UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~June~~September 30, 2019



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

For the transition period from ________ to ________

Commission File Number 001-31456

GENESEE & WYOMING INC.

(Exact name of registrant as specified in its charter)



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) 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. ☒ Yes ☐ 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). ☒ Yes ☐ 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. ☐

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

☐ Yes ☒ No

Shares of common stock outstanding as of the close of business on ~~August 1,~~October 31, 2019:



Class		Number of Shares Outstanding
Class A Common Stock		~~56,592,802~~57,037,678
Class B Common Stock		~~376,392~~2,072



INDEX
		Page

	Forward-Looking Statements	3

Part I	Financial Information	4

Item 1.	Financial Statements:

	Consolidated Balance Sheets (Unaudited) - As of ~~June~~September 30, 2019 and December 31, 2018	4
	Consolidated Statements of Operations (Unaudited) - For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	5
	Consolidated Statements of Comprehensive Income (Unaudited) - For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	6
	Consolidated Statements of Changes in Equity (Unaudited) - For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	7
	Consolidated Statements of Cash Flows (Unaudited) - For the ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	9
	Notes to Consolidated Financial Statements (Unaudited)	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3231

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66

Item 4.	Controls and Procedures	66

Part II	Other Information	67

Item 1.	Legal Proceedings	67

Item 1A.	Risk Factors	67

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6869

Item 3.	Defaults Upon Senior Securities	6869

Item 4.	Mine Safety Disclosures	6869

Item 5.	Other Information	6869

Item 6.	Exhibits	6869

Index to Exhibits		6970

Signatures		7071

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

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


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	82,383		$	90,387		$	86,912		$	90,387
Accounts receivable, net	444,168			426,305			437,062			426,305
Materials and supplies	55,321			56,716			58,476			56,716
Prepaid expenses and other	40,074			54,185			36,275			54,185
Total current assets	621,946			627,593			618,725			627,593
PROPERTY AND EQUIPMENT, net	4,669,704			4,613,014			4,664,837			4,613,014
GOODWILL	1,114,478			1,115,849			1,096,095			1,115,849
INTANGIBLE ASSETS, net	1,401,971			1,430,197			1,362,963			1,430,197
DEFERRED INCOME TAX ASSETS, net	5,376			4,616			5,102			4,616
OTHER ASSETS	550,714			77,192			536,657			77,192
Total assets	$	8,364,189		$	7,868,461		$	8,284,379		$	7,868,461
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	57,289		$	28,303		$	38,951		$	28,303
Accounts payable	269,644			288,070			278,418			288,070
Accrued expenses	246,188			165,280			245,874			165,280
Total current liabilities	573,121			481,653			563,243			481,653
LONG-TERM DEBT, less current portion	2,281,191			2,425,235			2,176,563			2,425,235
DEFERRED INCOME TAX LIABILITIES, net	889,197			877,721			884,402			877,721
DEFERRED ITEMS - grants from outside parties	335,485			326,520			344,813			326,520
OTHER LONG-TERM LIABILITIES	594,293			127,280			608,101			127,280
COMMITMENTS AND CONTINGENCIES
EQUITY:
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
Class A Common Stock, $0.01 par value, one vote per share; 180,000,000 shares authorized at September 30, 2019 and December 31, 2018; 75,696,850 and 75,240,513 shares issued and 56,663,012 and 56,349,327 shares outstanding (net of 19,033,838 and 18,891,186 shares in treasury) on September 30, 2019 and December 31, 2018, respectively							757			752
Class B Common Stock, $0.01 par value, ten votes per share; 30,000,000 shares authorized at September 30, 2019 and December 31, 2018; 376,392 and 517,138 shares issued and outstanding on September 30, 2019 and December 31, 2018, respectively							4			5
Additional paid-in capital	1,797,794			1,785,005			1,812,085			1,785,005
Retained earnings	2,571,251			2,482,252			2,638,043			2,482,252
Accumulated other comprehensive loss	(173,797		)	(146,456		)	(230,108		)	(146,456		)
Treasury stock, at cost	(708,482		)	(699,852		)	(711,922		)	(699,852		)
Total Genesee & Wyoming Inc. stockholders' equity	3,487,526			3,421,706			3,508,859			3,421,706
Noncontrolling interest	203,376			208,346			198,398			208,346
Total equity	3,690,902			3,630,052			3,707,257			3,630,052
Total liabilities and equity	$	8,364,189		$	7,868,461		$	8,284,379		$	7,868,461

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

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
OPERATING REVENUES	$	571,480		$	594,990		$	1,129,569		$	1,169,651		$	583,694		$	603,304		$	1,713,263		$	1,772,955
OPERATING EXPENSES:
Labor and benefits	179,943			179,838			364,251			363,554			175,500			175,853			539,751			539,407
Equipment rents	32,010			34,802			64,243			68,889			30,926			35,325			95,169			104,214
Purchased services	54,034			61,045			105,282			125,147			51,055			53,717			156,337			178,864
Depreciation and amortization	62,517			65,745			125,143			131,735			63,026			65,392			188,169			197,127
Diesel fuel used in train operations	41,504			45,623			86,141			91,774			41,533			45,713			127,674			137,487
Electricity used in train operations	2,226			2,044			4,550			4,278			1,794			2,742			6,344			7,020
Casualties and insurance	11,839			12,984			23,211			22,950			11,658			9,912			34,869			32,862
Materials	31,294			32,376			62,514			64,845			32,435			32,744			94,949			97,589
Trackage rights	21,727			23,303			43,367			44,281			21,266			22,838			64,633			67,119
Net loss/(gain) on sale and impairment of assets	980			(823		)	(510		)	(1,859		)
Net gain on sale and impairment of assets													(641		)	(642		)	(1,151		)	(2,501		)
Restructuring and related costs	7,561			9,362			15,195			9,645			3,561			3,286			18,756			12,931
Other expenses, net	31,645			25,566			62,272			54,374			38,825			28,604			101,097			82,978
Total operating expenses	477,280			491,865			955,659			979,613			470,938			475,484			1,426,597			1,455,097
OPERATING INCOME	94,200			103,125			173,910			190,038			112,756			127,820			286,666			317,858
Interest income	824			584			1,371			1,082			1,244			417			2,615			1,499
Interest expense	(27,399		)	(28,940		)	(55,009		)	(54,176		)	(25,386		)	(26,429		)	(80,395		)	(80,605		)
Other income/(loss), net	2,614			288			3,033			(1,752		)	1,132			1,515			4,165			(237		)
Income before income taxes	70,239			75,057			123,305			135,192			89,746			103,323			213,051			238,515
Provision for income taxes	(18,866		)	(26,446		)	(33,126		)	(10,556		)	(19,975		)	(31,013		)	(53,101		)	(41,569		)
Net income	$	51,373		$	48,611		$	90,179		$	124,636		$	69,771		$	72,310		$	159,950		$	196,946
Less: Net (loss)/income attributable to noncontrolling interest	(68		)	4,443			32			5,370
Less: Net income attributable to noncontrolling interest													2,979			2,720			3,011			8,090
Net income attributable to Genesee & Wyoming Inc.	$	51,441		$	44,168		$	90,147		$	119,266		$	66,792		$	69,590		$	156,939		$	188,856
Basic earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:	$	0.91		$	0.74		$	1.60		$	1.96		$	1.18		$	1.18		$	2.78		$	3.13
Weighted average shares – Basic	56,536			59,996			56,433			60,946			56,638			59,168			56,497			60,343
Diluted earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:	$	0.90		$	0.73		$	1.58		$	1.93		$	1.16		$	1.16		$	2.74		$	3.08
Weighted average shares – Diluted	57,272			60,879			57,182			61,841			57,532			60,131			57,297			61,255

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

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(dollars in thousands)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
NET INCOME	$	51,373		$	48,611		$	90,179		$	124,636		$	69,771		$	72,310		$	159,950		$	196,946
OTHER COMPREHENSIVE INCOME/(LOSS):
Foreign currency translation adjustment	(2,191		)	(48,923		)	4,828			(49,541		)
Net unrealized (loss)/gain on qualifying hedges, net of tax benefit/(provision) of $6,484, ($879), $10,710 and ($3,029), respectively	(21,525		)	2,701			(34,499		)	9,603
Changes in pension and other postretirement benefits, net of tax (provision)/benefit of ($7), ($14), $82 and ($28), respectively	62			43			(154		)	86
Foreign currency translation adjustment, net of tax provision of ($2,068), $0, ($1,885) and $0, respectively													(36,647		)	(9,501		)	(32,641		)	(59,042		)
Net unrealized (loss)/gain on qualifying hedges, net of tax benefit/(provision) of $8,720, ($1,583), $19,430 and ($4,612), respectively													(27,462		)	5,153			(61,139		)	14,756
Changes in pension and other postretirement benefits, net of tax (provision)/benefit of ($8), ($14), $74 and ($42), respectively													60			43			(94		)	129
Other comprehensive loss	(23,654		)	(46,179		)	(29,825		)	(39,852		)	(64,049		)	(4,305		)	(93,874		)	(44,157		)
COMPREHENSIVE INCOME	$	27,719		$	2,432		$	60,354		$	84,784		$	5,722		$	68,005		$	66,076		$	152,789
Less: Comprehensive loss attributable to noncontrolling interest	(3,370		)	(4,225		)	(2,452		)	(7,316		)	(4,759		)	(2,179		)	(7,211		)	(9,495		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC.	$	31,089		$	6,657		$	62,806		$	92,100		$	10,481		$	70,184		$	73,287		$	162,284

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

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(dollars in thousands)


	G&W Stockholders																							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			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			$	752	$	5		$	1,785,005		$	2,482,252		$	(146,456	)	$	(699,852	)	$	208,346		3,630,052
Net income	—		—			—			38,706			—			—			100			38,806			—		—			—			38,706			—			—			100			38,806
Other comprehensive (loss)/income	—		—			—			—			(6,989		)	—			818			(6,171		)	—		—			—			—			(6,989		)	—			818			(6,171		)
Conversion of 100,000 shares Class B Common Stock to Class A Common Stock	1		(1		)	—			—			—			—			—			—			1		(1		)	—			—			—			—			—			—
Value of stock issued for stock-based compensation - 164,732 shares Class A Common Stock	2		—			2,069			—			—			—			—			2,071			2		—			2,069			—			—			—			—			2,071
Compensation cost related to stock-based compensation	—		—			3,884			—			—			—			—			3,884			—		—			3,884			—			—			—			—			3,884
Value of treasury stock repurchased - 111,289 shares	—		—			—			—			—			(8,630		)	—			(8,630		)	—		—			—			—			—			(8,630		)	—			(8,630		)
Other	—		—			(832		)	(1,104		)	—			—			(796		)	(2,732		)	—		—			(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		$	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			—		—			—			51,441			—			—			(68		)	51,373
Other comprehensive loss	—		—			—			—			(20,352		)	—			(3,302		)	(23,654		)	—		—			—			—			(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			1		—			2,095			—			—			—			—			2,096
Compensation cost related to stock-based compensation	—		—			4,227			—			—			—			—			4,227			—		—			4,227			—			—			—			—			4,227
Other (including treasury stock repurchased - 107 shares)	—		—			1,346			(44		)	—			—			(1,722		)	(420		)	—		—			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		$	756	$	4		$	1,797,794		$	2,571,251		$	(173,797	)	$	(708,482	)	$	203,376		$	3,690,902
Net income																								—		—			—			66,792			—			—			2,979			69,771
Other comprehensive loss																								—		—			—			—			(56,311		)	—			(7,738		)	(64,049		)
Value of stock issued for stock-based compensation - 112,347 shares Class A Common Stock																								1		—			10,227			—			—			—			—			10,228
Compensation cost related to stock-based compensation																								—		—			4,277			—			—			—			—			4,277
Value of treasury stock acquisitions from equity awards - 31,256 shares																								—		—			—			—			—			(3,440		)	—			(3,440		)
Other																								—		—			(213		)	—			—			—			(219		)	(432		)
BALANCE, September 30, 2019																								$	757	$	4		$	1,812,085		$	2,638,043		$	(230,108	)	$	(711,922	)	$	198,398		$	3,707,257

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

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(dollars in thousands) (continued)


	G&W Stockholders														Non-controlling Interest			Total Equity				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						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	)	Non-controlling Interest	$	245,626		$	3,896,092			$	748			$	7			$	1,757,332			$	2,234,864			$	(105,534	)		$	(236,951	)		$	245,626		$	3,896,092
Net income	—		—		—		75,098		—			—			927			76,025				—				—				—				75,098				—				—				927			76,025
Other comprehensive income/(loss)	—		—		—		—		10,345			—			(4,018		)	6,327				—				—				—				—				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				1				—				1,049				—				—				—				—			1,050
Compensation cost related to stock-based compensation	—		—		4,056		—		—			—			—			4,056				—				—				4,056				—				—				—				—			4,056
Value of treasury stock repurchased - 832,232 shares	—		—		—		—		—			(60,175		)	—			(60,175		)		—				—				—				—				—				(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		)	—			—			—				—				—				—				2,970				(2,970		)		—				—			—
Other	—		—		—		—		—			—			1			1				—				—				—				—				—				—				1			1
BALANCE, March 31, 2018	$	749	$	7	$	1,762,437	$	2,312,932	$	(98,159	)	$	(297,126	)	$	242,536		$	3,923,376			$	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				—				—				—				44,168				—				—				4,443			48,611
Other comprehensive loss	—		—		—		—		(37,511		)	—			(8,668		)	(46,179		)		—				—				—				—				(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				1				—				1,856				—				—				—				—			1,857
Compensation cost related to stock-based compensation	—		—		4,515		—		—			—			—			4,515				—				—				4,515				—				—				—				—			4,515
Value of treasury stock repurchased - 1,873,170 shares	—		—		—		—		—			(134,952		)	—			(134,952		)		—				—				—				—				—				(134,952		)		—			(134,952		)
Distribution to noncontrolling interest	—		—		—		—		—			—			(14,898		)	(14,898		)		—				—				—				—				—				—				(14,898		)	(14,898		)
Other	—		—		—		—		—			—			48			48				—				—				—				—				—				—				48			48
BALANCE, June 30, 2018	$	750	$	7	$	1,768,808	$	2,357,100	$	(135,670	)	$	(432,078	)	$	223,461		$	3,782,378			$	750			$	7			$	1,768,808			$	2,357,100			$	(135,670	)		$	(432,078	)		$	223,461		$	3,782,378
Net income																						—				—				—				69,590				—				—				2,720			72,310
Other comprehensive income/(loss)																						—				—				—				—				594				—				(4,899		)	(4,305		)
Conversion of 130,000 shares Class B Common Stock to Class A Common Stock																						2				(2		)		—				—				—				—				—			—
Value of stock issued for stock-based compensation - 72,925 shares Class A Common Stock																						—				—				5,902				—				—				—				—			5,902
Compensation cost related to stock-based compensation																						—				—				4,458				—				—				—				—			4,458
Value of treasury stock acquisitions from equity awards - 893,705 shares																						—				—				—				—				—				(78,167		)		—			(78,167		)
Other																						—				—				—				—				—				—				(6		)	(6		)
BALANCE, September 30, 2018																						$	752			$	5			$	1,779,168			$	2,426,690			$	(135,076	)		$	(510,245	)		$	221,276		$	3,782,570

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

GENESEE & WYOMING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(dollars in thousands)


	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	90,179		$	124,636		$	159,950		$	196,946
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	125,143			131,735			188,169			197,127
Stock-based compensation	8,100			8,601			12,371			13,029
Deferred income taxes	22,534			(11,489		)	34,468			7,978
Insurance proceeds received	1,600			—
Gain on insurance recoveries							(2,500		)	—
Net gain on sale and impairment of assets	(510		)	(1,859		)	(1,151		)	(2,501		)
Changes in assets and liabilities which provided/(used) cash:
Accounts receivable, net	(4,930		)	(46,519		)	2,594			(50,143		)
Materials and supplies	1,278			2,460			(3,550		)	3,133
Prepaid expenses and other	(7,121		)	(7,587		)	(4,519		)	(11,663		)
Accounts payable and accrued expenses	(18,673		)	20,665			(7,065		)	33,818
Other assets and liabilities, net	5,521			10,684			5,434			9,750
Net cash provided by operating activities	223,121			231,327			384,201			397,474
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(144,740		)	(133,328		)	(227,266		)	(194,132		)
Grant proceeds from outside parties	14,881			12,901			22,987			16,696
Proceeds from settlement of derivative transactions	45,360			—			45,360			—
Proceeds from sale of business	—			7,927			—			7,927
Insurance proceeds for replacement of assets	1,597			1,866			4,297			2,780
Proceeds from disposition of property and equipment	4,176			2,795			5,200			3,710
Contributions to joint venture	(2,700		)	(2,921		)
Contributions to joint ventures							(2,965		)	(2,921		)
Net cash used in investing activities	(81,426		)	(110,760		)	(152,387		)	(165,940		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and finance lease obligations	(319,338		)	(706,965		)	(426,276		)	(799,726		)
Proceeds from revolving line-of-credit and long-term debt	178,726			795,241			195,335			854,679
Debt amendment/issuance costs	—			(5,303		)	—			(5,318		)
Purchase of additional shares in Freightliner Australia	(4,696		)	—			(4,696		)	—
Common share repurchases	(4,796		)	(192,324		)	(4,796		)	(270,488		)
Distribution to noncontrolling interest	—			(14,898		)	—			(14,898		)
Installment payments on Freightliner deferred consideration	(2,522		)	(6,255		)	(2,522		)	(6,255		)
Other financing related activities, net	(253		)	(893		)	6,534			5,006
Net cash used in financing activities	(152,879		)	(131,397		)	(236,421		)	(237,000		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	3,180			60			1,132			(939		)
DECREASE IN CASH AND CASH EQUIVALENTS	(8,004		)	(10,770		)	(3,475		)	(6,405		)
CASH AND CASH EQUIVALENTS, beginning of period	90,387			80,472			90,387			80,472
CASH AND CASH EQUIVALENTS, end of period	$	82,383		$	69,702		$	86,912		$	74,067

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 ~~six~~nine months ended ~~June~~September 30, 2019 and 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 2018 was derived from the audited financial statements in the Company's 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, 2018 included in the Company's 2018 Annual Report on Form 10-K.

During the process of preparing the Form 10-K for the year ended December 31, 2018, the Company determined that there was an error in and revised its statement of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2018, which resulted in the following offsetting adjustments: an increase of ~~$33~~$33.0 million 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 ~~$33~~$33.0 million in proceeds from revolving line-of-credit and long-term debt, representing cash inflows from financing activities. There was no effect on any other section of the Company's 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 for the three and ~~six~~nine months ended ~~June~~September 30, 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:

Proposed Merger

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 was approved by the Company stockholders on October 3, 2019 by an affirmative vote of the holders of approximately 82.9% of the voting power of the outstanding shares of G&W's common stock on the record date. Subject to the satisfaction of the other closing conditions, the Merger is expected to close by year end 2019 or early 2020.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 absence of any law, injunction or other order that prohibits the consummation of the Merger, (ii) the approval or authorization of, or exemption by, the Surface Transportation Board (or approval of the use of a voting trust structure), which exemption was granted on October 29, 2019, (iii) receipt of other antitrust and regulatory approvals, including approval of the Committee on Foreign Investment in the United States, and (iv) 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 (iv) to certain materiality qualifiers).

Australian Operations

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 (i) such cooperation would not unreasonably interfere with the Company's business or operations and (ii) 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.

North American Operations

Canada Lease Expirations: Two of the Company's short line railroad leases in Canada (Goderich-Exeter Railway (GEXR) and Southern Ontario Railway (SORR)) expired at the end of 2018. The Company's results for the three and ~~six~~nine months ended ~~June~~September 30, 2018 included ~~$5.6~~$5.1 million and ~~$11.1~~$16.1 million, respectively, of revenues and operating losses of $0.9 million and $1.3 million, respectively, from these leased railroads. ~~The Company's results included no material operating income from these leased railroads for the three and six months ended June 30, 2018.~~

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

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

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.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Restructuring and related costs associated with the optimization are expected to be approximately ~~$37~~$43 million (at an exchange rate of ~~$1.30~~$1.28 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		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019		Total Costs Incurred Through September 30, 2019		Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet	$	—	$	—	$	6,301	$	9,000	$	—	$	—	$	6,301	$	11,000
Management restructuring^(a)	5,058		9,141		13,781		16,000		1,240		10,381		15,021		17,000
Productivity and automation investments	1,725		3,138		7,181		12,000		1,998		5,136		9,179		15,000
Total	$	6,783	$	12,279	$	27,263	$	37,000	$	3,238	$	15,517	$	30,501	$	43,000


(a)	Subject to requisite U.K. consultative process.

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


	Rationalization of Locomotive and Railcar Fleet			Management Restructuring			Productivity and Automation Investments			Total			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		$	4,094		$	982		$	—		$	5,076
Restructuring and related costs incurred	—			9,141			3,138			12,279			—			10,381			5,136			15,517
Cash payments	(610		)	(6,691		)	(3,138		)	(10,439		)	(1,394		)	(8,079		)	(5,136		)	(14,609		)
Non-cash settlements	—			—			—			—			—			—			—			—
Restructuring and related liabilities as of June 30, 2019	$	3,484		$	3,432		$	—		$	6,916
Restructuring and related liabilities as of September 30, 2019													$	2,700		$	3,284		$	—		$	5,984

Continental Europe Intermodal Business: On June 5, 2018, the Company sold its Continental Europe intermodal business, ERS Railways B.V. (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 Company's results for the ~~three and six~~nine months ended ~~June~~September 30, 2018 included $~~9.4~~24.1 million ~~and $24.1 million, respectively,~~ of revenues ~~from ERS.~~ ~~The Company's results for the three~~ and ~~six months ended June 30, 2018 included no material~~$1.6 million of operating income from ERS.

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

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

3. EARNINGS PER COMMON SHARE:

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


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
Numerators:
Net income attributable to Genesee & Wyoming Inc.	$	51,441	$	44,168	$	90,147	$	119,266	$	66,792	$	69,590	$	156,939	$	188,856
Denominators:
Weighted average Class A common shares outstanding – Basic	56,536		59,996		56,433		60,946		56,638		59,168		56,497		60,343
Weighted average Class B common shares outstanding	405		673		452		687		376		664		426		679
Dilutive effect of employee stock-based awards	331		210		297		208		518		299		374		233
Weighted average shares – Diluted	57,272		60,879		57,182		61,841		57,532		60,131		57,297		61,255
Earnings per common share attributable to Genesee & Wyoming Inc. common stockholders:
Basic earnings per common share	$	0.91	$	0.74	$	1.60	$	1.96	$	1.18	$	1.18	$	2.78	$	3.13
Diluted earnings per common share	$	0.90	$	0.73	$	1.58	$	1.93	$	1.16	$	1.16	$	2.74	$	3.08

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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,
	2019	2018	2019	2018
Antidilutive shares	—	704	249	1,045

Share Repurchase

In 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 a new $500 million share repurchase program of Class A Common Stock, subject to certain limitations under the Company's credit facility. The table below presents information regarding shares repurchased by the Company under the share repurchase programs during the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
Class A Common Stock repurchased	—		1,873		65		2,666		—		894		65		3,560
Average price paid per share of Class A Common Stock repurchased	$	—	$	72.04	$	73.94	$	72.14	$	—	$	87.46	$	73.94	$	75.99

Repurchased shares are recorded in treasury stock, at cost, which includes any applicable commissions and fees. As of ~~June~~September 30, 2019, the remaining amount authorized for repurchase under the $500 million share repurchase program was $335.0 million. In light of the Company's entry into the ~~merger agreement~~Merger Agreement with affiliates of Brookfield Infrastructure and GIC, future share repurchases under the repurchase program have been suspended. See Note ~~15, Subsequent Events,~~2, Changes in Operations, for additional information regarding the ~~merger agreement.~~Merger Agreement.

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

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

4. ACCOUNTS RECEIVABLE:

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


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
Accounts receivable – trade	$	406,770		$	397,255		$	395,512		$	397,255
Accounts receivable – grants from outside parties	18,748			19,376			24,677			19,376
Accounts receivable – insurance and other third-party claims	31,707			19,729			29,386			19,729
Total accounts receivable	457,225			436,360			449,575			436,360
Less: Allowance for doubtful accounts	(13,057		)	(10,055		)	(12,513		)	(10,055		)
Accounts receivable, net	$	444,168		$	426,305		$	437,062		$	426,305

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 ~~June~~September 30, 2019 or December 31, 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 ~~$14.9~~$23.0 million and ~~$12.9~~$16.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 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. The Company records additions to property and equipment for its grant-funded projects and 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.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table sets forth the offset to depreciation expense from the amortization of deferred grants recorded by the Company during the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 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,
	2019		2018		2019		2018
Amortization of deferred grants	$	3,442	$	3,173	$	10,265	$	8,776

Insurance and Third-Party Claims

The increase in the balance of the accounts receivable from insurance and other third-party claims for the ~~six~~nine months ended ~~June~~September 30, 2019 was primarily related to the anticipated insurance recovery associated with a personal injury that occurred in the U.K. in 2019. The receivable and the associated claim liability were recorded on the balance sheet as of ~~June~~September 30, 2019.

The Company ~~recently~~ completed its annual property insurance renewal during the third quarter of 2019, which ~~takes effect~~became effective on August 1, 2019. Effective with this renewal, the Company's property policies ~~will~~ have various self-insured retentions, which vary based on the type and location of the incident, up to $10.0 million. The Company recently completed its annual liability insurance renewal, which became effective on November 1, 2019. Effective with this renewal, the Company's liability policies have various self-insured retentions up to $5.0 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 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 consolidated balance sheet, each as a result of the new requirement to recognize operating leases. No material cumulative-effect adjustment was recognized in retained earnings, and the adoption did not materially impact operating results, liquidity or the Company's debt-covenant compliance under these agreements. The Company continues to recognize its capital leases on the 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)~~

The Company enters into leases for railcars, locomotives and other 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 the discretion of the Company's 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.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As the implicit rate is not readily determinable in most of the Company's 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 leased assets and lease liabilities recorded in the consolidated balance sheet as of ~~June~~September 30, 2019 (dollars in thousands):


	Balance Sheet Location	June 30, 2019		Balance Sheet Location	September 30, 2019
Leased right-of-use assets:
Operating leased assets	Other assets	$	494,803	Other assets	$	471,929
Finance leased assets, net	Property and equipment, net^(a)	90,716		Property and equipment, net^(a)	85,230
Total leased assets		$	585,519		$	557,159
Lease liabilities:
Current
Operating lease liabilities	Accrued expenses	$	65,004	Accrued expenses	$	60,624
Finance lease liabilities	Current portion of long-term debt	11,477		Current portion of long-term debt	14,402
Non-current
Operating lease liabilities	Other long-term liabilities	428,087		Other long-term liabilities	411,153
Finance lease liabilities	Long-term debt, less current portion	72,500		Long-term debt, less current portion	64,309
Total lease liabilities		$	577,068		$	550,488


(a)	Net of ~~$29.2~~$30.1 million of accumulated amortization as of ~~June~~September 30, 2019, which was recognized in depreciation and amortization expense within the Company's consolidated statement of operations.

The following table summarizes the components of lease expense for the three and nine months ended September 30, 2019 (dollars in thousands):



	Location of Amount Recognized in Earnings	Three Months Ended			Nine Months Ended
	Location of Amount Recognized in Earnings	September 30, 2019			September 30, 2019
Finance leases:
Amortization of right-of-use assets	Depreciation and amortization	$	2,069		$	5,830
Interest on lease liability	Interest expense	881			2,554
Total finance lease cost		$	2,950		$	8,384
Operating leases:
Operating lease cost	Equipment rents/Trackage rights	$	22,292		$	66,976
Short-term lease cost	Equipment rents/Trackage rights	2,071			7,064
Variable lease cost	Equipment rents/Trackage rights	1,964			6,871
Sublease income (gross basis)	Operating revenues	(1,291		)	(3,541		)
Total operating lease cost		$	25,036		$	77,370
Total lease cost		$	27,986		$	85,754

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~The following table summarizes the components of lease expense for the three and six months ended June 30, 2019 (dollars in thousands):~~

Location of Amount Recognized in Earnings Three Months Ended
Six Months
Ended
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 follows as of ~~June~~September 30, 2019 (dollars in thousands):


	Finance Leases		Operating Leases		Finance Leases		Operating Leases
Maturity of lease liabilities:
2019 (remainder)	$	7,789	$	45,446	$	3,299	$	23,076
2020	19,586		74,453		19,373		72,851
2021	10,807		64,080		10,495		63,445
2022	15,097		52,091		14,650		52,080
2023	10,862		43,242		10,551		43,398
Thereafter	35,671		564,700		34,778		553,484
Total lease payments	99,812		844,012		93,146		808,334
Less: Imputed interest	15,835		350,921		14,435		336,557
Total lease liabilities	$	83,977	$	493,091	$	78,711	$	471,777

The following is a summary of future minimum lease payments based on the minimum non-cancelable lease term as required under previous guidance for capital and operating leases as of December 31, 2018 (dollars in thousands):



	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

The following table presents supplemental cash flow and other information for the Company's leases as of and for the nine months ended September 30, 2019 (dollars in thousands):



	Nine Months Ended
	September 30, 2019
Cash flow information:
Cash paid for operating leases included in operating activities	$	69,533
Cash paid for finance leases included in operating activities	$	2,608
Cash paid for finance leases included in financing activities	$	9,694

Weighted average remaining lease term (in years):
Operating leases	26.8
Finance leases	8.1

Weighted average discount rate:
Operating leases	3.8		%
Finance leases	4.5		%

New leases:
Right-of-use assets obtained in exchange for operating lease liabilities	$	36,333
Right-of-use assets obtained in exchange for finance lease liabilities	$	27,592

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~The following table presents supplemental cash flow and other information for the Company's leases as of and for the six 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

6. DERIVATIVE FINANCIAL INSTRUMENTS:

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 risks associated with underlying interest rate and foreign exchange rate exposures. The Company's use of these derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The 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.

