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

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8-K - FORM 8-K - RAILAMERICA INC /DE	d384170d8k.htm
EX-99.2 - EX-99.2 - RAILAMERICA INC /DE	d384170dex992.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

RailAmerica, Inc. Reports Second Quarter 2012 Results

Second Quarter Highlights

•

Revenue increased 12% versus second quarter 2011.

•

Operating income up 19%; (up 28% excluding 45G benefit, asset sales and impairments¹).

•

Net income of $0.23 per share.

•

Adjusted net income per share¹ of $0.34.

JACKSONVILLE, FL, July 25, 2012 – RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter ended June 30, 2012. Second quarter 2012 revenue increased 12% to $156.1 million from $139.2 million in the second quarter of 2011. Freight revenue increased 8% to $113.6 million with average revenue per car up 4% and carloads up 4%. Non-freight revenue increased 26% to $42.5 million.

RailAmerica President and Chief Executive Officer John Giles said “Exceptional execution by our team drove another strong quarter with operating income on a comparable basis up 28%. We remain well positioned for continued progress in the months ahead. During the second quarter we began integrating our two recent acquisitions. Additionally, our commercial and industrial development teams are pursuing a robust pipeline of opportunities.”

RailAmerica reported second quarter 2012 net income of $11.4 million, or $0.23 per diluted share. This compares to net income of $8.7 million, or $0.17 per diluted share in the second quarter of 2011. Noteworthy items impacting the second quarters of 2012 and 2011 include:

•

Early retirement of debt: Second quarter of 2012 included $5.7 million of charges related to the redemption of the remaining $74 million of our 9.25% senior notes.

•

Acquisition / Transaction costs: In the second quarter of 2012 the Company incurred $2.2 million of transaction related expenses. A large portion was due to the Company’s previously announced exploration of strategic alternatives. In the second quarter of 2011 the Company spent $0.2 million on acquisition related activity.

•

45G tax credits: A $5.1 million income statement benefit was recorded in the second quarter of 2011, but no benefit was recognized in the second quarter of 2012 since the credit is currently not in effect for 2012.

•

Amortization of swap termination costs: Non-cash charges of $1.4 million and $3.2 million were recorded in interest expense during the second quarters of 2012 and 2011, respectively, due to the June 2009 termination of an interest rate swap agreement.

•

Asset impairment: Second quarter of 2011 includes a non-cash, $3.2 million impairment charge resulting from a comprehensive evaluation of our locomotive fleet and the identification of surplus units.

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

Summary of Noteworthy Items Impacting Second Quarter 2011 and 2012


	For the Three Months Ended June 30,
($ in thousands except EPS)	2011						2012
	Pre Tax			EPS			Pre Tax			EPS
Loss on extinguishment of debt	$	0		$	0.00		($	5,666	)	($	0.07	)
Acquisition / Transaction Costs		(243	)		(0.00	)		(2,184	)		(0.03	)
45G benefit		5,133			0.06			—			—
Amortization of swap termination costs		(3,201	)		(0.04	)		(1,363	)		(0.02	)
Impairment of assets		(3,220	)		(0.04	)		—			—

Note: Effective tax rates of 39% and 37% for 2011 and 2012, respectively

The Company reported operating income of $34.2 million in the second quarter of 2012 compared to $28.7 million in the second quarter of 2011. In addition to the items mentioned above impacting operating income, second quarter 2012 expenses were up primarily due to operating expenses from acquisitions and higher engineering services activity. Operating income excluding the impact of 45G credits, asset sales and impairments is shown below.


	For the Three Months Ended June 30,
	2011			2012
($ in thousands)
Operating revenue	$	139,215		$	156,096
Operating expense		110,517			121,921

Operating income, reported		28,698			34,175

Less: Benefit from 45G credits		(5,133	)		—

Operating income excluding 45G Benefit ¹		23,565			34,175

Net (gain) loss on sale of assets		(64	)		5
Impairment of assets		3,220			—

Operating income excluding 45G Benefit, Asset Sales and Impairments ¹	$	26,721		$	34,180

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

On July 23, 2012 RailAmerica and Genesee & Wyoming Inc. (GWI) (NYSE: GWR) issued a joint press release announcing they had entered into an agreement under which GWI will acquire RailAmerica for an all cash purchase price of $27.50 per share. RailAmerica will not be holding a conference call to present its second quarter earnings. The Company will post a presentation containing supplemental information for the second quarter and year to date results in the Investors section of RailAmerica’s website (www.railamerica.com).

RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 45 individual railroads with approximately 7,500 miles of track in 28 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				MEDIA CONTACT
Ira Berger				Donia Crime
Vice President & Treasurer				Cell: 404.271.1437
Office: 904.999.5332				Office: 904.645.6200

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2011			2012			2011			2012
	(In thousands, except per share data)
Operating revenue	$	139,215		$	156,096		$	264,152		$	299,538
Operating expenses:
Labor and benefits		41,859			43,228			83,476			88,780
Equipment rents		8,889			9,939			17,555			18,335
Purchased services		11,327			15,550			20,433			26,520
Diesel fuel		14,578			13,210			28,745			26,635
Casualties and insurance		4,955			5,306			7,089			8,185
Materials		5,928			9,746			11,013			16,155
Joint facilities		2,550			2,755			4,755			5,346
Other expenses		10,672			10,588			20,605			21,689
Track maintenance expense reimbursement		(5,133	)		—			(9,283	)		—
Net (gain) loss on sale of assets		(64	)		5			143			(158	)
Impairment of assets		3,220			—			3,220			—
Depreciation and amortization		11,736			11,594			23,500			22,000

Total operating expenses		110,517			121,921			211,251			233,487

Operating income		28,698			34,175			52,901			66,051
Interest expense (including amortization costs of $4,384, $2,163, $9,242 and $4,779, respectively)		(18,143	)		(10,267	)		(36,734	)		(23,678	)
Other income (loss)		495			(5,476	)		1,035			(87,418	)

Income (loss) before income taxes		11,050			18,432			17,202			(45,045	)
Provision for (benefit from) income taxes		2,350			7,235			4,417			(16,023	)

Net income (loss)		8,700			11,197			12,785			(29,022	)

Less: Net loss attributable to noncontrolling interest		—			(202	)		—			(202	)

Net income (loss) attributable to the Company	$	8,700		$	11,399		$	12,785		$	(28,820	)

Basic earnings per common share:
Net income (loss) attributable to the Company	$	0.17		$	0.23		$	0.24		$	(0.57	)

Diluted earnings per common share:
Net income (loss) attributable to the Company	$	0.17		$	0.23		$	0.24		$	(0.57	)

Weighted Average common shares outstanding:
Basic		52,282			50,407			53,467			50,462
Diluted		52,282			50,578			53,467			50,462

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31, 2011		June 30, 2012
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	90,999	$	50,987
Accounts and notes receivable, net of allowance of $7,291 and $8,817, respectively		96,813		105,747
Current deferred tax assets		9,886		13,659
Other current assets		17,967		24,967

Total current assets		215,665		195,360
Property, plant and equipment, net		1,021,545		1,051,479
Intangible assets		134,851		175,202
Goodwill		211,841		233,922
Other assets		13,478		12,615

Total assets	$	1,597,380	$	1,668,578

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	71,991	$	64,120
Accounts payable		78,844		101,502
Accrued expenses		28,616		29,468

Total current liabilities		179,451		195,090
Long-term debt, less current maturities		1,827		576,628
Senior secured notes		501,876		—
Deferred income taxes		213,421		200,512
Other liabilities		20,680		31,825

Total liabilities		917,255		1,004,055

Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 400,000,000 shares authorized; 50,605,440 shares issued and outstanding at December 31, 2011; and 50,396,991 shares issued and outstanding at June 30, 2012		506		504
Additional paid in capital and other		591,341		594,988
Retained earnings		84,272		55,337
Accumulated other comprehensive income		4,006		6,221

Total stockholders’ equity		680,125		657,050

Noncontrolling interest		—		7,473

Total equity		680,125		664,523

Total liabilities and stockholders’ equity	$	1,597,380	$	1,668,578

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Six Months Ended June 30,
	2011			2012
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	12,785		$	(29,022	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including amortization of debt issuance costs classified in interest expense		25,864			23,825
Amortization of swap termination costs		6,878			2,954
Net loss (gain) on sale or disposal of properties		143			(158	)
Impairment of assets		3,220			—
Loss on extinguishment of debt		—			88,107
Equity compensation costs		4,979			7,647
Deferred income taxes and other		1,533			(18,022	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(23,767	)		(5,230	)
Other current assets		(10,031	)		(6,817	)
Accounts payable		11,914			9,471
Accrued expenses		19,691			339
Other assets and liabilities		(481	)		218

