<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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Commission File No. 0-20618
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RAILAMERICA, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 65-0328006
------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
301 Yamato Road, Suite 1190, Boca Raton, Florida 33431
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(Address of principal executive offices)
(Zip Code)
(561) 994-6015
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(Issuer's telephone number)
Check whether the registrant (1) 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. Yes XX No
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
Common Stock, par value $.001 - 8,428,229 shares as of May 19, 1997
<PAGE> 2
RAILAMERICA, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - March 31, 1997
and December 31, 1996 1
Consolidated Statements of Income - For the
three months ended March 31, 1997 and 1996 2
Consolidated Statements of Cash Flows - For the
three months ended March 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 17
Signatures
</TABLE>
<PAGE> 3
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,472,740 $ 3,879,972
Accounts receivable 4,968,643 4,575,958
Inventories 3,313,975 3,104,555
Other current assets 583,071 462,867
----------- ------------
Total current assets 10,338,429 12,023,352
Property, plant and equipment, net 54,511,587 54,148,966
Investment in and advances to majority-owned subsidiary 7,559,558 --
Other, net 2,314,892 2,426,615
Excess of cost over net assets of companies acquired, net 2,928,693 2,965,853
------------ ------------
Total assets $ 77,653,159 $ 71,564,786
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1,708,497 $ 1,752,926
Current maturities of subordinated debt 212,392 212,392
Accounts payable 3,630,010 3,162,953
Accrued expenses and income taxes payable 1,830,881 1,811,739
----------- ------------
Total current liabilities 7,381,780 6,940,010
------------ ------------
Long-term debt, less current maturities 37,487,989 38,401,119
------------ ------------
Subordinated debt, less current maturities 3,424,784 3,477,882
------------ ------------
Deferred income taxes 6,986,687 6,753,668
------------ ------------
Commitments and contingencies
Redeemable convertible preferred stock, $.001 par value, 1,000,000 -- --
shares authorized
Stockholders' equity:
Common stock, $.001 par value, 30,000,000 shares authorized;
8,225,317 issued and 7,988,317 outstanding at March 31, 1997;
6,125,410 issued and 5,888,410 outstanding at December 31, 1996 8,225 6,125
Additional paid-in capital 20,193,166 11,773,036
Common stock subscribed -- 2,340,000
Retained earnings 3,232,626 2,944,774
Cumulative translation adjustment 77,171 67,441
Less treasury stock (237,000 shares at cost) (1,139,269) (1,139,269)
------------ ------------
Total stockholders' equity 22,371,919 15,992,107
------------ ------------
Total liabilities and stockholders' equity $ 77,653,159 $ 71,564,786
============ ============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
1
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RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Operating revenues:
Transportation - railroad $ 3,631,671 $ 2,593,914
Manufacturing 4,074,019 3,453,214
Other 351,622 96,984
----------- -----------
8,057,312 6,144,112
----------- -----------
Operating expenses:
Transportation - railroad 1,502,697 999,383
Cost of goods sold - manufacturing 3,121,049 2,630,935
Selling, general and administrative 1,628,505 1,206,011
Depreciation and amortization 518,532 367,640
----------- -----------
6,770,783 5,203,969
----------- -----------
Operating income 1,286,529 940,143
Equity in income of majority-owned subsidiary 23,760 --
Interest expense (709,434) (403,958)
Other expenses (43,074) (20,666)
----------- -----------
Income from continuing operations before
income taxes 557,781 515,519
Provision for income taxes 208,250 190,742
----------- -----------
Income from continuing operations 349,531 324,777
Discontinued operations
Loss from operations of discontinued Motor
Carrier segment (less applicable income tax
benefit of $38,000 and $66,000, respectively) (61,680) (112,970)
----------- -----------
Net Income $ 287,851 $ 211,807
=========== ===========
Primary earnings per common share
Continuing operations $ 0.04 $ 0.07
Discontinued operations (0.00) (0.02)
----------- -----------
Net income $ 0.04 $ 0.05
=========== ===========
Fully diluted earnings per common share
Continuing operations $ 0.04 $ 0.07
Discontinued operations (0.00) (0.02)
----------- -----------
Net income $ 0.04 $ 0.05
=========== ===========
Weighted average common shares and common
share equivalents outstanding:
Primary 8,198,160 4,680,141
=========== ===========
Fully diluted 8,198,160 5,489,542
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
2
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RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 287,851 $ 211,807
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 660,204 508,585
Equity in income of affiliated company (23,760) --
Sale of properties -- 70,465
Employee stock grants -- 48,554
Deferred income taxes 233,019 90,254
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (392,685) (834,420)
Inventories (209,420) (697,999)
Other current assets (120,204) 73,675
Accounts payable 467,057 726,310
Income taxes payable -- (400,000)
Accrued liabilities 19,142 (321,628)
Deposits and other 7,568 (96,830)
------------ ------------
Net cash provided by (used in) operating activities 928,772 (621,227)
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (881,096) (1,481,478)
Acquisition of 55% of Ferronor (7,445,701) --
Deferred acquisition costs and other (70,453) (101,746)
------------ ------------
Net cash used in investing activities (8,397,250) (1,583,224)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt and capital leases 9,894,800 3,450,479
Principal payments on debt and capital leases (10,905,457) (3,202,430)
Sale of common stock 6,176,999 --
Deferred financing costs (89,030) --
Deferred loan costs (16,066) (5,697)
------------ ------------
Net cash provided by financing activities 5,061,246 242,352
------------ ------------
Net decrease in cash (2,407,232) (1,962,099)
Cash, beginning of period 3,879,972 3,488,866
------------ ------------
Cash, end of period $ 1,472,740 $ 1,526,767
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE> 6
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 BASIS OF PRESENTATION:
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of Management, the consolidated financial statements
contain all adjustments which are those of a recurring nature, and
disclosures necessary to present fairly the financial position of the
Company as of March 31, 1997 and December 31, 1996, and the results of
operations and cash flows for the three months ended March 31, 1997 and
1996.
