Genesee & Wyoming Reports Results for the Fourth Quarter of 2012

GREENWICH, Conn.--(BUSINESS WIRE)-- Genesee & Wyoming Inc. (GWI) (NYSE: GWR)

Acquisition of RailAmerica, Inc.

GWI acquired RailAmerica, Inc. (RailAmerica) on October 1, 2012 for approximately $2.0 billion, including the assumption of debt.1 Immediately following the acquisition, GWI placed the shares of RailAmerica into an independent voting trust pending regulatory approval of the transaction by the U.S. Surface Transportation Board (STB). The STB approved the transaction and permitted GWI to take control of RailAmerica on December 28, 2012. Immediately thereafter, GWI commenced integration activities. As a result, GWI’s reported earnings for the fourth quarter of 2012 include after-tax charges of $30.7 million, or $0.61 per diluted common share, associated with the RailAmerica transaction, financing and integration related expenses.

During the pendency of the voting trust in the fourth quarter of 2012, GWI accounted for the earnings of RailAmerica using the equity method of accounting. GWI’s initial allocation of the purchase price to the acquired assets and assumed liabilities is included in GWI’s consolidated balance sheet at December 31, 2012.

Fourth Quarter Highlights and Recent Developments

• Adjusted diluted earnings per common share (EPS) of $0.79 (adjusted primarily for RailAmerica acquisition and financing-related expenses); Reported diluted earnings per common share of $0.18 (1)
• Revenues increased 8.0% versus fourth quarter of 2011, led by higher Australian iron ore shipments.
• Consolidated adjusted operating ratio of 74.6% (adjusted primarily for RailAmerica acquisition and financing-related expenses); Reported operating ratio of 85.2% (2)
• Australian adjusted operating ratio of 70.0% (adjusted primarily for contract termination expense, business/corporate development costs and net gain on insurance recovery); Reported Australian operating ratio of 71.5% (2)
• Adjusted equity earnings from RailAmerica of $19.1 million (adjusted primarily for integration costs); Reported equity earnings from RailAmerica of $15.6 million (3)
• GWI will convert $350 million of Mandatorily Convertible Preferred Stock with a 5% coupon, issued to The Carlyle Group, into approximately 6 million shares of GWI Class A common stock, effective February 13, 2013; the conversion will eliminate annual dividends of $17.5 million and will not increase GWI’s diluted shares outstanding.

Jack Hellmann, President and CEO of GWI, commented, “G&W’s financial results for the fourth quarter of 2012 were consistent with our expectations. Our fourth quarter revenues increased 8%, our adjusted operating income increased 28% and our adjusted operating ratio improved 4.0 percentage points to 74.6%. In Australia, where our grain traffic was unusually low due to now-fixed mechanical issues in the Adelaide Outer Harbor, we nevertheless reported an adjusted operating ratio of 70.0% due to the smooth start-up of iron ore shipments from a new mine. Meanwhile, RailAmerica’s fourth quarter financial results were solid while it was held in a voting trust, contributing adjusted equity earnings of $19.1 million.” (2)(3)

“The integration of RailAmerica is well underway, with new regional management teams largely established, overlapping functions being rationalized and best practices being established in each department. We are optimistic that we will complete the vast majority of the integration work by the end of the second quarter of 2013.”

1 GWI financed the $1.37 billion cash purchase price for RailAmerica’s shares, the refinancing of $1.23 billion of GWI and RailAmerica total outstanding debt prior to the acquisition, as well as transaction and financing-related expenses with approximately $1.80 billion in borrowings under its new five-year Senior Secured Credit Facility, approximately $460 million of cash from public offerings of common stock and tangible equity units and $350 million through a private issuance of mandatorily convertible preferred stock to The Carlyle Group.

Financial Results

GWI reported net income in the fourth quarter of 2012 of $13.4 million, compared with net income of $33.3 million in the fourth quarter of 2011. Excluding the impact of certain significant items discussed below that primarily related to the RailAmerica acquisition, GWI's adjusted net income in the fourth quarter of 2012 was $44.2 million, compared with adjusted net income of $29.1 million in the fourth quarter of 2011 (1).

GWI's reported diluted EPS in the fourth quarter of 2012 were $0.18 with 50.6 million weighted average common shares outstanding, compared with diluted EPS of $0.77 with 42.9 million weighted average common shares outstanding in the fourth quarter of 2011. Excluding the significant items discussed below, GWI's adjusted diluted EPS in the fourth quarter of 2012 were $0.79 with 56.6 million weighted average common shares outstanding, including the common stock equivalents associated with the Mandatorily Convertible Preferred Stock Series A-1 on an “if-converted” basis, compared with adjusted diluted EPS of $0.68 with 42.9 million weighted average shares outstanding in the fourth quarter of 2011 (1).

In the fourth quarter of 2012 and 2011, GWI's results included certain significant items that are set forth in the following table ($ in millions, except per share amounts).

										After-Tax
										Net (Loss)/							Diluted
			(Loss)/							Income							(Loss)/
			Income							Attributable							Earnings Per
			Before Taxes							to GWI							Common
			Impact							Impact							Share Impact
Q4 2012
	RailAmerica acquisition-related costs		$	(12.6	)					$	(10.9	)					$	(0.23	)
	RailAmerica financing-related costs		$	(15.8	)					$	(9.5	)					$	(0.20	)
	RailAmerica integration costs		$	(11.4	)					$	(6.8	)					$	(0.12	)
	Acquisition/integration costs incurred by RailAmerica		$	-						$	(3.5	)					$	(0.06	)
	Other business/corporate development costs		$	(0.5	)					$	(0.3	)					$	(0.01	)
	Gain on insurance recoveries		$	0.6						$	0.4						$	0.01
	Net gain on sale of assets		$	0.8						$	0.6						$	0.01
	Contract termination expense in Australia		$	(1.1	)					$	(0.8	)					$	(0.01	)
Q4 2011
	Acquisition-related income tax benefits		$	-						$	1.9						$	0.04
	Net gain/(loss) on the sale and impairment of assets		$	3.0						$	1.9						$	0.04
	Edith River derailment costs		$	(1.8	)					$	(1.3	)					$	(0.03	)
	Business/corporate development costs		$	(0.8	)					$	(0.5	)					$	(0.01	)
	Short line tax credit		$	-						$	2.2						$	0.05

Explanation of Q4 2012 Significant Items

In the fourth quarter of 2012, GWI incurred $28.8 million of business development costs, primarily associated with the RailAmerica acquisition and related financing transactions. In addition, because GWI took control of RailAmerica’s railroads on December 28, 2012, GWI incurred an additional $11.4 million of integration costs, primarily associated with severance benefits paid to certain RailAmerica senior executives at the end of 2012. In the fourth quarter of 2012, GWI also recorded $1.4 million in net gains on the Edith River Bridge-related insurance recoveries and the sale of assets and incurred $1.1 million of expense associated with the termination of a contract with a track maintenance service provider in Australia. In addition, RailAmerica’s reported equity earnings included $3.5 million (after-tax) of expense associated with the integration, primarily related to severance obligations.

Results from Continuing Operations

In the fourth quarter of 2012, GWI's total operating revenues increased $16.9 million, or 8.0%, to $227.3 million, compared with $210.4 million in the fourth quarter of 2011. The increase included $2.8 million in revenues from new operations and a $2.0 million increase from the net appreciation of foreign currencies relative to the U.S. dollar. Excluding the net impact from foreign currency appreciation, GWI’s same railroad operating revenues increased $12.2 million, or 5.8%.

Same railroad freight revenues in the fourth quarter of 2012 were $163.1 million, compared with $148.8 million in the fourth quarter of 2011. Excluding $1.6 million from the impact of foreign currency appreciation, GWI’s same railroad freight revenues increased by $12.6 million, or 8.5%.

