<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 June 30, 1998 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
August 7, 1998:
Class Number of Shares Outstanding
- ----- ----------------------------
Class A Common Stock 4,449,084
Class B Common Stock 845,539
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
Item 1. Financial Statements: Page
-------
Consolidated Statements of Income - For the
Three and Six Month Periods Ended June 30,
1998 and 1997......................................... 3
Consolidated Balance Sheets June 30, 1998
and December 31, 1997................................. 4
Consolidated Statements of Cash Flows - For the
Six Month Periods Ended June 30, 1998 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 - 18
Item 3. Quantitative and Qualitative Disclosures About
Market Risk........................................... 18
Part II - Other Information....................................... 19
Index to Exhibits................................................. 20 - 21
Signatures........................................................ 22
2
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
----------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 37,065 $ 23,479 $ 74,806 $ 47,571
----------------------------------------------
OPERATING EXPENSES:
Transportation 11,958 6,752 23,772 13,984
Maintenance of way and structures 4,478 2,462 8,683 5,019
Maintenance of equipment 7,113 3,888 14,872 7,894
General and administrative 6,351 4,504 13,036 9,247
Depreciation and amortization 2,493 1,702 4,797 3,221
----------------------------------------------
Total operating expenses 32,393 19,308 65,160 39,365
INCOME FROM OPERATIONS 4,672 4,171 9,646 8,206
Interest expense (1,642) (647) (3,204) (1,221)
Other income 175 100 569 231
----------------------------------------------
Income before provision for income taxes 3,205 3,624 7,011 7,216
Provision for income tax 1,359 1,467 2,883 2,925
----------------------------------------------
NET INCOME $ 1,846 $ 2,157 $ 4,128 $ 4,291
==============================================
Earnings per common share - basic $ 0.35 $ 0.41 $ 0.78 $ 0.82
==============================================
Weighted average number of shares of
common stock - basic 5,294 5,247 5,294 5,246
==============================================
Earnings per common share - diluted $ 0.34 $ 0.40 $ 0.76 $ 0.79
==============================================
Weighted average number of shares of
common stock - diluted 5,400 5,440 5,398 5,455
==============================================
</TABLE>
3
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited)
------------------------------
<S> <C> <C>
ASSETS
CURRENTS ASSETS:
Cash and cash equivalents $ 25,104 $ 11,434
Accounts receivable, net 24,762 29,895
Note receivable - related party 4,542 4,499
Materials and supplies 3,379 5,039
Prepaid expenses and other 3,244 3,145
Deferred income tax assets, net 2,560 2,523
------------------------------
Total current assets 63,591 56,535
------------------------------
PROPERTY AND EQUIPMENT, net 128,841 124,985
------------------------------
SERVICE ASSURANCE AGREEMENT, net 13,188 13,563
------------------------------
OTHER ASSETS, net 14,818 15,449
------------------------------
Total assets $220,438 $210,532
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 512 $ 1,157
Accounts payable 30,525 30,025
Accrued expenses 7,660 6,796
------------------------------
Total current liabilities 38,697 37,978
------------------------------
LONG-TERM DEBT 77,424 72,987
------------------------------
OTHER LIABILITIES 3,166 3,237
------------------------------
DEFERRED INCOME TAX LIABILITIES, net 10,104 8,470
------------------------------
DEFERRED ITEMS--grants from governmental agencies 14,896 15,083
------------------------------
DEFERRED GAIN--sale/leaseback 4,200 4,434
STOCKHOLDERS' EQUITY:
Class A common stock, $0.01 par value, one vote per share;
12,000,000 shares authorized; 4,448,947 and 4,404,262 issued and
outstanding on June 30, 1998 and December 31, 1997, respectively. 45 44
Class B common stock, $0.01 par value, 10 votes per share;
1,500,000 shares authorized; 845,539 and 846,556 issued and 8 8
outstanding on March 31, 1998 and December 31, 1997, respectively.
Additional paid-in capital 46,710 46,205
Warrants outstanding --- 471
Retained earnings 27,169 23,056
Foreign currency translation adjustment (1,981) (1,441)
------------------------------
Total stockholders' equity 71,951 68,343
------------------------------
Total liabilities and stockholders' equity $220,438 $210,532
==============================
</TABLE>
4
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
-------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,128 $ 4,291
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 4,797 3,221
Deferred income taxes 1,919 1,330
Gain on disposition of property and equipment (12)
Changes in assets and liabilities, net of balances
assumed through acquisitions-
Receivables 3,581 1,211
Materials and supplies 1,199 11
Prepaid expenses and other (148) 245
Accounts payable and accrued expenses 1,017 (7,734)
Other assets and liabilities, net 322 (215)
-------------------------
Net cash provided by operating activities 16,815 2,348
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (9,513) (3,858)
Proceeds from disposition of property 1,445 266
-------------------------
Net cash used in investing activities (8,068) (3,592)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, (905) (7,565)
including capital leases
Proceeds from issuance of long-term debt 5,800 5,880
Net proceeds on grants 167 1,173
Proceeds from issuance of common stock 36 27
-------------------------
Net cash provided by (used in) financing activities 5,098 (485)
-------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (175) ---
-------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,670 (1,729)
CASH AND CASH EQUIVALENTS, beginning of period 11,434 14,121
-------------------------
CASH AND CASH EQUIVALENTS, end of period $ 25,104 $ 12,392
=========================
CASH PAID DURING PERIOD FOR:
Interest $ 3,329 $ 1,124
Incomes taxes 1,301 3,712
=========================
</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 and six-month periods ended June 30, 1998 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, 1997 included in the Company's
Form 10-K.
