<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
------------------
Commission File No. 0-20618
-------
RAILAMERICA, INC.
------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 65-0328006
--------- ---------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification Number)
5300 BROKEN SOUND BLVD, N.W., BOCA RATON, FLORIDA 33487
--------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(561) 994-6015
---------------
(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 [X] 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 - 18,623,320 shares as of November 13, 2000
<PAGE> 2
RAILAMERICA, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2000
PAGE NO.
--------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - September 30, 2000 and
December 31, 1999 1
Consolidated Statements of Income - For the three and nine
months ended September 30, 2000 and 1999 2
Consolidated Statement of Stockholders' Equity - For the
nine months ended September 30, 2000 3
Consolidated Statements of Cash Flows - For the nine
months ended September 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 3 Markeet Risk Disclosure 26
PART II OTHER INFORMATION
Item 1 Legal Proceedings 28
Item 6 Exhibits and Reports on Form 8-K 28
Signatures
<PAGE> 3
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 8,647 $ 11,598
Accounts and notes receivable 60,760 40,857
Inventories 10,321 9,929
Other current assets 8,921 3,500
Net assets of discontinued operation 18,588 14,996
--------- ---------
Total current assets 107,237 80,880
Property, plant and equipment, net 709,523 347,617
Investment in affiliates 4,886 4,667
Other assets 26,234 10,765
--------- ---------
Total assets $ 847,880 $ 443,929
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 18,768 $ 17,811
Current portion of asset sale bridge loan 39,251 --
Accounts payable 45,215 23,732
Accrued expenses 38,141 15,379
--------- ---------
Total current liabilities 141,375 56,922
Long-term debt, less current maturities 361,406 145,016
Subordinated debt 120,439 101,968
Convertible subordinated debt 20,496 20,481
Other liabilities 12,329 16,374
Deferred income taxes 61,261 15,382
Minority interest 10,696 9,489
--------- ---------
728,002 365,632
--------- ---------
Commitments and contingencies
Redeemable convertible preferred stock, $0.01 par value,
$25 liquidation value 6,678 8,830
--------- ---------
Stockholders' equity:
Common stock, $0.001 par value 20 13
Additional paid-in capital 121,036 52,305
Retained earnings 22,267 18,171
Accumulated other comprehensive (loss) income (23,623) 3,486
Treasury stock (1,027,839 and 716,589 shares,
respectively, at cost) (6,500) (4,508)
--------- ---------
Total stockholders' equity 113,200 69,467
--------- ---------
Total liabilities and stockholders' equity $ 847,880 $ 443,929
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
1
<PAGE> 4
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the three and nine months ended September 30, 2000 and 1999
(in thousands, except earnings per share)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenue $ 90,970 $ 39,678 $ 268,017 $ 80,055
--------- --------- --------- ---------
Operating expenses:
Transportation 50,460 25,465 152,563 48,934
Selling, general and administrative 15,481 4,572 44,231 12,378
Acquisition related costs 1,492 -- 3,416 --
Net (gain) loss on sale and impairment of assets (950) (12) (8,735) 373
Depreciation and amortization 7,650 3,051 22,034 5,771
--------- --------- --------- ---------
Total operating expenses 74,133 33,076 213,509 67,456
--------- --------- --------- ---------
Operating income 16,837 6,602 54,508 12,599
Interest expense, net (13,599) (4,609) (36,661) (9,140)
Amortization of financing costs (1,172) (1,348) (3,810) (2,336)
Minority interest and other income (expense) 141 (2,280) (2,095) (663)
--------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes 2,207 (1,635) 11,942 460
Provision (benefit) for income taxes 363 (3,913) 3,399 (3,191)
--------- --------- --------- ---------
Income from continuing operations 1,844 2,278 8,543 3,651
Discontinued operations:
(Loss) income from operations of discontinued
segment (net of applicable income taxes of
($415), $518, ($708) and $1,736,
respectively) (715) 1,009 (827) 3,587
--------- --------- --------- ---------
Income before extraordinary item 1,129 3,287 7,716 7,238
Extraordinary loss from early extinguishment
of debt (net of tax) (892) -- (3,108) --
--------- --------- --------- ---------
Net income $ 237 $ 3,287 $ 4,608 $ 7,238
========= ========= ========= =========
=========================================================================================================================
Net income available to common stockholders $ 71 $ 3,022 $ 4,096 $ 6,466
========= ========= ========= =========
Basic earnings per common share
Continuing operations $ 0.09 $ 0.17 $ 0.45 $ 0.26
Discontinued operations (0.04) 0.09 (0.05) 0.33
Extraordinary item (0.05) -- (0.17) --
--------- --------- --------- ---------
Net income $ 0.00 $ 0.26 $ 0.23 $ 0.59
========= ========= ========= =========
Diluted earnings per common share
Continuing operations $ 0.09 $ 0.16 $ 0.43 $ 0.25
Discontinued operations (0.04) 0.07 (0.04) 0.28
Extraordinary item (0.05) -- (0.15) --
--------- --------- --------- ---------
Net income $ 0.00 $ 0.23 $ 0.23 $ 0.53
========= ========= ========= =========
Weighted average common shares outstanding
Basic 18,555 11,466 17,847 11,018
========= ========= ========= =========
Diluted 18,752 14,103 20,404 12,789
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
2
<PAGE> 5
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the nine months ended September 30, 2000
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Stockholders' Equity
---------------------------------------------------------------------------------------------
Number of Additional Other
Shares Par Paid-in Retained Comprehensive Treasury
Issued Value Capital Earnings Income Stock Total
---------- ---------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 12,611 $ 13 $ 52,305 $ 18,171 $ 3,486 $ (4,508) $ 69,467
Net income -- -- -- 4,608 -- -- 4,608
Cumulative translation
adjustments -- -- -- -- (27,109) -- (27,109)
---------
Total comprehensive
income (22,501)
---------
Issuance of common stock 6,652 7 60,910 -- -- -- 60,917
Exercise of stock options 37 -- 177 -- -- -- 177
Conversion of redeemable
convertible preferred
stock 291 -- 2,242 -- -- -- 2,242
Conversion of convertible
subordinated debentures 36 332 332
Warrants issued 5,070 5,070
Purchase of treasury stock -- -- -- -- -- (1,992) (1,992)
Preferred stock dividends
and accretion -- -- -- (512) -- -- (512)
--------- --------- --------- --------- --------- --------- ---------
Balance, September 30, 2000 19,627 $ 20 $ 121,036 $ 22,267 $ (23,623) $ (6,500) $ 113,200
========= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 6
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2000 and 1999
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 16,970 $ 17,745
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (26,575) (36,212)
Proceeds from sale of properties 13,874 117
Acquisitions, net of cash acquired (149,969) (8,453)
Cash held in discontinued operations 27 --
Deferred acquisition costs and other (2,409) (79)
--------- ---------
Net cash used in investing activities (165,052) (44,627)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 354,771 159,319
Principal payments on long-term debt (186,910) (136,694)
Sale of convertible preferred stock -- 4,095
Sale of common stock -- 11,868
Proceeds from exercise of stock options 177 572
Preferred stock dividends paid (288) (411)
Purchase of treasury stock (1,992) (1,040)
Deferred financing costs paid (19,608) (2,663)
--------- ---------
Net cash provided by financing activities 146,150 35,046
--------- ---------
Net (decrease) increase in cash (1,931) 8,164
Effect of exchange rates on cash (1,020) (25)
Cash, beginning of period 11,598 5,760
--------- ---------
Cash, end of period $ 8,647 $ 13,899
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 7
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 of a recurring nature, and disclosures
necessary to present fairly the financial position of the Company as of
September 30, 2000 and December 31, 1999, and the results of operations
and cash flows for the three and nine months ended September 30, 2000
and 1999. The results of operations for the three and nine months ended
September 30, 2000 are not necessarily indicative of the results to be
expected for the full year.
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 1999 annual report on Form 10-K. Capitalized
terms used but not otherwise defined herein have the meanings set forth
in the Company's 1999 annual report on Form 10-K. Certain prior period
amounts have been reclassified to conform with the current period
presentation.
