U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 1999
Commission File Number 33-6658-C
Pioneer Railcorp
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(Exact name of Registrant as specified in its charter)
Iowa 37-1191206
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer ID #)
incorporation or organization)
1318 S. Johanson Rd Peoria, IL 61607
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(Address of principal executive offices) (Zip code)
Registrant's telephone number: 309-697-1400
Securities registered pursuant to Section 12(g) of the Act:
Title of each Class Name of each exchange on which registered
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Common Stock, Class A NASDAQ , Chicago Stock Exchange
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
4,611,217
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(Shares of Common Stock outstanding on September 30, 1999)
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Quarters Ended September 30, 1999 and 1998
UNAUDITED
<TABLE>
Third Quarter First Nine Months
1999 1998 1999 1998
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Operating revenue ............................... $ 3,586,959 $ 3,481,246 $ 10,522,892 $ 10,367,582
------------------------------------------------------------
Operating expenses
Maintenance of way ........................... 383,836 254,934 1,103,073 963,697
Maintenance of equipment ..................... 367,870 391,337 1,126,201 1,209,648
Transportation expense ....................... 742,125 910,689 2,355,153 2,444,232
Administrative expense ....................... 901,638 894,379 2,673,975 2,659,060
Depreciation & amortization ................. 435,298 395,963 1,310,826 1,182,827
------------------------------------------------------------
2,830,767 2,847,302 8,569,228 8,459,464
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Operating income ................................ 756,192 633,944 1,953,664 1,908,118
------------------------------------------------------------
Other income & expense
Other (income) expense ....................... (56,922) (50,798) (255,208) (156,361)
Loss on sale of subsidiary ................... -0- -0- 565,873 -0-
Interest expense, equipment .................. 165,959 171,364 493,269 570,432
Interest expense, other ...................... 193,541 137,200 564,826 394,014
Net (gain) loss on sale of fixed assets ...... 1,107 11,824 (1,108) (63,871)
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303,685 269,590 1,367,652 744,214
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Income before income taxes ...................... 452,507 364,354 586,012 1,163,904
Provision for income taxes ...................... 170,670 130,277 212,170 424,677
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Income before minority interest in preferred
stock dividends of consolidated subsidiaries . $ 281,837 $ 234,077 $ 373,842 $ 739,227
Minority interest in preferred stock dividends of
consolidated subsidiaries ................... $ 31,308 $ 31,308 $ 93,924 $ 93,924
Net income ...................................... $ 250,529 $ 202,769 $ 279,918 $ 645,303
============================================================
Basic earnings per common share ................. $ 0.05 $ 0.04 $ 0.06 $ 0.14
============================================================
Diluted earnings per common share ............... $ 0.05 $ 0.04 $ 0.06 $ 0.14
============================================================
Cash dividends per common share ................. $ 0.0000 $ 0.0000 $ 0.0225 $ 0.0200
============================================================
</TABLE>
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1999 and December 31, 1998
UNAUDITED
<TABLE>
September 30 December 31
1999 1998
-------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash ............................................... $ 264,692 $ 469,476
Accounts receivable, less allowance
for doubtful accounts 1999 $192,059; 1998 $156,282 2,971,724 2,660,012
Inventories ........................................ 299,111 331,841
Prepaid expenses ................................... 92,044 174,085
Income tax refund claims ........................... 33,272 56,933
Deferred taxes ..................................... 70,800 70,800
-------------------------
Total current assets .......................... 3,731,643 3,763,147
-------------------------
Property and Equipment less accumulated
depreciation 1999 $6,801,246; 1998 $5,997,160 ....... 23,760,665 19,563,368
-------------------------
Intangible Assets, less accumulated amortization
1999 $226,225; 1998 $250,365 ........................ 1,136,598 1,065,140
-------------------------
Investments, cash value of life insurance ............. 124,774 112,348
-------------------------
Total assets .......................................... $28,753,680 $24,504,003
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ................................... $ 2,285,206 $ 2,732,627
Notes payable ...................................... 108,532 307,886
Income taxes payable ............................... 347,537 14,206
Current maturities of long-term debt ............... 2,376,078 1,988,041
Accrued liabilities ................................ 451,749 537,018
-------------------------
Total current liabilities ..................... 5,569,102 5,579,778
-------------------------
Long-term debt, net of current maturities ............. 13,700,027 11,211,737
Deferred income taxes ................................. 4,158,740 2,545,900
-------------------------
Total liabilities & debt ...................... 23,427,869 19,337,415
-------------------------
Minority interest in subsidiaries ..................... 1,154,000 1,186,000
Stockholders' Equity
Common stock ....................................... 4,611 4,610
Additional paid-in capital ......................... 2,042,042 2,041,000
Retained earnings .................................. 2,125,158 1,934,978
-------------------------
Total stockholders' equity .................... 4,171,811 3,980,588
-------------------------
Total liabilities and equity .......................... $28,753,680 $24,504,003
=========================
</TABLE>
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FIRST NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30,1998
UNAUDITED
<TABLE>
First Nine Months
--------------------------
1999 1998
--------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income ................................................. $ 279,918 $ 645,303
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in preferred stock dividends of
consolidated subsidiaries ............................ 93,924 93,924
Depreciation ........................................... 1,264,449 1,143,582
Amortization ........................................... 46,377 39,245
Increase in cash value life insurance .................. (12,426) (13,446)
(Gain) on sale of property & equipment ................. (1,108) (63,871)
Loss on sale of subsidiary ............................. 565,872 -0-
Deferred taxes ......................................... (224,000) -0-
Change in assets and liabilities, net of effects from
acquisition of subsidiaries
(Increase) decrease accounts receivable ................ (506,626) (258,202)
(Increase) decrease inventories ........................ 32,730 2,652
(Increase) decrease prepaid expenses ................... 92,680 (66,817)
(Increase) decrease intangible assets .................. (3,758) 207
Increase (decrease) accounts payable ................... (12,189) 149,078
(Increase) decrease income tax refund claims ........... 23,661 168
Increase (decrease) income tax payable ................. 333,331 307,504
Increase (decrease) accrued liabilities ................ 113,641 32,349
-------------------------
Net cash provided by operating activities ....... 2,086,476 2,011,676
-------------------------
Cash Flows From Investing Activities
Proceeds from sale of property & equipment ............... 10,925 315,706
Purchase of property & equipment, net of property
and equipment from acquisition of subsidiaries.......... (1,496,775) (1,087,439)
Acquisition of subsidiaries, net of cash acquired ........ (3,875,000) -0-
-------------------------
Net cash (used in) investing activities ......... (5,360,850) (771,733)
-------------------------
Cash Flows From Financing Activities
Proceeds from short-term borrowings, net of debt
assumed in acquisition of subsidiaries ................. 1,852,004 2,813,442
Proceeds from long-term borrowings, net of debt
assumed in acquisition of subsidiaries ................. 7,421,590 3,779,181
Payments on short-term borrowings ........................ (2,051,358) (2,693,981)
Payments on long-term borrowings ......................... (3,938,029) (4,662,278)
Repurchase of minority interest .......................... (32,000) -0-
Proceeds from warrants and options exercised ............. 1,040 800
Cash dividends paid ...................................... (103,742) (92,201)
Payments to minority interest ............................ (79,915) (79,915)
-------------------------
Net cash provided by financing activities: ...... 3,069,590 (934,952)
-------------------------
Net increase (decrease) in cash ............................ (204,784) 304,991
Cash, beginning of period .................................. 469,476 407,428
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Cash, end of period ........................................ $ 264,692 $ 712,419
=========================
</TABLE>
<PAGE>
SEGMENT INFORMATION
Description of products and services from reportable segments:
Pioneer has two reportable segments, investing in operating railroad entities
and an investment in a railroad equipment entity. All other operations are
classified as corporate for purposes of this disclosure.
