UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the quarter ended September 30, 2004 Commission File No. 001-31456
GENESEE & WYOMING INC.
|
Delaware
|
06-0984624 | |
|
|
|
|
|
(State or other jurisdiction of
|
(I.R.S. Employer | |
|
incorporation or organization)
|
Identification No.) | |
|
|
||
|
66 Field Point Road, Greenwich, Connecticut
|
06830 | |
|
|
|
|
|
(Address of principal executive offices)
|
(Zip Code) | |
|
|
||
|
(203) 629-3722
|
||
|
|
||
|
(Telephone No.)
|
Shares of common stock outstanding as of the close of business on
November 1, 2004:
Class
Number of Shares Outstanding
24,245,025
2,650,122
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] YES [ ] NO
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)
[X] YES [ ] NO
INDEX
2
GENESEE & WYOMING INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements.
3
GENESEE & WYOMING INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements.
4
GENESEE & WYOMING INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these consolidated financial statements.
5
GENESEE & WYOMING INC. AND SUBSIDIARIES
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:
The interim consolidated financial statements presented herein include the
accounts of Genesee & Wyoming Inc. and its subsidiaries. References to “GWI”
or the “Company” mean Genesee & Wyoming Inc. and, unless the context indicates
otherwise, its consolidated subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation. These interim
consolidated financial statements have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the SEC) and accordingly do not contain all disclosures which would
be required in a full set of financial statements in accordance with accounting
principles generally accepted in the United States of America. In the opinion
of management, the unaudited financial statements for the three-month and
nine-month periods ended September 30, 2004 and 2003, are presented on a basis
consistent with audited financial statements and contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation. As discussed in Note 3, the Company adopted Issue No. 03-6 –
“Participating Securities and the Two-Class Method under FASB Statement No.
128, Earnings Per Share” which provides new guidance for the calculation of
Basic and Diluted Earnings Per Share. The results of operations for interim
periods are not necessarily indicative of results of operations for the full
year. The interim consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto for the
year ended December 31, 2003 included in the Company’s 2003 Form 10-K. Certain
prior period balances have been reclassified to conform to the 2004
presentation.
2. EXPANSION OF OPERATIONS:
On August 30, 2004, the Company’s newly formed subsidiary, the Tazewell &
Peoria Railroad, Inc. (TZPR) signed a twenty year agreement to lease the assets
of the Peoria and Pekin Union Railway (PPU) located in Peoria, Illinois. The
owners of the PPU include Norfolk Southern Railway Company, Union Pacific
Railroad Company and Illinois Central Railroad Company. The TZPR will be
operated by the Company’s Illinois Region and is contiguous to that Region’s
existing railroad operations. The TZPR began operations in November 2004.
On August 30, 2004, the Company completed the purchase from CSX
Transportation, Inc. of the Savannah Wharf Branch rail line located in
Savannah, Georgia for approximately $1.6 million. The transaction included the
acquisition of 6.5 miles of track and related assets and a twenty year lease of
the related real estate along the line. The $1.6 million purchase price was
allocated to the track and related assets. The Savannah Wharf Branch is
operated by the Company’s Rail Link Region and is contiguous to one of two
existing Rail Link operations in the Savannah area. Rail Link began operations
of the Savannah Wharf Branch in September 2004.
On January 27, 2004, the Company completed the purchase from CSX
Transportation, Inc. of the Homer City Branch rail line located in Homer City,
Pennsylvania for
approximately $600,000. The transaction included the acquisition of 16 miles
of track and related assets including land and property rights. The Homer City
Branch rail line will be operated by the Company’s New York-Pennsylvania Region
and is contiguous to that existing railroad operation. Operations of the
Homer City Branch are expected to begin in the second quarter of 2005 upon
completion of track rehabilitation, a portion of which will be funded
through government grants.
On December 31, 2003, the Company completed the purchase from
Georgia-Pacific Corporation (GP) of all of the issued and outstanding shares of
common stock of the Chattahoochee Industrial Railroad (CIRR), the Arkansas
Louisiana & Mississippi Railroad Company (ALM), and the Fordyce and Princeton
RR Co. (F&P, and collectively,
6
the GP Railroads) for approximately $54.9
million in cash. The purchase price was allocated to current assets ($2.7
million), property and equipment ($37.6 million), and intangible assets ($27.1
million), less current liabilities assumed ($12.5 million). As contemplated
with the acquisition, the Company implemented a severance program which is
included in the table below. The aggregate cost of the severance program, $1.0
million at December 31, 2003, is considered a liability assumed in the
acquisition, and as such, was allocated to the purchase price. In conjunction
with the acquisition, the Company entered into two Transportation Services
Agreements (TSAs) which are 20-year agreements for the GP Railroads to provide
rail transportation service to GP. One of the TSAs has been determined to be
an intangible asset and approximately $27.1 million of the purchase price has
been allocated to this asset. This TSA asset is being amortized on a
straight-line basis over a 30 year life, which is the expected life of the
plant being served, beginning January 1, 2004. No value was assigned to the
other TSA. The Company funded the acquisition through its revolving line of
credit held under its primary credit agreement.
The table below sets forth a roll-forward of the activity affecting the
restructuring reserves established in acquisitions, including the number of
employees and actual cash payments for severance:
Schedule of Acquisition Restructuring Activity
For U.S. tax purposes, the Company has made elections under Internal Revenue
Code Section 338 to treat the GP Railroads as a purchase of assets.
Pro Forma Financial Results
The following table summarizes the Company’s pro forma operating results
for the three-month and nine-month periods ended September 30, 2003, as if the
GP Railroads had been acquired as of the beginning of 2003. Actual results for
the three-month and nine-month periods ended September 30, 2004 are presented
for comparison purposes (in thousands, except per share amounts):
7
The pro forma operating results include the acquisition of the GP
Railroads adjusted for depreciation expense, net of tax resulting from the
step-up of GP Railroads property based on appraised values, and incremental
interest expense, net of tax related to borrowings used to fund the GP
Railroads acquisition.
The pro forma financial information does not purport to be indicative of
the results that actually would have been obtained had all the transactions
been completed as of the assumed dates and for the periods presented and are
not intended to be a projection of future results or trends.
3. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (EPS) (in thousands, except per share amounts):
8
Stock Split
On February 11, 2004, the Company announced a three-for-two common stock
split in the form of a 50% stock dividend distributed on March 15, 2004 to
stockholders of record as of February 27, 2004. All share, per share and par
value amounts presented herein have been restated to reflect the retroactive
effect of the stock split.
Public Offering of Class A Common Stock through Conversion of Class A Preferred
Stock
On June 1, 2004, upon the conversion by The 1818 Fund III, L.P., a private
equity partnership managed by Brown Brothers Harriman & Co., of 22,886 shares
of the Company’s then outstanding Series A Preferred Stock, the Company issued
3,358,303 shares of its Class A Common Stock to The 1818 Fund III, L.P., and
these shares were sold in a secondary public offering. Certain of the
Company’s management stockholders granted the underwriters of the offering a
30-day option to purchase up to an additional 503,745 shares of Class A Common
Stock to cover any over-allotments. The 1818 Fund III, L.P. accounted for
310,175 of such shares, all of which were sold, and certain management
stockholders accounting for the remaining 193,570 shares, all of which were
sold. The Company incurred $542,000 of costs in the second quarter of 2004
related to this offering. The Company received no proceeds from the secondary
offering.
Emerging Issues Task Force (EITF):
Issue No. 03-6 – “Participating Securities and the Two-Class Method Under FASB
Statement No. 128, Earnings Per Share”
During the second quarter of 2004 the Company adopted EITF 03-6,
“Participating Securities and the Two-Class Method under FASB Statement No.
128,” that provides additional guidance related to the calculation of earnings
per share under SFAS No. 128, “Earnings per Share,” which includes application
of the “two-class” method in computing earnings per share, identification of
participating securities, and requirements for the allocation of undistributed
earnings (and in some cases losses) to participating securities.
EITF 03-6 was effective for the quarter ending June 30, 2004 and required
retroactive restatement for all periods presented. The calculation for basic
EPS now excludes the Company’s Class B Common Stock from the denominator and
includes the share equivalents of the Series A Preferred Stock for periods
prior to its conversion. The diluted EPS calculation is now calculated on net
income less preferred stock dividends and accretion in the numerator. As a
result of the retroactive restatement, the adoption of EITF 03-06 reduced basic
and diluted EPS by $.01 and $.02, respectively for the three months ended
September 30, 2003 and $.04 and $.04, respectively for the nine months ended
September 30, 2003.
Stock-based Compensation Plans
In 1996, the Company established an incentive and nonqualified stock option
plan for key employees and a nonqualified stock option plan for non-employee
directors, and in 2004 the Company established a new Omnibus Incentive
Plan which also permits the granting of options (the Stock Option Plans). See Note 17 of the Company’s Form 10-K for
the year ended 2003 and Proxy for 2004 for additional information regarding the Stock Options
Plans. The Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized. Had compensation cost for all
options issued under these plans been determined consistent with FASB Statement
No. 123, the Company’s net income and earnings per share would have been
reduced as follows (in thousands, except EPS):
9
2004
2003
4. EQUITY INVESTMENTS
Australian Railroad Group
Australian Railroad Group Pty. Ltd. (ARG) is a company which is 50%-owned
by the Company and is accounted for under the equity method of accounting. The
related equity earnings in this investment are shown within the equity in net
income of international affiliates section in the accompanying consolidated
statements of income. The following are U.S. GAAP condensed balance sheets of
ARG as of September 30, 2004 and December 31, 2003, and the related condensed
consolidated statements of income and cash flows for the three-month and
nine-month periods ended September 30, 2004 and 2003 (in thousands of U.S.
dollars). For the dates and periods indicated below, one Australian dollar
could be exchanged into the following amounts of U.S. dollars:
10
Australian Railroad Group Pty. Ltd.
11
Australian Railroad Group Pty. Ltd.
Australian Railroad Group Pty. Ltd.
12
South America
Ferroviaria Oriental S.A. (Oriental) is a company which is 22.89%-owned by
the Company and is accounted for under the equity method of accounting. The
related equity earnings in this investment are shown within the equity in net
income of international affiliates section in the accompanying consolidated
statements of income. Oriental has a U.S. functional currency and the
following condensed results of operations for the three-month and nine-month
periods ended September 30, 2004 and 2003 are based on accounting principles
generally accepted in the United States (in thousands):
Condensed balance sheet information for Oriental as of September 30, 2004 and
December 31, 2003:
The above data does not include non-recourse debt of $12.0 million held at
an intermediate unconsolidated affiliate or any of the general and
administrative, interest or income tax costs at various intermediate
unconsolidated affiliates. The Company’s share of the various costs from the
intermediate unconsolidated affiliates is $235,000 and $178,000 for the three
months and $691,000 and $466,000 for the nine months ended September 30, 2004
and 2003, respectively, and is included in the Company’s equity income reported
for South America for the three-month and nine-month periods ended September
30, 2004 and 2003, respectively.
As noted previously, the Company holds its equity interest in Oriental
through a number of intermediate holding companies, and the Company accounts
for its interest in Oriental under the equity method of accounting. The
Company indirectly holds a 12.52% equity interest in Oriental through an
interest in Genesee & Wyoming Chile (GWC), and the Company holds its remaining
10.37% equity interest in Oriental through other companies. GWC is an obligor
of non-recourse debt of $12.0 million, which has an adjustable interest rate
dependent on operating results of Oriental. This non-recourse debt is secured
by a lien over GWC’s 12.52% indirect equity interest in Oriental.
This debt became due and payable on November 2, 2003. Due to the
political and economic unrest and uncertainties in Bolivia, it has become
difficult for GWC to refinance this debt and the Company has chosen not to
repay the non-recourse obligation. GWC entered into discussions with its
creditors on plans to restructure the debt, and as a result of those
discussions, GWC obtained a written waiver of principal repayment from the
creditors which expired on January 31, 2004. However,
13
negotiations with the creditors continue, and currently, none of GWC’s
creditors have commenced court proceedings to (i) collect on the debt or (ii)
exercise their rights pursuant to the lien.
If the Company were to lose its 12.52% equity stake in Oriental due to
creditors exercising their lien on GWC’s indirect equity interest in Oriental,
the Company would write-off its investment in Oriental held through GWC, which
on September 30, 2004 amounted to $385,000. A default, acceleration or effort
to foreclose on the lien under the non-recourse debt will have no impact on the
Company’s remaining 10.37% equity interest in Oriental because that equity
interest is held indirectly through holding companies outside of GWC’s
ownership in Oriental.
Oriental has no obligations associated with the $12.0 million debt. In
addition, a default, acceleration or effort to foreclose on the lien under the
non-recourse debt would not result in a breach of a representation, warranty,
covenant, cross-default or acceleration under the Company’s Senior Credit
Facility.
5. COMMITMENTS AND CONTINGENCIES:
Legal Proceedings – On March 31, 2004, Messrs. Chambers and Wheeler filed
a complaint against Genesee & Wyoming Inc. in the Chancery Court of Delaware.
The complaint relates to the sale by the plaintiffs in April of 1999 to the
Company of their ownership interests in certain of the Company’s Canadian
operations. Under the terms of the purchase agreement, among other things, the
plaintiffs were granted options to purchase up to 270,000 shares of the
Company’s Class A Common Stock at an exercise price of $2.56 per share if
certain of the Company’s Canadian operations had achieved certain financial
performance targets in any annual period between 1999 and 2003. The complaint
alleges that these financial performance targets have been met, and the
plaintiffs are seeking, among other things, a declaratory judgment that the
options granted under the purchase agreement have vested and are exercisable.
The Company has determined that the Canadian operations at issue failed to
achieve these financial performance targets in any of the required years, and
it intends to vigorously defend this lawsuit.
In addition, the Company is a defendant in certain lawsuits resulting from
its operations. The Company believes that it has adequate provisions in the
financial statements for any expected liabilities which may result from
disposition of such lawsuits. While it is possible that some of the foregoing
matters may be resolved at a cost greater than that provided for, the Company
believes that the ultimate liability, if any, will not be material to its
operating results, financial condition or liquidity.
14
6. COMPREHENSIVE INCOME:
Comprehensive income is the total of net income and all other non-owner
changes in equity. The following table sets forth the Company’s comprehensive
income, net of tax, for the three-month and nine-month periods ended September
30, 2004 and 2003 (in thousands):
The following table sets forth the components of accumulated other
comprehensive income, net of tax, included in the consolidated balance sheets
as of September 30, 2004, and December 31, 2003 (in thousands):
15
7. GEOGRAPHIC AREA INFORMATION:
The table below sets forth the Company’s geographic area data for its
consolidated operations for the three-month and nine-month periods ended
September 30, 2004 and 2003:
Geographic Area Data
8. DERIVATIVE FINANCIAL INSTRUMENTS:
The Company actively monitors its exposure to interest rate and foreign
currency exchange rate risks and uses derivative financial instruments to
manage the potential impact of certain of these risks. The Company uses
derivative financial instruments only for purposes of managing risk associated
with underlying exposures. Management believes that its use of derivative
instruments to manage risk is in the Company’s best interest. However, the
Company’s use of derivative financial instruments may result in short-term
gains or losses and increased earnings volatility.
Accounting for Derivative Financial Instruments
Interest Rate Risk
The Company uses interest rate swap agreements to manage its exposure to
changes in interest rates for its floating rate debt. Interest rate swap
agreements are accounted for as cash flow hedges. Gains or losses on the
swaps, representing interest rate differentials to be received or paid on the
swaps, are recognized in the consolidated statements of income as a reduction
or increase in interest expense, respectively. In accordance with the
derivative accounting requirements, the change in the fair value of the
derivative instrument is recorded in the consolidated balance sheets as a
component of current assets or liabilities, and the effective portion of the
change in the value of the derivative instrument is recorded in other
comprehensive income. The ineffective portion of the change in the fair value
of the derivative instrument, along with the gain or loss on the hedged item,
is recorded in earnings and reported in the consolidated statements of income
in interest expense.
During 2003, 2002 and 2001, the Company entered into various interest rate
swaps fixing its base interest rate by exchanging its variable LIBOR interest
rates on long-term debt for a fixed interest rate. The swaps expire at various
dates through September 2007 and the fixed base rates range from 3.35% to
5.46%. At September 30, 2004 and December 31, 2003, the notional amount under
these agreements was $56.8
16
million and $60.6 million, respectively and the fair value of these interest
rate swaps was a negative $1.2 million and $2.2 million, respectively.
