<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) July 26, 1999
--------------------------
RAILAMERICA, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- ------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-20618 65-0328006
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
5300 BROKEN SOUND BLVD N.W.
BOCA RATON, FLORIDA 33487
- ------------------------------------------------------------------------------
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code (561) 994-6015
---------------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Attached hereto as exhibit 7(a) and incorporated herein by reference:
(a) Financial Statements of Business Acquired.
Auditors' Report
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Income and Retained Earnings for the years
ended December 31, 1998 and 1997
Statement of Changes in Financial Position for the years ended
December 31, 1998 and 1997
Notes to consolidated financial statements
Report of Independent Certified Public Accountants
Reconciliation of 1998 consolidated financial statements to U.S. GAAP
Unaudited Consolidated Balance Sheet as of June 30, 1999
Unaudited Consolidated Income Statements for the six months ended
June 30, 1999 and 1998
Unaudited Statement of Cash Flows for the six months ended June 30,
1999 and 1998
Attached hereto as exhibit 7(b) and incorporated herein by reference:
(b) Pro Forma Financial Information.
Pro forma consolidated balance sheet as of June 30, 1999
Pro forma consolidated income statement for the six months ended
June 30, 1999.
Pro forma consolidated income statement for the year ended
December 31, 1998.
Notes to pro forma consolidated financial statements.
<PAGE> 3
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.
Dated: October 5, 1999 By:/s/ Gary O. Marino
----------------------------------
Name: Gary O. Marino
Its: Chairman, CEO and President
<PAGE> 4
RAILINK LTD.
AUDITORS' REPORT
To the Shareholders of RaiLink Ltd.
We have audited the consolidated balance sheets of RaiLink Ltd. as at
December 31, 1998 and December 31, 1997 and the consolidated statements of
income and retained earnings and changes in financial position for the years
ended December 31, 1998 and December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
December 31, 1998 and December 31, 1997 and the results of its operations and
changes in its financial position for the years ended December 31, 1998 and
December 31, 1997 in accordance with Canadian generally accepted accounting
principles.
PricewaterhouseCoopers LLP
Chartered Accountants
Edmonton, Alberta
March 5, 1999
<PAGE> 5
RAILINK LTD.
CONSOLIDATED BALANCE SHEETS
(In Canadian dollars)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments................................. $15,813,854 $ 5,811,089
Accounts receivable............................................. 4,136,690 8,923,572
Income taxes recoverable........................................ -- 439,150
Advance (Note 2)................................................ 2,500,000 100,000
Due from sale of capital assets................................. 1,730,685 --
Material and supplies........................................... 2,392,044 4,412,596
Prepaid expenses and other...................................... 669,408 1,363,912
----------- -----------
Total current assets.......................................... 27,242,681 21,050,319
Capital assets (Note 3)............................................ 18,452,501 58,481,148
Investment in affiliate (Note 4)................................... 1,504,931 4,942,263
Deferred income taxes.............................................. 967,861 1,174,161
Deferred charges (Note 5).......................................... 801,868 1,995,191
----------- -----------
Total assets.................................................. $48,969,842 $87,643,082
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Bank loan (Note 6).............................................. $ -- $ 58,577
Accounts payable and accrued liabilities........................ 5,627,337 7,003,234
Income taxes payable............................................ 1,266,272 --
Current portion of long-term debt (Note 6)...................... 922,600 8,440,668
----------- -----------
Total current liabilities..................................... 7,816,209 15,502,479
Long-term debt (Note 6)............................................ 9,488,864 20,281,427
----------- -----------
Total liabilities............................................. 17,305,073 35,783,906
SHAREHOLDERS' EQUITY
Share capital (Note 8)............................................. 26,120,669 43,596,247
Retained earnings.................................................. 5,544,100 8,262,929
----------- -----------
31,664,769 51,859,176
----------- -----------
$48,969,842 $87,643,082
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE> 6
RAILINK LTD.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(In Canadian dollars)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
OPERATING REVENUE
Freight revenue (Note 9) ........................... $ 21,996,326 $ 37,902,082
Other railway-related revenue ...................... 1,018,947 2,361,952
------------ ------------
23,015,273 40,264,034
EXPENSES
Train operations ................................... 8,393,487 17,318,357
Maintenance of way ................................. 4,972,441 6,864,477
Maintenance of equipment ........................... 962,274 1,780,431
General and administrative ......................... 2,599,800 4,807,937
Depreciation and amortization, net ................. 3,718,620 4,499,928
------------ ------------
20,646,622 35,271,130
============ ============
INCOME FROM OPERATIONS ............................. 2,368,651 4,992,904
OTHER EXPENSES (INCOME)
Interest expense ................................ 286,859 1,055,967
Amortization of deferred charges ................ 201,444 348,902
Interest and other income ....................... (326,575) (500,644)
Loss (gain) on sale of capital assets ........... (2,427,562) 2,650
------------ ------------
(2,265,834) 906,875
------------ ------------
INCOME BEFORE INCOME TAXES AND EQUITY IN INCOME .... 4,634,485 4,086,029
PROVISION FOR INCOME TAXES (NOTE 10)
Current ......................................... 2,434,797 1,760,100
Deferred ........................................ (368,000) 251,700
------------ ------------
2,066,797 2,011,800
------------ ------------
NET INCOME BEFORE EQUITY IN INCOME ................. 2,567,688 2,074,229
EQUITY IN INCOME OF AFFILIATE ...................... 140,000 644,600
------------ ------------
NET INCOME ...................................... 2,707,688 2,718,829
============ ============
RETAINED EARNINGS, BEGINNING OF YEAR ............... 2,836,412 5,544,100
------------ ------------
RETAINED EARNINGS, END OF YEAR ..................... $ 5,544,100 $ 8,262,929
------------ ------------
NET INCOME PER COMMON SHARE
