Annual Report — [x] Reg. S-K Item 405 — Form 10-K
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2: EX-3.3 Amendment Certificate of Incorporation 1 7K
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4: EX-10.78 Waiver & Amendment No.2 to Credit Agreement 61 52K
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10-K405 — Railamerica, Inc. Form 10-K405 Dated 12/31/00
Document Table of Contents
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
December 31, 2000 0-20618
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RAILAMERICA, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 65-0328006
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(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification Number)
5300 Broken Sound Blvd, N.W.
BOCA RATON, FLORIDA 33487
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 994-6015
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Common Stock Purchase Rights
Check whether the registrant (1) has 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 [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-K contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 23, 2001 computed by reference to the average bid
and asked prices of registrant's common stock reported on NASDAQ on such date
was $149.4 million.
The number of shares outstanding of registrant's Common Stock, $.001
par value per share, as of March 23, 2001 was 18,668,002.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's proxy statement for the 2001 Annual Meeting of
Stockholders (the "Definitive Proxy Statement") to be filed with the Commission
pursuant to Regulation 14A is incorporated by reference into Part III of this
Form 10-K.
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business 3
Item 2. Properties 17
Item 3. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 22
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 23
Item 6. Selected Financial Data 24
Item 7. Management's Discussion and Analysis 25
Item 7a. Market Risk 34
Item 8. Financial Statements 35
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 35
PART III
Item 10. Directors and Executive Officers of the Registrant 35
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain Beneficial Owners and Management 35
Item 13. Certain Relationships and Related Transactions 35
PART IV
Item 14. Exhibits and Reports on Form 8-K 36
Signatures
2
This Form 10-K contains certain "forward-looking" statements within the meaning
of The Private Securities Act of 1995 and information relating to RailAmerica,
Inc. and its subsidiaries that are based on the beliefs of our management and
that involve known and unknown risks and uncertainties. When used in this
report, the terms "anticipate," "believe," "estimate," "expect" and "intend" and
words or phrases of similar import, as they relate to us or our subsidiaries or
our management, are intended to identify forward-looking statements. These
statements reflect the current risks, uncertainties and assumptions related to
various factors including, without limitation, currency risk, competitive
factors, general economic conditions, customer relations, relationships with
vendors, fuel costs, the interest rate environment, governmental regulation and
supervision, seasonality, technological change, changes in industry practices,
the inability to successfully integrate acquired operations, the ability to
successfully market and sell non-core properties and assets, the liability to
consummate sale/leaseback transactions, the ability to service debt, one-time
events and other factors described in this report and in other filings made by
us with the Securities and Exchange Commission. Based upon changing conditions,
should any one or more of these risks or uncertainties materialize, or should
any underlying assumptions prove incorrect, actual results may vary materially
from those described in this report as anticipated, believed, estimated or
intended. We undertake no obligation to update, and we do not have a policy of
updating or revising, these forward-looking statements. Except where the context
otherwise requires, the terms "we," "us," or "our" refer to the business of
RailAmerica, Inc. and its consolidated subsidiaries.
PART I
ITEM 1. BUSINESS
GENERAL
We are 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. We own, operate or have an equity interest in, a
diversified portfolio of 39 railroads with approximately 11,000 miles of track
located in the United States, Australia, Canada, Chile and Argentina. Through
our diversified portfolio of rail lines, we operate in numerous geographic
regions with varying concentrations of commodities hauled. We believe that
individual economic and seasonal cycles in each region may partially offset each
other. All dollar amounts in this report are in U.S. dollars unless otherwise
indicated.
We were incorporated in Delaware on March 31, 1992 as a holding company
for two pre-existing railroad companies. Our principal executive office is
located at 5300 Broken Sound Blvd, N.W., Boca Raton, Florida 33487, and our
telephone number at that location is (561) 994-6015.
3
RECENT DEVELOPMENTS
Since January 1, 2000, we have completed the following significant transactions:
o In February 2000, we acquired RailTex, Inc., a leading owner and
operator of short line freight railroads concentrated in the
Southeastern, Midwestern, Great Lakes and New England regions of the
United States and in eastern Canada, with approximately 4,100 miles
of rail lines in North America. The total consideration was
approximately $128 million in cash, approximately 6.6 million shares
of our common stock, valued at $60.8 million, and assumption of
approximately $111 million in debt.
o In August 2000, we sold 130,000 units, each consisting of $1,000 of
12.875% senior subordinated notes due 2010 of our wholly owned
subsidiary, RailAmerica Transportation Corp. ("RTC"), and warrants
to purchase 10.873 shares of our common stock. Each unit was priced
at $940.38.
o During 2000, we sold several non-core railroads and various other
non-core assets for total proceeds of approximately $44.0 million.
In addition, we will receive a newly built 13.5 mile rail line in
Texas pursuant to an agreement with the State and Local Governments.
The cost of that rail line to the Government is expected to be
approximately $24 million.
o In December 2000, we sold the U.S.-based subsidiary of our specialty
truck trailer manufacturing operations, for $32.5 million, subject
to adjustments, to the Heil Company of Chattanooga, Tennessee. We
also sold substantially all of the assets of the Canadian based
subsidiary of our specialty truck trailer manufacturing operations,
to the Canam Manac Group in Saint-Georges, Quebec for approximately
$6.0 million.
o In December 2000, we completed the first phase of our sale/leaseback
program realizing $22.2 in proceeds on the sale of certain
locomotives.
NORTH AMERICAN RAILROAD OPERATIONS
We currently own, lease and/or operate 37 rail properties in North
America. All of our North American rail properties are short line railroads that
provide transportation services for both on-line customers and Class I
railroads, which interchange with our rail lines. Short line railroads are
typically less than 350 miles long, serve a particular class of customers in a
small geographic area and interchange with Class I railroads. Short line rail
operators primarily serve customers on their line by transporting products to
and from the Class I interchanges. Each of our North American rail lines is
typically the only rail carrier directly serving its customers. The ability to
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haul heavy and large quantities of freight as part of a long-distance haul makes
our rail services generally a more effective, lower-cost alternative to other
modes of transportation, including motor carriers.
UNITED STATES. We own, lease and/or operate 29 short line rail
properties in the United States with approximately 4,400 miles of track. Our
properties are geographically diversified and operate in 22 states. We have
clusters of rail properties in the southeastern, Midwestern, Great Lakes and New
England regions of the United States. We believe that this cluster strategy
provides economies of scale and helps achieve operational synergies.
CANADA. We own, lease and/or operate 8 short line rail properties in
Canada with approximately 1,800 miles of track. Our Canadian properties are
geographically diversified and operate in six provinces and/or territories. We
have clusters of rail properties in Alberta and southern Ontario/Quebec.
SALES AND MARKETING. We focus on providing rail service to our
customers that is easily accessible, reliable and cost-effective. Following
commencement of operations, our railroads generally have attracted increased
rail shipments from existing customers and obtained traffic from new customers
who had not previously shipped by rail or had ceased rail shipments. We believe
our ability to generate additional traffic is enhanced by our marketing efforts
which are aimed at identifying and responding quickly to the individual business
needs of customers along our rail lines. As part of our marketing efforts, we
often schedule more frequent rail service, help customers negotiate price and
service levels with interchange partners and assist customers in obtaining the
quantity and type of rail equipment required for their operations. We also
provide non-scheduled train service on short notice to accommodate customers'
special or emergency needs.
Our decentralized management structure is an important element of our
marketing strategy. We give significant discretion with respect to sales and
marketing activities to our North American regional marketing managers and
international marketing managers. Each regional marketing manager works closely
with personnel of our railroads and with other members of senior management to
develop marketing plans to increase shipments from existing customers and to
develop business from new customers. We also work with the marketing staffs of
the connecting Class I carriers to develop an appropriate array of rail-oriented
proposals to meet customers' needs and with industrial development organizations
to locate new rail users. We consider all of our employees to be customer
service representatives and encourage them to initiate and maintain regular
contact with shippers.
TRAFFIC. Rail traffic may be categorized as interline, local or bridge
traffic. Interline traffic either originates or terminates with customers
located along a rail line and is interchanged with other rail carriers. Local
traffic both originates and terminates on the same rail line and does not
involve other carriers. Bridge traffic passes over the line from one connecting
rail carrier to another.
5
Traffic which originated or terminated on our lines generated 89% of
our total freight revenue in both 2000 and 1999. We believe that higher levels
of interline and local traffic provide us with greater stability of revenues
because this traffic represents shipments to or from customers located along our
lines and cannot be easily diverted to other rail carriers, unlike bridge
traffic.
The following table summarizes freight revenue by type of traffic
carried by our railroads in 2000 and 1999, in dollars and as a percent of total
freight revenue.
NORTH AMERICA
FREIGHT REVENUE
(DOLLARS IN THOUSANDS)
[Download Table]
2000 1999
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Interline ....................... $146,184 72.0% $ 31,905 86.5%
Local ........................... 27,404 13.5% 945 2.6%
Bridge .......................... 29,396 14.5% 4,019 10.9%
-------- -------- -------- --------
$202,984 100.0% $ 36,869 100.0%
======== ======== ======== ========
CONNECTING CARRIERS. All of our short line properties interchange
traffic with Class I railroads. The following table summarizes our significant
connecting carriers in 2000 and 1999 by freight revenues and carloads as a
percentage of total interchanged (interline and bridge) traffic.
NORTH AMERICA
INTERCHANGED TRAFFIC
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2000 1999
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FREIGHT FREIGHT
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REVENUES CARLOADS REVENUES CARLOADS
-------- -------- -------- --------
Canadian National Railway 24.7% 24.7% 20.4% 21.6%
Union Pacific Railroad 24.0% 21.8% 3.5% 3.3%
CSXT Transportation 18.9% 15.0% 14.6% 10.0%
Canadian Pacific Railway 10.3% 16.6% 28.5% 24.4%
Burlington Northern Sante Fe Railway 8.5% 7.3% 26.6% 34.2%
Norfolk Southern 7.2% 7.3% -- --
All other railroads 6.4% 7.3% 6.4% 6.5%
--------------- ------------- ------------- -------------
Total interchanged traffic 100.0% 100.0% 100.0% 100.0%
=============== ============= ============= =============
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Charges for interchanged traffic are generally billed to the customers
by the connecting carrier and cover the entire transportation of a shipment from
origin to destination, including the portion that travels over our lines. Our
revenues from this traffic are generally collected through fees paid directly to
us by the connecting carriers rather than by customers on our lines and are
payable regardless of whether the connecting carriers are able to collect from
the customers. The fees payable by connecting carriers are set forth in
contracts entered into by each of our railroads with their respective connecting
carriers and are subject to periodic adjustments.
CUSTOMERS. In 2000, we served approximately 1,500 customers in North
America who shipped and/or received a wide variety of products. Our railroads
are typically the only rail carriers directly serving our customers.
Although most of our North American railroads have a well-diversified
customer base, several of the smaller rail lines have one or two dominant
customers. In 2000, our 10 largest North American customers accounted for
approximately 28% of North American transportation revenue. Three of these
customers accounted for approximately 15% of our North American transportation
revenue.
COMMODITIES. The following table sets forth by number and percentage
the carloads hauled by our North American railroads during the years ended
December 31, 2000 and 1999.
CARLOADS CARRIED BY COMMODITY GROUP
[Download Table]
YEAR ENDED YEAR ENDED
DECEMBER 31, 2000 DECEMBER 31, 1999
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COMMODITY CARLOADS % OF TOTAL CARLOADS % OF TOTAL
--------- -------- ---------- -------- ----------
Railroad equipment/
Intermodal ............. 192,323 23% 37,023 24%
Lumber, paper and forest
products ............... 149,226 18% 29,991 19%
Agriculture ............ 76,593 9% 28,140 18%
Metals ................. 61,049 7% 10,956 7%
Food products .......... 39,313 5% 9,736 6%
Chemicals/fertilizer ... 66,827 8% 8,522 6%
Petroleum products ..... 26,840 3% 5,678 4%
Coal ................... 71,945 9% 5,504 4%
Containers ............. 30,134 3% 5,033 3%
Minerals, ores & stones 53,173 6% 4,066 3%
Auto parts ............. 47,900 6% 3,415 2%
Other .................. 24,128 3% 6,927 4%
------- --- ------- -------
Total .......... 839,451 100% 154,991 100%
======= === ======= =======
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EMPLOYEES. Currently, we have approximately 1,320 full-time railroad
employees in North America. Approximately 260 of the 400 Canadian employees are
subject to collective bargaining agreements as well as approximately 260 of the
920 United States employees.
SAFETY. We endeavor to conduct safe railroad operations for the benefit
and protection of employees, customers and the communities served by our
railroads. Our safety program, led by the Vice President of Safety and Operating
Practices, involves all of our employees and is administered on a daily basis by
each Regional Vice President. Operating personnel are trained and certified in
train operations, hazardous materials handling, personal safety and all other
areas subject to governmental rules and regulations. Each U.S. employee involved
in train operations is subject to pre-employment and random drug testing whether
or not required by federal regulation. We believe that each of our North
American railroads complies in all material respects with federal, state,
provincial and local regulations. Additionally, each railroad is given
flexibility to develop more stringent safety rules based on local requirements
or practices. We also participate in governmental and industry sponsored safety
programs including Operation Lifesaver (the national grade crossing awareness
program) and the American Short Line and Regional Railroad Association Safety
Committee.
COMPETITION. In acquiring rail properties, we compete with other short
line and regional railroad operators, some of which have greater financial
resources than us. Competition for rail properties is based primarily upon
price, operating history and financing capability. We believe our established
reputation as a successful acquirer and operator of short line rail properties,
combined with our managerial resources, effectively positions us to take
advantage of future acquisition opportunities.
Our railroads are typically the only rail carriers directly serving
their customers; however, our railroads compete directly with other modes of
transportation, principally motor carriers and, to a lesser extent, ship and
barge operators. The extent of this competition varies significantly among our
railroads. Competition is based primarily upon the rate charged and the transit
time required, as well as the quality and reliability of the service provided,
for an origin-to-destination package. To the extent other carriers are involved
in transporting a shipment, we cannot control the cost and quality of service.
Cost reductions achieved by major rail carriers over the past several years have
generally improved their ability to compete with alternate modes of
transportation.
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INTERNATIONAL RAILROAD OPERATIONS
AUSTRALIAN RAILROAD OPERATIONS
We own Freight Australia, a regional freight railroad operating in and
around the State of Victoria, Australia. Formerly known as Freight Victoria,
Freight Australia is our 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 for total consideration of
approximately $103 million. The assets purchased from V/Line Freight Corporation
included 106 locomotives and over 2,600 rail cars. As part of the transaction,
Freight Australia prepaid to the State of Victoria the rental payments of a
45-year lease to operate 3,150 miles of track. The present value of the lease
payments totaling approximately $49 million is included in the $103 million
purchase price.
CUSTOMERS. Freight Australia's customers span a variety of industries,
with particular emphasis on companies in the Australian agricultural industry
for whom we carry bulk grain and other agricultural products. One customer
represented 19% of Freight Australia's transportation revenue in 2000.
Additionally, track access fees from V/Line Passenger represented 17% of Freight
Australia's transportation revenue in 2000.
COMMODITIES/SERVICES. The following table sets forth by dollar amount
(in thousands) and percentage Freight Australia's transportation revenue for the
year ended December 31, 2000 and the period from May 1, 1999 to December 31,
1999.
[Enlarge/Download Table]
2000 2000 1999 1999
COMMODITY/SERVICE US$ AMOUNT % OF TOTAL US$ AMOUNT % OF TOTAL
----------------- ---------- ---------- ---------- ----------
Agricultural products $ 45,440 46% $ 24,613 40%
Track access fees 16,309 16% 12,430 21%
Intermodal containers 13,540 14% 7,470 12%
Fast Track* 8,210 8% 6,744 11%
Bulk (i.e. cement, gypsum, stone, logs) 9,540 10% 6,213 10%
Interstate 5,954 6% 3,484 6%
----- ---- ---------- ----
Total transportation revenue $ 98,993 100% $ 60,954 100%
======== ==== ========= ====
* Fast Track - Freight Australia's Fast Track business transports
products which typically are less than a container load of freight. The
majority of traffic is either parcels or pallets. Services offered to
customers include depot-to-depot, depot-to-door, and door-to-door. The
Fast Track business has six metropolitan sites and services 24 regional
freight centers. Road contractors perform local pick-up and delivery to
and from the freight centers.
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EMPLOYEES. Freight Australia currently has approximately 650 employees.
A majority of these employees are subject to collective bargaining agreements.
CHILEAN RAILROAD OPERATIONS
In February 1997, we acquired 55% of the outstanding voting stock of
Ferronor for approximately $7.2 million. Ferronor owns and operates
approximately 1,400 miles of rail line serving northern Chile. The remaining 45%
of Ferronor was purchased by Andres Pirazzoli y Cia, Ltda., a Chilean contractor
providing equipment and mechanized services to the forest industry.
Ferronor owns and operates the only north-south railroad in northern
Chile, extending from La Calera near Santiago, where it connects with Chile's
southern railway, Ferrocarril del Pacifico, S.A., to its northern terminus at
Iquique, approximately 120 miles south of the Peruvian border. It also operates
several east-west branch lines that link a number of iron, copper and mineral
salt mines and production facilities with several Chilean Pacific port cities.
Ferronor also serves Argentina and Bolivia through traffic interchanged with the
Belgrano Cargas Railroad and the Antofagasta (Chile)-Bolivia Railway.
During the fourth quarter of 2000, Ferronor entered into an agreement
with Belgrano Cargas, S.A., the operator of the General Belgrano railroad in
Argentina. Under the new agreement, Ferronor will operate freight trains from
Chile's border city of Socompa to Guemes, Argentina. Ferronor will, for the
first time, be permitted to negotiate and sign transportation contracts with
customers on this portion of track and develop the Chilean export market into
Argentina and Bolivia. The agreement has an initial term of one year and
automatically renews for successive one-year terms unless either party gives
notice of termination.
CUSTOMERS. Ferronor's customers are principally in the mining industry.
Ferronor had two customers who each represented more than 10% of the
transportation revenue in Chile. The customers represented 44% and 38% of the
Chilean transportation revenue for 2000.
EMPLOYEES. Ferronor currently has approximately 260 full-time
employees. A majority of Ferronor's employees are subject to collective
bargaining agreements.
BUSINESS STRATEGY
Our strategy is to expand our position as a leading owner and operator
of short line and regional railroads in selected markets worldwide. Key elements
of this strategy include:
GROW INTERNALLY THROUGH FOCUSED SALES, MARKETING EFFORTS AND CUSTOMER
SERVICE. We continue to focus on increasing traffic in each of our markets by
aggressively marketing our customer service to our customers and bolstering
10
sales efforts. In many cases, customer service and sales and marketing at
railroads that we acquire have been neglected by the previous owners. The
Company has purchased a number of rail lines from Class I railroads. Due to the
size of the Class I railroads and their concentration on long-haul traffic, the
Class I operators typically have not effectively marketed to customers on these
branch line operations.
Once we acquire a rail property, we undertake steps to improve the
local sales and marketing efforts and to increase the railroad's focus on
customer service. Due to our decentralized management structure and a flexible,
cross-trained employee base, we are able to provide flexible and customized
solutions that were not previously available to the customers under the
ownership of a Class I operator. This increased focus on service enables us to
reestablish relationships with customers who had previously cancelled service.
In addition, we have been successful at increasing shipments from the
acquired railroad's existing customer base. As a result, typically, revenues
increase and profitability improves once we acquire and integrate a railroad.
Our management intends to continue this strategy by deepening our relationships
with customers and further improving upon our local sales and marketing efforts.
