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Delaware | 4011 | 65-0328006 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) | o | |||
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) | o |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate | Registration | ||||||||
Securities to be Registered | Registered | Price per Unit | Offering Price(1) | Fee | ||||||||
9.25% Senior Secured Notes due 2017 | $740,000,000 | 100% | $740,000,000 | $41,292 | ||||||||
Guarantees related to the 9.25% Senior Secured Notes due 2017 | N/A | N/A | N/A | N/A(2) | ||||||||
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(f) promulgated under the Securities Act of 1933, as amended. | |
(2) | No separate consideration is received for the guarantees, and, therefore, no additional fee is required. |
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State or Other | Primary Standard | |||||||||
Jurisdiction of | Industrial | I.R.S. Employer | ||||||||
Incorporation or | Classification Code | Identification | ||||||||
Name of Additional Registrant* | Formation | Number | Number | |||||||
A. & R. Line, Inc. | Indiana | 4011 | 35-1952789 | |||||||
Alabama & Gulf Coast Railway LLC | Delaware | 4011 | 75-2714522 | |||||||
Arizona & California Railroad Company | Delaware | 4011 | 35-2165912 | |||||||
Bauxite & Northern Railway Company | Arkansas | 4011 | 25-6000153 | |||||||
California Northern Railroad Company | Delaware | 4011 | 30-0066967 | |||||||
Cascade and Columbia River Railroad Company | Delaware | 4011 | 91-1734603 | |||||||
Central Oregon & Pacific Railroad, Inc. | Delaware | 4011 | 93-1151074 | |||||||
The Central Railroad Company of Indiana | Indiana | 4011 | 35-1824902 | |||||||
Central Railroad Company of Indianapolis | Indiana | 4011 | 35-1768799 | |||||||
Connecticut Southern Railroad, Inc. | Delaware | 4011 | 03-0353222 | |||||||
Dallas, Garland & Northeastern Railroad, Inc. | Texas | 4011 | 75-2410681 | |||||||
Eastern Alabama Railway, LLC | Alabama | 4011 | 63-1064122 | |||||||
Huron and Eastern Railway Company, Inc. | Michigan | 4011 | 38-2655990 | |||||||
Indiana & Ohio Rail Corp. | Delaware | 4011 | 74-2862101 | |||||||
Indiana & Ohio Railway Company | Delaware | 4011 | 74-2862102 | |||||||
Indiana Southern Railroad, LLC | Delaware | 4011 | 74-2932611 | |||||||
Kiamichi Railroad Company, L.L.C. | Delaware | 4011 | 73-1481038 | |||||||
Kyle Railroad Company | Kansas | 4011 | 94-2802283 | |||||||
Kyle Railways, LLC | Delaware | 4011 | 94-2279537 | |||||||
The Massena Terminal Railroad Company | New York | 4011 | 25-6002068 | |||||||
Mid-Michigan Railroad, Inc. | Michigan | 4011 | 31-1224037 | |||||||
Missouri & Northern Arkansas Railroad Company, Inc. | Kansas | 4011 | 43-1624703 | |||||||
New England Central Railroad, Inc. | Delaware | 4011 | 03-0344030 | |||||||
New StatesRail Holdings, LLC | Delaware | 4011 | 46-0486784 | |||||||
North Carolina & Virginia Railroad Company, LLC | Virginia | 4011 | 74-2932608 | |||||||
Otter Tail Valley Railroad Company, Inc. | Minnesota | 4011 | 41-1565408 | |||||||
Palm Beach Rail Holding, Inc. | Delaware | 4011 | 65-0979476 | |||||||
Point Comfort & Northern Railway Company | Texas | 4011 | 25-6002553 | |||||||
Puget Sound & Pacific Railroad | Delaware | 4011 | 32-0010360 | |||||||
RailAmerica Operations Shared Services, Inc., f/k/a American Rail Dispatching Center, Inc. | Delaware | 4011 | 68-0574072 | |||||||
RailAmerica Operations Support Group, Inc. f/k/a Rail Operating Support Group, Inc. | Delaware | 4011 | 65-0797247 | |||||||
RailAmerica Contract Switching Services, Inc. | Delaware | 4011 | 26-3586634 | |||||||
RailAmerica Equipment Corp. | Delaware | 4011 | 65-0622013 | |||||||
RailAmerica Intermodal Services, Inc. | Delaware | 4011 | 65-0553260 | |||||||
RailAmerica Transportation Corp. | Delaware | 4011 | 65-0979478 | |||||||
RailTex, Inc. | Texas | 4011 | 74-1948121 | |||||||
Rockdale, Sandow & Southern Railroad Company | Texas | 4011 | 25-6004106 | |||||||
San Diego & Imperial Valley Railroad Company, Inc. | California | 4011 | 74-2332456 | |||||||
San Joaquin Valley Railroad Co. | California | 4011 | 93-1073083 | |||||||
San Pedro Trails, Inc. | Arizona | 4011 | 42-1544984 | |||||||
South Carolina Central Railroad Company, LLC | South Carolina | 4011 | 57-0856173 | |||||||
South East Rail, Inc. | Delaware | 4011 | 62-1583702 | |||||||
StatesRail II Railroad, LLC | Delaware | 4011 | 02-0530889 | |||||||
StatesRail, LLC | Delaware | 4011 | 52-2353564 | |||||||
Toledo, Peoria & Western Railway Corp. | Delaware | 4011 | 22-2959560 | |||||||
Ventura County Railroad Company | Delaware | 4011 | 77-0495102 |
* | Addresses and telephone numbers of principal executive offices are the same as those of RailAmerica, Inc. described above. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
• | We will exchange new notes for all outstanding old notes that are validly tendered and not withdrawn prior to the expiration or termination of the exchange offer. | |
• | You may withdraw tenders of old notes at any time prior to the expiration or termination of the exchange offer. | |
• | The terms of the new notes are substantially identical to those of the outstanding old notes, except that the transfer restrictions and registration rights relating to the old notes do not apply to the new notes. | |
• | The exchange of old notes for new notes will not be a taxable transaction for U.S. federal income tax purposes. You should see the discussion under the caption “Material Federal Income Tax Considerations” for more information. | |
• | We will not receive any proceeds from the exchange offer. | |
• | We issued the old notes in a transaction not requiring registration under the Securities Act, and as a result, their transfer is restricted. We are making the exchange offer to satisfy your registration rights, as a holder of the old notes. |
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A. & R. Line, Inc. | New StatesRail Holdings, LLC | |
Alabama & Gulf Coast Railway LLC | North Carolina & Virginia Railroad Company, LLC | |
Arizona & California Railroad Company | Otter Tail Valley Railroad Company, Inc. | |
Bauxite & Northern Railway Company | Palm Beach Rail Holding, Inc. | |
California Northern Railroad Company | Point Comfort & Northern Railway Company | |
Cascade and Columbia River Railroad Company | Puget Sound & Pacific Railroad | |
Central Oregon & Pacific Railroad, Inc. | RailAmerica Operations Shared Services, Inc., f/k/a American Rail Dispatching Center, Inc. | |
The Central Railroad Company of Indiana | RailAmerica Operations Support Group, Inc. f/k/a Rail Operating Support Group, Inc. | |
Central Railroad Company of Indianapolis | RailAmerica Contract Switching Services, Inc. | |
Connecticut Southern Railroad, Inc. | RailAmerica Equipment Corp. | |
Dallas, Garland & Northeastern Railroad, Inc. | RailAmerica Intermodal Services, Inc. | |
Eastern Alabama Railway, LLC | RailAmerica Transportation Corp. | |
Huron and Eastern Railway Company, Inc. | RailTex, Inc. | |
Indiana & Ohio Rail Corp. | Rockdale, Sandow & Southern Railroad Company | |
Indiana & Ohio Railway Company | San Diego & Imperial Valley Railroad Company, Inc. | |
Indiana Southern Railroad, LLC | San Joaquin Valley Railroad Co. | |
Kiamichi Railroad Company, L.L.C. | San Pedro Trails, Inc. | |
Kyle Railroad Company | South Carolina Central Railroad Company, LLC | |
Kyle Railways, LLC | South East Rail, Inc. | |
The Massena Terminal Railroad Company | StatesRail II Railroad, LLC | |
Mid-Michigan Railroad, Inc. | StatesRail, LLC | |
Missouri & Northern Arkansas Railroad Company, Inc. | Toledo, Peoria & Western Railway Corp. | |
New England Central Railroad, Inc. | Ventura County Railroad Company |
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Freight Revenue by Commodity | Total Revenue Contribution by Region | |
• | Profitable operations with substantial earnings growth: Our focus on continuously improving the operating efficiency and profitability of each of our 40 railroads has allowed us to significantly increase our operating margins and grow our cash flow. As a result of our management team’s focus on improving operating efficiency, our operating ratio, defined as total operating expenses divided by total operating revenue, improved from 89% for the year ended December 31, 2006 to 86% for the year ended December 31, 2007 to 83% for the year ended December 31, 2008. Our operating ratio improved from 84% for the six months ended June 30, 2008 to 78% for the six months ended June 30, 2009. Additionally, due to the relative operational simplicity of our railroads, we have more predictable and lower capital expenditures when compared to the more complex requirements of many Class I networks. As a result of our focus on improving operating efficiency and our predictable capital expenditures, we expect to continue to be able to grow our earnings and cash flow over the long term. | |
• | Favorable tax attributes: We also benefit from favorable tax attributes which substantially reduce our income tax obligations. As of December 31, 2008, we had $120 million of federal net operating loss carry-forwards expiring between 2020 and 2027 and $95 million of short line tax credits available through 2028. We believe short line railroads will continue to benefit from strong legislative and shipper support due to the pro-competitive nature of our business. |
• | Diversified portfolio of freight railroads: We benefit from significant diversity in our customer base, product base, geographic footprint and our relationships with Class I railroads. For the year ended December 31, 2008, no single customer accounted for more than 5% of our freight revenue and our top ten customers accounted for approximately 20% of our freight revenue. In addition, the types of freight hauled over our railroads include more |
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than a dozen commodities, none of which accounted for more than 14% of our freight revenue for the year ended December 31, 2008. This diversity reduces the impact from a downturn in the volume of any single product or a particular regional economy and lowers our dependence on any one customer. |
• | Stable and predictable revenue base: Our railroads are often integrated into a customer’s facility and serve as an important component of that customer’s distribution or input network. In many circumstances, our customers have made significant capital investments in facilities on or near our railroads (as in the case of electric utilities, industrial plants or major warehouses) or are geographically unable to relocate (as in the case of coal mines and rock quarries). This provides us with a stable and predictable revenue base. | |
• | Focus on safety: Our focus on safety allows us to improve the quality and reliability of our services, prevent accidents and injuries, and lower the costs and risks associated with operating our business. As a result of this safety focus, from 2004 to 2008 we have reduced our Reportable Injuries Ratio, defined by the Federal Railroad Administration, or FRA, as reportable personal injuries per 200,000man-hours, from 2.84x to 1.64x. Similarly, from 2004 to 2008 we reduced our Reportable Train Accidents Ratio, defined by the FRA as reportable train accidents per 100,000 train miles, from 1.08x to 0.74x. | |
• | Highly experienced management: Our senior management team, which was appointed in early 2007, is comprised of experienced rail industry executives with an average of 26 years in the industry and a track record of generating financial improvements both at well established operations, as well as at newly acquired and underperforming railroads. Several members of management have held senior positions at both Class I railroads as well as other short line and regional railroads. We believe that the experience of our senior management team and its focus on revenue, cash flow and earnings growth are significant contributors to improving the operating and financial performance of our railroads. |
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Aggregate | ||||||||||||||
Miles | % of | |||||||||||||
Classification of Railroads | Number | Operated | Revenue | Revenues and Miles Operated in 2007 | ||||||||||
Class I(1) | 7 | 94,313 | 93 | % | Over $359.6 million | |||||||||
Regional | 33 | 16,930 | 3 | % | $40.0 to $359.6 million and/or 350 or more miles operated | |||||||||
Local/Short line | 523 | 28,891 | 4 | % | Less than $40.0 million and less than 350 miles operated | |||||||||
Total | 563 | 140,134 | 100 | % | ||||||||||
(1) | Includes CSX Transportation, BNSF Railway Co., Norfolk Southern, Kansas City Southern Railway Company, Union Pacific, Canadian National Railway and Canadian Pacific Railroad Co. |
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Old Notes | $740 million aggregate principal amount of 9.25% Senior Secured Notes due 2017. | |
New Notes | Up to $740 million aggregate principal amount of 9.25% Senior Secured Notes due 2017, the issuance of which has been registered under the Securities Act of 1933. The form and terms of the new notes are identical in all material respects to those of the old notes, except that the transfer restrictions and registration rights relating to the old notes do not apply to the new notes. | |
Exchange Offer | We are offering to issue up to $740 million aggregate principal amount of the new notes in exchange for a like principal amount of the old notes to satisfy our obligations under the registration rights agreement that was executed when the old notes were issued in a transaction in reliance upon the exemption from registration provided by Rule 144A and Regulation S of the Securities Act. Old notes may be tendered in minimum denominations of principal amount of $2,000 and integral multiples of $1,000. We will issue the new notes promptly after expiration of the exchange offer. See “The Exchange Offer — Terms of the Exchange; Period for Tendering Old Notes.” | |
Expiration Date; Tenders | The exchange offer will expire at 5:00 p.m., New York City time, on , 2009, unless extended by us. By tendering your old notes, you represent to us that: | |
• you are not our “affiliate,” as defined in Rule 405 under the Securities Act; | ||
• any new notes you receive in the exchange offer are being acquired by you in the ordinary course of your business; | ||
• neither you nor anyone receiving new notes from you, has any arrangement or understanding with any person to participate in a distribution of the new notes, as defined in the Securities Act; | ||
• you are not holding old notes that have, or are reasonably likely to have, the status of an unsold allotment in the initial offering; | ||
• if you are a broker-dealer that will receive new notes for your own account in exchange for old notes that were acquired by you as a result of your market-making or other trading activities, you will deliver a prospectus in connection with any resale of the new notes you receive. For further information regarding resales of the new notes by participating broker-dealers, see the discussion under the caption “Plan of Distribution.” | ||
Withdrawal; Non-Acceptance | You may withdraw any old notes tendered in the exchange offer at any time prior to 5:00 p.m., New York City time, on , 2009. If we decide for any reason not to accept any old notes tendered for |
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exchange, the old notes will be returned to the registered holder at our expense promptly after the expiration or termination of the exchange offer. In the case of the old notes tendered by book-entry transfer into the exchange agent’s account at The Depository Trust Company, any withdrawn or unaccepted old notes will be credited to the tendering holder’s account at DTC. For further information regarding the withdrawal of tendered old notes, see “The Exchange Offer — Terms of the Exchange Offer; Period for Tendering Old Notes” and the “The Exchange Offer — Withdrawal Rights.” | ||
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which we may waive. See the discussion below under the caption “The Exchange Offer — Conditions to the Exchange Offer” for more information regarding the conditions to the exchange offer. | |
Consequences of Not Exchanging Your Old Notes | If you are eligible to participate in the exchange offer and you do not tender your old notes, you will not have any further registration or exchange rights and your old notes will continue to be subject to transfer restrictions. These transfer restrictions and the availability of the new notes may adversely affect the liquidity of your old notes. See “The Exchange Offer — Consequences of Exchanging or Failing to Exchange Old Notes.” | |
Procedures for Tendering the Old Notes | You must do the following on or prior to the expiration or termination of the exchange offer to participate in the exchange offer: | |
• tender your old notes by sending the certificates for your old notes, in proper form for transfer, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other documents required by the letter of transmittal, to U.S. Bank National Association, as exchange agent, at one of the addresses listed below under the caption “The Exchange Offer — Exchange Agent,” or | ||
• tender your old notes by using the book-entry transfer procedures described below and transmitting a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent’s message instead of the letter of transmittal, to the exchange agent. In order for a book-entry transfer to constitute a valid tender of your old notes in the exchange offer, U.S. Bank National Association, as exchange agent, must receive a confirmation of book-entry transfer of your old notes into the exchange agent’s account at DTC prior to the expiration or termination of the exchange offer. For more information regarding the use of book-entry transfer procedures, including a description of the required agent’s message, see the discussion below under the caption “The Exchange Offer — Book-Entry Transfers.” | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner whose old notes are registered in the name of the broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes in the exchange offer, you should promptly contact the person in whose name the old notes are registered and instruct that person to tender on your behalf. If you wish to tender in the exchange offer on your own behalf, prior to completing and executing the letter of transmittal and delivering your |
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old notes, you must either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the person in whose name the old notes are registered. | ||
Material Federal Income Tax Considerations | The exchange of the old notes for new notes in the exchange offer will not be a taxable transaction for United States federal income tax purposes. See the discussion under the caption “Material Federal Income Tax Considerations” for more information regarding the tax consequences to you of the exchange offer. | |
Use of Proceeds | We will not receive any proceeds from the exchange offer. | |
Exchange Agent | U.S. Bank National Association is the exchange agent for the exchange offer. You can find the address and telephone number of the exchange agent below under the caption “The Exchange Offer — Exchange Agent.” | |
Resales | Based on interpretations by the staff of the Securities and Exchange Commission (“SEC”) as set forth in no-action letters issued to the third parties, we believe that the new notes you receive in the exchange offer may be offered for resale, resold or otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act. However, you will not be able to freely transfer the new notes if: | |
• you are our “affiliate,” as defined in Rule 405 under the Securities Act; | ||
• you are not acquiring the new notes in the exchange offer in the ordinary course of your business; | ||
• you are participating or intend to participate, or have an arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the new notes, you will receive in the exchange offer; or | ||
• you are holding old notes that have or are reasonably likely to have the status of an unsold allotment in the initial offering. | ||
If you fall within one of the exceptions listed above, you cannot rely on the applicable interpretations of the staff of the SEC and you must comply with the applicable registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction involving the new notes. See the discussion below under the caption “The Exchange Offer — Procedures for Tendering Old Notes” for more information. | ||
Broker-Dealer | Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes which were acquired by such broker-dealer as a result of market making activities or other trading activities. We have agreed that, for a period of 180 days after the |
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completion of this exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.” | ||
Furthermore, a broker-dealer that acquired any of its old notes directly from us: | ||
• may not rely on the applicable interpretations of the staff or the SEC’s position contained inExxon Capital Holdings Corp., SEC no-action letter (Apr. 13, 1988);Morgan Stanley & Co. Inc., SEC no-action letter (June 5, 1991); orShearman & Sterling, SEC no-Action Letter (July 2, 1993); and | ||
• must also be named as a selling security holder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. |
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Issuer | RailAmerica, Inc., a Delaware corporation. | |
Notes Offered | Up to $740 million aggregate principal amount of 9.25% senior secured notes due 2017. | |
Maturity Date | July 1, 2017. | |
Interest Payment Dates | January 1 and July 1 of each year, commencing on January 1, 2010. Interest will accrue from June 23, 2009. | |
Guarantees | All payments on the notes, including principal and interest, are jointly and severally guaranteed on a senior secured basis by all of our existing and future wholly-owned domestic restricted subsidiaries other than domestic subsidiaries all of the material assets of which consist of stock in foreign subsidiaries and certain domestic subsidiaries that do not have material assets or earnings. | |
Security | The notes and the guarantees are secured by a first-priority lien (subject to certain exceptions and permitted liens) on substantially all the tangible and intangible assets of us and the guarantors (other than ABL Collateral) (as defined below) in each case held by us and the guarantors including the capital stock of any subsidiary held by us, any guarantor and any first tier subsidiary that is a domestic subsidiary substantially all of the assets of which consist of stock in foreign subsidiaries (but limited to 65% of the voting stock of any such first-tier subsidiary that is a foreign subsidiary or a domestic subsidiary all of the material assets of which consist of stock in foreign subsidiaries), such assets are referred to as the Notes Collateral. See “Description of the Notes — Security for the Notes.” | |
The ABL Collateral consists of accounts receivable, deposit accounts, securities accounts, cash (other than cash proceeds of the Notes Collateral), related general intangibles and instruments related to the foregoing and proceeds of the foregoing, in each case held by us and the guarantors. | ||
Ranking | The notes and the guarantees will be our and the guarantors’ senior secured obligations. The indebtedness evidenced by the notes and the guarantees will: | |
• rank senior in right of payment to any existing and future subordinated indebtedness; | ||
• rank equally in right of payment with all of our and the guarantors’ existing and future senior indebtedness, including amounts outstanding under the ABL Facility; | ||
• rank equally to our and the guarantors’ obligations under any other pari passu lien obligations incurred after the issue date to the extent of the Notes Collateral; |
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• be effectively subordinated to our indebtedness and the guarantors’ obligations under the ABL Facility, any other debt incurred after the issue date that has a first-priority security interest in the ABL Collateral, any permitted hedging obligations and all cash management obligations incurred with any lender or any of its affiliates under the ABL Facility, in each case to the extent of the ABL Collateral; and | ||
• be structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries (other than indebtedness and liabilities owed to us or one of our guarantor subsidiaries). | ||
The Indenture governing the notes (the Indenture) permits additional indebtedness or other obligations to be secured by the Notes Collateral. | ||
Optional Redemption | During any12-month period commencing on the issue date, we may redeem up to 10% of the aggregate principal amount of the notes issued under the Indenture at a redemption price equal to 103% of the principal amount thereof plus accrued and unpaid interest, if any. | |
We may also redeem some or all of the notes at any time before July 1, 2013 at a price equal to 100% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium. | ||
We may also redeem some or all of the notes at any time after July 1, 2013 at the redemption prices described under “Description of the Notes — Optional Redemption” plus, in each case, accrued and unpaid interest, if any. | ||
In addition, prior to July 1, 2012, we may also redeem up to 35% of the aggregate principal amount of the notes using the proceeds of certain equity offerings at a price equal to 100% of the aggregate principal amount of the notes to be redeemed plus a premium equal to the stated interest rate of the notes, plus accrued and unpaid interest, if any; provided that after giving effect to any such redemption, at least 65% of the notes issued on the issue date would remain outstanding immediately after such redemption. See “Description of the Notes — Optional Redemption.” | ||
Change of Control | Upon a change of control, we will be required to make an offer to purchase each holder’s notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See “Description of the Notes — Repurchase at the Option of Holders — Change of Control.” | |
Asset Sales | If we sell assets under certain circumstances, we will be required to make an offer to purchase the notes at their face amount, plus accrued and unpaid interest to the purchase date. See “Description of the Notes — Repurchase at the Option of Holders — Asset Sales.” |
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Certain Covenants | The Indenture governing the notes contains covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to: | |
• incur additional indebtedness or issue certain disqualified stock and preferred shares; | ||
• create liens on certain assets to secure debt; | ||
• pay dividends or make other equity distributions; | ||
• purchase or redeem capital stock; | ||
• make certain investments; | ||
• sell assets; | ||
• agree to any restrictions on the ability of restricted subsidiaries to transfer property or make payments to us; | ||
• consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; | ||
• engage in transactions with affiliates; and | ||
• permit any person to become a restricted subsidiary without guaranteeing payment of the notes. | ||
These limitations are subject to a number of important qualifications and exceptions. See “Description of the Notes — Certain Covenants.” Many of these covenants will cease to apply to the notes at all times after such notes have investment grade ratings from both Moody’s Investors Service, Inc. and Standard & Poor’s. | ||
