RAILAMERICA INC /DE - FORM 8-K - EX-99.1

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8-K - FORM 8-K - RAILAMERICA INC /DE	d247174d8k.htm
EX-99.2 - EX-99.2 - RAILAMERICA INC /DE	d247174dex992.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

RailAmerica, Inc. Reports Third Quarter 2011 Results

Third Quarter Highlights

•

Revenue increased 9% versus third quarter 2010.

•

Income from continuing operations of $0.17 per share.

•

Adjusted income from continuing operations¹ of $0.24 per share.

JACKSONVILLE, FL, October 25, 2011 – RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter ended September 30, 2011. Third quarter 2011 revenue increased 9% to $139.7 million from $128.3 million in the third quarter of 2010. Freight revenue increased 7% to $104.7 million with average revenue per car up 14% and carloads down 6%. Non-freight revenue increased 14% to $35.0 million.

RailAmerica President and Chief Executive Officer John Giles, said “This was another strong quarter for us. Operating income excluding 45G credits, impairments and asset sales increased 10%. We achieved these results through our continuing focus on pricing, non-freight revenue and productivity. Our success in these areas allowed us to perform well despite lower carloads and the temporary disruption of service on our New England Central Railroad from Hurricane Irene.”

RailAmerica reported third quarter 2011 income from continuing operations of $9.1 million, or $0.17 per diluted share. This compares to $8.0 million, or $0.15 per diluted share in the third quarter of 2010. Noteworthy items impacting the third quarters of 2011 and 2010 include:

•

45G credits: Because the latest extension of the tax credits (for 2010 and 2011) did not occur until December 2010, no maintenance reimbursements were recognized in the third quarter of 2010. A $3.9 million reduction of expense was recorded in the third quarter of 2011.

•

Amortization of swap termination costs: Non-cash charges of $2.7 million and $4.9 million were recorded in interest expense during the third quarters of 2011 and 2010, respectively, due to the June 2009 termination of an interest rate swap agreement.

•

Asset impairment: Third quarter of 2011 includes a non-cash, $1.9 million impairment charge resulting from further evaluation of our locomotive fleet.

•

Credit facility replacement: Third quarter of 2011 includes a $0.7 million non-cash charge related to the replacement of our asset backed loan facility with a new revolving credit facility.

•

Acquisition income and expenses: The Company received a break-up fee in the third quarter of 2010 that offset other acquisition expenses resulting in a net $1.7 million of income.

•

Asset sales: Third quarter of 2010 includes $1.7 million of gains on asset sales.

•

Taxes: Cash taxes paid in the third quarter of 2011 were $1.1 million compared to the financial statement provision for income tax expense of $4.4 million.

¹	See schedule at end of press release for a reconciliation of non-GAAP financial measure.


	For the Three Months Ended September 30,
	2010						2011
($ in thousands except EPS)	Pre Tax			EPS			Pre Tax			EPS
45G benefit	$	0		$	0.00		$	3,879		$	0.05
Amortization of swap termination costs		(4,874	)		(0.05	)		(2,747	)		(0.03	)
Impairment of assets		—			—			(1,949	)		(0.02	)
Loss on extinguishment of credit agreement		—			—			(719	)		(0.01	)
Acquisition income (expense)		1,710			0.02			(203	)		(0.00	)
Gain (loss) on sale of assets		1,708			0.02			(8	)		(0.00	)

Note: Effective tax rate of 39%.

The Company reported operating income of $31.5 million in the third quarter of 2011 compared to $28.5 million in the third quarter of 2010. Third quarter 2011 operating income and expenses were favorably impacted by 45G credits as discussed above. In addition, third quarter 2011 operating expenses were up primarily due to higher fuel prices, labor expense and increases in materials and purchased services expenses largely due to growth in engineering services revenue. Operating income excluding the impact of 45G benefit, asset sales and impairments is shown below.


