-----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, PlMyYboE8JfXPlxQK+ITHDZUvQKaEZQzWMuVccrl7fqJvjwBcPnclSdxF3gN2xW5 OSKRWpxwRXz2wzNFbAvBQg== 0000831968-00-000014.txt : 20000510 0000831968-00-000014.hdr.sgml : 20000510 ACCESSION NUMBER: 0000831968-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 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: 623217 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 March 31, 2000 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 May 1, 2000, the registrant has 4,284,859 shares of common stock, par value $.50 per share, outstanding. 2 PROVIDENCE AND WORCESTER RAILROAD COMPANY Index Part I - Financial Information Item 1 - Financial Statements: Balance Sheets - March 31, 2000 and December 31, 1999 ..... 3 Statements of Income - Three Months Ended March 31, 2000 and 1999 ................................... 4 Statements of Cash Flows - Three Months Ended March 31, 2000 and 1999 ............................. 5 Notes to Financial Statements ............................. 6-7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ............. 8-10 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 10 Part II - Other Information: Item 6 Exhibits and Reports on Form 8-K .......................... 11 Signatures ........................................................... 12 3 Item 1. Financial Statements PROVIDENCE AND WORCESTER RAILROAD COMPANY BALANCE SHEETS (Dollars in Thousands Except Per Share Amounts) ASSETS MARCH 31,DECEMBER 31, 2000 1999 (Unaudited) ------- ------- Current Assets: Cash and equivalents ................................ $ 4,546 $ 4,626 Accounts receivable, net of allowance for doubtful accounts of $125 in 2000 and 1999 ......... 2,696 3,251 Materials and supplies .............................. 1,884 2,107 Prepaid expenses and other .......................... 136 181 Deferred income taxes ............................... 57 58 ------- ------- Total Current Assets ............................... 9,319 10,223 Property and Equipment, net .......................... 64,501 64,156 Land Held for Development ............................ 11,851 11,851 Goodwill, net ........................................ 117 141 ------- ------- Total Assets ......................................... $85,788 $86,371 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable .................................... $ 2,085 $ 2,347 Accrued expenses .................................... 538 650 ------- ------- Total Current Liabilities .......................... 2,623 2,997 ------- ------- Profit-Sharing Plan Contribution ..................... 400 400 ------- ------- Deferred Grant Income ................................ 7,377 7,421 ------- ------- Deferred Income Taxes ................................ 8,843 8,870 ------- ------- Commitments and Contingent Liabilities Shareholders' Equity: Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 647 shares ......................................... 32 32 Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,284,859 shares in 2000 and 4,281,280 shares in 1999 ..................................... 2,142 2,141 Additional paid-in capital .......................... 28,540 28,519 Retained earnings ................................... 35,831 35,991 ------- ------- Total Shareholders' Equity ......................... 66,545 66,683 ------- ------- Total Liabilities and Shareholders' Equity ........... $85,788 $86,371 ======= =======
The accompanying notes are an integral part of the financial statements. 4 PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts) Three Months Ended March 31 2000 1999 ------- ------- Operating Revenues - Freight and Non-Freight ........ $ 5,266 $ 4,926 ------- ------- Operating Expenses: Maintenance of way and structures .................. 955 720 Maintenance of equipment ........................... 625 541 Transportation ..................................... 1,477 1,275 General and administrative ......................... 951 903 Depreciation ....................................... 633 564 Taxes, other than income taxes ..................... 624 620 Car hire, net ...................................... 185 167 ------- ------- Total Operating Expenses .......................... 5,450 4,790 ------- ------- Income (Loss) from Operations ....................... (184) 136 Other Income ........................................ 221 269 ------- ------- Income before Income Taxes .......................... 37 405 ------- ------- Provision for Income Taxes: Current ............................................ 49 95 Deferred ........................................... (26) 50 ------- ------- Total Provision for Income Taxes .................. 23 145 ======= ======= Net Income .......................................... $ 14 $ 260 Preferred Stock Dividends ........................... 3 3 ------- ------- Net Income Available to Common Shareholders ......... $ 11 $ 257 ======= ======= Basic Income Per Common Share ....................... $ -- $ .06 ======= ======= Diluted Income Per Common Share ..................... $ -- $ .06 ======= =======
The accompanying notes are an integral part of the financial statements. 5 PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands) Three Months Ended March 31 2000 1999 ------- ------- Cash flows from operating activities: Net income ........................................... $ 14 $ 260 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization ....................... 656 581 Amortization of deferred grant income ............... (44) (41) Gains from sale and disposal of properties, equipment and easements, net ....................... (32) (63) Deferred income taxes (benefit) ..................... (26) 50 Increase (decrease) in cash from: Accounts receivable ................................ 256 (108) Materials and supplies ............................. 223 (159) Prepaid expenses and other ......................... 45 97 Accounts payable and accrued expenses .............. (191) (179) ------- ------- Net cash flows from operating activities ............. 