TOTAL AGGREGATE
NUMBER OF PAGES:_ 20 _
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended: June 30, 1996
Commission File Number: 0-12985
DELAWARE OTSEGO CORPORATION
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NEW YORK 16-0913491
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 Railroad Avenue, Cooperstown, New York 13326
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(Address of principal executive offices)
(607) 547-2555
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address, and former fiscal year, if changed
from last report.)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes___X___ No_______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $ .125 Par Value 1,744,177
- ------------------------------ ---------------------------------
(Title of Class) Outstanding at June 30, 1996
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INDEX
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DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
--------------------------------------------
Page
----
PART 1. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - 3
June 30, 1996 and December 31, 1995
Condensed Consolidated Statements of 5
Operations - Three months ended June
30, 1996 and June 30, 1995; Six months
ended June 30, 1996 and June 30, 1995
Condensed Consolidated Statements of 6
Cash Flows - Six months ended June 30,
1996 and June 30, 1995
Notes to Condensed Consolidated 7
Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis 9
of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION 13
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SIGNATURES 17
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<TABLE>
Part I - Financial Information
DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
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<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,045 $ 1,213
Accounts receivable 6,878 5,406
Reimbursable construction costs 1,024 1,212
Materials and supplies 809 742
Deferred income taxes 332 332
Prepaid expenses 971 698
Other current assets 32 665
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TOTAL CURRENT ASSETS 11,091 10,268
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 94,649 92,401
Less accumulated depreciation
and amortization (31,487) (29,414)
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TOTAL PROPERTY, PLANT AND EQUIPMENT 63,162 62,987
OTHER ASSETS
Other assets 1,164 1,523
Investment in Affiliate 2,191 -
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TOTAL OTHER ASSETS 3,355 1,523
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TOTAL ASSETS $ 77,608 $ 74,778
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<TABLE>
Part I - Financial Information
DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
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<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 3,300 $ 2,100
Accounts payable 10,800 10,400
Accrued and other current liabilities 2,376 1,977
Current maturities of long-term debt 1,504 1,075
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TOTAL CURRENT LIABILITIES 17,980 15,552
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LONG-TERM LIABILITIES
Long-term debt 12,981 12,802
Deferred income tax 10,074 10,398
SUBORDINATED NOTES
6.5% Convertible subordinated notes 3,580 3,580
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TOTAL LONG-TERM LIABILITIES 26,635 26,780
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TOTAL LIABILITIES 44,615 42,332
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STOCKHOLDERS' EQUITY
Common stock and additional paid-in capital 5,478 4,231
Contributed capital 18,816 18,021
Retained earnings 8,699 10,194
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TOTAL STOCKHOLDERS' EQUITY 32,993 32,446
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 77,608 $ 74,778
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<TABLE>
DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Railway operating revenues $ 7,166 $ 8,383 $ 14,469 $ 15,596
Other operating revenues 481 559 857 1,200
-------- -------- -------- --------
TOTAL OPERATING REVENUES 7,647 8,942 15,326 16,796
OPERATING EXPENSES
Maintenance, transportation
and car hire 5,909 7,078 12,425 13,389
Depreciation and amortization 1,137 1,033 2,264 2,047
General, administrative and other 1,260 1,535 2,309 2,664
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 8,306 9,646 16,998 18,100
-------- -------- -------- --------
LOSS FROM OPERATIONS (659) (704) (1,672) (1,304)
OTHER INCOME (EXPENSE)
Interest expense, net (363) (316) (754) (636)
Gain on sale of property, equipment
and other 231 5,183 251 5,223
-------- -------- -------- --------
OTHER INCOME (EXPENSE), NET (132) 4,867 (503) 4,587
-------- -------- -------- --------
(Loss) Income before income taxes (791) 4,163 (2,175) 3,283
Provision for income tax
benefit (expense) 269 (1,354) 739 (1,083)
-------- -------- -------- --------
(LOSS) INCOME BEFORE EQUITY
INTEREST IN LOSS OF AFFILIATE (522) 2,809 (1,436) 2,200
EQUITY INTEREST IN
INCOME (LOSS) OF AFFILIATE 2 - (59) -
-------- -------- -------- --------
NET INCOME (LOSS) $ (520) $ 2,809 $ (1,495) $ 2,200
======== ======== ======== ========
Primary Earnings (Loss) per Share $ (0.30) $ 1.74 $ (0.87) $ 1.36
======== ======== ======== ========
Fully Diluted Earnings
(Loss) per Share - $ 1.68 - $ 1.28
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<TABLE>
DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(THOUSANDS)
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<CAPTION>
SIX MONTHS ENDED
----------------------------
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (1,495) $ 2,200
Adjustments to reconcile net (loss) income
to net cash (used) provided by
operating activities:
Depreciation and amortization 2,264 2,047
Provision for losses on accounts receivable - (10)
Provision for deferred income taxes (733) 1,011
Gain on sale of fixed assets (253) (5,226)
Equity interest in loss of affiliate 59 -
Amortization of deferred income - (127)
Changes in operating assets and liabilities:
Increase in accounts receivable (1,472) (84)
Decrease (Increase) in materials, supplies,
prepaids and other current assets 527 (432)
Increase in accounts payable and accrued expenses 798 1,188
Increase in other assets (213) (31)
------------- -------------
Net Cash (Used) Provided by Operating Activities (518) 536
------------- -------------
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,484) (7,411)
Investment in affiliate (2,000) -
Acquisition of intangible assets - (36)
Proceeds and deposits from sale of assets\easement 276 6,315
Contributed capital 1,204 1,633
------------- -------------
Net Cash (Used) Provided by Investing Activities (3,004) 501
------------- -------------
FINANCING ACTIVITIES
Increase (decrease) in notes payable 1,200 (3,400)
Proceeds from long-term borrowings 1,171 4,444
Principal payments on long-term debt (563) (1,549)
Proceeds from other borrowings 556 (406)
Issuance of common stock 998 -
Dividends paid (8) (7)
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Net Cash Provided (Used) by Financing Activities 3,354 (918)
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (168) 119
Cash and cash equivalents at beginning of period 1,213 1,308
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,045 $ 1,427
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
DELAWARE OTSEGO CORPORATION AND SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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1. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
2. The results of operations for the six months ended June 30,
1996, are not necessarily indicative of the results to be
expected for the year ended December 31, 1996, due to
certain freight revenues subject to seasonal variations.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31,
1995.
3. Primary earnings (loss) per share is computed by dividing
net income (loss) by the weighted average number of shares
outstanding for the following periods: 1,744 and 1,614 for
the three month periods ended June 30, 1996 and 1995
respectively, including the effects of a 5% stock dividend
declared January 26, 1996; 1,722 and 1,618 for the six month
periods ended June 30, 1996 and 1995 respectively. Fully
diluted earnings per share is computed by dividing net
income plus after tax interest incurred on the convertible
debentures by the weighted average number of shares
outstanding after giving effect to dilutive stock options
and shares assumed to be issued on conversion of the
convertible debentures. The fully diluted weighted average
number of shares outstanding for the three and six month periods
ended June 30, 1995 were 1,672 and 1,719, respectively. Assumed
conversion of the debentures for the three and six month periods
ended June 30, 1996 is anti dilutive and therefore, not presented.
4. Certain prior year data has been reclassified to conform to
the 1996 presentation.
5. Investment in affiliate on the consolidated balance sheet
and equity interest in income (loss) of affiliate on the
consolidated statement of operations reflects the Company's
acquisition of a 40% interest in The Toledo, Peoria and
Western Railroad Corporation ( TP&W ) on January 31, 1996.
The TP&W net loss for the five month period ended June 30,
1996 was $148. During the three month period ended June 30,
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1996, the TP&W realized a net income of $5. The investment
is accounted for under Accounting Principles Board Opinion
No. 18, The Equity Method of Accounting for Investments in
Common Stock.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (THOUSANDS)
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RECENT ACQUISITION
- ------------------
On January 31, 1996, the Company completed the purchase of a 40%
interest in The Toledo, Peoria and Western Railroad Corporation
("TP&W") for consideration totalling $2.25 million, including
125,000 shares of the Company's common stock. The non-stock
portion of the consideration for the acquisition was funded
through a $1 million loan. Additionally, the Company issued
warrants to purchase 60,000 common shares to another party
involved in the transaction. The exercise price of each warrant
is $9.53 per share, after giving effect to the 5% stock dividend
declared January 26, 1996. The Company performs administrative
services for the TP&W which have had a positive impact on general
and administrative expenses for 1996 and expects to continue to
have a positive impact into the future. At December 31, 1995,
the Company had incurred $592 of advances related to the purchase
which were recorded in other current assets. The $592 was
reimbursed at closing on January 31, 1996. The investment is
accounted for under the provisions of APB 18, The Equity Method
of Accounting for Investments in Common Stock.