No Established Trading Market | The new notes generally will be freely transferable but will also be new securities for which there is no established market. Accordingly, a liquid market for the notes may not develop or be maintained. We have not applied, and do not intend to apply, for the listing of the new notes on any exchange or automated dealer quotation system. | |
Risk Factors | Tendering your old notes in the exchange offer involves risks. You should carefully consider the information in the section entitled “Risk Factors” beginning on page 16 and all the other information included in this prospectus before tendering any old notes. |
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Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 | Year Ended | Six Months Ended | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | to December 31, | December 31, | June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||||||
STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||||||||||||||
Operating revenue | $ | 366,896 | $ | 420,987 | $ | 462,580 | $ | 55,766 | $ | 424,154 | $ | 508,466 | $ | 255,240 | $ | 206,483 | ||||||||||||||||
Operating expenses | 315,825 | 369,965 | 412,577 | 57,157 | 355,776 | 422,418 | 213,970 | 161,174 | ||||||||||||||||||||||||
Operating income (loss) | 51,071 | 51,022 | 50,003 | (1,391 | ) | 68,378 | 86,048 | 41,270 | 45,309 | |||||||||||||||||||||||
Interest expense, including amortization costs | (27,696 | ) | (20,329 | ) | (27,392 | ) | (3,275 | ) | (42,996 | ) | (61,678 | ) | (24,334 | ) | (35,263 | ) | ||||||||||||||||
Other income (loss)(1) | (39,549 | ) | (621 | ) | — | 284 | 7,129 | (9,008 | ) | (1,340 | ) | (1,420 | ) | |||||||||||||||||||
Income (loss) from continuing operations before income taxes | (16,174 | ) | 30,072 | 22,611 | (4,382 | ) | 32,511 | 15,362 | 15,596 | 8,626 | ||||||||||||||||||||||
Provision for (benefit from) income taxes | (1,680 | ) | (1,112 | ) | (4,809 | ) | 935 | (1,747 | ) | 1,599 | 10,525 | 2,350 | ||||||||||||||||||||
Income (loss) from continuing operations | (14,494 | ) | 31,184 | 27,420 | (5,317 | ) | 34,258 | 13,763 | 5,071 | 6,276 | ||||||||||||||||||||||
Discontinued operations | (11,445 | ) | (362 | ) | 9,223 | — | (756 | ) | 2,764 | (297 | ) | 12,951 | ||||||||||||||||||||
Net income (loss) | $ | (25,939 | ) | $ | 30,822 | $ | 36,643 | $ | (5,317 | ) | $ | 33,502 | $ | 16,527 | $ | 4,774 | $ | 19,227 | ||||||||||||||
Income (loss) from continuing operations per share of common stock: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.41 | ) | $ | 0.83 | $ | 0.71 | $ | (0.14 | ) | $ | 0.80 | $ | 0.32 | $ | 0.12 | $ | 0.15 | ||||||||||||||
Diluted | $ | (0.41 | ) | $ | 0.81 | $ | 0.70 | $ | (0.14 | ) | $ | 0.80 | $ | 0.32 | $ | 0.12 | $ | 0.15 |
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Predecessor | Successor | |||||||||||||||||||||||
As of | ||||||||||||||||||||||||
As of December 31, | As of December 31, | June 30, | ||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 24,331 | $ | 14,310 | $ | 12,771 | $ | 15,387 | $ | 26,951 | $ | 23,930 | ||||||||||||
Total assets | 1,016,143 | 1,147,376 | 1,125,732 | 1,483,239 | 1,475,394 | 1,469,083 | ||||||||||||||||||
Long-term obligations, including current maturities | 363,350 | 433,873 | 400,638 | 636,941 | 629,580 | 713,884 | ||||||||||||||||||
Stockholders’ equity | 380,926 | 431,278 | 472,249 | 512,749 | 471,520 | 483,034 |
Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 to | Year Ended | Six Months Ended | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | December 31, | December 31, | June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
(In thousands, except for freight carloads) | ||||||||||||||||||||||||||||||||
OTHER DATA: | ||||||||||||||||||||||||||||||||
Freight carloads (continuing operations) | 1,173,243 | 1,248,102 | 1,238,182 | 141,006 | 1,021,657 | 1,056,710 | 556,689 | 414,303 | ||||||||||||||||||||||||
Freight revenue | $ | 330,381 | $ | 378,100 | $ | 406,366 | $ | 48,289 | $ | 371,089 | $ | 440,041 | $ | 225,136 | $ | 169,606 | ||||||||||||||||
Non-freight revenue | 36,515 | 42,887 | 56,214 | 7,477 | 53,065 | 68,425 | 30,104 | 36,877 | ||||||||||||||||||||||||
EBITDA(2) | 39,818 | 81,515 | 88,135 | 3,741 | 107,653 | 116,618 | 59,529 | 64,455 | ||||||||||||||||||||||||
Depreciation and amortization | 28,296 | 31,114 | 38,132 | 4,848 | 32,146 | 39,578 | 19,599 | 20,566 | ||||||||||||||||||||||||
Interest expense, including amortization costs | 27,696 | 20,329 | 27,392 | 3,275 | 42,996 | 61,678 | 24,334 | 35,263 | ||||||||||||||||||||||||
Capital expenditures | 75,800 | 75,907 | 70,425 | 5,545 | 65,400 | 61,282 | 29,625 | 25,766 | ||||||||||||||||||||||||
Net cash provided by (used in) Operating activities | 48,077 | 54,137 | 60,603 | (1,763 | ) | 67,931 | 83,572 | 38,754 | (43,358 | ) | ||||||||||||||||||||||
Investing activities | 110,669 | (138,980 | ) | (34,996 | ) | (5,448 | ) | (1,150,087 | ) | (45,651 | ) | (28,935 | ) | (6,501 | ) | |||||||||||||||||
Financing activities | (148,375 | ) | 74,502 | (27,081 | ) | 2,458 | 1,088,941 | (24,799 | ) | (655 | ) | 46,897 |
(1) | Other income (loss) for the year ended December 31, 2004 primarily relates to financing costs incurred to amend the senior credit facility and to repurchase our senior subordinated notes. Other income (loss) for the remaining periods primarily relates to non-cash foreign exchange gains or losses associated with U.S. dollar term borrowings by one of our Canadian subsidiaries. Other income (loss) for the six months ended June 30, 2009 primarily relates to write-off of deferred financing costs in conjunction with the repayment of our term borrowings. | |
(2) | EBITDA is defined as net income (loss) before interest expense, provision for (benefit from) income taxes and depreciation and amortization. We believe EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. generally accepted accounting principle (“GAAP”) measures and eliminates items that have less bearing on our operating performance. | |
EBITDA provides us with a key measure of operating performance as it assists us in comparing our performance on a consistent basis by removing the impact of changes in (i) our asset base (depreciation and amortization) from the Acquisition due to astep-up in value and from capital expenditures and (ii) our capital structure (interest expense, including amortization costs). | ||
Adjusted EBITDA (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”) represents EBITDA before impairment of assets, equity compensation costs, gain (loss) on foreign currency exchange and non-recurring headquarter relocation costs. Adjusted EBITDA assists us in monitoring our ability to undertake key investing and financing functions such as making investments, transferring property, paying dividends, and incurring additional indebtedness, which |
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are generally prohibited by the covenants under our senior secured notes unless we met certain financial ratios and tests. | ||
EBITDA provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. Among other things, it provides an indicator for management to determine if adjustments to current spending decisions are needed. | ||
An investor or potential investor should find this metric important in evaluating our performance, results of operations or financial position. | ||
The following table shows the reconciliation of our EBITDA from net income (loss): |
Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 to | Year Ended | Six Months | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | December 31, | December 31, | Ended June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Net Income (Loss) to EBITDA Reconciliation: | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | (25,939 | ) | $ | 30,822 | $ | 36,643 | $ | (5,317 | ) | $ | 33,502 | $ | 16,527 | $ | 4,774 | $ | 19,227 | ||||||||||||||
Add: Discontinued operations (gain) loss | 11,445 | 362 | (9,223 | ) | — | 756 | (2,764 | ) | 297 | (12,951 | ) | |||||||||||||||||||||
Income (loss) from continuing operations | (14,494 | ) | 31,184 | 27,420 | (5,317 | ) | 34,258 | 13,763 | 5,071 | 6,276 | ||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
Provision for (benefit from) income taxes | (1,680 | ) | (1,112 | ) | (4,809 | ) | 935 | (1,747 | ) | 1,599 | 10,525 | 2,350 | ||||||||||||||||||||
Interest expense, including amortization costs | 27,696 | 20,329 | 27,392 | 3,275 | 42,996 | 61,678 | 24,334 | 35,263 | ||||||||||||||||||||||||
Depreciation and amortization | 28,296 | 31,114 | 38,132 | 4,848 | 32,146 | 39,578 | 19,599 | 20,566 | ||||||||||||||||||||||||
EBITDA | $ | 39,818 | $ | 81,515 | $ | 88,135 | $ | 3,741 | $ | 107,653 | $ | 116,618 | $ | 59,529 | $ | 64,455 | ||||||||||||||||
EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with GAAP. We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. However, EBITDA has limitations as an analytical tool. It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to revenue, net income (loss) or any other performance measure derived in accordance with GAAP. |
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• | certificates for old notes or a book-entry confirmation of a book-entry transfer of old notes into the Exchange Agent’s account at DTC, New York, New York as depository, including an Agent’s Message (as defined herein) if the tendering holder does not deliver a letter of transmittal; | |
• | a completed and signed letter of transmittal (or facsimile thereof), with any required signature guarantees, or an Agent’s Message in lieu of the letter of transmittal; and | |
• | any other documents required by the letter of transmittal. |
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• | holders who are not “affiliates” of the Company within the meaning of Rule 405 of the Securities Act; | |
• | holders who acquire their notes in the ordinary course of business; and | |
• | holders who do not engage in, intend to engage in, or have arrangements to participate in a distribution (within the meaning of the Securities Act) of the notes do not have to comply with the registration and prospectus delivery requirements of the Securities Act. |
• | increasing our vulnerability to adverse economic, industry or competitive developments; | |
• | requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; | |
• | restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; | |
• | limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and | |
• | limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate, placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting. |
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• | incur additional indebtedness; | |
• | pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; | |
• | make certain investments; | |
• | sell, transfer or convey certain assets; | |
• | create liens; | |
• | designate our subsidiaries as unrestricted subsidiaries; | |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and | |
• | enter into certain transactions with our affiliates. |
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• | to enable the sale, transfer or other disposal of such Notes Collateral in a transaction not prohibited under the Indenture, including the sale of any entity in its entirety that owns or holds such Notes Collateral; and | |
• | with respect to Notes Collateral held by a guarantor, upon the release of such guarantor from its guarantee. |
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• | we or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the notes or the incurrence of the guarantees; | |
• | the issuance of the notes or the incurrence of the guarantees left us or any of the guarantors, as applicable, with an unreasonably small amount of capital to carry on the business; or | |
• | we or any of the guarantors intended to, or believed that we or such guarantor would, incur debts beyond our or such guarantor’s ability to pay such debts as they mature. |
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• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets; or | |
• | the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | it could not pay its debts as they become due. |
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• | adverse changes in the economy of Canada; | |
• | exchange rate fluctuations; and | |
• | economic uncertainties including, among others, risk of renegotiation or modification of existing agreements or arrangements with governmental authorities, exportation and transportation tariffs, foreign exchange restrictions and changes in taxation structure. |
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• | loss of key employees or customers; | |
• | possible inconsistencies in or conflicts between standards, controls, procedures and policies among the combined companies and the need to implement company-wide financial, accounting, information technology and other systems; | |
• | failure to maintain the quality of services that have historically been provided; | |
• | integrating employees of rail lines acquired from other entities into our regional railroad culture; | |
• | failure to coordinate geographically diverse organizations; and | |
• | the diversion of management’s attention from ourday-to-day business as a result of the need to manage any disruptions and difficulties and the need to add management resources to do so. |
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Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 to | Year Ended | Six Months | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | December 31, | December 31, | Ended June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
Ratio of earnings to fixed charges | (1 | ) | 1.96 | 1.57 | (1 | ) | 1.61 | 1.21 | 1.53 | 1.21 |
(1) | Earnings for the year ended December 31, 2004 and for the period from January 1, 2007 to February 14, 2007 were inadequate to cover fixed charges. The coverage deficiencies were $16.2 million and $4.4 million, respectively. |
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Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 to | Year Ended | Six Months | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | December 31, | December 31, | Ended June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||||||
STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||||||||||||||
Operating revenue | $ | 366,896 | $ | 420,987 | $ | 462,580 | $ | 55,766 | $ | 424,154 | $ | 508,466 | $ | 255,240 | $ | 206,483 | ||||||||||||||||
Operating expenses | 315,825 | 369,965 | 412,577 | 57,157 | 355,776 | 422,418 | 213,970 | 161,174 | ||||||||||||||||||||||||
Operating income (loss) | 51,071 | 51,022 | 50,003 | (1,391 | ) | 68,378 | 86,048 | 41,270 | 45,309 | |||||||||||||||||||||||
Interest expense, including amortization costs | (27,696 | ) | (20,329 | ) | (27,392 | ) | (3,275 | ) | (42,996 | ) | (61,678 | ) | (24,334 | ) | (35,263 | ) | ||||||||||||||||
Other income (loss) | (39,549 | ) | (621 | ) | — | 284 | 7,129 | (9,008 | ) | (1,340 | ) | (1,420 | ) | |||||||||||||||||||
Income (loss) from continuing operations before income taxes | (16,174 | ) | 30,072 | 22,611 | (4,382 | ) | 32,511 | 15,362 | 15,596 | 8,626 | ||||||||||||||||||||||
Provision for (benefit from) income taxes | (1,680 | ) | (1,112 | ) | (4,809 | ) | 935 | (1,747 | ) | 1,599 | 10,525 | 2,350 | ||||||||||||||||||||
Income (loss) from continuing operations | (14,494 | ) | 31,184 | 27,420 | (5,317 | ) | 34,258 | 13,763 | 5,071 | 6,276 | ||||||||||||||||||||||
Discontinued operations | (11,445 | ) | (362 | ) | 9,223 | (756 | ) | 2,764 | (297 | ) | 12,951 | |||||||||||||||||||||
Net income (loss) | $ | (25,939 | ) | $ | 30,822 | $ | 36,643 | $ | (5,317 | ) | $ | 33,502 | $ | 16,527 | $ | 4,774 | $ | 19,227 | ||||||||||||||
Income (loss) from continuing operations per share of common stock: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.41 | ) | $ | 0.83 | $ | 0.71 | $ | (0.14 | ) | $ | 0.80 | $ | 0.32 | $ | 0.12 | $ | 0.15 | ||||||||||||||
Diluted | $ | (0.41 | ) | $ | 0.81 | $ | 0.70 | $ | (0.14 | ) | $ | 0.80 | $ | 0.32 | $ | 0.12 | $ | 0.15 |
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Predecessor | Successor | |||||||||||||||||||||||
As of | ||||||||||||||||||||||||
As of December 31, | As of December 31, | June 30, | ||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||||||
Total assets | $ | 1,016,143 | $ | 1,147,376 | $ | 1,125,732 | $ | 1,483,239 | $ | 1,475,394 | $ | 1,469,083 | ||||||||||||
Long-term debt, including current maturities | 363,350 | 433,873 | 400,638 | 636,941 | 629,580 | 713,884 | ||||||||||||||||||
Stockholders’ equity | 380,926 | 431,278 | 472,249 | 512,749 | 471,520 | 483,034 |
Predecessor | Successor | |||||||||||||||||||||||||||||||
Period from | Period from | |||||||||||||||||||||||||||||||
January 1, | February 15, | |||||||||||||||||||||||||||||||
2007 to | 2007 to | Year Ended | Six Months Ended | |||||||||||||||||||||||||||||
Year Ended December 31, | February 14, | December 31, | December 31, | June 30, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2007 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
OPERATING DATA: | ||||||||||||||||||||||||||||||||
Freight carloads (continuing operations) | 1,173,243 | 1,248,102 | 1,238,182 | 141,006 | 1,021,657 | 1,056,710 | 556,689 | 414,303 |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 | |||||||||||||||||||||||
Average Freight | Average Freight | |||||||||||||||||||||||
Freight | Revenue per | Freight | Revenue per | |||||||||||||||||||||
Revenue | Carloads | Carload | Revenue | Carloads | Carload | |||||||||||||||||||
(Dollars in thousands, except carloads and average freight revenue per carload) | ||||||||||||||||||||||||
Agricultural Products | $ | 24,546 | 57,079 | $ | 430 | $ | 28,960 | 71,988 | $ | 402 | ||||||||||||||
Chemicals | 23,023 | 40,031 | 575 | 31,539 | 56,909 | 554 | ||||||||||||||||||
Coal | 18,958 | 89,535 | 212 | 19,713 | 92,420 | 213 | ||||||||||||||||||
Non-Metallic Minerals and Products | 16,058 | 38,789 | 414 | 19,966 | 49,812 | 401 | ||||||||||||||||||
Pulp, Paper and Allied Products | 15,943 | 30,910 | 516 | 20,197 | 40,158 | 503 | ||||||||||||||||||
Forest Products | 13,811 | 23,926 | 577 | 19,988 | 38,037 | 525 | ||||||||||||||||||
Food or Kindred Products | 13,158 | 26,154 | 503 | 12,441 | 26,751 | 465 | ||||||||||||||||||
Other | 11,570 | 34,221 | 338 | 14,816 | 51,024 | 290 | ||||||||||||||||||
Metallic Ores and Metals | 10,805 | 19,537 | 553 | 29,113 | 52,907 | 550 | ||||||||||||||||||
Petroleum | 9,740 | 21,351 | 456 | 10,126 | 22,831 | 444 | ||||||||||||||||||
Waste and Scrap Materials | 9,323 | 25,412 | 367 | 15,054 | 41,672 | 361 | ||||||||||||||||||
Motor Vehicles | 2,671 | 7,358 | 363 | 3,223 | 12,180 | 265 | ||||||||||||||||||
Total | $ | 169,606 | 414,303 | $ | 409 | $ | 225,136 | 556,689 | $ | 404 | ||||||||||||||
• | Agricultural products revenue decreased $4.4 million or 15% primarily due to customers in Kansas holding grain shipments in anticipation of more favorable grain prices; | |
• | Chemicals revenue decreased $8.5 million or 27% primarily due to a customer in South Carolina who filed for bankruptcy in 2008 and a decline in chemical shipments in Michigan as a result of the economic downturn; | |
• | Coal revenue decreased $0.8 million or 4% primarily due to reduced shipments in Canada and the weakening of the Canadian dollar; | |
• | Non-metallic minerals and products revenue decreased $3.9 million or 20% primarily due to a decrease in limestone moves in Alabama and Texas as a result of the downturn in the construction industry; | |
• | Pulp, paper and allied products revenue decreased $4.3 million or 21% due to decreased carloads in Alabama and Canada due to a weak demand for paper products and the weakening of the Canadian dollar; | |
• | Forest products revenue decreased $6.2 million or 31% primarily due to volume declines in the Pacific Northwest stemming from the continued downturn in the housing and construction markets; | |
• | Food or kindred products revenue increased $0.7 million or 6% primarily due to negotiated rate increases and increased shipments of tomato products and beer in California, partially offset by a delayed tomato harvest in California; | |
• | Other revenue decreased $3.2 million or 22% due to wind turbine component moves in Illinois in 2008 that did not recur until the second quarter of 2009, a decrease in bridge traffic (where we provide a pass through connection between one Class I railroad and another railroad without freight originating or terminating on the line) in Canada from the restructuring of a Class I contract during the six months ended June 30, 2009, which resulted in the freight revenue shifting to non-freight revenue and the weakening of the Canadian dollar; | |
• | Metallic ores and metals revenue decreased $18.3 million or 63% primarily due to the temporary closure of a customer facility and a production curtailment at a customer plant, both located in Texas and a decline in carloads resulting from weak steel and pig iron markets which affected customers in all geographic regions of the country; |
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• | Petroleum revenue decreased $0.4 million or 4% primarily due to a decrease in liquefied petroleum gas, or LPG, cars in California as a result of a decline in demand from business and residential customers, partially offset by an increase in moves of LPG cars to storage for a customer in Arizona; | |
• | Waste and scrap materials revenue decreased $5.7 million or 38% primarily due to a decline in construction debris moves in the Pacific Northwest and a loss of traffic to a competitor in mid 2008; and | |
• | Motor vehicles revenue decreased $0.6 million or 17% primarily due to reduced auto shipments in the Midwest, partially offset by an increase in the negotiated rate per carload. |
Six Months Ended June 30, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Operating revenue | $ | 206,483 | 100.0 | % | $ | 255,240 | 100.0 | % | ||||||||
Operating expenses: | ||||||||||||||||
Labor and benefits | 65,461 | 31.7 | % | 73,606 | 28.8 | % | ||||||||||
Equipment rents | 18,427 | 8.9 | % | 23,588 | 9.2 | % | ||||||||||
Purchased services | 15,883 | 7.7 | % | 18,163 | 7.1 | % | ||||||||||
Diesel fuel | 14,912 | 7.2 | % | 39,582 | 15.5 | % | ||||||||||
Casualties and insurance | 9,372 | 4.6 | % | 9,837 | 3.9 | % | ||||||||||
Materials | 5,161 | 2.5 | % | 4,956 | 1.9 | % | ||||||||||
Joint facilities | 2,325 | 1.1 | % | 6,672 | 2.6 | % | ||||||||||
Other expenses | 8,053 | 3.9 | % | 18,065 | 7.1 | % | ||||||||||
Net loss (gain) on sale of assets | 1,014 | 0.5 | % | (98 | ) | 0.0 | % | |||||||||
Depreciation and amortization | 20,566 | 10.0 | % | 19,599 | 7.7 | % | ||||||||||
Total operating expenses | 161,174 | 78.1 | % | 213,970 | 83.8 | % | ||||||||||
Operating income | $ | 45,309 | 21.9 | % | $ | 41,270 | 16.2 | % | ||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Selling, | Total | Selling, | Total | |||||||||||||||||||||
General and | Operating | General and | Operating | |||||||||||||||||||||
Transportation | Administrative | Expenses | Transportation | Administrative | Expenses | |||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Labor and benefits | $ | 37,657 | $ | 27,804 | $ | 65,461 | $ | 45,472 | $ | 28,134 | $ | 73,606 | ||||||||||||
Equipment rents | 18,215 | 212 | 18,427 | 23,354 | 234 | 23,588 | ||||||||||||||||||
Purchased services | 10,010 | 5,873 | 15,883 | 11,607 | 6,556 | 18,163 | ||||||||||||||||||
Diesel fuel | 14,907 | 5 | 14,912 | 39,582 | — | 39,582 | ||||||||||||||||||
Casualties and insurance | 6,707 | 2,665 | 9,372 | 5,693 | 4,144 | 9,837 | ||||||||||||||||||
Materials | 4,702 | 459 | 5,161 | 4,401 | 555 | 4,956 | ||||||||||||||||||
Joint facilities | 2,325 | — | 2,325 | 6,672 | — | 6,672 | ||||||||||||||||||
Other expenses | (3,073 | ) | 11,126 | 8,053 | 7,583 | 10,482 | 18,065 | |||||||||||||||||
Net loss (gain) on sale of assets | — | — | 1,014 | — | — | (98 | ) | |||||||||||||||||
Depreciation and amortization | — | — | 20,566 | — | — | 19,599 | ||||||||||||||||||
Total operating expenses | $ | 91,450 | $ | 48,144 | $ | 161,174 | $ | 144,364 | $ | 50,105 | $ | 213,970 | ||||||||||||
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• | Labor and benefits expense decreased $8.1 million, or 11% primarily due to a reduction in labor force as a result of the decline in carload volumes and additional cost savings initiatives implemented by management. Other benefits expense decreased as the six months ended June 30, 2008, included accrued termination benefits related to the restructuring and relocation of corporate headquarters. Health insurance costs continued to decrease in 2009 as a result of a change to our health insurance provider in early 2008 and an increase in employee contributions; | |
• | Equipment rents expense decreased $5.2 million, or 22% primarily due to a reduction in car hire expense as a result of the decline in carload volume; | |
• | Purchased services expense decreased $2.3 million, or 13% primarily due to cost reduction initiatives implemented by management during 2009; | |
• | Diesel fuel expense decreased $24.7 million, or 62% primarily due to lower average fuel costs of $1.72 per gallon in 2009 compared to $3.40 per gallon in 2008, resulting in a $13.8 million decrease in fuel expense and a favorable consumption variance of $10.7 million; | |
• | Casualties and insurance expense decreased $0.5 million, or 5% primarily due to a decrease in FRA reportable train accidents to 13 in the six months ended June 30, 2009 from 26 in the six months ended June 30, 2008; | |
• | Materials expense increased $0.2 million, or 4% primarily due to an increase in car repair material purchases, partially offset by a decrease in locomotive materials as a result of fewer repairs; | |
• | Joint facilities expense decreased $4.3 million, or 65% primarily due to the decline in carload volume; | |
• | Other expenses decreased $10.0 million, or 55% primarily due to a reduction in expense as a result of the execution of the Track Maintenance Agreement in 2009 as mentioned previously. For the six months ended June 30, 2009, the Shipper paid for $8.4 million of maintenance expenditures; | |
• | Asset sales resulted in net losses (gains) of $1.0 million and $(0.1) million in the six months ended June 30, 2009 and 2008, respectively. The gain on sale of $0.1 million in the six months of 2008 is primarily due to easement sales along our corridor of track. During the six months ended June 30, 2009, we sold a portion of track owned by the Central Railroad of Indianapolis at a price set by the STB of $0.4 million, which resulted in a loss on disposition of $1.5 million. We also sold a portion of track owned by the Central Oregon and Pacific Railroad, known as the Coos Bay Line, to the Port of Coos Bay for $16.6 million. The carrying value of this line approximated the sale price; and | |
• | Depreciation and amortization expense increased as a percentage of operating revenue to 10.0% in the six months ended June 30, 2009, from 7.7% in the six months ended June 30, 2008 due to the capitalization and depreciation of 2008 and 2009 capital projects and the overall decrease in operating revenue. |
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2008 | 2007 | |||||||||||||||
Successor | Successor | Predecessor | Combined | |||||||||||||
February 15, | January 1, | (Non-GAAP) | ||||||||||||||
Year Ended | 2007 through | 2007 through | Year Ended | |||||||||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2007 | |||||||||||||