901 438 ------- ------- Cash flows from Investing Activities: Purchase of property and equipment ................... (1,177) (3,670) Proceeds from sale of properties, equipment and easements ....................................... 60 78 Proceeds from deferred grant income .................. 290 144 ------- ------- Net cash flows used by investing activities .......... (827) (3,448) ------- ------- Cash Flows from Financing Activities: Dividends paid ....................................... (174) (130) Issuance of common shares for stock options exercised and employee stock purchases .............. 20 32 ------- ------- Net cash flows used by financing activities .......... (154) (98) ------- ------- Decrease in Cash and Equivalents ..................... (80) (3,108) Cash and Equivalents, Beginning of Period ............ 4,626 7,294 ------- ------- Cash and Equivalents, End of Period .................. $ 4,546 $ 4,186 ======= ======= Supplemental disclosures: Cash paid during the period for Income taxes ......... $ -- $ 53 ======= =======
The accompanying notes are an integral part of the financial statements. 6 PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS (Unaudited) THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (Dollars in Thousands Except Per Share Amounts) 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 March 31, 2000 and the results of operations and cash flows for the three months ended March 31, 2000 and 1999. 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 1999 Annual Report on Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission. 2. Changes in Shareholders' Equity: Total Additional Share Preferred Common Paid-in Retained holders' Stock Stock Capital Earnings Equity ------- ------- ------- ------- ------- Balance December 31,1999 .. $ 32 $ 2,141 $28,519 $35,991 $66,683 Issuance of 3,579 common shares for employee stock purchases and other ...... 1 21 22 Dividends: Preferred stock, $5.00 per share .......... (3) (3) Common stock, $.04 per share ................ (171) (171) Net income for the period ................... 14 14 ------- ------- ------- ------- ------- Balance March 31, 2000 .... $ 32 $ 2,142 $28,540 $35,831 $66,545 ======= ======= ======= ======= =======
3. Other Income: 2000 1999 ------ ------ Gains from sale and disposal of properties, equipment and easements, net ...................... $ 32 $ 63 Rentals ............................................ 122 148 Interest ........................................... 67 58 ---- ---- $221 $269 ==== ====
4. Income per Share: Basic income per common share is computed using the weighted average number of common shares outstanding during each year. Diluted income per common share reflects the effect of the Company's outstanding convertible preferred stock, options and warrants except where such items would be antidilutive. 7 A reconciliation of weighted average shares used for the basic computation and that used for the diluted computation is as follows: 2000 1999 --------- --------- Weighted average shares for basic .............. 4,281,394 4,230,052 Dilutive effect of convertible preferred stock, options and warrants ................... 68,431 91,270 --------- --------- Weighted average shares for diluted ............ 4,349,825 4,321,322 ========= =========
Options and warrants to purchase 197,012 and 191,020 shares of common stock were outstanding during the quarter ended March 31, 2000 and 1999 respectively, but were not included in the computation of diluted earnings per common share because their effect would be antidilutive. 5. Commitments and Contingent Liabilities: The Company is a defendant in certain lawsuits relating to casualty losses, many of which are covered by insurance subject to a deductible. The Company believes that adequate provision has been made in the financial statements for any expected liabilities which may result from disposition of such lawsuits. While it is possible that some of the foregoing matters may be settled at a cost greater than that provided for, it is the opinion of management based upon the advice of counsel that the ultimate liability, if any, will not be material to the Company's financial statements. 6. Dividends: On April 26, 2000, the Company declared a dividend of $.04 per share on its outstanding Common Stock payable May 25, 2000 to shareholders of record May 11, 2000. 8 PROVIDENCE AND WORCESTER RAILROAD COMPANY ITEM 2-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. Results of Operations The following table sets forth the Company's operating revenues by category in dollars and as a percentage of operating revenues: Three Months Ended March 31 -------------------------------------- 2000 1999 -------------------------------------- (In thousands, except percentages) Freight Revenues: Conventional carloads ............ $4,220 80.1% $4,010 81.4% Containers ....................... 632 12.0 510 10.4 Non-Freight Operating Revenues: Transportation services .......... 259 4.9 140 2.8 Other ............................ 155 3.0 266 5.4 ------ ----- ------ ----- Total ......................... $5,266 100.0% $4,926 100.0% ====== ===== ====== =====
The following table sets forth a comparison of the Company's operating expenses expressed in dollars and as a percentage of operating revenues: Three Months Ended March 31 -------------------------------------- 2000 1999 -------------------------------------- (In thousands, except percentages) Salaries, wages, payroll taxes and employee benefits ............... $3,091 58.7% $2,927 59.4% Casualties and insurance ............... 150 2.8 157 3.2 Depreciation and amortization .......... 656 12.5 581 11.8 Diesel fuel ............................ 293 5.6 115 2.3 Car hire, net .......................... 185 3.5 167 3.4 Purchased services, including legal and professional fees ........... 274 5.2 424 8.6 Repair and maintenance of equipment .... 318 6.0 269 5.5 Track and signal materials ............. 521 9.9 403 8.2 Other materials and supplies ........... 262 5.0 332 6.7 Other .................................. 372 7.1 403 8.2 ------ ----- ------ ----- Total ................................ 6,122 116.3 5,778 117.3 Less capitalized and recovered costs ..................... 672 12.8 988 20.1 ------ ----- ------ ----- Total ............................. $5,450 103.5% $4,790 97.2% ====== ===== ====== =====
