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 MARCH 31, 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 May 6, 1996 the registrant has 2,184,946 shares of common stock, par
value $.50 per share, outstanding.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED)
____________ ____________
<S> <C> <C>
Current assets:
Cash and equivalents................ $1,399,000 $2,012,000
Accounts receivable, net of
allowance for doubtful accounts of
$125,000........................... 2,591,000 2,834,000
Materials and supplies.............. 766,000 731,000
Prepaid expenses and other.......... 142,000 139,000
Deferred income taxes............... 767,000 767,000
___________ ___________
Total current assets.............. 5,665,000 6,483,000
___________ ___________
Properties:
Land and land improvements.......... 8,830,000 8,614,000
Deep-water pier project............. 10,572,000 10,419,000
Track structure..................... 44,614,000 44,390,000
Buildings and other structures...... 5,868,000 5,853,000
Equipment........................... 15,223,000 15,156,000
___________ ___________
85,107,000 84,432,000
Less accumulated depreciation....... 23,342,000 22,903,000
___________ ___________
Total properties, net............. 61,765,000 61,529,000
___________ ___________
$67,430,000 $68,012,000
___________ ___________
___________ ___________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable, bank.................$ 650,000 $ -
Current portion of long-term debt... 817,000 612,000
Accounts payable.................... 4,295,000 4,907,000
Accrued expenses.................... 1,004,000 1,642,000
_________ _________
Total current liabilities......... 6,766,000 7,161,000
_________ _________
Long-term debt, less current portion.. 12,626,000 12,977,000
_________ _________
Deferred grant income................. 5,045,000 5,035,000
_________ _________
Deferred income taxes................. 8,384,000 8,384,000
_________ _________
Contingencies (Note 6)................
Shareholders' equity (Notes 2 and 7):
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 2,163,676 shares in
1996 and 2,110,041 shares in 1995 . 1,082,000 1,055,000
Capital in excess of par............ 6,182,000 5,828,000
Retained earnings................... 27,312,000 27,539,000
__________ __________
Total shareholders' equity........ 34,609,000 34,455,000
__________ __________
$67,430,000 $68,012,000
__________ __________
__________ __________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
__________ __________
<S> <C> <C>
Revenues:
Operating revenues, freight and
other.............................. $4,185,000 $4,629,000
Other income (Note 3)............... 175,000 176,000
__________ __________
Total revenues................... 4,360,000 4,805,000
__________ __________
Expenses:
Operating:
Maintenance of way and structures.. 1,165,000 1,013,000
Maintenance of equipment........... 599,000 546,000
Transportation..................... 1,131,000 1,074,000
General............................ 817,000 1,002,000
Taxes, other than income........... 529,000 532,000
Car hire, net...................... 149,000 169,000
__________ __________
4,390,000 4,336,000
Interest............................ 337,000 302,000
__________ __________
Total expenses................... 4,727,000 4,638,000
__________ __________
Income (loss) before income taxes.... (367,000) 167,000
__________ __________
Income taxes (benefit):
Current............................. (140,000) 28,000
Deferred............................ - 37,000
__________ __________
(140,000) 65,000
__________ __________
Net income (loss).................... $ (227,000) $ 102,000
__________ __________
__________ __________
Earnings (loss) per weighted average
common and common equivalent share
outstanding, 2,161,773 shares in
1996 and 2,075,906 shares in 1995
(Note 4)............................ $ (.11) $ .05
__________ __________
__________ __________
Dividends per share:
Preferred .......................... $ -0- $ -0-
__________ __________
__________ __________
Common.............................. $ -0- $ -0-
__________ __________
__________ __________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH
1996 1995
_________ _________
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income (loss).................... $(227,000) $102,000
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation....................... 468,000 429,000
Amortization of deferred grant
income............................ (32,000) (28,000)
Gain from sales of properties and
easements......................... (33,000)
Deferred income taxes.............. 37,000
Changes in assets and liabilities:
Accounts receivable.............. 252,000 (232,000)
Materials and supplies........... (35,000) (113,000)
Prepaid expenses and other....... (3,000) 24,000
Accounts payable................. 8,000 764,000
Accrued expenses................. (259,000) (328,000)
_________ _________
Net cash provided by operations...... 172,000 622,000
_________ _________
Cash flows provided by (used in)
investing activities:
Purchase of properties and
equipment........................... (1,324,000) (865,000)
Proceeds from:
Sales of properties and easements... 33,000
Deferred grant income............... 35,000
_________ _________
Net cash used in investing
activities.......................... (1,289,000) (832,000)
_________ _________
Cash flows provided by (used in)
financing activities:
Net borrowings under line
of credit........................... 650,000 92,000
Payments of long-term debt........... (146,000) (169,000)
Proceeds from issuance of common
shares for
stock options exercised............ 5,000
_________ _________
Net cash provided by (used in)
financing activities................ 504,000 (72,000)
_________ _________
Decrease in cash and equivalents....... (613,000) (282,000)
Cash and equivalents, beginning of
period................................ 2,012,000 595,000
__________ _________
Cash and equivalents, end of period... $1,399,000 $313,000
__________ _________
__________ _________
Supplemental disclosures:
Cash paid during the period for:
Interest............................. $336,000 $371,000
________ ________
________ ________
Income taxes......................... $ -0- $138,000
________ ________
________ ________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 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 March 31, 1996 and the results of operations and cash
flows for the three months ended March 31, 1996 and 1995. Results
for interim periods may not be necessarily indicative of the results
to be expected for the year.
