10-Q

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 June 30, 2012

    ¨     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 incorporation or organization)	I.R.S. Employer Identification No.
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 by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such fields).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 1, 2012, the registrant has 4,837,973 shares of common stock, par value $.50 per share, outstanding.

PROVIDENCE AND WORCESTER RAILROAD COMPANY

Index to Quarterly Report on Form 10-Q

Part I – Financial Information
	Item 1 –Financial Statements (Unaudited):
		Condensed Balance Sheets – June 30, 2012 and December 31, 2011	3
		Condensed Statements of Operations – Three and Six Months Ended June 30, 2012 and 2011	4
		Condensed Statements of Cash Flows – Six Months Ended June 30, 2012 and 2011	5
		Notes to Condensed Financial Statements	6-10
	Item 2 –Management’s Discussion and Analysis of Financial Condition and Results of Operations		11-16
	Item 4 –Controls and Procedures		16
Part II – Other Information:
	Item 5 –Other Information		17
	Item 6 -Exhibits		17
Signatures			18

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Part I – FINANCIAL INFORMATION

Item 1 - Financial Statements

PROVIDENCE AND WORCESTER RAILROAD COMPANY

CONDENSED BALANCE SHEETS (Unaudited)

(Dollars in Thousands Except Per Share Amounts)

	JUNE 30, 2012		DECEMBER 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	4,043	$	3,943
Accounts receivable, net of allowance for doubtful accounts of $115 in 2012 and 2011		4,029		3,570
Materials and supplies		689		842
Prepaid expenses and other current assets		—		412
Deferred income taxes		291		291
Total Current Assets		9,052		9,058
Accounts receivable, less current portion		2,549		—
Property and Equipment, net		85,344		84,676
Land Held for Development		12,457		12,457
Total Assets	$	109,402	$	106,191
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term debt	$	123	$	120
Accounts payable		3,938		4,046
Current portion of deferred grant and other revenue		890		111
Accrued expenses		1,741		2,327
Total Current Liabilities		6,692		6,604
Long term debt, net of current portion		3,759		3,821
Deferred Income Taxes		11,723		12,290
Deferred Grant Income and Other Revenue		12,297		10,487
Shareholders’ Equity:
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2012 and 2011		32		32
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,837,973 shares in 2012 and 4,833,012 shares in 2011		2,419		2,417
Additional paid-in capital		37,402		37,271
Retained earnings		35,078		33,269
Total Shareholders’ Equity		74,931		72,989
Total Liabilities and Shareholders’ Equity	$	109,402	$	106,191

The accompanying notes are an integral part of the condensed financial statements.

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PROVIDENCE AND WORCESTER RAILROAD COMPANY

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in Thousands except Per Share Amounts)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2012			2011		2012			2011
Revenues:
Operating Revenues	$	8,214		$	7,774	$	14,873		$	14,624
Other Income		3,316			283		3,439			480
Total Revenues		11,530			8,057		18,312			15,104
Operating Expenses:
Maintenance of way and structures		1,765			182		3,206			2,017
Maintenance of equipment		945			993		1,841			2,023
Transportation		2,557			2,753		5,106			5,384
General and administrative		1,141			1,323		2,362			2,636
Depreciation		834			788		1,662			1,575
Taxes, other than income taxes		841			565		1,514			1,148
Car hire, net		257			365		492			590
Employee retirement plans		54			65		108			123
Track usage fees		13			183		261			386
Total Operating Expenses		8,407			7,217		16,552			15,882
Operating Income (Loss) before Interest and Income Taxes		3,123			840		1,760			(778	)
Interest expense		53			7		106			15
Income (Loss) from operations before Income Taxes		3,070			833		1,654			(793	)
Income Tax Provision (Benefit)		(29	)		5		(545	)		465
Net Income (Loss)		3,099			828		2,199			(1,258	)
Preferred Stock Dividends		—			—		3			3
Net Income (Loss) Attributable to Common Shareholders	$	3,099		$	828	$	2,196		$	(1,261	)
Income (Loss) Per Common Share:
Basic	$	.64		$	.17	$	.45		$	(.26	)
Diluted	$	.63		$	.17	$	.44		$	(.26	)
Weighted-Average Common Shares Outstanding:
For basic		4,833,640			4,818,415		4,833,640			4,818,415
For diluted		4,905,461			4,891,443		4,904,371			4,818,415

The accompanying notes are an integral part of the condensed financial statements.

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PROVIDENCE AND WORCESTER RAILROAD COMPANY

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in Thousands)

	Six Months Ended June 30,
	2012			2011
Cash Flows from Operating Activities:
Net income (loss)	$	2,199		$	(1,258	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation		1,662			1,575
Amortization of deferred grant income		(280	)		(132	)
Proceeds from deferred grant and other income		199			—
Deferred income taxes benefit		(567	)		447
Proceeds from sale of property		(181	)		—
Share-based compensation		65			102
Increase (decrease) in cash from:
Accounts receivable		(762	)		(1,025	)
Materials and supplies		153			17
Prepaid expenses and other current assets		412			370
Accounts payable and accrued expenses		(1,115	)		1,008
Net cash flows from operating activities		1,785			1,104
Cash flows from Investing Activities:
Purchase of property and equipment		(1,730	)		(5,014	)
Proceeds from sale of property and equipment		181			—
Proceeds from note receivable		—			44
Net cash flows used in investing activities		(1,549	)		(4,970	)
Cash Flows from Financing Activities:
Borrowings under long term debt		—			4,000
Repayments of long term debt		(59	)		—
Proceeds from deferred grant and other income		245			—
Dividends paid		(390	)		(389	)
Issuance of common shares for stock options exercised and employee stock purchases		68			69
Net cash flows (used in) from financing activities		(136	)		3,680
Increase (Decrease) in Cash and Cash Equivalents		100			(186	)
Cash and Cash Equivalents, Beginning of Period		3,943			1,517
Cash and Cash Equivalents, End of Period	$	4,043		$	1,331
Supplemental Disclosures:
Cash paid during year for interest	$	107		$	52
Cash paid for income taxes	$	70		$	—
Property and equipment included in accounts payable and accrued expenses	$	421		$	387
Accounts receivable and deferred revenue obtained pursuant to the Amtrak agreement (see Note 9)	$	2,425		$	—
Material and supplies received in exchange for account receivable	$	179		$	—
Accounts payable relieved pursuant to the Amtrak agreement (see Note 9)	$	244		$	—

The accompanying notes are an integral part of the condensed financial statements.

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PROVIDENCE AND WORCESTER RAILROAD COMPANY

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in Thousands Except Per Share Amounts)

1. In the opinion of management, the accompanying interim financial statements of Providence and Worcester Railroad Company (the “Company”) contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2012, the results of operations for the three and six months ended June 30, 2012 and 2011 and cash flows for the six months ended June 30, 2012 and 2011 in accordance with accounting principles generally accepted in the United States. The accompanying condensed balance sheet as of December 31, 2011, has been derived from audited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. 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, 2011 filed with the Securities and Exchange Commission. Results for interim periods may not necessarily be indicative of the results to be expected for the full year.

Certain amounts in the 2011 financial statements have been reclassified to conform with the 2012 presentation. Interest expense is shown separately in the 2012 presentation.

2. Recent Accounting Pronouncements:

The Company reviews new accounting standards as issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company expects none of the recent accounting pronouncements will have a significant impact on its financial statements.

