-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OqhVTUNVa349KDetcOOVl9ZWOMX5yHXmoED7kBprgsBPPeLUZ3D1rzca8Ibh6Zd5 2/KFJ+/67yj+LGrQJI+LzA== 0001275287-06-005626.txt : 20061101 0001275287-06-005626.hdr.sgml : 20061101 20061101063054 ACCESSION NUMBER: 0001275287-06-005626 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060111 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061101 DATE AS OF CHANGE: 20061101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESEE & WYOMING INC CENTRAL INDEX KEY: 0001012620 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 060984624 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31456 FILM NUMBER: 061177074 BUSINESS ADDRESS: STREET 1: 66 FIELD POINT ROAD CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036293722 MAIL ADDRESS: STREET 1: 66 FIELD POINT ROAD CITY: GREENWICH STATE: CT ZIP: 06830 8-K 1 gw7708.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): November 1, 2006 Genesee & Wyoming Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 001-31456 06-0984624 ---------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 66 Field Point Road, Greenwich, Connecticut 06830 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 629-3722 Not Applicable ----------------------------------------------------------- Former name or former address, if changed since last report Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02. Results of Operations and Financial Condition On November 1, 2006, Genesee & Wyoming Inc. (GWI) issued a press release reporting financial results for the third quarter of 2006. A copy of the press release is attached hereto as Exhibit 99.1. The attached Exhibit 99.1 is furnished in its entirety pursuant to this Item 2.02 and is incorporated herein by reference. ITEM 8.01 Other Events On November 1, 2006, GWI announced a delay in the restoration of hurricane-damaged rail line in Mexico and a write-down of Mexican assets in the third quarter of 2006. The press release announcing these developments, filed as Exhibits 99.2 hereto, and the information set forth therein is filed under this Item 8.01 and is incorporated herein by reference. ITEM 9.01 Financial Statements and Exhibits (d) Exhibit. 99.1 Press release, dated November 1, 2006 announcing results for the third quarter of 2006 99.2 Press release, dated November 1, 2006 announcing delay in restoration of hurricane-damaged rail line and write-down of Mexican assets SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENESEE & WYOMING INC. November 1, 2006 By: /s/ Timothy J. Gallagher ------------------------ Name: Timothy J. Gallagher Title: Chief Financial Officer EX-99.1 2 gw7708ex991.txt EXHIBIT 99.1 Exhibit 99.1 GENESEE & WYOMING REPORTS RESULTS FOR THE THIRD QUARTER OF 2006 GREENWICH, Conn., Nov. 1, 2006 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported a net loss of $12.1 million in the third quarter of 2006, compared to net income of $17.0 million in the third quarter of 2005. GWI's diluted loss per share in the third quarter of 2006 was $0.32 with 37.7 million shares outstanding, compared to diluted earnings per share of $0.41 with 41.8 million shares outstanding in the third quarter of 2005. In accordance with accounting standards generally accepted in the U.S., because of the loss reported, the diluted shares outstanding for the third quarter of 2006 exclude the effects of 4.6 million potential common shares from our Class B common stock and our stock-based compensation plans. Results for the third quarter of 2006 included certain charges and gains that totaled a net loss of $23.8 million ($28.0 million after-tax, or $0.74 per diluted share). Results for the third quarter of 2005 included a gain of $0.05 per share on the sale of surplus rail. Significant items impacting GWI's results for the third quarter of 2006 are enumerated in the following table: (dollars in millions, except per diluted share amounts)
Pre-Tax After-Tax EPS Item Amount Amount Impact - ---------------------------------------- ---------- ---------- ---------- Non-Cash Write-down of Mexican Assets $ (33.1) $ (34.1) $ (0.90) ARG Sale Post-Closing Adjustments $ 10.4 $ 6.8 $ 0.18 Settlement of Galveston Litigation $ (1.1) $ (0.7) $ (0.02) $ (23.8) $ (28.0) $ (0.74)
