RailAmerica Reports Second Quarter 2004 Earnings of $0.01 Per Diluted Share; Includes CEO Retirement Charge of $0.16 Per Diluted Share.BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , Fla. -- Company Provides Revised Earnings Guidance for Balance of the Year RailAmerica RailAmerica, Inc. (NYSE: RRA), based in Boca Raton, Florida, is a holding company of several short-line railroads in the United States and Canada, as well as overseas. , Inc. (NYSE NYSE See: New York Stock Exchange :RRA RRA Registered Record Administrator. ) today reported earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter of 2004 of $406,000, or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to earnings from continuing operations of $6.7 million, or $0.20 per diluted share, for the second quarter of 2003. Excluding the $5.6 million, net of tax, or $0.16 per diluted share charge for the former CEO's retirement, earnings from continuing operations were $6.0 million, or $0.17 per diluted share. Net income, which includes discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , was $1.6 million, or $0.05 per diluted share for the 2004 quarter compared to $4.7 million, or $0.14 per diluted share in 2003. Consolidated revenue from continuing operations for the second quarter ended June June: see month. 30, 2004 increased 12.7% to $96.2 million, from $85.4 million in 2003. As a result of the charge for the former CEO's retirement, higher fuel and casualty expenses, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. declined to $11.3 million for the second quarter of 2004 from $18.5 million in 2003. Excluding the charge for the former CEO's retirement, operating income was $18.0 million for the second quarter. The North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: for the second quarter of 2004 was 80.6% compared to 77.7% for the second quarter of 2003. Higher fuel prices impacted the operating ratio by 1.7% as the average fuel price increased to $1.26 per gallon gallon: see English units of measurement. in the second quarter of 2004 compared to $1.00 per gallon in the second quarter of 2003. Asset sale gains in the second quarter contributed $1.6 million to operating income which is consistent with the prior year's results. Due to the Company's plan to sell the operation, the results of the Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). and Eastern Railway have been included in discontinued operations. Gus Pagonis, Chairman of RailAmerica, said, "Despite the significant challenges we faced during the second quarter, we are pleased with our results and the efforts of our employee team. In May, we announced an agreement to lease 276 miles from CSX Transportation "CSX" redirects here. For the parent company, see CSX Corporation. For other uses, see CSX (disambiguation). CSX Transportation (AAR reporting marks CSXT) is a Class I railroad in the United States, owned by the CSX Corporation. , Inc. The line, known as the Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Fort Wayne Fort Wayne, city (1990 pop. 173,072), seat of Allen co., NE Ind., where the St. Joseph and St. Marys rivers join to form the Maumee River; inc. 1840. It is the second largest city in the state, a major railroad and shipping point, a wholesale and distribution hub, & Eastern Railroad railroad or railway, form of transportation most commonly consisting of steel rails, called tracks, on which freight cars, passenger cars, and other rolling stock are drawn by one locomotive or more. (CF&E) runs from Crestline, Ohio Crestline is a city in Crawford and Richland counties in Ohio, USA. It is part of the Mansfield-Bucyrus, OH Combined Statistical Area. The population was 5,088 at the 2000 census. It is the third largest city in Crawford County. to Tolleston, Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , east of Chicago. We expect to commence operations on August 1, 2004 and anticipate moving 40,000 - 45,000 carloads annually. In addition, our team continues to work on other strategic acquisition opportunities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . For the second half of the year, our focus will be on organic revenue growth and controlling costs as we expect to continue to be challenged by high fuel prices." Freight Australia Freight Australia was a railway company in Australia. Initially known as Freight Victoria, it operated rail freight services and controlled non-urban rail track in the state of Victoria, later expanding into freight haulage in other states. , which is included in discontinued operations, reported an increase in revenue for the second quarter of 2004 of $15.6 million or 67%, to $39.0 million from $23.4 million for the second quarter of 2003. Freight Australia's 2003 results were negatively affected by a drought in Australia Drought in Australia is defined as rainfall over a three month period being in the lowest decile of what has been recorded for that region in the past.[1] This definition takes into account that drought is a relative term and rainfall deficiencies need to be compared to . Grain tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. hauled in the second quarter of 2004 increased 164% to 1.2 million tons from 0.5 million tons in the second quarter of 2003. Freight Australia's operating income increased $5.0 million to $3.2 million in the second quarter of 2004 compared to a loss of $1.8 million in the second quarter of 2003. Pagonis added, "In March, RailAmerica executed an agreement to sell 100% of its ownership in Freight Australia to Pacific National for AUD AUD In currencies, this is the abbreviation for the Australian Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. $285 million (US$202 million based on recent exchange rates). As previously announced, the transaction was subject to approval by the Australian Competition and Consumer Commission For the other Australian organisation with the same acronym, see . The Australian Competition and Consumer Commission (ACCC) is an independent authority of the government of Australia. ("ACCC ACCC Association of Canadian Community Colleges ACCC Australian Competition & Consumer Commission ACCC Association of Community Cancer Centers ACCC Academic Computing and Communications Center ACCC American College of Chiropractic Consultants ") and the State of Victoria ("the State"). On July July: see month. 