Measurement of segment profit or loss and segment assets:
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Pioneer Railcorp evaluates segment
profit based on operating income including intersegment revenues, but before
provision for income taxes, items of other income and expense, and minority
interest in preferred stock dividends of consolidated subsidiaries.
Intersegment transactions:
Intersegment transactions are recorded at cost.
Factors management used to identify the reportable segments:
Pioneer Railcorp's reportable segments consist of a wholly-owned short line
railroad subsidiaries that offer similar services and a railroad equipment
subsidiary that leases railcars, locomotives, and other railroad equipment to
affiliated and unaffiliated entities. The corporate operations consist of
support services provided to the operating segments.
Third Quarter
------------------------
1999 1998
------------------------
Revenues from external customers
Railroads ..................................... 2,938,992 2,902,880
Leasing company ............................... 647,967 573,866
Corporate ..................................... 0 4,500
------------------------
Total revenues from external customers ..... 3,586,959 3,481,246
========================
Intersegment revenues
Railroads ..................................... 0 0
Leasing company ............................... 95,100 108,600
Corporate ..................................... 1,541,613 1,253,732
------------------------
Total intersegment revenues ................ 1,636,713 1,362,332
========================
Segment profit
Railroads ..................................... 1,363,535 1,215,111
Leasing company ............................... 309,001 277,658
Corporate ..................................... 720,369 503,507
------------------------
Total segment profit ....................... 2,392,905 1,996,276
Reconciling items
Intersegment revenues ........................ (1,636,713) (1,362,332)
Income taxes ................................. (170,670) (130,277)
Minority interest ............................ (31,308) (31,308)
Other income(expense), net ................... (303,685) (269,590)
------------------------
Total consolidated net income ............. 250,529 202,769
========================
<PAGE>
Nine Months
--------------------------
9/30/99 9/30/98
--------------------------
Assets
Railroads ................................... 17,091,093 14,169,110
Leasing company ............................. 10,832,853 10,012,573
Corporate ................................... 829,734 759,195
--------------------------
Total assets ............................. 28,753,680 24,940,878
==========================
Revenues from external customers
Railroads ................................... 8,544,380 8,379,313
Leasing company ............................. 1,978,512 1,982,464
Corporate ................................... 0 5,805
--------------------------
Total revenues from external customers ... 10,522,892 10,367,582
==========================
Intersegment revenues
Railroads ................................... 0 0
Leasing company ............................. 293,600 320,000
Corporate ................................... 4,398,111 3,746,683
--------------------------
Total intersegment revenues .............. 4,691,711 4,066,683
==========================
Segment profit
Railroads ................................... 3,607,539 4,743,374
Leasing company ............................. 1,001,753 1,043,630
Corporate ................................... 2,036,083 187,797
--------------------------
Total segment profit ..................... 6,645,375 5,974,801
Reconciling items
Intersegment revenues ...................... (4,691,711) (4,066,683)
Income taxes ............................... (212,170) (424,677)
Minority interest .......................... (93,924) (93,924)
Other income(expense), net ................. (1,367,652) (744,214)
--------------------------
Total consolidated net income ........... 279,918 645,303
==========================
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PIONEER RAILCORP AND SUBSIDIARIES
NOTE 1. STATEMENTS
The accompanying Consolidated Statements of Income, Balance Sheets, and
Statements of Cash Flows are unaudited. The interim financial statements reflect
all adjustments (consisting only of normal recurring accruals) which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods presented. These interim statements should be read in
conjunction with the latest financial statements and notes thereto included in
the Company's latest Annual Report on Form 10-KSB and subsequent Form 10-QSB
filings. The results of operations for the interim period should not be
considered indicative of results to be expected for the full year.
NOTE 2. NATURE OF BUSINESS
The consolidated financial statements include Pioneer Railcorp (Pioneer) and its
wholly-owned and controlled subsidiaries (collectively, "the Company"). The
Company's railroad operations segment consists of wholly-owned short line
railroad subsidiaries that offer similar services and includes the following
wholly-owned subsidiaries: West Michigan Railroad Co. (WMI), Michigan Southern
Railroad Company (MSO), Fort Smith Railroad Co. (FSR), Alabama Railroad Co.
(ALAB), Mississippi Central Railroad Co. (MSCI), Alabama & Florida Railway Co.,
Inc. (AF), Decatur Junction Railway Co. (DT), Vandalia Railroad Company (VRRC),
Minnesota Central Railroad Co. (MCTA) (sold effective May 1, 1999), Keokuk
Junction Railway Co. (KJRY), Midwest Terminal Railway Company (formerly Rochelle
Railroad Co.) (RRCO), Shawnee Terminal Railway Company (STR), Pioneer Industrial
Railway Co. (PRY), The Garden City Western Railway, Inc.(GCW). The Company's
equipment leasing segment leases railcars, locomotives, and other railroad
equipment to affiliated and unaffiliated entities and includes only the
wholly-owned subsidiary Pioneer Railroad Equipment Co., Ltd. (PREL). All other
Company operations are classified as corporate and include the following wholly-
owned subsidiaries: Pioneer Resources, Inc. (PRI), Pioneer Air, Inc. (PAR), and
Pioneer Railroad Services, Inc. (PRS). All significant intercompany balances and
transactions have been eliminated in consolidation.
