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, 2014

¨ 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 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, 2014, the registrant has 4,856,128 shares of common stock, par value $.50 per share, outstanding.

Index to Quarterly Report on Form 10-Q

Part I – Financial Information
	Item 1 –	Financial Statements (Unaudited):
		Condensed Balance Sheets – June 30, 2014 (Unaudited) and December 31, 2013	3
		Condensed Statements of Operations – Three and Six Months Ended June 30, 2014 and 2013 (Unaudited)	4
		Condensed Statements of Cash Flows – Six Months Ended June 30, 2014 and 2013 (Unaudited)	5
		Notes to Condensed Financial Statements (Unaudited)	6-10
	Item 2 –	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11-15
	Item 4 –	Controls and Procedures	15-16
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, 2014		DECEMBER 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	1,359	$	2,614
Accounts receivable, net of allowance for doubtful accounts of $275 in 2014 and $160 in 2013		6,136		5,727
Materials and supplies		1,217		1,308
Prepaid expenses and other current assets		148		508
Deferred income taxes		353		353
Total Current Assets		9,213		10,510
Property and Equipment, net		85,695		85,571
Land Held for Development		12,457		12,457
Rail Cars Held for Sale		332		—
Total Assets	$	107,697	$	108,538
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	3,023	$	3,745
Current portion of deferred grant and other revenue		481		239
Accrued expenses		1,891		1,677
Total Current Liabilities		5,395		5,661
Deferred Income Taxes		13,599		13,638
Deferred Grant and Other Revenue		12,194		12,477
Shareholders’ Equity:
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2014 and 2013		32		32
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,856,128 shares in 2014 and 4,850,014 shares in 2013		2,428		2,425
Additional paid-in capital		37,823		37,635
Retained earnings		36,226		36,670
Total Shareholders’ Equity		76,509		76,762
Total Liabilities and Shareholders’ Equity	$	107,697	$	108,538

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,
	2014		2013		2014			2013
Operating Revenues	$	9,511	$	8,777	$	16,025		$	15,769
Operating Expenses:
Maintenance of way and structures		1,325		1,312		2,677			2,838
Maintenance of equipment		1,049		999		1,961			2,018
Transportation		2,647		2,614		5,118			5,124
General and administrative		1,422		1,110		2,660			2,379
Depreciation		888		861		1,788			1,717
Taxes, other than income taxes		700		721		1,356			1,685
Car hire, net		226		220		453			459
Employee retirement plans		57		56		114			111
Track usage fees		87		80		116			122
Total Operating Expenses		8,401		7,973		16,243			16,453
Operating Income (Loss) before Interest and Income Taxes		1,110		804		(218	)		(684	)
Other income		117		13		127			19
Income (Loss) from operations before Income Taxes		1,227		817		(91	)		(665	)
Income Tax Provision (Benefit)		602		339		(39	)		(53	)
Net Income (Loss)		625		478		(52	)		(612	)
Preferred Stock Dividends		—		—		3			3
Net Income (Loss) Attributable to Common Shareholders	$	625	$	478	$	(55	)	$	(615	)
Income (Loss) Per Common Share:
Basic	$	.13	$	.10	$	(.01	)	$	(.13	)
Diluted	$	.13	$	.10	$	(.01	)	$	(.13	)
Weighted-Average Common Shares Outstanding:
For basic		4,853,088		4,843,608		4,852,469			4,843,012
For diluted		4,928,643		4,917,396		4,852,469			4,843,012

