RRA Railamerica

RailAmerica, Inc. (NYSE:RRA) (�RailAmerica� or the �Company�) today reported third quarter 2006 earnings from continuing operations of $7.0 million, or $0.18 per share, compared to $7.5 million, or $0.19 per share, for the third quarter of 2005. The 2006 results include expenses of $1.8 million, or $0.03 per share, related to the Company�s previously announced Process Improvement Project. Net income for the three months ended September 30, 2006, which includes discontinued operations, was $6.9 million, or $0.18 per share, compared to $7.7 million, or $0.20 per share in the three months ended September 30, 2005. Revenue for the third quarter of 2006 increased $12.2 million, or 12%, to $117.3 million, from $105.1 million in the third quarter of 2005. On a �same railroad� basis, revenue for the third quarter of 2006 increased $5.9 million, or 6%, from the third quarter of 2005, while �same railroad� carloads declined 2%. Operating income for the third quarter of 2006 increased 7%, to $13.5 million, from $12.8 million in the third quarter of 2005. The operating ratio for the third quarter of 2006 was 88.5% compared to 87.8% in the 2005 third quarter. For the nine months ended September 30, 2006, the Company reported earnings from continuing operations of $19.1 million, or $0.49 per share, compared to earnings from continuing operations of $21.4 million, or $0.56 per share for the nine months ended September 30, 2005. Total costs associated with the Process Improvement Project were $4.8 million, or $0.07 per share, during the nine months ended September 30, 2006. A change in Canadian tax laws resulted in a continuing operations tax benefit of $1.7 million, or $0.04 per share, in the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006, which includes discontinued operations, was $29.7 million, or $0.76 per share, compared to $23.2 million, or $0.60 per share in the nine months ended September 30, 2005. The 2006 results include the recognition of a $13.4 million pre-tax gain ($8.3 million net of tax) in the first quarter of 2006 for the expiration of the warranty period related to the sale of Freight Australia and the resulting adjustment to the reserves in discontinued operations, as well as a pre-tax gain of $2.5 million ($2.4 million net of tax) on the disposition of the Company�s E & N Railway on June 30. Revenue for the nine months ended September 30, 2006, increased $38.9 million, or 13%, to $348.5 million, from $309.6 million in 2005. On a �same railroad� basis, revenue for the nine months ended September 30, 2006 increased $20.1 million, or 7%, while �same railroad� carloads declined 2%, from the nine months ended September 30, 2005. Operating income for the nine months ended September 30, 2006 was $36.9 million, compared to $37.2 million for the nine months ended September 30, 2005. The operating ratio for the nine months ended September 30, 2006 was 89.4% compared to 88.0% for the nine months ended September 30, 2005. Charles Swinburn, RailAmerica's Chief Executive Officer, said, �We are pleased with our results this quarter. Despite the declines in our carloads, caused in significant part by the slowdown in the housing market, which resulted in a 12% decline in our lumber carloads compared to the third quarter of 2005, and the continued work stoppage at a paper facility in Nova Scotia, coupled with the expense of a single personal injury during the quarter, we continued to improve our operating results. Production recommenced in October at the paper facility in Nova Scotia and we expect carloads from this facility to begin to return to normal levels during the fourth quarter. In addition, we have made significant progress at our Ohio railroad, which saw its revenue increase 17% and its operating loss decline 78% from the second quarter.� Michael Howe, RailAmerica's Chief Financial Officer, said, "We continue to make progress on our Process Improvement Project. We have now completed our implementation planning and will commence implementation of our plan in the fourth quarter. We have already begun to realize savings through our staff reductions in June and our strategic sourcing initiatives. In addition, we have now completed the first year of operations of the four railroads purchased from Alcoa. The operating results of those railroads have exceeded our financial and cash flow targets since we acquired them on September 30, 2005.� RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 42 railroads operating approximately 7,800 miles in the United States and Canada. The Company is a member of the Russell 2000� Index. Its website may be found at www.railamerica.com. DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements regarding future events that involve risks and uncertainties that could cause actual results to differ materially. 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 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-Q and Form 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 nine months ended September 30, 2006 and 2005 (in thousands, except earnings per share) (unaudited) � Three months ended September 30, Nine months ended September 30, � � 2006� � 2005� � 2006� � 2005� � Operating revenue � $ 117,270� � $ 105,138� � $ 348,453� � $ 309,604� Operating expenses: Transportation 71,598� 65,730� 210,947� 188,808� Selling, general and administrative 23,672� 20,131� 74,187� 62,545� Net gain on sale of assets (954) (995) (1,957) (753) Depreciation and amortization � 9,437� � 7,479� � 28,385� � 21,819� Total operating expenses � 103,753� � 92,345� � 311,562� � 272,419� Operating income 13,517� 12,793� 36,891� 37,185� Interest expense (6,712) (4,795) (20,175) (13,728) Other expense � --� � (619) � (480) � (619) Income from continuing operations before income taxes 6,805� 7,379� 16,236� 22,838� Provision for (benefit from) income taxes � (243) � (77) � (2,836) � 1,437� Income from continuing operations 7,048� 7,456� 19,072� 21,401� Gain (loss) from sale of discontinued operations, net of income taxes (186) --� 10,481� 239� Income from discontinued operations, net of income taxes � --� � 218� � 163� � 1,528� Net income � $ 6,862� � $ 7,674� � $ 29,716� � $ 23,168� � Basic earnings per common share: Continuing operations $ 0.18� $ 0.20� $ 0.49� $ 0.57� Discontinued operations � 0.00� � 0.00� � 0.28� � 0.04� Net income � $ 0.18� � $ 0.20� � $ 0.77� � $ 0.61� � Diluted earnings per common share: Continuing operations $ 0.18� $ 0.19� $ 0.49� $ 0.56� Discontinued operations � 0.00� � 0.01� � 0.27� � 0.04� Net income � $ 0.18� � $ 0.20� � $ 0.76� � $ 0.60� � Weighted average common shares outstanding: Basic 38,715� 37,901� 38,562� 37,679� Diluted 39,102� 38,526� 39,002� 38,353� RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2006 and December 31, 2005 (in thousands, except share data) (unaudited) � � September 30, 2006 � December 31, 2005 � Assets Current assets: Cash and cash equivalents $ 8,551� $ 14,310� Accounts and notes receivable, net 83,566� 82,395� Current assets of discontinued operations --� 3,140� Other current assets � 12,135� � 14,114� Total current assets 104,252� 113,959� Property, plant and equipment, net 931,295� 904,588� Long-term assets of discontinued operations --� 25,879� Other assets � 97,329� � 102,950� Total assets � $ 1,132,876� � $ 1,147,376� � Liabilities and Stockholders� Equity Current liabilities: Current maturities of long-term debt $ 4,951� $ 6,079� Accounts payable 68,721� 75,222� Accrued expenses 32,363� 43,524� Current liabilities of discontinued operations � --� � 4,275� Total current liabilities 106,035� 129,100� Long-term debt, less current maturities 396,728� 427,794� Deferred income taxes 141,979� 141,606� Long-term liabilities of discontinued operations --� 2,261� Other liabilities � 18,534� � 15,337� Total liabilities � 663,276� � 716,098� Commitments and contingencies Stockholders' equity: Common stock, $0.001 par value, 60,000,000 shares authorized; 39,282,988 shares and 38,688,496 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively 39� 39� Additional paid-in capital and other 335,956� 330,919� Retained earnings 97,344� 67,628� Accumulated other comprehensive income � 36,261� � 32,692� Total stockholders' equity � 469,600� � 431,278� Total liabilities and