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, 1998
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 1, 1998, the registrant has 3,424,498 shares of common
stock, par value $.50 per share, outstanding.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
BALANCE SHEETS
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
ASSETS
MARCH 31,DECEMBER 31,
1998 1997
(UNAUDITED)
_________ _________
<S> <C> <C>
Current Assets:
Cash and equivalents $ 7,124 $ 519
Accounts receivable, net of allowance for
doubtful accounts of $125 in 1998 and 1997 2,519 2,345
Materials and supplies 1,948 2,086
Prepaid expenses and other 152 167
Deferred income taxes 123 204
_________ _________
Total Current Assets 11,866 5,321
Property and Equipment, net (Note 3) 66,258 65,891
_________ _________
Total Assets $78,124 $71,212
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt (Notes 2
and 9) $ 4,960 $ 931
Notes payable, bank 1,350
Accounts payable 2,197 2,083
Accrued expenses 613 931
_________ _________
Total Current Liabilities 7,770 5,295
_________ _________
Long-Term Debt, Less Current Portion 2,308 11,916
_________ _________
Profit-Sharing Plan Contribution 360 337
_________ _________
Deferred Grant Income 6,906 6,945
_________ _________
Deferred Income Taxes 8,645 8,681
_________ _________
Commitments and Contingent Liabilities
(Note 7)
Shareholders' Equity (Notes 2, 5 and 7):
Preferred stock, 10% noncumulative, $50 par
value; authorized, issued and outstanding
653 shares 33 33
Common stock, $.50 par value; authorized
15,000,000 shares; issued and outstanding
3,424,089 shares in 1998 and 2,221,933
shares in 1997 1,712 1,111
Additional paid-in capital 20,095 6,665
Retained earnings 30,295 30,229
_________ _________
Total Shareholders' Equity 52,135 38,038
_________ _________
Total Liabilities and Shareholders' Equity $78,124 $71,212
======== ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
__________ _________
<S> <C> <C>
Operating Revenues - Freight and Non-Freight $ 4,983 $ 4,682
_________ _________
Operating Expenses:
Maintenance of way and structures 798 741
Maintenance of equipment 508 452
Transportation 1,216 1,149
General and administrative 819 835
Depreciation 528 498
Taxes, other than income taxes 581 570
Car hire, net 155 162
_________ _________
Total Operating Expenses 4,605 4,407
_________ _________
Income from Operations 378 275
Other Income (Note 4) 186 165
Interest Expense (350) (335)
_________ _________
Income before Income taxes 214 105
_________ _________
Provision for Income Taxes:
Current 33 24
Deferred 45 18
_________ _________
Total Provision for Income Taxes 78 42
======== ========
Net income $ 136 $ 63
Preferred Stock Dividends 3 3
_________ _________
Net Income Available to Common Shareholders $ 133 $ 60
======== ========
Basic Income Per Share (Note 5) $ .06 $ .03
======== ========
Diluted Income Per Share (Note 5) $ .06 $ .03
======== ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 136 $ 63
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation 528 498
Amortization of deferred grant income (39) (36)
Gains from sale, condemnation and disposal
of properties and equipment (60) (19)
Deferred income taxes 45 18
Other, net 20
Increase (decrease) in cash from:
Accounts receivable (258) (70)
Materials and supplies 138 33
Prepaid expenses and other 15 (12)
Accounts payable and accrued expenses (580) 249
___________ _________
Net cash flows from (used by) operating
activities (55) 724
___________ _________
Cash flows from Investing Activities:
Purchase of property and equipment (895) (1,025)
Proceeds from sale and condemnation of
property and equipment 458 19
Proceeds from deferred grant income 85 126
___________ _________
Net cash flows used by investing activities (352) (880)
___________ _________
Cash Flows from Financing Activities:
Net payments under line of credit (1,350) (280)
Payments of long-term debt (4,179) (194)
Dividends paid (70) (3)
Proceeds from public offering of 1,000,000
shares of common stock 12,590
Issuance of common shares for stock options
exercised and employee stock purchases 21 10
___________ _________
Net cash flows from (used by) financing
activities 7,012 (467)
___________ _________
Increase (Decrease) in Cash and Equivalents 6,605 (623)
Cash and Equivalents, Beginning of Period 519 686
___________ ________
Cash and Equivalents, End of Period $ 7,124 $ 63
___________ ________
Supplemental disclosures:
Cash paid during the period for:
Interest $ 387 $ 333
============ ========
Income taxes $ 45 $ 28
============ ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Dollars in Thousands Except Per Share Amounts)
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, 1998 and the
results of operations and cash flows for the three months
ended March 31, 1998 and 1997. 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 1997 Annual
Report on Form 10-K for the year ended December 31, 1997
filed with the Securities and Exchange Commission.