2. EARNINGS PER SHARE:
For the three and nine months ended September 30, 2000 and 1999, basic
earnings per share is calculated using the weighted average number of
common shares outstanding during the period. Income from continuing
operations is reduced by preferred stock dividends and accretion for
the basic earnings per share computation.
For the nine months ended September 30, 2000 and the three and nine
months ended September 30, 1999, diluted earnings per share is
calculated using the sum of the weighted average number of common
shares outstanding plus potentially dilutive common shares arising out
of stock options, warrants and convertible debt. Options and warrants
totaling 5.1 million were excluded from the diluted earnings per share
calculation for the three and nine months ended September 30, 2000 as
the exercise price of these options and warrants were greater than the
average market price of the Common Stock. Assumed conversion of the
redeemable convertible preferred stock was anti-dilutive for all
periods reported. The $22.5 million of convertible debt (2.25 million
shares) is anti-dilutive for the three months ended September 30, 2000
and has been excluded from the weighted average shares outstanding for
diluted earnings per share.
5
<PAGE> 8
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. EARNINGS PER SHARE, continued
The following is a summary of the income from continuing operations
available for common stockholders and weighted average shares (in
thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- ---------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income from continuing operations $ 1,844 $ 2,278 $ 8,543 $ 3,651
Preferred stock dividends and accretion (166) (265) (516) (772)
-------- -------- -------- --------
Income from continuing operations available
to common stockholders (basic) 1,678 2,013 8,027 2,879
Interest on convertible debt -- 213 271 282
Preferred stock dividends and accretion -- -- -- --
-------- -------- -------- --------
Income from continuing operations available
to common stockholders (diluted) $ 1,678 $ 2,226 $ 8,298 $ 3,161
======== ======== ======== ========
Weighted average shares outstanding (basic) 18,555 11,466 17,847 11,018
Assumed conversion of options and warrants 197 433 193 403
Assumed conversion of convertible securities -- 2,204 2,364 1,368
-------- -------- -------- --------
Weighted average shares outstanding (diluted) 18,752 14,103 20,404 12,789
======== ======== ======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following as of September
30, 2000 and December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Land $132,634 $ 34,345
Buildings and improvements 13,012 8,683
Railroad track and improvements 416,201 186,670
Locomotives, transportation and other equipment 181,955 135,309
-------- --------
743,802 365,007
Less accumulated depreciation 34,279 17,390
-------- --------
$709,523 $347,617
======== ========
</TABLE>
In February 2000, the Company acquired RailTex, Inc. This acquisition
resulted in approximately $390 million of the fixed asset additions.
6
<PAGE> 9
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. ACQUISITIONS AND DISPOSITIONS:
On February 4, 2000, the Company acquired RailTex, Inc. for $128
million in cash, assumption of $105.3 million in debt and 6.6 million
shares of the Company's Common Stock, valued at $60.9 million. RailTex,
the operator of 25 railroads over 4,100 miles of rail lines in North
America, became a wholly-owned subsidiary of the Company. This
transaction was partially financed through the issuance of new debt
(see Note 6).
The acquisition of RailTex has been accounted for as a purchase and its
results have been consolidated since the acquisition date. The final
purchase price allocation was based upon the fair value of the net
assets acquired. As part of the purchase price and in accordance with
EITF 95-3, "Recognition of Liabilities in Connection with a Purchase
Business Combination", the Company recorded liabilities of $11.2
million which related to severance and change of control payments to
former RailTex employees.
The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition of RailTex had occurred at
the beginning of the periods presented and does not purport to be
indicative of what would have occurred had the acquisition been made as
of that date or results which may occur in the future (in thousands
except per share data). The nine months ended September 30, 1999 also
include the purchases of Freight Australia, which occurred in April
1999, RaiLink, Ltd., which occurred in July 1999 and Toledo, Peoria and
Western Railroad, which occurred in August 1999 as if these
acquisitions had occurred on January 1, 1999.
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating revenue $282,091 $276,746
Income from continuing operations $ 10,643 $ 7,372
Net income $ 6,708 $ 10,959
Earnings per share - continuing operations
Basic $ 0.56 $ 0.36
Diluted $ 0.52 $ 0.34
Earnings per share - net income
Basic $ 0.34 $ 0.57
Diluted $ 0.33 $ 0.52
</TABLE>
In August 2000, the Company sold two Minnesota railroads for $4.65
million, comprised of $4.3 million in cash and $0.35 million in the
form of a secured promissory note. The Company recognized a $0.9
million gain on the transaction.
In September 2000, the Company sold approximately 200 miles of track in
Alberta, Canada for approximately $4.5 million, which approximated book
value.
In the first nine months of 2000, the Company wrote-off $3.4 million of
costs related to its February 2000 acquisition of RailTex and its bid
for Westrail, an Australian railroad.
7
<PAGE> 10
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. OTHER ASSETS:
Other assets consist of the following as of September 30, 2000 and
December 31, 1999 (in thousands):
2000 1999
------- -------
Deferred loan costs $17,649 $ 6,657
Notes receivable 1,765 2,123
Deposits and other 6,820 1,985
------- -------
$26,234 $10,765
======= =======
6. LONG-TERM DEBT:
In August 2000, RailAmerica Transportation Corp., the Company's
wholly-owned subsidiary, sold units consisting of $130.0 million of
12-7/8% senior subordinated notes due 2010 and warrants to purchase
1,411,414 shares of the Company's common stock in a private offering,
for gross proceeds of $122.2 million after deducting the initial
purchasers' discount. The net proceeds received from the issuance of
the units were used to repay all $95.0 million of subordinated bridge
notes issued by RailAmerica Transportation, $20.0 million of the asset
sale bridge notes issued by Palm Beach Rail Holding, Inc., the
Company's wholly-owned subsidiary, and approximately $1.8 million of
term loans under the Company's senior credit facilities. All of the
Company's U.S. subsidiaries, excluding Kalyn/Siebert I, Inc. are
guarantors of the senior subordinated notes.
In February 2000, the Company entered into a credit agreement and two
bridge note facilities in connection with the acquisition of RailTex
and the refinancing of most of the Company's and RailTex's existing
debt. The credit agreement provides (1) a $125 million Term A loan,
bearing interest at LIBOR plus 3.00% (2) a $205 million Term B loan,
bearing interest at LIBOR plus 3.25%, and (3) a $50 million revolving
credit facility which includes $30 million of U.S. dollar denominated
loans, $10 million of Canadian dollar denominated loans and $10 million
of Australian dollar denominated loans with an interest rate of LIBOR
plus 3.00%. In May 2000, the Company entered into interest rate swaps
which lock in a blended rate of 10.35% on $212.5 million of this debt
for a three-year period. All of the stock of all the Company's U.S.
subsidiaries, excluding Kalyn/Siebert I, Inc. (a discontinued
operation), and 65% of the stock of the Company's foreign subsidiaries
serve as collateral for the credit facilities.
The Term A loan requires principal payments of 5% in 2000, 10% in 2001,
15% in 2002, 20% in 2003, and 25% in both 2004 and 2005. The Term B
loan requires principal payments of 1% per year through 2005 and a
balloon maturity at December 31, 2006. The revolving loan matures on
December 31, 2005 and the outstanding balance at September 30, 2000 was
$19.4 million.
8
<PAGE> 11
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. LONG-TERM DEBT, continued
The Company's borrowings include covenants which impose financial and
operating restrictions on the Company's ability to, among other things:
incur more debt; pay dividends, redeem or repurchase its common stock
or make other distributions; make acquisitions or investments; use
assets as collateral in other transactions; enter into transactions
with affiliates; merge or consolidate with others; dispose of assets or
use asset sale proceeds; create liens on its assets; and extend credit.
The facilities also contain financial covenants that require the
Company to meet a number of financial ratios and tests.