2. Changes in shareholders' equity:
<TABLE>
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 480 common
shares for stock options
exercised and under an
employee incentive
program.................. 3,000
Net loss for the period... (227,000)
________ __________ __________ ___________
Balance March 31, 1996.... $33,000 $1,082,000 $6,182,000 $27,312,000
________ __________ __________ ___________
________ __________ __________ ___________
</TABLE>
3. Other income:
<TABLE>
1996 1995
_______ _______
<S> <C> <C>
Gain from sales of
properties and easements,
net...................... $ - $ 33,000
Rentals................... 155,000 138,000
Interest.................. 20,000 5,000
_______ _______
$175,000 $176,000
_______ _______
_______ _______
</TABLE>
4. Earnings (loss) per share:
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. The
preferred stock is not included in the computation of loss per share
since its effect is antidilutive.
Unexercised stock options and warrants have not been considered in
the calculation of earnings (loss) per share since their effect is
not material.
5. Dividends:
On April 24, 1996, the Company declared a dividend of $5.00 per share
on its outstanding preferred stock and a dividend of $.05 per share
on its outstanding common stock payable May 23, 1996 to shareholders
of record May 9, 1996.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
6. Contingencies:
A number of lawsuits relating to casualty losses are pending against
the Company, many of which are covered by insurance 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.
7. Subsequent event:
In May 1996 the Company issued 20,925 shares of common stock to fund
the 1995 contribution to its profit sharing plan of $167,000, which
amount is included in "accrued expenses" on the accompanying balance
sheets.
8. Adoption of new accounting pronouncements:
Effective January 1, 1996, the Company adopted Statement of
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 months ended March 31, 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 statement of cash flows the Company
generated $172,000 of cash from operations during the first quarter of
1996. On an overall basis, however, the Company experienced a decrease
in cash for the quarter of $613,000. The principal uses of cash during
the quarter were expenditures for additions to property and equipment,
principal payments on long term borrowings and a reduction of current
liabilities.
Due to weather conditions etc., the Company's freight traffic volumes
are typically lower during the first quarter than during the remainder
of the year. As a result, management anticipates that cash generated
from operations during the remainder of 1996 will be sufficient to
enable the Company to meet its operating expenses, debt service and
capital expenditure requirements.
Results of Operations
Operating revenues for the quarter decreased by 10% from the first
quarter of 1995. This decrease is the result of a 23% decline in
conventional carloadings offset, in part, by a 16% increase in the
average revenue received per conventional carload. Net revenues from
containers on flatcars declined by just 1% between quarters. The
decrease in conventional carloadings, between quarters, was almost
evenly split between declines in construction aggregate traffic and
all other commodities. Construction aggregate traffic declined by 67%
for the quarter whereas traffic volume for all other commodities was
off by 14%. Since construction aggregate traffic generally produces
lower revenues per carload than most other commodities hauled by the
Company, the larger proportionate reduction in this traffic is
primarily responsible for the increase in average revenue received per
conventional carload.
The decrease in traffic volume for the quarter is chiefly attributable
to adverse weather and sluggish economic conditions. Management
believes that construction aggregate traffic, which is a seasonal
commodity especially impacted by adverse weather conditions in the
first quarter of 1996, will return to more normal levels during the
remainder of the year.
Operating expenses increased by only 1% over the first quarter of 1995.
Many of the Company's expenses are of a relatively fixed nature and,
therefore, do not increase or decrease proportionally with swings in
operating revenue.
Interest expense increased by 12% from the first quarter of 1995. This
increase is attributable to higher levels of borrowings partially
offset by interest rates which were somewhat lower.
<PAGE>
PART II
Item 6. "Exhibits and Reports on Form 8-K:
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 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
Orville R. Harrold
By:______________________________
Orville R. Harrold, President
Robert J. Easton
By:______________________________
Robert J. Easton
Treasurer and Principal
Financial Officer
DATED: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1399
<SECURITIES> 0
<RECEIVABLES> 2716
<ALLOWANCES> 125
<INVENTORY> 766
<CURRENT-ASSETS> 5665
<PP&E> 85107
<DEPRECIATION> 23342
<TOTAL-ASSETS> 67430
<CURRENT-LIABILITIES> 6766
<BONDS> 12626
0
33
<COMMON> 1082
<OTHER-SE> 33494
<TOTAL-LIABILITY-AND-EQUITY> 67430
<SALES> 0
<TOTAL-REVENUES> 4360
<CGS> 0
<TOTAL-COSTS> 4390
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337
<INCOME-PRETAX> (367)
<INCOME-TAX> (140)
<INCOME-CONTINUING> (227)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
