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 March 31, 2000
Commission File Number 33-6658-C
Pioneer Railcorp
------------------------------------------------------
(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
- ---------------------------------------- ----------
(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
- --------------------- -----------------------------------------
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 [ ].
4,535,377
------------------------------------------------------
(Shares of Common Stock outstanding on March 31, 2000)
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Quarters Ended March 31, 2000 and 1999
UNAUDITED
First Quarter
---------------------------
2000 1999
---------------------------
Operating revenue ................................ $ 3,605,722 $ 3,441,978
---------------------------
Operating expenses
Maintenance of way ............................ 361,135 336,185
Maintenance of equipment ...................... 332,959 370,850
Transportation expense ........................ 826,291 882,831
Administrative expense ........................ 872,262 818,331
Depreciation & amortization .................. 468,652 432,160
---------------------------
2,861,299 2,840,357
---------------------------
Operating income ................................. 744,423 601,621
---------------------------
Other income & expense
Other (income) expense ........................ (153,979) (145,554)
Interest expense, equipment ................... 194,324 164,906
Interest expense, other ....................... 183,113 184,122
Net (gain) loss on sale of fixed assets ....... (85,486) (1,880)
---------------------------
137,972 201,594
---------------------------
Income before income taxes ....................... 606,451 400,027
Provision for income taxes ....................... 234,800 152,800
---------------------------
Income before minority interest in preferred
stock dividends of consolidated subsidiaries .. $ 371,651 $ 247,227
Minority interest in preferred stock dividends of
consolidated subsidiaries .................... $ 31,308 $ 31,308
Net income ....................................... $ 340,343 $ 215,919
===========================
Basic earnings per common share .................. $ 0.08 $ 0.05
===========================
Diluted earnings per common share ................ $ 0.08 $ 0.05
===========================
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 and December 31, 1999
UNAUDITED
<TABLE>
March 31 December 31
2000 1999
----------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash ............................................... $ 1,054,856 $ 2,356,844
Accounts receivable, less allowance
for doubtful accounts 2000 $162,253; 1999 $186,998 3,897,930 3,940,029
Inventories ........................................ 272,278 272,278
Prepaid expenses ................................... 108,669 91,377
Income tax refund claims ........................... 94,449 94,449
Deferred taxes ..................................... 91,800 91,800
----------------------------
Total current assets .......................... 5,519,982 6,846,777
----------------------------
Property and Equipment less accumulated
depreciation 2000 $7,679,010; 1999 $7,242,732 ....... 26,260,056 24,159,995
----------------------------
Intangible Assets, less accumulated amortization
2000 $250,350; 1999 $239,846 ........................ 1,111,498 1,122,489
----------------------------
Investments, cash value of life insurance ............. 135,671 131,503
----------------------------
Total assets .......................................... $ 33,027,207 $ 32,260,764
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ................................... $ 3,025,619 $ 3,983,617
Notes payable ...................................... 3,170,000 810,000
Income taxes payable ............................... 269,047 561,697
Current maturities of long-term debt ............... 2,422,979 2,390,042
Accrued liabilities ................................ 649,608 670,873
----------------------------
Total current liabilities ..................... 9,537,253 8,416,229
----------------------------
Long-term debt, net of current maturities ............. 12,511,225 13,121,553
Deferred income taxes ................................. 4,505,100 4,505,100
----------------------------
Total liabilities & debt ...................... 26,553,578 26,042,882
----------------------------
Minority interest in subsidiaries ..................... 1,138,000 1,154,000
Stockholders' Equity
Common stock ....................................... 4,611 4,611
In Treasury 2000 75,840 shares; 1999 19,000 shares . (76) (19)
----------------------------
Outstanding 2000 4,435,377; 1999 4,592,217 ......... 4,535 4,592
Additional paid-in capital ......................... 2,042,042 2,042,042
Retained earnings .................................. 3,289,052 3,017,248
----------------------------
Total stockholders' equity .................... 5,335,629 5,063,882
----------------------------
Total liabilities and equity .......................... $ 33,027,207 $ 32,260,764
============================
</TABLE>
<PAGE>
PIONEER RAILCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters Ended March 31, 2000 and 1999
UNAUDITED
<TABLE>
First Quarter
--------------------------
2000 1999
--------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income ................................................. $ 340,343 $ 215,919
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in preferred stock dividends of