Foreign Currency Exchange Rate Risk
The Company uses purchased options to manage foreign currency exchange
rate risk related to certain projected cash flows related to foreign
operations. Foreign currency exchange rate options are accounted for as cash
flow hedges. In accordance with the derivative accounting requirements, the
change in the fair value of the derivative instrument is recorded in the
consolidated balance sheets as a component of current assets or liabilities,
and the effective portion of the change in the value of the derivative
instrument is recorded in other comprehensive income. The ineffective portion
of the change in the fair value of the derivative instrument, along with the
gain or loss on the hedged item, is recorded in earnings and reported in the
consolidated statements of income in interest expense.
During 2004 and 2003, the Company entered into various exchange rate
options that establish exchange rates for converting Mexican Pesos to U.S.
Dollars, one of which was outstanding as of September 30, 2004. This option,
which expires in March 2005, gives the Company the right to sell Mexican Pesos
for U.S. Dollars at an exchange rate of 13.34 Mexican Pesos to the U.S. Dollar.
The Company paid an up-front premium for this option of $28,000 in the quarter
ended June 30, 2004. At September 30, 2004 and December 31, 2003, the notional
amount under exchange rate options was $2.1 million and $5.3 million,
respectively. At September 30, 2004 and December 31, 2003, the fair value of
currency exchange rate options was $160 and $17,000, respectively.
9. INTANGIBLE AND OTHER ASSETS, NET AND GOODWILL:
Acquired intangible assets are as follows (in thousands):
The Chiapas-Mayab Operating License is being amortized over 30 years which
is the life of the concession agreement with the Mexican Communications and
Transportation Department. The Chiapas-Mayab Operating License is subject to
exchange rate changes resulting from conversion of Mexican Pesos to U.S.
Dollars at different periods.
17
On July 23, 2003 as a result of a settlement agreement with Commonwealth
Edison Company, the Company amended and restated the Service Assurance
Agreement and began to amortize the Amended and Restated Service Assurance
Agreement (ARSAA). The estimate of the useful life of the ARSAA asset is based
on the Company’s estimate that the useful life of the coal-fired electricity
generation plant to which the Company provides service will be in service
through 2027. Prior to the settlement date, upon adoption of SFAS No. 142, the
Service Assurance Agreement was determined to have an indefinite useful life
and therefore was not subject to amortization.
The Transportation Services Agreement, entered into in conjunction with
the GP transaction (the TSA), is a 20-year agreement to provide exclusive rail
transportation service to GP facilities. The Company believes that the
customer’s facilities have a 30-year economic life and that the Company will
continue to be the exclusive rail transportation service provider until the end
of the plant’s useful life. Therefore, the TSA is being amortized on a
straight-line basis over a 30-year life beginning January 1, 2004.
The Track Access Agreements are perpetual trackage agreements assumed in
the Company’s acquisition of Utah Railway Company. Under SFAS No. 142 these
assets have been determined to have an indefinite useful life and therefore are
not subject to amortization.
Deferred financing costs are amortized over terms of the related debt
using the effective-interest method for the term debt and using the
straight-line method for the revolving loan portion of debt.
Other assets consist primarily of executive split dollar life insurance,
assets held for sale and a minority equity investment in an agricultural
facility. Executive split dollar life insurance is the present value of life
insurance benefits which the Company funds but that are owned by executive
officers. The Company retains a collateral interest in the policies’ cash
values and death benefits. Assets held for sale or future use primarily
represent surplus track and locomotives.
Upon adoption of SFAS No. 142, amortization of goodwill was discontinued
as of January 1, 2002. The changes in the carrying amount of goodwill are as
follows:
18
10. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS:
Components of net periodic benefit cost
Three months ended September 30
Nine months ended September 30
Employer Contributions
The Company previously disclosed in its financial statements for the year
ended December 31, 2003, that it expected to contribute $216,701 to its pension
plan in 2004. As of September 30, 2004, $168,789 of contributions has been
made. The Company presently anticipates contributing an additional $100,103 to
fund its pension plan in 2004 for a total of $268,892.
11. SUBSEQUENT EVENT –
NEW U.S. TAX LEGISLATION EFFECTIVE 2005
On
October 22, 2004, the President of the United States signed into law the American Jobs
Creation Act of 2004. There are provisions in the Act intended to benefit the
railroad industry. One provision provides a 50% tax credit for
qualified track
maintenance expenditures incurred in 2005, 2006, and 2007. Another provision
reduces the 4.3 cent per gallon excise tax paid on locomotive diesel fuel in
phases starting in 2005, until it is eliminated in 2007. The Company is currently
in the process of evaluating the impact the new law will have on its
consolidated financial statements.
19
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company’s
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q, and with the consolidated financial statements,
related notes and other financial information included in the Company’s 2003
Form 10-K.
Forward-Looking Statements
This report and other documents referred to in this report may contain
forward-looking statements based on current expectations, estimates and
projections about the Company’s industry, management’s beliefs, and assumptions
made by management. Words such as “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions, including the following risks applicable
to all of the Company’s operations: risks related to the acquisition and
integration of railroads; difficulties associated with customers, competition,
connecting carriers, employees and partners; derailments; adverse weather
conditions; unpredictability of fuel costs; changes in environmental and other
laws and regulations to which the Company is subject; general economic and
business conditions; and additional risks associated with the Company’s foreign
operations. Therefore, actual results may differ materially from those
expressed or forecast in any such forward-looking statements. Such risks and
uncertainties include, in addition to those set forth in this Item 2, those
noted in the Company’s 2003 Form 10-K under “Risk Factors.” The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
General
The Company is a holding company whose subsidiaries and unconsolidated
affiliates own and/or operate short line and regional freight railroads and
provide related rail services in North America, South America and Australia.
The Company generates revenues primarily from the movement of freight over
track owned or operated by its railroads. The Company also generates
non-freight revenues primarily by providing railcar switching, car hire and
rental, repair, storage, weighing, blocking and bulk transfer for Class I
carriers and customers.
For a complete description of the Company’s accounting policies, see Note
2 to the audited consolidated financial statements for the year ended December
31, 2003 included in the Company’s 2003 Form 10-K.
On August 30, 2004, the Company’s newly formed subsidiary, the Tazewell &
Peoria Railroad, Inc. (TZPR) signed a twenty year agreement to lease the assets
of the Peoria and Pekin Union Railway (PPU) located in Peoria, Illinois. The
owners of the PPU include Norfolk Southern Railway Company, Union Pacific
Railroad Company and Illinois Central Railroad Company. The TZPR will be
operated by the Company’s Illinois Region and is contiguous to that Region’s
existing railroad operations. The TZPR began operations in November 2004.
On August 30, 2004, the Company completed the purchase from CSX
Transportation, Inc. of the Savannah Wharf Branch rail line located in
Savannah, Georgia for approximately $1.5 million. The transaction included the
acquisition of 6.5 miles of track and related assets and a twenty year lease of
the related real estate along the line. The $1.5 million purchase price was
allocated to the track and related assets. The Savannah Wharf Branch is
operated by the Company’s Rail Link Region and
20
is contiguous to one of two existing Rail Link operations in the Savannah area.
Rail Link began operations of the Savannah Wharf Branch in September 2004.
On January 27, 2004, the Company completed the purchase from CSX
Transportation, Inc. of the Homer City Branch rail line located in Homer City,
Pennsylvania for approximately $600,000. The transaction included the
acquisition of 16 miles of track and related assets including land and property
rights. The Homer City Branch rail line will be operated by the Company’s New
York-Pennsylvania Region and is contiguous to that existing railroad operation.
Operations of the Homer City Branch are expected to begin in the second
quarter of 2005 upon completion of track rehabilitation, a portion of
which will be funded through government grants.
On December 31, 2003, the Company completed the purchase from
Georgia-Pacific Corporation (GP) of all of the issued and outstanding shares of
common stock of the Chattahoochee Industrial Railroad (CIRR), the Arkansas
Louisiana & Mississippi Railroad Company (ALM), and the Fordyce and Princeton
RR Co. (F&P, collectively, the GP Railroads) for approximately $54.9 million in
cash. The purchase price was allocated to current assets ($2.7 million),
property and equipment ($37.6 million), and intangible assets ($27.1 million),
less current liabilities assumed ($12.5 million). As contemplated with the
acquisition, the Company implemented a severance program. The aggregate cost
of the severance program, $1.0 million, is considered a liability assumed in
the acquisition, and as such, was allocated to the purchase price. In
conjunction with the acquisition, the Company entered into two Transportation
Services Agreements (TSAs) which are 20-year agreements for the GP Railroads to
provide rail transportation service to GP. One of the TSAs was determined to
be an intangible asset and approximately $27.1 million of the GP Railroads’
purchase price was allocated to this asset. This TSA asset is being amortized
on a straight-line basis over a 30 year life, which is the expected life of the
plant being served. No value was assigned to the other TSA. The Company
funded the acquisition through its revolving line of credit held under its
primary credit agreement.
Results of Operations
Three Months Ended September 30, 2004 Compared to Three Months Ended September
30, 2003
Operating Revenues
Operating revenues (which exclude revenues from the Company’s equity
investments) were $77.2 million in the quarter ended September 30, 2004
compared to $61.5 million in the quarter ended September 30, 2003, an increase
of $15.7 million or 25.6%. The following table sets forth operating revenues
by acquisitions and existing operations for the quarters ended September 30,
2004 and 2003:
Operating Revenues by Acquisitions and Existing Operations
The $9.4 million increase on existing operations was primarily
attributable to $7.3 million in freight revenues which mainly consisted of a
$2.2 million increase in coal, coke and ores revenues in the Company’s
Illinois, Utah and New York-
21
Pennsylvania Regions, a $1.8 million increase in metals revenues primarily in
the Company’s New York-Pennsylvania and Canada Regions, a $857,000 net increase
in revenues from farm and food products, a $817,000 increase in lumber and
forest products, and a $1.8 million increase in non-freight switching revenues
primarily in the Company’s Rail Link Region due to new customer contracts. The
following table compares freight revenues, carloads and average freight
revenues per carload for the quarters ended September 30, 2004 and 2003:
Freight Revenues and Carloads Comparison by Commodity Group
Total carloads were 161,792 in the quarter ended September 30, 2004
compared to 131,834 in the quarter ended September 30, 2003, an increase of
29,958, or 22.7%. The increase consisted of 12,695 carloads from the new GP
Railroads and 17,263 from existing operations due largely to an increase of
7,036 from carloads of coal, coke and ores in the Company’s Illinois, Utah and
New York-Pennsylvania Regions, a net increase of 4,938 from carloads of metals
primarily in the Company’s New York-Pennsylvania and Canada Regions, a net
increase of 1,650 from carloads of lumber and forest products, a net increase
of 1,108 from carloads of minerals and stone and a net increase of 2,531 from
carloads of all other commodities combined. Average revenue per carload
increased to $353 in the quarter ended September 30, 2004, compared to $342 per
carload in the quarter ended September 30, 2003, an increase of 3.2%.
Non-freight revenues were $20.1 million in the quarter ended September 30,
2004 compared to $16.4 million in the quarter ended September 30, 2003, an
increase of $3.7 million or 22.3%. The $3.7 million increase was attributable
to $1.5 million of non-freight revenues from the new GP Railroads of which
$987,000 was car hire revenue, and a net increase of $2.2 million from existing
operations. The net increase of $2.2 million from existing operations
consisted of a $1.8 million increase in switching revenues primarily in the
Rail Link Region and a net increase of $321,000 from all other non-freight
revenues combined. The following table compares non-freight revenues for the
quarters ended September 30, 2004 and 2003:
22
Non-Freight Revenues Comparison
Operating Expenses
Operating expenses were $64.0 million in the quarter ended September 30,
2004, compared to $52.3 million in the quarter ended September 30, 2003, an
increase of $11.7 million or 22.5%. The increase was attributable to $4.0
million in operating expenses from the new GP Railroads and an increase of $7.7
million in operating expenses from existing operations. The following table
sets forth a comparison of the Company’s operating expenses in the quarters
ended September 30, 2004 and 2003:
Operating Expense Comparison
Labor and benefits expense was $26.6 million in the quarter ended
September 30, 2004 compared to $21.1 million in the quarter ended September 30,
2003, an increase of $5.5 million or 26.0%. The increase was attributable to
$1.3 million in labor and benefits expense from the new GP Railroads and an
increase of $4.2 million from existing operations. The increase from existing
operations was due to a $4.0 million increase in labor and benefits expense
related to increased freight shipments, regular wage and benefit increases and
a 5.2% appreciation of the Canadian dollar.
23
Equipment rents were $7.1 million in the quarter ended September 30, 2004
compared to $4.4 million in the quarter ended September 30, 2003, an increase
of $2.7 million or 62.8%. The increase was attributable to $1.3 million in
freight car operating lease and car hire expense from the new GP Railroads and
an increase of $1.4 million from existing operations primarily due to car hire
expense from increased freight shipments.
Depreciation and amortization expense was $4.8 million in the quarter
ended September 30, 2004 compared to $3.9 million in the quarter ended
September 30, 2003, an increase of $943,000 or 24.4%. The increase was
attributable to $568,000 from the new GP Railroads and an increase of $375,000
from existing operations.
Diesel fuel expense was $6.2 million in the quarter ended September 30,
2004 compared to $4.1 million in the quarter ended September 30, 2003, an
increase of $2.1 million or 51.6%. The increase was attributable to $144,000
from the new GP Railroads and an increase of $2.0 million on existing
operations primarily due to a 37.0% increase in the average price per gallon
and increased consumption due to carload increases.
Casualties and insurance expense was $4.6 million in the quarter ended
September 30, 2004 compared to $3.4 million in the quarter ended September 30,
2003, an increase of $1.2 million or 36.2%. The increase was attributable to
$73,000 from the new GP Railroads and an increase of $1.1 million on existing
operations. The increase on existing operations resulted primarily from
derailments in the Company’s Oregon Region and property damage in the Company’s
New York-Pennsylvania Region resulting from heavy rains and flooding.
All other expenses combined were $14.8 million in the quarter ended
September 30, 2004 compared to $15.5 million in the quarter ended September 30,
2003, a net decrease of $753,000 or 4.8%. A decline of $1.4 million on
existing operations primarily due to reduced third party contractor services
and materials for track maintenance work, was partially offset by $629,000 of new expense from the GP Railroads.
Operating Ratio
The Company’s operating ratio (total operating expenses as a percentage of
operating revenues) improved to 82.9% in the quarter ended September 30, 2004
from 85.0% in the quarter ended September 30, 2003 due to the performance of
both the Company’s existing and recently acquired railroads.
Interest Expense
Interest expense was $2.4 million in the quarter ended September 30, 2004
compared to $2.2 million in the quarter ended September 30, 2003, an increase
of $177,000.
Other Income, Net
Other income (expense), net in the quarter ended September 30, 2004, was a
loss of $221,000 compared to income of $54,000 in the quarter ended September
30, 2003, a decrease of $275,000. Other income, net consists primarily of
exchange rate transaction gains (losses) from foreign dollar-denominated cash
accounts and interest income.
Income Taxes
The Company’s effective income tax rate in the quarter ended September 30,
2004 was 40.3% compared to 33.7% in the quarter ended September 30, 2003. The
increase was primarily attributable to an increase in the effective tax rate of
the Company’s Mexico Region. This increase in Mexico was partially offset by a
reduction in the
24
Canada Region, due to a statutory rate decrease in Canada. In Mexico, for tax
purposes, the Company’s subsidiaries recognize exchange gain or loss on their
US dollar based assets and liabilities. As a result, the intra-quarter
appreciation of the Mexican peso compared to the US dollar in the quarter ended
September 30, 2004 compared to the quarter ended September 30, 2003 resulted in
a higher effective tax rate.
Equity in Net Income of Unconsolidated International Affiliates
Equity earnings of unconsolidated international affiliates, net were $3.8
million in the quarter ended September 30, 2004, compared to $2.9 million in
the quarter ended September 30, 2003, an increase of $884,000. Equity earnings
in the quarter ended September 30, 2004, consisted of $3.5 million from
Australian Railroad Group and $273,000 from South America affiliates. Equity
earnings in the quarter ended September 30, 2003, consisted of $2.7 million
from Australian Railroad Group and $203,000 from South America affiliates. See
additional information regarding ARG’s financial results and the impact of
exchange rate changes in Supplemental Information – Australian Railroad Group.
Net Income and Earnings Per Share
The Company’s net income in the quarter ended September 30, 2004 was $10.1
million compared to net income of $7.6 million in the quarter ended September
30, 2003, an increase of $2.5 million or 33.2%. The increase in net income was
the result of an increase in income before equity earnings of $1.6 million and
an increase in equity in net income of unconsolidated international affiliates
of $884,000.
Basic Earnings Per Share in the quarters ended September 30, 2004 and 2003
were $0.42 and $0.31 respectively, on weighted average shares of 24.2 million
and 20.0 million respectively. Diluted Earnings Per Share in the quarters
ended September 30, 2004 and 2003 were $0.37 and $0.27 respectively, on
weighted average shares of 27.5 million and 26.8 million respectively.
