-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NrQtIZ1E/bEa4pzQVAR7d2sSI9HRYJm54RhhwSszxusIh6R9UbW8DzQCANl2wXsU sa6JBj+ycj8GCne0EqLoxw== 0000831968-97-000016.txt : 19971114 0000831968-97-000016.hdr.sgml : 19971114 ACCESSION NUMBER: 0000831968-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENCE & WORCESTER RAILROAD CO/RI/ CENTRAL INDEX KEY: 0000831968 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 050344399 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12761 FILM NUMBER: 97713714 BUSINESS ADDRESS: STREET 1: 75 HAMMOND ST CITY: WORCESTER STATE: MA ZIP: 01610 BUSINESS PHONE: 5087554000 MAIL ADDRESS: STREET 1: PROVIDENCE & WORCESTER RAILROAD CO STREET 2: 75 HAMMOND STREET CITY: WORCESTER STATE: MA ZIP: 01610 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1997 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 0-16704 PROVIDENCE AND WORCESTER RAILROAD COMPANY (Exact name of registrant as specified in its charter) Rhode Island 05-0344399 _____________________________ __________________________ (State or other jurisdiction of I.R.S. Employer Identification No. incorporation or organization) 75 Hammond Street, Worcester, Massachusetts 01610 _____________________________ __________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 755-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.) YES X NO ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of October 31, 1997, the registrant has 2,220,172 shares of common stock, par value $.50 per share, outstanding. PROVIDENCE AND WORCESTER RAILROAD COMPANY BALANCE SHEETS SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS SEPTEMBER 30, DECEMBER 31, 1997 1996 (UNAUDITED) __________ __________ Current assets: Cash and equivalents $ 553,000 $ 686,000 Accounts receivable, net of allowance for doubtful accounts of $125,000 (Note 3) 3,194,000 2,537,000 Materials and supplies 1,831,000 1,021,000 Prepaid expenses and other 136,000 121,000 Deferred income taxes 400,000 400,000 __________ __________ Total current assets 6,114,000 4,765,000 __________ __________ Properties: Land and improvements 9,124,000 9,020,000 Deep-water pier project 11,455,000 11,339,000 Track structure 47,766,000 45,833,000 Buildings and other structures 5,172,000 5,955,000 Equipment (Note 4) 17,093,000 15,991,000 __________ __________ 90,610,000 88,138,000 Less accumulated depreciation 25,012,000 24,412,000 _________ __________ Total properties, net 65,598,000 63,726,000 __________ __________ $ 71,712,000 $ 68,491,000 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable, bank (Note 3) $ 1,095,000 $ 1,440,000 Current portion of long-term debt (Note 4) 850,000 677,000 Accounts payable 3,072,000 2,861,000 Accrued expenses 1,495,000 1,133,000 __________ __________ Total current liabilities 6,512,000 6,111,000 __________ __________ Long-term debt, less current portion (Note 4) 12,196,000 12,131,000 __________ __________ Deferred grant income 6,390,000 5,571,000 __________ __________ Deferred income taxes 8,917,000 8,617,000 __________ __________ Contingencies (Note 7) Shareholders' equity (Notes 2 and 6): Preferred stock, 10% noncumulative, $50 par; authorized, issued and outstanding 653 shares 33,000 33,000 Common stock, $.50 par; authorized 3,023,436 shares; issued and outstanding 2,219,369 shares in 1997 and 2,188,244 shares in 1996 1,109,000 1,094,000 Capital in excess of par 6,641,000 6,365,000 Retained earnings 29,914,000 28,569,000 __________ __________ Total shareholders' equity 37,697,000 36,061,000 __________ __________ $ 71,712,000 $ 68,491,000 ========== ========== See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 ________________ _________________ 1997 1996 1997 1996 _________ _________ _________ __________ Income: Operating revenues, freight and other $5,947,000 $5,227,000 $16,225,000 $14,321,000 Other income (Note 5) 108,000 100,000 523,000 507,000 _________ _________ __________ __________ 6,055,000 5,327,000 16,748,000 14,828,000 _________ _________ __________ __________ Expenses: Operating: Maintenance of way and structures 521,000 1,166,000 2,702,000 3,108,000 Maintenance of equipment 726,000 609,000 2,113,000 1,818,000 Transportation 1,329,000 1,153,000 3,706,000 3,521,000 General 966,000 979,000 2,764,000 2,780,000 Taxes, other than income 535,000 499,000 1,654,000 1,544,000 Car hire, net 149,000 170,000 467,000 463,000 _________ _________ __________ __________ 4,226,000 4,576,000 13,406,000 13,234,000 Interest 340,000 346,000 1,021,000 1,029,000 _________ _________ __________ __________ 4,566,000 4,922,000 14,427,000 14,263,000 _________ _________ __________ __________ Income before income taxes 1,489,000 405,000 2,321,000 565,000 _________ _________ __________ __________ Income taxes: Current 365,000 80,000 540,000 70,000 Deferred 165,000 60,000 300,000 130,000 _________ _________ __________ __________ 530,000 140,000 840,000 200,000 _________ _________ __________ __________ Net income $ 959,000 $ 265,000 $1,481,000 $ 365,000 ========= ========= ========== ========== Earnings per common and common equivalent share $ .42 $ .12 $ .65 $ .16 ========= ========= ========== ========== Weighted average common and common equivalent shares outstanding (Note 6) 2,282,639 2,251,140 2,270,325 2,240,450 ========= ========= ========= ========= Dividends per share: Preferred $ -0- $ -0- $ 5.00 $ 5.00 ========= ========= ========== ========== Common $ -0- $ -0- $ .06 $ .05 ========= ========= ========== ========== See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited)
