Genesee & Wyoming Reports Results for the Second Quarter of 2011

GREENWICH, Conn.--(BUSINESS WIRE)--Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the second quarter of 2011 of $31.1 million, compared with net income of $20.6 million in the second quarter of 2010. GWI's diluted earnings per share (EPS) increased 49% from $0.49 with 41.7 million weighted average shares outstanding in the second quarter of 2010 to $0.73 with 42.8 million weighted average shares outstanding in the second quarter of 2011.

GWI's effective income tax rate in the second quarter of 2011 was 26.8%, compared with 36.8% in the second quarter of 2010, primarily due to a benefit of $2.5 million from the extension of the short line tax credit in the fourth quarter of 2010.

Comments from the Chief Executive Officer

Jack Hellmann, President and CEO of GWI, commented, “Our financial results for the second quarter of 2011 were good, as revenue increased 32% to $210 million and operating income increased 35% to $51 million, both Company records. Our financial performance was well balanced by geography, as our North American and European Operations reported an operating ratio of 75.8% and our Australian Operations reported an operating ratio of 75.2%. Of particular note, our business strengthened over the course of the quarter, thereby supporting our outlook for the second half of 2011.”

Mr. Hellmann continued, “We continued to advance our business development initiatives in the quarter, as we started service to a new iron ore mine in Canada in June, we began shipments related to the expansion of a major steel facility in the United States in June, and we commenced new port operations in Belgium in May. In addition, a new iron ore customer in Australia recently received final government approval for certain permits, keeping the new mine on schedule for start-up in the second quarter of 2012. At the same time, we remain actively engaged in other potential acquisitions and investments related to the natural resources sector in both North America and Australia.”

Results from Continuing Operations

In the second quarter of 2011, GWI's operating revenues increased $51.1 million, or 32.3%, to $209.6 million, compared with $158.5 million in the second quarter of 2010. Excluding $37.6 million in revenues from GWA (North) Pty Ltd (GWA North), GWI’s subsidiary that acquired FreightLink, same railroad operating revenues increased $20.8 million, or 13.1%. During the second quarter of 2011, the appreciation of the Australian dollar, the Canadian dollar and the Euro versus the U.S. dollar increased same railroad operating revenues by $6.8 million. Excluding the impact from foreign currency, GWI’s same railroad operating revenues increased $14.0 million, or 8.8%.

Same railroad freight revenues in the second quarter of 2011 increased by $11.4 million, or 11.4%, to $111.6 million, compared with $100.2 million in the second quarter of 2010. Excluding the $3.0 million increase from foreign currency appreciation, GWI’s same railroad freight revenues increased by $8.4 million, or 8.4%.

GWI's traffic in the second quarter of 2011 was 249,508 carloads, an increase of 31,801 carloads, or 14.6%, compared with the second quarter of 2010. Excluding 20,194 carloads from GWA North, same railroad traffic in the second quarter of 2011 increased 11,607 carloads, or 5.3%. The traffic increase was principally due to increases of 3,515 carloads of coal and coke traffic, 2,685 carloads of farm and food products traffic, 2,253 carloads of pulp and paper traffic and 2,253 carloads of minerals and stone traffic. All remaining traffic increased by a net 901 carloads.

Same railroad average freight revenues per carload increased 5.9% in the second quarter of 2011. The appreciation of the Australian and Canadian dollars versus the U.S. dollar and higher fuel surcharges increased average revenues per carload by 3.2% and 2.5%, respectively, partially offset by a 0.3% reduction in average revenues per carload due to a change in commodity mix. Excluding these factors, same railroad average freight revenues per carload increased 0.5%. Average revenues per carload were negatively impacted by changes in the mix of customers within certain commodity groups, primarily due to length of haulage.

GWI’s same railroad non-freight revenues in the second quarter of 2011 increased $9.4 million, or 16.1%, to $67.6 million compared with $58.3 million in the second quarter of 2010. Excluding the $3.8 million increase from foreign currency appreciation, GWI’s same railroad non-freight revenues increased $5.6 million, or 9.6%, primarily due to higher switching revenues in the U.S., Canada and the Netherlands.