2. Changes in shareholders' equity:
<TABLE>
<CAPTION>
Additional Total
Preferred Common Paid-in Retained Shareholders'
Stock Stock Capital Earnings Equity Equity
________ ______ _______ ________ _________
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 $ 33 $1,111 $6,665 $30,229 $38,038
Issuance of 2,156 common
shares for stock options
exercised and employee
stock purchases 1 20 21
Issuance of 1,000,000
common shares for an
underwritten public
stock offering (net
of expenses) 500 12,090 12,590
Issuance of 200,000
common shares for
stock purchase
warrants exercised 100 1,320 1,420
Dividends:
Preferred stock,
$5.00 per share (3) (3)
Common stock, $.03
per share (67) (67)
Net income for the period 136 136
________ ______ _______ ________ ________
Balance March 31, 1998 $ 33 $1,712 $20,095 $30,295 $ 52,135
======= ====== ======= ======= ========
</TABLE>
In February 1998 the Company filed a registration statement
with the Securities and Exchange Commission for an
underwritten secondary public offering of Common Stock (the
"Common Stock Offering"). In March 1998, the Company
completed the Common Stock Offering and issued 1,000,000
shares of Common Stock at $14.25 per share. Net proceeds of
the Common Stock Offering were approximately $12.6 million.
Approximately $5.8 million was utilized to retire short and
long-term debt in March 1998, including 10% long-term notes
payable to Capital Properties, Inc. in the principal amount
of $3.9 million. Capital Properties, Inc. has a common
controlling shareholder with the Company. The Company
intends to utilize the balance of the Common Stock Offering
proceeds to retire additional long-term debt, acquire rail
cars and expand its Worcester maintenance facility.
In March 1998 Massachusetts Capital Resource Company
("MCRC") exercised its warrants to acquire 200,000 newly
issued shares of the Company's Common Stock at the rate of
$7.10 per share. Proceeds to the Company consisted of a
$1.4 million reduction in the outstanding principal balance
of its 10% subordinated long-term note payable to MCRC.
<PAGE>
<TABLE>
<CAPTION>
3. Property and Equipment:
Property and equipment consist of the following:
MARCH 31,DECEMBER 31,
1998 1997
_________ _________
<S> <C> <C>
Land and improvements $ 8,738 $ 9,128
South Quay property 11,464 11,464
Track structure 48,812 48,241
Buildings and other structures 5,329 5,318
Equipment 17,899 17,196
_________ _________
92,242 91,347
Less accumulated depreciation 25,984 25,456
_________ _________
Total property and equipment, net $66,258 $65,891
======== ========
4. Other income:
1998 1997
_________ _________
Gain from sales of properties and
easements, net $ 60 $ 19
Rentals 113 143
Interest 13 3
_________ _________
$ 186 $ 165
======== ========
</TABLE>
5. Income per Share:
In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128 "'Earnings per Share," which establishes
standards for computing and presenting earnings per share
and applies to entities with publicly held common stock or
potential common stock. Prior to 1997, the Company computed
income per common share using the methods outlined in
Accounting Principles Board Opinion No. 15, "'Earnings per
Share," and its interpretations. The Company adopted SFAS
No. 128 in 1997 and restated its earnings per share for the
first quarter of 1997. Previously reported income per
common share for the first quarter of 1997 did not differ
from that computed using SFAS 128.