The results of operations for interim periods are not necessarily indicative
of results of operations for the full year.
2. CORPORATE DEVELOPMENTS:
Australia - On August 28, 1997 the Company announced that its wholly owned
subsidiary, Genesee & Wyoming Australia Pty Ltd ("GWIA"), had been awarded the
contract to purchase certain railroad assets of SA Rail, a division of
Australian National Railway, through the Commonwealth of Australia Office of
Asset Sales. SA Rail provided intrastate freight services in the State of South
Australia, interstate haulage of contract freight, rolling stock rental and
maintenance, and interstate track maintenance. GWIA bid as part of a consortium
including EDI Clyde Engineering and Transfield Pty Ltd. EDI Clyde is a major
Australian provider of railway rolling stock and holds the Australian license
for GM/EMD locomotives. Transfield is a major Australian engineering,
construction and infrastructure maintenance provider. On November 8, 1997 GWIA
closed on the purchase and commenced operation of freight service under the name
of Australia Southern Railroad Pty. Ltd.
3. JOINT VENTURE:
The Company has formed a joint venture, Genesee Rail-One Inc. ("GRO") to
acquire railroads in Canada. GRO is a joint venture with Rail-One Inc., a
subsidiary of The Cygnus Group which is an integrated transportation facilities,
services and infrastructure provider in Canada. The Company's initial capital
investment in GRO was approximately $4,913,000.
On July 29, 1997, GRO commenced operations of the Huron Central Railway Inc.
("HCRY"), a 180-mile railroad located in central Ontario. HCRY leases its rail
line from the Canadian Pacific Railway for a 20 year term and is responsible for
operation and maintenance of the leased line.
GRO commenced operations on November 11, 1997 of the Quebec Gatineau Railway
Inc. ("QGRY"), a 354-mile railroad linking Quebec City, Montreal and Hull in
Southeastern Quebec. QGRY purchased the majority of assets and also leased a
smaller portion of assets for this railroad from the Canadian Pacific Railway
Company.
6
<PAGE>
Based on GWI's ownership position of 47.5%, the Company is reporting the
results of operations of GRO under the equity method of accounting for
investments. The results of operations of GRO are translated into U.S. dollars
at a weighted average exchange rate for each period and are included in other
income, net.
4. LEASES:
In March 1997, a subsidiary of the Company entered into a master lease
agreement with a leasing company. The lease provides for the inclusion of up to
$13.0 million in railroad rolling stock. As of June 30, 1998, the Company's
subsidiary had $11.8 million of equipment under this lease. Lease payments until
September 30, 1998, are interest only at LIBOR plus 1.5%. After that date, the
equipment currently under lease will require monthly payments of $116,461 until
March 2017. The Company's subsidiary has the right to purchase the equipment at
any time during the lease for fair market value.
In June 1998, a subsidiary of the Company entered into a sale leaseback
agreement with a bank for railroad rolling stock valued at $5.7 million. The
agreement will be accounted for as an operating lease and will require monthly
payments of $45,662 through July 2008.
5. CONTINGENCIES:
On July 23, 1998, the Surface Transportation Board ("STB") issued its written
order approving the petition of CSX Transportation, Inc. ("CSX") and Norfolk
Southern Corp. ("NS") to control and divide the assets of Consolidated Rail
Corporation ("Conrail"). Railroads in the Company's New York and Pennsylvania
region interchange with, or participate in overhead traffic with, one or both of
these railroads. Overhead traffic is defined as traffic that neither originates
nor terminates on the Company's northeastern rail network. In their joint
filing with the STB, CSX and NS estimated that approximately $8.3 million in
freight revenue related to overhead traffic on one of the Company's subsidiaries
may be diverted as a result of the proposed transactions. The Company agrees
with this estimate and is implementing operational changes to minimize this
impact. On October 21, 1997 the Company and several of its subsidiaries entered
into a confidential Rate and Route Agreement with CSX that the Company believes
will facilitate the operations restructuring process. The STB's written order
contains one or more conditions which may further minimize this impact. The
division of Conrail's assets is expected to occur in the first or second
quarters of 1999. While the Company believes that agreements reached with CSX
and NS in regard to the Conrail breakup will ultimately benefit the Company, the
transition will be uncertain until new operating patterns are established.
Based on its initial studies the Company believes that no impairment of its
assets will occur.
On August 6, 1998, a lawsuit was commenced against the Company and its
subsidiary, Illinois & Midland Railroad, Inc. ("IMRR"), by Commonwealth Edison
Company ("ComEd") in the Circuit Court of Cook County, Illinois. The suit
alleges that IMRR is in breach of certain provisions of a 1987 agreement entered
into by a prior unrelated owner of the IMRR rail line. The provisions pertain
to limitations on rates received by IMRR and by the unrelated predecessor on
freight hauled for ComEd's Powerton plant. The suit seeks unspecified
compensatory damages in excess of $100,000. ComEd is IMRR's largest customer
and in 1997 accounted for 15% of the consolidated revenues of the Company and
its subsidiaries. The Company believes the suit is without merit. IMRR intends
to vigorously defend against the suit.