GWI's income from operations in the second quarter of 2011 increased $13.3 million, or 35.1%, from $37.9 million in the second quarter of 2010 to $51.2 million in the second quarter of 2011. The operating ratio (operating expenses divided by operating revenues) was 75.6% in the second quarter of 2011 compared with an operating ratio of 76.1% in the second quarter of 2010.

Six Month Consolidated Results – Continuing Operations

For the six months ended June 30, 2011, GWI reported income from continuing operations of $53.3 million, a 45.3% increase over $36.7 million for the six months ended June 30, 2010. GWI's diluted earnings per share from continuing operations were $1.25 for the six months ended June 30, 2011 (with 42.7 million weighted average shares outstanding), a 42.0% increase over $0.88 for the six months ended June 30, 2010 (with 41.6 million weighted average shares outstanding). For the six months ended June 30, 2011, GWI's operating revenues increased $97.5 million, or 32.1%, to $401.5 million, compared with $304.0 million in the six months ended June 30, 2010. GWI's income from operations for the six months ended June 30, 2011 increased $22.4 million, or 32.9%, from $90.4 million for the six months ended June 30, 2010 to $68.0 million for six months ended June 30, 2011.

GWI’s 2011 results include a tax benefit of $4.7 million ($0.11 per diluted share) associated with the short line tax credit, which was extended in December 2010.

Free Cash Flow from Continuing Operations (1)

($ in millions)	Six Months Ended
	June 30, 2011
	2011			2010
Net cash provided by operating activities	$	52.0		$	73.8
Net cash used in investing activities, excluding
new Australian equipment investments		(23.7	)		(7.1	)
Net cash (received)/paid for divestitures/acquisitions		(0.9	)		-
Cash paid for acquisition-related expenses (a)		13.0			-
Free cash flow before new Australian
equipment investments		40.4			66.7
New Australian locomotives		(22.6	)		-
Free cash flow (1)	$	17.8		$	66.7
(a) Reflects expenses accrued as of December 31, 2010, but paid in 2011.

GWI’s continuing operations generated free cash flow of $17.8 million and $66.7 million for the six months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, changes in working capital decreased cash flow from operating activities by $42.3 million and $0.7 million, respectively. Of the $42.3 million for the six months ended June 30, 2011, $17.6 million was due to an increase in accounts receivable driven by the increase in business in 2011 and $24.2 million was due to a reduction in accounts payable and accrued expenses. Of the $24.2 million, $13.0 million was associated with the payment of stamp duty for the acquisition of FreightLink in Australia.

Net cash used in investing activities of $46.3 million for the six months ended June 30, 2011, included $62.1 million in purchases of property and equipment, including $22.6 million for the investment in new Australian locomotives, partially offset by $11.7 million in grant proceeds received from outside parties, $3.1 million from sale of assets and $1.4 million in proceeds from sale of investments. Net cash used in investing activities for the six months ended June 30, 2010, included $28.6 million in purchases of property and equipment, partially offset by $18.0 million in cash received from outside parties and $3.3 million from sale of assets.

Conference Call and Webcast Details

As previously announced, GWI's conference call to discuss financial results for the second quarter will be held Tuesday, August 2, 2011, at 11 a.m. EDT. Management will be referring to a slide presentation that will also be available at www.gwrr.com/investors prior to the conference call. The dial-in number for the teleconference is [phone]; outside U.S., call [phone], or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors.

An audio replay of the conference call will be accessible at www.gwrr.com/investors starting at 1 p.m. EDT on August 2, 2011, until the following quarter’s earnings press release. Telephone replay is available for 30 days beginning at 1 p.m. EDT on August 2, 2011, by dialing [phone] (or outside U.S., dial [phone]). The access code is 186289.

About Genesee & Wyoming Inc.

GWI owns and operates short line and regional freight railroads and provides railcar switching services in the United States, Canada, Australia, the Netherlands and Belgium. In addition, we operate the Tarcoola to Darwin rail line, which links the Port of Darwin to the Australian interstate rail network in South Australia. Operations currently include 63 railroads organized in nine regions, with approximately 7,400 miles of owned and leased track and approximately 1,400 additional miles under track access arrangements. We provide rail service at 17 ports in North America 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," "potential, " "outlook, " "should," "seeks," "expects," "estimates," 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, 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; customer demand, 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; unpredictability of fuel costs; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others including but not limited to, those noted in our 2010 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors,” many of which are beyond our control. 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 disclaims any intention to update the current expectations or forward-looking statements contained in this press release.

