<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, 1999 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 13, 1999:
Class Number of Shares Outstanding
- ----- ----------------------------
Class A Common Stock 3,523,798
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 Month Periods Ended March 31, 1999
and 1998....................................... 3
Consolidated Balance Sheets - March 31, 1999
and December 31, 1998.......................... 4
Consolidated Statements of Cash Flows - For the
Three Month Periods Ended March 31, 1999
and 1998....................................... 5
Notes to Consolidated Financial Statements....... 6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.. 11-20
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.................................... 20
Part II - Other Information................................ 21
Index to Exhibits.......................................... 22-23
Signatures................................................. 24
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,
1999 1998
----------------------------------
<S> <C> <C>
OPERATING REVENUES $ 34,172 $ 37,740
----------------------------------
OPERATING EXPENSES:
Transportation 11,317 11,814
Maintenance of ways and structures 4,160 4,205
Maintenance of equipment 6,942 7,759
General and administrative 7,020 6,685
Depreciation and amortization 2,695 2,303
----------------------------------
Total operating expenses 32,134 32,766
----------------------------------
INCOME FROM OPERATIONS 2,038 4,974
Interest expense (1,394) (1,562)
Other income (expense) (596) 394
----------------------------------
Income before provision for income taxes 48 3,806
Provision for income tax 379 1,524
----------------------------------
NET INCOME (LOSS) $ (331) $ 2,282
==================================
Earnings (loss) per common share - basic $ (0.07) $ 0.43
==================================
Weighted average number of shares of
common stock - basic 4,933 5,293
==================================
Earnings (loss) per common share - diluted $ (0.07) $ 0.42
==================================
Weighted average number of shares of
common stock - diluted 4,933 5,427
==================================
</TABLE>
3
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, Dec. 31,
1999 1998
ASSETS (Unaudited)
----------------------------------
<S> <C> <C>
CURRENTS ASSETS:
Cash and cash equivalents $ 15,403 $ 14,396
Accounts receivable, net 24,922 31,723
Materials and supplies 3,590 3,502
Prepaid expenses and other 2,910 2,914
Deferred income tax assets, net 2,584 2,315
----------------------------------
Total current assets 49,409 54,850
----------------------------------
PROPERTY AND EQUIPMENT, net 127,225 125,562
----------------------------------
SERVICE ASSURANCE AGREEMENT, net 12,626 12,814
----------------------------------
INVESTMENT IN UNCONSOLIDATED AFFILIATES 12,402 13,215
----------------------------------
OTHER ASSETS, net 10,338 10,319
----------------------------------
Total assets $ 212,000 $ 216,760
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,439 $ 2,591
Accounts payable 23,022 28,814
Accrued expenses 9,153 11,338
----------------------------------
Total current liabilities 34,614 42,743
----------------------------------
LONG-TERM DEBT 67,277 63,099
----------------------------------
OTHER LIABILITIES 3,185 2,803
----------------------------------
DEFERRED INCOME TAX LIABILITIES, net 12,275 12,006
----------------------------------
DEFERRED ITEMS--grants from governmental agencies 17,568 17,607
----------------------------------
DEFERRED GAIN--sale/leaseback 3,872 3,965
----------------------------------
STOCKHOLDERS' EQUITY:
Class A common stock, $0.01 par value, one vote per share;
12,000,000 shares authorized; 4,451,461 and 4,450,276 issued and
outstanding on March 31, 1999 and December 31, 1998, respectively. 45 45
Class B common stock, $0.01 par value, 10 votes per share;
1,500,000 shares authorized; 845,539 issued and outstanding
on March 31, 1999 and December 31, 1998. 8 8
Additional paid-in capital 46,743 46,730
Retained earnings 34,159 34,490
Foreign currency translation adjustment (1,700) (2,107)
Less treasury stock, at cost, 475,000 and 345,000 Class A shares
held on March 31, 1999 and December 31, 1998, respectively. (6,046) (4,629)
----------------------------------
Total stockholders' equity 73,209 74,537
----------------------------------
Total liabilities and stockholders' equity $ 212,000 $ 216,760
==================================
</TABLE>
4
<PAGE>
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (331) $ 2,282
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation and amortization 2,695 2,303
Deferred income taxes 282 969
Gain on disposition of property and equipment (16) ---
Changes in assets and liabilities -
Accounts receivable 6,879 3,833
Materials and supplies (53) (124)
Prepaid expenses and other 12 (56)
Accounts payable and accrued expenses (8,351) 1,130
Other assets and liabilities, net 825 (11)
---------------------------
Net cash provided by operating activities 1,942 10,326
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,231) (3,986)
Proceeds from disposition of property 38 1,261
---------------------------
Net cash used in investing activities (3,193) (2,725)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases (9,551) (482)
Proceeds from issuance of long-term debt 13,000 ---
Net proceeds on grants 225 ---
Proceeds from issuance of common stock 14 17
Purchase of treasury stock (1,417) ---
---------------------------
Net cash provided by (used in) financing activities 2,271 (465)
---------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (13) 112
---------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,007 7,248
CASH AND CASH EQUIVALENTS, beginning of period 14,396 11,434
---------------------------
CASH AND CASH EQUIVALENTS, end of period $ 15,403 $ 18,682
===========================
CASH PAID DURING PERIOD FOR:
Interest $ 1,202 $ 1,721
Incomes taxes 1,900 47
===========================
</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, 1999 and 1998, 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, 1998 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:
GW Mexico, S.A. de C.V.
