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, 1997
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 0-16704
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 2, 1997, the registrant has 2,214,776 shares of common stock,
par value $.50 per share, outstanding.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED)
__________ __________
<S> <C> <C>
Current assets:
Cash and equivalents $ 63,000 $ 686,000
Accounts receivable, net of allowance
for doubtful accounts of $125,000 2,456,000 2,537,000
Materials and supplies 988,000 1,021,000
Prepaid expenses and other 133,000 121,000
Deferred income taxes 400,000 400,000
__________ __________
Total current assets 4,040,000 4,765,000
__________ __________
Properties:
Land and land improvements 9,062,000 9,020,000
Deep-water pier project 11,367,000 11,339,000
Track structure 46,235,000 45,833,000
Buildings and other structures 5,998,000 5,955,000
Equipment 16,139,000 15,991,000
__________ __________
88,801,000 88,138,000
Less accumulated depreciation 24,910,000 24,412,000
__________ __________
Total properties, net 63,891,000 63,726,000
__________ __________
$ 67,931,000 $ 68,491,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, bank $ 1,160,000 $ 1,440,000
Current portion of long-term debt 693,000 677,000
Accounts payable 2,771,000 2,861,000
Accrued expenses 1,104,000 1,133,000
__________ __________
Total current liabilities 5,728,000 6,111,000
__________ __________
Long-term debt, less current portion 11,923,000 12,131,000
__________ __________
Deferred grant income 5,509,000 5,571,000
__________ __________
Deferred income taxes 8,635,000 8,617,000
__________ __________
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 2,190,689 shares in 1997
and 2,188,244 shares in 1996 1,095,000 1,094,000
Capital in excess of par 6,379,000 6,365,000
Retained earnings 28,629,000 28,569,000
__________ __________
Total shareholders' equity 36,136,000 36,061,000
__________ __________
$ 67,931,000 $ 68,491,000
========== ==========
<FN>
See notes to financial statements
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
__________ __________
<S> <C> <C>
Revenues:
Operating revenues, freight and other $ 4,682,000 $ 4,185,000
Other income (Note 3) 165,000 175,000
__________ __________
Total revenues 4,847,000 4,360,000
__________ __________
Expenses:
Operating:
Maintenance of way and structures 1,017,000 1,165,000
Maintenance of equipment 674,000 599,000
Transportation 1,149,000 1,131,000
General 835,000 817,000
Taxes, other than income 570,000 529,000
Car hire, net 162,000 149,000
__________ __________
4,407,000 4,390,000
Interest 335,000 337,000
__________ __________
Total expenses 4,742,000 4,727,000
__________ __________
Income (loss) before income taxes 105,000 (367,000)
__________ __________
Income taxes (benefit):
Current 24,000 (140,000)
Deferred 18,000 -
__________ __________
42,000 (140,000)
__________ __________
Net income (loss) $ 63,000 $ (227,000)
========== ==========
Earnings (loss) per common and common
equivalent share $ .03 $ (.11)
========== ==========
Weighted average common and common
equivalent shares outstanding (Note 4) 2,254,642 2,161,773
========== ==========
Dividends per share:
Preferred $ 5.00 $ -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, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH
1997 1996
__________ __________
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income (loss) $ 63,000 $ (227,000)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation 498,000 468,000
Amortization of deferred grant
income (36,000) (32,000)
Gain from sales of properties and
easements (19,000)
Deferred income taxes 18,000
Changes in assets and liabilities:
Accounts receivable (70,000) 252,000
Materials and supplies 33,000 (35,000)
Prepaid expenses and other (12,000) (3,000)
Accounts payable 278,000 8,000
Accrued expenses (29,000) (259,000)
__________ __________
Net cash provided by operations 724,000 172,000
__________ __________
Cash flows provided by (used in)
investing activities:
Purchase of properties and equipment (1,025,000) (1,324,000)
Proceeds from:
Sales of properties and easements 19,000
Deferred grant income 126,000 35,000
__________ __________
Net cash used in investing activities (880,000) (1,289,000)
__________ __________
Cash flows provided by (used in)
financing activities:
Net borrowings (payments) under line
of credit (280,000) 650,000
Payments of long-term debt (194,000) (146,000)
Payment of dividends (3,000)
Proceeds from issuance of common
shares for stock options exercised 10,000
__________ __________
Net cash provided by (used in)
financing activities (467,000) 504,000
__________ __________
Decrease in cash and equivalents (623,000) (613,000)
Cash and equivalents, beginning of
period 686,000 2,012,000
_________ __________
Cash and equivalents, end of period $ 63,000 $ 1,399,000
========== ==========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 333,000 $ 336,000
========== ==========
Income taxes $ 28,000 $ -0-
========== ==========
<FN>
See notes to financial statements
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(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, 1997 and the results of operations and
cash flows for the three months ended March 31, 1997 and 1996.
