<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the quarter ended March 31, 1997 Commission File No. 0-20847
-------------- -------
GENESEE & WYOMING INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0984624
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
71 Lewis Street, Greenwich, Connecticut 06830
- --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(203) 629-3722
- --------------
(Telephone No.)
Shares of common stock outstanding as of the close of business on
May 9, 1997:
Class Number of Shares Outstanding
- ----- ----------------------------
Class A Common Stock 4,400,073
Class B Common Stock 846,556
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
<PAGE>
INDEX
Part I - Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements: Page
-------
<S> <C>
Consolidated Statements of Income - For the
Three Months Ended March 31, 1996 and 1997............ 3
Consolidated Balance Sheets - December 31, 1996
and March 31, 1997.................................... 4
Consolidated Statements of Cash Flows - For the
Three Months Ended March 31, 1996 and 1997............ 5
Notes to Consolidated Financial Statements............. 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9 - 12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk........................................... 12
Part II - Other Information.............................. 13
Index to Exhibits........................................ 14 - 16
Signatures............................................... 17
</TABLE>
2
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1996 1997
-------------------
<S> <C> <C>
OPERATING REVENUES $16,608 $24,092
-------------------
OPERATING EXPENSES:
Transportation 4,480 7,232
Maintenance of ways and structures 2,186 2,557
Maintenance of equipment 2,994 4,006
General and administrative 2,809 4,743
Depreciation and amortization 1,325 1,519
-------------------
Total operating expenses 13,794 20,057
-------------------
INCOME FROM OPERATIONS 2,814 4,035
Interest expense (1,274) (574)
Other income 81 131
-------------------
Income before provision for income taxes 1,621 3,592
Provision for income tax 656 1,458
-------------------
NET INCOME $965 $2,134
===================
EARNINGS PER COMMON SHARE AND
COMMON SHARE EQUIVALENT:
NET INCOME $0.41 $0.39
===================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARE AND COMMON SHARE EQUIVALENTS
OUTSTANDING 2,348 5,469
===================
</TABLE>
3
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, March 31,
1996 1997
ASSETS (Unaudited)
-----------------------
CURRENTS ASSETS:
Cash and cash equivalents $14,121 $17,699
Accounts receivable, net 19,133 20,727
Materials and supplies 4,173 4,177
Prepaid expenses and other 1,771 2,029
Deferred income tax assets, net 1,632 1,734
------------------
Total current assets 40,830 46,366
------------------
PROPERTY AND EQUIPMENT, net 78,822 84,093
------------------
SERVICE ASSURANCE AGREEMENT, net 14,312 14,124
------------------
OTHER ASSETS, net 11,375 11,431
------------------
Total assets $145,339 $156,014
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $271 $306
Accounts payable 33,583 35,426
Accrued expenses 6,122 5,431
------------------
Total current liabilities 39,976 41,163
------------------
LONG-TERM DEBT 18,460 24,833
------------------
OTHER LIABILITIES 2,699 2,730
------------------
DEFERRED INCOME TAX LIABILITIES, net 4,720 5,442
------------------
DEFERRED ITEMS--grants from governmental
agencies 12,899 13,229
------------------
DEFERRED GAIN--sale/leaseback 4,902 4,785
------------------
STOCKHOLDERS' EQUITY:
Class A common stock, $0.01 par value,
one vote per share;
12,000,000 shares authorized;
4,399,463 and 4,399,953 issued and
outstanding on December 31, 1996 and
March 31, 1997, respectively 44 44
Class B common stock, $0.01 par value,
10 votes per share;
1,500,000 shares authorized; 846,556
issued and outstanding 8 8
Additional paid-in capital 46,102 46,117
Warrants outstanding 471 471
Retained earnings 15,058 17,192
------------------
Total stockholders' equity 61,683 63,832
------------------
Total liabilities and stockholders' equity $145,339 $156,014
==================
4
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1996 1997
--------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $965 $2,134
Adjustments to reconcile net income
to net cash provided
by operating activities-
Depreciation and amortization 1,325 1,519
Deferred income taxes 264 620
Gain on disposition of property and equipment (627) (7)
Changes in assets and liabilities,
net of balances
assumed through acquisitions-
Receivables (5,042) (1,594)
Materials and supplies (33) (4)
Prepaid expenses and other (292) (258)
Accounts payables and accrued expenses 9,227 1,152
Other assets and liabilities, net 235 (422)
------------------
