SECURITIES AND EXCHANGE COMMISSION



Delaware		06-0984624
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~20 West Avenue, Darien, Connecticut 06820~~
~~(Address of principal executive offices)(Zip Code)~~

~~(203)~~ 20 West Avenue, Darien, Connecticut06820

(Address of principal executive offices)(Zip Code)

(203) 202-8900

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class A Common Stock	GWR	New York Stock Exchange	(NYSE)

Indicate by check mark 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. x☒ Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x☒ Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).o

☐ Yes x☒ No

Shares of common stock outstanding as of the close of business on ~~November~~August 1, ~~2018~~2019:



Class		Number of Shares Outstanding
Class A Common Stock		~~58,390,843~~56,592,802
Class B Common Stock		~~541,138~~376,392



INDEX
		Page

	Forward-Looking Statements	3

Part I	Financial Information	4

Item 1.	Financial Statements:

	Consolidated Balance Sheets (Unaudited) - As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018	4
	Consolidated Statements of Operations (Unaudited) - For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018	5
	Consolidated Statements of Comprehensive Income (Unaudited) - For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018	6
	Consolidated Statements of Changes in Equity (Unaudited) - For the ~~Nine~~Three and Six Months Ended ~~September 31,~~June 30, 2019 and 2018 ~~and 2017~~	7
	Consolidated Statements of Cash Flows (Unaudited) - For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018	89
	Notes to Consolidated Financial Statements (Unaudited)	910

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3432

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7266

Item 4.	Controls and Procedures	7366

Part II	Other Information	7467

Item 1.	Legal Proceedings	7467

Item 1A.	Risk Factors	7467

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7468

Item 3.	Defaults Upon Senior Securities	7568

Item 4.	Mine Safety Disclosures	7568

Item 5.	Other Information	7568

Item 6.	Exhibits	7568

Index to Exhibits		7669

Signatures		7770

Unless the context otherwise requires, when used in this Quarterly Report on Form 10-Q, the terms "Genesee & Wyoming," "G&W," the "Company," "we," "our" and "us" refer to Genesee & Wyoming Inc. and its subsidiaries. All references to currency amounts included in this Quarterly Report on Form 10-Q, including the financial statements, are in United States dollars unless specifically noted otherwise. The term carload represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.

From time to time, we may use our website as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at www.gwrr.com/investors. In addition, you may automatically receive email alerts and other information about us by enrolling your email address in the "Email Alerts" section of www.gwrr.com/investors. The information contained on or connected to our Internet website is not deemed to be incorporated by reference in this Quarterly Report or filed with the Securities and Exchange Commission.

Forward-Looking Statements

This report and other documents referred to in this report contain forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that are based on current expectations, estimates and projections about our industry, our business and our performance, management's beliefs and assumptions made by management. Words such as "anticipates," "intends," "plans," "believes," "could," "should," "seeks," "expects," "will," "estimates," "trends," "outlook," variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including the following: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with affiliates of Brookfield Infrastructure and GIC; the inability to complete the proposed merger due to the failure to obtain stockholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; risks related to disruption of management’s attention from G&W's ongoing business operations due to the transaction; the effect of the proposed merger on G&W's ability to retain and hire key personnel or maintain relationships with its customers, operating results and business generally; the risk that the proposed merger will not be consummated in a timely manner; exceeding the expected costs of the merger; risks related to the operation of our railroads; severe weather conditions and other natural occurrences, which could result in shutdowns, derailments, railroad network and port congestion or other substantial disruption of operations; customer demand and changes in our operations or loss of important customers; exposure to the credit risk of customers and counterparties; changes in commodity prices; consummation and integration of acquisitions; implementation of restructuring plans; economic, political and industry conditions, including employee strikes or work stoppages; retention and contract continuation; our ability to attract and retain skilled workers; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we or our customers are subject; increased competition in relevant markets; funding needs and financing sources, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth, including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to and outcome of various legal claims, lawsuits and arbitrations; increase in, or volatility associated with, expenses related to estimated claims, self-insured retention amounts and insurance coverage, collectability and limits; consummation of new business opportunities; decrease in revenues and/or increase in costs and expenses; susceptibility to the risks of doing business in foreign countries; uncertainties arising from a referendum in which voters in the United Kingdom (U.K.) approved an exit from the European Union (E.U.), commonly referred to as Brexit; our ability to integrate acquired businesses successfully or to realize the expected synergies associated with acquisitions; risks associated with our substantial indebtedness; failure to maintain satisfactory working relationships with partners in Australia; failure to maintain an effective system of internal control over financial reporting as well as disclosure controls and procedures and other risks including, but not limited to, those set forth in Part II Item 1A of this Quarterly Report on Form 10-Q, if any, and those noted in our ~~2017~~2018 Annual Report on Form 10-K under "Risk Factors." Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this report or as of the date they were made. We do not undertake, and expressly disclaim, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF ~~SEPTEMBER~~JUNE 30, ~~2018~~2019 and DECEMBER 31, ~~2017~~2018 (Unaudited)

(dollars in thousands, except per share and share amounts)


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	74,067		$	80,472		$	82,383		$	90,387
Accounts receivable, net	441,105			416,705			444,168			426,305
Materials and supplies	52,517			57,750			55,321			56,716
Prepaid expenses and other	54,292			34,606			40,074			54,185
Total current assets	621,981			589,533			621,946			627,593
PROPERTY AND EQUIPMENT, net	4,613,295			4,656,921			4,669,704			4,613,014
GOODWILL	1,128,580			1,165,587			1,114,478			1,115,849
INTANGIBLE ASSETS, net	1,466,137			1,567,038			1,401,971			1,430,197
DEFERRED INCOME TAX ASSETS, net	3,883			3,343			5,376			4,616
OTHER ASSETS	70,122			52,475			550,714			77,192
Total assets	$	7,903,998		$	8,034,897		$	8,364,189		$	7,868,461
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	25,138		$	27,853		$	57,289		$	28,303
Accounts payable	271,539			253,993			269,644			288,070
Accrued expenses	171,011			185,935			246,188			165,280
Total current liabilities	467,688			467,781			573,121			481,653
LONG-TERM DEBT, less current portion	2,300,556			2,303,442			2,281,191			2,425,235
DEFERRED INCOME TAX LIABILITIES, net	866,821			873,194			889,197			877,721
DEFERRED ITEMS - grants from outside parties	323,370			321,592			335,485			326,520
OTHER LONG-TERM LIABILITIES	162,993			172,796			594,293			127,280
COMMITMENTS AND CONTINGENCIES
EQUITY:
Class A Common Stock, $0.01 par value, one vote per share; 180,000,000 shares authorized at September 30, 2018 and December 31, 2017; 75,199,229 and 74,808,305 shares issued and 58,737,895 and 61,946,078 shares outstanding (net of 16,461,334 and 12,862,227 shares in treasury) on September 30, 2018 and December 31, 2017, respectively	752			748
Class B Common Stock, $0.01 par value, ten votes per share; 30,000,000 shares authorized at September 30, 2018 and December 31, 2017; 541,138 and 701,138 shares issued and outstanding on September 30, 2018 and December 31, 2017, respectively	5			7
Class A Common Stock, $0.01 par value, one vote per share; 180,000,000 shares authorized at June 30, 2019 and December 31, 2018; 75,584,503 and 75,240,513 shares issued and 56,581,921 and 56,349,327 shares outstanding (net of 19,002,582 and 18,891,186 shares in treasury) on June 30, 2019 and December 31, 2018, respectively							756			752
Class B Common Stock, $0.01 par value, ten votes per share; 30,000,000 shares authorized at June 30, 2019 and December 31, 2018; 376,392 and 517,138 shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively							4			5
Additional paid-in capital	1,779,168			1,757,332			1,797,794			1,785,005
Retained earnings	2,426,690			2,234,864			2,571,251			2,482,252
Accumulated other comprehensive loss	(135,076		)	(105,534		)	(173,797		)	(146,456		)
Treasury stock, at cost	(510,245		)	(236,951		)	(708,482		)	(699,852		)
Total Genesee & Wyoming Inc. stockholders' equity	3,561,294			3,650,466			3,487,526			3,421,706
Noncontrolling interest	221,276			245,626			203,376			208,346
Total equity	3,782,570			3,896,092			3,690,902			3,630,052
Total liabilities and equity	$	7,903,998		$	8,034,897		$	8,364,189		$	7,868,461

The accompanying notes are an integral part of these consolidated financial statements.

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2018~~2019 and ~~2017~~2018 (Unaudited)

Net income attributable to Genesee & Wyoming Inc.

The accompanying notes are an integral part of these consolidated financial statements.

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2018~~2019 and ~~2017~~2018 (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

FOR THE ~~NINE~~THREE AND SIX MONTHS ENDED~~SEPTEMBER~~JUNE 30, ~~2018~~2019 and ~~2017~~2018 (Unaudited)

G&W Stockholders
Class A
Common Stock Class B
Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income/(Loss) Treasury
Stock Non-controlling Interest Total
Equity
BALANCE, December 31, 2016 $ 742
$ 8
$ 1,709,615
$ 1,685,813
$ (197,316 ) $ (232,348 ) $ 220,607
$ 3,187,121
Net income —
—
—
122,485
—
—
6,317
128,802
Other comprehensive income —
—
—
—
80,197
—
18,346
98,543
Conversion of 45,000 shares Class B Common Stock to Class A Common Stock 1
(1 ) —
—
—
—
—
—
Value of stock issued for stock-based compensation - 296,580 shares Class A Common Stock 2
—
8,001
—
—
—
—
8,003
Settlement of deferred stock awards - 17,661 shares —
—
738
—
—
—
—
738
Compensation cost related to stock-based compensation —
—
13,309
—
—
—
—
13,309
Value of treasury stock repurchased - 44,114 shares —
—
—
—
—
(3,275 ) —
(3,275 )
Other —
—
444
—
—
—
(6 ) 438
BALANCE, September 30, 2017 $ 745
$ 7
$ 1,732,107
$ 1,808,298
$ (117,119 ) $ (235,623 ) $ 245,264
$ 3,433,679

G&W Stockholders

Class A
Common Stock

Class B
Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock
Non-controlling Interest
Total
Equity
BALANCE, December 31, 2017 $ 748
$ 7
$ 1,757,332
$ 2,234,864
$ (105,534 ) $ (236,951 ) $ 245,626
$ 3,896,092
Net income —
—
—
188,856
—
—
8,090
196,946
Other comprehensive loss —
—
—
—
(26,572 ) —
(17,585 ) (44,157 )
Conversion of 160,000 shares Class B Common Stock to Class A Common Stock 2
(2 ) —
—
—
—
—
—
Value of stock issued for stock-based compensation - 209,357 shares Class A Common Stock 2
—
7,812
—
—
—
—
7,814
Settlement of deferred stock awards - 21,567 shares —
—
995
—
—
—
—
995
Compensation cost related to stock-based compensation —
—
13,029
—
—
—
—
13,029
Value of treasury stock repurchased - 3,599,107 shares —
—
—
—
—
(273,294 ) —
(273,294 )
Distribution to noncontrolling interest —
—
—
—
—
—
(14,898 ) (14,898 )
Amounts reclassified from accumulated other comprehensive loss to retained earnings related to the United States Tax Cuts and Jobs Act —
—
—
2,970
(2,970 ) —
—
—
Other —
—
—
—
—
—
43
43
BALANCE, September 30, 2018 $ 752
$ 5
$ 1,779,168
$ 2,426,690
$ (135,076 ) $ (510,245 ) $ 221,276
$ 3,782,570



	G&W Stockholders
	Class A Common Stock		Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Treasury Stock			Non-controlling Interest			Total Equity
BALANCE, December 31, 2018	$	752	$	5		$	1,785,005		$	2,482,252		$	(146,456	)	$	(699,852	)	$	208,346		3,630,052
Net income	—		—			—			38,706			—			—			100			38,806
Other comprehensive (loss)/income	—		—			—			—			(6,989		)	—			818			(6,171		)
Conversion of 100,000 shares Class B Common Stock to Class A Common Stock	1		(1		)	—			—			—			—			—			—
Value of stock issued for stock-based compensation - 164,732 shares Class A Common Stock	2		—			2,069			—			—			—			—			2,071
Compensation cost related to stock-based compensation	—		—			3,884			—			—			—			—			3,884
Value of treasury stock repurchased - 111,289 shares	—		—			—			—			—			(8,630		)	—			(8,630		)
Other	—		—			(832		)	(1,104		)	—			—			(796		)	(2,732		)
BALANCE, March 31, 2019	$	755	$	4		$	1,790,126		$	2,519,854		$	(153,445	)	$	(708,482	)	$	208,468		$	3,657,280
Net income/(loss)	—		—			—			51,441			—			—			(68		)	51,373
Other comprehensive loss	—		—			—			—			(20,352		)	—			(3,302		)	(23,654		)
Conversion of 40,746 shares Class B Common Stock to Class A Common Stock	—		—			—			—			—			—			—			—
Value of stock issued for stock-based compensation - 38,512 shares Class A Common Stock	1		—			2,095			—			—			—			—			2,096
Compensation cost related to stock-based compensation	—		—			4,227			—			—			—			—			4,227
Other (including treasury stock repurchased - 107 shares)	—		—			1,346			(44		)	—			—			(1,722		)	(420		)
BALANCE, June 30, 2019	$	756	$	4		$	1,797,794		$	2,571,251		$	(173,797	)	$	(708,482	)	$	203,376		$	3,690,902

The accompanying notes are an integral part of these consolidated financial statements.

FOR THE ~~NINE~~SIX MONTHS ENDED~~SEPTEMBER~~JUNE 30, ~~2018~~2019 and ~~2017~~2018 (Unaudited)

Nine Months Ended
September 30,
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 196,946
$ 128,802
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 197,127
186,509
Stock-based compensation 13,029
13,354
Deferred income taxes 7,978
51,231
Net gain on sale and impairment of assets (2,501 ) (1,096 )
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net (50,143 ) (18,020 )
Materials and supplies 3,133
8,998
Prepaid expenses and other (11,663 ) 14,257
Accounts payable and accrued expenses 33,818
(41,529 )
Other assets and liabilities, net 9,750
7,883
Net cash provided by operating activities 397,474
350,389
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (194,132 ) (149,105 )
Grant proceeds from outside parties 16,696
15,998
Net cash paid for acquisitions, net of cash acquired —
(107,586 )
Proceeds from sale of business 7,927
—
Proceeds from sale of investment —
2,100
Insurance proceeds for replacement of assets 2,780
1,406
Proceeds from disposition of property and equipment 3,710
4,238
Other investing activities (2,921 ) —
Net cash used in investing activities (165,940 ) (232,949 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and capital lease obligations (766,713 ) (498,925 )
Proceeds from revolving line-of-credit and long-term borrowings 821,666
418,735
Debt amendment/issuance costs (5,318 ) —
Common share repurchases (270,488 ) —
Distribution to noncontrolling interest (14,898 ) —
Installment payments on Freightliner deferred consideration (6,255 ) —
Other financing related activities, net 5,006
4,728
Net cash used in financing activities (237,000 ) (75,462 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (939 ) 5,980
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (6,405 ) 47,958
CASH AND CASH EQUIVALENTS, beginning of period 80,472
32,319
CASH AND CASH EQUIVALENTS, end of period $ 74,067
$ 80,277



	G&W Stockholders														Non-controlling Interest			Total Equity
	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)/Income			Treasury Stock			Non-controlling Interest			Total Equity
BALANCE, December 31, 2017	$	748	$	7	$	1,757,332	$	2,234,864	$	(105,534	)	$	(236,951	)	$	245,626		$	3,896,092
Net income	—		—		—		75,098		—			—			927			76,025
Other comprehensive income/(loss)	—		—		—		—		10,345			—			(4,018		)	6,327
Value of stock issued for stock-based compensation - 115,897 shares Class A Common Stock	1		—		1,049		—		—			—			—			1,050
Compensation cost related to stock-based compensation	—		—		4,056		—		—			—			—			4,056
Value of treasury stock repurchased - 832,232 shares	—		—		—		—		—			(60,175		)	—			(60,175		)
Amounts reclassified from accumulated other comprehensive loss to retained earnings related to the United States Tax Cuts and Jobs Act	—		—		—		2,970		(2,970		)	—			—			—
Other	—		—		—		—		—			—			1			1
BALANCE, March 31, 2018	$	749	$	7	$	1,762,437	$	2,312,932	$	(98,159	)	$	(297,126	)	$	242,536		$	3,923,376
Net income	—		—		—		44,168		—			—			4,443			48,611
Other comprehensive loss	—		—		—		—		(37,511		)	—			(8,668		)	(46,179		)
Conversion of 30,000 shares Class B Common Stock to Class A Common Stock	—		—		—		—		—			—			—			—
Value of stock issued for stock-based compensation - 42,102 shares Class A Common Stock	1		—		1,856		—		—			—			—			1,857
Compensation cost related to stock-based compensation	—		—		4,515		—		—			—			—			4,515
Value of treasury stock repurchased - 1,873,170 shares	—		—		—		—		—			(134,952		)	—			(134,952		)
Distribution to noncontrolling interest	—		—		—		—		—			—			(14,898		)	(14,898		)
Other	—		—		—		—		—			—			48			48
BALANCE, June 30, 2018	$	750	$	7	$	1,768,808	$	2,357,100	$	(135,670	)	$	(432,078	)	$	223,461		$	3,782,378

The accompanying notes are an integral part of these consolidated financial statements.



	Six Months Ended
	June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	90,179		$	124,636
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	125,143			131,735
Stock-based compensation	8,100			8,601
Deferred income taxes	22,534			(11,489		)
Insurance proceeds received	1,600			—
Net gain on sale and impairment of assets	(510		)	(1,859		)
Changes in assets and liabilities which provided/(used) cash:
Accounts receivable, net	(4,930		)	(46,519		)
Materials and supplies	1,278			2,460
Prepaid expenses and other	(7,121		)	(7,587		)
Accounts payable and accrued expenses	(18,673		)	20,665
Other assets and liabilities, net	5,521			10,684
Net cash provided by operating activities	223,121			231,327
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(144,740		)	(133,328		)
Grant proceeds from outside parties	14,881			12,901
Proceeds from settlement of derivative transactions	45,360			—
Proceeds from sale of business	—			7,927
Insurance proceeds for replacement of assets	1,597			1,866
Proceeds from disposition of property and equipment	4,176			2,795
Contributions to joint venture	(2,700		)	(2,921		)
Net cash used in investing activities	(81,426		)	(110,760		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and finance lease obligations	(319,338		)	(706,965		)
Proceeds from revolving line-of-credit and long-term debt	178,726			795,241
Debt amendment/issuance costs	—			(5,303		)
Purchase of additional shares in Freightliner Australia	(4,696		)	—
Common share repurchases	(4,796		)	(192,324		)
Distribution to noncontrolling interest	—			(14,898		)
Installment payments on Freightliner deferred consideration	(2,522		)	(6,255		)
Other financing related activities, net	(253		)	(893		)
Net cash used in financing activities	(152,879		)	(131,397		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	3,180			60
DECREASE IN CASH AND CASH EQUIVALENTS	(8,004		)	(10,770		)
CASH AND CASH EQUIVALENTS, beginning of period	90,387			80,472
CASH AND CASH EQUIVALENTS, end of period	$	82,383		$	69,702

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:

The interim consolidated financial statements presented herein include the accounts of Genesee & Wyoming Inc. and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. These interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and are unaudited. They do not contain all disclosures which would be required in a full set of financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, the unaudited financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are presented on a basis consistent with the audited financial statements and contain all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of the results for the interim periods presented. The results of operations for interim periods are not necessarily indicative of results of operations for the full year. The consolidated balance sheet data for ~~2017~~2018 was derived from the audited financial statements in the Company's ~~2017~~2018 Annual Report on Form 10-K, but does not include all disclosures required by U.S. GAAP.

The results of operations of the foreign entities are maintained in the local currency of the respective subsidiary and translated into United States dollars at the applicable exchange rates for inclusion in the consolidated financial statements. As a result, any appreciation or depreciation of these currencies against the United States dollar will impact the Company's results of operations.

The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, ~~2017~~2018 included in the Company's ~~2017~~2018 Annual Report on Form 10-K. ~~Certain reclassifications and adjustments have been made to prior period balances to conform to~~

During the ~~current year presentation as noted below.~~

~~On January 1, 2018,~~process of preparing the ~~Company adopted ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.~~ Prior to the adoption of ASU 2017-07, the Company presented net pension costs within operating income on the same line item as other compensation costs arising from services rendered by the applicable employees. ASU 2017-07 requires that net pension costs, other than service cost, be presented outside of operating income. The Company applied these changes retrospectively to its consolidated statement of operations which resulted in a $1.6 million and $4.8 million decrease in operating income and a corresponding change in other income/(loss), netForm 10-K for the ~~three and nine~~ ~~months~~year ended ~~September 30, 2017, respectively. The adjustments had no impact on net income.~~

~~On January 1, 2018, the Company adopted ASU 2018-02,~~ ~~Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~ The current standard, ASC Topic 740, requires deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from operations in the reporting period of the enactment date. The Tax Cuts and Jobs Act of 2017 (the TCJA) enacted by the Unites States federal government resulted in tax effects of items recorded within accumulated other comprehensive income (AOCI) or accumulated other comprehensive loss (AOCL), as the case may be, to be "stranded," as those items no longer reflect the appropriate tax rate. This amendment allows the reclassification from AOCI/AOCL to retained earnings for the stranded tax effects resulting from the new income tax rates. The Company applied the amendments as of January 1, 2018 by reclassifying $3.0 million from AOCL to retained earnings, eliminating the stranded tax effects in AOCL resulting from the TCJA. This reclassification reduced AOCL and increased retained earnings by $3.0 million. It is the Company's policy to release income tax effects from AOCI/AOCL using the item-by-item approach.

~~On January 1, 2018, the Company adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, which supersedes previous revenue guidance. The standard requires that the Company recognize revenue when it transfers the promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company adopted ASU 2014-09 and all related amendments using the modified retrospective approach. Under the standard, the Company continues to recognize freight revenue proportionally as a shipment moves from origin to destination. The adoption did not affect the Company’s financial condition, results of operations or liquidity. Disclosures related to the nature, amount and timing of revenue and cash flows resulting from contracts with customers are included in Note 4, Revenue.

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

On December 1, 2016, a subsidiary of the Company completed the acquisition of Glencore Rail (NSW) Pty Limited (GRail) and concurrently issued a 48.9% stake in G&W Australia Holdings LP (GWAHLP) (collectively, the Australia Partnership), which is the holding entity for all of the Company’s Australian businesses, including GRail, to a consortium of funds and clients managed by Macquarie Infrastructure and Real Assets (MIRA), a large infrastructure investment firm. The Company, through wholly-owned subsidiaries, also made incremental investments and retained a 51.1% ownership in GWAHLP. The investments made by both the Company and MIRA consisted of equity and debt financing of GWAHLP in similar proportions. As MIRA's investments were made at the contemporaneous fair value of GWAHLP as of December 1, 2016, accounting for MIRA's noncontrolling interest in the Company's consolidated financial statements required adjustments to reflect a proportional interest in the net book value of GWAHLP. During the three months ended March 31, 2018, the Company determined that there was an error in and revised its ~~December 1, 2016 calculation~~statement of cash flows for the ~~noncontrolling interest for MIRA's 48.9% equity interest,~~six months ended June 30, 2018, which resulted in the following ~~adjustment within the total equity section of the Company's consolidated balance sheet: a decrease in noncontrolling interest of $71.9 million,~~offsetting adjustments: an increase of $33 million in ~~additional paid-in~~principal payments on revolving line-of-credit, long-term debt and capital lease obligations, representing cash outflows from financing activities, and an increase of ~~$57.9~~$33 million in proceeds from revolving line-of-credit and a decrease in AOCL of $14.0 million. This revision has been reflected in the Company's consolidated balance sheet as of December 31, 2017 as well as the December 31, 2016 equity balances as disclosed in the Company's consolidated statements of changes in equity.long-term debt, representing cash inflows from financing activities. There was no effect on any other section of the Company's ~~balance sheet. This~~statement of cash flows, and this revision had no impact on the Company's consolidated balance sheet as of December 31, 2018 or the Company's consolidated statements of operations or comprehensive income ~~or cash flows~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018 and 2017.~~2018. The Company does not consider this revision material to any previously issued consolidated financial statements.

When comparing the Company's results of operations from one reporting period to another, it is important to consider that the Company has historically experienced fluctuations in revenues and expenses due to acquisitions and divestitures, changing economic conditions, fluctuations in commodity prices, competitive forces, changes in foreign currency exchange rates, rail network issues and congestion, the ability to attract and retain skilled workers, one-time freight moves, fuel price fluctuations, customer plant expansions and shutdowns, sales of property and equipment, derailments and weather-related conditions, such as hurricanes, cyclones, tornadoes, high winds, droughts, heavy snowfall, unseasonably hot or cold weather, freezing and flooding, among other factors. In periods when these events occur, the Company's results of operations are not easily comparable from one period to another. Finally, certain of the Company's railroads have commodity shipments that are sensitive to general economic conditions, global commodity prices and foreign exchange rates, such as steel products, iron ore, paper products, lumber and forest products and agricultural products, as well as product specific market conditions, such as the availability of lower priced alternative sources of power generation (coal) and energy commodity price differentials (crude oil and natural gas liquids) or congestion at ports (intermodal). Other shipments are relatively less affected by economic conditions and are more closely affected by other factors, such as winter weather (salt) and seasonal rainfall (agricultural products). As a result of these and other factors, the Company's results of operations in any reporting period may not be directly comparable to the Company's results of operations in other reporting periods.