On February 19, 1997, the Company acquired a 55% equity interest in
Empresa de Transporte Ferrovario S.A. ("Ferronor"). The Company has
accounted for its interest in Ferronor using the equity method.
The accounting principles which materially affect the financial
position, results of operations and cash flows of the Company are set
forth in Notes to the Consolidated Financial Statements which are
included in the Company's financial statements contained in the
Company's 1996 annual report on Form 10-KSB. Capitalized terms used but
not otherwise defined herein have the meanings set forth in the
Company's annual report on Form 10-KSB.
2 EARNINGS PER SHARE:
For the three months ended March 31, 1997, primary and fully diluted
earnings per share are based on the weighted average number of common
and common equivalent shares outstanding during the three month period
under the modified treasury stock method. The convertible notes payable
are anti-dilutive and have been excluded from weighted average number
of shares outstanding for fully diluted earnings per share.
4
<PAGE> 7
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2 EARNINGS PER SHARE, continued
For the three months ended March 31, 1996, primary earnings per share
is based on the weighted average number of common shares outstanding
during the three month period. Fully diluted earnings per share was
computed, in addition to the above computation, assuming the conversion
of the convertible subordinated notes payable and using the higher of
the average market price or the end of the quarter market price. The
stock options and warrants outstanding are anti-dilutive and have been
excluded from weighted average number of shares outstanding for both
primary basic and fully diluted earnings per share.
3. INVESTMENT IN AND ADVANCES TO MAJORITY-OWNED SUBSIDIARY:
Included in the Company's continuing operations at March 31, 1997 is an
equity interest of 55% in Ferronor, a railroad serving northern Chile
with approximately 1,400 miles of rail line. Ferronor's functional
currency is the Chilean Peso.
A summary of financial information of Ferronor as of and for the one
month period ended March 31, 1997 is set forth below:
<TABLE>
<S> <C> <C>
Current assets $ 5,272,000
Noncurrent assets 16,216,000
----------
Total assets 21,488,000
----------
Current liabilities 8,200,000
Noncurrent liabilities 180,000
-----------
Total liabilities 8,380,000
----------
Net assets $ 13,108,000
==========
Railroad revenue $ 677,000
===========
Net income $ 43,200
============
</TABLE>
5
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RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4 INVENTORIES:
Inventories consist of the following as of March 31, 1997 and December
31, 1996:
<TABLE>
<CAPTION>
1997 1996
------------ -------------
<S> <C> <C>
Raw materials $ 3,366,156 $ 2,284,683
Work in process 881,033 635,780
Finished goods 954,862 881,817
Replacement or repair parts for equipment
and road property 465,368 381,309
------------ -----------
5,667,419 4,183,589
Less, advances related to materials (2,353,444) (1,079,034)
------------ ------------
Inventories in excess of contract advances $ 3,313,975 $ 3,104,555
============ ============
</TABLE>
5. INCOME TAX PROVISION:
The difference between the U.S. federal statutory tax rate and the
Company's effective rate from continuing operations is primarily due
to the Chilean tax rate on income from Ferronor.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
RailAmerica, Inc. (together with its consolidated subsidiaries, the
"Company") is a multi- modal transportation company that acquires, develops and
operates shortline railroads formed primarily through the acquisition of light
density rail lines from larger railroads. The Company has expanded its
operations in the transportation industry through its acquisition of
Kalyn/Siebert, Inc. ("Kalyn"), a manufacturer of a broad range of truck
trailers, located in Gatesville, Texas. Through Kalyn, the Company has
established trailer manufacturing operations and substantially increased the
Company's assets, liabilities, revenue, expenses and income.
The Company's objectives are to create a diversified transportation
company by acquiring additional railroads and other transportation-related
companies. In accordance with this strategy, in February 1997, the Company
purchased a majority interest in the stock of Empresa de Transporte Ferrovario
S.A. ("Ferronor"), a railroad serving northern Chile with approximately 1,400
miles of rail line.
Set forth below is a discussion of the results of operations for the
Company's railroad operations, trailer manufacturing operations and motor
carrier operations (discontinued operations). The corporate overhead, which
benefits all of the Company's segments, has not been allocated to the business
segments for this analysis. The Company feels that this presentation will
facilitate a better understanding of the changes in the results of the Company's
operations. Corporate overhead increased by approximately $95,000 (or 17.6%) to
$634,279 in the three month period ended March 31, 1997 compared to $539,551 for
the prior year period. The increase was related to the additional costs incurred
to manage the new subsidiaries acquired during 1996 and 1997 including
Evansville Terminal Company ("ETC"), Cascade and Columbia River Railroad
Company, Inc. ("CCRR"), Otter Tail Valley Railroad Company, Inc. ("OTVR"),
Gettysburg Railway, Minnesota Northern Railroad, Inc. ("MNR") and Ferronor.