MAINTAIN CLOSE RELATIONSHIPS WITH CLASS I RAILROADS. Since all of our
North American short line properties interchange with at least one Class I
railroad, we maintain close relationships with all of the North American Class I
railroads. We believe that these relationships will enable us to pursue new
business opportunities on existing rail properties and potentially acquire
additional short line freight lines from the Class I railroads.
CONTINUE TO GROW THROUGH SELECTIVE ACQUISITIONS. We believe that the
market for domestic short line rail acquisitions is starting to expand as
mergers between Class I's and consolidations among short line and regional
railroads have opened up several thousand miles of rail lines for sale.
Opportunities also exist in international markets as certain government-owned
railway systems are being privatized. We intend to pursue those acquisitions
that meet our stringent criteria, particularly in regions where we currently
operate and can achieve cost savings and synergies. Any rail acquisitions that
we pursue must be accretive to earnings and not result in increasing our debt
leverage and coverage ratios.
DIVERSIFICATION. We believe that our revenue diversification limits our
exposure to geographic, economic and customer related risks, while positioning
us to take advantage of a broad range of business opportunities. This
diversification, and the stability it provides to our operations, differentiates
us from other regional and short line carriers. Diversification also enables us
to develop and maintain close relationships with essentially all Class I's in
North America.
DIVESTITURES. In order to capitalize on opportunities more profitable
to our overall portfolio, minimize the amount of management time and effort on
the smaller properties in our portfolio and to reduce debt, we may from time to
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time divest certain of our non-core railroad properties. We believe there is a
market for these divestitures among other smaller short line operating companies
and selected strategic buyers.
REGULATION
UNITED STATES. Our subsidiaries in the United States are subject to
various safety and other laws and regulations by numerous government agencies,
including (1) regulation by the Surface Transportation Board, or STB, and the
Federal Railroad Administration, or FRA, (2) labor related statutes including
the Railway Labor Act, Railroad Retirement Act, the Railroad Unemployment
Insurance Act, and the Federal Employer's Liability Act, and (3) regulation by
agencies in the states in which we do business. Additionally, we are subject to
STB regulation in connection with our acquisition of new railroad properties. As
a result of the enactment in 1980 of the Staggers Rail Act, which amended the
Interstate Commerce Act, and the enactment of the ICC Termination Act of 1995,
there has been a significant relaxation in regulation governing rail carriers,
which management believes has greatly simplified the purchase and sale of short
line railroad properties and expedited the closing of those transactions.
The STB has jurisdiction over, among other matters, the construction,
acquisition, or abandonment of rail lines, the consolidation or merger of
railroads, the assumption of control of one railroad by another railroad, the
use by one railroad of another railroad's tracks through lease, joint use or
trackage rights, the rates charged for their transportation services, and the
service provided by rail carriers. The ICC Termination Act replaced the
Interstate Commerce Commission, or ICC, with the STB. The ICC Termination Act
also abolished labor protective conditions applicable to numerous types of rail
transactions. Labor protective conditions cannot be imposed on the sale of a
railroad line to a new carrier. In the sale of a railroad line to a regional
railroad, which is a railroad with annual revenues between $20 million and $250
million, as adjusted by the railroad revenue deflator, labor protection consists
of the payment of up to one year of severance pay for employees affected by the
transaction. In some instances of the sale of a railroad line to a small
railroad, which is a railroad with annual revenues that are less than $20
million, as adjusted by the railroad revenue deflator, labor protection also
consists of the payment of up to one year of severance pay for employees
affected by the transaction. While imposition of labor protective conditions on
line sales and transfers does not subject a rail line buyer to the seller's
collective bargaining agreements, rates of pay, and other labor practices and
does not unionize the buyer's operating and maintenance employees, it does
entitle employees of the buyer or seller who are "adversely affected" by the
transaction in terms of job loss, pay cuts, loss of overtime, loss of hours,
loss of benefits, and moving expenses, to receive over a period of up to six
years payments representing compensation for those losses. Generally, in a line
sale or transfer, only the seller's or transferor's employees are affected.
As a result of the Staggers Rail Act, railroads have received
considerable rate and market flexibility including the ability to obtain
wholesale exemptions from numerous provisions of the Interstate Commerce Act.
The Staggers Rail Act allowed the deregulation of all containerized and truck
12
trailer traffic handled by railroads. On regulated traffic, railroads and
shippers are permitted to enter into contracts for rates and provision of
transportation services without the need to file tariffs. Moreover, on regulated
traffic, the Staggers Rail Act allows railroads considerable freedom to raise or
lower rates without objection from captive shippers. While the ICC Termination
Act retained maximum rate regulation on traffic over which railroads have
exclusive control, the new law relieved railroads from the requirements of
filing tariffs and rate contracts with the STB on all traffic other than
agricultural products.
The FRA regulates railroad safety and equipment standards, including
track maintenance, handling of hazardous shipments, locomotive and rail car
inspection and repair requirements, and operating practices and crew
qualifications.
AUSTRALIA. Our Australian railroad, Freight Australia, is subject to
regulation in the State of Victoria by the Office of the Regulator-General. The
Office of the Regulator-General, known as ORG, was established by the Office of
the Regulator-General Act. The purpose of the ORG is to create a regulatory
framework for regulated industries which promotes and safeguards competition and
fair and efficient market conduct or, if there is no competitive market,
promotes the simulation of competitive market conduct and the prevention of
misuse of monopoly power. These objectives were expanded by the Victorian
Government in the RAIL CORPORATIONS ACT 1996 to ensure that rail users have fair
and reasonable access to declared railway services.
The RAIL CORPORATIONS ACT 1996, known as RCA, regulates the operation
of the State of Victoria's passenger trains and trams and rail network. Part 2A
of the RCA outlines an access regime which potentially applies to railways and
rail infrastructure and gives power to the ORG to regulate access to relevant
services. At present, however, no rail transport services have been declared to
be subject to the regime. The Ministers for Transport and Ports jointly
announced on February 1, 2001 that the access regime will be declared effective
July 1, 2001. Draft pricing orders were issued on February 1, 2001 as well.
In the event that any services are declared to be "declared rail
transport services" and thus become subject to the Part 2A access regime, Part
2A provides that:
A manager of rail infrastructure and a provider and operator of rolling
stock must:
(1) use all reasonable endeavors to meet the requirements of
persons seeking access to the declared rail transport
services;
(2) make a formal proposal of terms and conditions for access
within 14 days after receiving a request for it to do so; and
(3) at the request of a person seeking, or considering seeking,
access provide to that person information as prescribed by
ORG.
13
In the following circumstances, an application may be made in writing
to ORG, by the operator or a person seeking access, for a determination:
(1) if the operator has not made a formal proposal within 14 days
after receiving a request for it to do so;
(2) if the operator and a person seeking access cannot agree on
the terms and conditions on which access is to be provided;
and
(3) a person considers that their right of access to a declared
rail transport service has been hindered.
A determination of ORG may, among other things:
(1) require the operator to provide access to the service to the
person seeking access;
(2) deal with the terms and conditions of access; and
(3) specify the extent to which the determination overrides an
earlier determination.
In addition, the Governor in the Council may specify policies or
principles which ORG must apply in:
(1) determining any amount to be paid for access to a specified
declared rail transport service; or
(2) determining the terms and conditions of access.
The Rail Corporations Act was amended in October 2000 to strengthen the
powers of the ORG, particularly in respect to the information the ORG may
require to be supplied by the access provider in order for the ORG to make a
determination.
In addition to complying with the above-described regulations, a
manager of rail infrastructure and a provider and operator of rolling stock must
be accredited under the TRANSPORT ACT 1993. A corporation which manages rail
infrastructure or operates rolling stock without accreditation is liable for a
fine of $140,000.
The Secretary to the Department of Infrastructure may take disciplinary
action against an accredited person if the person has failed to comply with the
requirements of accreditation or has permitted an unsafe practice or acted
negligently. Disciplinary action which the Secretary may take includes
disqualifying the person from holding an accreditation for a period specified by
the Secretary, suspension of the accreditation, early expiry of the
accreditation and immediate or future cancellation of the accreditation.
14
The person has a right of review concerning accreditation decisions and
may apply to the Victorian Civil and Administrative Tribunal for a review of a
decision made by the Secretary. An accreditation is personal to a person who
holds it, is not capable of being transferred of assigned or otherwise dealt
with by the person who holds it and does not vest by operation of law in any
other person.
The TRANSPORT ACT contains detailed provisions authorizing the
Secretary of the Department of the Infrastructure to carry out inspections and
giving inspectors powers to enter and inspect premises (including, testing
equipment and seizing property if appropriate). All actions must be reasonably
necessary to determine compliance with the Transport Act. A search warrant or
prior written consent of the occupier is necessary for entry into premises.
The Secretary must conduct safety audits of every person accredited at
least once every twelve months, to ensure that the accredited person is
complying with the requirements of accreditation. The Secretary may charge the
accredited person a fee for the safety audit service, subject to the limits set
out in the relevant regulations. An accredited person has a duty to inquire into
accidents and incidents.
CANADA. Our Canadian railroad subsidiaries are subject to regulation by
various governmental departments and regulatory agencies at the federal or
provincial level depending on whether the railroad operated by us in question
falls within federal or provincial jurisdiction. A Canadian railroad generally
falls within the jurisdiction of federal regulation if the railroad crosses
provincial or international borders or if the Parliament of Canada has declared
the railroad to be a federal work or undertaking and in selected other
circumstances. Any company which proposes to construct or operate a railway in
Canada which falls within federal jurisdiction is required to obtain a
certificate of fitness under the Canada Transportation Act, or CTA, which is
issued on proof of insurance. Under the CTA, the sale of a federally regulated
railroad line is not subject to federal approval, although a process of
advertising and negotiations may be required in connection with any proposed
discontinuance of a federal railway. Federal railroads are governed by federal
labor relations laws.
Short lines located within the boundaries of a single province which do
not otherwise fall within the federal jurisdiction are regulated by the laws of
the province in question, including laws as to licensing and labor relations.
Most of Canada's ten provinces have enacted new legislation, which is more
favorable to the operation of short line railroads than previous provincial
laws. Many of the provinces require as a condition of licensing under the short
line railroads acts that the licensees comply with federal regulations
applicable to safety and other matters and remain subject to inspection by
federal railway inspectors. Under some provincial legislation, the sale of a
provincially regulated railroad line is not subject to provincial approval,
although a process of advertising and negotiations may be required in connection
with any proposed discontinuance of a provincial railway.
15
Acquisition of additional railroad operations in Canada, whether
federally or provincially regulated, may be subject to review by the Investment
Canada Act, or ICA, a federal statute which applies to every acquisition of a
Canadian business or establishment of a new Canadian business by a non-Canadian.
Whether or not an acquisition is subject to review under the ICA is dependent on
the book value of the assets of the Canadian business being acquired.
Acquisitions that are subject to review must, before their completion, satisfy
the Minister responsible for administering the ICA that the acquisition is of
net benefit to Canada.
Any contemplated acquisitions may also be subject to the provisions of
the Competition Act federal antitrust legislation of general application. The
Competition Act contains merger control provisions which apply to certain
acquisitions. As a result, acquisitions exceeding specified asset and/or revenue
thresholds may be subject to pre-merger notification and subsequent substantive
review prior to their completion.
NORTH AMERICAN RAILROAD INDUSTRY
The U.S. railroad industry is dominated by major Class I railroads,
which operated approximately 121,000 miles of track in 1999. In addition to
large railroad operators, there were more than 500 short line and regional
railroads, which operated approximately 50,000 miles of track in 1999.
The railroad industry is subject to regulations of various government
agencies, primarily the STB. For regulatory purposes, the STB classifies
railroads into three groups: Class I, Class II and Class III, based on annual
operating revenue. For 1999, the Class I railroads had operating revenues of at
least $258.5 million, Class II railroads had revenues of $20.7 million to $258.4
million, and Class III railroads had revenues of less than $20.7 million.
In compiling data on the U.S. railroad industry, the Association of
American Railroads uses the STB's revenue threshold for Class I railroads.
Regionals are railroads operating at least 350 miles of rail line and/or
revenues between $40 million and the Class I revenue threshold. Locals are
railroads falling below the Regional criteria, plus switching and terminal
railroads.
1999 INDUSTRY OVERVIEW
[Download Table]
NUMBER OF (IN BILLIONS)
TYPE OF RAILROAD CARRIERS 1999 REVENUES % OF REVENUES
---------------- -------- ------------- -------------
Class I 9* $32.7 91.1%
Regional 36 1.8 5.0
Local 510 1.4 3.9
--- ----- -----
Total 555 $35.9 100.0%
=== ===== =====
*As of December 31, 2000, there were 7 Class I railroads.
As a result of deregulation, Class I railroads have been able to
concentrate on core, long-haul routes, while divesting many of their low-density
16
branch lines to smaller and more cost-efficient freight railroad operators such
as our company. Divesting branch lines allows Class I railroads to increase
traffic density, improve railcar utilization and avoid rail line abandonment.
The proportion of total track miles operated by short line and regional
railroads in the U.S. has increased dramatically as a result of these
divestitures.
Because of the focus by short line railroads on increasing traffic
volume through increased customer service and more efficient operations, traffic
volume on short line railroads frequently increases after divestiture by Class I
operators. Consequently, these transactions often result in net increases in
divesting carriers' freight traffic because much of the business originating or
terminating on branch lines feeds into divesting carriers' core routes.
INTERNATIONAL RAILROAD INDUSTRY
Freight railroad services in countries other than the United States and
Canada are typically operated by governments and conducted at a loss.
Government-run railroads are often unresponsive to market needs and
inefficiently operated. Due to economic necessity and a lack of cost-effective
solutions, many countries are privatizing their rail operations. Recent examples
include Mexico, the United Kingdom and Australia.
In the last few years several states in Australia have privatized their
rail systems. It is anticipated that other state rail systems as well as the
Australian national rail system will be privatized in the foreseeable future.
ITEM 2. PROPERTIES
NORTH AMERICAN RAILROAD PROPERTIES
The following table sets forth information with respect to the North
American railroad properties that we owned as of December 31, 2000:
[Enlarge/Download Table]
------------------------------- -------------- -------- ------------ --------------- -------------------------------
DATE OF TRACK PRINCIPAL
RAILROAD ACQUISITION MILES STRUCTURE LOCATION COMMODITIES
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Cape Breton & Central Nova Feb 2000 245 Owned Nova Scotia Coal, paper, metals, railroad
Scotia Railway equipment
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Carolina Piedmont Railroad Feb 2000 49 Owned South Carolina Chemicals, minerals, stones,
food products, turbines
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Cascade and Columbia River Sept. 1996 130 Owned; Washington Wood products, paper
Railroad Trackage products, limestone,
rights agricultural products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Central Oregon & Pacific Feb 2000 449 Owned; Oregon Lumber, paper and farm
Railroad Leased; products, food, chemicals
Trackage
rights
------------------------------- -------------- -------- ------------ --------------- -------------------------------
17
[Enlarge/Download Table]
------------------------------- -------------- -------- ------------ --------------- -------------------------------
DATE OF TRACK PRINCIPAL
RAILROAD ACQUISITION MILES STRUCTURE LOCATION COMMODITIES
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Central Railroad of Indiana Feb 2000 81 Owned Indiana, Ohio Chemicals, minerals, stones,
farm products, metals
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Central Railroad of Feb 2000 73 Leased; Indiana Farm and food products,
Indianapolis Trackage chemicals, railroad equipment
rights
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Central Western July 1999 23 Owned Alberta Agricultural products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Connecticut Southern Feb 2000 78 Owned; Connecticut Lumber, paper products,
Trackage chemicals, metal products
rights
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Dakota Rail Sept. 1995 44 Contract Minnesota Plastics, lumber, scrap steel,
for Deed chemicals
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Dallas Consolidated (2 rail Feb 2000 284 Leased Texas Food products, non-metallic
lines) ores, paper products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
E&N Railway Jan. 1999 61 Owned British Lumber, paper products,
120 Leased Columbia propane
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Georgia Southwestern Railroad Feb 2000 286 Leased Georgia, Non-metallic ores, lumber,
Alabama chemicals, forest products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Goderich-Exeter Railway Feb 2000 159 Owned; Ontario Auto parts, chemicals,
Leased non-metallic ores
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Huron and Eastern Railway March 1986 171 Owned; Michigan Agricultural products, sugar
May 1988 leased; products, fertilizer, scrap
trackage steel, auto parts
rights
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Indiana & Ohio Railway Feb 2000 577 Owned; Michigan, Autos, railroad equipment,
Leased Ohio, Indiana agricultural products,
chemicals
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Indiana Southern Railroad Feb 2000 176 Owned; Indiana Coal, farm products, chemicals
Trackage
rights
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Lakeland & Waterways July 1999 125 Owned Alberta Forest products, agricultural
products, bridge traffic
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Mackenzie Northern July 1999 650 Owned Alberta, Fuel, forest products,
Northwest agricultural products
Territory
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Michigan Consolidated (3 rail Feb 2000 118 Owned Michigan, Agricultural products,
lines) Ohio, Indiana non-metallic ores, chemicals,
auto parts
------------------------------- -------------- -------- ------------ --------------- -------------------------------
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[Enlarge/Download Table]
------------------------------- -------------- -------- ------------ --------------- -------------------------------
DATE OF TRACK PRINCIPAL
RAILROAD ACQUISITION MILES STRUCTURE LOCATION COMMODITIES
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Missouri & Northern Arkansas Feb 2000 497 Owned Missouri, Lumber, paper products, coal,
Railroad Arkansas, agricultural products
Kansas
------------------------------- -------------- -------- ------------ --------------- -------------------------------
New England Central Railroad Feb 2000 330 Owned Vermont, Lumber, paper products, coal,
Massachusetts copper, bridge traffic
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Ottawa Valley Railway July 1999 389 Leased Ontario Bridge traffic, forest
products, mining
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Otter Tail Valley Railroad Oct. 1996 72 Owned Minnesota Coal, agricultural products,
fertilizer
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Saginaw Valley Railway Jan. 1991 65 Owned Michigan Agricultural products,
Apr. 1998 fertilizer, sand, stone
------------------------------- -------------- -------- ------------ --------------- -------------------------------
San Diego & Imperial Valley Feb 2000 124 Trackage California, Petroleum, paper products,
Railroad rights Mexico non-metallic ores, lumber
------------------------------- -------------- -------- ------------ --------------- -------------------------------
South Carolina Central Feb 2000 97 Owned South Carolina Chemicals, metals, coal,
Railroad paper products, waste
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Southern Ontario July 1999 54 Leased Ontario Fuel, metals, agricultural
products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Texas-New Mexico Railroad Feb 2000 107 Owned Texas, New Non-metallic ores, waste,
Mexico petroleum
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Toledo, Peoria and Western Sept 1999 298 Owned; Indiana, Intermodal, agricultural
Railroad Trackage Illinois, Iowa products, fertilizers,
rights chemicals
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Ventura County Railroad Aug. 1998 13 Leased California Automobiles, chemicals,
paper products
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Virginia Consolidated (3 rail Feb 2000 211 Leased; Virginia, Coal, lumber, limestone,
lines) Owned North Carolina aggregates
------------------------------- -------------- -------- ------------ --------------- -------------------------------
West Texas & Lubbock Railroad Nov. 1995 104 Owned Texas Fertilizer, chemicals, cotton
products, scrap iron , steel
------------------------------- -------------- -------- ------------ --------------- -------------------------------
Total track miles 6,260
------------------------------- -------------- -------- ------------ --------------- -------------------------------
CHILEAN RAILROAD PROPERTIES
Ferronor, which we acquired in 1997, owns and operates the only
north-south railroad in northern Chile, extending from La Calera near Santiago,
where it connects with Chile's southern railway, Ferrocarril del Pacifico, S.A.,
to its northern terminus at Iquique, approximately 120 miles south of the
Peruvian border. It also operates several east-west branch lines that link a
19
number of iron, copper and mineral salt mines and production facilities with
several Chilean Pacific port cities. Ferronor also serves Argentina and Bolivia
through traffic interchanged with the Belgrano Cargas Railroad and the
Antofagasta (Chile)-Bolivia Railway. Ferronor owns approximately 1,400 miles of
track.
