-----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, Aa+veIy0C59vMnRzsngk97oEt6mp+P5hV0wqZf2tYAo/vyi7s9IIEGOB8peQccit Apuq+T/4R1pAP3+Q/q9/tQ== 0000831968-96-000016.txt : 19961115 0000831968-96-000016.hdr.sgml : 19961115 ACCESSION NUMBER: 0000831968-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-16704 FILM NUMBER: 96660489 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, 1996 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 November 8, 1996, the registrant has 2,188,021 shares of common stock, par value $.50 per share, outstanding. PROVIDENCE AND WORCESTER RAILROAD COMPANY BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
ASSETS SEPTEMBER 30, DECEMBER 31, 1996 1995 (UNAUDITED) __________ __________ Current assets: Cash and equivalents $ 1,359,000 $ 2,012,000 Accounts receivable, net of allowance for doubtful accounts of $125,000 2,434,000 2,834,000 Materials and supplies 996,000 731,000 Prepaid expenses and other 79,000 139,000 Deferred income taxes 400,000 767,000 __________ __________ Total current assets 5,268,000 6,483,000 __________ __________ Properties: Land and improvements 8,736,000 8,614,000 Deep-water pier project 10,892,000 10,419,000 Track structure 45,267,000 44,390,000 Buildings and other structures 5,894,000 5,853,000 Equipment 15,763,000 15,156,000 __________ __________ 86,552,000 84,432,000 Less accumulated depreciation 24,076,000 22,903,000 __________ __________ Total properties, net 62,476,000 61,529,000 __________ __________ $ 67,744,000 $ 68,012,000 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable, bank $ 1,500,000 $ - Current portion of long-term debt 662,000 612,000 Accounts payable 3,647,000 4,907,000 Accrued expenses 834,000 1,642,000 __________ __________ Total current liabilities 6,643,000 7,161,000 __________ __________ Long-term debt, less current portion 12,266,000 12,977,000 __________ __________ Deferred grant income 5,417,000 5,035,000 __________ __________ Deferred income taxes 8,147,000 8,384,000 __________ __________ Contingencies (Note 5) Shareholders' equity (Notes 2 and 4): 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 2,186,410 shares in 1996 and 2,110,041 shares in 1995 1,093,000 1,055,000 Capital in excess of par 6,353,000 5,828,000 Retained earnings 27,792,000 27,539,000 __________ __________ Total shareholders' equity 35,271,000 34,455,000 __________ __________ $ 67,744,000 $ 68,012,000 ========== ========== See notes to financial statements
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30 September 30 _____________________ ________________________ 1996 1995 1996 1995 __________ __________ __________ ___________ Income: Operating revenues, freight and other $5,227,000 $5,079,000 $14,321,000 $15,215,000 Other income (Note 3) 100,000 188,000 507,000 508,000 _________ _________ __________ __________ 5,327,000 5,267,000 14,828,000 15,723,000 _________ _________ __________ __________ Expenses: Operating: Maintenance of way and structures 1,166,000 760,000 3,108,000 2,778,000 Maintenance of equipment 609,000 575,000 1,818,000 1,720,000 Transportation 1,153,000 1,179,000 3,521,000 3,388,000 General 979,000 1,050,000 2,780,000 3,072,000 Taxes, other than income 499,000 503,000 1,544,000 1,551,000 Car hire, net 170,000 186,000 463,000 543,000 _________ _________ __________ __________ 4,576,000 4,253,000 13,234,000 13,052,000 Interest 346,000 286,000 1,029,000 893,000 _________ _________ __________ __________ 4,922,000 4,539,000 14,263,000 13,945,000 _________ _________ __________ __________ Income before income taxes 405,000 728,000 565,000 1,778,000 _________ _________ __________ __________ Income taxes: Current 80,000 135,000 70,000 360,000 Deferred 60,000 130,000 130,000 300,000 _________ _________ __________ __________ 140,000 265,000 200,000 660,000 _________ _________ __________ __________ Net income $ 265,000 $ 463,000 $ 365,000 $1,118,000 ========= ========= ========== ========== Earnings per weighted average common and common equivalent share outstanding, (Note 4) $ .12 $ .22 $ .16 $ .53 ========= ========= ========== ========== Dividends per share: Preferred $ -0- $ -0- $ 5.00 $ 5.00 ========= ========= ========== ========== Common $ -0- $ -0- $ .05 $ .05 ========= ========= ========== ========== See notes to financial statements.