Supplemental Information – Australian Railroad Group
ARG is a company owned 50% by the Company and 50% by Wesfarmers Limited, a
public corporation based in Perth, Western Australia. The Company accounts for
its 50% ownership in ARG under the equity method of accounting. As a result of
the strengthening of the Australian dollar relative to the U.S. dollar in 2004,
the average currency translation rate for the quarter ended September 30, 2004
was 7.1% more favorable than the rate for the quarter ended September 30, 2003,
the impact of which should be considered in the following discussions of equity
earnings, freight and non-freight operating revenues, and operating expenses.
In the quarters ended September 30, 2004 and 2003, the Company recorded
$3.5 million and $2.7 million, respectively, of equity earnings in the equity
in net income of international affiliates – Australian Railroad Group caption
in the accompanying consolidated statements of income.
25
Freight Revenues
Australian Railroad Group
ARG’s freight revenues were $69.7 million in the quarter ended September
30, 2004, compared to $50.6 million in the quarter ended September 30, 2003, an
increase of $19.1 million or 37.7%. The increase in freight revenues was led
by a $13.1 million increase in grain, due to the record harvest in Western
Australia and a new customer in New South Wales; a $2.1 million increase in
other ores and minerals, led by increased nickel related shipments; a $1.1
million increase in alumina shipments; and a $2.5 million increase in other
revenues due to new business in New South Wales. All other commodities
combined increased $0.2 million. In local currency, freight revenues increased
29.6% in the quarter ended September 30, 2004 compared to the quarter ended
September 30, 2003.
Total ARG carloads were 246,242 in the quarter ended September 30, 2004,
compared to 214,606 in the quarter ended September 30, 2003, an increase of
31,636, or 14.7%. The increase was primarily the result of a 33,633 carload
increase in grain offset by a net decrease in hook and pull of 2,293. Average
freight revenues per carload increased from $236 to $283, primarily due to the
appreciation of the Australian dollar relative to the U.S. dollar and higher
revenues per car in other ores and minerals and other, partially offset by
lower revenues per carload in hook and pull.
Non-Freight Revenues
The following table compares ARG’s non-freight revenues for the quarters
ended September 30, 2004 and 2003.
26
Australian Railroad Group
ARG’s non-freight revenues were $14.0 million in the quarter ended
September 30, 2004, compared to $11.1 million in the
quarter ended September 30,
2003, an increase of $2.9 million or 26.3%. ARG’s non-freight revenues
increase was primarily attributable to higher third party access fees and other
operating income, primarily fuel sales to other railroads, offset by a decrease
in revenues from the Alice Springs to Darwin (ASD) line due to completion of construction.
In local currency, non-freight revenue increased 19.0% in the quarter ended
September 30, 2004 compared to the quarter ended September 30, 2003.
Operating Expenses
ARG’s operating expenses were $66.9 million in the quarter ended September
30, 2004, compared to $50.5 million in the quarter ended September 30, 2003, an
increase of $16.4 million or 32.5%. The following table sets forth a
comparison of ARG’s operating expenses in the quarters ended September 30, 2004
and 2003.
Australian Railroad Group
Operating Expense Comparison
Labor and benefits expense, as a percentage of revenues, decreased to
17.4% in the quarter ended September 30, 2004, compared to 20.1% the quarter
ended September 30, 2003. In local currency, labor and benefits increased
9.6%. The increase was due
27
to higher freight volumes,
particularly the strong grain shipments and the new
business in New South Wales.
Purchased services expense decreased to 24.9% of revenues in the quarter
ended September 30, 2004, compared to 26.6% of revenues in the quarter ended
September 30, 2003. In local currency, purchased services increased 18.7%.
The increase was primarily due to the use of contract locomotive engineers,
increased grain transfer costs related to the increase in freight volume and
the commencement of operations of a rail loading facility in New South Wales.
Depreciation and amortization expense, as a percentage of revenues,
decreased to 8.1% in the quarter ended September 30, 2004, compared to 9.8% in
the quarter ended September 30, 2003. In local currency, depreciation and
amortization increased 4.6%. The increase was due to higher depreciation
related to an increase in depreciable assets due to capital expenditures.
Diesel fuel used in operations increased to 8.2% of revenues in the
quarter ended September 30, 2004, compared to 6.1% of revenues in the quarter
ended September 30, 2003. In local currency, the cost of fuel used in
operations increased 72.9%. The increase was due to higher freight volumes on
existing lines, the new business in New South Wales, the contract operations
on the ASD line and a 35.1% increase in fuel prices.
The cost of diesel fuel sold to third parties increased to 6.4% of
revenues in the quarter ended September 30, 2004, compared to 2.7% of revenues
in the quarter ended September 30, 2003. In local currency, the cost of diesel
fuel sold to third parties increased 208.2%. The increase was due to a higher
volume of fuel sales to other railroads and a 35.1% increase in fuel prices.
Casualties and insurance costs decreased to 1.9% of revenues in the
quarter ended September 30, 2004, compared to 2.5% of revenues in the quarter
ended September 30, 2003. In local currency, casualties and insurance
increased 1.4%.
Materials expense, as a percentage of revenues, decreased to 4.5% in the
quarter ended September 30, 2004, compared to 4.8% in the quarter ended
September 30, 2003. In local currency, materials expense increased 19.2%. The
increase was due to higher rolling stock maintenance costs.
Other expenses, as a percentage of revenues, decreased to 7.9% in the
quarter ended September 30, 2004, compared to 8.8% in the quarter ended
September 30, 2003. In local currency, other expenses increased 15.1%. The
increase was primarily due to track access fees and various other increases in
administrative costs related to the new business in New South Wales.
Nine Months Ended September 30, 2004 Compared to Nine Months Ended September
30, 2003
Operating Revenues
Operating revenues (which exclude revenues from the Company’s equity
investments) were $223.7 million in the nine months ended September 30, 2004,
compared to $183.3 million in the nine months ended September 30, 2003, an
increase of $40.4 million or 22.0%.
28
Operating Revenues by Acquisitions and Existing Operations
The $22.0 million increase in operating revenues from existing operations was
primarily attributable to $17.1 million in freight revenues which mainly
consisted of a $4.9 million increase in coal, coke and ores revenues in the
Company’s Illinois, Utah and New York-Pennsylvania Regions, a $3.8 million
increase in metals revenues primarily in the Company’s New York-Pennsylvania
and Canada Regions, a $2.9 million increase in revenues from farm and food
products in the Company’s Canada and Mexico Regions, a $1.9 million increase in
lumber and forest products in the Company’s New York-Pennsylvania and Oregon
Regions, a $1.6 million increase in chemicals revenues in the Company’s New
York-Pennsylvania and Rail Link Regions, and a $4.4 million increase in
non-freight switching revenues primarily in the Company’s Rail Link Region due
to new customer contracts. The following table compares freight revenues,
carloads and average freight revenues per carload for the nine months ended
September 30, 2004 and 2003:
Freight Revenues and Carloads Comparison by Commodity Group
Total carloads were 470,462 in the nine months ended September 30, 2004,
compared to 395,772 in the nine months ended September 30, 2003, an increase of
74,690, or
29
18.9%. The increase consisted of 37,078 carloads from the new GP Railroads and
37,612 carloads from existing operations. The increase of 37,612 carloads from
existing operations was due largely to a 16,563 increase from carloads of coal,
coke and ores in the Illinois, Utah and New York-Pennsylvania Regions, a 8,065
increase from carloads of metals, primarily in the New York-Pennsylvania
Region, a 4,936 increase from carloads of farm and food products, primarily in
the Company’s Canada and Mexico Regions, and a 4,066 increase from carloads of
lumber and forest products, primarily in the Oregon and New York-Pennsylvania
Regions. The average revenue per carload increased to $357 in the nine months
ended September 30, 2004, compared to $345 per carload in the nine months ended
September 30, 2003, an increase of 3.5%.
Non-freight revenues were $55.9 million in the nine months ended September
30, 2004, compared to $46.6 million in the nine months ended September 30,
2003, an increase of $9.3 million or 20.0%. The $9.3 million increase was
attributable to $4.4 million of non-freight revenues from the new GP Railroads
of which $2.7 million was car hire revenue, and a $4.9 million increase on
existing operations of which $3.5 million was switching
revenues, primarily in the
Company’s Rail Link Region due to new customer contracts. The
following table compares non-freight revenues for the nine months ended
September 30, 2004 and 2003:
Non-Freight Operating Revenues Comparison
Operating Expenses
Operating expenses were $185.4 million in the nine months ended September
30, 2004, compared to $155.2 million in the nine months ended September 30,
2003, an increase of $30.2 million or 19.4%. The increase was attributable to
$11.7 million in operating expenses from the new GP Railroads and an increase
of $18.5 million in operating expenses from existing operations. The following
table sets forth a comparison of the Company’s operating expenses in the nine
months ended September 30, 2004 and 2003:
30
Operating Expense Comparison
Labor and benefits expense was $77.9 million in the nine months ended
September 30, 2004, compared to $64.9 million in the nine months ended
September 30, 2003, an increase of $13.0 million or 20.1%. The increase was
attributable to $4.0 million in labor and benefits expense from the new GP
Railroads and an increase of $9.0 million from existing operations. The
increase from existing operations was due to an $8.0 million increase in labor
and benefits expense related to increased freight shipments, regular wage
increases and the 6.9% appreciation of the Canadian dollar and $1.0 million
related to revised executive benefit plans.
Equipment rents were $20.3 million in the nine months ended September 30,
2004, compared to $13.2 million in the nine months ended September 30, 2003, an
increase of $7.2 million or 54.4%. The increase was attributable to $3.4
million in freight car operating lease and car hire expense from the new GP
Railroads and an increase of $3.8 million from existing operations primarily
due to car hire expense on increased freight shipments.
Depreciation and amortization expense was $14.3 million in the nine months
ended September 30, 2004, compared to $11.4 million in the nine months ended
September 30, 2003, an increase of $2.9 million or 25.0%. The increase was
attributable to $1.7 million from the new GP Railroads and an increase of $1.2
million from existing operations including $214,000 related to the Amended and
Restated Service Assurance Agreement which the Company began amortizing in July
2003.
Diesel fuel expense was $17.5 million in the nine months ended September
30, 2004, compared to $13.7 million in the nine months ended September 30,
2003, an increase of $3.8 million or 27.6%. The increase was attributable to
$384,000 from the new GP Railroads and an increase of $3.4 million from
existing operations due to a 17.8% increase in the consolidated average price
per gallon and increased fuel consumption due to carload increases.
Casualties and insurance expense was $12.0 million in the nine months
ended September 30, 2004, compared to $9.7 million in the nine months ended
September 30, 2003, an increase of $2.3 million or 23.6%. The increase was
primarily attributable to $215,000 from the new GP Railroads, $1.6 million in
derailment expense primarily in the Company’s Oregon Region, as well as
significant property damage in the Company’s New York-Pennsylvania Region
resulting from heavy rains and flooding.
31
All other expenses combined were $43.4 million in the nine months ended
September 30, 2004, compared to $42.4 million in the nine months ended
September 30, 2003, a net increase of $1.0 million or 2.4%. A decline of $1.0
million on existing operations primarily due to reduced third party contractor
services and materials for track maintenance work, was partially offset by $2.0
million of new expense from the GP Railroads.
Operating Ratio
The Company’s operating ratio (total operating expenses as a percentage of
operating revenues) improved to 82.9% in the nine months ended September 30,
2004, from 84.7% in the nine months ended September 30, 2003 due to the
performance of both the Company’s existing and recently acquired railroads.
Interest Expense
Interest expense was $7.1 million in the nine months ended September 30,
2004, compared to $6.7 million in the nine months ended September 30, 2003, an
increase of $385,000.
Other Income, Net
Other income, net in the nine months ended September 30, 2004, was
$203,000 compared to $767,000 in the nine months ended September 30, 2003, a
decrease of $564,000. Other income, net consists primarily of exchange rate
transaction gains (losses) on foreign dollar-denominated cash accounts and
interest income.
Income Taxes
The Company’s effective income tax rate in the nine months ended September
30, 2004, was 39.0% compared to 37.3% in the nine months ended September 30,
2003. The increase was primarily attributable to an increase in the effective
tax rate of the Company’s Mexico Region. This increase in Mexico was partially
offset by a reduction in the Canada Region, due to a statutory rate decrease in
Canada. In Mexico, for tax purposes, the Company’s subsidiaries recognize
exchange gain or loss on their US dollar based assets and liabilities. As a
result, the movement of the Mexican peso compared to the US dollar in the nine
months ended September 30, 2004 compared to the nine months ended September 30,
2003 resulted in a higher effective tax rate.
Equity in Net Income of Unconsolidated International Affiliates
Equity earnings of unconsolidated international affiliates, net, were
$11.2 million in the nine months ended September 30, 2004, compared to $7.0
million in the nine months ended September 30, 2003, an increase of $4.3
million. Equity earnings in the nine months ended September 30, 2004,
consisted of $10.7 million from Australian Railroad Group and $496,000 from
South America affiliates. Equity earnings in the nine months ended September
30, 2003, consisted of $6.9 million from Australian Railroad Group and $112,000
from South America affiliates. See additional information regarding ARG’s
financial results and the impact of exchange rate changes in Supplemental
Information – Australian Railroad Group.
Net Income and Earnings Per Share
The Company’s net income was $30.4 million in the nine months ended
September 30, 2004, compared to net income of $20.8 million in the nine months
ended September 30, 2003, an increase of $9.6 million. The increase in net
income was the result of an increase in income before equity earnings of $5.3
million and an increase in equity in net income of unconsolidated international
affiliates of $4.3 million.
32
Basic Earnings Per Share in the nine months ended September 30, 2004 and
2003 were $1.24 and $0.84 respectively, on weighted average shares of 22.0
million and 19.9 million respectively. Diluted Earnings Per Share in the nine
months ended September 30, 2004 and 2003 were $1.09 and $0.74 respectively, on
weighted average shares of 27.4 million and 26.7 million respectively.
Supplemental Information – Australian Railroad Group
ARG is a company owned 50% by the Company and 50% by Wesfarmers Limited, a
public corporation based in Perth, Western Australia. The Company accounts for
its 50% ownership in ARG under the equity method of accounting. As a result of
the strengthening of the Australian dollar relative to the U.S. dollar in 2004,
the average currency translation rate for the nine months ended September 30,
2004 was 15.4% more favorable than the rate for the nine months ended September
30, 2003, the impact of which should be considered in the following discussions
of equity earnings, freight and non-freight operating revenues, and operating
expenses.
In the nine months ended September 30, 2004 and 2003, the Company recorded
$10.7 million and $6.9 million, respectively, of equity earnings in the equity
in net income of international affiliates – Australian Railroad Group caption
in the accompanying consolidated statements of income.
Freight Revenues
Australian Railroad Group
ARG’s freight revenues were $208.4 million in the nine months ended
September 30, 2004, compared to $143.2 million in the nine months ended September 30,
2003, an increase of $65.2 million or 45.5%. The increase in freight revenues
was led by a $37.6 million increase in grain, due to the record harvest in
Western Australia and a new customer in New South Wales; a $9.8 million
increase in other ores and minerals, led by increased nickel related shipments;
and a $7.3 million increase in iron ore, due to production expansion at ARG’s
largest iron ore customer and a new customer in Western Australia; a $2.9
million increase in alumina shipments; and a $7.7 million increase in other due
to new business in New South Wales. All other commodities combined decreased
$0.1 million. In local currency, freight revenues increased 26.5% in the nine
months ended September 30, 2004 compared to the nine months ended September 30,
2003.
33
Total ARG carloads were 741,723 in the nine months ended September 30,
2004, compared to 613,942 in the nine months ended September 30, 2003, an
increase of 127,781, or 20.8%. The increase was primarily the result of a
101,040 carload increase in grain, a 17,165 carload increase in iron ore, a
3,456 carload increase in other ores and minerals, and a 3,720 carload increase
in other. Carloads of all other commodities combined increased 2,400. Average
freight revenue per carload increased from $233 to $281, primarily due to the
strength of the Australian dollar relative to the U.S. dollar and higher
revenues per car in other ores and minerals and other, partially offset by
lower revenues per carload in hook and pull.
Non-Freight Revenues
The following table compares ARG’s non-freight revenues for the nine
months ended September 30, 2004 and 2003.
Australian Railroad Group
ARG’s non-freight revenues were $39.4 million in the nine months ended
September 30, 2004, compared to $31.8 million in the nine months September 30,
2003, an increase of $7.6 million or 23.8%. ARG’s non-freight revenue increase
was primarily attributable to the appreciation of the Australian dollar, higher
third party track access fees and other operating income, primarily fuel sales
to other railroads, offset by a decrease from the Alice Springs to Darwin (ASD)
line due to completion of construction. In local currency,
non-freight revenues
increased 8.1% in the nine months ended September 30, 2004, compared to the
nine months ended September 30, 2003.