AUSTRALIAN RAILROAD PROPERTIES
On April 30, 1999, through our wholly owned subsidiary Freight
Australia, we prepaid a 45-year lease to operate 3,150 miles of track in the
State of Victoria, Australia. Freight Australia's principal commodity is
agricultural products for use in Southwestern Australia as well as export
markets.
NORTH AMERICAN ROLLING STOCK
The following tables summarize the composition of our North American
railroad equipment fleet as of December 31, 2000:
[Download Table]
FREIGHT CARS
----------------------------------------
TYPE OWNED LEASED TOTAL
---- ----- ------ -----
Covered hopper cars 32 1,257 1,289
Open top hopper cars 0 405 405
Box cars 34 1,267 1,301
Flat cars 114 464 578
Tank cars 138 -- 138
Gondolas 0 525 525
Intermodal 0 35 35
---- ----- ------
318 3,953 4,271
=== ===== =====
[Download Table]
LOCOMOTIVES
----------------------------------------
HORSEPOWER/UNIT OWNED LEASED TOTAL
--------------- ----- ------ -----
Over 2000 100 138 238
1500 to 2000 99 9 108
Under 1500 13 9 22
---- ---- ---
212 156 368
==== ===== ====
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INTERNATIONAL ROLLING STOCK
The following tables summarize the composition of our Australian and
Chilean railroad equipment fleet as of December 31, 2000:
[Download Table]
FREIGHT CARS
----------------------------------------
TYPE CHILE AUSTRALIA TOTAL
---- ----- --------- -----
Covered hopper cars -- 1,157 1,157
Open top hopper cars 198 173 371
Box cars 140 249 389
Intermodal containers 500 646 1,146
Tank cars -- 335 335
Flat cars 70 84 154
Gondolas 55 -- 55
---- ------ ------
963 2,644 3,607
==== ====== ======
[Download Table]
LOCOMOTIVES
----------------------------------------
HORSEPOWER/UNIT CHILE AUSTRALIA TOTAL
--------------- ----- --------- -----
Over 2000 -- 40 40
1500 to 2000 -- 23 23
Under 1500 31 43 74
---- ------ ----
31 106 137
==== ====== ===
We own all of our international equipment fleet.
Based on current and forecasted traffic levels on our railroads,
management believes that our present equipment, combined with the availability
of other rail cars and/or locomotives for hire, is adequate to support its
operations. We believe that our insurance coverage with respect to our property
and equipment is adequate.
ADMINISTRATIVE OFFICES AND OTHER
In 1998, we purchased a 59,500 square foot office building, located in
Boca Raton, Florida, where our executive offices are located. Of this space,
approximately 30,000 square feet are leased or available for lease to others.
Our North American railroad headquarters, located in San Antonio, Texas, leases
approximately 24,000 square feet of office space for approximately $455K
annually. The lease expires December 31, 2005.
Freight Australia's administrative office is in Melbourne, Australia.
Freight Australia leases approximately 20,000 square feet of space from the
Victorian Government for $173,600 annually. The lease expires May 31, 2004.
Ferronor's administrative office is in Coquimbo, Chile, where Ferronor
owns a three-story 21,600 square foot office building.
21
We also own a building totaling approximately 45,000 square feet in
Quebec, Canada and own a terminal in Ontario, Canada, which includes an office
building and 5 acres.
ITEM 3. LEGAL PROCEEDINGS
In the second quarter of 2000, certain parties filed property damage claims
totaling approximately $32.5 million against Mackenzie Northern Railway, a
wholly-owned subsidiary of RailAmerica, 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 $13.0 million to cover these
claims. The Company's insurer has reserved $9.8 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.
In the ordinary course of conducting our business, we become involved
in various legal actions and other claims some of which are currently pending.
Litigation is subject to many uncertainties and we may be unable to accurately
predict the outcome of individual litigated matters. Some of these matters
possibly may be decided unfavorably to us. It is the opinion of management that
the ultimate liability, if any, with respect to these matters will not be
material. Other than ordinary routine litigation incidental to our business, no
other litigation exists.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 2000.
22
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock trades on the Nasdaq National Market under the symbol
"Rail". Set forth below is high and low price information for the common stock
as reported on the NASDAQ system for each period presented. All quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not reflect actual transactions.
1999 HIGH SALES PRICE LOW SALES PRICE
----------------- ------------------
First Quarter $10.250 $7.688
Second Quarter 10.313 8.750
Third Quarter 10.750 9.125
Fourth Quarter 9.938 7.063
2000 HIGH SALES PRICE LOW SALES PRICE
----------------- ------------------
First Quarter $ 9.063 $5.750
Second Quarter 6.938 4.625
Third Quarter 7.875 5.750
Fourth Quarter 8.000 5.688
2001 HIGH SALES PRICE LOW SALES PRICE
----------------- ------------------
First Quarter (through March 23) $ 9.250 $7.500
As of March 23, 2001, there were 519 holders of record of the common
stock. We have never declared or paid a dividend on our common stock. Certain of
our financial agreements limit our ability to pay dividends.
23
ITEM 6. SELECTED FINANCIAL DATA
The results of our continuing operations for the years ended December
31, 2000 and 1999 include the results of certain railroads from the dates they
were acquired as follows: RailTex, effective February 1, 2000, Freight
Australia, effective April 30, 1999, RaiLink, effective August 1, 1999, The
Toledo, Peoria, and Western Railroad, which we refer to as TPW, effective
September 1, 1999, and Ferronor, effective February 1, 1997. The income
statement data for the years ended December 31, 2000, 1999 and 1998 and the
balance sheet data at December 31, 2000 and 1999 are derived from, and are
qualified by reference to, audited financial statements included elsewhere in
this report and should be read in conjunction with those financial statements
and the notes thereto. The income statement data set forth below for the periods
ended December 31, 1997 and 1996 and the balance sheet data as of December 31,
1998, 1997 and 1996 are derived from our audited financial statements not
included (in thousands, except operating and per share data).
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA
Operating revenue ................... $ 357,936 $ 129,818 $ 39,136 $ 24,496 $ 12,020
Operating income .................... 70,034 25,279 5,781 3,365 2,529
Income from continuing operations ...... 9,608 6,025 113 288 478
Basic earnings per ommon share from
continuing operations ............... $ 0.50 $ 0.45 $ 0.01 $ 0.02 $ 0.10
Diluted earnings per common share from
continuing operations ............... $ 0.49 $ 0.43 $ 0.01 $ 0.02 $ 0.09
Weighted average common shares - Basic 18,040 11,090 9,553 8,304 4,966
Weighted average common shares - Diluted 18,267 11,665 9,778 8,587 4,966
BALANCE SHEET DATA
Total assets ........................... $ 839,703 $ 443,929 $ 130,964 $ 95,141 $ 65,215
Long-term obligations .................. 358,856 162,827 66,327 47,603 37,788
Subordinated debt ...................... 141,411 122,449 -- 2,212 2,212
Redeemable convertible preferred stock 6,613 8,830 -- -- --
Stockholders' equity ................... 129,908 69,467 34,760 26,814 15,992
OPERATING DATA
Freight carloads ....................... 1,125,897 394,177 117,535 69,140 25,871
Track mileage .......................... 11,000 8,400 2,400 2,330 930
Number of full time employees .......... 2,230 1,707 652 542 275
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
Our principal operations consist of the operations of North American
short line freight railroads and international regional railroads. We haul
various products for our customers corresponding to their local operating areas.
We recognize railroad transportation revenue after services are provided.
On February 4, 2000, we acquired RailTex for approximately $128 million
in cash, assumption of $105.3 million in debt and approximately 6.6 million
shares of our common stock, valued at $60.8 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. In connection with the
acquisition, we entered into a credit agreement providing $330 million of senior
term loans and $50 million of senior revolving loans. In addition, one of our
wholly owned subsidiaries issued $95 million of subordinated bridge notes and
another wholly owned subsidiary issued $55 million of asset sale bridge notes in
connection with the acquisition. All of the bridge notes were repaid in 2000.
Set forth below is a discussion of the historical results of operations
for our North American and international railroad operations as well as a
discussion of corporate overhead.
NORTH AMERICAN RAILROAD OPERATIONS
Our historical results of operations include the operations of our
acquired railroads from the dates of acquisition as follows:
NAME OF RAILROAD DATE OF ACQUISITION
Ventura County Railroad September 1998
E&N Railway January 1999
RaiLink properties (6 railroads) August 1999
Toledo, Peoria and Western Railroad September 1999
RailTex properties (25 railroads) February 2000
We disposed of certain 2000 railroads during 2000 as follows:
Minnesota Northern Railroad August 2000
St Croix Valley Railroad August 2000
South Central Tennessee Railroad December 2000
Pittsburgh Industrial Railroad December 2000
Ontario L'Orignal Railway December 2000
25
As a result, the results of operations for the years ended December 31,
2000, 1999 and 1998 are not comparable in various material respects and are not
indicative of the results which would have occurred had the acquisitions or
dispositions been completed at the beginning of the periods presented.
The following table sets forth the operating revenues and expenses (in
thousands) for our North American railroad operations for the periods indicated.
All results of operations discussed in this section are for our North American
railroads only, unless otherwise indicated.
YEARS ENDED DECEMBER 31,
----------------------------------------
2000 1999 1998
--------- --------- ---------
Total operating revenue $ 231,445 $ 44,924 $ 18,067
--------- --------- ---------
Operating Expenses:
Maintenance of way 25,448 5,920 1,974
Maintenance of equipment 13,101 2,068 682
Transportation 70,958 12,232 3,605
Equipment rental 15,842 4,512 2,296
(Gain) loss on sale of assets (12,063) 355 (79)
General and administrative 41,062 6,496 3,095
Depreciation and amortization 16,430 3,594 1,570
--------- --------- ---------
Total operating expenses 170,778 35,177 13,143
--------- --------- ---------
Operating income $ 60,667 $ 9,747 $ 4,924
========= ========= =========
COMPARISON OF NORTH AMERICAN RAILROAD OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
OPERATING REVENUES. Operating revenue increased by $186.5 million, or
415%, to $231.4 million for the year ended December 31, 2000 from $44.9 million
for the year ended December 31, 1999. North American carloads totaled 839,451
for the year ended December 31, 2000, an increase of 684,460 compared to 154,991
carloads in the prior year. These increases were primarily due to the
acquisitions of TPW, RaiLink and RailTex which on a combined basis contributed
$206.9 million in revenue and 782,614 carloads for the year ended December 31,
2000 compared to $18.1 million in revenue and 94,309 carloads for the year ended
December 31, 1999. Transportation revenue per carload remained fairly constant
at $239 and $238 for the years ended December 31, 2000 and 1999 respectively.
OPERATING EXPENSES. Operating expenses increased by $135.6 million, or
385%, to $170.8 million for the year ended December 31, 2000 from $35.2 million
for the year ended December 31, 1999. The increase was due to the acquisitions
of TPW, RaiLink and RailTex which on a combined basis contributed $164.6 million
26
in operating expenses for the year ended December 31, 2000 compared to $14.4
million for the year ended December 31, 1999. The increase was partially offset
by a $9.1 million gain on sale of land on a Texas railroad and a $3.0 million
gain on the sale of certain railroad subsidiaries. Additionally, increased fuel
costs impacted our operating expenses by approximately $4.4 million over
expected amounts during 2000. Operating expenses, as a percentage of operating
revenue, exclusive of the gain on sale of assets, were 79.0% and 77.5% for the
years ended December 31, 2000 and 1999, respectively.
COMPARISON OF NORTH AMERICAN RAILROAD OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
OPERATING REVENUES. Operating revenue increased $26.9 million, or 149%, to $44.9
million for the year ended December 31, 1999 from $18.1 million for the year
ended December 31, 1998. The increase was primarily due to increased carloads
resulting from 1999 acquisitions. The transportation revenue per carload
decreased to $238 from $303 per car primarily due to the acquisition of a rail
line in Canada that hauls a significant amount of bridge traffic at a lower rate
per car than the Company's other rail lines and intermodal traffic on the newly
acquired TPW which also moves at a lower rate per car than the Company's other
rail lines. Carloads handled totaled 154,991 for the year ended December 31,
1999, an increase of 105,472, or 213%, compared to 49,519 for the year ended
December 31, 1998. The increase was primarily due to the acquisitions of E&N
Railroad, the RaiLink properties and TPW, which moved 7,839, 77,328 and 16,981
carloads, respectively, for the year ended December 31, 1999.
OPERATING EXPENSES. Operating expenses increased $22.0 million, or
168%, to $35.2 million for the year ended December 31, 1999 from $13.1 million
for the year ended December 31, 1998. The increase was primarily due to the
acquisitions of E&N Railroad, the RaiLink properties and TPW, which had $4.4
million, $11.1 million and $3.4 million, respectively, in operating expenses for
the year ended December 31, 1999 and the write-off of $0.6 million in costs
related to the discontinuance of the Delaware Valley Railway. Operating
expenses, exclusive of gains and losses on sales, as a percentage of
operating revenue, were 77.5% and 73.2% for 1999 and 1998, respectively.
Exclusive of the write-off of costs at the Delaware Valley Railway, the
operating ratio was 76.9% for 1999.
INTERNATIONAL RAILROAD OPERATIONS
FREIGHT AUSTRALIA
The results of operations for the years ended December 31, 2000 and
1999 include the operations of Freight Australia from its date of acquisition,
May 1, 1999. Therefore, the results of operations for the year ended December
31, 2000 are not comparable to the prior year in certain material respects and
are not indicative of the results which would have occurred had the acquisition
been consummated January 1, 1999.
The following table sets forth the operating revenues and expenses (in
thousands) for Freight Australia's railroad operations for the year ended
December 31, 2000 and the period from May 1, 1999 to December 31, 1999.
27
2000 1999
-------- --------
Revenues: $102,204 $ 63,358
-------- --------
Operating expenses:
Transportation 70,118 42,742
General and administrative 6,253 5,169
Depreciation and amortization 5,438 3,429
-------- --------
Total operating expenses 81,809 51,340
-------- --------
Operating income $ 20,395 $ 12,018
======== ========
COMPARISON OF FREIGHT AUSTRALIA'S OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
OPERATING REVENUES. Operating revenues increased $38.8 million, or 61%,
to $102.2 million for the year ended December 31, 2000 from $63.4 million for
the year ended December 31, 1999. The increase in operating revenue was
primarily due to the 1999 period including only eight months of operations.
Freight Australia's carloads were 203,536 for the year ended December 31, 2000,
an increase of 71,051, or 35%, compared to 132,485 for the year ended December
31, 1999. Revenue per carload was $406 for 2000 versus $366 for 1999. The
increase in revenue per carload was primarily due to a change in commodity mix
from 1999 to 2000.
OPERATING EXPENSES. Operating expenses increased $30.5 million, or 59%,
to $81.8 million for the year ended December 31, 2000 from $51.3 million for the
period May 1, 1999 through December 31, 1999. The increase in operating expenses
was primarily due to the 1999 period including only eight months of operations.
Operating expenses, as a percentage of operating revenue, were 80.0% and
81.0%for the years ended December 31, 2000 and 1999. Operating expenses were
negatively impacted in 2000 by rising fuel prices in the amount of $2.5 million.
Operating income was lower in 2000 by $2.0 million due to the decline
in the Australian dollar exchange rate.
28
FERRONOR
The following table sets forth the operating revenues and expenses (in
thousands) for Ferronor's railroad operations for the years ended December 31,
2000, 1999 and 1998.
2000 1999 1998
------- ------- -------
Revenues: $22,873 $19,115 $15,924
------- ------- -------
Operating expenses:
Transportation 15,505 11,964 8,982
General and administrative 2,494 2,222 1,724
Depreciation and amortization 2,278 1,231 706
------- ------- -------
Total operating expenses 20,277 15,417 11,412
------- ------- -------
Operating income $ 2,596 $ 3,698 $ 4,512
======= ======= =======
COMPARISON OF FERRONOR'S OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 2000 AND 1999
OPERATING REVENUES. Operating revenue increased $3.8 million, or 20%, to
$22.9 million for the year ended December 31, 2000 from $19.1 million for the
year ended December 31, 1999. Ferronor's carloads handled totaled 98,991 for the
year ended December 31, 2000, an increase of 5,156, or 5%, compared to 93,835
for the year ended December 31, 1999. The increase in both carloads and revenue
is related to the commencing of operations in the fourth quarter of 1999 on a
new long-term contract.
OPERATING EXPENSES. Operating expenses increased $4.9 million, or 32%, to
$20.3 million for the year ended December 31, 2000 from $15.4 million for the
year ended December 31, 1999. The increase was due to start up costs related to
a new long-term contract which commenced in late 1999. Depreciation expense
increased in 2000 by $1 million over prior year due to capital expenditures
relating to new contracts. Operating expenses, as apercentage of operating
revenue, were 89% and 81% for the years ended December 31, 2000 and 1999,
respectively.
COMPARISON OF FERRONOR'S OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
OPERATING REVENUES. Operating revenue increased $4.2 million, or 28%, to
$19.1 million for the year ended December 31, 1999 from $14.9 million for the
year ended December 31, 1998. Ferronor's carloads handled totaled 93,835 for the
year ended December 31, 1999, an increase of 25,819, or 38%, compared to 68,016
for the year ended December 31, 1998. The increase in both carloads and revenue
is due to Ferronor commencing movement of iron ore out of the El Algarrabo mine
in late March 1998 and the Los Colorados mine in July 1998 and nitrates out of
the Minsal mine during 1999. These increases were offset slightly by a decrease
in the international traffic out of Argentina and Bolivia due to the slow down
in the world economy in the second quarter of 1998.
29
OPERATING EXPENSES. Operating expenses increased $4.0 million, or 35%, to
$15.4 million for the year ended December 31, 1999 from $11.4 million for the
year ended December 31, 1998. The increase was due to Ferronor commencing
movement of iron ore out of the El Algarrabo mine in late March 1998 and the Los
Colorados mine in July 1998 and nitrates out of the Minsal mine during 1999.
Operating expenses, as a percentage of operating revenue, were 80.7% and 76.5%
for the years ended December 31, 1999 and 1998, respectively. The operating
ratio increase was due primarily to the loss in 1999 of international traffic
which is typically higher margin business.
CORPORATE OVERHEAD AND OTHER
CORPORATE OVERHEAD. Corporate overhead services performed for our
subsidiaries include overall strategic planning, marketing, accounting, finance,
cash management, payroll, engineering and tax return preparation. Corporate
overhead, which is included in selling, general and administrative expenses in
the consolidated statements of income, increased $7.2 million, or 138%, to $12.4
million for the year ended December 31, 2000 from $5.2 million for the year
ended December 31, 1999. Corporate overhead increased $1.1 million, or 27%, to
$5.2 million for the year ended December 31, 1999 from $4.1 million for the year
ended December 31, 1998. The increases in each of the specified periods were
related to the additional costs incurred to manage the acquired rail roads and
to establish a strong management team to handle our continued growth. For the
year ended December 31, 2000, we incurred $4.8 million of costs related to our
acquisition of RailTex and our unsuccessful acquisition bid for Westrail, an
Australian railroad. We also recognized a $2.9 million non-cash foreign exchange
loss related to the debt associated with the acquisition of Freight Australia.
Such debt was refinanced in February 2000.