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,
	2014			2013
Cash Flows from Operating Activities:
Net loss	$	(52	)	$	(612	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation		1,788			1,717
Amortization of deferred grant income		(486	)		(396	)
Allowance for doubtful accounts		115			—
Proceeds from deferred grant and other revenue		445			1,580
Deferred income taxes benefit		(39	)		(194	)
Share-based compensation		114			78
Increase (decrease) in cash from:
Accounts receivable		(524	)		243
Materials and supplies		91			(163	)
Prepaid expenses and other current assets		360			447
Accounts payable and accrued expenses		(508	)		(648	)
Net cash flows from operating activities		1,304			2,052
Cash flows from Investing Activities:
Purchase of property and equipment		(2,494	)		(1,443	)
Proceeds from sale of property and equipment		250			—
Net cash flows used in investing activities		(2,244	)		(1,443	)
Cash Flows from Financing Activities:
Proceeds from deferred grant and other income		—			43
Dividends paid		(392	)		(393	)
Issuance of common shares for stock options exercised and employee stock purchases		77			38
Net cash flows used in financing activities		(315	)		(312	)
Increase (decrease) in Cash and Cash Equivalents		(1,255	)		297
Cash and Cash Equivalents, Beginning of Period		2,614			951
Cash and Cash Equivalents, End of Period	$	1,359		$	1,248
Supplemental Disclosures:
Cash paid for income taxes	$	97		$	420
Property and equipment included in accounts payable	$	119		$	509

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, 2014 AND 2013

(Dollars in Thousands Except Per Share Amounts)

1. In the opinion of management, the accompanying interim condensed 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, 2014, the results of operations for the three and six months ended June 30, 2014 and 2013 and cash flows for the six months ended June 30, 2014 and 2013 in accordance with accounting principles generally accepted in the United States. The accompanying condensed balance sheet as of December 31, 2013, 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, 2013 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.

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, 2013	$	32	$	2,425	$	37,635	$	36,670		$	76,762
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards				3		74					77
Share-based compensation, options granted						114					114
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.08 per share								(389	)		(389	)
Net loss for the period								(52	)		(52	)
Balance June 30, 2014	$	32	$	2,428	$	37,823	$	36,226		$	76,509

4. Debt:

The Company has a revolving line of credit facility in the amount of $5,000 from a commercial bank expiring on June 25, 2015. 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

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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, 2014 and December 31, 2013, no amounts were outstanding.

5. 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,
	2014		2013		2014		2013
Weighted-average common shares for basic		4,853,088		4,843,608		4,852,469		4,843,012
Dilutive effect of convertible preferred stock and stock options		75,555		73,788		—		—
Weighted-average common shares for diluted		4,928,643		4,917,396		4,852,469		4,843,012

Options to purchase 65,191 shares of common stock were outstanding at June 30, 2014. Options to purchase 70,348 shares of common stock were outstanding at June 30, 2013. For the three month periods ended June 30, 2014 and 2013, 11,555 and 9,788 of outstanding options to purchase common shares were included in the computation of diluted earnings per share (EPS). For the six month period ended June 30, 2014 and 2013, no outstanding options were included as the effect would be antidilutive.

Preferred Stock is convertible into common stock at the rate of 100 shares of common stock for each one share of Preferred Stock outstanding for the three and six-month periods ended June 30, 2014 and 2013. For the three month periods ended June 30, 2014 and 2013, the 64,000 shares of the Company’s common stock were included. For the six month period ended June 30, 2014 and 2013, the 64,000 shares of the Company’s common stock were not included as the effect would be antidilutive.

6. 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

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status as an owner and/or operator because its railroad 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.

7. Amtrak Agreement

On April 4, 2012, 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.

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Pursuant to the Agreement, the Company received a credit for mileage travelled along the Northeast Corridor. The Company will recognize the expense offset relative to Track Usage Fees as the expenses are incurred. As such, the Company did not record any related assets or liabilities relative to the mileage credit at the date of the settlement. The Company has recorded the following offsets to Track Usage expense and has the following track mileage credit remaining:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Mileage credit available, beginning	$	1,115	$	1,890	$	1,200	$	1,994
Utilized		210		201		295		305
Mileage credit available, ending	$	905	$	1,689	$	905	$	1,689

8. Open-Top Hoppers

In June, 2014, the Company acquired from GATX Corporation 75 open-top hoppers, which were previously under lease. The Company acquired these open-top hoppers for $1,500.