GWI's traffic in the fourth quarter of 2012 was 229,818 carloads, a decrease of 16,976 carloads, or 6.9%, compared with the fourth quarter of 2011. Traffic in the fourth quarter of 2012 included 4,497 carloads from new operations. Same railroad traffic decreased 21,473 carloads, or 8.7%, in the fourth quarter of 2012. The same railroad traffic decrease was principally due to decreases of 8,920 carloads of coal & coke traffic (primarily GWI’s Illinois and Ohio regions), 8,763 carloads of farm & food products traffic (primarily grain in GWI’s Australia Region), 8,741 carloads of other commodity group traffic (primarily overhead coal in GWI’s Ohio Region) and 3,225 carloads of minerals & stone traffic (primarily salt in GWI’s New York/Pennsylvania Region). These declines were partially offset by increases of 3,130 carloads of metallic ores traffic (primarily GWI’s Australia Region) and 3,125 carloads of lumber & forest products traffic (primarily GWI’s Oregon Region). All remaining traffic increased by a net 1,921 carloads.

Same railroad average freight revenues per carload increased 20.1% in the fourth quarter of 2012 compared with the fourth quarter of 2011. Same railroad average freight revenues per carload were impacted by three factors: a change in the mix of commodities, the appreciation of foreign currencies relative to the U.S. dollar and higher fuel surcharges, which increased same railroad average freight revenues per carload by 8.6%, 1.4% and 0.5%, respectively. Excluding these factors, same railroad average freight revenues per carload increased 9.6%. In addition to higher freight rates, same railroad average freight revenues per carload were positively impacted by changes in the mix of customers, primarily within the metallic ores and other commodities groups.

GWI’s same railroad non-freight revenues in the fourth quarter of 2012 were $61.4 million, compared with same railroad non-freight revenues in the fourth quarter of 2011 of $61.6 million. Excluding a $0.3 million increase from the net impact of foreign currency appreciation, GWI’s same railroad non-freight revenues decreased by $0.5 million, or 0.8%, primarily due to a $4.1 million decrease in third-party fuel sales resulting from GWI’s sale of its third party fuel operation in South Australia in the third quarter of 2012, partially offset by a $1.7 million increase in railcar switching and a $1.0 million increase in other income.

GWI's operating income in the fourth quarter of 2012 was $33.7 million, compared with $45.4 million in the fourth quarter of 2011. GWI’s operating ratio in the fourth quarter of 2012 was 85.2%, compared with an operating ratio of 78.4% in the fourth quarter of 2011. Operating income in the fourth quarter of 2012 included $24.0 million of RailAmerica-related expenses, primarily associated with closing costs and severance benefits, a $1.1 million contract termination payment in Australia associated with outsourced maintenance of way activities and other business/corporate development costs of $0.5 million, partially offset by $1.4 million of gains on insurance recoveries and the sale of assets. In the fourth quarter of 2011, operating income benefited $3.0 million from the net gain on the sale of assets, partially offset by Edith River derailment costs of $1.8 million and business/corporate development costs of $0.8 million. Excluding these items, GWI’s adjusted operating income increased $12.8 million, or 28.3%, to $57.8 million. GWI’s adjusted operating ratio improved 4.0 percentage points to 74.6% in the fourth quarter of 2012, compared with 78.6% in the fourth quarter of 2011 (2).

RailAmerica Results

As described above, because GWI did not control RailAmerica until December 28, 2012, we accounted for the fourth quarter earnings of RailAmerica using the equity method of accounting. We are providing the following analysis of RailAmerica’s fourth quarter 2012 results in order to provide a comparison to their fourth quarter 2011 results.

RailAmerica’s revenues in the fourth quarter of 2012 increased 2.6% to $151.1 million, compared with $147.3 million in the fourth quarter of 2011. The increase included $5.9 million from new operations. RailAmerica’s same railroad revenues decreased $2.1 million, or 1.5%. Same railroad freight revenues increased 6.5% to $110.0 million, with average revenue per car up 7.6% and carloads down 1.0%. Non-freight revenues declined $6.0 million, or 13.7%, to $38.0 million, primarily due to lower activity at Atlas Railroad Construction Company (Atlas).

RailAmerica’s traffic in the fourth quarter of 2012 was 214,272 carloads, an increase of 2,424 carloads, or 1.1%, compared with the fourth quarter of 2011. Traffic in the fourth quarter of 2012 included 4,709 carloads from new operations. Same railroad traffic decreased 2,285 carloads, or 1.1%, in the fourth quarter of 2012. The same railroad traffic decrease was principally due to a decrease of 7,421 carloads, or 18.0%, in coal traffic, partially offset by an increase of 3,127 carloads, or 3.4%, in industrial products traffic (primarily chemicals and petroleum traffic), and an increase of 2,155 carloads, or 4.5%, in agricultural products and food traffic (primarily export soybean traffic). All remaining traffic decreased by a net 146 carloads.

RailAmerica’s same railroad non-freight revenues in the fourth quarter of 2012 were $35.1 million, compared with same railroad non-freight revenues in the fourth quarter of 2011 of $44.0 million. RailAmerica’s same railroad non-freight revenues decreased by $8.9 million, or 20.1%, primarily due to an $11.5 million decrease in Atlas’ construction activity.

RailAmerica’s operating income in the fourth quarter of 2012 was $26.1 million, a decrease of $11.1 million, compared with $37.2 million in the fourth quarter of 2011. RailAmerica’s operating ratio in the fourth quarter of 2012 was 82.7%, compared with an operating ratio of 74.7% in the fourth quarter of 2011. RailAmerica’s operating income in the fourth quarter of 2012 included $1.4 million of incremental depreciation and amortization expense resulting from GWI’s acquisition accounting for RailAmerica. If the RailAmerica acquisition had occurred in 2011, RailAmerica’s operating income in the fourth quarter of 2011 would have had an incremental depreciation and amortization expense of approximately $1 million. Operating income in the fourth quarter of 2012 also included $5.7 million of acquisition-related expenses. In the fourth quarter of 2011, operating income benefited $3.6 million from the sale of short line tax credits and included $0.3 million of acquisition-related expenses. Adjusting for these items and the estimated acquisition-driven incremental depreciation and amortization expense for the fourth quarter of 2011, RailAmerica’s adjusted operating income was $31.8 million in the fourth quarter of 2012, compared with $33.0 million in the fourth quarter of 2011. RailAmerica’s adjusted operating ratio was 78.9% in the fourth quarter of 2012, compared with 77.6% in the fourth quarter of 2011 (4).

Recent Developments

On January 2, 2013, the U.S. Short Line Tax Credit (which had previously expired on December 31, 2011) was extended for fiscal years 2012 and 2013. GWI expects the extension of the Short Line Tax Credit to reduce its book income tax expense by approximately $35 million and $25 million, respectively, for fiscal years 2012 and 2013. Since the extension became law in 2013, the 2012 impact will be recorded in the first quarter of 2013.

On February 13, 2013, GWI will convert all of the outstanding Mandatorily Convertible Preferred Stock, Series A-1, par value $0.01 per share (the “Series A-1 Preferred Stock”) issued in conjunction with the RailAmerica acquisition, and held by certain affiliates of Carlyle Partners V, L.P. (“Carlyle”). GWI is permitted to convert the Series A-1 Preferred Stock because it has satisfied the conversion criteria, including that the closing price of GWI’s Class A Common Stock exceed 130% of the conversion price, or $76.03, for 30 consecutive trading days, which condition was satisfied on February 12, 2013. Upon conversion, each share of Series A-1 Preferred Stock will be converted into 17.0978166 shares of GWI’s Class A Common Stock, resulting in the issuance of 5,984,232 shares of the Company’s Class A Common Stock. These shares are included in GWI’s weighted average diluted common shares outstanding in calculating adjusted earnings per diluted share for the three months ended December 31, 2012. In addition, GWI will be required to pay to Carlyle cash in lieu of fractional shares and all accrued and unpaid dividends in respect of the Series A-1 Preferred Stock on the conversion date. Following the conversion, GWI will not incur the quarterly dividend of approximately $4.4 million that would otherwise have been due on the Series A-1 Preferred Stock.

Consolidated Annual Results – Continuing Operations

GWI reported net income for the twelve months ended December 31, 2012, of $52.4 million, compared with net income of $119.5 million for the twelve months ended December 31, 2011. Excluding the impact of certain significant items listed below that primarily related to the RailAmerica acquisition, GWI's adjusted net income in the twelve months ended December 31, 2012 was $129.7 million, compared with adjusted net income of $105.6 million in the twelve months ended December 31, 2011 (1).