RAILROAD OPERATIONS
The Company's railroad subsidiaries operated approximately 2,330 miles
of rail line as of March 31, 1997. Currently, these consist of: (i) 136 miles of
rail line which it owns in Michigan; (ii) 4 miles of trackage rights and 45
miles of rail line which are owned by the State of Michigan and operated
pursuant to an agreement with Michigan Department of Transportation; (iii) 49
miles of rail line leased from the South Central Tennessee Railroad Authority
near Nashville, Tennessee and 3 miles of trackage rights; (iv) 45 miles of rail
line in Pennsylvania, 18 miles of which the Company has agreed to purchase from
the Commonwealth of Pennsylvania for a price to be determined and 27 miles of
which are operated under a freight easement with the Commonwealth of
Pennsylvania; (v) 10 miles of rail line in Delaware made available to the
Company pursuant to a ten-year lease with the Wilmington & Northern Railroad
Company; (vi) 44 miles of rail line which the Company is operating pursuant to a
contract with the State of
7
<PAGE> 10
Minnesota; (vii) 104 miles of rail line and 4 miles of trackage rights in West
Texas; (viii) 51 miles of rail line in the state of Indiana, 18 miles of which
it owns and 33 miles of which it operates under an operating agreement; (ix) 131
miles of rail line which it owns in the state of Washington; (x) 23 miles of
rail line which it owns in southern Pennsylvania; (xi) 72 miles of rail line
which it owns in central Minnesota; (xii) 174 miles of rail line it owns in
northern Minnesota and 37 miles of trackage rights; and (xiii) 1,400 miles of
rail line in northern Chile.
The Company provides its customers with local rail freight services
with access to the nation's rail system for delivery of products both
domestically and internationally. The Company hauls varied products for its
customers based upon market demands in its local operating areas. The Company's
haulage of products in Michigan include agricultural commodities, automotive
parts, chemicals and fertilizer, ballast and other stone products. The Company's
haulage of products in Tennessee includes wood chips, paper, chemicals and
processed food products. The Company's haulage of products in Pennsylvania and
Delaware includes iron and steel products, chemicals, agricultural products,
lumber and processed food products. The Company's haulage of products in
Minnesota includes plastics, lumber, denatured alcohol, scrap iron and steel.
The Company's haulage of products in Texas consists of cotton, sodium sulfate,
chemicals, fertilizer, scrap iron and steel. The Company's haulage of products
in Indiana consists of agricultural commodities and plastics. The haulage of
products in Washington consists of wood chips, lumber, minerals, cement and
various agricultural products. The haulage of products in Chile consists of
copper, iron ore, limestone and other commodities.
In keeping with the general nature of business in its Michigan, Texas
and Minnesota market area, agricultural commodities have represented a
significant portion of the Company's annual carloadings. Although the
acquisitions of South Central Tennessee Railroad Corporation ("SCTR"), Delaware
Valley Railway Company ("DVRC"), Dakota Rail, Inc. ("DRI"), West Texas and
Lubbock Railroad Company, Inc. ("WTLR") and Plainview Terminal Company ("PTC")
and CCRR have helped to diversify the Company's traffic base and mitigate
seasonal fluctuations, the Company believes that, absent additional acquisitions
in industrial areas, agricultural commodities will continue to represent the
primary component of the Company's rail traffic base. As a result, the Company's
operations could be materially and adversely affected by factors such as adverse
weather conditions and fluctuations in grain prices. The Company anticipates
that in the future the acquisition of Ferronor will help insulate it from its
dependence on agricultural commodities. Additionally, sellers of commodities
tend to hold shipments if they anticipate price increases for their commodities.
Such actions could cause the Company's results of operations to fluctuate from
period to period as a result of fluctuations in the prices of those commodities.
Moreover, agricultural commodities are generally shipped from September to May
and the Company handles most of its traffic during such periods.
RESULTS OF RAILROAD OPERATIONS
The discussion of results of operations that follows reflects the
consolidated results of the Company's Railroad Operations for the three months
ended March 31, 1997 and March 31, 1996. The results of railroad operations
include the operations of ETC effective July 1, 1996, CCRR
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from September 6, 1996, OTVR from October 1, 1996, Gettysburg Railway from
November 1, 1996 and MNR from December 28, 1996. As a result, the results of
operations for the three months ended March 31, 1997 are not comparable to the
prior year period in certain material respects.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996
The table below compares the components of the Company's revenues from
its railroad operations for the periods shown.
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------------------------------
March 31, 1997 March 31, 1996
------------------------- ------------------------
Gross % Change Gross % Change
Revenues From 1996 Revenues From 1995
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Transportation Revenue $3,631,671 40.0% $2,593,914 67.8%
Other Revenue 257,002 221.9% 79,850 339.8%
--------- ----------
Total Revenue $3,888,673 45.4% $2,673,764 69.2%
========== ==========
</TABLE>
TRANSPORTATION REVENUES. Transportation revenues for the three month
period ended March 31, 1997 increased by $1.0 million, or 40.0%, compared to the
prior year period primarily due to the acquisitions which occurred during the
second half of 1996. CCRR, which was acquired in September 1996, had revenue of
approximately $0.6 million in the first quarter of 1997. MNR, which was acquired
in December 1996, had revenue of approximately $0.5 million in the first quarter
of 1997. OTVR, which was acquired in September 1996, had revenue of
approximately $0.4 million during the first quarter of 1997. These increases in
transportation revenue were partially offset by a decrease of approximately $0.3
million in revenue from HESR due to a decrease in the agricultural shipments in
the first quarter of 1997 compared to the first quarter of 1996. Additionally,
transportation revenue from WTLR decreased approximately $179,000 due to a
decrease in inbound shipments. The net increase in total revenues for the three
month period ended March 31, 1997 was comprised of an increase in both
transportation revenue and other revenue. The transportation revenue per carload
decreased from $395 to $327 per car primarily due to the acquisitions during
1996 of railroads with lower rates per carload than the Company's other
railroads. Carloads handled totaled 11,101 for the three months ended March 31,
1997, an increase of 4,535, or 69.1% compared to 6,566 carloads in the prior
year period. The increase was primarily the result of the acquisitions of MNR,
which handled 2,389 in the first quarter of 1997, CCRR, which handled 1,757
carloads in the first quarter of 1997, OTVR, which handled 1,281 carloads in the
first quarter of 1997 and Gettysburg Railway, which handled 353 carloads in the
first quarter of 1997. These increased carloadings were partially offset by
decreases of 770 carloads from HESR and 489 carloads from WTLR and PTC.