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations relates to the continuing
operations of the Company.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's cash and cash equivalents at June 30, 1996, totaled
$1,045. Cash generated from operations, sales of property,
additional debt and contributed capital are the Company's
principal sources of liquidity and are used primarily for capital
expenditures, debt service, and working capital requirements.
At June 30, 1996, the Company's working capital deficit was
$6,889, compared to $5,284 at December 31, 1995, resulting in a
working capital ratio of 61.7% compared to 66.0% at December 31,
1995. Total long-term liabilities at June 30, 1996 were $26,635.
Long-term debt (exclusive of current maturities) including
convertible subordinated notes, as a percentage of equity at June
30, 1996, was 50.2% compared to 50.5% at December 31, 1995, and
total capitalization (long-term debt, convertible subordinated
notes and equity) was $49,554 compared to $48,828 at December 31,
1995.
At June 30, 1996, notes payable consist of a secured advance
under a $5 million line of credit with Manufacturers and Traders
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<PAGE>
Trust Company. Interest on these borrowings is at prime plus 1%.
Prime at June 30, 1996 was 8.25%. Available borrowings are based
on and secured by eligible accounts receivable. At June 30,
1996, eligible accounts receivable were $4.6 million and
borrowings on the line were $3.3 million.
The Company may borrow up to $500 from an equipment line of
credit with Key Bank of New York which expires on April 30, 1997.
At June 30, 1996, the Company had drawn down $171 on the line.
The interest rate is the lender's base rate plus three quarters
percent (3/4%.)
During the second quarter of 1996, the Company borrowed $556 on
certain key-man life insurance contracts. Interest rates range
from 7.30% to 8.00%.
In the six month period ended June 30, 1996, additions to
property, plant and equipment were $2,484 of which $1,204 or
48.5% was funded by grants from the New York and New Jersey
Departments of Transportation. The balance was provided by
additional debt. Based upon the availability of funds, the
Company's capital spending program for the balance of 1996 is
anticipated to be approximately $10 million, of which $6 million
is for railway projects. The balance is for acquisition of land,
terminal upgrades and technological advances. It is anticipated
that funding for the capital program for the balance of 1996 will
be met by grants from participating state governments, available
funds from the lines of credit, cash generated by operations,
additional long-term debt and proceeds from sales of non-
operating assets. The Company believes it has adequate working
capital to fund existing and anticipated operations for at least
the next twelve months.
As was reported in the December 31, 1995 Annual Report on Form
10-K, the Company entered into a contract to sell certain parcels
of railroad property of a non-operating Company subsidiary for
$500, which is anticipated to close during 1996. The carrying
amount is estimated at $110. A portion of the purchase price is
subject to the buyers obtaining government funding. The proceeds
will be used for working capital purposes.
RESULTS OF OPERATIONS
- ---------------------
The Company relies on, and its ability to compete is dependent
upon its rail connections with CP and with Conrail for a
substantial portion of its rail traffic. Changes in the
operations of either of these carriers could have a material
adverse impact on the Company.
The Company has two major customers that provide approximately
70% of the Company's railroad volume. For the six month period
ended June 30, 1996, revenue
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<PAGE>
from the two customers was approximately $10,704. The loss of
either customer would have a material adverse effect on the
Company's results of operations.
Railway operating revenues, consisting of intermodal, carload and
other railway operating revenues, declined $1,217 and $1,127 for
the three and six month periods ended June 30, 1996 respectively,
compared to the same periods in 1995. For the three and six
month periods ended June 30, 1996, intermodal revenues, the
largest component of railway operating revenues, declined $939
and $900 respectively, compared to the same periods in 1995, due
principally to weak international volumes in the second quarter
of 1996. Declined business from General Motors is due mostly to
changes in shipping patterns due to currency exchange rate
fluctuations. Overall, it is anticipated that improved eastbound
business will be realized from the traditional seasonal period of
July through November.
Carload revenues for the three and six month periods ended June
30, 1996 declined $221 and $240 respectively, compared to the
same periods in 1995, due mainly to declines in shipments for
plastics, paper, lumber and building materials, and motor
vehicles.
Other operating revenues for the three and six month periods
ended June 30, 1996 declined $78 and $343, respectively,
compared to the same periods in 1995, due principally to reduced
rent revenue and lower billable construction costs.