Net cash provided by operating
activities 6,022 3,140
------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (970) (1,469)
Purchase of assets of Chicago & Illinois
Midland Railway Company (26,335) ----
Proceeds from disposition of property 1,555 259
------------------
Net cash used in investing activitie (25,750) (1,210)
------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings,
including capital leases (326) (4,357)
Proceeds from issuance of long-term debt 25,925 5,480
Debt issuance costs (1,642) ----
Net (payments) proceeds on grants (195) 510
Dividends paid (32) ----
Proceeds from issuance of stock - employee purchase plan 15
Proceeds from issuance of stock warrants 471 ----
------------------
Net cash provided by financing activities 24,201 1,648
------------------
INCREASE IN CASH AND CASH EQUIVALENTS 4,473 3,578
CASH AND CASH EQUIVALENTS, beginning of period 2,115 14,121
------------------
CASH AND CASH EQUIVALENTS, end of period $6,588 $17,699
==================
CASH PAID DURING PERIOD FOR:
Interest $1,240 $657
Incomes taxes 65 2,072
==================
SUPPLEMENTAL NON-CASH INVESTING ACTIVITIES:
Assumption of liabilities in connection
with purchase of
assets of Chicago & Illinois Midland
Railway Company $1,162 ----
==================
Capital lease obligation ---- $5,261
==================
</TABLE>
5
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:
The interim consolidated financial statements presented herein include the
accounts of Genesee & Wyoming Inc. and its subsidiaries. References to "GWI" or
the "Company" mean Genesee & Wyoming Inc. and, unless the context indicates
otherwise, its consolidated subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation. These interim
consolidated financial statements have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). In the opinion of management, the unaudited financial
statements for the three-month periods ended March 31, 1996 and 1997, are
presented on a basis consistent with audited financial statements and contain
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation. The interim consolidated financial statements should be
read in conjunction with the audited financial statements and notes thereto for
the year ended December 31, 1996 included in the Company's Annual Report and
Form 10-K.
The results of operations for interim periods are not necessarily indicative
of results of operations for the full year.
2. ACQUISITIONS:
Illinois & Midland Railroad, Inc. - On February 8, 1996, a newly-formed
subsidiary, Illinois & Midland Railroad, Inc. ("Illinois & Midland"), purchased
certain assets, primarily road and track structure, of Chicago & Illinois
Midland Railway Company for approximately $27.7 million, including related costs
and the assumption of certain liabilities. The purchase price was allocated to
purchased inventory ($750,000), assumed note receivable ($1,220,000), property
($10,773,000), and the service assurance agreement ($14,981,000). The purchase
also included the assumption of $1,394,000 of liabilities. This subsidiary
operates approximately 126 miles of track in the State of Illinois. The
acquisition was accounted for as a purchase.
Pittsburg & Shawmut Railroad, Inc. - On April 29, 1996, a newly formed
subsidiary, Pittsburg & Shawmut Railroad, Inc. ("Pittsburg & Shawmut"),
purchased certain assets, primarily road and track structure, of Pittsburg &
Shawmut Railroad Company, Mountain Laurel Railroad Company, and Red Bank
Railroad Company for approximately $15.2 million, including related costs. The
purchase price was allocated to purchased inventory ($50,000), property
($14,846,000), and other assets ($264,000). The purchase also included the
assumption of $3,194,000 of deferred grants from the State of Pennsylvania. In
addition, the purchase and sale agreement provides for additional contingency
payments of up to $2.5 million. A portion of these payments are required (up to
a maximum of $500,000) if certain coal shipments during any calendar year from
1997-1999, as defined, exceed 290,000 tons. The remaining contingency payments
(up to a maximum of $2.0 million) are calculated as 25% of the gross revenues
attributable to certain coal shipments that exceed 564,793 tons during any
calendar year from 2000-2009, as defined. Upon resolution of the amount of the
contingency payments, there will be an additional element of cost related to the
transaction, which will be recorded as excess cost over the fair market value of
tangible net assets acquired and amortized over the same period as the related
track structure, which is 20 years. The acquisition was accounted for as a
purchase. On June 28, 1996, a portion of the railcars acquired in the purchase
were sold for $2.4 million, the purchase price allocation was adjusted, and no
gain or loss was recognized.