OTHER REVENUES. Other revenues increased by $177,152, or 221.9%, from
$79,850 for the three months ended March 31, 1996 to $257,002 for the three
months ended March 31, 1997.
9
<PAGE> 12
Other revenues for the three months ended March 31, 1997 and 1996 primarily
represented rental of locomotives and real estate, sales of surplus rail and
material, certain miscellaneous assets and non-operating real estate. The
increase was primarily the result of sale of easements of approximately $90,000
during the first quarter of 1997 and increased rental income of approximately
$50,000.
OPERATING EXPENSES. The table below is a comparison of operating
expenses (which do not include interest expense and other expense) for the
periods shown.
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
% Change % Change
Expenses From 1996 Expenses From 1995
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Maintenance of way $ 514,777 68.4% $ 305,614 81.5%
Maintenance of equipment 193,823 14.4% 169,363 122.2%
Transportation 790,144 35.4% 510,198 40.3%
Equipment rental 3,953 (72.2%) 14,208 522.4%
Selling, general and
administrative 559,258 89.9% 294,474 99.9%
Depreciation and
amortization 363,801 46.3% 248,692 38.0%
---------- ----------
Total operating expenses $2,425,756 57.3% $1,542,549 100.3%
========== ==========
</TABLE>
Operating expenses increased by approximately $0.9 million, or 57.3%,
from $1.5 million for the three month period ended March 31, 1996 to $2.4
million for the three month period ended March 31, 1997. Maintenance of way
expenses increased by approximately $209,000, or 68.4%, from $305,614 for the
three month period ended March 31, 1996 to $514,777 for the three month period
ended March 31, 1997 primarily due to certain acquisitions which occurred during
the second half of 1996. MNR, which was acquired in December 1996, had
maintenance of way expenses of approximately $64,000 for the three months ended
March 31, 1997. CCRR, which was acquired September 1996, had maintenance of way
expenses of approximately $52,000 for the three months ended March 31, 1997.
Gettysburg Railway, which was acquired in November 1996, had maintenance of way
expenses of approximately $30,000 for the three months ended March 31, 1997. In
addition to the above acquisitions, WTLR's maintenance of way expenses increased
approximately $34,000 from the first quarter of 1996 to the first quarter of
1997 due to increased track work being performed as part of a maintenance
program.
Maintenance of equipment expenses increased by approximately $24,000,
or 14.4%, from $169,363 for the three month period ended March 31, 1996 to
$193,823 for the three month
10
<PAGE> 13
period ended March 31, 1997 primarily due to certain acquisitions which occurred
during the second half of 1996.
Transportation expense increased by approximately $280,000, or 35.4%,
from $510,198 for the three month period ended March 31, 1996 to $790,144 for
the three month period ended March 31, 1996 primarily due to certain
acquisitions in the second half of 1996. MNR incurred approximately $143,000 of
transportation expenses during the three months ended March 31, 1997. CCRR
incurred approximately $96,000 of transportation expense for the three months
ended March 31, 1997. OTVR, which was acquired in October 1996, incurred
approximately $63,000 of transportation expense for the three months ended March
31, 1997. Gettysburg Railway incurred approximately $32,000 of transportation
expense for the three months ended March 31, 1997. These increases were
partially offset by decreases in transportation expenses for HESR and WTLR of
approximately $18,000 and $43,000, respectively, due to decreased traffic volume
on these rail lines from the first quarter of 1996 to the first quarter of 1997.
Equipment rental decreased by approximately $10,000, or 72.2%, from
$14,208 for the three month period ended March 31, 1996 to $3,953 for the three
month period ended March 31, 1997.
Selling, general and administrative expenses increased by approximately
$265,000, or 89.9%, from $294,474 for the three month period ended March 31,
1996 to $559,258 for the three month period ended March 31, 1997 primarily due
to certain acquisition which occurred during the second half of 1996. MNR
incurred general and administrative expenses of approximately $79,000 for the
three months ended March 31, 1997. CCRR incurred general and administrative
expenses of approximately $74,000 for the three months ended March 31, 1997.
Gettysburg Railway incurred general and administrative expenses of approximately
$41,000 for the three months ended March 31, 1997. OTVR incurred general and
administrative expenses of approximately $39,000 for the three months ended
March 31, 1997.
Operating expenses, as a percentage of transportation revenue, were
66.8% and 60.8% for the three months ended March 31, 1997 and 1996,
respectively. The increase was primarily due to costs associated with the
adverse weather in Minnesota and Michigan during the first quarter of 1997 and
certain start up costs for acquisitions which occurred during the fourth quarter
of 1996. Management anticipates that operating expenses as a percentage of
revenue will remain fairly constant over the next twelve months at the first
quarter 1997 level.
OTHER INCOME (EXPENSE). Interest expense increased by approximately
$372,000, or 139.3% from $266,737 for the three months ended March 31, 1996 to
$638,299 for the three months ended March 31, 1997. Such increase was primarily
due to the financing of the acquisitions of CCRR, MNR and OTVR. The interest
expense during the first quarter of 1997 attributable to these three
acquisitions was $189,000, $96,000 and $96,000, respectively. Other income
(expense) decreased by approximately $32,000 from $1,366 of income for the three
months ended March 31, 1996 to $30,898 of expense for the three months ended
March 31, 1997.
TRAILER MANUFACTURING OPERATIONS
Kalyn, located in Gatesville, Texas, was established in 1968 and
manufactures a broad
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<PAGE> 14
range of specialty truck trailers. Kalyn products are marketed to customers in
the construction, trucking, agricultural, railroad, utility and oil industries.