As a result of the indefinite delay in the reconstruction of a hurricane-damaged rail line in Chiapas, GWI recorded a non-cash charge in the third quarter of 2006 of approximately US$34.1 million after-tax, or $0.90 per share, reflecting the non-cash write-down of its Mexican non-current assets and related effects. The write-down of the Mexican assets is more fully described in a press release that GWI also issued today. On June 1, 2006, GWI and its joint venture partner, Wesfarmers Limited (Wesfarmers), completed the sale of their Western Australia operations and certain other assets of the Australian Railroad Group (ARG) to Queensland Rail and Babcock & Brown Limited. ARG was 50 percent-owned by GWI and 50 percent-owned by Wesfarmers. This sale resulted in a gain of $208.4 million in the second quarter of 2006 ($123.0 million after-tax, or $2.89 per share). In the third quarter of 2006, GWI received payment of its share of the post-closing adjustments from the sale, and recorded an additional gain of $10.4 million ($6.8 million after-tax, or $0.18 per diluted share). Operating Results In the third quarter of 2006, GWI's revenue increased 21.9 percent to $128.3 million, compared to $105.3 million in the third quarter of 2005. Of this $23.1 million increase in revenue, $5.7 million was from same-railroad growth in the U.S. and Canada, while $20.2 million was from GWI's acquisition in South Australia and a small acquisition in the U.S. These gains were partially offset by a $2.8 million decrease in revenue in Mexico. The 6.0 percent growth in same-railroad revenue in the U.S. and Canada was primarily due to freight revenue increases of $2.0 million in coal and $1.8 million in metals. Same-railroad revenue per carload increased by 6.9 percent (on higher rates of 4.5 percent, higher fuel surcharge of 3.9 percent, partially offset by a decrease of 1.5 percent due to a change of commodity mix). GWI's same-railroad revenue per carload in the U.S. and Canada increased by 9.4 percent (on higher rates of 6.4 percent, higher fuel surcharges of 4.4 percent, partially offset by a 1.4 percent decrease due to a change of commodity mix). GWI's operating loss in the third quarter of 2006 was $13.0 million, compared with operating income of $24.1 million in the third quarter of 2005. Excluding the non-cash write-down and related charges in Mexico of $33.1 million ($34.1 million after-tax), third quarter of 2006 operating income was $21.2 million. GWI's operating results in the third quarter of 2006 also included $1.1 million of pre-tax expense associated with a legal settlement, while operating results from 2005 included a $3.4 million pre-tax gain on the disposition of surplus rail. Excluding the impairment and related charges, GWI's Mexican operations had an operating loss of $2.0 million in the third quarter of 2006, compared to operating income of $1.2 million in the third quarter of 2005. Mexican operating results for the third quarter of 2006 were adversely affected by i) the inoperability of a portion of the hurricane-damaged Chiapas line, ii) the loss of certain other long-haul traffic to barge, and iii) track-caused derailments during the rainy season. GWI's operating ratio in the third quarter of 2006 was 110.1 percent, compared to 77.1 percent in the third quarter of 2005. Excluding Mexico and the other significant items described above, GWI's operating ratio was 79.9 percent in the third quarter of 2006 compared with 79.5 percent in the third quarter of 2005.(1) GWI's traffic in the third quarter of 2006 increased by approximately 21,700 carloads, or 10.6 percent, compared with the third quarter of 2005. Excluding traffic from acquisitions, same railroad traffic in the third quarter of 2006 decreased by approximately 7,500 carloads, or 3.7 percent. Included in this decrease was a decline of approximately 2,900 carloads in GWI's Mexico Region. Free Cash Flow (dollars in millions)(2) Nine Months Ended September 30, -------------------------------- 2006 2005 -------------- -------------- Net cash provided by operating activities $ 63.8 $ 50.9 Net cash provided by (used in) investing activities $ 252.6 $ (261.9) Cash proceeds from divestitures $ (306.7) - Cash used for acquisitions $ 21.2 $ 244.7 Free cash flow $ 30.8 $ 33.8 For the nine months ended September 30, 2006, GWI generated net cash provided by operating activities of $63.8 million and free cash flow of $30.8 million. GWI's free cash flow for the nine months ended September 30, 2006, included an increase