On July 29, 1998 the Company began serving as the operator of a 900-mile
mineral railroad in northern Mexico. The Company's operations are being
conducted by its new wholly-owned subsidiary, GW Mexico, S.A. de C.V. The
railroad, known as Linea Coahuila Durango, is a concession awarded by the
Mexican government in 1998 to two Mexican industrial firms, Grupo Acerero del
Norte, S.A. de C.V. and Industrias Penoles, S.A. de C.V. The operating results
of GW Mexico, S.A. de C.V. are not material and are reported in U.S. railroad
operations.
3. JOINT VENTURE:
During 1997, the Company formed a joint venture, Genesee Rail-One Inc. ("GRO")
to acquire railroads in Canada. GRO was a joint venture with Rail-One Inc.
("Rail-One"), 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.
On November 11, 1997, GRO commenced operations of the Quebec Gatineau Railway
Inc. ("QGRY"), a 354-mile railroad linking Quebec City, Montreal and Hull in
Southeastern Quebec. QGRY purchased and leased the assets for this railroad from
St. Lawrence & Hudson Railway Company Limited which is a subsidiary of Canadian
Pacific Railway Company.
6
<PAGE>
In November, 1998, the Company recorded an additional investment of $875,000
for the purchase of a 10-mile segment of track that is contiguous to the QGRY.
Additionally, the Company agreed to provide a $2.2 million letter of credit to
GRO's primary lender in exchange for relief on certain financial covenants.
Based on GWI's ownership portion, the Company has reported 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. An
after-tax loss from GRO of $769,000 in the quarter ended March 31, 1999 and
after-tax income of $92,000 in the quarter ended March 31, 1998 are recorded in
other income, net.
As of March 31, 1999 the Company's investment was recorded at $12.1 million, a
reduction from December 31, 1998, of $769,000 due to GRO operating losses.
The Company loaned Rail-One $4,613,000 under a promissory note denominated in
Canadian currency to substantially finance Rail-One's initial investment in GRO.
The note accrued interest at 7.5 percent per annum, earned a commitment fee
equal to 4 percent of the principal amount of the note and was secured by Rail-
One's 47.5 percent ownership in GRO. The principal of the note, all accrued
interest on the principal amount and the commitment fee were due and payable on
November 10, 1998. The principal, all accrued interest and the commitment fee
were not paid on November 10, 1998, and the Company entered negotiations with
Rail-One regarding the transfer of Rail-One's ownership interest in GRO to the
Company.
On April 15, 1999, the Company closed in escrow on an agreement to acquire
Rail-One's 47.5% ownership interest in GRO thereby increasing the Company's
ownership of GRO to 95%. Under the terms of the agreement, the Company will pay
approximately $844,000 in cash to the owners of Rail-One in installments over a
four year period and the Company granted an option to the owners of Rail-One to
purchase 80,000 shares of the Company's Class A Common Stock at an exercise
price of $8.62 per share. Exercise of the option to purchase 80,000 shares is
contingent on the Company's recovery of its capital investment in GRO including
debt assumed if the Company were to sell GRO, and upon certain GRO income
performance measures. Effective with this agreement, the operating results of
GRO will be consolidated within the financial statements of the Company, with a
5% minority interest due to another GRO shareholder.
4. LEASES:
In March 1997, a subsidiary of the Company entered into a master capital lease
agreement with a leasing company. The capital lease provided for the inclusion
of up to $13.0 million in railroad rolling stock, of which $11.6 million was
under commitment as of August, 1998. In September 1998, the Company completed an
exchange of like-kind assets with the leasing company reducing its commitment
under the master lease agreement by approximately $5.1 million. The remaining
$6.5 million lease obligation was liquidated in February, 1999, through the
purchase of the remaining assets held under the master lease agreement.
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 was accounted for as an operating lease and requires monthly payments
of $45,662 through July 2008.
7
<PAGE>
5. CONTINGENCIES:
IMRR - 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 stock purchase
agreement entered into by a prior unrelated owner of the IMRR rail line. The
provisions pertain to limitations on rates received by IMRR and the unrelated
predecessor for freight hauled for ComEd's Powerton plant. The suit seeks
unspecified compensatory damages for alleged past and present rate overcharges.