NOTE 3. ESTIMATED IMPACT OF THE ADOPTION OF RECENT ACCOUNTING
STANDARDS
In July 1997, Statement of Financial Accounting Standard No. 131, "Disclosure
about Segments of an Enterprise and Related Information" (FAS 131), was issued
by the Financial Accounting Standards Board. The standard requires the Company
to disclose the factors used to identify reportable segments including the basis
of organization, differences in products and services, geographic areas, and
regulatory environments. FAS 131 additionally requires financial results to be
reported in the financial statements for each reportable segment. The standard
is effective for the Company's 1998 annual report and interim financial
statements following the 1998 annual report. The Company does not believe the
adoption of this standard will have a material impact on its consolidated
financial statements.
The Company is not aware of any other recent accounting standard issued, but not
yet required to be adopted by the Company, that would have a material effect on
its financial position or results of operations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This management's discussion and analysis of financial condition and results of
operations references the Company's two operating segments. The Company's
railroad operations segment consists of wholly-owned short line railroad
subsidiaries that offer similar services and the Company's equipment leasing
segment leases railcars, locomotives, and other railroad equipment to affiliated
and unaffiliated entities. All other operations are classified as corporate for
purpose of these discussions. All information provided for each operating
segment is presented after elimination of all intersegment transactions,
therefore reflecting its share of consolidated results.
Pioneer Railcorp, an Iowa corporation, is a railroad holding company. As used in
this Form 10-QSB, unless the context requires otherwise, the term "Company" or
"PRC" refers to the parent, Pioneer Railcorp and its subsidiaries: West Michigan
Railroad Co. (WMI), Michigan Southern Railroad Company (MSO), Fort Smith
Railroad Co. (FSR), Alabama Railroad Co. (ALAB), Mississippi Central Railroad
Co. (MSCI), Alabama & Florida Railway Co., Inc. (AF), Decatur Junction Railway
Co. (DT), Vandalia Railroad Company (VRRC), Minnesota Central Railroad Co.
(MCTA), Keokuk Junction Railway Co. (KJRY), Midwest Terminal Railway Company,
(formerly Rochelle Railroad Co.) (RRCO), Shawnee Terminal Railway Company (STR),
Pioneer Industrial Railway Co. (PRY), The Garden City Western Railway,
Inc.(GCW), Pioneer Resources, Inc. (PRI), Pioneer Railroad Equipment Co., Ltd.
(PREL), Pioneer Air, Inc. (PAR), and Pioneer Railroad Services, Inc. (PRS).
Summary: Third Quarter 1999 Compared to Third Quarter 1998.
The Company recorded net income of $250,529 in the third quarter 1999 compared
to net income of $202,769 in the same period last year, an increase of $47,760
or 24%. Revenue increased by $106,000 or 3% to $3,587,000 from $3,481,000 in the
same period last year. Operating expense decreased by $16,000, to $2,831,000
from $2,847,000 in the same period last year. Operating income increased by
$122,000, or 20% to $756,000 from $634,000 in the same period last year.
In the third quarter 1999 the Company's railroad operations had increased
operating income of approximately $146,000. Railroad operating income was
positively affected in the third quarter 1999 by increased operating income from
the Keokuk Junction Railway of $102,000 compared to the same period last year.
In addition, The Garden City Western Railway Inc., which the Company began
operating May 1, 1999, generated $156,000 of operating income. Railroad
operating income was positively affected by the sale of the Minnesota Central
Railroad which had an operating loss of approximately $64,000 in the third
quarter 1998. Railroad operating income was adversely affected by the loss of
the Rochelle Railroad, which resulted in a decrease of operating income of
$20,000 in the quarter compared to the same period last year. In addition, the
Fort Smith Railroad had decreased operating income in the third quarter 1999 of
$34,000 compared to the same period last year resulting from increased
maintenance of equipment expense and costs associated with using non-affiliated
railcars for customer loadings. The Mississippi Central had decreased operating
income of $32,000 in the third quarter 1999 compared to the same period last
year resulting from a decrease in loadings from the lines primary customer. The
Company is exploring ways to increase traffic on the MSCI and does not
anticipate a further decrease in shipping levels. In addition, the Alabama
Railroad had a decrease in operating income of $97,000 in the third quarter 1999
compared to the same period last year. This decrease resulted from several
factors, including a reduction in plywood shipments, a reduction of contract
services for track work in the third quarter 1999 that generated $30,000 in the
same period last year and an increase in maintenance of way expense. The
equipment leasing operations increased operating income by approximately $45,000
in the period, primarily from increased utilization of its railcar fleet by
non-affiliated railroads and increased income from locomotive leases to
non-affiliated entities. Corporate operations decreased operating income by
approximately $66,000 in the period.
<PAGE>
Revenue:
Revenue increased in the third quarter 1999 by $106,000 or 3% to $3,587,000 from
$3,481,000 in the same period last year. The railroad operations had increased
revenue of approximately $34,000 in the third quarter 1999 compared to the same
period last year. Significant increases in revenue in the third quarter 1999
from the railroad operations included a $158,000 revenue increase by the Keokuk
Junction Railway, a $78,000 revenue increase by the Alabama & Florida Railway
and $258,000 of revenue generated by The Garden City Western Railway.
Significant decreases in revenue from the railroad operations include $253,000
from the Minnesota Central Railroad, which was sold in the second quarter 1999
and a $78,000 decrease in revenue resulting from the termination of the Rochelle
Railroad lease which ceased operations on November 13, 1998. In addition, the
Mississippi Central Railroad had a decrease in revenue of $29,000 in the third
quarter 1999 compared to the same period last year and the Alabama Railroad had
a decrease in revenue of $78,000 in the third quarter compared to the same
period last year. The equipment leasing operations had a $74,000 increase in
revenue in the period resulting from increased utilization of its railcars by
non-affiliated railroads and increased income from locomotive leases to
non-affiliated entities.