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). Amounts recorded in OCI may be realized 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. 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.

~~The following table summarizes the fair value of the Company's derivative instruments recorded in 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 summarizes the fair value of the Company's derivative instruments recorded in the consolidated balance sheets as of September 30, 2019 and December 31, 2018 (dollars in thousands):



		Fair Value
	Balance Sheet Location	September 30, 2019		December 31, 2018
Asset Derivatives:
Derivatives designated as cash flow hedges:
British pound forward contracts	Prepaid expenses and other	$	4,535	$	—
British pound forward contracts	Other assets	—		26,011
Derivative designated as a net investment hedge:
Cross-currency swap contract	Other assets	8,039		—
Total derivatives designated as hedges		$	12,574	$	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	$	8,545	$	1,954
Interest rate swap agreements	Other long-term liabilities	86,483		12,441
British pound forward contracts	Other long-term liabilities	—		59
Derivative designated as a fair value hedge:
Cross-currency swap contract	Other long-term liabilities	4,047		—
Total derivatives designated as hedges		$	99,075	$	14,454

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~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Total Derivatives Designated as Hedges OCI Activity, Net of Tax												Total Derivatives Designated as Hedges OCI Activity, Net of Tax
	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
Derivatives Designated as Hedges:
Cash Flow Hedges:
Interest rate swap agreements	$	(21,299	)	$	2,687		$	(34,705	)	$	9,580		$	(26,746	)	$	4,816		$	(61,451	)	$	14,396
Foreign currency forward contracts	—			288			—			288			—			(13		)	—			275
British pound forward contracts, net ^(a)	1,026			(274		)	1,458			(265		)	(12		)	350			1,446			85
	$	(20,273	)	$	2,701		$	(33,247	)	$	9,603		$	(26,758	)	$	5,153		$	(60,005	)	$	14,756
Net Investment Hedge:
Cross-currency swap contract	$	(822	)	$	—		$	(822	)	$	—		$	6,821		$	—		$	6,048		$	—

Fair Value Hedge:
Cross-currency swap contract	$	(430	)	$	—		$	(430	)	$	—		$	(704	)	$	—		$	(1,134	)	$	—

Total derivatives designated as hedges	$	(21,525	)	$	2,701		$	(34,499	)	$	9,603		$	(20,641	)	$	5,153		$	(55,091	)	$	14,756

(a)

The three ~~and six~~ months ended ~~June~~September 30, 2019 represented a net loss of $1.0 million for the mark-to-market of the U.K. intercompany loan, partially offset by a net gain of $1.0 million for the mark-to-market of the British pound forward contracts. The nine months ended September 30, 2019 represented a net gain of ~~$16.7~~$18.5 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~~$17.0 million ~~and $18.0 million, respectively,~~ for the mark-to-market of the British pound forward contracts.

The three and ~~six~~nine months ended ~~June~~September 30, 2018 represented a net loss of ~~$9.2~~$1.7 million and ~~$3.7~~$5.4 million, respectively, for the mark-to-market of the U.K. intercompany loan, partially offset by a net gain of ~~$9.0~~$2.0 million and ~~$3.5~~$5.5 million, respectively, for the mark-to-market of the British ~~Pound~~pound forward contracts.

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 not designated as hedges for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 in the consolidated statements of operations (dollars in thousands):


			Amount Recognized in Earnings																Amount Recognized in Earnings
	Location of Amount Recognized in Earnings		Three Months Ended							Six Months Ended							Location of Amount Recognized in Earnings		Three Months Ended							Nine Months Ended
		June 30,							June 30,									September 30,							September 30,
		2019				2018			2019				2018					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	)		Other income/(loss), net		$	—		$	(2,410	)		$	(1,770	)	$	(4,900	)

(a)

The ~~three~~nine 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 JuneSeptember 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~~September 30, 2018 represented a net ~~gain~~loss of $3.0 million for the mark-to-market of the GRail Intercompany Loan, partially offset by a net ~~loss~~gain of ~~$2.8~~$0.6 million for the mark-to-market of the swaps. The ~~six~~nine months ended ~~June~~September 30, 2018 represented a net loss of ~~$5.1~~$8.1 million for the mark-to-market of the GRail Intercompany Loan, partially offset by a net gain of ~~$2.6~~$3.2 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~~nine months ended ~~June~~September 30, 2019 (dollars in thousands):


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

Derivatives not designated as hedges:
Cross-currency swap contract	19,272		19,272
Total cash received from settlement of derivative transactions, investing activities	$	45,360	$	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. Interest payments accrued each reporting period for these interest rate swaps are recognized in interest expense.

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

During the three and ~~six~~nine months ended ~~June~~September 30, 2019, ~~$1.0~~$1.7 million and ~~$1.5~~$3.2 million, respectively, of net losses associated with the Company's interest rate swaps were realized and recorded as interest expense in the consolidated statements of operations. During the three and ~~six~~nine months ended ~~June~~September 30, 2018, ~~$0.2~~$0.5 million and ~~$0.7~~$1.2 million, respectively, of 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 ~~June~~September 30, 2019, it expects to realize ~~$7.0~~$8.9 million of net losses that are reported in accumulated other comprehensive loss (AOCL) into earnings within the next 12 months. See Note 11, Accumulated Other Comprehensive Loss, for additional information regarding the Company's derivatives designated as hedges.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Foreign Currency Exchange Rate Risk

As of ~~June~~September 30, 2019, the Company's foreign subsidiaries had $~~1.0 billion~~948.4 million of third-party debt, including 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 related to non-functional currency denominated intercompany debt, foreign currency forward contracts or cross-currency swaps may be entered into for periods consistent with the underlying debt. In cases where foreign currency forward contracts or cross-currency swaps do not qualify for hedge accounting, the gains or losses from changes in the fair value are recognized in current period earnings within other income/(loss), net.

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

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

In 2015, the Company, in conjunction with the acquisition of Freightliner Group Limited (Freightliner) in the U.K., transferred cash 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). To mitigate the foreign currency exchange rate risk related to the outstanding balance of this loan, the Company entered into British pound forward contracts, which were accounted for as cash flow hedges. During the ~~six~~nine months ended ~~June~~September 30, 2019, the Company settled certain of its British pound forward contracts, 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~~September 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 ~~six~~nine months ended ~~June~~September 30, 2019, ~~$0.5~~$0.1 million and ~~$0.7~~$0.8 million, respectively, of net gains were recorded as interest income in the consolidated statements of operations. During the three and ~~six~~nine months ended ~~June~~September 30, 2018, $0.2 million and ~~$0.3~~$0.5 million, respectively, of net gains were recorded as interest ~~expense~~income in the consolidated statements of operations. Based on the Company's fair value assumptions as of ~~June~~September 30, 2019, it expects to realize ~~$0.3~~$0.2 million of net gains that are reported in AOCL into earnings within the next 12 months. See Note 11, Accumulated Other Comprehensive Loss, for additional information regarding the Company's derivatives designated as hedges.

In 2016, in conjunction with an acquisition in Australia, the Company's subsidiaries, G&W Australia Holdings LP (GWAHLP) and 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. 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. These agreements did 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 were recorded over the life of the agreements, which 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).

In June 2019, the Company entered into two new cross-currency swap agreements designated as fair value hedges of the non-functional currency GRail intercompany loan. In addition, the Company entered into a cross-currency swap in June 2019 that was designated as a net investment hedge of the GWBV investment. During the three and ~~six~~nine months ended ~~June~~September 30, 2019, the Company recognized a gain of ~~less than $0.1 million of 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 of ~~June~~September 30, 2019, its net investment hedge and fair value hedge, which each terminate on June 30, 2021, are expected to realize ~~$0.4~~$0.6 million ~~and $0.2 million, respectively,~~ of net gains and $0.9 million of net losses, respectively, that are currently reported in AOCL into earnings within the next 12 months. See Note 11, Accumulated Other Comprehensive Loss, for additional information regarding the Company's derivatives designated as hedges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

7. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following table presents the Company's financial instruments carried at fair value using Level 2 inputs as of ~~June~~September 30, 2019 and December 31, 2018 (dollars in thousands):


	June 30, 2019		December 31, 2018		September 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	$	4,535	$	26,011
Cross-currency swap contract - net investment hedge					8,039		—
Cross-currency swap contracts	—		19,684		—		19,684
Total financial assets carried at fair value	$	3,055	$	45,695	$	12,574	$	45,695
Financial liabilities carried at fair value:
Interest rate swap agreements	$	60,220	$	14,395	$	95,028	$	14,395
British pound forward contracts	14		59		—		59
Cross-currency swap contract - net investment hedge	807		—
Cross-currency swap contract - fair value hedge	2,387		—		4,047		—
Total financial liabilities carried at fair value	$	63,428	$	14,454	$	99,075	$	14,454

Financial Instruments Carried at Fair Value: Derivative instruments are recorded on the consolidated balance sheets as either assets or liabilities measured at fair value. 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 derivative financial instruments based on Level 2 valuation inputs, including fixed interest rates, LIBOR, British pound LIBOR, BBR and EURIBOR implied forward interest rates and the remaining time to maturity.

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 ~~June~~September 30, 2019 and December 31, 2018 (dollars in thousands):


	June 30, 2019				December 31, 2018				September 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value		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	$	1,261,983	$	1,258,527	$	1,295,672	$	1,296,079
U.K. term loan	314,078		317,394		315,524		319,556		289,357		290,883		315,524		319,556
Australian credit agreement	441,768		447,511		450,252		457,978		422,120		427,617		450,252		457,978
Australia subordinated shareholder loan from Macquarie Infrastructure and Real Assets	166,962		164,153		167,796		166,974		160,675		157,652		167,796		166,974
Revolving credit facility	32,707		36,150		160,033		163,662		319		3,687		160,033		163,662
Other debt	2,438		2,424		2,356		2,352		2,392		2,379		2,356		2,352
Total	$	2,254,502	$	2,262,266	$	2,391,633	$	2,406,601	$	2,136,846	$	2,140,745	$	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.

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.

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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 ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


		Three Months Ended						Six Months Ended							Three Months Ended						Nine Months Ended
		June 30,						June 30,							September 30,						September 30,
		2019			2018			2019			2018				2019			2018			2019			2018
Operating expense:	Operating expense:													Operating expense:
	Service cost^(a)	$	3,397		$	3,770		$	6,837		$	7,625		Service cost^(a)	$	3,257		$	3,610		$	10,094		$	11,235
Nonoperating income, net:	Nonoperating income, net:													Nonoperating income, net:
	Interest cost	2,336			2,488			4,702			5,033			Interest cost	2,240			2,383			6,942			7,416
	Expected return on plan assets	(4,336		)	(4,775		)	(8,727		)	(9,659		)	Expected return on plan assets	(4,158		)	(4,572		)	(12,885		)	(14,231		)
	Amortization of prior year service cost	44			—			88			—			Amortization of prior year service cost	42			—			130			—
	Total nonoperating income, net^(b)	(1,956		)	(2,287		)	(3,937		)	(4,626		)	Total nonoperating income, net^(b)	(1,876		)	(2,189		)	(5,813		)	(6,815		)
Net periodic benefit cost	Net periodic benefit cost	$	1,441		$	1,483		$	2,900		$	2,999		Net periodic benefit cost	$	1,381		$	1,421		$	4,281		$	4,420

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

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

During the ~~six~~nine months ended ~~June~~September 30, 2019, the Company contributed ~~£3.1~~£4.7 million (or ~~$4.1~~$6.0 million at the exchange rate when the payments were made) to fund the Pension Program. The Company expects to contribute ~~£3.8~~£2.3 million (or ~~$4.9~~$2.8 million at the ~~June~~September 30, 2019 exchange rate) to the Pension Program for the remainder of 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 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.

9. INCOME TAXES:

The Company's provision for income taxes for the three months ended ~~June~~September 30, 2019 was ~~$18.9~~$20.0 million, compared with ~~$26.4~~$31.0 million for the three months ended ~~June~~September 30, 2018. The Company's provision for income taxes for the ~~six~~three months ended ~~June~~September 30, 2019 included a $4.2 million benefit from the release of a reserve for an uncertain tax position as a result of a lapse of the statute of limitations. The Company's provision for income taxes for the three months ended September 30, 2018 included a $1.6 million measurement period adjustment to increase the one-time transition (toll) tax on earnings of certain foreign subsidiaries as a result of the Tax Cuts and Jobs Act (TCJA).

The Company's provision for income taxes for the nine months ended September 30, 2019 was ~~$33.1~~$53.1 million compared with ~~$10.6~~$41.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Based on developments during the ~~three and six~~nine months ended ~~June~~September 30, 2018, the Company recorded a reserve for uncertain tax positions of ~~$4.8~~$5.5 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~~nine months ended ~~June~~September 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~~nine months ended ~~June~~September 30, 2019 was ~~26.9%. Excluding the prior period portion of the reserve for uncertain tax positions, the~~22.3% and 24.9%, respectively. The Company's effective income tax rate for the three and nine months ended ~~June~~September 30, 2018 was ~~29.8%.~~30.0% and 17.4%, respectively. Excluding the benefit from the retroactive extension of the United States Short Line Tax Credit and the prior period portion of the reserve for uncertain tax positions, the Company's effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2018 was ~~28.5%~~29.1%. The decrease in the Company's effective income tax rate from 2018, excluding the benefit from the retroactive extension and the prior period portion of the reserve for uncertain tax positions, to 2019 was primarily due to the $4.2 million benefit from the release of a reserve for an uncertain tax position recognized during the three months ended September 30, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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.

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~~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. Although the cleanup associated with this derailment is substantially complete, the civil penalty associated with the contamination is subject to further discussion and potential litigation.

Following the filing of the Company’s definitive proxy statement (the Proxy Statement) associated with the Merger with the Securities and Exchange Commission (the SEC) on August 20, 2019, three lawsuits were filed in connection with the Merger, including two purported class action lawsuits that were filed on August 21, 2019 and September 4, 2019 in the United States District Court for the District of Delaware, and one lawsuit filed on behalf of a purported individual shareholder on September 12, 2019 in the United States District Court for the District of Connecticut. These lawsuits, Gordon vs. Genesee & Wyoming Inc. et al., Case No. 1:19-cv-01558-MN, Thompson vs. Genesee & Wyoming Inc. et al., Case No. 1;19-cv-01650-MN and Geery vs. Genesee & Wyoming Inc. et al., Case No. 3:19-cv-01438-VLB (collectively, the Disclosure Actions), named the Company and individual officers and members of the Company’s board of directors as defendants. The actions alleged, among other things, that the defendants failed to disclose certain information relating to the Company’s financial projections set forth in the Proxy Statement.

On September 25, 2019, solely to eliminate the burden, expense, and uncertainty inherent in such litigation, and without admitting any liability or wrongdoing, the Company filed a Form 8-K containing certain supplemental disclosures with the SEC. In consideration for such supplemental disclosures by the Company, plaintiffs in the Disclosure Actions had agreed to voluntarily dismiss the Disclosure Actions. On October 4, 2019, pursuant to those agreements, plaintiffs filed voluntary dismissals of the Disclosure Actions.

On September 17, 2019, in New South Wales, Australia, a complaint was filed by Australia Eastern Railroad Pty Ltd ACN against the Company, GWI Holdings Pty Ltd and Genesee & Wyoming Australia Pty Ltd in connection with the Merger. The complaint seeks an award of damages in connection with a right of first refusal provision in a commercial contract involving the Company’s majority-owned Australian subsidiary. The Company disputes the allegations made in the complaint and intends to defend itself appropriately.

In addition to the EPA matter and the lawsuits set forth above, from time to time, the Company is a defendant in certain lawsuits resulting from its operations in the ordinary course. Management believes there are adequate provisions in the financial statements for any probable liabilities that may result from disposition of the pending lawsuits and the aforementioned EPA matter. Based upon currently available information, management does not believe it is reasonably possible that any such lawsuit, related lawsuit or matter would be material to the Company's results of operations or have a material adverse effect on its financial position or liquidity.

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 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, 2018	$	(144,503	)		$	11,120			$	(13,073	)		$	(146,456	)
Other comprehensive loss before reclassifications	(24,026		)		—				(57,612		)		(81,638		)
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($26), $74 and $593, respectively	82			(a)	(94		)	(b)	(2,002		)	(c)	(2,014		)
Current period change	(23,944		)		(94		)		(59,614		)		(83,652		)
Balance, September 30, 2019	$	(168,447	)		$	11,026			$	(72,687	)		$	(230,108	)


	Foreign Currency Translation Adjustment			Defined Benefit Plans				Net Unrealized Gain/(Loss) on Hedges				Accumulated Other Comprehensive Loss			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	)	$	(74,617	)	$	(19,601	)		$	(11,316	)		$	(105,534	)
Other comprehensive income before reclassifications	(36,698		)	—				9,736				(26,962		)	(41,395		)	—				14,926				(26,469		)
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($28) and $115, respectively	—			86			(a)	(290		)	(b)	(204		)
Amounts reclassified from accumulated other comprehensive loss, net of tax (provision)/benefit of ($42) and $76, respectively															—			129			(b)	(232		)	(c)	(103		)
Current period change	(36,698		)	86				9,446				(27,166		)	(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		)	—			(132		)		(2,838		)		(2,970		)
Balance, June 30, 2018	$	(111,315	)	$	(19,647	)		$	(4,708	)		$	(135,670	)
Balance, September 30, 2018															$	(116,012	)	$	(19,604	)		$	540			$	(135,076	)


(a)	Net gains realized were recorded in other income/(loss), net within the consolidated statements of operations.


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

~~(b)~~(c)

For the ~~six~~nine months ended ~~June~~September 30, 2019, ~~$0.5~~$1.7 million and ~~$0.5~~$0.3 million of net losses were recorded in interest expense and other income/(loss), net, respectively, within the consolidated statements of operations. For the ~~six~~nine months ended ~~June~~September 30, 2018, net losses realized were recorded in interest expense on the consolidated statements of operations. See Note 6, Derivative Financial Instruments.

Comprehensive Loss Attributable to Noncontrolling Interest

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



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net income attributable to noncontrolling interest	$	2,979		$	2,720		$	3,011		$	8,090
Other comprehensive income/(loss):
Foreign currency translation adjustment	(7,690		)	(4,804		)	(8,697		)	(17,647		)
Net unrealized (loss)/gain on qualifying cash flow hedges, net of tax benefit/(provision) of $21, $41, $654 and ($26), respectively	(48		)	(95		)	(1,525		)	62
Comprehensive loss attributable to noncontrolling interest	$	(4,759	)	$	(2,179	)	$	(7,211	)	$	(9,495	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~Comprehensive Loss Attributable to Noncontrolling Interest~~

~~The following table sets forth comprehensive loss attributable to noncontrolling interest for the three and six months ended June 30, 2019 and 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 )

12. SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:

As of ~~June~~September 30, 2019 and 2018, the Company had outstanding accounts receivable from outside parties for the funding of capital expenditures of ~~$18.7~~$24.7 million and ~~$10.9~~$14.6 million, respectively. As of ~~June~~September 30, 2019 and 2018, the Company also had ~~$22.3~~$24.5 million and ~~$9.2~~$16.1 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.

13. SEGMENT INFORMATION:

The Company presents the financial results of its ~~eight~~8 operating regions as ~~three~~3 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 remaining ~~six~~6 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

Glencore Rail (NSW) Pty Limited (GRail) and the formation of a partnership with Macquarie Infrastructure and Real Assets (MIRA) (the Australia 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 ~~June~~September 30, 2019 and December 31, 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 ~~June~~September 30, 2019 and 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 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 ~~six~~nine months ended ~~June~~September 30, 2019 and 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 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 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~~nine months ended ~~June~~September 30, 2019. During the ~~six~~nine months ended ~~June~~September 30, 2018, the Australia Partnership made an A$40.0 million distribution, of which A$20.4 million (or $15.6 million at the exchange rate on June 5, 2018) and A$19.6 million (or $14.9 million at the exchange rate on June 5, 2018) were distributed to the Company and MIRA, respectively.

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~~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 exchange rate at the end of the period for 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 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 table reflects the balance sheet exchange rates used to translate each foreign entity's respective local currency balance sheet into United States dollars as of ~~June~~September 30, 2019 and December 31, 2018:


	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
United States dollar per Australian dollar	$	0.70	$	0.70	$	0.67	$	0.70
United States dollar per British pound	$	1.27	$	1.28	$	1.23	$	1.28
United States dollar per Canadian dollar	$	0.76	$	0.73	$	0.76	$	0.73
United States dollar per Euro	$	1.14	$	1.15	$	1.09	$	1.15

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
United States dollar per Australian dollar	$	0.70	$	0.76	$	0.71	$	0.77	$	0.69	$	0.73	$	0.70	$	0.76
United States dollar per British pound	$	1.29	$	1.36	$	1.29	$	1.38	$	1.23	$	1.30	$	1.27	$	1.35
United States dollar per Canadian dollar	$	0.75	$	0.77	$	0.75	$	0.78	$	0.76	$	0.77	$	0.75	$	0.78
United States dollar per Euro	$	1.12	$	1.19	$	1.13	$	1.21	$	1.11	$	1.16	$	1.12	$	1.19

~~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 ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Three Months Ended										Three Months Ended
	June 30, 2019										September 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	$	32,846	$	2,999		$	512		$	36,357	$	34,574	$	2,631	$	763		$	37,968
Autos & Auto Parts	6,084		—			—			6,084		6,339		—		—			6,339
Chemicals & Plastics	39,813		—			—			39,813		39,518		—		—			39,518
Coal & Coke	18,563		28,965			896			48,424		18,336		33,187		606			52,129
Food & Kindred Products	8,801		—			—			8,801		8,355		—		—			8,355
Intermodal	523		15,459			58,297			74,279		461		16,446		56,998			73,905
Lumber & Forest Products	23,519		—			—			23,519		22,862		—		—			22,862
Metallic Ores	2,865		7,523			—			10,388		4,225		7,036		—			11,261
Metals	29,055		—			—			29,055		28,115		—		—			28,115
Minerals & Stone	38,597		1,817			21,155			61,569		41,399		1,979		21,672			65,050
Petroleum Products	17,053		160			717			17,930		19,027		178		628			19,833
Pulp & Paper	28,013		—			—			28,013		30,648		—		—			30,648
Waste	7,964		—			—			7,964		8,278		—		—			8,278
Other	5,485		—			—			5,485		5,888		—		—			5,888
Total freight revenues	259,181		56,923			81,577			397,681		268,025		61,457		80,667			410,149
Freight-related revenues	66,135		8,036			68,225			142,396		68,129		8,011		65,229			141,369
All other revenues	16,531		1,572			13,300			31,403		16,288		2,132		13,756			32,176
Total operating revenues	$	341,847	$	66,531		$	163,102		$	571,480	$	352,442	$	71,600	$	159,652		$	583,694
Operating income/(loss)	$	84,261	$	11,655		$	(1,716	)	$	94,200	$	95,633	$	19,484	$	(2,361	)	$	112,756
Depreciation and amortization	$	38,738	$	14,192		$	9,587		$	62,517	$	39,164	$	13,779	$	10,083		$	63,026
Interest expense, net	$	11,872	$	11,800		$	2,903		$	26,575	$	12,599	$	10,694	$	849		$	24,142
Provision for/(benefit from) income taxes	$	18,140	$	(44	)	$	770		$	18,866
Provision for income taxes											$	16,876	$	2,641	$	458		$	19,975
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	52,649	$	9,103		$	6,814		$	68,566	$	53,239	$	14,845	$	6,336		$	74,420

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Three Months Ended									Three Months Ended
	June 30, 2018									September 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	$	29,693	$	6,006	$	785		$	36,484	$	30,565	$	4,150	$	1,053	$	35,768
Autos & Auto Parts	5,806		—		—			5,806		5,513		—		—		5,513
Chemicals & Plastics	38,972		—		—			38,972		38,436		—		—		38,436
Coal & Coke	19,087		32,570		2,687			54,344		23,006		32,357		2,588		57,951
Food & Kindred Products	8,476		—		—			8,476		8,761		—		—		8,761
Intermodal	380		17,102		66,483			83,965		514		17,538		58,609		76,661
Lumber & Forest Products	23,810		—		—			23,810		24,113		—		—		24,113
Metallic Ores	3,670		8,125		—			11,795		3,573		8,914		—		12,487
Metals	32,493		—		—			32,493		34,904		—		—		34,904
Minerals & Stone	38,034		2,087		22,326			62,447		38,570		2,066		22,344		62,980
Petroleum Products	16,151		185		8			16,344		18,236		224		99		18,559
Pulp & Paper	29,514		—		—			29,514		31,961		—		—		31,961
Waste	7,339		—		—			7,339		8,089		—		—		8,089
Other	6,443		—		—			6,443		7,191		—		—		7,191
Total freight revenues	259,868		66,075		92,289			418,232		273,432		65,249		84,693		423,374
Freight-related revenues	63,467		11,515		67,420			142,402		66,045		10,136		69,269		145,450
All other revenues	16,222		1,439		16,695			34,356		16,232		1,318		16,930		34,480
Total operating revenues	$	339,557	$	79,029	$	176,404		$	594,990	$	355,709	$	76,703	$	170,892	$	603,304
Operating income/(loss)	$	80,274	$	25,896	$	(3,045	)	$	103,125
Operating income										$	102,484	$	20,713	$	4,623	$	127,820
Depreciation and amortization	$	41,247	$	15,288	$	9,210		$	65,745	$	41,388	$	14,937	$	9,067	$	65,392
Interest expense, net	$	11,778	$	12,893	$	3,685		$	28,356	$	10,339	$	12,780	$	2,893	$	26,012
Provision for income taxes	$	20,091	$	3,901	$	2,454		$	26,446	$	26,323	$	2,398	$	2,292	$	31,013
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	48,924	$	14,489	$	4,726		$	68,139	$	42,120	$	8,185	$	6,704	$	57,009

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Six Months Ended									Nine Months Ended
	June 30, 2019									September 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	$	64,809	$	6,053	$	1,248		$	72,110	$	99,383	$	8,684	$	2,011		$	110,078
Autos & Auto Parts	11,566		—		—			11,566		17,905		—		—			17,905
Chemicals & Plastics	76,986		—		—			76,986		116,504		—		—			116,504
Coal & Coke	37,753		58,136		5,589			101,478		56,089		91,323		6,195			153,607
Food & Kindred Products	17,204		—		—			17,204		25,559		—		—			25,559
Intermodal	978		29,259		117,502			147,739		1,439		45,705		174,500			221,644
Lumber & Forest Products	45,376		—		—			45,376		68,238		—		—			68,238
Metallic Ores	5,658		15,141		—			20,799		9,883		22,177		—			32,060
Metals	58,917		—		—			58,917		87,032		—		—			87,032
Minerals & Stone	70,407		3,855		37,037			111,299		111,806		5,834		58,709			176,349
Petroleum Products	37,752		298		1,408			39,458		56,779		476		2,036			59,291
Pulp & Paper	58,292		—		—			58,292		88,940		—		—			88,940
Waste	14,826		—		—			14,826		23,104		—		—			23,104
Other	10,420		—		—			10,420		16,308		—		—			16,308
Total freight revenues	510,944		112,742		162,784			786,470		778,969		174,199		243,451			1,196,619
Freight-related revenues	130,611		15,891		132,156			278,658		198,740		23,902		197,385			420,027
All other revenues	32,738		3,005		28,698			64,441		49,026		5,137		42,454			96,617
Total operating revenues	$	674,293	$	131,638	$	323,638		$	1,129,569	$	1,026,735	$	203,238	$	483,290		$	1,713,263
Operating income/(loss)	$	153,576	$	24,158	$	(3,824	)	$	173,910	$	249,209	$	43,642	$	(6,185	)	$	286,666
Depreciation and amortization	$	77,169	$	28,603	$	19,371		$	125,143	$	116,333	$	42,382	$	29,454		$	188,169
Interest expense, net	$	24,273	$	23,923	$	5,442		$	53,638	$	36,871	$	34,618	$	6,291		$	77,780
Provision for income taxes	$	32,227	$	70	$	829		$	33,126	$	49,103	$	2,711	$	1,287		$	53,101
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	100,720	$	11,952	$	17,187		$	129,859	$	153,959	$	26,797	$	23,523		$	204,279

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Six Months Ended									Nine Months Ended
	June 30, 2018									September 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	$	61,065	$	11,489	$	2,020		$	74,574	$	91,630	$	15,639	$	3,073		$	110,342
Autos & Auto Parts	11,173		—		—			11,173		16,686		—		—			16,686
Chemicals & Plastics	75,189		—		—			75,189		113,625		—		—			113,625
Coal & Coke	39,032		64,149		6,163			109,344		62,038		96,506		8,751			167,295
Food & Kindred Products	16,826		—		—			16,826		25,587		—		—			25,587
Intermodal	689		33,075		133,804			167,568		1,203		50,613		192,413			244,229
Lumber & Forest Products	46,249		—		—			46,249		70,362		—		—			70,362
Metallic Ores	7,243		15,856		—			23,099		10,816		24,770		—			35,586
Metals	60,887		—		—			60,887		95,791		—		—			95,791
Minerals & Stone	68,552		4,181		41,505			114,238		107,122		6,247		63,849			177,218
Petroleum Products	34,634		336		8			34,978		52,870		560		107			53,537
Pulp & Paper	58,385		—		—			58,385		90,346		—		—			90,346
Waste	13,227		—		—			13,227		21,316		—		—			21,316
Other	12,134		—		—			12,134		19,325		—		—			19,325
Total freight revenues	505,285		129,086		183,500			817,871		778,717		194,335		268,193			1,241,245
Freight-related revenues	127,299		22,078		134,222			283,599		193,344		32,214		203,491			429,049
All other revenues	32,603		2,699		32,879			68,181		48,835		4,017		49,809			102,661
Total operating revenues	$	665,187	$	153,863	$	350,601		$	1,169,651	$	1,020,896	$	230,566	$	521,493		$	1,772,955
Operating income/(loss)	$	153,434	$	41,872	$	(5,268	)	$	190,038	$	255,918	$	62,585	$	(645	)	$	317,858
Depreciation and amortization	$	81,878	$	31,295	$	18,562		$	131,735	$	123,266	$	46,232	$	27,629		$	197,127
Interest expense, net	$	20,233	$	26,134	$	6,727		$	53,094	$	30,572	$	38,914	$	9,620		$	79,106
Provision for income taxes	$	606	$	4,722	$	5,228		$	10,556	$	26,930	$	7,120	$	7,519		$	41,569
Cash expenditures for additions to property & equipment, net of grants from outside parties	$	87,487	$	19,751	$	13,189		$	120,427	$	129,607	$	27,936	$	19,893		$	177,436

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


	June 30, 2019								September 30, 2019
	North American Operations		Australian Operations		U.K./European Operations		Total Operations		North American Operations		Australian Operations		U.K./European Operations		Total Operations
Cash and cash equivalents	$	23,624	$	41,325	$	17,434	$	82,383	$	37,261	$	31,142	$	18,509	$	86,912
Property and equipment, net	$	3,727,668	$	601,130	$	340,906	$	4,669,704	$	3,747,047	$	587,793	$	329,997	$	4,664,837



	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

Table of Contents GENESEE & WYOMING INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

14. RECENTLY ISSUED ACCOUNTING STANDARDS:

Accounting Standards Not Yet Effective

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments, which requires assessment of credit losses on an expected model rather than an incurred loss model. The guidance requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts. The amendment 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 2017, the FASB issued ASU 2017-04, 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 August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure for Fair Value Measurement. The amendments modify the disclosure requirements for fair value measurements in 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:~~

~~Proposed Merger~~

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.