INCREASE (DECREASE) IN CASH 1997 1996 __________ __________ Cash flows provided by (used in) operating activities: Net income $ 1,481,000 $ 365,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 1,518,000 1,424,000 Amortization of deferred grant income (108,000) (96,000) Gain from sales and disposals of properties and easements, net (150,000) (61,000) Deferred income taxes 300,000 130,000 Changes in assets and liabilities: Accounts receivable (408,000) 356,000 Materials and supplies (810,000) (265,000) Prepaid expenses and other (15,000) 60,000 Accounts payable 995,000 123,000 Accrued expenses 588,000 (262,000) __________ __________ Net cash provided by operations 3,391,000 1,774,000 __________ __________ Cash flows provided by (used in) investing activities: Purchase of properties and equipment (4,230,000) (3,913,000) Proceeds from: Sales of properties and easements 210,000 223,000 Deferred grant income 679,000 521,000 __________ __________ Net cash used in investing activities (3,341,000) (3,169,000) __________ __________ Cash flows provided by (used in) financing activities: Net borrowings (payments) under line of credit (345,000) 1,500,000 Payments of: Long-term debt (492,000) (661,000) Dividends (136,000) (112,000) Proceeds from: Long-term debt 730,000 Issuance of common shares for stock options exercised and employee stock purchases 60,000 15,000 __________ __________ Net cash provided by (used in) financing activities (183,000) 742,000 __________ __________ Decrease in cash (133,000) (653,000) Cash, beginning of period 686,000 2,012,000 _________ __________ Cash, end of period $ 553,000 $ 1,359,000 ========== ========== Supplemental disclosures: Cash paid during the period for: Interest $ 1,051,000 $ 981,000 ========== ========== Income taxes $ 228,000 $ 10,000 ========== ========== See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) 1. In the opinion of management, the accompanying interim financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of September 30, 1997, the results of operations for the three and nine months ended September 30, 1997 and 1996, and cash flows for the nine months ended September 30, 1997 and 1996. Results for interim periods may not be necessarily indicative of the results to be expected for the year. These interim financial statements should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1996 filed with the Securities and Exchange Commission. 2. Changes in shareholders' equity: Capital in Preferred Common excess of Retained Stock Stock par Earnings ________ ________ ________ _________ Balance December 31, 1996 $33,000 $1,094,000 $ 6,365,000 $28,569,000 Issuance of 22,550 common shares to fund the Company's 1996 profit sharing plan contribution 11,000 215,000 Issuance of 8,575 common shares for stock options exercised, employee stock purchases and other 4,000 61,000 Dividends: Preferred stock, $5.00 per share (3,000) Common stock, $.06 per share (133,000) Net income for the period 1,481,000 ________ ________ ________ _________ Balance September 30, 1997 $33,000 $1,109,000 $ 6,641,000 $29,914,000 ======== ========== =========== ===========
3. Notes payable, bank: In June 1997 the Company's principal bank renewed the Company's revolving line of credit and increased the maximum borrowing under the line from $1,500,000 to $1,750,000. Borrowings under the line continue to bear interest at prime plus 1/2%, are due on demand and are secured by the Company's accounts receivable. 4. Long-term debt: In July 1997 the Company completed the acquisition and renovation of three used locomotives at a total cost of $730,000 financed through long-term borrowings from a commercial lender. Terms of the loan agreement call for monthly payments of principal and interest in the amount of $15,000 PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) 4. Long-term debt (continued): through August 2002. The interest rate, which is variable, is set at 2.35% over the 30 day Commercial Paper rate (7.9% as of September 30, 1997). The Company has the option of converting to a fixed rate of interest set at 2.1% over the then current weekly average rate of 3 year U.S. Treasury Constant Maturities. The outstanding principal balance on this indebtedness at September 30, 1997 is $720.000 of which $125,000 has been classified as a current liability. The amount of the monthly payments will be adjusted annually in August to reflect the effects of the variable interest rates in effect during the previous year. The debt is collateralized by the three locomotives acquired. 5. Other income: Three Months Ended Nine Months Ended September 30 September 30 _____________________ _______________________ 1997 1996 1997 1996 ________ ________ ________ _________ Gain (loss) from sales and disposals of properties and easements, net $ -0- $ (33,000) $ 150,000 $ 61,000 Rentals 105,000 119,000 365,000 393,000 Interest 3,000 14,000 8,000 53,000 --------- --------- --------- ---------- $ 108,000 $ 100,000 $ 523,000 $ 507,000 ======== ======== ======== =========