2. CHANGES IN OPERATIONS:

North American Operations

~~Heart~~Canada Lease Expirations: Two of ~~Georgia Railroad, Inc.:~~ ~~On May 31, 2017,~~ the ~~Company completed~~Company's short line railroad leases in Canada (Goderich-Exeter Railway (GEXR) and Southern Ontario Railway (SORR)) expired at the ~~acquisition~~end of ~~all~~2018. The Company's results for the ~~outstanding shares of Atlantic Western Transportation, Inc., the parent company of Heart of Georgia Railroad, Inc. (HOG), for~~three and six months ended June 30, 2018 included $5.6 million ~~in cash~~ and ~~contingent consideration valued at $5.7 million.~~$11.1 million, respectively, of revenues from these leased railroads. The ~~contingent consideration is payable to~~Company's results included no material operating income from these leased railroads for the sellers upon satisfaction of certain conditions, which the Company expects to be paid in 2021. The results of operations from HOG have been included in the Company's consolidated statements of operations since the acquisition date.three and six months ended June 30, 2018.

HOG was founded in 1999 and operates 219 miles of track that runs across the State of Georgia. The track is leased from the Georgia Department of Transportation. It connects with the Company’s Georgia Southwestern Railroad at Americus, Georgia, and with the Company’s Georgia Central Railway at Vidalia, Georgia. HOG serves an inland intermodal terminal at Cordele, Georgia, providing five days per week, direct rail service via the Georgia Central Railway to the Port of Savannah for auto, agricultural products and other merchandise customers. HOG has Class I railroad connections with CSX Corp. at Cordele and with Norfolk Southern at Americus and Helena, Georgia. HOG transports approximately 7,000 annual carloads of agricultural products, feed, fertilizer, and lumber and forest products.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~Australian Operations~~

~~Arrium Limited:~~ On April 7, 2016, Genesee & Wyoming Australia's (GWA) customer, Arrium Limited (Arrium) announced it had entered into voluntary administration. As a result, during the first quarter of 2016, the Company recorded a $13.0 million non-cash charge related to the impairment of GWA's idle rolling-stock maintenance facility and an allowance for doubtful accounts charge of $8.1 million. Also, as a result of the voluntary administration, all payments to GWA associated with the rail haulage agreement for Arrium's Southern Iron mine ceased.

On August 31, 2017, Arrium was sold to GFG Alliance. The steel making business was rebranded as Liberty OneSteel, and the mining business was rebranded as SIMEC Mining (SIMEC). Although the Southern Iron mine is still mothballed, GWA continues to provide services and receive payments under the rail haulage agreement for SIMEC's Middleback Range operations. Pursuant to that rail haulage agreement, GWA serves several iron ore mines in the Middleback Range and the Whyalla steelworks operations.

In December 2017, the Company recovered $0.9 million of cash in relation to the Company's previous agreements with Arrium. During the three and nine months ended September 30, 2018, the Company recorded $0.9 million and $7.3 million, respectively, of gains on settlement from additional cash recoveries of pre-petition claims associated with Arrium, which were recognized as offsets to other expenses, net in the Company’s consolidated statement of operations.

U.K./European Operations

U.K. Operations Optimization: In May 2018, the Company began a program to restructure and further optimize its operations in the U.K., which it intends to complete by 2020. The program includes the rationalization of the locomotive and railcar fleet, management restructuring (following the U.K. consultative process) and technology investments to upgrade systems to enhance productivity and service quality.

Restructuring and related costs associated with the optimization are expected to be approximately $37 million (at an exchange rate of $1.30 for one British pound) and are comprised of the following (dollars in thousands):



	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019		Total Costs Incurred Through June 30, 2019		Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet	$	—	$	—	$	6,301	$	9,000
Management restructuring^(a)	5,058		9,141		13,781		16,000
Productivity and automation investments	1,725		3,138		7,181		12,000
Total	$	6,783	$	12,279	$	27,263	$	37,000

Changes in restructuring and related liabilities for the U.K. Operations Optimization program for the six months ended June 30, 2019 was as follows (dollars in thousands):



	Rationalization of Locomotive and Railcar Fleet			Management Restructuring			Productivity and Automation Investments			Total
Restructuring and related liabilities as of December 31, 2018	$	4,094		$	982		$	—		$	5,076
Restructuring and related costs incurred	—			9,141			3,138			12,279
Cash payments	(610		)	(6,691		)	(3,138		)	(10,439		)
Non-cash settlements	—			—			—			—
Restructuring and related liabilities as of June 30, 2019	$	3,484		$	3,432		$	—		$	6,916

Continental Europe Intermodal Business: ~~In 2017,~~On June 5, 2018, the Company ~~ceased all "open" train services from the port of Rotterdam, closed~~sold its Continental Europe intermodal business, ERS Railways B.V. (ERS), offices in Rotterdam and Frankfurt, and the ERS customer services function in Warsaw. The Company recorded restructuring charges of $0.7 million and $5.2 million for the three and nine months ended September 30, 2017, respectively, primarily related to severance costs and costs associated with surplus locomotive and railcar leases at ERS.

~~On June 5, 2018, the Company finalized the sale of ERS~~ for gross cash proceeds of €11.2 million (or $13.1 million at the exchange rate on June 5, 2018) or €6.8 million (or $7.9 million at the exchange rate on June 5, 2018) net of €4.4 million (or $5.2 million at the exchange rate on June 5, 2018) of cash on hand that transferred to the buyer. The ~~sale resulted in a net loss of $1.4 million recognized in the Company’s consolidated statement of operations~~Company's results for the ~~nine~~three and six months ended ~~September~~June 30, 2018 ~~within other income/(loss), net.~~

~~Pentalver Transport Limited:~~ ~~On May 3, 2017, the~~included $9.4 million and $24.1 million, respectively, of revenues from ERS. The Company's ~~subsidiary, GWI UK Acquisition Company Limited, purchased~~results for cash all of the issued share capital of Pentalver Transport Limited (Pentalver) from a subsidiary of APM Terminals (a subsidiary of AP Møller-Maersk A/S) for £97.8 million (or $126.2 million at the exchange rate on May 3, 2017) or £77.5 million (or $100.1 million at the exchange rate on May 3, 2017) net of £20.2 million (or $26.1 million at the exchange rate on May 3, 2017) of cash received in connection with the sale. The Company funded the acquisition with borrowings under the Company's Second Amended and Restated Senior Secured Syndicated Credit Facility Agreement.

~~Headquartered in Southampton, U.K., Pentalver operates off-dock container terminals (most under long-term leases) strategically placed at each of~~ the three ~~major seaports of Felixstowe, Southampton~~ and London Gateway, as well as an inland terminal located at Cannock, in the Midlands, near many of the nation’s largest distribution centers. In addition to providing storage for loaded and empty containers on over 100 acres of land, Pentalver also operates a trucking haulage service with more than 150 trucks, primarily providing daily service between the seaports of Felixstowe and Southampton and its inland terminal at Cannock. Pentalver also provides services related to container customization, maintenance and repair (including refrigerated containers) and is one of the largest sellers of new and used containers in the U.K.six months ended June 30, 2018 included no material operating income from ERS.

Pentalver’s operations are complementary to those of the Company's Freightliner Group Limited (Freightliner) subsidiary, which is the largest rail maritime intermodal operator in the U.K. The logistics of maritime container transportation in the U.K. are highly competitive, whether by road, rail or short-sea, with a premium placed on timely, efficient and safe service. The results of operations from Pentalver have been included in the Company's consolidated statements of operations since the May 3, 2017 acquisition date.

The Company accounted for the acquisition as a business combination using the acquisition method of accounting under U.S. GAAP. The acquired assets and liabilities of Pentalver were recorded at their acquisition-date fair values and were consolidated with those of the Company as of the acquisition date. The foreign exchange rate used to translate the balance sheet to United States dollars was $1.29 for one British pound.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~The acquisition date fair values were assigned to the acquired net assets as follows (amounts in thousands):~~

GBP USD
Cash and cash equivalents £ 20,224
$ 26,117
Accounts receivable 16,849
21,759
Materials and supplies 13,360
17,253
Prepaid expenses and other 3,238
4,182
Property and equipment 20,649
26,666
Goodwill 8,592
11,096
Intangible assets 42,000
54,239
Total assets 124,912
161,312
Accounts payable and accrued expenses 21,341
27,560
Deferred income tax liabilities, net 5,220
6,741
Deferred items-grants from outside parties 601
776
Net assets £ 97,750
$ 126,235

The $54.2 million of intangible assets relate to amortizable operational rights with contractual terms spanning up to 50 years and a weighted average amortization period of 33 years. The $11.1 million of goodwill will not be deductible for tax purposes.

3. EARNINGS PER COMMON SHARE:

The following table sets forth the computation of basic and diluted earnings per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands, except per share amounts):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerators:
Net income attributable to Genesee & Wyoming Inc.	$	51,441	$	44,168	$	90,147	$	119,266
Denominators:
Weighted average Class A common shares outstanding – Basic	56,536		59,996		56,433		60,946
Weighted average Class B common shares outstanding	405		673		452		687
Dilutive effect of employee stock-based awards	331		210		297		208
Weighted average shares – Diluted	57,272		60,879		57,182		61,841
Earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic earnings per common share	$	0.91	$	0.74	$	1.60	$	1.96
Diluted earnings per common share	$	0.90	$	0.73	$	1.58	$	1.93

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Numerators:
Net income attributable to Genesee & Wyoming Inc. $ 69,590
$ 50,240
$ 188,856
$ 122,485
Denominators:
Weighted average Class A common shares outstanding – Basic 59,168
61,629
60,343
61,518
Weighted average Class B common shares outstanding 664
723
679
743
Dilutive effect of employee stock-based awards 299
125
233
138
Weighted average shares – Diluted 60,131
62,477
61,255
62,399
Earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic earnings per common share $ 1.18
$ 0.82
$ 3.13
$ 1.99
Diluted earnings per common share $ 1.16
$ 0.80
$ 3.08
$ 1.96

The following total number of shares of Class A Common Stock issuable under the assumed exercise of stock-based awards computed based on the treasury stock method were excluded from the calculation of diluted earnings per common share, as the effect of including these shares would have been antidilutive (in thousands):



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
Antidilutive shares	257	1,130	566	1,043

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Antidilutive shares 704
1,245
1,045
1,302

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

In ~~September of~~October 2018, the Company completed its $300 million share repurchase program that had been approved in 2015, and the Company's Board of Directors authorized ~~the~~a new $500 million share repurchase program of ~~up to~~ ~~$300 million~~ ~~of the Company's~~ Class A Common Stock, ~~(the Repurchase Program),~~ subject to certain limitations under the Company's credit facility. The table below presents information regarding shares repurchased by the Company under the ~~Repurchase Program~~share repurchase programs during the three and ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 (in thousands, except ~~for~~ per share amounts):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Class A Common Stock repurchased	—		1,873		65		2,666
Average price paid per share of Class A Common Stock repurchased	$	—	$	72.04	$	73.94	$	72.14

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Class A Common Stock repurchased 894
3,560
Average price paid per share of Class A Common Stock repurchased $ 87.46
$ 75.99
Shares excluded from weighted-average basic shares outstanding 301
1,707

Repurchased shares are recorded in treasury stock, at cost, which includes any applicable commissions and fees. As of ~~September~~June 30, ~~2018,~~2019, the remaining amount authorized for repurchase under the ~~Repurchase Program~~$500 million share repurchase program was ~~$29.5~~$335.0 million. In ~~October 2018, the Company completed the~~ ~~$300 million~~ ~~Repurchase Program, and~~light of the Company's ~~Board~~entry into the merger agreement with affiliates of ~~Directors authorized a new $500 million repurchase plan of Class A Common Stock, subject to certain limitations~~Brookfield Infrastructure and GIC, future share repurchases under the ~~Company's credit facility.~~repurchase program have been suspended. See Note ~~6, Long-Term Debt,~~15, Subsequent Events, for additional information regarding the ~~Company's credit facility.~~merger agreement.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4. ~~REVENUE:~~ACCOUNTS RECEIVABLE:

~~The Company classifies its operating revenues into~~Accounts receivable consisted of the following ~~three categories: freight, freight-related~~as of June 30, 2019 and ~~all other. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Revenue is measured as the amount of consideration the Company expects to receive~~December 31, 2018 (dollars in exchange for providing services. Certain of the countries in which the Company operates have a tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer. The Company records these taxes on a net basis.thousands):

The Company generates freight revenues from the haulage of freight by rail based on a per car, per container or per ton basis. Freight revenues are recognized over time as shipments move from origin to destination as the customer simultaneously receives and consumes the benefit. Related expenses are recognized as incurred.



	June 30, 2019			December 31, 2018
Accounts receivable – trade	$	406,770		$	397,255
Accounts receivable – grants from outside parties	18,748			19,376
Accounts receivable – insurance and other third-party claims	31,707			19,729
Total accounts receivable	457,225			436,360
Less: Allowance for doubtful accounts	(13,057		)	(10,055		)
Accounts receivable, net	$	444,168		$	426,305

The Company generates freight-related revenues from port terminal railroad operations and industrial switching (where the Company operates trains on a contract basis in facilities it does not own), as well as demurrage, storage, car hire, trucking haulage services, track access rights, transloading, crewing services, traction service (or hook and pull service that requires the Company to provide locomotives and drivers to move a customer's train between specified origin and destination points), and other ancillary revenues related to the movement of freight. Freight-related revenues are recognized as services are performed or as contractual obligations are fulfilled.

The Company generates all other revenues from third-party railcar and locomotive repairs, container sales, property rentals and other ancillary revenues not directly related to the movement of freight. All other revenues are recognized as services are performed or as contractual obligations are fulfilled.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company’s contracts may have a single performance obligation or multiple performance obligations. Contracts with multiple obligations are evaluated to define the specific performance obligations to the customer. The Company typically allocates the standalone selling price adjusted for any applicable variable consideration to each performance obligation to determine the transaction price.

For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route. The invoicing railroad then pays the other railroads their portion of the total amount invoiced on a monthly basis. When the Company is the invoicing railroad, it is exposed to customer credit risk for the total amount invoiced and is required to pay the other railroads participating in the route even if the Company is not paid by the customer. The Company records revenue related to interline traffic that involves the services of another party or railroad on a net basis. The portion of the gross amount billed to customers that is remitted by the Company to another party is not reflected as revenue.

The timing of revenue recognition, billings and cash collections result in trade accounts receivable, contract assets and contract liabilities. The Company’s contract assets and liabilities are typically short-term in nature, with terms settled within a 12-month period. The Company had no material contract assets or contract liabilities recorded on the consolidated balance sheet as of ~~September~~June 30, ~~2018.~~

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Disaggregation of Revenue~~

The Company disaggregates its operating revenues into the following three categories: freight revenues, freight-related revenues and all other revenues. The Company further disaggregates its freight revenues into 14 commodity groups. Refer to Note 15, Segment Information, for the disaggregation of the Company's operating revenues by reportable segment for the three and nine months ended September 30, 2018 and 2017.

~~5. ACCOUNTS RECEIVABLE:~~

~~Accounts receivable consisted of the following as of~~ ~~September 30, 2018~~ ~~and~~ 2019 or December 31, ~~2017~~ ~~(dollars in thousands):~~

September 30,
2018 December 31,
2017
Accounts receivable – trade $ 423,880
$ 401,723
Accounts receivable – grants from outside parties 14,610
17,734
Accounts receivable – insurance and other third-party claims 12,186
10,753
Total accounts receivable 450,676
430,210
Less: Allowance for doubtful accounts (9,571 ) (13,505 )
Accounts receivable, net $ 441,105
$ 416,705
2018.

Grants from Outside Parties

The Company periodically receives grants for the upgrade and construction of rail lines and the upgrade of locomotives from federal, provincial, state and local agencies in the United States and provinces in Canada in which the Company operates.

These grants typically reimburse the Company for 50% to 100% of the actual cost of specific projects. In total, the Company received grant proceeds of ~~$16.7~~$14.9 million and ~~$16.0~~$12.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018, respectively, from such grant programs. The proceeds were presented as cash inflows from investing activities within the statement of cash flows for each of the applicable periods.

~~None of the Company's grants represent a future liability of the~~ The Company unless the Company abandons the rehabilitated or new track structure within a specified period of time or fails to maintain the upgraded or new track to certain standards, fails to make certain minimum capital improvements or ceases use of the locomotives within the specified geographic area and time period, or fails to comply with other grant provisions in each case, as set forth in the applicable grant agreement. As the Company intends to comply with the requirements of these agreements, the Company has recordedrecords additions to ~~track~~ property and ~~locomotives~~equipment for its grant-funded projects and ~~has deferred~~defers the amount of the grants. The amortization of deferred grants is a non-cash offset to depreciation expense over the useful lives of the related assets.

The following table sets forth the offset to depreciation expense from the amortization of deferred grants recorded by the Company during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Amortization of deferred grants	$	3,315	$	3,136	$	6,823	$	5,603

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Amortization of deferred grants $ 3,173
$ 2,978
$ 8,776
$ 9,287

Insurance and Third-Party Claims

~~Accounts~~The increase in the balance of the accounts receivable from insurance and other third-party claims ~~as of September~~for the six months ended June 30, ~~2018 included $6.4 million from~~2019 was primarily related to the ~~Company's U.K./European Operations and $5.8 million from the Company's North American Operations. The balance from the Company's U.K./European Operations resulted primarily from the Company's~~ anticipated insurance ~~recoveries~~recovery associated with a personal injury that occurred in the U.K. in ~~2016.~~2019. The receivable and the associated claim liability were recorded on the balance ~~from~~sheet as of June 30, 2019.

The Company recently completed its annual property insurance renewal, which takes effect on August 1, 2019. Effective with this renewal, the Company's ~~North American Operations~~property policies will have various self-insured retentions, which vary based on the type and location of the incident, up to $10.0 million.

5. LEASES:

On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (the New Standard), and all related amendments, which supersedes the previous lease guidance, using the transition method with the election not to adjust comparative periods. The New Standard requires lessees to recognize leases on their balance sheet as a right-of-use (ROU) asset with a corresponding lease liability. The adoption resulted ~~predominately from~~in the recognition of ROU assets included in other assets and lease liabilities included in accrued expenses and other long-term liabilities of approximately $495 million in the Company's ~~anticipated insurance recoveries associated with~~consolidated balance sheet, each as a ~~bridge washout~~result of the new requirement to recognize operating leases. No material cumulative-effect adjustment was recognized in ~~Canada in January 2018.~~retained earnings, and the adoption did not materially impact operating results, liquidity or the Company's debt-covenant compliance under these agreements. The Company ~~received proceeds from insurance totaling $2.8 million and $1.4 million for~~continues to recognize its capital leases on the ~~nine months ended~~ ~~September 30, 2018~~ ~~and~~ ~~2017, respectively.~~balance sheet but these leases are now referred to as "finance" leases, as required by the New Standard.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~Accounts receivable from insurance~~The Company enters into leases for railcars, locomotives and other ~~third-party claims~~equipment as well as real property. These leases may contain variable payments that vary with rate or index changes or include payment of a per car fee or per mile fee to use the track under variable lease contracts. The Company may receive rent holidays and other incentives provided by the lessor on lease agreements. On occasion, the Company subleases assets to other parties.

As of January 1, 2019, the Company adopted a number of practical expedients and exemptions included in the New Standard, which were intended to reduce the cost and complexity of complying with the transition requirements. The Company chose the following practical expedients and exemptions in setting its accounting policy elections for transition to:


1.	Not recognize an asset and liability for leases of all asset classes with a term of 12 months or less;


2.	Carry forward the historical lease classification and not reassess its existing contracts to determine whether the arrangements contained a lease or whether initial direct costs qualified for capitalization;


3.	Not separate lease and non-lease components; and


4.	Carry forward its current accounting treatment for land easements on existing agreements.

Lease contracts may include one or more renewal options, with renewal terms from one to fifty years or more. Leases may also include options to terminate the arrangement or options to purchase the underlying leased property. The exercise of lease options are generally at ~~December 31, 2017 included $5.9 million from~~the discretion of the Company's ~~North American Operations, $4.3 million from~~management team. The Company determines the expected term of a lease and includes options that are reasonably certain to be exercised in the calculation of its ROU assets and lease liabilities.

The determination of whether a contract contains a lease, as well as the analysis regarding the allocation of consideration in a contract between lease and non-lease components, is performed on a case by case basis and considers the nature and interdependency of the individual assets in the arrangement. The Company generally accounts for lease assets as a single component as the assets in most agreements are highly interrelated and dependent upon each other to fulfill the arrangement.

As the implicit rate is not readily determinable in most of the Company's ~~U.K./European Operations and $0.6 million from~~lease agreements, the Company uses its estimated secured incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The following table summarizes the Company's ~~Australian Operations. The balance from the Company's North American Operations resulted predominately from the Company's anticipated insurance recoveries associated with a 2015 trestle fire~~leased assets and lease liabilities recorded in the United States and derailments in Canada. The balance from the Company's U.K./European Operations resulted primarily from the Company's anticipated insurance recoveries associated with an ERS rail-related collision in Germany in 2014 that occurred prior to the Company's acquisition of Freightliner. This receivable and the associated claim liability were removed from the Company's consolidated balance sheet ~~with the sale~~as of ~~ERS in~~ June ~~2018. See Note 2, Changes in Operations, for additional information regarding the sale of ERS.~~

~~6. LONG-TERM DEBT:~~

~~Credit Agreement Amendment~~

On June 5, 2018, the Company entered into Amendment No. 3 (the Amendment) to the Credit Agreement, the Third Amended and Restated Senior Secured Syndicated Credit Facility Agreement (the Amended Credit Agreement). At closing, the credit facilities under the Amended Credit Agreement were comprised of a $1,423.0 million United States term loan, a £272.9 million (or $365.2 million at the exchange rate on June 5, 2018) U.K. term loan and a $625.0 million revolving credit facility. The revolving credit facility includes borrowing capacity for letters of credit and swingline loans. The Amendment also extended the maturity date of the Company's credit facilities to June 5, 2023.

In connection with entering into the Amendment, the Company wrote-off $2.2 million of unamortized deferred financing fees and capitalized an additional $5.3 million of new fees. Deferred financing costs are amortized as additional interest expense over the terms of the related debt using the effective-interest method for the term loan debt and the straight-line method for the revolving credit facility.

At the Company's election, at the time of entering into a specific borrowing, interest on that borrowing is calculated under a "LIBOR" or "Base Rate." LIBOR is the London Interbank Offered Rate. The applicable borrowing spread for the LIBOR Rate loans ranges from 1.00% to 2.00% depending on the Company's total leverage ratio. The applicable spread for the Base Rate loans ranges from 0.00% to 1.00% depending on the Company's total leverage ratio.

In addition to paying interest on any outstanding borrowing under the Amended Credit Agreement, the Company is required to pay a commitment fee related to the unutilized portion of the commitments under the revolving credit facility. The commitment fee ranges from 0.20% to 0.30% depending on the Company's total leverage ratio as defined in the Amended Credit Agreement.

Since entering into the Amendment, the Company has made prepayments of $120.0 million on its United States term loan and £25.0 million (or $32.8 million at the exchange rate at the time the payments were made) on its U.K. term loan, which were applied towards its future quarterly installments. As of September 30, ~~2018, the Company had the following amounts of term loans outstanding under the Amended Credit Agreement (amounts in thousands, except percentages):~~

Local Currency United States Dollar Equivalent Interest Rate
United States dollar $ 1,303,000
$ 1,303,000
3.74 %
British pound £ 247,932
$ 323,353
2.22 %

The United States dollar-denominated and British pound-denominated term loans will amortize in quarterly installments, with the remaining principal balance payable upon maturity, as set forth below (amounts2019 (dollars in thousands):

Quarterly Payment Date Principal Amount of Each Quarterly Installment
United States dollar: March 31, 2020 $ 4,513
June 30, 2020 through March 31, 2023 $ 17,788
Maturity date - June 5, 2023 $ 1,085,031

British pound: June 30, 2020 £ 2,293
September 30, 2020 through March 31, 2023 £ 3,412
Maturity date - June 5, 2023 £ 208,111



	Balance Sheet Location	June 30, 2019
Leased right-of-use assets:
Operating leased assets	Other assets	$	494,803
Finance leased assets, net	Property and equipment, net^(a)	90,716
Total leased assets		$	585,519
Lease liabilities:
Current
Operating lease liabilities	Accrued expenses	$	65,004
Finance lease liabilities	Current portion of long-term debt	11,477
Non-current
Operating lease liabilities	Other long-term liabilities	428,087
Finance lease liabilities	Long-term debt, less current portion	72,500
Total lease liabilities		$	577,068


(a)	Net of $29.2 million of accumulated amortization as of June 30, 2019, which was recognized in depreciation and amortization expense within the Company's consolidated statement of operations.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The ~~Company's availability to draw from~~following table summarizes the ~~unused borrowing capacity is subject to covenant limitations as discussed below. As~~components of ~~September 30, 2018,~~lease expense for the ~~Company had the following unused borrowing capacity under its revolving credit facility (amounts in thousands):~~

September 30, 2018
Total available borrowing capacity $ 625,000
Outstanding revolving loans $ 6,304
Outstanding letter of credit guarantees $ 2,086
Unused borrowing capacity $ 616,610

~~As of September 30, 2018, the Company had the following outstanding revolving loans under its revolving credit facility (amounts in thousands, except percentages):~~

Local Currency United States Dollar Equivalent Interest Rate
United States dollar (swingline loan) $ 5,000
$ 5,000
5.75 %
British pound (swingline loan) £ 1,000
$ 1,304
2.20 %

~~Under the Amended Credit Agreement, the Company is required to comply with specified maximum senior secured leverage ratios. The~~ ~~maximum senior secured leverage ratio is set at 4.25 to 1.00 through~~three and six months ended June 30, 2019 ~~and then, except~~(dollars in thousands):



	Location of Amount Recognized in Earnings	Three Months Ended			Six Months Ended
	Location of Amount Recognized in Earnings	June 30, 2019			June 30, 2019
Finance leases:
Amortization of right-of-use assets	Depreciation and amortization	$	1,888		$	3,761
Interest on lease liability	Interest expense	847			1,673
Total finance lease cost		$	2,735		$	5,434
Operating leases:
Operating lease cost	Equipment rents/Trackage rights	$	22,533		$	44,684
Short-term lease cost	Equipment rents/Trackage rights	2,566			4,993
Variable lease cost	Equipment rents/Trackage rights	2,995			4,907
Sublease income (gross basis)	Operating revenues	(1,527		)	(2,250		)
Total operating lease cost		$	26,567		$	52,334
Total lease cost		$	29,302		$	57,768

The maturities of lease liabilities under the New Standard based on the Company's reasonably certain holding period for each lease were as ~~described below, decreases to 4.00 to 1.00 for all periods thereafter, subject, if applicable, to netting~~follows as of ~~certain cash and cash equivalents~~June 30, 2019 (dollars in thousands):



	Finance Leases		Operating Leases
Maturity of lease liabilities:
2019 (remainder)	$	7,789	$	45,446
2020	19,586		74,453
2021	10,807		64,080
2022	15,097		52,091
2023	10,862		43,242
Thereafter	35,671		564,700
Total lease payments	99,812		844,012
Less: Imputed interest	15,835		350,921
Total lease liabilities	$	83,977	$	493,091

The following is a summary of the Company. Following acquisitions by the Company in excess of $500 million, subject to certain limitations, the senior secured leverage ratio will be set at a level of 4.50 to 1.00 for the four fiscal quarters immediately following the date of such applicable acquisition.