The Company believes the suit is without merit and intends to vigorously defend
against the suit. The parent company of ComEd announced its decision to sell
certain of ComEd's power facilities, one of which is the Powerton plant served
by IMRR under the provisions of a 1987 Service Assurance Agreement, (the "SAA")
entered into by a prior unrelated owner of the IMRR rail line. On April 6,
1999, a lawsuit was commenced by the Company and its subsidiary, IMRR, against
ComEd in the Circuit Court of Sangamon County, Illinois, seeking declaration of
certain rights regarding the SAA including declarations that the SAA is not
terminable at will and that ComEd must assign its contractual obligations under
the SAA to the purchaser of the Powerton plant. ComEd is IMRR's largest
customer and in 1998 accounted for 8.5% of the consolidated revenues of the
Company and its subsidiaries.
Conrail Merger - 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 substantially agrees with this estimate and is
implementing operational changes aimed at minimizing this impact. On October
21, 1997, the Company and several of its railroads 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 also may minimize this impact. The division of Conrail's
assets is expected to occur in the second or third 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 has or will
occur.
Stock Repurchase - On August 12, 1998, the Company's board of directors
authorized management to repurchase up to one million shares of the Company's
Class A common stock under SEC Rule 10b-18. At March 31, 1999 the Company had
purchased 475,000 shares at a cost of $6,046,000 (including 130,000 shares at
$1,417,000 purchased during the first quarter of 1999). After March 31, 1999, an
additional 453,000 shares were purchased at a cost of $4,156,000 increasing the
total shares repurchased as of May 13, 1999, to 928,000 at a total cost of
$10,202,000. The repurchase program remains open and purchase of the remaining
72,000 shares is expected.
8
<PAGE>
6. COMPREHENSIVE INCOME:
Comprehensive income is the total of net income and all other non-owner
changes in equity. The following table sets forth the Company's comprehensive
income for the three months ended March 31, 1999 and 1998:
Statement of Comprehensive Income
Three Month Periods Ended March 31, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
-------------------- ------------------
<S> <C> <C>
Net income (loss) $(331) $2,282
Other comprehensive income - Foreign currency
translation adjustments
407 284
---------------------- ------------------
Comprehensive income $ 76 $2,566
====================== ==================
</TABLE>
7. BUSINESS SEGMENT INFORMATION:
The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise
and Related Information, in 1998, which changes the way the Company reports
information about its operating segments. The information for 1998 has been
restated from prior quarters' presentations in order to conform to the 1999
presentation.
The Company operates in three business segments in two geographic areas:
United States Railroad Operations, which includes operating short line and
regional railroads, and buying, selling, leasing and managing railroad
transportation equipment within the United States; Australian Railroad
Operations, which includes operating a regional railroad and providing hook and
pull (haulage) services to other railroads within Australia; and Industrial
Switching, which includes providing freight car switching and related services
to industries with extensive railroad facilities within their complexes in the
United States.
Corporate overhead expenses, including acquisition expense, are reported in
United States Railroad Operations.
The accounting policies of the reportable segments are the same as those
described in Note 1. of Notes to Consolidated Financial Statements. The Company
evaluates the performance of its operating segments based on operating income.
Intersegment sales and transfers are not significant. Summarized financial
information for each business segment for the quarters ended March 31, 1999 and
1998 are shown in the following tables:
The remainder of this page is intentional left blank.
9
<PAGE>
<TABLE>
<CAPTION>
Business Segment
(amounts in thousands)
U.S. Australia Industrial
Railroad Railroad Switching
1999 Operations Operations Operations Total
- ------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 19,939 $11,022 $ 3,211 $ 34,172
Operating income (loss) 417 1,922 (301) 2,038
Other expense, net (1,468) (411) (111) (1,990)
Income before taxes (1,051) 1,511 (412) 48
Depreciation and
amortization 1,992 496 207 2,695
Identifiable assets 159,447 42,513 10,040 212,000
Capital expenditures 1,796 1,403 32 3,231
- ------------------------- -------- ------- ------- --------
<CAPTION>
U.S. Australia Industrial
Railroad Railroad Switching
1998 Operations Operations Operations Total
- ------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 22,390 $12,266 $ 3,084 $ 37,740
Operating income (loss) 3,809 1,678 (513) 4,974
Other expense, net (477) (613) (78) (1,168)
Income before taxes 3,332 1,065 (591) 3,806
Depreciation and
amortization 1,647 461 195 2,303
Identifiable assets 164,236 42,653 9,871 216,760
Capital expenditures 3,501 453 32 3,986
- ------------------------- -------- ------- ------- --------
</TABLE>
8. RECENTLY ISSUED ACCOUNTING STANDARDS:
The Financial Accounting Standards Board recently issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and hedging activities. The new standard requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value with changes in fair value reported
in income. This statement will require the Company to provide separate
disclosure of derivative instruments either on the face of the balance sheet or
within the footnotes to the financial statements. Adoption of this statement is
required no later than with the third quarter of 1999, which is when the Company
expects to adopt it. The impact will not be material.
The remainder of this page is intentionally left blank.
10
<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 1998
Form 10-K.