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 1996
Annual Report on Form 10-K for the year ended December 31, 1996
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 December 31,
1996 $ 33,000 $1,094,000 $6,365,000 $28,569,000
Issuance of 2,445
common shares for
stock options
exercised and other 1,000 14,000
Dividends, preferred
stock, $5.00 per
share (3,000)
Net income for the
period 63,000
________ _________ _________ __________
Balance March 31, 1997 $ 33,000 $ 1,095,000 $6,379,000 $28,629,000
======= ========= ========== ==========
</TABLE>
<TABLE>
3. Other income:
1997 1996
________ ________
<S> <C> <C>
Gain from sales of
properties and
easements, net $ 19,000 $ -
Rentals 143,000 155,000
Interest 3,000 20,000
$ 165,000 $ 175,000
======== ========
</TABLE>
4. Earnings (loss) per share:
Earnings (loss) per common and common equivalent share are
computed using the weighted average number of common and dilutive
common equivalent shares outstanding during the period, using the
provisions of Accounting Principles Board Opinion No. 15 "Earnings
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.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
4. Earnings (loss) per share (continued):
In March 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share". SFAS No. 128 which establishes standards
for computing and presenting earnings per share will be adopted by
the Company in the fourth quarter of 1997. SFAS No. 128 will
require the Company to provide a dual presentation of basic and
diluted earnings per share. Had SFAS No. 128 been effective for
the quarters ended March 31, 1997 and 1996 reported basic earnings
per share and diluted earnings per share would be the same.
5. Dividends:
On April 30, 1997, the Company declared a dividend of $.06 per
share on its outstanding common stock payable May 22, 1997 to
shareholders of record May 8, 1997.
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 events:
In April 1997 the Company issued 22,550 shares of common stock to
fund the 1996 contribution to its profit sharing plan of $226,000,
which amount is included in "accrued expenses" on the accompanying
balance sheets.
In April 1997 the Company finalized an agreement with a commercial
lender to borrow up to $750,000 for the acquisition and renovation
of three used locomotives. The terms of the loan agreement call
for level payments of principal and interest over a five year
term. The interest rate, which is variable, is set at 2.35% over
the 30 day Commercial Paper rate. The Company has the option of
converting to a fixed rate of interest set at 2.1% over the then
current weekly average rate of 3 year U.S. Treasury Constant
Maturities. It is anticipated that the locomotive acquisition and
renovation and the disbursement of funds under this agreement will
be completed during the second quarter of 1997.
<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 $724,000 of cash from operations during the first quarter of
1997. On an overall basis, however, the Company experienced a decrease
in cash for the quarter of $623,000. 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 and other seasonal factors, 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
1997 will be sufficient to enable the Company to meet its operating
expenses, debt service and capital expenditure requirements.
As discussed more fully in Note 7 to the accompanying financial
statements the Company intends to acquire three used locomotives during
the second quarter of 1997 at a total cost, including renovation, of
approximately $750,000. This acquisition is being financed through
long-term borrowings from a commercial lender.
Results of Operations
Operating revenues for the quarter increased by 12% over the first
quarter of 1996. This increase results primarily from an 18% increase
in conventional carloadings offset, in part, by an 8% decrease in the
average revenue received per carload. In addition, net revenue from
containers on flatcars increased by $16,000 (5%) between quarters.
Approximately one third of the increase in conventional carloadings,
between quarters, was made up of construction aggregate traffic with
increases in all other commodities comprising the remaining two thirds.
Since construction aggregate traffic typically produces lower revenues
per carload than most other commodities hauled by the Company, the fact
that increases in the volume of this commodity were greater than its
proportion of the total traffic mix accounts for most of the decrease
in the average revenue per carload.
The increase in traffic volume for the quarter is attributable to
improving economic conditions which first became evident late in third
quarter of 1996 and to improved weather conditions in the first quarter
of 1997 compared with 1996
Operating expenses increased by less than 1% over the first quarter of
1996. Many of the Company's expenses are of a relatively fixed nature
and, therefore, do not increase or decrease proportionally with changes
in operating revenue.
Interest expense was virtually unchanged between quarters. This is
primarily due to the fact that lower levels of long term debt
outstanding during the quarter were largely offset by increased levels
of short term borrowings.
<PAGE>
Recent Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
per Share," which will be effective during the fourth quarter of 1997.
SFAS No. 128 will require the Company to restate all previously
reported earnings per share information to conform with the new
pronouncement's requirements.
The statements contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MDA") which are not
historical are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. These forward-
looking statements represent the Company's present expectations or
beliefs concerning future events. The Company cautions, however, that
actual results could differ materially from those indicated in MDA.
<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, 1997.
<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: /S/ Orville R. Harrold
______________________________
Orville R. Harrold, President
By: /S/ Robert J. Easton
_____________________________
Robert J. Easton
Treasurer and Principal
Financial Officer
DATED: May 12, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 2581
<ALLOWANCES> 125
<INVENTORY> 988
<CURRENT-ASSETS> 4040
<PP&E> 88801
<DEPRECIATION> 24910
<TOTAL-ASSETS> 67931
<CURRENT-LIABILITIES> 5728
<BONDS> 11923
0
33
<COMMON> 1095
<OTHER-SE> 35008
<TOTAL-LIABILITY-AND-EQUITY> 67931
<SALES> 0
<TOTAL-REVENUES> 4847
<CGS> 0
<TOTAL-COSTS> 4407
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335
<INCOME-PRETAX> 105
<INCOME-TAX> 42
<INCOME-CONTINUING> 63
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