~~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 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).

Overview

We own or lease ~~120~~119 freight railroads worldwide that are organized in eight operating regions with approximately 8,000 employees and 3,000 customers. The financial results of our eight operating regions are reported in the following three distinct segments:

Our North American Operations segment includes six regions (Coastal, Midwest, Northeast, Southern, Western and Canada) that serve 4142 U.S. states and four Canadian provinces and include ~~114~~113 short line and regional freight railroads with more than 13,000 track-miles.

Our Australian Operations segment serves New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line. Since December 1, 2016, the Australia Region has 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).

Our U.K./European Operations segment is led by Freightliner Group Limited (Freightliner), the United Kingdom's (U.K.) largest rail maritime intermodal operator and 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. As more fully described in Note 13, Segment Information, to our 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 then 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 our results of operations.

~~Subsequent Events~~Overview of Three-Month Results

Consolidated Results

Our operating revenues decreased $19.6 million, or 3.3%, to $583.7 million for the three months ended September 30, 2019, compared with $603.3 million for the three months ended September 30, 2018. Operating income for the three months ended September 30, 2019 was $112.8 million, compared with $127.8 million for the three months ended September 30, 2018, a decrease of $15.1 million, or 11.8%. Our operating ratio, defined as operating expenses divided by operating revenues, was 80.7% for the three months ended September 30, 2019, compared with 78.8% for the three months ended September 30, 2018.

Net income attributable to G&W for the three months ended September 30, 2019 was $66.8 million, compared with $69.6 million for the three months ended September 30, 2018. Our diluted earnings per common share (EPS) were $1.16 with 57.5 million weighted average shares outstanding for the three months ended September 30, 2019 and $1.16 with 60.1 million weighted average shares outstanding for the three months ended September 30, 2018.

Our provision for income taxes for the three months ended September 30, 2019 was $20.0 million compared with $31.0 million for the three months ended September 30, 2018. Our effective income tax rate for the three months ended September 30, 2019 was 22.3% and included a $4.2 million income tax benefit due to the release of a reserve for an uncertain tax position due to the expiration of the statute of limitations. Excluding the release of the reserve, our effective tax rate for the three months ended September 30, 2019 was27.0%. Our effective income tax rate for the three months ended September 30, 2018 was 30.0% and included a $1.6 million measurement period adjustment to increase the one-time transition (toll) tax on earnings of certain foreign subsidiaries as a result of the Tax Cuts and Jobs Act (TCJA).

Items Affecting Comparability

Our results for the three months ended September 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 September 30, 2019
Corporate development and related costs	$	(8.2	)	$	(5.9	)	$	(0.10	)
Restructuring and related costs	$	(3.6	)	$	(2.9	)	$	(0.05	)
Release of a reserve for an uncertain tax position	$	—		$	4.2		$	0.07

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	)

For the three months ended September 30, 2019, our results included corporate development and related costs of $8.2 million, primarily related to fees associated with the proposed acquisition of G&W by affiliates of Brookfield Infrastructure and GIC, restructuring and related costs of $3.6 million, primarily associated with our optimization activities in the U.K., and a $4.2 million income tax benefit from the release of a reserve for an uncertain tax position due to the expiration of the statute of limitations.

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., and a gain on a settlement of $0.9 million from the recovery of pre-petition claims associated with an Australia customer's voluntary administration (bankruptcy) in the second quarter of 2016. As a result of the TCJA, the results for the three months ended September 30, 2018 also included a $1.6 million measurement period adjustment to the one-time transition (toll) tax on earnings of certain foreign subsidiaries.

Results by Segment

North America

Operating revenues from our North American Operations decreased $3.3 million, or 0.9%, to $352.4 million for the three months ended September 30, 2019, compared with $355.7 million for the three months ended September 30, 2018. Excluding $5.1 million of revenues in 2018 from two leased railroads in Canada that expired at the end of 2018, and a $0.2 million decrease due to foreign currency depreciation, North American existing operations revenues increased $2.0 million, or 0.6%, primarily due to an increase in freight-related revenues, partially offset by a decrease in freight revenues.

Total traffic from our North American Operations decreased 30,880 carloads, or 6.9%, to 415,339 carloads for the three months ended September 30, 2019, compared with the three months ended September 30, 2018. Excluding traffic from the two railroad leases in Canada that expired at the end of 2018, existing operations traffic decreased 23,236 carloads, or 5.3%. The decrease in traffic from existing operations included decreases of 17,532 carloads of coal and coke traffic, 8,428 carloads of metals traffic, 3,698 carloads of pulp and paper traffic, 2,292 carloads of lumber and forest products traffic and 1,597 carloads of other commodity traffic, partially offset by increases of 6,080 carloads of agricultural products traffic, 2,553 carloads of minerals and stone traffic and 1,376 carloads of autos and auto parts traffic. All remaining traffic increased by a net 302 carloads.

Operating income from our North American Operations was $95.6 million for the three months ended September 30, 2019, compared with $102.5 million for the three months ended September 30, 2018. Operating income for the three months ended September 30, 2019 included corporate development and related costs of $7.8 million and restructuring and related costs of $0.3 million. Operating income for the three months ended September 30, 2018 included corporate development and related costs of $0.1 million. The operating ratio was 72.9% for the three months ended September 30, 2019, compared with 71.2% for the three months ended September 30, 2018.

Australia

Operating revenues from our Australian Operations decreased $5.1 million, or 6.7%, to $71.6 million for the three months ended September 30, 2019, compared with $76.7 million for the three months ended September 30, 2018. Excluding a $4.8 million decrease due to foreign currency depreciation, Australian Operations operating revenues decreased $0.3 million, or 0.4%.

Total traffic from our Australian Operations decreased 3,840 carloads, or 2.5%, to 147,478 carloads for the three months ended September 30, 2019, compared with the three months ended September 30, 2018. The traffic decrease was primarily due to decreases of 5,004 carloads of agricultural products traffic and 1,480 carloads of metallic ores traffic, partially offset by an increase of 2,401 carloads of coal and coke traffic. All remaining traffic increased by a net 243 carloads.

Operating income from our Australian Operations was $19.5 million for the three months ended September 30, 2019, compared with $20.7 million for the three months ended September 30, 2018. The operating ratio for our Australian Operations was 72.8% for the three months ended September 30, 2019, compared with an operating ratio of 73.0% for the three months ended September 30, 2018.

U.K./Europe

Operating revenues from our U.K./European Operations decreased $11.2 million, or 6.6%, to $159.7 million for the three months ended September 30, 2019, compared with $170.9 million for the three months ended September 30, 2018. Excluding a $9.1 million decrease due to foreign currency depreciation, U.K./European operating revenues decreased $2.2 million, or 1.3%, primarily due to a decrease in all other revenue.

Total traffic from our U.K./European Operations decreased 5,880 carloads, or 2.4%, to 235,502 carloads for the three months ended September 30, 2019, compared with 241,382 carloads for the three months ended September 30, 2018. The decrease in traffic was primarily due to decreases of 8,855 carloads of intermodal traffic and 2,803 carloads of coal and coke traffic, partially offset by increases of 3,319 carloads of minerals and stone traffic and 2,675 carloads of petroleum products traffic. All remaining traffic decreased by 216 carloads.

Operating loss from our U.K./European Operations was $2.4 million for the three months ended September 30, 2019, compared with operating income of $4.6 million for the three months ended September 30, 2018. The operating loss for the three months ended September 30, 2019 and operating income for the three months ended September 30, 2018 included $3.2 million and $3.3 million, respectively, of restructuring and related costs, primarily driven by our optimization activities in the U.K. The operating loss for the three months ended September 30, 2019 also included $1.9 million of unrealized foreign currency costs related to the revaluation of non-functional currency denominated operating lease liabilities in Poland, which are now included on the balance sheet with the adoption of the new lease standard. See Note 5, Leases, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report for additional information regarding this standard.

The operating ratio was 101.5% for the three months ended September 30, 2019, compared with 97.3% for the three months ended September 30, 2018.

Overview of Nine-Month Results

Our operating revenues decreased $59.7 million, or 3.4%, to $1,713.3 million for the nine months ended September 30, 2019, compared with $1,773.0 million for the nine months ended September 30, 2018. Operating income for the nine months ended September 30, 2019 was $286.7 million, compared with $317.9 million for the nine months ended September 30, 2018, a decrease of $31.2 million, or 9.8%. Our operating ratio was 83.3% for the nine months ended September 30, 2019, compared with 82.1% for the nine months ended September 30, 2018.

Net income for the nine months ended September 30, 2019 was $160.0 million, compared with net income of $196.9 million for the nine months ended September 30, 2018. Our diluted EPS for the nine months ended September 30, 2019 was $2.74 with 57.3 million weighted average shares outstanding, compared with diluted EPS of $3.08 with 61.3 million weighted average shares outstanding for the nine months ended September 30, 2018.

Our provision for income taxes for the nine months ended September 30, 2019 was $53.1 million compared with $41.6 million for the nine months ended September 30, 2018. Our effective income tax rate for the nine months ended September 30, 2019 was 24.9% and included a $4.2 million income tax benefit due to the release of a reserve for an uncertain tax position due to the expiration of the statute of limitations. Excluding the release of the reserve, our effective tax rate for the nine months ended September 30, 2019 was26.9%. 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 2018, we recorded a reserve for uncertain tax positions of $5.5 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. The reserve for uncertain tax positions was included in our provision for income taxes for the nine months ended September 30, 2018. 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 months ended September 30, 2018 was 29.1%.

During the nine months ended September 30, 2019, we generated $384.2 million in cash flows from operating activities. During the same period, we purchased $227.3 million of property and equipment, including $18.9 million for new business investments, partially offset by $23.0 million in cash received from government grants and other outside parties for capital spending. We also paid $230.9 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 nine months ended September 30, 2018, we generated $397.5 million in cash flows from operating activities. During the same period, we purchased $194.1 million of property and equipment, including $33.9 million for new business investments, partially offset by $16.7 million in cash received from government grants and other outside parties for capital spending. We also repurchased 3.6 million shares of our Class A common stock for $270.5 million and received $55.0 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.

Items Affecting Comparability

Our results for the nine months ended September 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
Nine Months Ended September 30, 2019
Restructuring and related costs	$	(18.8	)	$	(14.3	)	$	(0.25	)
Corporate development and related costs	$	(11.1	)	$	(8.0	)	$	(0.14	)
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	)
Release of a reserve for an uncertain tax position	$	—		$	4.2		$	0.07

Nine Months Ended September 30, 2018
Corporate development and related costs	$	(0.9	)	$	(0.6	)	$	(0.01	)
Restructuring costs	$	(12.9	)	$	(10.5	)	$	(0.17	)
Loss on sale of ERS Railways B.V.	$	(1.4	)	$	(1.4	)	$	(0.02	)
Gain on settlement	$	7.3		$	2.6		$	0.04
Credit facility refinancing-related costs	$	(2.7	)	$	(2.0	)	$	(0.03	)
2017 Short Line Tax Credit	$	—		$	31.6		$	0.52
Prior period portion of tax adjustment	$	—		$	(3.7	)	$	(0.06	)
TCJA measurement period adjustment	$	—		$	(1.6	)	$	(0.03	)

Changes in Operations

Proposed Merger

On July 1, 2019, G&W, 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 per share of common stock valued at approximately $8.4 billion including debt (the Merger). The proposed Merger was approved by our stockholders on October 3, 2019 by an affirmative vote of the holders of approximately 82.9% of the voting power of the outstanding shares of G&W's common stock on the record date. Subject to the satisfaction of the other closing conditions, the Merger is expected to close by ~~year-end~~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.~~2020.

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)~~(ii) the approval or authorization of, or exemption by, the Surface Transportation Board (or approval of the use of a voting trust structure), ~~(iv)~~which exemption was granted on October 29, 2019, (iii) receipt of other antitrust and regulatory approvals, including approval of the Committee on Foreign Investment in the United States, and ~~(v)~~(iv) 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)~~(iv) to certain materiality qualifiers).

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

Under the Merger Agreement (as described in more detail above), we agreed to use reasonable best efforts to assist and cooperate with Parent in 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)~~(i) such cooperation would not unreasonably interfere with our business or operations and ~~(2)~~(ii) 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 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 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 G&W 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 our 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 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.

~~Overview of Three-Month Results~~

~~Consolidated Results~~

~~Our operating revenues decreased $23.5 million, or 4.0%, to $571.5 million for the three months ended June 30, 2019, compared with $595.0 million for the~~ ~~three~~ ~~months ended June 30, 2018. Operating income for the~~ ~~three~~ ~~months ended June 30, 2019 was $94.2 million, compared with $103.1 million for the~~ ~~three~~ ~~months ended June 30, 2018, a decrease of $8.9 million, or 8.7%. Our operating ratio, defined as operating expenses divided by operating revenues, was 83.5% for the~~ ~~three~~ ~~months ended June 30, 2019, compared with 82.7% for the~~ ~~three~~ ~~months ended June 30, 2018.~~

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

Our provision for income taxes for the three months ended June 30, 2019 was $18.9 million compared with $26.4 million for the three months ended June 30, 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 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 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 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.

~~Results by Segment~~

~~North America~~

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.

~~Australia~~

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.

~~U.K./Europe~~

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 six months ended June 30, 2018 was 28.5%.

During the six months ended June 30, 2019, we generated $223.1 million in cash flows from operating activities. During the same period, we purchased $144.7 million of property and equipment, including $7.3 million for new business investments, partially offset by $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 2.7 million shares of our Class A common stock for $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.

~~Items Affecting Comparability~~

Our results for the six 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
Six Months Ended June 30, 2019
Restructuring and related costs $ (15.2 ) $ (11.5 ) $ (0.20 )
Corporate development and related costs $ (2.9 ) $ (2.0 ) $ (0.04 )
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 )

Six Months Ended June 30, 2018
Corporate development and related costs $ (0.5 ) $ (0.4 ) $ (0.01 )
Restructuring costs $ (9.6 ) $ (7.8 ) $ (0.13 )
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 )
2017 Short Line Tax Credit $ —
$ 31.6
$ 0.51
Prior period portion of tax adjustment $ —
$ (3.7 ) $ (0.06 )

~~Changes in Operations~~

North American Operations

Canada Lease Expirations: Two of our short line railroad leases in Canada (Goderich-Exeter Railway (GEXR) and Southern Ontario Railway (SORR)) expired at the end of 2018. Our results for the three and ~~six~~nine months ended ~~June~~September 30, 2018 included ~~$5.6~~$5.1 million and ~~$11.1~~$16.1 million, respectively, of revenues and operating losses of $0.9 million and $1.3 million, respectively, 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 the U.K., which we intend 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.

We recorded restructuring and related costs associated with the optimization of ~~$6.8~~$3.2 million and ~~$12.3~~$15.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. Restructuring and related costs of ~~$9.4~~$3.3 million and ~~$9.6~~$12.9 million were recorded associated with the optimization for the three and ~~six~~nine months ended ~~June~~September 30, 2018, respectively. For additional information regarding 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.

Continental Europe Intermodal Business: On June 5, 2018, we sold our Continental Europe intermodal business, ERS Railways B.V. (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. Our results for the ~~three and six~~nine months ended ~~June~~September 30, 2018 included $~~9.4 million and $24.1~~24.1 million of revenues ~~respectively, from ERS. Our~~ ~~results for the three~~ and ~~six months ended June 30, 2018 included no material~~$1.6 million of operating income from ERS.

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

Consolidated Operating Results

Operating Revenues

The following table sets forth our total operating revenues and carloads for the three months ended ~~June~~September 30, 2019 and 2018. The table below also reflects the calculation of our existing operations by subtracting the 2018 revenues and carloads of the ~~divested~~ operations of ~~ERS and~~ the leased railroads in Canada that ~~we ceased operating~~expired at the end of 2018 from our total operations for the three months ended ~~June~~September 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*			Three Months Ended September 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												2019											2018																	Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount			2019				%			Amount								%			Currency Impact on 2018 Total Operations*		Total Operations			Divested Operations			Existing Operations			Amount			%			Amount				%									Currency Impact on 2018 Total Operations*
Freight revenues	$	397,681	$	418,232	$	10,407	$	407,825	$	(20,551	)		(4.9	)%		$	(10,144	)		(2.5	)%				$	(10,885				)	$	(10,286		)	$	410,149		$	423,374		$	3,216		$	420,158		$	(13,225	)		(3.1	)%		$	(10,009	)		(2.4	)%		$	(8,720		)	$	(8,687	)
Freight-related revenues	142,396		142,402		4,152		138,250		(6		)		—	%		4,146				3.0	%		(4,876		)	(4,646		)	141,369					145,450			1,434			144,016			(4,081		)	(2.8	)%		(2,647		)		(1.8	)%		(4,405		)	(4,391		)
All other revenues	31,403		34,356		432		33,924		(2,953		)		(8.6	)%		(2,521		)		(7.4	)%		(1,143		)		(1,128		)	32,176				34,480			415			34,065			(2,304		)	(6.7	)%		(1,889		)		(5.5	)%		(1,026		)		(1,022		)
Total operating revenues	$	571,480	$	594,990	$	14,991	$	579,999	$	(23,510	)		(4.0	)%		$	(8,519	)		(1.5	)%		$	(16,904	)		$	(16,060	)	$	583,694			$	603,304		$	5,065		$	598,239		$	(19,610	)	(3.3	)%		$	(14,545	)		(2.4	)%		$	(14,151	)		$	(14,100	)
Carloads	766,355		834,363		29,502		804,861		(68,008		)		(8.2	)%		(38,506		)		(4.8	)%									798,319				838,919			7,644			831,275			(40,600		)	(4.8	)%		(32,956		)		(4.0	)%

* 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.

Operating Expenses

Total operating expenses for the three months ended ~~June~~September 30, 2019 decreased ~~$14.6~~$4.5 million, or ~~3.0%~~1.0%, to ~~$477.3~~$470.9 million, compared with ~~$491.9~~$475.5 million for the three months ended ~~June~~September 30, 2018. The decrease consisted of ~~$14.2~~$5.9 million from ~~divested operations and $0.4~~the leased railroads in Canada that expired at the end of 2018, partially offset by an increase of $1.4 million from existing operations. Excluding a ~~$14.3~~$12.5 million benefit from the ~~net~~ depreciation of foreign currencies relative to the United States dollar, operating expenses from existing operations increased $13.9 million, or 3.0%. The increase from existing operations included increases of ~~$5.9~~$10.9 million in other expense, ~~$5.8~~net, primarily due to corporate development and related costs associated with the proposed Merger, $4.2 million in labor and benefits expense, ~~$3.9 million in purchased services expense, $2.1~~$2.6 million in depreciation and amortization expense and ~~$1.7~~$2.1 million in ~~net gain on the sale~~casualty and ~~impairment of assets,~~insurance expense, partially offset by decreases of ~~$1.9~~$3.2 million in equipment rents expense and $2.4 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.~~operations.

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


	Three Months Ended June 30,									Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease)Constant Currency*			Three Months Ended September 30,												Increase/(Decrease)			Currency Impact				2018 Constant Currency*				Increase/(Decrease)Constant Currency*
	2019				2018												2019									2018
	Amount		% of Operating Revenues		Amount			% of Operating Revenues									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		$	175,500			30.1	%	$	175,853		29.1	%		$	(353	)		$	(3,879	)		$	171,974		$	3,526
Equipment rents	32,010		5.6	%	34,802			5.9	%			(2,792		)		(1,263				)		33,539				(1,529		)	30,926				5.3	%	35,325			6.0	%	(4,399		)		(1,067		)		34,258				(3,332	)
Purchased services	54,034		9.5	%	61,045			10.3	%	(7,011		)		(2,875		)		58,170				(4,136		)	51,055				8.7	%		53,717			8.9	%	(2,662		)	(2,132		)		51,585				(530		)
Depreciation and amortization	62,517		10.9	%	65,745			11.0	%	(3,228		)		(1,889		)		63,856				(1,339		)	63,026				10.8	%		65,392			10.8	%	(2,366		)	(1,475		)		63,917				(891		)
Diesel fuel used in train operations	41,504		7.3	%	45,623			7.7	%	(4,119		)		(1,513		)		44,110				(2,606		)	41,533				7.1	%		45,713			7.6	%	(4,180		)	(1,284		)		44,429				(2,896		)
Electricity used in train operations	2,226		0.4	%	2,044			0.3	%	182				(113		)		1,931				295			1,794				0.3	%		2,742			0.5	%	(948		)	(142		)		2,600				(806		)
Casualties and insurance	11,839		2.1	%	12,984			2.2	%	(1,145		)		(206		)		12,778				(939		)	11,658				2.0	%		9,912			1.6	%	1,746			(191		)		9,721				1,937
Materials	31,294		5.5	%	32,376			5.4	%	(1,082		)		(1,185		)		31,191				103			32,435				5.6	%		32,744			5.4	%	(309		)	(1,112		)		31,632				803
Trackage rights	21,727		3.8	%	23,303			3.9	%	(1,576		)		(775		)		22,528				(801		)	21,266				3.6	%		22,838			3.8	%	(1,572		)	(658		)		22,180				(914		)
Net gain on sale and impairment of assets	980		0.2	%	(823		)	(0.1	)%	1,803				(14		)		(837		)		1,817			(641		)		(0.1	)%		(642		)	(0.1	)%	1			11				(631		)		(10		)
Restructuring and related costs	7,561		1.3	%	9,362			1.6	%	(1,801		)		(481		)		8,881				(1,320		)	3,561				0.6	%		3,286			0.5	%	275			(176		)		3,110				451
Other expenses, net	31,645		5.5	%	25,566			4.3	%	6,079				(78		)		25,488				6,157			38,825				6.7	%		28,604			4.7	%	10,221			(454		)		28,150				10,675
Total operating expenses	$	477,280	83.5	%	$	491,865		82.7	%	$	(14,585	)		$	(15,029	)		$	476,836			$	444		$	470,938			80.7	%		$	475,484		78.8	%	$	(4,546	)	$	(12,559	)		$	462,925			$	8,013

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

Operating Income/Operating Ratio

Operating income was ~~$94.2~~$112.8 million for the three months ended ~~June~~September 30, 2019, compared with ~~$103.1~~$127.8 million for the three months ended ~~June~~September 30, 2018. Operating income for the three months ended ~~June~~September 30, 2019 included corporate development and related costs of $8.2 million, primarily related to the proposed Merger, and restructuring and related costs of $3.6 million, primarily driven by our optimization activities in the U.K. Operating income for the three months ended September 30, 2018 included restructuring and related costs of ~~$7.6~~$3.3 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 ~~$2.4~~$0.3 million and a ~~$1.0~~gain on settlement of $0.9 million ~~net loss on~~from the ~~sale and impairment~~recovery of ~~certain assets~~pre-petition claims associated with an Australia customer's voluntary administration (bankruptcy) in ~~North America. Operating income~~the second quarter of 2016. Our operating ratio was 80.7% for the three months ended ~~June~~September 30, ~~2018 included restructuring and related costs of $9.4 million and corporate development and related costs of $0.4 million. Our operating ratio was 83.5%~~2019, compared with 78.8% for the three months ended ~~June 30, 2019, compared with 82.7% for the three months ended June~~September 30, 2018.

Interest Expense

Interest expense was ~~$27.4~~$25.4 million for the three months ended ~~June~~September 30, 2019, compared with ~~$28.9~~$26.4 million for the three months ended ~~June~~September 30, 2018. The decrease in interest expense for the three months ended ~~June~~September 30, 2019 was primarily driven by ~~the write-off of deferred financing fees associated with our credit facility refinancing~~a decrease in ~~June 2018.~~

outstanding borrowings due to normal scheduled payments and a decrease in interest rates.

Provision for Income Taxes

Our provision for income taxes for the three months ended ~~June~~September 30, 2019 was ~~$18.9~~$20.0 million compared with ~~$26.4~~$31.0 million for the three months ended ~~June~~September 30, 2018. Our effective income tax rate for the three months ended ~~June~~September 30, 2019 was ~~26.9%. Based on developments during~~22.3% and included a $4.2 million income tax benefit due to the ~~three months ended June 30, 2018, we recorded~~release of a reserve for an 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~~position due 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~~expiration of the ~~Freightliner acquisition when~~statute of limitations. Excluding the ~~arrangements were established, through December 31, 2017. The~~release of the reserve, ~~for uncertain~~our effective income tax ~~positions was included in our provision for income taxes~~rate for the three months ended ~~June~~September 30, ~~2018. Excluding the prior period portion of the reserve for uncertain tax positions, our~~2019 was27.0%. Our effective income tax rate for the three months ended ~~June~~September 30, 2018 was ~~29.8%.~~30.0% and included a $1.6 million measurement period adjustment to increase the one-time transition (toll) tax on earnings of certain foreign subsidiaries as a result of the TCJA. For additional information regarding income taxes, see Note 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 ~~June~~September 30, 2019 was ~~$51.4~~$66.8 million, compared with ~~$44.2~~$69.6 million for the three months ended ~~June~~September 30, 2018. Our basic EPS were ~~$0.91~~$1.18 with ~~56.5~~56.6 million weighted average shares outstanding for the three months ended ~~June~~September 30, 2019, compared with basic EPS of ~~$0.74~~$1.18 with ~~60.0~~59.2 million weighted average shares outstanding for the three months ended ~~June~~September 30, 2018. Our diluted EPS for the three months ended ~~June~~September 30, 2019 were ~~$0.90~~$1.16 with ~~57.3~~57.5 million weighted average shares outstanding, compared with diluted EPS of ~~$0.73~~$1.16 with ~~60.9~~60.1 million weighted average shares outstanding for the three months ended ~~June~~September 30, 2018. Our results for the three months ended ~~June~~September 30, 2019 and 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~~income attributable to noncontrolling interest for the three months ended ~~June~~September 30, 2019 was ~~$0.1~~$3.0 million, compared with ~~net income attributable to noncontrolling interest of $4.4~~$2.7 million for three months ended ~~June~~September 30, 2018.

Operating Results by Segment

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.