stockholders' equity � $ 1,132,876� � $ 1,147,376� RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2006 and 2005 (in thousands) (unaudited) � Nine months ended September 30, � � 2006� � 2005� � Cash flows from operating activities: Net income $ 29,716� $ 23,168� Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including amortization of deferred loan costs 30,477� 23,394� Net gain on sale or disposal of properties (17,600) (1,028) Equity compensation costs 2,176� 432� Refinancing costs --� 619� Deferred income taxes and other (389) (1,443) Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable 59� (8,335) Other current assets 1,942� 963� Accounts payable (6,250) (10,675) Accrued expenses 1,671� 1,811� Other assets and liabilities � 204� � 396� Net cash provided by operating activities � 42,006� � 29,302� � Cash flows from investing activities: Purchase of property, plant and equipment (50,478) (45,350) Proceeds from sale of assets, net of cash on-hand 32,527� 7,769� Acquisitions, net of cash acquired --� (77,830) Deferred transaction costs and other � --� � (143) Net cash used in investing activities � (17,951) � (115,554) � Cash flows from financing activities: Proceeds from issuance of long-term debt 42,100� 90,700� Principal payments on long-term debt (74,295) (17,506) Repurchase of senior subordinated notes --� (4,540) Proceeds from exercise of stock options and warrants 2,274� 7,199� Deferred financing costs � --� � (492) Net cash (used in) provided by financing activities � (29,921) � 75,361� � Effect of exchange rates on cash � 107� � 288� Net increase (decrease) in cash (5,759) (10,603) Cash, beginning of period � 14,310� � 24,331� Cash, end of period � $ 8,551� � $ 13,728� RAILAMERICA, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (amounts in thousands) (unaudited) � For the three months ended September 30, Functional Classification � 2006� � 2005� � Operating revenue � $ 117,270� � 100.0% � $ 105,138� � 100.0% Operating expenses: Maintenance of way 13,480� 11.5% 13,116� 12.5% Maintenance of equipment 4,237� 3.6% 3,916� 3.7% Transportation 40,587� 34.6% 36,690� 34.9% Equipment rental 13,294� 11.3% 12,008� 11.4% Selling, general and administrative 23,672� 20.2% 20,131� 19.1% Net gain on sale of assets (954) -0.8% (995) -0.9% Depreciation and amortization � 9,437� � 8.1% � 7,479� � 7.1% Total operating expenses � 103,753� � 88.5% � 92,345� � 87.8% Operating income � $ 13,517� � 11.5% � $ 12,793� � 12.2% � For the three months ended September 30, Natural Classification � 2006� � 2005� � Operating revenue � $ 117,270� � 100.0% � $ 105,138� � 100.0% Operating expenses: Labor and benefits 34,520� 29.4% 31,842� 30.3% Equipment rents 14,158� 12.0% 12,803� 12.2% Purchased services 9,872� 8.4% 8,356� 7.9% Diesel fuel 14,424� 12.3% 11,309� 10.7% Casualties and insurance 6,644� 5.7% 7,208� 6.9% Materials 2,679� 2.3% 2,552� 2.4% Joint facilities 3,379� 2.9% 3,097� 2.9% Other expenses 9,594� 8.2% 8,694� 8.3% Net gain on sale of assets (954) -0.8% (995) -0.9% Depreciation and amortization � 9,437� � 8.1% � 7,479� � 7.1% Total operating expenses � 103,753� � 88.5% � 92,345� � 87.8% Operating income � $ 13,517� � 11.5% � $ 12,793� � 12.2% RAILAMERICA, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (amounts in thousands) (unaudited) � For the nine months ended September 30, Functional Classification � 2006� � 2005� � Operating revenue � $ 348,453� � 100.0% � $ 309,604� � 100.0% Operating expenses: Maintenance of way 41,946� 12.0% 39,148� 12.6% Maintenance of equipment 13,023� 3.7% 11,639� 3.8% Transportation 117,072� 33.6% 102,670� 33.2% Equipment rental 38,906� 11.2% 35,351� 11.4% Selling, general and administrative 74,187� 21.3% 62,545� 20.2% Net gain on sale of assets (1,957) -0.6% (753) -0.2% Depreciation and amortization � 28,385� � 8.2% � 21,819� � 7.0% Total operating expenses � 311,562� � 89.4% � 272,419� � 88.0% Operating income � $ 36,891� � 10.6% � $ 37,185� � 12.0% � For the nine months ended September 30, Natural Classification � 2006� � 2005� � Operating revenue � $ 348,453� � 100.0% � $ 309,604� � 100.0% Operating expenses: Labor and benefits 108,106� 31.0% 96,897� 