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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2010, or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from ____ to _____
 Commission file number 001-32579
 
 RAILAMERICA, INC.
  Delaware
    
    65-0328006(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)7411 Fullerton Street, Suite 300, Jacksonville, Florida
    
    32256(Address of principal executive offices)
    
    (Zip Code)
   TITLE OF EACH CLASS
    
    NAME OF EACH EXCHANGE ON WHICH REGISTEREDCommon Stock, $.01 Par Value
    
    New York Stock Exchange
  o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)




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##### 



PAGEPART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    21Item 2. Properties
    
    
    21Item 3. Legal Proceedings
    
    
    23Item 4. Removed and Reserved
    
    
    23PART IIItem 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    26Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    27Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 8. Financial Statements and Supplementary Data
    
    
    43Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    43Item 9A. Controls and Procedures
    
    
    44Item 9B. Other Information
    
    
    44PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    45Item 11. Executive Compensation
    
    
    45Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    45Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    45Item 14. Principal Accountant Fees and Services
    
    
    45PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    46Signatures
    
    
    48EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I
 
 ITEM 1. BUSINESS
 OVERVIEW
   http://www.sec.gov
 3




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BUSINESS STRATEGY
  Growing freight revenue:
 Expanding our non-freight services and revenue:
 Pursuing opportunistic acquisitions:
 Continuing to improve operating efficiency and lowering costs:
 INDUSTRY OVERVIEW
  Industry Structure
  4




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AggregateMiles
    
    
    % ofClassification of Railroads
    
    
    Number
    
    
    Operated
    
    
    Revenue
    
    
    Revenues and Miles Operated in 2009Class I (1)
    
    
    7
    
    
    
    93,921
    
    
    
    93
    %
    
    Over $378.8 millionRegional
    
    
    23
    
    
    
    12,804
    
    
    
    3
    %
    
    $30.3 to $378.8 million and/or 350 or more miles operated with a minimum revenue of $20 millionLocal/Short line
    
    
    533
    
    
    
    32,393
    
    
    
    4
    %
    
    Less than $30.3 million and/or less than 350 miles or more than 350 miles and less than $20 million in revenueTotal
    
    
    563
    
    
    
    139,118
    
    
    
    100
    %
 
 (1)
    
    Includes CSX Transportation, BNSF Railway Co., Norfolk Southern,
Kansas City Southern Railway Company, Union Pacific, Canadian National
Railway and Canadian Pacific Railroad Co. Railroad Facts, 2010 Edition.
   Regional and Short line Railroads
    5




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RAIL TRAFFIC
 Revenue Model
  % of FreightService Type
    
    
    Description
    
    RevenueInterchange
    
    Freight transport between a customers facility and a connection point with a Class I railroad
    
    
    87
    %Local
    
    Freight that both originates and terminates on the same line
    
    
    4
    %Bridge
    
    Freight transport from one connecting Class I railroad to another
    
    
    9
    %
    Freight Revenue
 Commodities
  6




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##### Table of Contents



Year ended December 31, 2010
    
    
    Year ended December 31, 2009Average Freight
    
    
    
    
    
    
    
    
    
    
    Average FreightFreight
    
    
    
    
    
    
    Revenue per
    
    
    Freight
    
    
    
    
    
    
    Revenue perRevenue
    
    
    Carloads
    
    
    Carload
    
    
    Revenue
    
    
    Carloads
    
    
    Carload(Dollars in thousands, except average freight revenue per carload)Agricultural Products
    
    $
    63,999
    
    
    
    132,952
    
    
    $
    481
    
    
    $
    56,458
    
    
    
    126,683
    
    
    $
    446Chemicals
    
    
    59,038
    
    
    
    96,105
    
    
    
    614
    
    
    
    47,475
    
    
    
    82,083
    
    
    
    578Coal
    
    
    39,880
    
    
    
    178,735
    
    
    
    223
    
    
    
    36,914
    
    
    
    178,028
    
    
    
    207Metallic Ores and Metals
    
    
    37,825
    
    
    
    66,626
    
    
    
    568
    
    
    
    23,819
    
    
    
    41,602
    
    
    
    573Pulp, Paper and Allied Products
    
    
    37,379
    
    
    
    65,308
    
    
    
    572
    
    
    
    32,339
    
    
    
    62,816
    
    
    
    515Non-Metallic Minerals and Products
    
    
    34,646
    
    
    
    80,376
    
    
    
    431
    
    
    
    31,622
    
    
    
    75,766
    
    
    
    417Food or Kindred Products
    
    
    28,027
    
    
    
    56,812
    
    
    
    493
    
    
    
    25,386
    
    
    
    52,298
    
    
    
    485Forest Products
    
    
    27,017
    
    
    
    47,048
    
    
    
    574
    
    
    
    26,698
    
    
    
    46,999
    
    
    
    568Waste and Scrap Materials
    
    
    23,765
    
    
    
    57,121
    
    
    
    416
    
    
    
    20,232
    
    
    
    53,706
    
    
    
    377Petroleum
    
    
    19,542
    
    
    
    41,952
    
    
    
    466
    
    
    
    19,433
    
    
    
    41,960
    
    
    
    463Other
    
    
    10,937
    
    
    
    29,883
    
    
    
    366
    
    
    
    17,737
    
    
    
    49,613
    
    
    
    358Motor Vehicles
    
    
    6,694
    
    
    
    11,553
    
    
    
    579
    
    
    
    6,454
    
    
    
    17,458
    
    
    
    370Total
    
    $
    388,749
    
    
    
    864,471
    
    
    $
    450
    
    
    $
    344,567
    
    
    
    829,012
    
    
    $
    416
 Customers
  Pricing
   Contracts
  Contracts directly with customers/shippers:
 Contracts directly with Class I railroads:
 7




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Published rate, no contract:
 Non-Freight Revenue
  Competition
    EMPLOYEES
  SAFETY
  8




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ENVIRONMENTAL
       INSURANCE
   9




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REGULATION
 United States.
    Canada.
  10




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RAILROAD RETIREMENT
  
 ITEM 1A. RISK FACTORS
 Risks Related to Our Business
 Volatile macroeconomic and business conditions have and could continue to impact our business
negatively.
   Rising fuel costs could materially adversely affect our business.
  11




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As part of our railroad operations, we frequently transport hazardous materials, the accidental
release of which could have a material adverse effect on our operating results.
  Some of our employees belong to labor unions and strikes or work stoppages could materially
adversely affect our operations.
  Because we depend on Class I railroads and certain important customers for our operations, our
business and financial results may be materially adversely affected if our relationships with Class
I carriers and certain important customers deteriorate.
   If the track maintenance tax credit is not renewed by Congress past December 31, 2011, we will not
be able to earn or assign credits for track maintenance, after such date.
  12




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We are subject to the risks of doing business in Canada, including changes in Canadian economic
conditions, exchange rate fluctuations and other economic uncertainties.
  
 
 
  We are subject to environmental and other governmental regulation of our railroad operations which
could impose significant costs.
    Severe weather and natural disasters could disrupt normal business operations, which could result
in increased costs and liabilities and decreases in revenues.
  We face possible catastrophic loss and liability and our insurance may not be sufficient to cover
our damages or damages to others.
  13




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We may face liability for casualty losses which are not covered by insurance.
  We depend on our management and key personnel, and we may not be able to operate or grow our
business effectively if we lose the services of our management or key personnel or are unable to
attract qualified personnel in the future.
  Future acts of terrorism or war, as well as the threat of acts of terrorism or war, may cause
significant disruptions in our business operations.
  The availability of qualified personnel and an aging workforce may materially adversely affect our
operations.
  14




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We have a substantial amount of indebtedness, which may materially adversely affect our cash flow
and our ability to operate our business, including our ability to incur additional indebtedness.
   
 
 
 
 
   Our inability to acquire or integrate acquired businesses successfully or to realize the
anticipated cost savings and other benefits of acquisitions could have materially adverse
consequences to our business.
  
 
 15




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
 
 
 
   An impairment in the carrying value of goodwill could negatively impact our consolidated results of
operations and net worth.
    Future compensation expense may materially adversely affect our net income.
  16




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Year Ended
    
    
    Year EndedDecember 31, 2010
    
    
    December 31, 2009Net Income
    
    $
    19,117
    
    
    $
    15,842Executive Compensation Cost(1)
    
    $
    6,003
    
    
    $
    5,441
 
 (1)
    
    Executive Compensation Cost is computed in the manner computed for
purposes of the Summary Compensation Table for 2010 to be included in
our 2011 proxy statement. Risks Related to Our Organization and Structure
 If the ownership of our common stock continues to be highly concentrated, it may prevent minority
stockholders from influencing significant corporate decisions and may result in conflicts of
interest.
  We are a holding company with no operations and rely on our operating subsidiaries to provide us
with funds necessary to meet our financial obligations and to pay dividends.
  We do not anticipate paying any dividends on our common stock in the foreseeable future.
  Certain provisions of our stockholders agreement, our amended and restated certificate of
incorporation and our amended and restated bylaws could hinder, delay or prevent a change in
control of RailAmerica, which could materially adversely affect the price of our common stock.
  17




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
 
 
 
 
 
 
 
  Certain of our stockholders have the right to engage or invest in the same or similar businesses as
us.
   18




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Risks Related to our Common Stock
 The market price and trading volume of our common stock may be volatile, which could result in
rapid and substantial losses for our stockholders.
  
    
    variations in our quarterly or annual operating results;
    
    changes in our earnings estimates (if provided) or differences between our actual
financial and operating results and those expected by investors and analysts;
    
    the contents of published research reports about us or our industry or the failure of
securities analysts to cover our common stock;
    
    litigation and governmental investigations;
    
    changes in market valuations of similar companies;
    
    speculation or reports by the press or investment community with respect to us or our
industry in general;
    
    increases in market interest rates that may lead purchasers of our shares to seek
higher returns;
    
    announcements by us or our competitors of significant contracts, acquisitions,
dispositions, strategic partnerships, joint ventures or capital commitments;
    
    changes or proposed changes in laws or regulations affecting the railroad industry or
enforcement of these laws and regulations, or announcements relating to these matters; and
    
    general market, political and economic conditions, including any such conditions and
local conditions in the markets in which our customers are located.
  Future offerings of debt or equity securities by us may materially adversely affect the market
price of our common stock.
  19




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The market price of our common stock could be negatively affected by sales of substantial amounts
of our common stock in the public markets
   The future issuance of additional common stock in connection with our incentive plans, acquisitions
or otherwise will dilute all other shareholdings.
  We cannot assure you that our stock repurchase program will enhance long-term stockholder value and
stock repurchases, if any, could increase the volatility of the price of our common stock and will
diminish our cash reserves.
  Risks Related to Taxation
 Our ability to use net operating loss and tax credit carryovers and certain built-in losses to
reduce future tax payments is limited by provisions of the Internal Revenue Code.
  20




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Gain recognized by Non-U.S. Holders on the sale or other disposition of our common stock may be
subject to U.S. federal income tax.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  21




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No. of
    
    Track-Name
    
    Railroads
    
    Miles
    
    
    Major Commodities HauledCentral Region:Missouri & Northern Arkansas Railroad
    
    1
    
    
    594
    
    
    Coal, Agricultural ProductsConsolidated Dallas Railroads
    
    2
    
    
    337
    
    
    Non-Metallic Minerals and ProductsKyle Railroad Company
    
    1
    
    
    625
    
    
    Agricultural ProductsKiamichi Railroad
    
    1
    
    
    261
    
    
    Coal, Non-Metallic Minerals and ProductsPoint Comfort & Northern Railway
    
    1
    
    
    19
    
    
    Metallic Ores and MetalsOtter Tail Valley Railroad
    
    1
    
    
    80
    
    
    Agricultural Products, CoalRockdale, Sandow & Southern Railroad
    
    1
    
    
    8
    
    
    Waste and Scrap Materials, Metallic Ores and MetalsBauxite & Northern Railway
    
    1
    
    
    6
    
    
    Metallic & Non-Metallic OresTotal  Central Region
    
    9
    
    
    1,930Northeast Region:New England Central Railroad
    
    1
    
    
    396
    
    
    Forest Products, Non-Metallic Minerals and ProductsOttawa Valley Railway
    
    1
    
    
    179
    
    
    Pulp, Paper and Allied ProductsCape Breton & Central Nova Scotia Railway
    
    1
    
    
    295
    
    
    Pulp, Paper and Allied Products, CoalGoderich-Exeter Railway
    
    1
    
    
    181
    
    
    Chemicals, Agricultural ProductsSouthern Ontario Railway
    
    1
    
    
    46
    
    
    Petroleum, ChemicalsConnecticut Southern Railroad
    
    1
    
    
    42
    
    
    Waste and Scrap Materials, OtherMassena Terminal Railroad
    
    1
    
    
    4
    
    
    Metallic Ores and MetalsTotal  Northeast Region
    
    7
    
    
    1,143Midwest Region:Indiana & Ohio Railway
    
    1
    
    
    570
    
    
    Agricultural Products, Motor VehiclesChicago, Ft. Wayne & Eastern Railroad
    
    1
    
    
    311
    
    
    Agricultural Products, ChemicalsHuron and Eastern Railway
    
    1
    
    
    384
    
    
    Agricultural Products, ChemicalsToledo, Peoria & Western Railway
    
    1
    
    
    247
    
    
    Agricultural Products, ChemicalsConsolidated Michigan Railroads
    
    3
    
    
    184
    
    
    Agricultural Products, Non-Metallic Minerals and ProductsCentral Railroad Company of Indiana
    
    1
    
    
    96
    
    
    Motor Vehicles, Non-Metallic Minerals and ProductsCentral Railroad Company of Indianapolis
    
    1
    
    
    64
    
    
    Agricultural ProductsTotal  Midwest Region
    
    9
    
    
    1,856Southeast Region:Alabama & Gulf Coast Railway
    
    1
    
    
    348
    
    
    Pulp, Paper and Allied ProductsConsolidated Virginia Railroads
    
    2
    
    
    140
    
    
    Metallic Ores and Metals, Waste and Scrap MaterialsSouth Carolina Central Railroad
    
    2
    
    
    129
    
    
    Waste and Scrap Materials, Metallic Ores and MetalsIndiana Southern Railroad
    
    1
    
    
    196
    
    
    CoalEastern Alabama Railway
    
    1
    
    
    31
    
    
    Non-Metallic Minerals and ProductsTotal  Southeast Region
    
    7
    
    
    844Western Region:Central Oregon & Pacific Railroad
    
    1
    
    
    394
    
    
    Forest ProductsSan Joaquin Valley Railroad
    
    1
    
    
    382
    
    
    Food or Kindred Products, PetroleumCalifornia Northern Railroad
    
    1
    
    
    261
    
    
    Food or Kindred ProductsArizona & California Railroad
    
    1
    
    
    203
    
    
    Petroleum, Non-Metallic Minerals and ProductsPuget Sound & Pacific Railroad
    
    1
    
    
    108
    
    
    Waste and Scrap Materials, Agricultural ProductsSan Diego and Imperial Valley Railroad (1)
    
    1
    
    
    
    
    
    PetroleumCascade & Columbia River Railroad
    
    1
    
    
    148
    
    
    Non-Metallic Minerals and Products, Forest ProductsVentura County Railroad
    
    1
    
    
    17
    
    
    Motor VehiclesTotal  Western Region
    
    8
    
    
    1,513Total Company
    
    40
    
    
    7,286
 
 (1)
    