Basic ........................................... $ 0.58 $ 0.35
============ ============
Fully diluted ................................... $ 0.57 $ 0.34
============ ============
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,643,950 7,519,593
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 7
RAILINK LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(In Canadian dollars)
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1998
----------------- -----------------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income ............................................ $ 2,707,688 $ 2,718,829
Items not requiring a current outlay (receipt) of cash:
Depreciation ........................................ 3,948,036 4,499,928
Amortization of government grants ................... (229,416) --
Amortization of deferred charges .................... 201,444 348,902
Loss (gain) on sale of capital assets ............... (2,427,562) 2,650
Deferred income taxes ............................... (368,000) 251,700
Equity in income of affiliate ....................... (140,000) (644,600)
------------ ------------
3,692,190 7,177,409
Changes in non-cash working capital items (Note 11) ... (2,891,091) (3,700,778)
------------ ------------
801,099 3,476,631
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Proceeds from issue of long-term debt ................. 9,829,060 33,082,528
Repayment of long-term debt ........................... (2,097,416) (14,771,897)
Redemption of preferred shares ........................ (5,499,994) --
Issue of common shares, net ........................... 24,977,847 17,374,503
Redemption of common shares ........................... -- (356,925)
------------ ------------
27,209,497 35,328,209
============ ============
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of capital assets ............................ (17,548,770) (44,539,489)
Proceeds from sale of capital assets .................. 4,278,408 8,264
Increase in deferred charges .......................... (251,662) (1,542,225)
Increase in investment in affiliate ................... (481,532) (2,792,732)
------------ ------------
(14,003,556) (48,866,182)
INCREASE (DECREASE) IN CASH .............................. 14,007,040 (10,061,342)
CASH AND SHORT-TERM INVESTMENTS, BEGINNING OF YEAR ....... 1,806,814 15,813,854
------------ ------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR ............. $ 15,813,854 $ 5,752,512
============ ============
CASH AND SHORT-TERM INVESTMENTS IS COMPRISED OF
Cash .................................................. $ 3,113,854 $ 1,439,089
Short-term investments ................................ 12,700,000 4,372,000
Bank loan ............................................. -- (58,577)
------------ ------------
$ 15,813,854 $ 5,752,512
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 8
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared by
management in accordance with accounting principles generally accepted in
Canada. Because the precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a
period necessarily involves the use of estimates and approximations which have
been made using careful judgment. Actual results could differ from those
estimates. These consolidated financial statements have, in management's
opinion, been properly prepared within reasonable limits of materiality and
within the framework of the accounting policies summarized below.
BASIS OF PRESENTATION
These financial statements present the operations of the Company and
its wholly-owned subsidiaries, Central Western Railway Corporation and RaiLink
Canada Ltd. All material inter-company balances and transactions have been
eliminated on consolidation.
The Company also owns a 26.7% (1997 - 24.6%) interest in an affiliate,
Quebec Railway Corporation Inc., which is accounted for using the equity method
of accounting.
MATERIAL AND SUPPLIES
Material and supplies, which consist primarily of rail, ties and other
maintenance supplies, are valued at the lower of cost, determined on an
average-cost basis, and replacement cost.
DEFERRED CHARGES
Deferred charges consist of costs incurred to arrange long-term
financing, together with organization and start-up costs of the Company.
Financing costs are being amortized over the repayment period of the
debt using the effective-yield method whereby the costs deferred are recognized
as an expense at a constant percentage of the balance of the debt outstanding
from time to time.
Organization and start-up costs are being amortized using the
straight-line method over five years.
CAPITAL ASSETS
Capital assets are recorded at cost.
Depreciation of capital assets is recorded using either the
straight-line method or the declining balance method so as to depreciate the
original cost of the assets, less estimated net residual and salvage values,
over their average service lives at the following rates:
<TABLE>
<CAPTION>
<S> <C>
Trackage and bridges................................. Straight-line over 10 to 25 years
Capital track improvements on leased properties...... Straight-line over term of lease
Locomotives.......................................... Straight-line over 10 to 15 years
Vehicles and other equipment......................... Straight-line over 5 to 10 years or 20% to 30%
declining balance
</TABLE>
<PAGE> 9
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Buildings and leasehold improvements................. 5% declining balance or straight-line at the
lesser of 5 years and the remaining term of the
lease
Office furniture and computers....................... 20% to 50% declining balance
</TABLE>
The Company capitalizes the cost of labor and materials for all major
renewals and betterments as incurred. On its leased properties the Company
estimates the total amount of renewals and betterments required over the lease
term and amortizes this amount evenly over the term of the lease.
PENSION PLAN
The Company has a pension plan, with both defined benefit and defined
contribution components. The defined benefit component provides for pensions
based on length of service and final average earnings. The cost of pension
benefits is determined using the projected benefits method, prorated on
service, and reflects management's best estimates of investment returns, wage
and salary increases and age at retirement. Adjustments resulting from plan
enhancements, experience gains and losses and changes in assumptions are
amortized over the estimated average remaining service life of employees.
For the defined contribution component, employer contributions are
expensed as incurred.
INCOME TAXES
Income taxes are determined on the tax-allocation basis whereby the
provision for income taxes each year is determined on the basis of earnings
rather than the amounts reported for income tax purposes. The difference
between such taxes and taxes currently payable or recoverable is reflected as
deferred income taxes.