Basic income per common share is computed using the weighted
average number of common shares outstanding during each
year. Diluted income per common share reflects the effect
of the Company's outstanding convertible preferred stock,
options and warrants except where such items would be
antidilutive.
A reconciliation of net income available to common
shareholders for the computation of diluted income per share
is as follows:
<TABLE>
1998 1997
__________ __________
<S> <C> <C>
Net income available to common
shareholders $ 136 $ 63
Interest expense impact (net of tax) on
assumed conversion of debt to exercise
warrants 22
_________ _________
Net income available to common
shareholders assuming dilution $ 136 $ 85
======== ========
</TABLE>
A reconciliation of weighted average shares used for the
basic computation and that used for the diluted computation
is as follows:
<TABLE>
1998 1997
_________ _________
<S> <C> <C>
Weighted average shares-basic 2,327,198 2,189,315
Dilutive effect of convertible preferred
stock, options and warrants 84,844 275,617
_________ _________
Weighted average shares-diluted 2,412,042 2,464,932
========= =========
</TABLE>
<PAGE>
6. Dividends:
On April 29, 1998, the Company declared a dividend of $.03
per share on its outstanding Common Stock payable May 28,
1998 to shareholders of record May 14, 1998.
7. Commitments and Contingent Liabilities
The Company is a defendant in certain lawsuits relating to
casualty losses, many of which are covered by insurance
subject to a deductible. The Company believes that adequate
provision has been made in the financial statements for any
expected liabilities which may result from disposition of
such lawsuits.
While it is possible that some of the foregoing matters may
be settled at a cost greater than that provided for, it is
the opinion of management based upon the advice of counsel
that the ultimate liability, if any, will not be material to
the Company's financial statements.
Several years ago the Company was notified by CPC
International, Inc. (now "Bestfoods") and the United States
Environmental Protection Agency that the Company was alleged
to be a potentially responsible party for some or all of the
costs of remediation of a Superfund site, reportedly due to
the impact of a 1974 incident involving a rail car. In
December 1995, the Company concluded an agreement with
Bestfoods ("Agreement") in which the Company agreed to pay
$990 in settlement of all claims against it relating to this
incident. The Company issued 108,155 shares of its common
stock, having a total fair market value of $770 in December
1995 and January 1996 in partial payment of this claim. The
balance of the claim was paid in cash in March 1998. The
agreement further provides that, in the event Bestfoods
recovers insurance proceeds for its costs of evaluating and
remediating the Superfund Site, the Company is entitled to
receive 10% of the net recovery after deduction of
litigation expenses. Bestfoods is actively engaged in
litigation with an insurer seeking such a recovery.
Bestfood's insurance carrier (which to date has denied
coverage to Bestfoods) has brought suit against the Company
and Bestfoods to enforce its alleged rights of subrogation.
The Company believes that since Bestfoods has released the
Company from any liability, its carrier has no right of
subrogation and its claim is without merit. Moreover, under
the Agreement, Bestfoods is obligated to defend, indemnify
and hold harmless the Company for any claims which arise
from such contamination, including claims of the insurance
carrier. Pursuant to the Agreement, Bestfoods has assumed
the defense of the claim by the insurance carrier on behalf
of the Company.
In October 1997, the Company's Board of Directors approved
an agreement to purchase all of the outstanding common stock
of Connecticut Central Railroad Company ("Conn Central") for
20,000 shares of newly issued common stock of the Company.
If certain financial and other conditions are met, Conn
Central's shareholders will receive an additional 7,500
shares of the Company's common stock one year from the date
of the closing. The transaction was subsequently
consummated on April 21, 1998. Conn Central is a shortline
railroad headquartered in Middletown, Connecticut which has
operating rights over approximately 28 miles in central
Connecticut and connects to the Company's Middletown
Secondary line. Conn Central will be merged into the
Company during the second quarter of 1998.