GWI's diluted EPS for the twelve months ended December 31, 2012 were $1.02 with 51.3 million weighted average shares outstanding, compared with diluted EPS of $2.79 with 42.8 million weighted average shares outstanding for the twelve months ended December 31, 2011. Excluding the significant items listed below, GWI's adjusted diluted EPS for the twelve months ended December 31, 2012 were $2.53 with 51.3 million weighted average shares outstanding, compared with adjusted diluted EPS of $2.47 with 42.8 million weighted average shares outstanding for the twelve months ended December 31, 2011 (1).

GWI’s 2012 and 2011 results included certain significant items that are set forth in the following table ($ in millions, except per share amounts).

													After-Tax
													Net (Loss)/
						(Loss)/							Income							Diluted
						Income							Attributable							(Loss)/
						Before Taxes							to GWI							Earnings Per
						Impact							Impact							Share Impact
2012
	RailAmerica acquisition-related costs					$	(18.6	)					$	(14.5	)					$	(0.28	)
	RailAmerica financing-related costs					$	(15.8	)					$	(9.5	)					$	(0.19	)
	RailAmerica integration costs					$	(11.4	)					$	(6.8	)					$	(0.13	)
	Acquisition/integration costs incurred by RailAmerica					$	-						$	(3.5	)					$	(0.07	)
	Other business/corporate development costs					$	(1.8	)					$	(1.2	)					$	(0.02	)
	Gain on insurance recoveries					$	0.8						$	0.5						$	0.01
	Net gain on sale of assets					$	11.2						$	8.6						$	0.17
	Contract termination expense in Australia					$	(1.1	)					$	(0.8	)					$	(0.02	)
	Mark-to-market loss on Carlyle Convertible					$	(50.1	)					$	(50.1	)					$	(0.98	)
2011
	Acquisition-related income tax benefits					$	-						$	1.9						$	0.04
	Gain on insurance recoveries					$	1.1						$	0.7						$	0.02
	Net gain/(loss) on the sale and impairment of assets					$	5.7						$	3.9						$	0.09
	Edith River derailment costs					$	(1.8	)					$	(1.3	)					$	(0.03	)
	Business/corporate development costs					$	(3.5	)					$	(2.3	)					$	(0.05	)
	Short line tax credit					$	-						$	10.2						$	0.24
	Gain on sale of investment					$	0.9						$	0.8						$	0.02

Free Cash Flow from Continuing Operations (5)

(in millions)		Twelve Months Ended
		December 31,
		2012							2011
Net cash provided by operating activities		$	166.4						$	173.5
Net cash used in investing activities, excluding
Australian new business investments			(1,999.8	)						(156.9	)
Net cash used/(received) for acquisitions/divestitures (a)			1,964.2							88.6
Australian stamp duty (b)			-							13.0
Free cash flow before Australian new
business investments			130.8							118.1
Australian new business investments			(101.9	)						(78.2	)
Free cash flow (5)		$	28.9						$	39.9

(a) The 2012 period included $1.9 billion in net cash paid for the acquisition of RailAmerica, Inc. as well as $38.9 million in cash paid for incremental expenses related to the purchase, integration and financing of the acquisition. The 2011 period included $89.9 million in net cash paid for the acquisition of Arizona Eastern Railway Company.

(b) The payment of the Australian stamp duty in the 2011 period related to the acquisition of FreightLink in Australia, which was accrued as of December 31, 2010.

GWI’s free cash flow from continuing operations for the twelve months ended December 31, 2012 and 2011 was $28.9 million and $39.9 million, respectively (5). GWI’s free cash flow from continuing operations for the twelve months ended December 31, 2012 included $6.3 million in net cash payments related to the December 2011 Edith River derailment and $9.1 million for the settlement of a cross-currency swap that matured in December 2012.

Conference Call and Webcast Details

As previously announced, GWI's conference call to discuss financial results for the fourth quarter will be held Tuesday, February 12, 2013, at 4:30 p.m. EST. The dial-in number for the teleconference in the U.S. is (877) 209-9922; outside the U.S. is (612) 332-1210, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors by selecting "Fourth Quarter Earnings Conference Call Webcast." Management will be referring to a slide presentation that will also be available at www.gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors until the following quarter’s earnings press release. Telephone replay is available for 30 days beginning at 6:30 p.m. EST on February 12 by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 277581.

About GWI

GWI owns and operates short line and regional freight railroads in the United States, Australia, Canada, the Netherlands and Belgium. In addition, G&W operates the 1,400-mile Tarcoola to Darwin rail line, which links the Port of Darwin with the Australian interstate rail network in South Australia. Operations currently include 111 railroads organized in 11 regions, with more than 15,000 miles of owned and leased track, 4,500 employees and over 2,000 customers. We provide rail service at 35 ports in North America, Australia and Europe and perform contract coal loading and railcar switching for industrial customers.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that are based on current expectations, estimates and projections about our industry, management's beliefs, and assumptions made by management. Words such as "anticipates," "intends," "plans," "believes," "could," "should," "seeks," "expects," "estimates," "trends," "outlook," variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including the following risks applicable to all of our operations: risks related to the acquisition and integration of railroads; economic and competitive uncertainties and contingencies and third party approvals; economic, political and industry conditions (including employee strikes or work stoppages); customer demand and changes in our operations, retention and contract continuation; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we are subject; increased competition in relevant markets; funding needs and financing sources, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to various legal claims and lawsuits; increase in, or volatility associated with expenses associated with estimated claims, self-insured retention amounts, and insurance coverage limits; consummation of new business opportunities; exposure to the credit risk of customers and counterparties; severe weather conditions and other natural occurrences, which could result in shutdowns, derailments or other substantial disruption of operations; susceptibility to the risks of doing business in foreign countries; our success integrating RailAmerica railroads into our operations and our ability to realize the expected synergies associated with the acquisition of RailAmerica; and others including but not limited to, those noted in our 2011 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this press release or as of the date they were made. GWI does not undertake, and expressly disclaims, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

1. Net income and diluted earnings per common share that exclude items described above are non-GAAP financial measures and are not intended to replace the net income and diluted earnings per common share calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net income and diluted earnings per common share calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

2. The operating income and operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating income and operating ratios calculated using total operating expenses and total revenues, calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to operating income and operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

3. Equity earnings from RailAmerica that exclude certain items is a non-GAAP financial measure and is not intended to replace the equity earnings calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to equity earnings calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

4. RailAmerica’s operating income and operating ratio that exclude certain items are non-GAAP financial measures and are not intended to replace the operating income and operating ratios calculated using total operating expenses and operating revenue, calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to operating income and operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.

5. Free cash flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net cash provided by operating activities, is included in the tables attached to this press release.

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(in thousands, except per share amounts)
(unaudited)
		Three Months Ended														Twelve Months Ended
		December 31,														December 31,
			2012							2011							2012							2011
OPERATING REVENUES		$	227,316						$	210,386						$	874,916						$	829,096
OPERATING EXPENSES			193,656							164,998							684,594							637,317
INCOME FROM OPERATIONS			33,660							45,388							190,322							191,779
INTEREST INCOME			966							757							3,725							3,243
INTEREST EXPENSE			(36,793	)						(7,852	)						(62,845	)						(38,617	)
GAIN ON SALE OF INVESTMENTS			-							13							-							907
CONTINGENT FORWARD SALE CONTRACT MARK-TO-MARKET EXPENSE			-							-							(50,106	)						-
OTHER INCOME, NET			448							1,307							2,300							712
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(1,719	)						39,613							83,396							158,024
PROVISION FOR INCOME TAXES			(351	)						(6,339	)						(46,402	)						(38,531	)
INCOME FROM EQUITY INVESTMENT, NET			15,557							-							15,557							-
INCOME FROM CONTINUING OPERATIONS			13,487							33,274							52,551							119,493
(LOSS)/EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX			(91	)						1							(118	)						(9	)
NET INCOME			13,396							33,275							52,433							119,484
PREFERRED STOCK DIVIDEND ACCRUED			4,375							-							4,375							-
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS		$	9,021						$	33,275						$	48,058						$	119,484
BASIC EARNINGS PER SHARE:
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS		$	0.19						$	0.83						$	1.13						$	2.99
BASIC (LOSS)/EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS			-							-							-							-
BASIC EARNINGS PER COMMON SHARE		$	0.19						$	0.83						$	1.13						$	2.99
WEIGHTED AVERAGE SHARES - BASIC			48,116							40,166							42,693							39,912
DILUTED EARNINGS PER SHARE:
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS		$	0.18						$	0.77						$	1.02						$	2.79
DILUTED (LOSS)/EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS			-							-							-							-
DILUTED EARNINGS PER COMMON SHARE		$	0.18						$	0.77						$	1.02						$	2.79
WEIGHTED AVERAGE SHARES - DILUTED			50,590							42,946							51,316							42,772