	For the Three Months Ended September 30,
($ in thousands)	2010			2011
Operating revenue	$	128,257		$	139,665
Operating expense		99,766			108,177

Operating income, reported		28,491			31,488

Less: Benefit from 45G credits		—			(3,879	)

Operating income excluding 45G Benefit ¹		28,491			27,609

Net (gain) / loss on sale of assets		(1,708	)		8
Impairment of assets		—			1,949

Operating income excluding 45G Benefit, Asset Sales and Impairments ¹		26,783			29,566

¹	See schedule at the end of press release for a reconciliation of non-GAAP financial measure

As previously announced, RailAmerica, Inc. will present its third quarter earnings on Wednesday, October 26, 2011 at 8:30 a.m. Eastern Time via live teleconference and webcast. Those interested in participating via teleconference may dial (877) 756-2088. Callers outside the U.S. may dial (706) 643-9763. The conference ID number is 14222844. Participants should dial in no later than 10 minutes prior to the call. Presentation materials and access to the live webcast will be available in the Investors section of RailAmerica’s website (www.railamerica.com). Following the earnings call, a webcast replay will be archived on the Company’s website. A telephone replay will be available through November 2, 2011 beginning approximately two hours after the call. The recording can be accessed by dialing (800) 585-8367 or (404) 537-3406. The conference ID number is 14222844.

RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 43 individual railroads with approximately 7,400 miles of track in 27 U.S. states and three Canadian provinces.

Cautionary Note Regarding Forward-Looking Statements

Certain items in this press release and other information we provide from time to time may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future events and financial performance. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “appears,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. RailAmerica, Inc. can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from RailAmerica, Inc.’s expectations include, but are not limited to, prolonged capital markets disruption and volatility, general economic conditions and business conditions, our relationships with Class I railroads and other connecting carriers, our ability to obtain railcars and locomotives from other providers on which we are currently dependent, legislative and regulatory developments including rulings by the Surface Transportation Board or the Railroad Retirement Board, strikes or work stoppages by our employees, our transportation of hazardous materials by rail, rising fuel costs, goodwill assessment risks, acquisition risks, competitive pressures within the industry, risks related to the geographic markets in which we operate; and other risks detailed in RailAmerica, Inc.’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. In addition, new risks and uncertainties emerge from time to time, and it is not possible for RailAmerica, Inc. to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. RailAmerica, Inc. expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

###

INVESTOR CONTACT

Ira Berger

Vice President & Treasurer

Office: 904.538.6332

MEDIA CONTACT

Donia Crime

Office: 904.645.6200

Cell: 404.271.1437

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
	(In thousands, except per share data)
Operating revenue	$	139,665		$	128,257		$	403,817		$	362,655
Operating expenses:
Labor and benefits		41,379			38,745			124,855			114,381
Equipment rents		9,046			8,721			26,601			25,857
Purchased services		10,996			9,830			31,429			28,058
Diesel fuel		13,142			9,760			41,887			31,522
Casualties and insurance		4,006			4,816			11,095			13,255
Materials		7,879			6,782			18,892			14,581
Joint facilities		2,459			2,454			7,214			6,545
Other expenses		9,271			8,785			29,876			26,162
Track maintenance expense reimbursement		(3,879	)		—			(13,162	)		—
Net loss (gain) on sale of assets		8			(1,708	)		151			(1,717	)
Impairment of assets		1,949			—			5,169			—
Depreciation and amortization		11,921			11,581			35,421			33,259

Total operating expenses		108,177			99,766			319,428			291,903

Operating income		31,488			28,491			84,389			70,752
Interest expense (including amortization costs of $3,973, $6,020, $13,215 and $20,194, respectively)		(17,792	)		(19,735	)		(54,526	)		(64,592	)
Other (loss) income		(231	)		2,264			804			(5,177	)

Income from continuing operations before income taxes		13,465			11,020			30,667			983
Provision for (benefit from) income taxes		4,407			3,052			8,824			(250	)

Net income	$	9,058		$	7,968		$	21,843		$	1,233

Basic earnings per common share:
Net income	$	0.17		$	0.15		$	0.41		$	0.02

Diluted earnings per common share:
Net income	$	0.17		$	0.15		$	0.41		$	0.02

Weighted Average common shares outstanding:
Basic		52,083			54,872			53,006			54,769
Diluted		52,083			54,872			53,006			54,769