31.3% Equipment rents 41,393� 11.9% 37,385� 12.1% Purchased services 27,905� 8.0% 23,484� 7.6% Diesel fuel 43,158� 12.4% 33,020� 10.7% Casualties and insurance 17,275� 5.0% 17,405� 5.6% Materials 8,147� 2.3% 7,735� 2.5% Joint facilities 9,976� 2.8% 9,478� 3.0% Other expenses 29,174� 8.4% 25,949� 8.4% Net gain on sale of assets (1,957) -0.6% (753) -0.2% Depreciation and amortization � 28,385� � 8.2% � 21,819� � 7.0% Total operating expenses � 311,562� � 89.4% � 272,419� � 88.0% Operating income � $ 36,891� � 10.6% � $ 37,185� � 12.0% RAILAMERICA, INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload) (unaudited) � Three months ended September 30, 2006� 2005� Commodity Group � Freight Revenue � Carloads � Average Revenue per Carload � Freight Revenue � Carloads � Average Revenue per Carload � Lumber & Forest Products $ 13,366� 28,375� $ 471� $ 14,109� 32,266� $ 437� Chemicals 12,889� 27,310� 472� 11,315� 27,527� 411� Metal 11,019� 25,905� 425� 9,303� 24,013� 387� Agricultural & Farm Products 9,019� 26,536� 340� 9,526� 26,129� 365� Paper Products 8,044� 19,965� 403� 8,298� 22,399� 370� Coal 7,964� 34,372� 232� 8,529� 38,179� 223� Metallic/Non-metallic Ores 7,842� 23,594� 332� 4,181� 17,167� 244� Food Products 7,624� 20,756� 367� 6,955� 20,845� 334� Railroad Equipment/ Bridge Traffic 6,840� 48,846� 140� 6,089� 46,490� 131� Minerals 6,297� 14,557� 433� 5,913� 15,321� 386� Petroleum Products 4,935� 12,392� 398� 3,949� 10,879� 363� Other 4,447� 14,418� 308� 3,741� 13,648� 274� Autos 1,580� 5,647� 280� 1,603� 5,651� 284� Intermodal � 737� � 5,276� � 140� � 667� � 5,149� � 130� Totals � $102,603� � 307,949� � $ 333� � $ 94,178� � 305,663� � $ 308� Nine months ended September 30, 2006� 2005� Commodity Group � Freight Revenue � Carloads � Average Revenue per Carload � Freight Revenue � Carloads � Average Revenue per Carload � Lumber & Forest Products $ 42,901� 92,129� $ 466� $ 41,695� 96,227� $ 433� Chemicals 37,084� 82,772� 448� 34,420� 84,948� 405� Metal 30,789� 71,781� 429� 27,652� 73,149� 378� Agricultural & Farm Products 27,972� 82,156� 340� 26,373� 80,835� 326� Coal 26,196� 113,416� 231� 24,719� 112,626� 219� Food Products 23,215� 64,210� 362� 21,407� 64,819� 330� Paper Products 22,940� 59,655� 385� 24,452� 67,690� 361� Metallic/Non-metallic Ores 22,462� 67,976� 330� 12,753� 47,471� 269� Railroad Equipment/ Bridge Traffic 21,231� 156,883� 135� 18,829� 152,288� 124� Minerals 18,961� 44,447� 427� 16,868� 44,223� 381� Petroleum Products 14,104� 34,391� 410� 12,543� 35,557� 353� Other 12,668� 43,283� 293� 10,231� 40,403� 253� Autos 4,624� 16,383� 282� 4,677� 18,342� 255� Intermodal � 2,053� � 14,431� � 142� � 1,956� � 15,329� � 128� Totals � $307,200� � 943,913� � $ 325� � $278,575� � 933,907� � $ 298� RailAmerica, Inc. (NYSE:RRA) ("RailAmerica" or the "Company") today reported third quarter 2006 earnings from continuing operations of $7.0 million, or $0.18 per share, compared to $7.5 million, or $0.19 per share, for the third quarter of 2005. The 2006 results include expenses of $1.8 million, or $0.03 per share, related to the Company's previously announced Process Improvement Project. Net income for the three months ended September 30, 2006, which includes discontinued operations, was $6.9 million, or $0.18 per share, compared to $7.7 million, or $0.20 per share in the three months ended September 30, 2005. Revenue for the third quarter of 2006 increased $12.2 million, or 12%, to $117.3 million, from $105.1 million in the third quarter of 2005. On a "same railroad" basis, revenue for the third quarter of 2006 increased $5.9 million, or 6%, from the third quarter of 2005, while "same railroad" carloads declined 2%. Operating income for the third quarter of 2006 increased 7%, to $13.5 million, from $12.8 million in the third quarter of 2005. The operating ratio for the third quarter of 2006 was 88.5% compared to 87.8% in the 2005 third quarter. For the nine months ended September 30, 2006, the Company reported earnings from continuing operations of $19.1 million, or $0.49 per share, compared to earnings from continuing operations of $21.4 million, or $0.56 per share for the nine months