Subsequent to the acquisition of the 75 open-top hoppers, the Company entered into an agreement with an unrelated third party for the disposal of 126 open-top hopper cars (the “cars”). The Agreement calls for the cars to be disposed of over a period of time. The Company anticipates the disposal to be completed by

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September 30, 2014. The Company expects to receive proceeds of approximately $950 as a result of the disposal of the cars. The Company received $250, of the anticipated $950, in advance of the disposal, of which $62 remains in deferred grant and other revenue at June 30, 2014. As of June 30, 2014, the Company had disposed of twenty-five (25) cars resulting in a gain of $106, which is reported as other income in the Statement of Operations. The carrying value of the remaining 101 cars to be disposed of has been classified as Property Held for Sale in the Company’s Balance Sheet.

9. Subsequent event and dividends:

On July 30, 2014, the Company declared a dividend of $.04 per share on its outstanding common stock payable August 27, 2014 to shareholders of record as of August 13, 2014.

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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, as well as the Financial Statements, related notes and other financial information included in our 2013 Form 10-K. 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, 2013 during the first six months of 2014.

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;

• 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, exclusive of rental operating revenues of $178 and $202 during the three months ended June 30, 2014 and 2013, respectively and $338 and $329 during the six months ended June 30, 2014 and 2013, respectively, by category in dollars and as a percentage of operating revenues:

	Three Months Ended June 30,								Six Months Ended June 30,
	2014				2013				2014				2013
	(In thousands, except percentages)
Freight Revenues:
Conventional carloads	$	8,414	90.1	%	$	7,852	91.6	%	$	13,963	89.0	%	$	14,136	91.6	%
Containers		393	4.2			295	3.5			748	4.8			646	4.2
Other freight related		157	1.7			210	2.4			326	2.1			296	1.9
Other Operating Revenues		369	4.0			218	2.5			650	4.1			362	2.3
Total	$	9,333	100.0	%	$	8,575	100.0	%	$	15,687	100.0	%	$	15,440	100.0	%

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The following table sets forth a comparison of the Company’s operating expenses expressed in dollars and as a percentage of operating revenues, exclusive of rental operating revenues:

	Three Months Ended June 30,								Six Months Ended June 30,
	2014				2013				2014				2013
	(In thousands, except percentages)
Salaries, wages, payroll taxes and employee benefits	$	3,857	41.3	%	$	4,085	47.6	%	$	7,826	49.9	%	$	8,156	52.8	%
Casualties and insurance		266	2.9			254	3.0			702	4.5			539	3.5
Depreciation		888	9.5			861	10.0			1,788	11.4			1,717	11.1
Diesel fuel		869	9.3			818	9.5			1,467	9.4			1,605	10.4
Car hire, net		226	2.4			220	2.6			453	2.9			459	3.0
Purchased services, including legal and professional fees		1,018	10.9			526	6.1			1,551	9.9			901	5.8
Repair and maintenance of equipment		511	5.5			467	5.5			944	6.0			1,005	6.5
Track and signal materials		254	2.7			762	8.9			613	3.9			971	6.3
Track usage fees		299	3.2			281	3.3			431	2.7			426	2.8
Other materials and supplies		477	5.1			398	4.6			780	5.0			751	4.9
Other		832	8.9			563	6.6			1,444	9.2			1,481	9.6
Total		9,497	101.7			9,235	107.7			17,999	114.8			18,011	116.7
Less capitalized and recovered costs, including amounts relating to the Amtrak Agreement		1,096	11.7			1,262	14.7			1,756	11.2			1,558	10.1
Total	$	8,401	90.0	%	$	7,973	93.0	%	$	16,243	103.6	%	$	16,453	106.6	%

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Operating Revenues:

Operating revenues increased $247 thousand, or 1.6%, to $15.7 million in the six months ended June 30, 2014 from $15.4 million in 2013. This increase is the result of a $102 thousand (15.8%) increase in container freight revenues, a $30 thousand (10.1%) increase in other freight related revenues, and a $288 thousand (80.0%) increase in other operating revenues, offset by a $173 thousand (1.2%) decrease in revenues from conventional carload.