Operating Expenses
ARG’s operating expenses were $196.9 million in the nine months ended
September 30, 2004, compared to $138.4 million in the nine months ended
September 30, 2003, an increase of $58.5 million or 42.3%. The following table
sets forth a comparison of ARG’s operating expenses in the nine months ended
September 30, 2004 and 2003:
34
Australian Railroad Group
Labor and benefits expense, as a percentage of revenues, decreased to
17.7% in the nine months ended September 30, 2004, compared to 18.9% in the
nine months ended September 30, 2003. In local currency, labor and benefits
increased 15.1%. The increase was due to higher freight volumes, particularly
the strong grain movements and the new business in New South Wales.
Purchased services expense decreased to 24.3% of revenue in the nine
months ended September 30, 2004, compared to 24.7% of revenues in the nine
months ended September 30, 2003. In local currency, purchased services
increased 21.1%. The increase was primarily due to the use of contract
locomotive engineers, private road carriers, and a rail loading facility in New
South Wales.
Depreciation and amortization expense, as a percentage of revenues,
decreased to 8.0% in the nine months ended September 30, 2004, compared to 9.7%
in the nine months ended September 30, 2003. In local currency, depreciation
and amortization increased 1.8%. The increase was due to higher depreciation
related to an increase in depreciable assets due to capital expenditures.
Diesel fuel used in operations increased to 7.6% of revenues in the nine
months ended September 30, 2004, compared to 6.2% of revenues in the nine
months ended September 30, 2003. In local currency, the cost of fuel used in
operations increased 53.2%. The increase was due to higher freight volumes on
existing lines, the new business in New South Wales, the contract operations in
the Northern Territory (ASD), and a 15.8% increase in fuel prices.
The cost of diesel fuel sold to third parties increased to 5.5% of
revenues in the nine months ended September 30, 2004, compared to 2.6% of
revenues in the nine months ended September 30, 2003. In local currency, the
cost of diesel fuel sold to third parties increased 156.8%. The increase was
due to a higher volume of fuel sales to other railroads and a 15.8% increase in
fuel prices.
Casualties and insurance costs decreased to 2.6% of revenues in the nine
months ended September 30, 2004, compared to 3.7% of revenues in the nine
months ended
35
September 30, 2003. In local currency, casualties and insurance decreased
14.7%. The decrease was due to improved safety performance and a decrease in
insurance costs.
Materials expense, as a percentage of revenues, decreased to 4.3% in the
nine months ended September 30, 2004, compared to 4.8% in the nine months ended
September 30, 2003. In local currency, materials expense increased 10.1%. The
increase was due to higher rolling stock maintenance costs associated with the
higher freight volumes.
Net loss (gain) on sale and impairment of assets as a percentage of
revenues, changed from a gain of 0.5% in the nine months ended September 30,
2003 to a loss of 0.1% in the nine months ended September 30, 2004. The net
loss in the nine months ended September 30, 2004 was due to asset write offs in
South Australia related to a detailed asset review. In the nine months ended
September 30, 2003 asset dispositions resulted in a net gain.
Other expenses, as a percentage of revenues, increased to 8.5% in the nine
months ended September 30, 2004, compared to 8.3% in the nine months ended
September 30, 2003. In local currency, other expenses increased 26.4%. The
increase was primarily due to track access fees and various other increases in
administrative costs related to the new business in New South Wales.
Liquidity and Capital Resources
During the nine months ended September 30, 2004 the Company generated cash
flow from operating activities of $41.4 million, invested $19.8 million in
capital assets (net of $4.4 million in state grant funds received for track
rehabilitation and construction), purchased $2.1 million of new rail
properties, received $5.8 million in cash from unconsolidated international
affiliates and received $2.8 million in proceeds from employee stock purchases.
The Company paid $411,000 of dividends on the Company’s Redeemable Convertible
Preferred Stock and reduced its debt by $29.8 million during this same period
primarily by using cash provided by operations.
During the nine months ended September 30, 2003 the Company generated cash
from operations of $38.2 million, invested $14.3 million in capital assets (net
of $1.5 million in state grant funds received for track rehabilitation and
construction), received $132,000 in cash from unconsolidated affiliates and
received $1.7 million in proceeds from employee stock purchases. The Company
paid $750,000 of dividends on the Company’s Redeemable Convertible Preferred
Stock and reduced its debt by $29.9 million during this same period primarily
by using cash provided by operations to reduce debt.
The Company originally budgeted approximately $29.2 million in capital
expenditures in 2004, of which $19.8 million was for track rehabilitation and
$9.4 million was for equipment. During 2004, budget addendums related to track
rehabilitation increased the capital budget by approximately $1.0 million, net
of $2.3 million expected to be funded by grants from state and federal
agencies. Included in the revised budget of $30.2 million is approximately
$2.7 million to exercise an early buyout of 36 leased locomotives and
approximately $2.3 million to partially rehabilitate 16 miles of track to
access a new coal-fired power plant customer in Homer City, Pennsylvania. The
Company also expects to receive $6.3 million of state and federal grants to
fund a portion of the track rehabilitation on the Homer City line. Completion
of track rehabilitation projects is typically dependent on weather conditions
in the fourth quarter of each year. Any carryover amounts would be included in
the following year’s capital budget.
At September 30, 2004 the Company had long-term debt, including current
portion, totaling $129.0 million, which comprised 28.5% of its total
capitalization. At December 31, 2003 the Company had long-term debt, including
current portion, totaling $158.0 million, which comprised 35.2% of its total
capitalization including the Mandatorily Redeemable Convertible Preferred
Stock.
The Company has historically relied primarily on cash generated from
operations to fund working capital and capital expenditures relating to ongoing
operations, while
36
relying on borrowed funds and stock issuances to finance acquisitions and
investments in unconsolidated affiliates. The Company believes that its cash
flow from operations, together with amounts available under the credit
facilities, will enable the Company to meet its liquidity and capital
expenditure requirements relating to ongoing operations for at least the
duration of the credit facilities.
U.S. Credit Facilities
As of September 30, 2004, the Company’s $223.0 million revolving loan,
which matures in 2007, consisted of outstanding debt of $77.7 million, letter
of credit guarantees of $8.1 million and $137.2 million of unused borrowing
capacity. The $137.2 million ($113.4 million at December 31, 2003) of unused
borrowing capacity is available for general corporate purposes including
acquisitions. See Note 9 of the Company’s Form 10-K for the year ended 2003
for additional information regarding the Company’s credit facilities.
Mexican Financings
On December 7, 2000, one of the Company’s subsidiaries in Mexico,
Servicios, entered into three promissory notes payable (Notes) totaling $27.5
million with variable interest rates based on LIBOR plus 3.5 percentage points.
Two of the Notes, aggregating $16.8 million, have an eight year term with
combined semi-annual principal payments of $1.4 million which began March 15,
2003, and continue through the maturity date of September 15, 2008. The third
Note, in the amount of $10.5 million, has a nine year term with semi-annual
principal payments of $750,000 which began March 15, 2003, and continue through
the maturity date of September 15, 2009.
The Notes are secured by essentially all the assets of Servicios and its
subsidiary, Compania de Ferrocarriles Chiapas-Mayab, S.A. de C.V., (FCCM), and
a pledge of the Company’s shares of Servicios and FCCM. The Company is
obligated to provide up to $8.0 million of funding to its Mexican subsidiaries,
if necessary, to meet their investment or financial obligations prior to
completing the investment phase of the project funded by the Notes (Physical
Completion), consisting of several obligations related to capital investments,
operating performance and management systems and controls. In addition, the
Company is obligated to provide $7.5 million in funding to Servicios to meet
its debt service obligations prior to completing the financial phase of the
project (Financial Completion), consisting of several financial performance
thresholds. At present, FCCM has yet to achieve Physical Completion or
Financial Completion. To date, GWI has advanced $1.7 million of this
obligation, and based on current circumstances, it is probable that the Company
will have to fund additional payments in order to meet the future principal
repayment obligations of the Notes.
In conjunction with the refinancing of FCCM and Servicios, the
International Finance Corporation (IFC) (the primary lender to Servicios)
invested $1.9 million of equity in Servicios for a 12.7% indirect interest in
FCCM. Along with its equity investment, IFC received a put option exercisable
in 2005 to sell its equity stake back to the Company. The put price will be
based on a multiple of earnings before interest, taxes, depreciation and
amortization. The Company increases its minority interest expense if the value
of the put option exceeds the minority interest. Exercise of this put option by
the IFC would result in a future cash outflow for the Company.
Mexican Fuel Tax Credits –
Under prior tax regulations, FCCM could apply
diesel fuel tax credits it earned to a variety of its federal tax obligations,
including income taxes, payroll taxes and value added taxes. In 2003, FCCM
utilized approximately $3.3 million in such fuel tax credits. However,
effective January 2004, due to Mexican tax regulations that allow railroads to
apply these tax credits only to income tax related obligations, FCCM became
unable to utilize such fuel tax credits.
37
If this regulation remains in place, FCCM would face additional annual cash
payment obligations for the next few years until it generates sufficient
taxable income to utilize such credits. This additional burden will make it
more difficult for FCCM and Servicios to satisfy their debt obligations and
increases the likelihood that the Company will have to fund all or a portion of
its funding obligation. Company personnel are working with Secretary of
Communications and Transportation and Mexican tax authorities to attempt to
revise the tax regulation but the Company can offer no assurance that it will
be successful.
Supplemental Information – North America
Free Cash Flow Description and Discussion
– The Company views Free Cash
Flow as an important financial measure of how well it is managing its assets.
Subject to the limitations discussed below, Free Cash Flow is a useful
indicator of cash flow that may be available for use by the Company. Free Cash
Flow is defined as Net Cash Provided by Operating Activities less Net Cash Used
in Investing Activities, excluding the Cost of Acquisitions. Key limitations
of the Free Cash Flow measure include the assumptions that the Company will be
able to refinance its existing debt when it matures, and meet other cash flow
obligations from financing activities, such as required amortization of debt.
Free Cash Flow is not intended to represent, and should not be considered more
meaningful than, or as an alternative to, measures of cash flow determined in
accordance with Generally Accepted Accounting Principles.
The following table sets forth reconciliation for Net Cash Provided by
Operating Activities to Free Cash Flow:
Impact of Foreign Currencies on Operating Revenues –
In the nine months
ending September 30, 2004, foreign currency translation had a positive impact
on consolidated North America revenues primarily due to the strengthening of
the Canadian dollar. The following table sets forth the impact of foreign
currency translation on reported operating revenues:
Operating Revenues
38
Supplemental Information — Australian Railroad Group
ARG’s Free Cash Flow is defined as net cash provided by operating
activities, less net cash used in investing activities, excluding the cash
transfer to (from) restricted funds. The prior discussion concerning the
usefulness and limitations associated with the Company’s Free Cash Flow also
apply to the discussion of ARG’s Free Cash Flow. In addition, the Company has
no access or right to any of ARG’s Free Cash Flow other than as a shareholder,
and any dividend or distribution of cash by ARG must be approved by ARG’s board
of directors, the Company and the Company’s 50/50 partner, Wesfarmers. The
following table sets forth a reconciliation of ARG’s net cash provided by
operating activities to its Free Cash Flow:
Impact of Foreign Currency on ARG’s Operating Revenues and Net Income –
In
the nine months ending September 30, 2004, foreign currency translation had a
positive impact on ARG’s operating revenues and net income due to the
strengthening of the Australian dollar. The following table sets forth the
impact of foreign currency translation on reported operating revenues and net
income:
ARG Operating Revenues and Net Income
39
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
During 2003, 2002 and 2001, the Company entered into various interest rate
swaps fixing its base interest rate by exchanging its variable LIBOR interest
rates on long-term debt for a fixed interest rate. The swaps expire at various
dates through September 2007 and the fixed base rates range from 3.35% to
5.46%. At September 30, 2004 and December 31, 2003, the notional amount under
these agreements was $56.8 million and $60.6 million, respectively and the fair
value of these interest rate swaps was a negative $1.2 million and $2.2
million, respectively.
During 2004 and 2003, the Company entered into various exchange rate
options that establish exchange rates for converting Mexican Pesos to U.S.
Dollars, one of which was outstanding as of September 30, 2004. This option,
which expires in March 2005, gives the Company the right to sell Mexican Pesos
for U.S. Dollars at an exchange rate of 13.34 Mexican Pesos to the U.S. Dollar.
The Company paid an up-front premium for this option of $28,000 in the quarter
ended June 30, 2004. At September 30, 2004 and December 31, 2003, the notional
amount under exchange rate options was $2.1 million and $5.3 million,
respectively. At September 30, 2004 and December 31, 2003, the fair value of
currency exchange rate options was $160 and $17,000, respectively.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed
to
ensure that information required to be disclosed in the Company’s report under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and that such information is accumulated and
communicated to the Company’s management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures. Any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving
the
desired control objectives. The Company’s management, with the participation
of
the Company’s Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the design and operation of the Company’s
disclosure controls and procedures as of September 30, 2004. Based upon that
evaluation and subject to the foregoing, the Company’s Chief Executive Officer
and Chief Financial Officer concluded that the design and operation of the
Company’s disclosure controls and procedures provided reasonable assurance that
the disclosure controls and procedures are effective to accomplish their
objectives.