At the time of its purchase of RailTex, the Company, through its
wholly-owned subsidiary RailAmerica Transportation Corp., issued $95
million of subordinated bridge notes, bearing interest at an initial
rate of 13% per annum, and increasing every three months based on the
highest specified rates. The subordinated bridge note was fully paid
off in August 2000. In addition, the Company, through its wholly-owned
subsidiary Palm Beach Rail Holding, Inc. issued $55 million of asset
sale bridge notes. These notes mature on February 4, 2001 and have an
initial interest rate of 15% per annum, which rate increased on August
4, 2000 and November 4, 2000 based on the highest of specified rates
(15.75% at November 4, 2000). The asset sale bridge notes are
collateralized by the assets of Kalyn/Siebert. The asset sale bridge
notes are included in current liabilities and the related interest
expense is included in discontinued operations as the proceeds from the
sale of Kalyn/Siebert are required to be used to pay down the asset
sale bridge notes. $20 million of these notes were repaid in August
2000. On November 10, 2000, the Company executed a definitive agreement
to sell KSI for $32.5 million. The transaction, which is expected to
close within 30 days, is subject to regulatory approval and other
customary closing conditions. On November 14, 2000, the Company
announced it had entered into a letter of intent to sell KSC.
In connection with the issuance of the asset sale bridge notes, the
purchasers of such notes are entitled to receive warrants to purchase
common stock at an exercise price of $7.75 per share commencing in
August 2000 to the extent the asset sale bridge notes are then
outstanding. The maximum number of shares issuable upon exercise of
these warrants is 0.6 million, subject to specified anti-dilution
adjustments. In August 2000, 0.3 million of the warrants were issued,
and in November 2000, 0.15 million of the warrants were issued.
In connection with the February 2000 debt refinancing, including the
refinancing of RailTex's debt, the Company recorded an extraordinary
charge of $2.2 million for early extinguishment of debt, net of income
taxes, in the first quarter of 2000. In connection with the issuance of
the subordinated debt and the repayment of the subordinated bridge note
and a portion of the asset sale bridge notes, the Company recorded an
extraordinary charge of $0.9 million for early extinguishment of debt,
net of income taxes, in the third quarter of 2000.
9
<PAGE> 12
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the first nine months of 2000, $2.5 million of redeemable
convertible preferred stock and $0.4 million of convertible
subordinated debentures were converted into the Company's common stock.
In connection with the RailTex acquisition, the Company refinanced $223
million of its debt and $105.3 million of debt that it assumed from
RailTex using the credit facilities described in Note 6. The Company
also issued 6.6 million shares of its common stock, valued at $60.9
million as part of the purchase price.
In August 2000, the Company sold two Minnesota railroads. The Company
received a $0.35 million note as a portion of the proceeds. In
September 2000, the Company sold approximately 200 miles of track in
Alberta, Canada, and the purchaser assumed debt of $4.3 million.
8. COMMON STOCK:
The Company's common stock issued and outstanding as of September 30,
2000 was 19,626,703 and 18,598,864, respectively, and 12,610,725 and
11,894,136, respectively, as of December 31, 1999. There are 60,000,000
shares authorized.
On August 24, 1998, the Company's Board of Directors authorized a share
repurchase program to buy back up to 1,000,000 shares of its common
stock (limited to $2 million per year pursuant to the Company's credit
facilities). Purchases will be made from time to time in the open
market and will continue until all of such shares are purchased or
until the Company determines to terminate the repurchase program.
During the year 2000, the Company has purchased 311,250 shares with a
total cost of $2.0 million.
In June 2000, the Company engaged JW Genesis to assist the Company's
Board of Directors in evaluating the issuance of the subordinated debt,
and issued three-year warrants to purchase 150,000 shares of the
Company's common stock to JW Genesis. Of these warrants, 75,000 are at
an exercise price of $5.50 and 75,000 are at an exercise price of
$6.50.
10
<PAGE> 13
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. DISCONTINUED OPERATION:
In November 1999, the Company adopted a plan to sell its trailer
manufacturing operations, Kalyn/Siebert. This business has been
accounted for as a discontinued operation and the results of operations
have been excluded from continuing operations in the consolidated
statements of income for all periods presented. On November 13, 2000,
the Company executed a definitive agreement to sell KSI for $32.5
million. On November 14, 2000 the Company announced it had entered into
a letter of intent to sell KSC.
Total revenue for this business was $29.2 million and $33.9 million for
the nine months ended September 30, 2000 and 1999, respectively. Income
(loss) before income taxes for this business was ($1.5 million) and
$5.3 million for the nine months ended September 30, 2000 and 1999,
respectively. Interest of $4.3 million was allocated to the
discontinued operations for the first nine months of 2000 relating to
the asset sale bridge notes. Total assets in this business as of
September 30, 2000 and December 31, 1999 were $27.4 million and $28.8
million, respectively. Total liabilities in this business as of
September 30, 2000 and December 31, 1999 were $46.0 million, which
included the asset sale bridge note, and $13.9 million, respectively.
10. SEGMENT INFORMATION
The Company's continuing operations have been classified into two
segments: North American rail transportation and International rail
transportation. The North American rail transportation segment includes
the operations of the Company's railroad subsidiaries in the United
States and Canada and the international rail transportation segment
includes the operations of the Company's railroad subsidiaries in Chile
and Australia. Because the Company's trailer manufacturing segment was
classified as a discontinued operation its net assets are included in
corporate and other.
Segment information for the nine and three months ended September 30,
2000 and 1999 follows (in thousands):
NINE MONTHS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
North American International Corporate and
Consolidated Railroads Railroads Other
------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 268,017 $ 172,232 $ 94,530 $ 1,255
Depreciation and amortization $ 22,034 $ 15,764 $ 5,200 $ 1,070
Operating income (loss) $ 54,508 $ 45,169 $ 19,730 $ (10,391)
Total assets $ 847,880 $ 540,273 $ 112,293 $ 195,314
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1999:
<TABLE>
<CAPTION>
North American International Corporate and
Consolidated Railroads Railroads Other
------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 80,055 $ 25,876 $ 52,691 $ 1,488
Depreciation and amortization $ 5,771 $ 2,096 $ 3,008 $ 667
Operating income (loss) $ 12,599 $ 4,916 $ 10,476 $ (2,793)
Total assets $406,147 $164,766 $209,035 $ 32,346
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 2000:
<TABLE>
<CAPTION>
North American International Corporate and
Consolidated Railroads Railroads Other
------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 90,970 $ 59,690 $ 30,930 $ 350
Depreciation and amortization $ 7,650 $ 5,426 $ 1,739 $ 485
Operating income (loss) $ 16,837 $ 12,895 $ 5,086 $ (1,144)
Total assets $847,880 $540,217 $112,748 $194,915
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999:
<TABLE>
<CAPTION>
North American International
Consolidated Railroads Railroads Manufacturing Other
------------ -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue $ 39,678 $ 14,422 $ 26,930 -- $ (1,674)
Operating income (loss) $ 6,602 $ 2,296 $ 5,345 -- $ (1,039)
Identifiable assets $406,147 $164,766 $209,035 -- $ 32,346
Depreciation and amortization $ 3,051 $ 1,076 $ 1,751 -- $ 224
</TABLE>
11
<PAGE> 14
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
11. 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 tax benefits recognized in North America being at higher rates than
the tax provisions in Chile and Australia as well as the Company's
valuation allowance on Ferronor's net operating loss carryforward.
12. CONTINGENCIES
In the second quarter of 2000, certain parties filed property damage
claims totaling approximately CDN$50 million against the Mackenzie
Northern Railway and others in connection with fires that allegedly
occurred in 1998. The Company intends to vigorously defend these
claims, and has insurance coverage to approximately CDN$20 million to
cover these claims. Because the actions are in their early stages and
the claimants have not yet asserted the legal basis for their claims,
the Company is unable to assess the merits of the claims; however, our
insurer has reserved CDN$15 million for these matters. A loss, if any,
in excess of our insurance policy coverage may adversely affect the
Company's cash flow and financial condition.
12
<PAGE> 15
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
13. GUARANTOR FINANCIAL STATEMENT INFORMATION
Set forth are condensed Consolidating Financial Statements of the
Company (Parent), the Guarantor Subdiaries, Non Guarantor Subsidiaries
and the Company on a consolidated basis.
RAILAMERICA, INC.
