EX-99.1 2 v130281_ex99-1.htm Unassociated Document
Genesee & Wyoming Reports Results for the Third Quarter of 2008

GREENWICH, Conn., November 3, 2008 /PRNewswire-FirstCall/ — Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the third quarter of 2008 of $21.2 million, compared with net income of $16.2 million in the third quarter of 2007. GWI's diluted earnings per share (EPS) in the third quarter of 2008 were $0.58 with 36.6 million weighted average shares outstanding, compared with diluted EPS of $0.42 with 38.5 million weighted average shares outstanding in the third quarter of 2007. EPS from continuing operations in the third quarter of 2008 were $0.55, compared with EPS from continuing operations of $0.60 in the third quarter of 2007.
 
Results from continuing operations in the third quarter of 2008 included gains from the sale of assets of $1.2 million ($0.8 million after-tax, or $0.02 per diluted share) and a net tax benefit of $0.5 million ($0.01 per diluted share) associated with the filing of GWI’s 2007 U.S. income tax return.
 
Results from continuing operations in the third quarter of 2007 included gains from the sale of assets of $5.5 million ($3.3 million after-tax, or $0.09 per diluted share), a net tax benefit of $3.2 million ($0.08 per diluted share) associated with the sale of the Western Australia operations and certain other assets of the Australian Railroad Group (ARG) previously owned by GWI and its joint venture partner (ARG Sale) and a net tax benefit of $2.8 million ($0.07 per diluted share) from the short line tax credit in the United States.
 
The table below summarizes the financial impact of the significant items in the third quarters of 2008 and 2007 ($ in millions, except per share amounts).
 
   
After-Tax
Amount
  
EPS
Impact
  
           
Q3 2008 - Gains on the sale of assets
  
$
0.8
  
$
0.02
  
               - Tax benefit
 
$
0.5
  
$
0.01
  
               - Short line tax credit
  
$
0.0
  
$
0.00
  
               
Q3 2007 - Gains on the sale of assets
  
$
3.3
  
$
0.09
  
               - ARG Sale-related tax benefit
  
$
3.2
  
$
0.08
  
               - Short line tax credit
  
$
2.8
  
$
0.07
  
 
GWI reported income from its discontinued operations in Mexico of $1.1 million after-tax ($0.03 per diluted share) in the third quarter of 2008, compared with a loss of $6.9 million after-tax ($0.18 per diluted share) in the third quarter of 2007.


Continuing Operations

In the third quarter of 2008, GWI's revenues increased $28.2 million, or 21.5%, to $159.4 million, compared with $131.2 million in the third quarter of 2007. Of this increase, revenues from acquisitions contributed $12.8 million and revenues from same railroad operations increased $15.4 million, or 11.7%.

Same railroad freight revenues increased $6.3 million, or 7.6%, in the third quarter of 2008 primarily due to an increase in average revenues per carload of 15.3%, or 14.9% excluding the impact of the appreciation of the Australian and Canadian dollars relative to the U.S. dollar year over year. Same railroad non-freight revenues increased $9.1 million, or 18.9%, in the third quarter of 2008 primarily due to higher third-party fuel sales in Australia, increased crewing and iron ore services in Australia, and higher revenues from GWI's industrial switching and U.S. port railroads.

GWI's operating income in the third quarter of 2008 increased $4.9 million, or 16.5%, to $34.6 million, compared with $29.7 million in the third quarter of 2007. GWI's operating ratio was 78.3% in the third quarter of 2008, compared with an operating ratio of 77.4% in the third quarter of 2007. Operating income in the third quarter of 2008 included $1.2 million of gains on the sale of assets compared with $5.5 million in the third quarter of 2007.

GWI's effective income tax rate increased from 15.0% in the third quarter of 2007 to 34.7% in the third quarter of 2008, partially due to the expiration of the short line tax credit on December 31, 2007. On October 3, 2008, the short line tax credit was extended through December 31, 2009. The cumulative benefit of this credit, which was retroactive to January 1, 2008, will be recorded in the fourth quarter.

Comments from the Chief Executive Officer

“Our third quarter operating income was the best in GWI’s history and as we enter a period of economic uncertainty worldwide, GWI is doing so from a position of relative strength,” GWI Chief Executive Officer Jack Hellmann said. “In our regions that have more exposure to the current economic downturn such as Oregon and Canada, management has been doing an excellent job of managing costs. In addition, several major new customers have continued to ramp up shipments, and our recent acquisitions are performing well.”