Operating Expense:
Operating expense decreased in the third quarter 1999 by $16,000 to $2,831,000
from $2,847,000 in the prior year. The railroad operations had decreased
operating expense of approximately $112,000 in the third quarter 1999, of which
a decrease of $317,000 was attributable to the sale of the Minnesota Central
Railroad stock, and $58,000 was attributable to the termination of the Rochelle
Railroad lease. In addition, the Fort Smith Railroad had increased operating
expense in the third quarter 1999 of $32,000 compared to the same period last
year resulting from increased maintenance of equipment expense and costs
associated with using non-affiliated railcars for customer loadings. The Keokuk
Junction Railway had increased operating expense of $57,000, primarily related
to increased operating costs resulting from increased loadings, and the Alabama
& Florida Railway had increased operating expense of $63,000 primarily related
to capitalized labor in the third quarter 1998 and increased operating costs in
the third quarter 1999 resulting from increased loadings. The Garden City
Western Railway had operating expense of $102,000. The equipment leasing
operations increased operating expense approximately $29,000. Corporate support
services increased operating expense approximately $66,000 primarily related to
professional services, and public relation expenditures, increased health
insurance costs and payroll related expenditures.
Maintenance of way and structures expense (MOW) increased in the third quarter
$129,000 or 51% to $384,000 from $255,000 in the same period last year, most all
of which is related to the railroad operations. The Garden City Western Railway
increased MOW $29,000 in the third quarter 1999.
Maintenance of equipment expense (MOE) decreased in the third quarter 1999
$23,000, or 6% to $368,000 from $391,000 in the same period last year. The
railroad operations had an decrease in MOE of approximately $40,000. The Garden
City Western Railway had $12,000 of MOE expense in the quarter. The sale of the
MCTA resulted in a decrease of $23,000 in the quarter. The equipment leasing
operations increased MOE expense $11,000 as a result of increased costs
associated with maintaining the Company's railcar fleet. Corporate operations
had a increase in MOE of approximately $6,000 primarily related to reduced
payroll expenses.
Transportation expense (TRAN) decreased in the third quarter 1999 $169,000, or
19% to $742,000 from $911,000 in the same period last year. Most of the
decreased TRAN was generated by the railroad operations, primarily from the sale
of the Minnesota Central Railroad which decreased TRAN by $223,000 and the
Rochelle Railroad which decreased TRAN $28,000. The Fort Smith Railroad had
increased TRAN in the third quarter 1999 of $38,000 related to costs associated
with using non-affiliated railcars for customer loadings. In addition, the
Keokuk Junction had increased TRAN of $66,000 in the third quarter 1999
primarily resulting from increased operating costs due to increased loadings.
The Garden City Western Railway had $17,000 of TRAN in the quarter. Corporate
operations did not significantly affect TRAN expense in the quarter.
<PAGE>
General & administration expense (ADMIN) increased $7,000 in the third quarter
1999 to $902,000 from $895,000, in the prior year. The railroad operations were
responsible for approximately a $67,000 decrease in ADMIN in the period
primarily from the sale of the Minnesota Central Railroad which decreased ADMIN
$28,000 and the Rochelle Railroad which decreased ADMIN $25,000. The Garden City
Western Railway had $16,000 of ADMIN in the quarter. Corporate operations
increased ADMIN by approximately $63,000 in the period. The equipment leasing
operations increased ADMIN approximately $9,000 as a result of expenses related
to repositioning the Company's railcar fleet.
Depreciation and amortization expense increased in the third quarter 1999
$39,000, or 10%, to $435,000 compared to $396,000 in the same period last year.
The railroad operations had increased depreciation and amortization expense of
$26,000. Approximately $30,000 of the railroad operation increase is related to
depreciation expense of assets associated with the purchase of the Michigan
Southern Railroad stock on January 1, 1999. The Garden City Western Railway had
depreciation and amortization expense of $27,000 in the quarter. The Sale of the
Minnesota Central decreased depreciation and amortization expense $31,000 in the
quarter. The equipment leasing operations had increased depreciation and
amortization expense of $11,000 in the quarter resulting from increases to the
railcar and locomotive fleet.
Other Income and Expense Income Statement Line Item Discussion:
In the third quarter 1999 other income increased $6,000 to $57,000 compared to
$51,000 in the same period last year. The increase relates primarily to
additional lease income for the use of railroad property. The Company continues
to place a strong emphasis on identifying and collecting revenues from third
parties occupying Company property. In addition to lease income, other income
and expense includes revenues generated from scrap sales, and other
miscellaneous non-operating revenues and expenses, primarily generated by the
company's railroad operations.
Interest expense related to equipment financing decreased $5,000 in the third
quarter 1999 to $166,000 compared to $171,000 in the same period last year. This
decrease is the result of refinancing activities associated with the equipment
leasing operations, offset by additional interest expense in 1999 related to
financing transactions for additional equipment purchased in 1999. Other
interest expense increased $57,000 in the third quarter 1999 to $194,000 from
$137,000 in the same period last year. A majority of this increase relates to
the financing of the purchase of the Michigan Southern Railroad stock on January
1, 1999 for the amount of $2,400,000 and the purchase of The Garden City Western
Railway Inc. stock on May 1, 1999 for the amount of $1,500,000.
Net gain on fixed asset dispositions decreased approximately $11,000 in the
third quarter 1999 to less than $1,000 compared to $12,000 in the same period
last year. The net gain on fixed asset dispositions in both periods resulted
from insignificant sales of miscellaneous vehicles and equipment.
Summary: First Nine Months 1999 Compared to First Nine Months 1998.
The Company's net income for the first nine months 1999 was $279,918 compared to
net income of $645,303 in the same period last year, a decrease of $365,385 or
57%. Net Income was affected by a one-time charge in the second quarter 1999
relating to the sale of the Minnesota Central Railroad Co. stock and the
write-off of the net assets of the MCTA in the amount of $566,000 before tax and
$342,000 after tax. Revenue increased by $155,000 or 1% to $10,523,000 from
$10368,000 in the same period last year. Operating expense increased by $110,000
or 1%, to $8,569,000 from $8,459,000 in the same period last year. Operating
income increased by $46,000, or 2% to $1,954,000 from $1,908,000 in the same
period last year.