7
<PAGE>
6. COMPREHENSIVE INCOME:
The Financial Accounting Standards Board recently issued SFAS No. 130,
Reporting Comprehensive Income, which establishes standards for reporting and
display of comprehensive income. The objective of this standard is to report a
measure of changes in equity of an enterprise that result from transactions
other than with owners. Comprehensive income is the total of net income and all
other nonowner changes in equity. The following table sets forth the Company's
comprehensive income for the three months and six months ended June 30, 1998 and
1997:
Statement of Comprehensive Income
Three and Six Month Periods Ended June 30,
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended June 30, June 30,
1998 1997 1998 1997
---------------- --------------- ---------------- ------------
<S> <C> <C> <C> <C>
Net income $1,846 $2,157 $4,128 $4,291
Other comprehensive loss, net of tax Foreign currency
translation adjustments (824) -0- (540) -0-
------ ------ ------ ------
Comprehensive income $1,022 $2,157 $3,588 $4,291
</TABLE>
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 1997
Form 10-K.
General
The Company is a holding company whose subsidiaries own and operate short line
and regional freight railroads in the United States and, beginning in November,
1997, Australia, and through its industrial switching subsidiary, provides
railroad switching and related services to industries with extensive railroad
facilities within their complexes. The Company's United States and Australia
railroad subsidiaries generate revenues primarily from the movement of freight
over track owned or operated by its railroads. These subsidiaries also generate
non-freight revenues primarily by providing related rail services such as
railcar leasing, railcar repair and storage to shippers along its lines and to
the railroads that connect with its lines. The Company's industrial switching
subsidiary generates non-freight revenues primarily by providing switching and
other rail related services to industries with extensive railroad facilities
within their complexes.
The Company participates in a joint venture, Genesee Rail-One Inc. ("GRO") to
acquire railroads in Canada. The Company's initial capital investment in GRO
was approximately $4,913,000. Based on GWI's ownership position of 47.5%, the
Company is reporting the results of operations of GRO under the equity method of
accounting for investments. The results of operations of GRO are translated
into U.S. dollars at a weighted average exchange rate for each period and are
included in other income, net. GRO's results for the three and six month
periods ended June 30, 1998 are not significant.
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 shutdowns, 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 various types of acquisitions.
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.
Year 2000 Compliance
The Company is executing a plan to ensure its systems are compliant with the
requirements to process transactions in the Year 2000. The Company's systems
include internal financial systems and systems provided by third parties for the
transportation operations and certain revenue and expense account processing
related specifically to the rail industry. The Company believes that the costs
necessary to make its internal financial systems Year 2000 compliant will be
immaterial. The Company is communicating with its third party vendors to
coordinate Year 2000 compliance. The Company's rail related systems require data
provided through an industry association. Year 2000 compliance by the industry
association is planned but is not in the Company's or its third party vendors'
control. The Company believes that it will be able to achieve Year 2000
compliance; however, no assurance can be given that these efforts will be
successful.
Results of Operations
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
9
<PAGE>
Consolidated Operating Revenues
Operating revenues were $37.1 million in the quarter ended June 30, 1998
compared to $23.5 million in the quarter ended June 30, 1997, an increase of
$13.6 million or 57.9%. The increase was attributable to $12.1 million in
revenues from the Australia operation, a $198,000 increase in United States
railroad revenues and a $1.2 million increase in industrial switching revenues.
The following three sections provide information on railroad revenues in the
United States and Australia, and industrial switching revenues in the United
States.
United States Operating Revenues
Operating revenues were $20.5 million in the quarter ended June 30, 1998
compared to $20.3 million in the quarter ended June 30, 1997, an increase of
$198,000 or 1.0%. The increase was attributable to a $308,000 increase in non-
freight revenues, which offset a $110,000 decrease in freight revenues.
The following table compares United States freight revenues, carloads and
average freight revenues per carload for the three months ended June 30, 1998
and 1997:
United States Freight Revenues and Carloads Comparison by Commodity Group
Three Months Ended June 30, 1998 and 1997
Average
Freight
Revenues
Per
Freight Revenues Carloads Carload
- --------------------------------- -------- -------
<TABLE>
<CAPTION>
Commodity Group % of Total % of Total % of Total % of Total
1998 Total 1997 Total 1998 Total 1997 Total 1998 1997
------- ------ ------- ------ ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal, Coke & Ores $ 4,894 29.8% $ 4,748 28.7% 18,412 34.1% 19,341 35.8% $ 266 $ 245
Pulp & Paper 2,072 12.6% 2,032 12.3% 5,258 9.7% 5,374 9.9% 394 378
Chemicals & Plastics 1,761 10.7% 1,534 9.3% 3,454 6.4% 2,891 5.4% 510 530
Lumber & Forest
Products 1,657 10.1% 1,532 9.3% 5,675 10.5% 4,500 8.4% 292 340
Petroleum Products 1,550 9.4% 2,135 12.9% 3,446 6.4% 4,243 7.9% 450 503
Metals 1,398 8.5% 1,241 7.5% 4,804 8.9% 5,312 9.8% 291 234
Farm & Food Products 1,056 6.4% 962 5.8% 3,475 6.4% 3,097 5.7% 304 311
Minerals & Stone 847 5.2% 820 5.0% 2,904 5.4% 3,103 5.7% 292 264
Autos & Auto Parts
616 3.8% 967 5.9% 1,215 2.3% 1,799 3.3% 507 538
Other 564 3.5% 554 3.3% 5,324 9.9% 4,398 8.1% 106 126
------- ------ ------- ------ ------ ------ ------ ------ ----- -----
Total $16,415 100.0% $16,525 100.0% 53,967 100.0% 54,058 100.0% $ 304 $ 306
</TABLE>
The decrease of $110,000 in United States freight revenues was primarily
attributable to the decline in freight revenues from the shipment of Petroleum
Products and Autos and Auto Parts. Freight revenues from Petroleum Products
were $1.6 million in the quarter ended June 30, 1998, compared to $2.1 million
in the quarter ended June 30, 1997, a decrease of $585,000 or 27.4% due to
reduced shipments resulting from scheduled maintenance at a key customer's
facilities.