consolidated subsidiaries ....................... 31,308 31,308
Depreciation .................................... 458,148 408,649
Amortization .................................... 10,504 23,511
Increase in cash value life insurance ........... (4,168) (2,740)
(Gain) on sale of property & equipment .......... (84,586) (1,880)
Deferred taxes .................................. -0- -0-
Change in assets and liabilities, net of effects from
acquisition of subsidiaries
(Increase) decrease accounts receivable .... 137,099 (476,289)
(Increase) decrease inventories ............ -0- 21,400
(Increase) decrease prepaid expenses ....... (17,292) 61,384
(Increase) decrease intangible assets ...... 754 635
Increase (decrease) accounts payable ............ (957,998) 402,603
(Increase) decrease income tax refund claims -0- 20,751
Increase (decrease) income tax payable .......... (292,650) 118,739
Increase (decrease) accrued liabilities ......... (21,265) (42,558)
--------------------------
Net cash provided (used in) operating activities (399,803) 781,432
--------------------------
Cash Flows From Investing Activities
Proceeds from sale of property & equipment ...... 400 5,000
Purchase of property & equipment, net of property
and equipment from acquisition of subsidiaries (2,569,289) (2,578,225)
--------------------------
Net cash (used in) investing activities ......... (2,568,889) (2,573,225)
--------------------------
Cash Flows From Financing Activities
Proceeds from short-term borrowings, net of debt
assumed in acquisition of subsidiaries ........ 3,640,840 507,000
Proceeds from long-term borrowings, net of debt
assumed in acquisition of subsidiaries ........ -0- 2,400,000
Payments on short-term borrowings ............... (1,280,840) (568,612)
Payments on long-term borrowings ................ (577,391) (493,170)
Repurchase of minority interest ................. (16,000) (3,000)
Purchase of common stock for treasury ........... (82,605)
Proceeds from warrants and options exercised .... -0- -0-
Payments to minority interest ................... (17,300) (17,300)
--------------------------
Net cash provided by financing activities: ...... 1,666,704 1,824,918
--------------------------
Net increase (decrease) in cash ............................ (1,301,988) 33,125
Cash, beginning of period .................................. 2,356,844 469,476
--------------------------
Cash, end of period ........................................ $ 1,054,856 $ 502,601
==========================
</TABLE>
<PAGE>
SEGMENT INFORMATION
Description of products and services from reportable segments:
Pioneer Railcorp has two reportable segments, railroad operations and equipment
leasing operations. All other operations are classified as corporate support
services 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.
First Quarter
--------------------------
2000 1999
--------------------------
Revenues from external customers
Railroad operations ........................... 2,847,298 2,792,529
Equipment leasing operations .................. 758,334 649,449
Corporate support services .................... 90 0
--------------------------
Total revenues from external customers ..... 3,605,722 3,441,978
==========================
Intersegment revenues
Railroad operations ........................... 0 0
Equipment leasing operations .................. 95,100 104,100
Corporate support services .................... 1,511,954 1,277,646
--------------------------
Total intersegment revenues ................ 1,607,054 1,381,746
==========================
Segment profit
Railroad operations ........................... 1,181,876 1,046,893
Equipment leasing operations .................. 421,394 355,849
Corporate support services .................... 748,207 580,625
--------------------------
Total segment profit ....................... 2,351,477 1,983,367
Reconciling items
Intersegment revenues ........................ (1,607,054) (1,381,746)
Income taxes ................................. (234,800) (152,800)
Minority interest ............................ (31,308) (31,308)
Other income(expense), net ................... (137,972) (201,594)
--------------------------
Total consolidated net income ............. 340,343 215,919
==========================
<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. SIGNIFICANT ACCOUNTING POLICIES
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 May 6, 1999), Keokuk Junction
Railway Co. (KJRY), Shawnee Terminal Railway Company (STR), Pioneer Industrial
Railway Co. (PRY), The Garden City Western Railway, Inc. (GCW), and an inactive
subsidiary Midwest Terminal Railway Company (formerly Rochelle Railroad Co.)
(RRCO). 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
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.
<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
support services 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) (sold May 6, 1999), Keokuk Junction Railway Co. (KJRY), 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) and an inactive subsidiary Midwest Terminal Railway Company
(formerly Rochelle Railroad Co.) (RRCO).
Summary: First Quarter 2000 Compared to First Quarter 1999.
The Company's net income in the first quarter 2000 increased by 58% to $340,000
up $124,000 from $216,000 in the same period last year. Revenue increased by
$164,000 or 5% to $3,606,000 from $3,442,000 in the same period last year.
Operating expense increased by $21,000 or 1%, to $2,861,000 from $2,840,000 in
the same period last year. Operating income increased by $142,000, or 24% to
$744,000 from $602,000 in the same period last year.