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2011		December 31, 2010
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	95,774	$	152,968
Accounts and notes receivable, net of allowance of $7,436 and $6,767, respectively		107,364		74,668
Current deferred tax assets		28,146		12,769
Other current assets		22,218		15,200

Total current assets		253,502		255,605
Property, plant and equipment, net		1,007,508		981,622
Intangible assets		135,395		140,546
Goodwill		212,107		212,495
Other assets		13,978		13,385

Total assets	$	1,622,490	$	1,603,653

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	290	$	403
Accounts payable		85,654		66,258
Accrued expenses		44,619		36,913

Total current liabilities		130,563		103,574
Long-term debt, less current maturities		1,997		2,147
Senior secured notes		572,955		571,161
Deferred income taxes		225,547		202,985
Other liabilities		17,829		19,037

Total liabilities		948,891		898,904

Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 400,000,000 shares authorized; 51,576,825 shares issued and outstanding at September 30, 2011; and 54,859,261 shares issued and outstanding at December 31, 2010		516		549
Additional paid in capital and other		583,778		636,757
Retained earnings		87,346		65,503
Accumulated other comprehensive income		1,959		1,940

Total stockholders’ equity		673,599		704,749

Total liabilities and stockholders’ equity	$	1,622,490	$	1,603,653

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Nine Months Ended September 30,
	2011			2010
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,843		$	1,233
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including amortization of debt issuance costs classified in interest expense		39,012			36,863
Amortization of swap termination costs		9,625			16,582
Net loss (gain) on sale or disposal of properties		151			(1,717	)
Impairment of assets		5,169			—
Loss on extinguishment of debt		—			8,357
Deferred financing costs expensed		719			—
Equity compensation costs		7,381			5,525
Deferred income taxes and other		4,453			(3,770	)
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable		(33,167	)		(9,565	)
Other current assets		(7,209	)		9,056
Accounts payable		17,048			(2,808	)
Accrued expenses		7,967			10,326
Other assets and liabilities		(1,253	)		(2,210	)

Net cash provided by operating activities		71,739			67,872

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(93,518	)		(46,771	)
NECR government grant reimbursements		31,329			—
Proceeds from sale of assets		7,598			3,251
Acquisitions, net of cash acquired		(12,716	)		(23,926	)
Other		(65	)		—

Net cash used in investing activities		(67,372	)		(67,446	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt		(263	)		(391	)
Repurchase of senior secured notes		—			(76,220	)
Repurchase of common stock		(57,664	)		—
Costs associated with sale of common stock		—			(106	)
Deferred financing costs paid		(2,891	)		(224	)

Net cash used in financing activities		(60,818	)		(76,941	)

Effect of exchange rates on cash		(743	)		195

Net decrease in cash		(57,194	)		(76,320	)
Cash, beginning of period		152,968			190,218

Cash, end of period	$	95,774		$	113,898

RAILAMERICA, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Dollars in thousands)

(Unaudited)


	Three Months Ended September 30,
	2011					2010
Operating revenue	$	139,665		100.0	%	$	128,257		100.0	%
Operating expenses:
Labor and benefits		41,379		29.7	%		38,745		30.2	%
Equipment rents		9,046		6.5	%		8,721		6.8	%
Purchased services		10,996		7.9	%		9,830		7.7	%
Diesel fuel		13,142		9.4	%		9,760		7.6	%
Casualties and insurance		4,006		2.9	%		4,816		3.8	%
Materials		7,879		5.6	%		6,782		5.3	%
Joint facilities		2,459		1.8	%		2,454		1.9	%
Other expenses		9,271		6.6	%		8,785		6.8	%
Track maintenance expense reimbursement		(3,879	)	-2.8	%		—		0.0	%
Net loss (gain) on sale of assets		8		0.0	%		(1,708	)	-1.3	%
Impairment of assets		1,949		1.4	%		—		0.0	%
Depreciation and amortization		11,921		8.5	%		11,581		9.0	%