There have been no changes in the Company’s internal control over
financial reporting that occurred during the Company’s last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
40
Three Months
Nine Months
Ended September 30,
Ended September 30,
2004
2003
2004
2003
$
77,243
$
61,499
$
223,707
$
183,298
25,950
20,252
73,976
62,005
7,516
6,449
22,002
19,550
12,060
9,028
34,789
27,181
13,624
12,731
40,317
34,930
81
(35
)
(12
)
141
4,812
3,869
14,295
11,437
64,043
52,294
185,367
155,244
13,200
9,205
38,340
28,054
(2,352
)
(2,175
)
(7,070
)
(6,685
)
(221
)
54
203
767
10,627
7,084
31,473
22,136
4,284
2,384
12,267
8,260
6,343
4,700
19,206
13,876
3,529
2,715
10,746
6,859
273
203
496
112
$
10,145
$
7,618
$
30,448
$
20,847
$
10,145
$
6,114
$
27,433
$
16,788
$
10,145
$
7,234
$
29,969
$
19,878
$
0.42
$
0.31
$
1.24
$
0.84
24,213
20,037
22,048
19,932
$
0.37
$
0.27
$
1.09
$
0.74
27,497
26,835
27,412
26,712
Table of Contents
Table of Contents
Nine Months Ended
September 30,
2004
2003
$
30,448
$
20,847
14,295
11,437
4,737
4,750
(12
)
141
(11,242
)
(6,971
)
142
209
1,090
846
(7,774
)
1,457
(184
)
77
(541
)
(343
)
10,727
4,437
(217
)
1,271
41,469
38,158
(19,751
)
(12,846
)
—
(1,425
)
(2,124
)
—
5,757
132
315
644
(15,803
)
(13,495
)
(151,134
)
(121,932
)
121,300
92,000
2,795
1,680
(411
)
(750
)
(27,450
)
(29,002
)
69
253
(1,715
)
(4,086
)
11,118
11,028
$
9,403
$
6,942
$
7,206
$
6,533
$
4,635
$
922
Table of Contents
Table of Contents
Three Months Ended
September 30,
2004
2
2
2
2
$
179,000
80,000
142,000
$
117,000
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
Actual
Pro forma
Actual
Pro forma
2004
2003
2004
2003
$
77,243
$
66,046
$
223,707
$
196,525
$
10,145
$
8,441
$
30,448
$
21,955
$
0.42
$
0.34
$
1.24
$
0.89
$
0.37
$
0.30
$
1.09
$
0.78
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
Sept. 30,
Sept. 30,
2004
2003
2004
2003
$
10,145
$
7,618
$
30,448
$
20,847
—
384
479
969
—
1,120
2,536
3,090
$
10,145
$
6,114
$
27,433
$
16,788
—
1,120
2,536
3,090
$
10,145
$
7,234
$
29,969
$
19,878
24,213
20,037
22,048
19,932
—
3,668
2,038
3,668
2,650
2,708
2,682
2,708
634
422
644
404
27,497
26,835
27,412
26,712
$
0.42
$
0.31
$
1.24
$
0.84
$
0.37
$
0.27
$
1.09
$
0.74
Table of Contents
Table of Contents
Table of Contents
$
0.73
$
0.75
$
0.71
$
0.67
$
0.73
$
0.63
Condensed Consolidated Balance Sheets
(in thousands of U.S. dollars)
September 30,
December 31,
2004
2003
$
30,760
$
26,618
41,607
47,764
10,512
10,033
4,862
3,069
87,741
87,484
481,610
478,808
73,338
80,193
7,875
5,476
$
650,564
$
651,961
$
44,522
$
42,310
212
—
44,734
42,310
356,671
367,892
18,278
14,271
1,989
2,031
9,291
9,133
—
11,562
386,229
404,889
15,718
16,212
203,883
188,550
$
650,564
$
651,961
Table of Contents
Condensed Consolidated Statements of Income
(in thousands of U.S. dollars)
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
Sept. 30,
Sept. 30,
2004
2003
2004
2003
$
83,695
$
61,716
$
247,765
$
174,988
66,959
50,546
196,929
138,153
—
—
—
267
66,959
50,546
196,929
138,420
16,736
11,170
50,836
36,568
(6,865
)
(8,060
)
(21,068
)
(22,757
)
221
876
962
2,414
10,092
3,986
30,730
16,225
3,030
(1,446
)
9,236
2,505
$
7,062
$
5,432
$
21,494
$
13,720
Condensed Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
Nine Months Ended
Sept. 30,
Sept. 30,
2004
2003
$
21,494
$
13,720
19,845
16,940
8,894
8,362
376
(816
)
3,345
(3,926
)
53,954
34,280
(39,059
)
(21,014
)
1,296
4,027
—
(4,523
)
(37,763
)
(21,510
)
(10,710
)
—
(10,710
)
(1,339
)
3,488
4,142
16,258
26,618
5,882
$
30,760
$
22,140
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
2004
2003
2004
2003
$
8,554
$
7,325
$
23,045
$
18,745
2,040
1,510
4,777
2,846
Table of Contents
Table of Contents
Three Months Ended
September 30,
2004
2003
$
10,145
$
7,618
6,879
(2,476
)
(129
)
577
(624
)
2,468
$
16,271
$
8,187
Table of Contents
Three Months Ended
Nine Months Ended
2004
2003
2004
2003
$
57,514
$
44,388
$
166,335
$
131,792
11,269
8,782
33,633
27,142
8,460
8,329
23,739
24,364
$
77,243
$
61,499
$
223,707
$
183,298
As of
Sept. 30, 2004
$
464,176
58,739
39,071
$
561,986
Table of Contents
September 30, 2004
December 31, 2003
Gross
Gross
Carrying
Accumulated
Net
Carrying
Accumulated
Net
Amount
Amortization
Assets
Amount
Amortization
Assets
$
6,916
$
1,151
$
5,765
$
7,058
$
999
$
6,059
10,566
539
10,027
10,566
216
10,350
27,055
676
26,379
27,055
—
27,055
35,891
—
35,891
35,891
—
35,891
80,428
2,366
78,062
80,570
1,213
79,357
6,782
2,797
3,985
6,607
1,841
4,766
7,067
620
6,447
5,370
43
5,327
13,849
3,417
10,432
11,977
1,884
10,093
$
94,277
$
5,782
$
88,494
$
92,547
$
3,097
$
89,450
Table of Contents
Table of Contents
Other
Retirement
Pension
Benefits
2004
2003
2004
2003
$
57
$
45
$
28
$
25
52
48
68
69
(33
)
(23
)
—
—
36
36
—
—
—
—
—
—
4
3
21
5
$
116
$
109
$
117
$
99
Table of Contents
Table of Contents
Quarters Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
Total
Less
Existing
Total
Revenues
Acquisitions
Operations
Revenues
$
57,109
$
4,771
$
52,338
$
45,039
20,134
1,509
18,625
16,460
$
77,243
$
6,280
$
70,963
$
61,499
Table of Contents
Quarters Ended September 30, 2004 and 2003
(dollars in thousands, except average per carload)
Average
Freight
Revenues
Freight Revenues
Carloads
Per Carload
% of
% of
% of
% of
Commodity Group
2004
Total
2003
Total
2004
Total
2003
Total
2004
2003
$
11,641
20.4
%
$
9,271
20.6
%
50,750
31.4
%
43,307
32.8
%
$
229
$
214
10,420
18.2
%
8,019
17.8
%
23,981
14.8
%
19,361
14.7
%
435
414
6,628
11.6
%
4,333
9.6
%
19,861
12.3
%
13,652
10.4
%
334
317
5,973
10.5
%
3,999
8.9
%
18,572
11.5
%
13,241
10.0
%
322
302
5,866
10.3
%
5,791
12.9
%
16,457
10.2
%
15,296
11.6
%
356
379
5,803
10.2
%
6,079
13.5
%
7,806
4.8
%
7,636
5.8
%
743
796
4,021
7.0
%
2,775
6.2
%
7,499
4.6
%
5,998
4.5
%
536
463
3,648
6.4
%
2,708
6.0
%
8,692
5.4
%
6,826
5.2
%
420
397
1,350
2.4
%
1,116
2.5
%
3,048
1.9
%
2,773
2.1
%
443
402
587
1.0
%
411
0.9
%
1,724
1.1
%
1,347
1.0
%
340
305
1,172
2.0
%
537
1.1
%
3,402
2.0
%
2,397
1.9
%
345
224
$
57,109
100.0
%
$
45,039
100.0
%
161,792
100.0
%
131,834
100.0
%
353
342
Table of Contents
Quarters Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
% of
% of
Non-Freight
Non-Freight
$
Revenue
$
Revenue
$
10,234
50.8
%
$
8,387
51.0
%
3,131
15.6
%
1,755
10.7
%
1,295
6.4
%
1,026
6.2
%
5,474
27.2
%
5,292
32.1
%
$
20,134
100.0
%
$
16,460
100.0
%
Quarters Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
% of
% of
Operating
Operating
$
Revenues
$
Revenues
$
26,551
34.4
%
$
21,068
34.3
%
7,100
9.2
%
4,362
7.1
%
4,493
5.8
%
4,779
7.8
%
4,812
6.2
%
3,869
6.3
%
6,222
8.1
%
4,105
6.7
%
4,598
6.0
%
3,377
5.5
%
3,826
5.0
%
4,157
6.8
%
81
0.1
%
(35
)
(0.1
%)
6,360
8.1
%
6,612
10.6
%
$
64,043
82.9
%
$
52,294
85.0
%
Table of Contents
Table of Contents
Table of Contents
Freight Revenues and Carloads by Commodity Group
Quarters Ended September 30, 2004 and 2003
(U.S. dollars in thousands, except average per carload)
Average
Freight
Revenues
Freight
Revenues
Carloads
Per
Carload
Commodity Group
2004
% of
Total
2003
% of
Total
2004
% of
Total
2003
% of
Total
2004
2003
$
26,392
37.9
%
$
13,298
26.3
%
69,185
28.1
%
35,552
16.6
%
$
381
$
374
14,665
21.1
%
12,571
24.8
%
28,218
11.5
%
28,282
13.2
%
520
444
10,588
15.2
%
9,960
19.7
%
47,886
19.4
%
47,646
22.2
%
221
209
4,837
6.9
%
3,736
7.4
%
38,785
15.8
%
38,577
18.0
%
125
97
3,113
4.5
%
2,398
4.7
%
32,101
13.0
%
32,426
15.1
%
97
74
364
0.5
%
1,404
2.8
%
960
0.4
%
3,253
1.5
%
379
432
748
1.1
%
817
1.6
%
12,180
4.9
%
13,176
6.1
%
61
62
8,946
12.8
%
6,414
12.7
%
16,927
6.9
%
15,694
7.3
%
529
409
$
69,653
100.0
%
$
50,598
100.0
%
246,242
100.0
%
214,606
100.0
%
283
236
Table of Contents
Non-Freight Revenues Comparison
Quarters Ended September 30, 2004 and 2003
(U.S. dollars in thousands)
% of
% of
2004
Total
2003
Total
$
4,943
35.2
%
$
4,490
40.4
%
1,668
11.9
%
3,622
32.6
%
7,431
52.9
%
3,006
27.0
%
$
14,042
100.0
%
$
11,118
100.0
%
Quarters Ended September 30, 2004 and 2003
(U.S. dollars in thousands)
2004
2003
% of
% of
Operating
Operating
$
Revenues
$
Revenues
$
14,530
17.4
%
$
12,416
20.1
%
667
0.8
%
482
0.8
%
20,840
24.9
%
16,433
26.6
%
6,748
8.1
%
6,065
9.8
%
6,869
8.2
%
3,747
6.1
%
5,385
6.4
%
1,644
2.7
%
1,620
1.9
%
1,563
2.5
%
3,759
4.5
%
2,970
4.8
%
(95
)
-0.1
%
(183
)
-0.3
%
6,636
7.9
%
5,409
8.8
%
$
66,959
80.0
%
$
50,546
81.9
%
Table of Contents
Table of Contents
Nine Months Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
Total
Less
Existing
Total
Revenues
Acquisitions
Operations
Revenues
$
167,826
$
14,031
$
153,795
$
136,718
55,881
4,396
51,485
46,580
$
223,707
$
18,427
$
205,280
$
183,298
Nine Months Ended September 30, 2004 and 2003
(dollars in thousands, except average per carload)
Average
Freight
Revenues
Freight Revenues
Carloads
Per Carload
Commodity Group
2004
% of Total
2003
% of Total
2004
% of Total
2003
% of Total
2004
2003
$
34,440
20.5
%
$
28,919
21.2
%
144,051
30.6
%
125,418
31.7
%
$
239
$
231
29,710
17.7
%
23,288
17.0
%
70,171
14.9
%
56,340
14.2
%
423
413
18,793
11.2
%
12,776
9.3
%
57,323
12.2
%
40,508
10.2
%
328
315
18,251
10.9
%
18,750
13.7
%
24,301
5.2
%
24,033
6.1
%
751
780
17,078
10.2
%
12,951
9.5
%
53,940
11.5
%
44,986
11.4
%
317
288
16,695
9.9
%
16,521
12.1
%
44,850
9.5
%
42,604
10.8
%
372
388
11,996
7.1
%
8,209
6.0
%
22,775
4.8
%
17,631
4.5
%
527
466
11,387
6.8
%
8,199
6.0
%
27,058
5.8
%
21,688
5.5
%
421
378
4,946
2.9
%
4,351
3.2
%
11,458
2.4
%
10,764
2.7
%
432
404
1,769
1.1
%
1,199
0.9
%
4,824
1.0
%
4,335
1.1
%
367
277
2,761
1.7
%
1,555
1.1
%
9,711
2.1
%
7,465
1.8
%
284
208
$
167,826
100.0
%
$
136,718
100.0
%
470,462
100.0
%
395,772
100.0
%
357
345
Table of Contents
Nine Months Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
% of
% of
Non-Freight
Non-Freight
$
Revenue
$
Revenue
$
28,866
51.7
%
$
24,458
52.5
%
8,618
15.4
%
5,257
11.3
%
4,119
7.4
%
3,222
6.9
%
14,278
25.5
%
13,643
29.3
%
$
55,881
100.0
%
$
46,580
100.0
%
Table of Contents
Nine Months Ended September 30, 2004 and 2003
(dollars in thousands)
2004
2003
% of
% of
Operating
Operating
$
Revenues
$
Revenues
$
77,897
34.8
%
$
64,868
35.4
%
20,316
9.1
%
13,162
7.2
%
13,272
5.9
%
13,735
7.5
%
14,295
6.4
%
11,437
6.2
%
17,514
7.8
%
13,726
7.5
%
11,958
5.3
%
9,675
5.3
%
11,144
5.0
%
11,822
6.4
%
(12
)
0.0
%
141
0.1
%
18,983
8.6
%
16,678
9.1
%
$
185,367
82.9
%
$
155,244
84.7
%
Table of Contents
Table of Contents
Freight Revenues and Carloads by Commodity Group
Nine Months Ended September 30, 2004 and 2003
(U.S. dollars in thousands, except average per carload)
Average
Freight
Revenues
Freight
Per
Revenues
Carloads
Carload
Commodity Group
2004
% of Total
2003
% of Total
2004
% of Total
2003
% of Total
2004
2003
$
78,323
37.6
%
$
40,709
28.4
%
205,409
27.7
%
104,369
17.0
%
$
381
$
390
43,798
21.0
%
33,969
23.7
%
82,033
11.1
%
78,577
12.8
%
534
432
32,922
15.8
%
25,640
17.9
%
149,415
20.1
%
132,250
21.5
%
220
194
14,589
7.0
%
11,680
8.2
%
117,921
15.9
%
114,659
18.7
%
124
102
9,245
4.4
%
8,068
5.6
%
92,352
12.5
%
96,430
15.7
%
100
84
1,279
0.6
%
3,086
2.2
%
6,257
0.8
%
6,146
1.0
%
204
502
2,659
1.3
%
2,127
1.5
%
37,587
5.1
%
34,482
5.6
%
71
62
25,551
12.3
%
17,896
12.5
%
50,749
6.8
%
47,029
7.7
%
503
381
$
208,366
100.0
%
$
143,175
100.0
%
741,723
100.0
%
613,942
100.0
%
281
233
Table of Contents
Non-Freight Revenues Comparison
Nine Months Ended September 30, 2004 and 2003
(U.S. dollars in thousands)
% of
% of
2004
Total
2003
Total
$
15,852
40.3
%
$
12,003
37.7
%
4,855
12.3
%
11,533
36.3
%
18,692
47.4
%
8,277
26.0
%
$
39,399
100.0
%
$
31,813
100.0
%
Table of Contents
Operating Expense Comparison
Nine Months Ended September 30, 2004 and 2003
(U.S. dollars in thousands)
2004
2003
% of
% of
Operating
Operating
$
Revenues
$
Revenues
$
43,731
17.7
%
$
33,033
18.9
%
2,198
0.9
%
1,204
0.7
%
60,165
24.3
%
43,283
24.7
%
19,845
8.0
%
16,940
9.7
%
18,895
7.6
%
10,758
6.2
%
13,549
5.5
%
4,607
2.6
%
6,418
2.6
%
6,444
3.7
%
10,611
4.3
%
8,404
4.8
%
376
0.1
%
(816
)
(0.5
%)
21,141
8.5
%
14,563
8.3
%
$
196,929
79.5
%
$
138,420
79.1
%
Table of Contents
Table of Contents
Table of Contents
(dollars in thousands)
Nine Months Ended September,
2004
2003
Revenue
Currency
Excluding
Translation
Currency
As Reported
Impact
Impact
As Reported
$
166,335
n/a
$
166,335
$
131,793
33,633
$
(2,308
)
31,325
27,142
23,739
1,423
25,162
24,263
$
223,707
$
(885
)
$
222,822
$
183,298
Table of Contents
(a)
Cash transfer to restricted funds represents cash deposited in an
escrow account for mandated capital expenditures.
(U.S. dollars in thousands)
Nine Months Ended September 30,
2004
2003
Currency
Excluding
Translation
Currency
As Reported
Impact
Impact
As Reported
$
247,765
($32,310
)
$
215,455
$
174,988
$
21,494
($2,864
)
$
18,630
$
13,720
Table of Contents
Table of Contents
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Legal Proceedings – On March 31, 2004, Messrs. Chambers and Wheeler filed
a complaint against Genesee & Wyoming Inc. in the Chancery Court of Delaware.
The complaint relates to the sale by the plaintiffs in April of 1999 to the
Company of their ownership interests in certain of the Company’s Canadian
operations. Under the terms of the purchase agreement, among other things, the
plaintiffs were granted options to purchase up to 270,000 shares of the
Company’s Class A Common Stock at an exercise price of $2.56 per share if
certain of the Company’s Canadian operations had achieved certain financial
performance targets in any annual period between 1999 and 2003. The complaint
alleges that these financial performance targets have been met, and the
plaintiffs are seeking, among other things, a declaratory judgment that the
options granted under the purchase agreement have vested and are exercisable.
The Company has determined that the Canadian operations at issue failed to
achieve these financial performance targets in any of the required years, and
it intends to vigorously defend this lawsuit.
In addition, the Company is a defendant in certain lawsuits resulting from
its operations. There have been no material developments in any litigation
matters previously disclosed. The Company believes that it has adequate
provisions in the financial statements for any expected liabilities which may
result from disposition of such lawsuits. While it is possible that some of
the foregoing matters may be resolved at a cost greater than that provided for,
the Company believes that the ultimate liability, if any, will not be material
to its operating results, financial condition or liquidity.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no unregistered sales of equity securities for the
period covered by this Form 10-Q.
ITEM 2(e). ISSUER PURCHASES OF EQUITY SECURITIES
41
On
November 2, 2004 (and therefore after the period covered by this
Form 10-Q), the Company announced that its Board has authorized
the repurchase of up to 1,000,000 shares of its common stock. The Company
intends to use the repurchased stock to offset dilution caused by the issuance
of shares in connection with its employee and director stock plans that may
occur over time. Purchases may be made in the open market or in privately
negotiated transactions from time to time at management’s discretion.