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND DECEMBER 31, 2011
(in thousands)
(unaudited)
		December 31,						December 31,
ASSETS			2012						2011
CURRENT ASSETS:
Cash and cash equivalents		$	64,772					$	27,269
Accounts receivable, net			263,695						165,768
Materials and supplies			32,389						14,445
Prepaid expenses and other			30,827						13,332
Deferred income tax assets, net			74,181						19,385
Total current assets			465,864						240,199
PROPERTY AND EQUIPMENT, net			3,396,295						1,643,589
GOODWILL			524,069						160,277
INTANGIBLE ASSETS, net			670,206						230,628
DEFERRED INCOME TAX ASSETS, net			2,396						2,342
OTHER ASSETS, net			56,884						17,122
Total assets		$	5,115,714					$	2,294,157
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt		$	87,569					$	57,168
Accounts payable			226,375						134,081
Accrued expenses			97,427						69,097
Deferred income tax liabilities, net			3,083						925
Total current liabilities			414,454						261,271
LONG-TERM DEBT, less current portion			1,770,566						569,026
DEFERRED INCOME TAX LIABILITIES, net			744,658						285,780
DEFERRED ITEMS - grants from outside parties			228,579						198,824
OTHER LONG-TERM LIABILITIES			57,471						18,622
SERIES A-1 PREFERRED STOCK			399,524						-
TOTAL EQUITY			1,500,462						960,634
Total liabilities and equity		$	5,115,714					$	2,294,157

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(in thousands)
(unaudited)
		Twelve Months Ended
		December 31
			2012							2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	48,058						$	119,484
Adjustments to reconcile net income to net cash provided
by operating activities:
Loss from discontinued operations, net of tax			118							9
Income from equity investment, net			(15,557	)						-
Depreciation and amortization			73,405							66,481
Compensation cost related to equity awards			12,151							7,776
Excess tax benefits from share-based compensation			(5,335	)						(2,820	)
Deferred income taxes			29,926							26,291
Net (gain)/loss on sale and impairment of assets			(11,225	)						(5,660	)
Gain on sale of investments			-							(907	)
Gain on insurance recoveries			(5,760	)						(1,061	)
Insurance proceeds received			21,479							646
Contingent forward sale contract mark-to-market expense			50,106							-
Changes in assets and liabilities which (used) provided cash, net of effect of acquisitions:
Accounts receivable, net			(262	)						(12,307	)
Materials and supplies			(567	)						(1,206	)
Prepaid expenses and other			(2,625	)						3,543
Accounts payable and accrued expenses			(32,810	)						(25,556	)
Other assets and liabilities, net			5,320							(1,235	)
Net cash provided by operating activities from continuing operations			166,422							173,478
Net cash used in operating activities from discontinued operations			(118	)						(13	)
Net cash provided by operating activities			166,304							173,465
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(231,694	)						(178,668	)
Grant proceeds from outside parties			39,632							22,642
Cash paid for acquisitions, net of cash acquired			(1,925,296	)						(89,935	)
Proceeds from sale of investments			-							1,369
Insurance proceeds for the replacement of assets			370							-
Proceeds from disposition of property and equipment			15,298							9,464
Net cash used in investing activities from continuing operations			(2,101,690	)						(235,128	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases			(1,013,166	)						(533,544	)
Proceeds from issuance of long-term debt			2,192,916							581,394
Debt issuance costs			(38,839	)						(4,742	)
Proceeds from employee stock purchases			19,320							17,433
Treasury stock purchases			(4,314	)						(1,326	)
Net proceeds from TEU issuance			222,856							-
Net proceeds from Class A common stock issuance			234,340							-
Net proceeds from Series A-1 preferred stock issuance			349,418							-
Excess tax benefits from share-based compensation			5,335							2,820
Net cash provided by financing activities from continuing operations			1,967,866							62,035
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			5,023							(521	)
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS			-							1
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			37,503							(148	)
CASH AND CASH EQUIVALENTS, beginning of period			27,269							27,417
CASH AND CASH EQUIVALENTS, end of period		$	64,772						$	27,269

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
		Three Months Ended
		December 31
		2012													2011
									% of													% of
		Amount							Revenue						Amount							Revenue
Revenues:
Freight		$	165,410						72.8	%					$	148,793						70.7	%
Non-freight			61,906						27.2	%						61,593						29.3	%
Total revenues		$	227,316						100.0	%					$	210,386						100.0	%
Operating Expense Comparison:
Natural Classification
Labor and benefits		$	66,543						29.3	%					$	60,118						28.6	%
Equipment rents			9,252						4.1	%						10,998						5.2	%
Purchased services			22,240						9.8	%						21,249						10.1	%
Depreciation and amortization			18,458						8.1	%						17,700						8.4	%
Diesel fuel used in operations			23,756						10.5	%						22,983						10.9	%
Diesel fuel sold to third parties			862						0.4	%						4,745						2.3	%
Casualties and insurance			7,131						3.1	%						5,783						2.7	%
Materials			6,116						2.7	%						6,902						3.3	%
Net (gain)/loss on sale and impairment of assets			( 778	)					(0.3	%)						( 2,952	)					(1.4	%)
Gain on insurance recoveries			( 574	)					(0.3	%)						( 18	)					0.0	%
Other expenses			16,700						7.3	%						17,490						8.3	%
RailAmerica integration costs			11,359						5.0	%						-						0.0	%
RailAmerica acquisition-related costs			12,591						5.5	%						-						0.0	%
Total operating expenses		$	193,656						85.2	%					$	164,998						78.4	%
Functional Classification
Transportation		$	72,945						32.1	%					$	67,604						32.1	%
Maintenance of ways and structures			21,655						9.5	%						22,468						10.7	%
Maintenance of equipment			23,920						10.5	%						23,875						11.3	%
Diesel fuel sold to third parties			862						0.4	%						4,745						2.3	%
General and administrative			33,218						14.7	%						31,576						15.0	%
RailAmerica integration costs			11,359						5.0	%						-						0.0	%
RailAmerica acquisition-related costs			12,591						5.5	%						-						0.0	%
Net (gain)/loss on sale and impairment of assets			( 778	)					(0.3	%)						( 2,952	)					(1.4	%)
Gain on insurance recoveries			( 574	)					(0.3	%)						( 18	)					0.0	%
Depreciation and amortization			18,458						8.1	%						17,700						8.4	%
Total operating expenses		$	193,656						85.2	%					$	164,998						78.4	%