Consolidating Balance Sheet
At September 30, 2000
<TABLE>
<CAPTION>
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash $ -- $ 51 $ 8,596 $ -- $ 8,647
Accounts and notes receivable 1,732 33,053 27,674 (1,699) 60,760
Inventories -- 4,281 6,040 -- 10,321
Other current assets 844 5,347 2,730 -- 8,921
Net assets of discontinued operation -- -- 18,588 -- 18,588
--------- --------- --------- --------- ---------
Total current assets 2,576 42,732 63,628 (1,699) 107,237
Property, plant and equipment, net 663 425,583 283,277 -- 709,523
Investment in affiliates -- -- 4,886 -- 4,886
Other assets 3,889 19,027 3,318 -- 26,234
Investment in and advances to affiliates 114,619 411,322 (142,210) (383,731) --
--------- --------- --------- --------- ---------
Total assets $ 121,747 $ 898,664 $ 212,899 $(385,430) $ 847,880
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ -- $ 13,356 $ 7,111 $ (1,699) $ 18,768
Current portion of asset sale bridge -- -- 39,251 -- 39,251
Accounts payable 1,068 23,984 20,163 -- 45,215
Accrued expenses 340 22,723 15,078 -- 38,141
--------- --------- --------- --------- ---------
Total current liabilities 1,408 60,063 81,603 (1,699) 141,375
Long-term debt, less current maturities -- 340,691 20,715 -- 361,406
Subordinated debt -- 117,340 3,099 -- 120,439
Convertible subordinated debt 20,496 -- -- -- 20,496
Other liabilities -- 226 12,103 -- 12,329
Deferred income taxes (6,709) 63,167 4,803 -- 61,261
Minority interest -- -- 5,281 5,415 10,696
Redeemable convertible preferred stock 6,678 -- -- -- 6,678
Stockholders' equity:
Common stock 20 876 27,893 (28,769) 20
Additional paid-in capital 121,035 315,374 45,004 (360,377) 121,036
Retained earnings (14,681) 771 35,762 -- 21,852
Accumulated other comprehensive income -- (259) (23,364) -- (23,623)
Treasury stock (6,500) -- -- -- (6,500)
--------- --------- --------- --------- ---------
Total stockholders' equity 99,874 317,177 85,295 (389,146) 113,200
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 121,747 $ 898,664 $ 212,899 $(385,430) $ 847,880
========= ========= ========= ========= =========
</TABLE>
13
<PAGE> 16
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
13. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Statement of Income
For the Nine Months Ended September 30, 2000
<TABLE>
<CAPTION>
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating revenue $ 269 $ 141,813 $ 126,204 $ (269) $ 268,017
--------- --------- --------- --------- ---------
Operating expenses:
Transportation -- 74,465 78,098 -- 152,563
Selling, general and administrative 6,663 25,945 11,892 (269) 44,231
Acquisition related expenses 208 3,208 -- -- 3,416
Gain on sale and impairment of assets (net) -- (9,972) 1,237 -- (8,735)
Depreciation and amortization 95 13,988 7,951 -- 22,034
--------- --------- --------- --------- ---------
Total operating expenses 6,966 107,634 99,178 -- 213,509
--------- --------- --------- --------- ---------
Operating income (6,697) 34,179 27,026 -- 54,058
Interest expense (929) (25,779) (9,953) -- (36,661)
Amortization of financing costs (591) (3,219) -- -- (3,810)
Minority interest and other income (expense) 9 (595) (1,509) -- (2,095)
--------- --------- --------- --------- ---------
Income from continuing
operations before income taxes (8,208) 4,586 15,564 -- 11,942
Provision for income taxes (3,442) 1,584 5,257 -- 3,399
--------- --------- --------- --------- ---------
Income from continuing operations (4,766) 3,002 10,307 -- 8,543
Discontinued operations:
Loss from operations of discontinued
segment -- -- (827) -- (827)
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item (4,766) 3,002 9,480 -- 7,716
Extraordinary loss from early extinguishment
of debt (net of tax) (1,259) (956) (893) -- (3,108)
--------- --------- --------- --------- ---------
Net income $ (6,025) $ 2,046 $ 8,587 $ -- $ 4,608
========= ========= ========= ========= =========
</TABLE>
14
<PAGE> 17
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
13. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Statement of Cash Flow
For the Nine Months Ended September 30, 2000
<TABLE>
<CAPTION>
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ (9,279) $ 7,808 $ 18,441 $ -- $ 16,970
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (38) (10,765) (15,772) -- (26,575)
Proceeds from sale of properties -- 13,727 147 -- 13,874
Acquisitions, net of cash acquired -- (149,969) -- -- (149,969)
Cash held in discontinued operations -- -- 27 -- 27
Deferred acquisition costs and other (2,438) 29 -- -- (2,409)
--------- --------- --------- --------- ---------
Net cash used in investing activities (2,476) (146,978) (15,598) -- (165,052)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 986 346,433 7,352 -- 354,771
Principal payments on long-term debt (11,725) (173,132) (2,053) -- (186,910)
Disbursements/receipts on intercompany debt 24,553 (19,798) (4,755) -- --
Proceeds from exercise of stock options 177 -- -- -- 177
Preferred stock dividends paid (288) -- -- -- (288)
Purchase of treasury stock (1,992) -- -- -- (1,992)
Deferred financing costs paid (48) (18,052) (1,508) -- (19,608)
--------- --------- --------- --------- ---------
Net cash provided by financing activities 11,633 135,451 (964) -- 146,150
--------- --------- --------- --------- ---------
Net (decrease) increase in cash (92) (3,719) 1,879 -- (1,932)
Effect of exchange rates on cash -- -- (1,020) -- (1,020)
Cash, beginning of period 92 3,770 7,736 -- 11,598
--------- --------- --------- --------- ---------
Cash, end of period $ -- $ 51 $ 8,595 $ -- $ 8,646
========= ========= ========= ========= =========
</TABLE>
15
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
RailAmerica, Inc. (together with its consolidated subsidiaries, the
"Company" or "RailAmerica") is the largest owner and operator of short line
freight railroads in North America and a leading owner and operator of regional
freight railroads in Australia and Chile. RailAmerica owns, leases, operates or
has equity interests in, a diversified portfolio of 47 railroads with
approximately 12,000 miles of track located in the United States, Australia,
Canada and Chile. Through its diversified portfolio of rail lines, the Company
operates in numerous geographic regions with varying types of commodities
hauled. The Company believes that individual economic and seasonal cycles in
each region may partially offset each other. The Company recognizes railroad
transportation revenue after services are provided.
On February 4, 2000, the Company purchased RailTex, Inc. ("RailTex")
for $128 million in cash, assumption of $111 million in debt and 6.6 million
shares of the Company's common stock, valued at $60.9 million. RailTex owned and
operated 25 short line freight railroads with approximately 4,100 miles of track
concentrated in the southeastern, midwestern, Great Lakes and New England
regions of the United States and eastern Canada.
Set forth below is a discussion of the historical results of operations
for the Company's North American and international railroad operations, its
discontinued trailer manufacturing operations, and corporate overhead and other.
NORTH AMERICAN RAILROAD OPERATIONS
The Company's historical results of operations include the operations
of its acquired railroads from the following dates:
Name of Railroad
----------------
RaiLink properties (5 railroads) August 1, 1999
Toledo, Peoria and Western Railroad ("TPW") September 1, 1999
RailTex, Inc. (25 railroads) February 4, 2000
The Company sold two Minnesota railroads in August 2000. The results of
these railroads are included in operations through August 31, 2000.
Accordingly, the results of operations for the three and nine months
ended September 30, 2000 and 1999 are not comparable in various material
respects, and may not be indicative of the results which would have occurred had
all railroads been owned for all periods presented.
The following table sets forth the operating revenues and expenses (in
thousands) for the Company's North American railroad operations (which consist
of its U.S. and Canadian railroads) for the periods indicated.