PROVIDENCE AND WORCESTER RAILROAD COMPANY STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
INCREASE (DECREASE) IN CASH 1996 1995 __________ __________ Cash flows provided by (used in) operating activities: Net income $ 365,000 $ 1,118,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 1,424,000 1,305,000 Amortization of deferred grant income (96,000) (85,000) Gain from sales and disposals of properties and easements, net (61,000) (106,000) Deferred income taxes 130,000 300,000 Changes in assets and liabilities: Accounts receivable 356,000 (399,000) Materials and supplies (265,000) (172,000) Prepaid expenses and other 60,000 30,000 Accounts payable 123,000 777,000 Accrued expenses (262,000) 30,000 __________ __________ Net cash provided by operations 1,774,000 2,798,000 __________ __________ Cash flows provided by (used in) investing activities: Purchase of properties and equipment (3,913,000) (3,098,000) Proceeds from: Sales of properties and easements 223,000 106,000 Deferred grant income 521,000 105,000 __________ __________ Net cash used in investing activities (3,169,000) (2,887,000) __________ __________ Cash flows provided by (used in) financing activities: Net borrowings under line of credit 1,500,000 580,000 Payments of: Long-term debt (661,000) (2,315,000) Dividends (112,000) (106,000) Proceeds from: Long-term debt 1,800,000 Issuance of common shares for stock options exercised 15,000 17,000 __________ __________ Net cash provided by (used in) financing activities 742,000 (24,000) __________ __________ Decrease in cash (653,000) (113,000) Cash, beginning of period 2,012,000 595,000 __________ __________ Cash, end of period $ 1,359,000 $ 482,000 ========== ========== Supplemental disclosures: Cash paid during the period for: Interest $ 981,000 $ 919,000 ========== ========== Income taxes $ 10,000 $ 293,000 ========== ========== See notes to financial statements
PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (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, 1996, the results of operations for the three and nine months ended September 30, 1996 and 1995, and cash flows for the nine months ended September 30, 1996 and 1995. 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, 1995 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, 1995 $ 33,000 $1,055,000 $5,828,000 $27,539,000 Issuance of 53,155 common shares in payment of an environmental claim 27,000 352,000 Issuance of 20,925 common shares to fund the Company's 1995 profit sharing plan contribution 10,000 157,000 Issuance of 2,289 common shares for stock options exercised and under an employee incentive program 1,000 16,000 Dividends: Preferred stock, $5.00 per share (3,000) Common stock, $.05 per share (109,000) Net income for the period 365,000 ________ ________ ________ _________ Balance September 30, 1996 $ 33,000 $1,093,000 $6,353,000 $27,792,000 ======== ========= ========= ==========
PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited) 3. Other income:
Three Months Ended Nine Months Ended September 30 September 30 ________________ _________________ 1996 1995 1996 1995 ________ ________ ________ _________ Gain (loss) from sales and disposals of properties and easements, net $ (33,000) $ 48,000 $ 61,000 $ 106,000 Rentals 119,000 136,000 393,000 389,000 Interest 14,000 4,000 53,000 13,000 ________ ________ ________ _________ $ 100,000 $ 188,000 $ 507,000 $ 508,000 ======== ======== ======== =========
4. Earnings per share: Weighted average common and common equivalent shares outstanding used in computing earnings per share:
1996 1995 __________ __________ Three months ended September 30 2,251,140 2,118,412 ========== ========== Nine months ended September 30 2,240,450 2,100,391 ========== ==========
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. PROVIDENCE AND WORCESTER RAILROAD COMPANY NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited) 5. 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. 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 remediation, if any, would be material to the operations, financial position or liquidity of the Company. 6. Adoption of new accounting pronouncements: Effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation" ("Statement 123"). The Company has continued to account for its stock-based transactions to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" !nd will include the pro forma disclosures required by Statement 123, if mateial, in its annual financial statements for 1996. For stock option grants to non-employees, the Company follows the provisions of Statement 123, calculates compensation expense using 1 fair value-based method and amortizes compensation expense over the vesting period. Also, effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-Lived Assets to be Disposed Of" ("Statement 121"). Statement 121 requires that long- lived assets held and used by an entity be reviewed for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. It also requires that long-lived assets to be disposed of be reported at the lower of the carrying amount or fair value less the cost to sell. The adoption of Statement 121 did not have a material effect on the Company's financial position or results of operations for the three and nine months ended September 30, 1996. 