<PAGE>
Operating income was increased in the first nine months 1999 by the Company's
railroad operations by approximately $192,000 in the period. Railroad operating
income was positively affected in the first nine months 1999 by increased
operating income from the Keokuk Junction Railway of $309,000 in the first nine
months 1999 compared to the same period last year. In addition, operating income
generated by The Garden City Western Railway Inc. which the Company began
operating May 1, 1999 was $194,000. The Minnesota Central Railroad, which the
Company sold in the second quarter 1999, increased operating income $116,000 in
the first nine months 1999. The Alabama & Florida Railway operating income
increased by approximately $114,000 in the first nine months 1999. Railroad
operating income was adversely affected by the loss of the Rochelle Railroad.
operations, which resulted in a decrease of operating income of $227,000 in the
first nine months 1999 compared to the same period last year. In addition, the
Fort Smith Railroad had decreased operating income of $96,000 in the first nine
months 1999 compared to the same period last year resulting from increased
maintenance of equipment expenses and costs associated with using non-affiliated
railcars for customer loadings. The Michigan Southern Railroad had decreased
operating income of $105,000 in the first nine months 1999. The Michigan
Southern decrease was caused by decreased revenues from one of the railroads
primary shippers resulting from a tariff increase issued by Conrail prior to its
breakup which made the rail move non-competitive. The Company is working with
the new connecting carrier, the NS, to reduce the rates to a more competitive
level. In addition, in the first nine months 1999 the MSO had a reduction in
contract service income generated from road crossing flagging projects, had
increased signal maintenance expenses, and had increased carhire expense. In
addition, the MSO revenue has been negatively affected by extremely poor service
from the NS resulting from the Conrail breakup. The equipment leasing operations
decreased operating income by approximately $18,000 in the first nine months
1999, primarily from costs associated with relocating part of the fleet to
enhance future revenues. In addition, corporate support services decreased
operating income by approximately $128,000 in the first nine months 1999.
Revenue:
Revenue increased in the first nine months 1999 by $155,000 or 1% to $10,523,000
from $10,368,000 in the same period last year. The railroad operations increased
revenue by approximately $144,000 in the period. Significant increases in
revenue in the first nine months 1999 included a $358,000 revenue increase by
the Keokuk Junction Railway and $360,000 of revenue generated by The Garden City
Western Railway. In addition, the Alabama & Florida had increased revenue of
$192,000 in the first nine months 1999. Some of the more significant decreases
in revenue include a $415,000 decrease in revenue resulting from the termination
of the Rochelle Railroad lease which ceased operations on November 13, 1998, and
a $82,000 decrease in revenue from the Michigan Southern Railroad caused by
decreased revenues from one of the railroads primary shippers resulting from a
tariff increase issued by Conrail prior to its break-up which made the rail move
non-competitive. The Company is working with the new connecting carrier, the NS,
to reduce the rates to a more competitive level. Michigan Southern revenues were
also reduced by a reduction in contract service income generated from road
crossing flagging projects. In addition, the MSO revenue has been negatively
affected by extremely poor service from the NS resulting from the Conrail
breakup. The Minnesota Central Railroad reduced revenues by $233,000 during the
first nine months 1999. Due to decreased loadings the Mississippi Central had a
reduction of revenues of $47,000 in the period, and the Vandalia Railroad had a
reduction in revenues of $79,000 in the period. The equipment leasing operations
had a $8,000 decrease in revenue in the period.
Operating Expense:
Operating expense increased in the first nine months 1999 by $110,000 or 1%, to
$8,569,000 from $8,459,000 in the prior year. The railroad operations decreased
operating expense by approximately $47,000 in the first nine months 1999. The
Fort Smith Railroad had increased operating expense in the first nine months
1999 of $131,000 compared to the same period last year resulting from increased
maintenance of equipment expense and costs associated with using non-affiliated
railcars for customer loadings. The Garden City Western Railway Inc. had
operating expense of $166,000. Operating expense was decreased $349,000 by the
Minnesota Central Railroad and also decreased $188,000 resulting from the
termination of the Rochelle Railroad lease. The Alabama & Florida Railway had
increased operating expense of $78,000 primarily related to capitalized labor in
the first nine months 1998 and increased operating costs resulting from
increased loadings. The equipment leasing operations increased operating expense
approximately $12,000. Corporate support services increased operating expense
approximately $145,000, primarily related to professional services, and public
relation expenditures, increased health insurance costs and payroll related
expenditures.
<PAGE>
Maintenance of way and structures expense (MOW) increased in the first nine
months 1999 $139,000 or 2% to $1,103,000 from $964,000 in the same period last
year, most all of which is related to the railroad operations. The Garden City
Western Railway increased MOW $44,000 in period. MOW was decreased $35,000 as a
result of the sale of the Minnesota Central. Most of the remaining increase in
MOW resulted from the Alabama & Florida Railway, Alabama Railroad and the Keokuk
Junction Railway related to capitalized labor in 1998 and increased maintenance
to track.
Maintenance of equipment expense (MOE) decreased in the first nine months 1999
$84,000, or 7% to $1,126,000 from $1,210,000 in the same period last year.
Approximately a $47,000 decrease is related to the equipment leasing operations
resulting from decreased costs associated with maintaining the Company's railcar
fleet. The railroad operations had an decrease in MOE of approximately $31,000.
The Garden City Western Railway had $17,000 of MOE in the first nine months 1999
and the Fort Smith Railroad had an increase in MOE of $29,000 in the period,
primarily related to increased car repair supplies. The MCTA had a decrease in
MOE of $38,000 in the first nine months 1999 and the Michigan Southern had a
decrease in MOE of $57,000 in the first nine months 1999 relating to the
termination of equipment leases in effect prior to the purchase of the railroad
by the Company. Corporate operations had a decrease in MOE of approximately
$6,000 primarily related to reduced payroll expenses.
Transportation expense (TRAN) decreased in the first nine months 1999 $89,000,
or 4% to $2,355,000 from $2,444,000 in the same period last year. Most of the
increase in TRAN was generated by the railroad operations. The Fort Smith
Railroad had increased TRAN in the first nine months 1999 of $103,000 associated
with using non-affiliated railcars for customer loadings. The Garden City
Western Railway had $22,000 of TRAN in the period. The Minnesota Central
Railroad had a decrease of $161,000 in TRAN and TRAN was decreased by $86,000 as
a result of the termination of the Rochelle Railroad lease. The equipment
leasing operations decreased TRAN by $11,000 in the period and Corporate
operations increased TRAN approximately $32,000 primarily due to increased
payroll expenses.