10
<PAGE>
Freight revenues from Autos and Auto Parts were $616,000 in the quarter ended
June 30, 1998, compared to $967,000 in the quarter ended June 30, 1997, a
decrease of $351,000 or 36.3% due to reduced shipments resulting from loss of a
freight contract and labor issues in the auto industry. The decrease in freight
revenues from Petroleum Products and Autos was partially offset by increases in
freight revenues from Coal of $146,000 or 3.1%, Metals of $157,000 or 12.7% and
Chemical and Plastics of $227,000 or 14.8%. Freight revenues from all remaining
commodities reflected a net increase of $296,000.
Total United States carloads were 53,967 in the quarter ended June 30, 1998
compared to 54,058 in the quarter ended June 30, 1997, a decrease of 91 or 0.2%.
Also, the overall average revenue per carload declined to $304 in the quarter
ended June 30, 1998, compared to $306 per carload in the quarter ended June 30,
1997, a decrease of 0.7% due to changes in commodity mix and traffic patterns.
United States non-freight railroad revenues were $4.1 million in the quarter
ended June 30, 1998 compared to $3.7 million in the quarter ended June 30, 1997,
an increase of $308,000 or 8.2%.
Australia Operating Revenues (US Dollars)
Operating revenues were $12.1 million in the quarter ended June 30, 1998 and
consisted of $10.8 million in freight revenues and a $1.3 million in non-freight
revenues.
The following table outlines Australian freight revenues for the quarter ended
June 30, 1998:
Australian Freight Revenue by Commodity
Three Months Ended June 30, 1998
(in thousands)
Commodity Group Revenue
Hook and Pull (Haulage) $ 3,937
Grain 3,598
Coal 1,792
Gypsum 784
Marble 502
Lime 168
Other 55
-------
Total $10,836
Australia non-freight revenues were $1.3 million in the quarter ended June 30,
1998 and consisted of $880,000 in revenues from car hire and car rentals and
$429,000 in other non-freight revenue.
Industrial Switching Revenues
Revenues from industrial switching activities were $4.4 million in the quarter
ended June 30, 1997 compared to $3.2 million in the quarter ended June 30, 1997,
an increase of $1.2 million or 38.7%. The increase was primarily attributable
to a broadening of the customer base of Rail Link, Inc.
11
<PAGE>
Consolidated Operating Expenses
Operating expenses were $32.4 million in the quarter ended June 30, 1998
compared to $19.3 million in the quarter ended June 30, 1997, an increase of
$13.1 million or 67.8%. Expenses attributable to operations in Australia
represented $10.0 million or 76.4% of the change, with increases in United
States operating expenses making up the remaining $3.1 million or 23.6% of the
change.
The Company's operating ratio increased to 87.4% in the quarter ended June 30,
1998 from 82.2% in the quarter ended June 30, 1997. The increase is primarily
attributable to increases in labor and benefits and other expenses in the United
States railroad and industrial switching operations.
The following table sets forth a comparison of the Company's operating
expenses for the second quarters of 1998 and 1997:
Operating Expense Comparison
Three Months Ended June 30, 1998 and 1997
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
------------------------------- ---------------------------------
% of Operating % of Operating
Amount Revenues Amount Revenues
<S> <C> <C> <C> <C>
Labor and benefits $11,336 30.6% $ 8,790 37.4%
Equipment rents 2,659 7.2% 2,117 9.0%
Purchased services 5,011 13.5% 982 4.2%
Depreciation and
amortization 2,493 6.7% 1,702 7.2%
Diesel fuel 3,184 8.6% 1,164 5.0%
Casualties and insurance
1,395 3.8% 1,102 4.7%
Materials 1,643 4.4% 1,144 4.9%
Other 4,672 12.6% 2,307 9.8%
------- ---- ------- ----
Total $32,393 87.4% $19,308 82.2%
</TABLE>
Labor and benefits expense was $11.3 million in the quarter ended June 30,
1998 compared to $8.8 million in the quarter ended June 30, 1997, an increase of
$2.5 million or 29.0%, of which $1.2 million or 48.0% is due to the commencement
of operations in Australia and $1.3 million or 52.0% is due to increases in
United States railroad and switching operations. However, labor costs decreased
as a percentage of revenues to 30.6% in the quarter ended June 30, 1998 from
37.4% in the quarter ended June 30, 1997. The decrease is largely attributable
to the purchased services nature of the Australia operation in which contractors
perform maintenance of track and maintenance of equipment services traditionally
performed by labor thus resulting in a much lower labor-to-revenue ratio.
Similarly, purchased services expense was $5.0 million in the quarter ended June
30, 1998 compared to $1.0 million in the quarter ended June 30, 1997, an
increase of $4.0 million or 410.3%, due primarily to the commencement of
operations in Australia.