in working capital of $4.9 million and project-specific capital expenditures of $5.4 million. Project-specific capital expenditures include items such as track and equipment capital associated with new business development and the buy-out of certain equipment leases. For the nine months ended September 30, 2005, GWI generated net cash provided by operating activities of $50.9 million and free cash flow of $33.8 million. GWI's free cash flow for the nine months ended September 30, 2005, included an increase in working capital of $3.2 million and project-specific capital expenditures of $1.2 million. Comments from the Chief Executive Officer Mortimer B. Fuller, Chairman and CEO of GWI, commented, "We are disappointed by the failure to resolve the Mexican situation and the necessity to take this significant write-down. As we announced today, the increased cost and indefinite timing of the Chiapas rail line reconstruction have resulted in an unsustainable business. Without support from the Mexican Government until the Chiapas line is reconstructed, FCCM is not a viable enterprise. We are working closely with the Mexican Government to resolve the situation as expeditiously as possible and are considering all alternatives." Mr. Fuller continued, "Meanwhile, the core operating profits of GWI, excluding Mexico and other items identified in this release, increased more than 24 percent versus the third quarter of last year, performance which was ahead of our expectations. Despite general weakness in paper and forest products shipments, we have been able to improve yields and control costs, resulting in a core operating ratio of approximately 80 percent in the third quarter of 2006, comparable to that in the third quarter of 2005."(1) Conference Call and Webcast Details As previously announced, GWI's conference call to discuss financial results for the third quarter will be held today at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is 877-209-0397; outside U.S., call 612-332-0932, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's website (http://www.gwrr.com), by selecting "Third Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's website starting at 2:30 p.m. this afternoon. About Genesee & Wyoming Inc. GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. GWI railroads operate in 26 US states and two Canadian provinces and serve 11 US ports. GWI operates over 5,900 miles of owned and leased track and approximately 3,700 additional miles under track access arrangements Cautionary Statement Concerning Forward-Looking Statements This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic conditions, customer demand, increased competition in relevant markets, and others. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI's Forms 10-Q and 10-K which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. GWI disclaims any intention to update the current expectations or forward looking statements contained in this press release. 1. Operating income/losses and operating ratios that exclude the items described above are non-GAAP measures and are not intended to replace the operating income/loss or operating ratios calculated using total operating expenses and total revenue, calculated on a basis consistent with GAAP. The information required by Regulation G under the Securities Exchange Act of 1934, including reconciliation to the operating income calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release. 2. Free cash flow is a non-GAAP measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net cash provided by operating activities, is included in the tables attached to this press release. Contact: Christopher Capot Director - Corporate Communications Genesee & Wyoming Inc. 203-629-3722 Cell 203-379-8019 Investor Contact T. J. Gallagher Chief Financial Officer, Genesee & Wyoming Inc. 203-629-3722 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2006 2005 2006 2005 ---------- ---------- ---------- ---------- OPERATING REVENUES $ 128,304 $ 105,250 $ 354,876 $ 282,073 OPERATING EXPENSES 141,269 81,171 329,436 227,715 (LOSS) INCOME FROM OPERATIONS (12,965) 24,079 25,440 54,358 GAIN ON SALE OF EQUITY INVESTMENT IN ARG 10,421 - 218,845 - INVESTMENT LOSS - BOLIVIA - - (5,878) - EQUITY INCOME (LOSS) OF UNCONSOLIDATED INTERNATIONAL AFFILIATES - 3,585 (10,752) 10,440 INTEREST INCOME 3,279 154 4,461 253 INTEREST EXPENSE (3,890) (4,919) (13,587) (9,875) OTHER INCOME (EXPENSE), NET 776 (72) 2,257 (549) (LOSS) INCOME BEFORE INCOME TAXES (2,379) 22,827 220,786 54,627 PROVISION FOR INCOME TAXES 9,727 5,783 101,129 15,319 NET (LOSS) INCOME $ (12,106) $ 17,044 $ 119,657 $ 39,308 BASIC (LOSS) EARNINGS PER SHARE $ (0.32) $ 0.46 $ 3.18 $ 1.07 WEIGHTED AVERAGE SHARES - BASIC 37,739 37,035 37,600 36,829 DILUTED (LOSS) EARNINGS PER SHARE $ (0.32) $ 0.41 $ 2.82 $ 0.94 WEIGHTED AVERAGE SHARES - DILUTED 37,739 41,815 42,488 41,608
GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2006 2005 -------------- -------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 242,366 $ 18,669 Accounts receivable, net 113,870 91,134 Materials and supplies 11,776 6,765 Prepaid expenses and other 10,963 8,298 Deferred income tax assets, net 7,945 4,230 Total current assets 386,920 129,096 PROPERTY AND EQUIPMENT, net 551,162 535,994 INVESTMENT IN UNCONSOLIDATED AFFILIATES 4,535 136,443 GOODWILL 38,163 31,233 INTANGIBLE ASSETS, net 121,562 135,444 OTHER ASSETS, net 10,424 12,388 Total assets $ 1,112,766 $ 980,598 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 16,551 $ 4,726 Accounts payable 101,843 87,496 Accrued expenses 33,783 28,270 Income tax payable - Australia 86,216 - Total current liabilities 238,393 120,492 LONG-TERM DEBT, less current portion 232,192 333,625 DEFERRED INCOME TAX LIABILITIES, net 72,462 59,891 DEFERRED ITEMS - grants from governmental agencies 49,930 48,242 OTHER LONG-TERM LIABILITIES 17,176 20,528 TOTAL STOCKHOLDERS' EQUITY 502,613 397,820 Total liabilities and stockholders' equity $ 1,112,766 $ 980,598 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Nine Months Ended -------------------------------- September 30, September 30, 2006 2005 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 119,657 $ 39,308 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 22,138 17,717 Amortization of restricted stock 768 486 Compensation cost related to stock options 5,404 915 Excess tax benefits from share-based compensation (4,368) (392) Deferred income taxes 16,021 5,385 Tax benefit upon exercise of stock options - 309 Gain on insurance recovery (1,937) - Gain on sale of equity investment in ARG (218,845) - Net loss (gain) on sale and impairment of assets 36,264 (3,367) Investment loss - Bolivia 5,878 - Equity loss (income) of unconsolidated international affiliates, net of tax 7,500 (7,425) Changes in assets and liabilities, net of effect of acquisitions - Accounts receivable, net (10,562) (11,115) Materials and supplies (2,439) (1,091) Prepaid expenses and other (2,363) 741 Accounts payable and accrued expenses 10,467 8,220 Income tax payable - Australia 86,216 - Other assets and liabilities, net (5,983) 1,242 Net cash provided by operating activities 63,816 50,933 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of government grants (33,562) (21,951) Proceeds from ARG Sale 306,746 - Purchase of Chattahoochee Bay Railroad (6,050) - Purchase of Wesfarmers' 50-percent ownership of the remaining ARG operations, net of cash received (15,139) - Purchase of Rail Partners, net of cash received - (238,204) Additional purchase price for Genesee Rail-One - (6,500) Cash received from unconsolidated international affiliates - 655 Valuation adjustment of split dollar life insurance 63 32 Proceeds from disposition of property and equipment 499 4,093 Net cash provided by (used in) investing activities 252,557 (261,875) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term borrowings, including capital leases (183,446) (159,398) Proceeds from issuance of long-term debt 92,500 359,800 Debt issuance costs - (1,629) Proceeds from employee stock purchases 6,345 2,761 Treasury stock purchases (11,188) (368) Excess tax benefits from share-based compensation 4,368 392 Net cash (used in) provided by financing activities (91,421) 201,558 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,255) 1,152 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 223,697 (8,232) CASH AND CASH EQUIVALENTS, beginning of period 18,669 14,451 CASH AND CASH EQUIVALENTS, end of period $ 242,366 $ 6,219
GENESEE & WYOMING INC. AND SUBSIDIARIES Selected Consolidated Financial Information (dollars in thousands) (Unaudited)
