per diluted share, related to HCRY’s impairment and

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related charges. Basic EPS from continuing operations attributable to our common stockholders were $0.24 with 34.1 million weighted average shares outstanding in the three months ended June 30, 2009, compared with basic EPS from continuing operations attributable to our common stockholders of $0.51 with 31.8 million weighted average shares outstanding in the three months ended June 30, 2008.

Results from Discontinued Operations

Loss from discontinued operations attributable to our common stockholders in the three months ended June 30, 2009, was $0.6 million, compared with a loss from discontinued operations attributable to our common stockholders of $0.7 million in the three months ended June 30, 2008. Loss from discontinued operations attributable to our common stockholders in the three months ended June 30, 2009, consisted primarily of non-cash currency translation adjustments to residual assets in Mexico. Our diluted loss per share from discontinued operations attributable to our common stockholders in the three months ended June 30, 2009, was $0.02 with 36.9 million weighted average shares outstanding, compared with diluted loss per share from discontinued operations attributable to our common stockholders of $0.02 with 36.4 million weighted average shares outstanding in the three months ended June 30, 2008. Basic loss per share from discontinued operations attributable to our common stockholders was $0.02 with 34.1 million weighted average shares outstanding in the three months ended June 30, 2008, compared with basic loss per share from discontinued operations attributable to our common stockholders of $0.02 with 31.8 million weighted average shares outstanding in the three months ended June 30, 2008.

Six Months Ended June 30, 2009 Compared with Six Months Ended June 30, 2008

Operating Revenues

Overview

Operating revenues were $268.5 million in the six months ended June 30, 2009, compared with $293.4 million in the six months ended June 30, 2008, a decrease of $24.9 million, or 8.5%. The $24.9 million decrease in operating revenues consisted of a $61.1 million, or 20.8%, decrease in revenues from existing operations, partially offset by $36.3 million in revenues from new operations. The $61.1 million decrease in revenues from existing operations included decreases of $39.4 million in freight revenues and $21.8 million in non-freight revenues. The depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar resulted in a $15.2 million decrease in operating revenues from existing operations. New operations are those that did not exist in our consolidated financial results for a comparable period in the prior year. The following table breaks down our operating revenues into new operations and existing operations for the six months ended June 30, 2009 and 2008 (dollars in thousands):

	2009						2008		2009-2008 Variance Information
	Total Operations		New Operations		Existing Operations		Total Operations		Decrease in Total Operations					Decrease in Existing Operations
Freight revenues	$	168,462	$	28,695	$	139,767	$	179,147	$	(10,685	)	(6.0	%)	$	(39,380	)	(22.0	%)
Non-freight revenues		100,051		7,556		92,495		114,249		(14,198	)	(12.4	%)		(21,754	)	(19.0	%)
Total operating revenues	$	268,513	$	36,251	$	232,262	$	293,396	$	(24,883	)	(8.5	%)	$	(61,134	)	(20.8	%)

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Freight Revenues

The following table compares freight revenues, carloads and average freight revenues per carload for the six months ended June 30, 2009 and 2008 (in thousands, except average freight revenues per carload):

	Freight Revenues and Carloads Comparison by Commodity Group Six Months Ended June 30, 2009 and 2008
	Freight Revenues								Carloads						Average Freight Revenues Per Carload
Commodity Group	2009		% of Total		2008		% of Total		2009	% of Total		2008	% of Total		2009		2008
Coal, Coke & Ores	$	36,846	21.9	%	$	32,234	18.0	%	100,552	25.0	%	86,954	22.5	%	$	366	$	371
Pulp & Paper		25,547	15.2	%		36,811	20.5	%	45,963	11.4	%	60,920	15.8	%		556		604
Farm & Food Products		20,028	11.9	%		21,044	11.7	%	48,708	12.1	%	36,368	9.4	%		411		579
Minerals and Stone		18,679	11.1	%		20,957	11.7	%	66,571	16.5	%	68,694	17.8	%		281		305
Metals		17,213	10.2	%		20,194	11.3	%	34,838	8.7	%	40,281	10.4	%		494		501
Chemicals-Plastics		16,236	9.6	%		15,471	8.6	%	25,038	6.2	%	23,524	6.1	%		648		658
Lumber & Forest Products		13,526	8.0	%		16,638	9.3	%	29,914	7.4	%	37,640	9.7	%		452		442
Petroleum Products		10,288	6.1	%		9,248	5.2	%	14,798	3.7	%	13,787	3.6	%		695		671
Autos & Auto Parts		2,292	1.4	%		3,903	2.2	%	3,763	0.9	%	6,778	1.8	%		609		576
Other		7,807	4.6	%		2,647	1.5	%	32,483	8.1	%	11,037	2.9	%		240		240
Total freight revenues	$	168,462	100.0	%	$	179,147	100.0	%	402,628	100.0	%	385,983	100.0	%		418		464

Total carloads increased by 16,645 carloads, or 4.3%, in the six months ended June 30, 2009, compared with the same period in 2008. The increase consisted of 71,676 carloads from new operations, partially offset by a decrease of 55,031 carloads, or 14.3%, from existing operations.

The overall average revenues per carload decreased 9.9% to $418 in the six months ended June 30, 2009, compared with the same period in 2008. Average freight revenues per carload from existing operations decreased 9.0% to $422. The decrease in same railroad average revenues per carload of 9.0% was impacted by four factors: lower fuel surcharges, the depreciation of the Canadian and Australian dollars relative to the United States dollar, changes in commodity mix and changes in the RCAF which reduced average revenues per carload by 4.5%, 4.3%, 1.9% and 0.6%, respectively. Excluding these four factors, same railroad average revenues per carload increased 2.3% in total and 5.0% in North America.

The following table sets forth freight revenues by commodity group from new operations and existing operations for the six months ended June 30, 2009 and 2008 (dollars in thousands):

	Freight Revenues by Commodity Group From Existing and New Operations Six Months Ended June 30, 2009 and 2008
	2009						2008		2009-2008 Variance Information
Freight revenues	Total Operations		New Operations		Existing Operations		Total Operations		Increase (Decrease) in Total Operations					Increase (Decrease) in Existing Operations
Coal, Coke & Ores	$	36,846	$	10,539	$	26,307	$	32,234	$	4,612		14.3	%	$	(5,927	)	(18.4	%)
Pulp & Paper		25,547		1,408		24,139		36,811		(11,264	)	(30.6	%)		(12,672	)	(34.4	%)
Farm & Food Products		20,028		2,381		17,647		21,044		(1,016	)	(4.8	%)		(3,397	)	(16.1	%)
Minerals and Stone		18,679		2,156		16,523		20,957		(2,278	)	(10.9	%)		(4,434	)	(21.2	%)
Metals		17,213		3,722		13,491		20,194		(2,981	)	(14.8	%)		(6,703	)	(33.2	%)
Chemicals-Plastics		16,236		2,724		13,512		15,471		765		4.9	%		(1,959	)	(12.7	%)
Lumber & Forest Products		13,526		180		13,346		16,638		(3,112	)	(18.7	%)		(3,292	)	(19.8	%)
Petroleum Products		10,288		316		9,972		9,248		1,040		11.2	%		724		7.8	%
Autos & Auto Parts		2,292		3		2,289		3,903		(1,611	)	(41.3	%)		(1,614	)	(41.4	%)
Other		7,807		5,266		2,541		2,647		5,160		194.9	%		(106	)	(4.0	%)
Total freight revenues	$	168,462	$	28,695	$	139,767	$	179,147	$	(10,685	)	(6.0	%)	$	(39,380	)	(22.0	%)

The following information discusses the significant changes in freight revenues by commodity group from existing operations. The decrease in average freight revenues per carload in a commodity group is generally related to lower fuel surcharges, depreciation of the Australian and Canadian dollars relative to the United States dollar, the impact of lower fuel prices on rates that are indirectly indexed to fuel prices (e.g., RCAF indexed contracts) and changes in mix of business.

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Coal, coke and ores revenues decreased by $5.9 million, or 18.4%. The decrease consisted of $3.5 million due to a 10.9% decrease in average revenues per carload primarily due to changes in the mix of business and $2.4 million due to a carload decrease of 7,351, or 8.5%. The carload decrease was primarily due to extended maintenance outages at a mine in Utah and at power plants in the United States as well as decreased demand.

Pulp and paper revenues decreased $12.7 million, or 34.4%. Excluding a $1.6 million decrease due to the depreciation of the Canadian dollar relative to the United States dollar, pulp and paper revenues decreased by $11.1 million. The decrease of $11.1 million consisted of $9.7 million due to a carload decrease of 17,448, or 28.6%, and $1.4 million due to a 4.0% decrease in average revenues per carload as a result of a decrease in the fuel surcharge. The carload decrease was primarily due to decreased demand resulting in production cutbacks at customer locations and temporary shutdowns of plants served by us as a result of the recession.

Farm and food products revenues decreased by $3.4 million, or 16.1%. Excluding a $3.0 million decrease due to the depreciation of the Canadian and Australian dollars relative to the United States dollar, farm and food product revenues decreased by $0.4 million. The decrease of $0.4 million consisted of $3.5 million due to a 19.6% decrease in average revenues per carload, partially offset by $3.1 million due to a carload increase of 7,873, or 21.6%. The carload increase was primarily due to increased grain shipments in Australia as the result of an improved grain harvest. Because rates for Australian grain traffic have both a fixed and variable component, the increase in Australian grain traffic results in lower average revenues per carload. In addition, current Australian grain shipments were shorter-haul traffic for export compared with longer-haul interstate traffic to fulfill domestic needs during the severe drought last year.