3. Changes in Shareholders’ Equity:

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Total Shareholders’ Equity
Balance December 31, 2011	$	32	$	2,417	$	37,271	$	33,269		$	72,989
Issuance of 4,961 common shares for employee stock purchases, stock options exercised and employee stock awards				2		66					68
Share-based compensation, options granted						65					65
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.04 per share								(387	)		(387	)
Net income for the period								2,199			2,199
Balance June 30, 2012	$	32	$	2,419	$	37,402	$	35,078		$	74,931

4. Debt:

Revolving Line of Credit

The Company has a revolving line of credit facility in the amount of $5,000 from a commercial bank expiring on June 25, 2013. Borrowings under this line of credit are unsecured, due on demand and bear interest at either the bank's prime rate or one and three-quarters percent over the thirty, sixty or ninety day London Interbank Offered Rate (“LIBOR”) with a LIBOR floor of one

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and one-quarter percent. The Company pays no commitment fee on this line of credit and has no compensating balance requirements. It is subject to financial and non-financial covenants including maintenance of a minimum net worth and restrictions as to the incurrence of additional indebtedness, as well as the sale or encumbrance of its assets. At June 30, 2012, no amounts were outstanding.

Long term debt

In December 2010, the Company borrowed $4,000 from the same commercial bank, in order to finance the rehabilitation of the Willimantic Branch. The loan of up to $4,000 required payments of interest only for the first six months and accruing at the bank’s prime rate. After the six month period, the loan converted to a 10 year loan with a 20 year amortization period and bears interest at the Federal Home Loan Bank of Boston 5/20 rate plus 3% (5.18% at the date of conversion). This rate will reset based upon the same conversion factors after 5 years (Federal Home Loan Bank of Boston 5/20 rate plus 3%). The Company has the right to prepay all or any part thereof out of internally-generated funds without penalty. The Company is subject to financial and non-financial covenants, including maintenance of minimum net worth and minimum debt service coverage. As of June 30, 2012, the outstanding principal balance was $3,883.

The carrying value of the Company’s debt facilities approximated its fair value at June 30, 2012 which was estimated using current borrowing rates available to the Company.

5. Other Income:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Amtrak agreement	$	3,153	$	—	$	3,153	$	—
Rentals		140		186		260		354
Interest		6		4		9		7
Other		17		93		17		119
	$	3,316	$	283	$	3,439	$	480

6. Income (Loss) per Common Share:

Basic income (loss) per common share is computed using the weighted-average number of common shares outstanding during each period. Diluted income (loss) per common share reflects the effect of the Company’s outstanding convertible preferred stock and stock options except where such items would be antidilutive.

A reconciliation of weighted-average shares used for the basic computation and that used for the diluted computation is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Weighted-average shares for basic		4,833,640		4,818,415		4,833,640		4,818,415
Dilutive effect of convertible preferred stock and stock options		71,821		73,028		70,731		—
Weighted-average shares for diluted		4,905,461		4,891,443		4,904,371		4,818,415

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Options to purchase 65,508 shares of common stock were outstanding at June 30, 2012. Options to purchase 58,617 shares of common stock were outstanding at June 30, 2011. For the three month periods ended June 30, 2012 and 2011, 7,821 and 9,028 of outstanding options to purchase common shares were included in the computation of diluted earnings per share (EPS). The remaining outstanding options to purchase common stock were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the Company’s common stock.

For the six month period ended June 30, 2012, 6,731 of outstanding options to purchase common shares were included in the computation of diluted EPS. The remaining outstanding options to purchase common stock were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the Company’s common stock.

Preferred Stock convertible into 64,000 shares of common stock at the rate of 100 shares of common stock for each one share of Preferred Stock was outstanding for the three and six-month periods ended June 30, 2012 and 2011. For the three month periods ended June 30, 2012 and 2011 and for the six month period ended June 30, 2012, 64,000 shares of the Company’s common stock were included in the diluted EPS. For the six month period ended June 30, 2011, the 64,000 shares of the Company’s common stock were not included as the effect would be antidilutive.

7. Track Maintenance Agreement:

In the second quarter of 2011, the Company entered into a track maintenance agreement with an unrelated third party customer (“Shipper”). The Shipper paid for qualifying railroad track maintenance expenditures during 2011 in consideration of the assignment of railroad track miles which permits the Shipper to claim certain federal tax credits pursuant to Internal Revenue Code Section 45G. During 2011, the Company received $869 thousand, net of expenses. The authorizing federal legislation for track maintenance credits was not renewed by Congress upon its expiration on December 31, 2011. No amounts were received during the three and six months ended June 30, 2012 for track maintenance credits.

8. 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 condensed financial statements for any expected liabilities which may result from disposition of such lawsuits.

On January 29, 2002, the Company received a “Notice of Potential Liability” from the United States Environmental Protection Agency (“EPA”) regarding an existing Superfund Site that includes the J.M. Mills Landfill in Cumberland, Rhode Island. EPA sends these “Notice” letters to potentially responsible parties (“PRPs”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). EPA identified the Company as a PRP based on its status as an owner and/or operator because its railroad property traverses the Site. Via these Notice letters, EPA makes a demand for payment of past costs (identified in the letter as $762) and future costs associated with the response actions taken to address the contamination at the Site, and requests PRPs to indicate their willingness to participate and resolve their potential liability at the Site. The Company has responded to EPA by stating that it does not believe it has any liability for this Site, but that it is interested in cooperating with EPA to address issues concerning liability at the Site. At this point, two other parties have already committed via a consent order with EPA to pay for the Remedial Investigation/Feasibility Study (“RI/FS”) phase of the clean-up at the Site, which will take approximately two or more years to complete. After that, EPA will likely seek to negotiate the cost of the Remedial Design and implementation of the remedy at the Site with the PRPs it has identified via these Notice letters (which presently includes over sixty parties, and is likely to increase after EPA completes its investigation of the

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identity of PRPs). On December 15, 2003, the EPA issued a second “Notice of Potential Liability” letter to the Company regarding the Site. EPA again identified the Company as a PRP, this time because EPA “believes that [the Company] accepted hazardous substance for transport to disposal or treatment facilities and selected the site for disposal.” The Company responded again to EPA stating that it is interested in cooperating with EPA but that it does not believe it has engaged in any activities that caused contamination at the Site. The Company believes that none of its activities caused contamination at the Site, and will contest this claim by EPA and, therefore, no liability has been accrued for this matter.

In connection with the EPA claim described above, the two parties who have committed to conduct the RI/FS at the Site filed a complaint in the U.S. District Court of Rhode Island against the Company, in an action entitled CCL Custom Manufacturing, Inc. v. Arkwright Incorporated, et al (consolidated with Unilever Bestfoods v. American Steel & Aluminum Corp. et al), C.A. No. 01-496/L, on December 18, 2002. The Company was one of about sixty parties named by Plaintiffs, in this suit, to recover response costs incurred in investigating and responding to the releases of hazardous substances at the Site. Plaintiffs alleged that the Company is liable under 42 U.S.C. § 961(a)(3) of CERCLA as an “arranger” or “generator” of waste that ended up at the Site. The Company entered into a Generator Cooperation Agreement with other defendants to allocate costs in responding to this suit, and to share technical costs and information in evaluating the Plaintiffs’ claims. Although the Company does not believe it generated any waste that ended up at this Site, or that its activities caused contamination at the Site, the Company paid $45 to settle this suit in March 2006.

9. Amtrak Agreement

On April 4, 2012, Providence and Worcester Railroad Company (the “Company”) and National Railroad Passenger Corporation (“Amtrak”) entered into the 2012 Settlement and Amendment Agreement (the “2012 Agreement”) which settles certain disputes between the parties and amends, in part, both an Agreement dated January 3, 1978 (the “1978 Agreement”) and an Agreement dated July 9, 1979 by and between Amtrak and the Company. Under the 1978 Agreement, Amtrak obtained the right to remove certain Company trackage subject to the requirement of providing replacement facilities.