(In thousands) | ||||||||||||||||
Operating revenue | $ | 508,466 | $ | 424,154 | $ | 55,766 | $ | 479,920 | ||||||||
Operating expenses: | ||||||||||||||||
Transportation | 278,241 | 236,156 | 43,949 | 280,105 | ||||||||||||
Selling, general and administrative | 102,876 | 87,474 | 8,387 | 95,861 | ||||||||||||
Net gain on sale of assets | (1,697 | ) | — | (27 | ) | (27 | ) | |||||||||
Impairment of assets | 3,420 | — | — | — | ||||||||||||
Depreciation and amortization | 39,578 | 32,146 | 4,848 | 36,994 | ||||||||||||
Total operating expenses | 422,418 | 355,776 | 57,157 | 412,933 | ||||||||||||
Operating income (loss) | 86,048 | 68,378 | (1,391 | ) | 66,987 | |||||||||||
Interest expense, including amortization costs | (61,678 | ) | (42,996 | ) | (3,275 | ) | (46,271 | ) | ||||||||
Other income (loss) | (9,008 | ) | 7,129 | 284 | 7,413 | |||||||||||
Income (loss) from continuing operations before income taxes | 15,362 | 32,511 | (4,382 | ) | 28,129 | |||||||||||
Provision for (benefit from) income taxes | 1,599 | (1,747 | ) | 935 | (812 | ) | ||||||||||
Income (loss) from continuing operations | 13,763 | 34,258 | (5,317 | ) | 28,941 | |||||||||||
Discontinued operations: | ||||||||||||||||
Gain (loss) on disposal of discontinued business | 2,764 | (756 | ) | — | (756 | ) | ||||||||||
Net income (loss) | $ | 16,527 | $ | 33,502 | $ | (5,317 | ) | $ | 28,185 | |||||||
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Combined Year Ended | ||||||||||||||||||||||||
Year Ended December 31, 2008 | December 31, 2007 (Non-GAAP) | |||||||||||||||||||||||
Average Freight | Average Freight | |||||||||||||||||||||||
Freight | Revenue per | Freight | Revenue per | |||||||||||||||||||||
Revenue | Carloads | Carload | Revenue | Carloads | Carload | |||||||||||||||||||
(Dollars in thousands, except carloads and average freight revenue per carload) | ||||||||||||||||||||||||
Agricultural Products | $ | 61,193 | 143,730 | $ | 426 | $ | 54,633 | 147,363 | $ | 371 | ||||||||||||||
Chemicals | 60,082 | 104,791 | 573 | 56,692 | 113,234 | 501 | ||||||||||||||||||
Metallic Ores and Metals | 52,378 | 93,419 | 561 | 43,419 | 87,658 | 495 | ||||||||||||||||||
Pulp, Paper and Allied Products | 41,861 | 78,279 | 535 | 37,371 | 78,531 | 476 | ||||||||||||||||||
Forest Products | 40,269 | 71,419 | 564 | 50,361 | 95,784 | 526 | ||||||||||||||||||
Non-Metallic Minerals and Products | 38,553 | 93,690 | 411 | 39,095 | 109,465 | 357 | ||||||||||||||||||
Coal | 37,364 | 177,847 | 210 | 36,653 | 189,471 | 193 | ||||||||||||||||||
Other | 28,492 | 97,088 | 293 | 27,590 | 139,469 | 198 | ||||||||||||||||||
Waste and Scrap Materials | 28,392 | 77,495 | 366 | 28,637 | 84,766 | 338 | ||||||||||||||||||
Food or Kindred Products | 26,287 | 54,676 | 481 | 20,326 | 47,562 | 427 | ||||||||||||||||||
Petroleum | 19,733 | 44,946 | 439 | 17,912 | 44,033 | 407 | ||||||||||||||||||
Motor Vehicles | 5,437 | 19,330 | 281 | 6,689 | 25,327 | 264 | ||||||||||||||||||
Total | $ | 440,041 | 1,056,710 | $ | 416 | $ | 419,378 | 1,162,663 | $ | 361 | ||||||||||||||
• | Agricultural products revenue increased $6.6 million or 12% primarily due to negotiated rate increases, higher fuel surcharges, new business to move soybeans in North Carolina, and an increase in carrot shipments in California, partially offset by customers in Kansas, Illinois and Michigan holding grain shipments in anticipation of more favorable grain prices; | |
• | Chemicals revenue increased $3.4 million or 6% primarily due to negotiated rate increases, higher fuel surcharges and additional haulage for existing customers in Ohio and Illinois. Carloads were down 7% primarily due to reduced shipments with a customer in South Carolina who filed for bankruptcy in early 2008 and special hauls in Alabama in 2007; | |
• | Metallic ores and metals revenue increased $9.0 million or 21% primarily due to negotiated rate increases, higher fuel surcharges, plate, and rebar shipments in Alabama and North Carolina, special pipe moves in Texas and Oklahoma and additional copper anode moves for an existing customer in New England, partially offset by a temporary closure of a customer facility in Texas; | |
• | Pulp, paper and allied products revenue increased $4.5 million or 12% primarily due to increased carloads in Alabama to support a production change at a customer plant, negotiated rate increases and higher fuel surcharges, partially offset by a decline in carloads in New England due to weak market conditions; | |
• | Forest products revenue decreased $10.1 million or 20% primarily due to volume declines in the Pacific Northwest stemming from the continued downturn in the housing and construction markets; |
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• | Non-metallic minerals and products revenue decreased $0.5 million or 1% primarily due to a decrease in cement and limestone moves in the Southwest and Alabama as a result of a downturn in the construction industry; | |
• | Coal revenue increased $0.7 million or 2% primarily due to negotiated rate increases and increased business with existing power customers in the Midwest and Canada, partially offset by a 6% decrease in carloads from reduced shipments in Indiana as a result of coal shortages, power customers changing suppliers and weather related track wash-outs; | |
• | Other revenue increased $0.9 million or 3% primarily due to new business in Illinois to move wind turbine components, partially offset by a decrease in bridge traffic in Canada and a loss of intermodal traffic to a competitor in 2008. Carloads decreased 30% as a result of lower bridge traffic in Canada on one of our railroads where payment is primarily based on the number of trains rather than individual carloads. The total number of trains decreased 12% for the year ended December 31, 2008 compared to the year ended December 31, 2007; | |
• | Waste and scrap materials revenue decreased $0.2 million or 1% primarily due to a weakening demand for scrap iron in Ohio and a decrease in waste moves in South Carolina; | |
• | Food or kindred products revenue increased $6.0 million or 29% primarily due to negotiated rate increases, higher fuel surcharges and increased shipments of tomato products and beer in California, and soybean meal in Washington; | |
• | Petroleum revenue increased $1.8 million or 10% primarily due increased demand for LPG in Arizona and California and negotiated rate increases; and | |
• | Motor vehicles revenue decreased $1.3 million or 19% primarily due to a customer plant closing in Canada and reduced auto shipments in the Midwest. |
2008 | 2007 | |||||||||||||||||||||||
Successor | Successor | Predecessor | Combined | |||||||||||||||||||||
February 15, | January 1, | (Non-GAAP) | ||||||||||||||||||||||
2007 through | 2007 through | Year Ended | ||||||||||||||||||||||
Year Ended December 31, | December 31, | February 14, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2007 | 2007 | |||||||||||||||||||||
Operating revenue | $ | 508,466 | 100.0 | % | $ | 424,154 | $ | 55,766 | $ | 479,920 | 100.0 | % | ||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Labor and benefits | 148,789 | 29.3 | % | 121,879 | 22,605 | 144,484 | 30.1 | % | ||||||||||||||||
Equipment rents | 45,020 | 8.9 | % | 48,057 | 6,538 | 54,595 | 11.4 | % | ||||||||||||||||
Purchased services | 38,792 | 7.6 | % | 30,050 | 3,743 | 33,793 | 7.0 | % | ||||||||||||||||
Diesel fuel | 69,974 | 13.8 | % | 50,487 | 6,900 | 57,387 | 12.0 | % | ||||||||||||||||
Casualties and insurance | 22,041 | 4.3 | % | 24,057 | 5,347 | 29,404 | 6.1 | % | ||||||||||||||||
Materials | 10,663 | 2.1 | % | 9,068 | 1,286 | 10,354 | 2.1 | % | ||||||||||||||||
Joint facilities | 12,573 | 2.5 | % | 10,804 | 1,267 | 12,071 | 2.5 | % | ||||||||||||||||
Other expenses | 33,265 | 6.6 | % | 29,228 | 4,650 | 33,878 | 7.1 | % | ||||||||||||||||
Net loss (gain) on sale and impairment of assets | 1,723 | 0.3 | % | — | (27 | ) | (27 | ) | 0.0 | % | ||||||||||||||
Depreciation and amortization | 39,578 | 7.8 | % | 32,146 | 4,848 | 36,994 | 7.7 | % | ||||||||||||||||
Total operating expenses | 422,418 | 83.1 | % | 355,776 | 57,157 | 412,933 | 86.0 | % | ||||||||||||||||
Operating income (loss) | $ | 86,048 | 16.9 | % | $ | 68,378 | $ | (1,391 | ) | $ | 66,987 | 14.0 | % | |||||||||||
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Combined Period Ended December 31, 2007 | ||||||||||||||||||||||||
Year Ended December 31, 2008 | (Non-GAAP) | |||||||||||||||||||||||
Selling, | Total | Selling, | Total | |||||||||||||||||||||
General and | Operating | General and | Operating | |||||||||||||||||||||
Transportation | Administrative | Expenses | Transportation | Administrative | Expenses | |||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Labor and benefits | $ | 89,430 | $ | 59,359 | $ | 148,789 | $ | 91,169 | $ | 53,315 | $ | 144,484 | ||||||||||||
Equipment rents | 44,562 | 458 | 45,020 | 54,144 | 451 | 54,595 | ||||||||||||||||||
Purchased services | 22,913 | 15,879 | 38,792 | 22,187 | 11,606 | 33,793 | ||||||||||||||||||
Diesel fuel | 69,935 | 39 | 69,974 | 57,383 | 4 | 57,387 | ||||||||||||||||||
Casualties and insurance | 14,312 | 7,729 | 22,041 | 21,575 | 7,829 | 29,404 | ||||||||||||||||||
Materials | 9,494 | 1,169 | 10,663 | 9,299 | 1,055 | 10,354 | ||||||||||||||||||
Joint facilities | 12,573 | — | 12,573 | 12,071 | — | 12,071 | ||||||||||||||||||
Other expenses | 15,022 | 18,243 | 33,265 | 12,277 | 21,601 | 33,878 | ||||||||||||||||||
Net gain on sale of assets | — | — | 1,723 | — | — | (27 | ) | |||||||||||||||||
Depreciation and amortization | — | — | 39,578 | — | — | 36,994 | ||||||||||||||||||
Total operating expenses | $ | 278,241 | $ | 102,876 | $ | 422,418 | $ | 280,105 | $ | 95,861 | $ | 412,933 | ||||||||||||
• | Labor and benefits expense increased $4.3 million, or 3% primarily due to increased other benefits expense in 2008 from accrued and paid termination benefits related to the restructuring and relocation of corporate headquarters from Boca Raton, Florida to Jacksonville, Florida, partially offset by lower health insurance costs in 2008 as a result of a change to our health insurance provider and increases in employee contributions and higher restricted stock amortization in 2007 from the accelerated vesting of restricted shares triggered by a change in control clause as a result of the Fortress acquisition; | |
• | Equipment rents expense decreased $9.6 million, or 18% primarily as a result of purchasing locomotives that were previously leased under operating agreements. Locomotive lease expense declined $5.1 million in the year ended December 31, 2008 compared to the year ended December 31, 2007; | |
• | Purchased services expense increased $5.0 million, or 15% primarily due to consulting fees incurred in connection with the restructuring and relocation mentioned above; | |
• | Diesel fuel expense increased $12.6 million, or 22% primarily due to higher average fuel costs of $3.23 per gallon in 2008 compared to $2.33 per gallon in 2007, resulting in a $19.0 million increase in fuel expense in the year ended December 31, 2008, partially offset by a favorable consumption variance of $6.4 million; | |
• | Casualties and insurance expense decreased $7.4 million, or 25% primarily due to an accrual of $3.0 million recorded in 2007 related to the Indiana & Ohio Railway, or IORY, Styrene incident and a decrease in FRA personal injuries to 26 in the year ended December 31, 2008 from 40 in the year ended December 31, 2007. |
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Our FRA personal injury frequency ratio, which is measured as the number of reportable injuries per 200,000 person hours worked, was 1.64 at December 31, 2008, compared to 2.37 at December 31, 2007; |
• | Materials expense remained relatively flat with a slight increase of $0.3 million, or 3%; | |
• | Joint facilities expense increased $0.5 million, or 4% primarily due to an increase in reciprocal switch and usage charges; | |
• | Other expenses remained relatively flat at $33.3 million in the year ended December 31, 2008 and $33.9 million in the year ended December 31, 2007; | |
• | Asset sales and impairment resulted in a net loss of $1.7 million compared to a net gain of $0.03 million in the year ended December 31, 2008 and 2007, respectively. The year ended December 31, 2008 includes impairment charges of $3.4 million related to the former corporate headquarters building located in Boca Raton, Florida and to disposed surplus locomotives; and | |
• | Depreciation and amortization expense increased as a percentage of operating revenue to 7.8% in the year ended December 31, 2008, from 7.7% in the year ended December 31, 2007 due to the capitalization and depreciation of 2008 capital projects. |
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2007 | 2006 | |||||||||||||||
Successor | Predecessor | Combined | Predecessor | |||||||||||||
February 15, | January 1, | (Non-GAAP) | ||||||||||||||
2007 through | 2007 through | Year Ended | Year Ended | |||||||||||||
December 31, | February 14, | December 31, | December 31, | |||||||||||||
2007 | 2007 | 2007 | 2006 | |||||||||||||
(In thousands) | ||||||||||||||||
Operating revenue | $ | 424,154 | $ | 55,766 | $ | 479,920 | $ | 462,580 | ||||||||
Operating expenses: | ||||||||||||||||
Transportation | 236,156 | 43,949 | 280,105 | 278,314 | ||||||||||||
Selling, general and administrative | 87,474 | 8,387 | 95,861 | 99,515 | ||||||||||||
Net gain on sale of assets | — | (27 | ) | (27 | ) | (3,384 | ) | |||||||||
Depreciation and amortization | 32,146 | 4,848 | 36,994 | 38,132 | ||||||||||||
Total operating expenses | 355,776 | 57,157 | 412,933 | 412,577 | ||||||||||||
Operating income (loss) | 68,378 | (1,391 | ) | 66,987 | 50,003 | |||||||||||
Interest expense, including amortization costs | (42,996 | ) | (3,275 | ) | (46,271 | ) | (27,392 | ) | ||||||||
Other income | 7,129 | 284 | 7,413 | — | ||||||||||||
Income (loss) from continuing operations before income taxes | 32,511 | (4,382 | ) | 28,129 | 22,611 | |||||||||||
Provision for (benefit from) income taxes | (1,747 | ) | 935 | (812 | ) | (4,809 | ) | |||||||||
Income (loss) from continuing operations | 34,258 | (5,317 | ) | 28,941 | 27,420 | |||||||||||
Discontinued operations: | ||||||||||||||||
Gain (loss) on disposal of discontinued business | (756 | ) | — | (756 | ) | 9,060 | ||||||||||
Income from operations of discontinued business | — | — | — | 163 | ||||||||||||
Net income (loss) | $ | 33,502 | $ | (5,317 | ) | $ | 28,185 | $ | 36,643 | |||||||
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Combined | ||||||||||||||||||||||||
Year Ended December 31, 2007 | ||||||||||||||||||||||||
(Non-GAAP) | Year Ended December 31, 2006 | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Freight | Revenue | Freight | Revenue | |||||||||||||||||||||
Revenue | Carloads | per Carload | Revenue | Carloads | per Carload | |||||||||||||||||||
(Dollars in thousands, except carload and average revenue per carload) | ||||||||||||||||||||||||
Chemicals | $ | 56,692 | 113,234 | $ | 501 | $ | 49,894 | 109,004 | $ | 458 | ||||||||||||||
Agricultural Products | 54,633 | 147,363 | 371 | 51,751 | 153,169 | 338 | ||||||||||||||||||
Forest Products | 50,361 | 95,784 | 526 | 58,380 | 117,963 | 495 | ||||||||||||||||||
Metallic Ores and Metals | 43,419 | 87,658 | 495 | 35,261 | 73,936 | 477 | ||||||||||||||||||
Non-Metallic Minerals and Products | 39,095 | 109,465 | 357 | 41,015 | 119,691 | 343 | ||||||||||||||||||
Pulp, Paper and Allied Products | 37,371 | 78,531 | 476 | 31,405 | 77,645 | 404 | ||||||||||||||||||
Coal | 36,653 | 189,471 | 193 | 39,818 | 209,126 | 190 | ||||||||||||||||||
Waste and Scrap Materials | 28,637 | 84,766 | 338 | 25,626 | 80,420 | 319 | ||||||||||||||||||
Other | 27,590 | 139,469 | 198 | 30,442 | 184,920 | 165 | ||||||||||||||||||
Food or Kindred Products | 20,326 | 47,562 | 427 | 19,315 | 47,146 | 410 | ||||||||||||||||||
Petroleum | 17,912 | 44,033 | 407 | 16,974 | 41,855 | 406 | ||||||||||||||||||
Motor Vehicles | 6,689 | 25,327 | 264 | 6,485 | 23,307 | 278 | ||||||||||||||||||
Total | $ | 419,378 | 1,162,663 | $ | 361 | $ | 406,366 | 1,238,182 | $ | 328 | ||||||||||||||
• | Chemicals revenue increased $6.8 million or 14% primarily due to negotiated rate increases and volume growth with existing customers; | |
• | Agricultural products revenue increased $2.9 million or 6% primarily due to negotiated rate increases, offset by a decline in carloads due to strong local crops eliminating the need for haulage via rail; | |
• | Forest products revenue decreased $8.0 million or 14% primarily due to volume declines in the Pacific Northwest stemming from the continued downturn in the housing and construction markets; | |
• | Metallic ores and metals revenue increased $8.2 million or 23% primarily due to negotiated rate increases, favorable market conditions which resulted in increased shipments with existing customers and a new customer in the Southeast; | |
• | Non-metallic minerals and products revenue decreased $1.9 million or 5% primarily due to reduced volumes as core consumers changed sourcing options and made raw material substitutions and decreases in housing construction in the Midwest; |
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• | Pulp, paper and allied products revenue increased $6.0 million or 19% primarily due to negotiated price increases as a result of working closely with our Class I partners to take significant and targeted price actions; | |
• | Coal revenue decreased $3.2 million or 8% primarily due to the loss of some short-haul business to aggressive truck pricing; | |
• | Waste and scrap materials revenue increased $3.0 million or 12% primarily due to a demand for scrap iron and steel as a result of declining imports at competitive pricing; | |
• | Other revenue decreased $2.9 million or 9% primarily due to a decrease in bridge traffic in Canada. Carloads decreased 25% as a result of lower bridge traffic in Canada on one of our railroads where payment is primarily based on the number of trains rather than individual carloads; | |
• | Food or kindred products revenue increased $1.0 million or 5% primarily due to a change in traffic mix; | |
• | Petroleum revenue increased $0.9 million or 6% primarily due to negotiated rate increases; and | |
• | Motor vehicles revenue increased $0.2 million or 3% primarily due to new business with an existing customer. |
2007 | 2006 | |||||||||||||||||||||||
Predecessor | Successor | Combined | Predecessor | |||||||||||||||||||||
January 1, | February 15, | (Non-GAAP) | ||||||||||||||||||||||
2007 through | 2007 through | Year Ended | Year Ended | |||||||||||||||||||||
February 14, | December 31, | December 31, | December 31, | |||||||||||||||||||||
2007 | 2007 | 2007 | 2006 | |||||||||||||||||||||
Operating revenue | $ | 55,766 | $ | 424,154 | $ | 479,920 | 100.0 | % | $ | 462,580 | 100.0 | % | ||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Labor and benefits | 22,605 | 121,879 | 144,484 | 30.1 | % | 144,256 | 31.2 | % | ||||||||||||||||
Equipment rents | 6,538 | 48,057 | 54,595 | 11.4 | % | 55,356 | 12.0 | % | ||||||||||||||||
Purchased services | 3,743 | 30,050 | 33,793 | 7.0 | % | 37,701 | 8.2 | % | ||||||||||||||||
Diesel fuel | 6,900 | 50,487 | 57,387 | 12.0 | % | 57,456 | 12.4 | % | ||||||||||||||||
Casualties and insurance | 5,347 | 24,057 | 29,404 | 6.1 | % | 21,475 | 4.7 | % | ||||||||||||||||
Materials | 1,286 | 9,068 | 10,354 | 2.1 | % | 10,824 | 2.3 | % | ||||||||||||||||
Joint facilities | 1,267 | 10,804 | 12,071 | 2.5 | % | 13,068 | 2.8 | % | ||||||||||||||||
Other expenses | 4,650 | 29,228 | 33,878 | 7.1 | % | 37,693 | 8.1 | % | ||||||||||||||||
Net gain on sale of assets | (27 | ) | — | (27 | ) | 0.0 | % | (3,384 | ) | (0.7 | )% | |||||||||||||
Depreciation and amortization | 4,848 | 32,146 | 36,994 | 7.7 | % | 38,132 | 8.2 | % | ||||||||||||||||
Total operating expenses | 57,157 | 355,776 | 412,933 | 86.0 | % | 412,577 | 89.2 | % | ||||||||||||||||
Operating income (loss) | $ | (1,391 | ) | $ | 68,378 | $ | 66,987 | 14.0 | % | $ | 50,003 | 10.8 | % | |||||||||||
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Combined Period Ended December 31, 2007 | ||||||||||||||||||||||||
(Non-GAAP) | Year Ended December 31, 2006 | |||||||||||||||||||||||
Selling, | Total | Selling, | Total | |||||||||||||||||||||
General and | Operating | General and | Operating | |||||||||||||||||||||
Transportation | Administrative | Expenses | Transportation | Administrative | Expenses | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Labor and benefits | $ | 91,169 | $ | 53,315 | $ | 144,484 | $ | 93,025 | $ | 51,231 | $ | 144,256 | ||||||||||||
Equipment rents | 54,144 | 451 | 54,595 | 54,936 | 420 | 55,356 | ||||||||||||||||||
Purchased services | 22,187 | 11,606 | 33,793 | 22,366 | 15,335 | 37,701 | ||||||||||||||||||
Diesel fuel | 57,383 | 4 | 57,387 | 57,429 | 27 | 57,456 | ||||||||||||||||||
Casualties and insurance | 21,575 | 7,829 | 29,404 | 13,792 | 7,683 | 21,475 | ||||||||||||||||||
Materials | 9,299 | 1,055 | 10,354 | 9,660 | 1,164 | 10,824 | ||||||||||||||||||
Joint facilities | 12,071 | — | 12,071 | 13,068 | — | 13,068 | ||||||||||||||||||
Other expenses | 12,277 | 21,601 | 33,878 | 14,038 | 23,655 | 37,693 | ||||||||||||||||||
Net gain on sale of assets | — | — | (27 | ) | — | — | (3,384 | ) | ||||||||||||||||
Depreciation and amortization | — | — | 36,994 | — | — | 38,132 | ||||||||||||||||||
Total operating expenses | $ | 280,105 | $ | 95,861 | $ | 412,933 | $ | 278,314 | $ | 99,515 | $ | 412,577 | ||||||||||||
• | Labor and benefits expense increased $0.2 million, or less than 1% primarily due to higher restricted stock amortization in 2007 as compared to 2006 from the accelerated vesting of restricted shares triggered by a change in control clause as a result of the Fortress acquisition, partially offset by decreased salaries and wages in 2007 compared to 2006 from the severance of former senior executives upon the change in control; | |
• | Equipment rents expense decreased $0.8 million, or 1% primarily as a result of purchasing locomotives that were previously leased under operating agreements. Locomotive lease expense declined $1.0 million in the year ended December 31, 2007 compared to the year ended December 31, 2006; | |
• | Purchased services expense decreased $3.9 million, or 10% primarily due to consulting fees incurred in connection with our Process Improvement Project and reorganization in 2006; | |
• | Diesel fuel expense remained relatively flat at $57.4 million in the year ended December 31, 2007 and $57.5 million in the year ended December 31, 2006 primarily due to higher average fuel costs of $2.33 per gallon in 2007 compared to $2.20 per gallon in 2006, resulting in a $2.9 million increase in fuel expense in the year ended December 31, 2007, partially offset by a favorable consumption variance of $3.1 million; | |
• | Casualties and insurance expense increased $7.9 million, or 37% primarily due to an accrual of $3.0 million recorded in 2007 related to the IORY Styrene incident, an increase in our personal injury accruals of $2.3 million during 2007, and an increase in FRA personal injury frequency ratio to 2.37 at December 31, 2007, compared to 2.21 at December 31, 2006; | |
• | Materials expense decreased $0.4 million, or 3% primarily due to cost saving initiatives implemented by management which resulted in lower track material and tools and supplies costs; |
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• | Joint facilities expense decreased $1.0 million, or 8% primarily due to a decrease in usage fees and switch charges as a result of the decrease in carloads; | |
• | Other expenses decreased $3.8 million, or 10% primarily due to a reduction in rent, bad debt and travel and entertainment expenses in 2007; | |
• | Asset sales resulted in gains of $0.03 million compared to a net gain of $3.4 million in the year ended December 31, 2007 and 2006, respectively. The year ended December 31, 2006 included several land and easement sales along our railroad properties in the Pacific Northwest which resulted in asset sale gains; and | |
• | Depreciation and amortization expense decreased as a percentage of operating revenue to 7.7% in the year ended December 31, 2007, from 8.2% in the year ended December 31, 2006 as a result of a change in estimated asset lives in connection with the Fortress acquisition. |
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Successor | Predecessor | |||||||||||||||||||||||
February 15th, | January 1, | |||||||||||||||||||||||
Six Months Ended | Year Ended | 2007 through | 2007 through | Year Ended | ||||||||||||||||||||
June 30, | December 31, | December 31, | February 14th, | December 31, | ||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||||
Cash flows from operating activities to Adjusted EBITDA Reconciliation: | ||||||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (43,358 | ) | $ | 38,754 | $ | 83,572 | $ | 67,931 | $ | (1,763 | ) | $ | 60,603 | ||||||||||
Changes in working capital accounts | 27,738 | 1,468 | (11,524 | ) | (10,779 | ) | 5,965 | (3,717 | ) | |||||||||||||||
Depreciation and amortization, including amortization of debt issuance costs classified in interest expense | (28,150 | ) | (21,688 | ) | (49,118 | ) | (36,447 | ) | (4,917 | ) | (38,772 | ) | ||||||||||||
Amortization of swap termination costs | (972 | ) | — | — | — | — | — | |||||||||||||||||
Net gain (loss) on sale or disposal of properties | 12,258 | (353 | ) | 1,738 | (1,141 | ) | 27 | 19,058 | ||||||||||||||||
Foreign exchange gain (loss) on debt | 1,160 | (1,340 | ) | (8,260 | ) | 7,048 | — | — | ||||||||||||||||
Swap termination costs | 55,750 | — | — | — | — | — | ||||||||||||||||||
Write-off of deferred financing costs | (2,593 | ) | — | — | — | — | — | |||||||||||||||||
Equity compensation costs | (1,942 | ) | (1,695 | ) | (3,042 | ) | (1,178 | ) | (3,524 | ) | (2,604 | ) | ||||||||||||
Deferred income taxes | (664 | ) | (10,372 | ) | 3,161 | 8,068 | (1,105 | ) | 2,075 | |||||||||||||||
Net income | 19,227 | 4,774 | 16,527 | 33,502 | (5,317 | ) | 36,643 | |||||||||||||||||
Add: Discontinued operations (gain) loss | (12,951 | ) | 297 | (2,764 | ) | 756 | — | (9,223 | ) | |||||||||||||||
Income from continuing operations | 6,276 | 5,071 | 13,763 | 34,258 | (5,317 | ) | 27,420 | |||||||||||||||||
Add: | ||||||||||||||||||||||||
Provision for (benefit from) income taxes | 2,350 | 10,525 | 1,599 | (1,747 | ) | 935 | (4,809 | ) | ||||||||||||||||
Interest expense, including amortization costs | 35,263 | 24,334 | 61,678 | 42,996 | 3,275 | 27,392 | ||||||||||||||||||
Depreciation and amortization | 20,566 | 19,599 | 39,578 | 32,146 | 4,848 | 38,132 | ||||||||||||||||||
EBITDA | 64,455 | 59,529 | 116,618 | 107,653 | 3,741 | 88,135 | ||||||||||||||||||
Add: | ||||||||||||||||||||||||
Impairment of assets | — | — | 3,420 | — | — | — | ||||||||||||||||||
Equity compensation costs | 1,942 | 1,695 | 3,042 | 1,178 | 3,524 | 2,604 | ||||||||||||||||||
Foreign exchange (gain) loss on debt | (1,160 | ) | 1,340 | 8,260 | (7,048 | ) | — | — | ||||||||||||||||
Write-off of deferred financing costs | 2,593 | — | — | — | — | — | ||||||||||||||||||
Non-recurring headquarter relocation costs | 636 | 1,374 | 6,089 | — | — | — | ||||||||||||||||||
Adjusted EBITDA | $ | 68,466 | $ | 63,938 | $ | 137,429 | $ | 101,783 | $ | 7,265 | $ | 90,739 | ||||||||||||
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July 1, 2009 to | ||||||||||||||||||||
December 31, | After | |||||||||||||||||||
Total | 2009 | 2010-2011 | 2012-2013 | 2013 | ||||||||||||||||