Maintenance, transportation and car hire expenses in the
aggregate for the three and six month periods ended June 30, 1996
declined $1,169 and $964 respectively, compared to the same
periods in 1995.
Maintenance expenses in the aggregate for the three and six month
periods ended June 30, 1996 decreased $75 and increased $189
respectively, compared to the same periods in 1995. The increase
in the six month period of 1996 is due principally to increased
expenses necessary to maintain and provide reliable power to support
the Company's intermodal business.
Transportation expenses in the aggregate for the three and six
month periods ended June 30, 1996 declined $1,153 and $1,232
respectively, compared to the same periods in 1995, due
principally to lower international intermodal and carload
business, and the effects of the Company's on-going cost-cutting
initiatives. During the second quarter of 1996, the Company
renegotiated a haulage agreement with a connecting Class I
carrier that will create new marketing initiatives and result in
overall lower haulage related expenses, offset principally by
incremental increases in fuel, horsepower hours and car hire.
Car hire expenses for the three and six month periods ended June
30, 1996 increased $73 and $104 respectively, compared to the
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<PAGE>
same periods in 1995, due mostly to incremental increases from
the renegotiated haulage agreement, offset by declines in certain
intermodal volume.
Depreciation and amortization expenses for the three and six
month periods ended June 30, 1996 increased $104 and $217
respectively, compared to the 1995 periods, due mainly to
additions to property, plant and equipment.
General, administrative and other expenses in the aggregate for
the three and six month periods ended June 30, 1996 declined $275
and $355 respectively, compared to the 1995 periods, due
principally to the payment of a $337 company-wide bonus in the
second quarter of 1995. Additionally, the positive effects of
recovering amounts in excess of incremental expenses for
administrative and clerical support provided to the TP&W pursuant
to an Administrative Services Agreement entered into January 31,
1996 contributed to the reduced expenses.
As a result of the foregoing, the operating ratios for the three
and six month periods ended June 30, 1996 were 108.6% and 110.9%
respectively, compared to 107.9% and 107.8% for the comparable
1995 periods.
Interest expense net, consisting of interest expense (net of
capitalized interest) and interest income for the three and six
month periods ended June 30, 1996 increased $47 and $118
respectively, compared to the 1995 periods. In the three and six
month periods of 1996, total interest expense was $431 and $842
respectively, compared to $360 and $721 in the respective 1995
periods, due principally to interest rate and average outstanding
debt differentials.
Gain on sale of property, equipment and other for the three and
six month periods ended June 30, 1996 declined approximately $5
million compared to the 1995 periods, due principally to the sale
in 1995 of an 8.8 mile railroad line located in Union County, New
Jersey to the State of New Jersey for $6.4 million. During the
three month period ended June 30, 1996, various track materials
of a non-operating Company subsidiary were sold resulting in a
gain of $235. Cash proceeds were $255.
The Company's effective income tax rate on income (loss) before
income taxes for the six month period ended June 30, 1996 was
33.9% compared to 33.0% in the respective 1995 period.
On January 26, 1996, the Company declared a 5% stock dividend
payable to stockholders of record February 17, 1996. The
dividend was paid on March 20, 1996, resulting in the issuance of
82,297 shares of common stock. All data in the accompanying
financial statements and related notes have been restated to give
effect to the dividend.
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PART II
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OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
- ---------------------------
None.