8. New Accounting Pronouncements:
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, ''Disclosures about
Segments of an Enterprise and Related Information.'' SFAS
130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial
statements. SFAS 131 establishes standards for the way that
public business enterprises report information about
operating segments in annual financial statements and
requires that those enterprises report selected information
about operating segments in interim financial reports. It
also establishes standards for related disclosures about
products and services, geographic areas and major customers.
<PAGE>
Both standards were adopted by the Company during the first
quarter of 1998 and have not had material effects on its
financial position and results of operations.
9. Subsequent events:
During the period from April 3, 1998 through May 4, 1998 the
Company utilized approximately $5,065 of the proceeds of the
Common Stock Offering to retire long-term debt principal
including prepayment penalties of $151. These prepayment
penalties net of applicable income taxes, will be reported
as an extraordinary charge to income during the second
quarter of 1998. After applying these prepayments, the
Company's remaining long-term debt consists of approximately
$2,400 of 10% subordinated debt payable to MCRC. The debt
principal prepayments have been classified as current
liabilities as of March 31, 1998.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
Results of Operations
The following table sets forth the Company's operating revenues
by category in dollars and as a percentage of operating revenues:
<TABLE>
<CAPTION>
Three Months Ended March 31
____________________ __________________
1998 1997
____________________ __________________
(In thousands, except percentages)
<S> <C> <C> <C> <C>
Freight Revenues:
Conventional carloads $4,109 82.5% $3,967 84.7%
Containers 420 8.4 367 7.8
Non-Freight Operating
Revenues:
Transportation services 182 3.6 143 3.1
Other 272 5.5 205 4.4
________ ______ _______ ______
Total $4,983 100.0% $4,682 100.0%
======== ====== ======= ======
</TABLE>
The following table sets forth a comparison of the Company's
operating expenses expressed in dollars and as a percentage of
operating revenues:
<TABLE>
<CAPTION>
Three Months Ended March 31
_____________________ _________________
1998 1997
_____________________ _________________
(In thousands, except percentages)
<S> <C> <C> <C> <C>
Salaries, wages, payroll taxes
and employee benefits $2,658 53.3% $2,528 54.0%
Casualties and insurance 205 4.1 143 3.0
Depreciation 528 10.6 498 10.6
Diesel fuel 129 2.6 142 3.0
Car hire, net 155 3.1 162 3.5
Purchased services, including
legal and professional fees 353 7.1 315 6.7
Repair and maintenance of
equipment 253 5.1 257 5.5
Track and signal materials 243 4.9 218 4.7
Other materials and supplies 278 5.6 210 4.5
Other 378 7.6 365 7.8
_________ _______ ________ ______
Total 5,180 104.0 4,838 103.3
Less capitalized and
recovered costs 575 11.6 431 9.2
________ _______ ________ ______
Total $4,605 92.4% $4,407 94.1%
======== ======= ======== ======
</TABLE>
Operating Revenues:
Operating revenues increased $301,000, or 6.4%, to $5.0 million
in the first quarter of 1998 from $4.7 million in the first
quarter of 1997. This increase was comprised of a $142,000
(3.6%) increase in conventional freight revenues, a $53,000
(14.4%) increase in net container freight revenues and a
$106,000 (30.5%) increase in non-freight operating revenues.
<PAGE>
The increases in conventional and container freight revenues were
primarily the result of increases in traffic volume. The
Company's conventional freight carloadings increased by 359, or
6.9% , to 5,526 carloadings in the first quarter of 1998 from
5,167 in 1997. Total intermodal containers handled increased by
1,065, or 11.2%, to 10,569 containers in the first quarter of
1998 from 9,504 in 1997. Average revenue per conventional
carloading decreased by 2.4% between quarters, principally due to
a shift in the relative volume of commodities handled toward
construction aggregate, which commands a comparatively lower
freight rate. Approximately half of the conventional traffic
volume increase during the quarter was attributable to
construction aggregate. The average net revenues received per
intermodal container increased by 2.9% between quarters due to
rate adjustments attributable to changes in certain railroad
industry cost indices.
