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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Providence And Worcester Railroad Company | NASDAQ:PWX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 25.03 | 24.83 | 25.02 | 0 | 01:00:00 |
X
|
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended
September 30, 2011
|
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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)
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
x
|
Part I – Financial Information
|
|
Item 1 –Financial Statements (Unaudited):
|
|
Condensed Balance Sheets – September 30, 2011 and December 31, 2010
|
3
|
Condensed Statements of Operations – Three and Nine Months Ended September 30, 2011 and 2010
|
4
|
Condensed Statements of Cash Flows – Nine Months Ended September 30, 2011 and 2010
|
5
|
Notes to Condensed Financial Statements
|
6-10
|
Item 2 –Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
11-16
|
Item 3 –Quantitative and Qualitative Disclosures about Market Risk
|
16
|
Item 4 –Controls and Procedures
|
17
|
Part II – Other Information:
|
|
Item 5 – Other Information
|
18
|
Item 6 Exhibits
|
18
|
Signatures
|
19
|
ASSETS
|
||
September 30,
|
December 31,
|
|
2011
|
2010
|
|
Current Assets:
|
||
Cash and cash equivalents
|
$ 515
|
$ 1,517
|
Receivables:
|
||
Trade receivable, net of allowance for doubtful accounts of $55 in 2011 and 2010
|
3,638
|
2,849
|
Note receivable, less allowance of $60 in 2011 and 2010
|
309
|
37
|
Materials and supplies
|
634
|
552
|
Prepaid expenses and other current assets
|
600
|
382
|
Deferred income taxes
|
240
|
240
|
Total Current Assets
|
5,936
|
5,577
|
Note receivable, less current portion
|
—
|
347
|
Property and Equipment, net
|
84,309
|
79,595
|
Land Held for Development
|
12,457
|
12,457
|
Total Assets
|
$ 102,702
|
$ 97,976
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||
Current Liabilities:
|
||
Borrowings under line of credit
|
$ 400
|
$ 900
|
Current portion of long term debt
|
118
|
—
|
Accounts payable
|
3,941
|
3,029
|
Accrued expenses
|
1,551
|
1,751
|
Total Current Liabilities
|
6,010
|
5,680
|
Long term debt, net of current portion
|
3,852
|
—
|
Deferred Income Taxes
|
12,391
|
11,596
|
Deferred Grant Income
|
7,865
|
8,063
|
Other
|
39
|
40
|
Commitments and Contingent Liabilities
|
||
Shareholders’ Equity:
|
||
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2011 and 2010
|
32
|
32
|
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,830,503 shares in 2011 and 4,822,650 shares in 2010
|
2,415
|
2,411
|
Additional paid-in capital
|
37,247
|
37,045
|
Retained earnings
|
32,851
|
33,109
|
Total Shareholders’ Equity
|
72,545
|
72,597
|
Total Liabilities and Shareholders’ Equity
|
$ 102,702
|
$ 97,976
|
Three Months Ended
|
Nine Months Ended
|
|||
September 30,
|
September 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Revenues:
|
||||
Operating Revenues
|
$8,321
|
$7,467
|
$22,945
|
$21,244
|
Other Income
|
1,380
|
286
|
1,860
|
697
|
Total Revenues
|
9,701
|
7,753
|
24,805
|
21,941
|
Operating Expenses:
|
||||
Maintenance of way and structures
|
999
|
1,017
|
3,016
|
3,688
|
Maintenance of equipment
|
921
|
865
|
2,944
|
2,426
|
Transportation
|
2,671
|
2,141
|
8,054
|
6,618
|
General and administrative
|
1,216
|
1,471
|
3,850
|
4,062
|
Depreciation
|
817
|
776
|
2,392
|
2,328
|
Taxes, other than income taxes
|
606
|
577
|
1,755
|
1,807
|
Car hire, net
|
230
|
238
|
820
|
612
|
Employee retirement plans
|
59
|
60
|
182
|
173
|
Track usage fees
|
200
|
198
|
585
|
449
|
Total Operating Expenses
|
7,719
|
7,343
|
23,598
|
22,163
|
Operating income (loss) before Income Taxes
|
1,982
|
410
|
1,207
|
(222)
|
Interest expense
|
40
|
9
|
56
|
38
|
Income (loss) from operations prior to income taxes
|
1,942
|
401
|
1,151
|
(260)
|
Provision for Income Taxes (Benefit)
|
360
|
171
|
825
|
(67)
|
Net Income (Loss)
|
1,582
|
230
|
326
|
(193)
|
Preferred Stock Dividends
|
—
|
—
|
3
|
3
|
Net Income (Loss) Available to Common Shareholders.