General
The Company is a holding company whose subsidiaries own and/or operate short
line and regional freight railroads and provide related rail services in the
United States, Australia and Mexico. The Company, through its U.S. industrial
switching subsidiary, also provides freight car switching and related services
to United States 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 freight car 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
U.S. 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. Also, much of the
Company's growth to date has resulted from acquisitions. The Company completed
two acquisitions during the first four months of 1996, one in November 1996, and
another in November 1997. 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.
Joint Venture - Genesee Rail-One Inc. ("GRO")
During 1997, the Company formed a joint venture, Genesee Rail-One Inc. ("GRO")
to acquire railroads in Canada. GRO was a joint venture with Rail-One Inc.
("Rail-One"), 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. As of
March 31, 1999, the Company's investment was recorded at $12.1 million (see Note
3. To the consolidated financial statements).
Based on GWI's ownership portion, the Company has reported the results of
operations of GRO under the equity method of accounting for investments. The
11
<PAGE>
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. An
after-tax loss from GRO of $769,000 in the quarter ended March 31, 1999 and
after-tax income of $92,000 in the quarter ended March 31, 1998 are recorded in
other income, net.
On April 15, 1999, the Company closed in escrow on an agreement to acquire
Rail-One's 47.5% ownership interest in GRO thereby increasing the Company's
ownership of GRO to 95%. Under the terms of the agreement, the Company will pay
approximately $844,000 in cash to the owners of Rail-One in installments over a
four year period and the Company granted an option to the owners of Rail-One to
purchase 80,000 shares of the Company's Class A Common Stock at an exercise
price of $8.62 per share. Exercise of the option to purchase 80,000 shares is
contingent on the Company's recovery of its capital investment in GRO including
debt assumed if the Company were to sell GRO, and upon certain GRO income
performance measures. Effective with this agreement, the operating results of
GRO will be consolidated within the financial statements of the Company, with a
5% minority interest due to another GRO shareholder.
Year 2000 Compliance
In late 1997, the Company began a comprehensive initiative to address and
resolve potential exposure associated with the functioning of its information
systems and non-information technology systems that include embedded technology
with respect to dates in the Year 2000 and beyond.
This initiative led to the development of the GWI Year 2000 Project Handbook.
The Handbook was developed to report industry Year 2000 methods and standards,
and document "best practices" for each of the Company's subsidiaries. Its
purpose is to promote consistent implementation of the Year 2000 Project and
encourage cost-effective practices and efficient use of resources.
The Year 2000 Project Handbook contains information useful to managers, system
analysts, and other technical staff members, including consultants and business
partners. It is meant to be used as a reference throughout the Year 2000
design, modification, testing, and implementation phases. The Handbook
addresses most of the obstacles the Company may face and their potential
solutions, including project management issues, contracting and staffing,
interface and data exchange standards, and test and development methodologies.
Three major categories of systems addressed by the Company's Year 2000
Initiative are railroad operations/management systems, business systems and non-
information technology systems.
All of the Company's railroad operations and management processes are
supported through licensed third party development and contracted operations.
These systems are third party certified Year 2000 compliant. With respect to
electronic commerce transmissions, the Company is currently capable of
supporting certain Year 2000 compliant EDI (4010) transactions. Remaining Year
2000 compliant EDI transactions will be implemented according to industry-wide
schedules. Full EDI compliance is expected during the second quarter of 1999.
Because the potential exists that not all of the Company's trading partners will
achieve Year 2000 compliance, the Company's operational systems will accommodate
non-Year 2000 electronic commerce transmissions as well as Year 2000 ready
transmissions.
All of the Company's financial, purchasing, inventory, asset management,
payroll and human resource systems supporting business operations are third
party systems. The third party vendors have certified all packages to be Year
2000 compliant.
12
<PAGE>
With respect to non-information technology systems (e.g. fire and security,
HVAC, etc.) that may impact operations and/or business processes, the Company
has conducted initial assessments of its rail yard and office facilities and
found no major Year 2000 problems or obstacles.
As part of its Year 2000 initiative, the Company is in communication with its
interline carriers, significant suppliers, large customers and financial
institutions to assess their Year 2000 readiness and expects to conduct
interface tests with its external trading partners in 1999 upon completion of
internal testing of remediated applications.
To date, the Company has expended less than $50,000 on its Year 2000
initiative and remaining costs are expected to be minimal. Overall, the
Company's Year 2000 initiative is proceeding on schedule with completion of all
areas expected by mid-1999.
Failure to achieve Year-2000 compliance by the Company, other railroads, its
suppliers, and its customers could negatively affect the Company's ability to
conduct business for an extended period. Management believes that the Company
will be successful in its Year 2000 conversion; however, there can be no
assurance that other companies on which the Company's systems and operations
rely will be converted on a timely basis, and such failure could have a material
effect on the Company's financial position, results of operations, or liquidity.
The remainder of this page is intentionally left blank.