Minerals and stone revenues decreased by $4.4 million, or 21.2%. Excluding a $1.7 million decrease due to the depreciation of the Canadian and Australian dollars relative to the United States dollar, minerals and stone revenues decreased $2.7 million. The decrease of $2.7 million consisted of $2.1 million due to a carload decrease of 7,903, or 11.5%, and $0.6 million due to a 3.3% decrease in average revenues per carload. The carload decrease was primarily due to reduced demand as a result of the recession.

Metals revenues decreased by $6.7 million, or 33.2%. Excluding a $0.8 million decrease due to the depreciation of the Canadian dollar relative to the United States dollar, metals revenues decreased $5.9 million. The decrease of $5.9 million consisted of $8.1 million due to a carload decrease of 15,119, or 37.5%, partially offset by $2.2 million due to an 11.5% increase in average revenues per carload. The carload decrease was primarily due to severe weakness in the steel market, reduced construction activity and the permanent closure of a plant served by us.

Chemicals and plastics revenues decreased by $2.0 million, or 12.7%. The decrease consisted of $1.5 million due to a carload decrease of 2,314, or 9.8%, and $0.5 million due to a 3.1% decrease in average revenues per carload. The carload decrease was primarily due to the temporary shutdown of a customer in the Northeastern United States.

Lumber and forest products revenues decreased by $3.3 million, or 19.8%. The decrease consisted of $3.6 million due to a carload decrease of 8,044, or 21.4%, partially offset by $0.3 million due to a 2.0% increase in average revenues per carload. The carload decrease was primarily due to weak demand attributable to the decline in the housing market in the United States.

Auto and auto parts revenues decreased by $1.6 million, or 41.4%. The decrease consisted of $1.8 million due to a carload decrease of 3,025, or 44.6%, partially offset by $0.2 million due to a 5.9% increase in average revenues per carload. The carload decrease was primarily due to the decrease in production from the auto industry.

Freight revenues from all remaining commodities increased by $0.6 million, or 5.2%. The increase consisted of $1.0 million due to a 12.7% increase in average revenue per carload, partially offset by $0.3 million due to a carload decrease of 1,700, or 6.8%.

Non-Freight Revenues

Non-freight revenues were $100.1 million in the six months ended June 30, 2009, compared with $114.2 million in the six months ended June 30, 2008, a decrease of $14.2 million, or 12.4%. The $14.2 million decrease in non-freight revenues consisted of a decrease of $21.8 million in non-freight revenues from existing operations, partially offset by $7.6 million in non-freight revenues from new operations.

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The following table compares non-freight revenues for the six months ended June 30, 2009 and 2008 (dollars in thousands):

	Non-Freight Revenues Comparison Six Months Ended June 30, 2009 and 2008
	2009		% of Total		2008		% of Total
Railcar switching	$	45,987	46.0	%	$	46,679	40.9	%
Car hire and rental income		10,539	10.5	%		14,887	13.0	%
Fuel sales to third parties		6,701	6.7	%		20,062	17.6	%
Demurrage and storage		13,331	13.3	%		9,312	8.2	%
Car repair services		4,166	4.2	%		3,808	3.3	%
Other operating income		19,327	19.3	%		19,501	17.0	%
Total non-freight revenues	$	100,051	100.0	%	$	114,249	100.0	%

The following table sets forth non-freight revenues from new operations and existing operations for the six months ended June 30, 2009 and 2008 (dollars in thousands):

	Non-Freight Revenues from New Operations and Existing Operations Six Months Ended June 30, 2009 and 2008
	2009						2008		2009-2008 Variance Information
Non-freight revenues	Total Operations		New Operations		Existing Operations		Total Operations		Increase (Decrease) in Total Operations					Increase (Decrease) in Existing Operations
Railcar switching	$	45,987	$	3,466	$	42,521	$	46,679	$	(692	)	(1.5	%)	$	(4,158	)	(8.9	%)
Car hire and rental income		10,539		1,618		8,921		14,887		(4,348	)	(29.2	%)		(5,966	)	(40.1	%)
Fuel sales to third parties		6,701		—		6,701		20,062		(13,361	)	(66.6	%)		(13,361	)	(66.6	%)
Demurrage and storage		13,331		1,743		11,588		9,312		4,019		43.2	%		2,276		24.4	%
Car repair services		4,166		373		3,793		3,808		358		9.4	%		(15	)	(0.4	%)
Other operating income		19,327		356		18,971		19,501		(174	)	(0.9	%)		(530	)	(2.7	%)
Total non-freight revenues	$	100,051	$	7,556	$	92,495	$	114,249	$	(14,198	)	(12.4	%)	$	(21,754	)	(19.0	%)

The following information discusses the significant changes in non-freight revenues from existing operations.

Railcar switching revenues decreased $4.2 million, or 8.9%. Excluding a $2.5 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar, railcar switching decreased $1.7 million, or 3.6%. The decrease of $1.7 million included a $3.6 million decline in port switching revenues primarily due to business interruptions caused by Hurricane Ike at one of our port operations late last year and reduced shipments at other ports served by us, partially offset by an increase in industrial switching of $2.0 million primarily due to expanded iron ore service in Australia.

Car hire and rental income decreased $6.0 million, or 40.1%. Excluding a $1.8 million decrease due to the depreciation of the Australian and Canadian dollars relative to the United States dollar, car hire and rental income decreased $4.2 million, or 28.0%. The decrease of $4.2 million was primarily due to fewer off-line car moves, the return of leased rail cars in the United States that earned car hire income in the six months ended June 30, 2008, and lower demand for equipment rentals in Australia.

Fuel sales to third parties decreased $13.4 million, or 66.6%, primarily due to an $8.8 million decrease resulting from a 43.7% decrease in revenue per gallon and a $4.6 million decrease resulting from a 40.8% decrease in gallons sold.

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Demurrage and storage income increased $2.3 million, or 24.4%, primarily due to an increased number of unutilized cars due to reduced carload activity in the North American rail industry, which is causing car owners to look for storage options.

All other non-freight revenues decreased $0.5 million, or 2.3%. Excluding a $2.5 million decrease due to the depreciation of the Australian and Canadian dollars relative to the United States dollar, all other non-freight revenues increased $2.0 million, or 8.6%. The increase of $2.0 million was primarily due to crewing and other ancillary business in Australia.

Operating Expenses

Overview

Operating expenses were $227.8 million in the six months ended June 30, 2009, compared with $242.4 million in the six months ended June 30, 2008, a decrease of $14.6 million, or 6.0%. The decrease in operating expenses was attributable to a decrease of $40.1 million from existing operations, partially offset by $25.5 million from new operations. Our operating expenses for the six months ended June 30, 2009, included $9.0 million due to the HCRY impairment and related charges and $1.4 million of legal expenses associated with the resolution of the arbitration associated with the M&B Haulage Agreement, partially offset by $2.0 million in gains on the sale of assets and a $0.5 million insurance recovery. Operating expenses for the six months ended June 30, 2008, included $2.6 million in gains on the sale of assets and $0.4 million in gains from insurance recovery.

Operating Ratios

Our operating ratio, defined as total operating expenses divided by total operating revenues, increased to 84.8% in the six months ended June 30, 2009, from 82.6% in the six months ended June 30, 2008. The increase was primarily driven by the HCRY impairment and related charges in the six months ended June 30, 2009 of $9.0 million, or 4.0% of total operating expenses.

The following table sets forth a comparison of our operating expenses for the six months ended June 30, 2009 and 2008 (dollars in thousands):

	Operating Expense Comparison Six Months Ended June 30, 2009 and 2008
	2009					2008
	$			Percentage of Operating Revenues		$			Percentage of Operating Revenues
Labor and benefits	$	97,932		36.5	%	$	92,411		31.5	%
Equipment rents		14,793		5.5	%		17,143		5.8	%
Purchased services		19,317		7.2	%		23,627		8.0	%
Depreciation and amortization		23,423		8.7	%		18,652		6.4	%
Diesel fuel used in operations		16,344		6.1	%		33,363		11.4	%
Diesel fuel sold to third parties		6,493		2.4	%		18,946		6.5	%
Casualties and insurance		6,464		2.4	%		8,038		2.7	%
Materials		11,351		4.2	%		12,597		4.3	%
Net loss/(gain) on sale and impairment of assets		4,650		1.7	%		(2,632	)	(0.9	%)
Gain on insurance recovery		(500	)	(0.2	%)		(399	)	(0.1	%)
Restructuring charges		2,288		0.9	%		—		0.0	%
Other expenses		25,218		9.4	%		20,669		7.0	%
Total operating expenses	$	227,773		84.8	%	$	242,415		82.6	%

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Labor and benefits expense was $97.9 million in the six months ended June 30, 2009, compared with $92.4 million in the six months ended June 30, 2008, an increase of $5.5 million, or 6.0%. The increase was attributable to $9.4 million from new operations, partially offset by a $3.9 million decrease from existing operations. The decrease from existing operations consisted primarily of a decrease of $4.9 million due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar and $4.5 million attributable to cost cutting measures such as furloughed employees and decreased overtime, partially offset by $3.5 million attributable to new business in the United States and Australia and $2.0 million attributable to wage and benefit cost increases.

Equipment rents were $14.8 million in the six months ended June 30, 2009, compared with $17.1 million in the six months ended June 30, 2008, a decrease of $2.4 million, or 13.7%. The decrease was attributable to a $4.5 million decrease from existing operations, partially offset by $2.2 million from new operations. The decrease from existing operations was primarily due to a decrease in locomotive and railcar leases as a result of the recession and $1.0 million due to depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Purchased services expense was $19.3 million in the six months ended June 30, 2009, compared with $23.6 million in the six months ended June 30, 2008, a decrease of $4.3 million, or 18.2%. The decrease was attributable to a $6.2 million decrease from existing operations, partially offset by $1.9 million from new operations. The decrease from existing operations was primarily due to cost cutting measures implemented at each of our regions, the in-sourcing of locomotive repair work in one of our regions and $2.8 million from the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Depreciation and amortization expense was $23.4 million in the six months ended June 30, 2009, compared with $18.7 million in the six months ended June 30, 2008, an increase of $4.8 million, or 25.6%. The increase was attributable to $4.7 million from new operations and an increase of $1.0 million from existing operations, partially offset by $1.0 million due to the depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar.