(1) 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 SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
OPERATING REVENUES	$	209,589		$	158,453		$	401,500		$	304,032
OPERATING EXPENSES		158,424			120,580			311,132			236,053
INCOME FROM OPERATIONS		51,165			37,873			90,368			67,979
INTEREST INCOME		858			471			1,633			894
INTEREST EXPENSE		(10,253	)		(5,411	)		(20,192	)		(10,773	)
GAIN ON SALE OF INVESTMENTS		625			-			894			-
OTHER INCOME/(EXPENSE), NET		170			(175	)		469			275
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		42,565			32,758			73,172			58,375
PROVISION FOR INCOME TAXES		11,420			12,067			19,905			21,708
INCOME FROM CONTINUING OPERATIONS		31,145			20,691			53,267			36,667
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		-			(56	)		-			(72	)
NET INCOME	$	31,145			20,635		$	53,267			36,595
BASIC EARNINGS PER SHARE:
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	0.78		$	0.53		$	1.34		$	0.95
BASIC LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			-
BASIC EARNINGS PER COMMON SHARE	$	0.78		$	0.53		$	1.34		$	0.95
WEIGHTED AVERAGE SHARES - BASIC		39,903			38,831			39,695			38,711
DILUTED EARNINGS PER SHARE:
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	0.73		$	0.50		$	1.25		$	0.88
DILUTED LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			-
DILUTED EARNINGS PER COMMON SHARE	$	0.73		$	0.49		$	1.25		$	0.88
WEIGHTED AVERAGE SHARES - DILUTED		42,757			41,723			42,654			41,595

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2011 AND DECEMBER 31, 2010
(in thousands)
(unaudited)
	June 30,		December 31,
ASSETS	2011		2010
CURRENT ASSETS:
Cash and cash equivalents	$	25,938	$	27,417
Accounts receivable, net		153,331		132,225
Materials and supplies		15,524		13,259
Prepaid expenses and other		12,559		14,529
Deferred income tax assets, net		21,889		21,518
Total current assets		229,241		208,948
PROPERTY AND EQUIPMENT, net		1,503,388		1,444,177
GOODWILL		162,737		160,629
INTANGIBLE ASSETS, net		235,029		237,355
DEFERRED INCOME TAX ASSETS, net		2,420		2,879
OTHER ASSETS, net		13,144		13,572
Total assets	$	2,145,959	$	2,067,560
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	102,771	$	103,690
Accounts payable		132,258		124,948
Accrued expenses		51,806		76,248
Total current liabilities		286,835		304,886
LONG-TERM DEBT, less current portion		462,150		475,174
DEFERRED INCOME TAX LIABILITIES, net		274,325		263,361
DEFERRED ITEMS - grants from outside parties		190,796		183,356
OTHER LONG-TERM LIABILITIES		28,135		23,543
TOTAL STOCKHOLDERS' EQUITY		903,718		817,240
Total liabilities and stockholders' equity	$	2,145,959	$	2,067,560