Diesel fuel expense was $3.2 million in the quarter ended June 30, 1998
compared to $1.2 million in the quarter ended June 30, 1997, an increase of $2.0
million or 173.5%. The increase was due to $2.3 million in diesel fuel expense
in connection
12
<PAGE>
with the commencement of operations in Australia, which was partially offset by
a decrease of $285,000 in diesel fuel expense in connection with United States
operations. The price of diesel fuel is more expensive in Australia then in the
United States on a per unit basis. Other expense was $4.7 million in the quarter
ended June 30, 1998 compared to $2.3 million in the quarter ended June 30, 1997,
an increase of $2.4 million or 102.5%, of which $1.2 million is due to the
commencement of operations in Australia, and $1.2 million is due to increases in
United States operations primarily attributable to general and administrative
expense increases related to acquisition endeavors and legal costs, and
increases in trackage rights expense.
Interest Expense and Income Taxes
Interest expense in the quarter ended June 30, 1998 was $1.6 million compared
to $647,000 in the quarter ended June 30, 1997, an increase of $1.0 million or
153.8%. The increase reflects the growth of overall debt outstanding during the
1998 period compared to the 1997 period due to the financing of the acquisition
of assets in Australia; the investment in Genesee Rail-One in Canada; and the
acquisition of railroad rolling stock by several domestic subsidiaries. The
Company's effective income tax rate was 42.4% in the quarter ended June 30, 1998
compared to 40.5% in the quarter ended June 30, 1997.
Net Income
The Company's net income in the quarter ended June 30, 1998 was $1.8 million
compared to $2.2 million in the quarter ended June 30, 1997, a decrease of
$311,000 or 14.4%.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Consolidated Operating Revenues
Operating revenues were $74.8 million in the first six months of 1998 compared
to $47.6 million in the first six months of 1997, an increase of $27.2 million
or 57.3%. The increase was attributable to $24.4 million in revenue from the
Australia operation, a $836,000 increase in United States railroad revenue and a
$2.0 million increase in industrial switching revenues.
The following three sections provide information on railroad revenues in the
United States and Australia, and industrial switching revenues in the United
States.
United States Operating Revenues
Operating revenues were $42.0 million in the first six months of 1998 compared
to $41.2 million in the first six months of 1997, an increase of $836,000 or
2.0%. The
13
<PAGE>
increase was attributable to a $1.3 million increase in non-freight revenues,
which was partially offset by a $490,000 decrease in freight revenues.
The following table compares United States freight revenues, carloads and
average freight revenues per carload for the six months ended June 30, 1998 and
1997:
United States Freight Revenues and Carloads Comparison by Commodity Group
Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Average
Freight
Revenues
Per
Freight Revenues Carloads Carload
---------------- -------- ---------
Commodity % of % of % of % of
Group 1998 Total 1997 Total 1998 Total 1997 Total 1998 1997
- ------ ---- ----- ---- ----- ---- ----- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal, Coke &
Ores $10,045 30.0% $11,413 33.6% 39,289 34.8% 45,100 40.7% $ 256 $ 253
Pulp & Paper 4,418 13.2% 3,799 11.2% 11,367 10.1% 9,986 9.0% 389 380
Petroleum
Products 3,756 11.2% 4,091 12.1% 8,719 7.7% 8,315 7.5% 431 492
Chemicals and
Plastics 3,077 9.2% 3,057 9.0% 5,902 5.2% 5,726 5.2% 521 534
Lumber and
Forest
Products 2,972 8.9% 2,996 8.8% 10,017 8.9% 8,834 8.0% 297 339
Metals 2,908 8.7% 2,437 7.2% 10,751 9.5% 10,349 9.3% 270 236
Farm & Food
Products 1,999 6.0% 1,907 5.6% 7,231 6.4% 6,517 5.9% 276 293
Minerals &
Stone 1,725 5.2% 1,437 4.2% 6,089 5.4% 5,317 4.8% 283 270
Autos & Auto
Parts 1,067 3.2% 1,865 5.5% 2,109 1.9% 3,497 3.2% 506 533
Other 1,463 4.4% 918 2.8% 11,429 10.1% 7,270 6.4% 128 126
- ----- ------- ------ ------- ------ ------- ------ ------- ------ ----- -----
Total $33,430 100.0% $33,920 100.0% 112,903 100.0% 110,911 100.0% $ 296 $ 306
</TABLE>
The decrease in United States freight revenues was largely attributable to the
decline in freight revenues from shipments of Coal, Autos and Petroleum
Products. Freight revenues from Coal were $10.0 million in the six months ended
June 30, 1998, compared to $11.4 million in the six months ended June 30, 1997,
a decrease of $1.4 million or 12.0% due to reduced shipments of coal resulting
from scheduled maintenance at a key customer's facilities. Freight revenues
from Autos and Auto Parts were $1.1 million in the six months ended June 30,
1998, compared to $1.9 million in the six months ended June 30, 1997, a decrease
of $798,000 or 42.8% due to reduced shipments resulting from loss of a freight
contract and labor issues in the auto industry. Freight revenues from Petroleum
Products were $3.8 million in the six months ended June 30, 1998, compared to
$4.1 million in the six months ended June 30, 1997, a decrease of $335,000 or
8.2% due to reduced shipments of Petroleum Products resulting from scheduled
maintenance at a key customer's facilities. The decrease in freight revenues
from Coal, Auto and Petroleum Products was partially offset by increases in
freight revenues from Pulp & Paper of $619,000 or 16.3%, Metals of $471,000 or
19.3% and Minerals and Stone of $288,000 or 20.0%. Freight revenues from all
remaining commodities reflected a net increase of $633,000.