Diesel fuel expense was $16.3 million in the six months ended June 30, 2009, compared with $33.4 million in the six months ended June 30, 2008, a decrease of $17.0 million, or 51.0%. The decrease was attributable to a $19.1 million decrease from existing operations, partially offset by $2.1 million from new operations. The decrease from existing operations was due to a $16.5 million decrease resulting from a 49.5% decrease in fuel cost per gallon and $2.6 million due to a 15.2% decrease in diesel fuel consumption.

Diesel fuel sold to third parties was $6.5 million in the six months ended June 30, 2009, compared with $18.9 million in the six months ended June 30, 2008, a decrease of $12.5 million, or 65.7%. Of this decrease, $8.0 million resulted from a 42.1% decrease in diesel fuel cost per gallon and $4.5 million resulted from a 40.8% decrease in diesel fuel gallons sold.

Casualties and insurance expense was $6.5 million in the six months ended June 30, 2009, compared with $8.0 million in the six months ended June 30, 2008, a decrease of $1.6 million, or 19.6%. The decrease was attributable to a $2.2 million decrease from existing operations, partially offset by $0.6 million from new operations. The decrease from existing operations was primarily attributable to our long-term improvements in the safety of our railroad operations.

Net loss/(gain) on sale and impairment of assets was a $4.7 million net loss in the six months ended June 30, 2009, compared with a $2.6 million net gain in the six months ended June 30, 2008. The $4.7 million net loss in 2009 included a $6.7 million non-cash write-down of HCRY’s non-current assets, partially offset by gains from the sale of certain track related assets. The $2.6 million net gain in 2008 included gains resulting from the sale of certain land in the United States and freight cars in Canada.

Restructuring and related charges of $2.3 million in the six months ended June 30, 2009, resulted from the planned shutdown of HCRY’s operations.

The remaining expenses combined were $36.1 million in the six months ended June 30, 2009, compared with $32.9 million in the six months ended June 30, 2008, an increase of $3.2 million, or 9.7%. The increase was attributable to $4.5 million from new operations, partially offset by a decrease of $1.3 million from existing operations. The decrease from existing operations was primarily due to cost cutting measures on each of our railroads and $1.3 million due to depreciation of the Australian and Canadian dollars and the Euro relative to the United States dollar, partially offset by $1.4 million of legal expenses associated with the resolution of the arbitration associated with the M&B Haulage Agreement.

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Other Income (Expense) Items

Interest Income

Interest income was $0.4 million in the six months ended June 30, 2009, compared with $1.2 million in the six months ended June 30, 2008, a decrease of $0.8 million.

Interest Expense

Interest expense was $14.3 million in the six months ended June 30, 2009, compared with $8.0 million in the six months ended June 30, 2008, an increase of $6.3 million or 78.8%, primarily due to the increase in debt resulting from the purchases of RRF, CAGY, OCR and Georgia Southwestern.

Provision for Income Taxes

Our effective income tax rate in the six months ended June 30, 2009, was 21.5% compared with 38.8% in the six months ended June 30, 2008. The decrease in 2009 was primarily attributable to approximately $4.4 million resulting from the extension of the Short Line Tax Credit on October 3, 2008, and the HCRY-related tax benefit of $3.6 million.

The Short Line Tax Credit, which had been in existence from 2005 through 2007, expired on December 31, 2007. The extension was made retroactive to January 1, 2008 and expires on December 31, 2009. The retroactive effect of the extension was recorded upon enactment in the fourth quarter of 2008. The Short Line Tax Credit represents 50% of qualified track spending during each year, subject to a limitation of $3,500 per track mile owned or leased at the end of the year. Historically, we have incurred sufficient spending to meet the limitation.

Income and Earnings Per Share from Continuing Operations

Income from continuing operations attributable to our common stockholders in the six months ended June 30, 2009, was $22.0 million, compared with income from continuing operations attributable to our common stockholders of $27.4 million in the six months ended June 30, 2008. Our diluted EPS from continuing operations attributable to our common stockholders in the six months ended June 30, 2009, were $0.60 with 36.6 million weighted average shares outstanding, compared with diluted EPS from continuing operations attributable to our common stockholders of $0.76 with 36.2 million weighted average shares outstanding in the six months ended June 30, 2008. Our Basic EPS from continuing operations attributable to our common stockholders were $0.65 with 33.8 million weighted average shares outstanding in the six months ended June 30, 2009, compared with basic EPS from continuing operations attributable to our common stockholders of $0.87 with 31.6 million weighted average shares outstanding in the six months ended June 30, 2008.

Results from Discontinued Operations

Loss from discontinued operations attributable to our common stockholders in the six months ended June 30, 2009, was $0.7 million, compared with a loss from discontinued operations attributable to our common stockholders of $1.6 million in the six months ended June 30, 2008. Loss from discontinued operations attributable to our common stockholders in the six months ended June 30, 2009, consisted primarily of non-cash currency translation adjustments to residual assets in Mexico. Our diluted loss per share from discontinued operations attributable to our common stockholders in the six months ended June 30, 2009, was $0.02 with 36.6 million weighted average shares outstanding, compared with diluted loss per share from discontinued operations attributable to our commons stockholders of $0.04 with 36.2 million weighted average shares outstanding in the six months ended June 30, 2008. Basic loss per share from discontinued operations attributable to our common stockholders was $0.02 with 33.8 million weighted average shares outstanding in the six months ended June 30, 2009, compared with basic loss per share from discontinued operations attributable to our common stockholders of $0.05 with 31.6 million weighted average shares outstanding in the six months ended June 30, 2008.

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Liquidity and Capital Resources

On June 15, 2009, we completed a public offering of 4,600,000 shares of our Class A common stock at $24.50 per share, which included 600,000 shares of our Class A common stock issued as a result of the underwriters’ exercise of their over-allotment option. We received net proceeds of $107.0 million from the sale of our Class A common stock.

In June 2009, we used a portion of the proceeds along with cash on hand to repay $108.0 million of our revolving credit facility, which represented the entire balance then outstanding. As of June 30, 2009, our $300.0 million revolving credit facility, which matures in 2013, had unused borrowing capacity of $299.9 million and outstanding letter of credit guarantees of $0.1 million. We intend to use our cash on hand and unused borrowing capacity for general corporate purposes, including strategic investments and acquisitions.

During the six months ended June 30, 2009, we generated $44.1 million of cash from continuing operations, compared with $37.6 million of cash from continuing operations during the six months ended June 30, 2008. For the six months ended June 30, 2009, changes in working capital reduced net cash flow from operating activities by $6.4 million. For the six months ended June 30, 2008, changes in working capital reduced net cash flow from operating activities by $14.7 million.

During the six months ended June 30, 2009 and 2008, our cash flows used in investing activities from continuing operations were $26.1 million and $116.7 million, respectively. For the six months ended June 30, 2009, primary drivers of cash used in investing activities were $37.7 million of cash used for capital expenditures and $5.8 million of cash paid for acquisitions (net of cash acquired), partially offset by $3.0 million in cash received from grants from outside parties for capital spending completed in 2009, $5.9 million in cash received from grants from outside parties for capital spending completed in prior years, $5.6 million in cash proceeds from the disposition of property and equipment and $2.9 million of insurance proceeds. For the six months ended June 30, 2008, primary drivers of cash used in investing activities were $97.6 million of cash paid for acquisitions (net of cash acquired), $40.9 million of cash used for capital expenditures, partially offset by $8.5 million in cash received from government grants for capital spending completed in 2008, $8.3 million in cash received from government grants for capital spending completed prior to 2008, $4.6 million in cash proceeds from the disposition of property and equipment and $0.4 million of insurance proceeds for the replacement of assets.

During the six months ended June 30, 2009, our cash flows provided by financing activities from continuing operations were $9.7 million, compared with cash provided by financing activities from continuing operations of $71.8 million during the six months ended June 30, 2008. For the six months ended June 30, 2009, primary drivers of cash provided by financing activities were $107.0 million proceeds from the issuance of stock and $5.1 million from exercise of stock-based awards, offset by a decrease in outstanding debt of $102.4 million. For the six months ended June 30, 2008, primary drivers of cash provided by financing activities from continuing operations were a net increase in outstanding debt of $64.5 million and net cash inflows of $7.3 million from exercises of stock-based awards.

At June 30, 2009, we had long-term debt, including current portion, totaling $460.2 million, which comprised 42.1% of our total capitalization, and $299.9 million unused borrowing capacity. At December 31, 2008, we had long-term debt, including current portion, totaling $561.3 million, which comprised 54.0% of our total capitalization.

We believe that our cash flow from operations together with amounts available under our credit facilities will enable us to meet our liquidity and capital expenditure requirements relating to ongoing operations for at least the duration of the credit facilities.

2009 Budgeted Capital Expenditures

We have budgeted $58.0 million for capital expenditures in 2009, which consist of track and equipment improvements of $51.0 million and business development projects of $7.0 million. We also expect to receive approximately $38.0 million from grants to fund additional capital expenditures in 2009. Including these grant-funded projects, we have budgeted a total of $96.0 million for capital expenditures in 2009.

For the six months ended June 30, 2009, we have incurred $32.4 million in aggregate capital expenditures, of which we have paid $25.9 million in cash and accrued $6.5 million in accounts payable as of the end of the quarter. We expect to receive $8.7 million in grants related to this year-to-date activity, of which we have received $3.0 million and recorded $5.7 million in outstanding grant receivables from outside parties as of June 30, 2009.