~~In addition, the Amended Credit Agreement contains a maximum total leverage ratio and a~~future minimum ~~interest coverage ratio. The maximum total leverage ratio is 4.50 to 1.00 and~~lease payments based on the minimum ~~interest coverage ratio is 3.50 to 1.00~~non-cancelable lease term as required under previous guidance for ~~the term of the Amended Credit Agreement.~~

The Amendment permits the Company to repurchase an unlimited amount of shares of the Company’s Class A Common Stock if the Company’s total leverage ratio after giving effect to such repurchases on a pro forma basis would be less than 3.25 to 1.00, subject to certain other restrictionscapital and limitations. If the Company’s total leverage ratio after giving effect to such repurchases on a pro forma basis would exceed 3.25 to 1.00, the Company may, subject to certain limitations, repurchase shares of the Company’s Class A Common Stock with a value of up to the sum of $500 million and the amount remaining under the Company’s current share repurchase program, which was $29.5 millionoperating leases as of ~~September 30,~~December 31, 2018 ~~if the Company maintains at least $100 million of liquidity. See Note 3, Earnings Per Common Share, for additional information regarding the Company's common share repurchases.~~(dollars in thousands):

~~As of September 30, 2018, the Company was in compliance with the covenants under the Amended Credit Agreement.~~



	Capital		Operating
2019	$	11,405	$	82,191
2020	17,261		63,062
2021	8,668		54,305
2022	9,625		44,739
2023	10,780		35,919
Thereafter	13,988		383,739
Total minimum payments	$	71,727	$	663,955

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~7. U.K. OPERATIONS OPTIMIZATION:~~

~~In 2018,~~The following table presents supplemental cash flow and other information for the ~~Company reorganized its U.K. business into three service platforms: Rail (Intermodal~~Company's leases as of and ~~Heavy Haul), Road (former Freightliner and Pentalver road operations) and Terminals (former Freightliner and Pentalver terminals), with a single combined commercial organization responsible~~ for ~~selling all three services. The Company also announced a program to restructure and further optimize its operations in~~ the U.K. that began in May 2018 and is intended to be completed by early 2019. The program includes the rationalization of the locomotive and railcar fleet, management restructuring (following the U.K. consultative process), and technology investments to upgrade systems to enhance productivity and service quality. Restructuring and related expenses associated with the optimization are expected to be approximately $52 million (assuming the adjustment described in footnote (a) below does not occur and an exchange rate of $1.30 for one British pound) and are comprised of the following, including the current estimate of the timing of the related charges, which is subject to changesix months ended June 30, 2019 (dollars in thousands):



	Six Months Ended
	June 30, 2019
Cash flow information:
Cash paid for operating leases included in operating activities	$	45,571
Cash paid for finance leases included in operating activities	$	1,387
Cash paid for finance leases included in financing activities	$	4,688

Weighted average remaining lease term (in years):
Operating leases	26.5
Finance leases	8.2

Weighted average discount rate:
Operating leases	3.8		%
Finance leases	4.4		%

New leases:
Right-of-use assets obtained in exchange for operating lease liabilities	$	31,445
Right-of-use assets obtained in exchange for finance lease liabilities	$	27,335

Three Months Ended September 30, 2018 Nine Months Ended
September 30, 2018 Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet^(a)
$ 379
$ 6,317
$ 28,000
Management restructuring^(b)
1,610
3,739
10,000
Productivity and automation investments 1,502
2,790
14,000
Total $ 3,491
$ 12,846
$ 52,000


~~(a)~~	~~The emergence of new commercial opportunities may result in less restructuring and related expense.~~


~~(b)~~	~~Subject to requisite U.K. consultative process.~~

~~Restructuring and related activity for the U.K. Operations Optimization program for the nine months ended September 30, 2018 was as follows (dollars in thousands):~~

Rationalization of Locomotive and Railcar Fleet Management Restructuring Productivity and Automation Investments Total
Restructuring and related liability as of December 31, 2017 $ —
$ —
$ —
$ —
Restructuring and related costs incurred 6,317
3,739
2,790
12,846
Cash payments (797 ) (2,405 ) (2,567 ) (5,769 )
Non-cash settlements (897 ) —
(223 ) (1,120 )
Restructuring and related liability as of September 30, 2018 $ 4,623
$ 1,334
$ —
$ 5,957

8.6. DERIVATIVE FINANCIAL INSTRUMENTS:

~~On January 1, 2018, the Company adopted ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities,~~ which expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendment also includes certain improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The adoption of this guidance amended the Company’s accounting for cross-currency swaps whereby interest expense accruals previously presented in an interest expense line item are presented as a gain/loss on currency conversion within other income/(loss), net in the non-operating section of the consolidated statement of operations. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

The Company actively monitors its exposure to interest rate and foreign currency exchange rate risks and uses derivative financial instruments to manage the impact of ~~these risks. The Company uses derivatives only for purposes of managing risk~~risks associated with underlying ~~exposures. The Company does not trade or use derivative instruments with the objective of earning financial gains on the~~ interest rate orand foreign exchange rate ~~fluctuations alone, nor does the Company use derivative instruments where it does not have underlying~~ exposures. ~~Complex instruments involving leverage or multipliers are not used.~~ The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company's best interest. However, the Company's use of these derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The ~~Company's~~ instruments held by the Company are recorded in the consolidated balance sheets at fair value in prepaid expenses and other, other assets, accrued expenses or other long-term liabilities.

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

The Company may designate derivatives as a hedge of a forecasted transaction or a hedge of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). The portion of the changes in the fair value of the derivative used as a cash flow hedge that is offset by changes in the expected cash flows related to a recognized asset or liability is recorded in other comprehensive income/(loss) (OCI). ~~As the hedged item is~~Amounts recorded in OCI may be realized ~~the gain or loss included in accumulated other comprehensive income/(loss) is~~and reported in the consolidated statements of operations on the same line item as the hedged item in the event the hedged item is settled, did not or is no longer expected to occur or if the hedging relationship is no longer effective.

The Company may designate fair value hedges to mitigate foreign currency exchange rates on non-functional currency assets or liabilities. The Company uses the mark-to-market approach to remeasure the hedged item and the hedging instrument. The changes in the fair value of the hedged item is included in other income/(loss), net and are offset by changes in the fair value of the hedging instrument which are reported in the same income statement line item.

In addition, the Company may designate net investment hedges to reduce the impact of the variability of foreign currency exchange rates on its net investments in certain non-U.S. operations using cross-currency swaps. The Company measures the effectiveness of the hedge by offsetting the changes in the fair value of the cross-currency swap and the hedged asset or liability. Gains and losses on the after-tax effective portion of the net investment hedge are reported in currency translation adjustments where they remain until the investment is liquidated. The Company records the portion of the gain or loss on the hedging instrument that exceeds the gain or loss of the hedged item as an offset to the tax impact recognized during the period.

The Company matches the hedge instrument to the underlying hedged item (assets, liabilities, firm commitments or forecasted transactions). At inception of the hedge and at least quarterly thereafter, the Company assesses whether the derivatives used to hedge transactions are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. When it is determined that a derivative instrument ceases to be a highly effective hedge of the underlying transaction, the Company discontinues hedge accounting, and any gains or losses on the derivative instrument thereafter are recognized in earnings during the period in which it no longer qualifies for hedge accounting. Gains and losses on any excluded components of derivatives designated as hedges are recorded in OCI and amortized to other income/(loss), net over the life of the hedge.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

From time to time, the Company may enter into certain derivative instruments that may not be designated as hedges for accounting purposes. ~~For example, to mitigate currency exposures related to intercompany debt, cross-currency swap contracts may be entered into for periods consistent with the underlying debt.~~ The Company believes such instruments are closely correlated with the underlying exposure, thus reducing the associated risk. The gains or losses from the changes in the fair value of derivative instruments not accounted for using hedge accounting are recognized in current period earnings within other income/(loss), net. ~~Derivative~~

The following table summarizes the fair value of the Company's derivative instruments ~~entered into~~recorded in ~~conjunction with contemplated acquisitions also do~~the consolidated balance sheets as of June 30, 2019 and December 31, 2018 (dollars in thousands):



		Fair Value
	Balance Sheet Location	June 30, 2019		December 31, 2018
Asset Derivatives:
Derivatives designated as cash flow hedges:
British pound forward contracts	Prepaid expenses and other	$	3,055	$	—
British pound forward contracts	Other assets	—		26,011
Total derivatives designated as hedges		$	3,055	$	26,011
Derivatives not designated as hedges:
Cross-currency swap contract	Prepaid expenses and other	$	—	$	19,684
Total derivatives not designated as hedges		$	—	$	19,684

Liability Derivatives:
Derivatives designated as cash flow hedges:
Interest rate swap agreements	Accrued expenses	$	6,774	$	1,954
British pound forward contracts	Accrued expenses	14		—
Interest rate swap agreements	Other long-term liabilities	53,446		12,441
British pound forward contracts	Other long-term liabilities	—		59
Derivative designated as a net investment hedge:
Cross-currency swap contract	Other long-term liabilities	807		—
Derivative designated as a fair value hedge:
Cross-currency swap contract	Other long-term liabilities	2,387		—
Total derivatives designated as hedges		$	63,428	$	14,454

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table shows the effective portion of net changes in the fair value of the Company's derivative instruments designated as hedges recognized in OCI, net of tax for the three and six months ended June 30, 2019 and 2018 (dollars in thousands):



	Total Derivatives Designated as Hedges OCI Activity, Net of Tax
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Derivatives Designated as Hedges:
Cash Flow Hedges:
Interest rate swap agreements	$	(21,299	)	$	2,687		$	(34,705	)	$	9,580
Foreign currency forward contracts	—			288			—			288
British pound forward contracts, net ^(a)	1,026			(274		)	1,458			(265		)
	$	(20,273	)	$	2,701		$	(33,247	)	$	9,603
Net Investment Hedge:
Cross-currency swap contract	$	(822	)	$	—		$	(822	)	$	—

Fair Value Hedge:
Cross-currency swap contract	$	(430	)	$	—		$	(430	)	$	—

Total derivatives designated as hedges	$	(21,525	)	$	2,701		$	(34,499	)	$	9,603


(a)	The three and six months ended June 30, 2019 represented a net gain of $16.7 million and $19.5 million, respectively, for the mark-to-market of the U.K. intercompany loan, partially offset by a net loss of $15.6 million and $18.0 million, respectively, for the mark-to-market of the British pound forward contracts.

The three and six months ended June 30, 2018 represented a net loss of $9.2 million and $3.7 million, respectively, for the mark-to-market of the U.K. intercompany loan, partially offset by a net gain of $9.0 million and $3.5 million, respectively, for the mark-to-market of the British Pound forward contracts.

The following table shows the effect of the Company's derivative instruments not ~~qualify~~designated as hedges for ~~accounting purposes.~~the three and six months ended June 30, 2019 and 2018 in the consolidated statements of operations (dollars in thousands):



		Amount Recognized in Earnings
	Location of Amount Recognized in Earnings	Three Months Ended				Six Months Ended
		June 30,				June 30,
		2019		2018		2019			2018
Derivatives Not Designated as Hedges:
Cross-currency swap agreements, net ^(a)	Other income/(loss), net	$	715	$	272	$	(1,770	)	$	(2,490	)

(a)

The three months ended June 30, 2019 represented a net gain of $7.1 million for the mark-to-market of the swaps, partially offset by a net loss of $6.4 million for the mark-to-market of the GRail Intercompany Loan. The six months ended June 30, 2019 represented a net loss of $1.4 million for the mark-to-market of the GRail Intercompany Loan and a net loss of $0.3 million for the mark-to-market of the swaps. This derivative was settled in June 2019, and the Company received cash proceeds of€17.0 million (or $19.3 million at the exchange rate on June 30, 2019).

The three months ended June 30, 2018 represented a net gain of $3.0 million for the mark-to-market of the GRail Intercompany Loan, partially offset by a net loss of $2.8 million for the mark-to-market of the swaps. The six months ended June 30, 2018 represented a net loss of $5.1 million for the mark-to-market of the GRail Intercompany Loan, partially offset by a net gain of $2.6 million for the mark-to-market of the swaps.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table shows the cash flow impacts from the Company's derivatives that settled during the six months ended June 30, 2019 (dollars in thousands):



	Six Months Ended
	June 30, 2019
Derivatives designated as hedges:
British pound forward contracts	$	26,088

Derivatives not designated as hedges:
Cross-currency swap contract	19,272
Total cash received from settlement of derivative transactions, investing activities	$	45,360

Interest Rate Risk Management

The Company uses interest rate swap agreements to manage its exposure to the changes in interest rates on the Company's variable rate debt. These swap agreements are recorded in the consolidated balance sheets at fair value. Changes in the fair value of the swap agreements are recorded in net income or other comprehensive income/(loss), based on whether the agreements are designated as part of a hedge transaction and whether the agreements are effective in offsetting the change in the value of the future interest payments attributable to the underlying portion of the Company's variable rate debt. Interest payments accrued each reporting period for these interest rate swaps are recognized in interest expense. The Company formally documents its hedge relationships, including identifying the hedge instruments and hedged items, as well as its risk management objectives and strategies for entering into the hedge transaction.

The following table summarizes the terms of the Company's outstanding interest rate swap agreements entered into to manage the Company's exposure to changes in interest rates on its variable rate debt (amounts in thousands):



Effective Date	Expiration Date	Notional Amount		Pay Fixed Rate	Receive Variable Rate
12/1/2016	12/1/2021	A$	517,500	2.44%	AUD-BBR
8/31/2018	8/31/2021 - 8/31/2048	$	500,000	2.70% - 2.87%	1-month LIBOR

Notional Amount
Effective Date Expiration Date Date Amount Pay Fixed Rate Receive Variable Rate
12/1/2016 12/1/2021 12/1/2021 A$ 372,600
2.44% AUD-BBR
12/1/2016 12/1/2021 12/1/2021 A$ 110,746
2.44% AUD-BBR
12/1/2016 12/1/2021 12/1/2021 A$ 34,155
2.44% AUD-BBR
8/31/2018 8/31/2021 8/31/2021 $ 100,000
2.70% 1-month LIBOR
8/31/2018 8/31/2021 8/31/2021 $ 100,000
2.71% 1-month LIBOR
8/31/2018 8/31/2048 8/31/2048 $ 100,000
2.84% 1-month LIBOR
8/31/2018 8/31/2048 8/31/2048 $ 100,000
2.87% 1-month LIBOR
8/31/2018 8/31/2048 8/31/2048 $ 100,000
2.84% 1-month LIBOR

During the three and six months ended ~~September~~June 30, 2018, the Company entered into multiple 30-year interest rate swap agreements to manage the exposure to changes in interest rates on the Company's variable rate debt. The swaps have a mandatory termination feature on August 31, 2023. These 30-year swaps qualify for hedge accounting. In addition, it remains probable that the Company will either issue $300.02019, $1.0 million and $1.5 million, respectively, of fixed-rate debt or have $300.0 million of variable-rate debt under the Company's commercial banking lines throughout the term of the outstanding swap agreements. The Company expects to amortize any gains ornet losses ~~on the settlements over the life of the respective swap.~~

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The following table summarizes~~associated with the Company's interest rate ~~swap agreements that were settled during the nine months ended September 30, 2018 (dollars in thousands):~~

Notional Amount
Effective Date Settlement Date Date Amount Pay Fixed Rate Receive Variable Rate
9/30/2016 8/15/2018 9/30/2026 $ 100,000
2.76% 1-month LIBOR
9/30/2016 8/15/2018 9/30/2026 $ 100,000
2.74% 1-month LIBOR
9/30/2016 8/15/2018 9/30/2026 $ 100,000
2.73% 1-month LIBOR

The fair values of the Company's interest rate swap agreements were estimated based on Level 2 inputs. During the three and nine months ended September 30, 2018, $0.5 million and $1.2 million, respectively, of existing net lossesswaps were realized and recorded as interest expense in the consolidated statements of operations. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, $0.6~~2018, $0.2 million and ~~$1.5~~$0.7 million, respectively, of ~~existing~~ net losses associated with the Company's interest rate swaps were realized and recorded as interest expense in the consolidated statements of operations. Based on the Company's fair value assumptions as of ~~September~~June 30, ~~2018~~2019, it expects to realize ~~$0.2~~$7.0 million of ~~existing~~ net losses that are reported in ~~AOCL~~accumulated other comprehensive loss (AOCL) into earnings within the next 12 months. See Note 1311, Accumulated Other Comprehensive Loss, for additional information regarding the Company's ~~cash flow~~derivatives designated as hedges.

Foreign Currency Exchange Rate Risk

As of ~~September~~June 30, ~~2018~~2019, the Company's foreign subsidiaries had $1.0 billion of third-party debt, including ~~capital~~finance leases, denominated in the local currencies in which the Company's foreign subsidiaries operate, including the Australian dollar, the British pound, the Canadian dollar and the Euro. The debt service obligations associated with this foreign currency debt are generally funded directly from those foreign operations. As a result, foreign currency risk related to this portion of the Company's debt service payments is limited. However, in the event the foreign currency debt service is not paid by the Company's foreign subsidiaries and is paid by its United States subsidiaries, the Company may face exchange rate risk if the Australian dollar, the British pound, the Canadian dollar or the Euro were to appreciate relative to the United States dollar and require higher United States dollar equivalent cash.

The Company is also exposed to foreign currency exchange rate risk, including non-functional currency intercompany debt, typically associated with acquisitions and any timing difference between announcement and closing of an acquisition of a foreign business. To mitigate currency exposures ~~of non-United States dollar-denominated acquisitions, the Company may enter into foreign currency forward purchase contracts. To mitigate currency exposures~~ related to non-functional currency denominated intercompany debt, ~~cross-currency swaps or~~ foreign currency forward contracts or cross-currency swaps may be entered into for periods consistent with the underlying debt. ~~To mitigate currency exposures related to significant asset purchases in non-functional denominated currencies,~~In cases where foreign currency forward contracts may be entered into for periods consistent with the anticipated future outflow of cash. In determining the fair value of the derivative contract, the significant inputs to valuation models are quoted market prices of similar instruments in active markets. However,or cross-currency swap contracts and foreign currency forward contracts used to mitigate exposures on foreign currency intercompany debt may not qualify for hedge accounting. In cases where the cross-currency swap contracts and foreign currency forward contractsswaps do not qualify for hedge accounting, the ~~Company believes that such instruments are closely correlated with the underlying exposure, thus reducing the associated risk. The~~ gains or losses from changes in the fair value ~~of derivative instruments that do not qualify for hedge accounting~~ are recognized in current period earnings within other income/(loss), net.

The following table summarizes the Company's outstanding foreign currency forward contracts associated with assets to be purchased by GWA in United States dollars within the next six months (dollars in thousands):

Effective date Settlement Date Notional Amount Exchange Rate (AUD to USD)
5/2/2018 11/5/2018 $4,315 0.75
5/2/2018 12/21/2018 $5,753 0.75

~~The following table summarizes the Company's foreign currency forward contract that was settled during the nine months ended September 30, 2018 (dollars in thousands):~~

Effective date Settlement Date Notional Amount Exchange Rate (AUD to USD)
4/18/2018 7/5/2018 $5,379 0.78

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The fair values of the Company's foreign currency forward contracts were estimated based on Level 2 inputs, as further described in Note 9, Fair Value of Financial Instruments. During the three and nine months ended September 30, 2018, $0.4 million of net gains were recorded as other income/(loss), net in the consolidated statements of operations. Based on the Company's fair value assumptions as of September 30, 2018, it expects to realize $0.4 million of existing net gains that are reported in AOCL into earnings within the next 12 months. See Note 13, ~~Accumulated Other Comprehensive Loss, for additional information regarding the Company's cash flow hedges.~~

~~On March 25,~~In 2015, the Company, ~~closed on the Freightliner acquisition and paid cash consideration of £492.1 million (or $733.0 million at the exchange rate on March 25, 2015). The Company financed~~in conjunction with the acquisition ~~through a combination~~ of ~~available~~Freightliner Group Limited (Freightliner) in the U.K., transferred cash ~~and borrowings under the Company's Credit Agreement. A portion of the funds were transferred~~ from the United States to the U.K. through an intercompany loan with a notional amount of £120.0 million (or $181.0 million at the exchange rate on the effective date of the loan) ~~and accrued interest as of September 30, 2018 of £28.1 million (or $36.7 million at the exchange rate on September 30, 2018), each of which are expected to remain until maturity of the loan.~~. To mitigate the foreign currency exchange rate risk related to the outstanding balance of this ~~non-functional currency intercompany~~ loan, ~~and the related interest,~~ the Company entered into British pound forward contracts, which ~~are~~were accounted for as cash flow hedges.

~~The fair values~~ During the six months ended June 30, 2019, the Company settled certain of ~~the Company's~~its British pound forward contracts, ~~were estimated based on Level 2 inputs.~~which had notional amounts totaling £120.0 million with a settlement date of March 31, 2020 and exchange rates ranging from 1.50 to 1.51 GBP to USD. Upon settlement, the Company received cash proceeds of $26.1 million.

As of June 30, 2019, the Company's outstanding British pound forward contracts had a notional amount of £32.6 million with a settlement date of March 31, 2020 and exchange rates ranging from 1.28 to 1.57 GBP to USD. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, $0.2~~2019, $0.5 million and ~~$0.5~~$0.7 million, respectively, of net gains were recorded as interest income in the consolidated statements of operations. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, $0.1~~2018, $0.2 million and ~~$0.4~~$0.3 million, respectively, of net gains were recorded as interest ~~income~~expense in the consolidated statements of operations. Based on the Company's fair value assumptions as of ~~September~~June 30, ~~2018,~~2019, it expects to realize ~~$0.8~~$0.3 million of ~~existing~~ net gains that are reported in AOCL into earnings within the next 12 months. See Note ~~13,~~ 11, Accumulated Other Comprehensive Loss, for additional information regarding the Company's ~~cash flow~~derivatives designated as hedges.

~~The following table summarizes~~In 2016, in conjunction with an acquisition in Australia, the Company's ~~outstanding British pound forward contracts (British pounds in thousands):~~



~~Effective Date~~	~~Settlement Date~~	~~Notional Amount~~	~~Exchange Rate (GBP to USD)~~
~~3/25/2015~~	~~3/31/2020~~	~~£60,000~~	~~1.51~~
~~3/25/2015~~	~~3/31/2020~~	~~£60,000~~	~~1.50~~
~~6/30/2015~~	~~3/31/2020~~	~~£2,035~~	~~1.57~~
~~9/30/2015~~	~~3/31/2020~~	~~£1,846~~	~~1.51~~
~~12/31/2015~~	~~3/31/2020~~	~~£1,873~~	~~1.48~~
~~3/31/2016~~	~~3/31/2020~~	~~£1,881~~	~~1.45~~
~~6/30/2016~~	~~3/31/2020~~	~~£1,909~~	~~1.35~~
~~9/30/2016~~	~~3/31/2020~~	~~£1,959~~	~~1.33~~
~~12/30/2016~~	~~3/31/2020~~	~~£1,989~~	~~1.28~~
~~3/31/2017~~	~~3/31/2020~~	~~£1,975~~	~~1.30~~
~~6/30/2017~~	~~3/31/2020~~	~~£2,026~~	~~1.34~~
~~10/2/2017~~	~~3/31/2020~~	~~£2,079~~	~~1.36~~
~~12/29/2017~~	~~3/31/2020~~	~~£2,111~~	~~1.39~~
~~3/29/2018~~	~~3/31/2020~~	~~£2,096~~	~~1.44~~
~~6/29/2018~~	~~3/31/2020~~	~~£2,151~~	~~1.36~~
~~9/28/2018~~	~~3/31/2020~~	~~£2,207~~	~~1.34~~

~~On December 1, 2016, GWAHLP~~subsidiaries, G&W Australia Holdings LP (GWAHLP) and ~~the Company's subsidiary,~~ GWI Holding B.V. (GWBV), entered into an A$248.9 million non-recourse subordinated partner loan agreement (GRail Intercompany Loan), which is eliminated in consolidation. ~~GWAHLP used the proceeds from this loan to fund a portion of the acquisition of GRail.~~ To mitigate the foreign currency exchange rate risk related to the non-functional currency intercompany loan, the Company entered into two Euro/Australian dollar floating-to-floating cross-currency swap agreements (the Swaps) on December 22, ~~2016, which effectively convert the A$248.9 million intercompany loan receivable in the Netherlands into a €171.7 million loan receivable.~~2016. These agreements dodid not qualify as hedges for accounting purposes, and, accordingly, mark-to-market changes in the fair value of the Swaps relative to the underlying GRail Intercompany Loan ~~will be~~were recorded over the life of the agreements, which ~~expire~~expired on June 30, 2019. Upon settlement of the agreements, the Company received cash proceeds of €17.0 million (or $19.3 million at the exchange rate on June 30, ~~2019.~~2019).