Item 2. Changes in Rights of Security Holders
- -----------------------------------------------
By Certificate of Amendment of the Certificate of Incorporation of
the Registrant dated June 3, 1996, the Registrant's authorized capital stock
was increased from 10,000,000 shares of common stock, par value $.125 per
share, to 11,000,000 shares consisting of 1,000,000 Preferred Shares having
a par value of $.125 per share issuable in series as designated by
Registrant's Board of Directors, and 10,000,000 common shares having a par
value of $.125 per share. This amendment to Registrant's Certificate of
Incorporation was authorized by the affirmative vote of a majority of all
outstanding shares of the Registrant at its June 1, 1996 Annual Meeting of
Shareholders. (See Item 4)
Item 3. Defaults on Senior Securities
- ---------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
At the Annual Meeting of Shareholders held in Cooperstown, New York
on June 1, 1996, at which 1,391,507 shares, or 80% of the shares outstanding,
were present in person or by proxy, the nominees listed in the Registrant's
Proxy Statement were elected and other actions taken as follows:
For Against Abstain
--------- --------- ---------
1. Election of Directors
Walter G. Rich 1,378,435 13,072 -
Charles S. Brenner 1,378,435 13,072 -
Harvey Polly 1,359,990 31,517 -
2. Amendment of the Certificate
of Incorporation to authorize
a new class of 1,000,000 shares
of preferred stock issuable in
series 1,073,635 88,744 229,128
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3. Ratification of Appointment of
Independent Accountants 1,359,435 530 24,462
Item 5. Other Information
- ---------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
a) Exhibits:
Filed herewith (-) or
Incorporated by Reference to
----------------------------
3.1 Restated Certificate of Exhibit 3.1 to Registrant's
Incorporation of the Annual Report on Form 10-K
Delaware Otsego Corporation dated December 31, 1991
dated June 1, 1991
3.2 Certificate of Amendment of -
Certificate of Incorporation of
Delaware Otsego Corporation
dated June 3, 1996
3.3 By-Laws of DOC dated April 5, Exhibit 3.8 to Registrant's
1988 Annual Report on Form 10-K
dated December 31, 1988
10.1 Employment Agreement between Exhibit 10.1 to Registrant's
DOC and Walter Rich dated Form 10-Q dated June 30, 1995
June 3, 1995
10.2 Direct Loan Agreement between Exhibit 10(g) to Registration
New Jersey Economic Develop- Statement on Form S-1,
ment Authority and NYS&W No. 2-94319
dated August 6, 1982
10.3 Agreement between Conrail Exhibit 10(p) to Registration
and NYS&W dated March 30, Statement on Form S-1,
1982 relating to trackage No. 2-94319
rights over line of Conrail
from Binghamton, New York to
Warwick, New York via
Campbell Hall and Maybrook,
New York
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<PAGE>
10.4 Financing Agreement between Exhibit 19.11 to Form 10-Q
NYS&W and FRA dated dated November 13, 1986
September 30, 1985
10.5 Agreement Amending Financing Exhibit 19.12 to Form 10-Q
Agreement between FRA and dated November 13, 1986
NYS&W dated July 30, 1986
10.6 Amendment to Direct Loan Exhibit 19.18 to Form 10-Q
Agreement between New Jersey dated November 13, 1986
Economic Development
Authority and NYS&W dated
July 15, 1986
10.7 Amendment to Direct Loan Exhibit 19.19 to Form 10-Q
Agreement between New Jersey dated November 13, 1986
Economic Development
Authority and NYS&W dated
September 2, 1986
10.8 Amended and Restated Credit Exhibit 10.8 to Form 10-Q
Agreement between Manufac- dated November 11, 1994
turers and Traders Trust
Company and DOC dated
May 27, 1994
10.9 Agreement between NYS&W Exhibit 10.9 to Registrant's
and Brotherhood of Locomotive Annual Report on Form 10-K
Engineers dated March 30, 1994 dated March 27, 1995
10.10 Agreement between NYS&W and Exhibit 10.10 to Registrant's
Brotherhood of Maintenance of Annual Report on Form 10-K
Way Employes dated October 13, dated March 24, 1996
1995
10.11 Modification to Direct Loan Exhibit 10(hh) to Registration
Agreement and Direct Loan Statement on Form S-1,
Promissory Note dated as of No. 2-94319
August 6, 1982 between the
New Jersey Economic Develop-
ment Authority and NYS&W
dated July 17, 1984
10.22 Delaware Otsego Corporation Exhibit B to efinitive
1987 Stock Option Plan Proxy Statement Dated
October 7, 1987
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<PAGE>
10.23 Delaware Otsego Corporation Exhibit B to Definitive
1993 Stock Option Plan Proxy Statement Dated
May 5, 1993
10.27 Form of Delaware Otsego Exhibit 1 to Registrant's
Corporation 6.5% Convertible Form 8-K dated October 19,
Subordinated Note Due on 1993
September 1, 2003
10.28 Guarantee Commitment between Exhibit 10.28 to Registrant's
the Federal Railroad Adminis- Annual Report on Form 10-K
tration and DOC dated dated March 27, 1995
September 29, 1994
10.29 Warrant Agreement between Exhibit 10.29 to Registrant's
DOC and Creditanstalt Annual Report on Form 10-K
Corporate Finance, Inc. dated dated March 24, 1996
January 31, 1996
10.30 Deficiency Guarantee among Exhibit 10.30 to Registrant's
DOC and others and Credit- Annual Report on Form 10-K
anstalt Corporate Finance, Inc. dated March 24, 1996
dated January 31, 1996
10.31 Cash Collateral Agreement Exhibit 10.31 to Registrant's
among DOC and others and Annual Report on Form 10-K
Creditanstalt Corporate Finance, dated March 24, 1996
Inc. dated January 31, 1996
21 Subsidiaries of Registrant Exhibit 21 to Registrant's
Annual Report on Form 10-K
dated March 24, 1996
b) Reports on Form 8-K:
None.