(d) Maximum
(c) Total
Number (or
Number of
Approximate
Shares (or
Dollar Value)
Units)
of Shares (or
Purchased as
Units) that
(a) Total
Part of
May Yet Be
Number of
(b) Average
Publicly
Purchased
Shares (or
Price Paid
Announced
Under the
Units)
per Share (or
Plans or
Plans or
2004
Purchased
Unit)
Programs
Programs
—
—
NA
NA
642
$
23.35
NA
NA
—
—
NA
NA
642
$
23.35
NA
NA
Table of Contents
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES — NONE
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS — NONE
ITEM 5.
OTHER INFORMATION
On August 19, 2004, the board of directors of GWI (Board) amended
its Bylaws to make them more consistent with current Bylaws for
Delaware public companies. Among other changes, the amended Bylaws set forth clear
procedures for stockholders to follow in order to nominate a
candidate to the Board. In addition, the amended Bylaws no longer
have a provision that specifically permits stockholders to call a
meeting; determine the number of directors; or set the time and
place of the first Board meeting. The amended Bylaws are filed as
an exhibit to this Form 10-Q and are available on the Governance
hyperlink included in GWI’s website, which is: https:www.gwrr.com.
Table of Contents
INDEX TO EXHIBITS
43
(2.1)
Amended Bylaws
(10.1)
Genesee & Wyoming Inc. Award Notice for Employees for Options
(10.2)
Genesee & Wyoming Inc. Award Notice for Employees for Restricted Stock
(10.3)
Genesee & Wyoming Inc. Award Notice for Employees for Restricted Stock
Units
(10.4)
Genesee & Wyoming Inc. Award Notice for Directors for Restricted Stock
(10.5)
Genesee & Wyoming Inc. Award Notice for Directors for Restricted Stock
Units
(31.1)
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
(31.2)
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
(32.1)
Section 1350 Certifications
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GENESEE & WYOMING INC. | ||||
|
|
||||
|
Date: November 5, 2004
|
By: /s/ John C. Hellmann | |||
|
|
|
|||
|
|
Name: | John C. Hellmann | ||
|
|
Title: | Chief Financial Officer | ||
|
|
||||
|
Date: November 5, 2004
|
By: /s/ James M. Andres | |||
|
|
|
|||
|
|
Name: | James M. Andres | ||
|
|
Title: | Chief Accounting Officer and Global Controller | ||
44
EXHIBIT 2.1
AS OF AUGUST 19,2004
BY-LAWS
OF
GENESEE & WYOMING INC.
ARTICLE I.
STOCKHOLDERS
Section 1. Notice of Meetings. Except as otherwise provided by law, notice of the date, time, place and, in the case of a special meeting, the purpose or purposes of the meeting of stockholders thereto shall be delivered personally or mailed not earlier than sixty, nor less than ten, days before the date of the meeting, to each stockholder of record entitled to vote at the meeting at such address as appears on the records of the corporation.
Section 2. Quorum. The holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation; but if at any regularly called meeting of stockholders there shall be less than a quorum present, the stockholders present may adjourn the meeting from time to time without further notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 3. Organization.
(A) The Chairman of the Board, or in the Chairman's absence or at the Chairman's direction, the Chief Executive Officer, or in the Chief Executive Officer's absence or at the Chief Executive Officer's direction, any officer of the corporation shall call all meetings of the stockholders to order and shall act as Chairman of such meeting.. The Secretary or, in such officer's absence, an Assistant Secretary, shall act as secretary of the meeting. If neither the Secretary nor an Assistant Secretary is present, the Chairman of the meeting shall appoint a secretary of the meeting. Unless otherwise determined by the Board of Directors prior to the meeting, the Chairman of the meeting shall determine the order of business and shall have the authority in his or her discretion to regulate the conduct of any such meeting, including, without limitation, by imposing restrictions on the persons (other than stockholders of the corporation or their duly appointed proxies) who may attend any such meeting, whether any stockholder or stockholders' proxy may be excluded from any meeting of stockholders based upon any determination by the Chairman, in his or her sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings thereat, and the circumstances in which any person may make a statement or ask questions at any meeting of stockholders.
(B) The officer who has charge of the stock ledger of the corporation shall prepare and make at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at an office of the corporation located within the city where the meeting is to be held or if no such office exists, than at a place within the city where the meeting is to be held which shall be specified in the notice of meeting, or at the place where the meeting is to be held. The list shall also be produced at the time and kept at the place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
Section 4. Voting.
(A) At all meetings of stockholders, any stockholder entitled to vote thereat shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for the stockholder as proxy pursuant to the General Corporation Law of the State of Delaware, the following shall constitute a valid means by which a stockholder may grant such authority: (1) a stockholder may execute a writing authorizing another person or persons to act for the stockholder as proxy, and execution of the writing may be accomplished by the stockholder or the stockholder's authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature; or (2) a stockholder may authorize another person or persons to act for the stockholder as proxy by transmitting or authorizing an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. If it is determined that such electronic transmissions are valid, the judge or judges of stockholder votes or, if there are no such judges, such other persons making that determination shall specify the information upon which they relied.
(B) Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to the preceding paragraph of this Section 4 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
(C) Proxies shall be filed with the Secretary of the meeting prior to or at the commencement of the meeting to which they relate.
(D) A proxy, unless coupled with an interest, shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until written notice of revocation has been given to
the Secretary. A proxy shall not be revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, written notice of such death or incapacity is given to the Secretary.
(E) Except as set forth in Article II of these By-laws for the filling of vacancies and newly created directorships, the vote of the holders of a plurality of all voting power present in person or represented by proxy and entitled to vote at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Stockholders shall not be entitled to cumulate their votes in the election of directors. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall, at every meeting of the stockholders, be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder.
(F) When a quorum is present at any meeting, the vote of the holders of a majority in voting power of the stock present in person or represented by proxy and entitled to vote on the matter shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation or these By-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question.
Section 5. Record Date. In order that the corporation may determine the stockholders (a) entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, (b) entitled to consent to corporate action in writing without a meeting (c) entitled to receive payment of any dividend or other distribution or allotment of any rights, entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date (i) in the case of clause (a) above, shall not be more than sixty nor less than ten days before the date of such meeting, (ii) in the case of clause (b) above, shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors, and (iii) in the case of clause (c) above, shall not be more than sixty days prior to such action. If for any reason the Board of Directors shall not have fixed a record date for any such purpose, the record date for such purpose shall be determined as provided by law. Only those stockholders of record on the date so fixed or determined shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the corporation after any such record date so fixed or determined.
Section 6. Inspectors. When required by law or directed by the presiding officer, but not otherwise, the polls shall be opened and closed, the proxies and ballots shall be received and taken in charge, and all questions touching the qualifications of voters, the validity of proxies and the acceptance or rejection of votes shall be decided at any meeting of the stockholders by one or more Inspectors who may be appointed by the Board of Directors before the meeting, or if not so appointed, shall be appointed by the presiding officer at the meeting. If any person so appointed fails to appear or act, the vacancy may be filled by appointment in like manner.
Section 7. Meetings.
(A) Annual Meetings of Stockholders. An annual meeting of the stockholders shall be held in each fiscal year of the corporation on such day and at such time and place within or without the State of Delaware as the Board of Directors shall fix, at which time the stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.
(1) Nominations of persons for election to the Board of
Directors of the corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant
to the corporation's notice of meeting delivered pursuant to Article 1, Section
1 of these By-laws, (b) by or at the direction of the Chairman of the Board or
(c) by any stockholder of the corporation who is entitled to vote at the
meeting, who complied with the notice procedures set forth in subparagraphs (2)
and (3) of this paragraph (A) of this By-law and who was a stockholder of record
at the time such notice is delivered to the Secretary.
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this By-law, the stockholder must have given timely notice thereof in writing to the Secretary, and, in the case of business other than nominations, such other business must be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the corporation not less than seventy days nor more than one hundred days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty days, or delayed by more than seventy days, from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the one hundredth day prior to such annual meeting and not later than the close of business on the later of the seventieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the corporation; and provided further, that for purposes of the application of Rule 14a-4(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (or any successor provision), the date for notice specified in this paragraph (A)(2) shall be the earlier of the date calculated as hereinbefore provided or the date specified in paragraph (c)(1) of Rule 14a-4.
(3) Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder, including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the By-laws of the corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on the corporation's books, and of such beneficial owner and (ii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner; (d) a representation that such stockholder and such beneficial owner intends to appear in person or by proxy at the meeting to propose such business or nomination; and (e) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (i) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (ii) otherwise to solicit proxies from stockholders in support of such proposal or nomination.
(4) Notwithstanding anything in the second sentence of paragraph (A)(2) of this By-law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation on or before the date which is 10 days before the latest date by which a stockholder may timely notify the corporation of nominations or other business to be brought by a stockholder in accordance with paragraph (A)(2) of this By-law, a stockholder's notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the corporation.
(B) Special Meetings of Stockholders. Special meetings of the stockholders shall be called at any time by the Secretary or any other officer, whenever directed by the Board of Directors or by the Chief Executive Officer. The purpose or purposes of the proposed meeting shall be included in the notice setting forth such call. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation's notice of meeting pursuant to the prior sentence of this By-law. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this By-law and who is a stockholder of record at the time such notice is delivered to the Secretary of the corporation. Nominations of stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder's notice as required by paragraph (A)(2) of this By-law shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the one hundredth day prior to such special meeting and not later than the close of business on the later of the seventieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
(C) General.
(1) Only persons who are nominated in accordance with the procedures set forth in this By-law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-law. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this By-law and, if any proposed nomination or business is not in compliance with this By-law, to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted.
(2) For purposes of this By-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) For purposes of this By-law, no adjournment nor notice of adjournment of any meeting shall be deemed to constitute a new notice of such meeting for purposes of this By-law, and in order for any notification required to be delivered by a stockholder pursuant to this By-law to be timely, such notification must be delivered within the periods set forth above with respect to the originally scheduled meeting.
(4) Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 8. Consent in Lieu of Meetings. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken, shall be signed by the holder of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
Section 9. Record Holder of Shares. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The Board of Directors of the corporation shall consist of such number of directors, not less than three nor more than 15, as shall from time to time be fixed exclusively by resolution of the Board of Directors. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business and, except as otherwise provided by law, by the corporation's Certificate of Incorporation or by these By-laws, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors; but if at any regularly called meeting there shall be less than a quorum present, the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting until a quorum shall be present or represented. Directors need not be stockholders.
Section 2. Vacancies and Newly Created Directorships. Unless otherwise required by law, newly created directorships in the Board of Directors that result from an increase in the number of directors and any vacancy occurring in the Board of Directors may be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; and the directors so chosen shall hold office until the next annual election.
Section 3. Notice of Meetings. Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board of Directors or as may be specified in the notice of any meeting. A meeting of the Board of Directors may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting is held. Notice need not be given of regular meetings of the Board of Directors held at times fixed by resolution of the Board of Directors. Special meetings may be held at any time upon the call of the Chairman of the Board, the Chief Executive Officer or a majority of the Board of Directors on not less than one day's prior notice, which may be given orally or by written notice, including via e-mail or other means of electronic or written transmission. Notice shall be deemed received at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied, e-mailed or communicated orally; and the next day, if sent by overnight courier. Unless otherwise indicated in the notice thereof, any and all business other than an amendment of these By-laws may be transacted at any special meeting, and an amendment of these By-laws may be acted upon if the notice of the meeting shall have stated that the amendment of these By-laws is one of the purposes of the meeting. At any meeting at which every director shall be present, even though without any notice, any business may be transacted, including the amendment of these By-laws. Notice of any meeting need not be given to any director who shall attend such meeting in person (except when the director attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened), or who shall waive notice thereof, before or after such meeting, in writing.
Section 4. Organization. A Chairman shall be elected from the directors present to preside at all meetings of the Board of Directors. The Secretary of the corporation shall act as
secretary of all meetings of the directors; but in the absence of the Secretary, the Chairman may appoint any person to act as secretary of the meeting.
Section 5. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any director may belong to any number of committees. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided by resolution passed by a majority of the whole Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and the affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending these By-laws; and unless such resolution, these By-laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.
Section 6. Written Consent in Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors.
Section 7. Method of Meeting Participation. The members of the Board of Directors or any committee thereof may participate in a meeting of such Board of Directors or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting may simultaneously hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such a meeting.
Section 8. Director Compensation. The Board of Directors may establish policies for the compensation of directors and for the reimbursement of the expenses of directors, in each case, in connection with services provided by directors to the corporation.
ARTICLE III
OFFICERS
Section 1. Positions. The Board of Directors, after each annual meeting of the stockholders, shall elect officers of the corporation, including a Chairman of the Board, a Chief
Executive Officer and a Secretary. The Board of Directors may also from time to time elect such other officers (including a President, one or more Vice Presidents, a Treasurer, one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers) as it may deem proper or may delegate to any elected officer of the corporation the power to appoint and remove any such other officers and to prescribe their respective terms of office, authorities and duties. Any Vice President may be designated Executive, Senior or Corporate, or may be given such other designation or combination of designations as the Board of Directors may determine. Any two or more offices may be held by the same person.
Section 2. Appointment and Removals. All officers of the corporation elected by the Board of Directors shall hold office for such term as may be determined by the Board of Directors or until their respective successors are chosen and qualified. Any officer may be removed from office at any time either with or without cause by the affirmative vote of a majority of the members of the Board of Directors then in office, or, in the case of appointed officers, by any elected officer upon whom such power of removal shall have been conferred by the Board of Directors. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights, if any. All agents and employees other than officers elected by the Board of Directors shall also be subject to removal, with or without cause, at any time by the officers appointing them. Any vacancy caused by the death of any officer, his resignation, his removal, or otherwise, may be filled by the Board of Directors, and any officer so elected shall hold office at the pleasure of the Board of Directors.
Section 3. Authority. Each of the officers of the corporation elected by the Board of Directors or appointed by an officer in accordance with these By-laws shall have the powers and duties prescribed by law, by the By-laws or by the Board of Directors and, in the case of appointed officers, the powers and duties prescribed by the appointing officer, and, unless otherwise prescribed by the By-laws or by the Board of Directors or such appointing officer, shall have such further powers and duties as ordinarily pertain to that office.
Section 4. Delegation. Unless otherwise provided in these By-laws, in the absence or disability of any officer of the corporation, the Board of Directors may, during such period, delegate such officer's powers and duties to any other officer or to any director and the person to whom such powers and duties are delegated shall, for the time being, hold such office. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights, if any. All agents and employees other than officers elected by the Board of Directors shall also be subject to removal, with or without cause, at any time by the officers appointing them.
ARTICLE IV
CERTIFICATES OF STOCK
Section 1. Form of Certificate. The shares of stock of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the corporation's stock shall be un-certificated shares. Any such resolution shall not apply to shares represented by a certificate
until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of un-certificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the Chairman of the Board of Directors, the Chief Executive Officer, the President or a Vice President, and by the Treasurer or the Secretary of the corporation, or as otherwise permitted by law, representing the number of shares registered in certificate form. Any or all the signatures on the certificate may be a facsimile. In case any officer or officers who shall have signed any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates had not ceased to be such officer or officers of the corporation.
Section 2. Transfers of Stock. Transfers of stock shall be made on the books of the corporation by the holder of the shares in person or by such holder's attorney upon surrender and cancellation of certificates for a like number of shares, or as otherwise provided by law with respect to un-certificated shares.
Section 3. Lost Certificates. No certificate for shares of stock in the corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of such loss, theft or destruction and the upon delivery to the corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors in its discretion may require.
ARTICLE V
MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the corporation shall begin on the first day of January in each year and shall end on the thirty-first day of December following.
Section 2. Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends or for repairing or maintaining any property of the corporation or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
Section 3. Checks, Notes, Voting Upon Stocks. All checks and drafts on the corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be authorized from time to time by the Board of Directors. Unless otherwise ordered by the Board of Directors, the Chief Executive Officer, the President or
any Vice President shall have full power and authority on behalf of the corporation to attend and to act and to vote, or in the name of the corporation to execute proxies to vote, at any meetings of stockholders of any corporation in which the corporation may hold stock, and at any such meetings shall possess and may exercise, in person or by proxy, any and all rights, powers and privileges incident to ownership of such stock. The Board of Directors may from time to time, by resolution, confer like powers upon any other person or persons.
Section 4. Waiver of Notice. Whenever any notice whatever is required to be given by law, by the Certificate of Incorporation or by these By-laws to any person or persons, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The attendance of any person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.
Section 5. Corporate Books. The books of the corporation may be kept outside of the State of Delaware at such place or places as the Board of Directors may from time to time determine.