Three Months Ended September 30, --------------------------------------------------- 2006 2005 ----------------------- ------------------------ % of % of Amount Revenue Amount Revenue ---------- ---------- ---------- ----------- Revenues: Freight $ 86,955 67.8% $ 77,605 73.7% Non-freight 41,349 32.2% 27,645 26.3% Total revenues $ 128,304 100.0% $ 105,250 100.0% Operating Expense Comparison: Natural Classification Labor and benefits $ 36,700 28.6% $ 31,379 29.8% Equipment rents 9,873 7.7% 9,281 8.8% Purchased services 10,850 8.5% 7,583 7.2% Depreciation and amortization 7,888 6.1% 7,058 6.7% Diesel fuel used in operations 11,577 9.0% 10,709 10.2% Diesel fuel sold to third parties 5,458 4.3% - 0.0% Casualties and insurance 6,086 4.7% 4,548 4.3% Materials 6,422 5.0% 5,131 4.9% Net loss (gain) on sale and impairment of assets 36,397 28.4% (3,368) -3.2% Other expenses 10,018 7.8% 8,850 8.4% Total operating expenses $ 141,269 110.1% $ 81,171 77.1% Functional Classification Transportation $ 42,193 32.9% $ 36,052 34.3% Maintenance of ways and structures 11,032 8.6% 8,687 8.3% Maintenance of equipment 17,581 13.7% 14,991 14.2% Diesel fuel sold to third parties 5,458 4.3% - 0.0% General and administrative 20,720 16.1% 17,751 16.8% Net loss (gain) on sale and impairment of assets 36,397 28.4% (3,368) -3.2% Depreciation and amortization 7,888 6.1% 7,058 6.7% Total operating expenses $ 141,269 110.1% $ 81,171 77.1%
GENESEE & WYOMING INC. AND SUBSIDIARIES Selected Consolidated Financial Information (dollars in thousands) (Unaudited)
Nine Months Ended September 30, ---------------------------------------------------- 2006 2005 ------------------------ ------------------------ % of % of Amount Revenue Amount Revenue ---------- ---------- ---------- ---------- Revenues: Freight $ 255,392 72.0% $ 209,984 74.4% Non-freight 99,484 28.0% 72,089 25.6% Total revenues $ 354,876 100.0% $ 282,073 100.0% Operating Expense Comparison: Natural Classification Labor and benefits $ 116,636 32.9% $ 89,833 31.8% Equipment rents 28,898 8.1% 25,286 9.0% Purchased services 26,574 7.5% 18,778 6.7% Depreciation and amortization 22,138 6.2% 17,717 6.3% Diesel fuel used in operations 34,210 9.6% 27,523 9.8% Diesel fuel sold to third parties 7,089 2.0% - 0.0% Casualties and insurance 13,007 3.7% 13,682 4.9% Materials 17,921 5.0% 14,159 5.0% Net loss (gain) on sale and impairment of assets 36,264 10.2% (3,367) -1.2% Gain on insurance recovery (1,937) -0.5% - 0.0% Other expenses 28,636 8.1% 24,104 8.4% Total operating expenses $ 329,436 92.8% $ 227,715 80.7% Functional Classification Transportation $ 119,474 33.7% $ 96,765 34.3% Maintenance of ways and structures 31,369 8.8% 25,137 8.9% Maintenance of equipment 50,093 14.1% 41,771 14.8% Diesel fuel sold to third parties 7,089 2.0% - 0.0% General and administrative 64,946 18.3% 49,692 17.6% Net loss (gain) on sale and impairment of assets 36,264 10.2% (3,367) -1.2% Gain on insurance recovery (1,937) -0.5% - 0.0% Depreciation and amortization 22,138 6.2% 17,717 6.3% Total operating expenses $ 329,436 92.8% $ 227,715 80.7%
GENESEE & WYOMING INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload)
Three Months Ended Three Months Ended September 30, 2006 September 30, 2005 ------------------------------------ ------------------------------------ Average Average Revenue Revenue Freight Per Freight Per Commodity Group Revenues Carloads Carload Revenues Carloads Carload - ------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Pulp & Paper $ 17,637 34,552 $ 510 $ 17,273 37,267 $ 463 Coal, Coke & Ores 15,053 51,796 291 13,008 51,548 252 Minerals & Stone 10,348 34,455 300 8,563 21,495 398 Metals 9,300 21,613 430 7,504 20,047 374 Farm & Food Products 9,221 24,904 370 5,079 15,000 339 Lumber & Forest Products 8,534 21,586 395 9,667 27,018 358 Chemicals-Plastics 6,431 10,907 590 5,876 10,795 544 Petroleum Products 5,146 7,289 706 6,164 7,856 785 Autos & Auto Parts 1,685 3,079 547 1,365 2,658 514 Intermodal 455 1,103 413 563 1,279 440 Other 3,145 14,594 215 2,543 9,252 275 Totals $ 86,955 225,878 385 $ 77,605 204,215 380
GENESEE & WYOMING INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload)