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
		North American & European
Three Months Ended December 31, 2012		Operations													Australian Operations													Total Operations
									% of Total													% of Total													% of Total
Revenues:		Amount							Revenues						Amount							Revenues						Amount							Revenues
Freight		$	101,228						69.1	%					$	64,182						79.4	%					$	165,410						72.8	%
Non-freight (excluding fuel sales)			45,214						30.9	%						15,787						19.5	%						61,001						26.8	%
Fuel sales to third parties			-						0.0	%						905						1.1	%						905						0.4	%
Total revenues			146,442						100.0	%						80,874						100.0	%						227,316						100.0	%
Operating expenses
Labor and benefits			50,226						34.3	%						16,317						20.2	%						66,543						29.3	%
Equipment rents			6,557						4.5	%						2,695						3.3	%						9,252						4.1	%
Purchased services			6,840						4.7	%						15,400						19.1	%						22,240						9.8	%
Depreciation and amortization			12,802						8.7	%						5,656						7.0	%						18,458						8.1	%
Diesel fuel used in operations			14,440						9.9	%						9,316						11.5	%						23,756						10.5	%
Diesel fuel sold to third parties			-						0.0	%						862						1.1	%						862						0.4	%
Casualties and insurance			4,587						3.0	%						2,544						3.1	%						7,131						3.1	%
Materials			5,718						3.9	%						398						0.5	%						6,116						2.7	%
Net (gain)/loss on sale and impairment of assets			(802	)					(0.5	%)						24						0.0	%						(778	)					(0.3	%)
Gain on insurance recoveries			-						0.0	%						(574	)					(0.7	%)						(574	)					(0.3	%)
Other expenses			11,519						7.9	%						5,181						6.4	%						16,700						7.3	%
RailAmerica integration costs			11,359						7.8	%						-						0.0	%						11,359						5.0	%
RailAmerica acquisition-related costs			12,591						8.6	%						-						0.0	%						12,591						5.5	%
Total operating expenses			135,837						92.8	%						57,819						71.5	%						193,656						85.2	%
Income from Operations		$	10,605												$	23,055												$	33,660
Carloads			180,427													49,391													229,818
Net expenditures for additions to property & equipment		$	18,875												$	27,587												$	46,462
		North American & European
Three Months Ended December 31, 2011		Operations													Australian Operations													Total Operations
									% of Total													% of Total													% of Total
Revenues:		Amount							Revenues						Amount							Revenues						Amount							Revenues
Freight		$	98,643						70.4	%					$	50,150						71.4	%					$	148,793						70.7	%
Non-freight (excluding fuel sales)			41,529						29.6	%						15,010						21.4	%						56,539						26.9	%
Fuel sales to third parties			-						0.0	%						5,054						7.2	%						5,054						2.4	%
Total revenues			140,172						100.0	%						70,214						100.0	%						210,386						100.0	%
Operating expenses
Labor and benefits			47,367						33.8	%						12,751						18.2	%						60,118						28.6	%
Equipment rents			6,609						4.7	%						4,389						6.2	%						10,998						5.2	%
Purchased services			7,478						5.4	%						13,771						19.6	%						21,249						10.1	%
Depreciation and amortization			12,375						8.8	%						5,325						7.6	%						17,700						8.4	%
Diesel fuel used in operations			14,984						10.7	%						7,999						11.4	%						22,983						10.9	%
Diesel fuel sold to third parties			-						0.0	%						4,745						6.8	%						4,745						2.3	%
Casualties and insurance			3,293						2.4	%						2,490						3.5	%						5,783						2.7	%
Materials			6,060						4.3	%						842						1.2	%						6,902						3.3	%
Net (gain)/loss on sale and impairment of assets			(2,473	)					(1.8	%)						(479	)					(0.7	%)						(2,952	)					(1.4	%)
Gain on insurance recoveries			(18	)					0.0	%						-						0.0	%						(18	)					0.0	%
Other expenses			13,486						9.6	%						4,004						5.7	%						17,490						8.3	%
Total operating expenses			109,161						77.9	%						55,837						79.5	%						164,998						78.4	%
Income from Operations		$	31,011												$	14,377												$	45,388
Carloads			194,217													52,577													246,794
Net expenditures for additions to property & equipment		$	25,518												$	42,895												$	68,413

GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(in thousands, except average revenues per carload)
(unaudited)
Three Months Ended December 31, 2012
		North American & European Operations																	Australian Operations																	Total Operations
		Freight											Average Revenues						Freight											Average Revenues						Freight											Average Revenues
Commodity Group		Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload
Intermodal*		$	121					1,244					$	97					$	27,318					17,542					$	1,557					$	27,439					18,786					$	1,461
Coal & Coke			16,701					41,553						402						-					-						-						16,701					41,553						402
Farm & Food Products			5,717					13,549						422						6,863					7,246						947						12,580					20,795						605
Pulp & Paper			16,539					25,787						641						-					-						-						16,539					25,787						641
Metallic Ores **			2,473					2,652						933						26,293					9,323						2,820						28,766					11,975						2,402
Metals			15,451					22,078						700						-					-						-						15,451					22,078						700
Minerals & Stone			7,581					16,662						455						3,134					15,197						206						10,715					31,859						336
Chemicals & Plastics			13,411					16,368						819						-					-						-						13,411					16,368						819
Lumber & Forest Products			9,193					18,992						484						-					-						-						9,193					18,992						484
Petroleum Products			7,017					8,990						781						574					83						6,916						7,591					9,073						837
Autos & Auto Parts			2,007					2,622						765						-					-						-						2,007					2,622						765
Other			5,017					9,930						505						-					-						-						5,017					9,930						505
Totals		$	101,228					180,427					$	561					$	64,182					49,391					$	1,299					$	165,410					229,818					$	720
* Represents intermodal units
** Includes carload and intermodal units
Three Months Ended December 31, 2011
		North American & European Operations																	Australian Operations																	Total Operations
		Freight											Average Revenues						Freight											Average Revenues						Freight											Average Revenues
Commodity Group		Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload
Intermodal*		$	83					712					$	117					$	24,265					16,500					$	1,471					$	24,348					17,212					$	1,415
Coal & Coke			17,280					50,473						342						-					-						-						17,280					50,473						342
Farm & Food Products			5,935					12,300						483						10,655					16,986						627						16,590					29,286						566
Pulp & Paper			14,952					23,572						634						-					-						-						14,952					23,572						634
Metallic Ores			2,701					3,187						848						12,239					5,658						2,163						14,940					8,845						1,689
Metals			14,398					22,667						635						-					-						-						14,398					22,667						635
Minerals & Stone			9,672					21,096						458						2,240					13,314						168						11,912					34,410						346
Chemicals & Plastics			12,589					16,025						786						-					-						-						12,589					16,025						786
Lumber & Forest Products			7,769					15,764						493						-					-						-						7,769					15,764						493
Petroleum Products			6,199					7,504						826						751					119						6,311						6,950					7,623						912
Autos & Auto Parts			1,647					2,246						733						-					-						-						1,647					2,246						733
Other			5,418					18,671						290						-					-						-						5,418					18,671						290
Totals		$	98,643					194,217					$	508					$	50,150					52,577					$	954					$	148,793					246,794					$	603
* Represents intermodal units

RAILAMERICA, INC.
RAILROAD FREIGHT REVENUE, VOLUME AND REVENUE PER UNIT
COMPARISON BY COMMODITY GROUP
(in thousands, except average revenue per unit)
(unaudited)
		Three Months Ended December 31, 2012
Commodity Groups		Revenue						Volume					Revenue Per Unit
Agricultural Products		$	18,837					37,261					$	508
Chemicals			18,054					24,454						739
Coal			7,600					33,504						227
Food or Kindred Products			7,640					12,885						593
Forest Products			9,673					14,379						676
Metallic Ores and Metals			10,368					13,623						761
Motor Vehicles			3,516					5,425						662
Non-Metallic Minerals and Products			9,814					19,763						497
Other			4,862					10,583						459
Petroleum			6,547					12,254						535
Pulp, Paper & Allied Products			9,953					16,746						594
Waste & Scrap Materials			6,227					13,395						467
Totals		$	113,091					214,272					$	529
		Three Months Ended December 31, 2011
Commodity Groups		Revenue						Volume					Revenue Per Unit
Agricultural Products		$	16,289					32,827					$	496
Chemicals			14,666					21,180						692
Coal			9,333					40,925						228
Food or Kindred Products			8,014					14,680						546
Forest Products			7,821					12,149						644
Metallic Ores and Metals			11,155					17,436						640
Motor Vehicles			2,794					4,610						606
Non-Metallic Minerals and Products			9,696					20,482						473
Other			3,582					8,021						447
Petroleum			4,771					9,776						488
Pulp, Paper & Allied Products			8,353					14,878						561
Waste & Scrap Materials			6,809					14,884						457
Totals		$	103,283					211,848					$	488