Section 6. Corporate Seal. The corporate seal shall have inscribed thereon the name of the corporation. In lieu of the corporate seal, when so authorized by the Board of Directors or a duly empowered committee thereof, a facsimile thereof may be impressed or affixed or reproduced.
ARTICLE VI
AMENDMENTS
Section 1. Amendments by the Board of Directors. Subject to the corporation's Certificate of Incorporation, these By-laws and any amendment thereof may be altered, amended, added to, rescinded or repealed at any regular or special meeting of the Board of Directors by the affirmative vote of a majority of all of the members of the Board of Directors; provided, that in the case of any special meeting at which all of the members of the Board of Directors are not present, the notice of such meeting shall have stated that the amendment of these By-laws was one of the purposes of the meeting and the notice of the proposed change was given in a notice given not less than two days prior to the meeting.
Section 2. Amendments by Stockholders. Subject to the corporation's Certificate of Incorporation, these By-laws and any amendment thereof may be altered, amended, added to, rescinded or repealed at any annual or special of the stockholders, provided, in the case of any special meeting, that notice of such proposed alteration, amendment, adoption, rescission or repeal is included in the notice of the meeting.
Section 3. Stockholders' Rights Regarding Amendments. Nothing contained in these By-laws shall divest or limit the power of stockholders to alter, amend, add to, rescind or repeal these By-laws.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan, and, if applicable, the Procedures. The undersigned further acknowledges that this Award Notice and the Plan, and, if applicable, the Procedures, set forth the entire understanding between him or her and G&W regarding the restricted stock unit award granted by this Award Notice and that this Award Notice and the Plan, and, if applicable, the Procedures, supercede all prior oral and written agreements on that subject.
Dated:__________________
Genesee & Wyoming Inc. By:
EXHIBIT 10.1
GENESEE & WYOMING INC.
2004 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
GRANTEE: _____________________________
TYPE OF AWARD: Incentive Stock Option
NUMBER OF SHARES: _____________________________
EXERCISE PRICE PER SHARE: _____________________________
DATE OF GRANT: _____________________________
EXPIRATION DATE: _____________________________
|
1. Grant of Option. This Award Notice serves to notify you that the Compensation Committee (the "Committee") of the Board of Directors of Genesee & Wyoming Inc. ("G&W") hereby grants to you, under G&W's 2004 Omnibus Incentive Plan (the "Plan"), an incentive stock option (the "Option") to purchase, on the terms and conditions set forth in this Award Notice and the Plan, up to the number of shares of G&W's Class A Common Stock, par value $.01 per share (the "Common Stock") at the price per share set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W's Intranet or from G&W's Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.
2. Term. Unless the Option is previously terminated pursuant to the terms of the Plan, the Option will expire at the close of business on the Expiration Date.
3. Vesting. Subject to the terms set forth in this Award Notice and the Plan, the Option will vest and become exercisable as follows:
(i) the Option shall first become exercisable with respect to ____ Shares on _____________;
(ii) the Option shall first become exercisable with respect to an additional _____ Shares on _____________;
(iii) the Option shall first become exercisable with respect to an additional ____ Shares on ______________; and
4. Exercise.
(a) Method of Exercise. To the extent exercisable under Section 3, the Option may be exercised in whole or in part, provided that the Option may not be exercised for less than one share of Common Stock in any single transaction. The Option shall be exercised by your giving written notice of such exercise to G&W specifying the number of shares of Common Stock that you elect to purchase and the Exercise Price to be paid. Upon determining that compliance with this Award Notice has occurred, including compliance with such reasonable requirements as G&W may impose pursuant to the Plan or Section 14 of this Award Notice and payment of the Exercise Price, G&W shall issue to you a certificate for the shares of Common Stock purchased on the earliest practicable date (as determined by G&W) thereafter.
(b) Payment of Exercise Price. To the extent permissible under the Plan, the Exercise Price may be paid using any one or any combination of the following methods:
(i) in cash or by check, with such payment accompanying your written exercise notice; or
(ii) by delivery of shares of Common Stock already owned by you, with such shares of Common Stock valued at their Fair Market Value on the date of the Option exercise.
(c) Withholding. The exercise of the Option is conditioned upon your making arrangements satisfactory to G&W for the payment to G&W of the amount of all taxes required by any governmental authority to be withheld and paid over by G&W to the governmental authority on account of the exercise. The payment of such withholding taxes to G&W may be made by one or any combination of the following methods: (i) in cash or by check, or (ii) by G&W withholding such taxes from any other compensation owed to you by G&W or any Subsidiary.
5. Effect of Death. In the event of your death prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one year after the date of your death, but only: (i) by the beneficiary designated on your beneficiary designation form filed with G&W, or in the absence of same, by your estate or by or on behalf of the person or persons to whom the Option passes under your will or the laws of descent and distribution, (ii) to the extent that the Option was vested and exercisable on the date of your death, and (ii) prior to the close of business on the Expiration Date of the Option.
6. Effect of Disability. In the event of your "Disability" prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one year after the date of your Disability, but only: (i) to the extent that the Option was vested and exercisable on the date of your Disability, and (ii) prior to the close of business on the Expiration Date of the Option. The term "Disability" means you are permanently and totally disabled within the meaning of Section 22(e)(3) of the Code.
7. Effect of Other Termination.
(a) With "Cause." Upon your termination by G&W for Cause prior to the complete exercise of the Option, the remaining portion of the Option, whether or not then exercisable, shall be forfeited as of the date of such termination and no longer exercisable on or after such date of termination.
(b) Without "Cause." Upon your termination for a reason other than death, Disability or Cause prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within three months after the date of such termination, but only: (i) to the extent that the Option was vested and exercisable on the date such termination, and (ii) prior to the Expiration Date of the Option.
(c) The term "Cause" means (i) your willful and continued failure to substantially perform your duties with G&W or a Subsidiary after written warnings identifying the lack of substantial performance are delivered to you to specifically identify the manner in which G&W or a Subsidiary believes that you have not substantially performed your duties, (ii) your willful engaging in illegal conduct which is materially and demonstrably injurious to G&W or any Subsidiary, (iii) your commission of a felony, (iv) your material breach of a fiduciary duty owed by you to G&W or any Subsidiary, (v) your intentional unauthorized disclosure to any person of confidential information or trade secrets of a material nature relating to the business of G&W or any Subsidiary, or (vi) your engaging in any conduct that G&W's or a Subsidiary's written rules, regulations or policies specify as constituting grounds for discharge.
8. Effect of Breach of Certain Covenants.
(a) In General. If you engage in the conduct described in subsection
(c) of this Section 8, then, unless the Committee determines otherwise: (1) you
immediately forfeit, effective as of the date you engage in such conduct, the
unexercised portion of the Option; and (2) you must pay to G&W the amount of any
gain realized or payment received as a result of the exercise of the Option
within the six-month period immediately preceding the date you engage in such
conduct.
(b) Set-Off. By accepting the Option, you consent to a deduction from any amounts G&W or any Subsidiary owes you from time to time (including, but not limited to, amounts owed to you as wages or other compensation, fringe benefits, or vacation pay), to the extent of the amount that you owe G&W under subsection (a) of this Section 8. G&W may elect to make any set-off in whole or in part. If G&W does not recover by means of a set-off the full amount that you owe G&W, you shall immediately pay the unpaid balance to G&W.
(c) Conduct. You hereby agree that you will not, without the written consent of G&W, either during your employment by or service to G&W or any Subsidiary or thereafter, disclose to anyone or make use of any confidential information which you acquired during your employment or service relating to any of the business of G&W or any Subsidiary, except as such disclosure or use may be required in connection with your work as an employee or consultant of G&W or any Subsidiary. During your employment by or service to G&W or any Subsidiary,
and for a period of six months after the termination of such employment or
service, you will not, either as principal, agent, consultant, employee,
stockholder or otherwise, engage in any work or other activity in direct
competition with G&W or any Subsidiary. (For purposes of this Section 8, you
shall not be deemed a stockholder if your record and beneficial ownership amount
to not more than five percent of the outstanding capital stock of any company
subject to the periodic and other reporting requirements of the Exchange Act.)
The non-competition covenant of this Section 8 applies separately in the United
States and in other countries. Your breach of the covenant of this subsection
(c) shall result in the consequences described in this Section 8.
9. Effect of Change In Control.
(a) Upon the occurrence of a "Change In Control" of G&W, the unvested portion of the Option shall immediately vest and become exercisable as of the date of the occurrence of such event.
(b) The term "Change In Control" means a change in control of G&W of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of a Current Report on Form 8-K, as in effect on December 31, 1996, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the Exchange Act, other than a Permitted Holder becomes the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25 percent or more of the combined voting power of the outstanding securities of G&W ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than 75 percent of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of G&W ordinarily having the right to vote in the election of directors;
(ii) individuals who constitute the Board on May 12, 2004 (the "Incumbent Board") have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 12, 2004 whose election, or nomination for election by G&W's stockholders, was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of G&W in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of directors of G&W, as such terms are used in Rule 14a-11 under the Exchange Act, or "tender offer," as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;
(iii) upon the consummation by G&W of a reorganization, merger or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of G&W ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than 75 percent of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or
(iv) upon the approval by G&W's stockholders of a complete liquidation and dissolution of G&W or the sale or other disposition of all or substantially all of the assets of G&W other than to a Subsidiary.
(c) The term "Permitted Holder" means: (i) G&W or a Subsidiary, (ii) any employee benefit plan sponsored by G&W or any Subsidiary, or (iii) Mortimer B. Fuller III ("MBF"), or his spouse, siblings, children or grandchildren ("Family Members") or a trust, corporation, partnership or LLC, so long as all of the beneficial interests of which are held exclusively by MBF and/or one or more Family Members, where such person(s) or entity acquired their G&W stock from MFB.
10. Notice of Disposition of Shares. You hereby agree that you shall promptly notify G&W of the disposition of any of the shares of Common Stock acquired upon exercise of the Option, including a disposition by sale, exchange, gift or transfer of legal title, if such disposition occurs within two years from the Date of Grant or within one year from the date that you exercise the Option and acquire such shares of Common Stock.
11. Nonassignability. The Option may not be alienated, transferred, assigned or pledged (except by will or the laws of descent and distribution). Except as otherwise provided by Section 5 of this Award Notice, the Option is only exercisable by you during your lifetime.
12. Limitation of Rights. You will not have any rights as a stockholder with respect to the shares of Common Stock covered by the Option until you become the holder of record of such shares by exercising the Option. Neither the Plan, the granting of the Option nor this Award Notice gives you any right to remain in the employment of G&W or any Subsidiary.
13. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.
14. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares covered by the Option upon any securities exchange or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the exercise of the Option, the Option may not be exercised in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.
15. Plan Controls. The Option is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.
16. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the Option with your consent.
17. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.
18. Notices. All notices and other communications to G&W required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to G&W's office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Senior Vice President - Human Resources. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him and G&W regarding the incentive stock options granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.
Dated: _______________, 2004
Genesee & Wyoming Inc. By:
EXHIBIT 10.2
GENESEE & WYOMING INC.
2004 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
GRANTEE: ______________________________
TYPE OF AWARD: Restricted Stock Award
NUMBER OF SHARES: ______________________________
DATE OF GRANT: ______________________________
|
1. Grant of Restricted Stock. This Award Notice serves to notify you that the Compensation Committee (the "Committee") of the Board of Directors of Genesee & Wyoming Inc. ("G&W") hereby grants to you, under G&W's 2004 Omnibus Incentive Plan (the "Plan"), a restricted stock award (the "Award"), on the terms and conditions set forth in this Award Notice and the Plan, of the number of shares of G&W's Class A Common Stock, par value $.01 per share (the "Common Stock") set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W's Intranet or from G&W's Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.
2. Restrictions and Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the employment or service of G&W or any Subsidiary at that time, the Common Stock represented by the Award will vest as follows: pro rata with respect to one-third of the shares subject to such Award on the first, second and third anniversaries of the Date of Grant, with any fractional share resulting from such proration vesting on the third anniversary. In the event of your death or the termination of your employment or service to G&W or any Subsidiary prior to the complete vesting of the Award, the unvested portion of the Award shall be forfeited as of the date of your death or such termination.
3. Effect of Breach of Certain Covenants.
(a) In General. If you engage in the conduct described in subsection
(c) of this Section 3, then, unless the Committee determines otherwise: (1) you
immediately forfeit, effective as of the date you engage in such conduct, the
unvested portion of the Award; and (2) you must return to G&W the shares of
Common Stock that vested within the six-month period immediately preceding the
date you engage in such conduct or, at the option of G&W, pay to G&W the Fair
Market Value, as of the date you engage in such conduct, of the shares of Common
Stock that vested within such six-month period.
(b) Set-Off. By accepting the Award, you consent to a deduction from
any amounts G&W or any Subsidiary owes you from time to time (including, but not
limited to, amounts owed to you as wages or other compensation, fringe benefits,
or vacation pay), to the extent of the amount that you owe G&W under subsection
(a) of this Section 3. G&W may elect
to make any set-off in whole or in part. If G&W does not recover by means of a set-off the full amount that you owe G&W, you shall immediately pay the unpaid balance to G&W.
(c) Conduct. You hereby agree that you will not, without the written
consent of G&W, either during your employment by or service to G&W or any
Subsidiary or thereafter, disclose to anyone or make use of any confidential
information which you acquired during your employment or service relating to any
of the business of G&W or any Subsidiary, except as such disclosure or use may
be required in connection with your work as an employee or consultant of G&W or
any Subsidiary. During your employment by or service to G&W or any Subsidiary,
and for a period of six months after the termination of such employment or
service, you will not, either as principal, agent, consultant, employee,
stockholder or otherwise, engage in any work or other activity in direct
competition with G&W or any Subsidiary. (For purposes of this Section 3, you
shall not be deemed a stockholder if your record and beneficial ownership amount
to not more than five percent of the outstanding capital stock of any company
subject to the periodic and other reporting requirements of the Exchange Act.)
The non-competition covenant of this Section 3 applies separately in the United
States and in other countries. Your breach of the covenant of this subsection
(c) shall result in the consequences described in this Section 3.
4. Effect of Change In Control.
(a) Upon the occurrence of a "Change In Control" of G&W, the unvested portion of the Award shall immediately vest as of the date of the occurrence of such event.
(b) The term "Change In Control" means a change in control of G&W of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of a Current Report on Form 8-K, as in effect on December 31, 1996, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the Exchange Act, other than a Permitted Holder becomes the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25 percent or more of the combined voting power of the outstanding securities of G&W ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than 75 percent of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of G&W ordinarily having the right to vote in the election of directors;
(ii) individuals who constitute the Board on May 12, 2004 (the "Incumbent Board") have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 12, 2004 whose election, or nomination for election by G&W's stockholders, was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of G&W in which such person is named as a
nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of directors of G&W, as such terms are used in Rule 14a-11 under the Exchange Act, or "tender offer," as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;
(iii) upon the consummation by G&W of a reorganization, merger or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of G&W ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than 75 percent of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or
(iv) upon the approval by G&W's stockholders of a complete liquidation and dissolution of G&W or the sale or other disposition of all or substantially all of the assets of G&W other than to a Subsidiary.
(c) The term "Permitted Holder" means: (i) G&W or a Subsidiary, (ii) any employee benefit plan sponsored by G&W or any Subsidiary, or (iii) Mortimer B. Fuller III ("MBF"), or his spouse, siblings, children or grandchildren ("Family Members") or a trust, corporation, partnership or LLC, so long as all of the beneficial interests of which are held exclusively by MBF and/or one or more Family Members, where such person(s) or entity acquired their G&W stock from MFB.
5. Book-Entry Registration. The Award initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the shares of Common Stock underlying the Award.
6. Issuance of Shares. Subject to Section 10 of this Award Notice, upon the vesting of any shares of this Award pursuant to this Award Notice, G&W shall issue a certificate representing such vested shares of Common Stock as promptly as practicable following the date of vesting. The shares of Common Stock may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.
7. Nonassignability. The shares of Common Stock underlying the Award and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws and regulations under the Securities Exchange Act of 1934.
8. Rights as a Stockholder. Unless the Award is cancelled as provided in
Section 3 of this Award Notice, prior to the vesting of the shares of Common
Stock awarded under this Award Notice, you will have all of the other rights of
a stockholder with respect to the shares of
Common Stock so awarded, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of G&W.
9. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.
10. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares of Common Stock underlying the Award upon any securities exchange or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested shares of Common Stock under this Award Notice, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.
11. Plan Controls. The Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.
12. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the Award with your consent.
13. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.
14. Notices. All notices and other communications to G&W required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to G&W's office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Senior Vice President - Human Resources. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and G&W regarding the restricted stock granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.
Dated: ___________________________
Genesee & Wyoming Inc. By:
EXHIBIT 10.3
GENESEE & WYOMING INC.