|
$1,582
|
$230
|
$323
|
$(196)
|
Basic and Diluted Income (Loss) Per Common Share
|
$.32
|
$.05
|
$.07
|
$(.04)
|
Weighted-Average Common Shares Outstanding:
|
||||
For basic
|
4,828,286
|
4,818,312
|
4,826,126
|
4,816,276
|
For diluted
|
4,897,901
|
4,888,517
|
4,898,442
|
4,816,276
|
Nine Months Ended September 30,
|
||
2011
|
2010
|
|
Cash Flows from Operating Activities:
|
||
Net income (loss)
|
$ 326
|
$ (193)
|
Adjustments to reconcile the net income (loss) to cash flows from operating activities:
|
||
Depreciation
|
2,392
|
2,328
|
Amortization of deferred grant income
|
(198)
|
(194)
|
(Gains) losses from sale and disposal of property, equipment and easements
|
(1,921)
|
350
|
Note receivable
|
—
|
(486)
|
Deferred income tax benefit
|
807
|
(98)
|
Share-based compensation
|
113
|
94
|
Increase (decrease) in cash from:
|
||
Trade receivable
|
(789)
|
(542)
|
Materials and supplies
|
(82)
|
177
|
Prepaid expenses and other
|
(218)
|
(208)
|
Accounts payable and accrued expenses
|
308
|
539
|
Net cash flows from operating activities
|
738
|
1,767
|
Cash flows from Investing Activities:
|
||
Purchase of property and equipment
|
(6,715)
|
(1,732)
|
Proceeds from note receivable
|
75
|
10
|
Proceeds from sale of property, equipment and easements
|
1,921
|
350
|
Net cash flows used in investing activities
|
(4,719)
|
(1,372)
|
Cash Flows from Financing Activities:
|
||
Borrowings (payments) under line of credit
|
(500)
|
1,000
|
Proceeds from long term debt
|
4,000
|
—
|
Repayments of long term debt
|
(30)
|
—
|
Dividends paid
|
(584)
|
(582)
|
Issuance of common shares for stock options exercised and employee stock purchases
|
93
|
52
|
Net cash flows from financing activities
|
2,979
|
470
|
Increase (decrease) in Cash and Cash Equivalents
|
(1,002)
|
865
|
Cash and Cash Equivalents, Beginning of Period
|
1,517
|
157
|
Cash and Cash Equivalents, End of Period
|
$ 515
|
$ 1,022
|
Supplemental Disclosures:
|
||
Cash paid for interest
|
$ 104
|
$ 37
|
Property and equipment included in accounts payable and accrued expenses
|
$ 391
|
$ —
|
1.
|
In the opinion of management, the accompanying interim financial statements of Providence and Worcester Railroad Company (the “Company”) contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2011, the results of operations for the three and nine months ended September 30, 2011 and 2010 and cash flows for the nine months ended September 30, 2011 and 2010. Results for interim periods may not be necessarily indicative of the results to be expected for the full 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, 2010 filed with the Securities and Exchange Commission.
|
2.
|
Recent Accounting Pronouncements:
|
3.
|
Note Receivable and Subsequent Event:
|
|
In conjunction with a settlement agreement with an existing customer, the Company accepted an unsecured promissory note in the face amount of $486 thousand, whereby the Company receives monthly installments of $10 thousand including interest at 3.91% through January 2015, the maturity date. In October 2011, the customer and the Company agreed to settle the remaining amounts outstanding for $300 thousand. The Company received payment of $300 thousand in October 2011, and executed a release concurrently.
|
4.
|
Changes in Shareholders’ Equity:
|
Additional
|
Total
|
||||
Preferred
|
Common
|
Paid-in
|
Retained
|
Shareholders’
|
|
Stock
|
Stock
|
Capital
|
Earnings
|
Equity
|
|
Balance December 31, 2010
|
$32
|
$2,411
|
$37,045
|
$33,109
|
$72,597
|
Issuance of 7,082 common shares for stock options exercised, employee stock purchases and employee stock awards
|
4
|
100
|
104
|
||
Share-based compensation, options granted
|
102
|
102
|
|||
Dividends:
|
|||||
Preferred stock, $5.00 per share
|
(3)
|
(3)
|
|||
Common stock, $.12 per share
|
(581)
|
(581)
|
|||
Net income for the period
|
326
|
326
|
|||
Balance September 30, 2011
|
$32
|
$2,415
|
$37,247
|
$32,851
|
$72,545
|
5.