Under the 2012 Agreement, Amtrak’s obligations to P&W for outstanding track capacity are satisfied in full by, among other things, Amtrak (1) granting the Company a license for railroad operations to certain Amtrak trackage located in Cranston, RI (the “Cranston Yard Trackage”) ($179), (2) delivering to the Company track materials ($686), (3) granting the Company a credit against mileage charges payable to Amtrak by the Company for freight traffic utilizing the Northeast Corridor ($2,571), and (4) cash and relief of certain outstanding obligations the Company owed to Amtrak ($2,143), with the foregoing items having an agreed aggregate value of $5,578. The 2012 Agreement also relieves Amtrak of any future obligation (a) to maintain the Cranston Yard Trackage, and (b) to replace P&W track capacity modified or eliminated by Amtrak provided that no such modification or elimination may unreasonably interfere with the continuity of tracks being used for P&W’s freight service. The 2012 Agreement also contains provisions allocating the risk of use of the Cranston Yard Trackage, establishing procedures for contesting Amtrak invoices for maintenance of NEC freight sidings along the Northeast Corridor, permitting the Company to bill Amtrak for non-routine services requested by Amtrak and provided by the Company and permitting Amtrak to deduct from its cash payment to the Company the amount of certain uncontested invoices.

The Company recorded revenues through June 30, 2012 of $3,153. The remaining $2,425 relates to the credit against mileage charges payable to Amtrak by the Company for freight traffic utilizing the Northeast Corridor and is included in Deferred Grant and Other Revenue in the accompanying condensed balance sheet.

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10. Provision for Income Taxes (Benefit):

The income tax benefit for the three and six months of 2012 is equal to (1%) and (33%) of the pre-tax income, respectively. This effective rate reflects the federal income tax rate adjusted by the effect of non deductible expenses and state taxes. The estimated annual rate (35.5%) does not agree with expected amounts due to changes in the valuation allowance the Company had previously established against its deferred tax assets. During the second quarter the Company reversed $1.2 million of previously reserved deferred tax assets based upon the Company’s analysis of the Company’s reversal pattern of taxable temporary differences.

11. Related Party Transaction:

Robert Eder, who owns a majority of the Company’s Preferred Shares, with his wife, also controls Capital Properties, Inc. (“CPI”) and its subsidiaries. Pursuant to an agreement between the Company and Getty Oil Company (Eastern Operations), Inc. dated August 6, 1975, the Company has the right to relocate any portion of two pipelines located within the Company’s right of way in East Providence, Rhode Island. The Company and CPI have supported an extension of Waterfront Drive, so-called, in East Providence, which road is being constructed on the Company’s right of way. The State of Rhode Island’s plans for Waterfront Drive’s extension required a relocation of a portion of the pipelines which the Company has the right to relocate. The Rhode Island Department of Transportation (“RIDOT”) entered into an agreement with the Company to reimburse the Company for expenses incurred by us in relocating the pipelines up to a maximum of $159. In May 2011, CPI’s subsidiary, Capital Terminal Company (“CTC”), entered into an agreement with the Company to act as the Company’s agent to select, direct and supervise all subcontractors subject to the Company’s approval. All invoices from contractors to CTC are submitted to the Company for approval along with a check from CTC in the amount of the invoice. The Company pays the invoice out of the funds provided by CTC. The Company is then obligated to submit the invoices to RIDOT for reimbursement under its agreement with RIDOT. When the Company receives reimbursement from RIDOT, it is obligated to pay that amount to CTC. Any shortfall in RIDOT’s reimbursement is borne by CTC. The Company has received invoices to date of $219, which have been paid by the Company to the subcontractors out of funds received from CTC. CTC, through subcontractors, completed the pipeline relocation during 2011. During March 2012, the Company received $152 from RIDOT and remitted $152 to CTC. At June 30, 2012, the remaining receivable in the amount of $67 from RIDOT, and the corresponding accounts payable to CTC, in the same amount, have been reflected in the Company’s Condensed Balance Sheets. The Company has requested RIDOT to approve change orders to increase the amount payable to $219. The Company is obligated to CTC only to the extent it receives payment from RIDOT.

12. Subsequent event and dividends:

The Company has reached agreement in principle with an unrelated person (the “Grantee”) to convey to the Grantee a permanent easement along a portion of its right of way in exchange for a payment by the Grantee of $2,650. The Company is awaiting receipt from the Grantee of a draft of the proposed permanent easement. There can be no assurance that the Company and the Grantee will reach agreement on the terms of the easement.

On July 25, 2012, the Company declared a dividend of $.04 per share on its outstanding common stock payable August 22, 2012 to shareholders of record as of August 8, 2012.

*            *             *

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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. The following discussion should be read in conjunction with the Condensed Financial Statements and applicable notes to the Condensed Financial Statements, Item 1. The Company does not undertake the obligation to update forward-looking statements in response to new information, future events or otherwise.

Critical Accounting Policies

The Securities and Exchange Commission (“SEC”) defines critical accounting policies as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

The Company’s significant accounting policies are described in Note 1 of the Notes to Financial Statements in its Annual Report on Form 10-K. Not all of these significant accounting policies require management to make difficult, subjective or complex judgments or estimates. We continue to monitor our accounting policies to ensure proper application of current rules and regulations. There have been no significant changes to these policies as discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 during the first six months of 2012.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, including, without limitations, statements concerning the conditions in our industry and our operations, economic performance and financial condition, including, in particular, statements relating to our business and strategy. The words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe,” and other similar expressions are intended to identify forward-looking statements and information although not all forward-looking statements include these identifying words. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties.

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In particular, our business might be affected by uncertainties affecting the railroad and transportation industry generally as well as the following, among other factors:

• general economic, financial and political conditions, including downturns affecting the railroad industry and credit markets;

• our relationships with Class I railroads and other carriers;

• legislative and regulatory developments by the Surface Transportation Board, Railroad Retirement Board or the Federal Railroad Administration;

• our ability to comply with financial and non-financial covenants contained in our revolving line of credit and long-term debt;

• limitations and restrictions on the operation of our business contained in the documents governing our indebtedness;

• increases in transportation costs, including fuel prices, which in some instances may not be passed on to customers;

• competitive pressures, including changes in competitors’ pricing;

• our ability to generate cash flows to invest in the operation of our business; and

• our dependence upon our key customers, executives and other key employees and our ability to renegotiate our union contracts.

Recent Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company expects none of the recent accounting pronouncements will have a significant impact on its financial statements.