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The first swap requires~~In June 2019, the Company ~~to pay Australian dollar BBR plus 4.50% based on a notional amount~~entered into two new cross-currency swap agreements designated as fair value hedges of ~~A$123.9 million and allows~~the non-functional currency GRail intercompany loan. In addition, the Company ~~to receive EURIBOR plus 2.68% based on~~entered into a ~~notional amount~~cross-currency swap in June 2019 that was designated as a net investment hedge of ~~€85.5 million on a semi-annual basis. BBR is~~ the Bankers Buyers Rate and EURIBOR is the Euro Interbank Offered Rate, which the Company believes are generally considered equivalents to LIBOR. The second swap requires the Company to pay Australian dollar BBR plus 4.50% based on a notional amount of A$125.0 million and allows the Company to receive EURIBOR plus 2.90% based on a notional amount of €86.3 million on a semi-annual basis. The Swaps require semi-annual net settlement payments.GWBV investment. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, $2.4 million and $4.9~~2019, the Company recognized a gain of less than $0.1 million of ~~net expense, respectively, was realized~~foreign currency translation adjustment within OCI and a loss of less than $0.1 million within other income/(loss), net in the consolidated statement of operations related to amortization of excluded components of its net investment hedge. Based on the Company's assumptions as ~~a result~~ of ~~the mark-to-market impact of the GRail Intercompany Loan compared~~June 30, 2019, its net investment hedge and fair value hedge, which each terminate on June 30, 2021, are expected to ~~the mark-to-market of the Swaps.~~

~~During the three and nine months ended September 30, 2017, $0.8~~realize $0.4 million and ~~$4.5~~$0.2 million, respectively, of net ~~expense was realized~~losses that are currently reported in AOCL into earnings within ~~other income/(loss), net in~~ the consolidated statements of operations as a result of the mark-to-market impact of the GRail Intercompany Loan compared to the mark-to-market of the Swaps. Over the life of the Swaps, the Company expects the cumulative impact of net gains and losses from the mark-to-market of the GRail Intercompany Loan and Swaps to be approximately zero.

~~The following table summarizes the fair value of~~next 12 months. See Note 11, Accumulated Other Comprehensive Loss, for additional information regarding the Company's ~~derivative instruments recorded in the consolidated balance sheets~~derivatives designated as ~~of September 30, 2018 and December 31, 2017 (dollars in thousands):~~hedges.

Fair Value
Balance Sheet Location September 30,
2018 December 31, 2017
Asset Derivatives:
Derivatives designated as hedges:
Interest rate swap agreements Prepaid expenses and other $ 527
$ —
Foreign currency forward contracts Prepaid expenses and other 383
—
Interest rate swap agreements Other assets 6,596
—
British pound forward contracts Other assets 20,803
13,657
Total derivatives designated as hedges $ 28,309
$ 13,657
Derivatives not designated as hedges:
Cross-currency swap contract Prepaid expenses and other $ 16,648
$ 5,775
Cross-currency swap contract Other assets —
2,887
Total derivatives not designated as hedges $ 16,648
$ 8,662

Liability Derivatives:
Derivatives designated as hedges:
Interest rate swap agreements Accrued expenses $ 755
$ 1,972
Interest rate swap agreements Other long-term liabilities 1,706
12,410
British pound forward contracts Other long-term liabilities 246
829
Total derivatives designated as hedges $ 2,707
$ 15,211

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~The following table shows the effect of the Company's derivative instruments designated as cash flow hedges for the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2018~~ ~~and~~ ~~2017~~ ~~in other comprehensive income (OCI) (dollars in thousands):~~

Total Cash Flow Hedge OCI Activity,
Net of Tax
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Derivatives Designated as Cash Flow Hedges:
Effective portion of net changes in fair value recognized in OCI, net of tax:
Interest rate swap agreements $ 4,816
$ 388
$ 14,396
$ (1,382 )
Foreign currency forward contracts (13 ) —
275
—
British pound forward contracts, net ^(a)
350
348
85
2,020
$ 5,153
$ 736
$ 14,756
$ 638

~~(a)~~

The three and nine months ended September 30, 2018 represented a net gain of $2.0 million and $5.5 million, respectively, for the mark-to-market of the British pound forward contracts, offset by a net loss of $1.7 million and $5.4 million, respectively, for the mark-to-market of the U.K. intercompany loan. The three and nine months ended September 30, 2017 represented a net gain of $3.2 million and $8.6 million, respectively, for the mark-to-market of the U.K. intercompany loan, offset by a net loss of $2.8 million and $6.6 million, respectively, for the mark-to-market of the British pound forward contracts.

~~The following table shows the effect of the Company's derivative instruments not designated as hedges for the~~ ~~three and nine~~ ~~months ended September 30, 2018 and 2017 in the consolidated statements of operations (dollars in thousands):~~

Amount Recognized in Earnings
Location of Amount Recognized in Earnings Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Derivative Instruments Not Designated as Hedges:
Cross-currency swap agreements Interest expense $ —
$ (1,887 ) $ —
$ (1,887 )
Cross-currency swap agreements, net ^(a)
Other income/(loss), net (2,410 ) (842 ) (4,900 ) (4,510 )
$ (2,410 ) $ (2,729 ) $ (4,900 ) $ (6,397 )

~~(a)~~

The three months ended September 30, 2018 represented a net gain of $0.6 million for the mark-to-market of the Swaps, offset by a net loss of $3.0 million for the mark-to-market of the GRail Intercompany Loan. The nine months ended September 30, 2018 represented a net gain of $3.2 million for the mark-to-market of the Swaps, partially offset by a net loss of $8.1 million for the mark-to-market of the GRail Intercompany Loan. The three and nine months ended September 30, 2017 represented a net gain of $1.7 million and $2.0 million, respectively, for the mark-to-market of the Swaps, offset by a net loss of $2.5 million and $6.5 million, respectively, for the mark-to-market of the GRail Intercompany Loan.

9.7. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The ~~Company applies~~following table presents the ~~following three-level hierarchy of valuation inputs for measuring~~Company's financial instruments carried at fair ~~value:~~

~~Level 1 - Quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.~~

value using Level 2 ~~- Quoted prices for similar assets or liabilities~~inputs as of June 30, 2019 and December 31, 2018 (dollars in ~~active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data.~~

~~Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.~~thousands):

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~



	June 30, 2019		December 31, 2018
Financial instruments carried at fair value using Level 2 inputs:
Financial assets carried at fair value:
British pound forward contracts	$	3,055	$	26,011
Cross-currency swap contracts	—		19,684
Total financial assets carried at fair value	$	3,055	$	45,695
Financial liabilities carried at fair value:
Interest rate swap agreements	$	60,220	$	14,395
British pound forward contracts	14		59
Cross-currency swap contract - net investment hedge	807		—
Cross-currency swap contract - fair value hedge	2,387		—
Total financial liabilities carried at fair value	$	63,428	$	14,454

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The following methods and assumptions were used to estimate the fair value of each class of financial instruments held by the Company:~~

Financial Instruments Carried at Fair Value: Derivative instruments are recorded on the consolidated balance sheets as either assets or liabilities measured at fair value. ~~During~~As more fully described in Note 6, Derivative Financial Instruments, during the reporting period, the Company's derivative financial instruments consisted of interest rate swap agreements, foreign currency forward contracts and cross-currency swap agreements. The Company estimated the fair value of its ~~interest rate swap agreements~~derivative financial instruments based on Level 2 valuation inputs, including fixed interest rates, LIBOR, British pound LIBOR, BBR and ~~BBR~~EURIBOR implied forward interest rates and the remaining time to maturity.

The ~~Company estimated~~following table presents the carrying value, net of debt issuance costs and fair value ~~of its British pound forward contracts based on~~using Level 2 ~~valuation~~ inputs ~~including LIBOR implied forward interest rates, British pound LIBOR implied forward interest rates and the remaining time to maturity. The Company estimated the fair value~~ of its foreign currency forward contracts based on Level 2 valuation inputs, including BBR implied forward interest rates and the remaining time to maturity. The Company estimated the fair value of its cross-currency swap agreements based on Level 2 valuation inputs, including EURIBOR implied forward interest rates, BBR implied forward interest rates and the remaining time to maturity.

~~The Company's recurring fair value measurements using significant unobservable inputs (Level 3) relate to~~ the Company's ~~deferred consideration from the HOG acquisition~~financial instruments carried at historical cost as of June 30, 2019 and December 31, 2018 (dollars in ~~2017. The fair values of the deferred consideration liabilities were estimated by discounting, to present value, contingent payments expected to be made.~~thousands):



	June 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities carried at historical cost:
United States term loan	$	1,296,549	$	1,294,634	$	1,295,672	$	1,296,079
U.K. term loan	314,078		317,394		315,524		319,556
Australian credit agreement	441,768		447,511		450,252		457,978
Australia subordinated shareholder loan from Macquarie Infrastructure and Real Assets	166,962		164,153		167,796		166,974
Revolving credit facility	32,707		36,150		160,033		163,662
Other debt	2,438		2,424		2,356		2,352
Total	$	2,254,502	$	2,262,266	$	2,391,633	$	2,406,601

Financial Instruments Carried at Historical Cost: Since the Company's long-term debt is not actively traded, fair value was estimated using a discounted cash flow analysis based on Level 2 valuation inputs, including borrowing rates the Company believes are currently available to it for loans with similar terms and maturities.

~~The following table presents the Company's financial instruments carried at fair value using Level 2 inputs as of~~ ~~September 30, 2018~~ ~~and~~ ~~December 31, 2017~~ ~~(dollars in thousands):~~

September 30,
2018 December 31,
2017
Financial instruments carried at fair value using Level 2 inputs:
Financial assets carried at fair value:
Interest rate swap agreements $ 7,123
$ —
Foreign currency forward contracts 383
—
British pound forward contracts 20,803
13,657
Cross-currency swap contracts 16,648
8,662
Total financial assets carried at fair value $ 44,957
$ 22,319
Financial liabilities carried at fair value:
Interest rate swap agreements $ 2,461
$ 14,382
British pound forward contracts 246
829
Total financial liabilities carried at fair value $ 2,707
$ 15,211

~~The following table presents the Company's financial instrument carried at fair value using Level 3 inputs as of~~ ~~September 30, 2018~~ ~~and December 31, 2017 (dollars in thousands):~~

September 30,
2018 December 31,
2017
Financial instrument carried at fair value using Level 3 inputs:
Financial liabilities carried at fair value:
Accrued deferred consideration – HOG $ 6,368
$ 5,974

At the date of acquisition of HOG in 2017, the contingent liability represented the fair value of the deferred consideration payable to the sellers upon satisfaction of certain conditions, which the Company expects to be paid in 2021. See Note 2, Changes in Operations, for additional information regarding HOG.

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

As of September 30, 2017, the Company also had a $37.2 million deferred consideration liability associated with the 2015 acquisition of Freightliner. At the date of acquisition of Freightliner, the contingent liability represented the aggregate fair value of the shares transferred to the Company by certain former management shareholders of Freightliner (Management Shareholders) in exchange for the right to receive cash consideration for the representative economic interest of approximately 6% in Freightliner in the future (deferred consideration).

The Company's contingent liabilities have been adjusted each period since the acquisition dates to represent the fair value of the deferred consideration as of each balance sheet date. To do so, the Company recalculated the estimated fair value of the Freightliner deferred consideration in each reporting period by using a contractual formula designed to estimate the economic value of the Management Shareholders' retained interest in a manner consistent with that used to derive the Freightliner acquisition price per share on the acquisition date. The Company bought out the Freightliner deferred consideration in November 2017. In addition, the Company recalculates the HOG's deferred consideration based on the contractual formula as defined in the stock purchase agreement. These calculations effectively represent the present value of the expected payment to be made upon settlement of the deferred consideration. Accordingly, such recalculations reflect both the impact of the time value of money and the impact of changes in the expected future performance of the acquired business, as applicable. The Company expects to recognize future changes in HOG's contingent liability for the estimated fair value of the deferred consideration through other expenses within the Company's consolidated statement of operations. This future change in the estimated fair value of the deferred consideration is not expected to be deductible for tax purposes.

The following table presents the amounts recognized, through other expenses, net within the Company's consolidated statements of operations during the three and nine months ended September 30, 2018 and 2017, as a result of the change in the estimated fair value of the deferred consideration, which primarily represented the time value of money (dollars in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Freightliner $ —
$ 859
$ —
$ 2,405
HOG $ 137
$ 126
$ 394
$ 166

~~The following table presents the carrying value, net of debt issuance costs and fair value using Level 2 inputs of the Company's financial instruments carried at historical cost as of~~ ~~September 30, 2018~~ ~~and~~ ~~December 31, 2017~~ ~~(dollars in thousands):~~

September 30, 2018 December 31, 2017
Carrying Value Fair Value Carrying Value Fair Value
Financial liabilities carried at historical cost:
United States term loan $ 1,295,234
$ 1,302,650
$ 1,204,714
$ 1,208,657
U.K. term loan 322,526
325,565
124,747
126,480
Australian credit agreement 465,547
473,331
513,192
528,105
Australia subordinated shareholder loan from MIRA 172,296
170,173
186,085
184,750
Revolving credit facility 2,395
6,304
225,155
229,483
Other debt 2,375
2,363
2,419
2,426
Total $ 2,260,373
$ 2,280,386
$ 2,256,312
$ 2,279,901

~~10.~~8. U.K. PENSION PLAN:

Through its Freightliner subsidiary, the Company has a defined benefit pension plan for Freightliner's eligible U.K. employees through a standalone shared cost arrangement within the Railways Pension Scheme (Pension Program). The Pension Program is managed and administered by a professional pension administration company and is overseen by trustees with professional advice from independent actuaries and other advisers. The Pension Program is a shared cost arrangement with required contributions shared between Freightliner and its participating members, with Freightliner contributing 60% and the remaining 40% contributed by active employees. The Company engages independent actuaries to compute the amounts of liabilities and expenses relating to the Pension Program subject to the assumptions that the Company selects.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables summarize the components of the Pension Program related to the net benefit costs recognized in labor and benefits and other income/(loss), net in the Company's consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands):


															Three Months Ended						Six Months Ended
		Three Months Ended September 30,						Nine Months Ended September 30,							June 30,						June 30,
		2018			2017			2018			2017				2019			2018			2019			2018
Operating expense:	Operating expense:													Operating expense:
	Service cost^(a)	$	3,610		$	3,909		$	11,235		$	11,434		Service cost^(a)	$	3,397		$	3,770		$	6,837		$	7,625
Nonoperating income, net:	Nonoperating income, net:													Nonoperating income, net:
	Interest cost	2,383			2,588			7,416			7,569			Interest cost	2,336			2,488			4,702			5,033
	Expected return on plan assets	(4,572		)	(4,327		)	(14,231		)	(12,655		)	Expected return on plan assets	(4,336		)	(4,775		)	(8,727		)	(9,659		)
	Total nonoperating income, net^(b)	(2,189		)	(1,739		)	(6,815		)	(5,086		)	Amortization of prior year service cost	44			—			88			—
														Total nonoperating income, net^(b)	(1,956		)	(2,287		)	(3,937		)	(4,626		)
Net periodic benefit cost	Net periodic benefit cost	$	1,421		$	2,170		$	4,420		$	6,348		Net periodic benefit cost	$	1,441		$	1,483		$	2,900		$	2,999

(a) Included in labor and benefits within the Company’s consolidated ~~statement~~statements of operations.

(b) Included in other income/(loss), net within the Company’s consolidated ~~statement~~statements of operations.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, the Company contributed ~~£4.5~~£3.1 million (or ~~$6.0~~$4.1 million at the exchange rate when the payments were made) to fund the Pension Program. The Company expects to contribute ~~£2.9~~£3.8 million (or ~~$3.8~~$4.9 million at the ~~September~~June 30, ~~2018~~2019 exchange rate) to the Pension Program for the remainder of ~~2018.~~2019. The Pension Program's assets may undergo significant changes over time as a result of market conditions, and its assets and liabilities are formally valued on an independent actuarial basis every three years to assess the adequacy of funding levels. A key element of the valuation process is an assessment of the creditworthiness of the participating employer. In March 2018, the Company completed its triennial valuation based on the program's funding position as of December 31, 2016, which did not have and is not expected to have a material impact on its consolidated financial statements. In the event that the Pension Program's projected assets and liabilities reveal additional funding requirements, the shared cost arrangement generally means that the Company will be required to pay 60% of any additional contributions, with active members contributing the remaining 40%, in each case over an agreed recovery period. If the Pension Program was to be terminated and wound up, any deficit would fall entirely on the Company and could not be shared with active members. Currently, the Company has no intention of terminating the Pension Program.

~~11.~~9. INCOME TAXES:

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (TCJA) was enacted into law, and the SEC's staff issued Staff Accounting Bulletin No. 118 (SAB 118) to address the application of the TCJA on accounting for income taxes in the period which includes the enactment date. Specifically, when the initial accounting for items under the TCJA is incomplete, SAB 118 allows companies to include provisional amounts when reasonable estimates can be made. SAB 118 provides for an up to one-year measurement period during which the tax effect of the TCJA can be recomputed based on additional guidance and analysis. Any adjustment will be recorded as a tax expense or benefit in the reporting period during which the amounts are determined. As a result, during the three months ended September 30, 2018, the Company made a $1.6 million measurement period adjustment to increase the one-time transition (toll) tax on earnings of certain foreign subsidiaries. The Company will continue to refine its estimates as additional guidance and information is available including deferred taxes related to certain equity compensation arrangements.

The Company's provision for income taxes for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~$31.0~~$18.9 million, compared with ~~$30.5~~$26.4 million for the three months ended ~~September~~June 30, 2017. The Company's effective income tax rate for the three months ended September 30, 2018 was 30.0%, including the $1.6 million TCJA measurement period adjustment, compared with 36.4% for the three months ended September 30, 2017.2018. The Company's provision for income taxes for the ~~three~~six months ended ~~September~~June 30, 2017 included the recognition of $3.3 million of previously unrecognized tax benefits resulting from the lapse of the statute of limitations on acquired liabilities for uncertain tax positions. The decrease in the Company's effective income tax rate2019 was ~~primarily a result of the TCJA, which decreased the United States federal corporate income tax rate from 35% to 21%.~~

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The Company's provision for income taxes for the nine months ended September 30, 2018 was $41.6~~$33.1 million compared with ~~$82.0~~$10.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017. The provision for income taxes for~~2018. Based on developments during the ~~nine~~three and six months ended ~~September~~June 30, 2018, ~~included a $31.6 million benefit from~~ the retroactive extension of the United States Short Line Tax Credit for fiscal year 2017, which was enacted in February 2018. In addition, the provision for income taxes for the nine months ended September 30, 2018, included an adjustment to recordCompany recorded a reserve for uncertain tax positions of ~~$5.5~~$4.8 million related to tax deductions on intercompany financing arrangements in the U.K., of which $0.7 million related to the three months ended June 30, 2018, $0.4 million related to the three months ended March 31, 2018 and $3.7 million related to the period from March 25, 2015, the date of the Freightliner acquisition when the arrangements were established, through December 31, 2017. The provision for income taxes for the six months ended June 30, 2018 also included an income tax benefit of $31.6 million associated with the retroactive extension of the United States Short Line Tax Credit for fiscal year 2017, which was enacted in February 2018.

The Company's effective income tax rate for the three and six months ended June 30, 2019 was 26.9%. Excluding the prior period portion of the reserve for uncertain tax positions, the Company's effective income tax rate for the three months ended June 30, 2018 was 29.8%. Excluding the benefit from the retroactive extension and the prior period portion of the reserve for uncertain tax positions, the ~~effective income tax rate for the nine months ended September 30, 2018 was 28.4%. The~~ Company's effective income tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~38.9%. The decrease in the effective income tax rate was primarily a result of the TCJA, which decreased the United States federal corporate income tax rate from 35% to 21%~~28.5%.

The United States Short Line Tax Credit is an income tax track maintenance credit for Class II and Class III railroads to reduce their federal income tax based on qualified railroad track maintenance expenditures. Qualified expenditures include amounts incurred for maintaining track, including roadbed, bridges and related track structures owned or leased by a Class II or Class III railroad. The credit is equal to 50% of the qualified expenditures, subject to an annual limitation of $3,500 multiplied by the number of miles of railroad track owned or leased by the Class II or Class III railroad as of the end of its tax year. The United States Short Line Tax Credit was initially enacted for a three-year period, 2005 through 2007, and was subsequently extended a series of times with the last extension enacted in February 2018. The February 2018 extension provided a retroactive credit, solely for fiscal year 2017. Legislation is currently pending that seeks to make the United States Short Line Tax Credit permanent for fiscal year 2018 and beyond.

~~12.~~

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

10. COMMITMENTS AND CONTINGENCIES:

From time to time, the Company is a defendant in certain lawsuits and a party to certain arbitrations resulting from the Company's operations in the ordinary course as the nature of the Company's business exposes it to the potential for various claims and litigation, including those related to property damage, personal injury, freight loss, labor and employment, environmental and other matters. The Company maintains insurance policies to mitigate the financial risk associated with such claims. Management believes there are adequate provisions in the financial statements for any probable liabilities that may result from disposition of the pending lawsuits and arbitrations. However, any material changes to pending litigation or a catastrophic rail accident or series of accidents involving material freight loss or property damage, personal injuries or environmental liability or other claims or disputes that are not covered by insurance could have a material adverse effect on the Company's results of operations, financial condition and liquidity.

In November 2014, the Company received a notice from the United States Environmental Protection Agency (EPA) requesting information under the Clean Water Act related to the discharge of crude oil as a result of a derailment of an Alabama & Gulf Coast Railway LLC (AGR) freight train in November 2013 in the vicinity of Aliceville, Alabama. In May 2018, the EPA notified the AGR of a maximum civil payment of up to $14.1 million, based on the amount of oil allegedly discharged and other relevant factors considered under the applicable regulation. The Company's evaluation of its defenses, settlement options and insurance coverage is ongoing.

~~The Company has also been involved in several arbitrations related to contractual disputes that are not covered by insurance, which have been resolved during~~ Although the ~~three months ended September 30, 2018. In March 2017, CSX Transportation, Inc. (CSXT) initiated arbitration against several of the Company’s subsidiaries~~cleanup associated with ~~freight revenue factors (or divisions) under certain operating agreements~~this derailment is substantially complete, the civil penalty associated with ~~leased railroads. During~~ the ~~three months ended September 30, 2018, a final award was issued in the CSXT arbitration that denied CSXT's request~~contamination is subject to ~~reduce freight revenue factors~~further discussion and resolved the related contractual disputes with no material impact on the Company's subsidiaries. The pending arbitration related to the AGR's collection of approximately $13 million of liquidated damages under a volume commitment contract with a customer was also favorably resolved during the three months ended September 30, 2018, and all outstanding amounts due to AGR, plus interest, were collected in October 2018.potential litigation.

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~13.~~11. ACCUMULATED OTHER COMPREHENSIVE LOSS:

The following tables set forth the components of AOCL attributable to Genesee & Wyoming Inc. included in the consolidated balance sheets and consolidated statements of comprehensive income (dollars in thousands):

Foreign Currency Translation Adjustment Defined Benefit Plans Net Unrealized Gain/(Loss) on Cash Flow Hedges Accumulated Other Comprehensive Loss
Balance, December 31, 2017 $ (74,617 ) $ (19,601 ) $ (11,316 ) $ (105,534 )
Other comprehensive (loss)/income before reclassifications (41,395 ) —
14,926
(26,469 )
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($42) and $76, respectively —
129
(a) (232 ) (b) (103 )
Current period change (41,395 ) 129
14,694
(26,572 )
Amounts reclassified from accumulated other comprehensive loss to retained earnings related to the United States Tax Cuts and Jobs Act —
(132 ) (2,838 ) (2,970 )
Balance, September 30, 2018 $ (116,012 ) $ (19,604 ) $ 540
$ (135,076 )



	Foreign Currency Translation Adjustment			Defined Benefit Plans				Net Unrealized Gain/(Loss) on Hedges				Accumulated Other Comprehensive Loss
Balance, December 31, 2018	$	(144,503	)	$	11,120			$	(13,073	)		$	(146,456	)
Other comprehensive income/(loss) before reclassifications	5,835			—				(31,995		)		(26,160		)
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $82 and $233, respectively	—			(154		)	(a)	(1,027		)	(b)	(1,181		)
Current period change	5,835			(154		)		(33,022		)		(27,341		)
Balance, June 30, 2019	$	(138,668	)	$	10,966			$	(46,095	)		$	(173,797	)



	Foreign Currency Translation Adjustment			Defined Benefit Plans				Net Unrealized Gain/(Loss) on Hedges				Accumulated Other Comprehensive Loss
Balance, December 31, 2017	$	(74,617	)	$	(19,601	)		$	(11,316	)		$	(105,534	)
Other comprehensive income before reclassifications	(36,698		)	—				9,736				(26,962		)
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($28) and $115, respectively	—			86			(a)	(290		)	(b)	(204		)
Current period change	(36,698		)	86				9,446				(27,166		)
Amounts reclassified from accumulated other comprehensive loss to retained earnings related to the United States Tax Cuts and Jobs Act	—			(132		)		(2,838		)		(2,970		)
Balance, June 30, 2018	$	(111,315	)	$	(19,647	)		$	(4,708	)		$	(135,670	)

Foreign Currency Translation Adjustment Defined Benefit Plans Net Unrealized Gain/(Loss) on Cash Flow Hedges Accumulated Other Comprehensive Loss
Balance, December 31, 2016 $ (163,642 ) $ (19,948 ) $ (13,726 ) $ (197,316 )
Other comprehensive income/(loss) before reclassifications 81,412
(2,262 ) (7,003 ) 72,147
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision) of ($60) and ($5,347), respectively —
113
(a) 7,937
(b) 8,050
Current period change 81,412
(2,149 ) 934
80,197
Balance, September 30, 2017 $ (82,230 ) $ (22,097 ) $ (12,792 ) $ (117,119 )


(a)	~~Existing net~~ Net (losses)/gains realized were recorded in labor and benefits on the consolidated statements of operations.