    No track miles shown as this railroad is exclusively under an
operating agreement. 22




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Track and Equipment
 Track
  Locomotives and Railcars
   RailcarsOwned
    
    
    Leased
    
    
    TotalCovered hopper cars
    
    
    35
    
    
    
    3,192
    
    
    
    3,227Open top hopper cars
    
    
    238
    
    
    
    30
    
    
    
    268Box cars
    
    
    35
    
    
    
    2,623
    
    
    
    2,658Flat cars
    
    
    194
    
    
    
    759
    
    
    
    953Tank cars
    
    
    6
    
    
    
    4
    
    
    
    10Gondolas
    
    
    5
    
    
    
    540
    
    
    
    545Other/passenger cars
    
    
    11
    
    
    
    0
    
    
    
    11Total railcars
    
    
    524
    
    
    
    7,148
    
    
    
    7,672
 LocomotivesOwned
    
    
    Leased
    
    
    TotalHorsepower/unit:Over 3,000
    
    
    101
    
    
    
    101
    
    
    
    2022,000 to 2,999
    
    
    92
    
    
    
    81
    
    
    
    173Under 2,000
    
    
    54
    
    
    
    32
    
    
    
    86Total locomotives
    
    
    247
    
    
    
    214
    
    
    
    461
 
 ITEM 3. LEGAL PROCEEDINGS
    
 ITEM 4. (REMOVED AND RESERVED)
 23




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  Our Principal Stockholder
  Description of Common Stock
   Stock Market Results
  2009
    
    High Sales Price
    
    
    Low Sales PriceFourth Quarter (October 13 through December 31)
    
    $
    14.78
    
    
    $
    10.91
 2010
    
    High Sales Price
    
    
    Low Sales PriceFirst Quarter
    
    $
    14.47
    
    
    $
    10.94Second Quarter
    
    $
    13.61
    
    
    $
    9.73Third Quarter
    
    $
    11.60
    
    
    $
    9.27Fourth Quarter
    
    $
    13.13
    
    
    $
    9.16
 2011
    
    High Sales Price
    
    
    Low Sales PriceFirst
Quarter (January through March 3)
    
    $
    15.70
    
    
    $
    12.06
 Stock Repurchase Program
  24




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Stock Performance Graph
  COMPARISON OF 14 MONTH CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 10/13/09 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. 25




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ITEM 6. SELECTED FINANCIAL DATA
     Predecessor
    
    
    SuccessorYear ended
    
    
    Period from January
1,2007 to
    
    
    Period
fromFebruary 15, 2007 toDecember 31,
    
    
    February 14,
    
    
    December 31,
    
    
    Year ended December 31,2006
    
    
    2007
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010STATEMENT OF OPERATIONS DATA:Operating revenue
    
    $
    462,580
    
    
    $
    55,766
    
    
    $
    424,154
    
    
    $
    508,466
    
    
    $
    425,774
    
    
    $
    490,291Operating expenses
    
    
    412,577
    
    
    
    57,157
    
    
    
    355,776
    
    
    
    422,418
    
    
    
    311,569
    
    
    
    375,784Operating income (loss)
    
    
    50,003
    
    
    
    (1,391
    )
    
    
    68,378
    
    
    
    86,048
    
    
    
    114,205
    
    
    
    114,507Interest expense, including amortization costs
    
    
    (27,392
    )
    
    
    (3,275
    )
    
    
    (42,996
    )
    
    
    (61,678
    )
    
    
    (86,878
    )
    
    
    (83,775
    )Other income (loss)
    
    
    
    
    
    
    284
    
    
    
    7,129
    
    
    
    (9,008
    )
    
    
    (8,117
    )
    
    
    (4,759
    )Income (loss) from continuing operations
before income taxes
    
    
    22,611
    
    
    
    (4,382
    )
    
    
    32,511
    
    
    
    15,362
    
    
    
    19,210
    
    
    
    25,973(Benefit from) provision for income taxes
    
    
    (4,809
    )
    
    
    935
    
    
    
    (1,747
    )
    
    
    1,599
    
    
    
    16,299
    
    
    
    6,856Income (loss) from continuing operations
    
    
    27,420
    
    
    
    (5,317
    )
    
    
    34,258
    
    
    
    13,763
    
    
    
    2,911
    
    
    
    19,117Discontinued operations
    
    
    9,223
    
    
    
    
    
    
    
    (756
    )
    
    
    2,764
    
    
    
    12,931
    
    
    
    Net income (loss)
    
    $
    36,643
    
    
    $
    (5,317
    )
    
    $
    33,502
    
    
    $
    16,527
    
    
    $
    15,842
    
    
    $
    19,117Dividends declared and paid per common share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.46
    
    
    $
    Income (loss) from continuing operations per
share of common stock:Basic
    
    $
    0.71
    
    
    $
    (0.14
    )
    
    $
    0.80
    
    
    $
    0.32
    
    
    $
    0.07
    
    
    $
    0.35Diluted
    
    $
    0.70
    
    
    $
    (0.14
    )
    
    $
    0.80
    
    
    $
    0.32
    
    
    $
    0.07
    
    
    $
    0.35OPERATING DATA:Freight carloads (continuing operations)
    
    
    1,238,182
    
    
    
    141,006
    
    
    
    1,021,657
    
    
    
    1,056,710
    
    
    
    829,012
    
    
    
    864,471
 Predecessor
    
    
    SuccessorAs of December 31,
    
    
    As of December 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010BALANCE SHEET DATA:Total assets
    
    $
    1,125,732
    
    
    $
    1,483,239
    
    
    $
    1,470,447
    
    
    $
    1,598,629
    
    
    $
    1,603,653Long-term debt, including current maturities
    
    
    400,638
    
    
    
    636,941
    
    
    
    629,580
    
    
    
    643,778
    
    
    
    573,711Stockholders equity
    
    
    472,249
    
    
    
    512,749
    
    
    
    471,520
    
    
    
    659,331
    
    
    
    704,749
 26




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This managements discussion and analysis of financial condition and results of operations
contains forward-looking statements that involve risks, uncertainties and assumptions. You should
read the following discussion in conjunction with our historical consolidated financial statements
and the notes thereto. The results of operations for the periods reflected herein are not
necessarily indicative of results that may be expected for future periods.
 In October 2010, we entered into a new agreement with Canadian Pacific Railway Company (CP)
to operate portions of the Ottawa Valley Railway (OVRR) line, a previously discontinued
operation. As a result of this new operating agreement, this railroad is no longer considered
discontinued for financial statement presentation purposes and thus, the results of operations of
the OVRR have been reclassified to continuing operations on our statement of operations for all
periods presented.
 General
 Our Business
  Recent Acquisitions and Business Development
   Managing Business Performance
      27




---



##### Table of Contents



Commodity Mix
  Overview
       28




---



##### Table of Contents



Results of Operations
 Comparison of Operating Results for the Years ended December 31, 2010 and 2009
  Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009Operating revenue
    
    $
    490,291
    
    
    
    100.0
    %
    
    $
    425,774
    
    
    
    100.0
    %Operating expenses:Labor and benefits
    
    
    153,993
    
    
    
    31.4
    %
    
    
    143,604
    
    
    
    33.7
    %Equipment rents
    
    
    34,119
    
    
    
    7.0
    %
    
    
    35,978
    
    
    
    8.5
    %Purchased services
    
    
    37,971
    
    
    
    7.7
    %
    
    
    30,914
    
    
    
    7.3
    %Diesel fuel
    
    
    43,316
    
    
    
    8.8
    %
    
    
    33,290
    
    
    
    7.8
    %Casualties and insurance
    
    
    17,574
    
    
    
    3.6
    %
    
    
    16,795
    
    
    
    3.9
    %Materials
    
    
    19,607
    
    
    
    4.0
    %
    
    
    11,399
    
    
    
    2.7
    %Joint facilities
    
    
    8,667
    
    
    
    1.8
    %
    
    
    6,942
    
    
    
    1.6
    %Other expenses
    
    
    35,226
    
    
    
    7.2
    %
    
    
    33,037
    
    
    
    7.8
    %Track maintenance expense reimbursement
    
    
    (17,589
    )
    
    
    -3.6
    %
    
    
    (16,656
    )
    
    
    -3.9
    %Net gain on sale of assets
    
    
    (2,191
    )
    
    
    -0.5
    %
    
    
    (25,839
    )
    
    
    -6.1
    %Depreciation and amortization
    
    
    45,091
    
    
    
    9.2
    %
    
    
    42,105
    
    
    
    9.9
    %Total operating expenses
    
    
    375,784
    
    
    
    76.6
    %
    
    
    311,569
    
    
    
    73.2
    %Operating income
    
    
    114,507
    
    
    
    23.4
    %
    
    
    114,205
    
    
    
    26.8
    %Interest expense, including amortization costs
    
    
    (83,775
    )
    
    
    
    
    
    
    (86,878
    )Other income (loss)
    
    
    (4,759
    )
    
    
    
    
    
    
    (8,117
    )Income from continuing operations before income taxes
    
    
    25,973
    
    
    
    
    
    
    
    19,210Provision for income taxes
    
    
    6,856
    
    
    
    
    
    
    
    16,299Income from continuing operations
    
    
    19,117
    
    
    
    
    
    
    
    2,911Discontinued operations:Gain on disposal of discontinued business
    
    
    
    
    
    
    
    
    
    
    12,931Net income
    
    $
    19,117
    
    
    
    
    
    
    $
    15,842
 Operating Revenue
     Year ended December 31, 2010
    
    
    Year ended December 31, 2009Average Freight
    
    
    
    
    
    
    
    
    
    
    Average FreightFreight
    
    
    
    
    
    
    Revenue per
    
    
    Freight
    
    
    
    
    
    
    Revenue perRevenue
    
    
    Carloads
    
    
    Carload
    
    
    Revenue
    
    
    Carloads
    
    
    Carload(Dollars in thousands, except average freight revenue per carload)Industrial Products
    
    $
    195,180
    
    
    
    368,548
    
    
    $
    530
    
    
    $
    167,489
    
    
    
    349,238
    
    
    $
    480Agricultural Products
    
    
    92,026
    
    
    
    189,764
    
    
    
    485
    
    
    
    81,844
    
    
    
    178,981
    
    
    
    457Construction Products
    
    
    61,663
    
    
    
    127,424
    
    
    
    484
    
    
    
    58,320
    
    
    
    122,765
    
    
    
    475Coal
    
    
    39,880
    
    
    
    178,735
    
    
    
    223
    
    
    
    36,914
    
    
    
    178,028
    
    
    
    207Total
    
    $
    388,749
    
    
    
    864,471
    
    
    $
    450
    
    
    $
    344,567
    
    
    
    829,012
    
    
    $
    416
 29




---



##### Table of Contents




 
 
 
 Operating Expenses
   
 
 
 
 
 
 
 30




---



##### Table of Contents




 
 
 
 Other Income (Expense) Items
 Interest Expense. Derivatives and Hedging Topic
 Other Loss.
 Income Taxes.
 Discontinued Operations.
  31




---



##### Table of Contents



Comparison of Operating Results for the Years Ended December 31, 2009 and 2008
  Year Ended December 31,2009
    
    
    2008Operating revenue
    
    $
    425,774
    
    
    
    100.0
    %
    
    $
    508,466
    
    
    
    100.0
    %Operating expenses:Labor and benefits
    
    
    143,604
    
    
    
    33.7
    %
    
    
    148,789
    
    
    
    29.3
    %Equipment rents
    
    
    35,978
    
    
    
    8.5
    %
    
    
    45,020
    
    
    
    8.9
    %Purchased services
    
    
    30,914
    
    
    
    7.3
    %
    
    
    38,792
    
    
    
    7.6
    %Diesel fuel
    
    
    33,290
    
    
    
    7.8
    %
    
    
    69,974
    
    
    
    13.8
    %Casualties and insurance
    
    
    16,795
    
    
    
    3.9
    %
    
    
    22,041
    
    
    
    4.3
    %Materials
    
    
    11,399
    
    
    
    2.7
    %
    
    
    10,663
    
    
    
    2.1
    %Joint facilities
    
    
    6,942
    
    
    
    1.6
    %
    
    
    12,573
    
    
    
    2.5
    %Other expenses
    
    
    33,037
    
    
    
    7.8
    %
    
    
    33,265
    
    
    
    6.5
    %Track maintenance expense reimbursement
    
    
    (16,656
    )
    
    
    -3.9
    %
    
    
    
    
    
    
    Net gain on sale of assets
    
    
    (25,839
    )
    
    
    -6.1
    %
    
    
    (1,697
    )
    
    
    -0.3
    %Impairment of assets
    
    
    
    
    
    
    
    
    
    
    3,420
    
    
    
    0.6
    %Depreciation and amortization
    
    
    42,105
    
    
    
    9.9
    %
    
    
    39,578
    
    
    
    7.8
    %Total operating expenses
    
    
    311,569
    
    
    
    73.2
    %
    
    
    422,418
    
    
    
    83.1
    %Operating income
    
    
    114,205
    
    
    
    26.8
    %
    
    
    86,048
    
    
    
    16.9
    %Interest expense, including amortization costs
    
    
    (86,878
    )
    
    
    
    
    
    
    (61,678
    )Other loss
    
    
    (8,117
    )
    
    
    
    
    
    
    (9,008
    )Income from continuing operations before income taxes
    
    
    19,210
    
    
    
    
    
    
    
    15,362Provision for income taxes
    
    
    16,299
    
    
    
    
    
    
    
    1,599Income from continuing operations
    
    
    2,911
    
    
    
    
    
    
    
    13,763Discontinued operations:Gain on disposal of discontinued business
    
    
    12,931
    
    
    
    
    
    
    
    2,764Net income
    
    $
    15,842
    
    
    
    
    
    
    $
    16,527
 Operating Revenue
    32




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##### Table of Contents



Year Ended December 31, 2009
    
    
    Year Ended December 31, 2008Average Freight
    
    
    
    
    
    
    
    
    
    
    Average FreightFreight
    
    
    
    
    
    
    Revenue per
    
    
    Freight
    
    
    
    
    
    
    Revenue perRevenue
    
    
    Carloads
    
    
    Carload
    
    
    Revenue
    
    
    Carloads
    
    
    Carload(Dollars in thousands, except average freight revenue per carload)Industrial Products
    
    $
    167,489
    
    
    
    349,238
    
    
    $
    480
    
    
    $
    236,375
    
    
    
    515,348
    
    
    $
    459Agricultural Products
    
    
    81,844
    
    
    
    178,981
    
    
    
    457
    
    
    
    87,480
    
    
    
    198,406
    
    
    
    441Construction Products
    
    
    58,320
    
    
    
    122,765
    
    
    
    475
    
    
    
    78,822
    
    
    
    165,109
    
    
    
    477Coal
    
    
    36,914
    
    
    
    178,028
    
    
    
    207
    
    
    
    37,364
    
    
    
    177,847
    
    
    
    210Total
    
    $
    344,567
    
    
    
    829,012
    
    
    $
    416
    
    
    $
    440,041
    
    
    
    1,056,710
    
    
    $
    416
  
 
 