6
<PAGE>
Rail Link, Inc. - On November 8, 1996, the Company completed its acquisition
of all of the common stock of Rail Link, Inc. ("Rail Link") for approximately
$9.1 million in cash and $3.0 million in future amounts payable based on
performance. The purchase price was allocated to purchased net working capital
($1,218,000), property ($5,000,000), goodwill ($5,629,000) and other assets
($275,000). The goodwill is being amortized on a straight-line basis over 20
years. The purchase also included the assumption of $474,000 of liabilities.
Rail Link provides railroad switching and related services to North American
industries with extensive railroad facilities within their complexes.
Headquartered in Richmond, Virginia, Rail Link manages 20 switching operations,
a railcar cleaning operation, two track maintenance operations and a locomotive
leasing operation in 11 states. Rail Link also operates three short line
railroads located in Florida, North Carolina and Virginia. The acquisition was
accounted for as a purchase. The allocation of the purchase price is based on
preliminary estimates and may be revised at a later date.
Pro Forma for Acquisitions - Results for the operations of Illinois & Midland
Railroad, Inc., Pittsburg & Shawmut Railroad, Inc. and Rail Link, Inc. are
included within the consolidated financial statements commencing February 9,
1996, April 29, 1996, and November 8, 1996, respectively. Unaudited pro forma
results assuming all three acquisitions had been made as of January 1, 1996 and
the sale by the Company of 2,897,200 shares of Class A Common Stock in the
Common Stock Offering (see Note 3) are as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
<S> <C> <C>
3/31/96 3/31/87
(Unaudited) (Unaudited)
Revenues................................ $22,004 $ 24,092
Net income.............................. 1,673 2,134
Number of common shares................. 5,245 5,469
Net income per share.................... $0.32 $0.39
======== =====
</TABLE>
Such pro forma information is not necessarily indicative of the results of
future operations.
3. SUPPLEMENTAL EARNINGS PER SHARE:
On June 28, 1996 the Company closed an underwritten initial public offering
("IPO") of 3,045,200 shares of Class A Common Stock (the "Common Stock
Offering"), of which 2,897,200 shares were offered by the Company and 148,000
shares were offered by a selling stockholder. Had the IPO occurred on January
1, 1996, earnings per share and weighted average shares outstanding for the
three-month period ending March 31, 1996 would have been as follows:
Net income per share...................................$0.28
Weighted average shares and equivalent shares
outstanding (in thousands)............................5,526
The supplemental earnings per share information is not necessarily indicative of
the results of future operations.
7
<PAGE>
4. LEASES:
On March 31, 1997 a subsidiary of the Company entered into a long-term capital
lease agreement with a leasing company for the acquisition of up to $13 million
of rolling stock. As of March 31, 1997 the subsidiary, at the subsidiary's
election, had acquired rolling stock valued at $5.3 million under this lease.
The Company guarantees the subsidiary's performance under the lease. The lease
requires minimum monthly rent payments equal to the monthly interest payable
with respect to the outstanding balance on the $13,000,000 note from the Lessor
to a bank until September 30, 1998. Interest on the note is at LIBOR plus
1.875%. After September 30, 1998, based on the present amount of equipment
subject to the lease, the monthly lease payment will be $128,730 until March 31,
2017. The subsidiary has the right to purchase all the equipment from the
lessor prior to September 30, 1998 at the balance outstanding under the note.
5. CONTINGENCIES:
In March 1997, two large railroad companies, CSX Transportation, Inc. ("CSX")
and Norfolk Southern Corp. ("NS"), tentatively agreed on a plan to acquire and
divide the assets of a third large railroad, Consolidated Rail Corporation
("Conrail"). CSX and NS are expected to submit a plan for the breakup of Conrail
to the Surface Transportation Board ("STB") in June 1997, after which the STB
may take up to 255 calendar days to respond. Railroads in the Company's New
York and Pennsylvania region interchange with one or more of these three large
railroad companies, and rely on them in some cases for providing overhead
traffic, defined as traffic neither originating nor terminating on any of the
Company's subsidiaries. The volume of this overhead traffic may be negatively
impacted if the merger is consummated. The Company continues to hold
discussions with CSX and NS to explore its options to mitigate a potential
traffic diversion, but the effect on the Company cannot be determined at this
time.