2. ADVANCE
The advance of $100,000 at December 31, 1998 represents deposits paid
towards a rail network in northeastern Alberta.
The advance of $2,500,000 at December 31, 1997 represented deposits
paid at that time for a rail network in northwestern Alberta. This transaction
was completed on May 3, 1998.
3. CAPITAL ASSETS
<TABLE>
<CAPTION>
1997 1998
NET BOOK ACCUMULATED NET BOOK
VALUE COST DEPRECIATION VALUE
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Land, trackage and bridges ......... $ 9,282,565 $36,981,901 $ 263,708 $36,718,193
Capital track improvements on leased
properties ...................... 1,269,032 7,260,335 6,000,000 1,260,335
Locomotives ........................ 4,854,869 15,504,370 889,926 14,614,444
Vehicles and other equipment ....... 2,226,653 5,859,175 1,566,108 4,293,067
Buildings and leasehold improvements 430,441 1,046,329 115,276 931,053
Office furniture and computers ..... 388,941 994,348 330,292 664,056
----------- ----------- ----------- -----------
$18,452,501 $67,646,458 $ 9,165,310 $58,481,148
</TABLE>
<PAGE> 10
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. CAPITAL ASSETS, CONTINUED
On September 2, 1997, the Company purchased a railway line and certain
railway assets called the Lakeland & Waterways division running from Boyle to
Fort McMurray, Alberta. The operation of this division is in a developmental
stage. Included in capital assets is the original purchase cost of the land,
trackage and bridges plus the net expenses of this division's limited
operations of $365,424 from inception to December 31, 1998. Net expenses will
be capitalized while the operation is in the developmental stage and total
capitalized costs will not exceed the net realizable value of the railway
assets. Permanent operation of this division will commence when a certain
threshold of long-term traffic is reached, at which time results of operations
will be included in the Consolidated Statements of Income and Retained
Earnings.
The Company commenced operations of its rail network in northwestern
Alberta on May 3, 1998. The railway assets comprising the Mackenzie Northern
division were acquired from Canadian National Railway Company for $25,000,000.
The purchase price was allocated $712,500 to land, $24,027,500 to railway
structures, $250,000 to buildings and $10,000 to licensing agreements. These
assets were acquired for cash, with no other consideration, contingent or
otherwise, payable.
At December 31, 1998 the Company had locomotives with a net book value
of $836,280 which had been removed from service at various times throughout
1998. These locomotives were depreciated up to the date of their removal from
service and at December 31, 1998 do not exceed their net realizable value.
4. INVESTMENT IN AFFILIATE
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Shares, at cost, beginning of year ................... $ 760,891 $1,242,423
Shares purchased in the year ......................... 481,532 2,792,732
---------- ----------
Total shares, end of year ............................ 1,242,423 4,035,155
---------- ----------
Equity in undistributed income, beginning of year .... 122,508 262,508
Equity in income for the year ........................ 140,000 644,600
---------- ----------
Equity in undistributed income, end of year .......... 262,508 907,108
---------- ----------
Total investment in affiliate ........................ $1,504,931 $4,942,263
========== ==========
</TABLE>
5. DEFERRED CHARGES
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Financing fees ....................................... $ 195,057 $ 370,193
Organization and start-up costs ...................... 606,811 1,624,998
---------- ----------
$ 801,868 $1,995,191
========== ==========
</TABLE>
<PAGE> 11
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
RECOURSE DEBT
Revolving term loan, with interest varying at bank prime to bank
prime plus 0.5%, maturing March 31, 2003 ................................. $ -- $10,583,275
Non-revolving term loan, with interest varying at bank prime to bank
prime plus 0.5%, maturing May 31, 2002 ................................... -- 1,968,542
Other term loans ........................................................... -- 9,720,278
Term loan, with interest at 7.804% per annum, repayable in monthly principal
installments of $5,000 plus interest, maturing
December 31, 2001 ........................................................ 255,000 --
Term loan, with interest at 7.939% per annum, repayable in monthly
blended installments of $61,244, maturing September 30, 2001 ............. 2,377,149 --
Locomotive loan advances with interest at bank prime plus 0.75% per
annum, maturing between April 28 and December 18, 2002 ................... 1,329,315 --
Debenture payable, with interest at 6.5% per annum, maturing
December 31, 1999 ........................................................ 5,900,000 5,900,000
NON-RECOURSE DEBT
Unsecured loan, without interest, maturing December 31, 1999 ............... 550,000 550,000
----------- -----------
$10,411,464 $28,722,095
Less: Amounts due within one year
Recourse ................................................................. 922,600 7,890,668
Non-recourse ............................................................. -- 550,000
----------- -----------
922,600 8,440,668
----------- -----------
$ 9,488,864 $20,281,427
=========== ===========
</TABLE>
RECOURSE DEBT
The revolving term loan has interest charged at the Company's choice
of rates for bankers' acceptances and prime based loans. The weighted average
interest rate on borrowings outstanding at December 31, 1998 was 6.7% for these
loans.
The other term loans represent funds drawn upon by the Company under
$11,400,000 in credit facilities established with term lenders. Management
expects that draws under these facilities will be completed in May 1999 at
which time a repayment schedule will be established. Interest on these loans is
charged at prime to prime plus 0.5%.
The term loans are secured by:
o a first fixed charge on all the land, trackage and bridges
and equipment other than the Lakeland & Waterways division;
o a first fixed floating charge over all other assets; and
o an assignment of insurance on assets registered as security.
The debenture payable is secured by a fixed and floating charge on the
land, trackage and bridges of the Lakeland & Waterways division.
