-----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, F6MKYt9ux+QccRyPBOXUK6QQ1WPPXqeWRV1B8PzjId21nakuSA5nUQoOb3a1Ogto LzYK1h5deFFqwp3Bnv0VDQ== 0000831968-95-000013.txt : 19951130 0000831968-95-000013.hdr.sgml : 19951130 ACCESSION NUMBER: 0000831968-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVIDENCE & WORCESTER RAILROAD CO/RI/ CENTRAL INDEX KEY: 0000831968 STANDARD INDUSTRIAL CLASSIFICATION: 4011 IRS NUMBER: 050344399 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16704 FILM NUMBER: 95589801 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, 1995 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 0-17604 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 November 10, 1995, the registrant has 2,054,620 shares of common stock, par value $.50 per share, outstanding. PROVIDENCE AND WORCESTER RAILROAD COMPANY BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
ASSETS SEPTEMBER 30, DECEMBER 31, 1995 1994 (UNAUDITED) ____________ ____________ Current assets: Cash and equivalents................ $ 482,000 $ 595,000 Accounts receivable, net of allowance for doubtful accounts of $125,000 (Note 3).................. 2,467,000 1,791,000 Materials and supplies (Note 4)..... 835,000 663,000 Prepaid expenses and other.......... 97,000 127,000 Deferred income taxes............... 872,000 893,000 _________ _________ Total current assets.............. 4,753,000 4,069,000 _________ _________ Properties (Note 4): Land and land improvements.......... 8,547,000 8,520,000 Deep-water pier project............. 9,944,000 9,091,000 Track structure..................... 43,832,000 42,550,000 Buildings and other structures...... 5,665,000 5,531,000 Equipment........................... 14,012,000 13,393,000 __________ __________ 82,000,000 79,085,000 Less accumulated depreciation....... 22,712,000 21,658,000 __________ __________ Total properties, net............. 59,288,000 57,427,000 __________ __________ $64,041,000 $61,496,000 __________ __________ __________ __________
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable, bank (Note 3)........ $ 700,000 $ 120,000 Current portion of long-term debt (Note 4)........................... 871,000 638,000 Accounts payable.................... 3,749,000 2,904,000 Accrued expenses.................... 1,469,000 1,774,000 _________ _________ Total current liabilities......... 6,789,000 5,436,000 _________ _________ Long-term debt, less current portion (Note 4).............................. 9,737,000 10,485,000 _________ _________ Deferred grant income................. 4,668,000 4,371,000 _________ _________ Deferred income taxes................. 8,569,000 8,290,000 _________ _________ Contingencies (Note 8)................ 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 2,273,436 shares; issued and outstanding 2,053,692 shares in 1995 and 2,010,061 shares in 1994 .............................. 1,027,000 1,005,000 Capital in excess of par............ 5,376,000 5,046,000 Retained earnings................... 27,842,000 26,830,000 __________ __________ Total shareholders' equity........ 34,278,000 32,914,000 __________ __________ $64,041,000 $61,496,000 __________ __________ __________ __________ See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 __________________ _____________________ 1995 1994 1995 1994 ________ ________ __________ _________ Income: Operating revenues, freight and other.................. $5,079,000 $5,509,000 $15,215,000 $15,264,000 Other income (Note 5)...... 188,000 788,000 508,000 1,055,000 _________ _________ __________ __________ 5,267,000 6,297,000 15,723,000 16,319,000 _________ _________ __________ __________ Expenses: Operating: Maintenance of way and structures................. 760,000 1,022,000 2,778,000 2,839,000 Maintenance of equipment.. 575,000 574,000 1,720,000 1,623,000 Transportation............ 1,179,000 1,179,000 3,388,000 3,344,000 General................... 1,050,000 1,170,000 3,072,000 3,093,000 Taxes, other than income.. 503,000 478,000 1,551,000 1,485,000 Car hire, net............. 186,000 193,000 543,000 430,000 _________ _________ __________ __________ 4,253,000 4,616,000 13,052,000 12,814,000 Interest................... 286,000 322,000 893,000 983,000 _________ _________ __________ __________ 4,539,000 4,938,000 13,945,000 13,797,000 _________ _________ __________ __________ Income before income taxes.. 728,000 1,359,000 1,778,000 2,522,000 _________ _________ __________ __________ Income taxes: Current.................... 135,000 290,000 360,000 560,000 Deferred................... 130,000 175,000 300,000 340,000 ________ ________ _________ _________ 265,000 465,000 660,000 900,000 ________ ________ _________ _________ Net income.................. $ 463,000 $ 894,000 $ 1,118,000 $ 1,622,000 ________ ________ _________ _________ ________ ________ _________ _________ Earnings per common and common equivalent share outstanding, (Note 6)................... $ .22 $ .43 $ .53 $ .78 ________ ________ _________ _________ ________ ________ _________ _________ Dividends per share: New preferred.............. $ -0- $ -0- $ 5.00 $ -0- ________ ________ _________ _________ ________ ________ _________ _________ Old preferred.............. $ -0- $ -0- $ -0- $ .05 ________ ________ _________ _________ ________ ________ _________ _________ Common..................... $ -0- $ -0- $ .05 $ .05 ________ ________ _________ _________ ________ ________ _________ _________ See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1995 and 1994 (Unaudited)