6. RECENTLY ISSUED ACCOUNTING STANDARDS:
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings Per Share, which simplifies the standards for computing earnings per
share. It replaces the presentation of primary EPS with a presentation of basic
EPS. Is also requires dual presentation of basic and diluted EPS on the face of
the income statement and a reconciliation between the two computations. The
SFAS No. 128 presentation is required for the year ended December 31, 1997, and
will be adopted by the Company at that time. Had the Company calculated EPS
using SFAS No. 128 for the quarter ended March 31, 1997, basic EPS and diluted
EPS would have approximated $0.41 per share and $0.39 per share, respectively
and for the quarter ended March 31, 1996, basic EPS and diluted EPS would have
approximated $0.41 per share and $0.41 per share, respectively.
The remainder of this page is intentionally left blank.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q, and with the consolidated financial statements,
related notes and other financial information included in the Company's 1996
Annual Report and Form 10-K.
General
The Company is a holding company whose subsidiaries own and operate short line
and regional freight railroads and provide related rail services. The Company,
through its industrial switching subsidiary, also provides railroad switching
and related services to North American industries with extensive railroad
facilities within their complexes. The Company generates revenues primarily
from the movement of freight over track owned or operated by its railroads. The
Company also generates non-freight revenues primarily by providing industrial
switching and related rail services such as railcar leasing, railcar repair and
storage to industries with extensive railroad facilities within their complexes,
to shippers along its lines and to the Class I railroads that connect with its
lines.
The Company's operating expenses include wages and benefits, equipment rents
(including car hire), purchased services, depreciation and amortization, diesel
fuel, casualties and insurance, materials and other expenses. Car hire is a
charge paid by a railroad to the owners of railcars used by that railroad in
moving freight. Other expenses generally include property and other non-income
taxes, professional services, communication and data processing costs and
general overhead expense.
When comparing the Company's results of operations from one reporting period
to another, the following factors should be taken into consideration. The
Company has historically experienced fluctuations in revenues and expenses such
as one-time freight moves, customer plant expansions and shut-downs, railcar
sales, accidents and derailments. In periods when these events occur, results
of operations are not easily comparable to other periods. In addition, much of
the Company's growth to date has resulted from acquisitions. The Company
completed the acquisitions of the Illinois & Midland and Pittsburg & Shawmut
railroads during the first four months of 1996, and Rail Link, Inc. in November
1996. Because of variations in the structure, timing and size of these
acquisitions and differences in economics among the Company's railroads
resulting from differences in the rates and other material terms established
through negotiation, the Company's results of operations in any reporting period
may not be directly comparable to its results of operations in other reporting
periods.
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Operating Revenues
Operating revenues were $24.1 million in the first three months of 1997
compared to $16.6 million in the first three months of 1996, an increase of $7.5
million or 45.1%. The increase was attributable to a $4.4 million increase in
freight revenues and a $3.1 million increase in non-freight revenues.
9
<PAGE>
Freight revenues were $17.4 million in the first three months of 1997 compared
to $13.0 million in the first three months of 1996, an increase of $4.4 million
or 34.3%. The following table compares freight revenues, carloads and average
freight revenues per carload for the first three months of 1996 and 1997:
Freight Revenues and Carloads Comparison by Commodity Group
Three Months Ended March 31, 1996 and 1997
<TABLE>
<CAPTION>
AVERAGE
FREIGHT
REVENUES
FREIGHT REVENUES CARLOADS PER CARLOAD
--------------------------------- ------------------------------ ------------------
(DOLLARS IN THOUSANDS EXCEPT REVENUES PER CARLOAD)
% OF % OF % OF % OF
COMMODITY GROUP 1996 TOTAL 1997 TOTAL 1996 TOTAL 1997 TOTAL 1996 1997
------- ----- ------- ----- ------ ----- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COAL, COKE & ORES $ 3,007 23.2% $ 6,666 38.3% 11,941 30.3% 25,759 45.3% $ 252 $ 259
PETROLEUM PRODUCTS 2,270 17.5 1,956 11.2 4,542 11.6 4,072 7.2 500 480
PULP & PAPER 1,793 13.8 1,767 10.2 4,772 12.1 4,612 8.1 376 383
LUMBER & FOREST PRODUCTS 1,269 9.8 1,463 8.4 4,123 10.5 4,334 7.6 308 338
METALS 1,220 9.4 1,196 6.9 4,715 12.0 5,037 8.9 259 237
CHEMICALS 967 7.5 1,523 8.8 1,841 4.7 2,835 5.0 525 537
FARM & FOOD PRODUCTS 787 6.1 945 5.4 2,282 5.8 3,420 6.0 345 276
AUTOS & AUTO PARTS 764 5.9 898 5.2 1,463 3.7 1,698 3.0 522 529
MINERALS & STONE 349 2.7 617 3.5 1,303 3.3 2,214 3.9 268 279
OTHER 528 4.1 364 2.1 2,363 6.0 2,872 5.0 223 127
------- ----- ------- ----- ------ ----- ------ ----- ----- -----
TOTAL $12,954 100.0% $17,395 100.0% 39,345 100.0% 56,853 100.0% $ 329 $ 306
======= ===== ======= ===== ====== ===== ====== ===== ===== =====
</TABLE>
The increase in freight revenues was largely attributable to the operations on
new acquisitions, which generated freight revenues of $6.7 million in the first
three months of 1997, $6.0 of which were revenues from the shipment of coal,
compared to $2.5 million in the first three months of 1996, $2.4 million of
which were revenues from the shipment of coal.