16
<PAGE> 19
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
----------------------- -----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenue:
Transportation revenue $ 53,009 $ 10,865 $ 150,694 $ 21,570
Other revenue 6,756 1,503 21,538 3,933
--------- --------- --------- ---------
Total operating revenue 59,765 12,368 172,232 25,503
--------- --------- --------- ---------
Operating expenses:
Maintenance of way 6,586 1,689 18,461 3,394
Maintenance of equipment 2,235 628 9,472 1,093
Transportation 18,374 3,665 51,484 6,318
Equipment rental 4,057 1,139 11,588 3,093
Gain on sale of assets (950) -- (9,986) --
General and administrative 11,014 1,873 31,017 4,591
Depreciation and amortization 5,426 1,076 15,423 2,096
--------- --------- --------- ---------
Total operating expenses 46,742 10,070 127,459 20,585
--------- --------- --------- ---------
Operating income $ 13,023 $ 2,298 $ 44,773 $ 4,918
========= ========= ========= =========
</TABLE>
COMPARISON OF NORTH AMERICAN RAILROAD OPERATING RESULTS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999.
OPERATING REVENUES. Transportation revenue increased by $42.1 million,
or 388%, to $53.0 million for the three months ended September 30, 2000 from
$10.9 million for the three months ended September 30, 1999. North American
carloads totaled 217,617 for the three months ended September 30, 2000, an
increase of 169,503 compared to 48,114 carloads in the prior year period. The
increase was primarily due to the acquisitions of TPW, RaiLink and RailTex which
on a combined basis contributed $48.1 million in freight revenue and 209,622
carloads for the three months ended September 30, 2000 compared to $6.1 million
in freight revenue and 33,863 carloads for the three months ended September 30,
1999. The North American transportation revenue per carload increased to $244
from $215 primarily because the RaiLink properties, which were acquired July 31,
1999, represented a significant portion of the 1999 period carloads. These
properties haul traffic at a lower rate per car than the Company's other rail
lines. The Company's "same railroad" operating revenue and car loadings
decreased by 3% and 4%, respectively, from the three months ended September 30,
1999 compared to the three months ended September 30, 2000.
Other revenues increased by approximately $5.3 million, or 350%, to
$6.8 million for the three months ended September 30, 2000 from $1.5 million for
the three months ended September 30, 1999. Other revenues for the three months
ended September 30, 2000 and 1999 consist of car hire income, railroad lease and
rental income and other miscellaneous income. The increase was due primarily to
the acquisitions of RailTex, RaiLink and TPW which on a combined basis
contributed $6.1 million in other revenue for the three months ended September
30, 2000 compared to $0.4 million for the three months ended September 30, 1999.
OPERATING EXPENSES. Operating expenses increased by $36.6 million, or
364%, to $46.7 million for the three months ended September 30, 2000 from $10.1
million for the three months ended September 30, 1999. The increase was due to
the acquisitions of TPW, RaiLink and RailTex which contributed $46.1 million in
operating expenses for the three months ended September 30, 2000 compared to
$5.0 million for the three months ended September 30, 1999 offset by a $0.9
million gain on the sale of two Minnesota railroads. In addition there was a
slight decrease in operating expenses for the Company's "same railroad"
properties. Operating expenses, as a percentage of operating
17
<PAGE> 20
revenue, were 78.2% and 81.4% for the three months ended September 30, 2000 and
1999, respectively.
Due to the significant change in number of railroads operated from 1999
to 2000 it is difficult to access the dollar effect fuel prices have had on the
operating expenses from period to period. The Company estimates that the rising
fuel costs have increased the operating costs by approximately 2% for the 2000
periods.
COMPARISON OF NORTH AMERICAN RAILROAD OPERATING RESULTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999.
OPERATING REVENUES. Transportation revenue increased by $129.1 million,
or 599%, to $150.7 million for the nine months ended September 30, 2000 from
$21.6 million for the nine months ended September 30, 1999. North American
carloads totaled 670,643 for the nine months ended September 30, 2000, an
increase of 592,620 compared to 78,023 carloads in the prior year period. These
increases were primarily due to the acquisitions of TPW, RaiLink and RailTex
which on a combined basis contributed $136.2 million in freight revenue and
578,968 carloads for the nine months ended September 30, 2000 compared to $6.1
million in freight revenue and 33,863 carloads for the nine months ended
September 30, 1999. The North American transportation revenue per carload
decreased to $243 from $259 primarily because the acquired rail lines haul at a
lower rate per car than the Company's other rail lines. The Company's "same
railroad" operating revenue and car loadings both increased by 3% from the first
nine months of 1999 compared to the first nine months of 2000.
Other revenues increased by approximately $17.6 million, or 448%, to
$21.5 million for the nine months ended September 30, 2000 from $3.9 million for
the nine months ended September 30, 1999. Other revenues for the nine months
ended September 30, 2000 and 1999 consist of car hire income, railroad lease and
rental income and other miscellaneous income. The increase was due primarily to
the acquisitions of RailTex, RaiLink and TPW which on a combined basis
contributed $17.1 million in other revenue for the nine months ended September
30, 2000 compared to $0.4 million for the nine months ended September 30, 1999.
OPERATING EXPENSES. Operating expenses increased by $106.9 million, or
519%, to $127.5 million for the nine months ended September 30, 2000 from $20.6
million for the nine months ended September 30, 1999. The increase was due to
the acquisitions of TPW, RaiLink and RailTex which on a combined basis
contributed $126.1 million in operating expenses for the nine months ended
September 30, 2000 compared to $5.0 million for the nine months ended September
30, 1999 offset by a $9.0 million gain on sale of land on a Texas railroad and a
$0.9 million gain on the sale of two Minnesota railroads with a slight decrease
in operating expenses for the Company's "same railroad" properties. Operating
expenses, as a percentage of operating revenue, exclusive of the gain on sale of
assets, were 79.8% and 80.7% for the nine months ended September 30, 2000 and
1999, respectively.
INTERNATIONAL RAILROAD OPERATIONS
All results of operations discussed in this section are for the
Company's international railroads, consisting of Ferronor for all periods
indicated and Freight Australia since May 1, 1999.
In Australia, the Company owns Freight Australia, a regional freight
railroad operating in the State of Victoria. Freight Australia is the Company's
wholly-owned Australian subsidiary that purchased the assets and business of
V/Line Freight Corporation from the Government of the State of Victoria,
Australia on April 30, 1999. Accordingly, the results of operations for the nine
months ended September 30, 2000 and 1999 are not comparable in certain material
respects and may not be indicative
18
<PAGE> 21
of the results which would have occurred had the acquisition been consummated at
the beginning of the respective periods.
The following table sets forth the operating revenues and expenses (in
thousands) for the Company's international railroad operations for the periods
indicated.
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating revenue:
Transportation revenue $30,208 $26,794 $92,306 $50,934
Other revenue 722 137 2,224 1,757
------- ------- ------- -------
Total revenue 30,930 26,931 94,530 52,691
------- ------- ------- -------
Operating expenses:
Transportation 19,610 18,385 62,414 35,037
General and administrative 2,579 1,450 7,641 4,171
Depreciation and amortization 1,739 1,751 5,200 3,008
------- ------- ------- -------
Total operating expenses 23,928 21,586 75,255 42,216
------- ------- ------- -------
Operating income $ 7,002 $ 5,345 $19,275 $10,475
======= ======= ======= =======
</TABLE>
COMPARISON OF INTERNATIONAL RAILROAD OPERATING RESULTS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999.
FERRONOR.
OPERATING REVENUES. Transportation revenue increased $0.8 million, or
14.2%, to $6.4 million for the three months ended September 30, 2000 from $5.6
million for the three months ended September 30, 1999. Ferronor's carloads
totaled 45,809 for the three months ended September 30, 2000, an increase of
20,432, or 44.6%, compared to 25,377 for the three months ended September 30,
1999. The increase in both carloads and revenue is related to the commencement
of operations in the fourth quarter of 1999 on a new long-term contract.
OPERATING EXPENSES. Operating expenses increased $0.8 million, or
17.8%, to $5.3 million for the three months ended September 30, 2000 from $4.5
million for the three months ended September 30, 1999. The increase was due to
certain start up costs related to a new long-term contract which commenced in
late 1999. Operating expenses, as a percentage of transportation revenue, were
84.1% and 81.3% for the three months ended September 30, 2000 and 1999,
respectively.