Nine Months Ended Nine Months Ended September 30, 2006 September 30, 2005 ------------------------------------ ------------------------------------ Average Average Revenue Revenue Freight Per Freight Per Commodity Group Revenues Carloads Carload Revenues Carload Carload - ------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Pulp & Paper $ 52,364 104,731 $ 500 $ 42,284 93,362 $ 453 Coal, Coke & Ores 47,075 150,826 312 38,421 147,192 261 Metals 28,046 65,480 428 20,846 57,966 360 Minerals & Stone 27,482 79,917 344 21,390 53,284 401 Lumber & Forest Products 27,468 71,427 385 26,019 72,505 359 Farm & Food Products 21,304 57,435 371 13,526 39,407 343 Chemicals-Plastics 18,935 32,517 582 15,798 29,868 529 Petroleum Products 16,853 22,941 735 19,870 25,369 783 Autos & Auto Parts 5,464 10,530 519 5,248 10,866 483 Intermodal 1,310 3,058 428 1,561 3,577 436 Other 9,091 42,648 213 5,021 18,321 274 Totals $ 255,392 641,510 398 $ 209,984 551,717 381
Reconciliation of non-GAAP Financial Measures This earnings release contains free cash flow and adjusted operating ratios, which are "non-GAAP financial measures" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to their most directly comparable U.S. GAAP measures. Free Cash Flow Description and Discussion Management views Free Cash Flow as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities less Net Cash Used in/Provided by Investing Activities, excluding the Cost of Acquisitions/Proceeds from Divestitures. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as required dividend payments and principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with Generally Accepted Accounting Principles (GAAP). The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities to GWI's Free Cash Flow: Nine Months Ended September 30, -------------------------------- 2006 2005 -------------- -------------- Net cash provided by operating activities $ 63,816 $ 50,933 Net cash provided by (used in) investing activities 252,557 (261,875) Cash proceeds from divestitures (306,746) - Cash used for acquisitions 21,189 244,704 Free cash flow $ 30,816 $ 33,762 Operating Ratio Description and Discussion Management views the Operating Ratio, calculated as total Operating Expenses divided by total Revenues, as an important measure of GWI's operating performance. Because management believes it is useful for investors in assessing GWI's financial results compared to the same period in the prior year, Adjusted Operating Ratios are also presented excluding the effects of a legal settlement as well as the impairment loss on its Mexican assets and the effects of its operations in Mexico in the three month period ended September 30, 2006. GWI also discloses Adjusted Operating Ratios that exclude the effects of the sale of surplus rail as well as the effects of its operations in Mexico in the three month periods ended September 30, 2005. The Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Ratios calculated using amounts determined in accordance with GAAP. The following table sets forth a reconciliation of GWI's Operating Ratio calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratios described above:
For the Three Months Ended September 30, 2006 ---------------------------------------------------- Total Operating Total Operating Income Operating Revenues Expenses (Loss) Ratio - ----------------------------------- ---------- ---------- ---------- ---------- As Reported $ 128,304 $ 141,269 $ (12,965) 110.1% Legal Settlement (1,138) 1,138 Mexico Impairment (34,156) 34,156 Excluding Above Items 128,304 105,975 22,329 82.6% Mexico Operations (7,285) (9,262) 1,977 Excluding Above Items and Mexico $ 121,019 $ 96,713 $ 24,306 79.9%
For the Three Months Ended September 30, 2005 ---------------------------------------------------- Total Operating Total Operating Income Operating Revenues Expenses (Loss) Ratio - ----------------------------------- ---------- ---------- ---------- ---------- As Reported $ 105,250 $ 81,171 $ 24,079 77.1% Sale of Surplus Rail 3,398 (3,398) Excluding Above Items 105,250 84,569 20,681 80.4% Mexico Operations (10,107) (8,901) (1,206) Excluding Above Items and Mexico $ 95,143 $ 75,668 $ 19,475 79.5%