14
<PAGE>
Total United States carloads were 112,903 in the six months ended June 30,
1998 compared to 110,911 in the six months ended June 30, 1997, an increase of
1,992 or 1.8%. However, the overall average revenue per carload declined to $296
in the six months ended June 30, 1998, compared to $306 per carload in the six
months ended June 30, 1997, a decrease of 3.3% due to changes in commodity mix
and traffic patterns.
United States non-freight railroad revenues were $8.6 million in the six
months ended June 30, 1998 compared to $7.3 million in the six months ended June
30, 1997, an increase of $1.3 million or 18.2%.
Australia Operating Revenues (US Dollars)
Operating revenues were $24.4 million in the six months ended June 30, 1998
and consisted of $21.6 million in freight revenues and a $2.8 million in non-
freight revenues.
The following table outlines Australian freight revenues for the six months
ended June 30, 1998:
Australian Freight Revenue by Commodity
Six Months Ended June 30, 1998
(in thousands)
Commodity Group Revenue
Hook and Pull (Haulage) $ 7,877
Grain 6,472
Coal 3,856
Gypsum 1,541
Marble 1,010
Lime 524
Other 358
-------
Total $21,638
Australia non-freight revenues were $2.8 million in the six months ended June
30, 1998 and consisted of $1.9 million in revenues from car hire and car rentals
and $852,000 in other non-freight revenue.
15
<PAGE>
Industrial Switching Revenues
Revenues from industrial switching activities were $8.4 million in the six
months ended June 30, 1997 compared to $6.4 million in the six months ended June
30, 1997, an increase of $2.0 million or 31.2%. The increase was primarily
attributable to a broadening of the customer base of Rail Link, Inc.
Consolidated Operating Expenses
Operating expenses were $65.2 million in the six months ended June 30, 1998
compared to $39.4 million in the six months ended June 30, 1997, an increase of
$25.8 million or 65.5%. Expenses attributable to operations in Australia
represented $20.6 million or 79.9% of the change, with increases in domestic
operating expenses accounting for the remaining $5.2 million or 20.1% of the
change.
The Company's operating ratio increased to 87.1% in the six months ended June
30, 1998 from 82.7% in six months ended June 30, 1997. The increase is
primarily attributable to the higher levels of purchased services and the price
of diesel fuel inherent in the Australia operation, changes in the traffic mix,
principally related to the level of coal movements in the United States, and to
increases in labor and benefits and other expenses in the United States railroad
and industrial switching operations.
The following table sets forth a comparison of the Company's operating
expenses for the six months ended June 30, 1998 and 1997:
Operating Expense Comparison
Six Months Ended June 30, 1998 and 1997
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
------------------------ -----------------------
% of % of
Operating Operating
Amount Revenues Amount Revenues
<S> <C> <C> <C> <C>
Labor and benefits $22,521 30.1% $17,734 37.3%
Equipment rents 5,939 7.9% 4,552 9.6%
Purchased services 10,185 13.6% 1,998 4.2%
Depreciation and amortization 4,798 6.4% 3,221 6.8%
Diesel fuel 6,718 9.0% 2,507 5.3%
Casualties and insurance 2,698 3.6% 2,633 5.5%
Materials 3,090 4.1% 2,113 4.4%
Other 9,211 12.4% 4,607 9.6%
------- ---- ------- ----
Total $65,160 87.1% $39,365 82.7%
</TABLE>
Labor and benefits expense was $22.5 million in the six months ended June 30,
1998 compared to $17.7 million in the six months ended June 30, 1997, an
increase of $4.8 million or 27.0%, of which $2.6 million or 54.6% was due to the
commencement of operations in Australia and $2.2 million or 45.4% was due to
increases in United States railroad and switching operations. However, labor
costs decreased as a percentage of revenues to 30.1% in the six months ended
June 30, 1998 from 37.3% in the six months ended June 30, 1997. The decrease
is largely attributable to the
16
<PAGE>
purchased services nature of the Australia operation in which contractors
perform maintenance of track and maintenance of equipment services traditionally
performed by labor thus resulting in a much lower labor-to-revenue ratio.
Similarly, purchased services expense was $10.2 million in the six months ended
June 30, 1998 compared to $2.0 million in the six months ended June 30, 1997, an
increase of $8.2 million or 409.8%, due primarily to the commencement of
operations in Australia.
Diesel fuel expense was $6.7 million in the six months ended June 30, 1998
compared to $2.5 million in the six months ended June 30, 1997, an increase of
$4.2 million or 168.0%. This increase was due to $4.8 million in diesel fuel
expense in connection with the commencement of operations in Australia, which
was partially offset by a decrease of $558,000 in diesel fuel expense in
connection with United States operations. The price of diesel fuel is more
expensive in Australia then in the United States on a per unit basis. Other
expense was $9.2 million in the six months ended June 30, 1998 compared to $4.6
million in the six months ended June 30, 1997, an increase of $4.6 million or
99.9%, of which $2.4 million or 53.2% is due to the commencement of operations
in Australia and $2.2 million or 46.8% is due to increases in United States
operations primarily attributable to general and administrative increases
related to acquisition endeavors and legal costs, and trackage rights expense
increases.