FREIGHT AUSTRALIA.
OPERATING REVENUES. Operating revenue increased $3.3 million, or 15%,
to $24.6 million for the three months ended September 30, 2000 from $21.3
million for the three months ended September 30, 1999. Operating revenue
consisted of $20.1 million in freight revenue, $3.8 million in track access fees
and $0.7 million in other revenue for the three months ended September 30, 2000.
Operating revenue consisted of $16.4 million in freight revenue, $4.8 million in
track access fees and $0.1 million in other revenue for the three months ended
September 30, 1999. The increase in the transportation revenue was due primarily
to the impact of certain new grain and bulk commodity contracts obtained in late
1999 and early 2000 partially offset by a decrease in the Australian dollar
exchange rate. The decrease in the track access fees was primarily due to the
decrease in the Australian dollar exchange rate.
19
<PAGE> 22
OPERATING EXPENSES. Operating expenses increased $1.7 million, or 9.7%,
to $18.6 million for the three months ended September 30, 2000 from $16.9
million for the three months ended September 30, 1999. The increase in operating
expenses was primarily due to increase in traffic volume and the increase in
fuel prices. Operating expenses, as a percentage of operating revenue, were
73.8% and 79.3% for the three months ended September 30, 2000 and 1999,
respectively.
The Australian dollar has declined in value approximately 20% since the
acquisition of Freight Australia. This decline had the impact of reducing
operating revenue for the quarter by $2.3 million, operating expenses by $1.7
million and the operating income by $0.6 million.
COMPARISON OF INTERNATIONAL RAILROAD OPERATING RESULTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999.
FERRONOR.
OPERATING REVENUES. Transportation revenue increased $2.9 million, or
21.0%, to $16.7 million for the nine months ended September 30, 2000 from $13.8
million for the nine months ended September 30, 1999. Ferronor's carloads
totaled 80,307 for the nine months ended September 30, 2000, an increase of
11,519, or 16.7%, compared to 68,788 for the nine months ended September 30,
1999. The increase in both carloads and revenue is related to the commencement
of operations in the fourth quarter of 1999 on a new long-term contract.
OPERATING EXPENSES. Operating expenses increased $3.1 million, or
27.7%, to $14.3 million for the nine months ended September 30, 2000 from $11.2
million for the nine months ended September 30, 1999. The increase was due to
certain start up costs related to a new long-term contract which commenced in
late 1999. Operating expenses, as a percentage of transportation revenue, were
85.8% and 81.0% for the nine months ended September 30, 2000 and 1999,
respectively.
FREIGHT AUSTRALIA.
OPERATING REVENUES. Operating revenue increased $39.0 million, or
100.5%, to $77.8 million for the nine months ended September 30, 2000 from $38.8
million for the nine months ended September 30, 1999. Operating revenue
consisted of $63.0 million in freight revenue, $12.6 million in track access
fees and $2.2 million in other revenue for the nine months ended September 30,
2000. Operating revenue consisted of $29.3 million in freight revenue, $7.9
million in track access fees and $1.6 million for the period May 1, 1999 to
September 30, 1999. The increase in operating revenue was primarily due to the
1999 period including only five months of operations.
OPERATING EXPENSES. Operating expenses increased $30.2 million, or
98.3%, to $60.9 million for the nine months ended September 30, 2000 from $30.7
million for the nine months ended September 30, 1999. The increase in operating
expenses were primarily due to the 1999 period including only five months of
operations. Operating expenses, as a percentage of operating revenue, were 77.7%
and 79.4% for the nine months ended September 30, 2000 and 1999, respectively.
The Australian dollar has declined in value approximately 20% since the
acquisition of Freight Australia. This decline had the impact of reducing
operating revenue for the nine month period by $7.7 million, operating expenses
by $5.6 million and the operating income by $1.9 million.
TRAILER MANUFACTURING OPERATIONS
The discussion of results of operations that follows reflects the
results of Kalyn/Siebert L.P. ("KSI") and Kalyn/Siebert Canada ("KSC") for the
periods indicated.
20
<PAGE> 23
In November 1999, the Company adopted a plan to sell its trailer
manufacturing operations. This business has been classified as a discontinued
operation and the results of operations have been excluded from continuing
operations in the consolidated statements of income for all periods presented.
On November 10, 2000 the Company executed a definitive agreement to sell KSI for
$32.5 million. The transaction, which is expected to close within 30 days, is
subject to regulatory approval and other customary closing conditions. On
November 14, 2000, the Company announced it had entered into a letter of intent
to sell KSC.
COMPARISON OF OPERATING RESULTS OF TRAILER MANUFACTURING FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999
The following table sets forth the income and expense items (in
thousands) of the Company's trailer manufacturing operations for the three
months ended September 30, 2000 and 1999 and the percentage relationship of
income and expense items to net sales:
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------------------
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 7,720 100.0% $10,902 100.0%
Cost of goods sold 5,550 71.9% 8,105 74.3%
------- ----- ------- -----
Gross profit 2,170 28.1% 2,797 25.7%
Selling, general and administrative
expenses 925 12.0% 972 8.9%
Depreciation and amortization 264 3.4% 261 2.4%
------- ----- ------- -----
Income from operations $ 981 12.7% $ 1,564 14.4%
======= ===== ======= =====
</TABLE>
NET SALES. Net sales decreased by $3.2 million, or 29.2%, to $7.7
million for the three months ended September 30, 2000 from $10.9 million for the
three months ended September 30, 1999. The net sales decrease resulted from a
decrease of $2.1 million in KSC's sales and a decrease of $1.1 million in KSI's
sales. The decrease in KSC's sales was due to a slow down in the eastern
Canadian trucking industry, resulting in a reduction in orders received over
late 1999 and early 2000. Sales to governmental agencies represented 38.4% and
40.0% of KSI's net sales for the three months ended September 30, 2000 and 1999,
respectively.
COST OF GOODS SOLD. Cost of goods sold decreased by approximately $2.5
million, or 46.0% to $5.6 million for the three months ended September 30, 2000
from $8.1 million for the three months ended September 30, 1999. Cost of goods
sold was 71.9% of net sales for the three months ended September 30, 2000
compared to 74.3% for the three months ended September 30, 1999. The improvement
in gross margin was due to the mix of sales between KSI and KSC.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses of $0.9 million for the three months ended September 30,
2000 was comparable to $1.0 million for the three months ended September 30,
1999.
COMPARISON OF OPERATING RESULTS OF TRAILER MANUFACTURING FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999
The following table sets forth the income and expense items (in
thousands) of the Company's trailer manufacturing operations for the nine months
ended September 30, 2000 and 1999 and the percentage relationship of income and
expense items to net sales:
21
<PAGE> 24
<TABLE>
<CAPTION>
For the Nine Months Ended
-----------------------------------------------
September 30, 2000 September 30, 1999
-------------------- --------------------
<S> <C> <C> <C> <C>
Net sales $29,173 100.0% $33,859 100.0%
Cost of goods sold 21,098 72.3% 25,098 74.1%
------- ----- ------- -----
Gross profit 8,075 27.7% 8,761 25.9%
Selling, general and administrative
expenses 3,150 10.8% 2,772 8.2%
Depreciation and amortization 783 2.7% 778 2.3%
------- ----- ------- -----
Income from operations $ 4,142 14.2% $ 5,211 15.4%
======= =======
</TABLE>
NET SALES. Net sales decreased by $4.7 million, or 13.8%, to $29.2
million for the nine months ended September 30, 2000 from $33.9 million for the
nine months ended September 30, 1999. The net sales decrease resulted from a
decrease of $4.3 million in KSC's sales and $0.4 million in KSI's sales. The
decrease in KSC's sales was due to a slow down in the eastern Canadian trucking
industry, resulting in a reduction in orders received over late 1999 and early
2000. Sales to governmental agencies represented 31.8% and 40.0% of KSI's net
sales for the nine months ended September 30, 2000 and 1999, respectively. The
trailer manufacturing division had a backlog of orders of $12.9 million at
September 30, 2000.