(b)

~~Existing~~For the six months ended June 30, 2019, $0.5 million and $0.5 million of net ~~gains/(losses)~~losses were recorded in interest expense and other income/(loss), net, respectively, within the consolidated statements of operations. For the six months ended June 30, 2018, net losses realized were recorded in interest expense on the consolidated statements of ~~operations (see~~operations. See Note 8,6, Derivative Financial ~~Instruments).~~Instruments.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Comprehensive ~~Income/(Loss)~~Loss Attributable to Noncontrolling Interest

The following table sets forth comprehensive ~~income~~loss attributable to noncontrolling interest for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Net (loss)/income attributable to noncontrolling interest	$	(68	)	$	4,443		$	32		$	5,370
Other comprehensive income/(loss):
Foreign currency translation adjustment	(2,594		)	(8,825		)	(1,007		)	(12,843		)
Net unrealized (loss)/gain on qualifying cash flow hedges, net of tax benefit/(provision) of $303, ($67), $633 and ($67), respectively	(708		)	157			(1,477		)	157
Comprehensive loss attributable to noncontrolling interest	$	(3,370	)	$	(4,225	)	$	(2,452	)	$	(7,316	)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Net income attributable to noncontrolling interest $ 2,720
$ 3,145
$ 8,090
$ 6,317
Other comprehensive income/(loss):
Foreign currency translation adjustment (4,804 ) 4,972
(17,647 ) 18,642
Net unrealized gain/(loss) on qualifying cash flow hedges, net of tax (provision)/benefit of $41, ($164), ($26), and $127, respectively (95 ) 383
62
(296 )
Comprehensive (loss)/income attributable to noncontrolling interest $ (2,179 ) $ 8,500
$ (9,495 ) $ 24,663

~~14.~~12. SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:

As of ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018, the Company had outstanding accounts receivable from outside parties for the funding of capital expenditures of ~~$14.6~~$18.7 million and ~~$12.2~~$10.9 million, respectively. As of ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018, the Company also had ~~$16.1~~$22.3 million and ~~$12.3~~$9.2 million, respectively, of purchases of property and equipment that were not paid and, accordingly, were accrued in accounts payable in the normal course of business. See Note 5, Leases, for ROU assets obtained during the reporting period in exchange for lease liabilities.

~~Table of Contents~~ ~~GENESEE & WYOMING INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~15.~~13. SEGMENT INFORMATION:

The Company presents the financial results of its ~~nine~~eight operating regions as three reportable segments: North American Operations, Australian Operations and U.K./European Operations. During the three months ended March 31, 2019, the Company's Central Region railroads were consolidated into the Company's Midwest and Southern regions. The Company's ~~seven~~remaining six North American regions are aggregated into one segment as a result of having similar economic and operating characteristics. Each of the Company's segments generates the following three categories of revenues from external customers: freight revenues, freight-related revenues and all other revenues.

The Company's Australian business underwent a transformational change on December 1, 2016, with the acquisition of ~~GRail~~

Glencore Rail (NSW) Pty Limited (GRail) and the formation of ~~the~~a partnership with Macquarie Infrastructure and Real Assets (MIRA) (the Australia ~~Partnership,~~Partnership), which the Company controls through its 51.1% interest. The GRail acquisition significantly expanded the Company's operations in New South Wales. In conjunction with the GRail acquisition, the Company issued a 48.9% equity stake in its Australian subsidiary, GWAHLP, to MIRA. The Company retained a 51.1% controlling interest in GWAHLP and continues to consolidate 100% of its Australian Operations in the Company's financial statements and reports a noncontrolling interest for MIRA's 48.9% equity ownership. As a result, (1) 100% of the assets and liabilities of the Company's Australian Operations, after the elimination of intercompany balances, were included in the Company's consolidated balance sheets as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, with MIRA's 48.9% noncontrolling interest reflected in the equity section, (2) the Company's operating revenues and operating income for the three ~~and nine~~ months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 included 100% of the Australian Operations, while net income attributable to G&W reflected the Company's 51.1% ownership position in the Australian Operations ~~since the formation of the partnership on December 1, 2016~~ and (3) 100% of the cash flows of the Australian Operations, after the elimination of intercompany items, were included in the Company's consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018. Accordingly, any payments between the Company's Australian Operations and its other businesses are eliminated in consolidation, while the Company's cash flows reflect 100% of any cash flows between the Australian Operations and MIRA.

In accordance with the ~~Australia~~Company's Australian Partnership agreement with MIRA, the cash and cash equivalents of the Company's Australian Operations can be used to make payments in the ~~usual and regular~~ordinary course of business, to pay down debt of the Australia Partnership and to make distributions to the partners in proportion to their investments. No such distributions were made during the six months ended June 30, 2019. During the ~~nine~~six months ended ~~September~~June 30, 2018, the Australia Partnership made aan A$40.0 million distribution, of which A$20.4 million (or $15.6 million at the exchange rate ~~at the time the payment was made)~~on June 5, 2018) and A$19.6 million (or $14.9 million at the exchange rate ~~at the time the payment was made)~~on June 5, 2018) were distributed to the Company and MIRA, ~~respectively, and no such distributions were made for the nine months ended September 30, 2017.~~respectively.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The results of operations of the Company's foreign entities are maintained in the respective local currency (the Australian dollar, the British pound, the Canadian dollar and the Euro) and then translated into United States dollars at the ~~applicable~~ exchange ~~rates~~rate at the end of the period for ~~inclusion~~balance sheet items and, for the statement of operations, at the average rate for the period. Currency translation adjustments are reflected within the equity section of the balance sheet and are included in OCI. Upon complete or substantially complete liquidation of the underlying investment in the foreign subsidiary, cumulative translation adjustments are recognized in the consolidated ~~financial statements.~~statements of operations. As a result, any appreciation or depreciation of these currencies against the United States dollar will impact the Company's results of operations.

The following ~~tables reflect~~table reflects the balance sheet exchange rates ~~as of September 30, 2018 and December 31, 2017 and the average exchange rates for the~~ ~~three and nine~~ ~~months ended September 30, 2018 and 2017~~ used to translate ~~the~~each foreign ~~entities~~entity's respective local currency balance sheet into United States dollars as of June 30, 2019 and December 31, 2018:



	June 30, 2019		December 31, 2018
United States dollar per Australian dollar	$	0.70	$	0.70
United States dollar per British pound	$	1.27	$	1.28
United States dollar per Canadian dollar	$	0.76	$	0.73
United States dollar per Euro	$	1.14	$	1.15

The following table reflects the average exchange rates used to translate each foreign entity's respective local currency results of operations into United States dollars for the ~~respective period:~~three and six months ended June 30, 2019 and 2018:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
United States dollar per Australian dollar	$	0.70	$	0.76	$	0.71	$	0.77
United States dollar per British pound	$	1.29	$	1.36	$	1.29	$	1.38
United States dollar per Canadian dollar	$	0.75	$	0.77	$	0.75	$	0.78
United States dollar per Euro	$	1.12	$	1.19	$	1.13	$	1.21

September 30,
2018 December 31,
2017
United States dollar per Australian dollar $ 0.72
$ 0.78
United States dollar per British pound $ 1.30
$ 1.35
United States dollar per Canadian dollar $ 0.77
$ 0.80
United States dollar per Euro $ 1.16
$ 1.20

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
United States dollar per Australian dollar $ 0.73
$ 0.79
$ 0.76
$ 0.77
United States dollar per British pound $ 1.30
$ 1.31
$ 1.35
$ 1.28
United States dollar per Canadian dollar $ 0.77
$ 0.80
$ 0.78
$ 0.77
United States dollar per Euro $ 1.16
$ 1.17
$ 1.19
$ 1.11

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables set forth select financial data for the Company's reportable segments, including operating revenues by commodity group, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands) ~~(prior period revenue amounts have not been adjusted under the modified retrospective method)~~:



	Three Months Ended
	June 30, 2019
	North American Operations		Australian Operations			U.K./European Operations			Total Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products	$	32,846	$	2,999		$	512		$	36,357
Autos & Auto Parts	6,084		—			—			6,084
Chemicals & Plastics	39,813		—			—			39,813
Coal & Coke	18,563		28,965			896			48,424
Food & Kindred Products	8,801		—			—			8,801
Intermodal	523		15,459			58,297			74,279
Lumber & Forest Products	23,519		—			—			23,519
Metallic Ores	2,865		7,523			—			10,388
Metals	29,055		—			—			29,055
Minerals & Stone	38,597		1,817			21,155			61,569
Petroleum Products	17,053		160			717			17,930
Pulp & Paper	28,013		—			—			28,013
Waste	7,964		—			—			7,964
Other	5,485		—			—			5,485
Total freight revenues	259,181		56,923			81,577			397,681
Freight-related revenues	66,135		8,036			68,225			142,396
All other revenues	16,531		1,572			13,300			31,403
Total operating revenues	$	341,847	$	66,531		$	163,102		$	571,480
Operating income/(loss)	$	84,261	$	11,655		$	(1,716	)	$	94,200
Depreciation and amortization	$	38,738	$	14,192		$	9,587		$	62,517
Interest expense, net	$	11,872	$	11,800		$	2,903		$	26,575
Provision for/(benefit from) income taxes	$	18,140	$	(44	)	$	770		$	18,866
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	52,649	$	9,103		$	6,814		$	68,566

Three Months Ended September 30, 2018
North American Operations Australian Operations U.K./European Operations
Total
Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products $ 30,565
$ 4,150
$ 1,053
$ 35,768
Autos & Auto Parts 5,513
—
—
5,513
Chemicals & Plastics 38,436
—
—
38,436
Coal & Coke 23,006
32,357
2,588
57,951
Food & Kindred Products 8,761
—
—
8,761
Intermodal 514
17,538
58,609
76,661
Lumber & Forest Products 24,113
—
—
24,113
Metallic Ores 3,573
8,914
—
12,487
Metals 34,904
—
—
34,904
Minerals & Stone 38,570
2,066
22,344
62,980
Petroleum Products 18,236
224
99
18,559
Pulp & Paper 31,961
—
—
31,961
Waste 8,089
—
—
8,089
Other 7,191
—
—
7,191
Total freight revenues 273,432
65,249
84,693
423,374
Freight-related revenues 66,045
10,136
69,269
145,450
All other revenues 16,232
1,318
16,930
34,480
Total operating revenues $ 355,709
$ 76,703
$ 170,892
$ 603,304
Operating income $ 102,484
$ 20,713
$ 4,623
$ 127,820
Depreciation and amortization $ 41,388
$ 14,937
$ 9,067
$ 65,392
Interest expense, net $ 10,339
$ 12,780
$ 2,893
$ 26,012
Provision for income taxes $ 26,323
$ 2,398
$ 2,292
$ 31,013
Cash expenditures for additions to property & equipment, net of grants from outside parties $ 42,120
$ 8,185
$ 6,704
$ 57,009

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



	Three Months Ended
	June 30, 2018
	North American Operations		Australian Operations		U.K./European Operations			Total Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products	$	29,693	$	6,006	$	785		$	36,484
Autos & Auto Parts	5,806		—		—			5,806
Chemicals & Plastics	38,972		—		—			38,972
Coal & Coke	19,087		32,570		2,687			54,344
Food & Kindred Products	8,476		—		—			8,476
Intermodal	380		17,102		66,483			83,965
Lumber & Forest Products	23,810		—		—			23,810
Metallic Ores	3,670		8,125		—			11,795
Metals	32,493		—		—			32,493
Minerals & Stone	38,034		2,087		22,326			62,447
Petroleum Products	16,151		185		8			16,344
Pulp & Paper	29,514		—		—			29,514
Waste	7,339		—		—			7,339
Other	6,443		—		—			6,443
Total freight revenues	259,868		66,075		92,289			418,232
Freight-related revenues	63,467		11,515		67,420			142,402
All other revenues	16,222		1,439		16,695			34,356
Total operating revenues	$	339,557	$	79,029	$	176,404		$	594,990
Operating income/(loss)	$	80,274	$	25,896	$	(3,045	)	$	103,125
Depreciation and amortization	$	41,247	$	15,288	$	9,210		$	65,745
Interest expense, net	$	11,778	$	12,893	$	3,685		$	28,356
Provision for income taxes	$	20,091	$	3,901	$	2,454		$	26,446
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	48,924	$	14,489	$	4,726		$	68,139

Three Months Ended September 30, 2017
North American Operations Australian Operations U.K./European Operations
Total
Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products $ 28,699
$ 6,059
$ 964
$ 35,722
Autos & Auto Parts 6,079
—
—
6,079
Chemicals & Plastics 36,745
—
—
36,745
Coal & Coke 20,008
29,013
2,345
51,366
Food & Kindred Products 8,257
—
—
8,257
Intermodal 311
19,012
67,374
86,697
Lumber & Forest Products 22,204
—
—
22,204
Metallic Ores 3,703
11,305
—
15,008
Metals 26,008
—
—
26,008
Minerals & Stone 34,769
792
20,680
56,241
Petroleum Products 16,425
223
—
16,648
Pulp & Paper 28,135
—
—
28,135
Waste 6,662
—
—
6,662
Other 4,963
—
—
4,963
Total freight revenues 242,968
66,404
91,363
400,735
Freight-related revenues 60,286
12,880
67,757
140,923
All other revenues 15,673
1,986
17,610
35,269
Total operating revenues $ 318,927
$ 81,270
$ 176,730
$ 576,927
Operating income $ 82,203
$ 22,276
$ 5,363
$ 109,842
Depreciation and amortization $ 40,036
$ 15,753
$ 8,433
$ 64,222
Interest expense, net $ 9,817
$ 13,678
$ 4,323
$ 27,818
Provision for income taxes $ 28,270
$ 2,013
$ 224
$ 30,507
Cash expenditures for additions to property & equipment, net of grants from outside parties $ 41,713
$ 4,545
$ 6,981
$ 53,239

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


										Six Months Ended
	Nine Months Ended September 30, 2018									June 30, 2019
	North American Operations		Australian Operations		U.K./European Operations			Total Operations		North American Operations		Australian Operations		U.K./European Operations			Total Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products	$	91,630	$	15,639	$	3,073		$	110,342	$	64,809	$	6,053	$	1,248		$	72,110
Autos & Auto Parts	16,686		—		—			16,686		11,566		—		—			11,566
Chemicals & Plastics	113,625		—		—			113,625		76,986		—		—			76,986
Coal & Coke	62,038		96,506		8,751			167,295		37,753		58,136		5,589			101,478
Food & Kindred Products	25,587		—		—			25,587		17,204		—		—			17,204
Intermodal	1,203		50,613		192,413			244,229		978		29,259		117,502			147,739
Lumber & Forest Products	70,362		—		—			70,362		45,376		—		—			45,376
Metallic Ores	10,816		24,770		—			35,586		5,658		15,141		—			20,799
Metals	95,791		—		—			95,791		58,917		—		—			58,917
Minerals & Stone	107,122		6,247		63,849			177,218		70,407		3,855		37,037			111,299
Petroleum Products	52,870		560		107			53,537		37,752		298		1,408			39,458
Pulp & Paper	90,346		—		—			90,346		58,292		—		—			58,292
Waste	21,316		—		—			21,316		14,826		—		—			14,826
Other	19,325		—		—			19,325		10,420		—		—			10,420
Freight revenues	778,717		194,335		268,193			1,241,245
Total freight revenues										510,944		112,742		162,784			786,470
Freight-related revenues	193,344		32,214		203,491			429,049		130,611		15,891		132,156			278,658
All other revenues	48,835		4,017		49,809			102,661		32,738		3,005		28,698			64,441
Total operating revenues	$	1,020,896	$	230,566	$	521,493		$	1,772,955	$	674,293	$	131,638	$	323,638		$	1,129,569
Operating income/(loss)	$	255,918	$	62,585	$	(645	)	$	317,858	$	153,576	$	24,158	$	(3,824	)	$	173,910
Depreciation and amortization	$	123,266	$	46,232	$	27,629		$	197,127	$	77,169	$	28,603	$	19,371		$	125,143
Interest expense, net	$	30,572	$	38,914	$	9,620		$	79,106	$	24,273	$	23,923	$	5,442		$	53,638
Provision for income taxes	$	26,930	$	7,120	$	7,519		$	41,569	$	32,227	$	70	$	829		$	33,126
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	129,607	$	27,936	$	19,893		$	177,436	$	100,720	$	11,952	$	17,187		$	129,859

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


										Six Months Ended
	Nine Months Ended September 30, 2017									June 30, 2018
	North American Operations		Australian Operations		U.K./European Operations			Total Operations		North American Operations		Australian Operations		U.K./European Operations			Total Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products	$	92,956	$	17,737	$	3,532		$	114,225	$	61,065	$	11,489	$	2,020		$	74,574
Autos & Auto Parts	17,019		—		—			17,019		11,173		—		—			11,173
Chemicals & Plastics	111,660		—		—			111,660		75,189		—		—			75,189
Coal & Coke	57,123		86,292		7,464			150,879		39,032		64,149		6,163			109,344
Food & Kindred Products	24,856		—		—			24,856		16,826		—		—			16,826
Intermodal	726		52,113		190,163			243,002		689		33,075		133,804			167,568
Lumber & Forest Products	64,903		—		—			64,903		46,249		—		—			46,249
Metallic Ores	10,519		29,595		—			40,114		7,243		15,856		—			23,099
Metals	78,681		—		—			78,681		60,887		—		—			60,887
Minerals & Stone	97,446		4,787		49,823			152,056		68,552		4,181		41,505			114,238
Petroleum Products	50,696		507		—			51,203		34,634		336		8			34,978
Pulp & Paper	79,690		—		—			79,690		58,385		—		—			58,385
Waste	19,000		—		—			19,000		13,227		—		—			13,227
Other	14,347		—		—			14,347		12,134		—		—			12,134
Freight revenues	$	719,622	$	191,031	$	250,982		$	1,161,635
Total freight revenues										505,285		129,086		183,500			817,871
Freight-related revenues	186,814		36,089		164,978			387,881		127,299		22,078		134,222			283,599
All other revenues	47,641		4,866		34,445			86,952		32,603		2,699		32,879			68,181
Total operating revenues	$	954,077	$	231,986	$	450,405		$	1,636,468	$	665,187	$	153,863	$	350,601		$	1,169,651
Operating income/(loss)	$	229,545	$	59,685	$	(3,755	)	$	285,475	$	153,434	$	41,872	$	(5,268	)	$	190,038
Depreciation and amortization	$	117,822	$	45,915	$	22,772		$	186,509	$	81,878	$	31,295	$	18,562		$	131,735
Interest expense, net	$	29,928	$	41,500	$	7,732		$	79,160	$	20,233	$	26,134	$	6,727		$	53,094
Provision for/(benefit from) income taxes	$	78,133	$	4,805	$	(906	)	$	82,032
Provision for income taxes										$	606	$	4,722	$	5,228		$	10,556
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	105,940	$	9,721	$	17,446		$	133,107	$	87,487	$	19,751	$	13,189		$	120,427

The following tables set forth select balance sheet data for the Company's reportable segments as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 (dollars in thousands):



	June 30, 2019
	North American Operations		Australian Operations		U.K./European Operations		Total Operations
Cash and cash equivalents	$	23,624	$	41,325	$	17,434	$	82,383
Property and equipment, net	$	3,727,668	$	601,130	$	340,906	$	4,669,704

September 30, 2018
North American Operations Australian Operations U.K./European Operations
Total
Operations
Cash and cash equivalents $ 7,624
$ 52,568
$ 13,875
$ 74,067
Property and equipment, net $ 3,674,865
$ 617,960
$ 320,470
$ 4,613,295



	December 31, 2018
	North American Operations		Australian Operations		U.K./European Operations		Total Operations
Cash and cash equivalents	$	33,996	$	26,902	$	29,489	$	90,387
Property and equipment, net	$	3,679,279	$	609,450	$	324,285	$	4,613,014

December 31, 2017
North American Operations Australian Operations U.K./European Operations
Total
Operations
Cash and cash equivalents $ 13,584
$ 52,407
$ 14,481
$ 80,472
Property and equipment, net $ 3,657,801
$ 664,367
$ 334,753
$ 4,656,921

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~16.~~14. RECENTLY ISSUED ACCOUNTING STANDARDS:

Accounting Standards Not Yet Effective

In ~~February~~June 2016, the Financial Accounting Standards Board (FASB) issued ~~ASU 2016-02,~~ ~~Leases (Topic 842)~~Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments, which ~~will require lessees to recognize leases~~requires assessment of credit losses on ~~their balance sheets as a right-of-use asset with a corresponding liability. Lessees are permitted to make~~ an ~~accounting policy election to not recognize~~expected model rather than an ~~asset~~incurred loss model. The guidance requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and ~~liability for leases with a term of 12 months or less. Additional qualitative and quantitative disclosures, including significant judgments made by management, will also be required.~~

forecasts. The ~~new standard~~amendment will become effective for the Company beginning January 1, ~~2019, and previously required the use of a modified retrospective~~2020. Early adoption approach. In July 2018, the FASB approved another, optional, transition method that would instead allow companies to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.is permitted. The Company plans to elect the cumulative-effect adjustment transition method. Changes to processes and internal controls to meet the standard's reporting and disclosure requirements are being assessed. The Company is currently implementing a lease management system to support the new accounting requirements. At December 31, 2017, the Company disclosed approximately $615 million in aggregate future minimum operating lease payments and continues to evaluate those contracts as well as other existing arrangements to determine whether a right-of-use asset or lease liability will need to be recognized under the new standard and will assess new contracts entered into prior to the adoption of the new standard. The adoption of the new standard will result in a material increase to right of use assets and lease liabilities on the Company's consolidated balance sheet, primarily as a result of operating leases currently not recognized on the balance sheet. The Company, however, does not ~~anticipate a material impact to its operating results or liquidity as a result of~~expect the adoption of this ~~new standard and is currently evaluating disclosure requirements.~~guidance to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, ~~Intangibles-Goodwill~~Intangibles–Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments will become effective for the Company beginning January 1, 2020. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

~~In January 2018, the FASB issued ASU 2018-01,~~ ~~Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842,~~ which permits an entity to make an election not to apply Topic 842 to land easements that existed or expired before the effective date of Topic 842 provided that they were not previously assessed under ASC 840, ~~Leases~~. Effective January 1, 2019, Topic 842 will be applied to new and modified land easements to determine whether the arrangement should be accounted for as a lease. Upon the Company's adoption of Topic 842, the Company intends to apply this guidance by making an election to not apply Topic 842 to its land easements that existed or expired before January 1, 2019.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure ~~Framework-Changes~~Framework–Changes to the Disclosure for Fair Value Measurement. The amendments modify the disclosure requirements for fair value measurements in ~~ASC~~FASB Accounting Standards Codification (ASC) 820 based on revisions to the FASB Concepts Statement, Conceptual Framework for Financial Reporting (Concepts Statement), and cost/benefit considerations. The amendments will become effective for the Company beginning January 1, 2020. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its disclosure requirements.

In August 2018, the FASB issued ASU 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension plans or other postretirement benefit plans to make disclosure requirements more consistent with the revisions to the Concepts Statement. The amendments will become effective for the Company beginning January 1, 2021. Early adoption is permitted on a retrospective basis to all periods presented. The Company is still evaluating the potential impact of this guidance on its disclosure requirements.

15. SUBSEQUENT EVENTS:

On July 1, 2019, the Company, together with Brookfield Infrastructure, GIC and Brookfield Infrastructure's institutional partners, announced an agreement pursuant to which affiliates of Brookfield Infrastructure and GIC will acquire G&W for a transaction price of $112.00 per share of common stock valued at approximately $8.4 billion including debt (the Merger). The proposed Merger is expected to close by year end 2019 or early 2020 and is subject to customary closing conditions and regulatory approvals, including approval by the Company's stockholders, described in more detail below.

The Merger will be effected pursuant to the Agreement and Plan of Merger (the Merger Agreement), by and among the Company, DJP XX, LLC, a Delaware limited liability company (Parent), and MKM XXII Corp., a Delaware corporation and a wholly owned subsidiary of Parent (Merger Sub), Merger Sub will be merged with and into G&W with G&W surviving the Merger as a wholly-owned subsidiary of Parent. The proposed Merger will result in G&W becoming a privately held company.