Senior secured notes(1) | $ | 740,000 | $ | — | $ | — | $ | — | $ | 740,000 | ||||||||||
Other long term debt | 3,080 | 161 | 761 | 550 | 1,608 | |||||||||||||||
Interest payments on long term debt | 549,998 | 35,781 | 137,229 | 137,154 | 239,834 | |||||||||||||||
Capital lease obligations | 915 | 156 | 759 | — | — | |||||||||||||||
Operating lease obligations | 78,545 | 11,808 | 27,342 | 11,646 | 27,749 | |||||||||||||||
Total contractual cash obligations(2) | $ | 1,372,538 | $ | 47,906 | $ | 166,091 | $ | 149,350 | $ | 1,009,191 | ||||||||||
(1) | In June 2009, we repaid in full our $650 million bridge loan facilities with the amounts borrowed under the senior secured notes. | |
(2) | There were no material purchase obligations outstanding as of December 31, 2008. Table excludes any reserves for income taxes under FIN 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB 109,” because we are unable to reasonably predict the ultimate amount or timing of settlement of our unrecognized tax benefits beyond 2009. As of June 30, 2009, our reserves for income taxes totaled approximately $9.2 million. |
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• | certificates for such old notes must be received by the exchange agent along with the letter of transmittal; or | |
• | a timely confirmation of a book-entry transfer (a “book-entry confirmation”) of such old notes, if such procedure is available, into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfer must be received by the exchange agent, prior to the expiration date, with the letter of transmittal or an agent’s message in lieu of such letter of transmittal. |
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• | by a holder of the old notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal, or | |
• | for the account of an eligible institution (as defined below). |
• | cannot rely on the applicable interpretations of the staff of the SEC; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. |
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• | may not rely on the applicable interpretation of the staff of the SEC contained inExxon Capital Holdings Corp., SEC no-action letter (Apr. 13, 1988),Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) andShearman & Sterling, SEC no-action letter (July 2, 1993); and | |
• | must also be named as a selling security holder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. |
• | a timely book-entry confirmation of such old notes into the exchange agent’s account at DTC, | |
• | a properly completed and duly executed letter of transmittal or an agent’s message in lieu thereof, and | |
• | all other required documents. |
• | the name of the person having tendered the old notes to be withdrawn, |
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• | the old notes to be withdrawn (including the principal amount of such old notes). | |
• | where certificates for old notes have been transmitted, the name in which such old notes are registered, if different from that of the withdrawing holder. |
• | the exchange offer violates any applicable law or applicable interpretation of the staff of the SEC; or | |
• | there is threatened, instituted or pending any action or proceeding before, or any injunction, order or decree has been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission, |
• | seeking to restrain or prohibit the making or consummation of the exchange offer or any other transaction contemplated by the exchange offer, or assessing or seeking any damages as a result thereof, or | |
• | resulting in a material delay in our ability to accept for exchange or exchange some or all of the old notes pursuant to the exchange offer; | |
• | or any statute, rule, regulation, order or injunction has been sought, proposed, introduced, enacted, promulgated or deemed applicable to the exchange offer or any of the transactions contemplated by the exchange offer by any government or governmental authority, domestic or foreign, or any action has been taken, proposed or threatened, by any government, governmental authority, agency or court, domestic or foreign, that in our sole judgment might, directly or indirectly, result in any of the consequences referred to in clauses (1) or (2) above or, in our reasonable judgment, might result in the holders of new notes having obligations with respect to resales and transfers of new notes which are greater than those described in the interpretation of the SEC referred to on the cover page of this prospectus, or would otherwise make it inadvisable to proceed with the exchange offer; or |
• | there has occurred: |
• | any general suspension of or general limitation on prices for, or trading in, our securities on any national securities exchange or in theover-the-counter market, | |
• | any limitation by a governmental agency or authority which may adversely affect our ability to complete the transactions contemplated by the exchange offer, | |
• | a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit, or |
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• | a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the exchange offer, a material acceleration or worsening thereof; |
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• | you are our “affiliate,” as defined in Rule 405 under the Securities Act, | |
• | you are not acquiring the new notes in the exchange offer in the ordinary course of your business, | |
• | you have an arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the new notes you will receive in the exchange offer, | |
• | you are holding old notes that have, or are reasonably likely to have, the status of an unsold allotment in the initial offering, or | |
• | you are a participating broker-dealer. |
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Aggregate | ||||||||||||||
Miles | % of | |||||||||||||
Classification of Railroads | Number | Operated | Revenue | Revenues and Miles Operated in 2007 | ||||||||||
Class I(1) | 7 | 94,313 | 93 | % | Over $359.6 million | |||||||||
Regional | 33 | 16,930 | 3 | % | $40.0 to $359.6 million and/or 350 or more miles operated | |||||||||
Local/Short line | 523 | 28,891 | 4 | % | Less than $40.0 million and less than 350 miles operated | |||||||||
Total | 563 | 140,134 | 100 | % | ||||||||||
(1) | Includes CSX Transportation, BNSF Railway Co., Norfolk Southern, Kansas City Southern Railway Company, Union Pacific, Canadian National Railway and Canadian Pacific Railroad Co. |
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• | Capability to transport larger shipment sizes | |
• | Higher density; ratio of product handled in a railcar to a truck is higher | |
• | Longer distances | |
• | Reduced sensitivity to fast or reliable service | |
• | Less dependent on return haul requirements compared to trucking |
• | Lower marginal operating costs | |
• | Direct service to the customer, so that no transfer cost is incurred | |
• | Where transfer costs are incurred by both the short line and the competitive rail mode, greater efficiency at terminals. (Hazardous materials, for example, incur higher transfer costs because of the risks involved.) | |
• | Shorter distances to a transfer point | |
• | Better railcar supply | |
• | Less circuitry between origin and destination |
• | Capability for rail to transport larger shipments, with higher density as water vessels are limited by water depth and size of shipment | |
• | Railroads have a more direct route between origination and destination compared to vessels | |
• | Rail benefits from lower loading and unloading costs |
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No. of | Track- | 2008 | 2008 | |||||||||||||||
Name | Railroads | Miles | Carloads | Revenue | Major Commodities Hauled | |||||||||||||
($ in millions) | ||||||||||||||||||
Central Region: | ||||||||||||||||||
Missouri & Northern Railroad | 1 | 594 | 110,914 | $ | 30.0 | Farm Products, Coal | ||||||||||||
Dallas Garland & Northeastern Railroad | 2 | 337 | 59,649 | 24.2 | Metallic & Non-Metallic Ores | |||||||||||||
Kyle Railroad Company | 1 | 625 | 20,001 | 22.4 | Farm Products | |||||||||||||
Kiamichi Railroad | 1 | 261 | 52,927 | 19.4 | Coal | |||||||||||||
Point Comfort & Northern Railway | 1 | 19 | 12,402 | 12.3 | Metallic & Non-Metallic Ores | |||||||||||||
Otter Tail Valley Railroad | 1 | 81 | 10,996 | 4.7 | Farm Products, Coal | |||||||||||||
Rockdale, Sandow & Southern Railroad | 1 | 8 | 6,103 | 4.0 | Metallic & Non-Metallic Ores | |||||||||||||
Bauxite & Northern Railway | 1 | 6 | 4,059 | 3.4 | Metallic & Non-Metallic Ores | |||||||||||||
Total — Central Region | 9 | 1,930 | 277,051 | $ | 120.4 | |||||||||||||
Northeast Region: | ||||||||||||||||||
New England Central Railroad | 1 | 394 | 37,018 | $ | 27.3 | Lumber & Forest Products | ||||||||||||
Ottawa Valley Railway | 1 | 342 | 69,758 | 20.0 | Overhead Traffic | |||||||||||||
Cape Breton Central Nova Scotia Railway | 1 | 245 | 22,739 | 17.9 | Paper & Paper Products | |||||||||||||
Goderich-Exeter Railway | 1 | 181 | 24,724 | 16.1 | Chemicals | |||||||||||||
Southern Ontario Railway | 1 | 69 | 44,368 | 14.5 | Metal & Metal Products | |||||||||||||
Connecticut Southern Railroad | 1 | 42 | 23,663 | 10.4 | Waste | |||||||||||||
Massena Terminal Railroad | 1 | 4 | 4,295 | 2.5 | Metallic & Non-Metallic Ores | |||||||||||||
Total — Northeast Region | 7 | 1,278 | 226,565 | $ | 108.7 |
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No. of | Track- | 2008 | 2008 | |||||||||||||||
Name | Railroads | Miles | Carloads | Revenue | Major Commodities Hauled | |||||||||||||
($ millions) | ||||||||||||||||||
Midwest Region: | ||||||||||||||||||
Indiana & Ohio Railway | 1 | 570 | 62,353 | $ | 31.1 | Auto & Auto Parts, Chemicals | ||||||||||||
Chicago, Ft. Wayne & Eastern Railroad | 1 | 315 | 39,352 | 24.1 | Farm Products | |||||||||||||
Huron Eastern Railway Saginaw Valley | 1 | 384 | 34,646 | 17.4 | Chemicals | |||||||||||||
Toledo, Peoria & Western Railway | 1 | 247 | 26,546 | 15.7 | Intermodal, Farm Products | |||||||||||||
Mid-Michigan Railroad | 3 | 196 | 12,729 | 6.6 | Farm Products | |||||||||||||
Central Railroad of Indiana | 1 | 96 | 8,579 | 4.6 | Metal & Metal Products | |||||||||||||
Central Railroad of Indianapolis | 1 | 39 | 8,250 | 2.8 | Farm Products | |||||||||||||
Total — Midwest Region | 9 | 1,848 | 192,455 | $ | 102.3 | |||||||||||||
Southeast Region: | ||||||||||||||||||
Alabama & Gulf Coast Railway | 1 | 348 | 61,234 | $ | 30.9 | Paper & Paper Products | ||||||||||||
Consolidated Virginia Railroads | 2 | 135 | 32,154 | 23.0 | Metal & Metal Products | |||||||||||||
South Carolina Central Railroad | 2 | 129 | 35,529 | 18.8 | Chemicals, Waste | |||||||||||||
Indiana Southern Railroad | 1 | 196 | 70,021 | 16.5 | Coal | |||||||||||||
Eastern Alabama Railway | 1 | 31 | 15,351 | 9.8 | Minerals & Stone | |||||||||||||
Total — Southeast Region | 7 | 839 | 214,289 | $ | 99.0 | |||||||||||||
Western Region: | ||||||||||||||||||
Central Oregon & Pacific Railroad | 1 | 389 | 27,719 | $ | 21.8 | Lumber & Forest Products | ||||||||||||
San Joaquin Valley Railroad | 1 | 417 | 39,064 | 18.3 | Food Products | |||||||||||||
California Northern Railroad | 1 | 261 | 26,137 | 14.0 | Food Products | |||||||||||||
Arizona & California Railroad | 1 | 259 | 12,799 | 8.3 | Petroleum Products, Lumber & | |||||||||||||
Forest Products, Metal & Metal Products | ||||||||||||||||||
Puget Sound & Pacific Railroad | 1 | 108 | 26,498 | 8.2 | Intermodal | |||||||||||||
San Diego Valley Railroad | 1 | — | 6,804 | 4.6 | Petroleum Products | |||||||||||||
Cascade & Columbia River Railroad | 1 | 148 | 5,252 | 2.7 | Metallic & Non-Metallic | |||||||||||||
Ores, Lumber & Forest Products | ||||||||||||||||||
Ventura County Railroad | 1 | 17 | 2,077 | 1.0 | Auto & Auto Parts | |||||||||||||
Total — Western Region | 8 | 1,600 | 146,350 | $ | 78.9 | |||||||||||||
Total Company | 40 | 7,494 | 1,056,710 | $ | 509.3 | (1) |
(1) | Includes approximately $0.8 million of intercompany revenue eliminated in consolidation. |
% of Freight | ||||
Service Type | Description | Revenue | ||
Interchange | Freight transport between a customer’s facility and a connection point (“interchange”) with a Class I railroad | 88% | ||
Local | Freight that both originates and terminates on the same line | 4% | ||
Bridge | Freight transport from one connecting Class I railroad to another | 8% |
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2008 | ||||||||||||
Number of | Freight Revenue | % of Total | ||||||||||
Top 10 Customers | Railroads Served | U.S. Dollars | Freight Revenue | |||||||||
(In millions) | ||||||||||||
Customer #1 (Steel Producer) | 3 | $ | 20.8 | 4.7 | % | |||||||
Customer #2 (Lumber & Wood Products) | 6 | 11.2 | 2.5 | % | ||||||||
Customer #3 (Metals Fabricator) | 5 | 10.8 | 2.5 | % | ||||||||
Customer #4 (Class I Railroad) | 6 | 8.3 | 1.9 | % | ||||||||
Customer #5 (Coal Producer) | 1 | 6.3 | 1.4 | % | ||||||||
Customer #6 (Lumber & Wood Products) | 1 | 6.1 | 1.4 | % | ||||||||
Customer #7 (Grain Processor) | 3 | 5.9 | 1.3 | % | ||||||||
Customer #8 (Electric Generating Plant) | 1 | 5.8 | 1.3 | % | ||||||||
Customer #9 (Electric Generating Plant) | 1 | 5.4 | 1.2 | % | ||||||||
Customer #10 (Paper Mill) | 1 | 5.4 | 1.2 | % | ||||||||
Total Top 10 Customers | 86.1 | 19.6 | % | |||||||||
Other | 353.9 | 80.4 | % | |||||||||
Total | $ | 440.0 | 100.0 | % | ||||||||
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December 31, | December 31, | |||||||
2007 | 2008 | |||||||
(In millions) | ||||||||
Demurrage | $ | 12.6 | $ | 13.2 | ||||
Storage | 7.0 | 9.9 | ||||||
Car hire income | 9.7 | 9.8 | ||||||
Lease income | 7.4 | 9.4 | ||||||
Railcar switching | 4.8 | 5.4 | ||||||
Car repair services | 2.2 | 2.8 | ||||||
Other non-freight revenue | 16.8 | 17.9 | ||||||
Total | $ | 60.5 | $ | 68.4 | ||||
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Railcars | Locomotives | |||||||||||||||||||||||||
Owned | Leased | Total | Owned | Leased | Total | |||||||||||||||||||||
Covered hopper cars | 35 | 2,479 | 2,514 | Horsepower/unit: | ||||||||||||||||||||||
Open top hopper cars | 238 | 33 | 271 | Over 2,000 | 109 | 94 | 203 | |||||||||||||||||||
Box cars | 35 | 2,522 | 2,557 | 1,500 to 2,000 | 116 | 101 | 217 | |||||||||||||||||||
Flat cars | 194 | 1,584 | 1,778 | Under 1,500 | 15 | 11 | 26 | |||||||||||||||||||
Tank cars | 6 | 4 | 10 | |||||||||||||||||||||||
Gondolas | 5 | 573 | 578 | |||||||||||||||||||||||
Other/passenger cars | 11 | 0 | 11 | |||||||||||||||||||||||
Total railcars | 524 | 7,195 | 7,719 | Total locomotives | 240 | 206 | 446 | |||||||||||||||||||
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Name | Age | Position | ||||
Wesley R. Edens | 47 | Chairman of the Board of Directors | ||||
Joseph P. Adams, Jr. | 52 | Deputy Chairman of the Board of Directors | ||||
Paul R. Goodwin | 66 | Director | ||||
Vincent T. Montgomery | 48 | Director | ||||
Robert Schmiege | 68 | Director | ||||
John Giles | 60 | President and Chief Executive Officer | ||||
Clyde Preslar | 55 | Senior Vice President and Chief Financial Officer | ||||
David Rohal | 47 | Senior Vice President Strategic Relations | ||||
Paul Lundberg | 58 | Senior Vice President and Chief Operations Officer | ||||
Charles M. Patterson | 54 | Senior Vice President and Chief Commercial Officer | ||||
Scott Williams | 55 | Senior Vice President and General Counsel | ||||
David Novak | 55 | Senior Vice President and Chief Administrative Officer |
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• | reviews the audit plans and findings of our independent registered public accounting firm and our internal audit and risk review staff, as well as the results of regulatory examinations, and tracks management’s corrective action plans where necessary; | |
• | reviews our financial statements, including any significant financial itemsand/or changes in accounting policies, with our senior management and independent registered public accounting firm; | |
• | reviews our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters; and | |
• | has the sole discretion to appoint annually our independent registered public accounting firm, evaluate its independence and performance and set clear hiring policies for employees or former employees of the independent registered public accounting firm. |
• | reviews the performance of our board of directors and makes recommendations to the board regarding the selection of candidates, qualification and competency requirements for service on the board and the suitability of proposed nominees as directors; | |
• | advises the board with respect to the corporate governance principles applicable to us; | |
• | oversees the evaluation of the board and management; |
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• | reviews and approves in advance any related party transaction, other than those that are pre-approved pursuant to pre-approval guidelines or rules established by the committee; and | |
• | established guidelines or rules to cover specific categories of transactions. |
• | reviews and recommends to the board the salaries, benefits and equity incentive grants for all employees, consultants, officers, directors and other individuals we compensate; | |
• | reviews and approves corporate goals and objectives relevant to Chief Executive Officer compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives, and determines the Chief Executive Officer’s compensation based on that evaluation; and | |
• | oversees our compensation and employee benefit plans. |
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• | Balance short-term and long-term goals by delivering a substantial portion of total executive officer compensation through restricted share grants; | |
• | Deliver a mix of fixed and at-risk compensation, including through the use of restricted share grants, the value of which is directly related to the performance of RailAmerica; and | |
• | Through dividend equivalents on restricted share grants, tie a substantial portion of the overall compensation of executive officers to the dividends we pay to our shareholders. |
• | John Giles, $300,000 | |
• | Clyde Preslar, $250,000 | |
• | Paul Lundberg, $236,000 | |
• | Charles Patterson, $236,000 | |
• | David Rohal, $200,000 | |
• | Scott Williams, $243,763 |
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Stock | All Other | |||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($)(6) | Awards ($)(7) | Compensation ($) | Total ($) | ||||||||||||||||||
John Giles | 2008 | 300,000 | 483,533 | 890,717 | — | 1,674,250 | ||||||||||||||||||
(President and Chief Executive Officer)(1) | 2007 | 258,333 | 450,000 | 500,000 | — | 1,208,333 | ||||||||||||||||||
Clyde Preslar | 2008 | 164,773 | 156,532 | 39,835 | 131,107 | (8) | 492,247 | |||||||||||||||||
(Senior Vice President and Chief Financial Officer)(2) | 2007 | — | — | — | — | — | ||||||||||||||||||
Paul Lundberg | 2008 | 200,000 | 250,000 | 71,984 | 34,551 | (9) | 556,535 | |||||||||||||||||
(Senior Vice President and Chief Operations Officer)(3) | 2007 | 168,518 | 187,500 | 30,000 | — | 386,018 | ||||||||||||||||||
Charles Patterson, | 2008 | 200,000 | 250,000 | 71,984 | 39,519 | (10) | 561,503 | |||||||||||||||||
(Senior Vice President and Chief Commercial Officer)(4) | 2007 | 166,666 | 187,500 | 30,000 | — | 384,166 | ||||||||||||||||||
David Rohal, | 2008 | 200,000 | 250,000 | 71,984 | 11,626 | (11) | 553,610 | |||||||||||||||||
(Senior Vice President, Strategic Relations)(5) | 2007 | 166,666 | 187,500 | 30,000 | — | 384,166 | ||||||||||||||||||
Scott Williams, | 2008 | 243,762 | 237,152 | 91,984 | 716,281 | (12) | 1,289,179 | |||||||||||||||||
(Senior Vice President, General | 2007 | 243,762 | 187,500 | 102,068 | — | 535,330 | ||||||||||||||||||
Counsel & Secretary) | 2006 | 236,663 | 94,097 | 31,458 | — | 362,218 |
(1) | Mr. Giles commenced employment with the Company on February 21, 2007. | |
(2) | Mr. Preslar commenced employment with the Company on May 5, 2008. | |
(3) | Mr. Lundberg commenced employment with the Company on February 27, 2007. | |
(4) | Mr. Patterson commenced employment with the Company on March 1, 2007. | |
(5) | Mr. Rohal commenced employment with the Company on March 1, 2007. | |
(6) | Represents annual cash bonuses paid to the executives in respect of services performed for the applicable year. | |
(7) | Represents the total cost recognized for financial accounting purposes in the Company’s financial statements pursuant to SFAS 123R. | |
(8) | All Other Compensation for Mr. Preslar consists of reimbursement of $115,094 for costs associated with Mr. Preslar’s relocation from Tampa, Florida to Jacksonville, Florida, (including $39,755 associated with a tax “gross up”) travel related expenses incurred traveling from executive’s personal residence and Company’s headquarters, Company contributions to our 401(k) plan, and life insurance premiums paid on behalf of the executive. | |
(9) | All Other Compensation for Mr. Lundberg consists of travel related expenses incurred traveling from executive’s personal residence and Company’s headquarters, Company contributions to our 401(k) plan, and life insurance premiums paid on behalf of the executive. | |
(10) | All Other Compensation for Mr. Patterson consists of travel related expenses incurred traveling from executive’s personal residence and Company’s headquarters, Company contributions to our 401(k) plan, and life insurance premiums paid on behalf of the executive. | |
(11) | All Other Compensation for Mr. Rohal consists of travel related expenses incurred traveling from executive’s personal residence and Company’s headquarters, Company contributions to our 401(k) plan, and life insurance premiums paid on behalf of the executive. | |
(12) | All Other Compensation for Mr. Williams consists of a retention bonus of $700,000 paid to Mr. Williams in 2008 (payable in cash and our common stock), in connection with the Company’s acquisition by Fortress and Mr. Williams’ waiver of rights under a change in control agreement, travel related expenses incurred traveling from executive’s personal residence and Company’s headquarters, Company contributions to our 401(k) plan, and life insurance premiums paid on behalf of the executive. |
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All Other | ||||||||||||
Stock Awards: | Grant Date Fair | |||||||||||
Number of Shares | Market Value of Stock | |||||||||||
of Stock or Units | Awards | |||||||||||
Name | Grant Date | (#)(1) | ($) | |||||||||
John Giles | 7/15/08 | 11,565 | (2) | 174,503 | ||||||||
Clyde Preslar | 5/05/08 | 39,600 | (3) | 597,520 | ||||||||
Paul Lundberg | 7/15/08 | 4,824 | (2) | 72,789 | ||||||||
Charles Patterson | 7/15/08 | 4,824 | (2) | 72,789 | ||||||||
David Rohal | 7/15/08 | 4,824 | (2) | 72,789 | ||||||||
Scott Williams | 7/15/08 | 4,824 | (2) | 72,789 | ||||||||
Scott Williams | 1/2/08 | 27,000 | (4) | 300,000 | ||||||||
Scott Williams | 1/2/08 | 36,000 | (3) | 400,000 |
(1) | The numbers in this column give effect to the90-for-1 stock split of our common stock, which occurred on September 22, 2009. | |
(2) | Represents Bonus Restricted Shares which were granted under the Omnibus Stock Incentive Plan as in effect prior to our initial public offering, vesting in equal installments on each of the first three anniversaries of the date of grant. | |
(3) | Represents restricted shares which were granted pursuant to Management Shareholder Agreements dated May 1, 2008 and January 2, 2008, respectively. These restricted shares vest on each of the first five anniversaries of the applicable grant date, as follows: 10%, 15%, 25%, 25% and 25%. | |
(4) | Represents common shares which were granted pursuant to a Management Shareholder Agreement dated January 2, 2008. As described in footnote 12 to the Summary Compensation Table, these shares constitute a portion of the retention bonus paid to Mr. Williams in 2008 in connection with the Company’s acquisition by Fortress. |
Stock Awards | ||||||||
Number of Shares or | Market Value of Shares or | |||||||
Units of Stock That | Units of Stock | |||||||
Have Not Vested | That Have Not Vested | |||||||
Name | (#)(1) | ($)(2) | ||||||
John Giles | 486,000 | (3) | 7,516,800 | |||||
11,565 | (4) | 178,872 | ||||||
Clyde Preslar | 39,600 | (5) | 612,480 | |||||
Paul Lundberg | 32,400 | (6) | 501,120 | |||||
4,824 | (4) | 74,611 | ||||||
Charles Patterson | 32,400 | (7) | 501,120 | |||||
4,824 | (4) | 74,611 | ||||||
David Rohal | 32,400 | (7) | 501,120 | |||||
4,824 | (4) | 74,611 | ||||||
Scott Williams | 32,400 | (8) | 501,120 | |||||
4,824 | (4) | 74,611 |
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(1) | The numbers in this column give effect to the90-for-1 stock split of our common stock, which occurred on September 22, 2009. | |
(2) | The amounts in this column reflect the market value based on the valuation of the Company’s common stock effective as of December 31, 2008. | |
(3) | Represents restricted shares which vest in annual installments as follows: 15% on February 20, 2009, 25% on February 20, 2010, 25% on February 20, 2011 and 25% on February 20, 2012. | |
(4) | Represents restricted shares which vest in equal annual installments on April 1, 2009, April 1, 2010 and April 1, 2011. | |
(5) | Represents restricted shares which vest in annual installments as follows: 10% on May 1, 2009, 15% on May 1, 2010, 25% on May 1, 2011, 25% on May 1, 2012 and 25% on May 1, 2013. | |
(6) | Represents restricted shares which vest in annual installments as follows: 15% on April 1, 2009, 25% on April 1, 2010, 25% on April 1, 2011 and 25% on April 1, 2012. | |
(7) | Represents restricted shares which vest in annual installments as follows: 15% on March 21, 2009, 25% on March 21, 2010, 25% on March 21, 2011 and 25% on March 21, 2012. | |
(8) | Represents restricted shares which vest in annual installments as follows: 15% on June 1, 2009, 25% on June 1, 2010, 25% on June 1, 2011 and 25% on June 1, 2012. |
Stock Vested | ||||||||
Number of Shares | ||||||||
Acquired | Value Realized | |||||||
on Vesting | on Vesting | |||||||
(#)(1) | ($)(2) | |||||||
John Giles | 54,000 | 656,400 | ||||||
Clyde Preslar | — | — | ||||||
Paul Lundberg | 3,600 | 46,680 | ||||||
Charles Patterson | 3,600 | 46,680 | ||||||
David Rohal | 3,600 | 46,680 | ||||||
Scott Williams | 3,600 | 54,320 |
(1) | The numbers in this column give effect to the90-for-1 stock split of our common stock, which occurred on September 22, 2009. | |
(2) | The amounts in this column reflect the market value of the Company’s common stock as of the latest quarterly valuation effective during the time period of the vesting. |
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Not for | ||||||||||||||||||||||||
Cause or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Termination | ||||||||||||||||||||||||
Not for Cause | Within | |||||||||||||||||||||||
or Good | 12 Months Following a | |||||||||||||||||||||||
Reason | Change in | |||||||||||||||||||||||
Termination | Control | Death | Disability | Retirement | Resignation | |||||||||||||||||||
Salary | $ | 600,000 | $ | 600,000 | — | — | — | — | ||||||||||||||||
Bonus | $ | 450,000 | $ | 450,000 | — | — | — | — | ||||||||||||||||
Accelerated Vesting of Restricted Stock | $ | 2,058,072 | $ | 7,695,672 | $ | 1,938,777 | $ | 1,938,777 | — | — | ||||||||||||||
Life Insurance Proceeds | — | — | $ | 250,000 | — | — | — | |||||||||||||||||
Disability Policy Benefits | — | — | — | — | — | — | ||||||||||||||||||
Total: | $ | 3,108,072 | $ | 8,745,672 | $ | 2,188,777 | $ | 1,938,777 | — | — |
Not for | ||||||||||||||||||||||||
Cause or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Termination | ||||||||||||||||||||||||