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
		Twelve Months Ended
		December 31
		2012													2011
									% of													% of
		Amount							Revenue						Amount							Revenue
Revenues:
Freight		$	624,809						71.4	%					$	582,947						70.3	%
Non-freight			250,107						28.6	%						246,149						29.7	%
Total revenues		$	874,916						100.0	%					$	829,096						100.0	%
Operating Expense Comparison:
Natural Classification
Labor and benefits		$	257,618						29.5	%					$	236,152						28.5	%
Equipment rents			37,322						4.3	%						43,885						5.3	%
Purchased services			80,572						9.2	%						78,710						9.5	%
Depreciation and amortization			73,405						8.4	%						66,481						8.0	%
Diesel fuel used in operations			88,399						10.1	%						88,499						10.7	%
Diesel fuel sold to third parties			11,322						1.3	%						16,986						2.0	%
Casualties and insurance			24,858						2.8	%						22,469						2.7	%
Materials			25,240						2.9	%						26,419						3.2	%
Net (gain)/loss on sale and impairment of assets			( 11,225	)					(1.3	%)						( 5,660	)					(0.7	%)
Gain on insurance recoveries			( 5,760	)					(0.7	%)						( 1,061	)					(0.1	%)
Other expenses			72,799						8.3	%						64,437						7.8	%
RailAmerica integration costs			11,452						1.3	%						-						0.0	%
RailAmerica acquisition-related costs			18,592						2.1	%						-						0.0	%
Total operating expenses		$	684,594						78.2	%					$	637,317						76.9	%
Functional Classification
Transportation		$	276,316						31.5	%					$	263,405						31.8	%
Maintenance of ways and structures			87,751						10.0	%						81,354						9.8	%
Maintenance of equipment			92,531						10.6	%						96,084						11.6	%
Diesel fuel sold to third parties			11,322						1.3	%						16,986						2.0	%
General and administrative			130,210						15.0	%						119,728						14.5	%
RailAmerica integration costs			11,452						1.3	%						-						0.0	%
RailAmerica acquisition-related costs			18,592						2.1	%						-						0.0	%
Net (gain)/loss on sale and impairment of assets			( 11,225	)					(1.3	%)						( 5,660	)					(0.7	%)
Gain on insurance recoveries			( 5,760	)					(0.7	%)						( 1,061	)					(0.1	%)
Depreciation and amortization			73,405						8.4	%						66,481						8.0	%
Total operating expenses		$	684,594						78.2	%					$	637,317						76.9	%

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
		North American & European
Twelve Months Ended December 31, 2012		Operations													Australian Operations													Total Operations
									% of Total													% of Total													% of Total
Revenues:		Amount							Revenues						Amount							Revenues						Amount							Revenues
Freight		$	412,839						70.5	%					$	211,970						73.3	%					$	624,809						71.4	%
Non-freight (excluding fuel sales)			173,054						29.5	%						65,185						22.6	%						238,239						27.2	%
Fuel sales to third parties			-						0.0	%						11,868						4.1	%						11,868						1.4	%
Total revenues			585,893						100.0	%						289,023						100.0	%						874,916						100.0	%
Operating expenses
Labor and benefits			197,407						33.7	%						60,211						20.9	%						257,618						29.5	%
Equipment rents			26,298						4.5	%						11,024						3.8	%						37,322						4.3	%
Purchased services			26,330						4.5	%						54,242						18.8	%						80,572						9.2	%
Depreciation and amortization			50,156						8.6	%						23,249						8.0	%						73,405						8.4	%
Diesel fuel used in operations			56,298						9.6	%						32,101						11.1	%						88,399						10.1	%
Diesel fuel sold to third parties			-						0.0	%						11,322						3.9	%						11,322						1.3	%
Casualties and insurance			16,244						2.8	%						8,614						3.0	%						24,858						2.8	%
Materials			23,569						4.0	%						1,671						0.6	%						25,240						2.9	%
Net (gain)/loss on sale and impairment of assets			(9,178	)					(1.6	%)						(2,047	)					(0.7	%)						(11,225	)					(1.3	%)
Gain on insurance recoveries			-						0.0	%						(5,760	)					(2.0	%)						(5,760	)					(0.7	%)
Other expenses			53,338						9.1	%						19,461						6.7	%						72,799						8.3	%
RailAmerica integration costs			11,452						2.0	%						-						0.0	%						11,452						1.3	%
RailAmerica acquisition-related costs			18,592						3.2	%						-						0.0	%						18,592						2.1	%
Total operating expenses			470,506						80.4	%						214,088						74.1	%						684,594						78.2	%
Income from Operations		$	115,387												$	74,935												$	190,322
Carloads			543,021													154,255													697,276
Net expenditures for additions to property & equipment		$	69,636												$	122,426												$	192,062
		North American & European
Twelve Months Ended December 31, 2011		Operations													Australian Operations													Total Operations
									% of Total													% of Total													% of Total
Revenues:		Amount							Revenues						Amount							Revenues						Amount							Revenues
Freight		$	388,797						69.7	%					$	194,150						71.5	%					$	582,947						70.3	%
Non-freight (excluding fuel sales)			168,824						30.3	%						59,323						21.9	%						228,147						27.5	%
Fuel sales to third parties			-						0.0	%						18,002						6.7	%						18,002						2.2	%
Total revenues			557,621						100.0	%						271,475						100.0	%						829,096						100.0	%
Operating expenses
Labor and benefits			186,467						33.4	%						49,685						18.3	%						236,152						28.5	%
Equipment rents			26,460						4.7	%						17,425						6.4	%						43,885						5.3	%
Purchased services			27,880						5.0	%						50,830						18.7	%						78,710						9.5	%
Depreciation and amortization			47,218						8.5	%						19,263						7.1	%						66,481						8.0	%
Diesel fuel used in operations			57,394						10.3	%						31,105						11.5	%						88,499						10.7	%
Diesel fuel sold to third parties			-						0.0	%						16,986						6.3	%						16,986						2.0	%
Casualties and insurance			14,710						2.6	%						7,759						2.9	%						22,469						2.7	%
Materials			24,138						4.3	%						2,281						0.8	%						26,419						3.2	%
Net (gain)/loss on sale and impairment of assets			(5,167	)					(0.9	%)						(493	)					(0.2	%)						(5,660	)					(0.7	%)
Gain on insurance recoveries			(43	)					0.0	%						(1,018	)					(0.4	%)						(1,061	)					(0.1	%)
Other expenses			48,918						8.8	%						15,519						5.7	%						64,437						7.8	%
Total operating expenses			427,975						76.7	%						209,342						77.1	%						637,317						76.9	%
Income from Operations		$	129,646												$	62,133												$	191,779
Carloads			785,377													211,671													997,048
Net expenditures for additions to property & equipment		$	59,383												$	96,643												$	156,026

GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(in thousands, except average revenues per carload)
(unaudited)
Twelve Months Ended December 31, 2012
		North American & European Operations																	Australian Operations																	Total Operations
		Freight											Average Revenues						Freight											Average Revenues						Freight											Average Revenues
Commodity Group		Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload
Intermodal*		$	503					4,644					$	108					$	94,231					62,062					$	1,518					$	94,734					66,706					$	1,420
Coal & Coke			69,786					166,239						420						-					-						-						69,786					166,239						420
Farm & Food Products			25,471					53,518						476						38,534					50,672						760						64,005					104,190						614
Pulp & Paper			65,350					101,086						646						-					-						-						65,350					101,086						646
Metallic Ores **			10,549					11,183						943						64,639					30,734						2,103						75,188					41,917						1,794
Metals			62,331					94,945						656						-					-						-						62,331					94,945						656
Minerals & Stone			34,267					70,319						487						12,018					59,772						201						46,285					130,091						356
Chemicals & Plastics			55,104					66,637						827						-					-						-						55,104					66,637						827
Lumber & Forest Products			34,951					71,294						490						-					-						-						34,951					71,294						490
Petroleum Products			26,153					32,185						813						2,548					406						6,276						28,701					32,591						881
Autos & Auto Parts			8,313					10,148						819						-					-						-						8,313					10,148						819
Other			20,061					41,250						486						-					-						-						20,061					41,250						486
Totals		$	412,839					723,448					$	571					$	211,970					203,646					$	1,041					$	624,809					927,094					$	674
* Represents intermodal units
** Includes carload and intermodal units
Twelve Months Ended December 31, 2011
		North American & European Operations																	Australian Operations																	Total Operations
		Freight											Average Revenues						Freight											Average Revenues						Freight											Average Revenues
Commodity Group		Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload						Revenues						Carloads					Per Carload
Intermodal*		$	371					3,150					$	118					$	87,286					58,836					$	1,484					$	87,657					61,986					$	1,414
Coal & Coke			77,104					205,761						375						-					-						-						77,104					205,761						375
Farm & Food Products			24,237					53,653						452						43,270					69,673						621						67,507					123,326						547
Pulp & Paper			61,350					96,597						635						-					-						-						61,350					96,597						635
Metallic Ores			7,614					10,731						710						48,536					21,951						2,211						56,150					32,682						1,718
Metals			51,461					90,153						571						-					-						-						51,461					90,153						571
Minerals & Stone			35,549					77,963						456						12,417					60,746						204						47,966					138,709						346
Chemicals & Plastics			46,444					60,958						762						-					-						-						46,444					60,958						762
Lumber & Forest Products			31,502					64,914						485						-					-						-						31,502					64,914						485
Petroleum Products			23,274					29,563						787						2,641					465						5,680						25,915					30,028						863
Autos & Auto Parts			7,826					10,425						751						-					-						-						7,826					10,425						751
Other			22,065					81,509						271						-					-						-						22,065					81,509						271
Totals		$	388,797					785,377					$	495					$	194,150					211,671					$	917					$	582,947					997,048					$	585
* Represents intermodal units