“We believe that the Ohio Central Railroad System and the Georgia Southwestern will be smoothly integrated into our operations in the fourth quarter of 2008 and will strengthen our financial performance in 2009. Moreover, the recently enacted extension of the short line tax credit will lower our tax payments through 2009.”

Mr. Hellmann continued, “In light of the poor conditions in global credit markets, it is important to note that we have access to debt capital under our existing credit facilities. In conjunction with our recent acquisitions, we closed a new $570 million senior bank facility on October 1, 2008, that is due in 2013 and provides $170 million of unused capacity. This availability combined with our strong cash flow makes GWI well positioned both to withstand the economic downturn and to pursue opportunistic acquisitions.”


Free Cash Flow from Continuing Operations (1)
   
($ in millions)
  
Nine Months Ended
September 30,
  
   
2008
  
2007
  
Net cash provided by operating activities
 
$
91.3
  
$
5.5
  
Net cash used in investing activities
   
(148.5
)
  
(31.5
)
Net cash paid for acquisitions (a)
    
115.7
    
-
 
Australia taxes on ARG Sale (b)
    
-
   
95.6
  
Free cash flow (1)
  
$
58.5
  
$
69.6
  
 
 
(a)
Includes $89.5 million in net cash paid for the acquisition of CAGY Industries Inc. (CAGY), $22.6 million in net cash paid for the acquisition of Rotterdam Rail Feeding (RRF) and $3.6 million for final working capital adjustments related to the December 2007 acquisition of Maryland Midland Railway, Inc. (MMID).
 
 
(b)
Includes Australian taxes resulting from the 2006 ARG Sale totaling $95.6 million paid in 2007, as calculated using the U.S. Dollar/Australian Dollar exchange rate on the date of payment.
 
GWI’s continuing operations generated free cash flow of $58.5 million and $69.6 million for the nine months ended September 30, 2008 and 2007, respectively. In the nine months of 2008, working capital activities provided $11.6 million to net cash flow from operating activities. Other than the $95.6 million tax payment related to the ARG Sale, which was excluded from free cash flow, working capital activities provided $21.4 million to net cash flow from operations in the 2007 period.

Net cash used in investing activities in the nine months ended September 30, 2008, included $62.0 million in purchases of property and equipment, partially offset by $21.8 million in cash received from government grants and $7.4 million from sales of assets and insurance proceeds. Net cash used in investing activities in the nine months ended September 30, 2007, included $61.3 million in purchases of property and equipment, partially offset by $19.9 million in cash received from government grants and $9.9 million from sales of assets and insurance proceeds.


Discontinued Operations

For the quarter ended September 30, 2008, GWI reported income related to its discontinued Mexican business of $1.1 million after-tax (or $0.03 per diluted share), compared with a net loss of $6.9 million after-tax (or $0.18 per diluted share) for the quarter ended September 30, 2007. Results from discontinued operations in the third quarter of 2008 included a net tax benefit of $0.9 million ($0.02 per diluted share) primarily associated with the filing of GWI’s 2007 U.S. income tax return. For discontinued operations, cash used in operating activities was $2.8 million and $10.7 million for the nine months ended September 30, 2008 and 2007, respectively. There was no cash used in investing activities of discontinued operations for the nine months ended September 30, 2008, compared with $0.5 million for the same period in 2007. As of September 30, 2008, there was a net asset of $0.4 million remaining on GWI's balance sheet associated with its Mexican operations.

Conference Call and Webcast Details

As previously announced, GWI's conference call to discuss financial results for the third quarter will be held Monday, November 3, 2008 at 11 a.m. (Eastern Time). The dial-in number for the teleconference is (888) 423-3280; outside U.S., call (612) 332-0720, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's website (http://www.gwrr.com) by selecting "Third Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's website starting at 1 p.m. Monday, November 3, 2008. GWI uses its Web site as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on our website and is accessible on our Internet site at  www.gwrr.com by clicking on the "Investors" link.  In addition, you may automatically receive email alerts and other information about GWI by enrolling your email by visiting the "Email Alerts" section of our Internet site at www.gwrr.com after clicking on the "Investors" link.

About Genesee & Wyoming Inc.
 