 
 Operating Expenses
   
 33




---



##### Table of Contents




 
 
 
 
 
 
 
 
 
 
 Other Income (Expense) Items
 Interest Expense.
 34




---



##### Table of Contents



Derivatives and Hedging Topic
 Other Income (Loss).
 Income Taxes.
 Discontinued Operations.
  Liquidity and Capital Resources
  35




---



##### Table of Contents



Operating Activities
   Investing Activities
   Financing Activities
   Working Capital
  36




---



##### Table of Contents



Capital Expenditures
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(amounts in thousands)Ties
    
    $
    19,594
    
    
    $
    19,472
    
    
    $
    21,822Bridges
    
    
    8,309
    
    
    
    7,328
    
    
    
    7,127Surfacing
    
    
    5,817
    
    
    
    5,358
    
    
    
    5,424Rail
    
    
    12,173
    
    
    
    3,521
    
    
    
    3,909Crossings
    
    
    3,379
    
    
    
    3,086
    
    
    
    2,746Turnouts
    
    
    896
    
    
    
    1,306
    
    
    
    734Signals
    
    
    1,858
    
    
    
    1,258
    
    
    
    1,194Other
    
    
    
    
    
    
    632
    
    
    
    647Casualty related
    
    
    1,800
    
    
    
    92
    
    
    
    5,217NECR grant reimbursements
    
    
    (4,884
    )
    
    
    
    
    
    
    Capital reimbursements
    
    
    (4,686
    )
    
    
    (5,478
    )
    
    
    Total
    
    $
    44,256
    
    
    $
    36,575
    
    
    $
    48,820
   Year Ended December 31,2010
    
    
    2009
    
    
    2008Ties (each, in thousands)Installed
    
    
    
    
    
    
    3
    
    
    
    Replaced
    
    
    346
    
    
    
    346
    
    
    
    362Rail (miles)Installed
    
    
    
    
    
    
    1
    
    
    
    Replaced
    
    
    22
    
    
    
    16
    
    
    
    14Surfaced (miles)
    
    
    768
    
    
    
    873
    
    
    
    942
 Long-term Debt
 $740 million 9.25% Senior Secured Notes
  37




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##### Table of Contents



$40 million ABL Facility
    Covenants to Senior Secured Notes and ABL Facility
    38




---



##### Table of Contents



Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities to
Adjusted EBITDA Reconciliation:Net cash provided by operating activities
    
    $
    117,169
    
    
    $
    9,540
    
    
    $
    83,572Changes in working capital accounts
    
    
    (10,849
    )
    
    
    32,850
    
    
    
    (11,524
    )Depreciation and amortization, including
amortization of debt issuance costs
classified in interest expense
    
    
    (49,847
    )
    
    
    (52,340
    )
    
    
    (49,118
    )Amortization of swap termination costs
    
    
    (20,891
    )
    
    
    (16,616
    )
    
    
    Net gain on sale or disposal of properties
    
    
    2,191
    
    
    
    26,766
    
    
    
    1,738Foreign exchange gain (loss) on debt
    
    
    
    
    
    
    1,160
    
    
    
    (8,260
    )Swap termination costs
    
    
    
    
    
    
    55,750
    
    
    
    Loss on extinguishment of debt
    
    
    (8,357
    )
    
    
    (9,499
    )
    
    
    Equity compensation costs
    
    
    (7,534
    )
    
    
    (10,712
    )
    
    
    (3,042
    )Deferred income taxes
    
    
    (2,765
    )
    
    
    (21,057
    )
    
    
    3,161Net income
    
    
    19,117
    
    
    
    15,842
    
    
    
    16,527Add: Discontinued operations gain
    
    
    
    
    
    
    (12,931
    )
    
    
    (2,764
    )Income from continuing operations
    
    
    19,117
    
    
    
    2,911
    
    
    
    13,763Add:Provision for income taxes
    
    
    6,856
    
    
    
    16,299
    
    
    
    1,599Interest expense, including amortization costs
    
    
    83,775
    
    
    
    86,878
    
    
    
    61,678Depreciation and amortization
    
    
    45,091
    
    
    
    42,105
    
    
    
    39,578EBITDA
    
    
    154,839
    
    
    
    148,193
    
    
    
    116,618Add:Impairment of assets
    
    
    
    
    
    
    
    
    
    
    3,420Equity compensation costs
    
    
    7,534
    
    
    
    10,712
    
    
    
    3,042Foreign exchange (gain) loss on debt
    
    
    
    
    
    
    (1,160
    )
    
    
    8,260Loss on extinguishment of debt
    
    
    8,357
    
    
    
    9,499
    
    
    
    Acquisition income, net of expense
    
    
    (1,300
    )
    
    
    
    
    
    
    Gain on OVRR lease termination
    
    
    
    
    
    
    (26,811
    )
    
    
    Non-recurring headquarter relocation costs
    
    
    
    
    
    
    1,403
    
    
    
    6,089Adjusted EBITDA
    
    $
    169,430
    
    
    $
    141,836
    
    
    $
    137,429
 39




---



##### Table of Contents



$650 million Bridge Credit Facility
    Interest Rate Swaps
  40




---



##### Table of Contents



Fair Value Measurements and Disclosures
Topic
 Off-Balance Sheet Arrangements
  Contractual Obligations
  AfterTotal
    
    
    2011
    
    
    2012-2013
    
    
    2014-2015
    
    
    2015Senior secured notes
    
    $
    592,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    592,000Other long term debt
    
    
    2,527
    
    
    
    380
    
    
    
    605
    
    
    
    678
    
    
    
    864Interest payments on senior secured notes
    
    
    355,940
    
    
    
    54,760
    
    
    
    109,520
    
    
    
    109,520
    
    
    
    82,140Interest payments on long term debt
    
    
    768
    
    
    
    157
    
    
    
    254
    
    
    
    274
    
    
    
    83Capital lease obligations
    
    
    25
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    57,466
    
    
    
    17,318
    
    
    
    16,801
    
    
    
    5,021
    
    
    
    18,326Total contractual cash obligations(1)
    
    $
    1,008,726
    
    
    $
    72,640
    
    
    $
    127,180
    
    
    $
    115,493
    
    
    $
    693,413
 
 (1)
    
    There were no material purchase obligations outstanding as of December
31, 2010. Table excludes any reserves for income taxes under Income
Taxes Topic, ASC 740-10-25, because we are unable to reasonably
predict the ultimate amount or timing of settlement of our
unrecognized tax benefits beyond 2010. As of December 31, 2010, our
reserves for income taxes totaled approximately $5.5 million. Critical Accounting Policies and Use of Estimates
   Contingencies Topic
 41




---



##### Table of Contents



Intangibles- Goodwill and Other Topic,
    42




---



##### Table of Contents



Recently Issued Accounting Pronouncements
 Improving Disclosures
about Fair Value Measurements
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency.
 Interest Rates.
 Diesel Fuel.
 Counterparty Risk.
 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  43




---



##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES
  Internal Control  Integrated Framework
  
 ITEM 9B. OTHER INFORMATION
  44




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  45




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    The financial statements filed as part of this report are listed separately in the
Index of Financial Statements on page F-1 of this report.The information required by Schedule II, Valuation and Qualifying Accounts, is included in
Note 1 to the Consolidated Financial Statements. All other Financial Statement schedules are not applicable.(b)
    
    Exhibits
 ExhibitNo.
    
    Description3.1
    
    
    Amended and Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to RailAmerica, Inc.s Form
S-4 (File No. 333-162575) filed on October 20, 2009).3.2
    
    
    Amended and Restated Bylaws of the Registrant (incorporated by reference
to Exhibit 3.2 to RailAmerica, Inc.s Form S-4 (File No. 333-162575)
filed on October 20, 2009).4.1
    
    
    Stockholders Agreement by and between RailAmerica, Inc. and RR
Acquisition Holding, LLC (incorporated by reference to Exhibit 4.1 to
RailAmerica, Inc.s Form S-4 (File No. 333-162575) filed on October 20,
2009).4.2
    
    
    Indenture, dated as of June 23, 2009, by and between RailAmerica, Inc.,
the guarantors named therein, as Guarantors, and U.S. Bank National
Association, as Trustee and Notes Collateral Agent (incorporated by
reference to Exhibit 4.3 to RailAmerica, Inc.s Form S-1 (File No.
333-160835) filed on July 27, 2009).4.3
    
    
    Form of 9.25% Notes due 2017 (included in Exhibit 4.2).10.1
    
    
    Credit Agreement, dated as of June 23, 2009, among RailAmerica, Inc.,
RailAmerica Transportation Corp., the several lenders from time to time
parties thereto, Citicorp North America, Inc. and Citigroup Global
Markets Inc. (incorporated by reference to Exhibit 10.1 to Amendment No.
1 to RailAmerica, Inc.s Form S-1(File No. 333-160835) filed on
September 1, 2009).10.2
    
    
    RailAmerica, Inc. 2008 Omnibus Stock Incentive Plan (incorporated by
reference to Exhibit 10.2 to Amendment No. 2 to RailAmerica, Inc.s Form
S-1 (File No. 333-160835) filed on September 22, 2009).+10.3
    
    
    RailAmerica, Inc. 2009 Omnibus Stock Incentive Plan (incorporated by
reference to Exhibit 99.1 to RailAmerica, Inc.s Form S-8 (File No.
333-162428) filed on October 13, 2009).+10.4
    
    
    Form of Indemnification Agreement with directors and officers
(incorporated by reference to Exhibit 10.4 to Amendment No. 2 to
RailAmerica, Inc.s Form S-1 (File No. 333-160835) filed on September
22, 2009).10.5
    
    
    Form of Management Shareholder Award Agreement (incorporated by
reference to Exhibit 10.5 to Amendment No. 3 to RailAmerica, Inc.s Form
S-1 (File No. 333-160835) filed on September 29, 2009).+10.6
    
    
    Form of Amended and Restated Restricted Share Agreement for Bonus
Restricted Shares under the RailAmerica, Inc. Omnibus Stock Incentive
Plan (incorporated by reference to Exhibit 10.6 to Amendment No. 3 to
RailAmerica, Inc.s Form S-1 (File No. 333-160835) filed on September
29, 2009).+10.7
    
    
    Form of Director Restricted Share Agreement (incorporated by reference
to Exhibit 10.7 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File
No. 333-160835) filed on September 29, 2009).+10.8
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and John Giles (incorporated by reference to Exhibit
10.8 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File No.
333-160835) filed on September 29, 2009).+10.9
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and Clyde Preslar (incorporated by reference to
Exhibit 10.9 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File
No. 333-160835) filed on September 29, 2009).+10.10
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and David Rohal (incorporated by reference to Exhibit
10.10 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File No.
333-160835) filed on September 29, 2009).+
 46




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##### Table of Contents



ExhibitNo.
    
    Description10.11
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and Paul Lundberg (incorporated by reference to
Exhibit 10.11 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File
No. 333-160835) filed on September 29, 2009).+10.12
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and Charles Patterson (incorporated by reference to
Exhibit 10.12 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File
No. 333-160835) filed on September 29, 2009).+10.13
    
    
    Employment Agreement, dated as of September 28, 2009, by and between
RailAmerica, Inc. and Scott Williams (incorporated by reference to
Exhibit 10.13 to Amendment No. 3 to RailAmerica, Inc.s Form S-1 (File
No. 333-160835) filed on September 29, 2009).+10.14
    
    
    Form of FECR Rail Corp. Consulting Agreement (incorporated by reference
to Exhibit 10.14 to Amendment No. 3 to RailAmerica, Inc.s Form S-1
(File No. 333-160835) filed on September 29, 2009).+10.15
    
    
    Form of FECR Rail Corp. Restricted Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.15 to Amendment No. 3 to
RailAmerica, Inc.s Form S-1 (File No. 333-160835) filed on September
29, 2009).+10.16
    
    
    Form of Florida East Coast Industries, Inc. Consulting Agreement
(incorporated by reference to Exhibit 10.16 to Amendment No. 3 to
RailAmerica, Inc.s Form S-1 (File No. 333-160835) filed on September
29, 2009).+10.17
    
    
    Form of Florida East Coast Industries, Inc. Restricted Stock Unit Award
Agreement (incorporated by reference to Exhibit 10.17 to Amendment No. 3
to RailAmerica, Inc.s Form S-1 (File No. 333-160835) filed on September
29, 2009).+10.18
    
    
    Amendment No. 1 to the Asset Backed Loan Facility entered into on June
10, 2010 (incorporated by reference to Exhibit 10.1 to RailAmerica,
Inc.s Form 8-K (File No. 1-32579) filed on June 15, 2010).10.19
    
    
    Amendment No. 2 to the Asset Backed Loan Facility entered into on
February 23, 2011 (incorporated by reference to Exhibit 10.1 to
RailAmerica, Inc.s Form 8-K (File No. 1-32579) filed on February 23,
2011).21.1
    
    
    Subsidiaries of the Registrant.23.1
    
    
    Consent of Ernst & Young LLP.31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer32.1
    
    
    Principal Executive Officer Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of
200232.2
    
    
    Principal Financial Officer Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of
2002
 
 +
    
    Executive Compensation Plan or Arrangement. 47




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##### Table of Contents



RAILAMERICA, INC.By:
    /s/  B. CLYDE PRESLARB. Clyde Preslar, Senior Vice President andChief Financial Officer (Principal Financial Officer)Dated: March 4, 2011  SIGNATURES
    
    TITLE
    
    DATE/s/ JOHN E. GILES
    
    President and Chief Executive Officer
    
    March 4, 2011John E. Giles
    
    (Principal Executive Officer)/s/ WESLEY R. EDENS
    
    Chairman of the Board of Directors
    
    March 4, 2011Wesley R. Edens/s/ JOSEPH P. ADAMS JR.
    
    Deputy Chairman of the Board of Directors
    
    March 4, 2011Joseph P. Adams, Jr./s/ PAUL R. GOODWIN
    
    Director
    
    March 4, 2011Paul R. Goodwin/s/ VINCENT T. MONTGOMERY
    
    Director
    
    March 4, 2011Vincent T. Montgomery/s/ ROBERT SCHMIEGE
    
    Director
    
    March 4, 2011Robert Schmiege/s/ RANDY T. PIANIN
    
    Vice President and Corporate Controller
    
    March 4, 2011Randy T. Pianin
    
    (Principal Accounting Officer)
 48




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##### Table of Contents



INDEX OF CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets  As of December 31, 2010 and 2009
    
    
    F-4Consolidated Statements of Operations  For the years ended December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Stockholders Equity For the years ended December 31, 2010, 2009, and 2008
    
    
    F-6Consolidated Statements of Cash Flows  For the years ended December 31, 2010, 2009 and 2008
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F- 1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 
 F- 2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      .
  