Total operating expenses		108,177		77.5	%		99,766		77.8	%

Operating income	$	31,488		22.5	%	$	28,491		22.2	%


	Nine Months Ended September 30,
	2011					2010
Operating revenue	$	403,817		100.0	%	$	362,655		100.0	%
Operating expenses:
Labor and benefits		124,855		30.9	%		114,381		31.6	%
Equipment rents		26,601		6.6	%		25,857		7.1	%
Purchased services		31,429		7.8	%		28,058		7.7	%
Diesel fuel		41,887		10.4	%		31,522		8.7	%
Casualties and insurance		11,095		2.7	%		13,255		3.7	%
Materials		18,892		4.7	%		14,581		4.0	%
Joint facilities		7,214		1.8	%		6,545		1.8	%
Other expenses		29,876		7.4	%		26,162		7.2	%
Track maintenance expense reimbursement		(13,162	)	-3.3	%		—		0.0	%
Net (gain) loss on sale of assets		151		0.0	%		(1,717	)	-0.5	%
Impairment of assets		5,169		1.3	%		—		0.0	%
Depreciation and amortization		35,421		8.8	%		33,259		9.2	%

Total operating expenses		319,428		79.1	%		291,903		80.5	%

Operating income	$	84,389		20.9	%	$	70,752		19.5	%

RAILAMERICA, INC. AND SUBSIDIARIES

Railroad Freight Revenue, Carloads and Average Freight Revenue

Per Carload

Comparison by Commodity Group (Unaudited)


	Three Months Ended September 30, 2011						Three Months Ended September 30, 2010
	Freight Revenue		Carloads		Average Freight Revenue per Carload		Freight Revenue		Carloads		Average Freight Revenue per Carload
	(Dollars in thousands, except average freight revenue per carload)
Chemicals	$	16,220		24,037	$	675	$	14,639		23,947	$	611
Agricultural Products		15,911		29,044		548		16,690		32,730		510
Pulp, Paper and Allied Products		11,043		18,639		592		9,582		17,565		546
Metallic Ores and Metals		10,744		17,828		603		10,136		18,145		559
Non-Metallic Minerals and Products		10,144		21,508		472		8,819		21,421		412
Coal		8,738		35,335		247		10,303		47,176		218
Forest Products		7,937		12,647		628		6,709		11,780		570
Food or Kindred Products		7,479		14,032		533		6,643		13,660		486
Waste and Scrap Materials		6,435		14,965		430		5,934		14,231		417
Other		4,547		7,906		575		2,492		7,175		347
Petroleum		3,746		8,274		453		4,164		9,027		461
Motor Vehicles		1,715		2,760		621		1,554		2,642		588

Total	$	104,659		206,975	$	506	$	97,665		219,499	$	445


	Nine Months Ended September 30, 2011						Nine Months Ended September 30, 2010
	Freight Revenue		Carloads		Average Freight Revenue per Carload		Freight Revenue		Carloads		Average Freight Revenue per Carload
	(Dollars in thousands, except average freight revenue per carload)
Agricultural Products	$	48,888		93,900	$	521	$	46,580		97,704	$	477
Chemicals		48,708		73,435		663		43,929		71,908		611
Metallic Ores and Metals		32,276		52,815		611		29,198		51,214		570
Pulp, Paper and Allied Products		31,256		52,800		592		27,809		49,050		567
Non-Metallic Minerals and Products		29,633		64,132		462		26,005		60,624		429
Coal		25,127		110,762		227		29,661		134,142		221
Forest Products		22,695		36,735		618		20,685		36,091		573
Food or Kindred Products		22,148		41,921		528		20,821		42,617		489
Waste and Scrap Materials		18,105		43,575		415		17,921		43,361		413
Petroleum		13,698		27,936		490		14,492		31,006		467
Other		10,530		21,980		479		8,335		22,098		377
Motor Vehicles		4,797		8,121		591		5,326		9,202		579

Total	$	307,861		628,112	$	490	$	290,762		649,017	$	448

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

Adjusted income from continuing operations is a supplemental measure of profitability that is not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. However, Adjusted income from continuing operations has limitations as an analytical tool. It is not a measurement of our profitability under GAAP and should not be considered as an alternative to Income (loss) from continuing operations as a measure of profitability.