Total carloads were 56,853 in the first three months of 1997 compared to
39,345 in the first three months of 1996, an increase of 17,508 or 44.5%. The
increase was largely attributable to 25,306 carloads transported by the
operations on new acquisitions, which consisted primarily of coal, compared to
9,720 for the same period in 1996, which was also primarily coal.
Non-freight revenues were $6.7 million in the first three months of 1997
compared to $3.6 million in the first three months of 1996, an increase of $3.1
million or 83.3%. Revenues from switching and storage activities were $4.0
million in the first three months of 1997 compared to $1.1 in the first three
months of 1996, an increase of $2.9 million or 263.6%. The increase was largely
attributable to switching revenues generated by new acquisitions, primarily Rail
Link, Inc. Revenues from car hire and car rentals were $1.1 million in the
first three months of 1997 compared to $1.3 million in the first three months of
1996, a decrease of $195,000 or 15.0%. The 1996 period included a gain on the
sale of railcars of $593,000. Other car hire and car rentals revenue for 1997
increased by approximately $400,000 due primarily to operations on new
acquisitions. Other non-freight revenue was $1.6 million in the first three
months of 1997 compared to $1.2 million in the first three months of 1996, an
increase of $400,000 or 33.3%. This increase was due to
10
<PAGE>
approximately $220,000 of other revenues generated by operations on new
acquisitions and to an increase of approximately $180,000 on existing
operations, primarily in demurrage.
Operating Expenses
Operating expenses were $20.1 million in the first three months of 1997
compared to $13.8 million in the first three months of 1996, an increase of $6.3
million or 45.4%. Expenses associated with new acquisitions represented $5.3
million of the increase.
The Company's operating ratio increased slightly to 83.3% in the first three
months of 1997 from 83.1% in the first three months of 1996.
The following table sets forth a comparison of the Company's operating
expenses for the first quarters of 1996 and 1997:
Operating Expense Comparison
Three Months Ended March 31, 1996 and 1997
<TABLE>
<CAPTION>
1996 1997
---------------------- ------------------------
% of % of
Operating Operating
Amount Revenues Amount Revenues
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Labor and benefits $ 5,452 32.8% $ 8,944 37.1%
Equipment rents 1,880 11.3 2,435 10.1
Purchased services 780 4.7 1,017 4.2
Depreciation and amortization 1,325 8.0 1,519 6.4
Diesel fuel 1,065 6.4 1,343 5.6
Casualties and insurance 1,157 7.0 1,530 6.4
Materials 706 4.3 969 4.0
Other 1,429 8.6 2,300 9.5
------- ---- ------- ----
Total $13,794 83.1% $20,057 83.3%
======= ==== ======= ====
</TABLE>
Labor and benefits expense was $8.9 million in the first three months of 1997
compared to $5.5 million in the first three months of 1996, an increase of $3.4
million or 64.0%, primarily due to the commencement of operations on new
acquisitions. Labor costs increased as a percentage of revenues to 37.1% in
the first three months of 1997 from 32.8% in the first three months of 1996.
The increase is largely attributable to the labor-intensive nature of Rail Link,
Inc.'s industrial switching and other rail-related services operation. All
other categories of operating expenses decreased as percentages of operating
revenues because of the effect of the Rail Link acquisition. All categories of
operating expenses increased in amount primarily because of the effect of all
three 1996 acquisitions.