INTEREST EXPENSE. Interest expense, including amortization of financing
costs, has increased from $4.9 million in 1998 to $20.5 million in 1999 and
$56.0 million in 2000. This increase is primarily attributable to the financing
of our acquisitions of V/Line Freight, TPW and Railink in 1999 and RailTex in
2000.
INCOME TAXES. Our effective tax rate in 2000 was 23.5%. This rate, as
well as the rates in 1999 and 1998, are impacted by the allocation of income
taxes between continuing operations, discontinued operations and extraordinary
items. We believe our effective tax rate for 2001 will be approximately 31%.
EXTRAORDINARY LOSS. Pursuant to the refinancing of our debt in February
2000, we recorded an extraordinary charge for the year ended December 31, 2000
for the loss on early extinguishment of debt of $2.9 million, after-tax. In
connection with the issuance of subordinated debt in August 2000 we recorded an
extraordinary charge of $1.1 million for early extinguishment of debt, net of
income taxes.
DISCONTINUED OPERATIONS. We recorded net earnings from our discontinued
operations of $8.3 million in 2000 compared to $3.9 million in 1999 and $4.3
million in 1998. In connection with the acquisition of RailTex, we refinanced
30
our investment in our trailer manufacturing operations resulting in additional
interest expense of $7.3 million in 2000. In December 2000, we sold our trailer
manufacturing operations for $38.5 million resulting in a gain of approximately
$11.5 million, net of income taxes.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. We recorded a $2.3 million charge
associated with a change in accounting principle. Such charge resulted from a
beneficial conversion feature associated with warrants in connection with the
junior convertible subordinated debentures issued in 1999. This was a result of
a change during 2000 of the applicable accounting literature.
LIQUIDITY AND CAPITAL RESOURCES - COMBINED OPERATIONS
The discussion of liquidity and capital resources that follows reflects
our consolidated results and includes all subsidiaries.
Our cash provided by operating activities was $44 million for the year
ended December 31, 2000. This amount includes $12 million in net income and $35
million in depreciation and amortization.
Cash used in investing activities was $122 million for the year ended
December 31, 2000. The primary uses of cash during 2000 were for the acquisition
of RailTex, including costs, of $149 million, and the purchase of property,
plant and equipment with an aggregate cost of $63 million. These were partially
offset by the proceeds of $97 million from sale of certain assets.
Cash provided by financing activities was $80 million for 2000. This
consisted primarily of net borrowings under debt agreements of $101 million used
to fund the RailTex acquisition, partially offset by cash used for deferred loan
costs of $19 million.
In August 2000, RTC 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
our 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 RTC, $20.0 million of the asset sale bridge notes issued
by PBRH and approximately $1.8 million of term loans under our senior credit
facilities. All of our U.S. subsidiaries are guarantors of the senior
subordinated debt.
In February 2000, we entered into a credit agreement and two bridge note
facilities in connection with the acquisition of RailTex and the refinancing of
substantially all of both our and RailTex's existing debt. The credit agreement
provides (1) a $125 million Term A loan, (2) a $205 million Term B loan, 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
$10.0 million of Australian dollar denominated loans. The Term A loan and the
revolving loans mature on December 31, 2005 and the Term B loans mature December
31, 2006. At our option, the senior credit facilities will bear interest at
either (1) the alternative base rate, or ABR, (defined as greater of (i) The
31
Bank of Nova Scotia's prime rate and (ii) the Federal Funds Effective Rate plus
0.005%) plus 1.75% for the revolving credit facilities and for the Term A loan
facility and 2.00% for the Term B loan facility, or (2) LIBOR plus 3.00% for the
revolving credit facility and for the Term A loan facility and the 3.25% for the
Term B loan facility; provided, that the additional amounts added to ABR and the
LIBOR for the revolving credit facility and the Term A loan facility is subject
to adjustment based on changes in our leverage ratio. The loans are
collateralized by substantially all of our assets other than Ferronor, and the
loans are guaranteed by all of our subsidiaries other than Ferronor. Freight
Australia guarantees only the Australian dollar revolving loans and our Canadian
subsidiaries guarantee only the Canadian dollar revolving loans.
Our new credit facilities include numerous covenants imposing significant
financial and operating restrictions on our business. The covenants place
restrictions on our ability to, among other things: incur more debt; pay
dividends, redeem or repurchase our stock or make other distributions; make
acquisitions or investments; use assets as security in other transactions; enter
into transactions with affiliates; merge or consolidate with others; dispose of
assets or use asset sale proceeds; create liens on our assets; and extend
credit.
The new credit facilities also contain financial covenants that require
us to meet a number of financial ratios and tests. Our ability to meet these
ratios and tests and to comply with other provisions of the new credit
facilities can be affected by events beyond our control. Our failure to comply
with the obligations in our new credit facilities could result in an event of
default under our new credit facilities, which, if not cured or waived, could
permit acceleration of our indebtedness or other indebtedness which would have a
material adverse effect on us. As of December 31, 2000, we were in compliance
with these financial covenants.
Interest on our new credit facility is payable at variable rates. To
partially mitigate the interest rate risk on the credit facilities we entered
into interest rate swaps in May 2000. The interest rate swaps lock in a LIBOR
rate of 7.23% on $212.5 million of debt for a three-year period. Fluctuations in
the market interest rate will affect the cost of our remaining borrowings.
Assuming current debt levels, the effect of a 1% increase in interest rates on
this remaining debt would result in an increase in interest expense of $1.2
million for the year ended December 31, 2001.
At the time of our purchase of RailTex, RTC issued a $95 million of
subordinated bridge note. The subordinated note was fully paid off in August
2000 with the net proceeds from the issuance of its 12 7/8% senior subordinated
notes. In addition, PBRH issued $55 million of asset sale bridge notes. In
December 2000, we repaid the asset sale bridge notes with the proceeds from the
sale of the truck trailer manufacturing operations.
In connection with the issuance of the asset sale bridge notes, the
purchasers of these notes received 0.433 million warrants to purchase our common
stock at an exercise price of $7.75 per share. The warrants have a five-year
maturity.
32
As of December 31, 2000, we had a working capital deficit of $7.6 million
compared to working capital of $24.0 million as of December 31, 1999. Cash on
hand was $13.1 million as of December 31, 2000 compared to $11.6 million as of
December 31, 1999. Our cash flows from operations historically have been
sufficient to meet our ongoing operating requirements, capital expenditures for
property, plant and equipment, and to satisfy our interest requirements.
We expect that our future cash flows will be sufficient for our current
and contemplated operations for at least the next twelve months. We anticipate
using cash flows and borrowings for anticipated capital expenditures of
approximately $45 million for the upgrading of existing rail lines and purchases
of locomotives and equipment. We do not presently anticipate any other
significant capital expenditures over the next twelve months.
Based on our current debt levels, we anticipate debt service for the next
twelve months to be approximately $65 million including principal and interest.
We anticipate 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 our ability
to service the debt.
Our long-term business strategy includes the selective acquisition of
additional transportation-related businesses. Accordingly, we 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 those acquisitions or development, and there
is no assurance that sufficient financing for those activities will be available
on terms acceptable to us, if at all. As of March 23, 2001, we had $34.3 million
of availability under our revolving credit facilities. We also had $9.6 million
of cash.
INFLATION
Inflation in recent years has not had a significant impact on our
operations. We believe that inflation will not adversely affect us in the future
unless it increases substantially and we are unable to pass through the
increases in our freight rates. See discussion of fuel prices in Item 7A Market
Risk.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards, or SFAS, No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS No.
133 requires all derivatives to be measured at fair value and recognized as
either assets or liabilities on the balance sheet. Furthermore, the accounting
for changes in the fair value of a derivative (i.e. gains and losses) depends on
33
the intended use of the derivative. The Company adopted SFAS No. 133 on January
1, 2001, and will record a liability of approximately $7 million, net of income
taxes of $3 million, with a corresponding charge to equity relating to the
interest rate swaps in the first quarter of 2001.
ITEM 7A. MARKET RISK
FOREIGN CURRENCY. Our foreign currency risk arises from owning and
operating railroads in Canada and Australia. At December 31, 2000, we had not
entered into any transactions to manage this risk. A decrease in either of these
foreign currencies would negatively impact our earnings for the affected period.
A majority of our revenue and debt in Chile is U.S. dollar denominated.
Therefore, we are not negatively impacted by a decline in the value of the
Chilean peso.
The financial position and results of operations of our 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 year-end, while revenues and expenses are translated at
average exchange rates prevailing during the year. 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
realize through the sale or liquidation of the investment. At December 31, 2000,
the accumulated other comprehensive loss totaled $17.8 million.
INTEREST RATES. Our interest rate risk results from holding variable
rate debt obligations, as an increase in interest rates would result in lower
earnings and increased cash outflows.
The interest rate on our credit facility is payable at variable rates.
To partially mitigate the interest rate risk on the new credit facilities, we
entered into interest rate swaps in May 2000. The interest rate swaps lock in a
LIBOR rate of 7.23% on $212.5 million of debt for a three-year period.
Fluctuation in the market interest rate will affect the cost of our remaining
borrowings. The effect of a 1% increase in interest on the remaining borrowings
would result in an increase in interest expense of $1.2 million for the twelve
months ended December 31, 2001.
DIESEL FUEL. We are 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 our acquisition of RailTex, RailTex had
entered into a contract to hedge against fuel price increases 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 $0.45 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.
34
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of RailAmerica, the accompanying
notes thereto and the independent accountants' reports are included as part of
this Form 10-K and immediately follow the signature page of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning directors, executive officers and nominees is
incorporated by reference from our definitive proxy statement relating to our
2001 Annual Meeting of Stockholders to be filed with the Commission pursuant to
Regulation 14A on or before April 30, 2001.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is incorporated by
reference from our definitive proxy statement relating to our 2001 Annual
Meeting of Stockholders to be filed with the Commission pursuant to Regulation
14A on or before April 30, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership is incorporated by reference
from our definitive proxy statement relating to our 2001 Annual Meeting of
Stockholders to be filed with the Commission pursuant to Regulation 14A on or
before April 30, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions
is incorporated by reference from our definitive proxy statement relating to our
2001 Annual Meeting of Stockholders to be filed with the Commission pursuant to
Regulation 14A on or before April 30, 2001.
35
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
1.1 Purchase Agreement, dated August 9, 2000, between RailAmerica
Transportation Corp., RailAmerica, Inc., the Guarantors named
therein, Donaldson, Lufkin & Jenrette Securities Corporation,
Barclays Bank PLC and Scotia Capital (USA) Inc. (23)
2.1 Amended and Restated Stock Purchase Agreement, dated as of
August 3, 1999 by and among RailAmerica, Inc., Florida Rail
Lines, Inc. Bank Austria AG, Grand Cayman Branch, CSX
Transportation, Inc., Delaware Otsego Corporation, The Brenner
Group and The Toledo, Peoria and Western Railroad
Corporation(8)
2.2 Agreement and Plan of merger, dated as of October 14, 1999,
among RailAmerica, Inc., Cotton Acquisition Corp. and RailTex,
Inc.(9)
3.1 Amended and Restated Certificate of Incorporation of
Registrant, as amended(2)
3.2 By-laws of Registrant(1)
3.3 Certificate Of Amendment to Amended and Restated Certificate
of Incorporation of the Registrant
4.1 Form of Common Stock Rights Agreement, dated as of January 6,
1998, between the Registrant and American Stock Transfer &
Trust Company(6)
4.2 Certificate of Designation of Series A Convertible Redeemable
Preferred Stock(19)
4.3 Third Amendment to the Rights Agreement, dated as of
January 13, 2000, between the Company and American Stock
Transfer & Trust Company(10)
4.4 Warrant Agreement, dated as of February 4, 2000, among the
Company and RailAmerica Funding, Inc.(20)
4.5 Asset Bridge Warrant Agreement, dated as of February 4, 2000,
among the Company and RailAmerica Holdings Funding, Inc.(20)
4.6 Fourth Amendment to the Rights Agreement, dated as of April
13, 2000, between the Company and American Stock Transfer and
Trust Company (21)
4.7 Waiver and Supplemental Agreement, dated as of April 13, 2000,
among the Company and EGS Associates, L.P., EGS Partners
L.L.C., Bev Partners, L.P., Jonas Partners, L.P., EGS
Management, L.L.C., William Ehrman, Frederic Greenberg, Jonas
Gerstl and Juli Oliver (22)
4.8 Indenture, dated as of August 14, 2000, between RailAmerica
Transportation Corp., the Guarantors named therein and Wells
Fargo Bank Minnesota, N.A. (24)
4.9 Notes Registration Rights Agreement, dated as of August 14,
2000, between RailAmerica Transportation Corp., the Guarantors
named therein, Donaldson Lufkin & Jenrette Securities
Corporation, Barclays Bank PLC and Scotia Capital (USA) Inc.
(25)
36
4.10 Warrants Agreement, dated August 14, 2000, between
RailAmerica, Inc. and Wells Fargo Bank Minnesota, N.A. (26)
4.11 Warrant Registration Rights Agreement, dated August 14, 2000,
between RailAmerica, Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Barclays Bank PLC and Scotia Capital
(USA) Inc. (27)
10.43 Stock Option Agreement, dated November 11, 1994, between
RailAmerica, Inc. and Gary O. Marino(7)+
10.45 RailAmerica, Inc. 1995 Non-Employee Director Stock Option
Plan(2)
10.46 RailAmerica, Inc. 1995 Employee Stock Purchase Plan(2)
10.47 RailAmerica, Inc. Corporate Senior Executive Bonus Plan(2)+
10.56 Stock Purchase Agreement, dated as of September 20, 1996, by
and among Otter Tail Valley Railroad Company, Inc. and Dakota
Rail, Inc.(4)
10.59 RailAmerica, Inc. Nonqualified Deferred Compensation Trust(5)+
10.60 Nonqualified Deferred Compensation Agreement between
RailAmerica, Inc. and Gary O. Marino(5)+
10.63 RailAmerica, Inc. 1998 Executive Incentive Compensation
Plan(6)+
10.64 Sale of Assets Agreement dated February 22, 1999 by and among
RailAmerica, Inc., Freight Victoria Limited and V/Line Freight
Corporation 10.2 Primary Infrastructure (11)
10.65 Lease dated April 30, 1999 by and among the Director of Public
Transport and Freight Victoria Limited(12)
10.66 Asset Purchase Agreement, dated December 17, 1998, by and
among Canadian Pacific Railway Company and E&N Railway Company
(1998) Ltd., a subsidiary of RailAmerica, Inc.(13)
10.67 Noncompete Agreement, dated December 1999, by and between
Ronald A. Rittenmeyer and the Company(14)
10.68 Purchase Agreement, dated as of November 4, 1998 by and among
RailTex Global Investments, L.L.C., RailTex International
Holdings, Inc. and GEEMF II Latin America, L.L.C.(15)
10.69 Memorandum of Understanding, dated as of October 29, 1999,
providing for the sale by RailTex Global Investments, LLC of
its shares in Ferrovia Centro Atlantica, S.A. (English and
Portuguese language versions)(16)
10.70 Purchase Agreement, dated as of November 10, 1999, by and
between RailTex International Holdings, Inc. and GEEMF II
Latin America, L.L.C.(17)
10.71 Credit Agreement, dated as of February 4, 2000, by and among
the Company and Palm Beach Rail Holding, Inc., each as
guarantor, RailAmerica Transportation Corp., RaiLink, Ltd. And
Freight Victoria Limited, each as a borrower, various
financial institutions from time to time parties thereto, as
the lenders, DLJ Capital Funding, Inc., as the syndication
agent, the lead arranger and the sole book running manager,
The Bank of Nova Scotia, as the administrative agent for the
Lenders and ING (U.S.) Capital LLC and Fleet National Bank, as
the documentation agents for the lenders(20)
37
10.72 Securities Purchase Agreement, dated as of February 4, 2000,
among RailAmerica Transportation Corp., and the Company, Palm
Beach Rail Holding, Inc., and all of the Restricted
Subsidiaries (as defined in the Credit Agreement) of the
Company, each as a guarantor, and RailAmerica Funding, Inc. as
the purchaser.(20)
10.73 Asset Bridge Securities Purchase Agreement, dated as of
February 4, 2000, among Palm Beach Rail Holdings, Inc., and
the Company, Kalyn/Siebert I, Inc., KS Boca, Inc. and
Kalyn/Siebert, L.P., each as a guarantor, and RailAmerica
Holdings Funding, Inc., as the purchaser(20)
10.74 Equity Registration Rights Agreement, dated as of February 4,
2000, among the Company and RailAmerica Funding, Inc.(20)
10.75 Debt Registration Rights Agreement, dated as of February 4,
2000, among the Company and RailAmerica Funding, Inc.(20)
10.76 Asset Bridge Equity Registration Rights Agreement, dated as of
February 4, 2000, among the Company and RailAmerica Funding,
Inc.(20)
10.77 Waiver and Amendment No. 1 to Credit Agreement.
10.78 Waiver and Amendment No. 2 to Credit Agreement.
10.79 Employment Agreement, dated as of January 1, 2000, between the
Company and Gary O. Marino.
21.1 Subsidiaries of Registrant
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen Langton Clarke
25.1 Statement of Eligibility of Trustee (23)
99.1 Petition for Exemption, dated November 8, 1999, filed before
the Surface Transportation Board, finance Docket No. 33813, by
RailAmerica, Inc. and RailTex, Inc.(18)
99.2 Form of Letter of Transmittal with respect to Exchange
Offer(28)
99.3 Form of notice of Guaranteed Delivery(29)
(1) Incorporated by reference to the same exhibit number filed as part of
the Registrant's Registration Statement on Form S-1, Registration No.
33-49026.
(2) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-QSB for the quarter ended September 30, 1995,
filed with the Securities and Exchange Commission on November 12, 1995.
(3) Incorporated by reference to the exhibit A filed as part of the
Company's Form 8-K as of September 30, 1996, filed with the Securities
and Exchange Commission on October 17, 1996.
38
(4) Incorporated by reference to the exhibit 2.1 filed as part of the
Company's Form 8-K as of October 11, 1996, filed with the Securities
and Exchange Commission on October 25, 1996.
(5) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-KSB for year ended December 31, 1995, filed with
the Securities and Exchange Commission on March 31, 1997.
(6) Incorporated by reference to exhibit No. 4.1 filed as part of the
Registrant's Statement on Form 8-A, filed with the Securities and
Exchange Commission on January 6, 1998.
(7) Incorporated by reference to the same exhibit number filed as part of
the Company's Form 10-Q for the quarter ended March 31, 1998, filed
with the Securities and Exchange Commission on May 14, 1998.
(8) Incorporated by reference to exhibit 2.1 filed as part of the Company's
Form 8-K as of September 3, 1999, filed with the Securities and
Exchange Commission on September 20, 1999.
(9) Incorporated by reference to exhibit 2.1 filed as part of the Company's
Form 8-K as of October 14, 1999, filed with the Securities and Exchange
Commission on October 19, 1999.
(10) Incorporated by reference to exhibit 4.1 filed as part of the Company's
Form 8-K as of January 13, 2000, filed with the Securities and Exchange
Commission on January 26, 2000.
(11) Incorporated by reference to exhibit 10.1 filed as part of the
Company's Form 8-K as of April 30, 1999, filed with the Securities and
Exchange Commission on May 17, 1999.
(12) Incorporated by reference to exhibit 10.2 filed as part of the
Company's Form 8-K as of April 30, 1999, filed with the Securities and
Exchange Commission on May 17, 1999.
(13) Incorporated by reference to exhibit 10.64 filed as part of the
Company's Form 10-Q as of March 31, 1999, filed with the Securities and
Exchange Commission on May 17, 1999.
(14) Incorporated by reference to exhibit 10.1 filed as part of the
Company's Registration Statement on Form S-4, Registration No.