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 June 30,								Six Months Ended June 30,
	2012				2011				2012				2011
	(In thousands, except percentages)
Freight Revenues:
Conventional carloads	$	6,975	84.9	%	$	7,202	92.6	%	$	13,084	88.0	%	$	13,339	91.2	%
Containers		311	3.8			212	2.7			570	3.8			391	2.7
Other freight related		156	1.9			167	2.2			263	1.8			334	2.3
Other Operating Revenues		772	9.4			193	2.5			956	6.4			560	3.8
Total	$	8,214	100.0	%	$	7,774	100.0	%	$	14,873	100.0	%	$	14,624	100.0	%

12

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 June 30,								Six Months Ended June 30,
	2012				2011				2012				2011
	(In thousands, except percentages)
Salaries, wages, payroll taxes and employee benefits	$	4,081	49.7	%	$	3,918	50.4	%	$	8,197	55.1	%	$	7,897	54.0	%
Casualties and insurance		84	1.0			120	1.5			390	2.6			310	2.1
Depreciation		834	10.2			787	10.1			1,662	11.2			1,575	10.8
Diesel fuel		849	10.3			1,114	14.3			1,632	11.0			2,116	14.5
Car hire, net		257	3.1			365	4.7			492	3.3			590	4.0
Purchased services, including legal and professional fees		697	8.5			858	11.1			1,133	7.6			1,477	10.1
Repair and maintenance of equipment		322	3.9			93	1.2			757	5.1			696	4.8
Track and signal materials		857	10.4			145	1.9			1,190	8.0			427	2.9
Track usage fees		12	0.2			182	2.3			261	1.8			386	2.6
Other materials and supplies		388	4.7			292	3.8			708	4.8			607	4.2
Other		729	8.9			460	5.9			1,225	8.2			1,052	7.2
Total		9,110	110.9			8,334	107.2			17,647	118.7			17,133	117.2
Less capitalized and recovered costs		703	8.6			1,117	14.4			1,095	7.4			1,251	8.6
Total	$	8,407	102.3	%	$	7,217	92.8	%	$	16,552	111.3	%	$	15,882	108.6	%

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Operating Revenues:

Operating revenues increased $249 thousand, or 1.7%, to $14.9 million in the six months ended June 30, 2012 from $14.6 million in 2011. This increase is the result of a $179 thousand (45.7%) increase in container freight revenues, a $396 thousand (70.7%) increase in other operating revenues, offset by a $255 thousand (1.9%) decrease in conventional freight revenues, and a $71 thousand (21.3%) decrease in other freight-related revenues.

The decrease in conventional freight revenues results from a 4.9% increase in the average revenue received per conventional carloading, offset by a (7.0%) reduction in traffic volume. The Company’s conventional carloadings decreased by 1,150 to 15,296 in the first six months of 2012 from 16,446 in 2011.

13

The number of shipments of most commodities handled by the Company was relatively constant with decreases in coal and ethanol shipments contributing the majority of the decrease during the first six months of 2012. The decrease in coal shipments during the first six months of 2012 were due to a power plant customer being offline during a substantial portion of the period. Ethanol shipments were impacted by the weather conditions affecting the Midwestern corn crop. The increase in the average revenue received per conventional carloading is due to a shift in the mix of commodities, as well as some rate changes.

The increase in container freight revenues is the result of a 38.0% increase in traffic volume and an 8.0% increase in the average revenue received per container. Container traffic volume increased by 2,149 containers to 7,808 containers in the first six months of 2012 from 5,659 containers in 2011 as a result of the terminal operator located on the Company’s line obtaining an additional customer. This increase in traffic, along with improved economic conditions, contributed to the increase in the average revenue received per container.

The small decrease in other freight-related revenues results from a decrease in miscellaneous revenue.

The increase in other-operating revenues reflects an increase in maintenance department billings for services rendered to freight customers and other outside parties.

Other Income:

Income increased from $480 thousand in the first six months of 2011 to $3.4 million in 2012, due mainly to revenue recognized in conjunction with the Amtrak agreement described in note 9 to the financial statement.

Operating Expenses:

Operating expenses for the first six months of 2012 increased by $670 thousand, or 4.2%, to $16.6 million from $15.9 million in 2011. Increased operating costs were mainly due to increases in maintenance charges and maintenance of way expenses and other expenses, mainly increases in property tax amounts assessed to the Company as a result of a City wide re-valuation done in the City of Worcester. These increases were offset in part by decreases in diesel fuel consumption and professional fees. During 2011, the Company received amounts on account of assignment of tax maintenance credits ($869 thousand). During 2012, no amounts for tax maintenance credits were recognized. The decrease in amounts received was offset, in part, by increased capital projects performed by the Company’s maintenance of way department for various state projects.

Provision for Income Taxes (Benefit):

The income tax benefit for the first six months of 2012 is equal to (33%) of the pre-tax income. This effective rate reflects the federal income tax rate adjusted by the effect of non deductible expenses and state taxes. The estimated annual rate does not agree with expected amounts due to changes in the valuation allowance the Company had previously established against its deferred tax assets. During the second quarter the Company reversed $1.2 million of previously reserved deferred tax assets based upon the Company’s analysis of the Company’s reversal pattern of taxable temporary differences.

14

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Operating Revenues:

Operating revenues increased $440 thousand, or 5.7%, to $8.2 million in the second quarter of 2012 from $7.8 million in the second quarter of 2011. This increase is the result of a $579 thousand (300%) increase in other operating revenue, and a $99 thousand (46.7%) increase in container freight revenues, offset by a $227 thousand (3.2%) decrease in conventional freight revenues, and a $11 thousand (6.6%) decrease in other freight-related revenues.

The decrease in conventional freight revenues is attributable to an 8.7% decrease in traffic volume, offset by a 5.8% increase in average revenue per carloading. The Company’s conventional carloadings decreased by 817 to 8,605 in the second quarter of 2012 from 9,420 in 2011. The reasons for the decrease in conventional traffic volume and increase in average revenue per carloading are as previously discussed for the six months ended June 30, 2012.

The increase in container freight revenues is the result of a 35.5% increase in traffic volume and a 8.0% increase in the average revenue received per container. Container traffic volume increased by 1,109 containers to 4,234 in the second quarter of 2012 from 3,125 in the second quarter of 2011. Reasons for the increase in traffic volume and the average revenue received per container during the second quarter are as previously discussed.

Other operating revenues increased due to an increase of State projects performed by the Company’s maintenance of way personnel.

Other Income:

Other income increased from $283 thousand in the second quarter of 2012 to $3.3 million in 2012 due mainly to the 2012 Agreement with Amtrak.

Operating Expenses:

Operating expenses for the second quarter of 2012 increased by $1.2 million, or 16.7%, to $8.4 million in the second quarter of 2012 from $7.2 million in the second quarter of 2011. The principal reasons for this overall increase were recovered costs of $869 thousand on account of assignment of tax maintenance credits received in 2011 not received in 2012. These increases were offset in part by a decrease in the amount of diesel fuel consumed and purchased services utilized.

Provision for Income Taxes:

The income tax provision for the second quarter of 2012 is equal to approximately (1%) of pre-tax income. This effective tax rate represents the federal income tax rate increased by the impact of state income taxes and non-deductible expenses. The estimated annual rate does not agree to expected amounts due to changes in the valuation allowance the Company had previously established against its deferred tax assets ($1.2 million) based upon the Company’s analysis of the Company’s reversal pattern of taxable temporary differences.

Liquidity and Capital Resources

During the six months ended June 30, 2012, the Company generated $1.8 million of cash from operating activities, and the Company used $1.5 million in investing activities and $136 thousand in financing activities.

15

On July 25, 2012, the Company declared a quarterly dividend of approximately $193 thousand ($.04 per common share) to be paid on August 22, 2012. The declaration of future dividends and the amount thereof will depend on the Company’s future earnings, financial factors and other events.

The Company has a revolving line of credit facility in the amount of $5 million from a commercial bank expiring on June 25, 2013. At June 30, 2012, no amounts were outstanding.

Seasonality

Historically, the Company’s operating revenues are lower for the first half of the year due to the absence of construction aggregate shipments during a portion of this period and to winter weather conditions.

Item 4 - Controls and Procedures

Our management with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a–15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

There was no significant change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting. The Company continues to enhance its internal controls over financial reporting, primarily by evaluating and enhancing process and control documentation. Management discusses with and discloses these matters to the Audit Committee of the Board of Directors and the Company’s auditors.