North American Operations

Operating Revenues

The following table sets forth our North American Operations total operating revenues and carloads for the three months ended ~~June~~September 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~~leased railroads in Canada that expired at the end of 2018 from our total operations for the three months ended ~~June~~September 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*			Three Months Ended September 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												2019											2018																	Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount			2019				%			Amount								%			Currency Impact on 2018 Total Operations*		Total Operations			Divested Operations			Existing Operations			Amount			%			Amount				%									Currency Impact on 2018 Total Operations*
Freight revenues	$	259,181	$	259,868	$	3,733	$	256,135	$	(687	)		(0.3	)%		$	3,046			1.2	%				$	(645				)	$	(518		)	$	268,025		$	273,432		$	3,216		$	270,216		$	(5,407	)		(2.0	)%		$	(2,191	)		(0.8	)%		$	(183		)	$	(150	)
Freight-related revenues	66,135		63,467		1,467		62,000		2,668				4.2	%		4,135				6.7	%		(224		)	(171		)	68,129					66,045			1,434			64,611			2,084			3.2	%		3,518				5.4	%		(83		)	(69		)
All other revenues	16,531		16,222		423		15,799		309				1.9	%		732				4.6	%		(91		)		(77		)	16,288				16,232			415			15,817			56			0.3	%		471				3.0	%		(28		)		(24		)
Total operating revenues	$	341,847	$	339,557	$	5,623	$	333,934	$	2,290			0.7	%		$	7,913			2.4	%		$	(960	)		$	(766	)	$	352,442			$	355,709		$	5,065		$	350,644		$	(3,267	)	(0.9	)%		$	1,798			0.5	%		$	(294	)		$	(243	)
Carloads	406,895		430,353		8,679		421,674		(23,458		)		(5.5	)%		(14,779		)		(3.5	)%									415,339				446,219			7,644			438,575			(30,880		)	(6.9	)%		(23,236		)		(5.3	)%


*	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.

Freight Revenues

The following table sets forth our North American Operations total freight revenues for the three months ended ~~June~~September 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~~leased railroads in Canada that expired at the end of 2018 from our total operations for the three months ended ~~June~~September 30, 2018 (dollars in thousands):


	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*			Three Months Ended September 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									2019								2018
Commodity Group			Total Operations		Divested Operations		Existing Operations									Increase/(Decrease) in Existing Operations				Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*		Total Operations				Divested Operations				Existing Operations				Increase/(Decrease) in Existing Operations	Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*
Agricultural Products	$	32,846	$	29,693	$	458	$	29,235				$	3,611		$		(24	)	$						29,211		$	3,635		$	34,574			$	30,565					$	467				$	30,098			$	4,476		$	(8	)	$	30,090	$	4,484
Autos & Auto Parts	6,084		5,806		301		5,505		579			(26		)	5,479			605				6,339					5,513				264				5,249						1,090				(6		)	5,243			1,096
Chemicals & Plastics	39,813		38,972		775		38,197		1,616				(87		)			38,110				1,703			39,518				38,436				586				37,850				1,668				(23		)		37,827				1,691
Coal & Coke	18,563		19,087		—		19,087		(524		)		(34		)		19,053				(490		)	18,336				23,006				—				23,006				(4,670		)		(10		)		22,996				(4,660		)
Food & Kindred Products	8,801		8,476		186		8,290		511				(2		)		8,288				513			8,355				8,761				225				8,536				(181		)		(1		)		8,535				(180		)
Intermodal	523		380		—		380		143				—				380				143			461				514				—				514				(53		)		—				514				(53		)
Lumber & Forest Products	23,519		23,810		109		23,701		(182		)		(40		)		23,661				(142		)	22,862				24,113				77				24,036				(1,174		)		(10		)		24,026				(1,164		)
Metallic Ores	2,865		3,670		1		3,669		(804		)		(28		)		3,641				(776		)	4,225				3,573				(1		)		3,574				651				(10		)		3,564				661
Metals	29,055		32,493		589		31,904		(2,849		)		(57		)		31,847				(2,792		)	28,115				34,904				502				34,402				(6,287		)		(20		)		34,382				(6,267		)
Minerals & Stone	38,597		38,034		268		37,766		831				(31		)		37,735				862			41,399				38,570				193				38,377				3,022				(12		)		38,365				3,034
Petroleum Products	17,053		16,151		717		15,434		1,619				(40		)		15,394				1,659			19,027				18,236				658				17,578				1,449				(11		)		17,567				1,460
Pulp & Paper	28,013		29,514		41		29,473		(1,460		)		(127		)		29,346				(1,333		)	30,648				31,961				34				31,927				(1,279		)		(33		)		31,894				(1,246		)
Waste	7,964		7,339		66		7,273		691				(3		)		7,270				694			8,278				8,089				63				8,026				252				(2		)		8,024				254
Other	5,485		6,443		222		6,221		(736		)		(19		)		6,202				(717		)	5,888				7,191				148				7,043				(1,155		)		(4		)		7,039				(1,151		)
Total	$	259,181	$	259,868	$	3,733	$	256,135	$	3,046			$	(518	)		$	255,617			$	3,564		$	268,025			$	273,432			$	3,216			$	270,216			$	(2,191	)		$	(150	)		$	270,066			$	(2,041	)

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

The following table sets forth our North American Operations freight revenues, carloads and average freight revenues per carload for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Three Months Ended June 30,										Three Months Ended June 30,			Three Months Ended June 30,											Three Months Ended September 30,											Three Months Ended September 30,			Three Months Ended
		2019					2018 Constant Currency*						2019				Three Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Three Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Three Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	32,846		12.7	%	$	29,653	11.4	%	56,134			51,762	$	585		$	574		$	573		Agricultural Products	$	34,574			12.9	%		$	30,552		11.2	%		56,026	50,989	$	617		$	599		$	599
Autos & Auto Parts	Autos & Auto Parts	6,084			2.3	%	5,769		2.2	%	9,041			9,106	673			638			634			Autos & Auto Parts	6,339				2.4	%		5,506			2.0	%		9,575	8,724	662			632			631
Chemicals & Plastics	Chemicals & Plastics	39,813			15.3	%	38,858		15.0	%	44,376			45,285	897			861			858			Chemicals & Plastics	39,518				14.7	%		38,407			14.0	%		43,293	43,903	913			875			875
Coal & Coke	Coal & Coke	18,563			7.2	%	19,053		7.4	%	48,140			59,346	386			322			321			Coal & Coke	18,336				6.8	%		22,996			8.4	%		52,782	70,314	347			327			327
Food & Kindred Products	Food & Kindred Products	8,801			3.4	%	8,468		3.3	%	14,699			14,907	599			569			568			Food & Kindred Products	8,355				3.1	%		8,757			3.2	%		13,971	15,312	598			572			572
Intermodal	Intermodal	523			0.2	%	380		0.1	%	3,984			3,816	131			100			100			Intermodal	461				0.2	%		514			0.2	%		3,983	4,922	116			104			104
Lumber & Forest Products	Lumber & Forest Products	23,519			9.1	%	23,765		9.2	%	35,140			37,733	669			631			630			Lumber & Forest Products	22,862				8.5	%		24,103			8.8	%		34,840	37,328	656			646			646
Metallic Ores	Metallic Ores	2,865			1.1	%	3,642		1.4	%	3,813			4,448	751			825			819			Metallic Ores	4,225				1.6	%		3,565			1.3	%		4,872	4,655	867			768			766
Metals	Metals	29,055			11.2	%	32,418		12.5	%	34,860			40,806	833			796			794			Metals	28,115				10.5	%		34,878			12.8	%		33,862	43,752	830			798			797
Minerals & Stone	Minerals & Stone	38,597			14.9	%	37,994		14.7	%	62,005			62,156	622			612			611			Minerals & Stone	41,399				15.5	%		38,555			14.1	%		62,357	60,496	664			638			637
Petroleum Products	Petroleum Products	17,053			6.6	%	16,085		6.2	%	23,811			24,340	716			664			661			Petroleum Products	19,027				7.1	%		18,219			6.7	%		26,081	26,231	730			695			695
Pulp & Paper	Pulp & Paper	28,013			10.8	%	29,386		11.3	%	37,943			41,762	738			707			704			Pulp & Paper	30,648				11.4	%		31,926			11.7	%		40,638	44,403	754			720			719
Waste	Waste	7,964			3.1	%	7,334		2.8	%	15,331			14,837	519			495			494			Waste	8,278				3.1	%		8,087			3.0	%		15,764	15,859	525			510			510
Other	Other	5,485			2.1	%	6,418		2.5	%	17,618			20,049	311			321			320			Other	5,888				2.2	%		7,184			2.6	%		17,295	19,331	340			372			372
Total	Total	$	259,181		100.0	%	$	259,223	100.0	%	406,895			430,353	$	637		$	604		$	602		Total	$	268,025			100.0	%		$	273,249		100.0	%		415,339	446,219	$	645		$	613		$	612

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

Total traffic from our North American Operations decreased ~~23,458~~30,880 carloads, or ~~5.5%~~6.9%, to ~~406,895~~415,339 carloads for the three months ended ~~June~~September 30, 2019, compared with the three months ended ~~June~~September 30, 2018. Excluding traffic from the ~~two~~ railroad leases in Canada that expired at the end of 2018, existing operations traffic decreased ~~14,779~~23,236 carloads, or ~~3.5%. The decrease in traffic from existing operations~~5.3%, which included decreases of ~~11,206~~17,532 carloads of coal and coke traffic, ~~4,221~~8,428 carloads of metals traffic, ~~3,734~~3,698 carloads of pulp and paper traffic, ~~2,307~~2,292 carloads of lumber and forest products traffic and ~~1,683~~1,597 carloads of other commodity traffic, partially offset by increases of ~~5,418~~6,080 carloads of agricultural products traffic, ~~and 1,015~~2,553 carloads of ~~chemicals~~minerals and ~~plastics~~stone traffic and 1,376 carloads of autos and auto parts traffic. All remaining traffic increased by a net ~~1,939~~302 carloads.

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%~~0.2% impact of foreign currency, average freight revenues per carload from our North American Operations increased ~~5.8%~~5.4% to ~~$637~~$645 for the three months ended ~~June~~September 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%~~4.7% for the three months ended ~~June~~September 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%~~1.7%, ~~and~~while higher fuel surcharges ~~which increased~~decreased average freight revenues per carload by 0.6%. Excluding these factors, average freight revenues per carload increased ~~3.8%~~3.6%.

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

Agricultural products revenues increased ~~$3.6~~$4.5 million, or ~~12.4%~~14.9%. Agricultural products traffic increased ~~5,418~~6,080 carloads, or ~~10.7%~~12.2%, which increased revenues by ~~$3.2~~$3.8 million, and average freight revenues per carload increased ~~1.6%~~2.5%, which increased revenues by ~~$0.4~~$0.7 million. The increase in carloads was primarily due to increased grain shipments in the midwestern United States and farm products shipments in the western United ~~States~~States.

Autos and ~~grain shipments~~auto parts revenues increased $1.1 million, or 20.9%. Autos and auto parts traffic increased 1,376 carloads, or 16.8%, which increased revenues by $0.9 million, and average freight revenues per carload increased 3.6%, which increased revenues by $0.2 million. The increase in carloads was primarily due to higher export demand in the ~~midwestern~~western United States.

Chemicals and plastics revenues increased $1.7 million, or 4.5%. Chemicals and plastics traffic increased ~~1,015~~937 carloads, or ~~2.3%~~2.2%, which increased revenues by $0.9 million, and average freight revenues per carload increased ~~2.0%~~2.2%, which increased revenues by $0.8 million. The increase in carloads was primarily due to an increase in ~~industrial chemical~~ethanol shipments in the ~~western~~midwestern United ~~States.~~States associated with a new customer.

Coal and coke revenues decreased ~~$0.5~~ $4.7 million, or ~~2.6%~~20.3%. Coal and coke traffic decreased ~~11,206~~17,532 carloads, or ~~18.9%~~24.9%, which decreased revenues by ~~$4.3~~$6.1 million, while average freight revenues per carload increased ~~20.2%~~6.2%, which increased revenues by ~~$3.8~~$1.4 million. The decrease in carloads was primarily due to ~~decreased~~reduced demand in the midwestern, 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.~~unplanned outages, pending plant closures, natural gas competition and high inventories. The increase in average freight revenues per carload was primarily due to ~~stronger pricing and~~ a change in the mix of business.

~~Metals~~Lumber and forest products revenues decreased ~~$2.8~~$1.2 million, or ~~8.8%~~4.8%. ~~Metals~~Lumber and forest products traffic decreased ~~4,221~~2,292 carloads, or ~~10.8%~~6.2%, which decreased revenues by ~~$3.5~~$1.5 million, while average freight revenues per carload increased ~~2.2%~~1.4%, which increased revenues by $0.3 million. The decrease in carloads was primarily due to less demand for lumber across North America and decreased export log shipments in the western United States.

Metals revenues decreased $6.3 million, or 18.2%. Metals traffic decreased 8,428 carloads, or 19.9%, which decreased revenues by $7.0 million, while average freight revenues per carload increased 2.1%, which increased revenues by $0.7 million. The decrease in carloads was primarily due to decreased ~~scrap and~~ finished steel shipments ~~across~~in the southern and northeastern United States and decreased ~~pipe~~scrap steel shipments in the northeastern and midwestern United ~~States and decreased pig iron shipments in the southern and midwestern United~~ States.

Minerals and stone revenues increased ~~$0.9~~ $3.0 million, or ~~2.3%~~7.9%. Minerals and stone traffic increased ~~704~~2,553 carloads, or ~~1.0%~~4.3%, which increased revenues ~~$0.4~~$1.7 million, and average freight revenues per carload increased ~~1.0%~~3.4%, which increased revenues by ~~$0.4~~$1.3 million. The increase in ~~average freight per carload and traffic~~carloads was primarily due to ~~new business and strong demand for rock salt and frac sand in the northeastern United States, partially offset by a decrease in bentonite and clay~~increased aggregates shipments ~~due to flooding in the midwestern and southern United States.~~across North America.

Petroleum products revenues increased ~~$1.7~~$1.5 million, or ~~10.8%~~8.3%. Petroleum products average freight revenues per carload increased ~~9.6%~~5.2%, which increased revenues by ~~$1.5~~$0.9 million, and traffic increased ~~233~~766 carloads, or ~~1.0%~~3.0%, which increased revenues by ~~$0.2~~$0.6 million. The increase in average freight revenues per carload was primarily due to stronger pricing and a change in the mix of business.

Pulp and paper revenues decreased ~~$1.3~~$1.2 million, or ~~4.5%~~3.9%. Pulp and paper traffic decreased ~~3,734~~3,698 carloads, or ~~9.0%~~8.3%, which decreased revenues by $2.8 million, while average freight revenues per carload increased 4.8%, which increased revenues by ~~$1.5~~$1.6 million. The decrease in carloads was primarily due to fewer shipments of containerboard across the United States.

Other commodity revenues decreased $1.2 million, or 16.4%. Other commodity average freight revenues per carload decreased 8.8%, which decreased revenues by $0.6 million, and traffic decreased 1,597 carloads, or 8.5%, which decreased revenues by $0.6 million. The decrease in carloads was primarily due to decreased ~~containerboard~~empty car traffic in the midwestern United Sates and the decrease in average freight revenues per carload was primarily due to a change in mix of the business, led by fewer shipments ~~across North America.~~of wind tower components in the midwestern United States.

Freight revenues from all remaining commodities combined increased by ~~$0.3~~a net $0.7 million.

Freight-Related Revenues

Freight-related revenues from our North American Operations, which includes revenues from railcar switching, track access fees, storage and other ancillary revenues related to the movement of freight, were ~~$66.1~~$68.1 million for the three months ended ~~June~~September 30, 2019, compared with ~~$63.5~~$66.0 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$2.7~~$2.1 million, or ~~4.2%~~3.2%. Excluding ~~a decrease~~$1.4 million of ~~$1.5 million in~~ revenues from the leased railroads in Canada that ~~we ceased operating~~expired at the end of 2018, and a ~~$0.2~~$0.1 million decrease due to ~~the impact of~~ foreign currency depreciation, freight-related revenues from our North American Operations existing operations increased ~~$4.3~~$3.6 million, or ~~7.0%~~5.6%, for the three months ended ~~June~~September 30, 2019, compared with ~~$61.8~~$64.5 million for the three months ended ~~June~~September 30, 2018. The increase in freight-related revenues from our existing operations was primarily due to ~~increased~~increases in switching and storage revenues in the southeastern United States, ~~and increased~~ demurrage revenues in the midwestern United States and revenue from volume commitment shortfall contracts in the southern United States.

All Other Revenues

All other revenues from our North American Operations, which includes revenues from third-party railcar and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of freight, were ~~$16.5~~$16.3 million for the three months ended ~~June~~September 30, 2019, compared with $16.2 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$0.3~~$0.1 million, or ~~1.9%~~0.3%. Excluding ~~a decrease of~~ $0.4 million in revenues from the ~~Canadian leases~~leased railroads in Canada that expired at the end of 2018 and a decrease of less than $0.1 million ~~decrease~~ due to ~~the impact of~~ foreign currency depreciation, all other revenues from our North American Operations increased ~~$0.8~~$0.5 million, or ~~5.1%~~3.1%, for the three months ended ~~June~~September 30, 2019, compared with ~~$15.7~~$15.8 million for the three months ended ~~June~~September 30, 2018.

Operating Expenses

Total operating expenses from our North American Operations ~~decreased $1.7~~increased $3.6 million, or ~~0.7%~~1.4%, to ~~$257.6~~$256.8 million for the three months ended ~~June~~September 30, 2019, compared with ~~$259.3~~$253.2 million for the three months ended ~~June~~September 30, 2018. The ~~decrease~~increase included a ~~$5.7~~$9.7 million increase from existing operations, partially offset by a $5.9 million decrease in expenses from the ~~two~~ leased railroads in Canada that ~~we ceased operating~~expired at the end of 2018 and a ~~$0.9~~$0.2 million decrease due to ~~the impact of~~ foreign currency ~~depreciation, partially offset by a $4.9 million increase from existing operations.~~depreciation. The increase from existing operations included increases of ~~$2.7~~$6.6 million in other expenses, net, primarily due to corporate development and related costs associated with the proposed Merger, $2.4 million in purchased services expense, ~~$1.7~~$2.1 million in ~~net loss on sale~~casualties and ~~impairment of assets, $1.5 million in materials~~insurance expense and ~~$1.1~~$1.3 million in depreciation and amortization expense, partially offset by decreases of ~~$1.2~~$3.3 million in equipment rent expense and ~~$1.1~~$2.0 million in ~~casualties and insurance expense.~~ the cost of diesel fuel used in train operations.

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


	Three Months Ended June 30,									Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Three Months Ended September 30,													Increase/(Decrease)			Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019				2018								2019												2018
	Amount		% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount				% of Operating Revenues
Labor and benefits	$	108,458	31.7	%	$	109,289		32.2	%				$				(831		)		$		(326	)		$	108,963			$	(505	)	$	108,161		30.7	%		$	107,940		30.3	%		$	221		$	(88	)	$	107,852		$	309
Equipment rents	12,257		3.6	%	13,633			4.0	%				(1,376			)		(41		)		13,592				(1,335		)	12,075				3.4	%	15,441				4.4	%	(3,366		)		(11		)	15,430			(3,355		)
Purchased services	16,821		4.9	%	14,652			4.3	%	2,169					(56		)		14,596				2,225			16,648				4.7	%		14,968			4.2	%		1,680			(14		)		14,954			1,694
Depreciation and amortization	38,738		11.3	%	41,247			12.2	%	(2,509		)		(225		)		41,022				(2,284		)	39,164				11.1	%		41,388			11.6	%		(2,224		)	(63		)		41,325			(2,161		)
Diesel fuel used in train operations	21,672		6.4	%	23,253			6.8	%	(1,581		)		(105		)		23,148				(1,476		)	20,673				5.9	%		23,230			6.5	%		(2,557		)	(25		)		23,205			(2,532		)
Casualties and insurance	8,978		2.6	%	10,156			3.0	%	(1,178		)		(11		)		10,145				(1,167		)	8,605				2.4	%		6,636			1.9	%		1,969			(2		)		6,634			1,971
Materials	14,551		4.3	%	13,163			3.9	%	1,388				(51		)		13,112				1,439			13,577				3.9	%		12,836			3.6	%		741			(11		)		12,825			752
Trackage rights	10,906		3.2	%	10,527			3.1	%	379				(7		)		10,520				386			11,028				3.1	%		10,586			3.0	%		442			(1		)		10,585			443
Net loss/(gain) on sale and impairment of assets	1,037		0.3	%	(706		)	(0.2	)%	1,743				—				(706		)		1,743
Net gain on sale and impairment of assets																									(509		)		(0.1	)%		(506		)	(0.1	)%		(3		)	4				(502		)	(7		)
Restructuring and related costs	641		0.2	%	7			—	%	634				—				7				634			323				0.1	%		1			—	%		322			—				1			322
Other expenses, net	23,527		6.9	%	24,062			7.1	%	(535		)		(62		)		24,000				(473		)	27,064				7.7	%		20,705			5.8	%		6,359			(13		)		20,692			6,372
Total operating expenses	$	257,586	75.4	%	$	259,283		76.4	%	$	(1,697	)		$	(884	)		$	258,399			$	(813	)	$	256,809			72.9	%		$	253,225		71.2	%		$	3,584		$	(224	)		$	253,001		$	3,808

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

The following information discusses the significant changes in operating expenses of our North American Operations excluding a decrease of ~~$0.9~~$0.2 million due to the impact from foreign currency depreciation.

Equipment rents expense was ~~$12.3~~$12.1 million for the three months ended ~~June~~September 30, 2019, compared with ~~$13.6~~$15.4 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$1.3~~$3.4 million, or ~~9.8%~~21.7%. The decrease was primarily due to ~~decreased~~reduced car hire expense from existing ~~operations.~~

operations as a result of more fluid car movements in 2019.

Purchased services expense was ~~$16.8~~$16.6 million for the three months ended ~~June~~September 30, 2019, compared with ~~$14.6~~$15.0 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$2.2~~$1.7 million, or ~~15.2%~~11.3%. The increase consisted of ~~$2.7~~$2.4 million from existing operations, partially offset by a decrease of ~~$0.5~~$0.7 million from the expired Canadian leases. The increase in existing operations was primarily due to increases in track maintenance expense in 2019.

Depreciation and amortization expense was ~~$38.7~~$39.2 million for the three months ended ~~June~~September 30, 2019, compared with ~~$41.0~~$41.3 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$2.3~~$2.2 million, or ~~5.6%~~5.2%. The decrease consisted of ~~$3.4~~$3.5 million from the expired Canadian leases, partially offset by an increase of ~~$1.1~~$1.3 million from existing operations. The increase from existing operations was primarily attributable to ~~a larger depreciable asset base in 2019 compared with 2018, reflecting~~ capital spending in 2018.

The cost of diesel fuel used in train operations was ~~$21.7~~$20.7 million for the three months ended ~~June~~September 30, 2019, compared with ~~$23.1~~$23.2 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$1.5~~$2.5 million, or ~~6.4%~~10.9%. The decrease consisted of ~~$0.8~~$2.0 million from existing operations and ~~$0.7~~$0.5 million from the expired Canadian leases. The decrease from existing operations consisted of $2.6 million due to an 11.4% decrease in average fuel cost per gallon, partially offset by an increase of $0.6 million due to higher diesel fuel consumption.

Casualties and insurance expense was ~~$9.0~~$8.6 million for the three months ended ~~June~~September 30, 2019, compared with ~~$10.1~~$6.6 million for the three months ended ~~June~~September 30, 2018, ~~a decrease~~an increase of ~~$1.2~~$2.0 million, or ~~11.5%~~29.7%. The ~~decrease~~increase in existing operations was primarily attributable to ~~decreased~~higher derailment expense in 2019 associated with the washouts on the Rapid City, Pierre & Eastern Railroad.

Other expenses, ~~in 2019.~~

~~Materials expense was $14.6~~net were $27.1 million for the three months ended ~~June~~September 30, 2019, compared with ~~$13.1~~$20.7 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$1.4~~$6.4 million, or ~~11.0%~~30.8%. The increase consisted of $6.6 million from existing operations, partially offset by a decrease of $0.2 million from the expired Canadian leases. The increase from existing operations was primarily due to ~~an increase~~corporate development and related costs in ~~track maintenance expense in 2019.~~

~~Net loss on~~2019 associated with the sale and impairment of assets was $1.0 million for the three months ended June 30, 2019, compared with a net gain on the sale and impairment of assets of $0.7 million for the three months ended June 30, 2018, an increase of $1.7 million. The net loss in the three months ended June 30, 2019 was primarily attributable to the impairment of assets related to 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.proposed Merger.

Operating Income/Operating Ratio

Operating income from our North American Operations was ~~$84.3~~$95.6 million for the three months ended ~~June~~September 30, 2019, compared with ~~$80.3~~$102.5 million for the three months ended ~~June~~September 30, 2018. Operating income for the three months ended ~~June~~September 30, 2019 included corporate development and related costs of ~~$2.3 million, net loss on the sale and impairment of certain assets in United States of $1.0~~$7.8 million and restructuring and related costs of ~~$0.6~~$0.3 million. Operating income for the three months ended ~~June~~September 30, 2018 included ~~credit facility refinancing-related costs of $0.4 million and~~ corporate development and related costs of ~~$0.3~~$0.1 million. The operating ratio was ~~75.4%~~72.9% for the three months ended ~~June~~September 30, 2019, compared with ~~76.4%~~71.2% for the three months ended ~~June~~September 30, 2018.

Australian Operations

Operating Revenues

As previously disclosed, we own a controlling 51.1% interest in our Australian Operations, and therefore, we include 100% of our Australian Operations within our consolidated financial statements with a 48.9% noncontrolling interest recorded to reflect MIRA's ownership. The following table sets forth our Australian Operations operating revenues and carloads for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Three Months Ended June 30,				Increase/(Decrease) in Total Operations					Currency Impact on 2018 Total Operations*			Three Months Ended September 30,				Increase/(Decrease) in Total Operations					Currency Impact on 2018 Total Operations*
	2019		2018		Amount			%		Currency Impact on 2018 Total Operations*			2019		2018		Amount			%		Currency Impact on 2018 Total Operations*
Freight revenues	$	56,923	$	66,075	$	(9,152	)	(13.9	)%	$	(4,960	)	$	61,457	$	65,249	$	(3,792	)	(5.8	)%	$	(4,066	)
Freight-related revenues	8,036		11,515		(3,479		)	(30.2	)%	(866		)	8,011		10,136		(2,125		)	(21.0	)%	(633		)
All other revenues	1,572		1,439		133			9.2	%	(108		)	2,132		1,318		814			61.8	%	(84		)
Total operating revenues	$	66,531	$	79,029	$	(12,498	)	(15.8	)%	$	(5,934	)	$	71,600	$	76,703	$	(5,103	)	(6.7	)%	$	(4,783	)
Carloads	134,395		147,965		(13,570		)	(9.2	)%				147,478		151,318		(3,840		)	(2.5	)%


*	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.

Freight Revenues

The following table sets forth the changes in our Australian Operations freight revenues by commodity group for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	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 September 30,								Increase/(Decrease) in Total Operations				Currency Impact				2018 Constant Currency*			Increase/(Decrease) in Total Operations Constant Currency*
	Three Months Ended June 30,																			Three Months Ended September 30,
Commodity Group	2019		2018					2019								2018
Agricultural Products	$	2,999	$	6,006				$				(3,007	)		$	(451			)		$	5,555			$	(2,556	)	$	2,631			$	4,150			$	(1,519	)	$	(259	)		$	3,891	$	(1,260	)
Coal & Coke	28,965		32,570					(3,605			)		(2,445		)		30,125				(1,160		)	33,187				32,357				830				(2,025		)	30,332				2,855
Intermodal	15,459		17,102		(1,643		)			(1,284		)		15,818				(359		)	16,446				17,538				(1,092		)		(1,088		)		16,450			(4		)
Metallic Ores	7,523		8,125		(602		)		(610		)		7,515				8			7,036				8,914				(1,878		)		(552		)		8,362			(1,326		)
Minerals & Stone	1,817		2,087		(270		)		(157		)		1,930				(113		)	1,979				2,066				(87		)		(127		)		1,939			40
Petroleum Products	160		185		(25		)		(13		)		172				(12		)	178				224				(46		)		(15		)		209			(31		)
Total	$	56,923	$	66,075	$	(9,152	)		$	(4,960	)		$	61,115			$	(4,192	)	$	61,457			$	65,249			$	(3,792	)		$	(4,066	)		$	61,183		$	274

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

The following table sets forth our Australian Operations freight revenues, carloads and average freight revenues per carload for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Three Months Ended June 30,										Three Months Ended June 30,			Three Months Ended June 30,											Three Months Ended September 30,											Three Months Ended September 30,			Three Months Ended
		2019					2018 Constant Currency*						2019				Three Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Three Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Three Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	2,999		5.3	%	$	5,555	9.1	%	4,224			14,175	$	710		$	424		$	392		Agricultural Products	$	2,631			4.3	%		$	3,891		6.4	%		1,525	6,529	$	1,725		$	636		$	596
Coal & Coke	Coal & Coke	28,965			50.9	%	30,125		49.3	%	96,749			97,282	299			335			310			Coal & Coke	33,187				54.0	%		30,332			49.6	%		109,210	106,809	304			303			284
Intermodal	Intermodal	15,459			27.1	%	15,818		25.9	%	13,294			13,957	1,163			1,225			1,133			Intermodal	16,446				26.8	%		16,450			26.9	%		14,564	14,610	1,129			1,200			1,126
Metallic Ores	Metallic Ores	7,523			13.2	%	7,515		12.3	%	5,272			5,586	1,427			1,455			1,345			Metallic Ores	7,036				11.4	%		8,362			13.7	%		4,984	6,464	1,412			1,379			1,294
Minerals & Stone	Minerals & Stone	1,817			3.2	%	1,930		3.1	%	14,791			16,891	123			124			114			Minerals & Stone	1,979				3.2	%		1,939			3.1	%		17,121	16,813	116			123			115
Petroleum Products	Petroleum Products	160			0.3	%	172		0.3	%	65			74	2,462			2,500			2,324			Petroleum Products	178				0.3	%		209			0.3	%		74	93	2,405			2,409			2,247
Total	Total	$	56,923		100.0	%	$	61,115	100.0	%	134,395			147,965	$	424		$	447		$	413		Total	$	61,457			100.0	%		$	61,183		100.0	%		147,478	151,318	$	417		$	431		$	404

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

Total traffic from our Australian Operations decreased ~~13,570~~3,840 carloads, or ~~9.2%~~2.5%, to ~~134,395~~147,478 carloads for the three months ended ~~June~~September 30, 2019, compared with the three months ended ~~June~~September 30, ~~2018.~~ 2018~~The traffic~~ ~~decrease~~ ~~was~~, primarily due to decreases of ~~9,951~~5,004 carloads of agricultural products traffic and ~~2,100~~1,480 carloads of ~~minerals~~metallic ores traffic, partially offset by an increase of 2,401 carloads of coal and ~~stone~~coke traffic. All remaining traffic ~~decreased~~increased by a net ~~1,519~~243 carloads.

