RAILWORKS CORP, S-3, 1999-12-23

RAILWORKS CORP
S-3, 1999-12-23
ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1999.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RAILWORKS CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
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DELAWARE 58-2382378
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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RAILWORKS CORPORATION
1104 KENILWORTH DRIVE
SUITE 301
BALTIMORE, MARYLAND 21204
(410) 512-0500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

JOHN G. LARKIN
RAILWORKS CORPORATION
1104 KENILWORTH DRIVE
SUITE 301
BALTIMORE, MARYLAND 21204
(410) 512-0500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

COPIES TO:

MARY A. BERNARD
KING & SPALDING
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 556-2100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement, as determined in
light of market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common stock, par value $.01 per
share................................... 7,900,263 $10.38 $82,004,730 $21,650
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c).

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS

RAILWORKS CORPORATION

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7,900,263 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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This prospectus relates to the offering from time to time of up to
7,900,263 shares of common stock of RailWorks Corporation by certain of our
stockholders. We will not receive any of the proceeds from the sale of the
shares being offered. We are registering the resale of these shares, but the
registration of such shares does not necessarily mean that any of such shares
will be offered or sold by the selling stockholders.

The selling stockholders from time to time may offer and sell the shares
directly to purchasers or through agents, underwriters or dealers on terms to be
determined at the time of sale. If required, the names of any agents,
underwriters or dealers and any other required information will be set forth in
an accompanying prospectus supplement.

The common stock is listed on the Nasdaq National Market under the symbol
"RWKS." On December 22, 1999, the last sale price of the common stock as
reported on the Nasdaq National Market was $10.34 per share. Shares of common
stock offered pursuant to this prospectus will be approved for trading on the
Nasdaq National Market.

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INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4 FOR A DISCUSSION OF THESE RISKS.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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The date of this prospectus is December , 1999
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TABLE OF CONTENTS

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PAGE
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About this Prospectus....................................... 2
Where You Can Find More Information......................... 2
Special Note Regarding Forward-Looking Statements........... 3
RailWorks Corporation....................................... 4
Risk Factors................................................ 5
Use of Proceeds............................................. 10
Selling Stockholders........................................ 10
Plan of Distribution........................................ 12
Validity of Common Stock.................................... 12
Experts..................................................... 13
</TABLE>

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, certain of our stockholders, which we refer to as the
selling stockholders, may sell up to an aggregate of 7,900,263 shares of common
stock in one or more offerings. This prospectus provides you with a general
description of the common stock. You should read this prospectus and any
applicable prospectus supplement provided to you together with the additional
information described under the heading "Where You Can Find More Information."

The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Find More Information."

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the Nasdaq
National Market, Inc. at 1735 K Street, N.W., Washington, D.C. 20006-1506.

The SEC allows us to incorporate by reference into this prospectus the
information that we file with the SEC, which means that we disclose important
information to you by referring to such documents. The information incorporated
by reference is an important part of this prospectus and the accompanying
prospectus supplement. In addition, any information that we file with the SEC
subsequent to the date of this prospectus will automatically update this
prospectus. We incorporate by reference the documents listed below and any
filings that we make with the SEC under sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the initial filing of the registration
statement that contains this prospectus and prior to the time that the selling
stockholders sell all of the common stock offered by this prospectus:

- Annual Report on Form 10-K for fiscal year ended December 31, 1998,

- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999,

- Current Reports on Form 8-K filed on March 17, 1999, November 5, 1999 and
December 16, 1999, and

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- The description of the common stock included in our Registration
Statement on Form 8-A dated July 20, 1998.

You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address:

RailWorks Corporation
1104 Kenilworth Drive
Suite 301
Baltimore, Maryland 21204
(410) 512-0500

You should only rely on the information incorporated by reference or set
forth in this prospectus or any applicable prospectus supplement. We have not
authorized anyone else to provide you with different information. We are only
offering these securities in states where the offer is permitted. You should not
assume that the information in this prospectus or the applicable prospectus
supplement is accurate as of any date other than the dates on the front of such
documents.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus may incorporate by reference forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933. These
statements may be included in the information incorporated by reference above
under "Where You Can Find More Information." We use the words "believes,"
"anticipates," "expects," "estimates," "plans," "intends" and similar
expressions so as to identify forward-looking statements. All forward-looking
statements involve substantial risks and uncertainties. There may be events in
the future that we are not accurately able to predict, or over which we have no
control. Some factors that may cause actual results to differ from projected
results are:

- the absence of a combined operating history of the operating companies
and difficulties in integrating their operations;

- unanticipated difficulties or delays in implementing our acquisition
program;

- cyclicality in the demand for rail system services and products;

- availability of capital, including our ability to service or refinance
indebtedness;

- an unanticipated decrease in public sector contracts and funding;

- changes in our relationships with major customers;

- effects of changes in general economic conditions;

- actions by competitors;

- ability to retain qualified personnel; and

- unanticipated Year 2000 problems.