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(in thousands)
(unaudited)
	Six Months Ended
	June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	53,267		$	36,595
Adjustments to reconcile net income to net cash provided
by operating activities:
Loss from discontinued operations, net of tax		-			72
Depreciation and amortization		32,158			24,900
Compensation cost related to equity awards		3,839			3,694
Excess tax benefits from share-based compensation		(2,049	)		(969	)
Deferred income taxes		11,071			12,063
Net gain on sale of assets		(2,098	)		(1,848	)
Gain on sale of investments		(894	)		-
Gain on insurance recoveries		(1,043	)		-
Insurance proceeds received		24			-
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
Accounts receivable, net		(17,612	)		(5,796	)
Materials and supplies		(1,763	)		(314	)
Prepaid expenses and other		2,048			(1,989	)
Accounts payable and accrued expenses		(24,174	)		8,526
Other assets and liabilities, net		(813	)		(1,155	)
Net cash provided by operating activities from continuing operations		51,961			73,779
Net cash used in operating activities from discontinued operations		(5	)		(87	)
Net cash provided by operating activities		51,956			73,692
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(62,065	)		(28,599	)
Grant proceeds from outside parties		11,700			17,986
Cash paid for acquisitions, net of cash acquired		(440	)		-
Proceeds from sale of investments		1,369			208
Proceeds from disposition of property and equipment		3,106			3,293
Net cash used in investing activities from continuing operations		(46,330	)		(7,112	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases		(115,764	)		(13,637	)
Proceeds from issuance of long-term debt		94,612			-
Debt amendment costs		-			(1,641	)
Proceeds from employee stock purchases		12,631			5,219
Treasury stock purchases		(1,287	)		(846	)
Excess tax benefits from share-based compensation		2,049			969
Net cash used in financing activities from continuing operations		(7,759	)		(9,936	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		653			(3,147	)
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS		1			87
(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS		(1,479	)		53,584
CASH AND CASH EQUIVALENTS, beginning of period		27,417			105,707
CASH AND CASH EQUIVALENTS, end of period	$	25,938		$	159,291

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
	Three Months Ended
	June 30,
	2011					2010
				% of					% of
	Amount			Revenue		Amount			Revenue
Revenues:
Freight	$	146,788		70.0	%	$	100,194		63.2	%
Non-freight		62,801		30.0	%		58,259		36.8	%
Total revenues	$	209,589		100.0	%	$	158,453		100.0	%
Operating Expense Comparison:
Natural Classification
Labor and benefits	$	58,966		28.1	%	$	51,329		32.4	%
Equipment rents		11,011		5.3	%		8,266		5.2	%
Purchased services		19,942		9.5	%		12,895		8.1	%
Depreciation and amortization		16,297		7.8	%		12,452		7.9	%
Diesel fuel used in operations		22,629		10.8	%		10,605		6.7	%
Diesel fuel sold to third parties		4,500		2.1	%		3,910		2.4	%
Casualties and insurance		6,228		3.0	%		3,123		2.0	%
Materials		6,090		2.9	%		6,004		3.8	%
Net gain on sale of assets		( 1,088	)	(0.5	%)		( 1,399	)	(0.9	%)
Gain on insurance recoveries		( 1,018	)	(0.5	%)		-		0.0	%
Other expenses		14,867		7.1	%		13,395		8.5	%
Total operating expenses	$	158,424		75.6	%	$	120,580		76.1	%
Functional Classification
Transportation	$	69,240		33.0	%	$	45,783		28.9	%
Maintenance of ways and structures		19,668		9.4	%		14,057		8.9	%
Maintenance of equipment		22,862		10.9	%		18,897		11.9	%
Diesel fuel sold to third parties		4,500		2.1	%		3,910		2.4	%
General and administrative		27,963		13.4	%		26,880		17.0	%
Net gain on sale of assets		( 1,088	)	(0.5	%)		( 1,399	)	(0.9	%)
Gain on insurance recoveries		( 1,018	)	(0.5	%)		-		0.0	%
Depreciation and amortization		16,297		7.8	%		12,452		7.9	%
Total operating expenses	$	158,424		75.6	%	$	120,580		76.1	%