Accordingly, cash paid for purchases of property and equipment of $37.7 million for the six months ended June 30, 2009, included $25.9 million for 2009 capital projects and $11.8 million related to capital expenditures accrued in 2008. Grant proceeds of $8.9 million received in the six months ended June 30, 2009, included $3.0 million related to 2009 capital projects and $5.9 million from grants related to our capital expenditures from prior years.

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Credit Facilities

As of June 30, 2009, our $300.0 million revolving loan, which matures in 2013, consisted of letter of credit guarantees of $0.1 million and $299.9 million of unused borrowing capacity. The $299.9 million unused borrowing capacity is available for general corporate purposes including acquisitions. Our credit facilities require us to comply with certain financial covenants. As of June 30, 2009, we were in compliance with these covenants. See Note 8 of our Annual Report on Form 10-K for the year ended December 31, 2008, for additional information regarding our credit facilities.

Impact of Foreign Currencies on Operating Revenues

When comparing the effects of average foreign currency exchange rates on revenues during the six months ended June 30, 2009, versus the six months ended June 30, 2008, foreign currency translation had a negative impact on our consolidated revenues due to the weakening of the Australian and Canadian dollars and the Euro relative to the United States dollar in the six months ended June 30, 2009. The estimated impact for foreign currency was calculated by comparing reported revenues with estimated revenues assuming average rates in effect in the comparable period of the prior year. However, since the world’s major crude oil and refined product market is traded in United States dollars, we believe there was little, if any, impact of foreign currency translation on our fuel sales to third parties in Australia. The following table sets forth the estimated impact of foreign currency translation on reported operating revenues (dollars in thousands):

	Six Months Ended June 30, 2009
	As Reported		Currency Translation Impact		Revenues Excluding Currency Impact
United States Operating Revenues	$	201,144	$	—	$	201,144
Australia Operating Revenues		42,750		9,597		52,347
Canada Operating Revenues		20,254		5,114		25,368
Netherlands Operating Revenues		4,365		471		4,836
Total Operating Revenues	$	268,513	$	15,182	$	283,695

Off-Balance Sheet Arrangements

An off-balance sheet arrangement includes any contractual obligation, agreement or transaction involving an unconsolidated entity under which we 1) have made guarantees, 2) have a retained or contingent interest in transferred assets, or a similar arrangement, that serves as credit, liquidity or market risk support to that entity for such assets, 3) have an obligation under certain derivative instruments or 4) have any obligation arising out of a material variable interest in such an entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing or hedging services with us. There were no material changes in our off-balance sheet arrangements in the six months ended June 30, 2009.

Recently Issued Accounting Standards

In May 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 165, “Subsequent Events” (SFAS 165), which incorporates guidance into accounting literature that was previously addressed only in auditing standards. This statement refers to subsequent events that provide additional evidence about conditions that existed at the balance-sheet date as “recognized subsequent events.” Subsequent events which provide evidence about conditions that arose after the balance-sheet date but prior to the issuance of the financial statements are referred to as “non-recognized subsequent events.” It also requires companies to disclose the date through which subsequent events have been evaluated and whether this date is the date the financial statements were issued. On April 1, 2009, we adopted SFAS 165 – refer to Note 12 for related disclosure.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (SFAS 166). This statement removes the concept of a qualifying special-purpose entity from SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,” and removes the exception from applying FASB Interpretation No. 46 “Consolidation of Variable Interest Entities” to qualifying special-purpose entities. This

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statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. We will adopt SFAS 166 on January 1, 2010, and are currently evaluating the impact of the provisions of this standard on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). This statement is a revision to Interpretation 46(R) “Consolidation of Variable Interest Entities” and requires entities to perform an analysis to determine whether their variable interests give them a controlling interest in a variable interest entity and requires an ongoing reassessment of whether an entity is the primary beneficiary of a variable interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009, and for interim periods within that first annual reporting period. We will adopt SFAS 167 on January 1, 2010, and are currently evaluating the impact of the provisions of this standard on our consolidated financial statements.

In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.” The FASB Accounting Standards Codification will become the source of authoritative United States generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The codification does not change or alter existing GAAP, therefore, we do not expect there to be an impact on our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

On October 2, 2008, we entered into two interest rate swap agreements to manage our exposure to interest rates on a portion of our outstanding borrowings. The first swap has a notional amount of $120.0 million and requires us to pay 3.88% on the notional amount and allows us to receive 1-month LIBOR. This swap expires on September 30, 2013. The second swap has a notional amount of $100.0 million and requires us to pay 3.07% on the notional amount and allows us to receive 1-month LIBOR. This swap expires on December 31, 2009. The fair value of the interest rate swap agreements were estimated based on Level 2 valuation inputs. The fair values of the swaps represented liabilities of $6.2 million and $1.3 million, respectively, at June 30, 2009 and $10.6 million and $2.2 million, respectively, at December 31, 2008. During the six months ended June 30, 2009, there were no material changes to the Quantitative and Qualitative Disclosures About Market Risk previously disclosed in our 2008 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures — We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009. Based upon that evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2009, the disclosure controls and procedures are effective to accomplish their objectives at a reasonable assurance level.

Internal Control Over Financial Reporting — During the three months ended June 30, 2009, there were no changes in our internal control over financial reporting (as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Mexico

On June 25, 2007, our wholly-owned subsidiary, Ferrocarriles Chiapas-Mayab, S.A. de C.V. (FCCM), formally notified the Secretaria de Communicaciones y Transportes (SCT) of its intent to exercise its right to resign its 30-year concession from the Mexican government and to cease its rail operations. In response to this notification, on July 24, 2007, the SCT issued an official letter informing FCCM that the SCT did not accept the resignation of the concession. On August 8, 2007, the SCT issued another official letter to initiate a proceeding to impose sanctions on FCCM. The amount of the sanctions has not been specified. The proposed sanctions are based, in part, on allegations that FCCM has violated the Railroad Service Law in Mexico and the terms of its concession. On August 30, 2007, FCCM filed a brief with the SCT that challenged the proposed sanctions and introduced evidence supporting FCCM’s right to resign its concession. On September 21, 2007, FCCM also filed a proceeding in the Tax and Administrative Federal Court in Mexico seeking an annulment of the SCT’s July 24, 2007 official letter and recognition of FCCM’s right to resign its concession. As a result of SCT’s answer in this proceeding, on June 26, 2008, FCCM filed a brief with new arguments. The SCT also seized substantially all of FCCM’s operating assets in response to FCCM’s resignation of the concession. On September 19, 2007, FCCM filed a proceeding in the Second District Court in Merida (District Court) challenging the SCT’s seizure of its operating assets as unconstitutional. The District Court admitted the proceeding on October 11, 2007, and a hearing on the constitutional grounds for the seizure and the legality of the SCT’s actions took place on February 1, 2008. On April 30, 2008, the District Court issued a decision upholding the seizure without analyzing the merits of the case. On May 21, 2008, FCCM appealed the decision issued by the District Court, before the Circuit Court in Merida. On March 31, 2009, the Circuit Court confirmed the decision issued by the District Court. FCCM filed a new constitutional proceeding on June 13, 2009, challenging the Circuit Court’s decision. In addition to the allegations made by the SCT, FCCM is subject to claims and lawsuits from aggrieved customers as a result of its cessation of rail operations and the initiation of formal liquidation proceedings. We believe the SCT and customer actions are without merit and unlawful and we will continue to pursue appropriate legal remedies to support FCCM’s resignation of the concession and to recover FCCM’s operating assets. As of June 30, 2009, there was a net asset of $0.2 million remaining on our balance sheet associated with our Mexican operations.

M&B Arbitration

Our subsidiary, Meridian & Bigbee Railroad LLC (M&B), CSX Transportation, Inc. (CSX) and Kansas City Southern (KCS) were parties to a Haulage Agreement governing the movement of traffic between Meridian, Mississippi and Burkeville, Alabama. On November 17, 2007, M&B initiated arbitration with the American Arbitration Association against CSX and KCS in an effort to collect on outstanding claims of approximately $6.8 million under the Haulage Agreement. On June 23, 2009, the parties resolved their differences and agreed to withdraw the request for arbitration. In connection with the resolution of the ongoing arbitration, we recorded $1.4 million in legal expenses during the second quarter of 2009.

Other

In addition to the lawsuits set forth above, from time to time we are a defendant in certain lawsuits resulting from our operations. Management believes there are adequate provisions in the financial statements for any expected liabilities that may result from disposition of the pending lawsuits. Nevertheless, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. Were an unfavorable ruling to occur, there would exist the possibility of a material adverse impact on our results of operations, financial position or liquidity as of and for the period in which the ruling occurs.

ITEM 1A. RISK FACTORS

NONE

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities for the period covered by this Quarterly Report on Form 10-Q.