13
<PAGE>
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Consolidated Operating Revenues
Operating revenues were $34.2 million in the quarter ended March 31, 1999
compared to $37.7 million in the quarter ended March 31, 1998, a decrease of
$3.5 million or 9.5%. The decrease was attributable to $1.2 million decline in
revenues from the Australia operation and a $2.4 million decrease in United
States railroad revenues, offset by a $127,000 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 Railroad Operating Revenues
Operating revenues were $19.9 million in the quarter ended March 31, 1999
compared to $22.4 million in the quarter ended March 31, 1998, a decrease of
$2.5 million or 10.9%. The decrease was attributable to a $2.1 million decline
in freight revenues and a $344,000 decrease in non-freight revenues.
The following table compares United States freight revenues, carloads and
average freight revenues per carload for the quarters ended March 31, 1999 and
1998:
United States Freight Revenues and Carloads Comparison by Commodity Group
Quarters Ended March 31, 1999 and 1998
(dollars in thousands, except average per carload)
<TABLE>
<CAPTION>
Average
Freight
Revenues
Per
Freight Revenues Carloads Carload
-------------------- -------- -------
% of % of % of % of
Commodity Group 1999 Total 1998 Total 1999 Total 1998 Total 1999 1998
- --------------- ---- ----- ---- ----- ---- ----- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal, Coke & Ores $ 3,674 24.7% $ 5,151 30.3% 14,972 30.5% 20,877 35.4% $ 245 $ 247
Pulp & Paper 2,011 13.5% 2,346 13.8% 5,706 11.7% 6,109 10.4% 352 384
Petroleum Products 1,897 12.7% 2,206 13.0% 4,175 8.5% 5,273 8.9% 454 418
Chemicals & Plastics 1,809 12.2% 1,316 7.7% 3,471 7.1% 2,448 4.1% 521 538
Lumber & Forest
Products 1,659 11.1% 1,315 7.7% 5,801 11.8% 4,342 7.4% 286 303
Metals 1,046 7.0% 1,510 8.9% 4,259 8.7% 5,947 10.1% 246 254
Farm & Food Products 1,018 6.8% 943 5.5% 3,591 7.3% 3,756 6.4% 283 251
Other 700 4.7% 899 5.3% 4,169 8.5% 6,105 10.4% 168 147
Autos & Auto Parts 600 4.0% 451 2.6% 1,182 2.4% 894 1.5% 508 504
Minerals & Stone 494 3.3% 878 5.2% 1,722 3.5% 3,185 5.4% 287 276
-----------------------------------------------------------------------------------
Total $14,908 100.0% $17,015 100.0% 49,048 100.0% 58,936 100.0% 304 289
======================================================================================================
</TABLE>
The decrease of $2.1 million in United States freight revenues was primarily
attributable to the decline in freight revenues from the shipment of Coal which
decreased by $1.5 million or 28.7% due to reduced shipments resulting from
scheduled inventory reductions and maintenance projects at a key customer's
facilities.
14
<PAGE>
Freight revenues from all remaining commodities reflected a net decrease of
$630,000.
Total United States carloads were 49,048 in the quarter ended March 31, 1999
compared to 58,936 in the quarter ended March 31, 1998, a decrease of 9,888 or
16.8% of which 5,905 were from reduced coal shipments. However, the overall
average revenue per carload increased to $304 in the quarter ended March 31,
1999, compared to $289 per carload in the quarter ended March 31, 1998, an
increase of 5.2% due to changes in commodity mix and traffic patterns.
United States non-freight railroad revenues were $5.0 million in the quarter
ended March 31, 1999 compared to $5.4 million in the quarter ended March 31,
1998, a decrease of $344,000 or 6.4%.
Australia Operating Revenues (U.S. Dollars)
Operating revenues were $11.0 million in the quarter ended March 31, 1999,
compared to $12.2 million in the quarter ended March 31, 1998, a decrease of
$1.2 million or 10.1%. The decrease was attributable to a $874,000 drop in
freight revenues and a $370,000 decrease in non-freight revenues.
The following table outlines Australian freight revenues for the quarters
ended March 31, 1999 and 1998:
Australian Freight Revenue by Commodity
Quarters Ended March 31, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
Commodity Group 1999 1998
- --------------- ----------------------------
<S> <C> <C>
Hook and Pull (Haulage) $4,224 $ 3,940
Grain 3,663 2,874
Coal 654 2,064
Gypsum 653 757
Marble 472 508
Lime 255 356
Other 6 302
----------------------------
Total $9,927 $10,801
============================
</TABLE>
The net decrease of $874,000 in Australia freight revenues was primarily
attributable to the decline in freight revenues from the shipment of Coal which
was offset by an increase in freight revenues from Grain and Hook and Pull.
Freight revenues from Coal were $654,000 in the quarter ended March 31, 1999,
compared to $2.1 million in the quarter ended March 31, 1998, a decrease of $1.5
million or 28.7% due to the loss of a Coal contract which was a short-term
haulage contract with a low margin of operating return entered into as an
accommodation to a government utility as part of the purchase process. Due to
this low margin of return, additional costs that would need to be incurred to
secure a long-term haulage contract, and the competitive nature of the contract
bidding, the Company has determined it would be more beneficial to allocate the
crews and locomotives handling the Coal haulage to other areas of the business.