Not for Cause | Within | |||||||||||||||||||||||
or Good | 12 Months Following a | |||||||||||||||||||||||
Reason | Change in | |||||||||||||||||||||||
Termination | Control | Death | Disability | Retirement | Resignation | |||||||||||||||||||
Salary | $ | 500,000 | $ | 500,000 | — | — | — | — | ||||||||||||||||
Bonus(1) | $ | 156,532 | $ | 156,532 | — | — | — | — | ||||||||||||||||
Accelerated Vesting of Restricted Stock | $ | 153,120 | $ | 612,480 | $ | 153,120 | $ | 153,120 | — | — | ||||||||||||||
Life Insurance Proceeds | — | — | $ | 250,000 | — | — | — | |||||||||||||||||
Disability Policy Benefits | — | — | — | — | — | — | ||||||||||||||||||
Total: | $ | 809,652 | $ | 1,269,012 | $ | 403,120 | $ | 153,120 | — | — |
(1) | Amount represents the actual bonus paid to Mr. Preslar for 2008, the first year in which he was employed by the Company. |
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Not for | ||||||||||||||||||||||||
Cause or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Termination | ||||||||||||||||||||||||
Not for Cause | Within | |||||||||||||||||||||||
or Good | 12 Months Following a | |||||||||||||||||||||||
Reason | Change in | |||||||||||||||||||||||
Termination | Control | Death | Disability | Retirement | Resignation | |||||||||||||||||||
Salary | $ | 400,000 | $ | 400,000 | — | — | — | — | ||||||||||||||||
Bonus | $ | 187,500 | $ | 187,500 | — | — | — | — | ||||||||||||||||
Accelerated Vesting of Restricted Stock | $ | 199,891 | $ | 575,731 | $ | 150,058 | $ | 150,058 | — | — | ||||||||||||||
Life Insurance Proceeds | — | — | $ | 250,000 | — | — | — | |||||||||||||||||
Disability Policy Benefits | — | — | — | — | — | — | ||||||||||||||||||
Total: | $ | 787,391 | $ | 1,163,231 | $ | 400,058 | $ | 150,058 | — | — |
Not for | ||||||||||||||||||||||||
Cause or Good | ||||||||||||||||||||||||
Reason | ||||||||||||||||||||||||
Termination | ||||||||||||||||||||||||
Not for Cause | Within | |||||||||||||||||||||||
or Good | 12 Months Following a | |||||||||||||||||||||||
Reason | Change in | |||||||||||||||||||||||
Termination | Control | Death | Disability | Retirement | Resignation | |||||||||||||||||||
Salary | $ | 487,524 | $ | 487,524 | — | — | — | — | ||||||||||||||||
Bonus | $ | 187,500 | $ | 187,500 | — | — | — | — | ||||||||||||||||
Accelerated Vesting of Restricted Stock | $ | 199,891 | $ | 575,731 | $ | 150,058 | $ | 150,058 | — | — | ||||||||||||||
Life Insurance Proceeds | — | — | $ | 250,000 | — | — | — | |||||||||||||||||
Disability Policy Benefits | — | — | — | — | — | — | ||||||||||||||||||
Total: | $ | 874,915 | $ | 1,250,755 | $ | 400,058 | $ | 150,058 | — | — |
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Number of Shares | ||||||||
Beneficially Owned(1) | ||||||||
Number of | ||||||||
Name of Beneficial Owner(1) | Shares(3) | Percent(4) | ||||||
Executive Officers and Directors(2) | ||||||||
Wesley R. Edens(5) | 30,350,000 | (6) | 55.8 | % | ||||
Joseph P. Adams, Jr. | 0 | * | ||||||
Paul R. Goodwin | 20,000 | * | ||||||
Vincent T. Montgomery | 20,000 | * | ||||||
Robert Schmiege | 20,000 | * | ||||||
John Giles | 734,733 | 1.4 | % | |||||
Clyde Preslar | 60,003 | * | ||||||
David Rohal | 64,566 | * | ||||||
Paul Lundberg | 62,631 | * | ||||||
Charles Patterson | 64,566 | * | ||||||
Scott Williams | 82,899 | * | ||||||
All directors and executive officers as a group (12 persons) | 31,526,882 | 58.0 | % | |||||
5% stockholders | ||||||||
RR Acquisition Holding LLC(5) | 30,350,000 | 55.8 | % |
* | Less than 1% | |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days of the date hereof, are deemed outstanding for computing the percentage ownership of the person holding such options or warrants but are not deemed outstanding for computing the percentage of any other person. Except in cases where community property laws apply we believe that each stockholder possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. The beneficial owners listed in this table do not, individually or as a group, have the right to acquire beneficial ownership over any other shares of our common stock. | |
(2) | The address of each officer or director listed in this table is:c/o RailAmerica, Inc., 7411 Fullerton Street, Suite 300, Jacksonville, Florida 32256. | |
(3) | Consists of common stock held, including restricted shares, shares underlying stock options exercisable within 60 days and shares underlying warrants exercisable within 60 days. | |
(4) | Percentage amount assumes the exercise by such persons of all options and warrants exercisable within 60 days to acquire common stock and no exercise of options or warrants by any other person. | |
(5) | RR Acquisition Holding LLC is wholly-owned by Fortress Investment Fund IV (Fund A) L.P., Fortress Investment Fund IV (Fund B) L.P., Fortress Investment Fund IV (Fund C) L.P., Fortress Investment Fund IV (Fund D) L.P., Fortress Investment Fund IV (Fund E) L.P., Fortress Investment Fund IV (Fund F) L.P., Fortress Investment Fund IV (Fund G) L.P., Fortress Investment Fund IV (Coinvestment Fund A) L.P., Fortress Investment Fund IV (Coinvestment Fund B) L.P., Fortress Investment Fund IV (Coinvestment Fund C) L.P., Fortress Investment Fund IV (Coinvestment Fund D) L.P., Fortress Investment Fund IV (Coinvestment Fund F) L.P. and Fortress Investment Fund IV (Coinvestment Fund G) L.P. (collectively, the “Fund IV Funds”). FIG LLC is the investment manager of each of the Fund IV Funds. Fortress Operating Entity I LP |
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(“FOE I”) is the 100% owner of FIG LLC. FIG Corp. is the general partner of FOE I. FIG Corp. is a wholly-owned subsidiary of Fortress Investment Group LLC. As of June 30, 2009, Wesley R. Edens, the Chairman of our board of directors, owns approximately 16% of Fortress Investment Group LLC. By virtue of his ownership interest in Fortress Investment Group LLC and certain of its affiliates, Mr. Edens, may be deemed to beneficially own the shares listed as beneficially owned by RR Acquisition Holding LLC. Mr. Edens disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address of all entities listed above isc/o Fortress Investment Group LLC, 1345 Avenue of the Americas, 46th Floor, New York, New York 10105. RR Acquisition Holding LLC is not a broker-dealer or an affiliate of a broker-dealer. | ||
(6) | Includes all shares presented in this table that are held by the Initial Stockholder. |
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• | at least a majority of such directors shall be individuals designated by FIG LLC, for so long as the Fortress Stockholders beneficially own at least 40% of the voting power of the Company; | |
• | at least three directors (four if the board consists of more than seven directors) shall be individuals designated by FIG LLC, for so long as the Fortress Stockholders beneficially own less than 40% but at least 20% of the voting power of the Company; | |
• | at least two directors shall be individuals designated by FIG LLC, for so long as the Fortress Stockholders beneficially own less than 20% but at least 10% of the voting power of the Company; and | |
• | at least one director shall be an individual designated by FIG LLC, for so long as the Fortress Stockholders has beneficially own less than 10% but at least 5% of the voting power of the Company. |
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• | Prior to entering into a Related Party Transaction, the party wishing to enter into the proposed transaction must provide notice to our legal department of the facts and circumstances of the proposed transaction. | |
• | Our legal department will assess whether the proposed transaction is a Related Party Transaction. | |
• | If our legal department determines that the proposed transaction is a Related Party Transaction and unless such Related Party Transaction is required to be approved by our board of directors under our Indenture or any other agreement we may enter into from time to time, the proposed transaction will be submitted to our Nominating, Corporate Governance and Conflicts Committee for consideration at its next meeting or, in those instances in which our legal department, in consultation with our Chief Financial Officer, determines that it is not practicable or desirable to wait until the next meeting, to the Chair of the Nominating, Corporate Governance and Conflicts Committee. | |
• | The Nominating, Corporate Governance and Conflicts Committee, or where submitted to the chairperson of that committee, the chairperson, shall consider all of the relevant facts and circumstances available, including (if applicable): the benefits to us; the impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. Only those Related Party Transactions that are in, or are not inconsistent with, our best interests and those of our stockholders, may be approved. |
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• | general senior obligations of the Company; | |
• | pari passuin right of payment with any existing and future senior Indebtedness of the Company; | |
• | secured on a first-priority lien basis by the Notes Collateral, subject to certain liens permitted under the Indenture; | |
• | senior in right of payment to any Subordinated Indebtedness of the Company; | |
• | effectively senior to the Credit Agreement to the extent of the value of the Notes Collateral; | |
• | structurally subordinated to all liabilities and preferred stock of Subsidiaries of the Company that are not Guarantors; | |
• | effectively subordinated to the Company ’s obligations under the Credit Agreement to the extent of the value of the ABL Collateral; and | |
• | guaranteed on a senior secured basis by each Guarantor. |
• | a senior obligation of the Guarantor; | |
• | pari passuin right of payment with any existing and future senior Indebtedness of the Guarantor; |
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• | secured on a first-priority basis by the Notes Collateral owned by such Guarantor, subject to certain liens permitted under the Indenture; | |
• | senior in right of payment to any existing or future Subordinated Indebtedness of such Guarantor; | |
• | effectively senior to the guarantee of the Credit Agreement by such Guarantor to the extent of the value of the Notes Collateral owned by such Guarantor; | |
• | structurally subordinated to all liabilities and preferred stock of any Subsidiaries of such Guarantor that are not Guarantors; and | |
• | effectively subordinated to the guarantee of such Guarantor under the Credit Agreement to the extent of the value of the ABL Collateral owned by such Guarantor. |
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• | an Unrestricted Subsidiary will not be subject to many of the restrictive covenants in the Indenture; | |
• | a Subsidiary that has previously been a Guarantor and that is designated an Unrestricted Subsidiary will be released from its Guarantee; and | |
• | the assets, income, cash flow and other financial results of an Unrestricted Subsidiary will not be consolidated with those of the Company for purposes of calculating compliance with the restrictive covenants contained in the Indenture. |
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• | all of the other Equity Interests held by the Company, any Guarantor or any Foreign Subsidiary described in clause (ii) of the definition thereof (which, in the case of any equity interest in any Foreign Subsidiary, will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such Foreign Subsidiary); | |
• | certain owned real properties owned by the Company and the Guarantors and certain leasehold, subleasehold or other interests in real properties, together with all fixtures, easements, rights of way, trackage rights, hereditaments and appurtenances relating thereto and all other improvements, accessions, alterations, replacements and repairs thereto and all leases, rents and other income, issues or profits derived therefrom or relating thereto and fixtures and other improvements located thereon. In addition, the Company will not be obtaining any title searches, title insurance or surveys with respect to any of such properties, nor will mortgages be given if third party consents are required; | |
• | equipment and inventory; | |
• | patents, trademarks and copyrights; | |
• | general intangibles, instruments, books and records and supporting obligations related to the foregoing and proceeds of the foregoing; and | |
• | substantially all of the other tangible personal property and intangible assets of the Company and the Guarantors, other than the ABL Collateral. |
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• | all accounts receivable; | |
• | all deposit accounts and securities accounts (and all assets and amounts contained therein but excluding identifiable proceeds of the Notes Collateral unless such proceeds have been applied to the obligations under the ABL Credit Agreement prior to the earlier of (i) delivery to the ABL Agent of a written notice by the Notes Collateral Agent of an Event of Default under the Indenture, and (ii) commencement of any insolvency or liquidation proceeding with respect to the Company or any Guarantor); and | |
• | all general intangibles, instruments, chattel paper, books and records and supporting obligations related to the foregoing and proceeds of the foregoing, in each case held by the Company and the Guarantors. |
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• | to enable the disposition of such property or assets to the extent not prohibited under the covenant described under “Repurchase at the Option of Holders — Asset sales”; | |
• | in the case of a Guarantor that is released from its Guarantee, the release of the property and assets of such Guarantor; or | |
• | as described under “— Amendment, Supplement and Waiver” below. |
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• | selling or otherwise disposing of, in any transaction or series of related transactions, any property subject to the Lien of the Security Documents that has become worn out, defective, obsolete or not used or useful in the business; | |
• | abandoning, terminating, canceling, releasing or making alterations in or substitutions of any leases or contracts subject to the Lien of the Indenture or any of the Security Documents; | |
• | surrendering or modifying any franchise, license or permit subject to the Lien of the Security Documents that it may own or under which it may be operating; | |
• | altering, repairing, replacing, changing the location or position of and adding to its structures, machinery, systems, equipment, fixtures and appurtenances; | |
• | granting a license of any intellectual property; | |
• | selling, transferring or otherwise disposing of inventory in the ordinary course of business; and | |
• | abandoning any intellectual property that is no longer used or useful in the Company’s business. |
Year | Percentage | |||
2013 | 104.625 | % | ||
2014 | 102.313 | % | ||
2015 and thereafter | 100.000 | % |
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• | results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods); or | |
• | relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and |
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• | upon deposit of the global notes, DTC will credit the accounts of Participants with an interest in the global notes; and | |
• | ownership of such interests in the global notes will be shown on, and the transfer of ownership thereof, will be effected only through, records maintained by DTC (with respect to Participants) or by Participants and the Indirect Participants (with respect to other owners of beneficial interests in the global notes). |
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• | any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interests in the global notes, or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the global notes; or | |
• | any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. |
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• | DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the global notes or (b) has ceased to be a clearing agency registered under the Exchange Act and in either case, the Company thereupon fails to appoint a successor depositary; | |
• | the Company, at its option, notifies the trustee in writing that it elects to cause the issuance of the notes in certificated form; or | |
• | there shall have occurred and be continuing to occur a default or an event of default with respect to the notes. |
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• | may not rely on the applicable interpretation of the staff of the SEC’s position contained inExxon Capital Holdings Corp., SEC no-action letter (Apr. 13, 1988),Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) andShearman & Sterling, SEC no-action letter (July 2, 1983); and | |
• | must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. |
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Successor Company | ||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands, except share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 26,951 | $ | 15,387 | ||||
Accounts and notes receivable, net of allowance of $3,338 and $2,384, respectively | 76,384 | 89,965 | ||||||
Other current assets | 18,480 | 11,968 | ||||||
Current deferred tax assets | 5,854 | 9,537 | ||||||
Total current assets | 127,669 | 126,857 | ||||||
Property, plant and equipment, net | 953,604 | 970,505 | ||||||
Intangible assets | 172,859 | 190,149 | ||||||
Goodwill | 204,701 | 189,502 | ||||||
Other assets | 16,561 | 6,226 | ||||||
Total assets | $ | 1,475,394 | $ | 1,483,239 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 899 | $ | 627,434 | ||||
Accounts payable | 56,058 | 60,312 | ||||||
Accrued expenses | 51,349 | 43,555 | ||||||
Total current liabilities | 108,306 | 731,301 | ||||||
Long-term debt, less current maturities | 628,681 | 9,507 | ||||||
Deferred income taxes | 149,695 | 167,676 | ||||||
Other liabilities | 117,192 | 62,006 | ||||||
Total liabilities | 1,003,874 | 970,490 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value, 46,800,000 shares authorized; 43,531,272 shares issued and outstanding at December 31, 2008; and 43,198,650 shares issued and outstanding at December 31, 2007 | 435 | 432 | ||||||
Additional paid in capital and other | 470,578 | 468,762 | ||||||
Retained earnings | 50,029 | 33,502 | ||||||
Accumulated other comprehensive income (loss) | (49,522 | ) | 10,053 | |||||
Total stockholders’ equity | 471,520 | 512,749 | ||||||
Total liabilities and stockholders’ equity | $ | 1,475,394 | $ | 1,483,239 | ||||
F-4
Table of Contents
Successor Company | Predecessor Company | |||||||||||||||
For the Year | February 15, | January 1, | For the Year | |||||||||||||
Ended | 2007 through | 2007 through | Ended | |||||||||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Operating revenue | $ | 508,466 | $ | 424,154 | $ | 55,766 | $ | 462,580 | ||||||||
Operating expenses: | ||||||||||||||||
Transportation | 278,241 | 236,156 | 43,949 | 278,314 | ||||||||||||
Selling, general and administrative | 102,876 | 87,474 | 8,387 | 99,515 | ||||||||||||
Net gain on sale of assets | (1,697 | ) | — | (27 | ) | (3,384 | ) | |||||||||
Impairment of assets | 3,420 | — | — | — | ||||||||||||
Depreciation and amortization | 39,578 | 32,146 | 4,848 | 38,132 | ||||||||||||
Total operating expenses | 422,418 | 355,776 | 57,157 | 412,577 | ||||||||||||
Operating income (loss) | 86,048 | 68,378 | (1,391 | ) | 50,003 | |||||||||||
Interest expense, including amortization costs of $10,083, $2,880, $68 and $560, respectively | (61,678 | ) | (42,996 | ) | (3,275 | ) | (27,392 | ) | ||||||||
Other income (loss) | (9,008 | ) | 7,129 | 284 | — | |||||||||||
Income (loss) from continuing operations before income taxes | 15,362 | 32,511 | (4,382 | ) | 22,611 | |||||||||||
Provision for (benefit from) income taxes | 1,599 | (1,747 | ) | 935 | (4,809 | ) | ||||||||||
Income (loss) from continuing operations | 13,763 | 34,258 | (5,317 | ) | 27,420 | |||||||||||
Discontinued operations: | ||||||||||||||||
Gain (loss) on disposal of discontinued business (net of income taxes (benefit) of $697, $(385), $0 and $6,614, respectively) | 2,764 | (756 | ) | — | 9,060 | |||||||||||
Income from operations of discontinued business (net of income taxes of $97) | — | — | — | 163 | ||||||||||||
Net income (loss) | $ | 16,527 | $ | 33,502 | $ | (5,317 | ) | $ | 36,643 | |||||||
Basic earnings (loss) per common share: | ||||||||||||||||
Continuing operations | $ | 0.32 | $ | 0.80 | $ | (0.14 | ) | $ | 0.71 | |||||||
Discontinued operations | 0.06 | (0.02 | ) | — | 0.24 | |||||||||||
Net Income (Loss) | $ | 0.38 | $ | 0.78 | $ | (0.14 | ) | $ | 0.95 | |||||||
Diluted earnings (loss) per common share: | ||||||||||||||||
Continuing operations | $ | 0.32 | $ | 0.80 | $ | (0.14 | ) | $ | 0.70 | |||||||
Discontinued operations | 0.06 | (0.02 | ) | — | 0.23 | |||||||||||
Net Income (Loss) | $ | 0.38 | $ | 0.78 | $ | (0.14 | ) | $ | 0.93 | |||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 43,443 | 42,950 | 39,104 | 38,650 | ||||||||||||
Diluted | 43,443 | 42,950 | 39,104 | 39,265 |
F-5
Table of Contents
Stockholders’ Equity | ||||||||||||||||||||||||
Additional | Accumulated | |||||||||||||||||||||||
Number of | Paid-in | Other | ||||||||||||||||||||||
Shares | Par | Capital | Retained | Comprehensive | ||||||||||||||||||||
Issued | Value | and Other | Earnings | Income (Loss) | Total | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||
Balance, January 1, 2006 | 38,688 | $ | 39 | $ | 330,919 | $ | 67,628 | $ | 32,692 | $ | 431,278 | |||||||||||||
Net income | — | — | — | 36,643 | — | 36,643 | ||||||||||||||||||
Change in market value of derivative instruments, net | — | — | — | — | (967 | ) | (967 | ) | ||||||||||||||||
Realization of cumulative translation adjustment from the sale of Alberta Railroad Properties | — | — | — | — | (678 | ) | (678 | ) | ||||||||||||||||
Realization of cumulative translation adjustment from the disposal of E&N Railway | — | — | — | — | (2,000 | ) | (2,000 | ) | ||||||||||||||||
Cumulative translation adjustments | — | — | — | — | 589 | 589 | ||||||||||||||||||
Total comprehensive income | 33,587 | |||||||||||||||||||||||
Actuarial loss associated with pension and postretirement benefit plans | — | — | — | — | (1,382 | ) | (1,382 | ) | ||||||||||||||||
Issuance of common stock | 26 | — | 242 | — | — | 242 | ||||||||||||||||||
Stock based compensation | 217 | — | 2,224 | — | — | 2,224 | ||||||||||||||||||
Exercise of stock options | 496 | 1 | 4,984 | — | — | 4,985 | ||||||||||||||||||
Tax benefit on exercise of stock options | — | — | 563 | — | — | 563 | ||||||||||||||||||
Exercise of warrants | 114 | — | 752 | — | — | 752 | ||||||||||||||||||
Balance, December 31, 2006 | 39,541 | $ | 40 | $ | 339,684 | $ | 104,271 | $ | 28,254 | $ | 472,249 | |||||||||||||
Net loss | — | — | — | (5,317 | ) | — | (5,317 | ) | ||||||||||||||||
Change in market value of derivative instruments, net | — | — | — | — | (162 | ) | (162 | ) | ||||||||||||||||
Actuarial loss associated with pension and postretirement benefit plans | — | — | — | — | (181 | ) | (181 | ) | ||||||||||||||||
Cumulative translation adjustments | — | — | — | — | (945 | ) | (945 | ) | ||||||||||||||||
Total comprehensive loss | (6,605 | ) | ||||||||||||||||||||||
Adjustment to opening retained earnings for FIN 48 adoption | — | — | — | (3,855 | ) | — | (3,855 | ) | ||||||||||||||||
Issuance of common stock | 12 | — | 113 | — | — | 113 | ||||||||||||||||||
Stock based compensation | (3 | ) | — | 3,492 | — | — | 3,492 | |||||||||||||||||
Exercise of stock options | 9 | — | 100 | — | — | 100 | ||||||||||||||||||
Balance, February 14, 2007 | 39,559 | $ | 40 | $ | 343,389 | $ | 95,099 | $ | 26,966 | $ | 465,494 | |||||||||||||
Successor Company | ||||||||||||||||||||||||
Net income | — | — | — | 33,502 | — | 33,502 | ||||||||||||||||||
Change in market value of derivative instruments, net | — | — | — | — | (16,907 | ) | (16,907 | ) | ||||||||||||||||
Actuarial gain associated with pension and postretirement benefit plans | — | — | — | — | 219 | 219 | ||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | 26,741 | 26,741 | ||||||||||||||||||
Total comprehensive income | 43,555 | |||||||||||||||||||||||
Issuance of common stock | 42,186 | 422 | 464,578 | — | — | 465,000 | ||||||||||||||||||
Contribution of interest rate swap | — | — | 3,644 | — | — | 3,644 | ||||||||||||||||||
Stock based compensation | 1,013 | 10 | 540 | — | — | 550 | ||||||||||||||||||
Balance, December 31, 2007 | 43,199 | $ | 432 | $ | 468,762 | $ | 33,502 | $ | 10,053 | $ | 512,749 | |||||||||||||
�� | ||||||||||||||||||||||||
Net income | — | — | — | 16,527 | — | 16,527 | ||||||||||||||||||
Change in market value of derivative instruments, net | — | — | — | — | (25,812 | ) | (25,812 | ) | ||||||||||||||||
Actuarial gain associated with pension and postretirement benefit plans | — | — | — | — | 1,019 | 1,019 | ||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | (34,782 | ) | (34,782 | ) | ||||||||||||||||
Total comprehensive loss | (43,048 | ) | ||||||||||||||||||||||
Other equity contributions | 71 | 1 | 1,049 | — | — | 1,050 | ||||||||||||||||||
Stock repurchases | (5 | ) | — | (23 | ) | — | — | (23 | ) | |||||||||||||||
Stock based compensation | 269 | 2 | 790 | — | — | 792 | ||||||||||||||||||
Balance, December 31, 2008 | 43,531 | $ | 435 | $ | 470,578 | $ | 50,029 | $ | (49,522 | ) | $ | 471,520 | ||||||||||||
F-6
Table of Contents
Successor Company | Predecessor Company | |||||||||||||||
February 15, | January 1, | |||||||||||||||
Year Ended | 2007 through | 2007 through | Year Ended | |||||||||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
(In thousands) | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income (loss) | $ | 16,527 | $ | 33,502 | $ | (5,317 | ) | $ | 36,643 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 49,118 | 36,447 | 4,917 | 38,772 | ||||||||||||
Net loss (gain) on sale or disposal of properties | (1,738 | ) | 1,141 | (27 | ) | (19,058 | ) | |||||||||
Foreign exchange loss (gain) on debt | 8,260 | (7,048 | ) | — | — | |||||||||||
Equity compensation costs | 3,042 | 1,178 | 3,524 | 2,604 | ||||||||||||
Deferred income taxes and other | (3,161 | ) | (8,068 | ) | 1,105 | (2,075 | ) | |||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||
Accounts receivable | 12,257 | (14,225 | ) | 840 | 4,905 | |||||||||||
Other current assets | (5,861 | ) | (3,677 | ) | 2,104 | 576 | ||||||||||
Accounts payable | (5,016 | ) | 6,947 | (6,822 | ) | (6,566 | ) | |||||||||
Accrued expenses | 7,196 | 19,582 | (2,058 | ) | 4,453 | |||||||||||
Other assets and liabilities | 2,948 | 2,152 | (29 | ) | 349 | |||||||||||
Net cash provided by (used in) operating activities | 83,572 | 67,931 | (1,763 | ) | 60,603 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Purchase of property, plant and equipment | (61,282 | ) | (65,400 | ) | (5,545 | ) | (70,425 | ) | ||||||||
Proceeds from sale of assets | 17,367 | 2,764 | 97 | 35,429 | ||||||||||||
Deferred acquisition/disposition costs and other | (1,736 | ) | — | — | — | |||||||||||
Acquisition, net of cash acquired | — | (1,087,451 | ) | — | — | |||||||||||
Net cash used in investing activities | (45,651 | ) | (1,150,087 | ) | (5,448 | ) | (34,996 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Proceeds from issuance of long-term debt | — | 625,000 | 37,601 | 48,400 | ||||||||||||
Principal payments on long-term debt | (7,359 | ) | (117 | ) | (35,243 | ) | (81,635 | ) | ||||||||
Capital contribution | — | 465,000 | — | — | ||||||||||||