333-93611.
(15) Incorporated by reference to exhibit 10.56 filed as part of the Form
10-K filed for RailTex, Inc. for the year ended December 31, 1998,
filed with the Securities and Exchange Commission on March 30, 1999.
(16) Incorporated by reference to exhibit 10.60 filed as part of the Form
10-Q filed for RailTex, Inc. for the quarter ended September 30, 1999,
filed with the Securities and Exchange Commission on November 12, 1999.
(17) Incorporated by reference to exhibit 10.61 filed as part of the Form
10-Q filed for RailTex, Inc. for the quarter ended September 30, 1999,
filed with the Securities and Exchange Commission on November 12, 1999.
(18) Incorporated by reference to the exhibit 99.1 filed as part of the
Company's Form 8-K as of November 8, 1999, filed with the Securities
and Exchange Commission on November 12, 1999.
39
(19) Incorporated by reference to the exhibit of the same number filed as
part of the Company's Form 10-K for the year ended December 31, 1998
filed with the Securities and Exchange Commission on March 31, 1999.
(20) Incorporated by reference to the exhibit of the same number filed as
part of the Company's Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission on March 30, 2000.
(21) Incorporated by reference to Exhibit 4.1 filed as part of the Company's
Form 8-K, dated April 13, 2000.
(22) Incorporated by reference to Exhibit 4.2 filed as part of the Company's
Form 8-K, dated April 13, 2000.
(23) Incorporated by reference to the exhibit of the same number filed as
part of the Company's Registration Statement on Form S-4, Registration
No. 333-45196.
(24) Incorporated by reference to the Exhibit 4.1 filed as part of the
Company's Registration Statement on Form S-4, Registration No.
333-45196.
(25) Incorporated by reference to the Exhibit 4.2 filed as part of the
Company's Registration Statement on Form S-4, Registration No.
333-45196.
(26) Incorporated by reference to the Exhibit 4.1 filed as part of the
Company's Registration Statement on Form S-3, Registration No.
333-45200.
(27) Incorporated by reference to the Exhibit 4.2 filed as part of the
Company's Registration Statement on Form S-3, Registration No.
333-45200.
(28) Incorporated by reference to the Exhibit 99.1 filed as part of the
Company's Registration Statement on Form S-4, Registration No.
333-45196.
(29) Incorporated by reference to the Exhibit 99.2 filed as part of the
Company's Registration Statement on Form S-4, Registration No.
333-45196.
+ Executive Compensation Plan or Arrangement.
(b) Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the quarter
ended December 31, 2000:
None.
40
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange act
of 1934, the Company has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
RAILAMERICA, INC.
By: /s/ GARY O MARINO
-------------------------------------------------
Gary O. Marino, Chief Executive Officer
(Principal Financial officer)
By: /s/ BENNETT MARKS
------------------------------------------------
Bennett Marks, Chief Financial Officer, Sr.
Vice President and Principal Accounting Officer
Dated April 02, 2001
In accordance with the Securities Exchange Act of 1934, this Report has
been signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
[Enlarge/Download Table]
SIGNATURES TITLE DATE
---------- ----- ----
/s/ GARY O. MARINO Chairman, President, Chief Executive April 02, 2001
----------------------------- Officer and Director
Gary O. Marino
/s/ DONALD D. REDFEARN Chief Administrative Officer, Executive April 02, 2001
------------------------- Vice President, Secretary and Director
Donald D. Redfearn
/s/ JOHN H. MARINO Assistant Secretary and Director April 02, 2001
----------------------------
John H. Marino
/s/ DOUGLAS R. NICHOLS Director April 02, 2001
--------------------------
Douglas R. Nichols
/s/ RICHARD RAMPELL Director April 02, 2001
----------------------------
Richard Rampell
/s/ CHARLES SWINBURN Director April 02, 2001
--------------------------
Charles Swinburn
41
[Download Table]
SIGNATURES TITLE DATE
---------- ----- ----
/s/ JOHN M. SULLIVAN Director April 02, 2001
---------------------------
John M. Sullivan
/s/ FERD. C. MEYER, JR. Director April 02, 2001
----------------------------
Ferd C. Meyer, Jr.
/s/ WILLIAM G. PAGONIS Director April 02, 2001
--------------------------
William G. Pagonis
42
RAILAMERICA, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS
-------
The following consolidated financial statements of RailAmerica, Inc. and
Subsidiaries are referred to in Item 8:
[Download Table]
PAGES
-----
Reports of Independent Certified Public Accountants F-2 - F-3
Consolidated Balance Sheets - December 31, 2000 and 1999 F-4
Consolidated Statements of Income - For the Years Ended
December 31, 2000, 1999 and 1998 F-5
Consolidated Statements of Stockholders' Equity - For the Years
Ended December 31, 2000, 1999 and 1998 F-6
Consolidated Statements of Cash Flows - For the Years Ended
December 31, 2000, 1999 and 1998 F-7
Notes to Consolidated Financial Statements F-8 - F-36
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders of
RailAmerica, Inc.
In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of income, stockholders' equity and cash flows present fairly, in all material
respects, the financial position of RailAmerica, Inc. and its subsidiaries at
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. As of December 31, 1999 and for the years ended
December 31, 1999 and 1998, we did not audit the financial statements of Empresa
De Transporte Ferroviario S.A., a 55% owned subsidiary of the Company, which
statements reflect total assets of $87,555,000 as of December 31, 1999, and
total revenues of $19,115,000 and $15,312,000 for the years ended December 31,
1999 and 1998. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Empresa De Transporte Ferroviario S.A. as
of December 31, 1999 and for the years ended December 31, 1999 and 1998, is
based solely on the report of the other auditors. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits and the report of other auditors provide a reasonable basis for our
opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
March 15, 2001
F-2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Ferronor S.A.:
We have audited the balance sheet of Empresa De Transporte Ferroviario S.A.
("Ferronor") as of December 31, 1999, and the related statements of income and
cash flows for the years ended December 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We have conducted our audits of these statements in accordance with auditing
standards generally accepted in Chile, which are substantially consistent with
those followed in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and the significant estimates made by the management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ferronor as of December 31,
1999, and the results of operations and its cash flow for the years ended
December 31,1999 and 1998 in conformity with generally accepted accounting
principles in the United States of America.
/s/ Charles A. Bunce
Charles A. Bunce ARTHUR ANDERSEN - LANGTON CLARKE
February 4, 2000
Santiago, Chile
F-3
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
(in thousands)
[Enlarge/Download Table]
2000 1999
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 13,090 $ 11,598
Restricted cash in escrow 4,539 --
Accounts and notes receivable 62,864 40,857
Other current assets 19,551 13,429
Net assets of discontinued operations -- 14,996
--------- ---------
Total current assets 100,044 80,880
Property, plant and equipment, net 715,020 347,617
Other assets 24,639 15,432
--------- ---------
Total assets $ 839,703 $ 443,929
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 20,558 $ 17,811
Accounts payable 39,752 23,732
Accrued expenses 47,305 15,379
--------- ---------
Total current liabilities 107,615 56,922
Long-term debt, less current maturities 338,298 145,016
Subordinated debt 141,411 122,449
Deferred income taxes 87,288 15,382
Minority interest and other liabilities 35,044 25,863
--------- ---------
709,656 365,632
--------- ---------
Commitments and contingencies
Redeemable convertible preferred stock, $0.01 par value,
$25 liquidation value;
278,400 issued and outstanding at December 31, 2000
378,400 issued and outstanding at December 31, 1999 6,613 8,830
--------- ---------
Stockholders' equity:
Common stock, $0.001 par value, 60,000,000 authorized;
18,623,320 issued and outstanding at December 31, 2000
12,610,875 issued and 11,894,136 outstanding at December 31, 1999 19 13
Additional paid-in capital 118,502 47,797
Retained earnings 29,162 18,171
Accumulated other comprehensive income (loss) (24,249) 3,486
--------- ---------
Total stockholders' equity 123,434 69,467
--------- ---------
Total liabilities, redeemable preferred stock and stockholders' equity $ 839,703 $ 443,929
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 2000, 1999 and 1998
(in thousands, except earnings per share)
[Enlarge/Download Table]
2000 1999 1998
--------- --------- ---------
Operating revenue $ 357,936 $ 129,818 $ 39,136
--------- --------- ---------
Operating expenses:
Transportation 210,972 79,439 22,096
Selling, general and administrative 62,093 19,550 9,075
Net gain on sale and impairment of assets (11,184) (3,629) (360)
Depreciation and amortization 26,021 9,179 2,544
--------- --------- ---------
Total operating expenses 287,902 104,539 33,355
--------- --------- ---------
Operating income 70,034 25,279 5,781
Interest expense, including amortization of financing costs
of $4,854, $4,203 and $465, respectively (55,950) (20,490) (4,944)
Minority interest and other income (expense) (1,526) 449 (1,724)
--------- --------- ---------
Income (loss) from continuing operations before
income taxes 12,558 5,238 (887)
Provision (benefit) for income taxes 2,950 (787) (1,000)
--------- --------- ---------
Income from continuing operations 9,608 6,025 113
Discontinued operations:
Gain on disposal of discontinued segment (net of income
taxes of $6,850) 11,527 -- --
Income (loss) from operations of discontinued segment (net of
income taxes of ($1,650), $2,300, and $2,530, respectively) (3,226) 3,896 4,288
--------- --------- ---------
Income before extraordinary item and cumulative effect
of accounting change 17,909 9,921 4,401
Extraordinary loss from early extinguishment of debt (net of
income taxes of $2,200) (3,996) -- --
Cumulative effect of accounting change (2,252) -- --
--------- --------- ---------
Net income $ 11,661 $ 9,921 $ 4,401
========= ========= =========
---------
Net income available to common stockholders $ 10,991 $ 8,886 $ 4,401
========= ========= =========
Basic earnings per common share
Continuing operations $ 0.50 $ 0.45 $ 0.01
Discontinued operations 0.45 0.35 0.45
Extraordinary item (0.22) -- --
Cumulative effect of accounting change (0.12) -- --
--------- --------- ---------
Net income $ 0.61 $ 0.80 $ 0.46
========= ========= =========
Diluted earnings per common share
Continuing operations $ 0.49 $ 0.43 $ 0.01
Discontinued operations 0.45 0.34 0.44
Extraordinary item (0.22) -- --
Cumulative effect of accounting change (0.12) -- --
--------- --------- ---------
Net income $ 0.60 $ 0.77 $ 0.45
========= ========= =========
Weighted average common shares outstanding
Basic 18,040 11,090 9,553
========= ========= =========
Diluted 18,267 11,665 9,778
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2000, 1999 and 1998
(in thousands)
[Enlarge/Download Table]
Stockholders' Equity
-------------------------------------------------------------------------------------
Number of Additional Other
Shares Par Paid-in Retained Comprehensive
Issued Value Capital Earnings Income (loss) Total
--------- --------- --------- --------- ------------- ---------
Balance, January 1, 1998 9,130 $ 9 $ 21,906 $ 4,884 $ 15 $ 26,814
Net income -- -- -- 4,401 -- 4,401
Cumulative translation
adjustments -- -- -- -- 456 456
---------
Total comprehensive income 4,857
---------
Issuance of common stock 138 -- 677 -- -- 677
Purchase of treasury stock -- -- (1,838) -- -- (1,838)
Exercise of stock options and warrants 405 -- 1,983 -- -- 1,983
Conversion of debt 534 1 2,267 -- -- 2,268
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1998 10,207 10 24,995 9,285 471 34,761
Net income -- -- -- 9,921 -- 9,921
Cumulative translation
adjustments -- -- -- -- 3,015 3,015
---------
Total comprehensive income 12,936
---------
Issuance of common stock 1,438 1 12,028 -- -- 12,029
Purchase of treasury stock -- -- (1,224) -- -- (1,224)
Exercise of stock options 141 -- 732 -- -- 732
Conversion of debt 564 1 3,332 -- -- 3,333
Conversion of preferred stock 261 1 2,006 -- -- 2,007
Issuance of warrants -- -- 5,928 -- -- 5,928
Preferred stock dividends
and accretion -- -- -- (1,035) -- (1,035)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1999 12,611 13 47,797 18,171 3,486 69,467
Net income -- -- -- 11,661 -- 11,661
Cumulative translation
adjustments -- -- -- -- (27,735) (27,735)
---------
Total comprehensive loss (16,074)
---------
Issuance of common stock 6,652 7 60,917 -- -- 60,924
Exercise of stock options 49 -- 269 -- -- 269
Conversion of redeemable securities 339 -- 2,669 -- -- 2,669
Warrants issued -- -- 8,841 -- -- 8,841
Purchase of treasury stock -- -- (1,992) -- -- (1,992)
Retirement of treasury stock (1,028) (1) 1 -- -- --
Preferred stock dividends
and accretion -- -- -- (670) -- (670)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 2000 18,623 $ 19 $ 118,502 $ 29,162 $ (24,249) $ 123,434
========= ========= ========= ========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2000, 1999 and 1998
(in thousands)
[Enlarge/Download Table]
2000 1999 1998
--------- --------- ---------
Cash flows from operating activities:
Net income $ 11,661 $ 9,921 $ 4,401
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,566 14,134 4,157
Write-off of deferred loan costs 4,857 -- --
Interest paid in kind 5,806 -- --
Minority interest in income of subsidiary 995 1,551 1,672
Equity interest in earnings of affiliate (554) (230) --
Gain on insurance settlement -- (4,069) --
(Gain) loss on sale or disposal of properties (29,554) 118 (360)
Cumulative effect of accounting change 2,252 -- --
Deferred income taxes (2,797) 3,402 913
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable 3,654 (2,246) (886)
Other current assets 2,455 (4,102) (8,080)
Accounts payable 2,239 3,244 2,411
Accrued expenses 5,759 3,326 720
Other liabilities 4,071 (2,295) --
Deposits and other (977) (1,254) 512
--------- --------- ---------
Net cash provided by operating activities 44,433 21,500 5,460
--------- --------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (62,499) (51,391) (28,129)
Proceeds from sale of properties and investments 96,654 1,163 2,089
Acquisitions, net of cash acquired (148,922) (8,453) (1,757)
Deposit on purchase agreement -- -- (1,962)
Cash held in discontinued operations -- (656) (674)
Change in restricted cash in escrow (4,539) -- --
Deferred acquisition costs and other (2,711) 639 (613)
--------- --------- ---------
Net cash used in investing activities (122,017) (58,698) (31,046)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 549,235 182,085 56,007
Principal payments on long-term debt (448,107) (150,183) (35,724)
Sale of convertible preferred stock -- 4,095 7,515
Sale of common stock -- 11,868 1,032
Proceeds from exercise of stock options 234 581 871
Preferred stock dividends paid (289) (843) --
Purchase of treasury stock (1,992) (1,224) (1,838)
Deferred financing costs paid (18,980) (2,755) (937)
--------- --------- ---------
Net cash provided by financing activities 80,101 43,624 26,926
--------- --------- ---------
Net increase in cash 2,517 6,426 1,340
Effect of exchange rates on cash (1,025) 87 --
Cash, beginning of period 11,598 5,085 3,745
--------- --------- ---------
Cash, end of period $ 13,090 $ 11,598 $ 5,085
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of RailAmerica, Inc. and all of its subsidiaries (the "Company"). All
of RailAmerica's consolidated subsidiaries are wholly-owned except
Empresa De Transporte Ferroviario S.A. ("Ferronor"), a Chilean
railroad, in which the Company has a 55% equity interest. All
significant intercompany balances and transactions have been
eliminated. Certain prior period amounts have been reclassified to
conform to the 2000 presentation.
The Company's principal operations consist of rail freight
transportation in North America, Chile and Australia. The Company hauls
varied products for its customers corresponding to their local
operating areas, primarily paper and forest products and agricultural
commodities in North America, agricultural commodities in Australia and
iron ore and nitrates in Chile.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a
maturity of three months or less at the date of purchase to be cash
equivalents.
Concentration of Credit Risk
The Company maintains its cash in demand deposit accounts which at
times may exceed insurance limits. As of December 31, 2000, the Company
had approximately $3.9 million of cash in excess of insurance limits.
Property, Plant and Equipment
Property, plant and equipment are recorded at historical cost. Costs
assigned to property purchased as part of an acquisition are based on
the fair value of such assets on the date of acquisition. Improvements
are capitalized, and expenditures for maintenance and repairs are
charged to operations as incurred. Gains or losses on sales and
retirements of properties are included in the determination of the
results of operations. The Company periodically review its assets for
impairment by comparing the projected undiscounted cash flows of those
assets to their recorded amounts. Impairment charges are based on
F-8
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
the excess of the recorded amounts over their fair value.
Depreciation has been computed using the straight-line method based on
estimated useful lives as follows:
Buildings and improvements 20-33 years
Railroad track 30-40 years
Railroad track improvements 3-10 years
Locomotives, transportation and other equipment 5-30 years
Office equipment 5-10 years
Income Taxes
The Company utilizes the liability method of accounting for deferred
income taxes. This method requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined based
on the difference between the financial and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred tax assets are also
established for the future tax benefits of loss and credit carryovers.
The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight
of available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized.
Revenue Recognition
The Company recognizes transportation revenue after services are
provided. For the years ended December 31, 2000, 1999 and 1998, 9%, 27%
and 62%, and 19%, 15% and 30%, of the Company's North American revenue
was derived from interchanging with Burlington Northern Santa Fe
Railway and CSX Transportation, respectively. For the years ended
December 31, 2000 and 1999, 25% and 20%, 24% and 4%, and 10% and 29%,
of the Company's North American revenue was derived from interchanging
with Canadian National Railway, Union Pacific Railroad and Canadian
Pacific Railway, respectively. The Company had two customers in Chile
who represented 38% and 44%, respectively, in 2000 and 43%and 40%,
respectively, in 1999 of the Chilean revenue. Two customers in
Australia represented 19% and 17% in 2000, and 21% and 19% in 1999,
respectively, of the Australian revenue.
F-9
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Foreign Currency Translation
The financial statements and transactions of the Company's foreign
operations are maintained in their functional currency, except for
Chile, where the U.S. dollar is used as the functional currency. Where
functional currencies are used, assets and liabilities are translated
at current exchange rates in effect at the balance sheet date.
Translation adjustments, which result from the process of translating
the financial statements into United States dollars, are accumulated in
the cumulative translation adjustment account, which is a component of
accumulated other comprehensive income. Revenues and expenses are
translated at the average exchange rate for each period. Gains and
losses from foreign currency transactions are included in net income.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which establishes
accounting and reporting standards for derivative instruments and
hedging activities. SFAS No. 133 requires all derivatives to be
measured at fair value and recognized as either assets or liabilities
on the balance sheet. Furthermore, the accounting for changes in the
fair value of a derivative (i.e. gains and losses) depends on the
intended use of the derivative. The Company adopted SFAS No. 133 on
January 1, 2001, and will record a liability of approximately $7
million, net of income taxes of $3 million, with a corresponding charge
to equity relating to the interest rate swaps in the first quarter of
2001.
2. EARNINGS PER SHARE
Basic earnings per share is calculated using the weighted average
number of common shares outstanding during the year. For the years
ended December 31, 2000 and 1999, income from continuing operations is
reduced by preferred stock dividends and accretion for the basic
earnings per share computation.
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 and warrants. Options and
warrants totaling 4.3 million, 1.8 million and 0.3 million were
excluded from the diluted earnings per share calculation for the years
ended December 31, 2000, 1999 and 1998, respectively, as well as
assumed conversion of $29.2 million in 2000 and $26.5 million in 1999
of convertible preferred stock and convertible debentures, as such
securities are anti-dilutive for both periods.