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 ~~7.8%~~6.4% impact of foreign currency, average freight revenues per carload from our Australian Operations increased ~~2.7%~~3.2% to ~~$424~~$417 for the three months ended ~~June~~September 30, 2019, compared with the same period in 2018. A change in the mix of commodities decreased average freight revenues per carload by ~~4.8%~~13.8%, ~~while higher~~and lower fuel surcharges ~~increased~~decreased average freight revenues per carload by ~~0.3%~~0.2%. Excluding these factors, average freight revenues per carload increased ~~7.2%.~~17.2% primarily due to an increase in agricultural products freight revenues per carload.

The following information discusses the significant changes in our Australian Operations freight revenues by commodity group excluding the impact of foreign currency.

Agricultural products revenues decreased ~~$2.6~~$1.3 million, or ~~46.0%~~32.4%. Agricultural products traffic decreased ~~9,951~~5,004 carloads, or ~~70.2%~~76.6%, which decreased revenues by ~~$7.1~~$8.6 million, while average freight revenues per carload increased ~~81.1%~~189.4%, which increased revenues by ~~$4.5~~$7.4 million. The ~~carload~~ decrease in carloads was primarily due to a drought-related smaller grain harvest in 2019. The increase in average freight revenue per carload was primarily due to a change in mix and the conclusion of services on the Eyre Peninsula. The decrease in grain traffic resulted in higher average freight revenues per carload, primarily due to the rate structure for Australian grain traffic, which has both a fixed and variable component.

Coal and coke revenues ~~decreased $1.2~~increased $2.9 million, or ~~3.9%~~9.4%. Coal and coke average freight revenues per carload ~~decreased 3.5%~~increased 7.0%, which ~~decreased~~increased revenues by ~~$1.0~~$2.1 million, and traffic ~~decreased 533~~increased 2,401 carloads, or ~~0.5%~~2.2%, which ~~decreased~~increased revenues by ~~$0.2~~$0.7 million. The ~~decrease~~increase in average freight revenues per carload was primarily due to ~~lower spot coal revenue~~a change in the mix of business.

Metallic ores revenues decreased $1.3 million, or 15.9%. Metallic ores traffic decreased 1,480 carloads, or 22.9%, which decreased revenues by $2.1 million, primarily due to a temporary mine closure in 2019.

Freight revenues from all remaining commodities ~~decreased by a net $0.5 million.~~were relatively flat.

Freight-Related Revenues

Excluding a ~~$0.9~~$0.6 million decrease due to ~~the impact of~~ foreign currency depreciation, freight-related revenues from our Australian Operations, which includes revenues from railcar switching, track access rights, crewing services, storage and other ancillary revenues related to the movement of freight, decreased ~~$2.6~~$1.5 million, or ~~24.5%~~15.7%, to $8.0 million for the three months ended ~~June~~September 30, 2019, compared with ~~$10.6~~$9.5 million for the three months ended ~~June~~September 30, 2018. The decrease in freight-related revenues was primarily due to switching competition and prolonged drought conditions in 2019.

All Other Revenues

~~All~~Excluding a $0.1 million decrease due to foreign currency depreciation, all other revenues from our Australian Operations, ~~for the three months ended June 30, 2019,~~ which includes revenues from third-party railcar and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of freight, ~~remained relatively flat compared with~~increased $0.9 million, or 72.8%, to $2.1 million for the three months ended ~~June~~September 30, 2019, compared with $1.2 million for the three months ended September 30, 2018.

Operating Expenses

Total operating expenses from our Australian Operations for the three months ended ~~June~~September 30, 2019 ~~increased $1.7~~decreased $3.9 million, or ~~3.3%~~6.9%, to ~~$54.9~~$52.1 million, compared with ~~$53.1~~$56.0 million for the three months ended ~~June 30, 2018. The operating expenses for the three months ended June~~September 30, 2018, ~~included~~primarily due to a $6.3 million gain on settlement related to Arrium's voluntary administration that was recognized as an offset to other expenses, net. The operating expenses for the three months ended June 30, 2019 included $2.6 million of expense associated with amending an enterprise bargaining agreement, partially offset by decreases in purchased services expense, trackage rights expense and the cost of diesel fuel used in train operations. In addition, operating expenses included a $4.0$3.5 million decrease ~~due to the impact of~~from foreign currency depreciation for the three months ended ~~June~~September 30, 2019 compared with the three months ended ~~June~~September 30, 2018.

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


	Three Months Ended June 30,										Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Three Months Ended September 30,													Increase/(Decrease)				Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019					2018								2019												2018
	Amount			% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount				% of Operating Revenues
Labor and benefits	$	19,462		29.3	%	$	18,886		23.9	%				$				576				$		(1,417	)		$	17,469			$	1,993		$	15,865		22.2	%		$	17,400			22.7	%		$	(1,535	)	$	(1,085	)		$	16,315		$	(450	)
Equipment rents	827			1.2	%	1,183			1.5	%				(356			)		(89		)		1,094				(267		)	1,047				1.5	%	1,452				1.9	%		(405		)		(91		)	1,361				(314		)
Purchased services	5,451			8.2	%	6,895			8.7	%	(1,444		)			(518		)		6,377				(926		)	5,444				7.6	%		6,319			8.2	%		(875		)		(393		)		5,926			(482		)
Depreciation and amortization	14,192			21.3	%	15,288			19.4	%	(1,096		)		(1,147		)		14,141				51			13,779				19.2	%		14,937			19.5	%		(1,158		)		(929		)		14,008			(229		)
Diesel fuel used in train operations	6,962			10.5	%	8,173			10.3	%	(1,211		)		(614		)		7,559				(597		)	7,069				9.9	%		8,074			10.5	%		(1,005		)		(504		)		7,570			(501		)
Casualties and insurance	1,573			2.4	%	1,766			2.2	%	(193		)		(131		)		1,635				(62		)	2,117				3.0	%		1,651			2.2	%		466				(102		)		1,549			568
Materials	2,693			4.0	%	2,761			3.5	%	(68		)		(207		)		2,554				139			2,740				3.8	%		3,003			3.9	%		(263		)		(188		)		2,815			(75		)
Trackage rights	1,576			2.4	%	2,364			3.0	%	(788		)		(178		)		2,186				(610		)	1,555				2.2	%		1,932			2.5	%		(377		)		(123		)		1,809			(254		)
Net gain on sale and impairment of assets	(42		)	(0.1	)%	(67		)	(0.1	)%	25				5				(62		)		20			(111		)		(0.2	)%		(20		)	—	%		(91		)		1				(19		)	(92		)
Restructuring and related costs	137			0.2	%	—			—	%	137				—				—				137
Other expenses, net	2,045			3.1	%	(4,116		)	(5.2	)%	6,161				296				(3,820		)		5,865			2,611				3.6	%		1,242			1.6	%		1,369				(85		)		1,157			1,454
Total operating expenses	$	54,876		82.5	%	$	53,133		67.2	%	$	1,743			$	(4,000	)		$	49,133			$	5,743		$	52,116			72.8	%		$	55,990		73.0	%		$	(3,874	)		$	(3,499	)		$	52,491		$	(375	)

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

The following information discusses the significant ~~changes~~change in operating expenses of our Australian Operations excluding a ~~$4.0~~$3.5 million decrease from ~~the impact of~~ foreign currency depreciation.

~~Labor and benefits expense was $19.5~~Other expenses, net were $2.6 million for the three months ended ~~June~~September 30, 2019, compared with ~~$17.5~~$1.2 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$2.0 million, or 11.4%. The increase was primarily due to $2.6 million of~~$1.5 million. Other expense, ~~associated with amending an enterprise bargaining agreement.~~

~~Other expenses,~~ net ~~were $2.0 million~~ for the three months ended ~~June 30, 2019, compared with a net gain of $3.8 million for the three months ended June 30, 2018. The three months ended June~~September 30, 2018 included a ~~$6.3~~$0.9 million gain on settlement related to ~~Arrium's~~a customer's voluntary ~~administration.~~administration (bankruptcy).

Operating Income/Operating Ratio

~~Our~~Total operating income from our Australian Operations ~~had operating income of $11.7~~decreased $1.2 million, or 5.9%, to $19.5 million for the three months ended ~~June~~September 30, 2019, compared with ~~$25.9~~$20.7 million for the three months ended ~~June~~September 30, 2018. ~~Operating income~~The operating ratio was 72.8% for the three months ended ~~June~~September 30, 2019, ~~included $0.1 million of restructuring and related costs. The operating ratio was 82.5%~~compared with 73.0% for the three months ended ~~June 30, 2019, compared with 67.2% for the three months ended June~~September 30, 2018. Operating income from our Australian Operations was negatively impacted by ~~$1.9~~$1.3 million from foreign currency ~~depreciation, a 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's voluntary administration (bankruptcy) in the second quarter of 2016.depreciation.

U.K./European Operations

Operating Revenues

The following table sets forth our U.K./European Operations ~~total~~ operating revenues and carloads for the three months ended ~~June~~September 30, 2019 and 2018. The table below also reflects the calculation of our U.K./European Operations existing operations by subtracting the revenues and carloads from the divested ERS operations from our U.K./European Operations 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												Three Months Ended September 30,										Increase/(Decrease) in Total Operations							Currency Impact on 2018 Total Operations*
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount				Increase/(Decrease) in Existing Operations					%								Amount			Currency Impact on 2018 Total Operations*			%			Currency Impact on 2018 Total Operations*	2019				2018			Amount			%
Freight revenues	$	81,577	$	92,289	$	6,674	$	85,615	$	(10,712	)		(11.6	)%		$	(4,038	)	(4.7	)%			$	(5,280	)				$	(4,808	)	$	80,667		$	84,693				$	(4,026	)		(4.8	)%	$	(4,471	)
Freight-related revenues	68,225		67,420		2,685		64,735		805				1.2	%		3,490			5.4	%		(3,786		)	(3,609		)	65,229				69,269			(4,040		)			(5.8	)%		(3,689		)
All other revenues	13,300		16,695		9		16,686		(3,395		)		(20.3	)%		(3,386		)	(20.3	)%		(944		)		(943		)	13,756				16,930			(3,174		)		(18.7	)%		(914		)
Total operating revenues	$	163,102	$	176,404	$	9,368	$	167,036	$	(13,302	)		(7.5	)%		$	(3,934	)	(2.4	)%		$	(10,010	)		$	(9,360	)	$	159,652			$	170,892		$	(11,240	)		(6.6	)%		$	(9,074	)
Carloads	225,065		256,045		20,823		235,222		(30,980		)		(12.1	)%		(10,157		)	(4.3	)%									235,502				241,382			(5,880		)		(2.4	)%

Freight Revenues

The following table sets forth the changes in our U.K./European Operations ~~total~~ freight revenues by commodity group for the three months ended ~~June~~September 30, 2019 and 2018. The table below also reflects the calculation of our U.K./European Operations existing operations by subtracting the revenues from the divested ERS operations from our U.K./European Operations total operations for the three months ended June 30, 2018 (dollars in thousands):


	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*			Three Months Ended September 30,							Increase/(Decrease) in Total Operations			Currency Impact			2018 Constant Currency*				Increase/(Decrease) in Total Operations Constant Currency*
	2019		2018																					Three Months Ended September 30,
Commodity Group	2019		Total Operations		Divested Operations		Existing Operations					Increase/(Decrease) in Existing Operations				Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*				2019			2018
Agricultural Products	$	512	$	785	$	—	$	785									$	(273	)		$	(43	)	$	742	$	(230	)	$	763					$	1,053		$	(290	)		$	(55	)	$	998	$	(235	)
Coal & Coke	896		2,687		—		2,687		(1,791		)		(150		)		2,537				(1,641		)	606			2,588				(1,982		)	(137		)	2,451				(1,845		)
Intermodal	58,297		66,483		6,674		59,809		(1,512		)		(3,311		)		56,498				1,799			56,998			58,609				(1,611		)	(3,177		)	55,432				1,566
Minerals & Stone	21,155		22,326		—		22,326		(1,171		)		(1,304		)		21,022				133			21,672			22,344				(672		)	(1,097		)	21,247				425
Petroleum Products	717		8		—		8		709				—				8				709			628			99				529			(5		)	94				534
Total	$	81,577	$	92,289	$	6,674	$	85,615	$	(4,038	)		$	(4,808	)		$	80,807			$	770		$	80,667		$	84,693			$	(4,026	)	$	(4,471	)	$	80,222			$	445

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

The following table sets forth our U.K./European Operations freight revenues, carloads and average freight revenues per carload for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Three Months Ended June 30,										Three Months Ended June 30,			Three Months Ended June 30,											Three Months Ended September 30,											Three Months Ended September 30,			Three Months Ended
		2019					2018 Constant Currency*						2019				Three Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Three Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Three Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	512		0.6	%	$	742	0.8	%	393			607	$	1,303		$	1,293		$	1,222		Agricultural Products	$	763			0.9	%		$	998		1.2	%		560	776	$	1,363		$	1,357		$	1,286
Coal & Coke	Coal & Coke	896			1.1	%	2,537		2.9	%	1,655			4,038	541			665			628			Coal & Coke	606				0.7	%		2,451			3.1	%		1,468	4,271	413			606			574
Intermodal	Intermodal	58,297			71.5	%	62,700		72.1	%	172,966			201,058	337			331			312			Intermodal	56,998				70.7	%		55,432			69.1	%		179,147	188,002	318			312			295
Minerals & Stone	Minerals & Stone	21,155			25.9	%	21,022		24.2	%	46,517			50,322	455			444			418			Minerals & Stone	21,672				26.9	%		21,247			26.5	%		51,430	48,111	421			464			442
Petroleum Products	Petroleum Products	717			0.9	%	8		—	%	3,534			20	203			400			400			Petroleum Products	628				0.8	%		94			0.1	%		2,897	222	217			446			423
Total	Total	$	81,577		100.0	%	$	87,009	100.0	%	225,065			256,045	$	362		$	360		$	340		Total	$	80,667			100.0	%		$	80,222		100.0	%		235,502	241,382	$	343		$	351		$	332


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

Total traffic from our U.K./European Operations decreased ~~30,980~~5,880 carloads, or ~~12.1%~~2.4%, to ~~225,065~~235,502 carloads for the three months ended ~~June~~September 30, 2019, compared with the same period in ~~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 decreases of ~~7,269~~8,855 carloads of intermodal traffic ~~3,805 carloads of minerals~~ and ~~stone traffic and 2,383~~2,803 carloads of coal and coke traffic, partially offset by ~~an increase~~increases of ~~3,514~~3,319 carloads of minerals and stone traffic and 2,675 carloads of petroleum products traffic. All remaining traffic decreased by ~~a net 214~~216 carloads.

The following information discusses the significant changes in our U.K./European Operations freight revenues by commodity group excluding the impact of foreign ~~currency and the divested ERS operations.~~currency.

Coal and coke revenues decreased ~~$1.6~~$1.8 million, or ~~64.7%~~75.3%. Coal and coke traffic decreased ~~2,383~~2,803 carloads, or ~~59.0%~~65.6%, which decreased revenues by ~~$1.3~~$1.2 million, and average freight revenues per carload decreased ~~13.7%~~28.0%, which decreased revenues by ~~$0.3~~$0.7 million. The carload decrease was primarily due to ~~decreased demand~~the conclusion of certain customer contracts in the U.K.

Intermodal revenues increased ~~$1.8~~$1.6 million, or ~~3.2%~~2.8%. Intermodal average freight revenues per carload increased ~~7.7%~~7.8%, which increased revenues by ~~$4.2~~$4.4 million, while traffic decreased ~~7,269~~8,855 carloads, or ~~4.0%~~4.7%, which decreased revenues by ~~$2.4~~$2.8 million. The increase in average freight revenues per carload was primarily due to stronger pricing in the U.K. The decrease in carloads was primarily due to ~~temporary rail network outages.~~service cancellations and lower demand.

Freight revenues from all remaining commodities combined increased by a net ~~$0.6~~$0.7 million.

Freight-Related Revenues

Freight-related revenues from our U.K./European Operations includes trucking haulage services, container storage and switching services, as well as infrastructure services where we operate work trains for the track infrastructure owner. Freight-related revenues from our U.K./European Operations also include traction services (or hook and pull), which requires us 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~~Excluding a $3.7 million decrease due to foreign currency depreciation, freight-related revenues from our U.K./European Operations ~~were $68.2~~decreased $0.4 million, or 0.5%, to $65.2 million for the three months ended ~~June~~September 30, 2019, compared with ~~$67.4~~$65.6 million for the three months ended ~~June~~September 30, 2018, an increase of $0.8 million, or 1.2%. Excluding a decrease of $3.8 million due to the impact of foreign currency depreciation and $2.5 million from our divested ERS operations, freight-related revenues from our existing operations increased $7.1 million, or 11.6%, for the three months ended June 30, 2019, compared with $61.1 million for the three months ended June 30, 2018. The increase in freight-related revenues from our existing operations was primarily due to increased rates on trucking, switching and storage revenues and stronger trucking volumes in the U.K. as well as increased crewing services in Poland.

All Other Revenues

~~All~~Excluding a $0.9 million decrease due to foreign currency depreciation, all other revenues from our U.K./European Operations, which includes revenues from container sales and conversions, third-party car and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of ~~freight. All other revenues from our U.K./European Operations were $13.3~~freight, decreased $2.3 million, or 14.1%, to $13.8 million for the three months ended ~~June~~September 30, 2019, compared with ~~$16.7~~$16.0 million for the three months ended June 30, 2018, a decrease of $3.4 million, or 20.3%. Excluding a $0.9 million decrease due to the impact of foreign currency depreciation, all other revenues from our existing operations decreased $2.4 million, or 15.5%, for the three months ended June 30, 2019, compared with the three months ended JuneSeptember 30, 2018. The decrease in all other revenues ~~from our existing operations~~ was primarily due to ~~decreased container sales.~~reduced management and technical support revenues in Saudi Arabia in 2019.

Operating Expenses

~~Total~~Excluding an $8.8 million decrease due to foreign currency depreciation, total operating expenses from our U.K./European Operations ~~decreased $14.6~~increased $4.6 million, or ~~8.2%~~2.9%, to ~~$164.8~~$162.0 million for the three months ended ~~June~~September 30, 2019, compared with ~~$179.4~~$157.4 million for the three months ended ~~June~~September 30, 2018. The ~~decrease consisted of $10.1 million due to the impact of foreign currency depreciation and $7.7 million from divested operations, partially offset by a $3.2 million~~ increase ~~from existing operations. The increase from existing operations~~ included ~~increases of $3.6~~$3.7 million in labor and benefits expense, ~~and $2.1~~$2.8 million in ~~purchased services~~other expenses, net and $1.5 million in depreciation and amortization expense, partially offset by decreases of ~~$2.1~~$1.7 million in ~~restructuring~~purchased services expense and ~~related costs and $1.5~~$1.1 million in ~~materials~~trackage rights expense.

The following table sets forth operating expenses from our U.K./European Operations for the three months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Three Months Ended June 30,										Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Three Months Ended September 30,												Increase/(Decrease)				Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019					2018								2019												2018
	Amount			% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount			% of Operating Revenues
Labor and benefits	$	52,023		31.9	%	$	51,663		29.3	%				$				360				$		(2,894	)		$	48,769		$	3,254		$	51,474		32.3	%		$	50,513			29.6	%		$	961		$	(2,706	)		$	47,807	$	3,667
Equipment rents	18,926			11.6	%	19,986			11.3	%				(1,060			)		(1,133		)		18,853				73		17,804				11.2	%	18,432				10.8	%		(628		)		(965		)	17,467				337
Purchased services	31,762			19.5	%	39,498			22.4	%	(7,736		)			(2,301		)		37,197				(5,435		)	28,963			18.1	%		32,430			19.0	%		(3,467		)		(1,725		)		30,705			(1,742		)
Depreciation and amortization	9,587			5.9	%	9,210			5.2	%	377				(517		)		8,693				894			10,083			6.3	%		9,067			5.3	%		1,016				(483		)		8,584			1,499
Diesel fuel used in train operations	12,870			7.9	%	14,197			8.0	%	(1,327		)		(794		)		13,403				(533		)	13,791			8.7	%		14,409			8.4	%		(618		)		(755		)		13,654			137
Electricity used in train operations	2,226			1.4	%	2,044			1.2	%	182				(113		)		1,931				295			1,794			1.1	%		2,742			1.6	%		(948		)		(142		)		2,600			(806		)
Casualties and insurance	1,288			0.8	%	1,062			0.6	%	226				(64		)		998				290			936			0.6	%		1,625			1.0	%		(689		)		(87		)		1,538			(602		)
Materials	14,050			8.6	%	16,452			9.3	%	(2,402		)		(927		)		15,525				(1,475		)	16,118			10.1	%		16,905			9.9	%		(787		)		(913		)		15,992			126
Trackage rights	9,245			5.7	%	10,412			5.9	%	(1,167		)		(590		)		9,822				(577		)	8,683			5.4	%		10,320			6.0	%		(1,637		)		(534		)		9,786			(1,103		)
Net gain on sale and impairment of assets	(15		)	—	%	(50		)	—	%	35				(19		)		(69		)		54			(21		)	—	%		(116		)	(0.1	)%		95				6				(110		)	89
Restructuring and related costs	6,783			4.1	%	9,355			5.3	%	(2,572		)		(481		)		8,874				(2,091		)	3,238			2.0	%		3,285			1.9	%		(47		)		(176		)		3,109			129
Other expenses, net	6,073			3.7	%	5,620			3.2	%	453				(312		)		5,308				765			9,150			5.7	%		6,657			3.9	%		2,493				(356		)		6,301			2,849
Total operating expenses	$	164,818		101.1	%	$	179,449		101.7	%	$	(14,631	)		$	(10,145	)		$	169,304			$	(4,486	)	$	162,013		101.5	%		$	166,269		97.3	%		$	(4,256	)		$	(8,836	)		$	157,433		$	4,580

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

The following information discusses the significant changes in operating expenses from our U.K./European Operations excluding a decrease of ~~$10.1~~$8.8 million due to ~~the impact of~~ foreign currency depreciation.

Labor and benefits expense was ~~$52.0~~$51.5 million for the three months ended ~~June~~September 30, 2019, compared with ~~$48.8~~$47.8 million for the three months ended ~~June~~September 30, 2018, an increase of ~~$3.3~~$3.7 million, or ~~6.7%~~7.7%. The increase ~~consisted of $3.6 million from existing operations, partially offset by a $0.3 million decrease from our divested ERS operations. The increase from existing operations~~ was primarily due to annual wage increases and an increase in headcount to support ~~increased infrastructure services and~~ new ~~aggregate~~ business, ~~expected to commence in the fourth quarter of 2019,~~ partially offset by savings resulting from the U.K. ~~operations~~Operations optimization program.

Purchased services expense was ~~$31.8~~$29.0 million for the three months ended ~~June~~September 30, 2019, compared with ~~$37.2~~$30.7 million for the three months ended ~~June~~September 30, 2018, a decrease of ~~$5.4~~$1.7 million, or ~~14.6%~~5.7%. The decrease ~~consisted of $7.6 million from our divested ERS operations, partially offset by an increase of $2.1 million from existing operations. The increase from existing operations~~ was primarily due to ~~an increase in~~reduced subcontractor costs ~~associated with trucking activity.~~in 2019.

~~Materials~~Depreciation and amortization expense which primarily consists of the cost of containers sold to third parties, materials purchased for use in repairing and maintaining our locomotives, railcars and other equipment, as well as costs for general tools and supplies used in our business, was ~~$14.1~~$10.1 million for the three months ended ~~June~~September 30, 2019, compared with ~~$15.5~~$8.6 million for the three months ended ~~June~~September 30, 2018, an increase of $1.5 million, or 17.5%. The increase was primarily due to capital spending in 2018.

Trackage rights expense was $8.7 million for the three months ended September 30, 2019, compared with $9.8 million for the three months ended September 30, 2018, a decrease of ~~$1.5~~$1.1 million, or ~~9.5%~~11.3%. The decrease was primarily due to a ~~decrease in container sales.~~refund of prior year track access costs.

~~Restructuring and related costs~~

Other expenses, net were $9.2 million for the three months ended ~~June~~September 30, 2019, ~~and~~compared with $6.3 million for the three months ended September 30, 2018, an increase of ~~$6.8~~$2.8 million, ~~and $8.9 million, respectively, were~~or 45.2%. The increase was primarily attributable to unrealized foreign currency costs related to the revaluation of non-functional currency denominated operating lease liabilities in Poland, which are now included on the balance sheet with the adoption of the new lease standard. See Note 5, Leases, to our ~~optimization activities~~Consolidated Financial Statements set forth in ~~the U.K.~~"Part I Item 1. Financial Statements" of this quarterly report for additional information regarding this standard.

Operating Loss/Operating Ratio

Operating loss from our U.K./European Operations was ~~$1.7~~$2.4 million for the three months ended ~~June~~September 30, 2019, compared with an operating ~~loss~~income of ~~$3.0~~$4.6 million for the three months ended ~~June~~September 30, 2018. The operating loss for the three months ended ~~June~~September 30, 2019 included ~~$6.8~~$3.2 million of restructuring and related costs primarily driven by our optimization activities in the U.K. The operating ~~loss~~income for the three months ended ~~June~~September 30, 2018 included ~~$9.4~~$3.3 million ~~or $8.9 million excluding the impact of foreign currency,~~ of restructuring and related costs. The operating ratio was ~~101.1%~~101.5% for the three months ended ~~June~~September 30, 2019, compared with ~~101.7%~~97.3% for the three months ended ~~June~~September 30, 2018.

~~Six~~Nine Months Ended ~~June~~September 30, 2019 Compared with ~~Six~~Nine Months Ended ~~June~~September 30, 2018

Consolidated Operating Results

Operating Revenues

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


	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*			Nine Months Ended September 30,										Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations						Currency Impact on 2018 Total Operations*			Currency Impact on 2018 Existing Operations*
			2018																				2018														Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount			Increase/(Decrease) in Existing Operations		%		Amount								%				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	)	$	1,196,619	$	1,241,245	$	27,121	$	1,214,124		$	(44,626	)		(3.6	)%	$	(17,505	)		(1.4	)%	$	(32,978	)		$	(31,407	)
Freight-related revenues	278,658		283,599		10,325		273,274		(4,941		)		(1.7	)%	$	5,384		2.0	%	(10,563		)		(9,948		)	420,027				429,049		11,759		417,290		(9,022		)	(2.1	)%		2,737			0.7	%		(14,968		)	(14,339		)
All other revenues	64,441		68,181		958		67,223		(3,740		)		(5.5	)%	$	(2,782	)	(4.1	)%	(2,474		)		(2,432		)	96,617				102,661		1,373		101,288		(6,044		)	(5.9	)%		(4,671		)	(4.6	)%		(3,500		)	(3,454		)
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	)	$	1,713,263			$	1,772,955	$	40,253	$	1,732,702	$	(59,692	)	(3.4	)%		$	(19,439	)	(1.1	)%		$	(51,446	)	$	(49,200	)
Carloads	1,527,868		1,645,676		67,094		1,578,582		(117,808		)		(7.2	)%	(50,714		)	(3.2	)%								2,326,187				2,484,595		74,738		2,409,857		(158,408		)	(6.4	)%		(83,670		)	(3.5	)%

Operating Expenses

Total operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2019 decreased ~~$24.0~~$28.5 million, or ~~2.4%~~2.0%, to ~~$955.7~~$1,426.6 million, compared with ~~$979.6~~$1,455.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The decrease consisted of ~~$34.0~~$40.0 million from the divested operations and the leased railroads in Canada that expired at the end of 2018, partially offset by an increase of ~~$10.1~~$11.5 million from existing operations. Excluding a ~~$31.9~~$44.4 million benefit from the ~~net~~ depreciation of foreign currencies relative to the United States dollar, operating expenses from existing operations increased ~~$42.0 million.~~$55.9 million, or 4.1%. The increase from existing operations included increases of ~~$13.3~~$19.3 million in other expenses, net, $17.6 million in labor and benefits expense, ~~$8.4~~$7.4 million in ~~other expenses, net, $7.2 million of~~ purchased services expense, ~~$6.0~~$7.1 million in depreciation and amortization expense, $6.5 million in restructuring and related costs and ~~$4.5~~$3.0 million in ~~depreciation~~casualties and ~~amortization expense.~~insurance expense, partially offset by decreases of $3.9 million in equipment rents expense and $3.2 million in the cost of diesel fuel used in train operations.