Interest Expense and Income Taxes
Interest expense in the first three months of 1997 was $574,000 compared to
$1.3 million in the first three months of 1996, a decrease of $700,000 or 54.9%.
The decrease generally reflects the lower overall debt outstanding due to the
application of proceeds from the Company's June 28, 1996 initial public offering
to reduce debt. The Company's effective income tax rate was
11
<PAGE>
40.6% in the first three months of 1997 compared to 40.5% in the first three
months of 1996.
Net Income
The Company's net income in the first three months of 1997 was $2.1 million
compared to $965,000 in the first three months of 1996, an increase of $1.2
million or 121.1%.
Liquidity and Capital Resources
During the three months ended March 31, 1997 the Company generated cash from
operations of $3.1 million, had net new borrowings of $1.1 million, entered into
a $5.3 million long-term capital lease for rolling stock and recorded $510,000
in net proceeds on governmental grants. A total of $6.8 million was invested in
capital assets of which $5.3 million represented rolling stock under the long-
term capital lease. The Company received $259,000 in proceeds from the
disposition of property.
During the first three months of 1996, the Company generated cash from
operations of $6.0 million, which includes the effect of a $3.5 million increase
in net trade payables associated with the commencement of operations of Illinois
& Midland. In addition, the Company received $1.6 million in proceeds from the
sale of equipment and invested $970,000 in track and other fixed assets (apart
from its investment in the Illinois & Midland Railroad acquisition).
The Company has budgeted $15.2 million in capital expenditures in 1997. As of
March 31, 1997, $6.8 million, which included rolling stock under capital lease
of $5.3 million, was completed.
At March 31, 1997 the Company had long-term debt (including current portion)
totaling $25.1 million, which comprised 28.3% of its total capitalization. This
compares to long-term debt, including current portion, of $18.7 million at
December 31, 1996, comprising 23.3% of total capitalization.
The Company has historically relied primarily on cash generated from operations
to fund working capital and capital expenditures relating to ongoing operations,
while relying on borrowed funds to finance acquisitions and equipment needs
(primarily rolling stock) related to acquisitions. The Company believes that its
cash flow from operations together with amounts available under its credit
facilities will enable the Company to meet its liquidity and capital expenditure
requirements relating to ongoing operations for at least the duration of its
credit facilities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
The remainder of this page is intentionally left blank.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A). EXHIBITS - SEE INDEX TO EXHIBITS
(B) REPORTS ON FORM 8-K:
No Reports on Form 8-K were filed by the Registrant during the period covered
by this Report.
The remainder of this page is intentionally left blank.
13
<PAGE>
INDEX TO EXHIBITS
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
Not applicable.
(3) (i) ARTICLES OF INCORPORATION
The Form of Restated Certificate of Incorporation referenced under
(4)(a) hereof is incorporated herein by reference.
(ii) BY-LAWS
The By-laws referenced under (4)(b) hereof are incorporated herein
by reference.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
(a) Form of Restated Certificate of Incorporation (Exhibit 3.2)/2/
(b) By-laws (Exhibit 3.3)/1/
(c) Specimen stock certificate representing shares of Class A Common
Stock (Exhibit 4.1)/3/
(d) Form of Class B Stockholders' 1996, among the Registrant, its
executive officers and its Class B stockholders (Exhibit Agreement
dated as of May 20, 4.2)/2/
(e) Promissory Note dated October 7, 1991 of Buffalo & Pittsburgh
Railroad, Inc. in favor of CSX Transportation, Inc.
(Exhibit 4.6)/1/
(f) Amended and Restated Revolving Credit and Term Loan Agreement dated
as of February 8, 1996 among the Registrant and certain of its
Subsidiaries, The First National Bank of Boston, as agent, and the
Banks party thereto (Exhibit 4.10)/1/
(g) Revolving Credit Note dated as of February 8, 1996 of the
Registrant and certain of its subsidiaries in favor of The First
National Bank of Boston (Exhibit 4.11)/1/
(h) Term Note dated as of February 8, 1996 of the Registrant and
certain of its Subsidiaries in favor of The First National Bank of
Boston (Exhibit 4.12)/1/
(i) Amended and Restated Security Agreement dated as of February 8,1996
among the Registrant, certain of its Subsidiaries and The First
National Bank of Boston (Exhibit 4.13)/1/
(j) Amended and Restated Stock Pledge Agreement dated as of February 8,
1996 between the Registrant and The First National Bank of Boston
(Exhibit 4.14)/1/
14
<PAGE>
(k) Amended and Restated Collateral Assignment of Partnership Interests
dated as of February 8, 1996 of the Registrant and GWI Dayton, Inc.