Net cash provided by operating activities		52,728			73,312

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(36,185	)		(42,914	)
NECR government grant reimbursements		6,954			3,681
Proceeds from sale of assets		2,788			4,513
Acquisitions, net of cash acquired		(12,706	)		(55,443	)
Other		(45	)		(238	)

Net cash used in investing activities		(39,194	)		(90,401	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt		(263	)		(1,588	)
Proceeds from issuance of long-term debt		—			582,075
Repurchase of senior secured notes		—			(649,720	)
Repayment of revolving credit facility		—			(7,000	)
Proceeds from revolving credit facility		—			65,000
Repurchase of common stock		(50,091	)		(520	)
Financing costs paid		(119	)		(11,179	)

Net cash used in financing activities		(50,473	)		(22,932	)

Effect of exchange rates on cash		453			9

Net decrease in cash		(36,486	)		(40,012	)
Cash, beginning of period		152,968			90,999

Cash, end of period	$	116,482		$	50,987

RAILAMERICA, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Dollars in thousands)

(Unaudited)


	Three Months Ended June 30,
	2011					2012
Operating revenue	$	139,215		100.0	%	$	156,096	100.0	%
Operating expenses:
Labor and benefits		41,859		30.1	%		43,228	27.7	%
Equipment rents		8,889		6.4	%		9,939	6.4	%
Purchased services		11,327		8.1	%		15,550	10.0	%
Diesel fuel		14,578		10.5	%		13,210	8.4	%
Casualties and insurance		4,955		3.5	%		5,306	3.4	%
Materials		5,928		4.3	%		9,746	6.2	%
Joint facilities		2,550		1.8	%		2,755	1.8	%
Other expenses		10,672		7.7	%		10,588	6.8	%
Track maintenance expense reimbursement		(5,133	)	(3.7	%)		—	0.0	%
Net (gain) loss on sale of assets		(64	)	(0.0	%)		5	0.0	%
Impairment of assets		3,220		2.3	%		—	0.0	%
Depreciation and amortization		11,736		8.4	%		11,594	7.4	%

Total operating expenses		110,517		79.4	%		121,921	78.1	%

Operating income	$	28,698		20.6	%	$	34,175	21.9	%


	Six Months Ended June 30,
	2011					2012
Operating revenue	$	264,152		100.0	%	$	299,538		100.0	%
Operating expenses:
Labor and benefits		83,476		31.6	%		88,780		29.6	%
Equipment rents		17,555		6.7	%		18,335		6.1	%
Purchased services		20,433		7.7	%		26,520		8.9	%
Diesel fuel		28,745		10.9	%		26,635		8.9	%
Casualties and insurance		7,089		2.7	%		8,185		2.7	%
Materials		11,013		4.2	%		16,155		5.4	%
Joint facilities		4,755		1.8	%		5,346		1.8	%
Other expenses		20,605		7.8	%		21,689		7.2	%
Track maintenance expense reimbursement		(9,283	)	(3.5	%)		—		0.0	%
Net loss (gain) on sale of assets		143		0.0	%		(158	)	(0.1	%)
Impairment of assets		3,220		1.2	%		—		0.0	%
Depreciation and amortization		23,500		8.9	%		22,000		7.4	%

Total operating expenses		211,251		80.0	%		233,487		77.9	%

Operating income	$	52,901		20.0	%	$	66,051		22.1	%

RAILAMERICA, INC. AND SUBSIDIARIES

Railroad Freight Revenue, Carloads and Average Freight Revenue

Per Carload

Comparison by Commodity Group (Unaudited)