Issuer Purchases of Equity Securities

2009	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit) (1)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
April 1 to April 30	—	$	—	—	—
May 1 to May 31	10,591	$	28.32	—	—
June 1 to June 30	4,314	$	31.16	—	—
Total	14,905	$	29.14	—	—

(1) The 14,095 shares acquired in the three months ended June 30, 2009, represent common stock acquired by us from our employees who surrendered shares in lieu of cash to pay taxes on equity awards in conjunction with our Amended and Restated 2004 Omnibus Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 27, 2009, our stockholders voted on the following proposals at our Annual Stockholders Meeting:

Proposal 1: To elect two directors, David C. Hurley and Peter O. Scannell to serve for a three-year term expiring in 2012:

	Total Votes For	Total Votes Authority Held
David C. Hurley	44,996,824	11,891,755
Peter O. Scannell	50,769,153	6,119,426

Proposal 2: To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2009:

Total Votes For:	56,795,165
Total Votes Against:	71,885
Total Votes Abstained:	21,527

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ITEM 5. OTHER INFORMATION

NONE

ITEM 6. EXHIBITS

For a list of exhibits, see INDEX TO EXHIBITS following the signature page to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

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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: August 7, 2009	By:	/s/ Timothy J. Gallagher
	Name:	Timothy J. Gallagher
	Title:	Chief Financial Officer
Date: August 7, 2009	By:	/s/ Christopher F. Liucci
	Name:	Christopher F. Liucci
	Title:	Chief Accounting Officer and Global Controller

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INDEX TO EXHIBITS

Exhibit No.	Description of Exhibits
3.1	Articles of Incorporation
	Restated Certificate of Incorporation is incorporated herein by reference to Exhibit I to the Registrant’s Definitive Information Statement on Schedule 14C filed on February 23, 2004 (SEC File No. 001-31456)
3.2	By-Laws
	Amended By-laws, effective as of August 19, 2004, is incorporated herein by reference to Exhibit 2.1 to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2004 (SEC File No. 001-31456)
*10.1	Form of Option Award Notice (as supplemented, May 29, 2009) under the Amended and Restated 2004 Omnibus Incentive Plan, dated as of May 30, 2007 (as supplemented, May 28, 2008)
*10.2	Form of Restricted Stock Award Notice (as supplemented, May 29, 2009) under the Amended and Restated 2004 Omnibus Incentive Plan, dated as of May 30, 2007 (as supplemented, May 28, 2008)
*31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
*31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
*32.1	Section 1350 Certifications

* Exhibit filed with this Report.

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EX-10.1

Exhibit 10.1

GENESEE & WYOMING INC.

AMENDED AND RESTATED 2004 OMNIBUS INCENTIVE PLAN

FORM OF OPTION AWARD NOTICE

Grantee:	[Name]
Type of Award:	[Type]
Number of Shares:	[Number]
Exercise Price Per Share:	[Price]
Date of Grant:	[Date]
Expiration Date:	[Five Years from the Grant Date]
Anniversary Date:	[Date of First Grant for the Year of the Option]

1. Grant of Option. This Award Notice serves to notify you that the Compensation Committee (the “Committee”) of the Board of Directors of Genesee & Wyoming Inc. (“G&W”) hereby grants to you, under G&W’s Amended and Restated 2004 Omnibus Incentive Plan (the “Plan”), an [Type] stock option (the “Option”) to purchase, on the terms and conditions set forth in this Award Notice and the Plan, up to the number of shares of G&W’s Class A Common Stock, par value $.01 per share (the “Common Stock”) at the exercise price per share set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W’s Intranet under Corporate Policies then Human Resources or from G&W’s Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice that are not defined herein have the meanings as defined in the Plan.

2. Term. Unless the Option is previously terminated pursuant to the terms of the Plan or this Award Notice, the Option will expire at the close of business on the Expiration Date.

3. Vesting. Subject to the terms set forth in this Award Notice and the Plan, the Option will vest and become exercisable as follows:

(i) the Option shall first become exercisable with respect to [Number] Shares on [Anniversary Date Year 1];

(ii) the Option shall first become exercisable with respect to an additional [Number] Shares on [Anniversary Date Year 2]; and

(iii) the Option shall first become exercisable with respect to an additional [Number] Shares on [Anniversary Date Year 3].

4. Exercise.

(a) Method of Exercise. To the extent exercisable under Section 3, the Option may be exercised in whole or in part, provided that the Option may not be exercised for less than one share of Common Stock in any single transaction. The Option shall be exercised by your giving appropriate notice of such exercise to G&W, or its designated agent in accordance with established procedures, specifying the number of shares of Common Stock that you elect to purchase and the Exercise Price to be paid. Upon determining that compliance with this Award Notice has occurred, including compliance with such reasonable requirements as G&W may impose pursuant to the Plan or Section 12 of this Award Notice and payment of the Exercise Price, G&W, or its designated agent, shall issue to you a certificate for the shares of Common Stock purchased on the earliest practicable date (as determined by G&W) thereafter.

(b) Payment of Exercise Price. To the extent permissible under the Plan, the Exercise Price may be paid using any one or any combination of the following methods:

(i) in cash or by check, with such payment accompanying your written exercise notice;

[(ii) by delivery of shares of Common Stock already owned by you, with such shares of Common Stock valued at their Fair Market Value on the date of the Option exercise;] [NOTE: not applicable in Australia or the Netherlands; insert “(ii) RESERVED” if not applicable]

(iii) subject to any and all limitations imposed by the Committee from time to time (which may not be uniform), a “cashless exercise,” whereby you would irrevocably instruct a broker or dealer to sell shares of Common Stock on your behalf and deliver cash sale proceeds to G&W, or its designated agent, in payment of the Exercise Price and, if applicable, direct G&W, or its designated agent, to deliver shares of Common Stock to be issued upon such exercise of this Option directly to such broker or dealer; or

(iv) any other method approved or accepted by the Committee in its sole discretion, subject to any and all limitations imposed by the Committee from time to time (which may not be uniform).

[(c) Withholdings. The exercise of the Option is conditioned upon your making arrangements satisfactory to G&W for the payment to G&W, or its designated agent, of the amount of all taxes required by any governmental authority to be withheld and paid over by G&W to the governmental authority on account of the exercise. The payment of such withholding taxes to G&W, or its designated agent, may be made by one

2

or any combination of the following methods: (i) in cash or by check, (ii) by G&W withholding such taxes from any other compensation owed to you by G&W or any Subsidiary, (iii) pursuant to a cashless exercise program as contemplated in Section 4(b)(iii) above or (iv) any other method approved or accepted by the Committee in its sole discretion, subject, in the case of Section 4(c)(iii) and this Section 4(c)(iv), to any and all limitations imposed by the Committee from time to time (which may not be uniform) as contemplated in Section 4(b)(iii) and Section 4(b)(iv) above.] [NOTE: this version of 4(c) is applicable in U.S. and Canada only]

[(c) Responsibility for Taxes. Regardless of any action G&W, its designated agent, or your employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that G&W and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of shares of Common Stock acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items.

Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to G&W and/or the Employer to satisfy all withholding and payment on account of obligations of G&W and/or the Employer. In this regard, you authorize G&W and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by G&W and/or the Employer or from proceeds of the sale of shares of Common Stock. Alternatively, or in addition, if permissible under local law, G&W, or its designated agent, may sell or arrange for the sale of shares of Common Stock that you acquire to meet the withholding obligation for Tax-Related Items. Finally, you shall pay to G&W, its designated agent, or the Employer any amount of Tax-Related Items that G&W or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of shares of Common Stock that cannot be satisfied by the means previously described. G&W, or its designated agent, may refuse to honor the exercise and refuse to deliver the shares of Common Stock if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.

The payment of such withholding taxes to G&W may also be made pursuant to any method approved or accepted by the Committee in its sole discretion, subject to any and all limitations imposed by the Committee from time to time (which may not be uniform) as contemplated in Section 4(b)(iii) and 4(b)(iv) above.] [NOTE: this version of 4(c) is applicable in Australia and the Netherlands only]

5. Effect of Death. In the event of your death prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one year after the date of your death, but only: (i) by the beneficiary designated

3

on your beneficiary designation form filed with G&W, or in the absence of same, by your estate or by or on behalf of the person or persons to whom the Option passes under your will or the laws of descent and distribution, (ii) to the extent that the Option was vested and exercisable on the date of your death, and (iii) prior to the close of business on the Expiration Date of the Option.

6. Effect of Disability. In the event of your “Disability” prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one year after the date of your Disability, but only: (i) to the extent that the Option was vested and exercisable on the date of your Disability, and (ii) prior to the close of business on the Expiration Date of the Option. The term “Disability” means you are permanently and totally disabled within the meaning of Section 22(e)(3) of the Code.

7. Effect of Other Termination.

(a) With “Cause.” Upon your termination by G&W for Cause prior to the complete exercise of the Option, the remaining portion of the Option, whether or not then exercisable, shall be forfeited as of the date of such termination and no longer exercisable on or after such date of termination.

(b) Without “Cause.” Upon your termination for a reason other than death, Disability or Cause prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within three months after the date of such termination, but only: (i) to the extent that the Option was vested and exercisable on the date of such termination, and (ii) prior to the Expiration Date of the Option.

(c) The term “Cause” means (i) your willful and continued failure to substantially perform your duties with G&W or a Subsidiary after written warnings identifying the lack of substantial performance are delivered to you to specifically identify the manner in which G&W or a Subsidiary believes that you have not substantially performed your duties, (ii) your willful engaging in illegal conduct which is materially and demonstrably injurious to G&W or any Subsidiary, (iii) your commission of a felony, (iv) your material breach of a fiduciary duty owed by you to G&W or any Subsidiary, (v) your intentional unauthorized disclosure to any person of confidential information or trade secrets of a material nature relating to the business of G&W or any Subsidiary, or (vi) your engaging in any conduct that G&W’s or a Subsidiary’s written rules, regulations or policies specify as constituting grounds for discharge.

[(d) In the event of termination of your employment (whether or not in breach of local labor laws), your right to receive an Option and vest in an Option under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period

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pursuant to local law); furthermore, in the event of termination of employment (whether or not in breach of local labor laws), your right to exercise the Option after termination of employment, if any, will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law; the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of your Option grant.] [NOTE: this provision 7(d) is applicable in Australia and the Netherlands only]

[8. Notice of Disposition of Shares. You hereby agree that you shall promptly notify G&W of the disposition of any of the shares of Common Stock acquired upon exercise of the Option, including a disposition by sale, exchange, gift or transfer of legal title, if such disposition occurs within two years from the Date of Grant or within one year from the date that you exercise the Option and acquire such shares of Common Stock.] [NOTE: this provision 8 is applicable in U.S. only; if not applicable insert “8. RESERVED”]

9. Nonassignability. The Option may not be sold, alienated, transferred, assigned, encumbered or pledged in any way prior to the vesting of the Option, whether by operation of law or otherwise, except by will or the laws of descent and distribution. Except as otherwise provided by Section 5 of this Award Notice, the Option is only exercisable by you during your lifetime. After exercising the Option, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws and regulations under the Exchange Act.