Proceeds from exercise of stock options and warrants | — | — | 100 | 6,154 | ||||||||||||
Sale of common stock | 635 | 3,735 | — | — | ||||||||||||
Financing costs | (18,075 | ) | (4,677 | ) | — | — | ||||||||||
Net cash provided by (used in) financing activities | (24,799 | ) | 1,088,941 | 2,458 | (27,081 | ) | ||||||||||
Effect of exchange rates on cash | (1,558 | ) | 608 | (24 | ) | (65 | ) | |||||||||
Net increase (decrease) in cash | 11,564 | 7,393 | (4,777 | ) | (1,539 | ) | ||||||||||
Cash, beginning of period | 15,387 | 7,994 | 12,771 | 14,310 | ||||||||||||
Cash, end of period | $ | 26,951 | $ | 15,387 | $ | 7,994 | $ | 12,771 | ||||||||
Supplemental cash flow information: | ||||||||||||||||
Interest Paid | $ | 44,784 | $ | 40,241 | $ | 575 | $ | 26,535 | ||||||||
Income Taxes Paid | $ | 6,655 | $ | 2,779 | $ | 143 | $ | 3,694 |
F-7
Table of Contents
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-8
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Balance, beginning of year | $ | 2,384 | $ | 1,174 | $ | 573 | ||||||
Provisions | 1,297 | 2,008 | 1,827 | |||||||||
Charges | (343 | ) | (798 | ) | (1,226 | ) | ||||||
Balance, end of year | $ | 3,338 | $ | 2,384 | $ | 1,174 | ||||||
Buildings and improvements | 20-33 years | |||
Railroad track and ties | 30-40 years | |||
Railroad track improvements | 3-10 years | |||
Locomotives, transportation and other equipment | 5-30 years | |||
Office equipment and capitalized software | 5-10 years |
F-9
Table of Contents
F-10
Table of Contents
• | Current assets and current liabilities: The carrying value approximates fair value due to the short maturity of these items. | |
• | Long-term debt: The fair value of the Company’s long-term debt is based on secondary market indicators. Since the Company’s debt is not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, amortization schedule and liquidity. The carrying amount of the Company’s fixed rate and variable rate debt approximates its fair value. | |
• | Derivatives: The carrying value is based on fair value as of the balance sheet date. SFAS No. 157, “Fair Value Measurements” (SFAS 157) requires companies to maximize the use of observable inputs (Level 1 and Level 2), when available, and to minimize the use of unobservable inputs (Level 3) when determining fair value. The Company’s measurement of the fair value of interest rate derivatives is based on estimates of the mid-market values for the transactions provided by the counterparties to these agreements. For derivative instruments in an asset position, the Company also analyzes the credit standing of the counterparty and factors it into the fair value measurement. SFAS 157 states that the fair value of a liability also must reflect the nonperformance risk of the reporting entity. Therefore, the impact of the Company’s credit worthiness has also been factored into the fair value measurement of the derivative instruments in a liability position. This methodology is a market approach, which under SFAS 157 utilizes Level 2 inputs as it uses market data for similar instruments in active markets. |
F-11
Table of Contents
2. | MERGER AND ACQUISITION TRANSACTION |
F-12
Table of Contents
Common stockholders | $ | 639,115 | ||
Payoff of existing debt and accrued interest | 397,541 | |||
Payments to option and warrant holders | 28,838 | |||
Transaction costs | 10,721 | |||
Severance of executives | 11,236 | |||
Cash paid for acquisition | $ | 1,087,451 | ||
Balance as of December 31, 2007 | $ | 189,502 | ||
Impact of change in foreign exchange rates | (15,447 | ) | ||
Additions for tax liability adjustments | 22,347 | |||
Additions for fixed asset value adjustments | 8,299 | |||
Balance at December 31, 2008 | $ | 204,701 | ||
F-13
Table of Contents
Current assets | $ | 91,556 | ||
Intangible assets | 188,757 | |||
Goodwill | 204,979 | |||
Property, plant and equipment | 907,815 | |||
Other assets | 10,511 | |||
Total assets acquired | 1,403,618 | |||
Current liabilities | (86,117 | ) | ||
Other long term liabilities | (45,475 | ) | ||
Deferred tax liabilities | (184,575 | ) | ||
Total liabilities assumed | (316,167 | ) | ||
Purchase price | $ | 1,087,451 | ||
Weighted | ||||||||
Value | Average Life | |||||||
Intangible Asset Class | Assigned | (Years) | ||||||
Customer Contracts | $ | 24,495 | 5.3 | |||||
Railroad Leases | 9,835 | 16.8 | ||||||
Rolling stock Leases | 2,107 | 4.5 | ||||||
Locomotive Leases | 5,943 | 6.2 |
3. | EARNINGS PER SHARE |
F-14
Table of Contents
Successor Company | Predecessor Company | |||||||||||||||
February 15, | January 1, | |||||||||||||||
For the | 2007 | 2007 | For the | |||||||||||||
Year Ended | through | through | Year Ended | |||||||||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
Income (loss) from continuing operations available to common stockholders (basic and diluted) | $ | 13,763 | $ | 34,258 | $ | (5,317 | ) | $ | 27,420 | |||||||
Weighted average shares outstanding (basic) | 43,443 | 42,950 | 39,104 | 38,650 | ||||||||||||
Assumed conversion: | ||||||||||||||||
Options, warrants and unvested restricted stock | — | — | — | 615 | ||||||||||||
Weighted average shares outstanding (diluted) | 43,443 | 42,950 | 39,104 | 39,265 | ||||||||||||
4. | STOCK-BASED COMPENSATION |
F-15
Table of Contents
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Number of | Average | Aggregate | Remaining | |||||||||||||
Outstanding | Exercise | Intrinsic | Contractual | |||||||||||||
Options | Price | Value | Life | |||||||||||||
Outstanding at January 1, 2006 | 2,809,538 | $ | 10.50 | |||||||||||||
Granted | 0 | $ | 0.00 | |||||||||||||
Exercised | (492,693 | ) | $ | 10.05 | ||||||||||||
Forfeited | (590,736 | ) | $ | 11.98 | ||||||||||||
Outstanding at December 31, 2006 | 1,726,109 | $ | 10.28 | $ | 10,013 | 4.93 | ||||||||||
Granted | 0 | $ | 0.00 | |||||||||||||
Exercised | (9,250 | ) | $ | 10.77 | ||||||||||||
Forfeited | (2,750 | ) | $ | 10.19 | ||||||||||||
Outstanding at February 14, 2007 | 1,714,109 | $ | 10.28 | $ | 10,411 | 4.80 | ||||||||||
Exercisable at February 14, 2007 | 1,714,109 | |||||||||||||||
Time Based | Performance Based | Deferred | Total | |||||||||||||||||||||||||||||
Balance at January 1, 2006 | 251,805 | $ | 10.42 | 72,502 | $ | 11.72 | 44,602 | $ | 11.67 | 368,909 | $ | 10.83 | ||||||||||||||||||||
Granted | 170,065 | $ | 11.14 | 67,335 | $ | 11.23 | 47,111 | $ | 11.35 | 284,511 | $ | 11.20 | ||||||||||||||||||||
Vested | (106,487 | ) | $ | 10.81 | (28,703 | ) | $ | 11.48 | (39,894 | ) | $ | 11.61 | (175,084 | ) | $ | 11.10 | ||||||||||||||||
Cancelled | (21,375 | ) | $ | 10.59 | (6,298 | ) | $ | 11.72 | (3,481 | ) | $ | 11.65 | (31,154 | ) | $ | 10.97 | ||||||||||||||||
Balance at December 31, 2006 | 294,008 | $ | 10.68 | 104,836 | $ | 11.47 | 48,338 | $ | 11.41 | 447,182 | $ | 10.95 | ||||||||||||||||||||
Granted | — | $ | 0.00 | — | $ | 0.00 | — | $ | 0.00 | — | $ | 0.00 | ||||||||||||||||||||
Vested | (293,483 | ) | $ | 10.68 | (104,836 | ) | $ | 11.47 | (48,338 | ) | $ | 11.41 | (446,657 | ) | $ | 10.94 | ||||||||||||||||
Cancelled | (525 | ) | $ | 11.44 | — | $ | 0.00 | — | $ | 0.00 | (525 | ) | $ | 11.44 | ||||||||||||||||||
Balance at February 14, 2007 | — | $ | 0.00 | — | $ | 0.00 | — | $ | 0.00 | — | $ | 0.00 | ||||||||||||||||||||
F-16
Table of Contents
Time | Performance | |||||||||||
Total Fair Value of Shares Vested | Based | Based | Deferred | |||||||||
(In thousands) | ||||||||||||
January 1, 2007 through February 14, 2007 | $ | 4,798 | $ | 1,714 | $ | 790 | ||||||
Twelve months ended December 31, 2006 | $ | 1,060 | $ | 329 | $ | 464 |
F-17
Table of Contents
Time Based | ||||||||
Balance at February 14, 2007 | — | $ | 0.00 | |||||
Granted | 1,012,500 | $ | 11.11 | |||||
Vested | — | $ | 0.00 | |||||
Cancelled | — | $ | 0.00 | |||||
Balance at December 31, 2007 | 1,012,500 | $ | 11.11 | |||||
Granted | 358,398 | $ | 14.48 | |||||
Vested | (177,480 | ) | $ | 11.11 | ||||
Cancelled | (92,457 | ) | $ | 11.24 | ||||
Balance at December 31, 2008 | 1,100,961 | $ | 12.20 | |||||
5. | DISCONTINUED OPERATIONS |
2006 | ||||
Operating revenue | $ | 1,405 | ||
Operating income | 158 | |||
Income from discontinued operations | 158 | |||
Income tax provision | 53 | |||
Income from discontinued operations, net of income taxes | $ | 105 | ||
F-18
Table of Contents
2006 | ||||
Operating revenue | $ | 1,337 | ||
Operating income | 101 | |||
Income from discontinued operations | 101 | |||
Income tax provision | 43 | |||
Income from discontinued operations, net of tax | $ | 58 | ||
6. | OTHER BALANCE SHEET DATA |
2008 | 2007 | |||||||
Unbilled Reimbursable Projects | $ | 12,171 | $ | 5,161 | ||||
Other current assets | 6,309 | 6,807 | ||||||
$ | 18,480 | $ | 11,968 | |||||
F-19
Table of Contents
2008 | 2007 | |||||||
Accrued compensation and benefits | $ | 12,354 | $ | 9,667 | ||||
Accrued incident expense | 10,236 | 10,648 | ||||||
Accrued interest expense | 12,641 | 5,829 | ||||||
Other accrued liabilities | 16,118 | 17,411 | ||||||
$ | 51,349 | $ | 43,555 | |||||
2008 | 2007 | |||||||
FIN 48 liability | $ | 29,995 | $ | 18,222 | ||||
Interest rate hedge liability | 65,531 | 23,313 | ||||||
Other long term liabilities | 21,666 | 20,471 | ||||||
$ | 117,192 | $ | 62,006 | |||||
7. | PROPERTY, PLANT AND EQUIPMENT |
2008 | 2007 | |||||||
Land | $ | 186,835 | $ | 193,598 | ||||
Buildings and improvements | 4,975 | 15,202 | ||||||
Railroad track and improvements | 761,051 | 724,047 | ||||||
Locomotives, transportation and other equipment | 56,216 | 63,016 | ||||||
1,009,077 | 995,863 | |||||||
Less: accumulated depreciation | (55,473 | ) | (25,358 | ) | ||||
$ | 953,604 | $ | 970,505 | |||||
8. | GOODWILL AND INTANGIBLE ASSETS, NET |
F-20
Table of Contents
Successor Company at | Successor Company at | |||||||||||||||||||||||
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||
Carrying | Accumulated | Net Book | Carrying | Accumulated | Net Book | |||||||||||||||||||
Amount | Amortization | Value | Amount | Amortization | Value | |||||||||||||||||||
Amortizable intangible assets: | ||||||||||||||||||||||||
Customer contract intangibles | $ | 24,495 | $ | (8,906 | ) | $ | 15,589 | $ | 24,495 | $ | (4,156 | ) | $ | 20,339 | ||||||||||
Railroad leases intangibles | 9,835 | (1,843 | ) | 7,992 | 9,835 | (860 | ) | 8,975 | ||||||||||||||||
Rolling stock leases intangibles | 2,107 | (1,115 | ) | 992 | 2,107 | (536 | ) | 1,571 | ||||||||||||||||
Locomotive leases intangibles | 5,943 | (2,578 | ) | 3,365 | 5,943 | (1,238 | ) | 4,705 | ||||||||||||||||
Non-amortizable intangible assets Railroad leases intangibles | 143,426 | — | 143,426 | 153,064 | — | 153,064 | ||||||||||||||||||
Other intangible assets | 1,495 | — | 1,495 | 1,495 | — | 1,495 | ||||||||||||||||||
Total intangible assets | $ | 187,301 | $ | (14,442 | ) | $ | 172,859 | $ | 196,939 | $ | (6,790 | ) | $ | 190,149 | ||||||||||
2009 | $ | 7,463 | ||
2010 | 7,033 | |||
2011 | 5,483 | |||
2012 | 2,389 | |||
2013 | 680 | |||
Thereafter | 4,890 | |||
$ | 27,938 | |||
9. | LONG-TERM DEBT AND LEASES |
2008 | 2007 | |||||||
Bridge Credit Facility: | ||||||||
U.S. Dollar Term Loan | $ | 587,000 | $ | 587,000 | ||||
Canadian Dollar Term Loan | 38,000 | 38,000 | ||||||
U.S. Dollar Revolver | — | — | ||||||
Canadian Dollar Revolver | — | — | ||||||
Other long-term debt (including capital leases) | 4,580 | 11,941 | ||||||
629,580 | 636,941 | |||||||
Less: current maturities | 899 | 627,434 | ||||||
Long-term debt, less current maturities | $ | 628,681 | $ | 9,507 | ||||
F-21
Table of Contents
2009 | $ | 899 | ||
2010 | 625,679 | |||
2011 | 826 | |||
2012 | 263 | |||
2013 | 268 | |||
Thereafter | 1,645 | |||
$ | 629,580 | |||
F-22
Table of Contents
F-23
Table of Contents
Capital | Operating | |||||||
Leases | Leases | |||||||
2009 | $ | 502 | $ | 23,616 | ||||
2010 | 291 | 16,891 | ||||||
2011 | 467 | 10,451 | ||||||
2012 | — | 7,770 | ||||||
2013 | — | 3,876 | ||||||
Thereafter | — | 27,749 | ||||||
Total minimum lease payments | $ | 1,260 | $ | 90,353 | ||||
Less amount representing interest | (81 | ) | ||||||
Total obligations under capital leases | $ | 1,179 | ||||||
Less current maturities of obligations under capital leases | (502 | ) | ||||||
Obligations under capital leases payable after one year | $ | 677 | ||||||
10. | COMMON STOCK TRANSACTIONS |
F-24
Table of Contents
11. | INCOME TAX PROVISION |
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
Domestic | $ | 9,583 | $ | 9,560 | $ | (5,058 | ) | $ | 18,976 | |||||||
Foreign subsidiaries | 5,779 | 22,951 | 676 | 3,635 | ||||||||||||
$ | 15,362 | $ | 32,511 | $ | (4,382 | ) | $ | 22,611 | ||||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
Federal income taxes: | ||||||||||||||||
Current | $ | — | $ | — | $ | — | $ | — | ||||||||
Deferred | (10,073 | ) | (11,273 | ) | (977 | ) | (1,464 | ) | ||||||||
(10,073 | ) | (11,273 | ) | (977 | ) | (1,464 | ) | |||||||||
State income taxes: | ||||||||||||||||
Current | 2,243 | 1,359 | 196 | 1,847 | ||||||||||||
Deferred | 3,952 | 1,151 | (69 | ) | 1,150 | |||||||||||
Change in tax law | 1,914 | — | — | (11 | ) | |||||||||||
8,109 | 2,510 | 127 | 2,986 | |||||||||||||
Foreign income taxes | ||||||||||||||||
Current | 3,214 | 3,790 | (1,100 | ) | 2,252 | |||||||||||
Deferred | 1,524 | 4,379 | 2,885 | (183 | ) | |||||||||||
Change in tax law | (478 | ) | (1,538 | ) | — | (1,689 | ) | |||||||||
4,260 | 6,631 | 1,785 | 380 | |||||||||||||
Total income tax provision (benefit) | $ | 2,296 | $ | (2,132 | ) | $ | 935 | $ | 1,902 | |||||||
F-25
Table of Contents
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
Continuing operations | $ | 1,599 | $ | (1,747 | ) | $ | 935 | $ | (4,809 | ) | ||||||
Discontinued operations | 697 | (385 | ) | — | 6,711 | |||||||||||
Total income tax provision (benefit) | $ | 2,296 | $ | (2,132 | ) | $ | 935 | $ | 1,902 | |||||||
December 31, | December 31, | February 14, | December 31, | |||||||||||||
2008 | 2007 | 2007 | 2006 | |||||||||||||
Income tax provision (benefit), at 35% | $ | 5,377 | $ | 11,379 | $ | (1,534 | ) | $ | 7,914 | |||||||
Statutory federal surtax exemption | — | — | — | (226 | ) | |||||||||||
Foreign dividend | 3,283 | — | — | — | ||||||||||||
Net expense due to difference between U.S. & Foreign tax rates | 892 | 297 | 154 | 114 | ||||||||||||
Net expense (benefit) due to change in tax law, apportionment factors and other adjustments | 1,436 | (1,538 | ) | — | (1,700 | ) | ||||||||||
Permanent differences | 393 | (986 | ) | 2,786 | (61 | ) | ||||||||||
Track maintenance credit | (16,278 | ) | (13,858 | ) | (1,725 | ) | (12,990 | ) | ||||||||
Net operating loss adjustment | — | — | 796 | — | ||||||||||||
FIN 48 contingencies and settlements | 1,645 | 785 | — | — | ||||||||||||
State income taxes, net | 1,777 | 1,163 | 54 | 1,643 | ||||||||||||
Other, net | (19 | ) | 294 | (67 | ) | 397 | ||||||||||
Valuation allowance | 3,093 | 717 | 471 | 100 | ||||||||||||
Tax provision | $ | 1,599 | $ | (1,747 | ) | $ | 935 | $ | (4,809 | ) | ||||||
F-26
Table of Contents
2008 | 2007 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforward | $ | 52,264 | $ | 55,991 | ||||
Alternative minimum tax credit | 1,365 | 1,473 | ||||||
Track maintenance credit/GO zone credits | 94,819 | 65,748 | ||||||
Tax effect of unrecognized tax positions | 7,300 | 4,072 | ||||||
Hedge transactions | 25,823 | 10,002 | ||||||
Accrued expenses | 13,592 | 12,888 | ||||||
Total deferred tax assets | 195,163 | 150,174 | ||||||
Less: valuation allowance | (7,473 | ) | (5,817 | ) | ||||
Total deferred tax assets, net | 187,690 | 144,357 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | (322,922 | ) | (298,654 | ) | ||||
Intangibles | (6,299 | ) | (3,350 | ) | ||||
Other | (2,310 | ) | (492 | ) | ||||
Total deferred tax liabilities | (331,531 | ) | (302,496 | ) | ||||
Net deferred tax liability | $ | (143,841 | ) | $ | (158,139 | ) | ||
Expiration | ||||||||
Amount | Period | |||||||
U.S. — Federal | $ | 119,796 | 2020 - 2027 | |||||
U.S. — State | 224,384 | 2009 - 2028 | ||||||
Canada | 622 | 2009 - 2027 | ||||||
$ | 344,802 | |||||||
Expiration | ||||||||
Amount | Period | |||||||
Track maintenance credit | $ | 94,742 | 2025 - 2028 | |||||
GO Zone tax credit | 77 | 2026 | ||||||
Total credits | $ | 94,819 | ||||||
F-27
Table of Contents
Balance as of January 1, 2007 | $ | 12,890 | ||
Additions based on tax positions related to the current year | — | |||
Additions for tax positions of prior years | 5,826 | |||
Reductions for tax positions of prior years | — | |||
Settlements with taxing authorities | (494 | ) | ||
Lapse of statute of limitations | — | |||
Balance at December 31, 2007 | $ | 18,222 | ||
Additions based on tax positions related to the current year | 797 | |||
Additions for tax positions of prior years | 15,804 | |||
Reductions for tax positions of prior years | (3,521 | ) | ||
Settlements with taxing authorities | — | |||
Lapse of statute of limitations | (1,307 | ) | ||
Balance at December 31, 2008 | $ | 29,995 | ||
F-28
Table of Contents
12. | SUPPLEMENTAL CASH FLOW INFORMATION |
13. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
F-29
Table of Contents
14. | PENSION AND OTHER BENEFIT PROGRAMS |
F-30
Table of Contents
Canadian | U.S. | Total | Canadian | U.S. | Total | Canadian | U.S. | Total | ||||||||||||||||||||||||||||
2008 | 2008 | 2008 | 2007 | 2007 | 2007 | 2006 | 2006 | 2006 | ||||||||||||||||||||||||||||
CHANGE IN BENEFIT OBLIGATION | ||||||||||||||||||||||||||||||||||||
Benefit obligation at beginning of period | $ | 10,781 | $ | 297 | $ | 11,078 | $ | 8,646 | $ | 181 | $ | 8,827 | $ | 6,994 | $ | 23 | $ | 7,017 | ||||||||||||||||||
Service cost | 168 | 123 | 291 | 227 | 122 | 349 | 166 | 80 | 246 | |||||||||||||||||||||||||||
Interest cost | 604 | 18 | 622 | 454 | 10 | 464 | 420 | 1 | 421 | |||||||||||||||||||||||||||
Plan participants’ contributions | 122 | 0 | 122 | 113 | 0 | 113 | 116 | 0 | 116 | |||||||||||||||||||||||||||
Actuarial loss (gain) | (2,894 | ) | $ | 142 | (2,752 | ) | (139 | ) | (16 | ) | (155 | ) | 1,231 | 96 | 1,327 | |||||||||||||||||||||
Benefits paid | (126 | ) | $ | (8 | ) | (134 | ) | (125 | ) | 0 | (125 | ) | (280 | ) | (19 | ) | (299 | ) | ||||||||||||||||||
Foreign currency exchange rate changes | (2,159 | ) | 0 | (2,159 | ) | 1,605 | 0 | 1,605 | (1 | ) | 0 | (1 | ) | |||||||||||||||||||||||
Benefit obligation at end of period | $ | 6,496 | $ | 572 | $ | 7,068 | $ | 10,781 | $ | 297 | $ | 11,078 | $ | 8,646 | $ | 181 | $ | 8,827 | ||||||||||||||||||
CHANGE IN PLAN ASSETS | ||||||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of period | $ | 7,575 | $ | 168 | $ | 7,743 | $ | 6,143 | $ | 3 | $ | 6,146 | $ | 5,411 | $ | 0 | $ | 5,411 | ||||||||||||||||||
Actual return on plan assets | (1,177 | ) | (2 | ) | (1,179 | ) | 91 | (5 | ) | 86 | 654 | 1 | 655 | |||||||||||||||||||||||
Employer contribution | 350 | 185 | 535 | 262 | 170 | 432 | 243 | 21 | 264 | |||||||||||||||||||||||||||
Plan participants’ contributions | 122 | 0 | 122 | 113 | 0 | 113 | 116 | 0 | 116 | |||||||||||||||||||||||||||
Benefits paid | (126 | ) | (8 | ) | (134 | ) | (125 | ) | 0 | (125 | ) | (280 | ) | (19 | ) | (299 | ) | |||||||||||||||||||
Foreign currency exchange rate changes | (1,462 | ) | 0 | (1,462 | ) | 1,091 | 0 | 1,091 | (1 | ) | 0 | (1 | ) | |||||||||||||||||||||||
Fair value of plan assets at end of period | $ | 5,282 | $ | 343 | $ | 5,625 | $ | 7,575 | $ | 168 | $ | 7,743 | $ | 6,143 | $ | 3 | $ | 6,146 | ||||||||||||||||||
Funded status — (accrued) benefit cost | $ | (1,214 | ) | $ | (229 | ) | $ | (1,443 | ) | $ | (3,206 | ) | $ | (129 | ) | $ | (3,335 | ) | $ | (2,503 | ) | $ | (178 | ) | $ | (2,681 | ) | |||||||||
ASSUMPTIONS | ||||||||||||||||||||||||||||||||||||
Discount rate | 7.50 | % | 6.25 | % | N/A | 5.60 | % | 5.75 | % | N/A | 5.25 | % | 5.50 | % | N/A | |||||||||||||||||||||
Expected return on plan assets | 6.50 | % | 6.00 | % | N/A | 6.50 | % | 6.00 | % | N/A | 6.50 | % | 6.00 | % | N/A | |||||||||||||||||||||
Rate of compensation increase | 3.50 | % | 4.56 | % | N/A | 3.50 | % | 4.56 | % | N/A | 3.50 | % | 4.56 | % | N/A | |||||||||||||||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST IN PERIOD | ||||||||||||||||||||||||||||||||||||
Service cost | $ | 168 | $ | 123 | $ | 291 | $ | 227 | $ | 122 | $ | 349 | $ | 166 | $ | 80 | $ | 246 | ||||||||||||||||||
Interest cost | 604 | 18 | 622 | 454 | 10 | 464 | 420 | 1 | 421 | |||||||||||||||||||||||||||
Expected return on plan assets | (492 | ) | (13 | ) | (505 | ) | (399 | ) | (4 | ) | (403 | ) | (352 | ) | 0 | (352 | ) | |||||||||||||||||||
Amortization of prior service cost | 20 | 0 | 20 | 24 | 0 | 24 | 21 | 0 | 21 | |||||||||||||||||||||||||||
Amortization of net actuarial loss | 127 | 5 | 132 | 141 | 7 | 148 | 52 | 0 | 52 | |||||||||||||||||||||||||||
Net periodic pension cost | $ | 427 | $ | 133 | $ | 560 | $ | 447 | $ | 135 | $ | 582 | $ | 307 | $ | 81 | $ | 388 | ||||||||||||||||||
F-31
Table of Contents
Canadian | U.S. | Total | ||||||||||
Expected Employer Contribution in 2009 | $ | 286 | $ | 208 | $ | 494 | ||||||
Expected Employee Contribution in 2009 | 100 | 0 | 100 | |||||||||
Amortization of Loss in 2009 | 16 | 22 | 38 | |||||||||
Amortization of Prior Service Cost in 2009 | 20 | 0 | 20 | |||||||||
Expected Benefit Payments in | ||||||||||||
2009 | $ | 154 | $ | 20 | $ | 174 | ||||||
2010 | 180 | 29 | 209 | |||||||||
2011 | 194 | 35 | 229 | |||||||||
2012 | 220 | 44 | 264 | |||||||||
2013 | 264 | 55 | 319 | |||||||||
2014-2019 | 898 | 327 | 1,225 |
December 31, | December 31, | |||||||
Adjustments to Accumulated Other Comprehensive Income | 2008 | 2007 | ||||||
(In thousands) | ||||||||
Unrecognized net actuarial loss | $ | 1,332 | $ | (82 | ) | |||
Unrecognized transition obligation | 19 | 24 | ||||||
Total adjustment to AOCI, before tax | $ | 1,351 | $ | (58 | ) | |||
Total adjustment to AOCI, after tax | $ | 904 | $ | (38 | ) | |||
December 31, | December 31, | Target Allocation | ||||||||||
2008 | 2007 | 2009 | ||||||||||
Integra Strategic Allocated Pool Fund | 100 | % | 100 | % | 100 | % | ||||||
Fund holdings by class: | ||||||||||||
a) Equity securities | 59.5 | % | 60.0 | % | 60.0 | % | ||||||
b) Debt securities | 39.7 | % | 40.0 | % | 40.0 | % | ||||||
c) Real estate | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
d) Other (including cash) | 0.8 | % | 0.0 | % | 0.0 | % | ||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Expected long-term rate of return on assets | 6.50 | % | 6.50 | % | ||||||||
Expected rate of return on equity securities | 7.50 | % | 7.50 | % | ||||||||
Expected rate of return on debt securities | 5.50 | % | 5.50 | % |
F-32
Table of Contents
Policy | Minimum | Maximum | ||||||||||
Asset Mix Limits: | Mix | Limit | Limit | |||||||||
Canadian Equity | 30 | % | 20 | % | 40 | % | ||||||
US Equity | 15 | % | 5 | % | 20 | % | ||||||
International Equity | 15 | % | 5 | % | 20 | % | ||||||
Real Estate | 0 | % | 0 | % | 10 | % | ||||||
Total Equity | 60 | % | 25 | % | 70 | % | ||||||
Bonds | 40 | % | 30 | % | 75 | % | ||||||
Mortgages | 0 | % | 0 | % | 10 | % | ||||||
Short Term | 0 | % | 0 | % | 20 | % | ||||||
Total Fixed Income | 40 | % | 30 | % | 75 | % | ||||||
F-33
Table of Contents
January 1, 2008 to | January 1, 2007 to | January 1, 2006 to | ||||||||||
December 31, 2008 | December 31, 2007 | December 31, 2006 | ||||||||||
CHANGE IN BENEFIT OBLIGATION | ||||||||||||
Benefit obligation at beginning of period | $ | 2,053 | $ | 2,307 | $ | 2,597 | ||||||
Service cost | 45 | 49 | 48 | |||||||||
Interest cost | 128 | 132 | 121 | |||||||||
Actuarial gain | (246 | ) | (435 | ) | (459 | ) | ||||||
Benefit obligation at end of period | $ | 1,980 | $ | 2,053 | $ | 2,307 | ||||||
CHANGE IN PLAN ASSETS | ||||||||||||
Fair value of plan assets at beginning of period | $ | 0 | $ | 0 | $ | 0 | ||||||
Fair value of plan assets at end of period | $ | 0 | $ | 0 | $ | 0 | ||||||
Funded status — (accrued) benefit cost | $ | (1,980 | ) | $ | (2,053 | ) | $ | (2,307 | ) | |||
ASSUMPTIONS | ||||||||||||
Discount rate | 6.25 | % | 5.75 | % | 5.50 | % | ||||||
Current year health care cost trend rate (Ultimate rate reached in 2006) | N/A | N/A | N/A | |||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST IN PERIOD | ||||||||||||
Service cost | $ | 45 | $ | 49 | $ | 48 | ||||||
Interest cost | 128 | 132 | 121 | |||||||||
Amortization of net actuarial gain | (60 | ) | (20 | ) | (16 | ) | ||||||
Net periodic benefit cost | $ | 113 | $ | 161 | $ | 153 | ||||||
December 31, | December 31, | |||||||
Adjustments to Accumulated Other Comprehensive Income | 2008 | 2007 | ||||||
(In thousands) | ||||||||
Unrecognized net actuarial gain | $ | 186 | $ | 415 | ||||
Total adjustment to AOCI, before tax | $ | 186 | $ | 415 | ||||
Total adjustment to AOCI, after tax | $ | 115 | $ | 257 | ||||
Estimated Future | ||||
Benefit Payments | ||||
(In thousands) | ||||
2009 | $ | 16 | ||
2010 | 37 | |||
2011 | 54 | |||
2012 | 87 | |||
2013 | 125 | |||
2014 - 2018 | 830 |
F-34
Table of Contents
15. | COMMITMENTS AND CONTINGENCIES |
F-35
Table of Contents
16. | RELATED PARTY TRANSACTIONS |
17. | RESTRUCTURING COSTS |
18. | IMPAIRMENT OF ASSETS |
19. | SUBSEQUENT EVENTS |
F-36
Table of Contents
F-37
Table of Contents
20. | SEGMENT INFORMATION |
North America | ||||||||||||
Year Ended December 31, 2008: | Consolidated | United States | Canada | |||||||||
Revenue | $ | 508,466 | $ | 439,878 | $ | 68,588 | ||||||
Depreciation and amortization | 39,578 | 37,016 | 2,562 | |||||||||
Income from continuing operations before income taxes | 15,362 | 9,403 | 5,959 | |||||||||
Interest expense | 61,678 | 58,693 | 2,985 | |||||||||
Total assets | 1,475,394 | 1,261,678 | 213,716 | |||||||||
Capital expenditures | 61,282 | 53,133 | 8,149 |
North America | ||||||||||||
Period Ended December 31, 2007: | Consolidated | United States | Canada | |||||||||
Revenue | $ | 424,154 | $ | 366,283 | $ | 57,871 | ||||||
Depreciation and amortization | 32,146 | 30,328 | 1,818 | |||||||||
Income from continuing operations before income taxes | 32,511 | 9,536 | 22,975 | |||||||||
Interest expense | 42,996 | 40,447 | 2,549 | |||||||||
Total assets | 1,483,239 | 1,255,058 | 228,181 | |||||||||
Capital expenditures | 65,400 | 57,281 | 8,119 |
North America | ||||||||||||
Period Ended February 14, 2007: | Consolidated | United States | Canada | |||||||||
Revenue | $ | 55,766 | $ | 48,921 | $ | 6,845 | ||||||
Depreciation and amortization | 4,848 | 3,887 | 961 | |||||||||
Income (loss) from continuing operations before income taxes | (4,382 | ) | (5,052 | ) | 670 | |||||||
Interest expense | 3,275 | 2,973 | 302 | |||||||||
Capital expenditures | 5,545 | 5,394 | 151 |
F-38
Table of Contents
North America | ||||||||||||
Year Ended December 31, 2006: | Consolidated | United States | Canada | |||||||||
Revenue | $ | 462,580 | $ | 404,984 | $ | 57,596 | ||||||
Depreciation and amortization | 38,132 | 29,866 | 8,266 | |||||||||
Income from continuing operations before income taxes | 22,611 | 19,004 | 3,607 | |||||||||
Interest expense | 27,392 | 25,031 | 2,361 | |||||||||
Total assets | 1,125,732 | 937,889 | 187,843 | |||||||||
Capital expenditures | 70,425 | 51,423 | 19,002 |
F-39
Table of Contents
21. | Guarantor Financial Statement Information |
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 3,204 | $ | 14,737 | $ | 9,010 | $ | — | $ | 26,951 | ||||||||||
Accounts and notes receivable, net of allowance | 89 | 68,693 | 7,602 | — | 76,384 | |||||||||||||||
Other current assets | 243 | 16,548 | 1,689 | — | 18,480 | |||||||||||||||
Current deferred tax assets | 5,854 | — | — | — | 5,854 | |||||||||||||||
Total current assets | 9,390 | 99,978 | 18,301 | — | 127,669 | |||||||||||||||
Property, plant and equipment, net | 262 | 884,819 | 68,523 | — | 953,604 | |||||||||||||||