<PAGE> 12
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM DEBT, CONTINUED
The Company has operating lines of credit totaling $4,250,000 which,
when drawn, bear interest at bank prime. The lines of credit are secured by a
general assignment of accounts receivable and material and supplies in priority
to the term loan lender. At December 31, 1998, $58,577 had been drawn on the
facilities (1997 - $nil).
The Company has a locomotive loan line of credit which can be drawn to
a maximum amount of $4,000,000 and can be used to fund up to 75% of the cost of
locomotives. Each advance on the loan, which is secured by the related
locomotive, is repayable over 60 months in equal amounts plus interest from the
time of drawing the funds. At December 31, 1998, no amount had been drawn on
the locomotive loan line of credit (1997 - $1,329,315).
The following is a summary of the minimum principal payments on
long-term debt required over the next five years:
1999........... $8,440,668
2000........... 1,990,668
2001........... 1,990,668
2002........... 1,596,938
2003........... 1,400,100
7. FINANCIAL INSTRUMENTS
CREDIT RISK MANAGEMENT
The Company is exposed to credit risks in the event of non-performance
by counterparties to financial instruments; however, the Company does not
anticipate any non-performance as dealings have been with counterparties of
high quality.
INTEREST RATE EXPOSURE AND FAIR VALUES
The Company manages its interest rate exposure on its recourse debt by
choosing either fixed or floating rates. To date the Company has chosen to
manage its interest rate exposure through the use of floating rates established
by either bankers' acceptances or prime based loans, with interest varying at
bank prime to bank prime plus 0.5%. Short-term financial assets and liabilities
are valued at their carrying amounts as disclosed in the consolidated balance
sheet which are reasonable estimates of their fair values due to the relatively
short period to maturity of these instruments.
The fair value of the Company's long-term debts is assumed to
approximate the carrying amounts due to either the loans bearing interest at
floating rates for bankers' acceptances or bank prime or no significant changes
having occurred which would affect the terms and conditions of fixed interest
rate loan facilities.
<PAGE> 13
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. SHARE CAPITAL
<TABLE>
<CAPTION>
1997 1998
------------------------ --------------------------
NUMBER OF NUMBER OF
SHARES AMOUNT SHARES AMOUNT
-------- ------ ------ ------
<S> <C> <C> <C> <C>
AUTHORIZED
Unlimited number of Class A voting
common shares
ISSUED CLASS A VOTING COMMON SHARES
Balance, beginning of year ....... 2,578,246 $ 51,795 6,502,596 $ 26,120,669
Issued during the year for cash .. 3,924,350 26,068,874 1,602,750 17,832,503
Redeemed during the year ......... -- -- (56,200) (356,925)
--------- ----------- --------- ------------
Balance, end of year ............. 6,502,596 $26,120,669 8,049,146 $ 43,596,247
</TABLE>
On February 26, 1998 the Company issued 1,600,000 Special Warrants for
cash proceeds of $18,400,000 before issue costs of $570,000 which are reported
net of related deferred income taxes of $458,000. On May 11, 1998 all Special
Warrants were converted to Class A common shares on a one for one basis. The
Company issued an additional 2,750 Class A shares from treasury under the
Company's stock option plan for cash proceeds of $2,503.
On August 31, 1998 the Company announced that it had received approval
from The Toronto Stock Exchange to make a normal course issuer bid to purchase
for cancellation certain of its common shares. Through December 31, 1998 the
Company has purchased 56,200 shares under the bid at an average price of $6.35
per share.
The Company has a stock option plan under which options for a term not
exceeding 10 years may be granted to key employees and directors to purchase
common shares of the Company at a price not less than 100% of their fair market
value at the date of grant. 800,000 common shares have been reserved for the
exercise of options. At December 31, 1998 there were 206,684 (1997 - 86,684)
options outstanding with expiry dates ranging from October 31, 2006 to October
6, 2008 with exercise prices ranging from $0.91 per share to $11.55 per share.
In February 1999 the Company adopted a short-term Shareholder Rights
Plan (the "Plan") for the fair treatment of all shareholders. Under the Plan,
one right has been issued for each outstanding common share of the Company. The
rights remain attached to the common shares and are not exercisable until the
occurrence of certain designated events. The rights expire on May 15, 1999,
unless terminated at an earlier date by the board of directors.
9. ECONOMIC DEPENDENCE
The Company's primary customers are Canadian Pacific Railway Company
("CPR") and Canadian National Railway Company ("CN"). For the year ended
December 31, 1998, 57.3% of freight revenues were earned directly from CPR
(December 31, 1997 - 91.7%), and 42.7% of freight revenues were earned directly
from CN (December 31, 1997 - 8.3%).
Effective October 29, 1996, the Company entered into a 20-year lease
and trackage rights agreement with CPR to operate 389 miles of trackage for a
nominal cost of $2 per year. The lease provides that the operation of the
leased trackage is under the exclusive direction and control of the Company.
The lease and trackage rights agreement is subject to early termination by CPR
after 5 years under certain limited circumstances if CPR wishes to sell or
dispose of, or enter into a joint ownership agreement with respect to, all or
substantially all of its Eastern Canadian Rail Network.
As described in Note 3, on May 3, 1998, the Company acquired a rail
network in northwestern Alberta from CN. The transaction documents provide that
in the event that any third party railway corporation owns or controls,
directly or indirectly, 25% of the Company's voting shares, CN has the option
to repurchase the rail
<PAGE> 14
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
network for its net book value at that time, plus any severance costs incurred
by the Company in respect of employees employed on that line.