in favor of The First National Bank of Boston (Exhibit 4.15)/1/
(l) Amendment No. 1 to Amended and Restated Revolving Credit and Term
Loan Agreement dated as of April 26, 1996 among the Registrant and
certain of its Subsidiaries, The First National Bank of Boston, as
agent, and the Banks party thereto (Exhibit 4.16)/2/
(10) MATERIAL CONTRACTS
Not applicable.
*(11.1) STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(15) LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
Not applicable.
(18) LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
Not applicable.
(19) REPORT FURNISHED TO SECURITY HOLDERS
Not applicable.
(22) PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE OF SECURITY
HOLDERS
Not applicable.
(23) CONSENTS OF EXPERTS AND COUNSEL
Not applicable.
(24) POWER OF ATTORNEY
Not applicable.
*(27) FINANCIAL DATA SCHEDULE
(99) ADDITIONAL EXHIBITS
____________________________
*Exhibit filed with this Report.
/1/Exhibit previously filed as part of, and incorporated herein by
reference to, the Registrant's Registration Statement on Form S-1 (Registration
No. 333-3972). The exhibit number contained in parenthesis refers to the
exhibit number in such Registration Statement.
/2/Exhibit previously filed as part of, and incorporated herein by
reference to, Amendment No. 1 to the Registrant's Registration Statement on Form
S-1 (Registration No. 333-3972). The exhibit number contained in parenthesis
refers to the exhibit number in such Amendment.
15
<PAGE>
/3/Exhibit previously filed as part of, and incorporated herein by
reference to, Amendment No. 2 to the Registrant's Registration Statement on Form
S-1 (Registration No. 333-3972). The exhibit number contained in parenthesis
refers to the exhibit number in such Amendment.
The remainder of this page is intentionally left blank.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
GENESEE & WYOMING INC.
Date: May 12, 1997 By: /s/ Mortimer B. Fuller, III
---------------------------
Name: Mortimer B. Fuller, III
Title: President and CEO
Date: May 12, 1997 By: /s/ Alan R. Harris
---------------------------
Name: Alan R. Harris
Title: Chief Accounting Officer
The remainder of this page is intentionally left blank.
17
<PAGE>
EXHIBIT 11.1
GENESEE & WYOMING INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR TO DATE
MARCH 31, 1997
--------------
PRIMARY EARNINGS PER SHARE CALCULATION:
- ---------------------------------------
<S> <C>
Net Income $2,134
Weighted average number of common stock and common
stock equivalents outstanding:
Weighted average number of shares outstanding 5,246
Common stock equivalents applicable to warrants 42
Common stock equivalents issuable under stock option plans 181
------
Common stock and common stock equivalents 5,469
Earnings per share - primary $ 0.39
FULLY DILUTED EARNINGS PER SHARE CALCULATION:
- ---------------------------------------------
Net Income $2,134
Weighted average number of common stock and common
stock equivalents outstanding:
Weighted average number of shares outstanding 5,246
Common stock equivalents applicable to warrants 42
Common stock equivalents issuable under stock option plans 181
------
Common stock assuming full dilution 5,469
Earnings per share - fully diluted $ 0.39
</TABLE>
(1) This calculation is submitted in accordance with the regulations of the
Securities and Exchange Commission although not required by APB Opinion No. 15
because it results in dilution of less than 3%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 17,699
<SECURITIES> 0
<RECEIVABLES> 20,727
<ALLOWANCES> 0
<INVENTORY> 4,177
<CURRENT-ASSETS> 46,366
<PP&E> 103,354
<DEPRECIATION> 19,261
<TOTAL-ASSETS> 156,014
<CURRENT-LIABILITIES> 41,163
<BONDS> 24,833
0
0
<COMMON> 52
<OTHER-SE> 63,780
<TOTAL-LIABILITY-AND-EQUITY> 156,014
<SALES> 24,092
<TOTAL-REVENUES> 24,092
<CGS> 20,057
<TOTAL-COSTS> 20,057
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 443
<INCOME-PRETAX> 3,592
<INCOME-TAX> 1,458
<INCOME-CONTINUING> 2,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,134
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