Intangible Assets | — | 109,376 | 63,483 | — | 172,859 | |||||||||||||||
Goodwill | — | 198,331 | 6,370 | 204,701 | ||||||||||||||||
Other assets | 4,531 | 11,148 | 882 | — | 16,561 | |||||||||||||||
Investment in and advances to affiliates | 647,390 | 1,725,414 | 56,842 | (2,429,646 | ) | — | ||||||||||||||
Total assets | $ | 661,573 | $ | 3,029,066 | $ | 214,401 | $ | (2,429,646 | ) | $ | 1,475,394 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 899 | $ | — | $ | — | $ | 899 | ||||||||||
Accounts payable | 3,310 | 45,781 | 6,967 | — | 56,058 | |||||||||||||||
Accrued expenses | 9,214 | 36,849 | 5,286 | — | 51,349 | |||||||||||||||
Total current liabilities | 12,524 | 83,529 | 12,253 | — | 108,306 | |||||||||||||||
Long-term debt, less current maturities | 112,000 | 478,681 | 38,000 | — | 628,681 | |||||||||||||||
Deferred income taxes | (36,210 | ) | 171,067 | 14,838 | — | 149,695 | ||||||||||||||
Other liabilities | 101,739 | 14,253 | 1,200 | — | 117,192 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 435 | 1,493 | — | (1,493 | ) | 435 | ||||||||||||||
Additional paid-in capital | 470,578 | 2,215,023 | 135,373 | (2,350,396 | ) | 470,578 | ||||||||||||||
Retained earnings | 50,029 | 64,775 | 21,605 | (86,380 | ) | 50,029 | ||||||||||||||
Accumulated other comprehensive income (loss) | (49,522 | ) | 245 | (8,868 | ) | 8,623 | (49,522 | ) | ||||||||||||
Total stockholders’ equity | 471,520 | 2,281,536 | 148,110 | (2,429,646 | ) | 471,520 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 661,573 | $ | 3,029,066 | $ | 214,401 | $ | (2,429,646 | ) | $ | 1,475,394 | |||||||||
F-40
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 214 | $ | 439,664 | $ | 68,588 | $ | — | $ | 508,466 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | — | 243,448 | 34,793 | — | 278,241 | |||||||||||||||
Selling, general and administrative | 29,707 | 65,371 | 7,798 | — | 102,876 | |||||||||||||||
Net (gain) loss on sale of assets | — | (1,829 | ) | 132 | — | (1,697 | ) | |||||||||||||
Impairment of assets | — | 3,420 | — | — | 3,420 | |||||||||||||||
Depreciation and amortization | 209 | 36,807 | 2,562 | — | 39,578 | |||||||||||||||
Total operating expenses | 29,916 | 347,217 | 45,285 | — | 422,418 | |||||||||||||||
Operating (loss) income | (29,702 | ) | 92,447 | 23,303 | — | 86,048 | ||||||||||||||
Interest expense | (19,464 | ) | (39,229 | ) | (2,985 | ) | — | (61,678 | ) | |||||||||||
Equity in earnings of subsidiaries | 44,612 | — | — | (44,612 | ) | — | ||||||||||||||
Other income (loss) | 19,078 | (13,546 | ) | (14,540 | ) | — | (9,008 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | 14,524 | 39,672 | 5,778 | (44,612 | ) | 15,362 | ||||||||||||||
Provision for (benefit from) income taxes | (2,003 | ) | 1,106 | 2,496 | — | 1,599 | ||||||||||||||
Income (loss) from continuing operations | 16,527 | 38,566 | 3,282 | (44,612 | ) | 13,763 | ||||||||||||||
Gain on disposal of discontinued business (net of tax) | — | 1,548 | 1,216 | — | 2,764 | |||||||||||||||
Net income (loss) | $ | 16,527 | $ | 40,114 | $ | 4,498 | $ | (44,612 | ) | $ | 16,527 | |||||||||
F-41
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 16,527 | $ | 40,114 | $ | 4,498 | $ | (44,612 | ) | $ | 16,527 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 1,904 | 43,690 | 3,524 | — | 49,118 | |||||||||||||||
Equity in earnings of subsidiaries | (44,612 | ) | — | — | 44,612 | — | ||||||||||||||
Gain on sale or disposal of properties | — | (522 | ) | (1,216 | ) | — | (1,738 | ) | ||||||||||||
Foreign exchange loss on debt | — | — | 8,260 | — | 8,260 | |||||||||||||||
Equity compensation costs | 3,042 | — | — | — | 3,042 | |||||||||||||||
Deferred income taxes and other | (3,166 | ) | 1,695 | (1,690 | ) | — | (3,161 | ) | ||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | (144 | ) | 10,681 | 1,720 | — | 12,257 | ||||||||||||||
Other current assets | 2,048 | (8,173 | ) | 264 | — | (5,861 | ) | |||||||||||||
Accounts payable | 2,151 | (5,903 | ) | (1,264 | ) | — | (5,016 | ) | ||||||||||||
Accrued expenses | 3,714 | 3,227 | 255 | — | 7,196 | |||||||||||||||
Other assets and liabilities | 98 | 2,320 | 530 | — | 2,948 | |||||||||||||||
Net cash provided by (used in) operating activities | (18,438 | ) | 87,129 | 14,881 | — | 83,572 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | — | (53,021 | ) | (8,261 | ) | — | (61,282 | ) | ||||||||||||
Proceeds from sale of assets | — | 16,016 | 1,351 | — | 17,367 | |||||||||||||||
Deferred acquisition/disposition costs and other | (1,736 | ) | — | — | — | (1,736 | ) | |||||||||||||
Net cash used in investing activities | (1,736 | ) | (37,005 | ) | (6,910 | ) | — | (45,651 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Principal payments on long-term debt | — | (7,359 | ) | — | — | (7,359 | ) | |||||||||||||
(Disbursements)/receipts on intercompany debt | 18,216 | (16,208 | ) | (2,008 | ) | — | — | |||||||||||||
Sale of common stock | 635 | — | — | — | 635 | |||||||||||||||
Financing costs | (3,552 | ) | (13,084 | ) | (1,439 | ) | — | (18,075 | ) | |||||||||||
Net cash provided by (used in) financing activities | 15,299 | (36,651 | ) | (3,447 | ) | — | (24,799 | ) | ||||||||||||
Effect of exchange rates on cash | — | — | (1,558 | ) | — | (1,558 | ) | |||||||||||||
Net (decrease) increase in cash | (4,875 | ) | 13,473 | 2,966 | — | 11,564 | ||||||||||||||
Cash, beginning of period | 8,079 | 1,264 | 6,044 | — | 15,387 | |||||||||||||||
Cash, end of period | $ | 3,204 | $ | 14,737 | $ | 9,010 | $ | — | $ | 26,951 | ||||||||||
F-42
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 8,079 | $ | 1,264 | $ | 6,044 | $ | — | $ | 15,387 | ||||||||||
Accounts and notes receivable, net of allowance | (55 | ) | 79,375 | 10,645 | — | 89,965 | ||||||||||||||
Other current assets | 2,290 | 8,375 | 1,303 | — | 11,968 | |||||||||||||||
Current deferred tax assets | 9,537 | — | — | — | 9,537 | |||||||||||||||
Total current assets | 19,851 | 89,014 | 17,992 | — | 126,857 | |||||||||||||||
Property, plant and equipment, net | 471 | 886,798 | 83,236 | — | 970,505 | |||||||||||||||
Intangible Assets | — | 117,027 | 73,122 | — | 190,149 | |||||||||||||||
Goodwill | — | 182,854 | 6,648 | — | 189,502 | |||||||||||||||
Other assets | 313 | 5,492 | 421 | — | 6,226 | |||||||||||||||
Investment in and advances to affiliates | 653,192 | 1,689,043 | 53,750 | (2,395,985 | ) | — | ||||||||||||||
Total assets | $ | 673,827 | $ | 2,970,228 | $ | 235,169 | $ | (2,395,985 | ) | $ | 1,483,239 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Current maturities of long-term debt | $ | 112,000 | $ | 477,434 | $ | 38,000 | $ | — | $ | 627,434 | ||||||||||
Accounts payable | 1,081 | 51,664 | 7,567 | — | 60,312 | |||||||||||||||
Accrued expenses | 5,462 | 32,240 | 5,853 | — | 43,555 | |||||||||||||||
Total current liabilities | 118,543 | 561,338 | 51,420 | — | 731,301 | |||||||||||||||
Long-term debt, less current maturities | — | 9,507 | — | — | 9,507 | |||||||||||||||
Deferred income taxes | (3,369 | ) | 156,050 | 14,995 | — | 167,676 | ||||||||||||||
Other liabilities | 45,904 | 12,887 | 3,215 | — | 62,006 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 432 | 1,493 | — | (1,493 | ) | 432 | ||||||||||||||
Additional paid-in capital | 468,762 | 2,204,302 | 126,034 | (2,330,336 | ) | 468,762 | ||||||||||||||
Retained earnings | 33,502 | 24,661 | 17,105 | (41,766 | ) | 33,502 | ||||||||||||||
Accumulated other comprehensive income (loss) | 10,053 | (10 | ) | 22,400 | (22,390 | ) | 10,053 | |||||||||||||
Total stockholders’ equity | 512,749 | 2,230,446 | 165,539 | (2,395,985 | ) | 512,749 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 673,827 | $ | 2,970,228 | $ | 235,169 | $ | (2,395,985 | ) | $ | 1,483,239 | |||||||||
F-43
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 126 | $ | 366,157 | $ | 57,871 | $ | — | $ | 424,154 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | — | 209,137 | 27,019 | — | 236,156 | |||||||||||||||
Selling, general and administrative | 17,319 | 63,258 | 6,897 | — | 87,474 | |||||||||||||||
Net gain on sale of assets | — | 22 | (22 | ) | — | — | ||||||||||||||
Depreciation and amortization | 156 | 30,172 | 1,818 | — | 32,146 | |||||||||||||||
Total operating expenses | 17,475 | 302,589 | 35,712 | — | 355,776 | |||||||||||||||
Operating (loss) income | (17,349 | ) | 63,568 | 22,159 | — | 68,378 | ||||||||||||||
Interest expense | (5,949 | ) | (34,498 | ) | (2,549 | ) | — | (42,996 | ) | |||||||||||
Equity in earnings of subsidiaries | 41,766 | — | — | (41,766 | ) | — | ||||||||||||||
Other income (loss) | 12,077 | (8,289 | ) | 3,341 | — | 7,129 | ||||||||||||||
Income (loss) from continuing operations before income taxes | 30,545 | 20,781 | 22,951 | (41,766 | ) | 32,511 | ||||||||||||||
Provision for (benefit from) income taxes | (2,957 | ) | (4,636 | ) | 5,846 | — | (1,747 | ) | ||||||||||||
Income (loss) from continuing operations | 33,502 | 25,417 | 17,105 | (41,766 | ) | 34,258 | ||||||||||||||
Gain on disposal of discontinued business (net of tax) | — | (756 | ) | — | — | (756 | ) | |||||||||||||
Net income (loss) | $ | 33,502 | $ | 24,661 | $ | 17,105 | $ | (41,766 | ) | $ | 33,502 | |||||||||
F-44
Table of Contents
For the Successor period February 15, 2007 through December 31, 2007
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 33,502 | $ | 24,661 | $ | 17,105 | $ | (41,766 | ) | $ | 33,502 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 575 | 33,749 | 2,123 | — | 36,447 | |||||||||||||||
Equity in earnings of subsidiaries | (41,766 | ) | — | — | 41,766 | — | ||||||||||||||
Net loss on sale or disposal of properties | — | 1,141 | — | — | 1,141 | |||||||||||||||
Foreign exchange gain on debt | — | — | (7,048 | ) | — | (7,048 | ) | |||||||||||||
Equity compensation costs | 1,178 | — | — | — | 1,178 | |||||||||||||||
Deferred income taxes and other | (2,934 | ) | (5,599 | ) | 465 | — | (8,068 | ) | ||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | 212 | 21,237 | (35,674 | ) | — | (14,225 | ) | |||||||||||||
Other current assets | (1,900 | ) | (2,100 | ) | 323 | — | (3,677 | ) | ||||||||||||
Accounts payable | 19,898 | (18,670 | ) | 5,719 | — | 6,947 | ||||||||||||||
Accrued expenses | 4,658 | 13,699 | 1,225 | — | 19,582 | |||||||||||||||
Other assets and liabilities | 785 | 1,224 | 143 | — | 2,152 | |||||||||||||||
Net cash provided by (used in) operating activities | 14,208 | 69,342 | (15,619 | ) | — | 67,931 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | — | (57,281 | ) | (8,119 | ) | — | (65,400 | ) | ||||||||||||
Proceeds from sale of assets | — | 2,066 | 698 | — | 2,764 | |||||||||||||||
Acquisition, net of cash acquired | (694,478 | ) | (390,536 | ) | (2,437 | ) | — | (1,087,451 | ) | |||||||||||
Net cash used in investing activities | (694,478 | ) | (445,751 | ) | (9,858 | ) | — | (1,150,087 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | 112,000 | 475,000 | 38,000 | — | 625,000 | |||||||||||||||
Principal payments on long-term debt | — | (117 | ) | — | — | (117 | ) | |||||||||||||
(Disbursements)/receipts on intercompany debt | 102,030 | (92,026 | ) | (10,004 | ) | — | — | |||||||||||||
Capital contribution | 465,000 | — | — | — | 465,000 | |||||||||||||||
Sale of common stock | 3,735 | — | — | — | 3,735 | |||||||||||||||
Financing costs | (720 | ) | (3,670 | ) | (287 | ) | — | (4,677 | ) | |||||||||||
Net cash provided by financing activities | 682,045 | 379,187 | 27,709 | — | 1,088,941 | |||||||||||||||
Effect of exchange rates on cash | — | — | 608 | — | 608 | |||||||||||||||
Net increase in cash | 1,775 | 2,778 | 2,840 | — | 7,393 | |||||||||||||||
Cash, beginning of period | 6,304 | (1,514 | ) | 3,204 | — | 7,994 | ||||||||||||||
Cash, end of period | $ | 8,079 | $ | 1,264 | $ | 6,044 | $ | — | $ | 15,387 | ||||||||||
F-45
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 9 | $ | 48,912 | $ | 6,845 | $ | — | $ | 55,766 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | — | 39,019 | 4,930 | — | 43,949 | |||||||||||||||
Selling, general and administrative | 6,815 | 1,603 | (31 | ) | — | 8,387 | ||||||||||||||
Net gain on sale of assets | — | (20 | ) | (7 | ) | — | (27 | ) | ||||||||||||
Depreciation and amortization | 25 | 3,855 | 968 | — | 4,848 | |||||||||||||||
Total operating expenses | 6,840 | 44,457 | 5,860 | — | 57,157 | |||||||||||||||
Operating (loss) income | (6,831 | ) | 4,455 | 985 | — | (1,391 | ) | |||||||||||||
Interest expense | 69 | (3,065 | ) | (279 | ) | — | (3,275 | ) | ||||||||||||
Equity in earnings of subsidiaries | (1,384 | ) | — | — | 1,384 | — | ||||||||||||||
Other income (loss) | 1,471 | (1,157 | ) | (30 | ) | — | 284 | |||||||||||||
Income (loss) from continuing operations before income taxes | (6,675 | ) | 233 | 676 | 1,384 | (4,382 | ) | |||||||||||||
Provision for (benefit from) income taxes | (1,358 | ) | 508 | 1,785 | — | 935 | ||||||||||||||
Income (loss) from continuing operations | (5,317 | ) | (275 | ) | (1,109 | ) | 1,384 | (5,317 | ) | |||||||||||
Gain on disposal of discontinued business (net of tax) | — | — | — | — | — | |||||||||||||||
Net income (loss) | $ | (5,317 | ) | $ | (275 | ) | $ | (1,109 | ) | $ | 1,384 | $ | (5,317 | ) | ||||||
F-46
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (5,317 | ) | $ | (275 | ) | $ | (1,109 | ) | $ | 1,384 | $ | (5,317 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 24 | 3,954 | 939 | — | 4,917 | |||||||||||||||
Equity in earnings of subsidiaries | 1,384 | — | — | (1,384 | ) | — | ||||||||||||||
Net gain on sale or disposal of properties | — | (20 | ) | (7 | ) | — | (27 | ) | ||||||||||||
Equity compensation costs | 3,524 | — | — | — | 3,524 | |||||||||||||||
Deferred income taxes and other | (1,188 | ) | 508 | 1,785 | — | 1,105 | ||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | 8 | (31,989 | ) | 32,821 | — | 840 | ||||||||||||||
Other current assets | (20 | ) | 1,923 | 201 | — | 2,104 | ||||||||||||||
Accounts payable | (27,371 | ) | 24,877 | (4,328 | ) | — | (6,822 | ) | ||||||||||||
Accrued expenses | (3,909 | ) | 1,862 | (11 | ) | — | (2,058 | ) | ||||||||||||
Other assets and liabilities | 40 | (94 | ) | 25 | — | (29 | ) | |||||||||||||
Net cash provided by (used in) operating activities | (32,825 | ) | 746 | 30,316 | — | (1,763 | ) | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | — | (5,394 | ) | (151 | ) | — | (5,545 | ) | ||||||||||||
Proceeds from sale of assets | — | 89 | 8 | — | 97 | |||||||||||||||
Net cash used in investing activities | — | (5,305 | ) | (143 | ) | — | (5,448 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 34,000 | 3,601 | — | 37,601 | |||||||||||||||
Principal payments on long-term debt | — | (1,505 | ) | (33,738 | ) | — | (35,243 | ) | ||||||||||||
(Disbursements)/receipts on intercompany debt | 30,795 | (29,894 | ) | (901 | ) | — | — | |||||||||||||
Proceeds from exercise of stock options and warrants | 100 | — | — | — | 100 | |||||||||||||||
Net cash provided by (used in) financing activities | 30,895 | 2,601 | (31,038 | ) | — | 2,458 | ||||||||||||||
Effect of exchange rates on cash | — | — | (24 | ) | — | (24 | ) | |||||||||||||
Net (decrease) increase in cash | (1,930 | ) | (1,958 | ) | (889 | ) | — | (4,777 | ) | |||||||||||
Cash, beginning of period | 8,234 | 444 | 4,093 | — | 12,771 | |||||||||||||||
Cash, end of period | $ | 6,304 | $ | (1,514 | ) | $ | 3,204 | $ | — | $ | 7,994 | |||||||||
F-47
Table of Contents
For the Predecessor year ended December 31, 2006
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 363 | $ | 404,385 | $ | 57,832 | $ | — | $ | 462,580 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | — | 246,268 | 32,046 | — | 278,314 | |||||||||||||||
Selling, general and administrative | 28,463 | 63,768 | 7,284 | — | 99,515 | |||||||||||||||
Net gain on sale of assets | — | (3,362 | ) | (22 | ) | — | (3,384 | ) | ||||||||||||
Depreciation and amortization | 201 | 29,352 | 8,579 | — | 38,132 | |||||||||||||||
Total operating expenses | 28,664 | 336,026 | 47,887 | — | 412,577 | |||||||||||||||
Operating (loss) income | (28,301 | ) | 68,359 | 9,945 | — | 50,003 | ||||||||||||||
Interest expense | 210 | (24,988 | ) | (2,614 | ) | — | (27,392 | ) | ||||||||||||
Equity in earnings of subsidiaries | 47,308 | — | — | (47,308 | ) | — | ||||||||||||||
Other income (loss) | 18,900 | (13,845 | ) | (5,055 | ) | — | — | |||||||||||||
Income (loss) from continuing operations before income taxes | 38,117 | 29,526 | 2,276 | (47,308 | ) | 22,611 | ||||||||||||||
Provision for (benefit from) income taxes | 1,474 | (5,898 | ) | (385 | ) | — | (4,809 | ) | ||||||||||||
Income (loss) from continuing operations | 36,643 | 35,424 | 2,661 | (47,308 | ) | 27,420 | ||||||||||||||
Gain on disposal of discontinued business (net of tax) | — | 6,695 | 2,365 | — | 9,060 | |||||||||||||||
Income from operations of discontinued business (net of tax) | — | — | 163 | — | 163 | |||||||||||||||
Net income (loss) | $ | 36,643 | $ | 42,119 | $ | 5,189 | $ | (47,308 | ) | $ | 36,643 | |||||||||
F-48
Table of Contents
For the Predecessor year ended December 31, 2006
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 36,643 | $ | 42,119 | $ | 5,189 | $ | (47,308 | ) | $ | 36,643 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 201 | 29,771 | 8,800 | — | 38,772 | |||||||||||||||
Equity in earnings of subsidiaries | (47,308 | ) | — | — | 47,308 | — | ||||||||||||||
Net loss on sale or disposal of properties | — | (16,507 | ) | (2,551 | ) | — | (19,058 | ) | ||||||||||||
Equity compensation costs | 2,604 | — | — | — | 2,604 | |||||||||||||||
Deferred income taxes and other | 325 | (636 | ) | (1,764 | ) | — | (2,075 | ) | ||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | 18 | 3,906 | 981 | — | 4,905 | |||||||||||||||
Other current assets | 38 | 59 | 479 | — | 576 | |||||||||||||||
Accounts payable | 532 | (5,118 | ) | (1,980 | ) | — | (6,566 | ) | ||||||||||||
Accrued expenses | 3,171 | 2,297 | (1,015 | ) | — | 4,453 | ||||||||||||||
Other assets and liabilities | 85 | 3,372 | (3,108 | ) | — | 349 | ||||||||||||||
Net cash provided by (used in) operating activities | (3,691 | ) | 59,263 | 5,031 | — | 60,603 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | (26 | ) | (51,749 | ) | (18,650 | ) | — | (70,425 | ) | |||||||||||
Proceeds from sale of assets | — | 4,452 | 30,977 | — | 35,429 | |||||||||||||||
Net cash provided by (used in) investing activities | (26 | ) | (47,297 | ) | 12,327 | — | (34,996 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 48,400 | — | — | 48,400 | |||||||||||||||
Principal payments on long-term debt | — | (79,131 | ) | (2,504 | ) | — | (81,635 | ) | ||||||||||||
(Disbursements)/receipts on intercompany debt | 5,666 | 18,893 | (24,559 | ) | — | — | ||||||||||||||
Proceeds from exercise of stock options and warrants | 6,154 | — | — | — | 6,154 | |||||||||||||||
Net cash provided by (used in) financing activities | 11,820 | (11,838 | ) | (27,063 | ) | — | (27,081 | ) | ||||||||||||
Effect of exchange rates on cash | — | — | (65 | ) | — | (65 | ) | |||||||||||||
Net (decrease) increase in cash | 8,103 | 128 | (9,770 | ) | — | (1,539 | ) | |||||||||||||
Cash, beginning of period | 131 | 316 | 13,863 | — | 14,310 | |||||||||||||||
Cash, end of period | $ | 8,234 | $ | 444 | $ | 4,093 | $ | — | $ | 12,771 | ||||||||||
F-49
Table of Contents
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
(In thousands, except | ||||||||
share data) | ||||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 23,930 | $ | 26,951 | ||||
Accounts and notes receivable, net of allowance of $3,983 and $3,338, respectively | 76,146 | 76,384 | ||||||
Other current assets | 16,403 | 18,480 | ||||||
Current deferred tax assets | 5,854 | 5,854 | ||||||
Total current assets | 122,333 | 127,669 | ||||||
Property, plant and equipment, net | 948,883 | 953,604 | ||||||
Intangible assets | 172,445 | 172,859 | ||||||
Goodwill | 205,048 | 204,701 | ||||||
Other assets | 20,374 | 16,561 | ||||||
Total assets | $ | 1,469,083 | $ | 1,475,394 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 709 | $ | 899 | ||||
Accounts payable | 47,985 | 56,058 | ||||||
Accrued expenses | 28,266 | 51,349 | ||||||
Total current liabilities | 76,960 | 108,306 | ||||||
Long-term debt, less current maturities | 3,286 | 628,681 | ||||||
Senior secured notes | 709,889 | — | ||||||
Deferred income taxes | 163,455 | 149,695 | ||||||
Other liabilities | 32,459 | 117,192 | ||||||
Total liabilities | 986,049 | 1,003,874 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value, 46,800,000 shares authorized; 43,723,521 shares issued and outstanding at June 30, 2009; and 43,531,272 shares issued and outstanding at December 31, 2008 | 437 | 435 | ||||||
Additional paid in capital and other | 470,509 | 470,578 | ||||||
Retained earnings | 49,771 | 50,029 | ||||||
Accumulated other comprehensive loss | (37,683 | ) | (49,522 | ) | ||||
Total stockholders’ equity | 483,034 | 471,520 | ||||||
Total liabilities and stockholders’ equity | $ | 1,469,083 | $ | 1,475,394 | ||||
F-50
Table of Contents
For the Six Months Ended | ||||||||
June 30, | ||||||||
2009 | 2008 | |||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
Operating revenue | $ | 206,483 | $ | 255,240 | ||||
Operating expenses: | ||||||||
Transportation | 91,450 | 144,364 | ||||||
Selling, general and administrative | 48,144 | 50,105 | ||||||
Net gain on sale of assets | 1,014 | (98 | ) | |||||
Depreciation and amortization | 20,566 | 19,599 | ||||||
Total operating expenses | 161,174 | 213,970 | ||||||
Operating income | 45,309 | 41,270 | ||||||
Interest expense, including amortization costs (including amortization of swap termination costs of $972 and $0) | (35,263 | ) | (24,334 | ) | ||||
Other income (loss) | (1,420 | ) | (1,340 | ) | ||||
Income from continuing operations before income taxes | 8,626 | 15,596 | ||||||
Provision for income taxes | 2,350 | 10,525 | ||||||
Income from continuing operations | 6,276 | 5,071 | ||||||
Discontinued operations: | ||||||||
Gain (loss) on disposal of discontinued business (net of income taxes (benefit) of $322 and $(153), respectively) | 12,951 | (297 | ) | |||||
Net income | $ | 19,227 | $ | 4,774 | ||||
Dividends declared and paid per common share | $ | 0.46 | $ | — | ||||
Basic earnings (loss) per common share: | ||||||||
Continuing operations | $ | 0.15 | $ | 0.12 | ||||
Discontinued operations | 0.30 | (0.01 | ) | |||||
Net Income | $ | 0.45 | $ | 0.11 | ||||
Diluted earnings (loss) per common share: | ||||||||
Continuing operations | $ | 0.15 | $ | 0.12 | ||||
Discontinued operations | 0.30 | (0.01 | ) | |||||
Net Income | $ | 0.45 | $ | 0.11 | ||||
Weighted Average common shares outstanding: | ||||||||
Basic | 43,672 | 43,337 | ||||||
Diluted | 43,672 | 43,337 |
F-51
Table of Contents
For the Six Months Ended | ||||||||
June 30, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 19,227 | $ | 4,774 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization, including amortization of debt issuance costs classified in interest expense | 28,150 | 21,688 | ||||||
Amortization of swap termination costs | 972 | — | ||||||
Net (gain) loss on sale or disposal of properties | (12,258 | ) | 353 | |||||
Foreign exchange (gain) loss on debt | (1,160 | ) | 1,340 | |||||
Swap termination costs | (55,750 | ) | — | |||||
Write-off of deferred financing costs | 2,593 | — | ||||||
Equity compensation costs | 1,942 | 1,695 | ||||||
Deferred income taxes | 664 | 10,372 | ||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||
Accounts receivable | 707 | 7,828 | ||||||
Other current assets | 2,225 | 2,622 | ||||||
Accounts payable | (9,087 | ) | (8,309 | ) | ||||
Accrued expenses | (22,471 | ) | (3,927 | ) | ||||
Other assets and liabilities | 888 | 318 | ||||||
Net cash (used in) provided by operating activities | (43,358 | ) | 38,754 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property, plant and equipment | (25,766 | ) | (29,625 | ) | ||||
Proceeds from sale of assets | 19,620 | 690 | ||||||
Deferred acquisition/disposition costs and other | (355 | ) | — | |||||
Net cash used in investing activities | (6,501 | ) | (28,935 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of long-term debt | 709,830 | — | ||||||
Principal payments on long-term debt | (625,585 | ) | (1,290 | ) | ||||
Dividends paid to common stockholders | (19,485 | ) | — | |||||
Sale of common stock | — | 635 | ||||||
Deferred financing costs paid | (17,863 | ) | — | |||||
Net cash provided by (used in) financing activities | 46,897 | (655 | ) | |||||
Effect of exchange rates on cash | (59 | ) | (167 | ) | ||||
Net (decrease) increase in cash | (3,021 | ) | 8,997 | |||||
Cash, beginning of period | 26,951 | 15,387 | ||||||
Cash, end of period | $ | 23,930 | $ | 24,384 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 37,558 | $ | 23,511 | ||||
Income taxes paid | $ | 1,713 | $ | 3,996 |
F-52
Table of Contents
1. | PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION |
2. | RECENT ACCOUNTING PRONOUNCEMENTS |
F-53
Table of Contents
F-54
Table of Contents
3. | EARNINGS PER SHARE |
For the Six Months Ended June 30, | ||||||||
2009 | 2008 | |||||||
Income from continuing operations (basic and diluted) | $ | 6,276 | $ | 5,071 | ||||
Compensation expense recorded for dividends paid to unvested restricted shares, net of tax | 307 | — | ||||||
Income from continuing operations available to common stockholders (basic and diluted) | $ | 6,583 | $ | 5,071 | ||||
Weighted average shares outstanding (basic and diluted) | 43,672 | 43,337 |
4. | STOCK-BASED COMPENSATION |
F-55
Table of Contents
Time Based | ||||||||
Balance at December 31, 2008 | 1,100,961 | $ | 12.20 | |||||
Granted | 256,176 | $ | 15.47 | |||||
Vested | (185,004 | ) | $ | 12.11 | ||||
Cancelled | (17,073 | ) | $ | 11.96 | ||||
Balance at June 30, 2009 | 1,155,060 | $ | 12.88 | |||||
5. | DISCONTINUED OPERATIONS |
6. | LONG-TERM DEBT |
F-56
Table of Contents
7. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
F-57
Table of Contents
• | Current assets and current liabilities: The carrying value approximates fair value due to the short maturity of these items. | |
• | Long-term debt: The fair value of the Company’s Senior Secured Notes is based on secondary market indicators. The carrying amount of the Company’s other long term debt approximates its fair value. | |
• | Derivatives: The carrying value is based on fair value as of the balance sheet date. SFAS 157 requires companies to maximize the use of observable inputs (Level 1 and Level 2), when available, and to minimize the use of unobservable inputs (Level 3) when determining fair value. The Company’s measurement of the fair value of interest rate derivatives is based on estimates of the mid-market values for the transactions provided by the counterparties to these agreements. For derivative instruments in an asset position, the Company also analyzes the credit standing of the counterparty and factors it into the fair value measurement. SFAS 157 states that the fair value of a liability also must reflect the nonperformance risk of the reporting entity. Therefore, the impact of the Company’s credit worthiness has also been factored into the fair value measurement of the derivative instruments in a liability position. This methodology is a market approach, which under SFAS 157 utilizes Level 2 inputs as it uses market data for similar instruments in active markets. See Note 8 for further fair value disclosure of the Company’s interest rate swap. As the Company terminated its interest rate swap agreement in conjunction with the refinancing of its bridge credit facility on June 23, 2009, the swap had no fair value as of June 30, 2009. |
June 30, 2009 | ||||||||
Carrying | Fair | |||||||