2004 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
GRANTEE: ________________________________
TYPE OF AWARD: Restricted Stock Unit Award
NUMBER OF SHARES: ________________________________
DATE OF GRANT: ________________________________
SHARE ISSUANCE DATE: See Section 3
|
1. Grant of RSU. This Award Notice serves to notify you that the Compensation Committee (the "Committee") of the Board of Directors of Genesee & Wyoming Inc. ("G&W") hereby grants to you, under G&W's 2004 Omnibus Incentive Plan (the "Plan"), a restricted stock unit award (the "RSU"), on the terms and conditions set forth in this Award Notice and the Plan, representing the right to receive up to the number of shares of G&W's Class A Common Stock, par value $.01 per share (the "Common Stock") set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W's Intranet or from G&W's Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.
2. Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the employment or service of G&W or any Subsidiary at that time, the RSU will vest as follows: pro rata with respect to one-third of the shares subject to such RSU on the first, second and third anniversaries of the Date of Grant, with any fractional share resulting from such proration vesting on the third anniversary. In the event of your death or the termination of your employment or service to G&W or any Subsidiary prior to complete vesting of the RSU, the unvested portion of the RSU shall be forfeited as of the date of your death or such termination.
3. Issuance of Shares. Subject to Section 9 of this Award Notice, upon the vesting of any shares of the RSU pursuant to this Award Notice, G&W shall issue a certificate representing such vested shares of Common Stock as promptly as practicable following the date of vesting. The shares of Common Stock may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.
4. Effect of Breach of Certain Covenants.
(a) In General. If you engage in the conduct described in subsection
(c) of this Section 4, then, unless the Committee determines otherwise: (1) you
immediately forfeit, effective as of the date you engage in such conduct, the
unvested portion of the RSU; and (2) any
shares of Common Stock of the RSU that vested within the six-month period immediately preceding the date you engage in such conduct. If the shares of Common Stock that vested within the six-month period immediately preceding the date you engage in such conduct have been issued to you, you must return such shares to G&W or, at the option of G&W, pay to G&W the Fair Market Value, as of the date you engage in such conduct, of such shares of Common Stock.
(b) Set-Off. By accepting the RSU, you consent to a deduction from
any amounts G&W or any Subsidiary owes you from time to time (including, but not
limited to, amounts owed to you as wages or other compensation, fringe benefits,
or vacation pay), to the extent of the amount that you owe G&W under subsection
(a) of this Section 4. G&W may elect to make any set-off in whole or in part. If
G&W does not recover by means of a set-off the full amount that you owe G&W, you
shall immediately pay the unpaid balance to G&W.
(c) Conduct. You hereby agree that you will not, without the written
consent of G&W, either during your employment by or service to G&W or any
Subsidiary or thereafter, disclose to anyone or make use of any confidential
information which you acquired during your employment or service relating to any
of the business of G&W or any Subsidiary, except as such disclosure or use may
be required in connection with your work as an employee or consultant of G&W or
any Subsidiary. During your employment by or service to G&W or any Subsidiary,
and for a period of six months after the termination of such employment or
service, you will not, either as principal, agent, consultant, employee,
stockholder or otherwise, engage in any work or other activity in direct
competition with G&W or any Subsidiary. (For purposes of this Section 4, you
shall not be deemed a stockholder if your record and beneficial ownership amount
to not more than five percent of the outstanding capital stock of any company
subject to the periodic and other reporting requirements of the Exchange Act.)
The non-competition covenant of this Section 4 applies separately in the United
States and in other countries. Your breach of the covenant of this subsection
(c) shall result in the consequences described in this Section 4.
5. Effect of Change In Control.
(a) Upon the occurrence of a "Change In Control" of G&W, the unvested portion of the RSU shall immediately vest as of the date of the occurrence of such event and the Share Issuance Sate shall become the date of the occurrence of such event.
(b) The term "Change In Control" means a change in control of G&W of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of a Current Report on Form 8-K, as in effect on December 31, 1996, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the Exchange Act, other than a Permitted Holder becomes the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25 percent or more of the combined voting power of the outstanding securities of G&W ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such
acquisition, more than 75 percent of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of G&W ordinarily having the right to vote in the election of directors;
(ii) individuals who constitute the Board on May 12, 2004 (the "Incumbent Board") have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 12, 2004 whose election, or nomination for election by G&W's stockholders, was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of G&W in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of directors of G&W, as such terms are used in Rule 14a-11 under the Exchange Act, or "tender offer," as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;
(iii) upon the consummation by G&W of a reorganization, merger or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of G&W ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than 75 percent of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or
(iv) upon the approval by G&W's stockholders of a complete liquidation and dissolution of G&W or the sale or other disposition of all or substantially all of the assets of G&W other than to a Subsidiary.
(c) The term "Permitted Holder" means: (i) G&W or a Subsidiary, (ii) any employee benefit plan sponsored by G&W or any Subsidiary, or (iii) Mortimer B. Fuller III ("MBF"), or his spouse, siblings, children or grandchildren ("Family Members") or a trust, corporation, partnership or LLC, so long as all of the beneficial interests of which are held exclusively by MBF and/or one or more Family Members, where such person(s) or entity acquired their G&W stock from MFB.
6. Nonassignability. The RSU and the shares of Common Stock issuable thereunder, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged or encumbered in any way prior to the vesting of such RSU and the issuance of such shares thereunder, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After the vesting of the RSU and the issuance of the shares of Common Stock thereunder, the sale or other transfer of the shares of Common Stock issued under the RSU shall be subject to applicable laws and regulations under the Securities Exchange Act of 1934.
7. Limitation of Rights. You will not have any rights as a stockholder with respect to the shares of Common Stock covered by the RSU until you become the holder of record of such shares upon the issuance by G&W of such shares of Common Stock to you. Neither the Plan, the granting of the RSU nor this Award Notice gives you any right to remain in the employment or service of G&W or any Subsidiary.
8. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.
9. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares of Common Stock issuable under the RSU upon any securities exchange or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any shares of Common Stock issuable under the RSU pursuant to this Award Notice, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.
10. Plan Controls. The RSU is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.
11. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the RSU with your consent.
12. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.
13. Notices. All notices and other communications to G&W required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to G&W's office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Senior Vice President - Human Resources. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him and G&W regarding the restricted stock unit award granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.
Dated: _______________, 2004
Genesee & Wyoming Inc. By:
EXHIBIT 10.4
GENESEE & WYOMING INC.
2004 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
GRANTEE: ________________________________
TYPE OF AWARD: Restricted Stock Award
NUMBER OF SHARES: -- --
________________________________
DATE OF GRANT: ________________________________
|
1. Grant of Restricted Stock. This Award Notice serves to notify you that the Compensation Committee (the "Committee") of the Board of Directors of Genesee & Wyoming Inc. ("G&W") hereby grants to you, under G&W's 2004 Omnibus Incentive Plan (the "Plan"), a restricted stock award (the "Award"), on the terms and conditions set forth in this Award Notice and the Plan, of the number of shares of G&W's Class A Common Stock, par value $.01 per share (the "Common Stock") set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W's Intranet or from G&W's Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.
2. Restrictions and Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the service of G&W or any Subsidiary at that time, the Common Stock represented by the Award will vest as follows: pro rata with respect to one-half of the shares subject to such Award on the date of each of the next two annual meetings of shareholders, with any fractional share resulting from such proration vesting on the last vesting date. In the event of your death or the termination of your service to G&W or any Subsidiary prior to the complete vesting of the Award, the unvested portion of the Award shall be forfeited as of the date of your death or such termination.
3. Book-Entry Registration. The Award initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the shares of Common Stock underlying the Award.
4. Issuance of Shares. Subject to Section 9 of this Award Notice, upon the vesting of any shares of this Award pursuant to this Award Notice, G&W shall issue a certificate representing such vested shares of Common Stock as promptly as practicable following the date of vesting. The shares of Common Stock may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.
5. Effect of Change In Control.
(a) Upon the occurrence of a "Change In Control" of G&W, the unvested portion of the Award shall immediately vest as of the date of the occurrence of such event.
(b) The term "Change In Control" means a change in control of G&W of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of a Current Report on Form 8-K, as in effect on December 31, 1996, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the Exchange Act, other than a Permitted Holder becomes the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25 percent or more of the combined voting power of the outstanding securities of G&W ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than 75 percent of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of G&W ordinarily having the right to vote in the election of directors;
(ii) individuals who constitute the Board on May 12, 2004 (the "Incumbent Board") have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 12, 2004 whose election, or nomination for election by G&W's stockholders, was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of G&W in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of directors of G&W, as such terms are used in Rule 14a-11 under the Exchange Act, or "tender offer," as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;
(iii) upon the consummation by G&W of a reorganization, merger or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of G&W ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than 75 percent of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or
(iv) upon the approval by G&W's stockholders of a complete liquidation and dissolution of G&W or the sale or other disposition of all or substantially all of the assets of G&W other than to a Subsidiary.
(c) The term "Permitted Holder" means: (i) G&W or a Subsidiary, (ii) any employee benefit plan sponsored by G&W or any Subsidiary, or (iii) Mortimer B. Fuller III ("MBF"), or his spouse, siblings, children or grandchildren ("Family Members") or a trust, corporation, partnership or LLC, so long as all of the beneficial interests of which are held exclusively by MBF and/or one or more Family Members, where such person(s) or entity acquired their G&W stock from MFB.
6. Nonassignability. The shares of Common Stock underlying the Award and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws and regulations under the Securities Exchange Act of 1934.
7. Rights as a Stockholder. Unless the Award is cancelled, prior to the vesting of the shares of Common Stock awarded under this Award Notice, you will have all of the other rights of a stockholder with respect to the shares of Common Stock so awarded, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of G&W.
8. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.
9. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares of Common Stock underlying the Award upon any securities exchange or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested shares of Common Stock under this Award Notice, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.
10. Plan Controls. The Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.
11. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the Award with your consent.
12. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.
13. Notices. All notices and other communications to G&W required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to G&W's office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Senior Vice President - Human Resources. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and G&W regarding the restricted stock granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.
Dated:___________________________
Genesee & Wyoming Inc. By:
EXHIBIT 10.5
GENESEE & WYOMING INC.
2004 OMNIBUS INCENTIVE PLAN
AWARD NOTICE
GRANTEE: ________________________________
TYPE OF AWARD: Restricted Stock Unit Award
NUMBER OF SHARES: --
________________________________
DATE OF GRANT: ________________________________
SHARE ISSUANCE DATE: ________________________________
DEFERRAL AVAILABLE: Yes (see Section 4 below)
|
1. Grant of RSU. This Award Notice serves to notify you that the Compensation Committee (the "Committee") of the Board of Directors of Genesee & Wyoming Inc. ("G&W") hereby grants to you, under G&W's 2004 Omnibus Incentive Plan (the "Plan"), a restricted stock unit award (the "RSU"), on the terms and conditions set forth in this Award Notice and the Plan, representing the right to receive up to the number of shares of G&W's Class A Common Stock, par value $.01 per share (the "Common Stock") set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available on G&W's Intranet or from G&W's Human Resources Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.
2. Vesting. Subject to the terms set forth in this Award Notice and the Plan, provided you are still in the service of G&W or any Subsidiary at that time, the RSU will vest as follows: pro rata with respect to one half of the shares subject to such RSU on the date of each of the next two annual meetings of stockholders, with any fractional share resulting from such proration vesting on the last vesting date. No shares of Common Stock shall be issued to you upon vesting; vested shares of Common Stock will be issued pursuant to Section 3 of this Award Notice. In the event of your death or the termination of your service to G&W or any Subsidiary prior to complete vesting of the RSU, the unvested portion of the RSU shall be forfeited as of the date of your death or such termination.
3. Issuance of Shares. Subject to Section 9 of this Award Notice, and except as otherwise provided by Section 4 of this Award Notice, G&W shall issue a certificate representing one share of Common Stock for each vested RSU on the earliest practicable date (as determined by G&W) following the Share Issuance Date set forth above. The shares of Common Stock may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.
4. Deferral. Pursuant to the Restricted Stock Unit Award Deferral Procedures adopted by the Committee pursuant to its authority under the Plan (the "Procedures"), you make elect to defer receipt of the shares of Common Stock by making a deferral election in accordance with and subject to the terms of the Procedures. Such an election must be made within the time period permitted by the Procedures and on the form(s) provided by G&W. If you desire to make such an election, you may obtain a copy of the Procedures and the necessary forms from G&W's Intranet or from G&W's Human Resources Department upon request.
5. Effect of Change In Control.
(a) Upon the occurrence of a "Change In Control" of G&W, the unvested portion of the RSU shall immediately vest as of the date of the occurrence of such event and the Share Issuance Sate shall become the date of the occurrence of such event.
(b) The term "Change In Control" means a change in control of G&W of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of a Current Report on Form 8-K, as in effect on December 31, 1996, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the Exchange Act, other than a Permitted Holder becomes the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25 percent or more of the combined voting power of the outstanding securities of G&W ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than 75 percent of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of G&W ordinarily having the right to vote in the election of directors;
(ii) individuals who constitute the Board on May 12, 2004 (the "Incumbent Board") have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 12, 2004 whose election, or nomination for election by G&W's stockholders, was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of G&W in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of directors of G&W, as such terms are used in Rule 14a-11 under the Exchange Act, or "tender offer," as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;
(iii) upon the consummation by G&W of a reorganization, merger or consolidation, other than one with respect to which all or substantially all of those
persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of G&W ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than 75 percent of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or
(iv) upon the approval by G&W's stockholders of a complete liquidation and dissolution of G&W or the sale or other disposition of all or substantially all of the assets of G&W other than to a Subsidiary.
(c) The term "Permitted Holder" means: (i) G&W or a Subsidiary, (ii) any employee benefit plan sponsored by G&W or any Subsidiary, or (iii) Mortimer B. Fuller III ("MBF"), or his spouse, siblings, children or grandchildren ("Family Members") or a trust, corporation, partnership or LLC, so long as all of the beneficial interests of which are held exclusively by MBF and/or one or more Family Members, where such person(s) or entity acquired their G&W stock from MFB.
6. Nonassignability. The RSU and the shares of Common Stock issuable thereunder, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged or encumbered in any way prior to the vesting of such RSU and the issuance of such shares thereunder, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After the vesting of the RSU and the issuance of the shares of Common Stock thereunder, the sale or other transfer of the shares of Common Stock issued under the RSU shall be subject to applicable laws and regulations under the Securities Exchange Act of 1934.
7. Limitation of Rights. You will not have any rights as a stockholder with respect to the shares of Common Stock covered by the RSU until you become the holder of record of such shares upon the issuance by G&W of such shares of Common Stock to you. Neither the Plan, the granting of the RSU nor this Award Notice gives you any right to remain in the service of G&W or any Subsidiary.
8. Rights of G&W and Subsidiaries. This Award Notice does not affect the right of G&W or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.
9. Restrictions on Issuance of Shares. If at any time G&W determines that the listing, registration or qualification of the shares of Common Stock issuable under the RSU upon any securities exchange or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any shares of Common Stock issuable under the RSU pursuant to this Award Notice, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to G&W.
10. Plan Controls. The RSU is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.
11. Amendment. Except as otherwise provided by the Plan, G&W may only alter, amend or terminate the RSU with your consent.
12. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.
13. Notices. All notices and other communications to G&W required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to G&W's office at 1200-C Scottsville Road, Suite 200, Rochester, New York 14624, Attention: Senior Vice President - Human Resources. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answerback is received.
ACKNOWLEDGEMENT
The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan, and, if applicable, the Procedures. The undersigned further acknowledges that this Award Notice and the Plan, and, if applicable, the Procedures, set forth the entire understanding between him or her and G&W regarding the restricted stock unit award granted by this Award Notice and that this Award Notice and the Plan, and, if applicable, the Procedures, supercede all prior oral and written agreements on that subject.
Dated: _________________________
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
I, Mortimer B. Fuller, III, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Genesee & Wyoming Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 5, 2004 /s/ Mortimer B. Fuller, III
---------------------------
Mortimer B. Fuller, III,
Chairman and Chief Executive Officer
|
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
I, John C. Hellmann, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Genesee & Wyoming Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 5, 2004 /s/ John C. Hellmann
--------------------------------------
John C. Hellmann,
Chief Financial Officer
|
Exhibit 32.1
Section 1350 Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), Mortimer B. Fuller, III and John C. Hellmann, Chairman and Chief Executive Officer and Chief Financial Officer, respectively, of Genesee & Wyoming Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Genesee & Wyoming Inc.
/s/ Mortimer B. Fuller, III ----------------------------------------- Mortimer B. Fuller, III Chairman and Chief Executive Officer Date: November 5, 2004 /s/ John C. Hellmann ----------------------------------------- John C. Hellmann Chief Financial Officer Date: November 5, 2004 |