UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-17604
PROVIDENCE AND WORCESTER RAILROAD COMPANY
(Exact name of registrant as specified in its charter)
Rhode Island 05-0344399
_____________________________ __________________________
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
75 Hammond Street, Worcester, Massachusetts 01610
_____________________________ __________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 755-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.)
YES X NO ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of August 2, 1996, the registrant has 2,185,436 shares of common
stock, par value $.50 per share, outstanding.
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
<CAPTION>
ASSETS JUNE 30, DECEMBER 31,
1996 1995
(UNAUDITED)
__________ __________
<S> <C> <C>
Current assets:
Cash and equivalents $ 1,102,000 $ 2,012,000
Accounts receivable, net of allowance
for doubtful accounts of $125,000 2,537,000 2,834,000
Materials and supplies 785,000 731,000
Prepaid expenses and other 104,000 139,000
Deferred income taxes 475,000 767,000
__________ __________
Total current assets 5,003,000 6,483,000
__________ __________
Properties:
Land and land improvements 8,765,000 8,614,000
Deep-water pier project 10,724,000 10,419,000
Track structure 45,153,000 44,390,000
Buildings and other structures 5,869,000 5,853,000
Equipment 15,516,000 15,156,000
__________ __________
85,997,000 84,432,000
Less accumulated depreciation 23,743,000 22,903,000
_________ __________
Total properties, net 62,254,000 61,529,000
__________ __________
$ 67,257,000 $ 68,012,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, bank $ 1,110,000 $ -
Current portion of long-term debt 646,000 612,000
Accounts payable 3,594,000 4,907,000
Accrued expenses 933,000 1,642,000
__________ __________
Total current liabilities 6,283,000 7,161,000
__________ __________
Long-term debt, less current portion 12,465,000 12,977,000
__________ __________
Deferred grant income 5,354,000 5,035,000
__________ __________
Deferred income taxes 8,162,000 8,384,000
__________ __________
Contingencies (Note 5)
Shareholders' equity (Notes 2 and 4):
Preferred stock, 10% noncumulative,
$50 par; authorized, issued and
outstanding 653 shares 33,000 33,000
Common stock, $.50 par; authorized
3,023,436 shares; issued and
outstanding 2,184,946 shares in 1996
and 2,110,041 shares in 1995 1,092,000 1,055,000
Capital in excess of par 6,341,000 5,828,000
Retained earnings 27,527,000 27,539,000
__________ __________
Total shareholders' equity 34,993,000 34,455,000
__________ __________
$ 67,257,000 $ 68,012,000
========== ==========
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
_________________ __________________
1996 1995 1996 1995
________ ________ ________ _________
<S> <C> <C> <C> <C>
Income:
Operating revenues,
freight and other $4,909,000 $5,507,000 $9,094,000 $10,136,000
Other income (Note 3) 232,000 144,000 407,000 320,000
_________ _________ _________ __________
5,141,000 5,651,000 9,501,000 10,456,000
_________ _________ _________ __________
Expenses:
Operating:
Maintenance of way
and structures 777,000 1,005,000 1,942,000 2,018,000
Maintenance of
equipment 610,000 599,000 1,209,000 1,145,000
Transportation 1,237,000 1,135,000 2,368,000 2,209,000
General 984,000 1,020,000 1,801,000 2,022,000
Taxes, other than
income 516,000 516,000 1,045,000 1,048,000
Car hire, net 144,000 188,000 293,000 357,000
_________ _________ _________ __________
4,268,000 4,463,000 8,658,000 8,799,000
Interest 346,000 305,000 683,000 607,000
_________ _________ _________ __________
4,614,000 4,768,000 9,341,000 9,406,000
_________ _________ _________ __________
Income before income
taxes 527,000 883,000 160,000 1,050,000
_________ _________ _________ __________
Income taxes (benefit):
Current 130,000 197,000 (10,000) 225,000
Deferred 70,000 133,000 70,000 170,000
_________ _________ _________ __________
200,000 330,000 60,000 395,000
_________ _________ _________ __________
Net income $ 327,000 $ 553,000 $ 100,000 $ 655,000
========= ========= ========= ==========
Earnings per weighted
average common and
common equivalent
share outstanding,
(Note 4) $ .15 $ .26 $ .04 $ .31
========= ========= ========= ==========
Dividends per share:
Preferred $ 5.00 $ 5.00 $ 5.00 $ 5.00
========= ========= ========= ==========
Common $ .05 $ .05 $ .05 $ .05
========= ========= ========= ==========
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<CAPTION>
INCREASE (DECREASE) IN CASH
1996 1995
__________ __________
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income $ 100,000 $ 655,000
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation 941,000 867,000
Amortization of deferred grant
income (64,000) (56,000)
Gain from sales of properties and
easements (94,000) (58,000)
Deferred income taxes 70,000 170,000
Changes in assets and liabilities:
Accounts receivable 275,000 (369,000)
Materials and supplies (54,000) (185,000)
Prepaid expenses and other 35,000 12,000
Accounts payable (243,000) 445,000
Accrued expenses (164,000) (71,000)
__________ __________
Net cash provided by operations 802,000 1,410,000
__________ __________
Cash flows provided by (used in)
investing activities:
Purchase of properties and equipment (2,859,000) (1,807,000)
Proceeds from:
Sales of properties and easements 217,000 58,000
Deferred grant income 407,000 62,000
___________ ___________
Net cash used in investing activities (2,235,000) (1,687,000)
___________ ___________
Cash flows provided by (used in)
financing activities:
Net borrowings under line of credit 1,110,000 655,000
Payments of:
Long-term debt (478,000) (344,000)
Dividends (112,000) (106,000)
Proceeds from issuance of common
shares for stock options exercised 3,000 9,000
__________ __________
Net cash provided by (used in)
financing activities 523,000 214,000
__________ __________
Decrease in cash (910,000) (63,000)
Cash, beginning of period 2,012,000 595,000
__________ __________
Cash, end of period $ 1,102,000 $ 532,000
========== ==========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 639,000 $ 605,000
========== ==========
Income taxes $ 9,000 $ 265,000
========== ==========
<FN>
See notes to financial statements
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1. In the opinion of management, the accompanying interim financial
statements contain all adjustments (consisting solely of normal
recurring adjustments) necessary to present fairly the financial
position as of June 30, 1996, the results of operations for the
three and six months ended June 30, 1996 and 1995, and cash flows
for the six months ended June 30, 1996 and 1995. Results for
interim periods may not be necessarily indicative of the results
to be expected for the year. These interim financial statements
should be read in conjunction with the Company's annual report on
Form 10-K for the year ended December 31, 1995 filed with the
Securities and Exchange Commission.
<TABLE>
2. Changes in shareholders' equity:
Capital in
Preferred Common excess of Retained
Stock Stock par Earnings
_________ _________ _________ ___________
<S> <C> <C> <C> <C>
Balance Dec. 31,
1995 $ 33,000 $1,055,000 $5,828,000 $27,539,000
Issuance of 53,155
common shares in
payment of an
environmental
claim 27,000 351,000
Issuance of 20,925
common shares to
fund the
Company's 1995
profit sharing
plan
contribution 10,000 157,000
Issuance of 825
common shares for
stock options
exercised and
under an employee
incentive program 5,000
Dividends:
Preferred stock,
$5.00 per share (3,000)
Common stock,
$.05 per share (109,000)
Net income for the
period 100,000
________ ________ ________ _________
Balance June 30,
1996 $ 33,000 $1,092,000 $6,341,000 $27,527,000
======== ========= ========= ==========
</TABLE>
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<CAPTION>
3. Other income:
Three Months Ended Six Months Ended
June 30 June 30
________________ _________________
1996 1995 1996 1995
________ ________ ________ _________
<S> <C> <C> <C> <C>
Gain from sales of
properties and
easements, net $ 94,000 $ 25,000 $ 94,000 $ 58,000
Rentals 119,000 115,000 274,000 253,000
Interest 19,000 4,000 39,000 9,000
_________ _________ _________ __________
$ 232,000 $ 144,000 $ 407,000 $ 320,000
========= ========= ========= ==========
</TABLE>
4. Earnings per share:
<TABLE>
Weighted average common and common equivalent shares outstanding
used in computing earnings per share:
<CAPTION>
1996 1995
__________ __________
<S> <C> <C>
Three months ended June 30 2,243,053 2,106,389
========== ==========
Six months ended June 30 2,235,046 2,091,230
========== ==========
</TABLE>
The Company considers its $50 par preferred stock, each share of
which is convertible into 100 shares of common stock, to be common
equivalent shares for purposes of computing earnings per share.
Unexercised stock options and warrants have not been considered in
the calculation of earnings per share since their effect`is not
material.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
5. Contingencies:
A number of lawsuits relating to casualty losses are pending
against the Company, many of which are covered by incurance
subject to a deductible. The Company has provided for its
estimate of exposure to such claims and in management's opinion
additional liability, if any, will not be material to the
operations, financial position or liquidity of the Company.
The Company owns a site which is contaminated with petroleum
products. It is currently productive as a part of the Company's
double-stack intermodal yard. The site is not the subject of any
agency proceedings. Environmental specialists have indicated that
natural biodegradation of the contamination is occurring. It is
not anticipated that the costs of remediation, if any, would be
material to the operations, financial position or liquidity of the
Company.
6. Adoption of new accounting pronouncements:
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("Statement 123"). The Company has continued
to account for its stock-based transactions to employees in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and will include the
pro forma disclosures required by Statement 123, if material, in
its annual financial statements for 1996. For stock option grants
to non-employees, the Company follows the provisions of Statement
123, calculates compensation expense using a fair value-based
method and amortizes compensation expense over the vesting period.