The decrease in conventional freight revenues results from a 1.5% decrease in the average revenue received per conventional carload and a 1.8% decrease in traffic volume. The Company’s conventional carload decreased by 289 to 15,617 in the first six months of 2014 from 15,906 in 2013.

The number of shipments of most commodities handled by the Company remained constant. The majority of the decrease was attributable to shipments of chemicals and plastics (including ethanol). The decrease in chemicals and plastics was mainly a result of a decrease in the shipments of ethanol. This decrease was offset in part by an increase in the shipments of metal products. The decrease in the average revenue received per conventional carload is due mainly to the shifts in the mix of commodities as well as the shifts in interchange location for some of the shipments.

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The increase in container freight revenues is the result of a 16.0% increase in traffic volume. Container traffic volume increased by 1,444 containers to 10,447 containers in the first six months of 2014 from 9,003 containers in 2013 as a result of intermodal shipment being converted to rail due to changes in trucking regulations.

The small increase in other freight-related revenues results from an increase in switching and miscellaneous operating revenue while the increase in other operating revenues reflects an increase in maintenance department billings for services rendered to freight customers and other outside parties.

Operating Expenses:

Operating expenses for the six-month period ended June 30, 2014 decreased by $210 thousand, or 1.3%, to $16.24 million from $16.45 million in 2013. The decrease is attributable mainly to decreases in payroll related expense ($330 thousand), diesel fuel ($138 thousand), and track and signal materials expense ($358 thousand). These decreases were offset in part by increases in casualty related expense ($163 thousand), depreciation expense ($71 thousand), and purchased services ($650 thousand). The increase in purchased services, partially offset by the decrease in track and signal materials expense for reimbursable projects, was attributable to projects performed by the Company’s Maintenance of Way department for various state agencies. The increase in recovered costs also relates to these same projects.

Provision for Income Taxes (Benefit):

The income tax benefit for the first six months of 2014 and 2013 is equal to (43%) and (8%) 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 statutory rate due to changes in the valuation allowance the Company had previously established against its deferred tax assets based upon the Company’s analysis of the Company’s reversal pattern of taxable temporary differences.

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Operating Revenues:

Operating revenues increased $758 thousand, or 8.8%, to $9.3 million in the second quarter of 2014 from $8.6 million in the second quarter of 2013. This increase is the result of a $562 thousand (7.2%) increase in conventional carload revenue, a $98 thousand (33.2%) increase in container freight revenues, and a $151 thousand (69.3%) increase in other freight related revenues, offset by a $53 thousand (25.2%) decrease in other operating revenues.

The increase in conventional freight revenues is attributable to a 4.8% increase in traffic volume and a 2.2% increase in average revenue per carload. The Company’s conventional carloads increased by 448 to 9,828 in the second quarter of 2014 from 9,380 in 2013.

The number of shipments of most commodities handled by the Company increased in the second quarter of 2014. The majority of the increases were in metal products and other shipments. The small increase in the average revenue received per conventional carload is due mainly to the shifts in the mix of commodities and rate changes.

The increase in container freight revenues is mainly the result of a 30.2% increase in traffic volume. Container traffic volume increased by 1,270 containers to 5,472 containers in the second quarter of 2014 from 4,202 containers in 2013. The reason for the increase is as previously discussed for the six months ended June 30, 2014.

14

The decrease in other freight-related revenues results from a decrease in miscellaneous operating revenue while the increase in other operating revenues reflects an increase in maintenance department billings for services rendered to freight customers and other outside parties.