RAILAMERICA, INC.
RAILROAD FREIGHT REVENUE, VOLUME AND REVENUE PER UNIT
COMPARISON BY COMMODITY GROUP
(in thousands, except average revenue per unit)
(unaudited)
		Twelve Months Ended December 31, 2012
Commodity Groups		Revenue						Volume					Revenue Per Unit
Agricultural Products		$	70,951					136,337					$	520
Chemicals			70,397					97,368						723
Coal			31,877					142,317						224
Food or Kindred Products			30,334					53,379						568
Forest Products			37,875					57,037						664
Metallic Ores and Metals			44,583					65,070						685
Motor Vehicles			14,039					21,557						651
Non-Metallic Minerals and Products			41,355					83,670						494
Other			18,781					40,571						463
Petroleum			22,801					43,087						529
Pulp, Paper & Allied Products			38,982					67,666						576
Waste & Scrap Materials			25,759					56,077						459
Totals		$	447,734					864,136					$	518
		Twelve Months Ended December 31, 2011
Commodity Groups		Revenue						Volume					Revenue Per Unit
Agricultural Products		$	65,177					126,727					$	514
Chemicals			63,374					94,615						670
Coal			34,460					151,687						227
Food or Kindred Products			30,161					56,601						533
Forest Products			30,516					48,884						624
Metallic Ores and Metals			43,431					70,251						618
Motor Vehicles			7,591					12,731						596
Non-Metallic Minerals and Products			39,329					84,614						465
Other			14,097					30,001						470
Petroleum			18,470					37,712						490
Pulp, Paper & Allied Products			39,609					67,678						585
Waste & Scrap Materials			24,914					58,459						426
Totals		$	411,129					839,960					$	489

Reconciliation of non-GAAP Financial Measures

This earnings release contains references to adjusted operating income, adjusted operating ratios, adjusted net income, adjusted diluted earnings per share and free cash flow, which are "non-GAAP financial measures" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to its most directly comparable U.S. GAAP measures.

GWI’s Adjusted Net Income and Adjusted Diluted Earnings Per Common Share

Managements views its Net Income and Diluted Earnings Per Common Share as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results, the Net Income and Diluted Earnings Per Common Share for the three months ended December 31, 2012 used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Common Share, are presented excluding the RailAmerica acquisition-related costs, RailAmerica financing-related costs, RailAmerica integration costs, acquisition costs incurred by RailAmerica, other business/corporate development costs, gain on insurance recoveries, net gain on sale of assets and contract termination expense in Australia. The Net Income and Diluted Earnings Per Share for the three months ended December 31, 2011 used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Share, are presented excluding the acquisition-related income tax benefits, net (gain)/loss on sale/impairment of assets, Edith River derailment costs, business/corporate development costs and short line tax credit. The Adjusted Net Income and Adjusted Diluted Earnings Per Common Share presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Net Income and Diluted Earnings Per Common Share calculated using amounts in accordance with GAAP. Adjusted Net Income and Adjusted Diluted Earnings Per Common Share amounts may be different from similarly-titled non-GAAP financial measures used by other companies.

The following tables set forth reconciliations of GWI’s Net Income and Diluted Earnings Per Common Share calculated using amounts determined in accordance with GAAP to the Adjusted Net Income and Adjusted Diluted Earnings Per Common Share described above (in millions, except per share amounts):

															Diluted
															Earnings/(Loss)
															Per Common
Three Months Ended December 31, 2012			Net Income							Diluted shares					Share Impact
As reported			$	13.4						50.6					$	0.18
Add back certain items, net of tax:
	RailAmerica acquisition-related costs			10.9						6.0						0.23
	RailAmerica financing-related costs			9.5												0.20
	RailAmerica integration costs			6.8												0.12
	Acquisition/integration costs incurred by RailAmerica			3.5												0.06
	Other business/corporate development costs			0.3												0.01
	Gain on insurance recoveries			(0.4	)											(0.01	)
	Net gain on sale of assets			(0.6	)											(0.01	)
	Contract termination expense in Australia			0.8												0.01
Adjusted net income			$	44.2						56.6					$	0.79
Diluted shares - As reported				50.6
Preferred				6.0
Diluted shares - Adjusted				56.6
															Diluted
															Earnings/(Loss)
Three Months Ended December 31, 2011			Net Income							Diluted shares					Per Share Impact
As reported			$	33.3						42.9					$	0.77
Add back certain items, net of tax:
	Acquisition-related income tax benefits			(1.9	)											(0.04	)
	Net (gain)/loss on sale/impairment of assets			(1.9	)											(0.04	)
	Edith River derailment costs			1.3												0.03
	Business/corporate development costs			0.5												0.01
	Short line tax credit			(2.2	)											(0.05	)
Adjusted net income			$	29.1						42.9					$	0.68

GWI’s Adjusted Operating Income and Adjusted Operating Ratios Description and Discussion

Management views its Operating Income, calculated as Operating Revenues less Operating Expenses and Operating Ratios, calculated as Operating Expenses divided by Operating Revenues, as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results compared with the same period in the prior year, the Operating Income and Operating Ratios for the three months ended December 31, 2012, used to calculate Adjusted Operating Income and Adjusted Operating Ratios, are presented excluding RailAmerica acquisition-related costs, RailAmerica integration costs, other business/corporate development costs, gain on insurance recoveries, net gain on sale of assets and contract termination expense in Australia. The Operating Income and Operating Ratios for the three months ended December 31, 2011, used to calculate Adjusted Operating Income and Adjusted Operating Ratios, are presented excluding business/corporate development costs, net gain/(loss) on sale and impairment of assets and Edith River derailment costs. The Adjusted Operating Income and Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Income and Operating Ratios calculated using amounts in accordance with GAAP. Adjusted Operating Income and Operating Ratios may be different from similarly-titled non-GAAP financial measures used by other companies.