Forward-looking statements include, without limitation, our expectations
and estimates as to development of our services and products and expansion of
our customer base, future financial performance, including growth in revenues
and earnings and the effect on our finances of new acquisitions, cash flows from
operations, acquisitions, capital expenditures, the availability of funds from
credit facilities, the sale of securities and the cost and timely implementation
of our Year 2000 compliance modifications.

Consequently, you should regard forward-looking statements only as our
current plans, estimates and beliefs. We do not promise to notify you if we
learn that our assumptions or projections are wrong for any reason. Before you
decide to invest in shares of common stock you should be aware that the factors
we discuss in the "Risk Factors" section in this prospectus could cause our
actual results to differ from what we have stated in any forward-looking
statements.
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RAILWORKS CORPORATION

We are a leading provider of integrated rail system services and products
to a diverse base of customers throughout the United States. We believe we are
positioned to grow significantly due to our ability to comprehensively design,
supply, construct and maintain rail systems. Our strategy is based on providing
a full range of rail-related services and products on a "turnkey" basis
throughout North America and offering rail system solutions under the
"RailWorks" brand. We provide track construction, rehabilitation, repair and
maintenance; rail electrification and installation of communication and
signaling systems; and related products and supplies. We offer these services to
a wide variety of customers, including Class I and shortline railroads, publicly
funded transit authorities and commercial and industrial companies. We also
provide non-rail products and services such as electrical contracting, bridge
and highway support structures, and related concrete products.

We are incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 1104 Kenilworth Drive, Suite 301, Baltimore,
Maryland 21204, and our telephone number is (410) 512-0500. Unless the context
otherwise requires, all references to us include our consolidated subsidiaries.

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RISK FACTORS

You should carefully consider the following factors and other information
in this prospectus before deciding to invest in shares of common stock.

THE OPERATING COMPANIES DO NOT HAVE A COMBINED OPERATING HISTORY; WE MAY BE
UNSUCCESSFUL INTEGRATING THEIR DECENTRALIZED OPERATIONS

RailWorks was founded in March 1998 but conducted no operations and
generated no revenue until we completed the initial public offering, or IPO, of
our common stock in August 1998. We acquired 14 groups of companies, which we
refer to as the Founding Companies, concurrently with the completion of our IPO.
We have acquired an additional 15 operating companies through December 15, 1999.
Our operating companies were separate independent entities before we acquired
them and to a certain extent they continue to operate as independent entities
because we conduct our operations on a decentralized basis. The integration of
our operating companies, while allowing them to retain decentralized operations
and management, is important to our operating and growth strategies and the
achievement of efficiencies in the combined operations. We may not be able to
integrate the operations or the necessary systems and procedures, including
accounting and financial reporting systems and project management systems, to
manage effectively the combined enterprise. Certain members of our management
group have only recently joined RailWorks and there can be no assurance that the
management group will be able to implement our acquisition and operating
strategies. We cannot assure you that we will be able to establish, maintain or
increase the profitability of the operating companies. Any failure by our
management group to implement our strategies, integrate the operating companies
without substantial costs, delays or other operational or financial
difficulties, or effectively oversee the combined entity could have a material
adverse effect on our business, financial condition and results of operations.

WE MAY BE UNABLE TO COMPLETE AND FINANCE ACQUISITIONS

We have completed a significant number of acquisitions since the IPO and we
intend to continue to grow through acquisitions. Our acquisition strategy
entails reviewing acquired business operations, corporate infrastructure and
systems and financial controls. Unforeseen expenses, difficulties, complications
and delays frequently encountered in connection with the rapid expansion of
operations could inhibit our growth or adversely affect our financial
performance. We cannot assure you that we will maintain or accelerate our growth
or anticipate all of the changing demands that expanding operations will impose
on our management, personnel, operational and management information systems and
financial systems. We may not be able to identify, acquire or manage profitably
additional businesses or to integrate successfully any acquired businesses
without substantial costs, delays or other operational or financial
difficulties. Any of these occurrences could have a material adverse effect on
our business, financial condition and results of operations. We cannot predict
the timing, size and success of our acquisition efforts and any associated
capital commitments. We currently intend to finance future acquisitions with
bank borrowings, shares of our common stock, internally generated funds or a
combination of common stock and cash. If our common stock does not maintain a
sufficient market value, or if potential acquisition candidates are otherwise
unwilling to accept common stock as part of the consideration for the sale of
their businesses, we may be required to utilize more of our cash resources or
borrowings to maintain our acquisition program. In addition, our acquisitions
typically provide for the sellers to receive contingent consideration, which is
only paid if the acquired companies achieve certain operating results. These
payments could be substantial.