Freight revenues from Grain were $3.7 million in the quarter ended March 31,
1999, compared to $2.9 million in the quarter ended March 31, 1998, an increase
of $789,000 or 27.5% and freight revenues from Hook and Pull were $4.2 million
in the quarter ended March 31,
15
<PAGE>
1999, compared to $3.9 million in the quarter ended March 31, 1998, an increase
of $284,000 or 7.2%. Freight revenues from all remaining commodities reflected a
net decrease of $537,000 or 27.9%.
Australia non-freight revenues were $1.1 million in the quarter ended March
31, 1999, compared to $1.5 million in the quarter ended March 31, 1998, a
decrease of $370,000 or 25.3% due primarily to a reduction in car hire and
rental income.
Industrial Switching Revenues
Revenues from U.S. industrial switching activities were $3.2 million in the
quarter ended March 31, 1999 compared to $3.1 million in the quarter ended March
31, 1998, an increase of $127,000 or 4.1%.
Consolidated Operating Expenses
Operating expenses for all operations combined were $32.1 million in the
quarter ended March 31, 1999, compared to $32.8 million in the quarter ended
March 31, 1998, a net decrease of $ 632,000 or 1.9%. Expenses attributable to
U.S. railroad operations were $19.5 million in the quarter ended March 31, 1999,
compared to $18.6 million in the quarter ended March 31, 1998, an increase of
$941,000 or 5.1%. Expenses attributable to operations in Australia were $9.1
million in the quarter ended March 31, 1999, compared to $10.6 million in the
quarter ended March 31, 1998, a decrease of $ 1.5 million or 14.1%. Expenses
attributable to U.S. industrial switching were $3.5 million in the quarter ended
March 31, 1999, compared to $3.6 million in the quarter ended March 31, 1998, a
decrease of $ 85,000 or 2.4%.
The following three sections provide information on railroad expenses in the
United States and Australia, and industrial switching expenses in the United
States.
United States Railroad Operating Expenses
The following table sets forth a comparison of the Company's United States
railroad operating expenses in the quarters ended March 31, 1999 and 1998:
United States Railroad
Operating Expense Comparison
Quarters Ended March 31, 1999 and 1998
(dollars in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
% of % of
Operating Operating
$ Revenue $ Revenue
<S> <C> <C> <C> <C>
Labor and benefits $ 7,164 35.9% $ 7,409 33.1%
Equipment rents 2,720 13.6% 2,891 12.9%
Purchased services 994 5.0% 1,094 4.9%
Depreciation and amortization 1,992 10.0% 1,647 7.4%
Diesel fuel 572 2.9% 937 4.2%
Casualties and insurance 588 2.9% 901 4.0%
Materials 1,621 8.1% 936 4.2%
Other 3,871 19.5% 2,766 12.3%
------- ----- ------- -----
Total $19,522 97.9% $18,581 83.0%
======= ===== ======= ====
</TABLE>
16
<PAGE>
Labor and benefits expense was $7.2 million in the quarter ended March 31,
1999 compared to $7.4 million in the quarter ended March 31, 1998, a decrease of
$245,000 or 3.3%, due primarily to reduced railroad operations due to lower
carloadings.
Depreciation and amortization expense was $2.0 million in the quarter ended
March 31, 1999 compared to $1.6 million in the quarter ended March 31, 1998, an
increase of $345,000 or 20.9%, due primarily to increased capital spending in
1999 and 1998.
Diesel fuel was $572,000 in the quarter ended March 31, 1999 compared to
$937,000 in the quarter ended March 31, 1998, a decrease of $365,000 or 39.0%,
due primarily to declines in diesel fuel prices and reduced volumes due to lower
carloadings.
Casualties and insurance expense, including claims brought under the Federal
Employers' Liability Act, was $588,000 in the quarter ended March 31, 1999
compared to $901,000 in the quarter ended March 31, 1998, a decrease of $313,000
or 34.7%, due primarily to a decreases in derailment and claims expense.
Materials expense was $1.6 million in the quarter ended March 31, 1999
compared to $936,000 in the quarter ended March 31, 1998, an increase of
$685,000 or 73.2%, due primarily to increases in maintenance of equipment
repairs for locomotives and freight cars.
Other expense was $3.9 million in the quarter ended March 31, 1999 compared to
$2.8 million in the quarter ended March 31, 1998, an increase of $1.1 million or
39.9%, due primarily to an increase in acquisition expense of $1.2 million which
was offset by a net decrease of approximately $100,000 in other expenses.