F-10
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. EARNINGS PER SHARE, continued
The following is a summary of the net income available for common
stockholders and weighted average shares for the diluted calculation
(in thousands):
[Download Table]
YEAR ENDED DECEMBER 31,
--------------------------------------
2000 1999 1998
-------- -------- --------
Income from continuing operations $ 9,608 $ 6,025 $ 113
Preferred stock dividends and accretion (670) (1,035) --
Interest on convertible debt -- 42 --
-------- -------- --------
Income available to common stockholders $ 8,938 $ 5,032 $ 113
======== ======== ========
Basic weighted average shares outstanding 18,040 11,090 9,553
Assumed conversion of options and warrants 227 379 225
Assumed conversion of convertible debt -- 196 --
-------- -------- --------
Diluted weighted average shares outstanding 18,267 11,665 9,778
======== ======== ========
3. DISCONTINUED OPERATIONS
In February 2000, the Company finalized its plan to sell its trailer
manufacturing operations. The trailer manufacturing operations
consisted of Kalyn/Siebert, L.P. ("KSLP") and Kalyn/Siebert Canada
("KSC"). This business has been accounted for as a discontinued
operation and results of operations have been excluded from continuing
operations in the consolidated statements of operations for all periods
presented.
In December 2000, the Company sold KSLP for $32.5 million in cash
including $3.5 million which is in escrow at December 31, 2000. A gain
of $21.0 was recognized. In December 2000, the Company sold
substantially all of the assets and business of KSC for $6 million in
cash including $2 million which is in escrow at December 31, 2000. A
loss of $2.6 million was recognized.
Total revenue for the trailer manufacturing business was $34.7 million,
$44.3 million and $39.9 million for the years ended December 31, 2000,
1999 and 1998, respectively. Interest expense of $7.3 million was
charged to the manufacturing business in 2000, representing the
interest expense for the portion of the asset sale bridge note which
was repaid with the proceeds from the sale of the trailer manufacturing
business. Income (loss) before income taxes for the trailer
manufacturing business was ($5.8) million, $6.2 million and $6.9
million for the years ended December 31, 2000, 1999 and 1998,
respectively. Total assets in this business as of December 31, 1999
were $28.8 million. Total liabilities in this business as of December
31, 1999 were $13.9 million.
4. ACQUISITIONS
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 financed partially through the issuance of new debt
(see Note 8).
F-11
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. ACQUISITIONS, continued
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.
On September 3, 1999, the Company acquired The Toledo, Peoria and
Western Railroad Corporation ("TPW") for $18 million (including the
repayment of indebtedness), subject to certain adjustments. The Company
funded the acquisition through its revolving line of credit.
On July 26, 1999, the Company acquired RaiLink Ltd ("RaiLink") for
approximately $49.8 million. RaiLink and its 26.3% owned affiliate,
Quebec Railway Corporation, operated 11 regional railways covering
approximately 2,500 miles of track in Alberta, the Northwest
Territories, Ontario, Quebec and New Brunswick. A portion of the
funding for the transaction was provided by the Company's revolving
line of credit. The balance of the funding came from a private offering
of the Company's junior convertible subordinated debt. During the
fourth quarter of 2000, the Company sold its interest in the Quebec
Railway Corporation(see Note 5).
On April 30, 1999, the Company acquired the assets and liabilities
comprising the railroad freight business of V/Line Freight Corporation
("VLF"), a corporation established by the Government of the State of
Victoria, Australia. VLF was established in March 1997 as part of
Victoria's transportation privatization process and assumed many of the
activities formerly carried out by the V/Line Freight business unit of
the Public Transportation Corporation of the Government of Victoria.
Under the Sale of Assets Agreement the Company acquired all of the
locomotives, wagons, motor vehicles, equipment, stock, spare parts
inventory and accounts receivable, certain business, brand and trade
names and trademarks, and the outstanding business contracts of VLF for
a purchase price of $49.0 million. In connection with the acquisition,
Freight Australia also entered into other agreements, including a
primary infrastructure lease with the Director of Public Transport of
Australia and various facilities leases, access agreements, maintenance
and service agreements and other miscellaneous agreements. Pursuant to
the infrastructure lease, Freight Australia received a 45-year lease of
the non-electrified intrastate Victorian railway tracks and
infrastructure. Freight Australia prepaid in cash the net present value
of the rental payments for the infrastructure lease totaling
approximately $54.0 million. Freight Australia commenced operations of
the rail-based freight business on May 1, 1999. The acquisition of VLF
was financed through the issuance of a $100 million bridge note, which
has since been repaid.
All of the above acquisitions were accounted for as purchases and their
results have been included since the dates of acquisition. The
following unaudited pro forma summary presents the consolidated results
of operations as if these acquisitions had occurred at the
F-12
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. ACQUISITIONS, continued
beginning of 2000 and 1999 and do not purport to be indicative of what
would have occurred had the acquisitions been made as of those dates or
of results which may occur in the future. (In thousands except earnings
per share)
[Download Table]
2000 1999
-------- --------------
Operating revenue $ 372,010 $ 365,452
Income from continuing operations $ 11,708 $ 12,734
Earnings per share - continuing operations
Basic $ 0.59 $ 0.65
Diluted $ 0.57 $ 0.61
The significant adjustments related to the above years represent the
inclusion of revenue in Australia for track access fees which were
previously paid to the government, elimination of certain operating
costs, elimination of costs related to the acquisitions, inclusion of
depreciation differences on the revaluation of property, plant and
equipment, additional interest expense based on an increase in
long-term obligations, amortization of intangible assets and the
related income tax effects.
5. DISPOSITIONS
During 2000, the Company sold several non-core railroads and various
other non-core assets for total proceeds of $44.0 million, resulting in
a net gain of $11.2 million.
During 1997, the Company sold substantially all the assets of
Gettysburg Railway ("GBR") to a company owned by its Vice Chairman, for
$1.45 million, which consisted of cash of $0.3 million, an $0.8 million
promissory note and a $0.35 million mortgage note at an interest rate
of 8.5%. The promissory note and mortgage note were collateralized by
the land, buildings and track assets of Gettysburg Railway. A gain of
approximately $0.2 million was recognized on the transaction. As of
December 31, 2000, $1.15 million of notes receivable from related
parties are included in accounts and notes receivable on the
consolidated balance sheet. All obligations were paid in full in
February 2001.
6. OTHER BALANCE SHEET DATA
Other current assets consist of the following as of December 31, 2000
and 1999 (in thousands):
[Download Table]
2000 1999
---------- ---------
Track supplies $ 10,068 $ 9,929
Prepaid expenses and other 9,483 3,500
---------- ---------
$ 19,551 $ 13,429
=========== ========
F-13
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. OTHER BALANCE SHEET DATA, continued
Accrued liabilities consist of the following as of December 31, 2000
and 1999 (in thousands):
[Download Table]
2000 1999
------------ --------------
Accrued interest expense $ 10,727 $ 820
Accrued compensation and benefits 5,633 1,160
Other accrued liabilities 30,945 13,399
----------- ----------
$ 47,305 $ 15,379
=========== ==========
Other assets consist of the following as of December 31, 2000 and 1999
(in thousands):
[Download Table]
2000 1999
------------ ------------
Deferred loan costs, net $ 16,808 $ 6,657
Deposits and other 7,831 8,775
----------- ----------
$ 24,639 $ 15,432
=========== ==========
Deferred loan costs are being amortized utilizing the interest method
over the term of the respective term loans.
Other liabilities consist of the following at December 31, 2000 and
1999 (in thousands):
[Download Table]
2000 1999
----------- ------------
Minority interest $ 10,484 $ 9,489
Accrued liabilities 10,970 --
Long service leave 6,565 7,663
Annual leave 3,677 6,087
Other 3,348 2,624
-------- -------
$ 35,044 $25,863
======== =======
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following as of December
31, 2000 and 1999 (in thousands):
[Download Table]
2000 1999
-------------- --------------
Land $ 127,737 $ 34,345
Buildings and improvements 14,665 8,683
Railroad track and improvements 460,108 186,670
Locomotives, transportation and other equipment 151,786 135,309
------------- ------------
754,296 365,007
Less accumulated depreciation 39,276 17,390
------------- ------------
$ 715,020 $ 347,617
============= ============
Depreciation expense was approximately $25.1 million, $9.2 million and
$2.5 million for the years ended December 31, 2000, 1999 and 1998,
respectively.
F-14
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. PROPERTY, PLANT AND EQUIPMENT, continued
In the fourth quarter of 1999, a $4.1 million gain was recognized on an
insurance settlement from an accident which destroyed certain
locomotives and railcars in Australia.
During 2000, the Company completed $22.2 million in locomotive
sale/leaseback transactions.
8. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 2000 and 1999
(in thousands):
[Enlarge/Download Table]
2000 1999
---------- ----------
Senior credit facilities. See below $ 319,714 $ 121,005
Credit facility with Banco de Desarrollo, see below 10,462 10,261
Credit facility with Banco Security, interest rate of
7.12% - 8.4% 7,499 5,102
Mortgage note payable, bearing interest at 7.85%, due in fixed
monthly installments of $46 (including interest), with
a final payment of $4,827 in January 2010. Corporate
office building serves as collateral 5,927 6,000
Other long-term debt 15,254 20,459
--------- ----------
358,856 162,827
Less current maturities 20,558 17,811
--------- ----------
Long-term debt, less current maturities $ 338,298 $ 145,016
========= ==========
In February 2000, the Company entered into a credit agreement and two
bridge notes 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 (i) a $125 million Term A loan, initially
bearing interest at LIBOR plus 3.00% (9.72% at December 31, 2000), (ii)
a $205 million Term B loan, initially bearing interest at LIBOR plus
3.25% (9.97% at December 31, 2000), and (iii) a $50 million revolving
credit facility which includes $30 million of U.S. dollar denominated
loans, $10 million of Canadian dollar denominated loans and $10.0
million of Australian dollar denominated loans with an initial interest
rate of LIBOR plus 3.00%. All of the capital stock of all the Company's
U.S. subsidiaries serve as collateral for the credit facilities. As of
December 31, 2000, the two bridge notes have been repaid. (See Note 9).
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. The outstanding balance as of December 31, 2000 of
the Term A loan, Term B loan and revolving loan are $110.4 million,
$191.6 million and $17.7 million, respectively.
F-15
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. 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 stock or make
other distributions; make acquisitions or investments; use assets as
security 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.
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 extinguishments of debt, net of income
taxes.
In February 1999, Ferronor refinanced certain short-term debt with
Banco de Desarrollo. The refinancing consists of two credit lines. The
first credit line is a $5.0 million facility which bears interest at
the interbank cost plus 1.75% (9.05% at December 31, 2000) with
interest to be paid over 120 equal monthly installments and principal
to be paid over 96 equal installments beginning two years from the
funding. The second credit line is a $7.7 million facility which bears
interest at LIBOR plus 2.75%(10.05% at December 31, 2000) and is
payable in 120 equal monthly installments (including interest).
The aggregate annual maturities of long-term debt are as follows (in
thousands):
2001 $ 20,558
2002 26,653
2003 29,251
2004 33,109
2005 52,089
Thereafter 197,196
---------
$ 358,856
=========
During the years ended December 31, 2000, 1999 and 1998 interest of
approximately $1,257, $1,386 and $465, respectively, was capitalized
for on-going capital improvement projects.
On May 4, 2000, the Company entered into two interest rate swap
agreements for a total notional amount of $212.5 million. The
agreements, which have a term of three years, require the Company to
pay a fixed interest rate of 7.23% while receiving a variable interest
rate equal to the 90 day LIBOR rate.
Leases
The Company entered into equipment finance leases for certain tractors,
trailers and other equipment expiring at various times through 2003.
Certain of these leases are accounted
F-16
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. LONG-TERM DEBT, continued
for as capital leases. The financing of the purchase of the tractors,
trailers and equipment under these capital leases was capitalized using
the implicit interest rate at the inception of the respective leases.
Minimum annual lease commitments at December 31, 2000 are as follows
(in thousands):
CAPITAL OPERATING
LEASES LEASES
------ ------
2001 $ 1,240 $ 12,587
2002 1,268 11,051
2003 60 10,014
2004 -- 9,219
2005 -- 8,242
Thereafter -- 23,478
---------- --------
Total $ 2,568 $ 74,591
=========== ========
Rental expense under operating leases was approximately $9.0 million,
$3.4 million and $2.7 million for the years ended December 31, 2000,
1999 and 1998, respectively.
9. SUBORDINATED DEBT
In August 2000, RailAmerica Transportation Corp. ("RTC"), 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. All of the Company's U.S. subsidiaries are
guarantors of the senior subordinated notes. The net proceeds received
from the issuance of the units were used to pay $115.0 million of
bridge notes and approximately $1.8 million of term loans under the
Company's senior credit facilities, resulting in an extraordinary
charge of $1.8 million, net of taxes, associated with the early
extinguishment of debt.
In connection with the issuance of the bridge notes for the RailTex
acquisition, the purchasers of such notes received 0.433 million
warrants to purchase common stock at an exercise price of $7.75 per
share, expiring in 2010.
In connection with the financing for VLF, the Company issued to a bank
warrants to acquire 750,000 shares of the Company's Common Stock at an
exercise price of $9.75 per share and warrants to acquire 50,000 shares
of the Company's common stock at an exercise price of $7.79 per share.
The bridge loan was repaid in February 2000 in conjunction with the
acquisition of RailTex.
In addition to the bridge loan Freight Australia issued approximately
$2.0 million in subordinated debt to a vendor of Freight Australia
("Vendor Debt"). The Company also issued $2.64 million of convertible
debt in lieu of cash payments for fees owed to its
F-17
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SUBORDINATED DEBT, continued
investment banker in the transaction. The convertible debt was
converted in July 1999 into 272,415 shares of common stock.
In August 1999, the Company issued $22.5 million aggregate principal
amount of junior convertible subordinated debentures. Interest on the
debentures accrues at the rate of 6% per annum and is payable
semi-annually. The debentures are convertible, at the option of the
holder, into shares of RailAmerica at a conversion price of $10. The
debentures mature on July 31, 2004, are general unsecured obligations
and rank subordinate in right of payment to all senior indebtedness. At
RailAmerica's option, the debentures may be redeemed at par plus
accrued interest, in whole or in part, if the closing price of
RailAmerica's common stock is above 200% of the conversion price for 10
consecutive trading days. During 2000, $350,000 of the junior
convertible subordinated debentures were converted into common stock.
The Company recognized a $2.3 million charge in the fourth quarter of
2000 for the beneficial conversion feature included in the junior
convertible subordinated debentures. This charge is shown as the
cumulative effect of accounting change.
10. REDEEMABLE PREFERRED STOCK
In January 1999, the Company completed a private offering of $11.6
million of Series A Convertible Redeemable Preferred Stock ("Preferred
Stock"). The Company sold 464,400 shares of Preferred Stock at a price
of $25 per share. The Preferred Stock pays annual dividends of 7.5%, is
convertible into shares of the Company's common stock at a price of
$8.25 per share and is non-voting. The Preferred Stock is mandatorily
redeemable 5 years from its issuance. During 1999, 86,000 shares of the
Preferred Stock were converted and 100,000 shares were converted in
2000. Accretion of costs were $119,681 and $192,510 for the years ended
December 31, 2000 and 1999 respectively.
A company owned by a director of the Company served as the exclusive
placement agent for the Company's private placement which had a final
close in January 1999. A portion of the proceeds were received by the
Company and closed in December 1998. The Company paid a total of $0.8
million in placement fees and cost reimbursements during December 1998
and the first quarter of 1999 on this transaction and issued two-year
warrants to purchase 140,727 shares of common stock at an exercise
price of $8.25 per share. The warrants expired unexercised on January
31, 2001.
11. COMMON STOCK TRANSACTIONS
In June 2000, the Company engaged an investment banking firm to assist
the Company's Board of Directors in evaluating the issuance of the
senior subordinated notes, for which it issued three-year warrants to
purchase 150,000 shares of the Company's common stock. Of these
warrants, 75,000 are at an exercise price of $5.50 and 75,000 are at an
exercise price of $6.50.
In August 1999, the Company issued warrants to purchase 676,363 shares
of common stock to the investors in the private offering of its junior
convertible subordinated debentures. The warrants are exercisable
through August 5, 2004 at an exercise price of $10.50 per share,
subject to adjustment under selected circumstances. Warrants to
purchase 200,000 shares of common stock at an exercise price of $10.50
per share through July 31, 2001 were issued to the placement agent in
connection with the private offering.
F-18
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. COMMON STOCK TRANSACTIONS, continued
In August 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 new senior credit
facilities). As of December 31, 2000, the Company had purchased 756,650
shares with a total cost of $5.1 million. The shares were retired in
2000.
In March 1999, the Company completed a private placement of
approximately $12.5 million of restricted common stock. Pursuant to the
offering, the Company sold approximately 1.4 million shares of its
common stock at a price of $8.81 per share and issued approximately
212,000 warrants to purchase an equivalent number of shares of common
stock at an exercise price of $10.13 per share within one year of the
transaction's closing date. A company owned by one of the Company's
directors acted as placement agent and received approximately $0.4
million in fees and cost reimbursement and one-year warrants to
purchase 141,504 shares of the Company's common stock at an exercise
price of $10.13. All of the warrants issued for this transaction
expired unexercised on March 3, 2000.
12. INCOME TAX PROVISION
Income before income taxes for the years ended December 31, 2000, 1999
and 1998 consists of (in thousands):
2000 1999 1998
-------- -------- --------
Domestic $ (8,723) $ 2,868 $ 3,941
Foreign subsidiaries 26,334 8,566 1,990
-------- -------- --------
$ 17,611 $ 11,434 $ 5,931
======== ======== ========
The provision for income taxes for the years ended December 31, 2000,
1999 and 1998 consists of (in thousands):
2000 1999 1998
------- ------- -------
Federal income taxes:
Current $ 334 $ 15 $ 232
Deferred 2,494 1,234 1,039
------- ------- -------
2,828 1,249 1,271
------- ------- -------
State income taxes:
Current 700 149 281
Deferred (1,548) (106) (55)
------- ------- -------
(848) 43 226
------- ------- -------
Foreign income taxes:
Current 2,435 857 33
Deferred 1,535 2,197 --
Change in tax law -- (2,835) --
------- ------- -------
3,970 219 33
------- ------- -------
Total income tax provision $ 5,950 $ 1,511 $ 1,530
======= ======= =======
F-19
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. INCOME TAX PROVISION, continued
The following summarizes the total income tax provisions for each of
the years ended December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998
------- ------- -------
Continuing operations $ 2,950 $ (787) $(1,000)
Discontinued operations 5,200 2,298 2,530
Extraordinary item (2,200) -- --
------- ------- -------
Total income tax provision $ 5,950 $ 1,511 $ 1,530
======= ======= =======
The differences between the U.S. federal statutory tax rate and the
Company's effective rate from continuing operations are as follows (in
thousands):
[Download Table]
2000 1999 1998
------- ------- -------
Income tax provision, at 35% $ 4,406 $ 1,833 $ (310)
Net benefit due to difference between U.S. &
foreign tax rates (206) (561) (334)
Net benefit due to tax law changes in Australia -- (2,835) --
Amortization of non-deductible warrants (602) 602 --
Other, net (559) 344
(238)
Valuation allowance (89) (170) (118)
------- ------- -------
Tax provision $ 2,950 $ (787) $(1,000)
======= ======= =======
The Company files a consolidated U.S. income tax return with its
domestic subsidiaries. For state income tax purposes, the Company and
each of its domestic subsidiaries generally file on a separate return
basis in the states in which they do business. The Company's foreign
subsidiaries file income tax returns in their respective jurisdictions.