ended September 30, 2005. Total costs associated with the Process Improvement Project were $4.8 million, or $0.07 per share, during the nine months ended September 30, 2006. A change in Canadian tax laws resulted in a continuing operations tax benefit of $1.7 million, or $0.04 per share, in the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006, which includes discontinued operations, was $29.7 million, or $0.76 per share, compared to $23.2 million, or $0.60 per share in the nine months ended September 30, 2005. The 2006 results include the recognition of a $13.4 million pre-tax gain ($8.3 million net of tax) in the first quarter of 2006 for the expiration of the warranty period related to the sale of Freight Australia and the resulting adjustment to the reserves in discontinued operations, as well as a pre-tax gain of $2.5 million ($2.4 million net of tax) on the disposition of the Company's E & N Railway on June 30. Revenue for the nine months ended September 30, 2006, increased $38.9 million, or 13%, to $348.5 million, from $309.6 million in 2005. On a "same railroad" basis, revenue for the nine months ended September 30, 2006 increased $20.1 million, or 7%, while "same railroad" carloads declined 2%, from the nine months ended September 30, 2005. Operating income for the nine months ended September 30, 2006 was $36.9 million, compared to $37.2 million for the nine months ended September 30, 2005. The operating ratio for the nine months ended September 30, 2006 was 89.4% compared to 88.0% for the nine months ended September 30, 2005. Charles Swinburn, RailAmerica's Chief Executive Officer, said, "We are pleased with our results this quarter. Despite the declines in our carloads, caused in significant part by the slowdown in the housing market, which resulted in a 12% decline in our lumber carloads compared to the third quarter of 2005, and the continued work stoppage at a paper facility in Nova Scotia, coupled with the expense of a single personal injury during the quarter, we continued to improve our operating results. Production recommenced in October at the paper facility in Nova Scotia and we expect carloads from this facility to begin to return to normal levels during the fourth quarter. In addition, we have made significant progress at our Ohio railroad, which saw its revenue increase 17% and its operating loss decline 78% from the second quarter." Michael Howe, RailAmerica's Chief Financial Officer, said, "We continue to make progress on our Process Improvement Project. We have now completed our implementation planning and will commence implementation of our plan in the fourth quarter. We have already begun to realize savings through our staff reductions in June and our strategic sourcing initiatives. In addition, we have now completed the first year of operations of the four railroads purchased from Alcoa. The operating results of those railroads have exceeded our financial and cash flow targets since we acquired them on September 30, 2005." RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 42 railroads operating approximately 7,800 miles in the United States and Canada. The Company is a member of the Russell 2000(R) Index. Its website may be found at www.railamerica.com. DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements regarding future events that involve risks and uncertainties that could cause actual results to differ materially. 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 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-Q and Form 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. -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the three and nine months ended September 30, 2006 and 2005 (in thousands, except earnings per share) (unaudited) Three months ended Nine months ended September 30, September 30, 2006 2005 2006 2005 ---------------------------------------------------------------------- Operating revenue $117,270 $105,138 $348,453 $309,604 ---------------------------------------------------------------------- Operating expenses: Transportation 71,598 65,730 210,947 188,808 Selling, general and administrative 23,672 