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands and owns a minority interest in a railroad in Bolivia. Operations currently include 63 railroads organized in nine regions, with more than 6,700 miles of owned and leased track and approximately 3,000 additional miles under track access arrangements. GWI provides rail service at 16 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers.
 
 
Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments; increased competition in relevant markets; funding needs and financing sources; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others. Words such as "anticipates," "intends," "plans," "believes," "seeks," "expects," "estimates," variations of these words and similar expressions are intended to identify these forward-looking statements. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI's Forms 10-Q and 10-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. GWI disclaims any intention to update the current expectations or forward-looking statements contained in this press release.

(1)
Free Cash Flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net cash provided by operating activities is included in the tables attached to this press release.

Contact: Michael E. Williams
Director, Corporate Communications
Genesee & Wyoming Inc.
+1 (203) 629-3722

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(In thousands, except per share amounts)
(unaudited)

   
Three Months Ended
  
Nine Months Ended
  
   
September 30,
  
September 30,
  
   
2008
  
2007
  
2008
  
2007
  
                   
OPERATING REVENUES
  
$
159,432
  
$
131,224
  
$
452,828
  
$
381,625
  
                           
OPERATING EXPENSES
    
124,866
   
101,563
   
367,281
   
307,264
 
INCOME FROM OPERATIONS
    
34,566
   
29,661
   
85,547
   
74,361
 
                           
INTEREST INCOME
    
597
   
1,107
   
1,753
   
7,069
 
INTEREST EXPENSE
    
(4,250
)
  
(3,613
)
  
(12,203
)
  
(10,626
)
MINORITY INTEREST
    
(61
)
  
-
   
(146
)
  
-
 
OTHER (EXPENSE) INCOME, NET
    
(99
)
  
(47
)
  
560
   
846
 
                           
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
30,753
   
27,108
   
75,511
   
71,650
 
                           
PROVISION FOR INCOME TAXES
    
10,686
   
4,069
   
28,082
   
16,927
 
                           
INCOME FROM CONTINUING OPERATIONS
    
20,067
   
23,039
   
47,429
   
54,723
 
                           
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
    
1,087
   
(6,873
)
  
(487
)
  
(13,494
)
                           
NET INCOME
  
$
21,154
  
$
16,166
  
$
46,942
  
$
41,229
  
                           
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
  
$
0.63
  
$
0.68
  
$
1.49
  
$
1.53
  
BASIC EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS
    
0.03
   
(0.20
)
  
(0.02
)
  
(0.38
)
BASIC EARNINGS PER COMMON SHARE
  
$
0.66
  
$
0.48
  
$
1.48
  
$
1.15
  
                           
WEIGHTED AVERAGE SHARES - BASIC
    
32,018
   
34,026
   
31,758
   
35,702
 
                           
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
  
$
0.55
  
$
0.60
  
$
1.31
  
$
1.36
  
DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS
    
0.03
   
(0.18
)
  
(0.01
)
  
(0.34
)
DILUTED EARNINGS PER COMMON SHARE
  
$
0.58
  
$
0.42
  
$
1.29
  
$
1.02
  
                     
WEIGHTED AVERAGE SHARES - DILUTED
    
36,592
   
38,515
   
36,334
   
40,233
 


 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(In thousands)
(unaudited)

   
September 30,
  
December 31,
  
   
2008
  
2007
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
39,508
  
$
46,684
  
Accounts receivable, net
    
140,792
   
125,934
 
Materials and supplies
    
8,191
   
7,555
 
Prepaid expenses and other
    
9,934
   
18,147
 
Current assets of discontinued operations
    
1,483
   
2,213
 
Deferred income tax assets, net
    
7,246
   
7,495
 
Total current assets
    
207,154
   
208,028
 
               
PROPERTY AND EQUIPMENT, net
    
789,667
   
696,990
 
INVESTMENT IN UNCONSOLIDATED AFFILIATES
    
4,894
   
4,696
 
GOODWILL
    
57,411
   
39,352
 
INTANGIBLE ASSETS, net
    
194,338
   
117,106
 
DEFERRED INCOME TAX ASSETS, net
    
197
   
1,353
 
OTHER ASSETS, net
    
8,974
   
10,276
 
Total assets
  
$
1,262,635
  
$
1,077,801
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Current portion of long-term debt
  