The components of deferred income tax assets and liabilities as of
December 31, 2000 and 1999 are as follows (in thousands):
2000 1999
--------- ---------
Deferred tax assets:
Net operating loss carry forwards $ 11,829 $ 7,667
Alternative minimum tax credit 1,125 790
Accrued expense/reserves 5,201 4,478
Other 1,128 108
--------- ---------
Total deferred assets 19,283 13,043
Less: valuation allowance (999) (321)
--------- ---------
Total deferred assets, net 18,284 12,722
Deferred tax liabilities:
Property, plant and equipment 107,188 29,162
Deferred revenue (2,478) 495
Other 862 1,875
--------- ---------
Net deferred tax liability $ (87,288) $ (18,810)
========= =========
F-20
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. INCOME TAX PROVISION, continued
The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight
of available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. It is management's belief
that it is more likely than not that a portion of the deferred tax
assets will not be realized. The Company has established a valuation
allowance of $1.0 million at December 31, 2000 and $0.3 million at
December 31, 1999, respectively. Approximately $0.8 million of the
increase in the valuation allowance from December 31, 1999 to December
31, 2000 was related to deferred tax assets acquired in the acquisition
of RailTex, Inc.
The following is a summary of net operating loss carryforwards by
jurisdiction as of December 31, 2000 (in thousands):
[Download Table]
AMOUNT EXPIRATION PERIOD
------ -----------------
U.S. - Federal $ 3,086 2003 - 2020
U.S. - State 48,823 2001 - 2020
Chile 1,336 None
Australia 22,322 None
Canada 2,666 2004 - 2007
---------
$ 78,233
=========
As part of certain acquisitions, the Company acquired net operating
loss carry forwards for federal and state income tax purposes. The
utilization of the acquired tax loss carry forwards is further limited
by the Internal Revenue Code Section 382. These tax loss carry forwards
expire in the years 2001 through 2010.
No provision was made in 2000 for U.S. income taxes on undistributed
earnings of the Chilean, Canadian or Australian subsidiaries as it is
the intention of management to utilize those earnings in their
respective operations for an indefinite period of time.
13. STOCK OPTIONS
The Company has stock option plans under which employees and
non-employee directors may be granted options to purchase shares of
Company common stock at the fair market value at the date of grant.
Options generally vest in two or three years and expire in ten years
from the date of the grant.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation". Accordingly, no compensation
costs have been recognized for the stock options issued during 2000,
1999 and 1998 as all stock options were granted with an exercise price
at least equal to the market price on the date of grant. Had
compensation cost for the Company's stock options issued been
determined based on the fair value at the grant date for awards in
2000, 1999 and 1998 consistent with the
F-21
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. STOCK OPTIONS, continued
provisions of SFAS No. 123, the Company's net income and net income per
share would have been reduced to the pro forma amounts indicated below
(in thousands except per share information):
[Enlarge/Download Table]
2000 1999 1998
--------------- --------------- ---------------
Net income - as reported $ 11,661 $ 9,921 $ 4,401
=============== =============== ===============
Net income - pro forma $ 8,076 $ 8,972 $ 3,562
=============== =============== ===============
Basic net income per share - as reported $ 0.61 $ 0.80 $ 0.46
=============== =============== ===============
Basic net income per share - pro forma $ 0.41 $ 0.72 $ 0.37
=============== =============== ===============
Diluted net income per share - as reported $ 0.60 $ 0.77 $ 0.45
=============== =============== ===============
Diluted net income per share - pro forma $ 0.41 $ 0.68 $ 0.36
=============== =============== ===============
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 2000, 1999 and 1998:
dividend yield 0.0%, 0.0% and 0.0%; expected volatility of 41%, 40% and
40%; risk-free interest rate of 6.50%, 5.80% and 5.50%; and expected
lives of 5, 10 and 10 years. The weighted average fair value of options
granted for 2000, 1999 and 1998 were $4.75, $5.86, and $3.97,
respectively.
Information regarding the above options for 2000, 1999 and 1998 is as
follows:
[Enlarge/Download Table]
Weighted Weighted
Number of Average Number Of Average
Outstanding Exercise Shares Exercise
Shares Price Exercisable Price
-------------- --------------- --------------- ---------------
Outstanding at January 1, 1998 1,250,900 $4.10
Granted 551,000 $7.35
Exercised (237,950) $3.66
Forfeited (26,949) $3.58
--------- --------------
Outstanding at December 31, 1998 1,537,001 $5.40 1,234,500 $5.26
Granted 455,000 $8.97
Exercised (141,168) $4.35
Forfeited (10,833) $5.09
---------- --------------
Outstanding at December 31, 1999 1,840,000 $6.34 1,225,999 $5.40
Granted 1,882,558 $8.08
Exercised (48,969) $4.78
Forfeited (222,498) $7.64
---------- --------------
Outstanding at December 31, 2000 3,451,091 $7.23 1,937,858 $6.50
========== ==============
Authorized at December 31, 2000 4,525,402
==========
F-22
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. STOCK OPTIONS, continued
The following table summarizes information about stock options
outstanding at December 31, 2000:
[Enlarge/Download Table]
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ---------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OF OPTIONS LIFE PRICE OF OPTIONS PRICE
--------------------------------------------------------------------------------------------------
$3.40-$5.00 782,450 4.91 $4.24 782,450 $4.24
$5.01-$7.00 650,391 9.01 $6.32 282,410 $6.28
$7.01-$9.75 2,018,250 8.61 $8.67 872,998 $8.60
--------- --------
3,451,091 1,937,858
========= =========
In January 1995, the Company established an Employee Stock Purchase
Plan open to all full-time employees. Each employee may have payroll
deductions as a percentage of their compensation, not to exceed $25,000
per year. The purchase price equals 85% of the fair market value of a
share of the Company's Common Stock on January 1 or December 31, of any
given year, whichever is lower. For the years ended December 31, 2000,
1999 and 1998, 11,749, 16,500 and 18,289 shares of common stock,
respectively, were sold to employees under this plan.
14. NONCASH INVESTING AND FINANCING ACTIVITIES
Cash paid for interest from continuing operations during 2000, 1999 and
1998 was $41.2 million, $16.3 million and $5.7 million, respectively.
Cash paid for income taxes during 2000, 1999 and 1998 was $4.0 million,
$1.3 million and $0.2 million, respectively.
[Enlarge/Download Table]
2000 1999 1998
--------- --------- ---------
Acquisition of businesses (in thousands):
Common stock issued for businesses acquired $ 60,773 $ -- $ 453
Warrants issued for business acquired -- 3,031 --
Debt issued for business acquired 105,376 173,493 --
Acquisition costs accrued -- 4,897 31
Details of acquisitions:
Working capital components, other than cash 6,109 (5,827) (801)
Property and equipment (390,468) (217,965) (2,484)
Other assets (6,980) (4,834) (962)
Deferred loan costs -- (6,959) --
Goodwill -- (972) (355)
Notes payable and loans payable 3,148 35,466 1,921
Deferred income taxes payable 73,120 11,217 440
Minority interest -- -- --
--------- --------- ---------
Net cash used in acquisitions $(148,922) $ (8,453) $ (1,757)
========= ========= =========
F-23
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Management believes that the fair value of its senior long-term debt
approximates its carrying value for the based on the variable nature of
the financing and for all other long-term debt based on current
borrowing rates available with similar terms and maturities. The fair
value of the senior subordinated notes is $125,450 as of December 31,
2000.
16. PENSION AND OTHER BENEFIT PROGRAMS
The Company maintains a pension plan for a majority of its Canadian
railroad employees, with both defined benefit and defined contribution
components.
DEFINED BENEFIT - The defined benefit component applies to
approximately 60 employees who transferred employment directly from
Canadian Pacific Railway Company ("CPR") to a subsidiary of RaiLink,
Ltd. The defined benefit portion of the plan is a mirror plan of CPR's
defined benefit plan. The employees that transferred and joined the
mirror plan were entitled to transfer or buy back prior years of
service. As part of the arrangement, CPR transferred to the Company the
appropriate value of each employee's pension entitlement.
The following chart summarizes the benefit obligations, assets, funded
status and rate assumptions associated with the defined benefit plan
(in thousands) for the year ended December 31, 2000 and the period from
August 1, 1999 to December 31, 1999.
[Download Table]
2000 1999
------- -------
Change in benefit obligation
Benefit obligation at beginning of period $ 2,853 $ 2,710
Service cost 47 26
Interest cost 150 79
Plan participants' contributions 67 38
Benefits paid (3) 0
------- -------
Benefit obligation at end of period $ 3,114 $ 2,853
======= =======
Change in plan assets
Fair value of plan assets at beginning
of period $ 2,655 $ 2,445
Actual return on plan assets 340 132
Employer contributions 93 37
Plan participants' contributions 116 41
Benefits paid (3) 0
------- -------
Fair value of plan assets at end of period $ 3 ,201 $ 2,655
======= =======
Funded status
Prepaid (accrued) benefit cost $ 87 $ (198)
======= =======
Rate Assumptions
Discount rate 7.00% 7.00%
Expected return on plan assets 8.00% 8.00%
Rate of compensation increase 4.50% 4.50%
2000 1999
------- -------
Components of net periodic benefit cost:
Service cost $ 47 $ 26
Interest cost 150 79
Expected return on plan assets (147) (83)
Net obligation at date of adoption 16 17
------- -------
Net periodic pension cost $ 66 $ 39
======= =======
F-24
Freight Australia's employees participate in the Victorian government's
superannuation funds. The contributions made by Freight Australia are
as follows (in thousands) for the year ended December 31, 2000 and the
period from May 1, 1999 to December 31, 1999.
2000 1999
------ ------
Victorian Superannuation Fund $ 140 $ 62
State Superannuation Fund 972 647
Transport Fund 263 194
Freight Victoria Fund 161 53
------ ------
Total contributions $1,536 $ 956
====== ======
Defined contribution - The defined contribution component applies to a
majority of the Company's Canadian railroad employees that are not
covered by the defined benefit component. The Company contributes 3% of
a participating employee's salary to the plan. Pension expense for the
year ended December 31, 2000 and for the period August 1, 1999 to
December 31, 1999 for the defined contribution members was $0.2 million
and $0.1 million, respectively.
Profit Sharing Plan
The Company maintains a contributory profit sharing plan as defined
under Section 401(k) of the U.S. Internal Revenue Code. The Company
made contributions to this plan at a rate of 50% of the employees'
contribution up to a maximum annual contribution of $1,500 per eligible
employee. An employee becomes 100% vested with respect to the employer
contributions after completing six years of service. Employer
contributions during the years ended December 31, 2000, 1999 and 1998
were approximately $286,000, $81,000 and $66,000, respectively.
F-25
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. COMMITMENTS AND CONTINGENCIES
In the second quarter of 2000, certain parties filed property damage
claims totaling approximately $32.5 million against Mackenzie Northern
Railway, a wholly-owned subsidiary of RailAmerica, 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 $13.0 million to cover these claims. The Company's
insurer has reserved $9.8 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.
In the ordinary course of conducting its business, the Company becomes
involved in various legal actions and other claims which are pending or
could be asserted against the Company. Litigation is subject to many
uncertainties, the outcome of individual litigated matters is not
predictable with assurance, and it is reasonably possible that some of
these matters may be decided unfavorably to the Company. It is the
opinion of management that the ultimate liability, if any, with respect
to these matters will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
The Company has a $4.7 million contingent obligation, under certain
events of default or if line abandonment occurs, to the Canadian
National Railroad in connection with its properties. The contingent
obligation bears no interest and has no pre-defined terms of payment or
maturity.
The Company's operations are subject to extensive environmental
regulation. The Company records liabilities for remediation and
restoration costs related to past activities when the Company's
obligation is probable and the costs can be reasonably estimated. Costs
of ongoing compliance activities to current operations are expensed as
incurred. The Company's recorded liabilities for these issues represent
its best estimates (on an undiscounted basis) of remediation and
restoration costs that may be required to comply with present laws and
regulations. At December 31, 2000 these recorded liabilities were not
material. Although these costs cannot be predicted with certainty,
management believes that the ultimate outcome of identified matters
will not have a material adverse effect on the Company's consolidated
results of operations or financial condition.
18. SEGMENT INFORMATION
The Company's continuing operations have been classified into three
business segments: North American rail transportation, Australian rail
transportation, and Chilean rail transportation. The North American
rail transportation segment includes the operations of the Company's
railroad subsidiaries in the United States and Canada.
F-26
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. SEGMENT INFORMATION, continued
Business and geographical segment information for the years ended
December 31, 2000, 1999 and 1998 (dollar amounts in thousands) is as
follows:
YEAR ENDED DECEMBER 31, 2000:
[Enlarge/Download Table]
NORTH AMERICA
------------------------------
CONSOLIDATED UNITED STATES CANADA CHILE AUSTRALIA
------------ -------------- ------------- ------------ ------------
Revenue $ 357,936 $ 169,354 $ 63,505 $ 22,873 $ 102,204
Depreciation and
amortization $ 26,021 $ 14,052 $ 4,253 $ 2,278 $ 5,438
Income (loss) before
income taxes $ 12,558 $ (19,194) $ 13,752 $ 954 $ 17,046
Interest expense $ 51,096 $ 47,811 $ 431 $ 2,383 $ 471
Total assets $ 839,703 $ 635,746 $ 83,724 $ 57,629 $ 62,604
Capital expenditures $ 62,499 $ 24,566 $ 9,570 $ 10,018 $ 18,345
YEAR ENDED DECEMBER 31, 1999:
[Enlarge/Download Table]
NORTH AMERICA
------------------------------
CONSOLIDATED UNITED STATES CANADA CHILE AUSTRALIA
------------ -------------- ------------- ------------ ------------
Revenue $ 129,818 $ 27,166 $ 20,179 $ 19,115 $ 63,358
Depreciation and
amortization $ 9,179 $ 2,428 $ 2,091 $ 1,231 $ 3,429
Income (loss) before
income taxes $ 5,238 $ (2,979) $ 919 $ 1,473 $ 5,825*
Interest expense $ 16,287 $ 3,926 $ 3,203 $ 1,595 $ 7,563
Total assets $ 428,932 $ 115,295 $ 99,038 $ 52,022 $ 162,577
Capital expenditures $ 51,391 $ 14,604 $ 11,841 $ 13,389 $ 11,557
YEAR ENDED DECEMBER 31, 1998:
[Enlarge/Download Table]
NORTH AMERICA
------------------------------
CONSOLIDATED UNITED STATES CANADA CHILE AUSTRALIA
------------ -------------- ------------- ------------ ------------
Revenue $ 39,136 $ 18,960 $ 4,252 $ 15,924 $ --
Depreciation and
amortization $ 2,544 $ 1,838 $ -- $ 706 $ --
Income (loss) before
income taxes $ (887) $ (2,327) $ (142) $ 1,580 $ 2
Interest expense $ 4,479 $ 3,104 $ 109 $ 1,266 $ --
Total assets $ 117,081 $ 74,628 $ 2,672 $ 37,786 $ 1,995
Capital expenditures $ 28,129 $ 15,109 $ 213 $ 12,807 $ --
* - Amount includes $4.1 million casualty gain.
F-27
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. UNAUDITED QUARTERLY FINANCIAL DATA
Quarterly financial data for 2000 is as follows (in thousands except
per share amounts)
[Download Table]
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
Operating revenue $ 81,000 $ 96,047 $ 90,970 $ 89,919
Operating income $ 13,966 $ 23,705 $ 16,837 $ 15,526
Income (loss) from
continuing operations $ (889) $ 7,588 $ 1,844 $ 1,065
Net income (loss) $ (3,182) $ 7,553 $ 237 $ 7,053
Basic income (loss) from
continuing operations per share $ (0.06) $ 0.40 $ 0.09 $ 0.05
Diluted income (loss) from
continuing operations per share $ (0.06) $ 0.36 $ 0.09 $ 0.05
Quarterly financial data for 1999 is as follows (in thousands except
per share amounts)
[Download Table]
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
Operating revenue $ 11,062 $ 28,816 $ 39,678 $ 50,262
Operating income $ 1,628 $ 4,373 $ 6,602 $ 12,676
Income (loss) from
continuing operations $ 39 $ 1,389 $ 2,278 $ 2,319
Net income $ 1,203 $ 2,748 $ 3,287 $ 2,683
Basic income (loss) from
continuing operations per share $ (0.02) $ 0.10 $ 0.17 $ 0.18
Diluted income (loss) from
continuing operations per share $ (0.02) $ 0.10 $ 0.16 $ 0.17
The above amounts differ from those included in the Form 10-Q's filed
during 1999 due to the trailer manufacturing segment being included in
discontinued operations for all periods reported in these consolidated
financial statements.
F-28
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION
In August 2000, RailAmerica Transportation Corp. ("Issuer"), a wholly-owned
subsidiary of RailAmerica, Inc. ("Parent"), sold units including 12 7/8% senior
subordinated notes, which are registered with the Securities and Exchange
Commission. The notes are guaranteed by the Parent, the domestic subsidiaries
of the Issuer and Palm Beach Rail Holding, Inc.
RAILAMERICA, INC.