	Three Months Ended June 30, 2011						Three Months Ended June 30, 2012
	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	$	16,324		24,496	$	666	$	17,465		24,151	$	723
Agricultural Products		18,044		34,146		528		18,992		36,273		524
Metallic Ores and Metals		11,335		18,388		616		11,169		16,763		666
Non-Metallic Minerals and Products		10,437		22,774		458		11,426		23,493		486
Pulp, Paper and Allied Products		10,481		17,154		611		9,598		17,177		559
Forest Products		7,925		12,656		626		9,864		14,881		663
Coal		7,802		34,682		225		7,483		33,483		223
Food or Kindred Products		7,578		14,253		532		7,649		13,849		552
Waste and Scrap Materials		6,436		15,517		415		6,635		14,581		455
Petroleum		4,304		8,346		516		5,183		9,912		523
Other		3,401		7,019		485		4,388		9,542		460
Motor Vehicles		1,500		2,664		563		3,703		5,661		654

Total	$	105,567		212,095	$	498	$	113,555		219,766	$	517


	Six Months Ended June 30, 2011						Six Months Ended June 30, 2012
	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	$	32,489		49,398	$	658	$	34,186		48,056	$	711
Agricultural Products		32,979		64,856		508		35,614		68,897		517
Metallic Ores and Metals		21,533		34,987		615		23,395		35,669		656
Non-Metallic Minerals and Products		19,490		42,624		457		20,806		42,189		493
Pulp, Paper and Allied Products		20,214		34,161		592		18,885		33,713		560
Forest Products		14,759		24,088		613		18,798		28,546		659
Coal		16,389		75,427		217		15,631		71,318		219
Food or Kindred Products		14,669		27,889		526		15,171		27,668		548
Waste and Scrap Materials		11,671		28,610		408		12,778		28,552		448
Petroleum		9,953		19,662		506		10,982		20,774		529
Other		5,974		14,074		424		8,076		19,072		423
Motor Vehicles		3,082		5,361		575		7,051		11,053		638

Total	$	203,202		421,137	$	483	$	221,373		435,507	$	508

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

Adjusted net income (loss) 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 net income (loss) 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 Net income (loss) as a measure of profitability.

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


	2011
(In thousands, except per share data)	Q1						Q2				Q2 YTD
	After Tax			Per Share			After Tax		Per Share		After Tax			Per Share
Net income	$	4,085		$	0.07		$	8,700	$	0.17	$	12,785		$	0.24

Add:
Amortization of swap termination costs		2,243			0.04			1,953		0.04		4,196			0.08
Impairment of assets		—			—			1,964		0.04		1,964			0.04
Acquisition expense		44			0.00			148		0.00		192			0.00

Adjusted net income	$	6,372		$	0.12		$	12,765	$	0.24	$	19,137		$	0.36

Weighted Average common shares outstanding (diluted)		54,651						52,282				53,467

	2012
(In thousands, except per share data)	Q1						Q2				Q2 YTD
	After Tax			Per Share			After Tax		Per Share		After Tax			Per Share
Net income (loss)	($	40,219	)	($	0.80	)	$	11,399	$	0.23	($	28,820	)	($	0.57	)

Add:
Amortization of swap termination costs		1,002			0.02			859		0.02		1,861			0.04
Loss on extinguishment of debt		51,938			1.03			3,570		0.07		55,507			1.10
Acquisition / strategic alternatives expense		239			0.00			1,376		0.03		1,615			0.03

Adjusted net income	$	12,961		$	0.26		$	17,203	$	0.34	$	30,164		$	0.60

Weighted Average common shares outstanding (diluted)		50,518						50,578				50,462

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)	Q2 2011					Q2 2012
Operating revenue	$	139,215				$	156,096
Operating expense		110,517					121,921

Operating income, reported		28,698					34,175

Operating ratio reported				79.4	%			78.1	%

Less: Benefit from 45G credits		(5,133	)	3.7	%		—	0.0	%

Operating income excluding 45G Benefit		23,565					34,175

Operating ratio excluding 45G Benefit				83.1	%			78.1	%

Net (gain) loss on sale of assets		(64	)	0.0	%		5	0.0	%
Impairment of assets		3,220		-2.3	%		—	0.0	%

Operating income excluding 45G Benefit, Asset Sales & Impairments	$	26,721				$	34,180

Operating ratio, excluding 45G Benefit, Asset Sales & Impairments				80.8	%			78.1	%

Note: Numbers may not add due to rounding

RAILAMERICA INC /DE - FORM 8-K - EX-99.1 - July 25, 2012

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RAILAMERICA INC /DE Reports