10. Limitation of Rights. You will not have any rights as a stockholder with respect to the shares of Common Stock covered by the Option until you become the holder of record of such shares by exercising the Option. Neither the Plan, the granting of the Option nor this Award Notice gives you any right to remain in the employment of G&W or any Subsidiary.

11. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

12. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares covered by the Option upon any securities exchange or under any federal, state or local law, or the approval of any governmental agency, is necessary or advisable as a condition to the exercise of the Option, the Option may not be exercised in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.

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13. Plan Controls. The Option is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

14. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the Option with your consent.

15. Governing Law. This Option grant and Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

16. Notices. All notices and other communications to G&W, or its designated agent, required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, by facsimile, or electronically. If such notice or other communication is to G&W then it should be addressed to G&W’s office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Equity Plan Administrator; Telephone: (585) 328-8601; Facsimile: (585) 328-8622; Email: EquityPlanAdmin@gwrr.com. If such notice or other communication is to G&W’s designated agent, then it should be addressed and sent in accordance with established procedures. Each such notice and other communication delivered personally shall be deemed to have been given when received. Each such notice and other communication delivered by United States mail shall be deemed to have been given when it is received, and each such notice and other communication delivered by telex, telecopier or electronically shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.

17. Language. If you have received this Award Notice or any other document related to the Plan in a language other than English and if the translated version bears a meaning that is different from that of the English version, the English version will control, to the extent permitted by law.

18. Data Privacy. You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, the Employer, and G&W and its Subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan, to the extent permitted by law.

You understand that G&W and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in G&W, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be

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transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of stock acquired upon exercise of the Option, to the extent permitted by law. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

19. Electronic Delivery. G&W may, in its sole discretion, decide to deliver any documents related to the Option granted under the Plan (or related to future options that may be granted under the Plan) by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, hereby agree to participate in the Plan through an on-line or electronic system established and maintained by G&W or another third party designated by G&W.

20. Severability. The provisions of this Award Notice are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

[xx. Nature of Grant. In accepting the grant, you acknowledge that:

(a) the Plan is established voluntarily by G&W, it is discretionary in nature and it may be modified, amended, suspended or terminated by G&W at any time, unless otherwise provided in the Plan and this Award Notice;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past;

(c) all decisions with respect to future option grants, if any, will be at the sole discretion of G&W;

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(d) your participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate your employment relationship at any time with or without cause;

(e) you are voluntarily participating in the Plan;

(f) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to G&W or the Employer, and which is outside the scope of your employment contract, if any;

(g) the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for G&W or the Employer;

(h) in the event that you are not an employee of G&W, the Option grant will not be interpreted to form an employment contract or relationship with G&W; and furthermore, the Option grant will not be interpreted to form an employment contract with the Employer or any Subsidiary or affiliate of G&W;

(i) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty;

(j) if the underlying shares of Common Stock do not increase in value, the Option will have no value;

(k) if you exercise your Option and obtain shares of Common Stock, the value of those shares of Common Stock acquired upon exercise may increase or decrease in value, even below the exercise price; and

(l) in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or diminution in value of the Option or shares of Common Stock purchased through exercise of the Option resulting from termination of your employment by G&W or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release G&W and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Award Notice, you shall be deemed irrevocably to have waived your entitlement to pursue such claim.] [NOTE: this section is only applicable in Australia and the Netherlands]

[xy. Effect of Breach of Certain Covenants.

(a) In General. If you engage in the conduct described in subsection (c) of this Section [xy], then, unless the Committee determines otherwise: (i) you immediately forfeit, effective as of the date you engage in such conduct, the unexercised

8

portion of the Option; and (ii) you must pay to G&W the amount of any gain realized or payment received as a result of the exercise of the Option within the six-month period immediately preceding the date you engage in such conduct.

(b) Set-Off. By accepting the Option, you consent to a deduction from any amounts G&W or any Subsidiary owes you from time to time (including, but not limited to, amounts owed to you as wages or other compensation, fringe benefits, or vacation pay), to the extent of the amount that you owe G&W under subsection (a) of this Section [xy]. G&W may elect to make any set-off in whole or in part. If G&W does not recover by means of a set-off the full amount that you owe G&W, you shall immediately pay the unpaid balance to G&W.

(c) Conduct. You hereby agree that you will not, without the written consent of G&W, either during your employment by or service to G&W or any Subsidiary or thereafter, disclose to anyone or make use of any confidential information which you acquired during your employment or service relating to any of the business of G&W or any Subsidiary, except as such disclosure or use may be required in connection with your work as an employee or consultant of G&W or any Subsidiary. During your employment by or service to G&W or any Subsidiary, and for a period of six months after the termination of such employment or service, you will not, either as principal, agent, consultant, employee, stockholder or otherwise, engage in any work or other activity in direct competition with G&W or any Subsidiary. (For purposes of this Section [xy], you shall not be deemed a stockholder of any company subject to the periodic and other reporting requirements of the Exchange Act, if your record and beneficial ownership of any such company amount to not more than five percent of the outstanding capital stock of any such company.) The non-competition covenant of this Section [xy] applies separately in the United States and in other countries. Your breach of the covenant of this subsection (c) shall result in the consequences described in this Section [xy].] [NOTE: this section is only applicable to some Grantees, including Executive Officers]

[xz. Effect of Change in Control.

(a) Upon the occurrence of a “Change in Control” of G&W, the unvested portion of the Option shall immediately vest as of the date of the occurrence of such event.

(b) The term “Change in Control” shall be deemed to have occurred when:

(i) Any “person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding G&W and any Subsidiary and any employee benefit plan sponsored or maintained by G&W or any Subsidiary (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of G&W

9

representing 35% or more of the combined voting power of G&W’s then outstanding securities (other than indirectly as a result of G&W’s redemption of its securities); provided, however, that in no event shall a Change in Control be deemed to have occurred under this Section [xz](b)(i) so long as (x) the combined voting power of shares beneficially owned by (A) G&W’s executive officers (as defined in Rule 16a-1(f) under the Exchange Act) then in office (the “Executive Officer Shares”), (B) Mortimer B. Fuller and/or Sue Fuller and their lineal descendents (the “Founder Shares”), and (C) the shares beneficially owned by any other members of a “group” that includes the Founder Shares and/or a majority of the Executive Officer shares, exceeds 35% of the combined voting power of G&W’s current outstanding securities and remains the person or group with beneficial ownership of the largest percentage of combined voting power of G&W’s outstanding securities and (y) G&W remains subject to the reporting requirements of the Exchange Act; or

(ii) The consummation of any merger or other business combination of G&W, a sale of 51% or more of G&W’s assets, liquidation or dissolution of G&W or a combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which either (x) the shareholders of G&W and any trustee or fiduciary of any G&W employee benefit plan immediately prior to the Transaction own at least 51% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to G&W’s assets; (C) both the surviving corporation and the purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as applicable, the “Surviving Entity”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will later surrender such majority; or

(iii) Within any twelve-month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to G&W, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).] [NOTE: this section is only applicable to some Grantees, including Executive Officers]

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ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him and G&W regarding the [Type] stock options granted by this Award Notice and that this Award Notice and the Plan supersede all prior oral and written agreements on that subject.

Dated:                             

                [Name]

Genesee & Wyoming Inc. By:

                Matthew C. Brush

    Chief Human Resource Officer

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[NOTE: only applicable in the Netherlands]

ADDENDUM TO NON-QUALIFIED OPTIONS AWARD NOTICE

THE PARTIES

(1) GENESEE & WYOMING INC, a company incorporated under the laws of the State of Delaware, the United States, duly represented by Matthew C. Brush, hereafter referred to as G&W

And

(2) [Name], residing at [Address], hereafter referred to as the Beneficiary

The parties referred to under (1) and (2) above are hereafter together referred to as the Parties.

WHEREAS

(A) The Beneficiary is managing director of Rotterdam Rail Feeding B.V. (“RRF”) and Beneficiary has entered into an employment contract with RRF on [Date];

(B) G&W has acquired the entire share capital of RRF on [Date];

(C) G&W and the Beneficiary have agreed on an option grant as described in the letter dated [Date];

(D) In connection with the letter referred to under (C) above, the Parties enter into an Award Notice (the “Award Notice”); and

(E) For the purpose of compliance of the Award Notice with the provisions of Dutch law (if applicable), the terms and conditions of this Addendum shall apply in deviation of, or in addition to certain terms and conditions of the Award Notice.

HAVE AGREED ON THE FOLLOWING

1. DEFINITIONS

Except as provided otherwise in this Addendum, the definitions of the Award Notice shall apply to this Addendum.

2. DISABILITY

Clause 7 of the Award Notice shall, in addition to the meaning provided in that Clause, also apply in the circumstance that the Beneficiary is permanently ill and that, as a result thereof, the employment contract between the Beneficiary and RRF is terminated, in compliance with Dutch law.

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3. [NON COMPETITION

Clause [xy](c) of the Award Notice provides for a non-competition covenant to which the Beneficiary shall be bound for a period of six months following the termination of the Beneficiary’s employment contract with RRF. In deviation of Clause [xy](c) of the Award Notice, the non-competition covenant is limited solely to the territory of Europe.] [NOTE: this section 3 is only applicable to some Grantees; insert “3. RESERVED” if not applicable]

4. DATA PRIVACY

4.1 In deviation of Clause 18 of the Award Notice, the following shall apply. The Parties acknowledge that all personal data which are necessary for the performance of the contract provided in the Award Notice shall be collected, used and/or transferred to G&W. The personal data shall be processed for the exclusive purpose of implementing, administering and managing the Beneficiary’s participation in the Plan. Furthermore, Parties acknowledge that RRF shall be the controller in the meaning of the Dutch Data Protection Act. To the extent necessary, the Beneficiary explicitly agrees with the processing of his personal data as referred to in this Clause 4 of the Addendum, and specifically with the transfer of the Beneficiary’s personal data to G&W in the United States.