16

PART II – Other Information

Item 5- Other information

None.

Item 6- Exhibits

31.1	Rule 13a-14(a) Certification of Chairman of the Board and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a) Certification of Treasurer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certifications of Chairman of the Board and Chief Executive Officer and Treasurer and Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101†	The following financial information from the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2012, filed with the Securities and Exchange Commission on August 13, 2012, formatted in eXtensible Business Reporting Language:

(i) Balance Sheets as of June 30, 2012 and December 31, 2011

(ii) Statements of Operations for the Three and Six Months ended June 30, 2012 and 2011

(iii) Statements of Cash Flows for the Six Months ended June 30, 2012 and 2011

(iv) Notes to Financial Statements.

† This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (15 U.S.C.78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that the Company specifically incorporates it by reference.

17

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/ Robert H. Eder
	Robert H. Eder
	Chairman of the Board and Chief Executive Officer

By:	/s/ Daniel T. Noreck
	Daniel T. Noreck
	Treasurer and Chief Financial Officer

DATED: August 13, 2012

18

EX-31.1

EXHIBIT 31.1

Providence and Worcester Railroad Company

Certification Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, ROBERT H. EDER, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Providence and Worcester Railroad Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: August 13, 2012

By:	/s/ Robert H. Eder
	Robert H. Eder
	Chairman of the Board and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Providence and Worcester Railroad Company

Certification Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, DANIEL T. NORECK, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Providence and Worcester Railroad Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: August 13, 2012

By:	/s/ Daniel T. Noreck
	Daniel T. Noreck
	Treasurer and Chief Financial Officer

EX-32

EXHIBIT 32

PROVIDENCE AND WORCESTER RAILROAD COMPANY

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Providence and Worcester Railroad Company (the Company) on form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert H. Eder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Robert H. Eder
	Robert H. Eder
	Chairman of the Board and Chief Executive Officer
	August 13, 2012

EX-32.1

EXHIBIT 32.1

PROVIDENCE AND WORCESTER RAILROAD COMPANY

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Providence and Worcester Railroad Company (the Company) on form 10-Q for the quarterly period ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Daniel T. Noreck, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Daniel T. Noreck
	Daniel T. Noreck
	Treasurer and Chief Financial Officer
	August 13, 2012

XML

Income (Loss) per Common Share (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Weighted-Average Common Shares Outstanding:
Weighted-average shares for basic	4,833,640	4,818,415	4,833,640	4,818,415
Dilutive effect of convertible preferred stock and stock options	71,821	73,028	70,731
Weighted-average shares for diluted	4,905,461	4,891,443	4,904,371	4,818,415

XML

Debt

6 Months Ended

Jun. 30, 2012

Debt [Abstract]

Debt

4. Debt:

Revolving Line of Credit

The Company has a revolving line of credit facility in the amount of $5,000 from a commercial bank expiring on June 25, 2013. Borrowings under this line of credit are unsecured, due on demand and bear interest at either the bank's prime rate or one and three-quarters percent over the thirty, sixty or ninety day London Interbank Offered Rate (“LIBOR”) with a LIBOR floor of one and one-quarter percent. The Company pays no commitment fee on this line of credit and has no compensating balance requirements. It is subject to financial and non-financial covenants including maintenance of a minimum net worth and restrictions as to the incurrence of additional indebtedness, as well as the sale or encumbrance of its assets. At June 30, 2012, no amounts were outstanding.

Long term debt

In December 2010, the Company borrowed $4,000 from the same commercial bank, in order to finance the rehabilitation of the Willimantic Branch. The loan of up to $4,000 required payments of interest only for the first six months and accruing at the bank’s prime rate. After the six month period, the loan converted to a 10 year loan with a 20 year amortization period and bears interest at the Federal Home Loan Bank of Boston 5/20 rate plus 3% (5.18% at the date of conversion). This rate will reset based upon the same conversion factors after 5 years (Federal Home Loan Bank of Boston 5/20 rate plus 3%). The Company has the right to prepay all or any part thereof out of internally-generated funds without penalty. The Company is subject to financial and non-financial covenants, including maintenance of minimum net worth and minimum debt service coverage. As of June 30, 2012, the outstanding principal balance was $3,883.

The carrying value of the Company’s debt facilities approximated its fair value at June 30, 2012 which was estimated using current borrowing rates available to the Company.

XML

Amtrak Agreement (Details Textual) (USD $) In Thousands, unless otherwise specified	1 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Amtrak Agreement (Textual) [Abstract]
Remaining revenue relates to credit against mileage charges payable to Amtrak		$ 2,425
Amtrak Agreement [Member]
Amtrak Agreement (Textual) [Abstract]
Dispute Settlement Gross Amount		5,578
Recorded revenues	3,153
Nonsoftware License Arrangement [Member] | Amtrak Agreement [Member]
Amtrak Agreement (Textual) [Abstract]
Dispute Settlement Gross Amount		(179)
Track Material [Member] | Amtrak Agreement [Member]
Amtrak Agreement (Textual) [Abstract]
Dispute Settlement Gross Amount		(686)
Mileage Charges Freight [Member] | Amtrak Agreement [Member]
Amtrak Agreement (Textual) [Abstract]
Dispute Settlement Gross Amount		(2,571)
Remaining revenue relates to credit against mileage charges payable to Amtrak	2,425
Inter Entity Outstanding Adjustment [Member] | Amtrak Agreement [Member]
Amtrak Agreement (Textual) [Abstract]
Dispute Settlement Gross Amount		$ (2,143)

XML

Commitments and Contingent Liabilities (Details Textual) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 Plaintiffs
Commitments and Contingencies (Textual) [Abstract]
Payment of past costs demand	$ 762
Minimum Period for clean up of site	2 years
Number of parties named by Plaintiff	60
Amount paid to settle suit	$ 45

XML

Provision For Income Taxes (Benefit) (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Provision For Income Taxes (Benefit) (Textual) [Abstract]
Income tax benefit	(1.00%)	(33.00%)
Estimated annual income tax rate		(35.50%)
Reversal of reserved deferred tax assets		$ 1.2

XML

Related Party Transaction (Details Textual) (USD $) In Thousands, unless otherwise specified	1 Months Ended			6 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	May 31, 2011	Jun. 30, 2012 Pipelines
Related Party Transaction (Additional Textual) [Abstract]
Number of pipelines				2
Received invoice, amount			$ 219
Amount received from RIDOT		152
Remaining receivable from RIDOT	67			67
Increase in amount payable	219
Maximum [Member]
Related Party Transaction (Textual) [Abstract]
Maximum reimbursement				159
Subsidiary of Common Parent [Member]
Related Party Transaction (Textual) [Abstract]
Amount remitted to CTC		$ 152

XML

Changes in Shareholders' Equity

6 Months Ended

Jun. 30, 2012

Changes in Shareholders' Equity [Abstract]

Changes in Shareholders' Equity

3. Changes in Shareholders’ Equity:

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Total Shareholders’ Equity
Balance December 31, 2011	$	32	$	2,417	$	37,271	$	33,269		$	72,989
Issuance of 4,961 common shares for employee stock purchases, stock options exercised and employee stock awards				2		66					68
Share-based compensation, options granted						65					65
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.04 per share								(387	)		(387	)
Net income for the period								2,199			2,199
Balance June 30, 2012	$	32	$	2,419	$	37,402	$	35,078		$	74,931