The Company experienced increases in shipments by many of its
freight customers due to continually improving economic
conditions as well as the Company's marketing efforts. The
relatively mild weather during the first quarter of 1998 also
contributed to the increase in freight traffic, particularly
construction aggregate.
The $106,000 increase in non-freight operating revenues resulted
from increases in Maintenance of Way Department billing and from
demurrage and other transportation revenues. Such revenues can
vary from period to period depending upon customer needs.
Operating Expenses:
Operating expenses increased $198,000 or 4.5%, to $4.6 million in
the first quarter of 1998 from $4.4 million in 1997. Operating
expenses as a percentage of operating revenues ("operating
ratio"), however, decreased to 92.4% in the first quarter of 1998
from 94.1% in 1997. The smaller increase in operating expenses
compared to the increase in operating revenues and the decrease
in the operating ratio were attributable to the relatively fixed
nature of the Company's operating expenses and the fact that
capitalized costs for track and bridge projects, as well as costs
recovered from government grants for public improvements
increased $144,000 or 33.4%, to $575,000 in the first quarter of
1998 from $431,000 in 1997.
Other Income and Interest Expense:
The amounts of other income and interest expense for the three
months ended March 31, 1998 are comparable to 1997 amounts.
Liquidity and Capital Resources
The Company completed a secondary public offering of 1,000,000
newly issued shares of its common stock in March 1998 and
received net proceeds of approximately $12.6 million of which
approximately $5.8 million was utilized to retire long and short
term debt principal. Subsequent to March 31, 1998 additional
long-term debt principal in the approximate amount of $5 million
was retired. The Company intends to utilize the remainder of the
offering proceeds for additions to its property and equipment.
The Company's future cash requirements for debt principal and
interest payments will be substantially reduced as a result of
this debt retirement. The immediate effect has been to reduce
the Company's monthly debt principal and interest payments by
more than $150,000.
The Company concluded an agreement executed in October 1997 to
acquire all of the outstanding stock of Connecticut Central
Railroad Company ("Conn Central") during April 1998. Management
is not able to predict the total impact of this acquisition upon
future operations but it is estimated that rail freight revenues
from existing customers of Conn Central will amount to
approximately $500,000 per year at current levels of operations.
In addition, management intends to pursue whatever additional
growth opportunities may be available on the acquired lines.
<PAGE>
In management's opinion cash generated from operations during the
remainder of 1998 will be sufficient to enable the Company to
meet its operating expenses, capital expenditure and remaining
debt service requirements.
Seasonality
Historically, the Company's operating revenues are lowest for the
first quarter due to the absence of aggregate shipments during a
portion of this period and to winter weather conditions.
Year 2000 Compliance
The Company operates a mainframe computer with a PC network and
employs three in-house programmers who write and maintain a
substantial portion of the Company's software programs. The
Company utilizes Electronic Data Interchange and Interline
Settlement Systems through Railinc in Washington, D.C. for the
interchange of rail cars and revenue allocations with other
railroads. The Company has compatible back up mainframe systems
at both its Worcester, Massachusetts and Plainfield, Connecticut
facilities.
Preparations for the year 2000 have been underway for six years
and changes to the Company's programs are substantially complete.
Due to the short periodic cycle of rail car movements, the
exchange of data covers time periods where "Year 2000" compliance
is not a major factor and should not adversely affect the
Company's business. The Company does rely on waybills and car
supply and revenue data generated by other railroads in the
interchange of rail cars. The failure of these railroads to
supply accurate data could disrupt the Company's operations.
Railinc has informed the Company that it is currently addressing
the Year 2000 issue and the Company believes that its programs
can be readily modified to accommodate any resulting changes
which may be required.