 
 F- 3




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##### Table of Contents



RAILAMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2010
    
    
    2009(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    152,968
    
    
    $
    190,218Accounts and notes receivable, net of allowance of $6,767 and $4,557, respectively
    
    
    74,668
    
    
    
    66,619Current deferred tax assets
    
    
    12,769
    
    
    
    12,697Other current assets
    
    
    15,200
    
    
    
    21,958Total current assets
    
    
    255,605
    
    
    
    291,492Property, plant and equipment, net
    
    
    981,622
    
    
    
    952,527Intangible assets
    
    
    140,546
    
    
    
    136,654Goodwill
    
    
    212,495
    
    
    
    200,769Other assets
    
    
    13,385
    
    
    
    17,187Total assets
    
    $
    1,603,653
    
    
    $
    1,598,629LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    403
    
    
    $
    669Accounts payable
    
    
    66,258
    
    
    
    53,948Accrued expenses
    
    
    36,913
    
    
    
    34,675Total current liabilities
    
    
    103,574
    
    
    
    89,292Long-term debt, less current maturities
    
    
    2,147
    
    
    
    3,013Senior secured notes
    
    
    571,161
    
    
    
    640,096Deferred income taxes
    
    
    202,985
    
    
    
    185,002Other liabilities
    
    
    19,037
    
    
    
    21,895Total liabilities
    
    
    898,904
    
    
    
    939,298Commitments and contingenciesStockholders equity:Common stock, $0.01 par value, 400,000,000 shares authorized; 54,859,261 shares
issued and outstanding at December 31, 2010; and 54,364,306 shares issued and
outstanding at December 31, 2009
    
    
    549
    
    
    
    544Additional paid in capital and other
    
    
    636,757
    
    
    
    630,653Retained earnings
    
    
    65,503
    
    
    
    46,386Accumulated other comprehensive income (loss)
    
    
    1,940
    
    
    
    (18,252
    )Total stockholders equity
    
    
    704,749
    
    
    
    659,331Total liabilities and stockholders equity
    
    $
    1,603,653
    
    
    $
    1,598,629
  F- 4




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##### Table of Contents



RAILAMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share data)Operating revenue
    
    $
    490,291
    
    
    $
    425,774
    
    
    $
    508,466Operating expenses:Labor and benefits
    
    
    153,993
    
    
    
    143,604
    
    
    
    148,789Equipment rents
    
    
    34,119
    
    
    
    35,978
    
    
    
    45,020Purchased services
    
    
    37,971
    
    
    
    30,914
    
    
    
    38,792Diesel fuel
    
    
    43,316
    
    
    
    33,290
    
    
    
    69,974Casualties and insurance
    
    
    17,574
    
    
    
    16,795
    
    
    
    22,041Materials
    
    
    19,607
    
    
    
    11,399
    
    
    
    10,663Joint facilities
    
    
    8,667
    
    
    
    6,942
    
    
    
    12,573Other expenses
    
    
    35,226
    
    
    
    33,037
    
    
    
    33,265Track maintenance expense reimbursement
    
    
    (17,589
    )
    
    
    (16,656
    )
    
    
    Net gain on sale of assets
    
    
    (2,191
    )
    
    
    (25,839
    )
    
    
    (1,697
    )Impairment of assets
    
    
    
    
    
    
    
    
    
    
    3,420Depreciation and amortization
    
    
    45,091
    
    
    
    42,105
    
    
    
    39,578Total operating expenses
    
    
    375,784
    
    
    
    311,569
    
    
    
    422,418Operating income
    
    
    114,507
    
    
    
    114,205
    
    
    
    86,048Interest expense, including amortization costs of
$25,655, $26,889, and $10,083, respectively
    
    
    (83,775
    )
    
    
    (86,878
    )
    
    
    (61,678
    )Other loss
    
    
    (4,759
    )
    
    
    (8,117
    )
    
    
    (9,008
    )Income from continuing operations before income taxes
    
    
    25,973
    
    
    
    19,210
    
    
    
    15,362Provision for income taxes
    
    
    6,856
    
    
    
    16,299
    
    
    
    1,599Income from continuing operations
    
    
    19,117
    
    
    
    2,911
    
    
    
    13,763Discontinued operations:Gain on disposal of discontinued business (net of
income taxes (benefit) of $0, $(12,006), and $697,
respectively)
    
    
    
    
    
    
    12,931
    
    
    
    2,764Net income
    
    $
    19,117
    
    
    $
    15,842
    
    
    $
    16,527Dividends declared and paid per common share
    
    $
    
    
    
    $
    0.46
    
    
    $
    Basic earnings per common share:Continuing operations
    
    $
    0.35
    
    
    $
    0.07
    
    
    $
    0.32Discontinued operations
    
    
    
    
    
    
    0.28
    
    
    
    0.06Net income
    
    $
    0.35
    
    
    $
    0.35
    
    
    $
    0.38Diluted earnings per common share:Continuing operations
    
    $
    0.35
    
    
    $
    0.07
    
    
    $
    0.32Discontinued operations
    
    
    
    
    
    
    0.28
    
    
    
    0.06Net income
    
    $
    0.35
    
    
    $
    0.35
    
    
    $
    0.38Weighted average common shares outstanding:Basic
    
    
    54,793
    
    
    
    45,979
    
    
    
    43,443Diluted
    
    
    54,793
    
    
    
    45,979
    
    
    
    43,443
  F- 5




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##### Table of Contents



RAILAMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Stockholders EquityAdditional
    
    
    
    
    
    
    AccumulatedNumber of
    
    
    
    
    
    
    Paid-in
    
    
    
    
    
    
    OtherShares
    
    
    Par
    
   
    Capital
    
    
    Retained
    
    
    ComprehensiveIssued
    
    
    Value
    
    
    and Other
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Total(In thousands)Balance, January 1, 2008
    
    
    43,199
    
    
    $
    432
    
    
    $
    468,762
    
    
    $
    33,502
    
    
    $
    10,053
    
    
    $
    512,749Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,527
    
    
    
    
    
    
    
    16,527Change in market value of derivative instruments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,812
    )
    
    
    (25,812
    )Actuarial gain associated with pension and postretirement benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,019
    
    
    
    1,019Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,782
    )
    
    
    (34,782
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,048
    )Other equity contributions
    
    
    71
    
    
    
    1
    
    
    
    1,049
    
    
    
    
    
    
    
    
    
    
    
    1,050Stock repurchases
    
    
    (5
    )
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    (23
    )Stock based compensation
    
    
    266
    
    
    
    2
    
    
    
    790
    
    
    
    
    
    
    
    
    
    
    
    792Balance, December 31, 2008
    
    
    43,531
    
    
    $
    435
    
    
    $
    470,578
    
    
    $
    50,029
    
    
    $
    (49,522
    )
    
    $
    471,520Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,842
    
    
    
    
    
    
    
    15,842Change in market value of derivative instruments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,322
    
    
    
    5,322Amortization of terminated swap costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,303
    
    
    
    10,303Actuarial loss associated with pension and postretirement benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (843
    )
    
    
    (843
    )Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,488
    
    
    
    16,488Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,112Issuance of common stock
    
    
    10,500
    
    
    
    105
    
    
    
    143,018
    
    
    
    
    
    
    
    
    
    
    
    143,123Dividends paid to common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,485
    )
    
    
    
    
    
    
    (19,485
    )Other equity contributions
    
    
    
    
    
    
    
    
    
    
    819
    
    
    
    
    
    
    
    
    
    
    
    819Stock repurchases
    
    
    (49
    )
    
    
    
    
    
    
    (685
    )
    
    
    
    
    
    
    
    
    
    
    (685
    )Stock based compensation
    
    
    382
    
    
    
    4
    
    
    
    16,923
    
    
    
    
    
    
    
    
    
    
    
    16,927Balance, December 31, 2009
    
    
    54,364
    
    
    $
    544
    
    
    $
    630,653
    
    
    $
    46,386
    
    
    $
    (18,252
    )
    
    $
    659,331Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,117
    
    
    
    
    
    
    
    19,117Amortization of terminated swap costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,306
    
    
    
    13,306Write-off of swap costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,047
    
    
    
    1,047Actuarial gain associated with pension and postretirement benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    172Cumulative translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,667
    
    
    
    5,667Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,309Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    (106
    )
    
    
    
    
    
    
    
    
    
    
    (106
    )Stock repurchases
    
    
    (112
    )
    
    
    (1
    )
    
    
    (1,318
    )
    
    
    
    
    
    
    
    
    
    
    (1,319
    )Stock based compensation
    
    
    607
    
    
    
    6
    
    
    
    7,528
    
    
    
    
    
    
    
    
    
    
    
    7,534Balance, December 31, 2010
    
    
    54,859
    
    
    $
    549
    
    
    $
    636,757
    
    
    $
    65,503
    
    
    $
    1,940
    
    
    $
    704,749
  F- 6




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##### Table of Contents



RAILAMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    19,117
    
    
    $
    15,842
    
    
    $
    16,527Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization, including amortization of
debt issuance costs classified in interest expense
    
    
    49,847
    
    
    
    52,340
    
    
    
    49,118Amortization of swap termination costs
    
    
    20,891
    
    
    
    16,616
    
    
    
    Net gain on sale or disposal of properties
    
    
    (2,191
    )
    
    
    (26,766
    )
    
    
    (1,738
    )Foreign exchange (gain) loss on debt
    
    
    
    
    
    
    (1,160
    )
    
    
    8,260Swap termination costs
    
    
    
    
    
    
    (55,750
    )
    
    
    Loss on extinguishment of debt
    
    
    8,357
    
    
    
    9,499
    
    
    
    Equity compensation costs
    
    
    7,534
    
    
    
    10,712
    
    
    
    3,042Deferred income taxes and other
    
    
    2,765
    
    
    
    21,057
    
    
    
    (3,161
    )Changes in operating assets and liabilities, net of
acquisitions and dispositions:Accounts receivable
    
    
    (2,435
    )
    
    
    10,873
    
    
    
    12,257Other current assets
    
    
    7,512
    
    
    
    (3,093
    )
    
    
    (5,861
    )Accounts payable
    
    
    7,574
    
    
    
    (3,182
    )
    
    
    (5,016
    )Accrued expenses
    
    
    1,268
    
    
    
    (16,677
    )
    
    
    7,196Other assets and liabilities
    
    
    (3,070
    )
    
    
    (20,771
    )
    
    
    2,948Net cash provided by operating activities
    
    
    117,169
    
    
    
    9,540
    
    
    
    83,572CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment
    
    
    (62,710
    )
    
    
    (47,789
    )
    
    
    (61,282
    )NECR government grant reimbursement
    
    
    4,884
    
    
    
    
    
    
    
    Proceeds from sale/disposition of assets
    
    
    4,108
    
    
    
    90,340
    
    
    
    17,367Deferred acquisition/disposition costs and other
    
    
    
    
    
    
    (355
    )
    
    
    (1,736
    )Acquisition, net of cash acquired
    
    
    (23,926
    )
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (77,644
    )
    
    
    42,196
    
    
    
    (45,651
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of senior secured notes
    
    
    
    
    
    
    709,830
    
    
    
    Principal payments on long-term debt
    
    
    (622
    )
    
    
    (625,898
    )
    
    
    (7,359
    )Repurchase of senior secured notes
    
    
    (76,220
    )
    
    
    (76,220
    )
    
    
    Sale of common stock
    
    
    (106
    )
    
    
    143,123
    
    
    
    635Dividends paid to common stockholders
    
    
    
    
    
    
    (19,485
    )
    
    
    Deferred financing costs paid
    
    
    (224
    )
    
    
    (20,175
    )
    
    
    (18,075
    )Net cash (used in) provided by financing activities
    
    
    (77,172
    )
    
    
    111,175
    
    
    
    (24,799
    )Effect of exchange rates on cash
    
    
    397
    
    
    
    356
    
    
    
    (1,558
    )Net (decrease) increase in cash
    
    
    (37,250
    )
    
    
    163,267
    
    
    
    11,564Cash, beginning of period
    
    
    190,218
    
    
    
    26,951
    
    
    
    15,387Cash, end of period
    
    $
    152,968
    
    
    $
    190,218
    
    
    $
    26,951Supplemental cash flow information:Interest Paid
    
    $
    57,986
    
    
    $
    72,641
    
    
    $
    44,784Income Taxes Paid
    
    $
    7,444
    
    
    $
    3,416
    
    
    $
    6,655
  F- 7




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##### Table of Contents



RAILAMERICA, INC. AND SUBSIDIARIES
 
 NOTES TO ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 ORGANIZATION
    PRINCIPLES OF CONSOLIDATION
  BASIS OF PRESENTATION
  USE OF ESTIMATES
  CASH AND CASH EQUIVALENTS
  ALLOWANCE FOR DOUBTFUL ACCOUNTS
  F- 8




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##### Table of Contents



2010
    
    
    2009Balance, beginning of year
    
    $
    4,557
    
    
    $
    3,338Provisions
    
    
    3,544
    
    
    
    1,601Charges
    
    
    (1,334
    )
    
    
    (382
    )Balance, end of year
    
    $
    6,767
    
    
    $
    4,557
 MATERIALS AND SUPPLIES
  PROPERTY, PLANT AND EQUIPMENT
 Depreciation Method
  Track and Related Assets
   Railroad track and ties
    
    30-40 yearsRailroad track improvements
    
    3-10 years
    Building, Equipment and Other Fixed Assets
  F- 9




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##### Table of Contents



Buildings and improvements
    
    20-33 yearsLocomotives, transportation and other equipment
    
    5-30 yearsOffice equipment and capitalized software
    
    5-10 years
 Capital Expenditures
  Leases Topic
  Disposals and Retirements
 Track and Related Assets
    Building, Equipment and Other Fixed Assets
  Impairment Reviews
  F-10




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##### Table of Contents



GRANT LIABILITIES
  GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS
  Intangibles-
Goodwill and Other Topic,
  AMORTIZABLE INTANGIBLE ASSETS
 Property, Plant and Equipment Topic,
 INCOME TAXES
  REVENUE RECOGNITION
  F-11




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##### Table of Contents



FOREIGN CURRENCY TRANSLATION
  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements and Disclosures
 2. ACQUISITIONS
  Business Combinations Topic
 F-12




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##### Table of Contents



Current assets
    
    $
    6,607Intangible assets
    
    
    9,430Goodwill
    
    
    11,326Property, plant and equipment
    
    
    6,459Total assets acquired
    
    
    33,822Current liabilities
    
    
    (4,182
    )Deferred tax liabilities
    
    
    (5,714
    )Total liabilities assumed
    
    
    (9,896
    )Purchase price
    
    $
    23,926
  Value
    
    
    Weighted Average LifeAssigned
    
    
    (Years)Customer relationships
    
    $
    6,720
    
    
    
    20.0Project backlog
    
    $
    110
    
    
    
    0.5Non-compete agreements
    
    $
    810
    
    
    
    4.2
 3. EARNINGS PER SHARE
   For the Years EndedDecember 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Income from continuing operations (basic and diluted)
    
    $
    19,117
    
    
    $
    2,911
    
    
    $
    13,763Compensation expense recorded for dividends paid to
unvested restricted shares, net of tax
    
    
    
    
    
    
    307
    
    
    
    Income from continuing operations available to common
stockholders (basic and diluted)
    
    $
    19,117
    
    
    $
    3,218
    
    
    $
    13,763Weighted average shares outstanding (basic and diluted)
    
    
    54,793
    
    
    
    45,979
    
    
    
    43,443
 4. STOCK-BASED COMPENSATION
  F-13




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##### Table of Contents



Time BasedBalance at January 1, 2008
    
    
    1,012,500
    
    
    $
    11.11Granted
    
    
    358,398
    
    
    $
    14.48Vested
    
    
    (177,480
    )
    