4.2 The personal data to be processed shall include: the Beneficiary’s name, home address, e-mail address, salary, job title, any shares of stock or directorships held in G&W, details of all options or any other entitlement to shares of stock awarded, cancelled, exercised, vested, unvested or outstanding in favour of the Beneficiary, necessary for the performance of the Award Notice. Upon the vesting of the options, additional information may be required regarding bank or brokerage account(s) held by the Beneficiary. In case of death of the Beneficiary, the personal data mentioned in this Clause 4.2 shall also be required from the Beneficiary’s inheritors.

5. AWARD NOTICE

Unless described otherwise in this Addendum, the terms and conditions of the Award Notice shall be fully valid and binding between the Parties.

6. GOVERNING LAW

6.1 This Addendum shall be governed by the laws of the Netherlands.

6.2 The competent court of Rotterdam has exclusive jurisdiction to settle any dispute arising out of or in connection with this Addendum.

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SIGNATORIES

Thus agreed upon and executed in duplicate in                              on                     .

[Name]

Genesee & Wyoming Inc. By:

                Matthew C. Brush

    Chief Human Resource Officer

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EX-10.2

Exhibit 10.2

GENESEE & WYOMING INC.

AMENDED AND RESTATED 2004 OMNIBUS INCENTIVE PLAN

FORM OF RESTRICTED STOCK AWARD NOTICE

Grantee:	[Name]
Type of Award:	Restricted Stock Award
Number of Shares:	[Number]
Date of Grant:	[Date]
Anniversary Date:	[Date of First Grant for the Year of the Award] [NOTE: Anniversary Date definition only applicable for awards to non-directors]

1. Grant of Restricted Stock. This Award Notice serves to notify you that the Compensation Committee (the “Committee”) of the Board of Directors of Genesee & Wyoming Inc. (“G&W”) hereby grants to you, under G&W’s Amended and Restated 2004 Omnibus Incentive Plan (the “Plan”), a restricted stock award (the “Award”), on the terms and conditions set forth in this Award Notice and the Plan, of the number of shares of G&W’s Class A Common Stock, par value $.01 per share (the “Common Stock”) set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W’s Intranet under Corporate Policies then Human Resources or from G&W’s Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice that are not defined herein have the meanings as defined in the Plan.

[2. Restrictions and Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the employment or service of G&W or any Subsidiary at that time, the Common Stock represented by the Award will vest as follows: [Number, Number and Number] shares of Common Stock will vest on the first, second and third anniversaries of the Anniversary Date, respectively. In the event of your death, “Disability” or the termination of your employment or service to G&W or any Subsidiary prior to the complete vesting of the Award, the unvested portion of the Award shall be forfeited as of the date of your death, Disability or such termination. The term “Disability” means you are permanently and totally disabled within the meaning of Section 22(e)(3) of the Code.] [NOTE: this version of section 2 is only applicable for awards to non-directors]

[2. Restrictions and Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the service of G&W or any Subsidiary at that time, the Common Stock represented by the Award will vest as follows: [Number, Number and Number [NOTE: as applicable]] shares of Common Stock will vest on the date of the next [Number]

annual meetings of shareholders, respectively. In the event of your death or the termination of your service to G&W or any Subsidiary prior to the complete vesting of the Award, the unvested portion of the Award shall be forfeited as of the date of your death or such termination.] [NOTE: this version of section 2 is only applicable for awards to directors]

3. Issuance and Taxation of Shares.

(a) Issuance of Shares. Upon satisfaction of the vesting requirements detailed in Section 2, and upon further determining that compliance with this Award Notice has occurred, including compliance with such reasonable requirements as G&W may impose pursuant to the Plan or Section 11 of this Award Notice, and payment of any relevant taxes, G&W shall issue to you a certificate for the previously restricted shares of Common Stock on the earliest practicable date (as determined by G&W) thereafter, or execute an electronic transfer if so requested. The shares of Common Stock may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.

[(b) Tax Withholdings. The issuance of the Common Stock underlying the Award is conditioned upon your making arrangements satisfactory to G&W for the payment to G&W, or its designed agent, of the amount of all taxes required by any governmental authority to be withheld and paid over by G&W to the governmental authority on account of the issuance. The payment of such withholding taxes to G&W, or its designated agent, may be made by one or any combination of the following methods: (i) in cash or by check, (ii) by G&W withholding such taxes from any other compensation owed to you by G&W or any Subsidiary, (iii) an irrevocable election by you to surrender to G&W, or its designated agent, a number of shares of Common Stock underlying the Award sufficient to satisfy the withholding tax obligation, or (iv) any other method approved or accepted by the Committee in its sole discretion, subject to any and all limitations imposed by the Committee from time to time (which may not be uniform). You shall promptly notify G&W of any election made pursuant to Section 83(b) of the Internal Revenue Code, as amended, if applicable in your tax jurisdiction.] [NOTE: this version of 3(b) is applicable in U.S. and Canada only]

[(b) Responsibility for Taxes. Regardless of any action G&W, its designated agent, or your employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that G&W and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant, vesting or issuance of the Common Stock underlying the Award, the subsequent sale of shares of Common Stock acquired pursuant to such issuance and the receipt of any dividends; and (ii) do not commit to structure the terms of the award or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items.

Prior to issuance of the Common Stock underlying the Award, you shall pay cash or make adequate arrangements satisfactory to G&W and/or the Employer to satisfy all withholding and payment on account of obligations of G&W and/or the Employer. In this regard, you authorize G&W and/or the Employer to withhold all applicable Tax-Related Items legally

2

payable by you from your wages or other cash compensation paid to you by G&W and/or the Employer. Alternatively, or in addition, if permissible under local law, G&W, or its designated agent, may withhold in shares of Common Stock from the issuance of the Common Stock underlying the Award, provided that G&W, or its designated agent, only withholds the amount of shares of Common Stock necessary to satisfy the minimum withholding amount. Finally, you shall pay to G&W, its designated agent, or the Employer any amount of Tax-Related Items that G&W or the Employer may be required to withhold as a result of your participation in the Plan or receipt of shares of Common Stock that cannot be satisfied by the means previously described. G&W, or its designated agent, may refuse to honor the issuance and refuse to deliver the shares of Common Stock if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.

The payment of such withholding taxes to G&W, or its designated agent, may also be made pursuant to any method approved or accepted by the Committee in its sole discretion, subject to any and all limitations imposed by the Committee from time to time (which may not be uniform).] [NOTE: this version of 3(b) is applicable in Australia only] [NOTE: For Netherlands 3(b) is not applicable; insert “(b) RESERVED”]

[4. Effect of Breach of Certain Covenants.

(a) In General. If you engage in the conduct described in subsection (c) of this Section 4, then, unless the Committee determines otherwise: (i) you immediately forfeit, effective as of the date you engage in such conduct, the unvested portion of the Award; and (ii) you must return to G&W the shares of Common Stock that vested within the six-month period immediately preceding the date you engage in such conduct or, at the option of G&W, pay to G&W the Fair Market Value, as of the date you engage in such conduct, of the shares of Common Stock that vested within such six-month period.

(b) Set-Off. By accepting the Award, you consent to a deduction from any amounts G&W or any Subsidiary owes you from time to time (including, but not limited to, amounts owed to you as wages or other compensation, fringe benefits, or vacation pay), to the extent of the amount that you owe G&W under subsection (a) of this Section 4. G&W may elect to make any set-off in whole or in part. If G&W does not recover by means of a set-off the full amount that you owe G&W, you shall immediately pay the unpaid balance to G&W.

(c) Conduct. You hereby agree that you will not, without the written consent of G&W, either during your employment by or service to G&W or any Subsidiary or thereafter, disclose to anyone or make use of any confidential information which you acquired during your employment or service relating to any of the business of G&W or any Subsidiary, except as such disclosure or use may be required in connection with your work as an employee or consultant of G&W or any Subsidiary. During your employment by or service to G&W or any Subsidiary, and for a period of six months after the termination of such employment or service, you will not, either as principal, agent, consultant, employee, stockholder or otherwise, engage in any work or other activity in direct competition with G&W or any Subsidiary. (For purposes of this Section 4, you shall not be deemed a stockholder of any company subject to the periodic and other reporting requirements of the Exchange Act, if your record and beneficial ownership of any such company amount to not more than five percent of the outstanding capital stock of any such

3

company.) The non-competition covenant of this Section 4 applies separately in the United States and in other countries. Your breach of the covenant of this subsection (c) shall result in the consequences described in this Section 4.] [NOTE: not applicable in director restricted stock award; insert “4. RESERVED” if not applicable] [NOTE: this section 4 is only applicable to some Grantees, including Executive Officers; insert “4. RESERVED” if not applicable]

[5. Effect of Change in Control.

(a) Upon the occurrence of a “Change in Control” of G&W, the unvested portion of the Award shall immediately vest as of the date of the occurrence of such event.