Operating Expenses:

Operating expenses for the second quarter of 2014 increased by $428 thousand, or 5.4%, to $8.40 million from $7.97 million in the second quarter of 2013. The increase is attributable mainly to increases in diesel fuel ($51 thousand), other expenses ($269 thousand) due to higher bad debt expense related to the plant closure of a client, and purchased services ($492 thousand). These increases were offset in part by decreases in payroll related expense ($228 thousand) and track and signal materials expense ($508 thousand). The decrease in track and signal materials expense and the increase in purchase services were both attributable to projects performed by the Company’s Maintenance of Way department for various state agencies. The decrease in recovered costs also relates to these same projects.

Provision for Income Taxes:

The income tax provision for the three month period ended June 30, 2014 and 2013 is equal to approximately 49% and 41% respectively 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 statutory rates due to changes in the valuation allowance the Company had previously established against its deferred tax assets 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, 2014, the Company generated $1.3 million of cash from operating activities, and the Company used $2.2 million in investing activities and $315 thousand in financing activities.

On July 30, 2014, the Company declared a quarterly dividend of approximately $193 thousand ($.04 per common share) to be paid on August 27, 2014. 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. At June 30, 2014, no amounts were outstanding.

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.

15

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, 2014, filed with the Securities and Exchange Commission on August 11, 2014, formatted in eXtensible Business Reporting Language: (i)     Balance Sheets as of June 30, 2014 and December 31, 2013 (ii)    Statements of Operations for the Three and Six Months ended June 30, 2014 and 2013 (iii)  Statements of Cash Flows for the Six Months ended June 30, 2014 and 2013 (iv)   Notes to Financial Statements.

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 11, 2014

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 11, 2014

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 11, 2014

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, 2014, 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 11, 2014

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, 2014, 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 11, 2014

XML

Open-Top Hoppers - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014 Railcar
Long Lived Assets Held-for-sale [Line Items]
Number of cars held for disposal	126
Proceeds received from disposal of car	$ 250
Rail cars [Member]
Long Lived Assets Held-for-sale [Line Items]
Anticipated proceeds from disposal of cars	950
Proceeds received from disposal of car	250
Deferred grant income and other revenue	62
Gain on disposal of cars	106
Number of cars sold	25
Number of cars to be disposed of	101
Number of open-top hoppers acquired from GATX	75
Acquisition of open-top hoppers	$ 1,500

XML

Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Debt

4. Debt:

The Company has a revolving line of credit facility in the amount of $5,000 from a commercial bank expiring on June 25, 2015. 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, 2014 and December 31, 2013, no amounts were outstanding.

XML

Changes in Shareholders' Equity

6 Months Ended

Jun. 30, 2014

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, 2013	$	32	$	2,425	$	37,635	$	36,670		$	76,762
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards				3		74					77
Share-based compensation, options granted						114					114
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.08 per share								(389	)		(389	)
Net loss for the period								(52	)		(52	)
Balance June 30, 2014	$	32	$	2,428	$	37,823	$	36,226		$	76,509

XML

Condensed Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 1,359	$ 2,614
Accounts receivable, net of allowance for doubtful accounts of $275 in 2014 and $160 in 2013	6,136	5,727
Materials and supplies	1,217	1,308
Prepaid expenses and other current assets	148	508
Deferred income taxes	353	353
Total Current Assets	9,213	10,510
Property and Equipment, net	85,695	85,571
Land Held for Development	12,457	12,457
Rail Cars Held for Sale	332
Total Assets	107,697	108,538
Current Liabilities:
Accounts payable	3,023	3,745
Current portion of deferred grant and other revenue	481	239
Accrued expenses	1,891	1,677
Total Current Liabilities	5,395	5,661
Deferred Income Taxes	13,599	13,638
Deferred Grant and Other Revenue	12,194	12,477
Shareholders' Equity:
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2014 and 2013	32	32
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,856,128 shares in 2014 and 4,850,014 shares in 2013	2,428	2,425
Additional paid-in capital	37,823	37,635
Retained earnings	36,226	36,670
Total Shareholders' Equity	76,509	76,762
Total Liabilities and Shareholders' Equity	$ 107,697	$ 108,538

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation

1. In the opinion of management, the accompanying interim condensed 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, 2014, the results of operations for the three and six months ended June 30, 2014 and 2013 and cash flows for the six months ended June 30, 2014 and 2013 in accordance with accounting principles generally accepted in the United States. The accompanying condensed balance sheet as of December 31, 2013, 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, 2013 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.