Consolidating Balance Sheet
At December 31, 2000
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
Issuer (Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
ASSETS
Current Assets:
Cash $ -- $ 7 $ 2,943 $ 10,140 $ -- $ 13,090
Cash held in escrow -- -- 2,525 2,014 -- 4,539
Accounts and notes receivable 11 1,735 35,682 27,135 (1,699) 62,864
Other current assets 23 829 6,930 11,769 -- 19,551
--------- --------- --------- --------- --------- ---------
Total current assets 34 2,571 48,080 51,058 (1,699) 100,044
Property, plant and equipment, net 48 638 415,961 298,373 -- 715,020
Other assets 15,018 1,899 3,617 4,105 -- 24,639
Investment in and advances to affiliates 450,563 164,772 32,037 (161,811) (485,561) --
--------- --------- --------- --------- --------- ---------
Total assets $ 465,663 $ 169,880 $ 499,695 $ 191,725 $(487,260) $ 839,703
========= ========= ========= ========= ========= =========
LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 13,557 $ -- $ 1,427 $ 7,273 $ (1,699) $ 20,558
Accounts payable 74 537 13,748 25,393 -- 39,752
Accrued expenses 9,888 1,280 19,902 16,235 -- 47,305
--------- --------- --------- --------- --------- ---------
Total current liabilities 23,519 1,817 35,077 48,901 (1,699) 107,615
Long-term debt, less current maturities 423,818 -- (105,214) 19,694 -- 338,298
Subordinated debt -- 20,609 117,660 3,142 -- 141,411
Deferred income taxes (11,664) (6,842) 92,590 13,204 -- 87,288
Minority interest and other liabilities -- -- 11,500 18,129 5,415 35,044
Redeemable convertible preferred stock -- 6,613 -- -- -- 6,613
Stockholders' equity:
Common stock -- 19 972 27,772 (28,744) 19
Additional paid-in capital -- 118,502 310,880 47,314 (358,194) 118,502
Retained earnings 29,990 29,162 36,230 37,818 (104,038) 29,162
Accumulated other comprehensive income -- -- -- (24,249) -- (24,249)
--------- --------- --------- --------- --------- ---------
Total stockholders' equity 29,990 147,683 348,082 (88,655) (490,976) 123,434
--------- --------- --------- --------- --------- ---------
Total liabilities, redeemable preferred
stock and stockholders' equity $ 465,663 $ 169,880 $ 499,695 $ 191,725 $(487,260) $ 839,703
========= ========= ========= ========= ========= =========
F-29
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Statement of Income
For the Year Ended December 31, 2000
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
Issuer (Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
Operating revenue $ -- $ 594 $ 169,353 $ 188,582 $ (593) $ 357,936
--------- --------- --------- --------- --------- ---------
Operating expenses:
Transportation -- -- 87,897 123,075 -- 210,972
Selling, general and administrative 530 11,730 34,090 16,336 (593) 62,093
Gain on sale and impairment of assets (net) (762) -- (10,753) 331 -- (11,184)
Depreciation and amortization 944 121 12,987 11,969 -- 26,021
--------- --------- --------- --------- --------- ---------
Total operating expenses 712 11,851 124,221 151,711 (593) 287,902
--------- --------- --------- --------- --------- ---------
Operating income (712) (11,257) 45,132 36,871 -- 70,034
Interest expense (48,428) (1,910) (2,247) (3,365) -- (55,950)
Interest in equity of subsidiaries 55,891 25,301 -- -- (81,192) --
Minority interest and other income (expense) -- 7 223 (1,756) -- (1,526)
--------- --------- --------- --------- --------- ---------
Income from continuing
operations before income taxes 6,751 12,141 43,108 31,750 (81,192) 12,558
Provision for income taxes (11,548) (3,093) 10,130 7,461 -- 2,950
--------- --------- --------- --------- --------- ---------
Income from continuing operations 18,299 15,234 32,978 24,289 (81,192) 9,608
Discontinued operations:
Gain on disposal of discontinued segment -- -- 13,527 (2,000) -- 11,527
Loss from operations of discontinued
segment -- -- (5,077) 1,851 -- (3,226)
--------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary item 18,299 15,234 41,428 24,140 (81,192) 17,909
Extraordinary loss from early extinguishment
of debt (net of tax) (1,299) (1,321) (1,376) -- -- (3,996)
Cumulative effect of accounting change -- (2,252) -- -- -- (2,252)
--------- --------- --------- --------- --------- ---------
Net income $ 17,000 $ 11,661 $ 40,052 $ 24,140 $ (81,192) $ 11,661
========= ========= ========= ========= ========= =========
F-30
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Statement of Cash Flow
For the Year Ended December 31, 2000
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
Issuer (Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
Cash flows from operating activities:
Net income (loss) $ (38,891) $ (13,640) $ 40,052 $ 24,140 $ -- 11,661
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,594 1,236 15,751 12,985 -- 34,566
Write-off of deferred loan costs 1,615 1,353 735 1,154 -- 4,857
Interest paid in kind -- -- 5,806 -- -- 5,806
Minority interest in income of
subsidiary -- -- -- 995 -- 995
Equity interest in earnings of affiliate -- -- -- (554) -- (554)
(Gain) loss on sale or disposal of
properties (762) -- (31,857) 3,065 -- (29,554)
Cumulative effect of accounting change -- 2,252 -- -- -- 2,252
Deferred income taxes (13,984) (4,431) 20,549 (4,931) -- (2,797)
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable (356) 745 (2,676) 5,941 -- 3,654
Other current assets (23) (388) (1,802) 4,668 -- 2,455
Accounts payable 74 (240) (2,977) 5,382 -- 2,239
Accrued expenses 9,889 295 (2,562) (1,863) -- 5,759
Other liabilities -- -- 4,671 (600) -- 4,071
Deposits and other 263 (1,552) (392) 704 -- (977)
--------- --------- --------- ---------- --------- ---------
Net cash provided by operating
activities (37,581) (14,370) 45,297 51,088 -- 44,433
--------- --------- --------- ---------- --------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (52) (26) (24,034) (38,387) -- (62,499)
Proceeds from sale of properties -- -- 80,976 15,678 -- 96,654
Acquisitions, net of cash acquired -- -- (148,922) -- -- (148,922)
Change in cash in escrow -- -- (2,507) (2,032) -- (4,539)
Deferred acquisition costs and other -- (2,711) -- -- -- (2,711)
--------- --------- --------- ---------- --------- ---------
Net cash used in investing activities (52) (2,737) (94,486) (24,742) -- (122,017)
--------- --------- --------- ---------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 539,150 986 6,040 3,059 -- 549,235
Principal payments on long-term debt (97,186) (11,699) (156,010) (183,212) -- (448,107)
Disbursements/receipts on intercompany debt (385,991) 29,805 201,256 154,930 -- --
Proceeds from exercise of stock options -- 234 -- -- -- 234
Preferred stock dividends paid -- (289) -- -- -- (289)
Purchase of treasury stock -- (1,992) -- -- -- (1,992)
Deferred financing costs paid (18,340) (23) (617) -- -- (18,980)
--------- --------- --------- ---------- --------- ---------
Net cash provided by financing
activities 37,633 17,022 50,669 (25,223) -- 80,101
--------- --------- --------- ---------- --------- ---------
Net (decrease) increase in cash -- (85) 1,480 1,123 -- 2,517
Effect of exchange rates on cash -- -- -- (1,025) -- (1,025)
Cash, beginning of period -- 92 1,464 10,042 -- 11,598
--------- --------- --------- ---------- --------- ---------
Cash, end of period $ -- $ 7 $ 2,943 $ 10,140 $ -- $ 13,090
========= ========= ========= ========== ========= =========
F-31
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Balance Sheet
At December 31, 1999
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
ASSETS
Current Assets:
Cash $ 3,588 $ 274 $ 7,736 $ -- $ 11,598
Accounts and notes receivable 2,480 7,682 32,401 (1,705) 40,857
Other current assets 441 971 12,017 -- 13,429
Net assets of discontinued operation -- -- 14,996 -- 14,996
--------- --------- --------- --------- ---------
Total current assets 6,509 8,926 67,150 (1,705) 80,880
Property, plant and equipment, net 733 88,922 257,963 -- 347,617
Other assets 4,866 1,671 8,895 -- 15,432
Investment in and advances to affiliates 92,953 (15,833) (3,925) (73,196) --
--------- --------- --------- --------- ---------
Total assets $ 105,061 $ 83,686 $ 330,083 $ (74,901) $ 443,929
========= ========= ========= ========= =========
LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 5 $ 8,805 $ 9,001 $ -- $ 17,811
Accounts payable 777 3,936 19,024 (6) 23,732
Accrued expenses 842 2,662 11,875 -- 15,379
--------- --------- --------- --------- ---------
Total current liabilities 1,624 15,403 39,901 (6) 56,922
--------- --------- --------- --------- ---------
Long-term debt, less current maturities 10,708 42,019 93,989 (1,699) 145,016
Subordinated debt 20,481 -- 101,968 -- 122,449
Deferred income taxes (2,411) 18,649 (856) -- 15,382
Minority interest and other liabilities -- 441 20,007 5,415 25,863
Redeemable convertible preferred stock 8,830 -- -- -- 8,830
Stockholders' equity:
Common stock 12 119 28,259 (28,378) 13
Additional paid-in capital 47,645 3,514 20,557 (23,918) 47,797
Retained earnings 18,171 3,542 22,773 (26,315) 18,171
Accumulated other comprehensive income -- -- 3,486 -- 3,486
--------- --------- --------- --------- ---------
Total stockholders' equity 65,828 7,174 75,075 (78,611) 69,467
--------- --------- --------- --------- ---------
Total liabilities, redeemable preferred
stock and stockholders' equity $ 105,061 $ 83,686 $ 330,083 $ (74,901) $ 443,929
========= ========= ========= ========= =========
F-32
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION, CONTINUED
RAILAMERICA, INC.
Consolidating Statement of Income
For the Year Ended December 31, 1999
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
Operating revenue $ -- $ 27,166 $ 102,652 $ -- $ 129,818
--------- --------- --------- --------- ---------
Operating expenses:
Transportation -- 13,490 65,949 -- 79,439
Selling, general and administrative 4,825 4,374 10,351 -- 19,550
Net gain on sale of assets -- -- (3,629) -- (3,629)
Depreciation and amortization 108 2,320 6,751 -- 9,179
--------- --------- --------- --------- ---------
Total operating expenses 4,933 20,184 79,422 -- 104,539
--------- --------- --------- --------- ---------
Operating income (4,933) 6,982 23,231 -- 25,279
Interest expense (1,584) (3,221) (15,685) -- (20,490)
Interest in earnings of subsidiaries 13,934 -- -- (13,934) --
Minority interest and other income (expense) 45 (267) 671 -- 449
--------- --------- --------- --------- ---------
Income from continuing
operations before income taxes 7,462 3,494 8,217 (13,934) 5,238
Provision for income taxes (2,459) 1,328 345 -- (787)
--------- --------- --------- --------- ---------
Income from continuing operations 9,921 2,166 7,872 (13,934) 6,025
Discontinued operations:
Income from operations of discontinued
segments -- -- 3,896 -- 3,896
--------- --------- --------- --------- ---------
Net income $ 9,921 $ 2,166 $ 11,768 $ (13,934) $ 9,921
========= ========= ========= ========= =========
F-33
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
20. GUARANTOR FINANCIAL STATEMENT INFORMATION
RAILAMERICA, INC.
Consolidating Statement of Cash Flows
For the Year Ended December 31, 1999
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ ------------
Cash flows from operating activities:
Net income (loss) $ (4,013) $ 2,166 $ 11,768 $ -- $ 9,921
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 855 2,494 10,785 -- 14,134
Minority interest in income of subsidiary -- -- 1,551 -- 1,551
Equity interest in earnings of affiliate -- -- (230) -- (230)
Gain on insurance settlement -- -- (4,069) -- (4,069)
Loss (gain) on sale or disposal of properties 56 407 (345) -- 118
Deferred income taxes 1,918 (9,181) 10,665 -- 3,402
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable 802 5,533 (8,581) -- (2,246)
Other current assets 175 1,003 (5,280) -- (4,102)
Accounts payable (359) (3,965) 7,568 -- 3,244
Accrued expenses (203) (1,963) 5,492 -- 3,326
Other liabilities -- -- (2,294) -- (2,294)
Deposits and other (245) 4 (1,014) -- (1,255)
--------- --------- --------- ---------- ---------
Net cash provided by operating activities (1,014) (3,502) 26,016 -- 21,500
--------- --------- --------- ---------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (457) (13,458) (37,476) -- (51,391)
Proceeds from sale of properties -- 166 998 -- 1,163
Acquisitions, net of cash acquired -- (257) (8,196) -- (8,453)
Cash held in discontinued operations -- -- (656) -- (656)
Deferred acquisition costs and other 639 -- -- -- 639
--------- --------- --------- ---------- ---------
Net cash used in investing activities 182 (13,549) (45,330) -- (58,698)
--------- --------- --------- ---------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 146,405 8,630 -- -- 182,085
Principal payments on long-term debt (126,473) (18,445) (5,265) -- (150,183)
Disbursements/receipts on intercompany debt (35,636) 32,287 30,399 -- --
Sale of convertible preferred stock 4,095 -- -- -- 4,095
Sale of common stock 11,868 -- -- -- 11,868
Proceeds from exercise of stock options 581 -- -- -- 581
Preferred stock dividends paid (843) -- -- -- (843)
Purchase of treasury stock (1,224) -- -- -- (1,224)
Deferred loan costs paid (2,603) (152) -- -- (2,755)
--------- --------- --------- ---------- ---------
Net cash provided by financing activities (3,830) 22,320 25,134 -- 43,624
--------- --------- --------- ---------- ---------
Effect of exchange rates on cash -- -- 87 -- 87
--------- --------- --------- ---------- ---------
Net increase (decrease) in cash (4,662) 5,269 5,907 -- 6,513
Cash, beginning of period 4,754 230 101 -- 5,085
--------- --------- --------- ---------- ---------
Cash, end of period $ 92 $ 5,499 $ 6,008 $ -- $ 11,598
========= ========= ========= ========== =========
F-34
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
23. GUARANTOR FINANCIAL STATEMENT INFORMATION
RAILAMERICA, INC.
Consolidating Statement of Income
For the Year Ended December 31, 1998
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
Operating revenue $ -- $ 18,795 $ 20,341 $ -- $ 39,136
-------- -------- -------- -------- --------
Operating expenses:
Transportation -- 8,676 13,420 -- 22,096
Selling, general and administrative 3,978 3,373 1,724 -- 9,075
Net gain on sale of assets -- (360) -- -- (360)
Depreciation and amortization 104 1,734 706 -- 2,544
-------- -------- -------- -------- --------
Total operating expenses 4,082 13,423 15,850 -- 33,355
-------- -------- -------- -------- --------
Operating income (4,082) 5,372 4,491 -- 5,781
Interest expense, net (344) (3,721) (879) -- (4,944)
Interest in earnings of subsidiaries 7,241 -- -- (7,241) --
Minority interest in income of subsidiary (155) 147 (1,716) -- (1,724)
-------- -------- -------- -------- --------
Income from continuing operations before
income taxes 2,660 1,798 1,896 (7,241) (887)
Provision for income taxes (1,741) 551 190 -- (1,000)
-------- -------- -------- -------- --------
Income from continuing operations 4,401 1,247 1,706 (7,241) 113
Discontinued operations
Loss from operations of discontinued Motor
Carrier segment -- -- 4,288 -- 4,288
-------- -------- -------- -------- --------
Net Income $ 4,401 $ 1,247 $ 5,994 $ (7,241) $ 4,401
======== ======== ======== ======== ========
F-35
RAILAMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
23. GUARANTOR FINANCIAL STATEMENT INFORMATION
RAILAMERICA, INC.
Consolidating Statement of Cash Flows
For the Year Ended December 31, 1998
[Enlarge/Download Table]
Non
Company Guarantor Guarantor
(Parent) Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------ ------------ ------------
Cash flows from operating activities:
Net income (loss) $ (2,840) $ 1,246 $ 5,995 $ -- $ 4,401
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 388 1,904 1,865 -- 4,157
Minority interest in income of subsidiary -- -- 1,672 -- 1,672
Sale of properties -- (367) 7 -- (360)
Deferred income taxes (2,102) 2,763 252 -- 913
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable (254) 1,576 (2,208) -- (886)
Other current assets (65) (110) (7,905) -- (8,080)
Accounts payable 75 (1,033) 3,369 -- 2,411
Accrued expenses 340 303 77 -- 720
Deposits and other 82 59 371 -- 512
-------- -------- -------- -------- --------
Net cash provided by operating activities (4,376) 6,341 3,495 -- 5,460
-------- -------- -------- -------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (132) (11,615) (16,382) -- (28,129)
Proceeds from sale of properties -- 2,051 38 -- 2,089
Acquisitions, net of cash acquired -- -- (1,757) -- (1,757)
Deposit on purchase agreement (1,962) -- -- -- (1,962)
Cash held in discontinued operations -- -- (674) -- (674)
Deferred acquisition costs and other (606) (7) -- -- (613)
-------- -------- -------- -------- --------
Net cash used in investing activities (2,700) (9,571) (18,775) -- (31,046)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 32,021 8,571 15,415 -- 56,007
Principal payments on debt and capital leases (25,241) (2,961) (7,522) -- (35,724)
Disbursements/receipts on intercompany debt (5,162) (2,226) 7,388 -- --
Sale convertible preferred stock 7,515 -- -- -- 7,515
Sale of common stock 1,032 -- -- -- 1,032
Proceeds from exercise of stock options 871 -- -- -- 871
Purchase of treasury stock (1,838) -- -- -- (1,838)
Deferred loan costs paid (836) (100) (1) -- (937)
-------- -------- -------- -------- --------
Net cash provided by financing activities 8,362 3,284 15,280 -- 26,926
-------- -------- -------- -------- --------
Net increase in cash 1,286 54 -- -- 1,340
Cash, beginning of period 3,469 175 101 -- 3,745
-------- -------- -------- -------- --------
Cash, end of period $ 4,755 $ 229 $ 101 $ -- $ 5,085
======== ======== ======== ======== ========
F-36
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
---|
This ‘10-K405’ Filing | | Date | | First | | Last | | | Other Filings |
---|
| | |
| | 12/31/06 | | 31 | | 57 |
| | 12/31/05 | | 21 | | 57 | | | 10-K |
| | 8/5/04 | | 60 |
| | 7/31/04 | | 60 |
| | 5/31/04 | | 21 |
| | 12/31/01 | | 32 | | 34 | | | 10-K405, 4 |
| | 7/31/01 | | 60 | | | | | 4 |
| | 7/1/01 | | 13 |
| | 4/30/01 | | 35 | | | | | 3, 4, DEF 14A |
Filed on: | | 4/2/01 | | 41 | | 42 |
| | 3/23/01 | | 1 | | 33 |
| | 3/15/01 | | 44 |
| | 2/1/01 | | 13 |
| | 1/31/01 | | 60 | | | | | 3 |
| | 1/1/01 | | 34 | | 52 |
For Period End: | | 12/31/00 | | 7 | | 73 |
| | 8/14/00 | | 36 | | 37 | | | 10-Q, 3 |
| | 8/9/00 | | 36 |
| | 6/30/00 | | 34 | | | | | 10-Q |
| | 5/4/00 | | 58 |
| | 4/13/00 | | 36 | | 40 | | | 8-K |
| | 3/30/00 | | 40 | | | | | 10-K |
| | 3/3/00 | | 61 |
| | 2/4/00 | | 25 | | 53 | | | 3, 8-K, S-3/A |
| | 2/1/00 | | 24 |
| | 1/26/00 | | 39 | | | | | 8-A12G/A, 8-K |
| | 1/13/00 | | 36 | | 39 | | | 8-K |
| | 1/1/00 | | 4 | | 38 |
| | 12/31/99 | | 7 | | 76 | | | 10-K, 10-K/A |
| | 11/12/99 | | 39 | | | | | 8-K, 8-K/A |
| | 11/10/99 | | 37 |
| | 11/8/99 | | 38 | | 39 | | | 8-K |
| | 10/29/99 | | 37 |
| | 10/19/99 | | 39 | | | | | 8-K |
| | 10/14/99 | | 36 | | 39 | | | 8-K |
| | 9/30/99 | | 39 | | | | | 10-Q |
| | 9/20/99 | | 39 | | | | | 8-K, S-3 |
| | 9/3/99 | | 39 | | 54 | | | 8-K, 8-K/A |
| | 9/1/99 | | 24 |
| | 8/3/99 | | 36 |
| | 8/1/99 | | 24 | | 67 |
| | 7/26/99 | | 54 | | | | | 8-K, 8-K/A |
| | 5/17/99 | | 39 | | | | | 10-Q, 8-K |
| | 5/1/99 | | 9 | | 67 |
| | 4/30/99 | | 9 | | 54 | | | 8-K, 8-K/A, DEF 14A |
| | 3/31/99 | | 39 | | 40 | | | 10-K, 10-Q, 10-Q/A |
| | 3/30/99 | | 39 |
| | 2/22/99 | | 37 |
| | 1/1/99 | | 27 |
| | 12/31/98 | | 24 | | 78 | | | 10-K |
| | 12/17/98 | | 37 |
| | 11/4/98 | | 37 |
| | 5/14/98 | | 39 | | | | | 10-Q |
| | 3/31/98 | | 39 | | | | | 10-K, 10-Q |
| | 1/6/98 | | 36 | | 39 |
| | 12/31/97 | | 24 | | | | | 10-K |
| | 3/31/97 | | 39 | | | | | 10-Q, 10-Q/A, 10KSB, NT 10-Q |
| | 2/1/97 | | 24 |
| | 12/31/96 | | 24 | | | | | 10KSB, 10KSB/A |
| | 10/25/96 | | 39 | | | | | 8-K |
| | 10/17/96 | | 38 | | | | | 10-C, 8-K |
| | 10/11/96 | | 39 | | | | | 8-K, 8-K/A |
| | 9/30/96 | | 38 | | | | | 10-C, 10QSB, 8-K |
| | 9/20/96 | | 37 |
| | 12/31/95 | | 39 |
| | 11/12/95 | | 38 |
| | 9/30/95 | | 38 |
| | 11/11/94 | | 37 |
| | 3/31/92 | | 3 |
| List all Filings |
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