<PAGE>
PART II
Item 2.Changes in Securities and Use of Proceeds
(d)Use of Proceeds - The Company sold 1,000,000 shares
of the Company's Common Stock, par value $.50 per
share, on March 24, 1998, pursuant to a Registration
Statement on Form S-1 (File No. 333-46433), which was
declared effective by the Securities and Exchange
Commission on March 19, 1998. The Managing
underwriter of the offering was Advest, Inc.. The
aggregate gross proceeds of the offering were
$14,250,000. The Company's total expenses in
connection with the offering were $1,660,000, of
which $998,000 was for underwriting discounts and
commissions and $662,000 was for other expenses paid
to persons other than directors or officers of the
Company, persons owning more than 10 percent of any
class of equity securities of the Company, or
affiliates of the Company. The Company's net
proceeds from the 0ffering were $12,590,000. From
the March 24, 1998 through March 31, 1998 the Company
used $3,935,000 of the net proceeds to repay the
outstanding principal balance of its 10% long term
note payable to Capital Properties, Inc. and
$1,839,000 to retire short term obligations,
including all of its outstanding notes payable to
Fleet Bank. As of March 31, 1998 the Company had
approximately $6,816,000 of proceeds remaining from
the offering, substantially all of which were
invested in short-term, interest-bearing, investment-
grade securities, including money market instruments.
Item 4.Submission of Matters to a Vote of Security Holders
By written consent dated as of February 9, 1998 the
holders of majorities of the outstanding shares of Common
Stock and Preferred Stock approved an amendment to the
Company's Charter to change the authorized capital of the
Company by increasing the number of authorized shares of
Common Stock to 15,000,000 and reducing the number of
authorized shares of Preferred Stock to 653, and to
delete the provision in the Company's Charter which gives
the Board of Directors the authority to increase the
number of authorized shares of Common Stock without
additional shareholder action (the "Amendment").
As provided by the Rhode Island Business Corporation Act
(the "Rhode Island Act"), the Board of Directors (the
"Board"), at a meeting held on January 28, 1998, which
was attended by all members of the Board, including
Robert H. Eder, the Chairman, approved the proposed
Amendment and directed that the Amendment be submitted to
the Company's shareholders for their consideration and
approval. Under the Rhode Island Act, the affirmative
vote of a majority of the issued and outstanding shares
of Common Stock is required to approve the Amendment.
Pursuant to the Company's Charter, the holders of the
Common Stock and the holders of the Preferred Stock vote
as separate classes on all matters presented to the
Shareholders for their approval. On February 9, 1998,
Robert H. Eder, Linda Eder, Orville R. Harrold, Robert J.
Easton, Heidi J. Eddins, Frank W. Barrett, Phillip D.
Brown, John H. Cronin, J. Joseph Garrahy, John J. Healy,
William J. LeDoux, Charles M. McCollam, Jr. and Bestfoods
who collectively owned 1,134,137 shares, or 51.2%, of the
outstanding shares of Common Stock, executed a written
consent in favor of approval of the proposed Amendment.
Further, on February 9, 1998, Robert H. Eder, who owns
500 shares, or 77% of the outstanding shares of Preferred
Stock, executed a written consent in favor of approval of
the proposed Amendment. Accordingly, no additional
approval of the Amendment by the Company's shareholders
is required.
Item 6.Exhibits and Reports on Form 8-K
(a)Exhibit Number 3.1 Form of Restated Charter (filed
as Exhibit 3.1 to Form S-1 Registration Statement No.
333-46433 and by this reference incorporated herein).
(b)No reports on Form 8-K were filed during the quarter
ended March 31, 1998.
<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 14, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7124
<SECURITIES> 0
<RECEIVABLES> 2644
<ALLOWANCES> 125
<INVENTORY> 1948
<CURRENT-ASSETS> 11866
<PP&E> 92242
<DEPRECIATION> 25984
<TOTAL-ASSETS> 78124
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0
33
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</TABLE>