(b) The term “Change in Control” shall be deemed to have occurred when:

(i) Any “person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding G&W and any Subsidiary and any employee benefit plan sponsored or maintained by G&W or any Subsidiary (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of G&W representing 35% or more of the combined voting power of G&W’s then outstanding securities (other than indirectly as a result of G&W’s redemption of its securities); provided, however, that in no event shall a Change in Control be deemed to have occurred under this Section 5(b)(i) so long as (x) the combined voting power of shares beneficially owned by (A) G&W’s executive officers (as defined in Rule 16a-1(f) under the Exchange Act) then in office (the “Executive Officer Shares”), (B) Mortimer B. Fuller and/or Sue Fuller and their lineal descendents (the “Founder Shares”), and (C) the shares beneficially owned by any other members of a “group” that includes the Founder Shares and/or a majority of the Executive Officer shares, exceeds 35% of the combined voting power of G&W’s current outstanding securities and remains the person or group with beneficial ownership of the largest percentage of combined voting power of G&W’s outstanding securities and (y) G&W remains subject to the reporting requirements of the Exchange Act; or

(ii) The consummation of any merger or other business combination of G&W, a sale of 51% or more of G&W’s assets, liquidation or dissolution of G&W or a combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which either (x) the shareholders of G&W and any trustee or fiduciary of any G&W employee benefit plan immediately prior to the Transaction own at least 51% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to G&W’s assets; (C) both the surviving corporation and the purchaser in the event of any combination of

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Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as applicable, the “Surviving Entity”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will later surrender such majority; or

(iii) Within any twelve-month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to G&W, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).] [NOTE: this section 5 is only applicable to some Grantees, including Executive Officers and directors; insert “5. RESERVED” if not applicable]

6. Book-Entry Registration. The Award initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the shares of Common Stock underlying the Award.

7. RESERVED

8. Nonassignability. The shares of Common Stock underlying the Award and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, alienated, assigned, transferred, pledged or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws and regulations under the Exchange Act.

9. Rights as a Stockholder. Unless the Award is forfeited or cancelled, prior to the vesting of the shares of Common Stock awarded under this Award Notice, you will have all of the other rights of a stockholder with respect to the shares of Common Stock underlying the Award, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of G&W.

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10. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

11. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares of Common Stock underlying the Award upon any securities exchange or under any federal, state or local law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested shares of Common Stock under this Award Notice, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.

12. Plan Controls. The Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

13. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the Award with your consent.

14. Governing Law. This Award and Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

15. Language. If you have received this Award Notice or any other document related to the Plan in a language other than English and if the translated version bears a meaning that is different from that of the English version, the English version will control, to the extent permitted by law.

16. Notices. All notices and other communications to G&W, or its designated agent, required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, by facsimile or electronically. If such notice or other communication is to G&W then it should be addressed to G&W’s office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Equity Plan Administrator; Telephone: (585) 328-8601; Facsimile: (585) 328-8622; Email: EquityPlanAdmin@gwrr.com. If such notice or other communication is to G&W’s designated agent, then it should be addressed and sent in accordance with established procedures. Each such notice and other communication delivered personally shall be deemed to have been given when received. Each such notice and other communication delivered by United States mail shall be deemed to have been given when it is received, and each such notice and other communication delivered by telex, telecopier, or electronically shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.

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17. Data Privacy. You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, the Employer, and G&W and its Subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan, to the extent permitted by law.

You understand that G&W and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in G&W, details of all restricted stock awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of stock acquired upon issuance of the Common Stock underlying the Award, to the extent permitted by law. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

18. Electronic Delivery. G&W may, in its sole discretion, decide to deliver any documents related to the Award granted under the Plan (or related to future restricted stock awards that may be granted under the Plan) by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, hereby agree to participate in the Plan through an on-line or electronic system established and maintained by G&W or another third party designated by G&W.

19. Severability. The provisions of this Award Notice are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

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ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and G&W regarding the restricted stock granted by this Award Notice and that this Award Notice and the Plan supersede all prior oral and written agreements on that subject.

Dated:                             

                [Name]

Genesee & Wyoming Inc. By:

                Matthew C. Brush

    Chief Human Resource Officer

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[NOTE: only applicable in the Netherlands]

ADDENDUM TO RESTRICTED STOCK AWARD NOTICE

THE PARTIES

(1) GENESEE & WYOMING INC, a company incorporated under the laws of the State of Delaware, the United States, duly represented by Matthew C. Brush, hereafter referred to as G&W

And

(2) [Name], residing at [Address], hereafter referred to as the Beneficiary

The parties referred to under (1) and (2) above are hereafter together referred to as the Parties.

WHEREAS

(A) The Beneficiary is managing director of Rotterdam Rail Feeding B.V. (“RRF”) and Beneficiary has entered into an employment contract with RRF on [Date];

(B) G&W has acquired the entire share capital of RRF on [Date];

(C) G&W and the Beneficiary have agreed on a restricted stock award as described in the letter dated [date];

(D) In connection with the letter referred to under (C) above, the Parties enter into an Award Notice (the “Award Notice”); and

(E) For the purpose of compliance of the Award Notice with the provisions of Dutch law (if applicable), the terms and conditions of this Addendum shall apply in deviation of, or in addition to certain terms and conditions of the Award Notice.

HAVE AGREED ON THE FOLLOWING

1. DEFINITIONS

Except as provided otherwise in this Addendum, the definitions of the Award Notice shall apply to this Addendum.

2. DISABILITY

Regarding satisfaction of vesting requirements and issuance of share certificates, Clause 3(a) of the Award Notice shall, in addition to the meaning provided in that Clause, also apply in the circumstance that the Beneficiary is permanently ill and that, as a result thereof, the employment contract between the Beneficiary and RRF is terminated, in compliance with Dutch law.

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3. [NON COMPETITION

Clause 3(c) of the Award Notice provides for a non-competition covenant to which the Beneficiary shall be bound for a period of six months following the termination of the Beneficiary’s employment contract with RRF. In deviation of Clause 3(c) of the Award Notice, the non-competition covenant is limited solely to the territory of Europe.] [NOTE: this section 3 is only applicable to some Grantees; insert “3. RESERVED” if not applicable]

4. DATA PRIVACY

4.1 In deviation of Clause 17 of the Award Notice, the following shall apply. The Parties acknowledge that all personal data which are necessary for the performance of the contract provided in the Award Notice shall be collected, used and/or transferred to G&W. The personal data shall be processed for the exclusive purpose of implementing, administering and managing the Beneficiary’s participation in the Plan. Furthermore, Parties acknowledge that RRF shall be the controller in the meaning of the Dutch Data Protection Act. To the extent necessary, the Beneficiary explicitly agrees with the processing of his personal data as referred to in this Clause 4 of the Addendum, and specifically with the transfer of the Beneficiary’s personal data to G&W in the United States.

4.2 The personal data to be processed shall include: the Beneficiary’s name, home address, e-mail address, salary, job title, any shares of stock or directorships held in G&W, details of all restricted stock awards or any other entitlement to shares of stock awarded, cancelled, exercised, vested, unvested or outstanding in favour of the Beneficiary, necessary for the performance of the Award Notice. Upon the issuance of the Common Stock underlying the Award, additional information may be required regarding bank or brokerage account(s) held by the Beneficiary. In case of death of the Beneficiary, the personal data mentioned in this Clause 4.2 shall also be required from the Beneficiary’s inheritors.

5. TAX

The Award is subject to tax at the moment it is granted or at the moment it vests. G&W and/or RRF will file a request with the appropriate tax authorities in order to receive advance certainty in this respect.

Regardless of any action G&W, its designated agent, or RRF takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that G&W and/or RRF (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award grant, including the grant or vesting of the Award, the subsequent sale of shares of Common Stock acquired pursuant to such grant or vesting and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items.

Prior to the grant or vesting of the Award, you shall pay or make adequate arrangements satisfactory to G&W and/or RRF to satisfy all withholding and payment on account obligations of G&W and/or RRF. In this regard, you authorize G&W and/or RRF to withhold all applicable

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Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by G&W and/or RRF or from proceeds of the sale of shares of Common Stock. Alternatively, or in addition, if permissible under local law, G&W, or its designated agent, may (1) sell or arrange for the sale of shares of Common Stock that you acquire to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in shares of Common Stock, provided that G&W, or its designated agent, only withholds the amount of shares of Common Stock necessary to satisfy the minimum withholding amount. Finally, you shall pay to G&W, its designated agent, or RRF any amount of Tax-Related Items that G&W or RRF may be required to withhold as a result of your participation in the Plan or your purchase of shares of Common Stock that cannot be satisfied by the means previously described.

G&W, or its designated agent, may refuse to honor the vesting and refuse to issue a certificate representing such vested shares of Common Stock if you fail to comply with your obligations in connection with the Tax Related Items as described in this section.

6. AWARD NOTICE

Unless described otherwise in this Addendum, the terms and conditions of the Award Notice shall be fully valid and binding between the Parties.

7. GOVERNING LAW

7.1 This Addendum shall be governed by the laws of the Netherlands.

7.2 The competent court of Rotterdam has exclusive jurisdiction to settle any dispute arising out of or in connection with this Addendum.

SIGNATORIES

Thus agreed upon and executed in duplicate in                              on                     .

[Name]

Genesee & Wyoming Inc. By:

                Matthew C. Brush

    Chief Human Resource Officer

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EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

I, John C. Hellmann, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 of Genesee & Wyoming Inc. (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009	/s/ John C. Hellmann
	John C. Hellmann,
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

I, Timothy J. Gallagher, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 of Genesee & Wyoming Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009	/s/ Timothy J. Gallagher
	Timothy J. Gallagher,
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Section 1350 Certification

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), John C. Hellmann and Timothy J. Gallagher, President and Chief Executive Officer and Chief Financial Officer, respectively, of Genesee & Wyoming Inc., certify that (i) the Quarterly Report on Form 10-Q for the three months ended June 30, 2009, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Genesee & Wyoming Inc.

/s/ John C. Hellmann

John C. Hellmann

President and Chief Executive Officer

Date: August 7, 2009

/s/ Timothy J. Gallagher

Timothy J. Gallagher

Chief Financial Officer

Date: August 7, 2009