XML

Subsequent event and dividends (Details Textual) (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended
	Jul. 27, 2012	Jul. 29, 2012 Subsequent Event [Member]
Loss Contingencies [Line Items]
Amount received for settlement of certain legal proceedings and grant of permanent easement		$ 2,650
Dividends (Textual) [Abstract]
Dividend Declared	$ 0.04
Dividend payable, declared	Jul. 25, 2012
Outstanding common stock payable date	Aug. 08, 2012
Dividends Payable Date on record	Aug. 22, 2012

XML

Condensed Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current Assets:
Cash and cash equivalents	$ 4,043	$ 3,943
Accounts receivable, net of allowance for doubtful accounts of $115 in 2012 and 2011	4,029	3,570
Materials and supplies	689	842
Prepaid expenses and other current assets		412
Deferred income taxes	291	291
Total Current Assets	9,052	9,058
Accounts receivable, less current portion	2,549
Property and Equipment, net	85,344	84,676
Land Held for Development	12,457	12,457
Total Assets	109,402	106,191
Current Liabilities:
Current portion of long term debt	123	120
Accounts payable	3,938	4,046
Current portion of deferred grant and other revenue	890	111
Accrued expenses	1,741	2,327
Total Current Liabilities	6,692	6,604
Long term debt, net of current portion	3,759	3,821
Deferred Income Taxes	11,723	12,290
Deferred Grant Income and Other Revenue	12,297	10,487
Shareholders' Equity:
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2012 and 2011	32	32
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,837,973 shares in 2012 and 4,833,012 shares in 2011	2,419	2,417
Additional paid-in capital	37,402	37,271
Retained earnings	35,078	33,269
Total Shareholders' Equity	74,931	72,989
Total Liabilities and Shareholders' Equity	$ 109,402	$ 106,191

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

1. In the opinion of management, the accompanying interim financial statements of Providence and Worcester Railroad Company (the “Company”) contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2012, the results of operations for the three and six months ended June 30, 2012 and 2011 and cash flows for the six months ended June 30, 2012 and 2011 in accordance with accounting principles generally accepted in the United States. The accompanying condensed balance sheet as of December 31, 2011, has been derived from audited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. 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, 2011 filed with the Securities and Exchange Commission. Results for interim periods may not necessarily be indicative of the results to be expected for the full year.

Certain amounts in the 2011 financial statements have been reclassified to conform with the 2012 presentation. Interest expense is shown separately in the 2012 presentation.

XML

Changes in Shareholders Equity (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012
Changes in Shareholders' Equity (Textual) [Abstract]
Issuance of 4,961 common shares for employee stock purchases, stock options exercised and employee stock awards	4,691
Cash Dividend Per Share, Preferred stock	$ 5.00
Cash Dividend Per Share, Common stock	$ 0.04

XML

Other Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Other Income
Amtrak agreement	$ 3,153		$ 3,153
Rentals	140	186	260	354
Interest	6	4	9	7
Other	17	93	17	119
Other income, Total	$ 3,316	$ 283	$ 3,439	$ 480

XML

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements:

The Company reviews new accounting standards as issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company expects none of the recent accounting pronouncements will have a significant impact on its financial statements.

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Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Condensed Balance Sheets [Abstract]
Allowance for accounts receivable	$ 115	$ 115
Percentage of noncumulative preferred stock	10.00%	10.00%
Preferred stock, par value	$ 50	$ 50
Preferred stock, shares authorized	640	640
Preferred stock, shares issued	640	640
Preferred stock, shares outstanding	640	640
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	4,837,973	4,833,012
Common stock, shares outstanding	4,837,973	4,833,012

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Subsequent event and dividends

6 Months Ended

Jun. 30, 2012

Subsequent event and dividends [Abstract]

Subsequent event and dividends

12. Subsequent event and dividends:

The Company has reached agreement in principle with an unrelated person (the “Grantee”) to convey to the Grantee a permanent easement along a portion of its right of way in exchange for a payment by the Grantee of $2,650. The Company is awaiting receipt from the Grantee of a draft of the proposed permanent easement. There can be no assurance that the Company and the Grantee will reach agreement on the terms of the easement.

On July 25, 2012, the Company declared a dividend of $.04 per share on its outstanding common stock payable August 22, 2012 to shareholders of record as of August 8, 2012.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 01, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	PROVIDENCE & WORCESTER RAILROAD CO/RI/
Entity Central Index Key	0000831968
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,837,973

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Changes in Shareholders Equity (Tables)

6 Months Ended

Jun. 30, 2012

Changes in Shareholders' Equity [Abstract]

Shareholders' Equity

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Total Shareholders’ Equity
Balance December 31, 2011	$	32	$	2,417	$	37,271	$	33,269		$	72,989
Issuance of 4,961 common shares for employee stock purchases, stock options exercised and employee stock awards				2		66					68
Share-based compensation, options granted						65					65
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.04 per share								(387	)		(387	)
Net income for the period								2,199			2,199
Balance June 30, 2012	$	32	$	2,419	$	37,402	$	35,078		$	74,931

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Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues:
Operating Revenues	$ 8,214	$ 7,774	$ 14,873	$ 14,624
Other Income	3,316	283	3,439	480
Total Revenues	11,530	8,057	18,312	15,104
Operating Expenses:
Maintenance of way and structures	1,765	182	3,206	2,017
Maintenance of equipment	945	993	1,841	2,023
Transportation	2,557	2,753	5,106	5,384
General and administrative	1,141	1,323	2,362	2,636
Depreciation	834	788	1,662	1,575
Taxes, other than income taxes	841	565	1,514	1,148
Car hire, net	257	365	492	590
Employee retirement plans	54	65	108	123
Track usage fees	13	183	261	386
Total Operating Expenses	8,407	7,217	16,552	15,882
Operating Income (Loss) before Interest and Income Taxes	3,123	840	1,760	(778)
Interest expense	53	7	106	15
Income (Loss) from operations before Income Taxes	3,070	833	1,654	(793)
Income Tax Provision (Benefit)	(29)	5	(545)	465
Net Income (Loss)	3,099	828	2,199	(1,258)
Preferred Stock Dividends			3	3
Net Income (Loss) Attributable to Common Shareholders	$ 3,099	$ 828	$ 2,196	$ (1,261)
Income (Loss) Per Common Share:
Basic	$ 0.64	$ 0.17	$ 0.45	$ (0.26)
Diluted	$ 0.63	$ 0.17	$ 0.44	$ (0.26)
Weighted-Average Common Shares Outstanding:
For basic	4,833,640	4,818,415	4,833,640	4,818,415
For diluted	4,905,461	4,891,443	4,904,371	4,818,415

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Track Maintenance Agreement

6 Months Ended

Jun. 30, 2012

Track Maintenance Agreement [Abstract]

Track Maintenance Agreement

7. Track Maintenance Agreement:

In the second quarter of 2011, the Company entered into a track maintenance agreement with an unrelated third party customer (“Shipper”). The Shipper paid for qualifying railroad track maintenance expenditures during 2011 in consideration of the assignment of railroad track miles which permits the Shipper to claim certain federal tax credits pursuant to Internal Revenue Code Section 45G. During 2011, the Company received $869 thousand, net of expenses. The authorizing federal legislation for track maintenance credits was not renewed by Congress upon its expiration on December 31, 2011. No amounts were received during the three and six months ended June 30, 2012 for track maintenance credits.

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Income (Loss) per Common Share

6 Months Ended

Jun. 30, 2012

Income (Loss) per Common Share [Abstract]

Income (Loss) per Common Share

6. Income (Loss) per Common Share:

Basic income (loss) per common share is computed using the weighted-average number of common shares outstanding during each period. Diluted income (loss) per common share reflects the effect of the Company’s outstanding convertible preferred stock and stock options except where such items would be antidilutive.