    $
    11.11Cancelled
    
    
    (92,457
    )
    
    $
    11.24Balance at December 31, 2008
    
    
    1,100,961
    
    
    $
    12.20Granted
    
    
    401,647
    
    
    $
    15.22Vested
    
    
    (196,362
    )
    
    $
    12.11Cancelled
    
    
    (19,917
    )
    
    $
    12.43Balance at December 31, 2009
    
    
    1,286,329
    
    
    $
    13.10Granted
    
    
    662,296
    
    
    $
    11.90Vested
    
    
    (418,440
    )
    
    $
    13.06Cancelled
    
    
    (53,960
    )
    
    $
    13.38Balance at December 31, 2010
    
    
    1,476,225
    
    
    $
    12.59
 5. DISCONTINUED OPERATIONS
 Alberta Railroad Properties
  Freight Australia
  F-14




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##### Table of Contents



6. OTHER BALANCE SHEET DATA
  2010
    
    
    2009Unbilled reimbursable projects
    
    $
    6,073
    
    
    $
    15,434Other current assets
    
    
    9,127
    
    
    
    6,524$
    15,200
    
    
    $
    21,958
  2010
    
    
    2009Accrued compensation and benefits
    
    $
    13,554
    
    
    $
    12,028Accrued incident expense
    
    
    8,214
    
    
    
    8,322Other accrued liabilities
    
    
    15,145
    
    
    
    14,325$
    36,913
    
    
    $
    34,675
 7. PROPERTY, PLANT AND EQUIPMENT
  2010
    
    
    2009Land
    
    $
    186,688
    
    
    $
    185,991Buildings and improvements
    
    
    7,024
    
    
    
    5,367Railroad track and improvements
    
    
    826,747
    
    
    
    781,702Locomotives, transportation and other equipment
    
    
    88,545
    
    
    
    68,8931,109,004
    
    
    
    1,041,953Less: accumulated depreciation
    
    
    (127,382
    )
    
    
    (89,426
    )$
    981,622
    
    
    $
    952,527
  8. GOODWILL AND INTANGIBLE ASSETS, NET
 Goodwill
  F-15




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##### Table of Contents



Balance at January 1, 2009
    
    $
    199,754Impact of change in foreign exchange rates
    
    
    1,015Balance at December 31, 2009
    
    $
    200,769Addition for the acquisition of Atlas
    
    
    11,326Impact of change in foreign exchange rates
    
    
    400Balance at December 31, 2010
    
    $
    212,495
 Indefinite-Lived Intangible Assets
  Definite-Lived Intangible Assets
  WeightedValue
    
    
    Average LifeIntangible Asset Class
    
    Assigned
    
    
    (Years)Customer Contracts
    
    $
    24,495
    
    
    
    5.3Railroad Leases
    
    
    9,835
    
    
    
    16.8Rolling stock Leases
    
    
    2,107
    
    
    
    4.5Locomotive Leases
    
    
    5,943
    
    
    
    6.2Customer relationships
    
    
    6,720
    
    
    
    20.0Project backlog
    
    
    110
    
    
    
    0.5Non-compete agreements
    
    
    810
    
    
    
    4.2
  December 31, 2010
    
    
    December 31, 2009Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Carrying
    
    
    Accumulated
    
    
    Net BookAmount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    ValueAmortizable intangible assets:Customer contract intangibles
    
    $
    24,495
    
    
    $
    (18,406
    )
    
    $
    6,089
    
    
    $
    24,495
    
    
    $
    (13,657
    )
    
    $
    10,838Railroad leases intangibles
    
    
    9,835
    
    
    
    (3,808
    )
    
    
    6,027
    
    
    
    9,835
    
    
    
    (2,825
    )
    
    
    7,010Rolling stock leases intangibles
    
    
    2,107
    
    
    
    (2,061
    )
    
    
    46
    
    
    
    2,107
    
    
    
    (1,648
    )
    
    
    459Locomotive leases intangibles
    
    
    5,943
    
    
    
    (4,663
    )
    
    
    1,280
    
    
    
    5,943
    
    
    
    (3,776
    )
    
    
    2,167Customer relationships
    
    
    6,720
    
    
    
    (168
    )
    
    
    6,552
    
    
    
    
    
    
    
    
    
    
    
    Project backlog
    
    
    110
    
    
    
    (110
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-compete agreements
    
    
    810
    
    
    
    (98
    )
    
    
    712
    
    
    
    
    
    
    
    
    
    
    
    Non-amortizable intangible assets:Railroad leases intangibles
    
    
    116,555
    
    
    
    
    
    
    
    116,555
    
    
    
    114,685
    
    
    
    
    
    
    
    114,685Trade names
    
    
    1,790
    
    
    
    
    
    
    
    1,790
    
    
    
    
    
    
    
    
    
    
    
    Other intangible assets
    
    
    1,495
    
    
    
    
    
    
    
    1,495
    
    
    
    1,495
    
    
    
    
    
    
    
    1,495Total intangible assets
    
    $
    169,860
    
    
    $
    (29,314
    )
    
    $
    140,546
    
    
    $
    158,560
    
    
    $
    (21,906
    )
    
    $
    136,654
 F-16




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##### Table of Contents



2011
    
    $
    6,0142012
    
    
    2,9192013
    
    
    1,2112014
    
    
    8912015
    
    
    793Thereafter
    
    
    8,878$
    20,706
 9. LONG-TERM DEBT AND LEASES
  9.25% Senior Secured Notes (net of original issue discount of $20,839 and $25,904, respectively)
    
    $
    571,161
    
    
    $
    640,096Other long-term debt (including capital leases)
    
    
    2,550
    
    
    
    3,682573,711
    
    
    
    643,778Less: current maturities
    
    
    403
    
    
    
    669Long-term debt, less current maturities
    
    $
    573,308
    
    
    $
    643,109
  2011
    
    $
    4032012
    
    
    2942013
    
    
    3112014
    
    
    3292015
    
    
    349Thereafter
    
    
    592,864$
    594,550
 $740 Million 9.25% Senior Secured Notes
    F-17




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##### Table of Contents



$40 Million ABL Facility
     $650 Million Bridge Credit Facility
     F-18




---



##### Table of Contents



Leases
  Capital
    
    
    OperatingLeases
    
    
    Leases2011
    
    $
    25
    
    
    $
    17,3182012
    
    
    
    
    
    
    10,5322013
    
    
    
    
    
    
    6,2692014
    
    
    
    
    
    
    2,7732015
    
    
    
    
    
    
    2,248Thereafter
    
    
    
    
    
    
    18,326Total minimum lease payments
    
    $
    25
    
    
    $
    57,466Less amount representing interest
    
    
    (2
    )Total obligations under capital leases
    
    $
    23Less current maturities of obligations under capital leases
    
    
    (23
    )Obligations under capital leases payable after one year
    
    $
    
  10. DERIVATIVE FINANCIAL INSTRUMENTS
 Derivatives and Hedging Topic
  Fair Value Measurements and
Disclosures Topic
  F-19




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##### Table of Contents



The Effect of Derivative Instruments on Statement of OperationsAmount of Gainor (Loss)Recognized inAccumulated
    
    
    Location of Gain
    
    
    Amount of Gain
    
    
    
    
    
    
    Amount of GainOther
    
    
    (Loss)
    
    
    (Loss)
    
    
    Location of Gain
    
    
    (Loss)Comprehensive
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    (Loss) Recognized
    
    
    Recognized inIncome (AOCI)
    
    
    AOCI into
    
    
    AOCI into
    
    
    in Income on
    
    
    Income onDerivatives in ASC 815
    
    on Derivative
    
    
    Income
    
    
    Income
    
    
    Derivative
    
    
    DerivativeCash Flow Hedging
    
    (Effective
    
    
    (Effective
    
    
    (Effective
    
    
    (Ineffective
    
    
    (IneffectiveRelationships
    
    Portion)
    
    
    Portion)
    
    
    Portion)
    
    
    Portion)
    
    
    Portion)Interest Rate Swap
    
    $
    5,322
    
    
    Interest Expense
    
    $
    (7,270
    )
    
    Interest Expense
    
    $
    (278
    )
  11. FAIR VALUE OF FINANCIAL INSTRUMENTS
   
    
    Current assets and current liabilities:The carrying value approximates fair value due
to the short maturity of these items.
    
    Long-term debt:The fair value of the Companys senior secured notes is based on
secondary market indicators. The carrying amount of the Companys other long term debt
approximates its fair value.
    
    Derivatives:The carrying value is based on fair value as of the balance sheet date.
Companies are required to maximize the use of observable inputs (Level 1 and Level 2), when
available, and to minimize the use of unobservable inputs (Level 3) when determining fair
value. The Companys measurement of the fair value of interest rate derivatives is based on
estimates of the mid-market values for the transactions provided by the counterparties to
these agreements. For derivative instruments in an asset position, the Company also analyzes
the credit standing of the counterparty and factors it into the fair value measurement.
ASC 820 states that the fair value of a liability also must reflect the nonperformance risk of
the reporting entity. Therefore, the impact of the Companys credit worthiness has also been
factored into the fair value measurement of the derivative instruments
 F-20




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##### Table of Contents



in a liability position. This methodology is a market approach, which under ASC 820 utilizes
Level 2 inputs as it uses market data for similar instruments in active markets. See Note 10
for further fair value disclosure of the Companys interest rate swap. As the Company
terminated its interest rate swap agreement in conjunction with the refinancing of its bridge
credit facility on June 23, 2009, the swap had no fair value as of December 31, 2010 or 2009.
  December 31, 2010Carrying
    
    
    FairAmount
    
    
    ValueCash and cash equivalents
    
    $
    152,968
    
    
    $
    152,9689.25% Senior secured notes
    
    $
    571,161
    
    
    $
    649,306
 12. COMMON STOCK TRANSACTIONS
    Stock Repurchase Program
  13. INCOME TAX PROVISION
  December 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Domestic
    
    $
    14,019
    
    
    $
    (15,725
    )
    
    $
    9,583Foreign subsidiaries
    
    
    11,954
    
    
    
    34,935
    
    
    
    5,779$
    25,973
    
    
    $
    19,210
    
    
    $
    15,362
 F-21




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##### Table of Contents



December 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Federal income taxes:Current
    
    $
    
    
    
    $
    
    
    
    $
    Deferred
    
    
    4,022
    
    
    
    13,868
    
    
    
    (10,073
    )4,022
    
    
    
    13,868
    
    
    
    (10,073
    )State income taxes:Current
    
    
    18
    
    
    
    (333
    )
    
    
    2,243Deferred
    
    
    103
    
    
    
    910
    
    
    
    5,866121
    
    
    
    577
    
    
    
    8,109Foreign income taxes:Current
    
    
    4,073
    
    
    
    6,279
    
    
    
    3,214Deferred
    
    
    (1,360
    )
    
    
    (16,431
    )
    
    
    1,0462,713
    
    
    
    (10,152
    )
    
    
    4,260Total income tax provision
    
    $
    6,856
    
    
    $
    4,293
    
    
    $
    2,296
  December 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Continuing operations
    
    $
    6,856
    
    
    $
    16,299
    
    
    $
    1,599Discontinued operations
    
    
    
    
    
    
    (12,006
    )
    
    
    697Total income tax provision
    
    $
    6,856
    
    
    $
    4,293
    
    
    $
    2,296
  December 31,
    
    
    December 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2008Income tax expense at federal statutory rate
    
    $
    9,091
    
    
    $
    6,724
    
    
    $
    5,377Foreign tax rate differential
    
    
    (379
    )
    
    
    (1,726
    )
    
    
    892Net expense (benefit) due to change in tax law,
apportionment factors and other adjustments
    
    
    1,159
    
    
    
    (3,315
    )
    
    
    1,436State income tax refunds net of federal benefit
    
    
    
    
    
    
    (760
    )
    
    
    Non-deductible/nontaxable items
    
    
    411
    
    
    
    318
    
    
    
    393Track maintenance credit
    
    
    
    
    
    
    
    
    
    
    (16,278
    )Tax expense on foreign repatriation
    
    
    
    
    
    
    14,952
    
    
    
    Expired tax attributes
    
    
    
    
    
    
    1,447
    
    
    
    Tax contingencies and settlements
    
    
    (1,118
    )
    
    
    (4,601
    )
    
    
    1,645State income taxes net of federal benefit
    
    
    (174
    )
    
    
    (797
    )
    
    
    1,777Foreign dividend
    
    
    
    
    
    
    
    
    
    
    3,283Stock-based compensation
    
    
    720
    
    
    
    
    
    
    
    Change in valuation allowance
    
    
    (2,871
    )
    
    
    4,024
    
    
    
    3,093Other, net
    
    
    17
    
    
    
    33
    
    
    
    (19
    )Income tax expense
    
    $
    6,856
    
    
    $
    16,299
    
    
    $
    1,599
 F-22




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##### Table of Contents



2010
    
    
    2009Deferred tax assets:Net operating loss carryforward
    
    $
    38,064
    
    
    $
    56,010Alternative minimum tax credit
    
    
    1,459
    
    
    
    1,356General business credit carryovers
    
    
    94,819
    
    
    
    94,819Tax effect of unrecognized tax positions
    
    
    740
    
    
    
    1,010Hedge transactions
    
    
    
    
    
    
    Accrued expenses
    
    
    20,355
    
    
    
    17,234Total deferred tax assets
    
    
    155,437
    
    
    
    170,429Less: valuation allowance
    
    
    (8,076
    )
    
    
    (10,947
    )Total deferred tax assets, net
    
    
    147,361
    
    
    
    159,482Deferred tax liabilities:Property, plant and equipment
    
    
    (326,900
    )
    
    
    (322,330
    )Intangibles
    
    
    (10,310
    )
    
    
    (6,447
    )Other
    
    
    (367
    )
    
    
    (3,010
    )Total deferred tax liabilities
    
    
    (337,577
    )
    
    
    (331,787
    )Net deferred tax liabilities
    
    $
    (190,216
    )
    
    $
    (172,305
    )
   ExpirationAmount
    
    
    PeriodU.S.  Federal
    
    $
    79,124
    
    
    
    2021 - 2028U.S.  State
    
    
    252,331
    
    
    
    2011- 2030Canada
    
    
    961
    
    
    
    2014 - 2030
  ExpirationAmount
    
    
    PeriodTrack maintenance credit
    
    $
    94,742
    
    
    
    2025 - 2028GO Zone tax credit
    
    
    77
    
    
    
    2026Total credits
    
    $
    94,819
   F-23




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Balance at beginning of year
    
    $
    6,097
    
    
    $
    29,995
    
    
    $
    18,222Additions based on tax positions related to the current year
    
    
    
    
    
    
    
    
    
    
    797Additions for tax positions of prior years
    
    
    43
    
    
    
    128
    
    
    
    15,804Reductions for tax positions of prior years
    
    
    
    
    
    
    (497
    )
    
    
    (3,521
    )Settlements with taxing authorities
    
    
    
    
    
    
    (20,993
    )
    
    
    Lapse of statute of limitations
    
    
    (970
    )
    
    
    (2,536
    )
    
    
    (1,307
    )Balance at end of year
    
    $
    5,170
    
    
    $
    6,097
    
    
    $
    29,995
      F-24




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##### Table of Contents



14. PENSION AND OTHER BENEFIT PROGRAMS
 Canadian Employees
  DEFINED CONTRIBUTION COMPONENT
 DEFINED BENEFIT COMPONENT
  U.S. Employees
   F-25




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##### Table of Contents



Canadian
    
    
    U.S.
    