WE MAY BE UNABLE TO GENERATE INTERNAL GROWTH

Our ability to grow will be affected by various factors, including demand
for rail system services and products, our success in bidding on new projects,
the success of our cross-selling efforts and our ability to develop a national
accounts program. Our growth may also depend on increased outsourcing by rail
system operators. Many of these factors are beyond our control. Our strategies
may not be successful or we may be unable to generate cash flow adequate for
combined operations and to support internal growth. The senior managers of the
operating companies retain responsibility for day-to-day operations. If proper
business
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controls are not implemented and maintained, this decentralized operating
strategy could result in inconsistent operating and financial practices of the
operating companies, which could have a material adverse effect on our business,
financial condition and results of operations.

WE HAVE SUBSTANTIAL LEVERAGE

Our substantial indebtedness could adversely affect our financial health.
We have a substantial amount of debt outstanding. On a pro forma basis, as of
September 30, 1999, we would have had outstanding total debt of $272.2 million,
ratio of earnings to fixed charges of 1.8 and stockholders' equity of $129.3
million. Despite current indebtedness levels, we and our subsidiaries may incur
substantial additional debt in the future. On a pro forma basis as of September
30, 1999, $82.5 million would have been available for additional borrowing under
our credit facility (subject to customary borrowing conditions). If new debt is
added to our and our subsidiaries' current debt levels, the related risks that
we and they now face could intensify.

Our substantial amount of debt could have important consequences for you.
For example, it could:

- limit our ability to obtain additional financing, if we need it, for
working capital, capital expenditures, acquisitions, debt service
requirements or other purposes;

- increase our vulnerability to adverse economic and industry conditions;

- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing funds available for
operations, future business opportunities or other purposes;

- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and

- place us at a competitive disadvantage compared to our competitors that
have less debt.

To service our indebtedness, we will require a significant amount of cash.
Our ability to make payments on our debt and to fund planned capital
expenditures and acquisitions will depend on our future operating performance
and on our ability to successfully implement our business strategy. Prevailing
general economic conditions and financial, business, regulatory and other
factors, many of which are beyond our control, will affect our ability to make
these payments. If future cash flow is not sufficient to make scheduled payments
on our debt, we will need to refinance all or a portion of our debt before
maturity, obtain additional financing, delay planned acquisitions and capital
expenditures, or sell assets. Any such event could have a material adverse
effect on our business, financial condition and results of operations.

WE HAVE BEEN DEPENDENT ON CERTAIN CUSTOMERS

We derived approximately 28.1% of our pro forma revenue for the year ended
December 31, 1998 from our top ten customers. Approximately 15.4% of our 1998
pro forma revenue was derived from projects undertaken for the New York City
Transit Authority, which we refer to as NYCTA. These projects were undertaken
under a number of separate contracts. If the NYCTA were to significantly reduce
the amount of business that it does with us or determine not to do business with
us in the future, it would have a material adverse effect on our business,
financial condition and results of operations.

CERTAIN OPERATING COMPANIES HAVE A HISTORY OF LOSSES

From time to time, primarily due to industry cyclicality and uncertainties
inherent in the competitive bidding process, certain of our operating companies
have experienced net losses. See "-- Our Fixed Price Contracts Expose us to
Significant Risks" below. We cannot assure you that we or our operating
companies will be profitable in the future.

WE FACE INTENSE COMPETITION

The rail system services and products industry is highly competitive.
Numerous companies provide services to transit authorities, construct and repair
rail systems or sell related products or supplies, and some of

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these companies operate in more than one of these lines of business. Some of our
competitors have greater resources than we have, may also provide a broad range
of services and products, and may have sufficient bonding capacity and other
resources to undertake large projects. Any inability to compete successfully
against our existing and future competitors would have a material adverse effect
on our business, financial condition and results of operations. Certain of our
operating companies also provide electrical contracting services to non-rail
industrial and commercial customers. While we believe that we currently compete
effectively in the non-rail electrical contracting business, this industry is
highly competitive and is served by small, owner-operated private companies,
public companies and several large regional companies. Additionally, we could
face competition in the future from other competitors entering our markets.