6. Earnings per share: Earnings per common and common equivalent share are computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, using the provisions of Accounting Principles Board Opinion No. 15 "Earnings per Share". The Company considers its $50 par preferred stock, each share of which is convertible into 100 shares of common stock, to be common equivalent shares for purposes of computing earnings per share. Unexercised stock options and warrants have not been considered in the calculation of earnings per share since their effect is not material. 7. Contingencies: A number of lawsuits relating to casualty losses are pending against the Company, many of which are covered by insurance subject to a deductible. The Company has provided for its estimate of exposure to such claims and in management's opinion additional liability, if any, will not be material to the operations, financial position or liquidity of the Company. PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) The Company owns a site which is contaminated with petroleum products and is currently productive as a part of the Company's double-stack intermodal yard. The Company has now concluded further assessment of the site, including a risk assessment. The studies conclude that the site poses no significant risk to health or the environment. The Company imposed an activity and use limitation on the site to restrict future uses of the property to industrial and transportation activities. No further action or remediation is required for this site. 8. New accounting pronouncements: In February 1997 the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings per Share" and SFAS No. 129 "Disclosure of Information about Capital Structure". SAFS 128 establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. SFAS 129 establishes standards for disclosing information about an entity's capital structure and applies to all entities. The Company will adopt both SAFS 128 and SAFS 129 in the fourth quarter of fiscal 1997. The implementation of these standards is not expected to have a material effect on its financial position and results of operations. In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". SAFS 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general purpose financial statements. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. Both standards will be adopted by the Company during the first quarter of fiscal 1998 and are not expected to have a material effect on its financial position and results of operations. 9. Subsequent event: In October 1997 the Company's Board of Directors approved an agreement to purchase all of the outstanding common stock of Connecticut Central Railroad Company ("CCCL") for 20,000 shares of newly issued common stock of the Company. If certain financial and other conditions are met, CCCL's shareholders will receive an additional 7,500 shares of the Company's common stock one year from the date of the closing. The transaction is expected to be completed in the second quarter of 1998 following approval or exemption of the United States Surface Transportation Board. Upon completion of the acquisition of CCCL, which conducts rail freight operations on approximately 17 miles of rail lines connecting to the Company's Middletown Secondary branch line, it is anticipated that it will be merged into the Company's rail freight operations and will cease to exist as a separate entity. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The statements contained in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MDA") which are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward- looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions, however, that actual results could differ materially from those indicated in MDA. Liquidity and Capital Resources As detailed in the accompanying statements of cash flows, the Company generated $3,391,000 of cash from operations during the nine months ended September 30, 1997. On an overall basis, however, the Company's total cash decreased by $133,000 during the nine month period. The principal uses of cash during the period were for additions to properties and equipment, debt principal payments and the payment of dividends. Deferred grant income receipts of $679,000 were utilized to fund certain of the capitalized improvements to the Company's track structure. Expenditures for property and equipment during the nine month period include $410,000 for the Company's deep-water pier project, $1,934,000 of capitalized track structure and bridge improvements, $1,603,000 of equipment additions and $283,000 of land and building improvements. Management expects that total expenditures for plant and equipment additions in 1997 will approximate those made in 1996 when such expenditures amounted to $5,465,000. As discussed more fully in Note 4 to the accompanying financial statements the Company acquired and renovated three used locomotives during the second quarter of 1997 at a total cost of $730,000, financed through long term borrowings from a commercial lender. Expenditures incurred on this project are included as expenditures for equipment additions in the accompanying statements of cash flows. As disclosed in Note 3 to the accompanying financial statements the Company's principal bank renewed the Company's revolving line of credit in June 1997 and increased the maximum borrowings allowed from $1,500,000 to $1,750,000. Loans in the amount of $1,095,000 were outstanding under this line as of September 30, 1997. As discussed more fully in Note 9 to the accompanying financial statements, the Company concluded an agreement in October 1997 to acquire all of the outstanding stock of Connecticut Central Railroad Company ("CCCL") effective during the second quarter of 1998. Management is not able to predict the total impact of this acquisition upon future operations but it is estimated that rail freight revenues from existing customers of CCCL will amount to approximately $500,000 per year at current levels of operations. In addition, management intends to pursue whatever additional growth opportunities may be available on the acquired lines. In management's opinion, the Company will be able to generate sufficient cash from operations during the remainder of 1997 to enable it to meet its operating expense, debt service and capital expenditure requirements. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Operating revenues for the nine months ended September 30, 1997 increased by 13% from 1996. This increase results from a 15% increase in the volume of conventional freight cars and a 9% increase in volume of containers handled, a 3% increase in the average net revenue received per container and an increase in other operating revenues, partially offset by a 4% decrease in the average revenue received per conventional carload. Net container revenue increased from $1,103,000 in 1996 to $1,236,000 in 1997 and other operating revenues increased from $268,000 to $635,000. Operating revenues for the third quarter of 1997 increased by 14% from the third quarter of 1996. This increase results from a 16% increase in the volume of conventional freight cars and an 15% increase in the volume of containers handled and a 4% increase in the average revenue received per container, partially offset by a 2% decrease in the average revenue received per conventional carload. Net container revenue increased from $408,000 in 1996 to $486,000 in 1997. Other operating revenue amounted to $151,000 in both years. Construction aggregate traffic volume increased by 23% for the nine month period and 26% for the quarter, whereas the volume of all other commodities of conventional traffic increased by 12% for the nine month period and 9% for the quarter. Since construction aggregate traffic typically produces lower revenues per carload than most other commodities hauled by the Company, the fact that increases in the volume of this commodity were greater than its proportion of the total traffic mix accounts for much of the decrease in the average revenue per conventional carload. The increased traffic volume for the nine month period and for the quarter is attributable to improving economic conditions which first became evident late in the third quarter of 1996. Other operating revenues consist primarily of reimbursements the Company receives from freight customers and other third parties for work performed by its Maintenance of Way and Equipment Departments. The amount of such revenues can vary significantly from period to period. Total operating expenses for the nine month period increased by 1% and for the quarter decreased by 8% from the comparable 1996 periods. Many of the Company's expenses are of a relatively fixed nature and, therefore, do not increase proportionally with changes in operating revenue. The decrease in total operating expenses for the third quarter of 1997 from the third quarter of 1996 and the small increase for the nine month period result, to a large degree, from the fact that a larger portion of maintenance of way payroll and overhead costs were capitalized in connection with capital improvements to the Company's track structure and bridges or were reimbursed through government grants for grade crossing improvements in 1997 than in 1996. Total capitalized track expenses and recovered costs for the nine month period ended September 30, 1997 amounted to $2,685,000 compared with $1,350,000 in 1996, an increase of $1,335,000. Capitalized track expenses and recovered costs for the third quarter of 1997 amounted to $1,372,000 compared with $340,000 in 1996, an increase of $1,032,000. Interest expense was virtually unchanged between periods, due to the fact that lower levels of long term debt outstanding during the nine month period and third quarter of 1997 were largely offset by increased levels of short term borrowings. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Recent Accounting Pronouncements In February 1997 the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings per Share" and SFAS No. 129 "Disclosure of Information about Capital Structure". SAFS 128 establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. SFAS 129 establishes standards for disclosing information about an entity's capital structure and applies to all entities. The Company will adopt both SAFS 128 and SAFS 129 in the fourth quarter of fiscal 1997. The implementation of these standards is not expected to have a material effect on its financial position and results of operations. In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". SAFS 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general purpose financial statements. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. Both standards will be adopted by the Company during the first quarter of fiscal 1998 and are not expected to have a material effect on its financial position and results of operations. PART II Item 6.Exhibits and Reports on Form 8-K (b)No reports on Form 8-K were filed during the quarter ended September 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROVIDENCE AND WORCESTER RAILROAD COMPANY By: /s/ Orville R. Harrold ______________________________ Orville R. Harrold, President By: /s/ Robert J. Easton _____________________________ Robert J. Easton Treasurer and Principal Financial Officer DATED: November 12, 1997 EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 553 0 3319 125 1831 6114 90610 25012 71712 6512 12196 0 33 1109 36555 71712 0 16748 0 13406 0 0 1021 2321 840 1481 0 0 0 1481 .65 .65
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