Adjusted income from continuing operations assists us in measuring our performance and profitability of our operations without the impact of transaction costs related to debt and credit facility extinguishment, acquisitions, impairment of assets and swap termination. The following table sets forth the reconciliation of Adjusted income from continuing operations.


	2011
	Q1						Q2						Q3						Q3 YTD
(In thousands, except per share data)	After Tax			Per Share			After Tax			Per Share			After Tax			Per Share			After Tax			Per Share
Income from continuing operations	$	4,085		$	0.07		$	8,700		$	0.17		$	9,058		$	0.17		$	21,843		$	0.41

Add:
Amortization of swap termination costs		2,243			0.04			1,953			0.04			1,675			0.03			5,871			0.11
Impairment of assets		—			—			1,964			0.04			1,189			0.02			3,153			0.06
Loss on extinguishment of debt and credit facility		—			—			—			—			439			0.01			439			0.01
Acquisition costs		44			0.00			148			0.00			124			0.00			316			0.01

Adjusted income from continuing operations	$	6,372		$	0.12		$	12,765		$	0.24		$	12,485		$	0.24		$	31,622		$	0.60

Weighted Average common shares outstanding (diluted)		54,651						52,282						52,083						53,006

	2010
	Q1						Q2						Q3						Q3 YTD
(In thousands, except per share data)	After Tax			Per Share			After Tax			Per Share			After Tax			Per Share			After Tax			Per Share
Income (loss) from continuing operations	($	2,514	)	($	0.05	)	($	4,221	)	($	0.08	)	$	7,968		$	0.15		$	1,233		$	0.02

Add:
Amortization of swap termination costs		3,644			0.07			3,437			0.06			2,973			0.05			10,054			0.18
Loss on extinguishment of debt and credit facility		—			—			5,098			0.09			—			—			5,098			0.09
Acquisition (income) expense		—			—			159			0.00			(1,043	)		(0.02	)		(884	)		(0.02	)

Adjusted income from continuing operations	$	1,130		$	0.02		$	4,473		$	0.08		$	9,898		$	0.18		$	15,501		$	0.28

Weighted Average common shares outstanding (diluted)		54,568						54,869						54,872						54,769

Note: Numbers may not add due to rounding

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

Operating Income Excluding 45G Benefit, Operating Ratio Excluding 45G Benefit, Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments are supplemental measures of profitability that are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. However, Operating Income Excluding 45G Benefit, Operating Ratio Excluding 45G Benefit, Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments have limitations as analytical tools. They are not measurements of our profitability under GAAP and should not be considered as alternatives to Operating Income or Operating Ratio as measures of profitability.

Operating Income Excluding 45G Benefit and Operating Ratio Excluding 45G Benefit assist us in measuring our performance and profitability of our operations without the impact of monetizing the 45G tax benefit. Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments assist us in measuring our performance and profitability of our operations without the impact of monetizing the 45G tax benefit, Asset Sales and Impairments. The following table sets forth the reconciliation of Operating Income Excluding 45G Benefit from our Operating Income, Operating Ratio Excluding 45G Benefit from our Operating Ratio, Operating Income Excluding 45G Benefit, Asset Sales & Impairments from our Operating Income and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments from our Operating Ratio.


($ in thousands)	Q3 2011					Q3 2010
Operating revenue	$	139,665				$	128,257
Operating expense		108,177					99,766

Operating Income, reported		31,488					28,491

Operating ratio Reported				77.5	%				77.8	%

Less: Benefit from 45G credits		(3,879	)	2.8	%		—		0.0	%

Operating income excluding 45G Benefit		27,609					28,491

Operating ratio excluding 45G Benefit				80.3	%				77.8	%

Net (gain) loss on sale of assets		8		0.0	%		(1,708	)	1.3	%
Impairment of assets		1,949		-1.4	%		—		0.0	%

Operating income excluding 45G Benefit, Asset Sales & Impairments	$	29,566				$	26,783

Operating ratio, excluding 45G Benefit, Asset Sales & Impairments				78.9	%				79.1	%

Note: Numbers may not add due to rounding

RAILAMERICA INC /DE - FORM 8-K - EX-99.1 - October 26, 2011

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RAILAMERICA INC /DE Reports