2, 2004, the ACCC announced its approval of the sale to Pacific National; however, the State has raised a number of issues which RailAmerica and Pacific National are seeking to resolve." Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Howe, Executive Vice President and Chief Financial Officer, said, "We are pleased by the progress we have made in strengthening our balance sheet. Our net debt-to-capital ratio at June 30, 2004 was 57.2% compared to 58.3% at December December: see month. 31, 2003. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. has increased to $388 million at June 30, 2004 from $372 million at December 31, 2003. Additionally, $15 million of our junior convertible bonds have converted into common stock at the conversion price of $10.00 per share resulting in a remaining balance of $7 million, as of July 28, 2004, which will either be converted or redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. by July 31, 2004." Howe continued, "At the beginning of the year, we provided guidance for earnings from continuing operations of $0.75 to $0.85 per share for the year. We now anticipate that earnings will be in the range of $0.48 to $0.54 for the year, due to our pessimistic pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" outlook on fuel, congestion The condition of a network when there is not enough bandwidth to support the current traffic load. congestion - When the offered load of a data communication path exceeds the capacity. and service issues by the Class I railroads A Class I railroad in the United States, or a Class I railway (also Class I rail carrier) in Canada, is one of the largest freight railroads, as classified based on operating revenue. Smaller railroads are classified as Class II and Class III. , average shares outstanding projected to increase to 38 million due to the exercise of options and warrants, the results of the Arizona Eastern Railway The Arizona Eastern Railway (AAR reporting marks AZER) was a Class III railroad in the United States state of Arizona. Originally chartered as the Gila Valley, Globe and Northern Railway on January 5 1895, the Arizona Eastern Railroad name took over during construction. being reclassified to discontinued operations, and the impact of the retirement of our former CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Excluding the results from the anticipated sale of Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , the use of proceeds from such sale, and the impact of the retirement of our former CEO, we expect earnings to be in the range of $0.64 to $0.70." Pagonis concluded, "Despite our cautious outlook for the second half of the year and the challenges the industry faces, we look forward to North American growth opportunities, the commencement of operations on the CF&E and the sale of Freight Australia." RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 47 railroads rail·road n. 1. A road composed of parallel steel rails supported by ties and providing a track for locomotive-drawn trains or other wheeled vehicles. 2. operating approximately 12,000 miles in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , and Australia. The Company is a member of the Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. 2000(R) Index. For more information about RailAmerica, please visit our website at www.railamerica.com Disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements regarding future events and the performance of RailAmerica that involve risks and uncertainties that could cause actual results to differ materially including, but not limited to, fuel costs, foreign currency risks, failure to successfully integrate acquisitions, failure to service debt, failure to successfully market and sell Freight Australia and nonoperating/nonstrategic properties and assets when scheduled or at all, failure to successfully refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. debt, failure to accomplish new marketing initiatives, economic conditions, customer demand, increased competition in the relevant market, and others. In particular, forward-looking statements regarding earnings and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of the Company and entities to be acquired are subject to inherent economic, financial and operating uncertainties, including changes in economic conditions, realization of operating synergies, the ability to retain key customers and the impact of unforeseen costs and liabilities of such entities. Forward-looking statements speak only as of the date the statement was made. The Company assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Company does update any forward-looking statement, no inference (logic) inference - The logical process by which new facts are derived from known facts by the application of inference rules. See also symbolic inference, type inference. should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. We refer you to the documents that RailAmerica files from time to time with the Securities and Exchange Commission, such as the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , Form 10-Q Form 10-Q See 10-Q. and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. , which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release.