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
	North American
	& European			Australian			Total
Three Months Ended June 30, 2011	Operations			Operations			Operations
Revenues:
Freight	$	96,598		$	50,190		$	146,788
Non-freight (excluding fuel sales)		42,737			15,472			58,209
Fuel sales to third parties		-			4,592			4,592
Total revenues		139,335			70,254			209,589
Operating expenses:
Labor and benefits		46,167			12,799			58,966
Equipment rents		6,513			4,498			11,011
Purchased services		7,117			12,825			19,942
Depreciation and amortization		11,565			4,732			16,297
Diesel fuel used in operations		14,056			8,573			22,629
Diesel fuel sold to third parties		-			4,500			4,500
Casualties and insurance		4,733			1,495			6,228
Materials		5,650			440			6,090
Net gain on sale of assets		(1,076	)		(12	)		(1,088	)
Gain on insurance recoveries		-			(1,018	)		(1,018	)
Other expenses		10,873			3,994			14,867
Total operating expenses		105,598			52,826			158,424
Income from Operations	$	33,737		$	17,428		$	51,165
Operating statistics:
Operating ratio		75.8	%		75.2	%		75.6	%
Carloads		195,677			53,831			249,508
Net expenditures for additions to property & equipment	$	14,742		$	27,412		$	42,154
	North American
	& European			Australian			Total
Three Months Ended June 30, 2010	Operations			Operations			Operations
Revenues:
Freight	$	88,421		$	11,773		$	100,194
Non-freight (excluding fuel sales)		38,583			15,432			54,015
Fuel sales to third parties		-			4,244			4,244
Total revenues		127,004			31,449			158,453
Operating expenses:
Labor and benefits		42,877			8,452			51,329
Equipment rents		7,093			1,173			8,266
Purchased services		6,857			6,038			12,895
Depreciation and amortization		10,908			1,544			12,452
Diesel fuel used in operations		9,188			1,417			10,605
Diesel fuel sold to third parties		-			3,910			3,910
Casualties and insurance		2,827			296			3,123
Materials		5,685			319			6,004
Net gain on sale of assets		(1,389	)		(10	)		(1,399	)
Gain on insurance recoveries		-			-			-
Other expenses		11,805			1,590			13,395
Total operating expenses		95,851			24,729			120,580
Income from Operations	$	31,153		$	6,720		$	37,873
Operating statistics:
Operating ratio		75.5	%		78.6	%		76.1	%
Carloads		185,654			32,053			217,707
Net expenditures for additions to property & equipment	$	5,181		$	1,204		$	6,385

GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Three Months Ended June 30, 2011
	North American & European Operations(1)					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(2)	$	120	1,010	$	119	$	21,929	14,213	$	1,543	$	22,049	15,223	$	1,448
Coal & Coke		20,122	47,531		423		-	-		-		20,122	47,531		423
Farm & Food Products		5,871	13,881		423		11,569	18,434		628		17,440	32,315		540
Pulp & Paper		15,480	23,823		650		-	-		-		15,480	23,823		650
Metallic Ores		1,319	2,096		629		12,607	5,855		2,153		13,926	7,951		1,751
Metals		11,686	22,198		526		-	-		-		11,686	22,198		526
Minerals & Stone		9,105	20,127		452		3,408	15,203		224		12,513	35,330		354
Chemicals & Plastics		11,376	15,135		752		-	-		-		11,376	15,135		752
Lumber & Forest Products		8,224	16,961		485		-	-		-		8,224	16,961		485
Petroleum Products		5,255	6,915		760		677	126		5,373		5,932	7,041		842
Autos & Auto Parts		2,203	2,881		765		-	-		-		2,203	2,881		765
Other		5,837	23,119		252		-	-		-		5,837	23,119		252
Totals	$	96,598	195,677	$	494	$	50,190	53,831	$	932	$	146,788	249,508	$	588
(1) We currently do not generate any freight revenues in Europe.
(2) Represents intermodal units
Three Months Ended June 30, 2010
	North American & European Operations(1)					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(2)	$	92	856	$	107	$	-	-	$	-	$	92	856	$	107
Coal & Coke		18,178	44,016		413		-	-		-		18,178	44,016		413
Farm & Food Products		6,038	12,752		473		8,917	16,878		528		14,955	29,630		505
Pulp & Paper		13,180	21,570		611		-	-		-		13,180	21,570		611
Metallic Ores		1,112	2,124		524		-	-		-		1,112	2,124		524
Metals		11,983	23,916		501		-	-		-		11,983	23,916		501
Minerals & Stone		7,985	17,902		446		2,856	15,175		188		10,841	33,077		328
Chemicals & Plastics		9,840	14,262		690		-	-		-		9,840	14,262		690
Lumber & Forest Products		7,609	16,766		454		-	-		-		7,609	16,766		454
Petroleum Products		4,916	6,851		718		-	-		-		4,916	6,851		718
Autos & Auto Parts		2,257	3,013		749		-	-		-		2,257	3,013		749
Other		5,231	21,626		242		-	-		-		5,231	21,626		242
Totals	$	88,421	185,654	$	476	$	11,773	32,053	$	367	$	100,194	217,707	$	460
(1) We currently do not generate any freight revenues in Europe.
(2) Represents intermodal units