INCREASE (DECREASE) IN CASH 1995 1994 _________ _________ Cash flows provided by (used in) operating activities: Net income........................... $1,118,000 $1,622,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation....................... 1,305,000 1,214,000 Amortization of deferred grant income............................ (85,000) (72,000) Gain from sales of properties and easements......................... (106,000) (720,000) Deferred income taxes.............. 300,000 340,000 Changes in assets and liabilities: Accounts receivable............... (399,000) (24,000) Materials and supplies............ (172,000) Prepaid expenses and other........ 30,000 125,000 Accounts payable.................. 777,000 (938,000) Accrued expenses.................. 30,000 308,000 Income taxes...................... 105,000 __________ __________ Net cash provided by operations...... 2,798,000 1,960,000 __________ __________ Cash flows provided by (used in) investing activities: Purchase of properties and equipment........................... (3,098,000) (1,997,000) Proceeds from: Sales of properties and easements... 106,000 951,000 Deferred grant income............... 105,000 539,000 __________ __________ Net cash used in investing activities.......................... (2,887,000) (507,000) __________ __________ Cash flows provided by (used in) financing activities: Net borrowings under line of credit.. 580,000 (1,000,000) Repurchase of preferred stock........ (3,000) Payments of: Long-term debt...................... (2,315,000) (652,000) Dividends........................... (106,000) (103,000) Proceeds from: Long-term debt...................... 1,800,000 Issuance of common shares for stock options exercised.................. 17,000 9,000 __________ __________ Net cash used in financing activities.......................... (24,000) (1,749,000) __________ __________ Increase (decrease) in cash............ (113,000) (296,000) Cash, beginning of period.............. 595,000 574,000 __________ __________ Cash, end of period.................... $ 482,000 $ 278,000 __________ __________ __________ __________ Supplemental disclosures: Cash paid during the period for: Interest............................. $ 919,000 $1,056,000 __________ __________ __________ __________ Income taxes......................... $ 293,000 $ 455,000 __________ __________ __________ __________ See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (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, 1995, the results of operations for the three and nine months ended September 30, 1995 and 1994, and cash flows for the nine months ended September 30, 1995 and 1994. Results for interim periods may not be necessarily indicative of the results to be expected for the year. 2. Changes in shareholders' equity: Capital in Preferred Common excess of Retained Stock Stock par Earnings ________ ________ ________ _________ Balance Dec. 31, 1994.... $33,000 $1,005,000 $5,046,000 $26,830,000 Issuance of 40,606 common shares to fund the Company's 1994 profit sharing plan contribution............. 20,000 315,000 Issuance of 3,025 common shares for stock options exercised................ 2,000 15,000 Dividends: New preferred stock, $5.00 per share.......... (3,000) Common stock, $.05 per share.................... (103,000) Net income for the period................... 1,118,000 ________ ________ ________ _________ Balance September 30, 1995..................... $ 33,000 $1,027,000 $5,376,000 $27,842,000 ________ _________ _________ __________ ________ _________ _________ __________
3. Notes payable, bank: In August 1995 the Company obtained an increase in its revolving line of credit from its principal bank from $1,250,000 to $1,500,000. Amounts outstanding under this line of credit are due on demand, bear interest at the bank's prime rate plus 1/2% (9 1/4% at September 30, 1995) and are secured by the Company's accounts receivable. In addition, the Company pays the bank a commitment fee on the unused portion of the line of credit at the rate of 1/2% per year. Loans in the amount of $700,000 under this line were outstanding as of September 30, 1995. 4. Long-term debt: In August 1995 the Company concluded an agreement with its principal bank for a five year senior term loan in the amount of $1,800,000. The loan is payable in monthly installments of principal of $21,000 plus interest at prime plus 3/4% (9 1/2 % as of September 30, 1995) beginning September 30, 1995, with the remaining principal balance being payable at the end of the five year term. The loan is collateralized by a mortgage on the Company's corporate headquarters building in Worcester, Mass., as well as liens on its inventory of materials and supplies and certain of its track structure. The loan agreement contains various covenants which, among other things, limit the Company's annual acquisitions of for property and equipment and require the Company to maintain a minimum tangible net worth and certain ratios of leverage and cash flow to debt service. PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited) 4. Long-term debt (cont.): All of the proceeds from this loan were applied against the outstanding principal balance of the Company's long-term mortgage note payable to Capital Properties, Inc. ("CPI"), with which the Company has a common controlling shareholder. The payment of $1,800,000 reduced the outstanding principal balance on the CPI mortgage note to $4,662,000 as of September 30, 1995. Upon receipt of this principal prepayment CPI reduced the annual interest rate on this indebtedness from 12% to 10%. The CPI note is now payable in monthly installments of principal and interest of $55,000 through December 2007. 5. Other income: Three Months Ended Nine Months Ended September 30 September 30 __________________ ____________________ 1995 1994 1995 1994 ________ ________ ________ ________ Gain from sales of properties and easements, net........... $ 48,000 $681,000 $106,000 $ 720,000 Rentals................... 136,000 105,000 389,000 331,000 Interest.................. 4,000 2,000 13,000 4,000 ________ ________ ________ ________ $188,000 $788,000 $508,000 $1,055,000 ________ ________ ________ ________ ________ ________ ________ ________