WE ARE DEPENDENT ON PUBLIC SECTOR CONTRACTS AND FUNDING

The rail system services and products business involves contracts that are
supported by funding from federal, state and local governmental agencies, as
well as contracts with such agencies, which we refer to as "public sector
contracts". Public sector contracts are subject to detailed regulatory
requirements and public policies, as well as funding priorities. These contracts
may be conditioned upon the continuing availability of public funds; the
availability of public funds depends upon lengthy and complex budgetary
procedures. These contracts may also be subject to significant pricing
constraints. Moreover, public sector contracts may generally be terminated for
reasons beyond the control of the contractor, including when such termination is
in the best interests of the governmental agency. We cannot assure you that
these factors or others unique to public sector contracts will not have a
material adverse effect on our business, financial condition and results of
operations.

OUR FIXED PRICE CONTRACTS EXPOSE US TO SIGNIFICANT RISKS

Fixed price contracts are typically awarded in the rail system services
industry pursuant to a competitive bidding process. In compiling our bid on a
particular project, we must estimate the time it will take to complete the
project, along with the project's labor and supply costs. These costs may be
affected by a variety of factors, some of which may be beyond our control. If we
cannot accurately predict the costs of fixed price contracts, certain projects
could have lower margins than anticipated or we could suffer losses on the
projects. Lower margins and losses could have a material adverse effect on our
business, financial condition and results of operations.

WE RELY ON SUBCONTRACTORS AND SUPPLIERS

We generally perform electrical contracting services for transit signaling
and communication systems as a subcontractor to companies that design the
systems and manufacture or purchase the necessary equipment. In other instances,
we act as the prime contractor and subcontract the design of the signal or
communication system and necessary equipment. When we are a prime contractor for
such projects, we generally require subcontractors to post performance bonds. We
may not require a subcontractor to post a performance bond in situations where
(1) the subcontractor has strong experience with a specific type of project and
demonstrates financial stability and (2) the customer does not require bonds
from us as prime contractor. We sometimes depend upon the subcontractor to
perform design and other services and provide equipment. For certain projects
only a limited number of companies can perform the subcontract if the initial
subcontractor defaults. As a result, we depend upon our subcontractors to
perform under the subcontracts. Further, the major components of signaling and
communication systems for transit authorities are manufactured to specifications
and require long lead times for production. If a subcontractor or supplier
defaults, or if a supplier refuses or cannot do business with us, it could have
a material adverse effect on our business, financial condition and results of
operations.

THE RAIL SYSTEM INDUSTRY IS CYCLICAL

We derive a substantial portion of our revenue from public contracts, which
we expect will constitute a relatively stable source of business due to funding
provided by the Transportation Equity Act for the 21st Century which we refer to
as TEA 21. However, demand for rail system services and products could fluctuate
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in conjunction with overall economic conditions. In economic downturns, rail
system operators may defer certain construction and rehabilitation projects and
purchases of related products to conserve cash in the short term. Reductions in
freight traffic due to economic downturns or other factors may also reduce
demand for our construction and rehabilitation services and related products. In
economic upturns, railroads, particularly Class I railroads, experience heavier
traffic demands that can cause problems associated with congestion. The
operational problems related to congestion have an unpredictable impact on
railroad expenditures for construction and rehabilitation services and related
products, including those we provide. During periods of peak usage, rail system
owners may defer certain expenditures because they may need to address
operational challenges these conditions cause. Other issues, such as the
possibility of heightened government regulation during periods of congestion and
the internal challenges of managing railroad operations as the Class I railroads
continue to consolidate, may exacerbate the effects of these uncertainties.

WE ARE EXPOSED TO DOWNTURNS IN COMMERCIAL CONSTRUCTION

We derived approximately 10.4% of our pro forma revenue for the year ended
December 31, 1998 from installation of electrical systems in newly constructed
or renovated commercial buildings and power and industrial plants. The demand
for electrical installation services is affected by fluctuations in the level of
new construction and renovation of commercial buildings. These fluctuations
reflect the cyclical nature of the construction industry and depend upon general
economic conditions, changes in interest rates and other related factors.
Downturns in levels of commercial construction and renovation could have a
material adverse effect on our business, financial condition and results of
operations. Further, our electrical installation business is focused in the
northeastern United States and is therefore particularly susceptible to economic
downturns in that region.

OUR WORKFORCE IS UNIONIZED

As of September 30, 1999, approximately 50% of our employees were covered
under collective bargaining agreements. In June 1994, one of our operating
companies was affected by a one-week work stoppage by the United Brotherhood of
Teamsters. We cannot assure you that future work stoppages will not affect us.
In addition, labor agreements are generally negotiated on an industry-wide basis
and the terms and conditions of future labor agreements could be beyond our
control. We may be subject to terms and conditions in future labor agreements
that could have a material adverse effect on our business, financial condition
and results of operations.