    
    Total
    
    
    Canadian
    
    
    U.S.
    
    
    Total
    
    
    Canadian
    
    
    U.S.
    
    
    Total2010
    
    
    2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008CHANGE IN BENEFIT OBLIGATIONBenefit obligation at beginning of period
    
    $
    9,780
    
    
    $
    738
    
    
    $
    10,518
    
    
    $
    6,496
    
    
    $
    572
    
    
    $
    7,068
    
    
    $
    10,781
    
    
    $
    297
    
    
    $
    11,078Service cost
    
    
    119
    
    
    
    83
    
    
    
    202
    
    
    
    101
    
    
    
    73
    
    
    
    174
    
    
    
    168
    
    
    
    123
    
    
    
    291Interest cost
    
    
    621
    
    
    
    43
    
    
    
    664
    
    
    
    487
    
    
    
    35
    
    
    
    522
    
    
    
    604
    
    
    
    18
    
    
    
    622Plan participants contributions
    
    
    74
    
    
    
    0
    
    
    
    74
    
    
    
    84
    
    
    
    0
    
    
    
    84
    
    
    
    122
    
    
    
    0
    
    
    
    122Actuarial loss (gain)
    
    
    342
    
    
    
    21
    
    
    
    363
    
    
    
    1,736
    
    
    
    59
    
    
    
    1,795
    
    
    
    (2,894
    )
    
    
    142
    
    
    
    (2,752
    )Benefits paid
    
    
    (846
    )
    
    
    (24
    )
    
    
    (870
    )
    
    
    (306
    )
    
    
    (1
    )
    
    
    (307
    )
    
    
    (126
    )
    
    
    (8
    )
    
    
    (134
    )Foreign currency exchange rate changes
    
    
    462
    
    
    
    0
    
    
    
    462
    
    
    
    1,182
    
    
    
    0
    
    
    
    1,182
    
    
    
    (2,159
    )
    
    
    0
    
    
    
    (2,159
    )Benefit obligation at end of period
    
    $
    10,552
    
    
    $
    861
    
    
    $
    11,413
    
    
    $
    9,780
    
    
    $
    738
    
    
    $
    10,518
    
    
    $
    6,496
    
    
    $
    572
    
    
    $
    7,068CHANGE IN PLAN ASSETSFair value of plan assets at beginning of period
    
    $
    7,613
    
    
    $
    548
    
    
    $
    8,161
    
    
    $
    5,282
    
    
    $
    343
    
    
    $
    5,625
    
    
    $
    7,575
    
    
    $
    168
    
    
    $
    7,743Actual return on plan assets
    
    
    961
    
    
    
    (7
    )
    
    
    954
    
    
    
    1,030
    
    
    
    (6
    )
    
    
    1,024
    
    
    
    (1,177
    )
    
    
    (2
    )
    
    
    (1,179
    )Employer contribution
    
    
    1,936
    
    
    
    93
    
    
    
    2,029
    
    
    
    592
    
    
    
    212
    
    
    
    804
    
    
    
    350
    
    
    
    185
    
    
    
    535Plan participants contributions
    
    
    74
    
    
    
    0
    
    
    
    74
    
    
    
    84
    
    
    
    0
    
    
    
    84
    
    
    
    122
    
    
    
    0
    
    
    
    122Benefits paid
    
    
    (846
    )
    
    
    (24
    )
    
    
    (870
    )
    
    
    (306
    )
    
    
    (1
    )
    
    
    (307
    )
    
    
    (126
    )
    
    
    (8
    )
    
    
    (134
    )Foreign currency exchange rate changes
    
    
    386
    
    
    
    0
    
    
    
    386
    
    
    
    931
    
    
    
    0
    
    
    
    931
    
    
    
    (1,462
    )
    
    
    0
    
    
    
    (1,462
    )Fair value of plan assets at end of period
    
    $
    10,124
    
    
    $
    610
    
    
    $
    10,734
    
    
    $
    7,613
    
    
    $
    548
    
    
    $
    8,161
    
    
    $
    5,282
    
    
    $
    343
    
    
    $
    5,625Funded status  accrued benefit cost
    
    $
    (428
    )
    
    $
    (251
    )
    
    $
    (679
    )
    
    $
    (2,167
    )
    
    $
    (190
    )
    
    $
    (2,357
    )
    
    $
    (1,214
    )
    
    $
    (229
    )
    
    $
    (1,443
    )ASSUMPTIONSDiscount rate
    
    
    5.70
    %
    
    
    5.30
    %
    
    
    N/A
    
    
    
    6.40
    %
    
    
    5.90
    %
    
    
    N/A
    
    
    
    7.50
    %
    
    
    6.25
    %
    
    
    N/AExpected return on plan assets
    
    
    6.50
    %
    
    
    6.00
    %
    
    
    N/A
    
    
    
    6.50
    %
    
    
    6.00
    %
    
    
    N/A
    
    
    
    6.50
    %
    
    
    6.00
    %
    
    
    N/ARate of compensation increase
    
    
    3.50
    %
    
    
    4.56
    %
    
    
    N/A
    
    
    
    3.50
    %
    
    
    4.56
    %
    
    
    N/A
    
    
    
    3.50
    %
    
    
    4.56
    %
    
    
    N/ACOMPONENTS OF NET PERIODIC BENEFIT COST IN PERIODService cost
    
    $
    119
    
    
    $
    83
    
    
    $
    202
    
    
    $
    101
    
    
    $
    73
    
    
    $
    174
    
    
    $
    168
    
    
    $
    123
    
    
    $
    291Interest cost
    
    
    621
    
    
    
    43
    
    
    
    664
    
    
    
    487
    
    
    
    35
    
    
    
    522
    
    
    
    604
    
    
    
    18
    
    
    
    622Expected return on plan assets
    
    
    (495
    )
    
    
    (35
    )
    
    
    (530
    )
    
    
    (343
    )
    
    
    (25
    )
    
    
    (368
    )
    
    
    (492
    )
    
    
    (13
    )
    
    
    (505
    )Amortization of prior service cost
    
    
    24
    
    
    
    0
    
    
    
    24
    
    
    
    23
    
    
    
    0
    
    
    
    23
    
    
    
    20
    
    
    
    0
    
    
    
    20Amortization of net actuarial loss
    
    
    126
    
    
    
    30
    
    
    
    156
    
    
    
    21
    
    
    
    22
    
    
    
    43
    
    
    
    127
    
    
    
    5
    
    
    
    132Net periodic pension cost
    
    $
    395
    
    
    $
    121
    
    
    $
    516
    
    
    $
    289
    
    
    $
    105
    
    
    $
    394
    
    
    $
    427
    
    
    $
    133
    
    
    $
    560
 (in thousands)Canadian
    
    
    U.S.
    
    
    TotalExpected Employer Contribution in 2011
    
    $
    149
    
    
    $
    87
    
    
    $
    236Expected Employee Contribution in 2011
    
    
    75
    
    
    
    0
    
    
    
    75Amortization of Loss in 2011
    
    
    102
    
    
    
    33
    
    
    
    135Amortization of Prior Service Cost in 2011
    
    
    24
    
    
    
    0
    
    
    
    24Expected Benefit Payments in2011
    
    $
    291
    
    
    $
    29
    
    
    $
    3202012
    
    
    291
    
    
    
    40
    
    
    
    3312013
    
    
    291
    
    
    
    53
    
    
    
    3442014
    
    
    331
    
    
    
    61
    
    
    
    3922015
    
    
    388
    
    
    
    61
    
    
    
    4492016-2021
    
    
    3,102
    
    
    
    353
    
    
    
    3,455
 December 31,
    
    
    December 31,Adjustments to Accumulated Other Comprehensive Income
    
    2010
    
    
    2009(In thousands)Unrecognized net actuarial loss
    
    $
    175
    
    
    $
    (1,139
    )Foreign currency translation
    
    
    277
    
    
    
    Unrecognized transition obligation
    
    
    24
    
    
    
    (21
    )Total adjustment to AOCI, before tax
    
    $
    476
    
    
    $
    (1,160
    )Total adjustment to AOCI, after tax
    
    $
    329
    
    
    $
    (765
    )Balance in AOCI, net of tax of $167 and $20, respectively
    
    $
    429
    
    
    $
    100
  December 31,
    
    
    December 31,
    
    
    Target Allocation2010
    
    
    2009
    
    
    2011Integra Strategic Allocated Pool Fund
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Fund holdings by class:a) Equity securities
    
    
    59.9
    %
    
    
    60.0
    %
    
    
    60.0
    %b) Debt securities
    
    
    32.7
    %
    
    
    40.0
    %
    
    
    40.0
    %c) Other (including cash)
    
    
    7.4
    %
    
    
    0.0
    %
    
    
    0.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Expected long-term rate of return on assets
    
    
    6.50
    %
    
    
    6.50
    %Expected rate of return on equity securities
    
    
    7.50
    %
    
    
    7.50
    %Expected rate of return on debt securities
    
    
    5.50
    %
    
    
    5.50
    %
 F-26




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##### Table of Contents



Policy
    
    
    Minimum
    
    
    MaximumAsset Mix Limits:
    
    Mix
    
    
    Limit
    
    
    LimitCanadian Equity
    
    
    30
    %
    
    
    20
    %
    
    
    40
    %U.S. Equity
    
    
    15
    %
    
    
    5
    %
    
    
    20
    %International Equity
    
    
    15
    %
    
    
    5
    %
    
    
    20
    %Real Estate
    
    
    0
    %
    
    
    0
    %
    
    
    10
    %Total Equity
    
    
    60
    %
    
    
    25
    %
    
    
    70
    %Bonds
    
    
    40
    %
    
    
    30
    %
    
    
    75
    %Mortgages
    
    
    0
    %
    
    
    0
    %
    
    
    10
    %Short Term
    
    
    0
    %
    
    
    0
    %
    
    
    20
    %Total Fixed Income
    
    
    40
    %
    
    
    30
    %
    
    
    75
    %
  January 1, 2010 to
    
    
    January 1, 2009 to
    
    
    January 1, 2008 toDecember 31, 2010
    
    
    December 31, 2009
    
    
    December 31, 2008CHANGE IN BENEFIT OBLIGATIONBenefit obligation at beginning of period
    
    $
    2,201
    
    
    $
    1,980
    
    
    $
    2,053Service cost
    
    
    43
    
    
    
    43
    
    
    
    45Interest cost
    
    
    129
    
    
    
    123
    
    
    
    128Actuarial gain
    
    
    (92
    )
    
    
    55
    
    
    
    (246
    )Benefits paid
    
    
    (3
    )
    
    
    0
    
    
    
    0Benefit obligation at end of period
    
    $
    2,278
    
    
    $
    2,201
    
    
    $
    1,980CHANGE IN PLAN ASSETSFair value of plan assets at beginning of period
    
    $
    0
    
    
    $
    0
    
    
    $
    0Employer direct benefit payments
    
    
    3
    
    
    
    0
    
    
    
    0Direct benefit payments
    
    
    (3
    )
    
    
    0
    
    
    
    0Fair value of plan assets at end of period
    
    $
    0
    
    
    $
    0
    
    
    $
    0Funded status  (accrued) benefit cost
    
    $
    (2,278
    )
    
    $
    (2,201
    )
    
    $
    (1,980
    )ASSUMPTIONSDiscount rate
    
    
    5.30
    %
    
    
    5.90
    %
    
    
    6.25
    %Current year health care cost trend rate
(ultimate rate reached in 2006)
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ACOMPONENTS OF NET PERIODIC BENEFIT COST IN
PERIODService cost
    
    $
    43
    
    
    $
    43
    
    
    $
    45Interest cost
    
    
    129
    
    
    
    123
    
    
    
    128Amortization of net actuarial gain
    
    
    (61
    )
    
    
    (71
    )
    
    
    (60
    )Net periodic benefit cost
    
    $
    111
    
    
    $
    95
    
    
    $
    113
 F-27




---



##### Table of Contents



December 31,
    
    
    December 31,Adjustments to Accumulated Other Comprehensive Income
    
    2010
    
    
    2009(In thousands)Unrecognized net actuarial (loss) gain
    
    $
    33
    
    
    $
    (126
    )Total adjustment to AOCI, before tax
    
    $
    33
    
    
    $
    (126
    )Total adjustment to AOCI, after tax
    
    $
    21
    
    
    $
    (78
    )Balance in AOCI, net of tax of $193 and $181, respectively
    
    $
    316
    
    
    $
    295
 Estimated FutureBenefit Payments(In thousands)2011
    
    $
    352012
    
    
    572013
    
    
    942014
    
    
    1262015
    
    
    1472016 - 2020
    
    
    929
 15. COMMITMENTS AND CONTINGENCIES
      F-28




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##### Table of Contents



Government grants
  16. RELATED PARTY TRANSACTIONS
      F-29




---



##### Table of Contents



17. RESTRUCTURING COSTS
  18. IMPAIRMENT OF ASSETS
   19. TRACK MAINTENANCE AGREEMENT
   20. OTHER INCOME
  F-30




---



##### Table of Contents



21. UNAUDITED QUARTERLY FINANCIAL DATA
   First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterOperating revenue
    
    $
    114,941
    
    
    $
    119,457
    
    
    $
    128,257
    
    
    $
    127,636Operating income
    
    $
    19,201
    
    
    $
    23,060
    
    
    $
    28,491
    
    
    $
    43,755Income (loss) from continuing operations
    
    $
    (2,514
    )
    
    $
    (4,221
    )
    
    $
    7,968
    
    
    $
    17,884Net income (loss)
    
    $
    (2,514
    )
    
    $
    (4,221
    )
    
    $
    7,968
    
    
    $
    17,884Basic income (loss) from continuing operations per share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    0.15
    
    
    $
    0.33Diluted income (loss) from continuing operations per share
    
    $
    (0.05
    )
    
    $
    (0.08
    )
    
    $
    0.15
    
    
    $
    0.33
   First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterOperating revenue
    
    $
    103,218
    
    
    $
    103,265
    
    
    $
    110,137
    
    
    $
    109,154Operating income
    
    $
    21,795
    
    
    $
    23,514
    
    
    $
    25,608
    
    
    $
    43,288Income (loss) from continuing operations
    
    $
    809
    
    
    $
    5,467
    
    
    $
    3,503
    
    
    $
    (6,868
    )Net income (loss)
    
    $
    993
    
    
    $
    18,234
    
    
    $
    3,483
    
    
    $
    (6,868
    )Basic income (loss) from continuing operations per share
    
    $
    0.02
    
    
    $
    0.13
    
    
    $
    0.08
    
    
    $
    (0.13
    )Diluted income (loss) from continuing operations per share
    
    $
    0.02
    
    
    $
    0.13
    
    
    $
    0.08
    
    
    $
    (0.13
    )
  F-31




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##### Table of Contents



22. SEGMENT INFORMATION
   North AmericaYear Ended December 31, 2010:
    
    Consolidated
    
    
    United States
    
    
    CanadaRevenue
    
    $
    490,291
    
    
    $
    427,017
    
    
    $
    63,274Depreciation and amortization
    
    
    45,091
    
    
    