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
	Six Months Ended
	June 30,
	2011					2010
				% of					% of
	Amount			Revenue		Amount			Revenue
Revenues:
Freight	$	279,593		69.6	%	$	189,760		62.4	%
Non-freight		121,907		30.4	%		114,272		37.6	%
Total revenues	$	401,500		100.0	%	$	304,032		100.0	%
Operating Expense Comparison:
Natural Classification
Labor and benefits	$	117,048		29.1	%	$	101,517		33.4	%
Equipment rents		21,578		5.4	%		15,915		5.2	%
Purchased services		37,384		9.3	%		23,292		7.7	%
Depreciation and amortization		32,158		8.0	%		24,900		8.2	%
Diesel fuel used in operations		44,027		11.0	%		21,642		7.1	%
Diesel fuel sold to third parties		8,579		2.1	%		7,703		2.5	%
Casualties and insurance		11,666		2.9	%		7,027		2.3	%
Materials		12,673		3.2	%		11,481		3.8	%
Net gain on sale of assets		( 2,098	)	(0.5	%)		( 1,848	)	(0.6	%)
Gain on insurance recoveries		( 1,043	)	(0.3	%)		-		0.0	%
Other expenses		29,160		7.3	%		24,424		8.0	%
Total operating expenses	$	311,132		77.5	%	$	236,053		77.6	%
Functional Classification
Transportation	$	132,646		33.0	%	$	90,399		29.7	%
Maintenance of ways and structures		37,562		9.4	%		26,886		8.8	%
Maintenance of equipment		44,933		11.2	%		35,801		11.8	%
Diesel fuel sold to third parties		8,579		2.1	%		7,703		2.5	%
General and administrative		58,395		14.6	%		52,212		17.2	%
Net gain on sale of assets		( 2,098	)	(0.5	%)		( 1,848	)	(0.6	%)
Gain on insurance recoveries		( 1,043	)	(0.3	%)		-		0.0	%
Depreciation and amortization		32,158		8.0	%		24,900		8.2	%
Total operating expenses	$	311,132		77.5	%	$	236,053		77.6	%

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
	North American
	& European			Australian			Total
Six Months Ended June 30, 2011	Operations			Operations			Operations
Revenues:
Freight	$	187,327		$	92,266		$	279,593
Non-freight (excluding fuel sales)		84,315			28,581			112,896
Fuel sales to third parties		-			9,011			9,011
Total revenues		271,642			129,858			401,500
Operating expenses:
Labor and benefits		92,626			24,422			117,048
Equipment rents		13,006			8,572			21,578
Purchased services		13,482			23,902			37,384
Depreciation and amortization		22,911			9,247			32,158
Diesel fuel used in operations		29,033			14,994			44,027
Diesel fuel sold to third parties		-			8,579			8,579
Casualties and insurance		8,056			3,610			11,666
Materials		11,912			761			12,673
Net gain on sale of assets		(2,084	)		(14	)		(2,098	)
Gain on insurance recoveries		(25	)		(1,018	)		(1,043	)
Other expenses		22,053			7,107			29,160
Total operating expenses		210,970			100,162			311,132
Income from Operations	$	60,672		$	29,696		$	90,368
Operating statistics:
Operating ratio		77.7	%		77.1	%		77.5	%
Carloads		389,907			104,157			494,064
Net expenditures for additions to property & equipment	$	21,811		$	28,554		$	50,365
	North American
	& European			Australian			Total
Six Months Ended June 30, 2010	Operations			Operations			Operations
Revenues:
Freight	$	169,022		$	20,738		$	189,760
Non-freight (excluding fuel sales)		75,218			30,694			105,912
Fuel sales to third parties		-			8,360			8,360
Total revenues		244,240			59,792			304,032
Operating expenses:
Labor and benefits		84,724			16,793			101,517
Equipment rents		13,595			2,320			15,915
Purchased services		12,310			10,982			23,292
Depreciation and amortization		21,823			3,077			24,900
Diesel fuel used in operations		19,276			2,366			21,642
Diesel fuel sold to third parties		-			7,703			7,703
Casualties and insurance		6,405			622			7,027
Materials		10,926			555			11,481
Net gain on sale of assets		(1,846	)		(2	)		(1,848	)
Gain on insurance recoveries		-			-			-
Other expenses		21,863			2,561			24,424
Total operating expenses		189,076			46,977			236,053
Income from Operations	$	55,164		$	12,815		$	67,979
Operating statistics:
Operating ratio		77.4	%		78.6	%		77.6	%
Carloads		361,490			58,939			420,429
Net expenditures for additions to property & equipment	$	5,877		$	4,736		$	10,613

GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Six Months Ended June 30, 2011
	North American & European Operations(1)					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(2)	$	218	1,856	$	117	$	39,762	27,085	$	1,468	$	39,980	28,941	$	1,381
Coal & Coke		38,993	101,735		383		-	-		-		38,993	101,735		383
Farm & Food Products		12,721	28,161		452		21,373	35,036		610		34,094	63,197		539
Pulp & Paper		30,259	48,132		629		-	-		-		30,259	48,132		629
Metallic Ores		2,844	4,874		584		23,272	10,046		2,317		26,116	14,920		1,750
Metals		23,023	44,738		515		-	-		-		23,023	44,738		515
Minerals & Stone		15,399	34,276		449		6,780	31,781		213		22,179	66,057		336
Chemicals & Plastics		21,840	29,484		741		-	-		-		21,840	29,484		741
Lumber & Forest Products		15,613	32,536		480		-	-		-		15,613	32,536		480
Petroleum Products		11,303	14,620		773		1,079	209		5,163		12,382	14,829		835
Autos & Auto Parts		4,349	5,771		754		-	-		-		4,349	5,771		754
Other		10,765	43,724		246		-	-		-		10,765	43,724		246
Totals	$	187,327	389,907	$	480	$	92,266	104,157	$	886	$	279,593	494,064	$	566
(1) We currently do not generate any freight revenues in Europe.
(2) Represents intermodal units
Six Months Ended June 30, 2010
	North American & European Operations(1)					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(2)	$	142	1,311	$	108	$	-	-	$	-	$	142	1,311	$	108
Coal & Coke		37,283	96,154		388		-	-		-		37,283	96,154		388
Farm & Food Products		12,458	26,333		473		15,004	28,192		532		27,462	54,525		504
Pulp & Paper		25,410	41,876		607		-	-		-		25,410	41,876		607
Metallic Ores		2,234	4,616		484		-	-		-		2,234	4,616		484
Metals		21,116	42,174		501		-	-		-		21,116	42,174		501
Minerals & Stone		13,972	31,677		441		5,734	30,747		186		19,706	62,424		316
Chemicals & Plastics		18,592	26,893		691		-	-		-		18,592	26,893		691
Lumber & Forest Products		14,129	31,424		450		-	-		-		14,129	31,424		450
Petroleum Products		10,290	14,302		719		-	-		-		10,290	14,302		719
Autos & Auto Parts		4,023	5,692		707		-	-		-		4,023	5,692		707
Other		9,373	39,038		240		-	-		-		9,373	39,038		240
Totals	$	169,022	361,490	$	468	$	20,738	58,939	$	352	$	189,760	420,429	$	451
(1) We currently do not generate any freight revenues in Europe.
(2) Represents intermodal units

Reconciliation of non-GAAP Financial Measures

This earnings release contains references to free cash flow, which is a "non-GAAP financial measure" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled this non-GAAP financial measure to its most directly comparable U.S. GAAP measure.

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 cash (received)/paid for divestitures/acquisitions and cash paid for acquisition-related expenses. 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):

	Six Months Ended
	June 30,
	2011			2010
Net cash provided by operating activities
from continuing operations	$	52.0		$	73.8
Net cash used in investing activities from
continuing operations (1)		(46.3	)		(7.1	)
Net cash (received)/paid for
divestitures/acquisitions		(0.9	)		-
Cash paid for acquisition-related expenses		13.0			-
Free cash flow	$	17.8		$	66.7
(1) Includes $22.6 million for the investment in new Australian locomotives in 2011