General & administration expense (ADMIN) increased $15,000 in the first nine
months 1999 to $2,674,000 from $2,659,000, in the prior year. The railroad
operations were responsible for approximately a $140,000 decrease in ADMIN in
the period primarily from the Minnesota Central Railroad which had a decrease of
$65,000 and the Rochelle Railroad which had a decrease of $79,000. The Garden
City Western Railway had $36,000 of ADMIN in the period. Corporate operations
increased ADMIN by approximately $115,000 in the period, primarily related to
professional services, and public relation expenditures, increased health
insurance costs and payroll related expenditures. The equipment leasing
operations increased ADMIN approximately $40,000 as a result of expenses related
to repositioning the Company's railcar fleet.
Depreciation and amortization expense increased in the first nine months 1999
$128,000, or 11%, to $1,311,000 compared to $1,183,000 in the same period last
year. The railroad operations had increased depreciation and amortization
expense of $94,000. Approximately $100,000 of the railroad operation increase is
related to depreciation expense of assets associated with the purchase of the
Michigan Southern Railroad stock on January 1, 1999. The Garden City Western
Railway had depreciation and amortization expense of $46,000 in the period. The
Sale of the Minnesota Central decreased depreciation and amortization expense
$50,000 in the period. The equipment leasing operations had increased
depreciation and amortization expense of $30,000 in the period resulting from
increases to the railcar and locomotive fleet.
Other Income and Expense Income Statement Line Item Discussion:
In the first nine months 1999 other income increased $99,000 to $255,000
compared to $156,000 in the same period last year. The increase relates
primarily to additional lease income for the use of railroad property. The
Company continues to place a strong emphasis on identifying and collecting
revenues from third parties occupying Company property. In addition to lease
income, other income and expense includes revenues generated from scrap sales,
and other miscellaneous non-operating revenues and expenses, primarily generated
by the company's railroad operations.
A loss on the sale of the Minnesota Central Railroad Co. stock and the write-off
of the net assets associated with the MCTA in the amount of $566,000 was
recorded in the second quarter 1999.
<PAGE>
Interest expense related to equipment financing decreased $77,000 in the first
nine months 1999 to $493,000 compared to $570,000 in the same period last year.
A majority of this decrease is the result of refinancing activities associated
with the equipment leasing operations. Other interest expense increased $171,000
in the first nine months 1999 to $565,000 from $394,000 in the same period last
year. A majority of this increase relates to the financing of the purchase of
the Michigan Southern Railroad stock on January 1, 1999 for the amount of
$2,400,000 and the purchase of The Garden City Western Railway Inc. stock on May
1, 1999 for the amount of $1,500,000.
Net gain on fixed asset dispositions decreased approximately $63,000 in the
first nine months 1999 to $1,000 compared to $64,000 in the same period last
year. The net gain on fixed asset dispositions in the first nine months 1999
resulted from insignificant sales of miscellaneous vehicles and equipment. Net
gain on fixed asset dispositions during the first nine months 1998 of $64,000
included a gain of $90,000 from the sale or disposition of railcars and a loss
of $28,000 resulting from the sale of the Company's former corporate
headquarters building in Chillicothe, Illinois.
Impact of New Accounting Pronouncements:
The Company is not aware of any recent accounting standard issued, but not yet
required to be adopted by the Company, that would have a material effect on its
financial position or results of operations.
Year 2000 Compliance:
The Year 2000 compliance issue exists because many computer systems and
applications currently use two-digit fields to designate a year. As the century
date change occurs, datesensitive systems may either fail or not operate
properly unless the underlying programs are modified or replaced.
The Company has initiated a program to ensure that all computer applications
will be Year 2000 compliant on a timely basis. The program includes engaging an
outside consultant to review all of the Company's computer hardware and
software, as well as to confirm with significant outside vendors that their
products are Year 2000 compliant. Based on this review the Company believes its
internal systems are Year 2000 compliant.
The Company relies primarily on one third party software company whose software
is critical to daily operations. The Company believes this third party vendor
will be Year 2000 compliant in a timely manner. If the third party vendor is not
Year 2000 compliant in a timely manner, it will have a materially adverse affect
on the Company. To date the Company is not aware of any unaffiliated entity with
a Year 2000 issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, the Company has no means
of ensuring that unaffiliated entities will be Year 2000 compliant. The
inability of unaffiliated entities to complete their Year 2000 resolution
process in a timely fashion could materially impact the Company.
The Company has expended approximately $50,000 to date on its resolution of the
Year 2000 compliance issue and estimates that less than $10,000 will be expended
to complete Year 2000 compliance.
As noted, the Company will be dependent on successful resolution of Year 2000
issues by unaffiliated entities. Failure by one or more of these unaffiliated
entities to successfully resolve the Year 2000 issue could result in the
mishandling of revenue loads and delayed collection of revenues. In addition,
disruptions in the economy generally resulting from the Year 2000 issues could
also materially adversely affect the Company. The amount of lost revenue as the
results of these events cannot reasonably be determined at this time, but could
be material in nature.
The Company currently has no contingency plans in place to address unknown
shortcomings in its internal systems or those of unaffiliated entities. The
Company plans to continually evaluate its Year 2000 situation periodically
throughout the year.
Liquidity and Capital Resources:
The Company primarily uses cash generated from operations to fund working
capital needs and relies on long-term financing for railcars, new operating
subsidiaries, and other significant capital expenditures. The Company has
working capital facilities totaling $1,200,000 all of which $1,100,000 was
available for use at September 30, 1999.
<PAGE>
In March 1996, the Company negotiated a credit facility with Citizens Bank &
Trust located in Chillicothe, MO., to provide a $2.5 million annual revolving
acquisition line of credit. This facility was collateralized by the common stock
of the Alabama Railroad Co. and the Mississippi Central Railroad Co., as well as
the Company's investment in stock of any subsidiaries acquired under the line.
The interest rate was adjustable quarterly to 2.5% over New York Prime, limited
to a one percent annual increase or decrease, not to exceed 13.5% or be reduced
below 10%. Any amounts drawn on the line were to be repaid monthly over a seven
year period. On January 1, 1999, the Company borrowed $2.4 million on the line
in connection with its purchase of the stock of the Michigan Southern Railroad.
This credit facility was replaced with a credit facility with National City Bank
of Michigan/Illinois and the $2.4 million advanced for the purchase of the
Michigan Southern Railroad stock was financed on a separate note with National
City Bank of Michigan/Illinois on May 21, 1999.