6. Earnings per share: Weighted average common and common equivalent shares outstanding used in computing earnings per share: 1995 1994 __________ __________ Three months ended September 30 2,118,412 2,075,116 __________ __________ __________ __________ Nine months ended September 30 2,100,391 2,067,631 __________ __________ __________ __________
The Company considers its $50 par "New 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. New Preferred Stock was issued in September 1994 in accordance with terms of a plan of recapitalization which called for conversion of the Company's $.50 par "Old Preferred Stock" into New Preferred in a ratio of one share of New Preferred Stock for one hundred shares of Old Preferred Stock. The Company has not given effect to the outstanding options to purchase its common stock in calculating earnings per share since the effect of such options is not material. 7. Dividends: On October 25, 1995, the Company declared a dividend of $.05 per share on its outstanding Common Stock payable November 24, 1995 to shareholders of record November 9, 1995. PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited) 8. 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 or financial position of the Company. The Company owns a site which is contaminated with petroleum products. It is currently productive as a part of the Company's double-stack intermodal yard. The site is not the subject of any agency proceedings. Environmental specialists have indicated that natural biodegradation of the contamination is occurring. It is not anticipated that the costs of remediating the site would have a materially adverse effect upon the Company. The Company has been notified by CPC International, Inc. ("CPC") and the United States Environmental Protection Agency ("EPA") that the Company is alleged to be a potentially responsible party for a portion of the costs of remediation of a Superfund site, reportedly due to the impact of a 1974 incident involving a rail car. The EPA's preliminary estimate of the total cost of the clean-up alternative it has recommended is approximately $7 million. The Company has no ownership interest in the site. The Company has denied responsibility to both parties. No formal claims or proceedings against the Company have been initiated in this matter. The Company believes it has strong defenses in the event any such claim or proceeding is forthcoming. CPC and other private parties have executed a Consent Decree with EPA pursuant to which CPC has agreed to perform the required remediation and reimburse EPA for past and future response costs. The Consent Decree has been filed in the United States District Court and is expected to be approved by the Court. The Company is not a party to this Consent Decree. The Company is continuing negotiations with CPC to resolve CPC's potential claims against the Company to recover some or all of the costs of response and remediation. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources As detailed in the accompanying statements of cash flows, the Company generated $2,798,000 of cash from operations during the nine months ended September 30, 1995. On an overall basis, however, the Company's total cash decreased by $113,000 during the nine month period. The principal uses of cash during the period were for additions to properties and equipment, principal payments on long term debt, and payment of dividends. Deferred grant income of $382,000, recorded during the period, was utilized to fund certain of the additions to properties. Expenditures for properties and equipment include $779,000 for the Company's deep-water pier project, $1,282,000 of capitalized track structure improvements, $878,000 of equipment additions and $159,000 of land and building improvements. As disclosed in Note 3 to the accompanying financial statements the Company obtained an increase in its revolving line of credit from its principal bank, from $1,250,000 to $1,500,000, in August 1995. The interest rate on loans outstanding under this line was reduced from prime plus 3/4% to prime plus 1/2%. The effect of this increase was to increase the Company's working capital availability by $250,000 and to decrease its incremental, short-term borrowing cost by 1/4%. Loans are drawn against this line and payments of principal are made from time to time depending upon current cash balances and requirements. Loans in the amount of $700,000 were outstanding under this line as of September 30, 1995. As disclosed more fully in Note 4 to the accompanying financial statements, the Company obtained a five year senior term loan in the amount of $1,800,000 from its principal bank in August 1995. The proceeds from this loan were utilized to prepay a portion of the outstanding principal balance of the Company's 12% long-term mortgage note payable to Capital Properties, Inc. ("CPI"). The Company and CPI have a common, controlling shareholder. Upon receipt of the $1,800,000 principal prepayment CPI reduced the interest rate on the remaining balance of its long-term mortgage note ($4,662,000 as of September 