Operating income was increased in the first quarter 2000 by the Company's
railroad operations which increased operating income by approximately $136,000
in the period. The equipment leasing operations increased operating income by
approximately $75,000 in the period, primarily from increased revenue generated
from locomotive leases and an increase in the utilization of its railcar fleet
by non-affiliated railroads. In addition, corporate support services decreased
operating income by approximately $69,000 in the period.
Revenue:
Revenue increased in the first quarter 2000 by approximately $164,000, or 5%, to
$3,606,000 from $3,442,000 in the same period last year. The railroad operations
increased revenue by approximately $55,000 in the period which resulted from an
increase in revenues of approximately $347,000 generated by the railroads
operated in the first quarter 2000 less a decrease in revenue of approximately
$292,000 as a result of the sale of the Minnesota Central Railroad on May 6,
1999. The increase of revenue of $347,000 generated from the railroads operated
in the first quarter 2000 resulted from a combination of increased freight
revenue, increased revenue for the storage of private railcars from
non-affiliated entities, and an increase in revenue of $148,000 generated by The
Garden City Western Railway, which the Company began operating on May 1, 1999.
The equipment leasing operations had a $108,000 increase in revenue in the
period resulting from increased revenue generated from locomotive leases and an
increase in the utilization of its railcar fleet by non-affiliated railroads.
Operating Expense:
Operating expense increased in the first quarter 2000 by $21,000 or 1%, to
$2,861,000 from $2,840,000 in the prior year. The railroad operations decreased
operating expense by approximately $80,000 in the period which resulted from an
increase in operating expense of approximately $211,000 from the railroads
operated in the first quarter 2000 less a decrease in operating expense of
approximately $292,000 as a result of the sale of the Minnesota Central Railroad
on May 6, 1999. The increase in operating expenses of $211,000 from the
railroads operated in the first quarter 2000 resulted from a variety of factors
including increased track maintenance, fuel and other transportation expenses,
and $95,000 of operating expenses for The Garden City Western Railway, which the
Company began operating on May 1, 1999. The equipment leasing operations
increased operating expense approximately $34,000, primarily from an increase in
depreciation expense related to the acquisition of railcars and locomotives.
Corporate support services increased operating expense approximately $67,000,
primarily related to payroll related expenditures.
<PAGE>
Maintenance of way and structures expense (MOW) increased $25,000 or 7% to
$361,000 from $336,000 in the same period last year. Railroads operated in the
first quarter 2000 had an increase of $58,000 in MOW, primarily related to
increased track material by the railroad operations and $22,000 of MOW expense
for The Garden City Western Railway. In addition, MOW was decreased by $39,000
as a result of the sale of the MCTA.
Maintenance of equipment expense (MOE) decreased $38,000, or 10% to $333,000
from $371,000 in the same period last year. Approximately $10,000 of the
decrease related to the equipment leasing operations as a result of decreased
costs associated with maintaining the Company's railcar fleet. Railroads
operated in the first quarter 2000 had a decrease of $11,000 in MOE. The Garden
City Western Railway did not have a significant amount of MOE in the period. In
addition, MOE was decreased by $22,000 as a result of the sale of the MCTA.
Transportation expense (TRAN) decreased $57,000, or 6% to $826,000 from $883,000
in the same period last year. Most of the decreased TRAN expense was generated
by the railroad operations. Railroads operated in the first quarter 2000 had an
increase of $122,000 in TRAN, primarily related to increased fuel and carhire
expenses, and also $25,000 of TRAN expense for The Garden City Western Railway.
In addition, TRAN was decreased by $186,000 as a result of the sale of the MCTA.
General & administration expense (ADMIN) increased $54,000 in the first quarter
2000 to $872,000 from $818,000 in the prior year. Railroads operated in the
first quarter 2000 had an increase of $14,000 in ADMIN expense in the period
including $19,000 ADMIN expense for The Garden City Western Railway. In
addition, ADMIN was decreased by $13,000 as a result of the sale of the MCTA.
Corporate expenses related corporate support expenditures increased ADMIN
expense by approximately $52,000 in the period.
Depreciation and amortization expense increased $36,000, or 8%, to $469,000 from
$432,000 in the same period last year. Approximately $28,000 of the increase is
related to The Garden City & Western Railway. In addition, depreciation and
amortization was decreased by $33,000 as a result of the sale of the MCTA. The
equipment leasing operations increased depreciation expense approximately
$41,000 related to the acquisition of railcars and locomotives.