XML

Income (Loss) Per Common Share - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred stock convertible into common stock at rate of shares of common stock	100	100	100	100
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Options outstanding for the purchase of common stock	65,191	70,348	65,191	70,348
Shares included to computation of earnings per share	11,555	9,788
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation of diluted earnings per share			0	0
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from computation of diluted earnings per share			64,000	64,000
Shares included to computation of earnings per share	64,000	64,000

XML

Amtrak Agreement - Schedule of Remaining Track Mileage Credit (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Agreement With Related Party [Abstract]
Mileage credit available, beginning	$ 1,115	$ 1,890	$ 1,200	$ 1,994
Utilized	210	201	295	305
Mileage credit available, ending	$ 905	$ 1,689	$ 905	$ 1,689

XML

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2014

Accounting Changes And Error Corrections [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.

XML

Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 275	$ 160
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	4,856,128	4,850,014
Common stock, shares outstanding	4,856,128	4,850,014

XML

Amtrak Agreement (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Schedule of Remaining Track Mileage Credit

The Company has recorded the following offsets to Track Usage expense and has the following track mileage credit remaining:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Mileage credit available, beginning	$	1,115	$	1,890	$	1,200	$	1,994
Utilized		210		201		295		305
Mileage credit available, ending	$	905	$	1,689	$	905	$	1,689

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Entity Registrant Name	PROVIDENCE & WORCESTER RAILROAD CO/RI/
Entity Central Index Key	0000831968
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,856,128

XML

Changes in Shareholders' Equity - Changes in Shareholders' Equity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Balance December 31, 2013			$ 76,762
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards			77
Share-based compensation, options granted			114
Dividends:
Preferred stock, $5.00 per share			(3)
Common stock, $.08 per share			(389)
Net loss for the period	625	478	(52)	(612)
Balance June 30, 2014	76,509		76,509
Preferred Stock [Member]
Balance December 31, 2013			32
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards
Share-based compensation, options granted
Dividends:
Preferred stock, $5.00 per share
Common stock, $.08 per share
Net loss for the period
Balance June 30, 2014	32		32
Common Stock [Member]
Balance December 31, 2013			2,425
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards			3
Share-based compensation, options granted
Dividends:
Preferred stock, $5.00 per share
Common stock, $.08 per share
Net loss for the period
Balance June 30, 2014	2,428		2,428
Additional Paid-in Capital [Member]
Balance December 31, 2013			37,635
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards			74
Share-based compensation, options granted			114
Dividends:
Preferred stock, $5.00 per share
Common stock, $.08 per share
Net loss for the period
Balance June 30, 2014	37,823		37,823
Retained Earnings [Member]
Balance December 31, 2013			36,670
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards
Share-based compensation, options granted
Dividends:
Preferred stock, $5.00 per share			(3)
Common stock, $.08 per share			(389)
Net loss for the period			(52)
Balance June 30, 2014	$ 36,226		$ 36,226

XML

Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Operating Revenues	$ 9,511	$ 8,777	$ 16,025	$ 15,769
Operating Expenses:
Maintenance of way and structures	1,325	1,312	2,677	2,838
Maintenance of equipment	1,049	999	1,961	2,018
Transportation	2,647	2,614	5,118	5,124
General and administrative	1,422	1,110	2,660	2,379
Depreciation	888	861	1,788	1,717
Taxes, other than income taxes	700	721	1,356	1,685
Car hire, net	226	220	453	459
Employee retirement plans	57	56	114	111
Track usage fees	87	80	116	122
Total Operating Expenses	8,401	7,973	16,243	16,453
Operating Income (Loss) before Interest and Income Taxes	1,110	804	(218)	(684)
Other income	117	13	127	19
Income (Loss) from operations before Income Taxes	1,227	817	(91)	(665)
Income Tax Provision (Benefit)	602	339	(39)	(53)
Net Income (Loss)	625	478	(52)	(612)
Preferred Stock Dividends			3	3
Net Income (Loss) Attributable to Common Shareholders	$ 625	$ 478	$ (55)	$ (615)
Income (Loss) Per Common Share:
Basic	$ 0.13	$ 0.10	$ (0.01)	$ (0.13)
Diluted	$ 0.13	$ 0.10	$ (0.01)	$ (0.13)
Weighted-Average Common Shares Outstanding:
For basic	4,853,088	4,843,608	4,852,469	4,843,012
For diluted	4,928,643	4,917,396	4,852,469	4,843,012