The Company, on June 18, 1999, entered into a credit agreement with National
City Bank of Michigan/Illinois to provide a $5 million revolving acquisition
line of credit for railroad acquisitions at a variable interest rate of prime
plus 1%, renewable every 2 years. Amounts drawn on the line are amortized over a
10 year period. This credit line is secured by all non real estate assets of the
Mississippi Central Railroad Co., the Alabama Railroad Co. and any company
acquired using proceeds from the credit line. This credit facility replaced the
Citizens Bank & Trust credit line. The Company has used $1.5 of this credit
facility to finance the purchase of The Garden City Western Railway, Inc. common
stock, leaving $3.5 million available for future acquisitions. The monthly
principal and interest payment currently required to be repaid is $18,800.
The Company, on May 21, 1999, entered into a credit agreement with National City
Bank of Michigan/Illinois to refinance the $2.4 million that was outstanding on
the Citizens Bank & Trust line related to the Michigan Southern Railroad stock
purchase. The National City Bank credit facility is a fixed interest rate of
8.5% amortized over 10 years. The monthly principal and interest payment on this
note is $30,830.
The Company, on May 21, 1999, entered into interest repricing agreements with
National City Bank that reduced the interest rate on the Keokuk Junction Railway
Co. note from 9.5% to 8.5% and reduced the interest rate on the Alabama &
Florida Railway Co. note from 9.25% to 8.5%. Both rates are fixed and will be
repriced in five years to the bank's cost of funds plus 2.25%. The total
outstanding principal balance on the Keokuk Junction Railway and the Alabama &
Florida Railway notes is approximately $4 million.
Long-term equipment financing has historically been readily available to the
Company for its railcar acquisition program. The Company believes it will be
able to continue obtaining long-term equipment financing should the need arise.
The Company's plans for new debt in the foreseeable future is contingent upon
new railroad acquisitions and increased needs and/or opportunities for railcars.
The City of Rochelle, Illinois, terminated the Rochelle Railroad Co.'s lease
agreement effective January 19, 1998, however, Rochelle Railroad Co. continued
to operate on the trackage until November 13, 1998 pending the outcome of
certain legal proceedings. In 1998 the Rochelle Railroad Co. generated $440,000
in revenue and $216,000 of operating income. In 1997, the Rochelle Railroad Co.
generated $408,000 in revenue and $250,000 of operating income. The Company
believes that a majority of the lost operating income resulting from the
termination of the Rochelle Railroad will be recovered through increased
marketing efforts on the remaining operating railroads.
Pioneer Railcorp guaranteed certain long-term debt obligations of the Minnesota
Central Railroad Co. in connection with the initial asset purchase by the
Minnesota Central Railroad Co. in 1994. Pioneer Railcorp remains on one note as
a guarantor and could be required to repay the principal and accrued interest of
the note if it is defaulted upon. The principal balance of the note as of
September 30, 1999 was approximately $80,000.
The Company anticipates that the outcomes involving current legal proceedings
will not materially affect the Company's consolidated financial position or
results of operation.
The Company believes its cash flow from operations and its available working
capital credit lines, will be more than sufficient to meet liquidity needs
through at least the next twelve months.
<PAGE>
Balance Sheet and Cash Flow Items:
The Company generated net cash from operating activities of $2,070,000 in the
first nine months 1999 compared to $2,011,676 in the same period last year. Net
cash from operating activities for the first nine months 1999 was generated from
$280,000 of net income, $1,311,000 of depreciation and amortization, an increase
in income tax payable of $333,000, an increase of net cash provided by changes
in various other operating assets and liabilities of $310,000, and a noncash
write off of approximately $566,000 related to the Company's investment in the
net assets of the Minnesota Central Railroad at the date of sale. Net cash from
operating activities was reduced by an increase in accounts receivable of
$506,000, and a decrease in deferred taxes of $224,000 related to the
disposition of the Minnesota Central Railroad
In the first nine months 1999, the Company recorded $3,119,000 million of fixed
assets relating to the purchase of the stock of the Michigan Southern Railroad,
of which $1,643,300 was allocated to track structures, $1,300,700 allocated to
land and right of way, $175,000 allocated to buildings, and the remaining
$351,000 allocated to transportation equipment, vehicles, and railcars. In
addition, as a result of the purchase, the Company recorded goodwill in the
amount of $90,000 and a deferred tax liability of $1,160,000.
In the first nine months 1999, the Company recorded $2,144,510 million of fixed
assets relating to the purchase of the stock of The Garden City Western Railway
Inc., of which $1,280,000 was allocated to track structures, $272,000 allocated
to land and right of way, $253,000 allocated to buildings, and the remaining
$339,510 allocated to transportation equipment, vehicles, and railcars. In
addition, as a result of the purchase, the Company recorded goodwill in the
amount of $24,077 and a deferred tax liability of $676,840.
In the first nine months 1999, the Company purchased approximately $1,500,000 of
fixed assets and capital improvements, including 170 railcars costing $828,650.
The railcars were financed with long term fixed rate debt. Other capital
expenditures include $84,000 for track, $12,000 for leasehold improvements,
$110,000 for two locomotives, $108,000 for various vehicles, equipment and
structures, with the remaining $357,350 related to railcar and locomotive
betterments.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In the course of business, the Company experiences crossing accidents, employee
injuries, delinquent and/or disputed accounts, and other incidents, which give
rise to claims that may result in litigation. Management vigorously pursues
settlement and release of such claims, but at any one time, some such incidents,
which could result in lawsuits by and against the Company, remain unresolved.
Management believes it has valid claims for, or good defenses to, these actions.
Management considers such claims to be a routine part of the Company's business.
On January 7, 1999, Michigan Southern Railroad Company, Inc. exercised its
option to purchase the rail line owned by the Branch & St. Joseph Counties Rail
Users Association, Inc. (RUA) between Sturgis and Coldwater, Michigan. RUA
refused to honor the option and litigation is currently pending in the Michigan
Circuit Court for St. Joseph County, Michigan. Management believes it will
prevail in this matter, but RUA's attempted introduction of another carrier onto
the line creates a risk to the Company's business in Coldwater. Management does
not believe that this controversy is likely to have a material adverse affect on
the Company's consolidated financial position or results of operation. The
Company believes the cost to purchase the rail line will be approximately
$600,000.