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


	Six Months Ended June 30,										Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Nine Months Ended September 30,												Increase/(Decrease)			Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*
	2019					2018												2019									2018
	Amount			% of Operating Revenues		Amount			% of Operating Revenues									Amount								% of Operating Revenues			Amount				% of Operating Revenues
Labor and benefits	$	364,251		32.3	%	$	363,554		31.1	%			$	697			$	(10,393				)			$	353,161			$	11,090		$	539,751			31.5	%	$	539,407		30.4	%		$	344			$	(14,272	)		$	525,135		$	14,616
Equipment rents	64,243			5.7	%	68,889			5.9	%			(4,646		)		(2,944				)		65,945				(1,702		)	95,169				5.6	%	104,214			5.9	%	(9,045		)		(4,011		)		100,203				(5,034	)
Purchased services	105,282			9.3	%	125,147			10.7	%	(19,865		)		(6,561		)		118,586				(13,304		)	156,337				9.1	%		178,864			10.1	%	(22,527		)	(8,693		)		170,171				(13,834		)
Depreciation and amortization	125,143			11.1	%	131,735			11.3	%	(6,592		)		(4,336		)		127,399				(2,256		)	188,169				11.0	%		197,127			11.1	%	(8,958		)	(5,811		)		191,316				(3,147		)
Diesel fuel used in train operations	86,141			7.6	%	91,774			7.9	%	(5,633		)		(3,344		)		88,430				(2,289		)	127,674				7.5	%		137,487			7.8	%	(9,813		)	(4,628		)		132,859				(5,185		)
Electricity used in train operations	4,550			0.4	%	4,278			0.4	%	272				(283		)		3,995				555			6,344				0.4	%		7,020			0.4	%	(676		)	(425		)		6,595				(251		)
Casualties and insurance	23,211			2.1	%	22,950			2.0	%	261				(528		)		22,422				789			34,869				2.0	%		32,862			1.8	%	2,007			(719		)		32,143				2,726
Materials	62,514			5.5	%	64,845			5.5	%	(2,331		)		(2,589		)		62,256				258			94,949				5.5	%		97,589			5.5	%	(2,640		)	(3,701		)		93,888				1,061
Trackage rights	43,367			3.8	%	44,281			3.8	%	(914		)		(1,724		)		42,557				810			64,633				3.8	%		67,119			3.8	%	(2,486		)	(2,382		)		64,737				(104		)
Net gain on sale and impairment of assets	(510		)	—	%	(1,859		)	(0.2	)%	1,349				(2		)		(1,861		)		1,351			(1,151		)		(0.1	)%		(2,501		)	(0.1	)%	1,350			9				(2,492		)		1,341
Restructuring costs	15,195			1.3	%	9,645			0.8	%	5,550				(497		)		9,148				6,047			18,756				1.1	%		12,931			0.7	%	5,825			(673		)		12,258				6,498
Other expenses, net	62,272			5.5	%	54,374			4.6	%	7,898				(818		)		53,556				8,716			101,097				5.9	%		82,978			4.7	%	18,119			(1,272		)		81,706				19,391
Total operating expenses	$	955,659		84.6	%	$	979,613		83.8	%	$	(23,954	)		$	(34,019	)		$	945,594			$	10,065		$	1,426,597			83.3	%		$	1,455,097		82.1	%	$	(28,500	)	$	(46,578	)		$	1,408,519			$	18,078

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

Operating Income/Operating Ratio

Operating income was ~~$173.9~~$286.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$190.0~~$317.9 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Operating income for the ~~six~~nine months ended ~~June~~September 30, 2019 included restructuring and related costs of ~~$15.2~~$18.8 million, primarily driven by our optimization activities in the U.K., ~~$2.9~~$11.1 million of corporate development and related costs primarily related to the proposed Merger, $2.6 million of expense associated with amending an enterprise bargaining agreement in Australia and a $1.0 million net loss on the sale and impairment of certain assets in North America. Operating income for the ~~six~~nine months ended ~~June~~September 30, 2018 included restructuring and related costs of ~~$9.6~~$12.9 million, primarily related to the restructuring of ERS, and corporate development and related costs of ~~$0.5~~$0.9 million, partially offset by a ~~$6.3~~$7.3 million gain on settlement related to ~~Arrium's~~an Australia customer's voluntary ~~administration.~~administration (bankruptcy). Our operating ratio was ~~84.6%~~83.3% for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~83.8%~~82.1% for the ~~six~~nine months ended ~~June~~September 30, 2018.

Interest Expense

Interest expense was ~~$55.0~~$80.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$54.2~~$80.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The ~~increase~~decrease in interest expense for the ~~six~~nine months ended ~~June~~September 30, 2019 was primarily ~~driven by an increase in interest rates as compared with the six months ended June 30, 2018 and an increase in outstanding borrowing primarily related~~due to ~~the funding of our share repurchases, partially offset by~~ the write-off of deferred financing fees associated with our credit facility refinancing in June ~~2018.~~2018, partially offset by changes in outstanding borrowings and fluctuations in interest rates.

Provision for Income Taxes

Our provision for income taxes for the ~~six~~nine months ended ~~June~~September 30, 2019 was ~~$33.1~~$53.1 million compared with ~~$10.6~~$41.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Our effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2019 was 24.9% and included a $4.2 million income tax benefit due to the release of a reserve for an uncertain tax position due to the expiration of the statute of limitations. Excluding the release of the reserve, our effective income tax rate for the nine months ended September 30, 2019 was26.9%. Our effective income tax rate for the nine months ended September 30, 2018 was 17.4%. Our results for the ~~six~~nine months ended ~~June~~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 six months ended June 30,~~ 2018, we recorded a reserve for uncertain tax positions of ~~$4.8~~$5.5 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. The reserve for uncertain tax positions was included in our provision for income taxes for the nine months ended September 30, 2018. 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 ~~six~~nine months ended ~~June~~September 30, 2018 was ~~28.5%~~29.1%. For additional information regarding our provision for income taxes, see Note 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 ~~six~~nine months ended ~~June~~September 30, 2019 was ~~$90.1~~$156.9 million, compared with ~~$119.3~~$188.9 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Our basic EPS were ~~$1.60~~$2.78 with ~~56.4~~56.5 million weighted average shares outstanding for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with basic EPS of ~~$1.96~~$3.13 with ~~60.9~~60.3 million weighted average shares outstanding for the ~~six~~nine months ended ~~June~~September 30, 2018. Our diluted EPS for the ~~six~~nine months ended ~~June~~September 30, 2019 were ~~$1.58~~$2.74 with ~~57.2~~57.3 million weighted average shares outstanding, compared with diluted EPS of ~~$1.93~~$3.08 with ~~61.8~~61.3 million weighted average shares outstanding for the ~~six~~nine months ended ~~June~~September 30, 2018. Our results for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 included certain items affecting comparability between the periods as previously presented in the "Overview—Overview of ~~Six-Month~~Nine-Month Results—Items Affecting Comparability."

Net 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 income attributable to noncontrolling interest for the ~~six~~nine months ended ~~June~~September 30, 2019 was ~~less than $0.1~~$3.0 million, compared with ~~$5.4~~$8.1 million for ~~six~~nine months ended ~~June~~September 30, 2018.

North American Operations

Operating Revenues

The following table sets forth our North American Operations total operating revenues and carloads for the ~~six~~nine months ended ~~June~~September 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 ~~six~~nine months ended ~~June~~September 30, 2018 (dollars in thousands):


	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*			Nine Months Ended September 30,										Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations					Currency Impact on 2018 Total Operations*			Currency Impact on 2018 Existing Operations*
			2018																				2018														Increase/(Decrease) in Total Operations					Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount			Increase/(Decrease) in Existing Operations		%		Amount								%				2019		Total Operations		Divested Operations		Existing Operations			Amount			%		Amount								%
Freight revenues	$	510,944	$	505,285	$	6,819	$	498,466	$	5,659			1.1	%	$	12,478		2.5	%		$	(1,533	)					$	(1,258	)	$	778,969	$	778,717	$	10,035	$	768,682		$	252		—	%	$	10,287		1.3	%	$	(1,716	)		$	(1,408	)
Freight-related revenues	130,611		127,299		3,319		123,980		3,312				2.6	%	6,631			5.3	%	(493		)		(352		)	198,740				193,344		4,753		188,591		5,396			2.8	%	10,149			5.4	%	(576		)	(421		)
All other revenues	32,738		32,603		937		31,666		135				0.4	%	1,072			3.4	%	(256		)		(216		)	49,026				48,835		1,352		47,483		191			0.4	%	1,543			3.2	%	(284		)	(240		)
Total operating revenues	$	674,293	$	665,187	$	11,075	$	654,112	$	9,106			1.4	%	$	20,181		3.1	%	$	(2,282	)		$	(1,826	)	$	1,026,735			$	1,020,896	$	16,140	$	1,004,756	$	5,839		0.6	%	$	21,979		2.2	%	$	(2,576	)	$	(2,069	)
Carloads	800,752		836,366		16,145		820,221		(35,614		)		(4.3	)%	(19,469		)	(2.4	)%								1,216,091				1,282,585		23,789		1,258,796		(66,494		)	(5.2	)%	(42,705		)	(3.4	)%

Freight Revenues

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


	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*			Nine Months Ended September 30,													Increase/(Decrease) in Existing Operations			Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*			Increase/(Decrease) in Existing Operations Constant Currency*
			2018																	2018
Commodity Group	2019		Total Operations		Divested Operations		Existing Operations					2019								Total Operations					Divested Operations				Existing Operations
Agricultural Products	$	64,809	$	61,065	$	1,007	$	60,058				$			4,751			$	(123	)					$	59,935			$	4,874	$	99,383		$	91,630		$	1,474		$	90,156			$	9,227		$	(131	)	$	90,025		$	9,358
Autos & Auto Parts	11,566		11,173		481		10,692					874					(53		)				10,639				927			17,905			16,686			745			15,941			1,964				(59	)		15,882			2,023
Chemicals & Plastics	76,986		75,189		1,368		73,821		3,165					(206		)		73,615				3,371			116,504				113,625			1,954			111,671			4,833			(229		)		111,442			5,062
Coal & Coke	37,753		39,032		—		39,032		(1,279		)		(62		)		38,970				(1,217		)	56,089				62,038			—			62,038			(5,949		)	(72		)		61,966			(5,877		)
Food & Kindred Products	17,204		16,826		326		16,500		704				(5		)		16,495				709			25,559				25,587			551			25,036			523			(6		)		25,030			529
Intermodal	978		689		—		689		289				(1		)		688				290			1,439				1,203			—			1,203			236			(1		)		1,202			237
Lumber & Forest Products	45,376		46,249		187		46,062		(686		)		(88		)		45,974				(598		)	68,238				70,362			264			70,098			(1,860		)	(98		)		70,000			(1,762		)
Metallic Ores	5,658		7,243		3		7,240		(1,582		)		(72		)		7,168				(1,510		)	9,883				10,816			2			10,814			(931		)	(82		)		10,732			(849		)
Metals	58,917		60,887		983		59,904		(987		)		(147		)		59,757				(840		)	87,032				95,791			1,485			94,306			(7,274		)	(167		)		94,139			(7,107		)
Minerals & Stone	70,407		68,552		527		68,025		2,382				(63		)		67,962				2,445			111,806				107,122			720			106,402			5,404			(75		)		106,327			5,479
Petroleum Products	37,752		34,634		1,357		33,277		4,475				(101		)		33,176				4,576			56,779				52,870			2,015			50,855			5,924			(112		)		50,743			6,036
Pulp & Paper	58,292		58,385		83		58,302		(10		)		(297		)		58,005				287			88,940				90,346			117			90,229			(1,289		)	(330		)		89,899			(959		)
Waste	14,826		13,227		117		13,110		1,716				(4		)		13,106				1,720			23,104				21,316			180			21,136			1,968			(6		)		21,130			1,974
Other	10,420		12,134		380		11,754		(1,334		)		(36		)		11,718				(1,298		)	16,308				19,325			528			18,797			(2,489		)	(40		)		18,757			(2,449		)
Total	$	510,944	$	505,285	$	6,819	$	498,466	$	12,478			$	(1,258	)		$	497,208			$	13,736		$	778,969			$	778,717		$	10,035		$	768,682		$	10,287		$	(1,408	)		$	767,274		$	11,695

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

The following table sets forth our North American Operations freight revenues, carloads and average freight revenues per carload for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Six Months Ended June 30,										Six Months Ended June 30,			Six Months Ended June 30,											Nine Months Ended September 30,											Nine Months Ended September 30,			Nine Months Ended
		2019					2018 Constant Currency*						2019				Six Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Six Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Nine Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	64,809		12.7	%	$	60,900	12.1	%	110,389			105,526	$	587		$	579		$	577		Agricultural Products	$	99,383			12.7	%		$	91,452		11.8	%		166,415	156,515	$	597		$	585		$	584
Autos & Auto Parts	Autos & Auto Parts	11,566			2.3	%	11,101		2.2	%	17,460			17,822	662			627			623			Autos & Auto Parts	17,905				2.2	%		16,607			2.1	%		27,035	26,546	662			629			626
Chemicals & Plastics	Chemicals & Plastics	76,986			15.1	%	74,928		14.9	%	85,304			88,627	902			848			845			Chemicals & Plastics	116,504				15.0	%		113,335			14.6	%		128,597	132,530	906			857			855
Coal & Coke	Coal & Coke	37,753			7.4	%	38,970		7.7	%	102,210			121,312	369			322			321			Coal & Coke	56,089				7.2	%		61,966			8.0	%		154,992	191,626	362			324			323
Food & Kindred Products	Food & Kindred Products	17,204			3.4	%	16,808		3.4	%	29,064			30,090	592			559			559			Food & Kindred Products	25,559				3.3	%		25,565			3.3	%		43,035	45,402	594			564			563
Intermodal	Intermodal	978			0.2	%	688		0.1	%	7,793			6,900	125			100			100			Intermodal	1,439				0.2	%		1,202			0.1	%		11,776	11,822	122			102			102
Lumber & Forest Products	Lumber & Forest Products	45,376			8.9	%	46,153		9.2	%	68,085			73,983	666			625			624			Lumber & Forest Products	68,238				8.8	%		70,256			9.0	%		102,925	111,311	663			632			631
Metallic Ores	Metallic Ores	5,658			1.0	%	7,170		1.4	%	7,415			8,844	763			819			811			Metallic Ores	9,883				1.3	%		10,735			1.4	%		12,287	13,499	804			801			795
Metals	Metals	58,917			11.5	%	60,702		12.1	%	72,110			76,044	817			801			798			Metals	87,032				11.2	%		95,580			12.3	%		105,972	119,796	821			800			798
Minerals & Stone	Minerals & Stone	70,407			13.8	%	68,468		13.6	%	109,510			109,852	643			624			623			Minerals & Stone	111,806				14.3	%		107,023			13.8	%		171,867	170,348	651			629			628
Petroleum Products	Petroleum Products	37,752			7.4	%	34,476		6.8	%	50,879			50,000	742			693			690			Petroleum Products	56,779				7.3	%		52,695			6.8	%		76,960	76,231	738			694			691
Pulp & Paper	Pulp & Paper	58,292			11.4	%	58,085		11.5	%	79,256			83,119	735			702			699			Pulp & Paper	88,940				11.4	%		90,011			11.6	%		119,894	127,522	742			708			706
Waste	Waste	14,826			2.9	%	13,218		2.6	%	28,305			26,818	524			493			493			Waste	23,104				3.0	%		21,305			2.7	%		44,069	42,677	524			499			499
Other	Other	10,420			2.0	%	12,085		2.4	%	32,972			37,429	316			324			323			Other	16,308				2.1	%		19,269			2.5	%		50,267	56,760	324			340			339
Total	Total	$	510,944		100.0	%	$	503,752	100.0	%	800,752			836,366	$	638		$	604		$	602		Total	$	778,969			100.0	%		$	777,001		100.0	%		1,216,091	1,282,585	$	641		$	607		$	606

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

Total traffic from our North American Operations decreased ~~35,614~~66,494 carloads, or ~~4.3%~~5.2%, for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with the same period in 2018. Excluding traffic from the Canadian leases that expired at the end of 2018, existing operations traffic decreased ~~19,469~~42,705 carloads, or ~~2.4%. The~~ ~~decrease~~ ~~in traffic from existing operations was~~3.4%, primarily due to decreases of ~~19,102~~36,634 carloads of coal and coke traffic, ~~5,404~~9,481 carloads of metals traffic, 7,696 carloads of lumber and forest products traffic, ~~3,695~~7,393 carloads of pulp and paper traffic, ~~3,143~~4,740 carloads of other ~~commodities~~commodity traffic ~~1,422~~and 1,202 carloads of metallic ores ~~traffic and 1,053 carloads of metals~~ traffic, partially offset by increases of ~~7,191~~13,271 carloads of agricultural products traffic, ~~2,509~~3,931 carloads of minerals and stone traffic, 3,275 carloads of petroleum products traffic, ~~1,670~~1,925 carloads of autos and auto parts traffic, 1,676 carloads of waste traffic and ~~1,378~~1,108 carloads of ~~minerals~~chemicals and ~~stone~~plastics traffic. All remaining traffic ~~increased~~decreased by ~~a net 1,602~~745 carloads.

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 ~~0.4%~~0.2% impact of foreign currency, average freight revenues per carload from our North American Operations increased ~~6.0%~~5.8% to ~~$638~~$641 for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with the same period in 2018. Average freight revenues per carload from existing operations, excluding the impact of foreign currency, increased ~~5.3%~~5.1% to ~~$638~~$641 for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with the same period in 2018. The increase in average freight revenues per carload from existing operations was impacted by ~~higher fuel surcharges, which increased average freight revenues per carload by 0.9%, and~~ a change in the mix of commodities, which increased average freight revenues per carload by ~~0.9%~~1.2%, and higher fuel surcharges, which increased average freight revenues per carload by 0.4%. Excluding these factors, average freight revenues per carload increased ~~3.4%~~3.5%.

The following information discusses the significant changes in our North American Operations freight revenues ~~from existing operations~~ by commodity group excluding the impact of foreign ~~currency.~~currency and freight revenues from the leased railroads in Canada that expired at the end of 2018.

Agricultural products revenues increased ~~$4.9~~$9.4 million, or ~~8.1%~~10.4%. Agricultural products traffic increased ~~7,191~~13,271 carloads, or ~~7.0%~~8.7%, which increased revenues by ~~$4.2~~$7.9 million, and average freight revenues per carload increased ~~1.0%~~1.5%, which increased revenues by ~~$0.7~~$1.5 million. The increase in carloads was primarily due to ~~increased~~higher farm products and soybean shipments in the western United States and increased grain and dried distillers' grains shipments in the midwestern United States, partially offset by decreased grain shipments in Canada.

Autos and auto parts revenues increased $2.0 million, or 12.7%. Autos and auto parts traffic increased 1,925 carloads, or 7.7%, which increased revenues by $1.3 million, and average freight revenues per carload increased 4.7%, which increased revenues by $0.7 million. The increase in carloads was primarily due to higher export demand in the western United States.

Chemicals and plastics revenues increased ~~$3.4~~$5.1 million, or ~~4.6%, primarily due to an increase in~~4.5%. Chemicals and plastics average freight revenues per carload ~~of 4.3%, which~~ increased ~~revenues $3.2 million. Traffic remained relatively flat at a net increase of 171 carloads, or 0.2%~~by 3.7%, which increased revenues by ~~$0.2~~$4.1 million, and traffic increased 1,108 carloads, or 0.9%, which increased revenues by $1.0 million. The increase in average revenue per carload was primarily related to a change in the mix of business. The increase in carloads was primarily related to increased sulphuric acid shipments in the western United States, partially offset by fewer plastic shipments across the United States.

Coal and coke revenues decreased ~~$1.2~~$5.9 million, or ~~3.1%~~9.5%. Coal and coke traffic decreased ~~19,102~~36,634 carloads, or ~~15.7%~~19.1%, which decreased revenues by ~~$7.0~~$13.3 million, while average freight revenues per carload increased ~~15.0%~~12.1%, which increased revenues by ~~$5.8~~$7.4 million. The decrease in carloads was primarily due to ~~decreased~~reduced demand in the midwestern and southern United States due to natural gas competition and high inventories. The increase in average freight revenues per carload was primarily due to a change in the mix of business.

Lumber and forest products revenues decreased $1.8 million, or 2.5%. Lumber and forest products traffic decreased 7,696 carloads, or 7.0%, which decreased revenues by $5.1 million, while average freight revenues per carload increased 4.7%, which increased revenues by $3.3 million. The decrease in carloads was primarily due to fewer lumber shipments in the southern and western United States, lower wood chip shipments in the southeastern United States and decreased export log shipments in the western United States. The increase in average freight revenues per carload was primarily due to a change in the mix of business.

~~Metallic ores~~Metals revenues decreased ~~$1.5~~$7.1 million, or ~~21.1%~~7.5%. ~~Metallic ores~~Metals traffic decreased ~~1,422~~9,481 carloads, or ~~16.1%~~8.2%, which decreased revenues by ~~$1.1~~$7.8 million, ~~and~~while average freight revenues per carload ~~decreased 5.9%~~increased 0.7%, which ~~decreased~~increased revenues by ~~$0.4~~$0.7 million. The decrease in carloads was primarily due to ~~decreased copper~~reduced finished steel shipments in the ~~western~~northeastern and southern United States, lower scrap steel shipments in the midwestern, northeastern and southern United States, reduced slab shipments in the midwestern United States and ~~decreased alumina~~lower pipe shipments in ~~Canada.~~the northeastern United States.

Minerals and stone revenues increased ~~$2.4~~$5.5 million, or ~~3.6%~~5.2%. Minerals and stone average freight revenues per carload increased ~~2.2%~~2.8%, which increased revenues by ~~$1.6~~$2.9 million, and traffic increased ~~1,378~~3,931 carloads, or ~~1.3%~~2.3%, which increased revenues by ~~$0.9~~$2.6 million. The increase in average freight revenue per carload was primarily due to stronger pricing and increased fuel surcharge revenues. The increase in carloads was primarily due to ~~increased~~higher rock salt and sand shipments in the northeastern United States, partially offset by decreased aggregates shipments in the western United States and decreased sand shipments in the southern United States.

Petroleum products revenues increased ~~$4.6~~$6.0 million, or ~~13.8%~~11.9%. Petroleum products average freight revenues per carload increased ~~8.2%~~7.1%, which increased revenues by ~~$2.7~~$3.6 million, and traffic increased ~~2,509~~3,275 carloads, or ~~5.2%~~4.4%, which increased revenues by ~~$1.9~~$2.4 million. The increase in average freight revenues per carload was primarily due to stronger pricing and increased fuel surcharge revenues. The increase in carloads was primarily due to increased liquid petroleum gas shipments in the western and southern United States and increased other petroleum products shipments in the northeastern United States, partially offset by decreased liquid petroleum gas and other petroleum products shipments in Canada.

Pulp and paper revenues decreased $1.0 million, or 1.1%. Pulp and paper traffic decreased 7,393 carloads, or 5.8%, which decreased revenues by $5.5 million, while average freight revenues per carload increased 5.1%, which increased revenues by $4.5 million. The decrease in carloads was primarily due to fewer containerboard shipments in the southern and western United States, partially offset by increased pulp products shipments in the southern United States. The increase in average freight revenues per carload was primarily due to stronger pricing and increased fuel surcharge revenues.

Waste revenues increased ~~$1.7~~$2.0 million, or ~~13.1%~~9.3%. Waste average freight revenues per carload increased 5.2%, which increased revenues by $1.1 million, and traffic increased ~~1,670~~1,676 carloads, or ~~6.3%~~4.0%, which increased revenues by $0.9 ~~million, and~~million. The increase in average freight revenues per carload ~~increased 6.5%, which increased revenues by $0.8 million. The increase in carloads~~ was primarily due to ~~increased waste carloads~~a change in the ~~northeastern United States.~~mix of business.

Other commodity revenues decreased ~~$1.3~~$2.4 million, or ~~11.1%~~13.1%. Other traffic decreased ~~3,143~~4,740 carloads, or ~~8.7%~~8.6%, which decreased revenues by ~~$1.0~~$1.5 million, and average freight revenues per carload decreased ~~2.5%~~5.0%, which decreased revenues by ~~$0.3~~$0.9 million. The decrease in carloads was primarily due to decreased empty car traffic across North ~~America.~~America led by the southern United States. The decrease in average freight revenues per carload was primarily due to decreased shipments of wind tower components in the midwestern United States.

Freight revenues from all remaining commodities combined ~~increased~~decreased by a net ~~$0.8~~$0.1 million.

Freight-Related Revenues

Freight-related revenues from our North American Operations, which includes revenues from railcar switching, track access fees, storage and other ancillary revenues related to the movement of freight, were ~~$130.6~~$198.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$127.3~~$193.3 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$3.3~~$5.4 million, or ~~2.6%~~2.8%. Excluding a decrease of ~~$3.3~~$4.8 million in revenues from the leased railroads in Canada that ~~we ceased operating~~expired at the end of 2018, and a $0.4 million decrease due to ~~the impact of~~ foreign currency depreciation, freight-related revenues from our North American Operations increased ~~$7.0~~$10.6 million, or 5.6%, for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$123.6~~$188.2 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The increase in freight-related revenues from our existing operations was primarily due to ~~increased~~increases in demurrage revenues ~~across North America.~~primarily in the midwestern United States, switching revenues in the southeastern United States and Canada and storage revenues in the southeastern United States.

All Other Revenues

All other revenues from our North American Operations, which includes revenues from third-party railcar and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of freight, were ~~$32.7~~$49.0 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$32.6~~$48.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$0.1~~$0.2 million, or 0.4%. Excluding a decrease of ~~$0.9~~$1.4 million in revenues from the Canadian leases that expired at the end of 2018 and a $0.2 million decrease due to ~~the impact of~~ foreign currency depreciation, all other revenues from our North American Operations increased ~~$1.3~~$1.8 million, or ~~4.1%~~3.8%, for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$31.5~~$47.2 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The increase in all other revenues from our existing operations was primarily due to ~~increases in~~increased other rental revenues in the western, southern and midwestern United States.

Operating Expenses

Total operating expenses from our North American Operations increased ~~$9.0~~$12.5 million, or ~~1.8%~~1.6%, to ~~$520.7~~$777.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$511.8~~$765.0 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The increase ~~included an $11.1~~consisted of $31.9 million from existing operations, partially offset by a $16.9 million decrease in expenses from the ~~two~~ leased railroads in Canada that ~~we ceased operating~~expired at the end of 2018 and a ~~$2.2~~$2.4 million decrease due to ~~the impact of~~ foreign currency ~~depreciation, partially offset by a $22.2 million increase from existing operations.~~depreciation. The increase from existing operations was primarily due to increases of ~~$6.8~~$7.8 million in labor and benefits expense, ~~$5.3~~$7.7 million in purchased services expense, ~~$2.6~~$6.7 million in other expenses, net, $3.9 million in depreciation and amortization expense, ~~$2.5 million in trackage rights expense, $1.6 million in materials expense, $1.4~~$3.5 million in casualties and insurance expense, $2.9 million in trackage rights expense, $2.5 million in materials expense and ~~$1.2~~$1.5 million in restructuring and related costs, partially offset by ~~a decrease~~decreases of ~~$1.3~~$4.6 million in equipment rents ~~expense.~~expense and $1.9 million in the cost of diesel fuel used in operations. The ~~six~~nine months ended ~~June~~September 30, 2019 also included a ~~$0.4 million net loss on the sale and impairment of assets compared with a $1.6~~$0.2 million net gain on the sale and impairment of assets compared with $2.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018.