10. INCOME TAXES
The provision for income taxes differs from the amount that would have
been expected using the combined Canadian federal and provincial statutory
income tax rate. The difference results from the items shown in the following
table:
<TABLE>
<CAPTION>
1997 1998
----------- ----------
<S> <C> <C>
Income before income taxes and equity in income $ 4,634,485 $4,086,029
----------- ----------
Statutory income tax rate ..................... 44.6% 44.4%
----------- ----------
Income taxes, at statutory rate ............... $ 2,066,980 $1,814,197
Non-taxable capital gain ...................... (58,790) --
Provincial capital tax ........................ -- 107,000
Large corporations tax, in excess of surtax ... -- 64,930
Other ......................................... 58,607 25,673
----------- ----------
Provision for income taxes .................... $ 2,066,797 $2,011,800
</TABLE>
11. CHANGES IN NON-CASH WORKING CAPITAL ITEMS
<TABLE>
1997 1998
----------- ----------
<S> <C> <C>
Accounts receivable ......................... $(1,510,638) $(4,786,882)
Advance ..................................... (2,500,000) 2,400,000
Due from sale of capital assets ............. (1,730,685) 1,730,685
Material and supplies ....................... (1,586,343) (2,020,552)
Prepaid expenses and other .................. (161,727) (694,504)
Accounts payable and accrued liabilities .... 3,639,240 1,375,897
Income taxes payable ........................ 959,062 (1,705,422)
----------- -----------
$(2,891,091) $(3,700,778)
=========== ===========
</TABLE>
12. PENSION COSTS AND OBLIGATIONS
The Company has a pension plan, with both defined benefit and defined
contribution components.
DEFINED BENEFIT
The defined benefit component applies to approximately 60 employees
who transferred employment directly from CPR in connection with the
subsidiary's lease and trackage agreement with CPR. The defined benefit portion
of the plan is a mirror plan of CPR's defined benefit plan. The employees that
transferred to the subsidiary and joined the mirror plan were entitled to
transfer or buy back prior years of service. As part of this arrangement, CPR
is to transfer to the company the appropriate value of each employee's pension
entitlement.
As at December 31, 1998, accrued pension benefits are $4,023,189 (1997
- - $3,460,360) and pension fund assets are $4,237,806 (1997 - $3,659,080).
Pension expense for the year for the defined benefit members was $107,279 (1997
- - $105,456).
<PAGE> 15
RAILINK LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEFINED CONTRIBUTION
At December 31, 1998, employees not participating in the defined
benefit component of the pension plan were entitled to participate in the
defined contribution component of the pension plan. The Company contributes 3%
of a participating employee's salary to the plan.
Pension expense for the year, for the defined contribution members,
was $258,377 (1997 - $58,659).
13. LEASE COMMITMENTS
The following is a summary of the minimum lease payments on operating
leases required over the next five years:
1999............. $907,740
2000............. 59,500
2001............. 41,600
2002............. 39,250
2003............. 22,400
14. UNCERTAINTY DUE TO YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar problems
may arise in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the year 2000 Issue may be
experienced before, on, or after January 1, 2000 and, if not addressed, the
impact on operations and financial reporting may range from minor errors to
significant systems failure, which could affect RaiLink's ability to conduct
normal business operations.
It is not possible to be certain that all aspects of the Year 2000
Issue affecting RaiLink, including those related to the efforts of customers,
suppliers or other third parties, will be fully resolved.
<PAGE> 16
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders
Of RailAmerica, Inc.
We have audited the reconciliation of net income of RaiLink Ltd. for the year
ended December 31, 1998 and of shareholders' equity as of December 31, 1998,
from Canadian generally accepted auditing principles to U.S. GAAP, as set out
in Schedule 1. Our audit has been conducted in accordance with generally
accepted auditing standards to provide reasonable assurance of whether the U.S.
GAAP reconciliation is free of material misstatement. Our procedures included
the examination of the audited financial statements for the year ended December
31, 1998 of RaiLink Ltd. in order to identify the application of accounting
policies which would be inconsistent with U.S. GAAP, and the examination of the
U.S. GAAP reconciliation including examining, on a test basis, of evidence
supporting the amounts of the reconciling items. These procedures have been
undertaken to form an opinion whether, in all material respects, the U.S. GAAP
reconciliation is presented fairly, and represents the amount of net income and
shareholders' equity in accordance with U.S. GAAP. The audit opinion expressed
in this report has been formed on the above basis.
In our opinion, the U.S. GAAP reconciliation of RaiLink Ltd. presents fairly,
in all material respects, the shareholders' equity of RaiLink Ltd. as of
December 31, 1998 and the results of their operations for the year ended
December 31, 1998 in conformity with U.S. GAAP.
PricewaterhouseCoopers LLP
Miami, Florida
October 4, 1999
<PAGE> 17
Schedule 1
RAILINK LTD
Reconciliation of 1998 Consolidated Financial Statements to U.S. GAAP
(in Canadian dollars)
<TABLE>
<CAPTION>
For the year ended
December 31, 1998
-------------------
<S> <C>
Net income under Canadian GAAP ........................... $ 2,707,688
Less: Loss of Lakeland & Waterways ..................... (365,424)(1)
Less: Organization and start-up costs capitalized in 1998 (1,193,323)(2)
Add: Tax effect of above reconciling items at 44.4% ..... 692,084
-------------
Net income under U.S. GAAP ............................... $ 1,841,025
=============
</TABLE>
<TABLE>
<CAPTION>
As of
December 31, 1998
------------------
<S> <C>
Shareholders' equity under Canadian GAAP $ 31,664,769
Less: Loss of Lakeland & Waterways (365,424)(1)
Less: Net organization and start-up costs (1,995,191)(3)
Add: Tax effect of above reconciling items at 44.4% 1,048,113
---------------
Shareholders' equity under U.S. GAAP $ 30,352,267
===============
</TABLE>
1 The losses of Lakeland & Waterways had been capitalized during 1998 as
this subsidiary was in a developmental stage. Under U.S. GAAP, such
amounts would be expensed in accordance with Statement of Financial
Accounting Standard No. 7.