As of the date of this Form 10-QSB, management is not aware of any incident
which is likely to result in a liability that would materially affect the
Company's consolidated financial position or results of operation.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders in the third quarter
1999.
<PAGE>
Item 5. OTHER INFORMATION
Effective January 1, 1999, the Company's wholly-owned subsidiary Michigan
Southern Railroad Company (MSO) purchased all of the stock of the Michigan
Southern Railroad Company, Inc. (MSRR) from Gordon D. Morris, for $2.4 million.
The transaction was initially funded with long-term fixed rate debt obtained
from the Company's $2.5 million revolving acquisition line of credit with
Citizens Bank and Trust and subsequently refinanced with a separate note with
National City Bank on May 21, 1999. The Company had been operating the line
under an operating lease since December of 1996.
On April 30, 1999, the Company purchased 100% of the stock of Garden City
Western Railway, Inc.(GCW) from the Garden City Coop, Inc. and immediately began
operations. The GCW is located in southwest Kansas and totals 45 miles of
operating railroad. In 1998 the GCW handled over 2,000 cars and has handled over
3,000 cars in previous years. The primary commodities include grain, frozen
beef, fertilizer, farm implements, feed products and utility poles. The Company
projects that during the first full year of operations, the GCW will add
approximately $750,000 of revenue and $250,000 of operating income. The purchase
was financed with a 60 day note with an interest rate of Prime plus 1% from
National City Bank and was refinanced with the National City Bank revolving
acquisition line of credit on June 18, 1999.
On May 13, 1999, Pioneer Railcorp sold all of the stock of the Minnesota Central
Railroad Co. to Southern Rail Resources, Inc., an Iowa Corporation. Southern
Rail Resources, Inc. is not affiliated with Pioneer Railcorp or any of Pioneer
Railcorp's officers, directors, or employees. The Company realized a loss of
$19,999 on the sale of the stock and $546,000 on the write-off of net assets
associated with the Minnesota Central Railroad. At the date of the sale, the
Minnesota Central accounted for approximately $374,000 of revenue and $387,000
of operating expense on Pioneer Railcorp's consolidated statement of income. At
the date of the sale, the Minnesota Central accounted for approximately $1.8
million of assets and $1.3 million of liabilities reported on the consolidated
balance sheet of Pioneer Railcorp. Since the transaction was a stock sale, all
liabilities of the Minnesota Central Railroad Co. remain with the Minnesota
Central Railroad Co.
On March 22, 1999, Pioneer Railcorp's Board of Directors declared a $.0225 per
common share dividend payable to shareholders of record as of April 30, 1999,
payable by June 30,1999. The total dividend paid was $103,742.
Pioneer Railcorp's Board of Directors authorized the repurchase of up to one
million shares (1,000,0000) of the Company's common stock. The repurchase will
coincide with the planned sale of certain non-essential assets expected to be
completed within the next six months.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit # 11 - Statement re computation of per share earnings.
Exhibit # 27 - Financial data schedule.
The following reports were filed on Form 8-K during the first nine months 1999:
(1) Form 8-K filed January 15, 1999 regarding the purchase of the Michigan
Southern Railroad stock.
(2) Form 8-K filed May 27, 1999 regarding the sale of the Minnesota Central
Railroad Co. stock.
(3) Form 8-K filed September 23, 1999 regarding common stock repurchase.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
PIONEER RAILCORP
(Registrant)
11/08/99 /s/ Guy L. Brenkman
-------- -----------------------------------------
DATE GUY L. BRENKMAN
PRESIDENT & CEO
11/08/99 /s/ J. Michael Carr
-------- -----------------------------------------
DATE J. MICHAEL CARR
TREASURER & CHIEF
FINANCIAL OFFICER
Following is information about the computation of the earnings per share (EPS)
data for the quarter ended September 30, 1999 and 1998:
For the Quarter Ended
September 30, 1999
-----------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common stockholders ... $ 250,529 4,610,802 $ 0.05
========
Effect of Diluted Securities - None
Diluted EPS
Income available to common stockholders
plus assumed conversions .............. $ 250,529 4,610,802 $ 0.05
================================
For the Quarter Ended
September 30, 1998
-----------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common stockholders ... $ 202,769 4,610,447 $ 0.04
========
Effect of Diluted Securities
Employee stock options
Diluted EPS
Income available to common stockholders
plus assumed conversions .............. $ 202,769 4,610,447 $ 0.04
==================================
Following is information about the computation of the earnings per share (EPS)
data for the first 9 months ended September 30, 1999 and 1998:
For the 9 months Ended
September 30, 1999
-----------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common stockholders ... $ 279,918 4,610,752 $ 0.06
========
Effect of Diluted Securities - None
Diluted EPS
Income available to common stockholders
plus assumed conversions .............. $ 279,918 4,610,752 $ 0.06
=================================
For the 9 months Ended
September 30, 1998
-----------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common stockholders .. $ 645,303 4,610,520 $ 0.14
========
Effect of Diluted Securities
Employee stock options
Diluted EPS
Income available to common stockholders
plus assumed conversions .............. $ 645,303 4,610,520 $ 0.14
=================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial informatin extracted from the Registrant's
Third Quarter Form 10-QSB and is qualified in its entirety by reference to those
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 264,692
<SECURITIES> 0
<RECEIVABLES> 3,163,783
<ALLOWANCES> 192,059
<INVENTORY> 299,111
<CURRENT-ASSETS> 3,731,643
<PP&E> 30,561,911
<DEPRECIATION> 6,081,246
<TOTAL-ASSETS> 28,753,680
<CURRENT-LIABILITIES> 5,569,102
<BONDS> 0
0
0
<COMMON> 4,611
<OTHER-SE> 4,167,200
<TOTAL-LIABILITY-AND-EQUITY> 28,753,680
<SALES> 0
<TOTAL-REVENUES> 10,522,892
<CGS> 0
<TOTAL-COSTS> 8,569,228
<OTHER-EXPENSES> 309,557
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,058,095
<INCOME-PRETAX> 586,012
<INCOME-TAX> 212,170
<INCOME-CONTINUING> 373,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279,918<F1>
<EPS-BASIC> .06
<EPS-DILUTED> .06
<FN>
<F1>The difference between income from continuing operations and net income
relates to minority interests in preferred stock dividends of consolidated
subsidiaries.
</FN>
</TABLE>