Completion of the proposed Merger is subject to various closing conditions, including, among others, (i) the adoption of the Merger Agreement by holders of 66 2/3% of the voting power of the outstanding shares of G&W’s common stock, (ii) the absence of any law, injunction or other order that prohibits the consummation of the Merger, (iii) the approval or authorization of, or exemption by, the Surface Transportation Board (or approval of the use of a voting trust structure), (iv) receipt of other antitrust and regulatory approvals, including approval of the Committee on Foreign Investment in the United States, and (v) other customary closing conditions, including the accuracy of each party’s representations and warranties and each party’s compliance with its covenants and agreements contained in the Merger Agreement (subject in the case of this clause (v) to certain materiality qualifiers).

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Divestiture of 51.1% Interest in G&W Australia Holdings LP(GWAHLP)

Under the Merger Agreement (as described in more detail above), the Company agreed to use reasonable best efforts to assist and cooperate with Parent in Parent’s efforts to consummate any planned divestiture by Parent of G&W's interests in GWAHLP, the holding company for all of the Company's Australian businesses, to a third party (the GWA Divestiture), provided that (1) such cooperation would not unreasonably interfere with the Company's business or operations and (2) the Company would not be required to take any action that would subject it to actual or potential liability, to bear any cost or expense or to pay any fee or make any other payment or agree to provide any indemnity in connection with the GWA Divestiture prior to the effective time of the Merger. Following the execution of the Merger Agreement, Parent requested that G&W cause certain of its subsidiaries to enter into a Definitive Interest Sale Agreement for the GWA Divestiture (the GWA Divestiture Agreement), and, on August 4, 2019, G&W's board of directors and the governing bodies of such subsidiaries approved the GWA Divestiture Agreement and such subsidiaries entered into the GWA Divestiture Agreement.

Under the GWA Divestiture Agreement, certain entities affiliated with MIRA that currently own 48.9% of GWAHLP will acquire, directly or indirectly, the remaining interests in GWAHLP from certain subsidiaries of G&W in exchange for A$627.4 million, subject to adjustment. The GWA Divestiture is subject to customary closing conditions, including the satisfaction of the closing conditions set forth in the Merger Agreement. Neither the Company nor any of its subsidiaries will have any liability under the GWA Divestiture Agreement prior to the consummation of the Merger. The GWA Divestiture Agreement may be terminated under certain circumstances, including by any party thereto if the transactions contemplated by the GWA Divestiture Agreement have not been consummated on or before July 1, 2020.

The consideration to be received by the subsidiaries of the Company that are parties to the GWA Divestiture Agreement will not be distributed to any of the Company’s stockholders prior to consummation of the Merger, and the sole consideration that the Company's stockholders will receive in the Merger is $112.00 in cash per share of G&W common stock on the terms and conditions set forth in the Merger Agreement.

The consummation of the GWA Divestiture is not a condition to the closing of the Merger or any of Parent’s other obligations under the Merger Agreement.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with our consolidated financial statements and related notes set forth in this Quarterly Report on Form 10-Q and our ~~2017~~2018 Annual Report on Form 10-K. Our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP).

When comparing our results of operations from one reporting period to another, it is important to consider that we have historically experienced fluctuations in revenues and expenses due to acquisitions and divestitures, changing economic conditions, commodity prices, competitive forces, changes in foreign currency exchange rates, rail network issues and congestion, the ability to attract and retain skilled workers, one-time freight moves, fuel price fluctuations, customer plant expansions and shutdowns, sales of property and equipment, derailments and weather-related conditions, such as hurricanes, cyclones, tornadoes, high winds, droughts, heavy snowfall, unseasonably hot or cold weather, freezing and flooding, among other factors. In periods when these events occur, our results of operations are not easily comparable from one period to another. Finally, certain of our railroads have commodity shipments that are sensitive to general economic conditions, global commodity prices and foreign exchange rates, such as steel products, iron ore, paper products, lumber and forest products and agricultural products, as well as product specific market conditions, such as the availability of lower priced alternative sources of power generation (coal) and energy commodity price differentials (crude oil and natural gas liquids) or congestion at ports (intermodal). Other shipments are relatively less affected by economic conditions and are more closely affected by other factors, such as winter weather (salt) and seasonal rainfall (agricultural products). As a result of these and other factors, our results of operations in any reporting period may not be directly comparable to our results of operations in other reporting periods.

When we discuss foreign exchange impact, we are referring to the change in our results due to the change in foreign currency exchange rates. We calculate foreign exchange impact by comparing the prior period results translated from local currency to United States dollars using current period exchange rates to the prior period results in United States dollars as reported. Constant currency, which is a non-GAAP measure, reflects the prior period results translated at the current period exchange rates. When we discuss results from existing operations or same railroad operations, we are referring to the change in our results, period-over-period, associated with operations that we managed in both periods (i.e., excluding the impact of acquisitions and divestitures).

We own or lease ~~121~~120 freight railroads worldwide that are organized in ~~nine locally managed~~eight operating regions with approximately 8,000 employees ~~serving~~and 3,000 customers.

The financial results of our ~~nine~~eight operating regions are reported in the following three ~~reportable~~distinct segments:

Our North American Operations: ~~Our seven North American~~ segment includes six regions (Coastal, Midwest, Northeast, Southern, Western and Canada) that serve 41 U.S. states and four Canadian provinces and include ~~115~~114 short line and regional freight railroads with more than 13,000 track-miles.

Our Australian Operations: ~~Our Australia Region~~ segment serves New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line. ~~The~~Since December 1, 2016, the Australia Region ishas been 51.1% owned by us and 48.9% owned by a consortium of funds and clients managed by Macquarie Infrastructure and Real Assets (MIRA).

~~U.K./European Operations~~: Our U.K./European ~~Region includes~~Operations segment is led by Freightliner Group Limited (Freightliner), the United Kingdom's (U.K.) largest rail maritime intermodal operator and ~~the~~ second-largest freight rail provider, as well as regional rail services in Continental Europe.

Our subsidiaries and joint ventures also provide rail service at more than 40 major ports, rail-ferry service between the U.S. Southeast and Mexico, transload services, contract coal loading, and industrial railcar switching and repair.

~~Outlook for Q4 2018~~

~~In October 2018, our North American Operations took a direct hit from Hurricane Michael. The hurricane struck the Florida Panhandle and our Bay Line Railroad~~ As more fully described in ~~Panama City, Florida, causing significant damage~~Note 13, Segment Information, to our ~~buildings~~Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report, the results of operations of the foreign entities are maintained in the respective local currency and ~~resulting~~then translated into United States dollars at the applicable exchange rates for inclusion in ~~thousands of trees down on~~ the ~~tracks of our Florida and Georgia railroads.~~consolidated financial statements. As a result, ~~we expect~~any appreciation or depreciation of these currencies against the United States dollar will impact our results of operations.

On July 1, 2019, G&W, together with Brookfield Infrastructure, GIC and Brookfield Infrastructure's institutional partners, announced an agreement pursuant to ~~reach our insurance deductible~~which affiliates of Brookfield Infrastructure and ~~experience lower revenue due to damage to our customers' facilities in the fourth quarter~~GIC will acquire G&W for a transaction price of ~~2018. We expect a portion~~$112 per share of ~~the lost income from the hurricane to be recoverable in 2019 under our business interruption insurance policy.~~

~~In our Australian Operations, we have a new train set that is now serving spot coal volumes and a second train set~~common stock valued at approximately $8.4 billion including debt (the Merger). The proposed Merger is expected to ~~arrive at~~close by year-end 2019 or early 2020 and is subject to customary closing conditions and regulatory approvals, including approval by our stockholders, described in more detail below.

The Merger will be effected pursuant to the ~~end~~Agreement and Plan of Merger (the Merger Agreement), by and among the Company, DJP XX, LLC, a Delaware limited liability company (Parent), and MKM XXII Corp., a Delaware corporation and a wholly owned subsidiary of Parent (Merger Sub), Merger Sub will be merged with and into G&W with G&W surviving the Merger as a wholly-owned subsidiary of Parent. The proposed Merger will result in G&W becoming a privately held company.

Completion of the ~~fourth quarter~~proposed Merger is subject to various closing conditions, including, among others, (i) the adoption of ~~2018. However,~~the Merger Agreement by holders of 66 2/3% of the voting power of the outstanding shares of G&W’s common stock, (ii) the absence of any law, injunction or other order that prohibits the consummation of the Merger, (iii) the approval or authorization of, or exemption by, the Surface Transportation Board (or approval of the use of a voting trust structure), (iv) receipt of other antitrust and regulatory approvals, including approval of the Committee on Foreign Investment in the United States, and (v) other customary closing conditions, including the accuracy of each party’s representations and warranties and each party’s compliance with its covenants and agreements contained in the Merger Agreement (subject in the case of this clause (v) to certain materiality qualifiers).

Divestiture of 51.1% Interest in G&W Australia Holdings LP(GWAHLP)

Under the Merger Agreement (as described in more detail above), we ~~expect delays~~agreed to use reasonable best efforts to assist and cooperate with Parent in ~~certain coal shipments~~Parent’s efforts to consummate any planned divestiture by Parent of our interests in GWAHLP, the holding company for all of our Australian businesses, to a third party (the GWA Divestiture), provided that (1) such cooperation would not unreasonably interfere with our business or operations and (2) we would not be required to take any action that would subject us to actual or potential liability, to bear any cost or expense or to pay any fee or make any other payment or agree to provide any indemnity in connection with the GWA Divestiture prior to the effective time of the Merger. Following the execution of the Merger Agreement, Parent requested that we ~~expect~~cause certain of our subsidiaries to enter into a Definitive Interest Sale Agreement for the GWA Divestiture (the GWA Divestiture Agreement), and, on August 4, 2019, our board of directors and the governing bodies of such subsidiaries approved the GWA Divestiture Agreement and such subsidiaries entered into the GWA Divestiture Agreement.

Under the GWA Divestiture Agreement, certain entities affiliated with MIRA that currently own 48.9% of GWAHLP will ~~shift~~acquire, directly or indirectly, the remaining interests in GWAHLP from certain subsidiaries of G&W in exchange for A$627.4 million, subject to adjustment. The GWA Divestiture is subject to customary closing conditions, including the ~~fourth quarter~~satisfaction of ~~2018 into early 2019.~~

~~Our U.K./European Operations continue to experience operational challenges at~~ the ~~Port of Felixstowe, as well as a near-term locomotive driver shortage~~closing conditions set forth in the ~~U.K.~~Merger Agreement. Neither G&W nor any of its subsidiaries will have any liability under the GWA Divestiture Agreement prior to the consummation of the Merger. The ~~driver shortage recently emerged due~~GWA Divestiture Agreement may be terminated under certain circumstances, including by any party thereto if the transactions contemplated by the GWA Divestiture Agreement have not been consummated on or before July 1, 2020.

The consideration to ~~a rapid increase in retirements, as well as hiring pressure from passenger services. We expect~~be received by our ~~U.K./European operating margins~~subsidiaries that are parties to the GWA Divestiture Agreement will not be distributed to any of our stockholders prior to consummation of the Merger, and the sole consideration that our stockholders will receive in the ~~fourth quarter~~Merger is $112.00 in cash per share of ~~2018 will be reduced as we actively ramp up hiring~~G&W common stock on the terms and ~~training drivers~~conditions set forth in the ~~U.K.~~Merger Agreement.

The consummation of the GWA Divestiture is not a condition to ~~not only fill~~ the ~~immediate driver need, but also to handle a commercial pipeline that continues to build.~~closing of the Merger or any of Parent's other obligations under the Merger Agreement.

Overview of Three-Month Results

Consolidated Results

Our operating revenues ~~increased $26.4~~decreased $23.5 million, or ~~4.6%~~4.0%, to ~~$603.3~~$571.5 million for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with ~~$576.9~~$595.0 million for the three months ended ~~September~~June 30, ~~2017.~~2018. Operating income for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~$127.8~~$94.2 million, compared with ~~$109.8~~$103.1 million for the three months ended ~~September~~June 30, ~~2017, an increase~~2018, a decrease of ~~$18.0~~$8.9 million, or ~~16.4%~~8.7%. Our operating ratio, defined as operating expenses divided by operating revenues, was ~~78.8%~~83.5% for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with ~~81.0%~~82.7% for the three months ended ~~September~~June 30, ~~2017.~~2018.

Our effective income tax rate for the three months ended September 30, 2018 was 30.0%, compared with 36.4% for the three months ended September 30, 2017. The decrease in our effective income tax rate was primarily a result of the Tax Cuts and Jobs Act of 2017 (TCJA), which decreased the United States federal corporate income tax rate from 35% to 21%.

Net income attributable to G&W for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~$69.6~~$51.4 million, compared with ~~net income of $50.2~~$44.2 million for the three months ended ~~September~~June 30, ~~2017.~~2018. Our diluted earnings per common share (EPS) for the three months ended ~~September~~June 30, ~~2018~~2019 were ~~$1.16~~$0.90 with ~~60.1~~57.3 million weighted average shares outstanding, compared with diluted EPS of ~~$0.80~~$0.73 with ~~62.5~~60.9 million weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2017.~~2018.

~~Items Affecting Comparability~~

Our ~~results~~provision for ~~the~~ ~~three~~ ~~months ended~~ ~~September 30, 2018~~ ~~and~~ ~~2017~~ ~~included certain items affecting comparability between the periods that are set forth below (dollars in millions, except per share amounts):~~

Income/(Loss) Before Taxes Impact After-Tax Net Income/(Loss) Attributable to G&W Impact Diluted Earnings/(Loss) Per Common Share Impact
Three Months Ended September 30, 2018
Corporate development and related costs $ (0.3 ) $ (0.3 ) $ —
Restructuring and related costs $ (3.3 ) $ (2.7 ) $ (0.04 )
Gain on settlement $ 0.9
$ 0.3
$ 0.01
TCJA measurement period adjustment $ —
$ (1.6 ) $ (0.03 )

Three Months Ended September 30, 2017
Corporate development and related costs $ (1.7 ) $ (1.4 ) $ (0.02 )
Restructuring costs $ (2.6 ) $ (2.2 ) $ (0.04 )
Recognition of unrecognized tax benefits $ —
$ 3.3
$ 0.05

For the three months ended September 30, 2018, our results included restructuring and related costs of $3.3 million, primarily driven by our optimization activities in the U.K., corporate development and related costs of $0.3 million and a gain on settlement of $0.9 million from the recovery of pre-petition claims associated with Arrium Limited's (Arrium) voluntary administration in the second quarter of 2016. As a result of the TCJA, the resultsincome taxes for the three months ended ~~September~~June 30, ~~2018 also included a $1.6~~2019 was $18.9 million ~~measurement period adjustment to the one-time transition (toll) tax on earnings of certain foreign subsidiaries.~~

For the three months ended September 30, 2017, our results included restructuring costs of $2.6 million, primarily in our U.K./European Region, as well as corporate development and related costs of $1.7 million, primarily related to the acquisition and integration of Pentalver Transport Limited (Pentalver). The results for the three months ended September 30, 2017 also included the recognition of $3.3 million of previously unrecognized tax benefits resulting from the lapse of the statute of limitations on acquired liabilities for uncertain tax positions.

~~Results by Segment~~

~~Operating revenues from our North American Operations increased $36.8 million, or 11.5%, to $355.7~~compared with $26.4 million for the three months ended ~~September~~June 30, ~~2018, compared with $318.9 million~~2018. Our effective income tax rate for the three months ended ~~September~~June 30, 2017. Excluding a $1.0 million decrease due to the impact of foreign currency depreciation, North American Operations operating revenues increased $37.8 million, or 11.9%, primarily due to an increase in freight revenues.

~~North American Operations traffic increased 38,522 carloads, or 9.4%, to 446,219 carloads for the three months ended September 30, 2018. The traffic increase~~2019 was ~~principally due to increases of~~ 9,749 carloads of metals traffic (primarily in the Southern, Midwest and Canada regions), 9,450 carloads of coal and coke traffic (primarily in the Midwest, Northeast and Central regions), 4,079 carloads of other commodity traffic (primarily in the Southern and Midwest regions), 3,401 carloads of agricultural products traffic (primarily in the Western Region), 3,392 carloads of minerals and stone traffic (primarily in the Southern, Coastal and Canada regions), 2,159 carloads of pulp and paper traffic (primarily in the Coastal Region), 1,777 carloads of intermodal traffic (primarily in the Northeast and Canada regions), 1,529 carloads of waste traffic (primarily in the Northeast Region), 1,482 carloads of lumber and forest products traffic (primarily in the Western Region) and 1,459 carloads of petroleum products traffic (primarily in the Canada and Northeast regions)26.9%. ~~All remaining traffic increased by a net 45 carloads.~~

Operating income from our North American Operations for the three months ended September 30, 2018 was $102.5 million, compared with $82.2 million for the three months ended September 30, 2017. The operating ratio for our North American Operations for the three months ended September 30, 2018 was 71.2%, compared with 74.2% for the three months ended September 30, 2017.

Operating revenues from our Australian Operations decreased $4.6 million, or 5.6%, to $76.7 million for the three months ended September 30, 2018, compared with $81.3 million for the three months ended September 30, 2017. Excluding a $6.0 million decrease due to the impact of foreign currency depreciation, Australian Operations' operating revenues increased $1.4 million, or 1.9%, primarily due to an increase in freight revenues.

~~Australian Operations traffic increased 27,667 carloads, or 22.4%, to 151,318 carloads for the three months ended September 30, 2018.~~ ~~The traffic~~ ~~increase~~ ~~was~~ principally due to increases of 25,667 carloads of coal and coke traffic and 11,325 carloads of minerals and stone traffic, partially offset by decreases of 6,634 carloads of agricultural products traffic and 1,890 carloads of metallic ores traffic. All remaining traffic decreased by a net 801 carloads.

~~Operating income from our Australian Operations for the~~ ~~three months ended September 30, 2018~~ ~~was $20.7 million, compared with $22.3 million~~ ~~for~~ the three months ended September 30, 2017. The operating ratio for our Australian Operations was 73.0% for the three months ended September 30, 2018, compared with an operating ratio of 72.6% for the three months ended September 30, 2017. The operating income for the three months ended September 30, 2018 included a gain on settlement of $0.9 million related to Arrium's voluntary administration in the second quarter of 2016.

Operating revenues from our U.K./European Operations decreased $5.8 million, or 3.3%, to $170.9 million for the three months ended September 30, 2018, compared with $176.7 million for the three months ended September 30, 2017. Excluding $13.7 million of revenues from our divested operations for 2017 and a $1.2 million decrease due to the impact of foreign currency depreciation, U.K./European same railroad revenues increased $9.1 million, or 5.6%, primarily due to increases in freight-related and freight revenues in the U.K. and Poland.

U.K./European Operations traffic decreased 41,398 carloads, or 14.6%, to 241,382 carloads for the three months ended September 30, 2018. Excluding traffic from our divested operations for 2017, same railroad traffic decreased 10,159 carloads, or 4.0%, to 241,382 carloads. The same railroad traffic decrease was principally due to decreases of 9,818 carloads of intermodal traffic in the U.K. and 1,035 carloads of minerals and stone traffic (primarily in Poland), partially offset by increases of 473 carloads in coal and coke traffic and 222 carloads of petroleum products traffic.

~~Operating income from our U.K./European Operations was $4.6 million for~~ the three months ended September 30, 2018, compared with operating income of $5.4 million for the three months ended September 30, 2017. The operating ratio for our U.K./European Operations was 97.3% for the three months ended September 30, 2018, compared with an operating ratio of 97.0% for the three months ended September 30, 2017. Our operating income ~~for~~ the three months ended September 30, 2018 included restructuring and related costs of $3.3 million, primarily driven by our optimization activities in the U.K. Our operating income for the three months ended September 30, 2017 included restructuring costs of $2.3 million, primarily related to severance costs associated with our 2017 restructuring of our Continental Europe intermodal business, ERS Railways B.V. (ERS).

~~Overview of Nine-Month Results~~

Our operating revenues increased $136.5 million, or 8.3%, to $1,773.0 million for the nine months ended September 30, 2018, compared with $1,636.5 million for the nine months ended September 30, 2017. Operating income for the nine months ended September 30, 2018 was $317.9 million, compared with $285.5 million for the nine months ended September 30, 2017, an increase of $32.4 million, or 11.3%. Our operating ratio was 82.1% for the nine months ended September 30, 2018, compared with 82.6% for the nine months ended September 30, 2017. Our same railroad operating ratio for the nine months ended September 30, 2018 was 81.5%, compared with 81.8% for the nine months ended September 30, 2017. When we discuss either operating ratios from existing operations or same railroad operating ratios, we are referring to the change in our operating ratio, period-over-period, associated with operations that we managed in both periods (~~i.e., excluding the impact of acquisitions and divestitures).~~

Net income for the nine months ended September 30, 2018 was $196.9 million, compared with net income of $128.8 million for the nine months ended September 30, 2017. Our diluted EPS for the nine months ended September 30, 2018 was $3.08 with 61.3 million weighted average shares outstanding, compared with diluted EPS of $1.96 with 62.4 million weighted average shares outstanding for the nine months ended September 30, 2017. Our results for the nine months ended September 30, 2018 included an income tax benefit of $31.6 million associated with the retroactive extension of the United States Short Line Tax Credit for fiscal year 2017, which was enacted in February 2018. Based on developments during the ~~nine~~three months ended ~~September~~June 30, 2018, we recorded a reserve for uncertain tax positions of ~~$5.5~~$4.8 million related to tax deductions on intercompany financing arrangements in the U.K., of which $0.7 million related to the three months ended June 30, 2018, $0.4 million related to the three months ended March 31, 2018 and $3.7 million related to the period from March 25, 2015, the date of the Freightliner acquisition when the arrangements were established, through December 31, 2017. The reserve for uncertain tax positions was included in our provision for income taxes for the ~~nine~~three months ended ~~September~~June 30, 2018. Excluding the prior period portion of the reserve for uncertain tax positions, our effective income tax rate for the three months ended June 30, 2018 was 29.8%.

Items Affecting Comparability

Our results for the three months ended June 30, 2019 and 2018 included certain items affecting comparability between the periods that are set forth below (dollars in millions, except per share amounts):



	Income/(Loss) Before Taxes Impact			After-Tax Net Income/(Loss) Attributable to G&W Impact			Diluted Earnings/(Loss) Per Common Share Impact
Three Months Ended June 30, 2019
Corporate development and related costs	$	(2.4	)	$	(1.7	)	$	(0.03	)
Restructuring and related costs	$	(7.6	)	$	(6.0	)	$	(0.10	)
Net loss on sale and impairment of certain assets in North America	$	(1.0	)	$	(0.8	)	$	(0.01	)
Australia enterprise bargaining agreement amendment	$	(2.6	)	$	(0.9	)	$	(0.02	)

Three Months Ended June 30, 2018
Corporate development and related costs	$	(0.4	)	$	(0.3	)	$	—
Restructuring and related costs	$	(9.4	)	$	(7.6	)	$	(0.12	)
Loss on sale of ERS	$	(1.4	)	$	(1.4	)	$	(0.02	)
Gain on settlement	$	6.3		$	2.3		$	0.04
Credit facility refinancing-related costs	$	(2.7	)	$	(2.0	)	$	(0.03	)
Prior period portion of tax adjustment	$	—		$	(4.1	)	$	(0.07	)

For the three months ended June 30, 2019, our results included restructuring and related costs of $7.6 million, primarily associated with our optimization activities in the U.K., $2.6 million of expense associated with amending an enterprise bargaining agreement in Australia, corporate development and related costs of $2.4 million and a $1.0 million net loss on the sale and impairment of assets in North America resulting from the impairment of assets associated with the expiration of a lease of a rail line in the southeastern United States, partially offset by a gain on the sale of land in the northeastern United States.

For the three months ended June 30, 2018, our results included restructuring and related costs of $9.4 million, primarily associated with our optimization activities in the U.K., credit facility refinancing-related costs of $2.7 million, a $1.4 million loss on the sale of our Continental Europe intermodal business, ERS Railways B.V. (ERS), and a gain on settlement of $6.3 million from the recovery of pre-petition claims associated with Arrium Limited's voluntary administration (bankruptcy) in the second quarter of 2016. The three months ended June 30, 2018 also included a $4.1 million income tax expense associated with uncertain tax deductions on intercompany financing arrangements in the U.K. previously recorded from March 25, 2015, the date of the Freightliner acquisition when the arrangements were established, through March 31, 2018.

Operating revenues from our North American Operations increased $2.3 million, or 0.7%, to $341.8 million for the three months ended June 30, 2019, compared with $339.6 million for the three months ended June 30, 2018. Excluding $5.6 million of revenues in 2018 from two leased railroads in Canada that we ceased operating at the end of 2018, and a $0.8 million decrease due to the impact of foreign currency depreciation, North American existing operations revenues increased $8.7 million, or 2.6%, primarily due to increases in freight and freight-related revenues.

Total traffic from our North American Operations decreased 23,458 carloads, or 5.5%, to 406,895 carloads for the three months ended June 30, 2019, compared with the three months ended June 30, 2018. Excluding traffic from the two railroad leases in Canada that expired at the end of 2018, existing operations traffic decreased 14,779 carloads, or 3.5%. The decrease in traffic from existing operations included decreases of 11,206 carloads of coal and coke traffic, 4,221 carloads of metals traffic, 3,734 carloads of pulp and paper traffic, 2,307 carloads of lumber and forest products traffic and 1,683 carloads of other commodity traffic, partially offset by increases of 5,418 carloads of agricultural products traffic and 1,015 carloads of chemicals and plastics traffic. All remaining traffic increased by a net 1,939 carloads.

Operating income from our North American Operations was $84.3 million for the three months ended June 30, 2019, compared with $80.3 million for the three months ended June 30, 2018. Operating income for the three months ended June 30, 2019 included corporate development and related costs of $2.3 million, a $1.0 million net loss on the sale and impairment of certain assets in the United States and restructuring and related costs of $0.6 million. Operating income for the three months ended June 30, 2018 included credit facility refinancing-related costs of $0.4 million and corporate development and related costs of $0.3 million. The operating ratio was 75.4% for the three months ended June 30, 2019, compared with 76.4% for the three months ended June 30, 2018.