2 During 1998, the Company capitalized certain organizational and
start-up costs in accordance with CICA 3070. Additionally, the Company
recorded amortization of amounts capitalized in prior years. Under
U.S.GAAP, such amounts would be expensed immediately in accordance
with Statement of Position 98-5.
3 Amount represents the net balance of organizational and start-up costs
recorded on the balance sheet at December 31, 1998.
<PAGE> 18
RAILINK LTD.
CONSOLIDATED BALANCE SHEETS
(IN CANADIAN DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1999
--------------
(in thousands)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash ...................................................... $ 808
Accounts and notes receivable ............................. 11,224
Inventory ................................................. 6,462
Other current assets ...................................... 641
-------
Total current assets .............................. 19,135
Property, plant and equipment, net ........................ 70,961
Investment in affiliate ................................... 5,345
Deferred income taxes ..................................... 2,548
-------
Total assets ...................................... $97,989
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ...................... $ 6,383
Accounts payable and accrued liabilities .................. 8,816
-------
Total current liabilities ......................... 15,199
-------
LONG-TERM DEBT 30,563
STOCKHOLDERS' EQUITY:
Share capital ............................................. 43,546
Retained earnings ......................................... 8,681
-------
Total stockholders' equity ........................ 52,227
-------
Total liabilities and stockholders' equity ........ $97,989
=======
</TABLE>
<PAGE> 19
RAILINK LTD.
CONSOLIDATED STATEMENTS OF INCOME
(IN CANADIAN DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1998 1999
----------- -----------
(in thousands)
<S> <C> <C>
OPERATING REVENUES:
Transportation ...................... $16,246 $ 24,042
Other ............................... 1,099 1,561
------- --------
Total operating revenue ..... 17,345 25,603
------- --------
OPERATING EXPENSES:
Transportation ...................... 9,968 15,040
General and administrative .......... 3,219 4,269
Depreciation and amortization ....... 2,130 2,683
------- --------
Total operating expenses .... 15,317 21,992
------- --------
Operating income ........ 2,028 3,611
INTEREST AND OTHER EXPENSES ............ 182 (847)
------- --------
Income before income taxes .......... 2,210 2,764
PROVISION FOR INCOME TAXES ............. 833 1,167
------- --------
Net income .............. $ 1,377 $ 1,597
======= ========
</TABLE>
<PAGE> 20
RAILINK LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN CANADIAN DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1998 1999
---------- --------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 1,377 $ 1,597
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ........................... 2,261 2,931
(Gain) loss on sale of properties ....................... 3 (12)
Deferred income taxes ................................... (843) (102)
Equity in income of affiliate ........................... (338) (403)
Net change in non-cash working capital .................. (423) (1,316)
-------- -------
Net cash provided by operating activities ....... 2,037 2,695
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ................. (34,756) (8,691)
Increase in investment in affiliate ....................... (2,793) --
Proceeds from sale of properties .......................... -- 81
Increase in deferred charges .............................. (1,338) (125)
-------- -------
Net cash used in investing activities ........... (38,887) (8,735)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issue of special warrants ................................. 17,372 --
Proceeds from issuance of long-term debt .................. 15,241 --
Principal payments on debt ................................ (4,176) (1,533)
Common stock repurchased .................................. -- (50)
-------- -------
Net cash provided by financing activities ....... 28,437 (1,583)
-------- -------
Net increase in cash ...................................... (8,413) (7,623)
Cash, beginning of period ................................. 15,814 5,753
-------- -------
Cash, end of period ....................................... $ 7,401 $(1,870)
======== =======
</TABLE>
<PAGE> 21
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
RailAmerica(a) Railink Ltd.(a) Adjustments Pro Forma
-------------- -------------- ------------ ---------
ASSETS
<S> <C> <C> <C> <C>
Cash ...................................... $ 15,386 $ 549 $ $ 15,935
Accounts and notes receivable ............. 27,395 7,347 34,742
Inventories ............................... 13,589 4,387 17,976
Other current assets ...................... 2,856 708 3,564
--------- -------- --------- --------
Total current assets ................. 59,226 12,991 -- 72,217
Property, plant and equipment, net ........ 245,540 48,175 10,222(b) 310,128
6,191(c)
Notes receivable, less current portion .... 1,301 -- 1,301
Investment in affiliates .................. 1,939 3,629 5,568
Excess of cost over net assets of
companies acquired ...................... 2,189 -- 2,189
Other assets .............................. 10,755 -- -- 10,755
--------- -------- --------- --------
Total assets ......................... $ 320,950 $ 64,795 $ 16,413 $402,158
========= ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt ...... $ 3,243 $ 4,333 $ (4,333)(b) $ 3,243
Current maturities of subordinated
debt .................................... 201 -- 201
Accounts payable .......................... 18,189 5,986 24,175