$
2,301
  
$
2,247
  
Accounts payable
    
137,729
   
128,038
 
Accrued expenses
    
40,037
   
37,792
 
Current liabilities of discontinued operations
    
1,080
   
3,919
 
Deferred income tax liabilities, net
    
79
   
66
 
Total current liabilities
    
181,226
   
172,062
 
               
LONG-TERM DEBT, less current portion
    
314,699
   
270,519
 
DEFERRED INCOME TAX LIABILITIES, net
    
154,280
   
93,336
 
DEFERRED ITEMS - grants from governmental agencies
    
111,791
   
94,651
 
OTHER LONG-TERM LIABILITIES
    
21,158
   
15,144
 
MINORITY INTEREST
    
1,254
   
1,108
 
               
TOTAL STOCKHOLDERS' EQUITY
    
478,227
   
430,981
 
Total liabilities and stockholders' equity
  
$
1,262,635
  
$
1,077,801
  
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

   
Nine Months Ended September 30,
  
   
2008
  
2007
  
           
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Net income
 
$
46,942
  
$
41,229
  
Adjustments to reconcile net income to net cash provided by operating activities:
              
Loss from discontinued operations, net of tax
    
487
   
13,494
 
Depreciation and amortization
    
28,871
   
23,515
 
Compensation cost related to equity awards
    
4,163
   
4,068
 
Excess tax benefits from share-based compensation
    
(4,169
)
  
(847
)
Deferred income taxes
    
7,549
   
4,195
 
Net gain on sale of assets
   
(4,216
)
  
(5,914
)
Minority interest
    
146
   
-
 
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
              
Accounts receivable, net
    
(3,357
)
  
(4,514
)
Materials and supplies
    
(662
)
  
2,197
 
Prepaid expenses and other
    
8,968
   
(144
)
Accounts payable and accrued expenses
    
4,580
   
20,920
 
Income tax payable - Australia
    
(1,956
)
  
(92,737
)
Other assets and liabilities, net
   
3,972
   
58
 
Net cash provided by operating activities from continuing operations
    
91,318
   
5,520
 
Net cash used in operating activities from discontinued operations
    
(2,815
)
  
(10,677
)
Net cash provided by (used in) operating activities
    
88,503
   
(5,157
)
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Purchase of property and equipment
    
(61,999
)
  
(61,307
)
Grant proceeds from government agencies
    
21,832
   
19,949
 
Cash paid for acquisitions, net of cash received
    
(115,699
)
  
-
 
Insurance proceeds for the replacement of assets
    
419
   
1,747
 
Proceeds from disposition of property and equipment
    
6,992
   
8,106
 
Net cash used in investing activities from continuing operations
    
(148,455
)
  
(31,505
)
Net cash used in investing activities from discontinued operations
    
-
   
(517
)
Net cash used in investing activities
   
(148,455
)
  
(32,022
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Principal payments on long-term borrowings, including capital leases
    
(117,905
)
  
(1,451
)
Proceeds from issuance of long-term debt
    
163,000
   
25,000
 
Net proceeds from employee stock purchases
    
9,122
   
2,978
 
Treasury stock purchases
    
(2,355
)
  
(171,018
)
Excess tax benefits from share-based compensation
    
4,169
   
847
 
Net cash provided by (used in) financing activities from continuing operations
    
56,031
   
(143,644
)
Net cash used in financing activities from discontinued operations
    
-
   
(13,301
)
Net cash provided by (used in) financing activities
   
56,031
   
(156,945
)
               
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
    
(2,907
)
  
7,838
 
           
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS
    
(348
)
  
(1,258
)
               
DECREASE IN CASH AND CASH EQUIVALENTS
    
(7,176
)
  
(187,544
)
CASH AND CASH EQUIVALENTS, beginning of period
    
46,684
   
240,206
 
CASH AND CASH EQUIVALENTS, end of period
  
$
39,508
  
$
52,662
  



GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)

   
Three Months Ended
  
   
September 30,
  
   
2008
  
2007
  
       
% of
      
% of
  
   
Amount
  
Revenue
  
Amount
  
Revenue
  
Revenues:
                  
Freight
  
$
95,602
    
60.0
%
$
83,173
    
63.4
%
Non-freight
   
63,830
   
40.0
%
  
48,051
   
36.6
%
                           
Total revenues
  
$
159,432
    
100.0
%
$
131,224
    
100.0
%
                           
Operating Expense Comparison:
                          