Operating revenues from our Australian Operations decreased $12.5 million, or 15.8%, to $66.5 million for the three months ended June 30, 2019, compared with $79.0 million for the three months ended June 30, 2018. Excluding a $5.9 million decrease due to the impact of foreign currency depreciation, Australian Operations operating revenues decreased $6.6 million, or 9.0%, primarily due to decreases in drought impacted agricultural products freight and freight-related revenues.

Total traffic from our Australian Operations decreased 13,570 carloads, or 9.2%, to 134,395 carloads for the three months ended June 30, 2019, compared with the three months ended June 30, 2018. The traffic decrease was primarily due to decreases of 9,951 carloads of agricultural products traffic and 2,100 carloads of minerals and stone traffic. All remaining traffic decreased by a net 1,519 carloads.

Operating income from our Australian Operations was $11.7 million for the three months ended June 30, 2019, compared with $25.9 million for the three months ended June 30, 2018. The operating income for the three months ended June 30, 2019 was negatively impacted by $1.9 million from foreign currency depreciation, a $2.6 million decrease in grain volumes due to drought conditions in South Australia and New South Wales as well as $2.6 million of expense associated with amending an enterprise bargaining agreement. The operating income for the three months ended June 30, 2018 included a gain on settlement of $6.3 million from the recovery of pre-petition claims associated with Arrium Limited's voluntary administration (bankruptcy) in the second quarter of 2016. The operating ratio for our Australian Operations was 82.5% for the three months ended June 30, 2019, compared with an operating ratio of 67.2% for the three months ended June 30, 2018.

Operating revenues from our U.K./European Operations decreased $13.3 million, or 7.5%, to $163.1 million for the three months ended June 30, 2019, compared with $176.4 million for the three months ended June 30, 2018. Excluding $8.7 million of revenues for 2018 from our Continental Europe intermodal business, ERS Railways B.V. (ERS), which was sold in June 2018, and a $10.0 million decrease due to the impact of foreign currency depreciation, U.K./European existing operations revenues increased $5.4 million, or 3.4%, primarily due to increases in freight-related revenues in the U.K. and Poland.

Total traffic from our U.K./European Operations decreased 30,980 carloads, or 12.1%, to 225,065 carloads for the three months ended June 30, 2019, compared with 256,045 carloads for the three months ended June 30, 2018. Excluding traffic from our divested ERS operations for 2018, existing operations traffic decreased 10,157 carloads, or 4.3%. The decrease in traffic from existing operations was primarily due to a decrease of 7,269 carloads of intermodal traffic, 3,805 carloads of minerals and stone traffic and 2,383 carloads of coal and coke traffic, partially offset by an increase of 3,514 carloads of petroleum products traffic. All remaining traffic decreased by a net 214 carloads.

Operating loss from our U.K./European Operations was $1.7 million for the three months ended June 30, 2019, compared with an operating loss of $3.0 million for the three months ended June 30, 2018. The operating loss for the three months ended June 30, 2019 included $6.8 million of restructuring and related costs primarily driven by our optimization activities in the U.K. The operating loss for the three months ended June 30, 2018 included $9.4 million of restructuring and related costs. The operating ratio was 101.1% for the three months ended June 30, 2019, compared with 101.7% for the three months ended June 30, 2018.

Overview of Six-Month Results

Our operating revenues decreased $40.1 million, or 3.4%, to $1,129.6 million for the six months ended June 30, 2019, compared with $1,169.7 million for the six months ended June 30, 2018. Operating income for the six months ended June 30, 2019 was $173.9 million, compared with $190.0 million for the six months ended June 30, 2018, a decrease of $16.1 million, or 8.5%. Our operating ratio was 84.6% for the six months ended June 30, 2019, compared with 83.8% for the six months ended June 30, 2018.

Net income for the six months ended June 30, 2019 was $90.2 million, compared with net income of $124.6 million for the six months ended June 30, 2018. Our diluted EPS for the six months ended June 30, 2019 was $1.58 with 57.2 million weighted average shares outstanding, compared with diluted EPS of $1.93 with 61.8 million weighted average shares outstanding for the six months ended June 30, 2018.

Our provision for income taxes for the six months ended June 30, 2019 was $33.1 million compared with $10.6 million for the six months ended June 30, 2018. Our effective income tax rate for the six months ended June 30, 2019 was 26.9%. Our results for the six months ended June 30, 2018 included an income tax benefit of $31.6 million associated with the retroactive extension of the United States Short Line Tax Credit for fiscal year 2017, which was enacted in February 2018. Based on developments during the six months ended June 30, 2018, we recorded a reserve for uncertain tax positions of $4.8 million related to tax deductions on intercompany financing arrangements in the U.K., of which $3.7 million related to the period from March 25, 2015, the date of the Freightliner acquisition when the arrangements were established, through December 31, 2017. Excluding the benefit from the retroactive extension and the prior period portion of the reserve for uncertain tax positions, our effective income tax rate for the ~~nine~~six months ended ~~September~~June 30, 2018 was ~~28.4%~~28.5%. Our effective income tax rate for the nine months ended September 30, 2017 was 38.9%. The decrease in our effective income tax rate was primarily a result of the TCJA, which decreased the United States federal corporate income tax rate from 35% to 21%.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we generated ~~$397.5~~$223.1 million in cash flows from operating activities. During the same period, we purchased ~~$194.1~~$144.7 million of property and equipment, including ~~$33.9~~$7.3 million for new business investments, partially offset by ~~$16.7~~$14.9 million in cash received from government grants and other outside parties for capital spending. We also paid $140.6 million in cash from the net decrease in outstanding debt and received cash of $45.4 million from the settlement of derivative transactions.

During the six months ended June 30, 2018, we generated $231.3 million in cash flows from operating activities. During the same period, we purchased $133.3 million of property and equipment, including $22.7 million for new business investments, partially offset by $12.9 million in cash received from government grants and other outside parties for capital spending. We also repurchased ~~3.6~~2.7 million shares of our Class A common stock for ~~$270.5 million.~~$192.3 million and received $88.3 million in cash from the net increase in outstanding debt. In addition, Genesee & Wyoming Australia (GWA) made a distribution of $14.9 million to its noncontrolling interest ~~holders, and we received $55.0 million in net proceeds from the net increase in outstanding debt.~~holders.

Items Affecting Comparability

Our results for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 included certain items affecting comparability between the periods that are set forth below (dollars in millions, except per share amounts):

Changes in Operations

North American Operations

~~Heart~~Canada Lease Expirations: Two of ~~Georgia Railroad, Inc.:~~ ~~On May 31, 2017, we completed~~our short line railroad leases in Canada (Goderich-Exeter Railway (GEXR) and Southern Ontario Railway (SORR)) expired at the ~~acquisition~~end of ~~all~~2018. Our results for the ~~outstanding shares of Atlantic Western Transportation, Inc., the parent company of Heart of Georgia Railroad, Inc. (HOG), for~~three and six months ended June 30, 2018 included $5.6 million and $11.1 million, respectively, of revenues from these leased railroads. Our results included no material operating income from these leased railroads for the three and six months ended June 30, 2018.

U.K./European Operations

U.K. Operations Optimization: In May 2018, we began a program to restructure and further optimize our operations in ~~cash and contingent consideration of $5.7 million. The contingent consideration is payable to~~ the ~~sellers upon satisfaction of certain conditions,~~U.K., which we ~~expect~~intend to ~~be paid in 2021.~~complete by 2020. The ~~results~~program includes the rationalization of ~~operations from HOG have been included in our consolidated statements~~the locomotive and railcar fleet, management restructuring (following the U.K. consultative process) and technology investments to upgrade systems to enhance productivity and service quality.

We recorded restructuring and related costs associated with the optimization of ~~operations since~~$6.8 million and $12.3 million for the ~~acquisition date.~~three and six months ended June 30, 2019, respectively. Restructuring and related costs of $9.4 million and $9.6 million were recorded associated with the optimization for the three and six months ended June 30, 2018, respectively. For additional information regarding ~~HOG,~~the optimization of our U.K. operations, see Note 2, Changes in Operations, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report.

~~Australian Operations~~

~~Arrium Limited:~~ On April 7, 2016, GWA's customer, Arrium announced it had entered into voluntary administration. As a result, during the first quarter of 2016, we recorded a $13.0 million non-cash charge related to the impairment of GWA's idle rolling-stock maintenance facility and an allowance for doubtful accounts charge of $8.1 million. Also, as a result of the voluntary administration, all payments to GWA associated with the rail haulage agreement for Arrium's Southern Iron mine ceased.

In December 2017, GWA recovered $0.9 million of cash in relation to our previous agreements with Arrium. During the three and nine months ended September 30, 2018, GWA recorded $0.9 million and $7.3 million, respectively, of gains on settlement from additional cash recoveries of pre-petition claims associated with Arrium, which were recognized as offsets to other expenses, net in our consolidated statement of operations.

~~U.K./European Operations~~

Continental Europe Intermodal Business: ~~In 2017,~~On June 5, 2018, we ~~ceased all "open" train services from the port of Rotterdam, closed~~sold our Continental Europe intermodal business, ERS, offices in Rotterdam and Frankfurt, and the ERS customer services function in Warsaw. We recorded restructuring charges of $0.7 million and $5.2 million for the three and nine months ended September 30, 2017, respectively, primarily related to severance costs and costs associated with surplus locomotive and railcar leases.

~~On June 5, 2018, we finalized the sale of~~ ERS, for gross cash proceeds of €11.2 million (or $13.1 million at the exchange rate on June 5, 2018) or €6.8 million (or $7.9 million at the exchange rate on June 5, 2018) net of €4.4 million (or $5.2 million at the exchange rate on June 5, 2018) of cash on hand that transferred to the buyer. ~~The sale resulted in a net loss of $1.4 million recognized in our consolidated statement of operations~~Our results for the ~~nine~~three and six months ended ~~September~~June 30, 2018 ~~within other income/(loss), net.~~

~~Pentalver Transport Limited:~~ ~~On May 3, 2017, our subsidiary, GWI UK Acquisition Company Limited, purchased~~included $9.4 million and $24.1 million of revenues, respectively, from ERS. Our results for cash all of the issued share capital of Pentalver from a subsidiary of APM Terminals (a subsidiary of AP Møller-Maersk A/S) for £97.8 million (or $126.2 million at the exchange rate on May 3, 2017) or £77.5 million (or $100.1 million at the exchange rate on May 3, 2017) net of £20.2 million (or $26.1 million at the exchange rate on May 3, 2017) of cash received in connection with the sale. We funded the acquisition with borrowings under our Second Amended and Restated Senior Secured Syndicated Credit Facility Agreement.

~~The results of operations~~six months ended June 30, 2018 included no material operating income from Pentalver have been included in our consolidated statements of operations since the May 3, 2017 acquisition date. For additional information regarding the acquisition of Pentalver, see Note 2, Changes in Operations, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report.ERS.

Three Months Ended ~~September~~June 30, ~~2018~~2019 Compared with Three Months Ended ~~September~~June 30, ~~2017~~2018

Consolidated Operating Results

The following table sets forth our total operating revenues and carloads for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017. In June 2018, we sold our Continental Europe intermodal business, ERS.~~2018. The table below also reflects the calculation of our ~~total~~ existing operations by subtracting the 2018 revenues and carloads ~~from~~of the divested operations of ERS ~~operations~~and the leased railroads in Canada that we ceased operating at the end of 2018, from our total operations for the three months ended ~~September~~June 30, ~~2017~~2018 (dollars in thousands):

* Currency impact was calculated by comparing the 2018 results translated from local currency to United States dollars using 2019 exchange rates to the 2018 results in United States dollars as reported.

Total operating expenses for the three months ended ~~September~~June 30, ~~2018 increased $8.4~~2019 decreased $14.6 million, or ~~1.8%~~3.0%, to ~~$475.5~~$477.3 million, compared with ~~$467.1~~$491.9 million for the three months ended ~~September~~June 30, ~~2017.~~2018. The ~~increase~~decrease consisted of ~~$19.7~~$14.2 million from divested operations and $0.4 million from existing ~~operations, partially offset by an $11.3~~operations. Excluding a $14.3 million decrease from divested operations. The increase from existing operations included increases of $11.8 million in diesel fuel used in train operations, $8.7 million in labor and benefits, $3.3 million in equipment rents, $2.6 million in depreciation and amortization and $2.5 million in materials expense, partially offset by a decrease of $3.4 million in purchased services expense. The change from existing operations also included a $6.3 million decreasebenefit from the net depreciation of foreign currencies relative to the United States ~~dollar.~~dollar, operating expenses from existing operations increased $13.9 million, or 3.0%. The increase from existing operations included increases of $5.9 million in other expense, $5.8 million in labor and benefits expense, $3.9 million in purchased services expense, $2.1 million in depreciation and amortization expense and $1.7 million in net gain on the sale and impairment of assets, partially offset by decreases of $1.9 million in the cost of diesel fuel used in train operations, $1.3 million in restructuring and related costs and $1.1 million in equipment rents expense.

The following table sets forth our total operating expenses for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands):

Three Months Ended September 30, Increase/(Decrease) Currency
Impact 2017 Constant Currency* Increase/(Decrease)Constant Currency*
2018 2017
Amount % of
Operating
Revenues Amount % of
Operating
Revenues
Labor and benefits $ 175,853
29.1 % $ 169,576
29.4 % $ 6,277
$ (1,872 ) $ 167,704
$ 8,149
Equipment rents 35,325
5.9 % 33,291
5.8 % 2,034
(305 ) 32,986
2,339
Purchased services 53,717
8.9 % 68,562
11.9 % (14,845 ) (880 ) 67,682
(13,965 )
Depreciation and amortization 65,392
10.9 % 64,222
11.1 % 1,170
(1,464 ) 62,758
2,634
Diesel fuel used in train operations 45,713
7.6 % 34,535
6.0 % 11,178
(607 ) 33,928
11,785
Electricity used in train operations 2,742
0.5 % 765
0.1 % 1,977
(30 ) 735
2,007
Casualties and insurance 9,912
1.6 % 10,624
1.9 % (712 ) (117 ) 10,507
(595 )
Materials 32,744
5.4 % 30,664
5.3 % 2,080
(378 ) 30,286
2,458
Trackage rights 22,838
3.8 % 22,632
3.9 % 206
(366 ) 22,266
572
Net gain on sale and impairment of assets (642 ) (0.1 )% (315 ) (0.1 )% (327 ) 7
(308 ) (334 )
Restructuring costs 3,286
0.5 % 2,628
0.5 % 658
(22 ) 2,606
680
Other expenses, net 28,604
4.7 % 29,901
5.2 % (1,297 ) (363 ) 29,538
(934 )
Total operating expenses $ 475,484
78.8 % $ 467,085
81.0 % $ 8,399
$ (6,397 ) $ 460,688
$ 14,796



	Three Months Ended June 30,									Increase/(Decrease)			Currency Impact			2018 Constant Currency*			Increase/(Decrease)Constant Currency*
	2019				2018
	Amount		% of Operating Revenues		Amount			% of Operating Revenues
Labor and benefits	$	179,943	31.4	%	$	179,838		30.2	%	$	105		$	(4,637	)	$	175,201		$	4,742
Equipment rents	32,010		5.6	%	34,802			5.9	%	(2,792		)	(1,263		)	33,539			(1,529		)
Purchased services	54,034		9.5	%	61,045			10.3	%	(7,011		)	(2,875		)	58,170			(4,136		)
Depreciation and amortization	62,517		10.9	%	65,745			11.0	%	(3,228		)	(1,889		)	63,856			(1,339		)
Diesel fuel used in train operations	41,504		7.3	%	45,623			7.7	%	(4,119		)	(1,513		)	44,110			(2,606		)
Electricity used in train operations	2,226		0.4	%	2,044			0.3	%	182			(113		)	1,931			295
Casualties and insurance	11,839		2.1	%	12,984			2.2	%	(1,145		)	(206		)	12,778			(939		)
Materials	31,294		5.5	%	32,376			5.4	%	(1,082		)	(1,185		)	31,191			103
Trackage rights	21,727		3.8	%	23,303			3.9	%	(1,576		)	(775		)	22,528			(801		)
Net gain on sale and impairment of assets	980		0.2	%	(823		)	(0.1	)%	1,803			(14		)	(837		)	1,817
Restructuring and related costs	7,561		1.3	%	9,362			1.6	%	(1,801		)	(481		)	8,881			(1,320		)
Other expenses, net	31,645		5.5	%	25,566			4.3	%	6,079			(78		)	25,488			6,157
Total operating expenses	$	477,280	83.5	%	$	491,865		82.7	%	$	(14,585	)	$	(15,029	)	$	476,836		$	444

* Constant currency amounts reflect the prior period results translated at the current period exchange rates.

Operating Income/Operating Ratio

Operating income was ~~$127.8~~$94.2 million for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with ~~$109.8~~$103.1 million for the three months ended ~~September~~June 30, ~~2017.~~2018. Operating income for the three months ended ~~September~~June 30, ~~2018~~2019 included restructuring and related costs of ~~$3.3~~$7.6 million, primarily driven by our optimization activities in the U.K., $2.6 million of expense associated with amending an enterprise bargaining agreement in Australia, corporate development and related costs of ~~$0.3~~$2.4 million and a ~~gain~~$1.0 million net loss on ~~settlement~~the sale and impairment of ~~$0.9 million from the recovery of pre-petition claims associated with Arrium's voluntary administration~~certain assets in ~~the second quarter of 2016.~~North America. Operating income for the three months ended ~~September~~June 30, ~~2017~~2018 included restructuring and related costs of ~~$2.6~~$9.4 million ~~primarily related to severance costs associated with our 2017 restructuring of ERS, as well as~~and corporate development and related costs of ~~$1.7 million, primarily related to the acquisition and integration of Pentalver.~~$0.4 million. Our operating ratio was ~~78.8%~~83.5% for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with ~~81.0%~~82.7% for the three months ended ~~September~~June 30, ~~2017.~~2018.

Interest expense was ~~$26.4~~$27.4 million for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with ~~$28.3~~$28.9 million for the three months ended ~~September~~June 30, ~~2017.~~2018. The decrease in interest expense for the three months ended ~~September~~June 30, ~~2017 included approximately $1.9 million related to an unrealized revaluation loss on a cross currency swap.~~2019 was primarily driven by the write-off of deferred financing fees associated with our credit facility refinancing in June 2018.

Provision for Income Taxes

Our provision for income taxes for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~$31.0~~$18.9 million compared with ~~$30.5~~$26.4 million for the three months ended ~~September~~June 30, ~~2017. As~~2018. Our effective income tax rate for the three months ended June 30, 2019 was 26.9%. Based on developments during the three months ended June 30, 2018, we recorded a ~~result~~reserve for uncertain tax positions of $4.8 million related to tax deductions on intercompany financing arrangements in the U.K., of which $0.7 million related to the three months ended June 30, 2018, $0.4 million related to the three months ended March 31, 2018 and $3.7 million related to the period from March 25, 2015, the date of the ~~TCJA,~~Freightliner acquisition when the arrangements were established, through December 31, 2017. The reserve for uncertain tax positions was included in our provision for income taxes for the three months ended ~~September~~June 30, ~~2018 was a $1.6 million measurement~~2018. Excluding the prior period ~~adjustment to the one-time transition (toll) tax on earnings of certain foreign subsidiaries. Our provision for income taxes for the~~ ~~three~~ ~~months ended September 30, 2017 included the recognition of $3.3 million of previously unrecognized tax benefits resulting from the lapse~~portion of the ~~statute of limitations on acquired liabilities~~reserve for uncertain tax ~~positions. Our~~positions, our effective income tax rate for the three months ended ~~September~~June 30, 2018 was 30.0%, compared with 36.4% for the three months ended September 30, 2017. The decrease in our effective income tax rate was primarily a result of the TCJA, which decreased the United States federal corporate income tax rate from 35% to 21%29.8%. For additional information regarding ~~our provision for~~ income taxes, see Note ~~11,~~9, Income Taxes, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report.

Net Income Attributable to G&W and Earnings Per Common Share

Net income attributable to G&W for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~$69.6~~$51.4 million, compared with ~~$50.2~~$44.2 million for the three months ended ~~September~~June 30, ~~2017.~~2018. Our basic EPS were ~~$1.18~~$0.91 with ~~59.2~~56.5 million weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2018,~~2019, compared with basic EPS of ~~$0.82~~$0.74 with ~~61.6~~60.0 million weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2017.~~2018. Our diluted EPS for the three months ended ~~September~~June 30, ~~2018~~2019 were ~~$1.16~~$0.90 with ~~60.1~~57.3 million weighted average shares outstanding, compared with diluted EPS of ~~$0.80~~$0.73 with ~~62.5~~60.9 million weighted average shares outstanding for the three months ended ~~September~~June 30, ~~2017.~~2018. Our results for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 included certain items affecting comparability between the periods as previously presented in the "Overview—Overview of Three-Month Results—Items Affecting Comparability."

Net Loss/Income Attributable to Noncontrolling Interest

We own a 51.1% controlling interest in our Australian Operations. As such, we include 100% of the revenues and expenses from our Australian Operations within our consolidated financial statements and report a noncontrolling interest for MIRA’s 48.9% equity ownership. Net loss attributable to noncontrolling interest for the three months ended June 30, 2019 was $0.1 million, compared with net income attributable to noncontrolling interest of $4.4 million for three months ended June 30, 2018.

Our various rail operations are organized into eight operating regions. We present our financial information as three reportable segments: North American Operations, Australian Operations and U.K./European Operations. Our six North American regions are aggregated into one segment as a result of having similar economic and operating characteristics. Each of our segments generates the following three categories of revenues from external customers: freight revenues, freight-related revenues and all other revenues.

The following table sets forth our North American Operations total operating revenues and carloads for the three months ended June 30, 2019 and 2018. The table also reflects the calculation of our existing operations by subtracting the 2018 revenues and carloads from the Canadian leases that expired at the end of 2018 from our total operations for the three months ended June 30, 2018 (dollars in thousands):



	Three Months Ended June 30,								Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations					Currency Impact on 2018 Total Operations*			Currency Impact on 2018 Existing Operations*
	2019		2018						Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Amount			%		Amount			%
Freight revenues	$	259,181	$	259,868	$	3,733	$	256,135	$	(687	)	(0.3	)%	$	3,046		1.2	%	$	(645	)	$	(518	)
Freight-related revenues	66,135		63,467		1,467		62,000		2,668			4.2	%	4,135			6.7	%	(224		)	(171		)
All other revenues	16,531		16,222		423		15,799		309			1.9	%	732			4.6	%	(91		)	(77		)
Total operating revenues	$	341,847	$	339,557	$	5,623	$	333,934	$	2,290		0.7	%	$	7,913		2.4	%	$	(960	)	$	(766	)
Carloads	406,895		430,353		8,679		421,674		(23,458		)	(5.5	)%	(14,779		)	(3.5	)%

The following table sets forth our North American Operations total freight revenues for the three months ended June 30, 2019 and 2018. The table below also reflects the calculation of our existing operations by subtracting the 2018 revenues and carloads from the Canadian leases that expired at the end of 2018 from our total operations for the three months ended June 30, 2018 (dollars in thousands):

* Constant currency amounts reflect the prior period existing operations translated at the current period exchange rates.

* Constant currency amounts reflect the prior period results translated at the current period exchange rates.

Changes in average freight revenues per carload in a commodity group may be impacted by changes in customer rates, fuel surcharges, commodity mix and the mix of customer traffic within a commodity group. Excluding a 0.3% impact of foreign currency, average freight revenues per carload from our North American Operations increased 5.8% to $637 for the three months ended June 30, 2019, compared with the same period in 2018. Average freight revenues per carload from existing operations, excluding the impact of foreign currency, increased 5.1% for the three months ended June 30, 2019, compared with the same period in 2018. The increase in average freight revenues per carload was impacted by a change in the mix of commodities, which increased average freight revenues per carload by 0.7%, and higher fuel surcharges, which increased average freight revenues per carload by 0.6%. Excluding these factors, average freight revenues per carload increased 3.8%.

The following information discusses the significant changes in our North American Operations freight revenues by commodity group excluding the impact of foreign currency and the Canadian leases that expired at the end of 2018.

Agricultural products revenues increased $3.6 million, or 12.4%. Agricultural products traffic increased 5,418 carloads, or 10.7%, which increased revenues by $3.2 million, and average freight revenues per carload increased 1.6%, which increased revenues by $0.4 million. The increase in carloads was primarily due to increased farm products shipments in the western United States and grain shipments in the midwestern United States.

Chemicals and plastics revenues increased $1.7 million, or 4.5%. Chemicals and plastics traffic increased 1,015 carloads, or 2.3%, which increased revenues by $0.9 million, and average freight revenues per carload increased 2.0%, which increased revenues by $0.8 million. The increase in carloads was primarily due to an increase in industrial chemical shipments in the western United States.

Coal and coke revenues decreased $0.5 million, or 2.6%. Coal and coke traffic decreased 11,206 carloads, or 18.9%, which decreased revenues by $4.3 million, while average freight revenues per carload increased 20.2%, which increased revenues by $3.8 million. The decrease in carloads was primarily due to decreased demand in the southern United States primarily associated with low natural gas prices, high inventory levels and mild temperatures as well as decreased coal shipments in the midwestern United States due to flooding, partially offset by increased demand in the northeastern United States primarily associated with new business. The increase in average freight revenues per carload was primarily due to stronger pricing and a change in the mix of business.