In addition, a substantial portion of Kalyn's sales are to the military and
several other local and federal government agencies.
Kalyn builds all the structural parts of its trailers using primarily
steel bars and plates. The major manufacturing steps include cutting, bending
and welding of steel and, once assembled, sand blasting, cleaning and painting.
The axles and running gears are purchased as sub-assemblies which are integrated
into the Kalyn trailer design. Kalyn contracts out any necessary machining.
Kalyn exercises strict quality control by screening suppliers and conducting
inspections throughout the production process.
As a consequence of significant increases in sales order volume, during
1995 Kalyn expanded its manufacturing facility to partially address this
increased demand by building additional manufacturing space upon land that Kalyn
owns. The expansion was also completed to accommodate the receipt of a contract
with the U.S. Army Tank Automotive Command ("TACOM") pursuant to which Kalyn has
agreed to exclusively produce over a three-year period all of TACOM's
requirements for twelve-ton, tactical semi-trailer vans ("Tactical Vans"). TACOM
has advised Kalyn that over the term of this agreement, orders could be placed
for up to approximately 345 Tactical Vans, which could generate sales of up to
approximately $27 million. In February 1996, Kalyn was awarded an additional
requirements contract by TACOM. Pursuant to the terms of such agreements, TACOM
is not required to purchase a minimum number of Tactical Vans or other trailers.
During 1996, Kalyn also built a new paint booth building to accommodate the
additional volume of trailer orders. Kalyn's plant is currently operating one
shift, although Kalyn believes manufacturing capacity can be increased by adding
a partial second shift.
RESULTS OF TRAILER MANUFACTURING OPERATIONS
The discussion of results of operations that follows reflects the
results of Kalyn and RailAmerica Equipment Corporation ("REC") for the three
month periods ended March 31, 1997 and 1996. REC currently leases railroad tank
cars, flat cars and locomotives to various railroads and shippers.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996
The following table sets forth the income and expense items of Kalyn
for the three months ended March 31, 1997 and 1996 and the percentage
relationship of income and expense items to net sales:
<TABLE>
<CAPTION>
For the Three Months Ended
-------------------------------------------------------
March 31, 1997 March 31, 1996
-------------------------- -------------------------
<S> <C> <C> <C> <C>
Net sales $ 4,074,019 100.0% $ 3,453,214 100.0%
</TABLE>
12
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C>
Cost of goods sold 3,121,049 76.6% 2,630,935 76.2%
----------- -----------
Gross profit 952,970 23.4% 822,279 23.8%
Selling, general and
administrative expenses 400,046 9.8% 350,487 10.2%
Depreciation and amortization 115,006 2.9% 107,687 3.1%
----------- -----------
Income from operations 437,918 10.4% 364,105 10.5%
Other expenses (net) (61,895) 1.5% (97,604) 2.8%
----------- -----------
Net Income Before Taxes $ 376,023 8.9% $ 266,501 7.7%
=========== ===========
</TABLE>
NET SALES. Net sales consist of trailers sales, part sales and repair
income. Net sales increased by approximately $0.6 million, or 18.0%, from $3.5
million for the three month period ended March 31, 1996 to $4.1 million for the
three month period ended March 31, 1997. Trailer sales represent approximately
95% and 96% of the net sales in the first quarter of 1997 and 1996,
respectively. Kalyn sold 144 trailers for the three month period ended March 31,
1997 and 141 trailers for the three month period ended March 31, 1996. The
increase in sales volume increased net sales by approximately $70,000 from the
first quarter of 1996 to the first quarter of 1997. The average price per
trailer sold was approximately $27,150 for the three month period ended March
31, 1997 and approximately $23,500 for the three month period ended March 31,
1996. The increase in average price per trailer increased sales by approximately
$0.5 million. Sales to governmental agencies represented 31.6% and 16.5% of
Kalyn's net sales for the three month period ended March 31, 1997 and 1996,
respectively. During the first quarter of 1996, Kalyn was in the process of
building 5 proto-type trailers in connection with the October 1995 TACOM
contract. Full production under the contract began during the first quarter of
1997. The increase in sales for the three month period ended March 31, 1997
compared to the three month period ended March 31, 1996 was principally due to
the above contract work. Kalyn produced 15 Tactical Vans during the first
quarter of 1997 representing approximately $1.1 million of sales. Kalyn's
backlog of orders was approximately $12.7 million as of March 31, 1997 compared
to $10.9 million at March 31, 1996.
COST OF GOODS SOLD. Cost of goods sold increased by approximately $0.5
million, or 18.6%, from $2.6 million for the three month period ended March 31,
1996 to $3.1 million for the three month period ended March 31, 1997. Cost of
goods sold was 76.6% of net sales for the three month period ended March 31,
1997 compared to 76.2% for the three month period ended March 31, 1996.
Management anticipates gross profit as a percentage of net revenue to increase
over the next twelve months as sales increase and a larger percentage of sales
are to government agencies based upon the new contracts that were received
during the fourth quarter of 1995 and first quarter of 1996.
13
<PAGE> 16
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased approximately $50,000 from the first quarter
of 1996 to the first quarter of 1997 but decreased slightly as a percentage of
net sales.
REC. Revenue for REC for the three month period ended March 31, 1997
increased by approximately $77,000 from $17,134 for the three month period ended
March 31, 1996 to $94,620 for the three month period ended March 31, 1997 as a
result of tank car leases entered into during March 1996. Selling, general and
administrative expense increased by approximately $20,000 from $15,337 for the
three month period ended March 31, 1996 to $34,922 for the three month period
ended March 31, 1997. The increase was due to costs associated with management
and operation of the tank car fleet. Depreciation and amortization expenses also
increased by approximately $18,000 from $97 for the three month period ended
March 31, 1996 to $18,163 for the three month period ended March 31, 1997 due to
the addition of the tank cars. Interest expense of $25,831 in the three month
period ended March 31, 1997 represented interest from financing the purchase of
tank cars and locomotives.