WE ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL AND GOVERNMENT REGULATION

Our operations are subject to extensive federal, state and local regulation
under environmental laws and regulations. Among other things, these laws and
regulations cover emissions to the air, discharges to waters and the generation,
handling, storage, transportation, treatment and disposal of waste, underground
and aboveground storage tanks and remediation of soil and groundwater
contamination. Environmental liability can extend to previously owned or
operated properties, leased properties and properties owned by third parties, as
well as to properties currently owned and used by us. Environmental liabilities
may also arise from claims asserted by adjacent landowners or other third
parties in toxic tort litigation. We could incur significant ongoing costs
associated with environmental regulatory compliance. Further, we sometimes use
hazardous materials in connection with our operations. Although we believe that
we materially comply with all of the various environmental regulations
applicable to our business, we cannot assure you that requirements will not
change in the future or that we will not incur significant costs to comply with
such requirements. In addition to safety, health and other regulations of
general applicability, our operations may be significantly affected by
regulations of the Surface Transportation Board, the Federal Railroad
Administration, the Occupational Safety and Health Administration, state
departments of transportation and other state and local regulatory agencies.
Changes in regulation of the rail and transit industries through legislative,
administrative, judicial or other action could have a material adverse effect on
our business, financial condition and results of operations.

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WE ARE DEPENDENT ON KEY PERSONNEL

Our success depends to a significant extent upon the efforts and abilities
of John G. Larkin, Chairman of the Board and Chief Executive Officer, and
Michael R. Azarela, Executive Vice President and Chief Financial Officer. We
also rely on senior management of our operating companies. While we have entered
into employment agreements with Messrs. Larkin and Azarela and certain senior
managers of the operating companies, we cannot be sure that such individuals
will remain with us throughout the terms of their agreements, or thereafter.
Further, we likely will depend on the senior management of any significant
businesses we acquire in the future. The loss of the services of one or more of
these key employees before we are able to attract and retain qualified
replacement personnel could have a material adverse effect on our business,
financial condition and results of operation.

OUR SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT

We have developed a plan to address year 2000 issues. To date, we have
substantially completed the identification, assessment, remediation, and testing
of our internal information systems and other equipment with date-sensitive
operating controls, such as manufacturing equipment, HVAC, security and other
similar systems.

We have also been in communication with hardware and software vendors with
whom we transact business, third parties with whom we exchange information
electronically, major or sole source suppliers, government agencies, and major
customers. The focus of these communications is to determine the state of
readiness of each of these third parties with respect to their own year 2000
issues and how their progress may impact us. The majority of responses received
from third party inquiries indicate that they are working on their year 2000
issues, but the responses do not provide specific details. Follow-up action
related to material third party inquiries and responses is expected to continue
as these material third parties progress in their own year 2000 readiness
projects. We have no means of ensuring that third parties with whom we deal will
be year 2000 compliant or that the information obtained from such third parties
regarding year 2000 compliance will prove to be accurate.

While we anticipate that all computer systems have been assessed, remedied
and tested, there can be no assurance that all will be completely error free and
that such programs will be compliant by such dates. We rely on third party
software, equipment and services to conduct our business. While we believe we
have made reasonable efforts to address this issue, we have no means of ensuring
that third parties with whom we deal will be year 2000 compliant or that the
information obtained from such third parties regarding year 2000 compliance will
prove to be accurate.

We believe that it is difficult to specifically identify the most
reasonably likely worst case year 2000 scenario. The following factors could
result in interruptions to our operations or business activities:

- the failure to correct a material year 2000 problem,

- the inability of any key customer, key supplier or governmental agency to
make the necessary computer system changes on a timely basis,

- the inaccuracy of responses received from these third parties, and

- the potential shortage of skilled human resources to install and test
upgraded software and equipment.

Due to the general uncertainty inherent in the year 2000 issues,
particularly as it relates to the readiness of our key customers and suppliers,
and of governmental agencies, we cannot ascertain at this time whether the
consequences of year 2000 failures will have a material impact on our results of
operations, liquidity or financial condition. Our insurance coverage is limited
to business interruptions resulting from fire, explosion, or related perils
which are caused by a year 2000 system failure.

Our year 2000 efforts are ongoing and our consideration of contingency
plans will continue to evolve as new information becomes available. While we
anticipate continuity of our business activities, that continuity will depend
upon our ability, and the ability of third parties upon whom we rely on directly
or indirectly, to be

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year 2000 compliant. You are cautioned that you should read forward-looking
statements regarding Year 2000 issues in conjunction with "Special Note
Regarding Forward-Looking Statements."