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<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DELAWARE OTSEGO CORPORATION
-------------------------------
(Registrant)
Date: August 14, 1996
WALTER G. RICH
-------------------------------
Walter G. Rich
President and
Chief Executive Officer
ROBERT E. PIERCE
-------------------------------
Robert E. Pierce
Vice President / Controller and
Chief Accounting Officer
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EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DELAWARE OTSEGO CORPORATION
Under Section 805 of the Business Corporation Law, and Section 6 of the
Railroad Law.
We, the undersigned President and Secretary, respectively, of the
Delaware Otsego Corporation hereby certify:
1. The name of the corporation is DELAWARE OTSEGO CORPORATION.
2. The Certificate of Incorporation was filed by the Department of
State on April 20, 1965, under the name DELAWARE OTSEGO RAILROAD CO., INC.
3. The change to the Certificate of Incorporation effected by this
Certificate of Amendment is to authorize the corporation to issue a new
class of 1,000,000 shares of Preferred Stock, par value $.125 per share in
series, the voting, dividend, liquidation and other rights of which may be
determined from time to time by the Board of Directors.
To accomplish the foregoing amendment, Article FIFTH of the Certificate
of Incorporation, which refers to the number of shares of common stock and
its par value is hereby stricken in its entirety and the following new
article is substituted in lieu thereof:
- 18 -
<PAGE>
FIFTH: (a) The aggregate number of shares of all classes
which the Corporation shall have authority to
issue is 11,000,000 shares, consisting of
1,000,000 Preferred Shares having a par value
of $.125 and 10,000,000 Common Shares having
a par value of $.125 per share.
(b) Authority is hereby expressly granted to the
Board of Directors, subject to the provisions
of this ARTICLE, to establish and designate
from time to time one or more series of
Preferred Shares, each of which shall have
such number of shares, designation, relative
rights, preferences and limitations as are fixed
by the Board of Directors.
4. The manner in which the aforesaid amendments to the Certificate
of Incorporation were authorized was by a vote of the Board of Directors of
the Corporation followed by a vote of the holders of a majority of all
outstanding shares entitled to vote thereon at a meeting of shareholders.
IN WITNESS WHEREOF, we have executed this Certificate this 3rd day of
June, 1996.
/s/ Walter G. Rich
-------------------------
Walter G. Rich, President
/s/ Nathan R. Fenno
--------------------------
Nathan R. Fenno, Secretary
- 19 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF OTSEGO )
NATHAN R. FENNO, being duly sworn, deposes and says that he is the
Secretary of DELAWARE OTSEGO CORPORATION, the Corporation named herein,
and one of the persons who signed the foregoing Certificate of Amendment,
that he has read the Certificate of Amendment, and knows the contents
thereof and that the same is true to his knowledge.
/s/ Nathan R. Fenno
--------------------------
Nathan R. Fenno, Secretary
Sworn to before me this
3rd day of June, 1996.
/s/ Kathy S. Perry
- --------------------------------
Kathy S. Perry
Notary Public, State of New York
No. 4765617
Qualified in Otsego County
Commission Expires 4-30-98
- 20 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 1045
<SECURITIES> 0
<RECEIVABLES> 6878
<ALLOWANCES> 0
<INVENTORY> 809
<CURRENT-ASSETS> 11091
<PP&E> 94649
<DEPRECIATION> 31487
<TOTAL-ASSETS> 77608
<CURRENT-LIABILITIES> 17980
<BONDS> 16561
0
0
<COMMON> 217
<OTHER-SE> 32776
<TOTAL-LIABILITY-AND-EQUITY> 77608
<SALES> 15326
<TOTAL-REVENUES> 15326
<CGS> 0
<TOTAL-COSTS> 16998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842
<INCOME-PRETAX> (2175)
<INCOME-TAX> (739)
<INCOME-CONTINUING> (1436)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1495)
<EPS-PRIMARY> (.87)
<EPS-DILUTED> 0
</TABLE>