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2004 and 2003
(in thousands, except earnings per share)
(unaudited)
Three months Six months
ended ended
June 30, June 30,
2004 2003 2004 2003
----------------------------------------------------------------------
Operating revenue $96,225 $85,350 $192,244 $170,145
----------------------------------------------------------------------
Operating expenses:
Transportation 52,518 43,597 104,060 86,398
Selling, general and administrative 27,003 19,001 49,322 38,973
Net gain on sale of assets (1,576) (1,638) (1,954) (2,005)
Depreciation and amortization 6,933 5,899 13,628 11,490
----------------------------------------------------------------------
Total operating expenses 84,878 66,859 165,056 134,856
----------------------------------------------------------------------
Operating income 11,347 18,491 27,188 35,289
Interest and other expense (8,249) (7,881) (16,452) (15,909)
----------------------------------------------------------------------
Income from continuing operations
before income taxes 3,098 10,610 10,736 19,380
Provision for income taxes 2,692 3,950 5,600 7,045
----------------------------------------------------------------------
Income from continuing operations 406 6,660 5,136 12,335
Loss from sale of discontinued
operations, net of income taxes -- -- (3,951) --
Income (loss) from discontinued
operations, net of income taxes 1,206 (1,967) 1,702 (3,308)
----------------------------------------------------------------------
Net income $1,612 $4,693 $2,887 $9,027
======================================================================
Basic earnings (loss) per common
share:
Continuing operations $0.01 $0.21 $0.16 $0.39
Discontinued operations 0.04 (0.06) (0.07) (0.10)
----------------------------------------------------------------------
Net income $0.05 $0.15 $0.09 $0.29
======================================================================
Diluted earnings (loss) per common
share:
Continuing operations $0.01 $0.20 $0.15 $0.38
Discontinued operations 0.04 (0.06) (0.07) (0.10)
----------------------------------------------------------------------
Net income $0.05 $0.14 $0.08 $0.28
======================================================================
Weighted average common shares
outstanding:
Basic 33,963 31,781 33,350 31,826
Diluted 35,352 34,133 34,623 34,108
The accompanying Notes are an integral part of the consolidated
financial statements.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2004 and December 31, 2003
(in thousands, except share data)
(unaudited)
June December
30, 31,
2004 2003
----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $8,061 $13,714
Accounts and notes receivable, net 51,773 52,312
Current assets of discontinued operations 30,593 36,319
Other current assets 14,379 12,118
----------------------------------------------------------------------
Total current assets 104,806 114,463
Property, plant and equipment, net 853,932 826,646
Long-term assets of discontinued operations 211,459 263,007
Other assets 35,180 28,374
----------------------------------------------------------------------
Total assets $1,205,377 $1,232,490
======================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $15,806 $25,093
Accounts payable 34,206 34,851
Accrued expenses 29,969 31,290
Current liabilities of discontinued
operations 25,010 40,338
----------------------------------------------------------------------
Total current liabilities 104,991 131,572
Long-term debt, less current maturities 328,056 327,280
Subordinated debt 122,148 121,506
Deferred income taxes 152,961 150,784
Long-term liabilities of discontinued
operations 93,194 115,907
Other liabilities 15,817 13,681
----------------------------------------------------------------------
Total liabilities 817,167 860,730
----------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 60,000,000
shares authorized; 35,154,013
shares and 32,094,387 shares issued and
outstanding at June 30, 2004
and December 31, 2003, respectively 35 32
Additional paid-in capital and other 296,467 262,384
Retained earnings 65,632 62,745
Accumulated other comprehensive income 26,076 46,599
----------------------------------------------------------------------
Total stockholders' equity 388,210 371,760
----------------------------------------------------------------------
Total liabilities and stockholders'
equity $1,205,377 $1,232,490
======================================================================
The accompanying Notes are an integral part of the consolidated
financial statements.