(Mark One)
x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
OPERATING REVENUES	$	603,304		$	576,927		$	1,772,955		$	1,636,468		$	571,480		$	594,990		$	1,129,569		$	1,169,651
OPERATING EXPENSES:
Labor and benefits	175,853			169,576			539,407			500,936			179,943			179,838			364,251			363,554
Equipment rents	35,325			33,291			104,214			100,399			32,010			34,802			64,243			68,889
Purchased services	53,717			68,562			178,864			176,358			54,034			61,045			105,282			125,147
Depreciation and amortization	65,392			64,222			197,127			186,509			62,517			65,745			125,143			131,735
Diesel fuel used in train operations	45,713			34,535			137,487			105,718			41,504			45,623			86,141			91,774
Electricity used in train operations	2,742			765			7,020			6,072			2,226			2,044			4,550			4,278
Casualties and insurance	9,912			10,624			32,862			33,346			11,839			12,984			23,211			22,950
Materials	32,744			30,664			97,589			77,861			31,294			32,376			62,514			64,845
Trackage rights	22,838			22,632			67,119			66,652			21,727			23,303			43,367			44,281
Net gain on sale and impairment of assets	(642		)	(315		)	(2,501		)	(1,096		)
Restructuring costs	3,286			2,628			12,931			8,744
Net loss/(gain) on sale and impairment of assets													980			(823		)	(510		)	(1,859		)
Restructuring and related costs													7,561			9,362			15,195			9,645
Other expenses, net	28,604			29,901			82,978			89,494			31,645			25,566			62,272			54,374
Total operating expenses	475,484			467,085			1,455,097			1,350,993			477,280			491,865			955,659			979,613
OPERATING INCOME	127,820			109,842			317,858			285,475			94,200			103,125			173,910			190,038
Interest income	417			463			1,499			1,271			824			584			1,371			1,082
Interest expense	(26,429		)	(28,281		)	(80,605		)	(80,431		)	(27,399		)	(28,940		)	(55,009		)	(54,176		)
Other income/(loss), net	1,515			1,868			(237		)	4,519			2,614			288			3,033			(1,752		)
Income before income taxes	103,323			83,892			238,515			210,834			70,239			75,057			123,305			135,192
Provision for income taxes	(31,013		)	(30,507		)	(41,569		)	(82,032		)	(18,866		)	(26,446		)	(33,126		)	(10,556		)
Net income	$	72,310		$	53,385		$	196,946		$	128,802		$	51,373		$	48,611		$	90,179		$	124,636
Less: Net income attributable to noncontrolling interest	2,720			3,145			8,090			6,317
Less: Net (loss)/income attributable to noncontrolling interest													(68		)	4,443			32			5,370
Net income attributable to Genesee & Wyoming Inc.	$	69,590		$	50,240		$	188,856		$	122,485		$	51,441		$	44,168		$	90,147		$	119,266
Basic earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:	$	1.18		$	0.82		$	3.13		$	1.99		$	0.91		$	0.74		$	1.60		$	1.96
Weighted average shares – Basic	59,168			61,629			60,343			61,518			56,536			59,996			56,433			60,946
Diluted earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:	$	1.16		$	0.80		$	3.08		$	1.96		$	0.90		$	0.73		$	1.58		$	1.93
Weighted average shares – Diluted	60,131			62,477			61,255			62,399			57,272			60,879			57,182			61,841



	GBP		USD
Cash and cash equivalents	£	20,224	$	26,117
Accounts receivable	16,849		21,759
Materials and supplies	13,360		17,253
Prepaid expenses and other	3,238		4,182
Property and equipment	20,649		26,666
Goodwill	8,592		11,096
Intangible assets	42,000		54,239
Total assets	124,912		161,312
Accounts payable and accrued expenses	21,341		27,560
Deferred income tax liabilities, net	5,220		6,741
Deferred items-grants from outside parties	601		776
Net assets	£	97,750	$	126,235



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Class A Common Stock repurchased	894		3,560
Average price paid per share of Class A Common Stock repurchased	$	87.46	$	75.99
Shares excluded from weighted-average basic shares outstanding	301		1,707



	Local Currency		United States Dollar Equivalent		Interest Rate
United States dollar	$	1,303,000	$	1,303,000	3.74	%
British pound	£	247,932	$	323,353	2.22	%



	Quarterly Payment Date	Principal Amount of Each Quarterly Installment
United States dollar:	March 31, 2020	$	4,513
	June 30, 2020 through March 31, 2023	$	17,788
	Maturity date - June 5, 2023	$	1,085,031

British pound:	June 30, 2020	£	2,293
	September 30, 2020 through March 31, 2023	£	3,412
	Maturity date - June 5, 2023	£	208,111



	September 30, 2018
Total available borrowing capacity	$	625,000
Outstanding revolving loans	$	6,304
Outstanding letter of credit guarantees	$	2,086
Unused borrowing capacity	$	616,610



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018		Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet^(a)	$	379	$	6,317	$	28,000
Management restructuring^(b)	1,610		3,739		10,000
Productivity and automation investments	1,502		2,790		14,000
Total	$	3,491	$	12,846	$	52,000



Effective date	Settlement Date	Notional Amount	Exchange Rate (AUD to USD)
5/2/2018	11/5/2018	$4,315	0.75
5/2/2018	12/21/2018	$5,753	0.75



	September 30, 2018		December 31, 2017
Financial instrument carried at fair value using Level 3 inputs:
Financial liabilities carried at fair value:
Accrued deferred consideration – HOG	$	6,368	$	5,974



	September 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities carried at historical cost:
United States term loan	$	1,295,234	$	1,302,650	$	1,204,714	$	1,208,657
U.K. term loan	322,526		325,565		124,747		126,480
Australian credit agreement	465,547		473,331		513,192		528,105
Australia subordinated shareholder loan from MIRA	172,296		170,173		186,085		184,750
Revolving credit facility	2,395		6,304		225,155		229,483
Other debt	2,375		2,363		2,419		2,426
Total	$	2,260,373	$	2,280,386	$	2,256,312	$	2,279,901



	Foreign Currency Translation Adjustment			Defined Benefit Plans				Net Unrealized Gain/(Loss) on Cash Flow Hedges				Accumulated Other Comprehensive Loss
Balance, December 31, 2017	$	(74,617	)	$	(19,601	)		$	(11,316	)		$	(105,534	)
Other comprehensive (loss)/income before reclassifications	(41,395		)	—				14,926				(26,469		)
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($42) and $76, respectively	—			129			(a)	(232		)	(b)	(103		)
Current period change	(41,395		)	129				14,694				(26,572		)
Amounts reclassified from accumulated other comprehensive loss to retained earnings related to the United States Tax Cuts and Jobs Act	—			(132		)		(2,838		)		(2,970		)
Balance, September 30, 2018	$	(116,012	)	$	(19,604	)		$	540			$	(135,076	)



	Three Months Ended September 30, 2017
	North American Operations		Australian Operations		U.K./European Operations		Total Operations
Operating revenues:
Freight revenues by commodity group:
Agricultural Products	$	28,699	$	6,059	$	964	$	35,722
Autos & Auto Parts	6,079		—		—		6,079
Chemicals & Plastics	36,745		—		—		36,745
Coal & Coke	20,008		29,013		2,345		51,366
Food & Kindred Products	8,257		—		—		8,257
Intermodal	311		19,012		67,374		86,697
Lumber & Forest Products	22,204		—		—		22,204
Metallic Ores	3,703		11,305		—		15,008
Metals	26,008		—		—		26,008
Minerals & Stone	34,769		792		20,680		56,241
Petroleum Products	16,425		223		—		16,648
Pulp & Paper	28,135		—		—		28,135
Waste	6,662		—		—		6,662
Other	4,963		—		—		4,963
Total freight revenues	242,968		66,404		91,363		400,735
Freight-related revenues	60,286		12,880		67,757		140,923
All other revenues	15,673		1,986		17,610		35,269
Total operating revenues	$	318,927	$	81,270	$	176,730	$	576,927
Operating income	$	82,203	$	22,276	$	5,363	$	109,842
Depreciation and amortization	$	40,036	$	15,753	$	8,433	$	64,222
Interest expense, net	$	9,817	$	13,678	$	4,323	$	27,818
Provision for income taxes	$	28,270	$	2,013	$	224	$	30,507
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	41,713	$	4,545	$	6,981	$	53,239


*	Currency impact was calculated by comparing the 2018 results translated from local currency to United States dollars using 2019 exchange rates to the 2018 results in United States dollars as reported.



	Three Months Ended June 30,								Increase/(Decrease) in Existing Operations			Currency Impact on Existing Operations			2018 Constant Currency Existing Operations*		Increase/(Decrease) in Existing Operations Constant Currency*
	2019		2018
Commodity Group	2019		Total Operations		Divested Operations		Existing Operations
Agricultural Products	$	32,846	$	29,693	$	458	$	29,235	$	3,611		$	(24	)	$	29,211	$	3,635
Autos & Auto Parts	6,084		5,806		301		5,505		579			(26		)	5,479		605
Chemicals & Plastics	39,813		38,972		775		38,197		1,616			(87		)	38,110		1,703
Coal & Coke	18,563		19,087		—		19,087		(524		)	(34		)	19,053		(490		)
Food & Kindred Products	8,801		8,476		186		8,290		511			(2		)	8,288		513
Intermodal	523		380		—		380		143			—			380		143
Lumber & Forest Products	23,519		23,810		109		23,701		(182		)	(40		)	23,661		(142		)
Metallic Ores	2,865		3,670		1		3,669		(804		)	(28		)	3,641		(776		)
Metals	29,055		32,493		589		31,904		(2,849		)	(57		)	31,847		(2,792		)
Minerals & Stone	38,597		38,034		268		37,766		831			(31		)	37,735		862
Petroleum Products	17,053		16,151		717		15,434		1,619			(40		)	15,394		1,659
Pulp & Paper	28,013		29,514		41		29,473		(1,460		)	(127		)	29,346		(1,333		)
Waste	7,964		7,339		66		7,273		691			(3		)	7,270		694
Other	5,485		6,443		222		6,221		(736		)	(19		)	6,202		(717		)
Total	$	259,181	$	259,868	$	3,733	$	256,135	$	3,046		$	(518	)	$	255,617	$	3,564



	Freight Revenues								Carloads		Average Freight Revenues Per Carload
	Freight Revenues								Carloads		Average Freight Revenues Per Carload
	Three Months Ended June 30,								Three Months Ended June 30,		Three Months Ended June 30,
	2019				2018 Constant Currency*				Three Months Ended June 30,		Three Months Ended June 30,
Commodity Group	Amount		% of Total		Amount		% of Total		2019	2018	2019		2018		2018 Constant Currency*
Agricultural Products	$	32,846	12.7	%	$	29,653	11.4	%	56,134	51,762	$	585	$	574	$	573
Autos & Auto Parts	6,084		2.3	%	5,769		2.2	%	9,041	9,106	673		638		634
Chemicals & Plastics	39,813		15.3	%	38,858		15.0	%	44,376	45,285	897		861		858
Coal & Coke	18,563		7.2	%	19,053		7.4	%	48,140	59,346	386		322		321
Food & Kindred Products	8,801		3.4	%	8,468		3.3	%	14,699	14,907	599		569		568
Intermodal	523		0.2	%	380		0.1	%	3,984	3,816	131		100		100
Lumber & Forest Products	23,519		9.1	%	23,765		9.2	%	35,140	37,733	669		631		630
Metallic Ores	2,865		1.1	%	3,642		1.4	%	3,813	4,448	751		825		819
Metals	29,055		11.2	%	32,418		12.5	%	34,860	40,806	833		796		794
Minerals & Stone	38,597		14.9	%	37,994		14.7	%	62,005	62,156	622		612		611
Petroleum Products	17,053		6.6	%	16,085		6.2	%	23,811	24,340	716		664		661
Pulp & Paper	28,013		10.8	%	29,386		11.3	%	37,943	41,762	738		707		704
Waste	7,964		3.1	%	7,334		2.8	%	15,331	14,837	519		495		494
Other	5,485		2.1	%	6,418		2.5	%	17,618	20,049	311		321		320
Total	$	259,181	100.0	%	$	259,223	100.0	%	406,895	430,353	$	637	$	604	$	602



	Three Months Ended June 30,				Increase/(Decrease) in Total Operations			Currency Impact			2018 Constant Currency*		Increase/(Decrease) in Total Operations Constant Currency*
	Three Months Ended June 30,
Commodity Group	2019		2018
Agricultural Products	$	2,999	$	6,006	$	(3,007	)	$	(451	)	$	5,555	$	(2,556	)
Coal & Coke	28,965		32,570		(3,605		)	(2,445		)	30,125		(1,160		)
Intermodal	15,459		17,102		(1,643		)	(1,284		)	15,818		(359		)
Metallic Ores	7,523		8,125		(602		)	(610		)	7,515		8
Minerals & Stone	1,817		2,087		(270		)	(157		)	1,930		(113		)
Petroleum Products	160		185		(25		)	(13		)	172		(12		)
Total	$	56,923	$	66,075	$	(9,152	)	$	(4,960	)	$	61,115	$	(4,192	)


*	Constant currency amounts reflect the prior period results translated at the current period exchange rates.



	Six Months Ended June 30,								Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations					Currency Impact on 2018 Total Operations*			Currency Impact on 2018 Existing Operations*
			2018						Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Amount			%		Amount			%
Freight revenues	$	786,470	$	817,871	$	23,905	$	793,966	$	(31,401	)	(3.8	)%	$	(7,496	)	(0.9	)%	$	(24,258	)	$	(22,720	)
Freight-related revenues	278,658		283,599		10,325		273,274		(4,941		)	(1.7	)%	$	5,384		2.0	%	(10,563		)	(9,948		)
All other revenues	64,441		68,181		958		67,223		(3,740		)	(5.5	)%	$	(2,782	)	(4.1	)%	(2,474		)	(2,432		)
Total operating revenues	$	1,129,569	$	1,169,651	$	35,188	$	1,134,463	$	(40,082	)	(3.4	)%	$	(4,894	)	(0.4	)%	$	(37,295	)	$	(35,100	)
Carloads	1,527,868		1,645,676		67,094		1,578,582		(117,808		)	(7.2	)%	(50,714		)	(3.2	)%



	Three Months Ended September 30, 2018
	North American Operations			Australian Operations			U.K./European Operations			Total Operations
Operating revenues:
Freight revenues	$	273,432		$	65,249		$	84,693		$	423,374
Freight-related revenues	66,045			10,136			69,269			145,450
All other revenues	16,232			1,318			16,930			34,480
Total operating revenues	355,709			76,703			170,892			603,304
Operating expenses:
Labor and benefits	107,940			17,400			50,513			175,853
Equipment rents	15,441			1,452			18,432			35,325
Purchased services	14,968			6,319			32,430			53,717
Depreciation and amortization	41,388			14,937			9,067			65,392
Diesel fuel used in train operations	23,230			8,074			14,409			45,713
Electricity used in train operations	—			—			2,742			2,742
Casualties and insurance	6,636			1,651			1,625			9,912
Materials	12,836			3,003			16,905			32,744
Trackage rights	10,586			1,932			10,320			22,838
Net gain on sale and impairment of assets	(506		)	(20		)	(116		)	(642		)
Restructuring costs	1			—			3,285			3,286
Other expenses, net	20,705			1,242			6,657			28,604
Total operating expenses	253,225			55,990			166,269			475,484
Operating income	$	102,484		$	20,713		$	4,623		$	127,820
Operating ratio	71.2		%	73.0		%	97.3		%	78.8		%
Interest expense, net	$	10,339		$	12,780		$	2,893		$	26,012
Provision for income taxes	$	26,323		$	2,398		$	2,292		$	31,013
Expenditures for additions to property & equipment, net of grants from outside parties	$	42,120		$	8,185		$	6,704		$	57,009
Carloads	446,219			151,318			241,382			838,919


					Increase/(Decrease) in Total Operations				Currency Impact				2017 Constant Currency*				Increase/(Decrease) Constant Currency*			Six Months Ended June 30,													Increase/(Decrease) in Existing Operations			Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*			Increase/(Decrease) in Existing Operations Constant Currency*
	Three Months Ended September 30,															2018
Commodity Group	2018		2017					2019								Total Operations					Divested Operations				Existing Operations
Agricultural Products	$	30,565	$	28,699				$			1,866			$	(38	)					$	28,661			$	1,904	$	64,809		$	61,065		$	1,007		$	60,058			$	4,751		$	(123	)	$	59,935		$	4,874
Autos & Auto Parts	5,513		6,079					(566			)		(33		)				6,046				(533		)	11,566			11,173			481			10,692			874				(53	)		10,639			927
Chemicals & Plastics	38,436		36,745		1,691					(118		)		36,627				1,809			76,986				75,189			1,368			73,821			3,165			(206		)		73,615			3,371
Coal & Coke	23,006		20,008		2,998				(32		)		19,976				3,030			37,753				39,032			—			39,032			(1,279		)	(62		)		38,970			(1,217		)
Food & Kindred Products	8,761		8,257		504				(11		)	��	8,246				515			17,204				16,826			326			16,500			704			(5		)		16,495			709
Intermodal	514		311		203				(1		)		310				204			978				689			—			689			289			(1		)		688			290
Lumber & Forest Products	24,113		22,204		1,909				(44		)		22,160				1,953			45,376				46,249			187			46,062			(686		)	(88		)		45,974			(598		)
Metallic Ores	3,573		3,703		(130		)		(44		)		3,659				(86		)	5,658				7,243			3			7,240			(1,582		)	(72		)		7,168			(1,510		)
Metals	34,904		26,008		8,896				(84		)		25,924				8,980			58,917				60,887			983			59,904			(987		)	(147		)		59,757			(840		)
Minerals & Stone	38,570		34,769		3,801				(44		)		34,725				3,845			70,407				68,552			527			68,025			2,382			(63		)		67,962			2,445
Petroleum Products	18,236		16,425		1,811				(62		)		16,363				1,873			37,752				34,634			1,357			33,277			4,475			(101		)		33,176			4,576
Pulp & Paper	31,961		28,135		3,826				(144		)		27,991				3,970			58,292				58,385			83			58,302			(10		)	(297		)		58,005			287
Waste	8,089		6,662		1,427				(9		)		6,653				1,436			14,826				13,227			117			13,110			1,716			(4		)		13,106			1,720
Other	7,191		4,963		2,228				(26		)		4,937				2,254			10,420				12,134			380			11,754			(1,334		)	(36		)		11,718			(1,298		)
Total freight revenues	$	273,432	$	242,968	$	30,464			$	(690	)		$	242,278			$	31,154
Total																				$	510,944			$	505,285		$	6,819		$	498,466		$	12,478		$	(1,258	)		$	497,208		$	13,736


	Three Months Ended September 30,				Increase/(Decrease) in Total Operations				Currency Impact				2017 Constant Currency*				Increase/(Decrease) Constant Currency*									Increase/(Decrease) in Total Operations				Currency Impact				2018 Constant Currency*			Increase/(Decrease) Total Operations Constant Currency*
	Three Months Ended September 30,							Six Months Ended June 30,
Commodity Group	2018		2017					2019								2018
Agricultural Products	$	4,150	$	6,059				$				(1,909			)					$	(442	)		$	5,617	$	(1,467	)	$	6,053			$	11,489		$	(5,436	)		$	(963	)	$	10,526	$	(4,473	)
Coal & Coke	32,357		29,013					3,344					(2,162		)				26,851				5,506
Coal and Coke																				58,136				64,149		(6,013		)		(5,406		)		58,743			(607		)
Intermodal	17,538		19,012		(1,474		)			(1,391		)		17,621				(83		)	29,259				33,075		(3,816		)		(2,780		)		30,295			(1,036		)
Metallic Ores	8,914		11,305		(2,391		)		(820		)		10,485				(1,571		)	15,141				15,856		(715		)		(1,333		)		14,523			618
Minerals & Stone	2,066		792		1,274				(48		)		744				1,322			3,855				4,181		(326		)		(354		)		3,827			28
Petroleum Products	224		223		1				(17		)		206				18			298				336		(38		)		(27		)		309			(11		)
Total freight revenues	$	65,249	$	66,404	$	(1,155	)		$	(4,880	)		$	61,524			$	3,725
Total																				$	112,742			$	129,086	$	(16,344	)		$	(10,863	)		118,223			$	(5,481	)


	Three Months Ended September 30,								Increase/(Decrease) in Existing Operations			Currency Impact on Ongoing Operations				2017 Constant Currency Existing Operations*				Increase/(Decrease) in Existing Operations Constant Currency*			Six Months Ended June 30,													Increase/(Decrease) in Existing Operations			Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*			Increase/(Decrease) in Existing Operations Constant Currency*
	2018		2017																2018
Commodity Group	Total Operations		Total Operations		Divested Operations		Total Existing/Ongoing Operations				2019								Total Operations					Divested Operations				Existing Operations
Agricultural Products	$	1,053	$	964	$	—	$	964			$			89			$	(24	)					$	940			$	113	$	1,248		$	2,020		$	—		$	2,020			$	(772	)	$	(171	)	$	1,849		$	(601	)
Coal & Coke	2,588		2,345		—		2,345				243					(29		)				$	2,316			272			5,589			6,163			—			6,163			(574		)		(426	)		5,737			(148	)
Intermodal	58,609		67,374		10,590		56,784		1,825				(247		)		$	56,537			2,072			117,502				133,804			17,086			116,718			784			(6,955		)		109,763			7,739
Minerals & Stone	22,344		20,680		—		20,680		1,664			(328		)		$	20,352			1,992			37,037				41,505			—			41,505			(4,468		)	(3,047		)		38,458			(1,421		)
Petroleum Products	99		—		—		—		99			—				$	—			99			1,408				8			—			8			1,400			—				8			1,400
Total operating revenues	$	84,693	$	91,363	$	10,590	$	80,773	$	3,920		$	(628	)		$	80,145			$	4,548
Total																							$	162,784			$	183,500		$	17,086		$	166,414		$	(3,630	)	$	(10,599	)		$	155,815		$	6,969



	Nine Months Ended September 30, 2018		Outlook for Three Months Ended December 31, 2018		Outlook for Six Months Ended June 30, 2019		Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet^(a)	$	6,317	$	—	$	21,200	$	28,000
Management restructuring^(b)	3,739		2,800		3,350		10,000
Productivity and automation investments	2,790		2,400		8,500		14,000
Total	$	12,846	$	5,200	$	33,050	$	52,000



	Nine Months Ended September 30,								Increase/(Decrease) in Existing/Ongoing Operations				Currency Impact on Total Ongoing Operations
	2018						2017		Increase/(Decrease) in Existing/Ongoing Operations
	Total Ongoing Operations		New Operations		Existing Operations		Total Ongoing Operations		Amount		%
Freight revenues	$	1,224,159	$	1,580	$	1,222,579	$	1,129,077	$	93,502	8.3	%	$	11,279
Freight-related revenues	422,043		32,532		389,511		375,941		13,570		3.6	%	7,084
All other revenues	102,640		14,440		88,200		86,930		1,270		1.5	%	1,123
Total operating revenues	$	1,748,842	$	48,552	$	1,700,290	$	1,591,948	$	108,342	6.8	%	$	19,486
Carloads	2,433,646		2,813		2,430,833		2,381,576		49,257		2.1	%



	Nine Months Ended September 30,								Increase in Total Operations				Increase in Existing Operations				Currency Impact
	2018						2017		Increase in Total Operations				Increase in Existing Operations
	Total Operations		New Operations		Existing Operations		Total Operations		Amount		%		Amount		%
Freight revenues	$	778,717	$	1,580	$	777,137	$	719,622	$	59,095	8.2	%	$	57,515	8.0	%	$	748
Freight-related revenues	193,344		240		193,104		186,814		6,530		3.5	%	6,290		3.4	%	170
All other revenues	48,835		10		48,825		47,641		1,194		2.5	%	1,184		2.5	%	127
Total operating revenues	$	1,020,896	$	1,830	$	1,019,066	$	954,077	$	66,819	7.0	%	$	64,989	6.8	%	$	1,045
Carloads	1,282,585		2,813		1,279,772		1,207,760		74,825		6.2	%	72,012		6.0	%



	Nine Months Ended September 30,								Increase/(Decrease) in Existing/Ongoing Operations					Currency Impact on Total Ongoing Operations
	2018						2017		Increase/(Decrease) in Existing/Ongoing Operations
	Total Ongoing Operations		New Operations		Total Existing		Total Ongoing Operations		Amount			%
Freight revenues	$	251,107	$	—	$	251,107	$	218,424	$	32,683		15.0	%	$	12,689
Freight-related revenues	196,485		32,292		164,193		153,038		11,155			7.3	%	7,350
All other revenues	49,788		14,430		35,358		34,423		935			2.7	%	1,087
Total operating revenues	$	497,380	$	46,722	$	450,658	$	405,885	$	44,773		11.0	%	$	21,126
Carloads	708,263		—		708,263		723,421		(15,158		)	(2.1	)%



	2018 Budgeted Capital Expenditures
	North American Operations			Australian Operations		U.K./European Operations		Total
Track and equipment, self-funded	$	150,000		$	22,000	$	28,000	$	200,000
Track and equipment, subject to third-party funding	70,000			—		—		70,000
New business investments	15,000			20,000		5,000		40,000
Gross capital expenditures	235,000			42,000		33,000		310,000
Grants from outside parties	(55,000		)	—		—		(55,000		)
Net capital expenditures	$	180,000		$	42,000	$	33,000	$	255,000



Period in 2018	(a) Total Number of Shares (or Units) Purchased (1)(2)	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number of Shares (or Units) (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
July 1 to July 31	—	$	—	—	$	107,676,240
August 1 to August 31	481,974	$	87.21	481,974	$	65,642,994
September 1 to September 30	411,731	$	87.76	411,701	$	29,511,717
Total	893,705	$	87.46	893,675

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