PRINCIPAL STOCKHOLDERS HAVE SUBSTANTIAL INFLUENCE

As of December 6, 1999 our executive officers and directors controlled
approximately 14.3% of the combined outstanding voting power of all classes of
our common stock. As a result, with limited exception, such persons exert
substantial influence with respect to all matters submitted to a vote of holders
of common stock, including election of our directors.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of
common stock offered by the selling stockholders under this prospectus but have
agreed to bear certain expenses associated with registering such shares under
Federal and state securities laws. We are registering the shares for sale to
provide the holders thereof with freely tradeable securities (subject to the
contractual limitations discussed below), but the registration of such shares
does not necessarily mean that any of such shares will be offered or sold by the
holders thereof.

SELLING STOCKHOLDERS

The following table sets forth, as of December 15, 1999:

- the names of the selling stockholders,

- the number of shares of common stock owned by each selling stockholder
prior to this offering, and

- the maximum number of shares of common stock offered by each selling
stockholder under this prospectus.

All the selling stockholders were either officers or stockholders of a
predecessor of our company. Other than that affiliation, no selling stockholder
has any position, office or other material relationship with the Company. Under
the agreement pursuant to which each selling stockholder acquired its shares
from us, such selling stockholder has agreed that it may sell its shares
pursuant to this prospectus only in accordance with the provisions of that
agreement. Under such agreement, each selling stockholder may sell up to a
specified number of shares in either a block trade or a registered public
offering, at our option. Such sale may be made only on a quarterly basis as
determined by us.

Because the selling stockholders may sell all, some or none of the common
stock offered under this prospectus, no estimate can be given as to the amount
of common stock that will be held by the selling stockholders upon termination
of the offering. See "Plan of Distribution."

10
<PAGE> 12

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED MAXIMUM NUMBER OF
NAME OF SELLING STOCKHOLDER PRIOR TO THE OFFERING SHARES BEING OFFERED
- --------------------------- --------------------- --------------------
<S> <C> <C>
Catholic Charities of the Diocese of Spokane(1)........... 5,000 5,000
John David Baker.......................................... 427,650 427,650
David H. McGinley......................................... 629,537 629,537
Susan M. Peirson.......................................... 28,334 28,334
Fulton Kennedy............................................ 133,509 133,509
Peter Alan Pasch.......................................... 401,012 401,012
John Barra................................................ 13,700 13,700
Michael Cahn.............................................. 373,612 373,612
Keith C. George........................................... 373,612 373,612
Gary Guild................................................ 27,401 27,401
Robert Herschenfeld....................................... 27,401 27,401
Frank Leonhartsberger..................................... 27,401 27,401
Douglas Orcutt............................................ 27,401 27,401
Nicholas Pantelides....................................... 373,612 373,612
Nat A. Pappagallo......................................... 27,401 27,401
Lex A. Passman............................................ 373,612 373,612
Michael Rothschild........................................ 373,612 373,612
Daniel R. Zury............................................ 13,700 13,700
Raymond Haber............................................. 5,000 5,000
Mark A. Valenti........................................... 5,000 5,000
Patricia O'Donahue........................................ 5,000 5,000
Robert A. Hill............................................ 5,000 5,000
Edward Bekian............................................. 5,000 5,000
John J. Mueck............................................. 5,000 5,000
Kathleen G. Kelly......................................... 5,000 5,000
John P. George............................................ 5,000 5,000
Charles Salerno........................................... 5,000 5,000
Lester O. Wuerfl.......................................... 5,000 5,000
Joseph Tangney............................................ 2,500 2,500
Vincent Cianci............................................ 2,500 2,500
Richard Raia.............................................. 2,500 2,500
John Sietz................................................ 2,500 2,500
Paul J. Farrell........................................... 2,500 2,500
Richard M. Cannon......................................... 2,500 2,500
Thomas Hanna.............................................. 2,500 2,500
Pierre Lescaut............................................ 2,500 2,500
Steve Goggin.............................................. 292,456 292,456
Harry Lucaitis............................................ 438,917 438,917
Anthony Julian............................................ 141,389 141,389
Daniel F. Julian.......................................... 141,389 141,389
Michael Julian............................................ 141,389 141,389
E. Donald Matson.......................................... 254,587 254,587
Sean Gough................................................ 410,945 410,945
L.L. Tameling............................................. 72,587 72,587
Arnold Morren............................................. 80,219 80,219
Cynthia L Morren.......................................... 7,629 7,629
Douglas James Nagel Revocable Trust 1989.................. 145,174 145,174
Daniel E. Burg............................................ 116,394 116,394
</TABLE>

11
<PAGE> 13

- ---------------

(1) Represents shares originally held by John Condon and subsequently donated to
Catholic Charities of the Diocese of Spokane in Spokane, WA.