The following table sets forth a reconciliation of GWI’s Operating Income and Operating Ratios by segment calculated using amounts determined in accordance with GAAP to the Adjusted Operating Income and Adjusted Operating Ratios by segment described above (in millions):

		North American
		& European							Australian							Total
Three months ended December 31, 2012		Operations							Operations							Operations
Operating revenues		$	146.4						$	80.9						$	227.3
Operating expenses			135.8							57.8							193.7
Operating income		$	10.6						$	23.1						$	33.7
Operating ratio			92.8	%						71.5	%						85.2	%
Operating expenses		$	135.8						$	57.8						$	193.7
RailAmerica acquisition-related costs			(12.5	)						(0.1	)						(12.6	)
RailAmerica integration costs			(11.4	)						-							(11.4	)
Other business/corporate development costs			0.0							(0.5	)						(0.5	)
Gain on insurance recoveries			-							0.6							0.6
Net gain on sale of assets			0.8							(0.0	)						0.8
Contract termination expense in Australia			-							(1.1	)						(1.1	)
Adjusted operating expenses		$	112.8						$	56.6						$	169.5
Adjusted operating income		$	33.6						$	24.2						$	57.8
Adjusted operating ratio			77.1	%						70.0	%						74.6	%
		North American
		& European							Australian							Total
Three months ended December 31, 2011		Operations							Operations							Operations
Operating revenues		$	140.2						$	70.2						$	210.4
Operating expenses			109.2							55.8							165.0
Operating income		$	31.0						$	14.4						$	45.4
Operating ratio			77.9	%						79.5	%						78.4	%
Operating expenses		$	109.2						$	55.8						$	165.0
Business/corporate development costs			(0.4	)						(0.4	)						(0.8	)
Net gain/(loss) on sale and impairment of assets			2.5							0.5							3.0
Edith River derailment costs			-							(1.8	)						(1.8	)
Adjusted operating expenses		$	111.2						$	54.1						$	165.3
Adjusted operating income		$	29.0						$	16.1						$	45.1
Adjusted operating ratio			79.3	%						77.0	%						78.6	%

Adjusted Income from Equity Investment, Net

Management views its Equity Earnings from RailAmerica as an important measure of RailAmerica’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results, the Equity Earnings from RailAmerica for the three months ended December 31, 2012 is presented excluding integration costs and acquisition expenses. The Adjusted Equity Earnings presented excluding these effects is not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Equity Earnings calculated using amounts in accordance with GAAP. Adjusted Equity Earnings may be different from similarly-titled non-GAAP financial measures used by other companies.

Three Months Ended December 31, 2012
Income from equity investment, net		$	15.6
Add back certain items, net of tax
Integration costs			3.4
Acquisition expenses			0.1
Adjusted income from equity investment, net		$	19.1

RailAmerica’s Adjusted Operating Income and Adjusted Operating Ratio Description and Discussion

Management views RailAmerica’s Operating Income, calculated as Operating Revenues less Operating Expenses, and Operating Ratio, calculated as Operating Expenses divided by Operating Revenues, as important measures of RailAmerica’s operating performance. Because management believes this information is useful for investors in assessing RailAmerica’s financial results compared with the same period in the prior year, the Operating Income and Operating Ratio for the three months ended December 31, 2012, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding integration costs and acquisition expenses. The Operating Income and Operating Ratio for the three months ended December 31, 2011, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding acquisition expenses and the short line tax credit. In addition, the 2011 period is adjusted for the pro forma impact of depreciation and amortization expense as if GWI acquired RailAmerica in 2011. The Adjusted Operating Income and Operating Ratio presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Income and Operating Ratios calculated using amounts in accordance with GAAP. Adjusted Operating Income and Operating Ratio may be different from similarly-titled non-GAAP financial measures used by other companies.

The following table sets forth a reconciliation of RailAmerica’s Operating Income and Operating Ratio calculated using amounts determined in accordance with GAAP to the Adjusted Operating Income and Operating Ratio described above ($ in millions):

		Three Months Ended
		December 31,
			2012							2011
Operating revenues		$	151.1						$	147.3
Operating expenses			124.9							110.1
Operating income		$	26.1						$	37.2
Operating ratio			82.7	%						74.7	%
Operating expenses		$	124.9						$	110.1
Integration costs			(5.5	)						-
Acquisition expenses			(0.1	)						(0.3	)
Pro forma depreciation and amortization expense			-							1.0
Short line tax credit			-							3.6
Adjusted operating expenses		$	119.3						$	114.3
Adjusted operating income		$	31.8						$	33.0
Adjusted operating ratio			78.9	%						77.6	%

GWI’s Adjusted Net Income and Adjusted Diluted Earnings Per Share

Managements views its Net Income and Diluted Earnings Per Share as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results, the Net Income and Diluted Earnings Per Share for the twelve months ended December 31, 2012 used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Share, are presented excluding the RailAmerica acquisition-related costs, RailAmerica financing-related costs, RailAmerica integration costs, acquisition costs incurred by RailAmerica, other business/corporate development costs, gain on insurance recoveries, net gain on sale of assets, contract termination expense in Australia, and mark-to-market loss on Carlyle Convertible. The Net Income and Diluted Earnings Per Share for the twelve months ended December 31, 2011 used to calculate Adjusted Net Income and Adjusted Diluted Earnings Per Share, are presented excluding the acquisition-related income tax benefits, gain on insurance recoveries, net (gain)/loss on sale/impairment of assets, Edith River derailment costs, business/corporate development cost, short line tax credit and gain on sale of investment. The Adjusted Net Income and Adjusted Diluted Earnings Per Share presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Net Income and Diluted Earnings Per Share calculated using amounts in accordance with GAAP. Adjusted Net Income and Adjusted Diluted Earnings Per Share amounts may be different from similarly-titled non-GAAP financial measures used by other companies.

The following tables set forth reconciliations of GWI’s Net Income and Diluted Earnings Per Share calculated using amounts determined in accordance with GAAP to the Adjusted Net Income and Adjusted Diluted Earnings Per Share described above (in millions, except per share amounts):

															Diluted
															Earnings/(Loss)
Twelve Months Ended December 31, 2012			Net Income							Diluted shares					Per Share Impact
As reported			$	52.4						51.3					$	1.02
Add back certain items, net of tax:
	RailAmerica acquisition-related costs			14.5												0.28
	RailAmerica financing-related costs			9.5												0.19
	RailAmerica integration costs			6.8												0.13
	Acquisition/integration costs incurred by RailAmerica			3.5												0.07
	Other business/corporate development costs			1.2												0.02
	Gain on insurance recoveries			(0.5	)											(0.01	)
	Net gain on sale of assets			(8.6	)											(0.17	)
	Contract termination expense in Australia			0.8												0.02
	Mark-to-market loss on Carlyle Convertible			50.1												0.98
Adjusted net income			$	129.7						51.3					$	2.53
Diluted shares - As reported				51.3
Preferred				-
Diluted shares - Adjusted				51.3
															Diluted
															Earnings/(Loss)
Twelve Months Ended December 31, 2011			Net Income							Diluted shares					Per Share Impact
As reported			$	119.5						42.8					$	2.79
Add back certain items, net of tax:
	Acquisition-related income tax benefits			(1.9	)											(0.04	)
	Gain on insurance recoveries			(0.7	)											(0.02	)
	Net (gain)/loss on sale/impairment of assets			(3.9	)											(0.09	)
	Edith River derailment costs			1.3												0.03
	Business/corporate development costs			2.3												0.05
	Short line tax credit			(10.2	)											(0.24	)
	Gain on sale of investment			(0.8	)											(0.02	)
Adjusted net income			$	105.6						42.8					$	2.47

GWI’s Free Cash Flow Description and Discussion

Management views Free Cash Flow as an important financial measure of how well GWI 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 discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities from Continuing Operations less Net Cash Used in Investing Activities from Continuing Operations, excluding net cash used for acquisitions/divestitures and the cash paid for Australian stamp duty. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on 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 GAAP. Free Cash Flow may be different from similarly-titled non-GAAP financial measures used by other companies.

The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities from Continuing Operations to GWI's Free Cash Flow ($ in millions):

		Twelve Months Ended
		December 31,
			2012							2011
Net cash provided by operating activities from continuing operations		$	166.4						$	173.5
Net cash used in investing activities from continuing operations			(2,101.7	)						(235.1	)
Net cash used for acquisitions/divestitures (a)			1,964.2							88.6
Cash paid for acquisition-related expenses (b)			-							13.0
Free cash flow		$	28.9						$	39.9

(a) The 2012 period included $1.9 billion in net cash paid for the acquisition of RailAmerica, Inc. as well as $38.9 million in cash paid for incremental expenses related to the purchase, integration and financing of the acquisition. The 2011 period included $89.9 million in net cash paid for the acquisition of Arizona Eastern Railway Company.

(b) The payment of the Australian stamp duty in the 2011 period related to the acquisition of FreightLink in Australia, which was accrued as of December 31, 2010.

Genesee & Wyoming Inc.
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com

Source: Genesee & Wyoming Inc.