30, 1995) to 10% per year. The effect of this refinancing for the remainder of 1995 will be to reduce the Company's interest expense by $47,000 and to increase the cash outlay required for payment of interest and principal on long-term debt by $26,000. The anticipated impact upon the Company for 1996 will be to reduce interest expense by approximately $150,000 and to increase its cash outlay for debt service by approximately $62,000. In management's opinion, the Company will be able to generate sufficient cash from operations during the remainder of the year to enable it to meet its operating expense, debt service and capital expenditure requirements. Results of Operations Operating revenues for the nine months ended September 30, 1995 decreased by $49,000 (less than one percent) from 1994. Conventional traffic volume increased by 7% between periods but this increase was offset by the combination of a 5% decrease in the average revenue received per conventional carload handled and a 30% decrease in net revenue from containers on flatcars, which revenue decreased from $1,653,000 in 1994 to $1,154,000 in 1995. The volume of containers handled decreased by 11% between periods and the average net revenue received per container decreased by 22%. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating revenues for the quarter ended September 30, 1995 decreased by $430,000 (8%) from the third quarter of 1994. This decrease is the combined result of a 2% decrease in conventional traffic, a 5% decrease in the average revenue received per conventional carload handled and a 23% decrease in net container on flatcar revenue from $543,000 in 1994 to $419,000 in 1995. The volume of containers handled decreased by 1% between periods and the average net revenue received per container decreased by 22%. The relatively small increase in conventional traffic volume for the nine month period and the decrease for the quarter are largely attributable to a general softening in economic conditions which was evident in the third quarter of 1995. Traffic volumes for certain of the Company's manufacturing customers declined somewhat during the quarter as these customers sought to reduce excessive inventory levels. It is anticipated that these traffic reductions are of a temporary nature for the most part. While overall conventional traffic volume has been sluggish the volume of construction aggregate traffic has increased rather significantly. Since this commodity commands a relatively low revenue the resulting change in commodity mix has led to the decrease in the average revenue received per conventional carload. The decrease in the volume of containers handled during the nine month period is largely attributable to the loss of the Company's largest containership line customer in July 1994. The relatively small decrease in container volume experienced during the third quarter of 1995, compared with 1994, is attributable to the softening of general economic conditions as previously discussed. The decrease in the net revenue received per container, between periods, is attributable to rate adjustments necessitated by competitive factors within the industry. Total operating expenses for the nine months ended September 30, 1995 increased by 2% from 1994. Total operating expenses for the third quarter of 1995 decreased by 8% from the third quarter of 1994. Total operating expenses expressed as a percentage of operating revenues increased from 84% to 86% for the nine month period. Total operating expenses amounted to 84% of operating revenues for the third quarters of 1994 and 1995. The decrease in total operating expenses in the third quarter and the small increase for the nine month period in 1995 as compared with 1994 are explained by 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 or were reimbursed through government grants for grade crossing improvements in 1995 than in 1994. Total capitalized track expenses and recovered costs for the nine month period ended September 30, 1995 amounted to $1,282,000 and $689,000, respectively, compared with $938,000 and $97,000 in 1994. Capitalized track expenses and recovered costs for the third quarter of 1995 amounted to $563,000 and $573,000, respectively compared with $390,000 and $26,000 in 1994. Other income decreased by $547,000 and $600,000 respectively during the nine and three month periods ended September 30, 1995 from the comparable 1994 periods. These decreases are the result of reductions in net gains realized from the sales of properties and easements. Income of this type has historically been subject to significant fluctuations among periods. Interest expense for the nine and three month periods in 1995 decreased by 9% and 11% respectively from the comparable periods in 1994. These decreases result from lower levels of long term borrowings and from the reduction in interest rates which resulted from the debt refinancing, as disclosed in Note 4 to the accompanying financial statements, which took place in August 1995. PART II Item 6. Exhibits and Reports on Form 8-K (b) No reports on Form 8-K were filed by the registrant during the quarter ended September 30, 1995. 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:Orville R. Harrold, President Orville R. Harrold, President By:Robert J. Easton Robert J. Easton Treasurer and Principal Financial Officer DATED: November 13, 1995 EX-27 2
5 1,000 9-MOS DEC-31-1995 SEP-30-1995 482 0 2592 125 835 4753 82000 22712 64041 6789 9737 1027 0 33 33218 64041 0 15723 0 13052 0 0 893 1778 660 1118 0 0 0 1118 .53 .53
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