A reconciliation of weighted-average shares used for the basic computation and that used for the diluted computation is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Weighted-average shares for basic		4,833,640		4,818,415		4,833,640		4,818,415
Dilutive effect of convertible preferred stock and stock options		71,821		73,028		70,731		—
Weighted-average shares for diluted		4,905,461		4,891,443		4,904,371		4,818,415

Options to purchase 65,508 shares of common stock were outstanding at June 30, 2012. Options to purchase 58,617 shares of common stock were outstanding at June 30, 2011. For the three month periods ended June 30, 2012 and 2011, 7,821 and 9,028 of outstanding options to purchase common shares were included in the computation of diluted earnings per share (EPS). The remaining outstanding options to purchase common stock were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the Company’s common stock.

For the six month period ended June 30, 2012, 6,731 of outstanding options to purchase common shares were included in the computation of diluted EPS. The remaining outstanding options to purchase common stock were not included in the computation of diluted EPS because the options exercise price was greater than the average market price of the Company’s common stock.

Preferred Stock convertible into 64,000 shares of common stock at the rate of 100 shares of common stock for each one share of Preferred Stock was outstanding for the three and six-month periods ended June 30, 2012 and 2011. For the three month periods ended June 30, 2012 and 2011 and for the six month period ended June 30, 2012, 64,000 shares of the Company’s common stock were included in the diluted EPS. For the six month period ended June 30, 2011, the 64,000 shares of the Company’s common stock were not included as the effect would be antidilutive.

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Debt (Details Textual) (USD $) In Thousands, unless otherwise specified	6 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2012 Revolving Credit Facility [Member]	Dec. 31, 2011 Construction Loan [Member]
Debt (Textual) [Abstract]
Extended revolving line of credit facility			$ 5,000	$ 4,000
Line of credit facility maturity date			Jun. 25, 2013
Variable rate interest			LIBOR	5/20 rate plus 0.03
Variable rate interest with percent interest rate			1.75%	3.00%
Outstanding line of credit			0
Variable rate interest Option 2			one and three-quarters percent over the thirty, sixty or ninety day London Interbank Offered Rate (“LIBOR”) with a LIBOR floor of one and one-quarter percent.
Commitment fee amount			0
Compensating balance amount		0
Construction loan converted to term loan period				10 years
Construction loan amortization period				20 years
Interest rate at Federal Home Loan				5.18%
Outstanding balance, construction loan				3,883
Actual borrowed amount	$ 4,000

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Other Income (Tables)

6 Months Ended

Jun. 30, 2012

Other Income [Abstract]

Other Income

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Amtrak agreement	$	3,153	$	—	$	3,153	$	—
Rentals		140		186		260		354
Interest		6		4		9		7
Other		17		93		17		119
	$	3,316	$	283	$	3,439	$	480

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Provision For Income Taxes (Benefit)

6 Months Ended

Jun. 30, 2012

Provision For Income Taxes (Benefit) [Abstract]

Provision For Income Taxes (Benefit)

10. Provision for Income Taxes (Benefit):

The income tax benefit for the three and six months of 2012 is equal to (1%) and (33%) of the pre-tax income, respectively. This effective rate reflects the federal income tax rate adjusted by the effect of non deductible expenses and state taxes. The estimated annual rate (35.5%) does not agree with expected amounts due to changes in the valuation allowance the Company had previously established against its deferred tax assets. During the second quarter the Company reversed $1.2 million of previously reserved deferred tax assets based upon the Company’s analysis of the Company’s reversal pattern of taxable temporary differences.

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Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2012

Commitments and Contingent Liabilities [Abstract]

Commitments and Contingent Liabilities

8. 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 condensed financial statements for any expected liabilities which may result from disposition of such lawsuits.

On January 29, 2002, the Company received a “Notice of Potential Liability” from the United States Environmental Protection Agency (“EPA”) regarding an existing Superfund Site that includes the J.M. Mills Landfill in Cumberland, Rhode Island. EPA sends these “Notice” letters to potentially responsible parties (“PRPs”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). EPA identified the Company as a PRP based on its status as an owner and/or operator because its railroad property traverses the Site. Via these Notice letters, EPA makes a demand for payment of past costs (identified in the letter as $762) and future costs associated with the response actions taken to address the contamination at the Site, and requests PRPs to indicate their willingness to participate and resolve their potential liability at the Site. The Company has responded to EPA by stating that it does not believe it has any liability for this Site, but that it is interested in cooperating with EPA to address issues concerning liability at the Site. At this point, two other parties have already committed via a consent order with EPA to pay for the Remedial Investigation/Feasibility Study (“RI/FS”) phase of the clean-up at the Site, which will take approximately two or more years to complete. After that, EPA will likely seek to negotiate the cost of the Remedial Design and implementation of the remedy at the Site with the PRPs it has identified via these Notice letters (which presently includes over sixty parties, and is likely to increase after EPA completes its investigation of the identity of PRPs). On December 15, 2003, the EPA issued a second “Notice of Potential Liability” letter to the Company regarding the Site. EPA again identified the Company as a PRP, this time because EPA “believes that [the Company] accepted hazardous substance for transport to disposal or treatment facilities and selected the site for disposal.” The Company responded again to EPA stating that it is interested in cooperating with EPA but that it does not believe it has engaged in any activities that caused contamination at the Site. The Company believes that none of its activities caused contamination at the Site, and will contest this claim by EPA and, therefore, no liability has been accrued for this matter.

In connection with the EPA claim described above, the two parties who have committed to conduct the RI/FS at the Site filed a complaint in the U.S. District Court of Rhode Island against the Company, in an action entitled CCL Custom Manufacturing, Inc. v. Arkwright Incorporated, et al (consolidated with Unilever Bestfoods v. American Steel & Aluminum Corp. et al), C.A. No. 01-496/L, on December 18, 2002. The Company was one of about sixty parties named by Plaintiffs, in this suit, to recover response costs incurred in investigating and responding to the releases of hazardous substances at the Site. Plaintiffs alleged that the Company is liable under 42 U.S.C. § 961(a)(3) of CERCLA as an “arranger” or “generator” of waste that ended up at the Site. The Company entered into a Generator Cooperation Agreement with other defendants to allocate costs in responding to this suit, and to share technical costs and information in evaluating the Plaintiffs’ claims. Although the Company does not believe it generated any waste that ended up at this Site, or that its activities caused contamination at the Site, the Company paid $45 to settle this suit in March 2006.

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Amtrak Agreement

6 Months Ended

Jun. 30, 2012

Amtrak Agreement [Abstract]

Amtrak Agreement

9. Amtrak Agreement

On April 4, 2012, Providence and Worcester Railroad Company (the “Company”) and National Railroad Passenger Corporation (“Amtrak”) entered into the 2012 Settlement and Amendment Agreement (the “2012 Agreement”) which settles certain disputes between the parties and amends, in part, both an Agreement dated January 3, 1978 (the “1978 Agreement”) and an Agreement dated July 9, 1979 by and between Amtrak and the Company. Under the 1978 Agreement, Amtrak obtained the right to remove certain Company trackage subject to the requirement of providing replacement facilities.