PLAN OF DISTRIBUTION

The sale of common stock by selling stockholders pursuant to this
prospectus may be effected from time to time in one or more transactions at a
fixed price or prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices.

The selling stockholders may from time to time offer and sell the shares
directly to purchasers or through agents, underwriters or dealers. Such sales
may be in the form of secondary distributions, exchange distributions, block
trades, ordinary brokerage transactions or a combination of such methods of
sale. Agents or underwriters acting on behalf of any selling stockholder may
receive compensation from the selling stockholder or from purchasers of the
common stock for whom they act as agent in the form of discounts, concessions or
commissions. Underwriters may sell the common stock to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Agents, underwriters and dealers that participate
in the distribution of common stock may be deemed to be underwriters for
purposes of the Securities Act of 1933, as amended, which we refer to as the
Act, and any discounts, concessions or commissions received by them from any
selling stockholder and any profit on the resale of common stock by them may be
deemed to be underwriting discounts and commissions under the Act.

At a time a particular offer of shares is made, a prospectus supplement, if
required, will be distributed that will set forth the names of any agents,
underwriters or dealers and any compensation from the selling stockholders and
any other required information.

In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.

We estimate that we will spend approximately $160,000 for expenses in
connection with the offering of shares by the selling stockholders.

Agents, underwriters or dealers may engage in transactions with or perform
services for us in the ordinary course of business.

VALIDITY OF COMMON STOCK

The validity of the common stock offered hereby will be passed upon for us
by King & Spalding.

12
<PAGE> 14

EXPERTS

The financial statements of RailWorks Corporation and Subsidiaries, Mid
West Railroad Construction and Maintenance Corporation of Wyoming, F&V Metro
Contracting Corp. and Affiliates and W.T. Byler Co., Inc. incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.

The financial statements of Gantrex Group incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent chartered accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.

13
<PAGE> 15

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

7,900,263 Shares

RAILWORKS CORPORATION

Common Stock

------------------------
PROSPECTUS
------------------------

December , 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 16

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
SEC registration fee........................................ $ 21,650
Legal fees and expenses..................................... 50,000
Blue sky fees and expenses.................................. 2,000
Accounting fees and expenses................................ 20,000
Printing expenses........................................... 10,000
Miscellaneous............................................... 56,350
--------
Total............................................. $160,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102(b)(7) of the Delaware General Corporation Law, which we refer
to as DGCL, permits a corporation, in its certificate of incorporation, to limit
or eliminate, subject to some statutory limitations, the liability of directors
to the corporation or its stockholders for monetary damages for breaches of
fiduciary duty, except for liability (a) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the DGCL, or (d) for any transaction from which
the director derived an improper personal benefit. Article 10 of the
registrant's restated Certificate of Incorporation provides that the personal
liability of directors of the registrant is eliminated to the fullest extent
permitted by Section 102(b)(7) of the DGCL.

Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and subject to
certain limitations against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of being a director or officer of the
corporation if it is determined that the director or officer acted in accordance
with the applicable standard of conduct set forth in such statutory provision.
Article 7 of the registrant's Bylaws provides that the registrant will indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee or agent of the registrant,
or is or was serving at the request of the registrant as a director, officer,
employee or agent of another entity, against certain liabilities, costs and
expenses. Article 7 further permits the registrant to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
registrant, or is or was serving at the request of the registrant as a director,
officer, employee or agent of another entity, against any liability asserted
against such person and incurred by such person in any such capacity or arising
out of his status as such, whether or not the registrant would have the power to
indemnify such person against such liability under the DGCL. The registrant
expects to maintain directors' and officers' liability insurance.

The foregoing statements are subject to the detailed provisions of Article
10 of the registrant's restated Certificate of Incorporation.

II-1
<PAGE> 17

ITEM 16. EXHIBITS

<TABLE>
<C> <S> <C>
4.1 -- Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to Registrant's
Registration Statement on Form S-1, File No. 333-53483).
4.2 -- By-Laws of the Registrant (incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1, File No. 333-53483).
4.3 -- Specimen Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to Registration Statement on Form S-1, File
No. 333-53483).
5.1 -- Opinion of King & Spalding.
23.1 -- Consent of King & Spalding (included as part of its opinion
filed as Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of Arthur Andersen LLP (Canada).
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned registrant, which we refer to as the Registrant hereby
undertakes:

(1) To file, during any period in which offers or sales are made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set in the "Calculation of Registration
Fee" Table in the effective registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;

provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 of Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15

II-2
<PAGE> 18

above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-3
<PAGE> 19

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore, State of Maryland, on December 23, 1999.