Australia Railroad Operating Expenses (U.S. Dollars)
The following table sets forth a comparison of the Company's Australia
railroad operating expenses in the quarters ended March 31, 1999 and 1998:
Australia Railroad
Operating Expense Comparison
Quarters Ended March 31, 1999 and 1998
(dollars in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
% of % of
Operating Operating
$ Revenue $ Revenue
<S> <C> <C> <C> <C>
Labor and benefits $1,373 12.5% $ 1,394 11.4%
Equipment rents 29 0.3% 353 2.9%
Purchased services 2,953 26.8% 4,001 32.6%
Depreciation and amortization 496 4.5% 461 3.8%
Diesel fuel 1,978 17.9% 2,464 20.1%
Casualties and insurance 621 5.6% 308 2.5%
Materials 481 4.4% 341 2.8%
Other 1,169 10.6% 1,266 10.3%
------ ---- ------- ----
Total $9,100 82.6% $10,588 86.4%
====== ==== ======= ====
</TABLE>
Equipment rent was $29,000 in the quarter ended March 31, 1999 compared to
$353,000 in the quarter ended March 31, 1998, a decrease of $324,000 or 91.8%,
due
17
<PAGE>
primarily to a decline in locomotive rental because of the improved availability
of the owned locomotives fleet.
Purchased services were $3.0 million in the quarter ended March 31, 1999
compared to $4.0 million in the quarter ended March 31, 1998, a decrease of $1.0
million or 26.2%, due primarily to the loss of the coal haulage contract
discussed earlier in the Australia revenue section.
Diesel fuel was $2.0 million in the quarter ended March 31, 1999 compared to
$2.5 million in the quarter ended March 31, 1998, a decrease of $486,000 or
19.7%, due primarily to a combination of price reductions and reduced fuel
consumption resulting from lower freight volumes.
Casualties and insurance was $621,000 in the quarter ended March 31, 1999
compared to $308,000 in the quarter ended March 31, 1998, an increase of
$313,000 or 101.6%, due primarily to an increase in derailment expense.
U. S. Industrial Switching Operating Expenses
The following table sets forth a comparison of the Company's U.S. industrial
switching operating expenses in the quarters ended March 31, 1999 and 1998:
U.S. Industrial Switching
Operating Expense Comparison
Quarters Ended March 31, 1999 and 1998
(dollars in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
% of % of
Operating Operating
$ Revenue $ Revenue
<S> <C> <C> <C> <C>
Labor and benefits $2,297 71.5% $2,382 77.2%
Equipment rents 47 1.5% 36 1.2%
Purchased services 106 3.3% 79 2.6%
Depreciation and amortization 207 6.4% 195 6.3%
Diesel fuel 120 3.7% 133 4.3%
Casualties and insurance 393 12.2% 94 3.0%
Materials 201 6.3% 170 5.5%
Other 141 4.4% 508 16.5%
------ ----- ------ -----
Total $3,512 109.3% $3,597 116.6%
====== ===== ====== =====
</TABLE>
Casualties and insurance expense was $393,000 in the quarter ended March 31,
1999 compared to $94,000 in the quarter ended March 31, 1998, an increase of
$299,000 or 318.1%, due primarily to an increase in claims expense.
Operating Ratios
The Company's combined operating ratio increased to 94.0% in the quarter ended
March 31, 1999 from 86.8% in the quarter ended March 31, 1998. The operating
ratio for U.S. railroad operations increased to 97.9% in the quarter ended March
31, 1999 from 83.0% in the quarter ended March 31, 1998. The operating ratio
for Australia railroad operations decreased to 82.6% in the quarter ended March
31, 1999 from 86.4% in the quarter ended March 31, 1998. The operating ratio
for U.S. industrial
18
<PAGE>
switching operations decreased to 109.3% in the quarter ended March 31, 1999
from 116.6% in the quarter ended March 31, 1998.
Interest Expense and Income Taxes
Interest expense in the quarter ended March 31, 1999 was $1.4 million compared
to $1.6 million in the quarter ended March 31, 1998, a decrease of $168,000 or
10.8%. The Company's effective income tax rate in the quarter ended March 31,
1999, after adjustment for losses in unconsolidated affiliate GRO, was 46.4%
which compared to 40.0% in the quarter ended March 31, 1998. The increase is
primarily attributable to state income tax treatment of operating losses.
Net Income (Loss)
The Company's net loss in the quarter ended March 31, 1999 was $331,000
compared to net income of $2.3 million in the quarter ended March 31, 1998, a
decrease of $2.6 million or 114.5%. The decrease in net income is the net result
a decrease in net income from United States railroad operations of $3.0 million
offset by an increase in net income from operations in Australia of $294,000 and
a decrease in the net loss of industrial switching of $113,000.
Liquidity and Capital Resources
Stock Repurchase - On August 12, 1998, the Company's board of directors
authorized management to repurchase up to one million shares of the Company's
Class A common stock under SEC Rule 10b-18. At March 31, 1999 the Company had
purchased 475,000 shares at a cost of $6,046,000 (including 130,000 shares at
$1,417,000 purchased during the first quarter of 1999). After March 31, 1999, an
additional 453,000 shares were purchased at a cost of $4,156,000 increasing the
total shares repurchased as of May 13, 1999, to 928,000 at a total cost of
$10,202,000. The repurchase program remains open and purchase of the remaining
72,000 shares is expected.