Under the 2012 Agreement, Amtrak’s obligations to P&W for outstanding track capacity are satisfied in full by, among other things, Amtrak (1) granting the Company a license for railroad operations to certain Amtrak trackage located in Cranston, RI (the “Cranston Yard Trackage”) ($179), (2) delivering to the Company track materials ($686), (3) granting the Company a credit against mileage charges payable to Amtrak by the Company for freight traffic utilizing the Northeast Corridor ($2,571), and (4) cash and relief of certain outstanding obligations the Company owed to Amtrak ($2,143), with the foregoing items having an agreed aggregate value of $5,578. The 2012 Agreement also relieves Amtrak of any future obligation (a) to maintain the Cranston Yard Trackage, and (b) to replace P&W track capacity modified or eliminated by Amtrak provided that no such modification or elimination may unreasonably interfere with the continuity of tracks being used for P&W’s freight service. The 2012 Agreement also contains provisions allocating the risk of use of the Cranston Yard Trackage, establishing procedures for contesting Amtrak invoices for maintenance of NEC freight sidings along the Northeast Corridor, permitting the Company to bill Amtrak for non-routine services requested by Amtrak and provided by the Company and permitting Amtrak to deduct from its cash payment to the Company the amount of certain uncontested invoices.

The Company recorded revenues through June 30, 2012 of $3,153. The remaining $2,425 relates to the credit against mileage charges payable to Amtrak by the Company for freight traffic utilizing the Northeast Corridor and is included in Deferred Grant and Other Revenue in the accompanying condensed balance sheet.

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Related Party Transaction

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related Party Transaction

11. Related Party Transaction:

Robert Eder, who owns a majority of the Company’s Preferred Shares, with his wife, also controls Capital Properties, Inc. (“CPI”) and its subsidiaries. Pursuant to an agreement between the Company and Getty Oil Company (Eastern Operations), Inc. dated August 6, 1975, the Company has the right to relocate any portion of two pipelines located within the Company’s right of way in East Providence, Rhode Island. The Company and CPI have supported an extension of Waterfront Drive, so-called, in East Providence, which road is being constructed on the Company’s right of way. The State of Rhode Island’s plans for Waterfront Drive’s extension required a relocation of a portion of the pipelines which the Company has the right to relocate. The Rhode Island Department of Transportation (“RIDOT”) entered into an agreement with the Company to reimburse the Company for expenses incurred by us in relocating the pipelines up to a maximum of $159. In May 2011, CPI’s subsidiary, Capital Terminal Company (“CTC”), entered into an agreement with the Company to act as the Company’s agent to select, direct and supervise all subcontractors subject to the Company’s approval. All invoices from contractors to CTC are submitted to the Company for approval along with a check from CTC in the amount of the invoice. The Company pays the invoice out of the funds provided by CTC. The Company is then obligated to submit the invoices to RIDOT for reimbursement under its agreement with RIDOT. When the Company receives reimbursement from RIDOT, it is obligated to pay that amount to CTC. Any shortfall in RIDOT’s reimbursement is borne by CTC. The Company has received invoices to date of $219, which have been paid by the Company to the subcontractors out of funds received from CTC. CTC, through subcontractors, completed the pipeline relocation during 2011. During March 2012, the Company received $152 from RIDOT and remitted $152 to CTC. At June 30, 2012, the remaining receivable in the amount of $67 from RIDOT, and the corresponding accounts payable to CTC, in the same amount, have been reflected in the Company’s Condensed Balance Sheets. The Company has requested RIDOT to approve change orders to increase the amount payable to $219. The Company is obligated to CTC only to the extent it receives payment from RIDOT.

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Changes in Shareholders Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended				6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Preferred Stock [Member]	Dec. 31, 2011 Preferred Stock [Member]	Jun. 30, 2012 Common Stock [Member]	Jun. 30, 2012 Additional Paid-in Capital [Member]	Jun. 30, 2012 Retained Earning [Member]
Changes in Shareholders' Equity:
Stockholders Equity Beginning Balance			$ 72,989		$ 32	$ 32	$ 2,417	$ 37,271	$ 33,269
Issuance of 4,961 common shares for employee stock purchases, stock options exercised and employee stock awards			68				2	66
Share-based compensation, options granted			65					65
Dividends:
Preferred stock, $5.00 per share			(3)						(3)
Common stock, $.04 per share			(387)						(387)
Net income for the period	3,099	828	2,199	(1,258)					2,199
Stockholders Equity Ending Balance	$ 74,931		$ 74,931		$ 32	$ 32	$ 2,419	$ 37,402	$ 35,078

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Income (Loss) Per Common Share (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income (Loss) per Common Share (Textual) [Abstract]
Preferred stock convertible into shares of common stock	64,000	64,000	64,000	64,000
Preferred stock convertible into common stock at rate of shares of common stock	100	100	100	100
Options to purchase common shares were included in the computation of diluted EPS	7,821	9,028	6,731
Convertible Preferred Stock [Member]
Income (Loss) per Common Share (Textual) [Abstract]
Preferred stock convertible into shares of common stock	64,000	64,000	64,000	64,000
Stock Options [Member]
Income (Loss) per Common Share (Textual) [Abstract]
Options to purchase common stock outstanding	65,508	58,617	65,508	58,617

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Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flows from Operating Activities:
Net income (loss)	$ 2,199	$ (1,258)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation	1,662	1,575
Amortization of deferred grant income	(280)	(132)
Proceeds from deferred grant and other income	199
Deferred income taxes benefit	(567)	447
Proceeds from sale of property	(181)
Share-based compensation	65	102
Increase (decrease) in cash from:
Accounts receivable	(762)	(1,025)
Materials and supplies	153	17
Prepaid expenses and other current assets	412	370
Accounts payable and accrued expenses	(1,115)	1,008
Net cash flows from operating activities	1,785	1,104
Cash flows from Investing Activities:
Purchase of property and equipment	(1,730)	(5,014)
Proceeds from sale of property and equipment	181
Proceeds from note receivable		44
Net cash flows used in investing activities	(1,549)	(4,970)
Cash Flows from Financing Activities:
Borrowings under long term debt		4,000
Repayments of long term debt	(59)
Proceeds from deferred grant and other income	245
Dividends paid	(390)	(389)
Issuance of common shares for stock options exercised and employee stock purchases	68	69
Net cash flows (used in) from financing activities	(136)	3,680
Increase (Decrease) in Cash and Cash Equivalents	100	(186)
Cash and Cash Equivalents, Beginning of Period	3,943	1,517
Cash and Cash Equivalents, End of Period	4,043	1,331
Supplemental Disclosures:
Cash paid during year for interest	107	52
Cash paid for income taxes	70
Property and equipment included in accounts payable and accrued expenses	421	387
Accounts receivable and deferred revenue obtained pursuant to the Amtrak agreement (see Note 9)	2,425
Material and supplies received in exchange for account receivable	179
Accounts payable relieved pursuant to the Amtrak agreement (see Note 9)	$ 244

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Other Income

6 Months Ended

Jun. 30, 2012

Other Income [Abstract]

Other Income

5. Other Income:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Amtrak agreement	$	3,153	$	—	$	3,153	$	—
Rentals		140		186		260		354
Interest		6		4		9		7
Other		17		93		17		119
	$	3,316	$	283	$	3,439	$	480

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Track Maintenance Agreement (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Track Maintenance Agreement (Textual) [Abstract]
Track maintenance revenue from third party	$ 0	$ 0	$ 869

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Income (Loss) per Common Share (Tables)

6 Months Ended

Jun. 30, 2012

Income (Loss) per Common Share [Abstract]

Reconciliation of weighted-average shares used for the basic computation and that used for the diluted computation

A reconciliation of weighted-average shares used for the basic computation and that used for the diluted computation is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Weighted-average shares for basic		4,833,640		4,818,415		4,833,640		4,818,415
Dilutive effect of convertible preferred stock and stock options		71,821		73,028		70,731		—
Weighted-average shares for diluted		4,905,461		4,891,443		4,904,371		4,818,415