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Yesterday, RailAmerica Inc. reported second-quarter earnings from continuing operations of $406,000, a 1,650 percent decline compared with $6.7 million in second-quarter 2003 because of rising expenses. Quarterly net income of $1.6 million decreased about 300 percent compared with last year's $4.7 million.

Consolidated revenue from continuing operations increased 12.7 percent to $96.2 million, but operating income dropped 60 percent to $11.3 million because of costs associated with former President and Chief Executive Officer Gary Marino's retirement, fuel and insurance. RailAmerica's quarterly North American operating ratio worsened 2.9 points to 80.6.

"Despite the significant challenges we faced during the second quarter, we are pleased with our results and the efforts of our employee team," said RailAmerica Chairman Gus Pagonis in a prepared statement. "For the second half of the year, our focus will be on organic revenue growth and controlling costs as we expect to continue to be challenged by high fuel prices."

RailAmerica continues to try and close the sale of Freight Australia to Pacific National for $202 million. The Australian Competition and Consumer Commission has approved the sale, but the state of Victoria has "raised a number of issues, which RailAmerica and Pacific National are seeking to resolve," said Pagonis.

During the year's first half, RailAmerica increased operating revenue 13 percent to $192.2 million. But operating income dropped 23 percent to $27.2 million, net income dropped 70 percent to $2.9 million and operating expenses increased 23 percent to $165 million compared with first-half 2003 figures.