The following table sets forth operating expenses from our North American Operations for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Six Months Ended June 30,									Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Nine Months Ended September 30,													Increase/(Decrease)			Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019				2018								2019												2018
	Amount		% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount				% of Operating Revenues
Labor and benefits	$	225,810	33.5	%	$	221,206		33.3	%				$				4,604				$		(800	)		$	220,406			$	5,404		$	333,971		32.5	%		$	329,146		32.2	%		$	4,825		$	(888	)	$	328,258		$	5,713
Equipment rents	24,534		3.6	%	26,133			3.9	%				(1,599			)		(99		)		26,034				(1,500		)	36,609				3.6	%	41,574				4.1	%	(4,965		)		(110		)	41,464			(4,855		)
Purchased services	33,116		4.9	%	28,582			4.3	%	4,534					(111		)		28,471				4,645			49,764				4.8	%		43,550			4.3	%		6,214			(125		)		43,425			6,339
Depreciation and amortization	77,169		11.4	%	81,878			12.3	%	(4,709		)		(542		)		81,336				(4,167		)	116,333				11.3	%		123,266			12.1	%		(6,933		)	(605		)		122,661			(6,328		)
Diesel fuel used in train operations	47,140		7.0	%	48,733			7.3	%	(1,593		)		(285		)		48,448				(1,308		)	67,813				6.6	%		71,963			7.0	%		(4,150		)	(310		)		71,653			(3,840		)
Casualties and insurance	17,829		2.6	%	16,613			2.5	%	1,216				(54		)		16,559				1,270			26,434				2.6	%		23,249			2.3	%		3,185			(56		)		23,193			3,241
Materials	27,716		4.1	%	26,353			4.0	%	1,363				(111		)		26,242				1,474			41,293				4.0	%		39,189			3.8	%		2,104			(122		)		39,067			2,226
Trackage rights	22,095		3.3	%	19,639			2.9	%	2,456				(16		)		19,623				2,472			33,123				3.2	%		30,225			2.9	%		2,898			(17		)		30,208			2,915
Net loss/(gain) on sale and impairment of assets	358		0.1	%	(1,618		)	(0.2	)%	1,976				3				(1,615		)		1,973
Net gain on sale and impairment of assets																									(151		)		—	%		(2,124		)	(0.2	)%		1,973			7				(2,117		)	1,966
Restructuring and related costs	1,230		0.2	%	41			—	%	1,189				—				41				1,189			1,553				0.2	%		42			—	%		1,511			—				42			1,511
Other expenses, net	43,720		6.5	%	44,193			6.6	%	(473		)		(147		)		44,046				(326		)	70,784				6.9	%		64,898			6.4	%		5,886			(160		)		64,738			6,046
Total operating expenses	$	520,717	77.2	%	$	511,753		76.9	%	$	8,964			$	(2,162	)		$	509,591			$	11,126		$	777,526			75.7	%		$	764,978		74.9	%		$	12,548		$	(2,386	)		$	762,592		$	14,934

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

The following information discusses the significant changes in operating expenses of our North American Operations excluding a decrease of ~~$2.2~~$2.4 million due to ~~the impact of~~ foreign currency depreciation.

Labor and benefits expense was ~~$225.8~~$334.0 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$220.4~~$328.3 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$5.4~~$5.7 million, or ~~2.5%~~1.7%. The increase consisted of ~~$6.8~~$7.8 million, or ~~3.1%~~2.4%, from existing operations, partially offset by a decrease of ~~$1.4~~$2.1 million from the expired Canadian leases. The increase from existing operations was primarily due to annual wage increases and ~~$2.1~~$1.6 million of expense representing the mark-to-market impact on our deferred compensation plan liabilities. This expense was offset by ~~$2.1~~$1.6 million of mark-to-market earnings on investment assets associated with the deferred compensation plan recognized in other non-operating income.

Equipment rents expense was ~~$24.5~~$36.6 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$26.0~~$41.5 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.5~~$4.9 million, or ~~5.8%~~11.7%. The decrease consisted of ~~$1.3~~$4.6 million, or ~~5.2%~~11.1%, from existing operations and ~~$0.2~~$0.3 million from the expired Canadian leases. The decrease from existing operations was primarily due to ~~decreases in~~reduced car hire ~~expense.~~expense as a result of more fluent car movements in 2019.

Purchased services expense was ~~$33.1~~$49.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$28.5~~$43.4 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$4.6~~$6.3 million, or ~~16.3%~~14.6%. The increase consisted of ~~$5.3~~$7.7 million, or ~~19.0%~~18.3%, from existing operations, partially offset by a decrease of ~~$0.6~~$1.3 million from the expired Canadian leases. The increase from existing operations was primarily due to increases in track maintenance expense in 2019.

Depreciation and amortization expense was ~~$77.2~~$116.3 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$81.3~~$122.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$4.2~~$6.3 million, or ~~5.1%~~5.2%. The decrease consisted of ~~$6.8~~$10.2 million from the expired Canadian leases, partially offset by an increase of ~~$2.6~~$3.9 million, or 3.5%, from existing operations. The increase ~~from existing operations~~ was primarily ~~attributable~~due to ~~a larger depreciable asset base in 2019 compared with 2018, reflecting~~ capital spending in 2018.

The cost of diesel fuel used in train operations was ~~$47.1~~$67.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$48.4~~$71.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.3~~$3.8 million, or 5.4%. The decrease consisted of $2.0 million from the expired Canadian leases and $1.9 million, or 2.7%, ~~which was primarily~~from existing operations. The decrease in existing operations consisted of $5.0 million due to ~~the expired Canadian leases.~~a 7.3% decrease in average fuel cost per gallon, partially offset by an increase of $3.1 million due to higher diesel fuel consumption.

Casualties and insurance expense was ~~$17.8~~$26.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$16.6~~$23.2 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$1.3~~$3.2 million, or ~~7.7%~~14.0%, primarily due to ~~increased~~higher derailment expense in ~~the first quarter of~~ 2019, partially offset by ~~decreased derailment expense in the second quarter of 2019 and~~ a gain on an insurance recovery recognized in 2019 resulting from a business interruption claim related to Hurricane Michael in the southern United States in October 2018.

Materials expense was ~~$27.7~~$41.3 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$26.2~~$39.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$1.5~~$2.2 million, or ~~5.6%~~5.7%. The increase consisted of ~~$1.6~~$2.5 million, or ~~6.3%~~6.4%, from existing operations, partially offset by a decrease of $0.2 million from the expired Canadian leases. The increase in existing operations was primarily due to increases in track maintenance expense in 2019.

Trackage rights expense was ~~$22.1~~$33.1 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$19.6~~$30.2 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$2.5~~$2.9 million, or ~~12.6%~~9.6%. The increase was primarily attributable to increased traffic at port switching locations and increased rail traffic.

Net ~~loss~~gain on the sale and impairment of assets was ~~$0.4~~$0.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~a net gain on the sale and impairment of assets of $1.6~~$2.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a change of $2.0 million. The net ~~loss~~gain for the ~~six~~nine months ended ~~June~~September 30, 2019 was primarily attributable to a gain on the sale of land in the northeastern United States, partially offset by an impairment of assets related to 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.

Restructuring costs for the ~~six~~nine months ended ~~June~~September 30, 2019 of ~~$1.2~~$1.6 million were primarily related to the consolidation of our Central ~~Region.~~Region in 2019.

Other expenses, net were $70.8 million for the nine months ended September 30, 2019, compared with $64.7 million for the nine months ended September 30, 2018, an increase of $6.0 million, or 9.3%. The increase consisted of $6.7 million, or 10.4%, from existing operations, partially offset by a decrease of $0.6 million from the expired Canadian leases. The increase was primarily due to corporate development and related costs in 2019 associated with the proposed Merger.

Operating Income/Operating Ratio

Operating income from our North American Operations was ~~$153.6~~$249.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$153.4~~$255.9 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Operating income for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 included corporate development and related costs of ~~$2.7~~$10.5 million and ~~$0.5~~$0.7 million, respectively. The operating ratio was ~~77.2%~~75.7% for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~76.9%~~74.9% for the ~~six~~nine months ended ~~June~~September 30, 2018.

Australian Operations

Operating Revenues

As previously disclosed, we own a controlling 51.1% interest in our Australian Operations, and therefore, we include 100% of our Australian Operations within our consolidated financial statements with a 48.9% noncontrolling interest recorded to reflect MIRA's ownership. The following table sets forth our Australian Operations operating revenues and carloads for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Six Months Ended June 30,				Increase/(Decrease) in Total Operations					Currency Impact on 2018 Total Operations*			Nine Months Ended September 30,				Increase/(Decrease) in Total Operations					Currency Impact on 2018 Total Operations*
	2019		2018		Amount			%		Currency Impact on 2018 Total Operations*			2019		2018		Amount			%		Currency Impact on 2018 Total Operations*
Freight revenues	$	112,742	$	129,086	$	(16,344	)	(12.7	)%	$	(10,863	)	$	174,199	$	194,335	$	(20,136	)	(10.4	)%	$	(14,929	)
Freight-related revenues	15,891		22,078		(6,187		)	(28.0	)%	(1,852		)	23,902		32,214		(8,312		)	(25.8	)%	(2,485		)
All other revenues	3,005		2,699		306			11.3	%	(226		)	5,137		4,017		1,120			27.9	%	(310		)
Total operating revenues	$	131,638	$	153,863	$	(22,225	)	(14.4	)%	$	(12,941	)	$	203,238	$	230,566	$	(27,328	)	(11.9	)%	$	(17,724	)
Carloads	271,773		291,480		(19,707		)	(6.8	)%				419,251		442,798		(23,547		)	(5.3	)%

Freight Revenues

The following table sets forth the changes in our Australian Operations freight revenues by commodity group for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


					Increase/(Decrease) in Total Operations				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Total Operations Constant Currency*										Increase/(Decrease) in Total Operations				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Total Operations Constant Currency*
	Six Months Ended June 30,							Nine Months Ended September 30,
Commodity Group	2019		2018					2019								2018
Agricultural Products	$	6,053	$	11,489				$				(5,436			)					$	(963	)		$	10,526		$	(4,473	)	$	8,684			$	15,639			$	(6,955	)		$	(1,222	)		$	14,417	$	(5,733	)
Coal and Coke	58,136		64,149					(6,013			)		(5,406		)				58,743				(607		)	91,323			96,506				(5,183		)		(7,431		)		89,075				2,248
Intermodal	29,259		33,075		(3,816		)			(2,780		)		30,295				(1,036		)	45,705				50,613			(4,908		)		(3,868		)		46,745				(1,040		)
Metallic Ores	15,141		15,856		(715		)		(1,333		)		14,523				618			22,177				24,770			(2,593		)		(1,885		)		22,885				(708		)
Minerals & Stone	3,855		4,181		(326		)		(354		)		3,827				28			5,834				6,247			(413		)		(481		)		5,766				68
Petroleum Products	298		336		(38		)		(27		)		309				(11		)	476				560			(84		)		(42		)		518				(42		)
Total	$	112,742	$	129,086	$	(16,344	)		$	(10,863	)		118,223				$	(5,481	)	$	174,199			$	194,335		$	(20,136	)		$	(14,929	)		179,406				$	(5,207	)

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

The following table sets forth our Australian Operations freight revenues, carloads and average freight revenues per carload for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Six Months Ended June 30,										Six Months Ended June 30,			Six Months Ended June 30,											Nine Months Ended September 30,											Nine Months Ended September 30,			Nine Months Ended
		2019					2018 Constant Currency*						2019				Six Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Six Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Nine Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	6,053		5.4	%	$	10,526	8.9	%	8,484			27,287	$	713		$	421		$	386		Agricultural Products	$	8,684			5.0	%		$	14,417		8.0	%		10,009	33,816	$	868		$	462		$	426
Coal & Coke	Coal & Coke	58,136			51.6	%	58,743		49.7	%	196,251			194,138	296			330			303			Coal & Coke	91,323				52.4	%		89,075			49.6	%		305,461	300,947	299			321			296
Intermodal	Intermodal	29,259			25.9	%	30,295		25.6	%	24,995			26,711	1,171			1,238			1,134			Intermodal	45,705				26.2	%		46,745			26.1	%		39,559	41,321	1,155			1,225			1,131
Metallic Ores	Metallic Ores	15,141			13.4	%	14,523		12.3	%	10,629			10,457	1,424			1,516			1,389			Metallic Ores	22,177				12.7	%		22,885			12.8	%		15,613	16,921	1,420			1,464			1,352
Minerals & Stone	Minerals & Stone	3,855			3.4	%	3,827		3.2	%	31,290			32,754	123			128			117			Minerals & Stone	5,834				3.4	%		5,766			3.2	%		48,411	49,567	121			126			116
Petroleum Products	Petroleum Products	298			0.3	%	309		0.3	%	124			133	2,403			2,526			2,323			Petroleum Products	476				0.3	%		518			0.3	%		198	226	2,404			2,478			2,292
Total	Total	$	112,742		100.0	%	$	118,223	100.0	%	271,773			291,480	$	415		$	443		$	406		Total	$	174,199			100.0	%		$	179,406		100.0	%		419,251	442,798	$	416		$	439		$	405

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

Total traffic from our Australian Operations decreased ~~19,707~~23,547 carloads, or ~~6.8%~~5.3%, to ~~271,773~~419,251 carloads for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with the same period in ~~2018. The traffic decrease was~~2018, primarily due to decreases of ~~18,803~~23,807 carloads of agricultural products traffic, ~~1,716~~1,762 carloads of intermodal traffic, 1,308 carloads of metallic ores traffic and ~~1,464~~1,156 carloads of minerals and stone traffic, partially offset by an increase of ~~2,113~~4,514 carloads of coal and coke traffic. All remaining traffic ~~increased~~decreased by ~~a net 163~~28 carloads.

The following information discusses the significant changes in our Australian Operations freight revenues by commodity group excluding the impact of foreign currency.

Agricultural products revenues decreased ~~$4.5~~$5.7 million, or ~~42.5%~~39.8%. Agricultural products traffic decreased ~~18,803~~23,807 carloads, or ~~68.9%~~70.4%, which decreased revenues by ~~$13.4~~$20.7 million, while average freight revenues per carload increased ~~85.0%~~103.8%, which increased revenues by ~~$8.9~~$14.9 million. The carload decrease was primarily due to a drought-related smaller grain harvest in ~~2019.~~2019 and conclusion of services on the Eyre Peninsula. The decrease in grain traffic resulted in higher average freight revenues per carload, primarily due to the rate structure for Australian grain traffic, which has both a fixed and variable ~~component.~~component, and a change in the mix of business.

Coal and coke revenues increased $2.2 million, or 2.5%. Coal and coke traffic increased 4,514 carloads, or 1.5%, which increased revenues by $1.4 million, and average freight revenues per carload increased 1.0%, which increased revenues by $0.9 million. The carload increase was primarily due to higher shipping activity and longer hauls.

Intermodal revenues decreased $1.0 million, or ~~3.4%~~2.2%. Intermodal traffic decreased ~~1,716~~1,762 carloads, or ~~6.4%~~4.3%, which decreased revenues by $2.0 million, while average freight revenues per carload increased ~~3.3%~~2.1%, which increased revenues by $1.0 million. The carload decrease was primarily due to service cancellations and decreased automotive movements.

Freight revenues from all remaining commodities combined ~~had~~decreased by a net ~~increase of less than $0.1~~$0.7 million.

Freight-Related Revenues

Excluding a ~~$1.9~~$2.5 million decrease due to ~~the impact of~~ foreign currency depreciation, freight-related revenues from our Australian Operations, which includes revenues from railcar switching, track access rights, crewing services, storage and other ancillary revenues related to the movement of freight, decreased ~~$4.3~~$5.8 million, or ~~21.4%~~19.6%, to ~~$15.9~~$23.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$20.2~~$29.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The decrease in freight-related revenues was primarily due to prolonged drought conditions in 2019, switching competition and a customer termination payment received in 2018.

All Other Revenues

Excluding ~~the impact of~~a $0.3 million decrease due to foreign currency depreciation, all other revenues from our Australian Operations, which includes revenues from third-party railcar and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of freight, ~~decreased~~increased $1.4 million, or 38.6%, to ~~$3.0~~$5.1 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$2.5~~$3.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018.

Operating Expenses

~~Total~~Excluding a $13.0 million decrease due to foreign currency depreciation, total operating expenses from our Australian Operations for the ~~six~~nine months ended ~~June~~September 30, 2019 ~~decreased $4.5~~increased $4.6 million, or ~~4.0%~~3.0%, to ~~$107.5~~$159.6 million, compared with ~~$112.0~~$155.0 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The ~~decrease~~increase in operating expenses included increases of $7.6 million in other expenses, net and $1.7 million in restructuring and related costs, partially offset by decreases of ~~$9.5 million from the impact of foreign currency depreciation, $1.3 million in trackage rights expense, $1.1~~$1.6 million in purchased services expense, ~~and $1.0~~$1.5 million in the cost of diesel fuel used in operations ~~partially offset by increases of $1.7~~and $1.5 million in ~~restructuring and related costs and $1.0 million in labor and benefits~~trackage rights expense. In addition, total operating expenses for the six months ended June 30, 2018 included a $6.3 million gain on settlement related to Arrium's voluntary administration that was recognized as an offset to other expenses, net.

The following table sets forth operating expenses from our Australian Operations for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Six Months Ended June 30,										Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Nine Months Ended September 30,													Increase/(Decrease)				Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019					2018								2019												2018
	Amount			% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount				% of Operating Revenues
Labor and benefits	$	35,740		27.1	%	$	37,918		24.7	%				$				(2,178		)		$		(3,201	)		$	34,717			$	1,023		$	51,605		25.4	%		$	55,318			24.0	%		$	(3,713	)	$	(4,286	)		$	51,032		$	573
Equipment rents	1,884			1.4	%	2,498			1.6	%				(614			)		(213		)		2,285				(401		)	2,931				1.4	%	3,950				1.7	%		(1,019		)		(304		)	3,646				(715		)
Purchased services	11,023			8.4	%	13,284			8.6	%	(2,261		)			(1,114		)		12,170				(1,147		)	16,467				8.1	%		19,603			8.5	%		(3,136		)		(1,507		)		18,096			(1,629		)
Depreciation and amortization	28,603			21.7	%	31,295			20.3	%	(2,692		)		(2,648		)		28,647				(44		)	42,382				20.9	%		46,232			20.1	%		(3,850		)		(3,577		)		42,655			(273		)
Diesel fuel used in train operations	13,165			10.0	%	15,483			10.1	%	(2,318		)		(1,300		)		14,183				(1,018		)	20,234				10.0	%		23,557			10.2	%		(3,323		)		(1,804		)		21,753			(1,519		)
Casualties and insurance	2,955			2.2	%	3,547			2.3	%	(592		)		(298		)		3,249				(294		)	5,072				2.5	%		5,198			2.3	%		(126		)		(400		)		4,798			274
Materials	5,491			4.2	%	5,722			3.7	%	(231		)		(482		)		5,240				251			8,231				4.0	%		8,725			3.8	%		(494		)		(670		)		8,055			176
Trackage rights	2,942			2.2	%	4,578			3.0	%	(1,636		)		(385		)		4,193				(1,251		)	4,497				2.2	%		6,510			2.8	%		(2,013		)		(508		)		6,002			(1,505		)
Net (gain)/loss on sale and impairment of assets	(59		)	—	%	(113		)	(0.1	)%	54				9				(104		)		45
Net gain on sale and impairment of assets																										(170		)		(0.1	)%		(133		)	(0.1	)%		(37		)		10				(123		)	(47		)
Restructuring and related costs	1,686			1.3	%	—			—	%	1,686				—				—				1,686			1,686				0.8	%		—			—	%		1,686				—				—			1,686
Other expenses, net	4,050			3.1	%	(2,221		)	(1.4	)%	6,271				121				(2,100		)		6,150			6,661				3.3	%		(979		)	(0.4	)%		7,640				36				(943		)	7,604
Total operating expenses	$	107,480		81.6	%	$	111,991		72.8	%	$	(4,511	)		$	(9,511	)		$	102,480			$	5,000		$	159,596			78.5	%		$	167,981		72.9	%		$	(8,385	)		$	(13,010	)		$	154,971		$	4,625

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

The following information discusses the significant changes in operating expenses of our Australian Operations excluding a decrease of ~~$9.5~~$13.0 million due to ~~the impact of~~ foreign currency depreciation.

Labor and benefits expense ~~was $35.7~~of $51.6 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$34.7~~$51.0 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$1.0~~$0.6 million, or ~~2.9%~~1.1%. The increase ~~from existing operations~~ was primarily due to $2.6 million ~~of expense~~ associated with the amending of an enterprise bargaining agreement, partially offset by a decrease in labor expense attributable to a smaller grain harvest in 2019.

Purchased services expense was ~~$11.0~~$16.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$12.2~~$18.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.1~~$1.6 million, or ~~9.4%~~9.0%. The decrease was primarily due to the timing of ~~track~~equipment maintenance ~~decreased unscheduled repairs in 2019~~ and decreased infrastructure services.

The cost of diesel fuel used in train operations was ~~$13.2~~$20.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$14.2~~$21.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.0~~$1.5 million, or ~~7.2%~~7.0%. The decrease consisted of ~~$1.7~~$1.8 million due to a ~~10.9%~~7.9% decrease in diesel fuel consumption, partially offset by an increase of ~~$0.7~~$0.3 million due to a ~~4.1% increase in~~1.0% higher average fuel cost per gallon.

Trackage rights expense was ~~$2.9~~$4.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$4.2~~$6.0 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.3~~$1.5 million, or ~~29.8%~~25.1%. The decrease was primarily due to lower volumes related to drought affected harvests and ~~decreased~~reduced intermodal activity in 2019.

Restructuring and related costs of $1.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019 were primarily related to a severance provision associated with the termination of grain service on the Eyre Peninsula.

Other expenses, net for the ~~six~~nine months ended ~~June~~September 30, 2018 included a $7.3 million a ~~$6.3 million~~gain on settlement related to ~~Arrium's~~a customer's voluntary administration.

Operating Income/Operating Ratio

Operating income from our Australian Operations was ~~$24.2~~$43.6 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$41.9~~$62.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018. Operating income for the ~~six~~nine months ended ~~June~~September 30, 2019 included $2.6 million of expense associated with amending an enterprise bargaining agreement and $1.7 million of expense primarily related to a severance provision associated with the termination of grain service on the Eyre Peninsula. Operating income for the ~~six~~nine months ended ~~June~~September 30, 2018 included a ~~$6.3~~$7.3 million gain on a settlement related to Arrium's voluntary ~~administration.~~administration (bankruptcy). The operating ratio was ~~81.6%~~78.5% for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~72.8%~~72.9% for the ~~six~~nine months ended ~~June~~September 30, 2018.

U.K./European Operations

Operating Revenues

The following table sets forth our U.K./European Operations total operating revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018. The table below also reflects the calculation of our U.K./European Operations existing operations by subtracting the revenues and carloads from the divested ERS operations from our U.K./European total operations for the ~~six~~nine months ended ~~June~~September 30, ~~2019 and~~ 2018 (dollars in thousands):


	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*			Nine Months Ended September 30,										Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations						Currency Impact on 2018 Total Operations*			Currency Impact on 2018 Existing Operations*
			2018																				2018														Increase/(Decrease) in Total Operations						Increase/(Decrease) in Existing Operations
	2019		Total Operations		Divested Operations		Existing Operations		Increase/(Decrease) in Total Operations			Amount			Increase/(Decrease) in Existing Operations		%		Amount								%				2019		Total Operations		Divested Operations		Existing Operations			Amount				%		Amount									%
Freight revenues	$	162,784	$	183,500	$	17,086	$	166,414	$	(20,716	)		(11.3	)%	$	(3,630	)	(2.2	)%		$	(11,862	)					$	(10,599	)	$	243,451	$	268,193	$	17,086	$	251,107		$	(24,742	)		(9.2	)%	$	(7,656	)		(3.0	)%	$	(16,333	)		$	(15,070	)
Freight-related revenues	132,156		134,222		7,006		127,216		(2,066		)		(1.5	)%	4,940			3.9	%	(8,218		)		(7,744		)	197,385				203,491		7,006		196,485		(6,106		)	(3.0	)%		900			0.5	%		(11,907		)	(11,433		)
All other revenues	28,698		32,879		21		32,858		(4,181		)		(12.7	)%	(4,160		)	(12.7	)%	(1,992		)		(1,990		)	42,454				49,809		21		49,788		(7,355		)	(14.8	)%		(7,334		)	(14.7	)%		(2,906		)	(2,904		)
Total operating revenues	$	323,638	$	350,601	$	24,113	$	326,488	$	(26,963	)		(7.7	)%	$	(2,850	)	(0.9	)%	$	(22,072	)		$	(20,333	)	$	483,290			$	521,493	$	24,113	$	497,380	$	(38,203	)	(7.3	)%		$	(14,090	)	(2.8	)%		$	(31,146	)	$	(29,407	)
Carloads	455,343		517,830		50,949		466,881		(62,487		)		(12.1	)%	(11,538		)	(2.5	)%								690,845				759,212		50,949		708,263		(68,367		)	(9.0	)%		(17,418		)	(2.5	)%

Freight Revenues

The following table sets forth our U.K./European Operations total freight revenues for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018. The table below also reflects the calculation of our U.K./European Operations existing operations by subtracting the revenues from the divested ERS operations from our U.K./European Operations total operations for the ~~six~~nine months ended ~~June~~September 30, ~~2019 and~~ 2018 (dollars in thousands):


	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*			Nine Months Ended September 30,														Increase/(Decrease) in Existing Operations				Currency Impact on Existing Operations				2018 Constant Currency Existing Operations*			Increase/(Decrease) in Existing Operations Constant Currency*
			2018																	2018
Commodity Group	2019		Total Operations		Divested Operations		Existing Operations					2019								Total Operations					Divested Operations				Existing Operations
Agricultural Products	$	1,248	$	2,020	$	—	$	2,020				$			(772	)		$	(171	)					$	1,849			$	(601	)	$	2,011		$	3,073		$	—			$	3,073			$	(1,062	)	$	(226	)	$	2,847		$	(836	)
Coal & Coke	5,589		6,163		—		6,163					(574			)		(426		)				5,737				(148		)	6,195				8,751			—			8,751				(2,556		)		(563	)		8,188			(1,993	)
Intermodal	117,502		133,804		17,086		116,718		784					(6,955		)		109,763				7,739			174,500				192,413				17,086			175,327			(827		)		(10,132		)		165,195			9,305
Minerals & Stone	37,037		41,505		—		41,505		(4,468		)		(3,047		)		38,458				(1,421		)	58,709				63,849				—			63,849			(5,140		)		(4,144		)		59,705			(996		)
Petroleum Products	1,408		8		—		8		1,400				—				8				1,400			2,036				107				—			107			1,929				(5		)		102			1,934
Total	$	162,784	$	183,500	$	17,086	$	166,414	$	(3,630	)		$	(10,599	)		$	155,815			$	6,969		$	243,451			$	268,193			$	17,086		$	251,107		$	(7,656	)		$	(15,070	)		$	236,037		$	7,414

*Constant currency amounts reflect the prior period Total Ongoing Operations translated at the current period exchange rates.

The following table sets forth our U.K./European Operations freight revenues, carloads and average freight revenues per carload for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands, except average freight revenues per carload):


		Freight Revenues									Carloads				Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
															Average Freight Revenues Per Carload										Freight Revenues													Carloads		Average Freight Revenues Per Carload
		Freight Revenues		Six Months Ended June 30,										Six Months Ended June 30,			Six Months Ended June 30,											Nine Months Ended September 30,											Nine Months Ended September 30,			Nine Months Ended
		2019					2018 Constant Currency*						2019				Six Months Ended June 30,										2018 Constant Currency*							September 30,
Commodity Group	Commodity Group	Amount			% of Total		Amount		% of Total		Carloads	2019		Six Months Ended June 30,			2018			2019			2018				2018 Constant Currency*			Commodity Group	Amount			% of Total			Amount		Nine Months Ended September 30,		% of Total		2019		2018			2019	2018	2018 Constant Currency*
Agricultural Products	Agricultural Products	$	1,248		0.8	%	$	1,849	1.1	%	926			1,573	$	1,348		$	1,284		$	1,175		Agricultural Products	$	2,011			0.9	%		$	2,847		1.1	%		1,486	2,349	$	1,353		$	1,308		$	1,212
Coal & Coke	Coal & Coke	5,589			3.4	%	5,737		3.3	%	9,939			9,933	562			620			578			Coal & Coke	6,195				2.5	%		8,188			3.3	%		11,407	14,204	543			616			576
Intermodal	Intermodal	117,502			72.2	%	125,586		73.2	%	353,968			411,838	332			325			305			Intermodal	174,500				71.7	%		181,018			71.9	%		533,115	599,840	327			321			302
Minerals & Stone	Minerals & Stone	37,037			22.7	%	38,458		22.4	%	83,990			94,466	441			439			407			Minerals & Stone	58,709				24.0	%		59,705			23.7	%		135,420	142,577	434			448			419
Petroleum Products	Petroleum Products	1,408			0.9	%	8		—	%	6,520			20	216			400			400			Petroleum Products	2,036				0.9	%		102			—	%		9,417	242	216			442			421
Total	Total	$	162,784		100.0	%	$	171,638	100.0	%	455,343			517,830	$	357		$	354		$	331		Total	$	243,451			100.0	%		$	251,860		100.0	%		690,845	759,212	$	352		$	353		$	332

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

Total traffic from our U.K./European Operations decreased ~~62,487~~68,367 carloads, or ~~12.1%~~9.0%, to ~~455,343~~690,845 carloads for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with the same period in 2018. Excluding traffic from our divested ERS operations, existing operations traffic decreased ~~11,538~~17,418 carloads, or 2.5%~~. The decrease in traffic from existing operations was~~, primarily due to decreases of ~~10,476~~15,776 carloads of intermodal traffic, 7,157 carloads of minerals and stone traffic and ~~6,921~~2,797 carloads of ~~intermodal~~coal and coke traffic, partially offset by an increase of ~~6,500~~9,175 carloads of petroleum products traffic. All remaining traffic decreased by ~~a net 641~~863 carloads.

The following information discusses the significant changes in our U.K./European Operations freight revenues by commodity group excluding the impact of foreign currency and the divested ERS operations.