Other Income and Expense Income Statement Line Item Discussion:
In the first quarter 2000 other income and expense increased $9,000 to $154,000
compared to $145,000 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 increased $29,000 in the first
quarter 2000 to $194,000 compared to $165,000 in the same period last year. A
majority of this increase is the result of financing activities associated with
additional locomotive purchases made by the Company in the fourth quarter 1999
and first quarter 2000. Other interest expense decreased insignificantly in the
first quarter 2000 to $183,000 from $184,000 in the prior year. Other interest
expense increases related to the Garden City & Western Railway acquisition and
other changes in interest expenses were offset by a reduction of interest
expense of approximately $12,000 related to the sale of the MCTA.
Net gain on fixed asset dispositions increased approximately $84,000 in the
first quarter 2000 to $85,000 compared to $2,000 in the same period last year.
The gain in 2000 primarily relates to the sale of a locomotive.
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.
<PAGE>
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, of which
$325,000 was available for use at the end of the first quarter 2000. In
addition, the Company believes the market value of its railcar fleet is
significantly higher then the amount of debt associated with the railcar fleet.
Therefore, the Company believes it could refinance or sell part of its railcar
fleet and generate up to $1 million in cash.
On June 18, 1999, the Company 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 used $1.5 million of this credit
facility to finance the purchase of The Garden City Western Railway, Inc. common
stock. The monthly principal and interest payment currently required to be
repaid is $18,900. As of March 31, 2000, the availability of the line has been
further reduced by a separate $2.4 million financing agreement with National
City Bank used to purchase 33 locomotives. The note is due May 10, 2000 and the
Company is in negotiations with the bank to convert the note to long-term fixed
rate financing.
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.
On July 1, 1995, the Company's stock split and warrant issuance became payable
to shareholders. The 2 for 1 stock split increased the number of shares issued
and outstanding from 2,099,142 to 4,198,284. At the same time shareholders
became entitled to purchase an additional 4,198,284 shares through stock
warrants issued by the Company as dividends. One warrant was issued for each
share of common stock held after the split, entitling the holder to purchase 1
share of common stock for $2.00 per share. The shares purchased through the
exercise of the warrants must be held for 1 year from date of purchase. As of
March 31, 2000, a total of 67,766 warrants originally issued had been exercised,
and the Company realized $135,532 on the issuance of the warrants.
The Company granted 836,000 options to certain employees under its 1994
incentive stock option plan. The options are exercisable at prices equal to the
market value of the Company's stock at the date of grant. The exercise price
ranges from $3.56 to $4.40 per share. No options were exercised in 1999. Since
the plans inception a total of 69,700 options had been exercised and the Company
has realized $104,550 on the exercise of the options. As of March 31, 2000, a
total of 151,759 options are outstanding under this plan.
On June 26, 1996, the Company's shareholders approved a stock option plan
permitting the issuance of 407,000 shares of common stock. Options granted under
the plan are incentive based except for the options granted to the CEO whose
options are non-qualified. The options will be fully vested and will be
exercisable as of July 1, 2001. The exercise date can be accelerated if Pioneer
Railcorp common shares reach a closing price of $7.25 per share, or higher, for
any consecutive 10-day period, as reported in the Wall Street Journal. The
options will be exercisable at prices ranging from $2.75 to $3.03, based upon
the trading price on the date of the grant, in whole or in part within 10 years
from the date of grant. As of March 31, 2000, a total of 215,000 options are
outstanding under this plan.
Pioneer Railcorp guarantees certain long-term debt obligations of the Minnesota
Central Railroad Co. in connection with debt acquired as part of the initial
asset purchase by the Minnesota Central Railroad Co. in 1994. Pioneer Railcorp
remains as a guarantor on one note and could be required to repay the principal
and accrued interest on the note if it is defaulted upon. The principal balance
of the note as of December 31, 1999 was approximately $75,000.
<PAGE>
In 1999, Pioneer Railcorp's Board of Directors authorized and approved the
repurchase of up to one million shares (1,000,0000) of the Company's common
stock and as of March 31, 2000, a total of 75,840 shares had been repurchased at
a cost of $109,083. The Company plans to continue buying back its common stock
but believes the repurchase will be on a more limited scope then previously
anticipated due to capital requirements and the trading volume of the Company's
stock.
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.