Natural Classification
                          
Labor and benefits
 
$
48,409
    
30.4
%
$
41,571
    
31.7
%
Equipment rents
   
9,121
   
5.7
%
  
8,872
   
6.8
%
Purchased services
   
11,975
   
7.5
%
  
10,213
   
7.8
%
Depreciation and amortization
   
10,219
   
6.4
%
  
7,969
   
6.1
%
Diesel fuel used in operations
    
15,948
   
10.0
%
  
10,815
   
8.2
%
Diesel fuel sold to third parties
    
9,947
   
6.2
%
  
6,969
   
5.3
%
Casualties and insurance
   
3,803
   
2.4
%
  
4,589
   
3.5
%
Materials
   
6,211
   
3.9
%
  
6,272
   
4.8
%
Net gain on sale of assets
    
(1,185
)
  
-0.7
%
  
(5,450
)
  
-4.2
%
Other expenses
   
10,418
   
6.5
%
  
9,743
   
7.4
%
                           
Total operating expenses
  
$
124,866
    
78.3
%
$
101,563
    
77.4
%
                           
Functional Classification
                          
Transportation
 
$
51,897
    
32.6
%
$
42,261
    
32.2
%
Maintenance of ways and structures
   
11,718
   
7.3
%
  
11,783
   
9.0
%
Maintenance of equipment
   
18,084
   
11.3
%
  
17,426
   
13.3
%
Diesel fuel sold to third parties
    
9,947
   
6.2
%
  
6,969
   
5.3
%
General and administrative
   
24,186
   
15.2
%
  
20,605
   
15.7
%
Net gain on sale of assets
    
(1,185
)
  
-0.7
%
  
(5,450
)
  
-4.2
%
Depreciation and amortization
   
10,219
   
6.4
%
  
7,969
   
6.1
%
                           
Total operating expenses
  
$
124,866
    
78.3
%
$
101,563
    
77.4
%
 


GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)

   
Nine Months Ended
  
   
September 30,
  
   
2008
  
2007
  
       
% of
      
% of
  
   
Amount
  
Revenue
  
Amount
  
Revenue
  
Revenues:
                          
Freight
  
$
274,749
    
60.7
%
$
247,047
    
64.7
%
Non-freight
    
178,079
   
39.3
%
  
134,578
   
35.3
%
                                    
Total revenues
  
$
452,828
    
100.0
%
$
381,625
    
100.0
%
                                    
Operating Expense Comparison:
                          
Natural Classification
                          
Labor and benefits
  
$
140,820
    
31.1
%
$
123,718
    
32.4
%
Equipment rents
    
26,264
   
5.8
%
  
27,848
   
7.3
%
Purchased services
    
35,602
   
7.8
%
  
29,359
   
7.7
%
Depreciation and amortization
    
28,871
   
6.4
%
  
23,515
   
6.2
%
Diesel fuel used in operations
    
49,311
   
10.9
%
  
31,917
   
8.3
%
Diesel fuel sold to third parties
    
28,893
   
6.4
%
  
18,042
   
4.7
%
Casualties and insurance
    
11,841
   
2.6
%
  
12,485
   
3.3
%
Materials
    
18,808
   
4.1
%
  
17,706
   
4.6
%
Net gain on sale of assets
    
(4,216
)
  
-0.9
%
  
(5,914
)
  
-1.5
%
Other expenses
    
31,087
   
6.9
%
  
28,588
   
7.5
%
                           
Total operating expenses
  
$
367,281
    
81.1
%
$
307,264
    
80.5
%
                           
Functional Classification
                          
Transportation
  
$
152,629
    
33.7
%
$
122,014
    
32.0
%
Maintenance of ways and structures
    
36,249
   
8.0
%
  
34,830
   
9.1
%
Maintenance of equipment
    
53,954
   
11.9
%
  
52,622
   
13.8
%
Diesel fuel sold to third parties
    
28,893
   
6.4
%
  
18,042
   
4.7
%
General and administrative
    
70,901
   
15.6
%
  
62,155
   
16.2
%
Net gain on sale of assets
    
(4,216
)
  
-0.9
%
  
(5,914
)
  
-1.5
%
Depreciation and amortization
    
28,871
   
6.4
%
  
23,515
   
6.2
%
                           
Total operating expenses
  
$
367,281
    
81.1
%
$
307,264
    
80.5
%


GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)