XML

Amtrak Agreement

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Amtrak Agreement

7. Amtrak Agreement

On April 4, 2012, 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.

Pursuant to the Agreement, the Company received a credit for mileage travelled along the Northeast Corridor. The Company will recognize the expense offset relative to Track Usage Fees as the expenses are incurred. As such, the Company did not record any related assets or liabilities relative to the mileage credit at the date of the settlement. The Company has recorded the following offsets to Track Usage expense and has the following track mileage credit remaining:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Mileage credit available, beginning	$	1,115	$	1,890	$	1,200	$	1,994
Utilized		210		201		295		305
Mileage credit available, ending	$	905	$	1,689	$	905	$	1,689

XML

Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2014

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

6. 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 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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Commitments and Contingent Liabilities - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	6 Months Ended
	Mar. 31, 2006	Jun. 30, 2014 Plaintiff
Commitments And Contingencies Disclosure [Abstract]
Payment of past costs demand		$ 762
Minimum period for clean-up of site		2 years
Number of parties named by Plaintiff		60
Accrued liability from United States Environmental Protection Agency		0
Amount paid to settle suit	$ 45

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Changes in Shareholders' Equity - Changes in Shareholders' Equity (Parenthetical) (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014
Equity [Abstract]
Issuance of common shares for stock options exercised	6,114
Preferred stock dividends per share	$ 5.00
Common stock dividends per share	$ 0.08

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Changes in Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Changes in Shareholders' Equity

	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Total Shareholders’ Equity
Balance December 31, 2013	$	32	$	2,425	$	37,635	$	36,670		$	76,762
Issuance of 6,114 common shares for employee stock purchases, stock options exercised and employee stock awards				3		74					77
Share-based compensation, options granted						114					114
Dividends:
Preferred stock, $5.00 per share								(3	)		(3	)
Common stock, $.08 per share								(389	)		(389	)
Net loss for the period								(52	)		(52	)
Balance June 30, 2014	$	32	$	2,428	$	37,823	$	36,226		$	76,509

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Open-Top Hoppers

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Open-Top Hoppers

8. Open-Top Hoppers

In June, 2014, the Company acquired from GATX Corporation 75 open-top hoppers, which were previously under lease. The Company acquired these open-top hoppers for $1,500.

Subsequent to the acquisition of the 75 open-top hoppers, the Company entered into an agreement with an unrelated third party for the disposal of 126 open-top hopper cars (the “cars”). The Agreement calls for the cars to be disposed of over a period of time. The Company anticipates the disposal to be completed by September 30, 2014. The Company expects to receive proceeds of approximately $950 as a result of the disposal of the cars. The Company received $250, of the anticipated $950, in advance of the disposal, of which $62 remains in deferred grant and other revenue at June 30, 2014. As of June 30, 2014, the Company had disposed of twenty-five (25) cars resulting in a gain of $106, which is reported as other income in the Statement of Operations. The carrying value of the remaining 101 cars to be disposed of has been classified as Property Held for Sale in the Company’s Balance Sheet.

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Subsequent event and dividends

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent event and dividends

9. Subsequent event and dividends:

On July 30, 2014, the Company declared a dividend of $.04 per share on its outstanding common stock payable August 27, 2014 to shareholders of record as of August 13, 2014.