20,131 74,187 62,545 Net gain on sale of assets (954) (995) (1,957) (753) Depreciation and amortization 9,437 7,479 28,385 21,819 ---------------------------------------------------------------------- Total operating expenses 103,753 92,345 311,562 272,419 ---------------------------------------------------------------------- Operating income 13,517 12,793 36,891 37,185 Interest expense (6,712) (4,795) (20,175) (13,728) Other expense -- (619) (480) (619) ---------------------------------------------------------------------- Income from continuing operations before income taxes 6,805 7,379 16,236 22,838 Provision for (benefit from) income taxes (243) (77) (2,836) 1,437 ---------------------------------------------------------------------- Income from continuing operations 7,048 7,456 19,072 21,401 Gain (loss) from sale of discontinued operations, net of income taxes (186) -- 10,481 239 Income from discontinued operations, net of income taxes -- 218 163 1,528 ---------------------------------------------------------------------- Net income $6,862 $7,674 $29,716 $23,168 ====================================================================== Basic earnings per common share: Continuing operations $0.18 $0.20 $0.49 $0.57 Discontinued operations 0.00 0.00 0.28 0.04 ---------------------------------------------------------------------- Net income $0.18 $0.20 $0.77 $0.61 ====================================================================== Diluted earnings per common share: Continuing operations $0.18 $0.19 $0.49 $0.56 Discontinued operations 0.00 0.01 0.27 0.04 ---------------------------------------------------------------------- Net income $0.18 $0.20 $0.76 $0.60 ====================================================================== Weighted average common shares outstanding: Basic 38,715 37,901 38,562 37,679 Diluted 39,102 38,526 39,002 38,353 *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2006 and December 31, 2005 (in thousands, except share data) (unaudited) September December 30, 2006 31, 2005 ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $8,551 $14,310 Accounts and notes receivable, net 83,566 82,395 Current assets of discontinued operations -- 3,140 Other current assets 12,135 14,114 ---------------------------------------------------------------------- Total current assets 104,252 113,959 Property, plant and equipment, net 931,295 904,588 Long-term assets of discontinued operations -- 25,879 Other assets 97,329 102,950 ---------------------------------------------------------------------- Total assets $1,132,876 $1,147,376 ====================================================================== Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt $4,951 $6,079 Accounts payable 68,721 75,222 Accrued expenses 32,363 43,524 Current liabilities of discontinued operations -- 4,275 ---------------------------------------------------------------------- Total current liabilities 106,035 129,100 Long-term debt, less current maturities 396,728 427,794 Deferred income taxes 141,979 141,606 Long-term liabilities of discontinued operations -- 2,261 Other liabilities 18,534 15,337 ---------------------------------------------------------------------- Total liabilities 663,276 716,098 ---------------------------------------------------------------------- Commitments and contingencies Stockholders' equity: Common stock, $0.001 par value, 60,000,000 shares authorized; 39,282,988 shares and 38,688,496 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively 39 39 Additional paid-in capital and other 335,956 330,919 Retained earnings 97,344 67,628 Accumulated other comprehensive income 36,261 32,692 ---------------------------------------------------------------------- Total stockholders' equity 469,600 431,278 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $1,132,876 $1,147,376 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2006 and 2005 (in thousands) (unaudited) Nine months ended September 30, 2006 2005 ---------------------------------------------------------------------- Cash flows from operating activities: Net income $29,716 $23,168 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including