Accrued expenses .......................... 10,390 -- 10,390
--------- -------- --------- --------
Total current liabilities ............ 32,023 10,319 (4,333) 38,009
--------- -------- --------- --------
Long-term debt ............................ 81,753 20,749 36,650(b) 139,152
Subordinated debt ......................... 100,000 -- 100,000
Convertible debt .......................... 7,018 -- 13,362(b) 20,380
Other liabilities ......................... 18,764 -- 18,764
Deferred income taxes ..................... 7,443 (1,730) 6,191(c) 11,904
Minority interest ......................... 8,319 -- 8,319
Redeemable convertible preferred stock 10,740 -- -- 10,740
Stockholders' equity:
Common stock ......................... 12 -- 12
Additional paid in capital ........... 43,933 29,563 (29,563)(d) 43,933
Retained earnings .................... 12,729 5,894 (5,894)(d) 12,729
Accumulated other comprehensive
income ............................... 2,135 -- 2,135
Less treasury stock .................. (3,919) -- (3,919)
--------- -------- --------- --------
Total stockholders' equity........... 54,890 35,457 (35,457) 54,890
--------- -------- --------- --------
Total liabilities and
stockholders' equity ............... $ 320,950 $ 64,795 $ 16,413 $402,158
========= ======== ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
<PAGE> 22
Unaudited Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 1998
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
V/Line Freight RaiLink Pro Forma
RailAmerica(a) Corporation(b) Ltd.(a) Adjustments Pro Forma
------------- ------------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUE:
Transportation - railroad ..... $ 30,304 $ 62,830 $ 25,470 $ 16,548(c) $ 135,152
Transportation-motor carrier .. 4,252 -- -- -- 4,252
Manufacturing ................. 39,887 -- -- -- 39,887
Other ......................... 2,700 21,501 1,587 -- 25,788
-------- -------- -------- --------- ---------
Total operating revenue........ 77,143 84,331 27,057 16,548 205,079
-------- -------- -------- --------- ---------
OPERATING EXPENSES:
Transportation - railroad ..... 15,702 89,495 17,447 -- 122,644
Costs of goods sold -
manufacturing ............... 28,583 -- -- -- 28,583
Selling, general and
administrative .............. 12,399 -- 4,033 -- 16,432
Depreciation and amortization.. 3,379 2,337 3,024 4,742 (d) 13,384
(98)(e)
Motor Carrier ................. 4,438 -- -- -- 4,438
-------- -------- -------- --------- ---------
Total operating expenses .. 64,501 91,832 24,504 4,645 185,481
-------- -------- -------- --------- ---------
Operating income .......... 12,642 (7,501) 2,554 11,903 19,598
Interest and other expense ......... (4,934) (251) (421) (9,811)(f) (24,372)
(4,706)(g)
(4,249)(h)
Minority interest in income of
subsidiary ...................... (1,672) -- -- -- (1,672)
-------- -------- -------- --------- ---------
Income before income taxes .... 6,036 (7,752) 2,132 (6,863) (6,446)
Provision for income taxes .... 1,570 -- 887 (5,648)(i) (3,191)
-------- -------- -------- --------- ---------
Net (loss) income.............. $ 4,466 $ (7,752) $ 1,245 $ (1,215) $ (3,255)
======== ======== ======== ========= =========
Weighted average shares outstanding:
Basic ......................... 9,553 1,415(j) 10,968
===== ===== ======
Diluted ....................... 10,307 661(k) 10,968
===== ===== ======
Earnings per share - Basic ......... $ 0.47 $ (0.24)
===== ======
Earnings per share - Diluted ....... $ 0.44 $ (0.24)
===== ======
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
<PAGE> 23
Unaudited Pro Forma Consolidated Statement of Income
for the Six Months Ended June 30, 1999
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
V/Line Freight
RailAmerica Corporation Railink Ltd. Pro Forma
(a) (b) (a) Adjustments Pro Forma
------------ ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUE:
Transportation - railroad ......... $ 34,846 $ 24,302 $ 16,142 $ 5,747 (c) $ 81,036
Manufacturing ..................... 22,956 -- -- -- 22,956
Other ............................. 3,468 4,529 1,048 -- 9,045
-------- -------- -------- ------- -----------
Total operating revenue ........ 61,270 28,831 17,190 5,747 113,037
-------- -------- -------- ------- -----------
OPERATING EXPENSES:
Transportation - railroad ......... 21,787 31,291 10,098 -- 63,176
Costs of goods sold - manufacturing 16,992 -- -- -- 16,992
Selling, general and administrative 9,606 -- 2,866 -- 12,472
Depreciation and amortization ..... 3,237 1,230 1,801 1,206 (d) 7,258
(216)(e)
-------- -------- -------- ------- -----------
Total operating expenses ............. 51,622 32,521 14,765 809 99,898
-------- -------- -------- ------- -----------
Operating income ............. 9,648 (3,690) 2,424 4,757 13,139
Interest and other expense ........... (3,375) (234) (566) (3,423)(f) (11,369)
(2,309)(g)
(1,461)(h)
Minority interest in income of
subsidiary ........................ (381) -- -- -- (381)
-------- -------- -------- ------- -----------
Income before income taxes ........... 5,892 (3,924) 1,858 (2,437) 1,390
Provision for income taxes ........... 1,941 -- 783 (2,466)(i) 259
-------- -------- -------- ------- -----------
Net income ................... $ 3,951 $ (3,924) $ 1,075 $ (29) $ 1,131
======== ======== ======== ======= =========
Weighted average shares outstanding:
Basic ........................... 10,617 520 (j) 11,137
======== ======= =========
Diluted ......................... 11,432 92 (k) 11,524
======== ======= =========
Earnings per share - Basic ........... $ 0.32 $ 0.08
======== =========
Earnings per share - Diluted ......... $ 0.31 $ 0.07
======== =========
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET:
(a) Represents the historical balance sheet at June 30, 1999.