Interest Expense and Income Taxes
Interest expense in the six months ended June 30, 1998 was $3.2 million
compared to $1.2 million in the six months ended June 30, 1997, an increase of
$2.0 million or 162.4%. The increase reflects the growth of overall debt
outstanding during the 1998 period compared to the 1997 period due to the
financing of the acquisition of assets in Australia; the investment in Genesee
Rail-One in Canada; and the acquisition of railroad rolling stock by several
domestic subsidiaries. The Company's effective income tax rate was 41.1% in the
six months ended June 30, 1998 compared to 40.6% in the six months ended June
30, 1997.
Net Income
The Company's net income in the six months ended June 30, 1998 was $4.1
million compared to $4.3 million in the six months ended June 30, 1997, a
decrease of $163,000 or 3.8%.
Liquidity and Capital Resources
On August 12, 1998, the Company announced that it would repurchase up to one
million shares of its Class A Common Stock in accordance with Exchange Act Rule
10b-18. Purchases will be made from time to time in the open market and will
continue until all of such shares are repurchased or until the Company
determines to terminate the repurchase program. Repurchased shares will be held
in the Company treasury and may be used for customary corporate purposes.
During the six months ended June 30, 1998 the Company generated cash from
operations of $16.8 million, invested $9.5 million in capital assets, had a net
increase in debt of $4.9 million and received $1.4 million in proceeds from the
disposition of property.
During the six months ended June 30, 1997 the Company generated cash from
operations of $2.3 million, had a net reduction in debt of $1.7 million, entered
into a $5.3 million long-term capital lease for rolling stock and recorded $1.2
million in net proceeds on governmental grants. A total of $9.1 million was
invested in capital assets of which $5.3 million represented rolling stock under
the
17
<PAGE>
long-term capital lease. The Company received $266,000 in proceeds from the
disposition of property.
The Company has budgeted approximately $12.0 million in capital expenditures
in 1998, primarily for track rehabilitation, of which $1.5 million is expected
to be used to complete an obligation to replace rail under the terms of a lease
of one of the Company's railroads in the United States, and $2.5 million is
expected to be used in Australia. Approximately $9.5 million of the budgeted
capital expenditures of $12.0 million were completed as of June 30, 1998.
At June 30, 1998 the Company had long-term debt (including current portion)
totaling $77.9 million, which comprised 52.0% of its total capitalization. This
compares to long-term debt, including current portion, of $22.4 million at June
30, 1997, comprising 25.3% 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.
Forward-Looking Statements
This Report and the documents incorporated herein by reference may contain
forward-looking statements based on current expectations, estimates and
projections about the Company's industry, management's beliefs and assumptions
made by management. Words such as "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are no guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to forecast. Therefore,
actual results may differ materially from those expressed or forecast in any
such forward-looking statements. Such risks and uncertainties include, in
addition to those set forth in this Item 2, those noted in the documents
incorporated by reference. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
The remainder of this page is intentionally left blank.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 6, 1998, a lawsuit was commenced against the Company and its
subsidiary, Illinois & Midland Railroad, Inc. ("IMRR"), by
Commonwealth Edison Company ("ComEd") in the Circuit Court of Cook
County, Illinois. The suit alleges that IMRR is in breach of certain
provisions of a 1987 agreement entered into by a prior unrelated owner
of the IMRR rail line. The provisions pertain to limitations on rates
received by IMRR and by the unrelated predecessor on freight hauled
for ComEd's Powerton plant. The suit seeks unspecified compensatory
damages in excess of $100,000. ComEd is IMRR's largest customer and
in 1997 accounted for 15% of the consolidated revenues of the Company
and its subsidiaries. The Company believes the suit is without merit.
IMRR intends to vigorously defend against the suit.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - 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.
19
<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' Agreement dated as of May 20,
1996, among the Registrant, its executive officers and its
Class B stockholders (Exhibit 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) Second Amendment and Restated Revolving Credit Agreement
dated as of October 31, 1997 among the Registrant, its
subsidiaries, BankBoston, N.A. and the banks named therein
(Exhibit 4.1)4
(10) Material Contracts
*(10.1) Amendment No. 2 to the Genesee & Wyoming Inc. 1996 Stock Option
Plan
*(10.2) Amendment No. 1 to the Genesee & Wyoming Inc. Employee Stock
Purchase Plan
*(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.
20
<PAGE>
(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
Not applicable.
____________________________
*Exhibit filed with this Report.
1Exhibit 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.
2Exhibit 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.
3Exhibit 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.
4Exhibit previously filed as part of, and incorporated herein by
reference to, the Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1997. The exhibit number contained in parenthesis refers to the
exhibit number in such Report.
The remainder of this page is intentionally left blank.
21
<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: August 14, 1998 By: /s/ Mortimer B. Fuller, III
---------------------------
Name: Mortimer B. Fuller, III
Title: Chairman of the Board and CEO
Date: August 14, 1998 By: /s/ Alan R. Harris
---------------------------
Name: Alan R. Harris
Title: Senior Vice President and
Chief Accounting Officer
The remainder of this page is intentionally left blank.
22
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 2
TO THE
GENESEE & WYOMING INC.