Also, effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-Lived Assets to be
Disposed Of" ("Statement 121"). Statement 121 requires that long-
lived assets held and used by an entity be reviewed for impairment
whenever circumstances indicate that the carrying amount of an
asset may not be recoverable. It also requires that long-lived
assets to be disposed of be reported at the lower of the carrying
amount or fair value less the cost to sell. The adoption of
Statement 121 did not have a material effect on the Company's
financial position or results of operations for the three and six
months ended June 30, 1996.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As detailed in the accompanying statements of cash flows, the Company
generated $802,000 of cash from operations during the six months ended
June 30, 1996. On an overall basis, however, the Company's total cash
decreased by $910,000 during the six month period. The principal uses
of cash during the period were for additions to properties and
equipment, principal payments on long term debt, reduction of current
liabilities and payment of dividends. Deferred grant income of
$383,000, recorded during the period, was utilized to fund certain of
the additions to properties. Expenditures for properties and equipment
include $681,000 for the Company's deep-water pier project, $937,000 of
capitalized track structure and bridge improvements, $960,000 of
equipment additions and $281,000 of building and land improvements.
Management expects that total expenditures for plant and equipment
additions in 1996 will approximate those made in 1995 when such
expenditures amounted to $4,490,000.
In May 1996 the Company made an additional principal payment of
$200,000 on its 10% mortgage note payable to Capital Properties, Inc.,
a company with which it has a common controlling shareholder. The
outstanding principal balance of this note has been reduced to
$4,297,000 as of June 30, 1996 and the monthly payments of principal
and interest have been reduced from $55,000 to $53,000 through
December 2007.
In management's opinion, the Company will be able to generate
sufficient cash from operations during the remainder of the year to
enable it to meet its operating expense, debt service and capital
expenditure requirements.
Results of Operations
Operating revenues for the six months ended June 30, 1996 decreased by
10% from 1995. This decrease is the result of a 16% decline in
conventional carloadings offset, in part, by an 8% increase in the
average revenue received per conventional carload and a 5% decrease in
net revenue from containers on flatcars from $735,000 in 1996 to
$695,000 in 1995. The volume of containers handled decreased by 7%
between periods whereas the average net revenue received per container
increased by 2%.
Operating revenues for the second quarter of 1996 decreased by 11% from
the second quarter of 1995. This decrease is the result of a 12%
decline in conventional carloadings offset, in part, by a 3% increase
in the average revenue received per conventional carload and a 9%
decrease in net revenue from containers on flatcars from $379,000 in
the second quarter of 1995 to $344,000 in 1996. The volume of
containers handled decreased by 10% between quarters, whereas the
average net revenue received per container increased by 1%.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Construction aggregate traffic volume declined by 20% for the six month
period and 6% for the second quarter. The volume of all other
commodities of conventional traffic declined by 15% for the six month
period and 16% for the quarter. Since construction aggregate traffic
typically generates lower revenues per carload than most other
commodities hauled by the Company, the reduction in the traffic volume
of this commodity had a greater impact upon the average revenue
received per conventional carload during the six month period than
during the second quarter. The decrease in both conventional and
container traffic volume experienced by the Company for the six month
period and the quarter is chiefly attributable to an economic slowdown
which first became apparent late in the third quarter of 1995. In
addition, adverse weather conditions during the first quarter of 1996
contributed to the significant decline in the volume of construction
aggregates hauled during that period.
Operating expenses decreased by 2% during the six month period and by
4% during the second quarter from the comparable periods in 1995.
These decreases result from management's efforts to minimize operating
costs during periods of reduced freight traffic. Many of the Company's
operating expenses are of a relatively fixed nature and, therefore, do
not increase or decrease proportionally with increases or decreases in
operating revenue.
Interest expense increased by 13% in both the six month period and the
second quarter of 1996 from 1995. The increase is attributable to
higher levels of long and short term borrowings partially offset by
lower interest rates.
<PAGE>
PART II
Item 4.Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on April 24, 1996.
Of the 2,163,676 shares of common stock entitled to vote,
1,656,659 shares were present, in person or by proxy. Of the
653 shares of preferred stock entitled to vote, 627 shares were
present, in person or by proxy.
All directors of the Company are elected on an annual basis and
the following were so elected at this Annual Meeting:
Carl P. Belke, Ronald P. Chrzanowski, Robert H. Eder and
William J. LeDoux were elected Common Stock Directors. Each
director received 1,654,876 affirmative votes and 1,783
negative votes of common shares.
Frank W. Barrett, Phillip D. Brown, John H. Cronin, Robert J.
Easton, J. Joseph Garrahy, Orville R. Harrold, John J. Healy,
and Charles M. McCollum, Jr. were elected Preferred Stock
Directors. Each director received 626 affirmative votes and 1
negative vote of preferred shares.
A resolution was presented for the appointment of Deloitte &
Touche LLP as independent auditors of the accounts of the
Company for 1996. The resolution received 1,654,350
affirmative votes and 563 negative votes of common shares with
1,746 common shares abstaining. The resolution received 627
affirmative votes and no negative votes of preferred shares.
Item 6.Exhibits and Reports on Form 8-K
(b)No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By: Orville R. Harrold
______________________________
Orville R. Harrold, President
By: Robert J. Easton
______________________________
Robert J. Easton
Treasurer and Principal
Financial Officer
DATED: August 9, 1996
<TABLE> <S> <C>
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<S> <C>
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<PERIOD-END> JUN-30-1996
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0
33
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</TABLE>