9 Operating Revenues: Operating revenues increased $340,000, or 6.9%, to $5.3 million in the first quarter of 2000 from $4.9 million in the first quarter of 1999. This increase is the result of a $210,000 (5.2%) increase in conventional freight revenues, a $122,000 (23.9%) increase in net container freight revenues and an $8,000 (2.0%) increase in non-freight operating revenues. The increase in conventional freight revenues is attributable to an increase in traffic volume, partially offset by a decrease in the average revenue received per conventional carloading of approximately 3.0%. The Company's conventional freight carloadings increased by 436, or 8.5%, to 5,595 in 2000 from 5,159 in 1999. The increase in conventional carloadings results from new customers as well as increased rail traffic from certain existing customers. A change in the mix of traffic during the quarter toward lower margin commodities, such as construction aggregate traffic, accounts for the reduction in the average revenue received per conventional carloading. The increase in net container freight revenues is primarily the result of an increase in container traffic volume. Total intermodal containers handled increased by 2,587, or 19.9%, to 15,569 containers in the first quarter of 2000 from 12,982 containers in 1999. The average revenue received per container increased by approximately 3.3% due to increases in certain railroad industry cost indices and to variations in the mix of containers handled. The small increase in non-freight operating revenues results from increases in demurrage and other transportation-related revenues partially offset by decreases in Maintenance of Way Department billings. Such revenues can vary from period to period depending upon customer needs. Operating Expenses: Operating expenses increased $660,000, or 13.8%, to $5.5 million in the first quarter of 2000 from $4.8 million in 1999. Operating expenses as a percentage of operating revenues ("operating ratio") increased to 103.5% in the first quarter of 2000 from 97.2% in 1999. The increase in operating expenses is attributable to a number of factors, among the more significant of which are the following: o Diesel fuel expense increased by $178,000, or 154.8%, to $293,000 in the first quarter of 2000 from $115,000 in 1999 as a result of sharply increased costs in effect for petroleum products. o Depreciation and amortization expense increased by $75,000, or 12.9%, to $656,000 in the first quarter of 2000 from $581,000 in 1999 due to recent property and equipment additions and amortization of goodwill. o Costs capitalized and recovered through projects funded by public grants and contracts decreased by $316,000, or 32.0% to $672,000 in the first quarter of 2000 from $988,000 in 1999. The Company's operating expenses are of a relatively fixed nature and do not increase or decrease proportionately with variations in operating revenues. In addition the Company's operating ratio is typically near 100% for the first quarter of each year since the seasonal nature of certain of its freight traffic and winter weather conditions typically result in lower levels of freight revenues and proportionally higher levels of operating expenses for that quarter. Provision for Income Taxes: The provision for income taxes for the first quarter of 2000 is equal to 62.2% of pre-tax income. This abnormally high percentage is attributable to the disproportionate impact of non- deductible expenses when pre-tax income is at a marginal level. 10 Liquidity and Capital Resources During the first quarter of 2000 the Company generated $901,000 of cash from operations. Total cash and equivalents decreased by $80,000 for the quarter. The principal utilization of cash during the quarter was for expenditures for property and equipment, of which $619,000 was for additions and improvements to track structure, and for the payment of dividends. In management's opinion cash generated from operations during the remainder of 2000 will be sufficient to enable the Company to meet its operating expenses and capital expenditure and dividend requirements. Seasonality Historically, the Company's operating revenues are lowest for the first quarter due to the absence of construction aggregate shipments during a portion of this period and to winter weather conditions. Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", subsequently amended in June 1999 and effective for fiscal years beginning after June 15, 2000. The new standard requires that all companies record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. Management is currently assessing the impact of SFAS No. 133 on the financial statements of the Company. The Company will adopt this accounting standard on January 1, 2001, as required. Item 3. Quantitative and Qualitative Disclosures About Market Risk Cash and Equivalents As of March 31, 2000, the Company is exposed to market risks which primarily include changes in U.S. interest rates. The Company invests cash balances in excess of operating requirements in short-term securities, generally with maturities of 90 days or less. In addition, the Company's revolving line of credit agreement provides for borrowings which bear interest at variable rates based on either prime rate or one and one half percent over either the one or three month London Interbank Offered Rates. The Company had no borrowings outstanding pursuant to the revolving line of credit agreement at March 31, 2000. The Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company's financial position, results of operations, and cash flows should not be material. 11 PART II - Other Information Item 6.Exhibits and Reports on Form 8-K (b) Noreports on Form 8-K were filed during the quarter ended March 31, 2000. 12 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: May 9, 2000 EX-27 2
5 1000 3-mos DEC-31-2000 MAR-31-2000 4546 0 2821 125 1884 9319 106433 30081 85788 2623 0 0 32 2142 64371 85788 0 5487 0 5450 0 0 0 37 23 14 0 0 0 14 .00 .00
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