amortization of deferred loan costs 30,477 23,394 Net gain on sale or disposal of properties (17,600) (1,028) Equity compensation costs 2,176 432 Refinancing costs -- 619 Deferred income taxes and other (389) (1,443) Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable 59 (8,335) Other current assets 1,942 963 Accounts payable (6,250) (10,675) Accrued expenses 1,671 1,811 Other assets and liabilities 204 396 ---------------------------------------------------------------------- Net cash provided by operating activities 42,006 29,302 ---------------------------------------------------------------------- Cash flows from investing activities: Purchase of property, plant and equipment (50,478) (45,350) Proceeds from sale of assets, net of cash on- hand 32,527 7,769 Acquisitions, net of cash acquired -- (77,830) Deferred transaction costs and other -- (143) ---------------------------------------------------------------------- Net cash used in investing activities (17,951) (115,554) ---------------------------------------------------------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 42,100 90,700 Principal payments on long-term debt (74,295) (17,506) Repurchase of senior subordinated notes -- (4,540) Proceeds from exercise of stock options and warrants 2,274 7,199 Deferred financing costs -- (492) ---------------------------------------------------------------------- Net cash (used in) provided by financing activities (29,921) 75,361 ---------------------------------------------------------------------- Effect of exchange rates on cash 107 288 ---------------------------------------------------------------------- Net increase (decrease) in cash (5,759) (10,603) Cash, beginning of period 14,310 24,331 ---------------------------------------------------------------------- Cash, end of period $8,551 $13,728 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (amounts in thousands) (unaudited) For the three months ended September 30, Functional Classification 2006 2005 ---------------------------------------------------------------------- Operating revenue $117,270 100.0% $105,138 100.0% ---------------------------------------------------------------------- Operating expenses: Maintenance of way 13,480 11.5% 13,116 12.5% Maintenance of equipment 4,237 3.6% 3,916 3.7% Transportation 40,587 34.6% 36,690 34.9% Equipment rental 13,294 11.3% 12,008 11.4% Selling, general and administrative 23,672 20.2% 20,131 19.1% Net gain on sale of assets (954) -0.8% (995) -0.9% Depreciation and amortization 9,437 8.1% 7,479 7.1% ---------------------------------------------------------------------- Total operating expenses 103,753 88.5% 92,345 87.8% ---------------------------------------------------------------------- Operating income $13,517 11.5% $12,793 12.2% ====================================================================== For the three months ended September 30, Natural Classification 2006 2005 ---------------------------------------------------------------------- Operating revenue $117,270 100.0% $105,138 100.0% ---------------------------------------------------------------------- Operating expenses: Labor and benefits 34,520 29.4% 31,842 30.3% Equipment rents 14,158 12.0% 12,803 12.2% Purchased services 9,872 8.4% 8,356 7.9% Diesel fuel 14,424 12.3% 11,309 10.7% Casualties and insurance 6,644 5.7% 7,208 6.9% Materials 2,679 2.3% 2,552 2.4% Joint facilities 3,379 2.9% 3,097 2.9% Other expenses 9,594 8.2% 8,694 8.3% Net gain on sale of assets (954) -0.8% (995) -0.9% Depreciation and amortization 9,437 8.1% 7,479 7.1% ---------------------------------------------------------------------- Total operating expenses 103,753 88.5% 92,345 87.8% ---------------------------------------------------------------------- Operating income $13,517 11.5% $12,793 12.2% ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (amounts in thousands) (unaudited) For the nine months ended September 30, Functional Classification 2006 2005 ---------------------------------------------------------------------- Operating revenue $348,453 100.0% $309,604 