SOURCE Genesee & Wyoming Inc. -0- 11/01/2006 /CONTACT: Christopher Capot, Director of Corporate Communications, Genesee & Wyoming Inc., +1-203-629-3722, cell, +1-203-379-8019, or Investor, T.J. Gallagher, Chief Financial Officer, Genesee & Wyoming Inc., +1-203-629-3722/ /Web site: http://www.gwrr.com / EX-99.2 3 gw7708ex992.txt EXHIBIT 99.2 Exhibit 99.2 GENESEE & WYOMING ANNOUNCES DELAY IN RESTORATION OF HURRICANE-DAMAGED RAIL LINE AND WRITE-DOWN OF MEXICAN ASSETS IN THE THIRD QUARTER OF 2006 GREENWICH, Conn., Nov. 1, 2006 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) announced today that in connection with the preparation of its Form 10-Q for the three and nine month periods ended September 30, 2006, GWI has determined that it will record non-cash expense in the third quarter of 2006 of US$34.1 million after-tax, or $0.90 per share, reflecting the write-down of the non-current assets and related charges of its Mexican railroad operations, Ferrocarriles Chiapas-Mayab, S.A. de C.V. ("FCCM") and GW Servicios S.A. ("Servicios"). In October 2005, FCCM's operations were struck by Hurricane Stan with the most severe impact concentrated in the State of Chiapas between the town of Tonala and the Guatemalan border. Approximately seventy bridges were damaged or destroyed and various segments of track were washed out. Over the past twelve months, FCCM has been working with the Mexican Ministry of Communications and Transportation (SCT) and other Mexican government agencies to develop a reconstruction plan for the damaged portion of the railroad. As announced by GWI in July 2006, FCCM received a letter from the SCT indicating that the SCT intended to fund 75% of the US$20 million expected cost to rebuild the rail line subject to certain conditions. That project was expected to begin prior to year-end 2006. Since July 2006, FCCM has been negotiating a formal agreement with the SCT and undertaking project design work. However, recent actions taken by the National Water Commission ("CNA") and other Mexican government agencies in the storm-damaged area have significantly increased the cost of the rail line reconstruction project and have made the timetable to completion uncertain. As a result, it is not clear that adequate resources are available to fund the project. For the twelve months ended September 30, 2006, FCCM recorded operating losses of $4.2 million (excluding the write-down), reducing GWI's diluted EPS by approximately $0.07. Going forward, GWI expects to continue to incur operating losses from the Mexican business and may record additional charges, depending on the outcome of discussions with the Mexican Government. GWI is engaged in a number of actions seeking rapid resolution of the situation. First, FCCM continues to be positively engaged with the SCT regarding restoration of the Chiapas line and financial support for FCCM. Second, FCCM has filed a formal request with the Mexican Government for financial compensation for damages caused by Hurricane Stan. Third, if these actions are not successful, GWI is pursuing other options for the railroad. As previously disclosed, on September 15, 2006, Servicios was unable to fund its principal and interest payment of US$1.9 million due under its loan agreements, and GWI decided not to advance these funds to Servicios. As a result, the lenders to the Mexican operations have the right to accelerate the outstanding debt and commence actions to (i) collect on the entire outstanding balance under the loan agreements (approximately US$15.2 million), or (ii) exercise their rights to the collateral pledged under the loan agreements, including FCCM's rolling stock and GWI's shares in FCCM and Servicios. If the lenders accelerate the outstanding debt, they may demand immediate payment of $8.9 million pursuant to GWI's partial guarantee of the debt. Neither this payment default, nor any action taken by the lenders to collect under the loan agreements, will result in a default under GWI's other outstanding debt obligations. John C. Hellmann, President of GWI, commented, "The increased cost and indefinite timing of the Chiapas rail line reconstruction have resulted in an unsustainable business for FCCM. Without support from the Mexican Government during the reconstruction period, FCCM is not a viable enterprise. Despite the increasingly difficult situation, FCCM's management and employees have demonstrated the highest professionalism and commitment in their efforts to preserve the business and to ensure the safety of its operations. GWI continues to seek an agreement with the Mexican Government as quickly as possible." CONTACT: Timothy J. Gallagher, Chief Financial Officer, 203-629-3722 Website: www.gwrr.com SOURCE Genesee & Wyoming Inc. -0- 11/01/2006 /CONTACT: Timothy J. Gallagher, Chief Financial Officer, Genesee & Wyoming Inc., +1-203-629-3722/ /Web site: http://www.gwrr.com/ -----END PRIVACY-ENHANCED MESSAGE-----