RAILWORKS CORPORATION

By: /s/ JOHN G. LARKIN
------------------------------------
John G. Larkin
Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John G. Larkin and Michael R. Azarela and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 23th day of December, 1999.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----

<C> <S>

/s/ JOHN G. LARKIN Chairman of the Board, Chief Executive
- --------------------------------------------- Officer and Director (Principal Executive
John G. Larkin Officer)

/s/ MICHAEL R. AZARELA Executive Vice President -- Chief Financial
- --------------------------------------------- Officer (Principal Financial Officer)
Michael R. Azarela

/s/ HAROLD C. KROPP Vice President -- Chief Accounting Officer
- --------------------------------------------- (Principal Accounting Officer)
Harold C. Kropp

/s/ JOHN KENNEDY Director
- ---------------------------------------------
John Kennedy

/s/ KENNETH R. BURK Director
- ---------------------------------------------
Kenneth R. Burk

/s/ DON TRAVISS Director
- ---------------------------------------------
Don Traviss

/s/ SCOTT D. BRACE Director
- ---------------------------------------------
Scott D. Brace
</TABLE>

II-4
<PAGE> 20

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----

<C> <S>
/s/ RONALD W. DRUCKER Director
- ---------------------------------------------
Ronald W. Drucker

/s/ R.C. MATNEY Director
- ---------------------------------------------
R.C. Matney
</TABLE>

II-5
<PAGE> 21

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBITS PAGE NO.
- ------- ----------------------- ----------
<C> <S> <C> <C>
4.1 -- Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to Registrant's
Registration Statement on Form S-1, File No. 333-53483).
4.2 -- By-Laws of the Registrant (incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1, File No. 333-53483).
4.3 -- Specimen Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to Registration Statement on Form S-1, File
No. 333-53483).
5.1 -- Opinion of King & Spalding.
23.1 -- Consent of King & Spalding (included as part of its opinion
filed as Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of Arthur Andersen LLP (Canada).
</TABLE>

<PAGE> 1
EXHIBIT 5.1

December 23, 1999

RailWorks Corporation
1104 Kenilworth Drive
Suite 301
Baltimore, Maryland 21204

Re: RailWorks Corporation
Registration Statement on Form S-3

Gentlemen:

We have acted as counsel for RailWorks Corporation, a Delaware
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed
with the Securities and Exchange Commission relating to 7,900,263 shares of
common stock outstanding as of the date hereof that may be sold by certain
stockholders of the Company (the "Shares").

As such counsel, we have examined and relied upon such records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to form the basis for the opinions hereinafter set forth. In all
such examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to us as certified, conformed or photographic copies, and as to certificates of
public officials, we have assumed the same to have been properly given and to be
accurate.

The opinions expressed herein are limited in all respects to the
corporate law of the State of Delaware, and no opinion is expressed with respect
to the laws of any other jurisdiction or any effect which such laws may have on
the opinions expressed herein. This opinion is limited to the matters stated
herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein.

Based upon the foregoing, we are of the opinion that the Shares are
validly issued, fully paid and nonassessable.

This opinion is given as of the date hereof, and we assume no
obligation to advise you after the date hereof of facts or circumstances that
come to our attention or changes in law that occur which could affect the
opinions contained herein. This letter is being rendered solely for the benefit
of RailWorks Corporation in connection with the matters addressed herein. This
opinion may not be furnished to or relied upon by any person or entity for any
purpose without our prior written consent.

We consent to the filing of this opinion as an Exhibit to the
Registration Statement.

Very truly yours,

/s/ KING & SPALDING

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus for the
registration of 7,900,263 shares of common stock of the Company and to the
incorporation by reference therein of (i) our report dated February 8, 1999,
with respect to the consolidated financial statements and schedule of RailWorks
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1998, (ii) our report dated February 8, 1999, with respect to the
consolidated financial statements of RailWorks Corporation and subsidiaries
included in its Current Report (Form 8-K) dated March 17, 1999, (iii) our report
dated March 12, 1999, with respect to the financial statements of Mid West
Railroad Construction and Maintenance Corporation of Wyoming in its Current
Report (Form 8-K) dated March 17, 1999, (iv) our report dated March 15, 1999,
with respect to combined financial statements of F&V Metro Contracting Corp. and
Affiliates included in its Current Report (Form 8-K) dated March 17, 1999 and
(v) our report dated November 12, 1999 with respect to the financial statements
of W.T. Byler Co., Inc. included in its Current Report (Form 8-K/A) filed
December 16, 1999, each filed with the Securities and Exchange Commission.

Arthur Andersen LLP

December 22, 1999
Stamford, Connecticut

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

Arthur Andersen LLP (Canada)

December 22, 1999
Mississauga, Canada