Coal and coke revenues decreased $2.0 million, or 24.3%. Coal and coke traffic decreased 2,797 carloads, or 19.7%, which decreased revenues by $1.5 million, and average freight revenues per carload decreased 5.7%, which decreased revenues by $0.5 million. The carload decrease was primarily due to the conclusion of certain customer contracts in the U.K.

Intermodal revenues increased ~~$7.7~~$9.3 million, or ~~7.1%~~5.6%. Intermodal average freight revenues per carload increased ~~9.2%~~8.6%, which increased revenues by ~~$10.0~~$14.5 million, while traffic decreased ~~6,921~~15,776 carloads, or ~~1.9%~~2.9%, which decreased revenues by ~~$2.3~~$5.2 million. The increase in average freight revenues per carload was primarily due to stronger pricing in the U.K. The decrease in carloads was primarily due to temporary rail network ~~outages.~~outages, service cancellations and lower demand.

Minerals and stone revenues decreased ~~$1.4~~$1.0 million, or ~~3.7%~~1.7%. Minerals and stone traffic decreased ~~10,476~~7,157 carloads, or ~~11.1%~~5.0%, which decreased revenues by ~~$4.6~~$3.1 million, while average freight revenues per carload increased ~~8.3%~~3.6%, which increased revenues by ~~$3.2~~$2.1 million. The carload decrease was primarily due to lower construction aggregates shipments in Poland primarily as a result of unfavorable weather conditions, partially offset by ~~higher construction aggregates shipments~~new customer contracts in the U.K. ~~The increase in average freight revenues per carload was primarily due to stronger pricing.~~

Petroleum products revenues increased ~~$1.4~~$1.9 million, primarily due to an increase in traffic of ~~6,500~~9,175 carloads. The carload increase was primarily due to a new customer contract in the U.K.

Freight revenues from all remaining commodities decreased by ~~$0.7~~$0.8 million.

Freight-Related Revenues

Freight-related revenues from our U.K./European Operations includes trucking haulage services, container storage and switching services, as well as infrastructure services, where we operate work trains for the track infrastructure owner. Freight-related revenues from our U.K./European Operations also include traction service (or hook and pull), which requires us 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 from our U.K./European Operations were ~~$132.2~~$197.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$134.2~~$203.5 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$2.1~~$6.1 million, or ~~1.5%~~3.0%. Excluding a decrease of ~~$8.2~~$11.9 million due to ~~the impact of~~ foreign currency depreciation and $6.5 million from our divested ERS operations, freight-related revenues from our existing operations increased ~~$12.7~~$12.3 million, or ~~10.6%~~6.7%, for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$119.5~~$185.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The increase in freight-related revenues from our existing operations was primarily due to increased rates on trucking, switching and storage services in the U.K. and increased crewing services in Poland, partially offset by a decrease in infrastructure services in the U.K.

All Other Revenues

All other revenues from our U.K./European Operations includes revenues from container sales, third-party car and locomotive repairs, property rentals and other ancillary revenues not directly related to the movement of freight. All other revenues from our U.K./European Operations were ~~$28.7~~$42.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$32.9~~$49.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$4.2~~$7.4 million, or ~~12.7%~~14.8%. Excluding a ~~$2.0~~$2.9 million decrease due to ~~the impact of~~ foreign currency depreciation, all other revenues from our existing operations decreased ~~$2.2~~$4.4 million, or ~~7.0%~~9.4%, for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$30.9~~$46.9 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The decrease in all other revenues from our existing operations was primarily due to reduced management and technical support revenues in Saudi Arabia and ~~decreased~~lower container sales in 2019.

Operating Expenses

Total operating expenses from our U.K./European Operations were ~~$327.5~~$489.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$355.9~~$522.1 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$28.4~~$32.7 million, or ~~8.0%~~6.3%. The decrease consisted of ~~$22.3~~$31.2 million due to ~~the impact of~~ foreign currency depreciation and $20.9 million from divested operations, partially offset by a ~~$14.8~~$19.4 million increase from existing operations. The increase from existing operations included increases of ~~$5.5~~$9.2 million in labor and benefits expense, ~~$3.2~~$5.1 million in other expenses, net, $3.5 million in depreciation and amortization expense, $3.3 million in restructuring and related costs, ~~$3.1~~$1.4 million in equipment rents expense and $1.4 million in purchased services expense, ~~$2.2 million in other expenses, net, $2.0 million in depreciation and amortization expense and $1.1 million in equipment rents expense,~~ partially offset by ~~a decrease~~decreases of $1.5 million in trackage rights expense and $1.3 million in materials expense.

The following table sets forth operating expenses from our U.K./European Operations for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 (dollars in thousands):


	Six Months Ended June 30,										Increase/(Decrease)				Currency Impact				2018 Constant Currency*				Increase/(Decrease) Constant Currency*			Nine Months Ended September 30,												Increase/(Decrease)				Currency Impact				2018 Constant Currency*			Increase/(Decrease) Constant Currency*
	2019					2018								2019												2018
	Amount			% of Operating Revenues		Amount			% of Operating Revenues					Amount								% of Operating Revenues					Amount			% of Operating Revenues
Labor and benefits	$	102,701		31.7	%	$	104,430		29.8	%				$				(1,729		)		$		(6,392	)		$	98,038		$	4,663		$	154,175		31.9	%		$	154,943			29.7	%		$	(768	)	$	(9,098	)		$	145,845	$	8,330
Equipment rents	37,825			11.7	%	40,258			11.5	%				(2,433			)		(2,632		)		37,626				199		55,629				11.5	%	58,690				11.3	%		(3,061		)		(3,597		)	55,093				536
Purchased services	61,143			18.9	%	83,281			23.8	%	(22,138		)			(5,336		)		77,945				(16,802		)	90,106			18.7	%		115,711			22.2	%		(25,605		)		(7,061		)		108,650			(18,544		)
Depreciation and amortization	19,371			6.0	%	18,562			5.3	%	809				(1,146		)		17,416				1,955			29,454			6.1	%		27,629			5.3	%		1,825				(1,629		)		26,000			3,454
Diesel fuel used in train operations	25,836			8.0	%	27,558			7.9	%	(1,722		)		(1,759		)		25,799				37			39,627			8.2	%		41,967			8.0	%		(2,340		)		(2,514		)		39,453			174
Electricity used in train operations	4,550			1.4	%	4,278			1.2	%	272				(283		)		3,995				555			6,344			1.3	%		7,020			1.3	%		(676		)		(425		)		6,595			(251		)
Casualties and insurance	2,427			0.7	%	2,790			0.8	%	(363		)		(176		)		2,614				(187		)	3,363			0.7	%		4,415			0.8	%		(1,052		)		(263		)		4,152			(789		)
Materials	29,307			9.0	%	32,770			9.3	%	(3,463		)		(1,996		)		30,774				(1,467		)	45,425			9.4	%		49,675			9.5	%		(4,250		)		(2,909		)		46,766			(1,341		)
Trackage rights	18,330			5.7	%	20,064			5.7	%	(1,734		)		(1,323		)		18,741				(411		)	27,013			5.6	%		30,384			5.8	%		(3,371		)		(1,857		)		28,527			(1,514		)
Net loss/(gain) on sale and impairment of assets	(809		)	(0.2	)%	(128		)	—	%	(681		)		(14		)		(142		)		(667		)
Net gain on sale and impairment of assets																										(830		)	(0.2	)%		(244		)	—	%		(586		)		(8		)		(252		)	(578		)
Restructuring and related costs	12,279			3.8	%	9,604			2.7	%	2,675				(497		)		9,107				3,172			15,517			3.2	%		12,889			2.5	%		2,628				(673		)		12,216			3,301
Other expenses, net	14,502			4.5	%	12,402			3.5	%	2,100				(792		)		11,610				2,892			23,652			4.9	%		19,059			3.7	%		4,593				(1,148		)		17,911			5,741
Total operating expenses	$	327,462		101.2	%	$	355,869		101.5	%	$	(28,407	)		$	(22,346	)		$	333,523			$	(6,061	)	$	489,475		101.3	%		$	522,138		100.1	%		$	(32,663	)		$	(31,182	)		$	490,956		$	(1,481	)

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

The following information discusses the significant changes in operating expenses of our U.K./European Operations excluding a decrease of ~~$22.3~~$31.2 million due to ~~the impact of~~ foreign currency depreciation.

Labor and benefits expense was ~~$102.7~~$154.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$98.0~~$145.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$4.7~~$8.3 million, or ~~4.8%~~5.7%. The increase consisted of ~~$5.5~~$9.2 million from existing operations, partially offset by a decrease of $0.8 million from divested operations. The increase from existing operations was primarily due to annual wage increases and an increase in headcount to support ~~increased infrastructure services and~~ new aggregate business, ~~expected to commence in the fourth quarter of 2019,~~ partially offset by savings resulting from the U.K. Operations optimization program.

Purchased services expense was ~~$61.1~~$90.1 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$77.9~~$108.7 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$16.8~~$18.5 million, or ~~21.6%~~17.1%. The decrease consisted of $19.9 million from divested operations, partially offset by an increase of ~~$3.1~~$1.4 million from existing ~~operations. The decrease was primarily due to crewing costs incurred in 2018 associated with our divested ERS~~ operations. The increase from existing operations was primarily due to an increase in trucking activity and the timing of maintenance.

Depreciation and amortization expense was ~~$19.4~~$29.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$17.4~~$26.0 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$2.0~~$3.5 million, or ~~11.2%~~13.3%. The increase was primarily ~~attributable~~due to ~~a larger depreciable asset base in 2019 compared with 2018, reflecting~~ capital spending in 2018.

Materials expense, which primarily consists of the cost of containers sold to third parties, materials purchased for use in repairing and maintaining our locomotives, railcars and other equipment, as well as costs for general tools and supplies used in our business, was ~~$29.3~~$45.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$30.8~~$46.8 million for the ~~six~~nine months ended ~~June~~September 30, 2018, a decrease of ~~$1.5~~$1.3 million, or ~~4.8%~~2.9%. The decrease was primarily due to ~~a decrease in~~reduced container sales in 2019 and timing of roadway maintenance.

Trackage rights expense was $27.0 million for the nine months ended September 30, 2019, compared with $28.5 million for the nine months ended September 30, 2018, a decrease of $1.5 million, or 5.3%. The decrease was primarily due to a refund of prior year track access costs.

Restructuring and related costs for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 of ~~$12.3~~$15.5 million and ~~$9.1~~$12.2 million, respectively, were primarily related to our optimization activities in the U.K.

Other expenses, net were ~~$14.5~~$23.7 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~$11.6~~$17.9 million for the ~~six~~nine months ended ~~June~~September 30, 2018, an increase of ~~$2.9~~$5.7 million, or ~~24.9%~~32.1%. The increase consisted of ~~$2.2~~$5.1 million from existing operations and $0.7 million from divested operations. The increase from existing operations was primarily attributable to implementation costs associated with information technology initiatives.

Operating Loss and Operating Ratio

Our U.K./European Operations had an operating loss of ~~$3.8~~$6.2 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with an operating loss of ~~$5.3~~$0.6 million for the ~~six~~nine months ended ~~June~~September 30, 2018. The operating loss for the ~~six~~nine months ended ~~June~~September 30, 2019 included ~~$12.3~~$15.5 million of restructuring and related costs primarily driven by our optimization activities in the U.K. The operating loss for the ~~six~~nine months ended ~~June~~September 30, 2018 included ~~$9.6~~$12.9 million, or ~~$9.1~~$12.2 million excluding ~~the impact of~~ foreign currency, of restructuring and related ~~costs.~~costs primarily driven by our optimization activities in the U.K. The operating ratio was ~~101.2%~~101.3% for the ~~six~~nine months ended ~~June~~September 30, 2019, compared with ~~101.5%~~100.1% for the ~~six~~nine months ended ~~June~~September 30, 2018.

Liquidity and Capital Resources

We had cash and cash equivalents of ~~$82.4~~$86.9 million as of ~~June~~September 30, 2019, of which ~~$41.3~~$31.1 million was from our Australian Operations, which we control through a 51.1% ownership interest. In accordance with our Australia partnership agreement with MIRA, the cash and cash equivalents of our Australian Operations can be used to make payments in the ordinary course of business, pay down debt of the Australia Partnership and make distributions to the partners in proportion to their investments. No such distributions were made during the ~~six~~nine months ended ~~June~~September 30, 2019. During the ~~six~~nine months ended ~~June~~September 30, 2018, the Australia Partnership made an A$40.0 million distribution, of which A$20.4 million (or $15.6 million at the exchange rate on June 5, 2018) and A$19.6 million (or $14.9 million at the exchange rate on June 5, 2018) were distributed to us and MIRA, respectively.

Based on current expectations, we believe our cash, together with our other liquid assets, anticipated future cash flows from operations, availability under our credit agreement and access to debt and equity capital markets and other sources of available financing will be sufficient to fund expected operating, capital and debt service requirements and other financial commitments for the foreseeable future. As of ~~June~~September 30, 2019, we had ~~$586.1~~$618.8 million of unused borrowing capacity under our credit agreement.

As of ~~June~~September 30, 2019, we had long-term debt, including current portion, of $~~2,338.5~~2,215.5 million, which comprised ~~38.8%~~37.4% of our total capitalization. As of December 31, 2018, we had long-term debt, including current portion, of $2,453.5 million, which comprised 40.3% of our total capitalization. Our long-term debt, including current portion, consisted of the following as of ~~June~~September 30, 2019 and December 31, 2018 (dollars in thousands):


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
Senior secured credit facility	$	1,654,098		$	1,783,423		$	1,561,648		$	1,783,423
Australian senior secured credit facility^(a)	448,266			458,166			427,718			458,166
Australian subordinated shareholder loan from MIRA^(b)	166,962			167,796			160,675			167,796
Other debt	86,416			64,261			81,060			64,261
Less: deferred financing fees	(17,262		)	(20,108		)	(15,587		)	(20,108		)
Total debt	$	2,338,480		$	2,453,538		$	2,215,514		$	2,453,538

(a) Standalone credit agreement is non-recourse to us and MIRA.

(b) Shareholder loan is non-recourse to us.

During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, we generated $~~223.1~~384.2 million and $~~231.3~~397.5 million, respectively, of cash from operating activities. Changes in working capital decreased net cash flows by $~~23.9~~7.1 million and ~~$20.3~~$15.1 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018,, our net cash used in investing activities was ~~$81.4~~$152.4 million and ~~$110.8~~$165.9 million,, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2019,, the primary drivers of cash used in investing activities were ~~$144.7~~$227.3 million of cash used for capital expenditures, including $26.8 million related to capital expenditures accrued in 2018, partially offset by ~~$14.9~~$23.0 million of cash received from grants from outside parties for capital spending and $45.4 million of cash received from the settlement of certain derivative investments. For the ~~six~~nine months ended ~~June~~September 30, 2018,, primary drivers of cash used in investing activities were ~~$133.3~~$194.1 million of cash used for capital expenditures, including $20.1 million related to capital expenditures accrued in 2017, partially offset by ~~$12.9~~$16.7 million in cash received from grants from outside parties for capital spending and $7.9 million of net proceeds received from the sale of ERS.

During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, our net cash used in financing activities was ~~$152.9~~$236.4 million and ~~$131.4~~$237.0 million,, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2019, the primary drivers of cash used in financing activities were net payments on outstanding debt of ~~$140.6~~$230.9 million, $4.8 million for common share repurchases and $4.7 million for the purchase of additional shares in Freightliner Australia from its noncontrolling interest ~~holders.~~holders, partially offset by $6.5 million of cash provided by other financing activities. For the ~~six~~nine months ended ~~June~~September 30, 2018, the primary drivers of cash used in financing activities were ~~$192.3~~$270.5 million for common share repurchases and $14.9 million of cash distributed to MIRA, $6.3 million for installment payments on deferred consideration related to the Freightliner acquisition and $5.3 million in debt amendment and issuance costs, partially offset by a net increase in outstanding debt of ~~$88.3~~$55.0 million. For additional information regarding our common share repurchases, see Note 3, Earnings Per Common Share, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report.

Property Insurance

We ~~recently~~ completed our annual property insurance renewal during the third quarter of 2019, which ~~takes effect~~became effective on August 1, 2019. Effective with this renewal, our property policies ~~will~~ have various self-insured retentions, which vary based on the type and location of the incident, up to $10.0 million. We recently completed our annual liability insurance renewal, which became effective on November 1, 2019. Effective with this renewal, our liability policies have various self-insured retentions up to $5.0 million.

2019 Capital Expenditures

During the ~~six~~nine months ended ~~June~~September 30, 2019, we incurred ~~$140.3~~$225.1 million in aggregate capital expenditures related to current year projects of which we paid ~~$118.0~~$200.5 million in cash and accrued ~~$22.3~~$24.5 million in accounts payable as of ~~June~~September 30, 2019. We expect to receive ~~$11.5~~$19.2 million of grants from outside parties related to these current year projects, which was included in outstanding grant receivables from outside parties as of ~~June~~September 30, 2019.

The following table sets forth our capital expenditures related to current year projects incurred by segment for the ~~six~~nine months ended ~~June~~September 30, 2019 (dollars in thousands):


	Six Months Ended June 30, 2019										Nine Months Ended September 30, 2019
	North American Operations			Australian Operations		U.K./European Operations		Total			North American Operations			Australian Operations		U.K./European Operations		Total
Capital Expenditures:
Track and equipment, self-funded	$	103,184		$	4,637	$	17,187	$	125,008		$	130,679		$	11,500	$	23,523	$	165,702
Track and equipment, subject to third-party funding	7,992			—		—		7,992			40,409			—		—		40,409
New business investments	1,208			6,117		—		7,325			2,635			16,305		—		18,940
Gross capital expenditures	112,384			10,754		17,187		140,325			173,723			27,805		23,523		225,051
Grants from outside parties	(13,993		)	—		—		(13,993		)	(27,553		)	—		—		(27,553		)
Net capital expenditures	$	98,391		$	10,754	$	17,187	$	126,332		$	146,170		$	27,805	$	23,523	$	197,498

Cash paid for purchases of property and equipment during the ~~six~~nine months ended ~~June~~September 30, 2019 of ~~$144.7~~$227.3 million consisted of ~~$118.0~~$200.5 million for 2019 capital projects and $26.8 million related to capital expenditures accrued in 2018. Grant proceeds from outside parties received during the ~~six~~nine months ended ~~June~~September 30, 2019 of ~~$14.9~~$23.0 million were primarily related to our capital expenditures from prior years.

During the three months ended September 30, 2019, our Australian Operations entered into a commitment of approximately $26 million to procure locomotives and wagons to serve new business.

Recently Adopted and Recently Issued Accounting Standards

See Note 5, Leases, and Note 14, Recently Issued Accounting Standards, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report for additional information regarding recently adopted and recently issued accounting standards.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement includes any contractual obligation, agreement or transaction involving an unconsolidated entity under which we (1) have made guarantees, (2) have a retained or contingent interest in transferred assets, or a similar arrangement, that serves as credit, liquidity or market risk support to that entity for such assets, (3) have an obligation under certain derivative instruments or (4) have any obligation arising out of a material variable interest in such an entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing or hedging services with us.

Our off-balance sheet arrangements as of December 31, 2018 consisted of operating lease obligations. Effective January 1, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which required lessees to now recognize operating leases on their balance sheet as a right-of-use asset with a corresponding liability. See Note 5, Leases, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report for additional information regarding this standard. As of ~~June~~September 30, 2019, we had no off-balance sheet arrangements.

Impact of Foreign Currencies on Consolidated Results

As more fully described in Note 13, Segment Information, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly report, the results of operations of our foreign entities are maintained in the respective local currency and then translated into United States dollars at the applicable exchange rates for inclusion in the consolidated financial statements. When comparing the effects of average foreign currency exchange rates on operating revenues and operating expenses during the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, foreign currency translation had a negative impact on our consolidated operating revenues and a positive impact on our consolidated operating expenses. Currency effects related to operating revenues and operating expenses are presented within the discussion of these respective items included within this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During the ~~six~~nine months ended ~~June~~September 30, 2019, we settled certain of our British pound forward contracts, which had notional amounts totaling £120.0 million and received cash proceeds of $26.1 million. In addition, we settled our cross-currency swap agreements, which had notional amounts totaling A$248.9 million, and received cash proceeds of €17.0 million (or $19.3 million at the exchange rate on June 30, ~~2019)~~2019, the date of settlement).

In June 2019, we entered into two new cross-currency swap agreements designated as a fair value hedges and a cross-currency swap designated as a net investment ~~hedge (see~~hedge. See Note 6, Derivative Financial Instruments, to our Consolidated Financial Statements set forth in "Part I Item 1. Financial Statements" of this quarterly ~~report).~~report for additional information regarding our swap agreements.


ITEM 4.	CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures — We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June~~September 30, 2019. Based upon that evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June~~September 30, 2019, the disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Internal Control Over Financial Reporting — There were no changes in our internal control over financial reporting (as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~June~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS.

From time to time, we are a defendant in certain lawsuits and a party to certain arbitrations resulting from our operations in the ordinary course, as the nature of our business exposes us 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. We maintain insurance policies to mitigate the financial risk associated with such claims. 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 our results of operations, financial condition and liquidity.

In November 2014, we 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 penalty of $14.1 million, based on the amount of oil allegedly discharged and other relevant factors considered under the applicable regulation. Although the cleanup associated with this derailment is substantially complete, the civil penalty associated with the contamination is subject to further discussion and potential litigation.

Following the filing of our definitive proxy statement (the Proxy Statement) associated with the Merger with the Securities and Exchange Commission (the “SEC”) on August 20, 2019, three lawsuits were filed in connection with the Merger, including two purported class action lawsuits that were filed on August 21, 2019 and September 4, 2019 in the United States District Court for the District of Delaware, and one lawsuit filed on behalf of a purported individual shareholder on September 12, 2019 in the United States District Court for the District of Connecticut. These lawsuits, Gordon vs. Genesee & Wyoming Inc. et al., Case No. 1:19-cv-01558-MN, Thompson vs. Genesee & Wyoming Inc. et al., Case No. 1;19-cv-01650-MN and Geery vs. Genesee & Wyoming Inc. et al., Case No. 3:19-cv-01438-VLB (collectively, the “Disclosure Actions”), named us and individual officers and members of our board of directors as defendants. The actions alleged, among other things, that the defendants failed to disclose certain information relating to our financial projections set forth in the Proxy Statement.

On September 25, 2019, solely to eliminate the burden, expense, and uncertainty inherent in such litigation, and without admitting any liability or wrongdoing, we filed a Form 8-K containing certain supplemental disclosures with the SEC. In consideration for such supplemental disclosures by us, plaintiffs in the Disclosure Actions had agreed to voluntarily dismiss the Disclosure Actions. On October 4, 2019, pursuant to those agreements, plaintiffs filed voluntary dismissals of the Disclosure Actions.

On September 17, 2019, in New South Wales, Australia, a complaint was filed by Australia Eastern Railroad Pty Ltd ACN against the Company, GWI Holdings Pty Ltd and Genesee & Wyoming Australia Pty Ltd in connection with the Merger. The complaint seeks an award of damages in connection with a right of first refusal provision in a commercial contract involving our majority-owned Australian subsidiary. We dispute the allegations made in the complaint and intend to defend us appropriately.

In addition to the EPA matter and the lawsuits set forth above, from time to time, we are a defendant in certain lawsuits resulting from our operations in the ordinary course. Management believes there are adequate provisions in the financial statements for any probable liabilities that may result from disposition of the pending lawsuits and the aforementioned EPA matter. Based upon currently available information, we do not believe it is reasonably possible that any such lawsuit, related lawsuits or matter would be material to our results of operations or have a material adverse effect on our financial position or liquidity.


ITEM 1A.	RISK FACTORS.

For a discussion of our potential risks or uncertainties, please see Risk Factors in Part I Item 1A of the Company's 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Except for the risks described below, there have been no material changes to the risk factors disclosed in the 2018 Annual Report.

There are risks and uncertainties associated with the proposed merger.

On July 1, 2019, G&W entered into an Agreement and Plan of Merger (the Merger Agreement), by and among G&W, 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), pursuant to which Merger Sub will be merged with and into G&W (the Merger) 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 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)~~(ii) the approval or authorization of, or exemption by, the Surface Transportation Board ~~(iv)~~(or approval of the use of a voting trust structure), which exemption was granted on October 29, 2019, (iii) receipt of other antitrust and regulatory approvals, including approval of the Committee on Foreign Investment in the United States, and ~~(v)~~(iv) 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)~~(iv) to certain materiality qualifiers). We cannot provide any assurance that these conditions will be met or waived, or that we will be able to successfully consummate the proposed Merger as provided for under the Merger Agreement, or at all.

In this regard, we face risks and uncertainties due both to the pendency of the proposed Merger as well as the potential failure to consummate the proposed Merger, including:

the occurrence of any event, change or other circumstances that could give us or Parent the right to terminate the Merger Agreement;

the outcome of any legal proceedings that may be instituted against us with respect to the proposed Merger;

the ~~risk that we may not obtain the required stockholder approval on the expected schedule or at all;~~

~~the~~ ability to obtain regulatory approvals and satisfy other closing conditions to the proposed Merger in a timely manner or at all, including the risk that regulatory approvals required for the proposed Merger are not obtained or are obtained subject to conditions that are not anticipated;

delay in closing the proposed Merger;

business disruptions from the proposed Merger that may harm our business, including our current plans and operations;

adverse effects on our ability to retain and hire key personnel or maintain relationships with customers or on our operating results and business generally;

the risk that developments with respect to the proposed Merger could have adverse effects on the market price of our common stock;

~~certain~~ restrictions during the pendency of the proposed Merger that may impact our ability to pursue certain business opportunities or strategic transactions; and

the risk that G&W will be required to pay Parent a termination fee of $194 million in the event the Merger Agreement is terminated by G&W or Parent under certain circumstances specified in the Merger Agreement, including upon a termination by G&W in connection with G&W’s entry into a superior proposal (which termination fee would be payable even if such superior proposal is not consummated).

In addition, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, and these fees and costs are payable by us regardless of whether the proposed Merger is consummated.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

There were no unregistered sales of equity securities for the period covered by this Quarterly Report on Form 10-Q.

Issuer Purchases of Equity Securities

Period in 2019
(a) Total Number of
Shares (or Units)
Purchased (1)

(b) Average Price Paid
per Share (or Unit)(1)

(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)
April 1 to April 30 92
$ 82.00
—
$ 335,000,045
May 1 to May 30 —
$ —
—
$ 335,000,045
June 1 to June 30 15
$ 82.00
—
$ 335,000,045
Total 107
$ 82.00
—



Period in 2019	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid per Share (or Unit)(1)		(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	—	$	—	—	$	335,000,045
August 1 to August 31	31,256	$	110.05	—	$	335,000,045
September 1 to September 30	—	$	—	—	$	335,000,045
Total	31,256	$	110.05	—

(1) The ~~107~~31,256 shares acquired in the three months ended ~~June~~September 30, 2019 represent common stock acquired by us from our employees who surrendered shares in lieu of cash either to fund their exercise of stock options or to pay taxes on equity awards granted under our Fourth Amended and Restated 2004 Omnibus Plan.

(2) In November 2018, the Board of Directors authorized the repurchase of $500 million of our Class A Common Stock. During the three months ended ~~June~~September 30, 2019, we did not purchase any shares of our Class A Common Stock under the repurchase program. In connection with entering into the Merger Agreement, we suspended future share repurchases under the repurchase program.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 4.	MINE SAFETY DISCLOSURES.

Not applicable.


ITEM 5.	OTHER INFORMATION.

None.


ITEM 6.	EXHIBITS.

For a list of exhibits, see Index to Exhibits in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

INDEX TO EXHIBITS



Number			Description

2.1			Agreement and Plan of Merger, dated as of July 1, 2019, by and among Genesee & Wyoming Inc., DJP XX, LLC and MKM XXII Corp., is incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on July 1, 2019.

*2.2			Partnership Interest Sale Agreement, dated August 4, 2019, by and among GWI Holding B.V., GWI International Pty Ltd, GWI International B.V., Macquarie Australian Infrastructure Management 1 Limited as trustee for the PGGM Ibis LP Trust, as the Buyer, Brookfield Infrastructure Group LLC and trustees, guarantors and partners thereto,

~~3.1~~			~~Second Amended and Restated By-laws of Genesee & Wyoming Inc.,~~ is incorporated herein by reference to ~~Exhibit 3.1 to~~ the Registrant’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed on ~~July 1,~~August 7, 2019.

*31.1			Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

*31.2			Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

*32.1			Section 1350 Certification

*101			The following financial information from Genesee & Wyoming Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2019, formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Consolidated Balance Sheets as of ~~June~~September 30, 2019 and December 31, 2018, (ii) Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, (iv) Consolidated Statements of Changes in Equity for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, (v) Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, and (vi) the Notes to Consolidated Financial Statements.

*104			Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)

*Exhibit filed or furnished with this Report.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure, other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		GENESEE & WYOMING INC.

Date:	~~August 7,~~November 6, 2019	By:	/s/ TIMOTHY J. GALLAGHER
		Name:	Timothy J. Gallagher
		Title:	Chief Financial Officer (Principal Financial Officer)

Date:	~~August 7,~~November 6, 2019	By:	/s/ CHRISTOPHER F. LIUCCI
		Name:	Christopher F. Liucci
		Title:	Chief Accounting Officer (Principal Accounting Officer)

7071



	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

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