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Income (Loss) per Common Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per 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,
	2014		2013		2014		2013
Weighted-average common shares for basic		4,853,088		4,843,608		4,852,469		4,843,012
Dilutive effect of convertible preferred stock and stock options		75,555		73,788		—		—
Weighted-average common shares for diluted		4,928,643		4,917,396		4,852,469		4,843,012

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Income (Loss) per Common Share - Reconciliation of Weighted-Average Shares Used for the Basic Computation and that Used for the Diluted Computation (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Weighted-average common shares for basic	4,853,088	4,843,608	4,852,469	4,843,012
Dilutive effect of convertible preferred stock and stock options	75,555	73,788
Weighted-average common shares for diluted	4,928,643	4,917,396	4,852,469	4,843,012

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Subsequent Event and Dividends - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014	Jul. 30, 2014 Subsequent Events [Member]
Subsequent Event [Line Items]
Dividend declared		$ 0.04
Dividend payable declared	Jul. 30, 2014
Outstanding common stock payable date	Aug. 27, 2014
Dividend payable date on record	Aug. 13, 2014

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Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash Flows from Operating Activities:
Net loss	$ (52)	$ (612)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation	1,788	1,717
Amortization of deferred grant income	(486)	(396)
Allowance for doubtful accounts	115
Proceeds from deferred grant and other revenue	445	1,580
Deferred income taxes benefit	(39)	(194)
Share-based compensation	114	78
Increase (decrease) in cash from:
Accounts receivable	(524)	243
Materials and supplies	91	(163)
Prepaid expenses and other current assets	360	447
Accounts payable and accrued expenses	(508)	(648)
Net cash flows from operating activities	1,304	2,052
Cash flows from Investing Activities:
Purchase of property and equipment	(2,494)	(1,443)
Proceeds from sale of property and equipment	250
Net cash flows used in investing activities	(2,244)	(1,443)
Cash Flows from Financing Activities:
Proceeds from deferred grant and other income		43
Dividends paid	(392)	(393)
Issuance of common shares for stock options exercised and employee stock purchases	77	38
Net cash flows used in financing activities	(315)	(312)
Increase (decrease) in Cash and Cash Equivalents	(1,255)	297
Cash and Cash Equivalents, Beginning of Period	2,614	951
Cash and Cash Equivalents, End of Period	1,359	1,248
Supplemental Disclosures:
Cash paid for income taxes	97	420
Property and equipment included in accounts payable	$ 119	$ 509

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Income (Loss) per Common Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Income (Loss) per Common Share

5. 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,
	2014		2013		2014		2013
Weighted-average common shares for basic		4,853,088		4,843,608		4,852,469		4,843,012
Dilutive effect of convertible preferred stock and stock options		75,555		73,788		—		—
Weighted-average common shares for diluted		4,928,643		4,917,396		4,852,469		4,843,012

Options to purchase 65,191 shares of common stock were outstanding at June 30, 2014. Options to purchase 70,348 shares of common stock were outstanding at June 30, 2013. For the three month periods ended June 30, 2014 and 2013, 11,555 and 9,788 of outstanding options to purchase common shares were included in the computation of diluted earnings per share (EPS). For the six month period ended June 30, 2014 and 2013, no outstanding options were included as the effect would be antidilutive.

Preferred Stock is convertible into common stock at the rate of 100 shares of common stock for each one share of Preferred Stock outstanding for the three and six-month periods ended June 30, 2014 and 2013. For the three month periods ended June 30, 2014 and 2013, the 64,000 shares of the Company’s common stock were included. For the six month period ended June 30, 2014 and 2013, the 64,000 shares of the Company’s common stock were not included as the effect would be antidilutive.

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Debt - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Compensating balance amount	$ 0
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Extended revolving line of credit facility	5,000
Line of credit facility maturity date	Jun. 25, 2015
Variable rate interest	LIBOR
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
Outstanding line of credit	$ 0	$ 0