COST OF GOODS SOLD. Cost of goods sold decreased by approximately $4.0
million, or 15.9%, to $21.1 million for the nine months ended September 30, 2000
from $25.1 million for the nine months ended September 30, 1999. Cost of goods
sold was 72.3% of net sales for the nine months ended September 30, 2000
compared to 74.1% for the nine months ended September 30, 1999. The improvement
in gross margin was due to the mix of sales between KSI and KSC.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased by $0.4 million, or 13.6%, to $3.2 million for
the nine months ended September 30, 2000 from $2.8 million for the nine months
ended September 30, 1999. Selling, general and administrative expenses increased
primarily due to increased sales efforts, foreign exchange rate fluctuations and
installation of certain computer systems.
CORPORATE OVERHEAD AND OTHER
CORPORATE OVERHEAD. Corporate overhead, which benefits all of the
Company's segments, has not been allocated to the business segments for this
analysis. Corporate overhead services include overall strategic planning,
marketing, accounting, legal services, finance, cash management, payroll,
engineering and tax return preparation. The Company believes that this
presentation facilitates a better understanding of the changes in the results of
the Company's operations. Corporate overhead, which is included in selling,
general and administrative expenses in the consolidated statements of income,
increased $4.6 million, or 120%, to $8.4 million for the nine months ended
September 30, 2000 from $3.8 million for the nine months ended September 30,
1999. The increase was primarily due to the addition of employees and facility
costs to manage the acquisitions of TPW, RaiLink, Freight Australia and RailTex.
Corporate overhead decreased from 5% of operating revenue for the nine months
ended September 30, 1999 to 3% for the nine months ended September 30, 2000.
OTHER. Pursuant to the refinancing of RailAmerica's and RailTex's debt
in February 2000, the Company recorded an extraordinary charge for the nine
months ended September 30, 2000 for the loss on early extinguishment of debt of
$2.2 million, after-
22
<PAGE> 25
tax. The Company also recognized a $3.4 million, after-tax, foreign exchange
loss related to the refinancing of debt associated with the acquisition of
Freight Australia. In connection with the issuance of subordinated debt in
August 2000 the Company recorded an extraordinary charge of $0.9 million for
early extinguishment of debt, net of income taxes.
The Company's interest expense increased by $27.5 million, or 301%, to
$36.7 million for the nine months ended September 30, 2000 from $9.2 million for
the nine months ended September 30, 1999. The increase was due to the debt
incurred on the company's acquisitions of Freight Australia, RaiLink, TPW and
RailTex.
The Company recognized a $0.5 million loss on sale and an asset
impairment charge of $0.8 million in the second quarter of 2000 related to its
tractor and trailer fleet.
In the third quarter of 2000, the Company wrote off $1.5 million of
costs related to its bid for Westrail, an Australian railroad, and its February
2000 acquisition of RailTex. The costs are included in the acquisition related
costs line in the consolidated statement of income.
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 $16.4 million
for the nine months ended September 30, 2000. This amount includes $4.2 million
in net income and $20.6 million in depreciation and amortization.
Cash used in investing activities was $165.1 million for the nine
months ended September 30, 2000. The primary uses of cash during the nine-month
period were for the acquisition of RailTex, including costs, for $150.0 million,
and the purchase of property, plant and equipment with an aggregate cost of
$26.6 million.
Cash provided by financing activities was $146.2 million for the nine
months ended September 30, 2000. This consisted primarily of net borrowings
under the Company's credit facilities of $167.9 million used to fund the RailTex
acquisition partially offset by cash used for deferred loan costs of $19.6
million.
In August 2000, RailAmerica Transportation Corp., the Company's
wholly-owned subsidiary, sold units consisting of $130.0 million of 12-7/8%
senior subordinated notes due 2010 and warrants to purchase 1,411,414 shares of
the Company's common stock in a private offering, for gross proceeds of $122.2
million after deducting the initial purchasers' discount. The net proceeds
received from the issuance of the units were used to repay all $95.0 million of
subordinated bridge notes issued by RailAmerica Transportation, $20.0 million of
the asset sale bridge notes issued by Palm Beach Rail Holding, Inc., the
Company's wholly-owned subsidiary, and approximately $1.8 million of term loans
under the Company's senior credit facilities. All of the Company's U.S.
subsidiaries excluding Kalyn/Siebert I, Inc. are guarantors of the senior
subordinated debt.
In February 2000, the Company entered into a credit agreement and two
bridge note facilities in connection with the acquisition of RailTex and the
refinancing of most of the Company's and RailTex's existing debt. The credit
agreement provides (1) a $125 million Term A loan, bearing interest at LIBOR
plus 3.00% (2) a $205 million Term B loan, bearing interest at LIBOR plus 3.25%,
and (3) a $50 million revolving credit facility which includes $30 million of
U.S. dollar denominated loans, $10 million of Canadian dollar denominated loans
and $10 million of Australian dollar denominated loans with an
23
<PAGE> 26
interest rate of LIBOR plus 3.00%. All of the stock of all the Company's U.S.
subsidiaries, excluding Kalyn/Siebert I, Inc. (a discontinued operation), and
65% of the stock of the Company's foreign subsidiaries serve as collateral for
the credit facilities.
The Term A loan requires principal payments of 5% in 2000, 10% in 2001,
15% in 2002, 20% in 2003, and 25% in both 2004 and 2005. The Term B loan
requires principal payments of 1% per year through 2005 and a balloon maturity
at December 31, 2006. The revolving loan matures on December 31, 2005, and the
outstanding balance at September 30, 2000 was $19.4 million.
The Company's borrowings include covenants which impose financial and
operating restrictions on the Company's ability to, among other things: incur
more debt; pay dividends, redeem or repurchase its common stock or make other
distributions; make acquisitions or investments; use assets as collateral in
other transactions; enter into transactions with affiliates; merge or
consolidate with others; dispose of assets or use asset sale proceeds; create
liens on its assets; and extend credit.
The credit facilities also contain financial covenants that will
require the Company to meet a number of financial ratios and tests. The
Company's ability to meet these ratios and tests and to comply with other
provisions of the credit facilities can be affected by events beyond its
control. The Company's failure to comply with the obligations in the new credit
facilities could result in an event of default under the new credit facilities,
which, if not cured or waived, could permit acceleration of the indebtedness or
other indebtedness which would have a material adverse effect on the Company.
Interest on the Company's credit facility is payable at variable rates.
To partially mitigate the interest rate risk on the credit facilities the
Company entered into interest rate swaps in May 2000. The interest rate swaps
lock in a blended rate of 10.35% on $212.5 million of debt for a three-year
period. Fluctuations in the market interest rate will affect the cost of the
Company's remaining borrowings. Assuming current debt levels the effect of a 1%
increase in interest rates on this remaining debt would result in an increase
debt in interest expense of $1.3 million for the twelve months ended September
30, 2001.
At the time of its purchase of RailTex, the Company, through its
wholly-owned subsidiary RailAmerica Transportation Corp., issued $95 million of
subordinated bridge notes bearing interest at an initial rate of 13% per annum,
and increasing every three months based on the highest specified rates. The
subordinated bridge note was fully paid off in August 2000. In addition, the
Company, through its wholly-owned subsidiary Palm Beach Rail Holding, Inc.
issued $55 million of asset sale bridge notes. These notes mature on February 4,
2001 and have an initial interest rate of 15% per annum, which rate increased on
August 4, 2000 and November 4, 2000 based on the highest of specified rates
(15.75% at November 4, 2000). The asset sale bridge notes are collateralized by
the assets of Kayln/Siebert. The asset sale bridge notes are included in current
liabilities and the related interest expense is included in discontinued
operations as the proceeds from the sale of Kayln/Siebert are required to be
used to pay down the asset sale bridge notes. $20 million of these notes were
repaid in August 2000. On November 10, 2000, the Company executed a definitive
agreement to sell KSI for $32.5 million. The transaction, which is expected to
close within 30 days, is subject to regulatory approval and other customary
closing conditions. On November 14, 2000, the Company announced it had entered
into a letter of intent to sell KSC.