RESULTS OF MOTOR CARRIER OPERATIONS (Discontinued Operations)
The discussion of results of operations that follows reflects the
results of Steel City Carriers and RailAmerica Intermodal Services ("RIS") for
the three month period ended March 31, 1997 and 1996.
Since the Company's acquisition of Steel City Carriers, its performance
and development have not met the Company's expectations. Accordingly, in March
1997 the Company adopted a formal plan to discontinue its motor carrier
operations and refocus the Company's efforts on expanding its core railroad
business. The Company's Board of Directors approved the plan of discontinuance
on March 20, 1997. Management anticipates selling either substantially all of
the assets or the stock of the Company's motor carrier subsidiaries during 1997.
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C> <C> <C>
Transportation revenue $1,729,886 100.0% $1,718,791 100.0%
---------- ----------
Direct operating expenses 1,524,534 88.1% 1,590,355 92.5%
Selling, general and administrative
expenses 144,262 8.3% 165,103 9.6%
Depreciation and amortization 93,733 5.4% 87,523 5.1%
---------- ---------- -----
Total operating expenses 1,762,529 101.9% 1,842,981 107.2%
---------- ---------- -----
Operating loss $ (32,643) (1.9%) $ (124,190) (7.2%)
========== ==========
</TABLE>
14
<PAGE> 17
TRANSPORTATION REVENUE - Transportation revenues remained fairly
constant from the first quarter of 1996 to the first quarter of 1997.
DIRECT OPERATING EXPENSES - Direct operating expenses decreased by
approximately $66,000, or 4.1% from $1.6 million for the three month period
ended March 31, 1996 to $1.5 million for the three month period ended March 31,
1997. Direct operating expenses represented 88.1% of transportation revenue for
the three month period ended March 31, 1997 compared to 92.5% for the three
month period ended March 31, 1996. The decrease was due to decreased equipment
maintenance and repairs and the unusually extreme weather in early 1996. The
extreme winter weather caused many roads in Ontario and the northern United
States to be closed for extended periods of time, resulting in lost revenue and
increased costs during 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses decreased slightly as a percentage of transportation
revenue for the first quarter of 1997 compared to the first quarter of 1996. The
decrease was due to efficiencies achieved by combining of the operations of
Steel City Carriers and RIS into Steel City Carriers in late 1996.
LIQUIDITY AND CAPITAL RESOURCES - COMBINED OPERATIONS
The discussion of liquidity and capital resources that follows reflects
the consolidated results of the Company, including all subsidiaries.
The Company's cash provided by operating activities was $0.9 million
for the three month period ended March 31, 1997.
Cash used in investing activities was $8.4 million for the three month
period ended March 31, 1997. The Company's main use of cash during the first
quarter of 1997 was for the purchase of a 55% equity interest in Ferronor. In
addition, property, plant and equipment increased $0.3 million during the first
quarter of 1997 primarily due to the purchase of locomotives and improvements
made to the Company's various rail lines offset by depreciation taken in the
first quarter of 1997.
The Company's cash provided by financing activities was $5.1 million
for the three month period ended March 31, 1997 consisting of the net proceeds
of approximately $4.6 million from the issuance of 1,670,000 shares of the
Company's common stock in a private placement transaction completed in January
1997 and net proceeds of approximately $1.1 million from the conversion of a
portion of the Company's Class B Warrants.
The Company's long term debt represents financing of property and
equipment, as well as the acquisition financing for Ferronor, SCTR, Kalyn, Steel
City Carriers, Dakota Rail, WTLR, ETC, CCRR, MNR, OTVR and Gettysburg Railway.
Certain of this indebtedness was refinanced through a $25 million revolving line
of credit (the "Revolver") with National Bank of Canada. The Revolver bears
interest, at the option of the Company, at either the bank's prime rate plus
0.5% or the one, three or six month LIBOR plus 2.5%. The maturity date of the
Revolver is
15
<PAGE> 18
October 1999. The Revolver is collateralized by substantially all of the assets
of the Company, Kalyn, HESR, SGVY, RIS, CCRR, Steel City Carriers, WTLR and
OTVR.
On March 3, 1997, the Company received a loan commitment from National
Bank of Canada and Comerica Bank N.A. to further increase the Revolver to $40
million. It is anticipated that this additional increase will be finalized in
the second quarter of 1997.
As of March 31, 1997, the Company had working capital of $2.9 million
compared to working capital of $5.1 million as of December 31, 1996. Cash on
hand as of March 31, 1997 was $1.5 million compared to $3.9 million as of
December 31, 1996. The decrease in cash from December 31, 1996 to March 31, 1997
is due primarily to the purchase of an equity interest in Ferronor in February
1997 and paydown on the Company's Revolver. The Company's cash flows from
operations have been historically sufficient to meet its ongoing operating
requirements, capital expenditures for property, plant and equipment, and to
satisfy the Company's interest requirements.
The Company expects that its future cash flow will be sufficient for
its current and contemplated operations for at least the next twelve months, and
will be used for, among other things, anticipated capital expenditures for the
upgrading of existing rail lines and purchases of locomotives and equipment of
approximately $1.5 million and capital expenditures at Kalyn of approximately
$100,000. The Company does not presently anticipate any other significant
capital expenditures over the next twelve months. To the extent possible, the
Company will seek to finance any further acquisitions of property, plant and
equipment in order to allow its cash flow from operations to be devoted to other
uses, including debt reduction and acquisition requirements.