Balance Sheet and Cash Flow Items:
The Company operating activities in the first quarter 2000 generated a net
decrease in cash of $400,000 compared to the same period last year. Net cash
from operating activities for the first quarter 2000 was generated from $340,000
of net income, $469,000 of depreciation and amortization, a decrease in accounts
payable of $958,000, a decrease in income tax payable of $293,000 and a net cash
of $42,000 provided by changes in various other operating assets and
liabilities. The majority of the decrease in accounts payable relates to the
payment of freight revenues to nonaffiliated railroads as part of the industries
"interline settlement system". Under the interline settlement system, the
Company's operating railroads primarily bill and collect the complete freight
rate which would include the amounts due other railroads who are in the delivery
route.
In the first quarter 2000, the Company purchased approximately $2,569,000 of
fixed assets and capital improvements. Capital expenditures included $1.6
million for 22 locomotives. The Company plans to expand it's locomotive leasing
operations and update it's current fleet. The locomotives were financed with a
short term note with National City Bank and negotiations are in process to
convert this note to long term financing. In addition, the company purchased 100
railcars for approximately $826,000. This transaction was paid by cash and the
Company is in the process of negotiating to finance the railcars with long term
fixed rate financing. Capital expenditures for track and leasehold improvements
totaled $57,000 in the first quarter 2000. The remaining fixed assets and
capital improvements expenditures of approximately $86,000 relate to equipment
and railcar betterments.
<PAGE>
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.
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 first quarter
2000.
Item 5. OTHER INFORMATION
On April 6, 2000, Pioneer Railcorp's Board of Directors declared a $.025 per
common share dividend payable to shareholders of record as of April 30, 2000,
payable by June 10, 2000.
On April 1, 2000, the Company through its wholly-owned subsidiary Indiana
Southwestern Railway Co. (ISW) acquired all of the rail facilities owned or
leased by the Evansville Terminal Railway Company and began operations
immediately. The total purchase price was $619,000 and was funded with the
Comapny's acquisiton line of credit. The line begins in Evansville, Indiana and
is 23 miles in length. The primary commodities are grain, plastics and rail
equipment. The Company projects the ISW will initially generate annual revenues
of $300,000 and $50,000 of operating income.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit # 11 - Statement re computation of per share earnings.
Exhibit # 27 - Financial data schedule.
No reports were filed on Form 8-K during the first quarter 2000.
<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)
/s/ Guy L. Brenkman
5/10/00 -----------------------------------------
DATE GUY L. BRENKMAN
PRESIDENT & CEO
/s/ J. Michael Carr
5/10/00 -----------------------------------------
DATE J. MICHAEL CARR
TREASURER & CHIEF FINANCIAL OFFICER
Following is information about the computation of the earnings per share (EPS)
data for the quarters ended March 31, 2000 and 1999:
<TABLE>
For the Quarter Ended March 31, 2000
------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------------------------------
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders ..... $ 340,343 4,555,897 $ 0.08
========
Effect of Diluted Securities
Employee stock options ...................... -- --
----------------------
Diluted EPS
Income available to common stockholders
plus assumed conversions ................ $ 340,343 4,555,897 $ 0.08
====================== ========
For the Quarter Ended March 31, 1999
------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------------------------------
Basic EPS
Income available to common stockholders ..... $ 215,919 4,610,608 $ 0.05
========
Effect of Diluted Securities
Employee stock options ...................... -- --
----------------------
Diluted EPS
Income available to common stockholders
plus assumed conversions ................ $ 215,919 4,610,608 $ 0.05
====================== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Registrant's
First Quarter 2000 Form 10-QSB and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,054,856
<SECURITIES> 0
<RECEIVABLES> 4,060,183
<ALLOWANCES> 162,253
<INVENTORY> 272,278
<CURRENT-ASSETS> 5,519,982
<PP&E> 33,939,066
<DEPRECIATION> 7,679,010
<TOTAL-ASSETS> 33,027,207
<CURRENT-LIABILITIES> 9,537,253
<BONDS> 0
0
0
<COMMON> 4,535
<OTHER-SE> 5,331,094
<TOTAL-LIABILITY-AND-EQUITY> 33,027,207
<SALES> 0
<TOTAL-REVENUES> 3,605,722
<CGS> 0
<TOTAL-COSTS> 2,861,299
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377,437
<INCOME-PRETAX> 606,451
<INCOME-TAX> 234,800
<INCOME-CONTINUING> 371,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340,343<F2>
<EPS-BASIC> .08
<EPS-DILUTED> .08
<FN>
<F1>Other expenses and income are netted and the alance is income of $239,465.
<F2>The difference between income from continuing operations and net income relates
to minority interests in preferred stock dividends of consolidated
subsidiaries.
</FN>
</TABLE>