Amount | Value | |||||||
Cash and cash equivalents | $ | 23,930 | $ | 23,930 | ||||
9.25% Senior secured notes | $ | 709,889 | $ | 709,475 |
8. | DERIVATIVE FINANCIAL INSTRUMENTS |
F-58
Table of Contents
The Effect of Derivative Instruments on Statement of Operations | ||||||||||||||||
Amount of Gain | ||||||||||||||||
or (Loss) | ||||||||||||||||
Recognized in | ||||||||||||||||
Accumulated | Location of Gain | Amount of Gain | ||||||||||||||
Other | (Loss) | (Loss) | Location of Gain | Amount of | ||||||||||||
Comprehensive | Reclassified from | Reclassified from | (Loss) Recognized | Gain (Loss) | ||||||||||||
Derivatives in SFAS 133 | Income (AOCI) | AOCI into | AOCI into | in Income on | Recognized in | |||||||||||
Cash Flow Hedging | on Derivative | Income (Effective | Income (Effective | Derivative (Ineffective | Income on Derivative | |||||||||||
Relationships | (Effective Portion) | Portion) | Portion) | Portion) | (Ineffective Portion) | |||||||||||
Interest Rate Swap | $ | 5,322 | Interest Expense | $ | (7,270 | ) | Interest Expense | $ | (278 | ) |
F-59
Table of Contents
9. | COMMON STOCK TRANSACTIONS |
10. | TRACK MAINTENANCE AGREEMENT |
11. | INCOME TAX PROVISION |
F-60
Table of Contents
Balance at January 1, 2009 | $ | 29,995 | ||
Additions based on tax positions related to the current year | — | |||
Additions for tax positions of prior years | 158 | |||
Reductions for tax positions of prior years | — | |||
Settlements with taxing authorities | (20,993 | ) | ||
Lapse of statute of limitations | — | |||
Balance at June 30, 2009 | $ | 9,160 | ||
12. | COMPREHENSIVE INCOME |
For the Six Months | ||||||||
Ended June 30, | ||||||||
2009 | 2008 | |||||||
Net income | $ | 19,227 | $ | 4,774 | ||||
Other comprehensive income | ||||||||
Unrealized gain on derivatives designated as hedges, net of taxes of $3,262 and $1,226 | 5,322 | 2,000 | ||||||
Amortization of terminated swap costs, net of taxes of $369 | 603 | — | ||||||
Change in cumulative translation adjustments | 5,914 | 3,548 | ||||||
Total comprehensive income | $ | 31,066 | $ | 10,322 | ||||
13. | PENSION DISCLOSURES |
Pension Benefits | ||||||||
For the Six Months | ||||||||
Ended June 30, | ||||||||
2009 | 2008 | |||||||
Service cost | $ | 83 | $ | 178 | ||||
Interest cost | 265 | 307 | ||||||
Expected return on plan assets | (188 | ) | (249 | ) | ||||
Amortization of net actuarial loss | 19 | 74 | ||||||
Amortization of prior service costs | 10 | 12 | ||||||
Net cost recognized | $ | 189 | $ | 322 | ||||
F-61
Table of Contents
Health and Welfare | ||||||||
Benefits | ||||||||
For the Six Months | ||||||||
Ended June 30, | ||||||||
2009 | 2008 | |||||||
Service cost | $ | 21 | $ | 22 | ||||
Interest cost | 62 | 64 | ||||||
Amortization of net actuarial gain | (35 | ) | (30 | ) | ||||
Net cost recognized | $ | 48 | $ | 56 | ||||
14. | COMMITMENTS AND CONTINGENCIES |
F-62
Table of Contents
15. | RELATED PARTY TRANSACTIONS |
16. | RESTRUCTURING COSTS |
F-63
Table of Contents
17. | SUBSEQUENT EVENT |
18. | GUARANTOR FINANCIAL STATEMENT INFORMATION |
F-64
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 20,008 | $ | 1,325 | $ | 2,597 | $ | — | $ | 23,930 | ||||||||||
Accounts and notes receivable, net of allowance | 3,137 | 66,654 | 6,355 | — | 76,146 | |||||||||||||||
Other current assets | 360 | 14,780 | 1,263 | — | 16,403 | |||||||||||||||
Current deferred tax assets | 5,854 | — | — | — | 5,854 | |||||||||||||||
Total current assets | 29,359 | 82,759 | 10,215 | — | 122,333 | |||||||||||||||
Property, plant and equipment, net | 157 | 875,311 | 73,415 | — | 948,883 | |||||||||||||||
Intangible Assets | — | 105,644 | 66,801 | — | 172,445 | |||||||||||||||
Goodwill | — | 198,300 | 6,748 | 205,048 | ||||||||||||||||
Other assets | 16,773 | 3,617 | (16 | ) | — | 20,374 | ||||||||||||||
Investment in and advances to affiliates | 1,161,207 | 1,271,506 | 21,810 | (2,454,523 | ) | — | ||||||||||||||
Total assets | $ | 1,207,496 | $ | 2,537,137 | $ | 178,973 | $ | (2,454,523 | ) | $ | 1,469,083 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 709 | $ | — | $ | — | $ | 709 | ||||||||||
Accounts payable | 5,108 | 40,797 | 2,080 | — | 47,985 | |||||||||||||||
Accrued expenses | 5,741 | 17,270 | 5,255 | — | 28,266 | |||||||||||||||
Total current liabilities | 10,849 | 58,776 | 7,335 | — | 76,960 | |||||||||||||||
Long-term debt, less current maturities | — | 3,286 | — | — | 3,286 | |||||||||||||||
Senior secured notes | 709,889 | — | — | — | 709,889 | |||||||||||||||
Deferred income taxes | (13,001 | ) | 160,740 | 15,716 | — | 163,455 | ||||||||||||||
Other liabilities | 16,725 | 14,298 | 1,436 | — | 32,459 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 437 | 1,493 | — | (1,493 | ) | 437 | ||||||||||||||
Additional paid-in capital | 470,509 | 2,215,024 | 129,954 | (2,344,978 | ) | 470,509 | ||||||||||||||
Retained earnings | 49,771 | 83,337 | 25,325 | (108,662 | ) | 49,771 | ||||||||||||||
Accumulated other comprehensive income (loss) | (37,683 | ) | 183 | (793 | ) | 610 | (37,683 | ) | ||||||||||||
Total stockholders’ equity | 483,034 | 2,300,037 | 154,486 | (2,454,523 | ) | 483,034 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,207,496 | $ | 2,537,137 | $ | 178,973 | $ | (2,454,523 | ) | $ | 1,469,083 | |||||||||
F-65
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 99 | $ | 180,560 | $ | 25,824 | $ | — | $ | 206,483 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | (8,252 | ) | 85,450 | 14,252 | — | 91,450 | ||||||||||||||
Selling, general and administrative | 13,091 | 31,902 | 3,151 | — | 48,144 | |||||||||||||||
Net loss (gain) on sale of assets | — | 1,047 | (33 | ) | — | 1,014 | ||||||||||||||
Depreciation and amortization | 104 | 19,027 | 1,435 | — | 20,566 | |||||||||||||||
Total operating expenses | 4,943 | 137,426 | 18,805 | — | 161,174 | |||||||||||||||
Operating (loss) income | (4,844 | ) | 43,134 | 7,019 | — | 45,309 | ||||||||||||||
Interest expense | (15,211 | ) | (18,389 | ) | (1,663 | ) | — | (35,263 | ) | |||||||||||
Equity in earnings of subsidiaries | 22,283 | — | — | (22,283 | ) | — | ||||||||||||||
Other income (loss) | 8,233 | (7,834 | ) | (1,819 | ) | — | (1,420 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | 10,461 | 16,911 | 3,537 | (22,283 | ) | 8,626 | ||||||||||||||
Provision for income taxes | 2,350 | — | — | — | 2,350 | |||||||||||||||
Income (loss) from continuing operations | 8,111 | 16,911 | 3,537 | (22,283 | ) | 6,276 | ||||||||||||||
Gain on disposal of discontinued business (net of tax) | 11,116 | 1,651 | 184 | — | 12,951 | |||||||||||||||
Net income (loss) | $ | 19,227 | $ | 18,562 | $ | 3,721 | $ | (22,283 | ) | $ | 19,227 | |||||||||
F-66
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 19,227 | $ | 18,562 | $ | 3,721 | $ | (22,283 | ) | $ | 19,227 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 705 | 25,322 | 2,123 | — | 28,150 | |||||||||||||||
Equity in earnings of subsidiaries | (22,283 | ) | — | — | 22,283 | — | ||||||||||||||
Amortization of swap termination costs | 972 | — | — | — | 972 | |||||||||||||||
Net gain on sale or disposal of properties | (11,116 | ) | (835 | ) | (307 | ) | — | (12,258 | ) | |||||||||||
Foreign exchange gain on debt | — | — | (1,160 | ) | — | (1,160 | ) | |||||||||||||
Swap termination costs | (55,750 | ) | — | — | — | (55,750 | ) | |||||||||||||
Write-off of deferred financing costs | 509 | 1,875 | 209 | — | 2,593 | |||||||||||||||
Equity compensation costs | 1,942 | — | — | — | 1,942 | |||||||||||||||
Deferred income taxes | 342 | 232 | 90 | — | 664 | |||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | (3,048 | ) | 2,038 | 1,717 | — | 707 | ||||||||||||||
Other current assets | (129 | ) | 1,844 | 510 | — | 2,225 | ||||||||||||||
Accounts payable | 1,298 | (5,040 | ) | (5,345 | ) | — | (9,087 | ) | ||||||||||||
Accrued expenses | (3,573 | ) | (18,896 | ) | (2 | ) | — | (22,471 | ) | |||||||||||
Other assets and liabilities | 268 | 463 | 157 | — | 888 | |||||||||||||||
Net cash provided by (used in) operating activities | (70,636 | ) | 25,565 | 1,713 | — | (43,358 | ) | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | — | (23,534 | ) | (2,232 | ) | — | (25,766 | ) | ||||||||||||
Proceeds from sale of assets | — | 19,338 | 282 | — | 19,620 | |||||||||||||||
Deferred acquisition/disposition costs and other | (355 | ) | — | — | — | (355 | ) | |||||||||||||
Net cash used in investing activities | (355 | ) | (4,196 | ) | (1,950 | ) | — | (6,501 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | 709,830 | — | — | — | 709,830 | |||||||||||||||
Principal payments on long-term debt | (112,000 | ) | (475,585 | ) | (38,000 | ) | — | (625,585 | ) | |||||||||||
(Disbursements)/receipts on intercompany debt | (473,827 | ) | 441,944 | 31,883 | — | — | ||||||||||||||
Dividends paid to common stockholders | (19,485 | ) | — | — | — | (19,485 | ) | |||||||||||||
Deferred financing costs paid | (16,723 | ) | (1,140 | ) | — | — | (17,863 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 87,795 | (34,781 | ) | (6,117 | ) | — | 46,897 | |||||||||||||
Effect of exchange rates on cash | — | — | (59 | ) | — | (59 | ) | |||||||||||||
Net (decrease) increase in cash | 16,804 | (13,412 | ) | (6,413 | ) | — | (3,021 | ) | ||||||||||||
Cash, beginning of period | 3,204 | 14,737 | 9,010 | — | 26,951 | |||||||||||||||
Cash, end of period | $ | 20,008 | $ | 1,325 | $ | 2,597 | $ | — | $ | 23,930 | ||||||||||
F-67
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 3,204 | $ | 14,737 | $ | 9,010 | $ | — | $ | 26,951 | ||||||||||
Accounts and notes receivable, net of allowance | 89 | 68,693 | 7,602 | — | 76,384 | |||||||||||||||
Other current assets | 243 | 16,548 | 1,689 | — | 18,480 | |||||||||||||||
Current deferred tax assets | 5,854 | — | — | — | 5,854 | |||||||||||||||
Total current assets | 9,390 | 99,978 | 18,301 | — | 127,669 | |||||||||||||||
Property, plant and equipment, net | 262 | 884,819 | 68,523 | — | 953,604 | |||||||||||||||
Intangible Assets | — | 109,376 | 63,483 | — | 172,859 | |||||||||||||||
Goodwill | — | 198,331 | 6,370 | 204,701 | ||||||||||||||||
Other assets | 4,531 | 11,148 | 882 | — | 16,561 | |||||||||||||||
Investment in and advances to affiliates | 647,390 | 1,725,414 | 56,842 | (2,429,646 | ) | — | ||||||||||||||
Total assets | $ | 661,573 | $ | 3,029,066 | $ | 214,401 | $ | (2,429,646 | ) | $ | 1,475,394 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 899 | $ | — | $ | — | $ | 899 | ||||||||||
Accounts payable | 3,310 | 45,781 | 6,967 | — | 56,058 | |||||||||||||||
Accrued expenses | 9,214 | 36,849 | 5,286 | — | 51,349 | |||||||||||||||
Total current liabilities | 12,524 | 83,529 | 12,253 | — | 108,306 | |||||||||||||||
Long-term debt, less current maturities | 112,000 | 478,681 | 38,000 | — | 628,681 | |||||||||||||||
Deferred income taxes | (36,210 | ) | 171,067 | 14,838 | — | 149,695 | ||||||||||||||
Other liabilities | 101,739 | 14,253 | 1,200 | — | 117,192 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 435 | 1,493 | — | (1,493 | ) | 435 | ||||||||||||||
Additional paid-in capital | 470,578 | 2,215,023 | 135,373 | (2,350,396 | ) | 470,578 | ||||||||||||||
Retained earnings | 50,029 | 64,775 | 21,605 | (86,380 | ) | 50,029 | ||||||||||||||
Accumulated other comprehensive income (loss) | (49,522 | ) | 245 | (8,868 | ) | 8,623 | (49,522 | ) | ||||||||||||
Total stockholders’ equity | 471,520 | 2,281,536 | 148,110 | (2,429,646 | ) | 471,520 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 661,573 | $ | 3,029,066 | $ | 214,401 | $ | (2,429,646 | ) | $ | 1,475,394 | |||||||||
F-68
Table of Contents
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Operating revenue | $ | 74 | $ | 219,035 | $ | 36,131 | $ | — | $ | 255,240 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Transportation | — | 125,861 | 18,503 | — | 144,364 | |||||||||||||||
Selling, general and administrative | 11,428 | 34,478 | 4,199 | — | 50,105 | |||||||||||||||
Net gain on sale of assets | — | (98 | ) | — | — | (98 | ) | |||||||||||||
Depreciation and amortization | 105 | 18,187 | 1,307 | — | 19,599 | |||||||||||||||
Total operating expenses | 11,533 | 178,428 | 24,009 | — | 213,970 | |||||||||||||||
Operating (loss) income | (11,459 | ) | 40,607 | 12,122 | — | 41,270 | ||||||||||||||
Interest expense | (7,760 | ) | (15,517 | ) | (1,057 | ) | — | (24,334 | ) | |||||||||||
Equity in earnings of subsidiaries | 27,931 | — | — | (27,931 | ) | — | ||||||||||||||
Other income (loss) | 6,587 | (4,489 | ) | (3,438 | ) | — | (1,340 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | 15,299 | 20,601 | 7,627 | (27,931 | ) | 15,596 | ||||||||||||||
Provision for income taxes | 10,525 | — | — | — | 10,525 | |||||||||||||||
Income (loss) from continuing operations | 4,774 | 20,601 | 7,627 | (27,931 | ) | 5,071 | ||||||||||||||
Gain on disposal of discontinued business (net of tax) | — | (297 | ) | — | — | (297 | ) | |||||||||||||
Net income (loss) | $ | 4,774 | $ | 20,304 | $ | 7,627 | $ | (27,931 | ) | $ | 4,774 | |||||||||
F-69
Table of Contents
For the six months ended June 30, 2008
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 4,774 | $ | 20,304 | $ | 7,627 | $ | (27,931 | ) | $ | 4,774 | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization, including amortization costs classified in interest expense | 737 | 19,587 | 1,364 | — | 21,688 | |||||||||||||||
Equity in earnings of subsidiaries | (27,931 | ) | — | — | 27,931 | — | ||||||||||||||
Net loss on sale or disposal of properties | — | 353 | — | — | 353 | |||||||||||||||
Foreign exchange loss on debt | — | — | 1,340 | — | 1,340 | |||||||||||||||
Equity compensation costs | 1,695 | — | — | — | 1,695 | |||||||||||||||
Deferred income taxes | 10,525 | (153 | ) | — | — | 10,372 | ||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
Accounts receivable | (112 | ) | 7,920 | 20 | — | 7,828 | ||||||||||||||
Other current assets | 1,939 | (160 | ) | 843 | — | 2,622 | ||||||||||||||
Accounts payable | 2,100 | (4,665 | ) | (5,744 | ) | — | (8,309 | ) | ||||||||||||
Accrued expenses | (743 | ) | (3,461 | ) | 277 | — | (3,927 | ) | ||||||||||||
Other assets and liabilities | (682 | ) | 291 | 709 | — | 318 | ||||||||||||||
Net cash provided by (used in) operating activities | (7,698 | ) | 40,016 | 6,436 | — | 38,754 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | — | (27,108 | ) | (2,517 | ) | — | (29,625 | ) | ||||||||||||
Proceeds from sale of assets | — | 341 | 349 | — | 690 | |||||||||||||||
Net cash used in investing activities | — | (26,767 | ) | (2,168 | ) | — | (28,935 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Principal payments on long-term debt | — | (1,290 | ) | — | — | (1,290 | ) | |||||||||||||
(Disbursements)/receipts on intercompany debt | 7,603 | (2,816 | ) | (4,787 | ) | — | — | |||||||||||||
Sale of common stock | 635 | — | — | 635 | ||||||||||||||||
Net cash provided by (used in) financing activities | 8,238 | (4,106 | ) | (4,787 | ) | — | (655 | ) | ||||||||||||
Effect of exchange rates on cash | — | — | (167 | ) | — | (167 | ) | |||||||||||||
Net (decrease) increase in cash | 540 | 9,143 | (686 | ) | — | 8,997 | ||||||||||||||
Cash, beginning of period | 8,079 | 1,264 | 6,044 | — | 15,387 | |||||||||||||||
Cash, end of period | $ | 8,619 | $ | 10,407 | $ | 5,358 | $ | — | $ | 24,384 | ||||||||||
F-70
Table of Contents
Table of Contents
Item 20. | Indemnification of Directors and Officers |
II-1
Table of Contents
Item 21. | Exhibits and Financial Statement Schedules |
A. | Exhibits |
Exhibit | ||||
No. | Description | |||
3 | .1 | Amended and Restated Certificate of Incorporation of the Registrant. | ||
3 | .2 | Amended and Restated Bylaws of the Registrant. | ||
4 | .1 | Stockholders Agreement by and between RailAmerica, Inc. and RR Acquisition Holding, LLC. | ||
4 | .2 | Indenture, dated as of June 23, 2009, by and between RailAmerica, Inc., the guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee and Notes Collateral Agent (incorporated by reference to Exhibit 4.3 to RailAmerica, Inc.’sForm S-1 filed on July 27, 2009). | ||
4 | .3 | Form of 9.25% Notes due 2017 (included in Exhibit 4.2). | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. | ||
10 | .1 | Credit Agreement, dated as of June 23, 2009, among RailAmerica, Inc., RailAmerica Transportation Corp., the several lenders from time to time parties thereto, Citicorp North America, Inc. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to RailAmerica, Inc.’sForm S-1 filed on September 1, 2009). | ||
10 | .2 | RailAmerica, Inc. 2008 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Amendment No. 2 to RailAmerica, Inc.’sForm S-1 filed on September 22, 2009). | ||
10 | .3 | RailAmerica, Inc. 2009 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to RailAmerica, Inc.’sForm S-8 filed on October 13, 2009). | ||
10 | .4 | Form of Indemnification Agreement with directors and officers (incorporated by reference to Exhibit 10.4 to Amendment No. 2 to RailAmerica, Inc.’sForm S-1 filed on September 22, 2009). | ||
10 | .5 | Form of Management Shareholder Award Agreement (incorporated by reference to Exhibit 10.5 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .6 | Form of Amended and Restated Restricted Share Agreement for Bonus Restricted Shares under the RailAmerica, Inc. Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .7 | Form of Director Restricted Share Agreement (incorporated by reference to Exhibit 10.7 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .8 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and John Giles (incorporated by reference to Exhibit 10.8 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). |
II-2
Table of Contents
Exhibit | ||||
No. | Description | |||
10 | .9 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Clyde Preslar (incorporated by reference to Exhibit 10.9 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .10 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and David Rohal (incorporated by reference to Exhibit 10.10 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .11 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Paul Lundberg (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .12 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Charles Patterson (incorporated by reference to Exhibit 10.12 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .13 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Scott Williams (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .14 | Form of FECR Rail Corp. Consulting Agreement (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .15 | Form of FECR Rail Corp. Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.15 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .16 | Form of Florida East Coast Industries, Inc. Consulting Agreement (incorporated by reference to Exhibit 10.16 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .17 | Form of Florida East Coast Industries, Inc. Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.17 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
12 | .1 | Statement Regarding Computation of Ratio of Earnings to Fixed Charges. | ||
21 | .1 | Subsidiaries of the Registrant. | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). | ||
24 | .1 | Power of Attorney (included as part of the signature page). | ||
25 | .1 | Statement of Eligibility of Trustee onForm T-1. | ||
99 | .1 | Form of Letter of Transmittal. | ||
99 | .2 | Form of Letter to Clients. | ||
99 | .3 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. |
B. | Financial Statement Schedules |
Item 22. | Undertakings |
II-3
Table of Contents
II-4
Table of Contents
By: | /s/ John Giles |
Title: | President and Chief Executive Officer |
Name | Title | |||
/s/ Wesley R. Edens Wesley R. Edens | Chairman of the Board of Directors | |||
/s/ Joseph P. Adams, Jr. Joseph P. Adams, Jr. | Deputy Chairman of the Board of Directors | |||
/s/ Vincent T. Montgomery Vincent T. Montgomery | Director | |||
/s/ Robert Schmiege Robert Schmiege | Director | |||
/s/ John Giles John Giles | President and Chief Executive Officer (principal executive officer) | |||
/s/ Clyde Preslar Clyde Preslar | Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) |
II-5
Table of Contents
By: | /s/ Brad Ovitt |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Brad Ovitt Brad Ovitt | President (principal executive officer, principal financial officer and principal accounting officer) |
II-6
Table of Contents
By: | /s/ STEVE TRUITT |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Manager (In lieu of Director) | |||
/s/ Harold Tynes Harold Tynes | Manager (In lieu of Director) | |||
/s/ Kevin Polansky Kevin Polansky | Manager (In lieu of Director) | |||
/s/ Steve Truitt Steve Truitt | President (principal executive officer, principal financial officer and principal accounting officer) |
II-7
Table of Contents
By: | /s/ Robert Jones |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Clyde Preslar Clyde Preslar | Director | |||
/s/ Robert Jones Robert Jones | President (principal executive officer, principal financial officer and principal accounting officer) |
II-8
Table of Contents
By: | /s/ Ray Stephens |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Clyde Preslar Clyde Preslar | Director | |||
/s/ Ray Stephens Ray Stephens | President (principal executive officer, principal financial officer and principal accounting officer) |
II-9
Table of Contents
By: | /s/ Brad Ovitt |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Clyde Preslar Clyde Preslar | Director | |||
/s/ Brad Ovitt Brad Ovitt | President (principal executive officer, principal financial officer and principal accounting officer) |
II-10
Table of Contents
By: | /s/ Peter Touesnard |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Clyde Preslar Clyde Preslar | Director | |||
/s/ Peter Touesnard Peter Touesnard | President (principal executive officer, principal financial officer and principal accounting officer) |
II-11
Table of Contents
By: | /s/ Scott Williams |
Title: | President |
Name | Title | |||
/s/ Harold Tynes Harold Tynes | Manager (in lieu of Director) | |||
/s/ Clyde Preslar Clyde Preslar | Manager (in lieu of Director) | |||
/s/ Scott Williams Scott Williams | Manager (in lieu of Director), President (principal executive officer, principal financial officer and principal accounting officer) |
II-12
Table of Contents
By: | /s/ Scott Williams |
Title: | President |
Name | Title | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ Scott Williams Scott Williams | Director and President (principal executive officer, principal financial officer and principal accounting officer) |
II-13
Table of Contents
By: | /s/ David Rohal |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ David Rohal David Rohal | President (principal executive officer, principal financial officer and principal accounting officer) |
II-14
Table of Contents
By: | /s/ David Novak |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Director | |||
/s/ Harold Tynes Harold Tynes | Director | |||
/s/ David Novak David Novak | President (principal executive officer, principal financial officer and principal accounting officer) |
II-15
Table of Contents
By: | /s/ Ray Stephens |
Title: | President |
Name | Title | |||
/s/ Scott Williams Scott Williams | Manager (In lieu of Director) | |||
/s/ Harold Tynes Harold Tynes | Manager (In lieu of Director) | |||
/s/ Clyde Preslar Clyde Preslar | Manager (In lieu of Director) | |||
/s/ Ray Stephens Ray Stephens | President (principal executive officer, principal financial officer and principal accounting officer) |
II-16
Table of Contents
Exhibit | ||||
No. | Description | |||
3 | .1 | Amended and Restated Certificate of Incorporation of the Registrant. | ||
3 | .2 | Amended and Restated Bylaws of the Registrant. | ||
4 | .1 | Stockholders Agreement by and between RailAmerica, Inc. and RR Acquisition Holding, LLC. | ||
4 | .2 | Indenture, dated as of June 23, 2009, by and between RailAmerica, Inc., the guarantors named therein, as Guarantors, and U.S. Bank National Association, as Trustee and Notes Collateral Agent (incorporated by reference to Exhibit 4.3 to RailAmerica, Inc.’sForm S-1 filed on July 27, 2009). | ||
4 | .3 | Form of 9.25% Notes due 2017 (included in Exhibit 4.2). | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. | ||
10 | .1 | Credit Agreement, dated as of June 23, 2009, among RailAmerica, Inc., RailAmerica Transportation Corp., the several lenders from time to time parties thereto, Citicorp North America, Inc. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to RailAmerica, Inc.’sForm S-1 filed on September 1, 2009). | ||
10 | .2 | RailAmerica, Inc. 2008 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Amendment No. 2 to RailAmerica, Inc.’sForm S-1 filed on September 22, 2009). | ||
10 | .3 | RailAmerica, Inc. 2009 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to RailAmerica, Inc.’sForm S-8 filed on October 13, 2009). | ||
10 | .4 | Form of Indemnification Agreement with directors and officers (incorporated by reference to Exhibit 10.4 to Amendment No. 2 to RailAmerica, Inc.’sForm S-1 filed on September 22, 2009). | ||
10 | .5 | Form of Management Shareholder Award Agreement (incorporated by reference to Exhibit 10.5 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .6 | Form of Amended and Restated Restricted Share Agreement for Bonus Restricted Shares under the RailAmerica, Inc. Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .7 | Form of Director Restricted Share Agreement (incorporated by reference to Exhibit 10.7 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .8 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and John Giles (incorporated by reference to Exhibit 10.8 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .9 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Clyde Preslar (incorporated by reference to Exhibit 10.9 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .10 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and David Rohal (incorporated by reference to Exhibit 10.10 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .11 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Paul Lundberg (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .12 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Charles Patterson (incorporated by reference to Exhibit 10.12 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .13 | Employment Agreement, dated as of September 28, 2009, by and between RailAmerica, Inc. and Scott Williams (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .14 | Form of FECR Rail Corp. Consulting Agreement (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .15 | Form of FECR Rail Corp. Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.15 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
10 | .16 | Form of Florida East Coast Industries, Inc. Consulting Agreement (incorporated by reference to Exhibit 10.16 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). |
Table of Contents
Exhibit | ||||
No. | Description | |||
10 | .17 | Form of Florida East Coast Industries, Inc. Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.17 to Amendment No. 3 to RailAmerica, Inc.’sForm S-1 filed on September 29, 2009). | ||
12 | .1 | Statement Regarding Computation of Ratio of Earnings to Fixed Charges. | ||
21 | .1 | Subsidiaries of the Registrant. | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). | ||
24 | .1 | Power of Attorney (included as part of the signature page). | ||
25 | .1 | Statement of Eligibility of Trustee onForm T-1. | ||
99 | .1 | Form of Letter of Transmittal. | ||
99 | .2 | Form of Letter to Clients. | ||
99 | .3 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. |