(b) Reflects allocation of the purchase price, inclusive of estimated
costs, and the debt used to fund the purchase of RaiLink Ltd. as
follows:
Revolving line of credit.................... $48.6 Million
Convertible debt............................ $13.3 Million
Existing debt assumed....................... $8.8 Million
-----
$70.7 Million
=====
(c) Reflects an increase in deferred income taxes due to the write-up of
the property, plant and equipment based upon the purchase price
allocation of RaiLink Ltd.
(d) Reflects elimination of RaiLink Ltd.'s old equity accounts.
STATEMENT OF INCOME:
(a) Reflects the historical consolidated statement of income for the
twelve months ended December 31, 1998 and six months ended June 30,
1999.
(b) Reflects the historical statement of income for the twelve months
ended December 31, 1998 and four months ended April 30, 1999.
(c) Reflects revenue from track access fees at V/Line Freight Corporation
based upon the kilometers traveled times the agreed upon rate from
other railroads with access to Freight Victoria tracks.
(d) Reflects the increased depreciation and amortization due to the
revaluation of V/Line Freight's property, plant and equipment and
infrastructure lease. The assets are being depreciated or amortized
over the following lives:
ESTIMATED
USEFUL LIFE
-----------
Infrastructure lease........................ 45 Years
Locomotives and railcars.................... 15 Years
Other Equipment............................. 10 Years
Furniture and fixtures...................... 10 Years
(e) Reflects the decreased depreciation and amortization due to the
revaluation of RaiLink Ltd.'s property, plant and equipment. The
assets are being depreciated or amortized over the following estimated
useful lives:
<PAGE> 25
ESTIMATED
USEFUL LIFE
-----------
Track.............................. 30 years
Leaseholds......................... 20 years
Locomotives, railcars and equipment 15 years
Other equipment.................... 10 years
Vehicles........................... 3 years
(f) Reflects the increased interest expense on the V/Line Freight
acquisition from a bridge loan and convertible debt issued less the
elimination of debt on liabilities not assumed and interest earned on
excess cash. The interest rates and debt balances are as follows:
<TABLE>
<CAPTION>
Interest Expense
-----------------------------
Interest Beginning December 31, June 30,
Rate Principal Amount 1998 1999
------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Bridge loan ........................... 10.65% $100.0 million $ 10,249,000 $ 3,719,000
Convertible debt ...................... 6.00% $ 6.3 million 378,000 126,000
Excess cash ........................... 5.00% $ 11.3 million (565,000) (188,000)
------------ -----------
$ 10,062,000 $ 3,657,000
============ ===========
</TABLE>
(g) Reflects the increased interest expense on the RaiLink Ltd.
acquisition from borrowing on the Company's revolver and convertible
debt issued in a private placement. The interest rates and debt
balances are as follows for the six months ended June 30, 1999:
<TABLE>
<CAPTION>
Interest Beginning Interest
Rate Principal Amount Expense
------- ---------------- ----------
<S> <C> <C> <C>
Revolving line of credit ..... 8.30% $48.6 Million $2,016,000
Convertible debt ............. 8.00% $13.3 Million 563,000
Existing debt assumed ........ various $8.8 Million 287,000
----------
$2,866,000
==========
</TABLE>
The interest rates and debt balances are as follows for the year ended
December 31, 1998:
<TABLE>
<CAPTION>
Interest Beginning Interest
Rate Principal Amount Expense
---- ---------------- -------
<S> <C> <C> <C>
Revolving line of credit 8.30% $48.6 Million $4,033,000
Convertible debt ....... 8.00% $13.3 Million 1,125,000
Existing debt assumed .. 6.50% $ 4.0 Million 258,000
----------
$5,416,000
==========
</TABLE>
(h) Reflects the amortization of loan costs related to the V/Line Freight
acquisition financing.
(i) Reflects the income tax effect to the pro forma adjustments at an
assumed income tax rate of 36% for V/Line Freight and 44.4% for
RaiLink.
<PAGE> 26
PER SHARE DATA:
(j) The weighted average shares-basic gives effect to the 1.4 million
shares issued by the Company in a private placement to partially fund
the V/Line Freight acquisition.
(k) The weighted average shares-diluted gives effect to three private
placements, which occurred during 1999, as if the occurred at the
beginning of the respective period.
(1) 464,400 shares of redeemable convertible preferred stock with
a $25 liquidation value and a conversion price of $8.25.
(2) 1.4 million shares of Common Stock.
(3) $13.3 million of 6% junior convertible subordinated
debentures, convertible at $10 per share.
Pro forma net income (loss) per share is calculated as follows:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1998 June 30, 1999
----------------- -------------
<S> <C> <C>
Net income (loss) ..................................... $ (3,255) $ 1,390
Preferred stock dividends and accretion ............... (1,064) (532)
-------- --------
Income available to common stockholders
(basic) ............................................. (4,319) 858
Interest from convertible debt ........................ -- * -- *
Preferred stock dividends and accretion ............... -- * -- *
-------- --------
Income available to common stockholders
(diluted) ........................................... $ (4,319) $ 858
======== ========
Weighted average shares outstanding (basic)............ 10,968 11,137
Assumed exercise of options and warrants
..................................................... -- * 387
Assumed conversion of convertible
securities .......................................... -- * -- *
-------- --------
Weighted average shares outstanding
(diluted) ........................................... 10,968 11,524
======== ========
</TABLE>
* Convertible securities, options and warrants are anti-dilutive so they
are excluded from the computation.