1996 STOCK OPTION PLAN
EFFECTIVE MARCH 28, 1998
(SUBJECT TO SUBSEQUENT RATIFICATION BY THE STOCKHOLDERS)
WHEREAS, Genesee & Wyoming Inc., a Delaware corporation (the "Company"), has
established the Genesee & Wyoming Inc. 1996 Stock Option Plan, as heretofore
amended (the "Plan"); and
WHEREAS, deeming it appropriate and advisable so to do, and pursuant to
Section 19 of the Plan, the Board of Directors of the Company has authorized,
approved and adopted the further amendment to the Plan set forth herein;
NOW, THEREFORE, the Plan is hereby amended, effective March 28, 1998, as set
forth below; provided, however, that if the stockholders of the Company fail to
approve and ratify at the next Annual Meeting of Stockholders of the Company
both (i) this Amendment and (ii) Amendment No. 1 to the Genesee & Wyoming Inc.
Employee Stock Purchase Plan, then this Amendment shall be null and void and of
no effect:
1. The first sentence of Section "4. NUMBER OF SHARES." of the Plan is
hereby amended to provide in its entirety as follows (with the remainder of said
Section 4 being unchanged and unaffected by this Amendment and continuing in
full force and effect):
"Subject to the provisions of Section 5, the total number of shares of
the Company's Class A Common Stock, par value $.01 per share (the `Class
A Common Stock'), which may be issued under Options granted pursuant to
the Plan shall not exceed 850,000."
2. Except as amended hereby, the Plan shall remain in full force and
effect in accordance with its terms.
THIS AMENDMENT NO. 2 TO THE GENESEE & WYOMING INC. 1996 STOCK OPTION PLAN
WAS AUTHORIZED, APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY ON
MARCH 28, 1998, AND APPROVED AND RATIFIED BY THE STOCKHOLDERS OF THE COMPANY ON
MAY 12, 1998.
/S/ JAMES B. GRAY, JR.
----------------------
JAMES B. GRAY, JR., SECRETARY
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1
TO THE
GENESEE & WYOMING INC.
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE MARCH 28, 1998
(SUBJECT TO SUBSEQUENT RATIFICATION BY THE STOCKHOLDERS)
WHEREAS, Genesee & Wyoming Inc., a Delaware corporation (the "Company"), has
established the Genesee & Wyoming Inc. Employee Stock Purchase Plan (the
"Plan"); and
WHEREAS, deeming it appropriate and advisable so to do, and pursuant to
Section 15 of the Plan, the Board of Directors of the Company has authorized,
approved and adopted the amendment to the Plan set forth herein;
NOW, THEREFORE, the Plan is hereby amended, effective March 28, 1998, as set
forth below; provided, however, that if the stockholders of the Company fail to
approve and ratify at the next Annual Meeting of Stockholders of the Company
both (i) this Amendment and (ii) Amendment No. 2 to the Genesee & Wyoming Inc.
1996 Stock Option Plan, then this Amendment shall be null and void and of no
effect:
1. The first sentence of Section "3. SHARES SUBJECT TO THE PLAN" of
the Plan is hereby amended to provide in its entirety as follows (with the
remainder of said Section 3 being unchanged and unaffected by this Amendment and
continuing in full force and effect):
"Subject to the provisions of Section 12, the total number of shares of
Class A Common Stock which may be purchased by employees under the Plan
shall not exceed 250,000."
2. Except as amended hereby, the Plan shall remain in full force and
effect in accordance with its terms.
THIS AMENDMENT NO. 1 TO THE GENESEE & WYOMING INC. EMPLOYEE STOCK PURCHASE
PLAN WAS AUTHORIZED, APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS OF THE
COMPANY ON MARCH 28, 1998, AND APPROVED AND RATIFIED BY THE STOCKHOLDERS OF THE
COMPANY ON MAY 12, 1998.
/S/ JAMES B. GRAY, JR.
----------------------
JAMES B. GRAY, JR., SECRETARY
<PAGE>
Exhibit 11.1
GENESEE & WYOMING INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
BASIC EARNINGS PER SHARE CALCULATION:
Net Income $1,846 $4,128
Weighted average number of shares
of common stock 5,294 5,294
Earnings per share - basic $0.35 $0.78
DILUTED EARNINGS PER SHARE CALCULATION:
Net Income $1,846 $4,128
Weighted average number of shares of common stock
and common stock equivalents outstanding:
Weighted average number of shares
of common stock 5,294 5,294
Common stock equivalents issuable under stock
option plans 106 104
Weighted average number of shares of common stock
and common stock equivalents - diluted 5,400 5,398
Earnings per share - diluted $ 0.34 $0.76
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 25,104
<SECURITIES> 0
<RECEIVABLES> 29,304
<ALLOWANCES> 0
<INVENTORY> 3,379
<CURRENT-ASSETS> 63,591
<PP&E> 156,649
<DEPRECIATION> 27,808
<TOTAL-ASSETS> 220,438
<CURRENT-LIABILITIES> 38,697
<BONDS> 77,424
0
0
<COMMON> 53
<OTHER-SE> 71,898
<TOTAL-LIABILITY-AND-EQUITY> 220,438
<SALES> 74,806
<TOTAL-REVENUES> 74,806
<CGS> 65,160
<TOTAL-COSTS> 65,160
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,635
<INCOME-PRETAX> 7,011
<INCOME-TAX> 2,883
<INCOME-CONTINUING> 4,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,128
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.76
</TABLE>