    41,867
    
    
    
    3,224Income from continuing operations before income taxes
    
    
    25,973
    
    
    
    14,019
    
    
    
    11,954Interest expense
    
    
    83,775
    
    
    
    79,246
    
    
    
    4,529Total assets
    
    
    1,603,653
    
    
    
    1,396,922
    
    
    
    206,731Capital expenditures, net
    
    
    57,826
    
    
    
    51,845
    
    
    
    5,981
 North AmericaYear Ended December 31, 2009:
    
    Consolidated
    
    
    United States
    
    
    CanadaRevenue
    
    $
    425,774
    
    
    $
    370,265
    
    
    $
    55,509Depreciation and amortization
    
    
    42,105
    
    
    
    39,088
    
    
    
    3,017Income (loss) from continuing operations before income taxes
    
    
    19,210
    
    
    
    (16,730
    )
    
    
    35,940Interest expense
    
    
    86,878
    
    
    
    82,767
    
    
    
    4,111Total assets
    
    
    1,598,629
    
    
    
    1,402,794
    
    
    
    195,835Capital expenditures
    
    
    47,789
    
    
    
    42,815
    
    
    
    4,974
 North AmericaYear Ended December 31, 2008:
    
    Consolidated
    
    
    United States
    
    
    CanadaRevenue
    
    $
    508,466
    
    
    $
    439,878
    
    
    $
    68,588Depreciation and amortization
    
    
    39,578
    
    
    
    37,016
    
    
    
    2,562Income from continuing operations before income taxes
    
    
    15,362
    
    
    
    9,403
    
    
    
    5,959Interest expense
    
    
    61,678
    
    
    
    58,693
    
    
    
    2,985Total assets
    
    
    1,470,447
    
    
    
    1,256,731
    
    
    
    213,716Capital expenditures
    
    
    61,282
    
    
    
    53,133
    
    
    
    8,149
 F-32




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##### Table of Contents



23. GUARANTOR FINANCIAL STATEMENT INFORMATION
  RailAmerica, Inc.
 Consolidating Balance Sheet
December 31, 2010
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    137,335
    
    
    $
    15,633
    
    
    $
    
    
    
    $
    152,968Accounts and notes receivable, net of allowance
    
    
    116
    
    
    
    65,920
    
    
    
    8,632
    
    
    
    
    
    
    
    74,668Current deferred tax assets
    
    
    12,769
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,769Other current assets
    
    
    205
    
    
    
    13,976
    
    
    
    1,019
    
    
    
    
    
    
    
    15,200Total current assets
    
    
    13,090
    
    
    
    217,231
    
    
    
    25,284
    
    
    
    
    
    
    
    255,605Property, plant and equipment, net
    
    
    485
    
    
    
    898,155
    
    
    
    82,982
    
    
    
    
    
    
    
    981,622Intangible Assets
    
    
    
    
    
    
    103,935
    
    
    
    36,611
    
    
    
    
    
    
    
    140,546Goodwill
    
    
    
    
    
    
    204,679
    
    
    
    7,816
    
    
    
    
    
    
    
    212,495Other assets
    
    
    12,401
    
    
    
    984
    
    
    
    
    
    
    
    
    
    
    
    13,385Investment in and advances to affiliates
    
    
    1,265,556
    
    
    
    1,119,507
    
    
    
    33,534
    
    
    
    (2,418,597
    )
    
    
    Total assets
    
    $
    1,291,532
    
    
    $
    2,544,491
    
    
    $
    186,227
    
    
    $
    (2,418,597
    )
    
    $
    1,603,653LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt
    
    $
    
    
    
    $
    403
    
    
    $
    
    
    
    $
    
    
    
    $
    403Accounts payable
    
    
    7,311
    
    
    
    54,150
    
    
    
    4,797
    
    
    
    
    
    
    
    66,258Accrued expenses
    
    
    3,939
    
    
    
    29,362
    
    
    
    3,612
    
    
    
    
    
    
    
    36,913Total current liabilities
    
    
    11,250
    
    
    
    83,915
    
    
    
    8,409
    
    
    
    
    
    
    
    103,574Long-term debt, less current maturities
    
    
    
    
    
    
    2,147
    
    
    
    
    
    
    
    
    
    
    
    2,147Senior secured notes
    
    
    571,161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    571,161Deferred income taxes
    
    
    (1,087
    )
    
    
    182,747
    
    
    
    21,325
    
    
    
    
    
    
    
    202,985Other liabilities
    
    
    5,459
    
    
    
    13,113
    
    
    
    465
    
    
    
    
    
    
    
    19,037Stockholders equity:Common stock
    
    
    549
    
    
    
    1,493
    
    
    
    
    
    
    
    (1,493
    )
    
    
    549Additional paid-in capital
    
    
    636,757
    
    
    
    2,218,338
    
    
    
    130,816
    
    
    
    (2,349,154
    )
    
    
    636,757Retained earnings
    
    
    65,503
    
    
    
    42,633
    
    
    
    9,653
    
    
    
    (52,286
    )
    
    
    65,503Accumulated other comprehensive income
    
    
    1,940
    
    
    
    105
    
    
    
    15,559
    
    
    
    (15,664
    )
    
    
    1,940Total stockholders equity
    
    
    704,749
    
    
    
    2,262,569
    
    
    
    156,028
    
    
    
    (2,418,597
    )
    
    
    704,749Total liabilities and stockholders equity
    
    $
    1,291,532
    
    
    $
    2,544,491
    
    
    $
    186,227
    
    
    $
    (2,418,597
    )
    
    $
    1,603,653
 F-33




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Operations
For the year ended December 31, 2010
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenue
    
    $
    203
    
    
    $
    426,814
    
    
    $
    63,274
    
    
    $
    
    
    
    $
    490,291Operating expenses:Labor and benefits
    
    
    21,838
    
    
    
    116,560
    
    
    
    15,595
    
    
    
    
    
    
    
    153,993Equipment rents
    
    
    127
    
    
    
    32,012
    
    
    
    1,980
    
    
    
    
    
    
    
    34,119Purchased services
    
    
    6,414
    
    
    
    28,716
    
    
    
    2,841
    
    
    
    
    
    
    
    37,971Diesel fuel
    
    
    
    
    
    
    36,067
    
    
    
    7,249
    
    
    
    
    
    
    
    43,316Casualties and insurance
    
    
    1,003
    
    
    
    14,499
    
    
    
    2,072
    
    
    
    
    
    
    
    17,574Materials
    
    
    169
    
    
    
    17,662
    
    
    
    1,776
    
    
    
    
    
    
    
    19,607Joint facilities
    
    
    
    
    
    
    8,643
    
    
    
    24
    
    
    
    
    
    
    
    8,667Other expenses
    
    
    3,096
    
    
    
    28,471
    
    
    
    3,659
    
    
    
    
    
    
    
    35,226Track maintenance expense reimbursement
    
    
    (17,589
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,589
    )Net gain on sale of assets
    
    
    
    
    
    
    (2,142
    )
    
    
    (49
    )
    
    
    
    
    
    
    (2,191
    )Depreciation and amortization
    
    
    54
    
    
    
    41,813
    
    
    
    3,224
    
    
    
    
    
    
    
    45,091Total operating expenses
    
    
    15,112
    
    
    
    322,301
    
    
    
    38,371
    
    
    
    
    
    
    
    375,784Operating (loss) income
    
    
    (14,909
    )
    
    
    104,513
    
    
    
    24,903
    
    
    
    
    
    
    
    114,507Interest expense
    
    
    (17,117
    )
    
    
    (62,129
    )
    
    
    (4,529
    )
    
    
    
    
    
    
    (83,775
    )Equity in earnings of subsidiaries
    
    
    54,203
    
    
    
    
    
    
    
    
    
    
    
    (54,203
    )
    
    
    Other income
(loss)
    
    
    2,126
    
    
    
    1,537
    
    
    
    (8,422
    )
    
    
    
    
    
    
    (4,759
    )Income from continuing operations before income taxes
    
    
    24,303
    
    
    
    43,921
    
    
    
    11,952
    
    
    
    (54,203
    )
    
    
    25,973Provision for income taxes
    
    
    5,186
    
    
    
    (1,726
    )
    
    
    3,396
    
    
    
    
    
    
    
    6,856Income from continuing operations
    
    
    19,117
    
    
    
    45,647
    
    
    
    8,556
    
    
    
    (54,203
    )
    
    
    19,117Net income
    
    $
    19,117
    
    
    $
    45,647
    
    
    $
    8,556
    
    
    $
    (54,203
    )
    
    $
    19,117
 F-34




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Cash Flows
For the year ended December 31, 2010
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    19,117
    
    
    $
    45,647
    
    
    $
    8,556
    
    
    $
    (54,203
    )
    
    $
    19,117Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization, including
amortization costs classified in interest expense
    
    
    4,419
    
    
    
    42,206
    
    
    
    3,222
    
    
    
    
    
    
    
    49,847Equity in earnings of subsidiaries
    
    
    (54,203
    )
    
    
    
    
    
    
    
    
    
    
    54,203
    
    
    
    Amortization of swap termination costs
    
    
    20,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,891Net gain on sale or disposal of properties
    
    
    
    
    
    
    (2,142
    )
    
    
    (49
    )
    
    
    
    
    
    
    (2,191
    )Loss on extinguishment of debt
    
    
    8,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,357Equity compensation costs
    
    
    7,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,534Deferred income taxes and other
    
    
    1,649
    
    
    
    2,308
    
    
    
    (1,192
    )
    
    
    
    
    
    
    2,765Changes in operating assets and liabilities, net
of acquisitions and dispositions:Accounts receivable
    
    
    (56
    )
    
    
    (1,201
    )
    
    
    (1,178
    )
    
    
    
    
    
    
    (2,435
    )Other current assets
    
    
    (19
    )
    
    
    6,258
    
    
    
    1,273
    
    
    
    
    
    
    
    7,512Accounts payable
    
    
    5,105
    
    
    
    1,846
    
    
    
    623
    
    
    
    
    
    
    
    7,574Accrued expenses
    
    
    481
    
    
    
    2,940
    
    
    
    (2,153
    )
    
    
    
    
    
    
    1,268Other assets and liabilities
    
    
    (1,301
    )
    
    
    (219
    )
    
    
    (1,550
    )
    
    
    
    
    
    
    (3,070
    )Net cash provided by operating activities
    
    
    11,974
    
    
    
    97,643
    
    
    
    7,552
    
    
    
    
    
    
    
    117,169Cash flows from investing activities:Purchase of property, plant and equipment, net of
NECR government grant reimbursement
    
    
    (442
    )
    
    
    (51,403
    )
    
    
    (5,981
    )
    
    
    
    
    
    
    (57,826
    )Proceeds from sale of assets
    
    
    
    
    
    
    3,948
    
    
    
    160
    
    
    
    
    
    
    
    4,108Acquisitions, net of cash acquired
    
    
    
    
    
    
    (23,926
    )
    
    
    
    
    
    
    
    
    
    
    (23,926
    )Net cash used in investing activities
    
    
    (442
    )
    
    
    (71,381
    )
    
    
    (5,821
    )
    
    
    
    
    
    
    (77,644
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    
    
    
    
    (622
    )
    
    
    
    
    
    
    
    
    
    
    (622
    )Repurchase of senior secured notes
    
    
    (76,220
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,220
    )(Disbursements)/receipts on intercompany debt
    
    
    (57,152
    )
    
    
    56,996
    
    
    
    156
    
    
    
    
    
    
    
    Sale of common stock
    
    
    (106
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (106
    )Deferred financing costs paid
    
    
    (95
    )
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    (224
    )Net cash (used in) provided by financing activities
    
    
    (133,573
    )
    
    
    56,245
    
    
    
    156
    
    
    
    
    
    
    
    (77,172
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    397Net (decrease) increase in cash
    
    
    (122,041
    )
    
    
    82,507
    
    
    
    2,284
    
    
    
    
    
    
    
    (37,250
    )Cash, beginning of period
    
    
    122,041
    
    
    
    54,828
    
    
    
    13,349
    
    
    
    
    
    
    
    190,218Cash, end of period
    
    $
    
    
    
    $
    137,335
    
    
    $
    15,633
    
    
    $
    
    
    
    $
    152,968
 F-35




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Balance Sheet
December 31, 2009
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    122,041
    
    
    $
    54,828
    
    
    $
    13,349
    
    
    $
    
    
    
    $
    190,218Accounts and notes receivable, net of allowance
    
    
    60
    
    
    
    59,575
    
    
    
    6,984
    
    
    
    
    
    
    
    66,619Current deferred tax assets
    
    
    12,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,697Other current assets
    
    
    184
    
    
    
    19,560
    
    
    
    2,214
    
    
    
    
    
    
    
    21,958Total current assets
    
    
    134,982
    
    
    
    133,963
    
    
    
    22,547
    
    
    
    
    
    
    
    291,492Property, plant and equipment, net
    
    
    97
    
    
    
    876,380
    
    
    
    76,050
    
    
    
    
    
    
    
    952,527Intangible Assets
    
    
    
    
    
    
    101,913
    
    
    
    34,741
    
    
    
    
    
    
    
    136,654Goodwill
    
    
    
    
    
    
    193,353
    
    
    
    7,416
    
    
    
    
    
    
    
    200,769Other assets
    
    
    16,051
    
    
    
    1,153
    
    
    
    (17
    )
    
    
    
    
    
    
    17,187Investment in and advances to affiliates
    
    
    1,155,110
    
    
    
    1,190,835
    
    
    
    32,136
    
    
    
    (2,378,081
    )
    
    
    Total assets
    
    $
    1,306,240
    
    
    $
    2,497,597
    
    
    $
    172,873
    
    
    $
    (2,378,081
    )
    
    $
    1,598,629LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt
    
    $
    
    
    
    $
    669
    
    
    $
    
    
    
    $
    
    
    
    $
    669Accounts payable
    
    
    5,388
    
    
    
    48,658
    
    
    
    (98
    )
    
    
    
    
    
    
    53,948Accrued expenses
    
    
    3,448
    
    
    
    25,837
    
    
    
    5,390
    
    
    
    
    
    
    
    34,675Total current liabilities
    
    
    8,836
    
    
    
    75,164
    
    
    
    5,292
    
    
    
    
    
    
    
    89,292Long-term debt, less current maturities
    
    
    
    
    
    
    3,013
    
    
    
    
    
    
    
    
    
    
    
    3,013Senior secured notes
    
    
    640,096
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    640,096Deferred income taxes
    
    
    (8,807
    )
    
    
    168,530
    
    
    
    25,279
    
    
    
    
    
    
    
    185,002Other liabilities
    
    
    6,784
    
    
    
    12,922
    
    
    
    2,189
    
    
    
    
    
    
    
    21,895Stockholders equity:Common stock
    
    
    544
    
    
    
    1,493
    
    
    
    
    
    
    
    (1,493
    )
    
    
    544Additional paid-in capital
    
    
    630,653
    
    
    
    2,214,974
    
    
    
    127,311
    
    
    
    (2,342,285
    )
    
    
    630,653Retained earnings
    
    
    46,386
    
    
    
    21,262
    
    
    
    3,202
    
    
    
    (24,464
    )
    