100.0% ---------------------------------------------------------------------- Operating expenses: Maintenance of way 41,946 12.0% 39,148 12.6% Maintenance of equipment 13,023 3.7% 11,639 3.8% Transportation 117,072 33.6% 102,670 33.2% Equipment rental 38,906 11.2% 35,351 11.4% Selling, general and administrative 74,187 21.3% 62,545 20.2% Net gain on sale of assets (1,957) -0.6% (753) -0.2% Depreciation and amortization 28,385 8.2% 21,819 7.0% ---------------------------------------------------------------------- Total operating expenses 311,562 89.4% 272,419 88.0% ---------------------------------------------------------------------- Operating income $36,891 10.6% $37,185 12.0% ====================================================================== For the nine months ended September 30, Natural Classification 2006 2005 ---------------------------------------------------------------------- Operating revenue $348,453 100.0% $309,604 100.0% ---------------------------------------------------------------------- Operating expenses: Labor and benefits 108,106 31.0% 96,897 31.3% Equipment rents 41,393 11.9% 37,385 12.1% Purchased services 27,905 8.0% 23,484 7.6% Diesel fuel 43,158 12.4% 33,020 10.7% Casualties and insurance 17,275 5.0% 17,405 5.6% Materials 8,147 2.3% 7,735 2.5% Joint facilities 9,976 2.8% 9,478 3.0% Other expenses 29,174 8.4% 25,949 8.4% Net gain on sale of assets (1,957) -0.6% (753) -0.2% Depreciation and amortization 28,385 8.2% 21,819 7.0% ---------------------------------------------------------------------- Total operating expenses 311,562 89.4% 272,419 88.0% ---------------------------------------------------------------------- Operating income $36,891 10.6% $37,185 12.0% ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload) (unaudited) Three months ended September 30, 2006 2005 ---------------------------- -------------------------- Average Average Revenue Revenue Commodity Freight per Freight per Group Revenue Carloads Carload Revenue Carloads Carload ---------------------------------------------------------------------- Lumber & Forest Products $13,366 28,375 $471 $14,109 32,266 $437 Chemicals 12,889 27,310 472 11,315 27,527 411 Metal 11,019 25,905 425 9,303 24,013 387 Agricultural & Farm Products 9,019 26,536 340 9,526 26,129 365 Paper Products 8,044 19,965 403 8,298 22,399 370 Coal 7,964 34,372 232 8,529 38,179 223 Metallic/Non- metallic Ores 7,842 23,594 332 4,181 17,167 244 Food Products 7,624 20,756 367 6,955 20,845 334 Railroad Equipment/ Bridge Traffic 6,840 48,846 140 6,089 46,490 131 Minerals 6,297 14,557 433 5,913 15,321 386 Petroleum Products 4,935 12,392 398 3,949 10,879 363 Other 4,447 14,418 308 3,741 13,648 274 Autos 1,580 5,647 280 1,603 5,651 284 Intermodal 737 5,276 140 667 5,149 130 ---------------------------------------------------------------------- Totals $102,603 307,949 $333 $94,178 305,663 $308 ====================================================================== *T -0- *T Nine months ended September 30, 2006 2005 --------------------------- --------------------------- Average Average Revenue Revenue Commodity Freight per Freight per Group Revenue Carloads Carload Revenue Carloads Carload ---------------------------------------------------------------------- Lumber & Forest Products $42,901 92,129 $466 $41,695 96,227 $433 Chemicals 37,084 82,772 448 34,420 84,948 405 Metal 30,789 71,781 429 27,652 73,149 378 Agricultural & Farm Products 27,972 82,156 340 26,373 80,835 326 Coal 26,196 113,416 231 24,719 112,626 219 Food Products 23,215 64,210 362 21,407 64,819 330 Paper Products 22,940 59,655 385 24,452 67,690 361 Metallic/Non- metallic Ores 22,462 67,976 330 12,753 47,471 269 Railroad Equipment/ Bridge Traffic 21,231 156,883 135 18,829 152,288 124 Minerals 18,961 44,447 427 16,868 44,223 381 Petroleum Products 14,104 34,391 410 12,543 35,557 353 Other 12,668 43,283 293 10,231 40,403 253 Autos 4,624 16,383 282 4,677 18,342 255 Intermodal 2,053 14,431 142 1,956 15,329 128 ---------------------------------------------------------------------- Totals $307,200 943,913 $325 $278,575 933,907 $298 ====================================================================== *T