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2004 and 2003
(in thousands)
(unaudited)
2004 2003
----------------------------------------------------------------------
Cash flows from operating activities:
Net income $2,887 $9,027
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, including
amortization of deferred loan costs 24,291 22,684
Gain on sale of assets (1,954) (2,005)
Non-cash CEO retirement costs 3,600 --
Deferred income taxes and other 10,274 5,494
Changes in operating assets and liabilities, net of
acquisitions and dispositions:
Accounts receivable (4,868) 5,240
Other current assets (1,389) 510
Accounts payable (6,566) 4,343
Accrued expenses 1,886 (7,093)
Other assets and liabilities 2,719 (1,906)
----------------------------------------------------------------------
Net cash provided by operating activities 30,880 36,294
----------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (41,887)(30,403)
Proceeds from sale of assets, net of Ferronor's
cash on-hand 12,855 2,900
Acquisitions, net of cash acquired (24,645)(25,846)
Deferred transaction costs and other (2,602) (106)
----------------------------------------------------------------------
Net cash used in investing activities (56,279)(53,455)
----------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 78,256 19,000
Principal payments on long-term debt (77,758) (8,668)
Proceeds from exercise of stock options and
warrants 19,590 443
Purchase of treasury stock -- (1,226)
Deferred financing costs (26) (660)
----------------------------------------------------------------------
Net cash provided by financing activities 20,062 8,889
----------------------------------------------------------------------
Effect of exchange rates on cash (316) 1,069
----------------------------------------------------------------------
Net decrease in cash (5,653) (7,203)
Cash, beginning of period 13,714 28,887
----------------------------------------------------------------------
Cash, end of period $8,061 $21,684
======================================================================
The accompanying Notes are an integral part of the consolidated
financial statements.
RAILAMERICA, INC. AND SUBSIDIARIES
Selected Financial Information - North America / Australia
(Unaudited)
(Amounts in thousands) Three Months Ended June 30,
% of % of
2004 Rev. 2003 Rev.
--------------- ---------------
North America: (1)
Operating revenue $96,130 100.0% $85,257 100.0%
--------------- ---------------
Operating expenses:
Maintenance of way 10,999 11.5% 9,196 10.8%
Maintenance of equipment 3,491 3.6% 3,260 3.8%
Transportation 28,669 29.8% 22,776 26.7%
Equipment rental 9,359 9.7% 8,365 9.8%
SG&A 18,168 18.9% 16,929 19.9%
Depreciation and amortization 6,778 7.1% 5,741 6.7%
--------------- ---------------
Total operating expenses 77,464 80.6% 66,267 77.7%
--------------- ---------------
Operating income $18,666 19.4% $18,990 22.3%
=============== ===============
Australia:
Operating revenue $38,997 100.0% $23,398 100.0%
--------------- ---------------
Operating expenses:
Maintenance of way 3,071 7.9% 2,765 11.8%
Maintenance of equipment 3,852 9.8% 2,163 9.2%
Transportation 21,324 54.7% 13,774 58.9%
Equipment rental 990 2.6% 276 1.2%
SG&A 2,479 6.4% 2,797 12.0%
Depreciation and amortization 4,108 10.5% 3,379 14.4%
--------------- ---------------
Total operating expenses 35,824 91.9% $25,154 107.5%
--------------- ---------------
Operating income (loss) $3,173 8.1% $(1,756) -7.5%
=============== ===============
Six Months Ended June 30,
% of % of
2004 Rev. 2003 Rev.
--------------- ---------------
North America:(1)
Operating revenue $192,072 100.0% $169,943 100.0%
--------------- ---------------
Operating expenses:
Maintenance of way 21,808 11.4% 17,938 10.5%
Maintenance of equipment 7,009 3.6% 6,602 3.9%
Transportation 56,543 29.5% 45,550 26.8%
Equipment rental 18,699 9.7% 16,308 9.6%
SG&A 37,254 19.4% 34,531 20.3%
Depreciation and amortization 13,317 6.9% 11,184 6.6%
--------------- ---------------
Total operating expenses 154,630 80.5% 132,113 77.7%
--------------- ---------------
Operating income $37,442 19.5% $37,830 22.3%
=============== ===============
Australia:
Operating revenue $78,241 100.0% $44,149 100.0%
--------------- ---------------
Operating expenses:
Maintenance of way 6,289 8.0% 5,584 12.6%
Maintenance of equipment 6,972 8.9% 3,829 8.7%
Transportation 43,096 55.1% 25,748 58.3%
Equipment rental 2,236 2.9% 389 0.9%
SG&A 6,120 7.8% 4,875 11.1%
Depreciation and amortization 7,789 10.0% 6,463 14.6%
--------------- ---------------
Total operating expenses 72,502 92.7% 46,888 106.2%
--------------- ---------------
Operating income (loss) $5,739 7.3% $(2,739) -6.2%
=============== ===============
(1) excludes Corporate
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