    
    46,386Accumulated other comprehensive (loss) income
    
    
    (18,252
    )
    
    
    239
    
    
    
    9,600
    
    
    
    (9,839
    )
    
    
    (18,252
    )Total stockholders equity
    
    
    659,331
    
    
    
    2,237,968
    
    
    
    140,113
    
    
    
    (2,378,081
    )
    
    
    659,331Total liabilities and stockholders equity
    
    $
    1,306,240
    
    
    $
    2,497,597
    
    
    $
    172,873
    
    
    $
    (2,378,081
    )
    
    $
    1,598,629
 F-36




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Operations
For the year ended December 31, 2009
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenue
    
    $
    172
    
    
    $
    370,093
    
    
    $
    55,509
    
    
    $
    
    
    
    $
    425,774Operating expenses:Labor and benefits
    
    
    24,222
    
    
    
    104,586
    
    
    
    14,796
    
    
    
    
    
    
    
    143,604Equipment rents
    
    
    51
    
    
    
    33,832
    
    
    
    2,095
    
    
    
    
    
    
    
    35,978Purchased services
    
    
    5,644
    
    
    
    23,599
    
    
    
    1,671
    
    
    
    
    
    
    
    30,914Diesel fuel
    
    
    
    
    
    
    27,934
    
    
    
    5,356
    
    
    
    
    
    
    
    33,290Casualties and insurance
    
    
    606
    
    
    
    13,067
    
    
    
    3,122
    
    
    
    
    
    
    
    16,795Materials
    
    
    82
    
    
    
    9,749
    
    
    
    1,568
    
    
    
    
    
    
    
    11,399Joint facilities
    
    
    
    
    
    
    6,916
    
    
    
    26
    
    
    
    
    
    
    
    6,942Other expenses
    
    
    1,990
    
    
    
    25,938
    
    
    
    5,109
    
    
    
    
    
    
    
    33,037Track maintenance expense reimbursement
    
    
    (16,656
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,656
    )Net loss (gain) on sale of assets
    
    
    
    
    
    
    936
    
    
    
    (26,775
    )
    
    
    
    
    
    
    (25,839
    )Depreciation and amortization
    
    
    209
    
    
    
    38,879
    
    
    
    3,017
    
    
    
    
    
    
    
    42,105Total operating expenses
    
    
    16,148
    
    
    
    285,436
    
    
    
    9,985
    
    
    
    
    
    
    
    311,569Operating (loss) income
    
    
    (15,976
    )
    
    
    84,657
    
    
    
    45,524
    
    
    
    
    
    
    
    114,205Interest expense
    
    
    (41,169
    )
    
    
    (41,598
    )
    
    
    (4,111
    )
    
    
    
    
    
    
    (86,878
    )Equity in earnings of subsidiaries
    
    
    53,366
    
    
    
    
    
    
    
    
    
    
    
    (53,366
    )
    
    
    Other income
(loss)
    
    
    3,023
    
    
    
    (5,666
    )
    
    
    (5,474
    )
    
    
    
    
    
    
    (8,117
    )Income from continuing operations before income taxes
    
    
    (756
    )
    
    
    37,393
    
    
    
    35,939
    
    
    
    (53,366
    )
    
    
    19,210Provision for (benefit from) income taxes
    
    
    (5,482
    )
    
    
    13,861
    
    
    
    7,920
    
    
    
    
    
    
    
    16,299Income from continuing operations
    
    
    4,726
    
    
    
    23,532
    
    
    
    28,019
    
    
    
    (53,366
    )
    
    
    2,911Discontinued operations:Gain on disposal of discontinued business (net of income taxes)
    
    
    11,116
    
    
    
    1,651
    
    
    
    164
    
    
    
    
    
    
    
    12,931Net income
    
    $
    15,842
    
    
    $
    25,183
    
    
    $
    28,183
    
    
    $
    (53,366
    )
    
    $
    15,842
 F-37




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Cash Flows
For the year ended December 31, 2009
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    15,842
    
    
    $
    25,183
    
    
    $
    28,183
    
    
    $
    (53,366
    )
    
    $
    15,842Adjustments to reconcile net income to net cash
(used in) provided by operating activities:Depreciation and amortization, including
amortization costs classified in interest expense
    
    
    3,276
    
    
    
    45,360
    
    
    
    3,704
    
    
    
    
    
    
    
    52,340Equity in earnings of subsidiaries
    
    
    (53,366
    )
    
    
    
    
    
    
    
    
    
    
    53,366
    
    
    
    Amortization of swap termination costs
    
    
    16,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,616Net loss (gain) on sale or disposal of properties
    
    
    1,201
    
    
    
    (949
    )
    
    
    (27,018
    )
    
    
    
    
    
    
    (26,766
    )Foreign exchange gain on debt
    
    
    
    
    
    
    
    
    
    
    (1,160
    )
    
    
    
    
    
    
    (1,160
    )Swap termination costs
    
    
    (55,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,750
    )Loss on extinguishment of debt
    
    
    7,415
    
    
    
    1,875
    
    
    
    209
    
    
    
    
    
    
    
    9,499Equity compensation costs
    
    
    10,712
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,712Deferred income taxes and other
    
    
    (1,780
    )
    
    
    14,891
    
    
    
    7,946
    
    
    
    
    
    
    
    21,057Changes in operating assets and liabilities, net
of acquisitions and dispositions:Accounts receivable
    
    
    29
    
    
    
    9,117
    
    
    
    1,727
    
    
    
    
    
    
    
    10,873Other current assets
    
    
    47
    
    
    
    (2,652
    )
    
    
    (488
    )
    
    
    
    
    
    
    (3,093
    )Accounts payable
    
    
    3,361
    
    
    
    511
    
    
    
    (7,054
    )
    
    
    
    
    
    
    (3,182
    )Accrued expenses
    
    
    (4,548
    )
    
    
    (11,580
    )
    
    
    (549
    )
    
    
    
    
    
    
    (16,677
    )Other assets and liabilities
    
    
    (22,865
    )
    
    
    2,320
    
    
    
    (226
    )
    
    
    
    
    
    
    (20,771
    )Net cash (used in) provided by operating activities
    
    
    (79,810
    )
    
    
    84,076
    
    
    
    5,274
    
    
    
    
    
    
    
    9,540Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (44
    )
    
    
    (42,771
    )
    
    
    (4,974
    )
    
    
    
    
    
    
    (47,789
    )Proceeds from sale of assets
    
    
    
    
    
    
    21,381
    
    
    
    68,959
    
    
    
    
    
    
    
    90,340Deferred acquisition/disposition costs and other
    
    
    (355
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (355
    )Net cash (used in) provided by investing activities
    
    
    (399
    )
    
    
    (21,390
    )
    
    
    63,985
    
    
    
    
    
    
    
    42,196Cash flows from financing activities:Proceeds from issuance of senior secured notes
    
    
    709,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    709,830Principal payments on long-term debt
    
    
    (112,000
    )
    
    
    (475,898
    )
    
    
    (38,000
    )
    
    
    
    
    
    
    (625,898
    )Repurchase of senior secured notes
    
    
    (76,220
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,220
    )(Disbursements)/receipts on intercompany debt
    
    
    (427,167
    )
    
    
    454,443
    
    
    
    (27,276
    )
    
    
    
    
    
    
    Sale of common stock
    
    
    143,123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143,123Dividends paid to common stockholders
    
    
    (19,485
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,485
    )Deferred financing costs paid
    
    
    (19,035
    )
    
    
    (1,140
    )
    
    
    
    
    
    
    
    
    
    
    (20,175
    )Net cash provided by (used in) financing activities
    
    
    199,046
    
    
    
    (22,595
    )
    
    
    (65,276
    )
    
    
    
    
    
    
    111,175Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    356
    
    
    
    
    
    
    
    356Net increase in cash
    
    
    118,837
    
    
    
    40,091
    
    
    
    4,339
    
    
    
    
    
    
    
    163,267Cash, beginning of period
    
    
    3,204
    
    
    
    14,737
    
    
    
    9,010
    
    
    
    
    
    
    
    26,951Cash, end of period
    
    $
    122,041
    
    
    $
    54,828
    
    
    $
    13,349
    
    
    $
    
    
    
    $
    190,218
 F-38




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Operations
For the year ended December 31, 2008
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenue
    
    $
    214
    
    
    $
    439,664
    
    
    $
    68,588
    
    
    $
    
    
    
    $
    508,466Operating expenses:Labor and benefits
    
    
    17,585
    
    
    
    111,741
    
    
    
    19,463
    
    
    
    
    
    
    
    148,789Equipment rents
    
    
    30
    
    
    
    42,741
    
    
    
    2,249
    
    
    
    
    
    
    
    45,020Purchased services
    
    
    9,167
    
    
    
    26,723
    
    
    
    2,902
    
    
    
    
    
    
    
    38,792Diesel fuel
    
    
    
    
    
    
    60,354
    
    
    
    9,620
    
    
    
    
    
    
    
    69,974Casualties and insurance
    
    
    512
    
    
    
    19,469
    
    
    
    2,060
    
    
    
    
    
    
    
    22,041Materials
    
    
    82
    
    
    
    9,207
    
    
    
    1,374
    
    
    
    
    
    
    
    10,663Joint facilities
    
    
    
    
    
    
    12,554
    
    
    
    19
    
    
    
    
    
    
    
    12,573Other expenses
    
    
    2,331
    
    
    
    26,030
    
    
    
    4,904
    
    
    
    
    
    
    
    33,265Track maintenance expense reimbursement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (gain) loss on sale of assets
    
    
    
    
    
    
    (1,829
    )
    
    
    132
    
    
    
    
    
    
    
    (1,697
    )Impairment of assets
    
    
    
    
    
    
    3,420
    
    
    
    
    
    
    
    
    
    
    
    3,420Depreciation and amortization
    
    
    209
    
    
    
    36,807
    
    
    
    2,562
    
    
    
    
    
    
    
    39,578Total operating expenses
    
    
    29,916
    
    
    
    347,217
    
    
    
    45,285
    
    
    
    
    
    
    
    422,418Operating (loss) income
    
    
    (29,702
    )
    
    
    92,447
    
    
    
    23,303
    
    
    
    
    
    
    
    86,048Interest expense
    
    
    (19,464
    )
    
    
    (39,229
    )
    
    
    (2,985
    )
    
    
    
    
    
    
    (61,678
    )Equity in earnings of subsidiaries
    
    
    44,612
    
    
    
    
    
    
    
    
    
    
    
    (44,612
    )
    
    
    Other
income (loss)
    
    
    19,078
    
    
    
    (13,546
    )
    
    
    (14,540
    )
    
    
    
    
    
    
    (9,008
    )Income from continuing operations before income taxes
    
    
    14,524
    
    
    
    39,672
    
    
    
    5,778
    
    
    
    (44,612
    )
    
    
    15,362Provision for (benefit from) income taxes
    
    
    (2,003
    )
    
    
    1,106
    
    
    
    2,496
    
    
    
    
    
    
    
    1,599Income from continuing operations
    
    
    16,527
    
    
    
    38,566
    
    
    
    3,282
    
    
    
    (44,612
    )
    
    
    13,763Discontinued operations:Gain on
disposal of discontinued business (net of income taxes)
    
    
    
    
    
    
    1,548
    
    
    
    1,216
    
    
    
    
    
    
    
    2,764Net income
    
    $
    16,527
    
    
    $
    40,114
    
    
    $
    4,498
    
    
    $
    (44,612
    )
    
    $
    16,527
 F-39




---



##### Table of Contents



RailAmerica, Inc.
 Consolidating Statement of Cash Flows
For the year ended December 31, 2008
 NonCompany
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    16,527
    
    
    $
    40,114
    
    
    $
    4,498
    
    
    $
    (44,612
    )
    
    $
    16,527Adjustments to reconcile net income to net
cash provided by (used in) operating activities:Depreciation and amortization, including
amortization costs classified in interest expense
    
    
    1,904
    
    
    
    43,690
    
    
    
    3,524
    
    
    
    
    
    
    
    49,118Equity in earnings of subsidiaries
    
    
    (44,612
    )
    
    
    
    
    
    
    
    
    
    
    44,612
    
    
    
    Net gain on sale or disposal of properties
    
    
    
    
    
    
    (522
    )
    
    
    (1,216
    )
    
    
    
    
    
    
    (1,738
    )Foreign exchange loss on debt
    
    
    
    
    
    
    
    
    
    
    8,260
    
    
    
    
    
    
    
    8,260Equity compensation costs
    
    
    3,042
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,042Deferred income taxes and other
    
    
    (3,166
    )
    
    
    1,695
    
    
    
    (1,690
    )
    
    
    
    
    
    
    (3,161
    )Changes in operating assets and liabilities, net
of acquisitions and dispositions:Accounts receivable
    
    
    (144
    )
    
    
    10,681
    
    
    
    1,720
    
    
    
    
    
    
    
    12,257Other current assets
    
    
    2,048
    
    
    
    (8,173
    )
    
    
    264
    
    
    
    
    
    
    
    (5,861
    )Accounts payable
    
    
    2,151
    
    
    
    (5,903
    )
    
    
    (1,264
    )
    
    
    
    
    
    
    (5,016
    )Accrued expenses
    
    
    3,714
    
    
    
    3,227
    
    
    
    255
    
    
    
    
    
    
    
    7,196Other assets and liabilities
    
    
    98
    
    
    
    2,320
    
    
    
    530
    
    
    
    
    
    
    
    2,948Net cash (used in) provided by operating activities
    
    
    (18,438
    )
    
    
    87,129
    
    
    
    14,881
    
    
    
    
    
    
    
    83,572Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (53,021
    )
    
    
    (8,261
    )
    
    
    
    
    
    
    (61,282
    )Proceeds from sale of assets
    
    
    
    
    
    
    16,016
    
    
    
    1,351
    
    
    
    
    
    
    
    17,367Deferred acquisition/disposition costs and other
    
    
    (1,736
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,736
    )Net cash used in investing activities
    
    
    (1,736
    )
    
    
    (37,005
    )
    
    
    (6,910
    )
    
    
    
    
    
    
    (45,651
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    
    
    
    
    (7,359
    )
    
    
    
    
    
    
    
    
    
    
    (7,359
    )(Disbursements)/receipts on intercompany debt
    
    
    18,216
    
    
    
    (16,208
    )
    
    
    (2,008
    )
    
    
    
    
    
    
    Sale of common stock
    
    
    635
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635Financing costs
    
    
    (3,552
    )
    
    
    (13,084
    )
    
    
    (1,439
    )
    
    
    
    
    
    
    (18,075
    )Net cash provided by (used in) financing activities
    
    
    15,299
    
    
    
    (36,651
    )
    
    
    (3,447
    )
    
    
    
    
    
    
    (24,799
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    (1,558
    )
    
    
    
    
    
    
    (1,558
    )Net (decrease) increase in cash
    
    
    (4,875
    )
    
    
    13,473
    
    
    
    2,966
    
    
    
    
    
    
    
    11,564Cash, beginning of period
    
    
    8,079
    
    
    
    1,264
    
    
    
    6,044
    
    
    
    
    
    
    
    15,387Cash, end of period
    
    $
    3,204
    
    
    $
    14,737
    
    
    $
    9,010
    
    
    $
    
    
    
    $
    26,951
 F-40