   
Three Months Ended
  
Three Months Ended
  
   
September 30, 2008
  
September 30, 2007
  
           
Average Freight
          
Average Freight
  
   
Freight
      
Revenues
  
Freight
      
Revenues
  
Commodity Group
  
Revenues
  
Carloads
  
Per Carload
  
Revenues
  
Carloads
  
Per Carload
  
                           
Pulp & Paper
  
$
19,180
    
30,705
  
$
625
  
$
17,244
    
29,712
  
$
580
  
Coal, Coke & Ores
    
17,223
    
48,259
    
357
    
15,551
    
52,307
    
297
  
Minerals & Stone
    
12,952
    
37,797
    
343
    
8,426
    
32,494
    
259
  
Metals
    
12,529
    
25,330
    
495
    
8,721
    
18,796
    
464
  
Lumber & Forest Products
    
9,319
    
20,539
    
454
    
9,151
    
21,519
    
425
  
Chemicals-Plastics
    
8,650
    
12,649
    
684
    
6,967
    
11,169
    
624
  
Farm & Food Products
    
8,247
    
15,161
    
544
    
8,804
    
17,492
    
503
  
Petroleum Products
    
4,382
    
6,434
    
681
    
3,899
    
6,434
    
606
  
Autos & Auto Parts
    
1,719
    
2,422
    
710
    
1,552
    
2,990
    
519
  
Intermodal
    
122
    
315
    
387
    
295
    
580
    
509
  
Other
    
1,279
    
4,442
    
288
    
2,563
    
11,367
    
225
  
                                       
Totals
  
$
95,602
    
204,053
    
469
  
$
83,173
    
204,860
    
406
  


GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)

   
Nine Months Ended
  
Nine Months Ended
  
   
September 30, 2008
  
September 30, 2007
  
           
Average Freight
          
Average Freight
  
   
Freight
      
Revenues
  
Freight
      
Revenues
  
Commodity Group
  
Revenues
  
Carloads
  
Per Carload
  
Revenues
  
Carloads
  
Per Carload
  
                           
Pulp & Paper
  
$
55,991
    
91,625
  
$ 
611
  
$
51,749
    
92,604
  
$
559
  
Coal, Coke & Ores
    
49,457
    
135,213
    
366
    
44,303
    
143,850
    
308
  
Minerals & Stone
    
33,909
    
106,491
    
318
    
23,269
    
92,173
    
252
  
Metals
    
32,723
    
65,611
    
499
    
27,456
    
59,857
    
459
  
Farm & Food Products
    
29,291
    
51,529
    
568
    
26,298
    
53,621
    
490
  
Lumber & Forest Products
    
25,958
    
58,179
    
446
    
27,704
    
65,354
    
424
  
Chemicals-Plastics
    
24,121
    
36,173
    
667
    
20,118
    
33,450
    
601
  
Petroleum Products
    
13,630
    
20,221
    
674
    
12,193
    
20,105
    
606
  
Autos & Auto Parts
    
5,622
    
9,200
    
611
    
5,317
    
10,552
    
504
  
Intermodal
    
391
    
936
    
418
    
856
    
1,680
    
510
  
Other
    
3,656
    
14,858
    
246
    
7,784
    
36,164
    
215
  
                                       
Totals
  
$
274,749
    
590,036
    
466
  
$
247,047
    
609,410
    
405
  

 
Reconciliation of non-GAAP Financial Measure
 
This earnings release contains free cash flow, which is a "non-GAAP financial measure" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled this non-GAAP financial measure to its most directly comparable U.S. GAAP measure.
 
Free Cash Flow Description and Discussion

Management views Free Cash Flow as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities from Continuing Operations less Net Cash Used in Investing Activities from Continuing Operations, excluding the Cost of Acquisitions and tax effects of Divestitures. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with GAAP.

The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities from Continuing Operations to GWI's Free Cash Flow ($ in millions):

   
Nine Months Ended
  
   
September 30,
  
   
2008
  
2007
  
Net cash provided by operating activities from continuing operations
  
$
91.3
  
$
5.5
  
Net cash used in investing activities from continuing operations
     (148.5 )   (31.5 )
Cash paid for acquisitions, net of cash acquired
     115.7     -  
Australia taxes on ARG Sale
     -     95.6  
Free cash flow
  
$
58.5
  
$
69.6