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 $1,774,000 of cash from operations during the nine months ended September 30, 1996. On an overall basis, however, the Company's total cash decreased by $653,000 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, reduction of current liabilities and payment of dividends. Deferred grant income of $478,000, recorded during the period, was utilized to fund certain of the additions to properties. Expenditures for properties and equipment include $1,056,000 for the Company's deep- water pier project, $1,115,000 of capitalized track structure and bridge improvements, $1,439,000 of equipment additions and $303,000 of building and land improvements. Management expects that total expenditures for plant and equipment additions in 1996 will approximate those made in 1995 when such expenditures amounted to $4,490,000. In May 1996 the Company made an additional principal payment of $200,000 on its 10% mortgage note payable to Capital Properties, Inc., a company with which it has a common controlling shareholder. The outstanding principal balance of this note has been reduced to $4,263,000 as of September 30, 1996 and the monthly payments of principal and interest have been reduced from $55,000 to $53,000 through December 2007. 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, 1996 decreased by 6% from 1995. This decrease is the result of an 11% decline in conventional carloadings offset, in part, by a 4% increase in the average revenue received per conventional carload and a 4% decrease in net revenue from containers on flatcars from $1,154,000 in 1996 to $1,103,000 in 1995. The volume of containers handled decreased by 6% between periods whereas the average net revenue received per container increased by 2%. Operating revenues for the third quarter of 1996 increased by 3% from the third quarter of 1995. This increase is the result of a 4% increase in the average revenue received per conventional carloading offset, in part, by a 1% decrease in conventional traffic volume and a 3% decrease in net revenue from containers on flatcars from $419,000 in the third quarter of 1995 to $408,000 in 1996. The volume of containers handled decreased by 3% between quarters, whereas the average net revenue received per container was virtually unchanged. PROVIDENCE AND WORCESTER RAILROAD COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Construction aggregate traffic volume declined by 7% for the nine month period and increased by 7% for the third quarter. The volume of all other commodities of conventional traffic declined by 12% for the nine month period and 6% for the quarter. Since construction aggregate traffic typically generates lower revenues per carload than most other commodities hauled by the Company, the reduction in the traffic volume of this commodity had a greater impact upon the average revenue received per conventional carload during the nine month period than during the third quarter. The decrease in both conventional and container traffic volume experienced by the Company for the nine month period and the quarter is chiefly attributable to an economic slowdown which first became apparent late in the third quarter of 1995. In addition, adverse weather conditions during the first quarter of 1996 contributed to the significant decline in the volume of construction aggregates hauled during that period. During the third quarter of 1996 volumes of both conventional carload and container traffic improved to the point that they began to approach 1995 levels. Total operating expenses for the nine months ended September 30, 1996 increased by 1% from 1995. Total operating expenses for the third quarter of 1996 increased by 8% over the third quarter of 1995. Total operating expenses expressed as a percentage of operating revenues increased from 86% to 92% for the nine month period and from 84% to 88% for the third quarter. The increase in total operating expenses for the third quarter of 1996 from the third quarter of 1995 and the small increase for the nine month period result, to a large degree, from the fact that a smaller 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 1996 than was the case in 1995. Total capitalized track expenses and recovered costs for the nine month period ended September 30, 1996 amounted to $1,380,000 compared with $1,971,000 in 1995, a decrease of $591,000. Capitalized track expenses and recovered costs for the third quarter of 1996 amounted to $370,000 compared with $1,136,000 in 1995, a decrease of $766,000. The expense increases resulting from these reductions were offset, to a degree, by management's efforts to minimize expenses during periods of reduced freight traffic. Many of the Company's operating expenses are relatively fixed in nature and, therefore, do not increase or decrease proportionally with increases or decreases in operating revenue. Interest expense increased by 15% during the nine month period and by 21% during the third quarter of 1996 from 1995. These increases are attributable to higher levels of long and short term borrowings partially offset by lower interest rates. 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, 1996. 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 ______________________________ Orville R. Harrold, President By: Robert J. Easton _____________________________ Robert J. Easton Treasurer and Principal Financial Officer DATED: November 13, 1996 EX-27 2
5 9-MOS DEC-31-1996 SEP-30-1996 1359 0 2559 125 996 5268 86552 24076 67744 6643 12266 0 33 1093 34145 67744 0 14828 0 13234 0 0 1029 565 200 365 0 0 0 365 .16 .16
-----END PRIVACY-ENHANCED MESSAGE-----