The Company's long-term business strategy includes the selective
acquisition of additional transportation-related businesses. Accordingly, the
Company may require additional equity and/or debt capital in order to consummate
an acquisition or undertake major development activities. It is impossible to
predict the amount of capital that may be required for such acquisitions or
development, and there is no assurance that sufficient financing for such
activities will be available on terms acceptable to the Company, if at all. The
Company's $25 million revolving line of credit allows acquisition loan advances
of up to $20 million for such acquisitions. Upon the closing of the increase in
the Revolver, the Company will have approximately $12.5 million available for
future acquisitions. As of May 15, 1997, the Company had approximately $1.8
million of availability under the $25 million Revolver.
INFLATION
Inflation in recent years has not had a significant impact on the
Company's operations, and it is not expected to adversely affect the Company in
the future unless it increases substantially, and the Company is unable to pass
through the increases in its freight rates and trailer prices.
16
<PAGE> 19
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
The foregoing Management's Discussion and Analysis contains various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, which represents the Company's expectations or beliefs concerning
future events, including the following: statements regarding the further growth
in transportation-related assets; the acquisition of additional railroads and
other transportation-related companies; the development of additional
transportation-related businesses; the increased usage of the Company's existing
rail lines; the growth of gross revenues; and the sufficiency of the Company's
cash flow for the Company's future liquidity and capital resource needs. The
Company cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward-looking statements, including, without limitations, the following:
decline in demand for transportation services; the effect of economic conditions
generally and particularly in the markets served by the Company; orders under
the TACOM agreements; the Company's dependence upon the agricultural industry as
a significant user of the Company's rail services; the Company's dependence upon
the availability of financing for acquisitions of railroads and other
transportation-related companies and the development of additional
transportation-related businesses; a decline in the market acceptability of
railroad services; the effect of competitive pricing; the regulation of the
Company by federal, state and local regulatory authorities. Any material adverse
change in the financial condition or results of operations of Kalyn would have a
material adverse impact on the Company. Results actually achieved thus may
differ materially from expected results included in these statements.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
a. Exhibits
3.1 Amended and Restated Articles of Incorporation of Registrant(9)
3.2 By-laws of Registrant(1)
4.2 Class B Warrant(2)
4.3 Unit Purchase Warrant(2)
4.4 Series A Convertible Subordinated Debentures(7)
10.14 RailAmerica, Inc. 1992 Stock Option Plan(1)+
10.23 Loan Agreement among RailAmerica, Inc., South Central Tennessee Railroad
Corporation, South Central Tennessee Railroad Company, Inc. and Charter
Financial, Inc., dated as of December 31, 1993(5)
10.24 Lease Agreement between South Central Tennessee Railroad Authority and
South Central Tennessee Railroad Company, Inc. dated October 16, 1984(3)
10.32 Stock Purchase Agreement between Steel City Truck Lines Limited, Josef
Bichler and RailAmerica, Inc. dated December 19, 1994(10)
10.33 Stock Purchase Agreement between 823215 Ontario, Inc. and RailAmerica, Inc.
dated February 6, 1995(10)
10.35 Employment Agreement between Robert B. Coward and Kalyn/Siebert
Incorporated(6)
10.37 Stock Purchase Agreement, dated July 11, 1995, among RailAmerica, Inc., Brain
E. Muir, Elli M.A. Mills and Kimberly Hughes, Prairie Holding Corporation and
Dakota Rail, Inc.(7)
10.38 Settlement Agreement, entered into March 15, 1995, by Eric D. Gerst and
RailAmerica, Inc., RailAmerica Services Corporation and Huron and Eastern
Railway Company, Inc.(7)
10.39 Loan Agreement, dated September 29, 1995, by and between
RailAmerica, Inc., Kalyn/Siebert Incorporated, RailAmerica
Intermodal Services, Inc., RailAmerica Carriers, Inc., Steel
City Carriers, Inc., Saginaw Valley Railway Company, Inc.,
Huron and Eastern Railway Company, Inc. and National Bank of
Canada(9)
10.40 Asset Purchase Agreement, dated October 11, 1995, by and among Seagraves,
Whiteface & Lubbock Railroad Co., American Railway Corporation, TEMCO
Corporation and RailAmerica, Inc.(8)