In connection with the issuance of the asset sale bridge notes, the
purchasers of such notes are entitled to receive warrants to purchase common
stock at an exercise price of $7.75 per share commencing in August 2000 to the
extent the asset sale bridge notes are then outstanding. The maximum number of
shares issuable upon exercise of these warrants is 0.6 million, subject to
specified anti-dilution adjustments. In August 2000, 0.3 million of the warrants
were issued and in November 2000, 0.15 million warrants were issued.
As of September 30, 2000, the Company had a working capital deficit of
$34.6 million compared to working capital of $24.0 million as of December 31,
1999. The decrease in working capital was primarily related to the
classification of the asset sale bridge note as current due to the expected sale
of the trailer manufacturing division. Cash on hand was $8.6 million as of
September 30, 2000 compared to $11.6 million as of December 31, 1999. The
Company's cash flows from operations and borrowings under its revolver
historically have been sufficient to meet our 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 flows will be sufficient for
its current and contemplated operations for at least the next twelve months. The
Company anticipates using cash flows and borrowings under its revolver for
anticipated capital expenditures of $30 million for the upgrading
24
<PAGE> 27
of existing North American rail lines and purchases of locomotives and
equipment. The Company anticipates capital expenditures of $10 million over the
next twelve months primarily related to new Ferronor contracts received since
its acquisition by the Company. Ferronor closed on a debt financing in the first
quarter of 1999 that was used to fund certain of the capital expenditures.
Freight Australia's capital expenditures are estimated to be $15 million over
the next twelve months and the Company anticipates paying for these through cash
generated from Freight Australia's operations. The Company does not presently
anticipate any other significant capital expenditures over the next twelve
months. To the extent possible under its loan agreements, 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 anticipates debt service for the next twelve months,
exclusive of the asset sale bridge notes, to be approximately $75 million,
including principal and interest; of the amount $34 million is due before March
30, 2001. It is anticipated that a portion of the debt service will be paid from
the operating cash flow of Freight Australia. A material change in the currency
exchange rate between the U.S. dollar and Australian dollar could adversely
affect the Company's ability to service the debt.
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
acquisitions 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. As
of November 11, 2000, the Company had $25.4 million of availability under the
revolving line of credit facility. In addition, the Company has approximately
$12 million in cash on hand at November 11, 2000.
The Company has announced an asset rationalization plan to sell certain
non-strategic assets. The plan, which includes the sale of some of the Company's
smaller railroads and specialty truck trailer business, is geared toward paying
down the debt from the new credit facilities, including the revolver. The
Company has received proceeds of approximately $19 million through September 30,
2000 as part of this asset rationalization plan. It has executed definitive
agreements and letters of intent to sell $67.5 million of additional non-core
assets.
INFLATION
Inflation in recent years has not had a significant impact on the
Company's operations. The Company believes that inflation will not adversely
affect the Company in the future unless it increases substantially and the
Company is unable to pass through such increases in its freight rates.
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 represent the Company's expectations or beliefs concerning
future events, including: statements regarding further growth in
transportation-
25
<PAGE> 28
related assets; the acquisition or disposition of railroads, assets and other
companies; the increased usage of the Company's existing rail lines; the growth
of gross revenues; and the sufficiency of the Company's cash flows 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 limitation, the following: decline in demand for
transportation services; the effect of economic conditions generally and
particularly in the markets served by the Company; the Company's dependence upon
obtaining future government contracts; the Company's dependence upon certain
commodities, including the agricultural, mining, and forest industries as
significant users of the Company's rail services; the Company's dependence upon
the availability of financing for acquisitions of railroads and other companies;
an adverse change in currency exchange rates, interest rates or fuel costs; a
decline in the market acceptability of railroad services; an organization or
unionization of a material segment of the Company's employee base; the effect of
competitive pricing; the inability to integrate acquired businesses; the
Company's failure to achieve expected synergies; failure to service debt; the
Company's failure to successfully market and sell non-core properties and
assets; and the regulation of the Company by federal, state, local and foreign
regulatory authorities. Results actually achieved thus may differ materially
from expected results included in these statements.
ITEM 3. MARKET RISK
FOREIGN CURRENCY. The Company's foreign currency risk arises from
owning and operating railroads in Canada and Australia. At September 30, 2000,
the Company had not entered into any transactions to manage this risk. A
decrease in either of these foreign currencies would negatively impact the
Company's earnings for the affected period. A majority of the Company's revenue
and debt in Chile is U.S. dollar indexed. Therefore, the Company is not
negatively impacted by a decline in the value of the Chilean Peso.
The financial position and results of operations of the Company's
Canadian and Australian subsidiaries are measured using the local currency as
the functional currency. Assets and liabilities are translated into U.S. dollars
at exchange rates in effect at period-end, while revenues and expenses are
translated at average exchange rates prevailing during the period. The resulting
translation gains and losses are charged directly to accumulated other
comprehensive income, a component of stockholders' equity, and are not included
in income until realized through the sale or liquidation of the investment. At
September 30, 2000, the accumulated other comprehensive losses totaled ($23.6
million), or 21% of total stockholders' equity. The losses result primarily from
a decline of approximately 20% in the value of the Australian dollar since the
Company's acquisition of Freight Australia in April 1999.
It is anticipated that a portion of the Company's debt service will be
paid from the operating cash flow of Freight Australia. If the value of the
Australian dollar does not improve, the Company's ability to service its debt
will be adversely affected.
INTEREST RATES. The Company's interest rate risk results from holding
variable rate debt obligations, as an increase in interest rates results in
lower earnings and increased cash outflows.
The interest rate on the Company's credit facility is payable at
variable rates. To partially mitigate the interest rate risk on the new credit
facilities the Company entered into interest rate swaps in May 2000. The
interest rate swaps lock in a blended rate of 10.35% on $212.5 million of debt
for a three-year period. Fluctuations in the market interest rate will affect
the cost of the Company's
26
<PAGE> 29
remaining borrowings. The effect of a 1% increase in interest on the remaining
borrowings would result in an increase in interest expense of $1.3 million for
the twelve months ended September 30, 2001.
DIESEL FUEL. The Company is exposed to fluctuations in diesel fuel
prices, as an increase in the price of diesel fuel would result in lower
earnings and increased cash outflows. Prior to the Company's acquisition of
RailTex, RailTex had entered into a contract to hedge against fuel prices with a
cap which fixed the price of 725,000 gallons of diesel fuel per month for the
period July 1999 to June 2000 at $0.4500 per gallon. No fuel hedging is in place
after June 30, 2000. The effect of a $0.01 increase in fuel prices would result
in an increase in fuel expense of approximately $40,000 per month.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the second quarter of 2000, certain parties filed property damage
claims totaling approximately CDN$50 million against the Mackenzie Northern
Railway and others, in connection with fires that allegedly occurred in 1998. We
intend to vigorously defend these claims, and have insurance coverage to
approximately CDN$20 million to cover these claims. Because the actions are in
their early stages and the claimants have not yet asserted the legal basis for
their claims, the Company is unable to assess the merits of the claims; however,
our insurer has reserved CDN$15 million for these matters. A loss, if any, in
excess of our insurance policy coverage may adversely affect the Company's cash
flow and financial condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the quarter
ended September 30, 2000:
1. Current report on Form 8-K, dated August 1, 2000, was filed
with the Securities and Exchange Commission on August 1, 2000
in connection with the issuance of subordinated debt by the
Company's wholly-owned subsidiary RailAmerica Transportation
Corporation.
2. Current report on Form 8-K, dated August 31, 2000, was filed
with the Securities and Exchange Commission on September 1,
2000 in connection with the Company's acquisition of the
common stock of RailTex, Inc.
27
<PAGE> 30
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: November 14, 2000
By: /s/ Gary O. Marino
----------------------------
Gary O. Marino, Chairman
and Chief Executive Officer
By: /s/ Bennett Marks
----------------------------
Bennett Marks, Chief
Financial Officer, Sr. Vice
President and Principal
Accounting Officer
28