During the three months ended March 31, 1999 the Company generated cash from
operations of $1.9 million, invested $3.2 million in capital assets, had a net
increase in debt of $3.5 million and received $225,000 in proceeds from the
disposition of property.
During the three months ended March 31, 1998 the company generated cash from
operations of $10.3 million, invested $4.0 million in capital assets and
received $1.3 million in proceeds from disposition of property.
The Company has budgeted approximately $16.5 million in capital expenditures
in 1999, of which $11.5 million is planned for track rehabilitation and $5.0 is
planned for equipment. Of these amounts, $3.7 million is planned for track
rehabilitation in Australia and $2.5 million is planned for equipment in
Australia. Approximately $3.2 million of the budgeted capital expenditures of
$16.5 million were completed as of March 31, 1999.
At March 31, 1999 the Company had long-term debt (including current portion)
totaling $69.7 million, which comprised 48.8% of its total capitalization. This
compares to long-term debt, including current portion, of $65.7 million at
December 31, 1998, comprising 46.8% 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
19
<PAGE>
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.
The Company is exposed to the impact of interest rate changes. The Company's
exposure to changes in interest rates applies to its borrowings under a credit
facility and a capital lease arrangement, both of which have variable interest
rates tied to the LIBOR rate. In addition, the Company's Australian subsidiary
has a variable rate loan, one-half of which fluctuates with market changes in
interest rates and one-half of which is fixed at 6.24%. The Australian loan is
denominated in Australia dollars. The Company estimates that the fair value of
these debt instruments approximated their market values and carrying values at
March 31, 1999. The Company invests excess cash in overnight money market
accounts.
The remainder of this page is intentionally left blank.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
IMRR - 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 stock purchase agreement entered into by
a prior unrelated owner of the IMRR rail line. The provisions pertain
to limitations on rates received by IMRR and the unrelated
predecessor for freight hauled for ComEd's Powerton plant. The suit
seeks unspecified compensatory damages for alleged past and present
rate overcharges. The Company believes the suit is without merit and
intends to vigorously defend against the suit. The parent company of
ComEd announced its decision to sell certain of ComEd's power
facilities, one of which is the Powerton plant served by IMRR under
the provisions of a 1987 Service Assurance Agreement, ("SAA") entered
into by a prior unrelated owner of the IMRR rail line. On April 6,
1999 a lawsuit was commenced by the Company and its subsidiary, IMRR,
against ComEd in the Circuit Court of Sangamon County, Illinois,
seeking declaration of certain rights regarding the SAA including
declarations that the SAA is not terminable at will and that ComEd
must assign its contractual obligations under the SAA to the
purchaser of the Powerton plant. ComEd is IMRR's largest customer and
in 1998 accounted for 8.5% of the consolidated revenues of the
Company and its subsidiaries.
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.
21
<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 Amended 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
(g) First Amendment to Promissory Note dated as of March 19, 1999
between Buffalo & Pittsburgh Railroad, Inc. and CSX Transportation,
Inc. (Exhibit 4.1)5
(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.
22
<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.
5Exhibit 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, 1998. The exhibit number contained in parenthesis refers to the
exhibit number in such Report.
The remainder of this page is intentionally left blank.
23
<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 14, 1999 By: /s/ Mortimer B. Fuller, III
---------------------------
Name: Mortimer B. Fuller, III
Title: Chairman of the Board and
CEO
Date: May 14, 1999 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.
24
<PAGE>
Exhibit 11.1
GENESEE & WYOMING INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE CALCULATION:
Net Income (loss) $ (331) $ 2,282
Weighted average number of shares
of common stock 4,933 5,293
Earnings (loss) per share - basic $(0.07) $ 0.43
DILUTED EARNINGS (LOSS) PER SHARE CALCULATION:
Net Income (loss) $ (331) $ 2,282
Weighted average number of
shares of common stock and common
stock equivalents outstanding:
Weighted average number of shares
of common stock 4,933 5,293
Common stock equivalents issuable under stock
option plans -0- 134
Weighted average number of
shares of common stock and common
stock equivalents - diluted 4,933 5,427
Earnings (loss) per share - diluted $(0.07) $ 0.42
</TABLE>
25
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 15,403
<SECURITIES> 0
<RECEIVABLES> 24,922
<ALLOWANCES> 0
<INVENTORY> 3,590
<CURRENT-ASSETS> 49,409
<PP&E> 158,444
<DEPRECIATION> 31,219
<TOTAL-ASSETS> 212,000
<CURRENT-LIABILITIES> 34,614
<BONDS> 67,277
0
0
<COMMON> 53
<OTHER-SE> 73,156
<TOTAL-LIABILITY-AND-EQUITY> 212,000
<SALES> 34,172
<TOTAL-REVENUES> 34,172
<CGS> 32,134
<TOTAL-COSTS> 32,134
<OTHER-EXPENSES> 596
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,394
<INCOME-PRETAX> 48
<INCOME-TAX> 379
<INCOME-CONTINUING> (331)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (331)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