10.41 Emloyment Agreement between Gary O. Marino and RailAmerica,
Inc.(9)+
10.42 Employment Agreement between John H. Marino and
RailAmerica, Inc.(9)+
10.43 Stock Option Agreement, dated November 11, 1994, between RailAmerica, Inc.
and Gary O. Marino(9)+
10.44 RailAmerica, Inc. 1995 Stock Incentive Plan(9)+
10.45 RailAmerica, Inc. 1995 Non-Employee Director Stock Option Plan(9)
10.46 RailAmerica, Inc. 1995 Employee Stock Purchase Plan(9)
10.47 RailAmerica, Inc. Corporate Senior Executive Bonus Plan(9)+
10.49 Purchase and Sale Agreement dated November 30, 1995, by and between CSX
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C>
Transportation, Inc. and Saginaw Valley Railway Company, Inc.(10)
10.50 Stock Purchase Agreement dated October 1, 1995 by and between RailAmerica,
Inc. and the holders of all the issued and outstanding shares of the Company's
Preferred Stock(10)
10.51 Asset Purchase Agreement dated January 26, 1996 by and
between TEMCO Corporation and RailAmerica Equipment
Corporation(10)
10.52 Agreement of Sale dated July 18, 1996 by and between the
Commonwealth's Department of Transportation and Delaware
Valley Railway Company, Inc., a wholly-owned subsidiary of
RailAmerica, Inc.(11)
10.53 Agreement entered into by and between R. Frank Unger, Trustee of Sagamore
National Corporation, Indiana HiRail Corporation and RailAmerica, Inc.(11)
10.54 Asset Purchase Agreement, dated August 5, 1996, by and among
Burlington Northern Railroad Company and Cascade and
Columbia River Railroad Company, a subsidiary of
RailAmerica, Inc.(12)
10.55 Confidential Private Placement Memorandum dated September 20, 1996.(13)
10.56 Stock Purchase Agreement, dated as of September 20, 1996, by and among Otter
Tail Valley Railroad Company, Inc. and Dakota Rail, Inc.(14)
10.57 Commitment letter relating to $40,000,000 Revolving Line of Credit/Term Loan
Facility, dated March 3, 1997, by and between National Bank
of Canada, Comerica Bank, RailAmerica, Inc., Kalyn/Siebert,
Incorporated, RailAmerica Intermodal Services, Inc.,
RailAmerica Carriers, Inc., Steel City Carriers, Inc.,
Saginaw Valley Railway Company, Inc., Huron and Eastern
Railway Company, Inc., West Texas and Lubbock Railroad
Company, Inc., Plainview Terminal Company, Cascade and
Columbia River Railroad Company, Inc., Minnesota Northern
Railroad Company, Inc. and Delaware Valley Railway Company,
Inc.(15)
10.58 Agreement for sale of certain assets, rights and obligations
of Burlington Northern Railroad Company to Minnesota
Northern Railroad, Inc.(15)
10.59 RailAmerica, Inc. Nonqualified Deferred Compensation Trust.(15)+
10.60 Nonqualified Deferred Compensation Agreement between RailAmerica, Inc. and
Gary O. Marino(15)+
10.61 Nonqualified Deferred Compensation Agreement between RailAmerica, Inc. and
John H. Marino(15)+
21 Subsidiaries of Registrant(15)
27 Financial Data Schedule (for SEC use only).
</TABLE>
(1) Incorporated by reference to the same exhibit number filed as part of
the Registrant's Registration Statement on Form S-1, Registration No.
33-49026.
(2) Incorporated by reference to the same exhibit number filed as part of
the Registrant's Post-Effective Amendment No. 3 on Form SB-2, dated
November 25, 1994, Registration No. 33-49026.
(3) Incorporated by reference to the same exhibit number filed as part of
the Company's annual report on Form 10-KSB, filed with the Securities
and Exchange Commission on
18
<PAGE> 21
March 31, 1993.
(4) Incorporated by reference to the same exhibit number filed as part of
the Registrant's Post-Effective Amendment No. 4 on Form SB-2, dated
December 14, 1994, Registration No. 33-49026.
(5) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-KSB for the year ended December 31, 1993, filed
with the Securities and Exchange Commission on April 15, 1994.
(6) Incorporated by reference to the same exhibit number filed as a part of
the Registrant's Post-Effective Amendment No. 2 on Form SB-2, dated
October 17, 1994, Registration No. 33-49026.
(7) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-QSB for the quarter ended June 30, 1995, filed
with the Securities and Exchange Commission on August 9, 1995.
(8) Incorporated by reference to the exhibit number 2.1 filed as part of
the Company's Form 8-K as of November 1, 1995, filed with the
Securities and Exchange Commission on November 3, 1995.
(9) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-QSB for the quarter ended September 30, 1995,
filed with the Securities and Exchange Commission on November 12, 1995.
(10) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-KSB for the year ended December 31, 1995, filed
with the Securities and Exchange Commission on April 12, 1996.
(11) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-QSB for the quarter ended July 30, 1996, filed
with the Securities and Exchange Commission on August 12, 1996.
(12) Incorporated by reference to the exhibit 2.1 filed as part of the
Company's Form 8-K as of September 6, 1996, filed with the Securities
and Exchange Commission on September 12, 1996.
(13) Incorporated by reference to the exhibit A filed as part of the
Company's Form 8-K as of September 30, 1996, filed with the Securities
and Exchange Commission on October 17, 1996.
(14) Incorporated by reference to the exhibit 2.1 filed as part of the
Company's Form 8-K as of October 11, 1996, filed with the Securities
and Exchange Commission on October 25, 1996.
(15) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-KSB for the year ended December 31, 1995, filed
with the Securities and Exchange Commission on March 31, 1997.
+ Executive Compensation Plan or Arrangement.
(b)Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the first
quarter of 1997:
19
<PAGE> 22
1. A Form 8-K dated January 15, 1997, was filed on January 29, 1997, as a
result of completing a Private Placement of 1,670,000 shares of the
Company's common stock.
2. A Form 8-K dated February 19, 1997, was filed on March 6, 1997, as a
result of completing the purchase of a majority equity interest in
Empresa de Transporte Ferrovario S.A.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RAILAMERICA, INC.
Date: May 19, 1997 By: /s/Gary O. Marino
-----------------
Gary O. Marino, on behalf
of the Company as Chairman,
and as Chief Executive Officer
(Principal Financial Officer)
21
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,472,740
<SECURITIES> 0
<RECEIVABLES> 4,968,643
<ALLOWANCES> 0
<INVENTORY> 3,313,975
<CURRENT-ASSETS> 10,338,429
<PP&E> 54,511,587
<DEPRECIATION> 0
<TOTAL-ASSETS> 77,653,159
<CURRENT-LIABILITIES> 7,381,780
<BONDS> 37,487,989
0
0
<COMMON> 8,225
<OTHER-SE> 22,363,694
<TOTAL-LIABILITY-AND-EQUITY> 77,653,159
<SALES> 4,074,019
<TOTAL-REVENUES> 8,057,312
<CGS> 3,121,049
<TOTAL-COSTS> 6,770,783
<OTHER-EXPENSES> 19,314
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 709,434
<INCOME-PRETAX> 557,781
<INCOME-TAX> 208,250
<INCOME-CONTINUING> 349,531
<DISCONTINUED> (61,680)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 287,851
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