|
Debt:
|
6.
|
Other Income:
|
Three Months Ended
|
Nine Months Ended
|
||||
September 30,
|
September 30,
|
||||
2011
|
2010
|
2011
|
2010
|
||
Gains (losses) from sale and disposal of property, equipment and easements, net
|
$
—
|
$(350)
|
$ 1
|
$(350)
|
|
Proceeds from legal settlement
|
1,242
|
—
|
1,242
|
—
|
|
Rentals
|
77
|
147
|
431
|
497
|
|
Interest
|
5
|
—
|
12
|
1
|
|
Other
|
56
|
489
|
174
|
549
|
|
$1,380
|
$286
|
$1,860
|
$697
|
7.
|
Track Maintenance Agreement:
|
8.
|
Income (Loss) per Common Share:
|
Three Months Ended
|
Nine Months Ended
|
||||
September 30,
|
September 30,
|
||||
2011
|
2010
|
2011
|
2010
|
||
Weighted-average shares for basic
|
4,828,286
|
4,818,312
|
4,826,126
|
4,816,276
|
|
Dilutive effect of convertible preferred stock and stock options
|
69,615
|
70,205
|
72,316
|
—
|
|
Weighted-average shares for diluted
|
4,897,901
|
4,888,517
|
4,898,442
|
4,816,276
|
9.
|
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.
|
|
On January 29, 2002, the Company received a “Notice of Potential Liability” from the United States Environmental Protection Agency (“EPA”) regarding an existing Superfund Site (“the Site”) that includes the J.M. Mills Landfill in Cumberland, Rhode Island. EPA sends these “Notice” letters to potentially responsible parties (“PRPs”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). EPA identified the Company as a PRP based on its status as an owner and/or operator because its railroad property traverses the Site. Via these Notice letters, EPA makes a demand for payment of past costs (identified in the letter as $762) and future costs associated with the response actions taken to address the contamination at the Site, and requests PRPs to indicate their willingness to participate and resolve their potential liability at the Site. The Company has responded to EPA by stating that it does not believe it has any liability for this Site, but that it is interested in cooperating with EPA to address issues concerning liability at the Site. At this point, two other parties have already committed via a consent order with EPA to pay for the Remedial Investigation/Feasibility Study (“RI/FS”) phase of the clean-up at the Site, which will take approximately two or more years to complete. After that, EPA will likely seek to negotiate the cost of the Remedial Design and implementation of the remedy at the Site with the PRPs it has identified via these Notice Letters (which presently includes over sixty parties, and is likely to increase after EPA completes its investigation of the identity of PRPs). On December 15, 2003, the EPA issued a second “Notice of Potential Liability” letter to the Company regarding the Site. EPA again identified the Company as a PRP, this time because EPA “believes that [the Company] accepted hazardous substance for transport to disposal or treatment facilities and selected the site for disposal.” The Company responded again to EPA stating that it is interested in cooperating with EPA but that it does not believe it has engaged in any activities that caused contamination at the Site. The Company believes that none of its activities caused contamination at the Site, and will contest this claim by EPA and therefore no liability has been accrued for this matter.
|
|
In connection with the EPA claim described above, the two parties who have committed to conduct the RI/FS at the Site filed a complaint in the U.S. District Court of Rhode Island against the Company, in an action entitled
CCL Custom Manufacturing, Inc. v. Arkwright Incorporated, et al (consolidated with Unilever Bestfoods v. American Steel & Aluminum Corp. et al)
, C.A. No. 01-496/L, on December 18, 2002. The Company was one of about sixty parties named by Plaintiffs, in this suit, to recover response costs incurred in investigating and responding to the releases of hazardous substances at the Site. Plaintiffs alleged that the Company is liable under 42 U.S.C. § 961(a)(3) of CERCLA as an “arranger” or “generator” of waste that ended up at the Site. The Company entered into a Generator Cooperation Agreement with other defendants to allocate costs in responding to this suit, and to share technical costs and information in evaluating the Plaintiffs’ claims. Although the Company does not believe it generated any waste that ended up at this Site, or that its activities caused contamination at the Site, the Company paid $45 thousand to settle this suit in March 2006.
|
10.
|
Dividends:
|
|
PROVIDENCE AND WORCESTER RAILROAD COMPANY
|
·
|
general economic, financial and political conditions, including downturns affecting the railroad industry and credit markets;
|
·
|
our ability to comply with financial and non-financial covenants contained in our revolving line of credit and long term debt;
|
·
|
limitations and restrictions on the operation of our business contained in the documents governing our indebtedness;
|
·
|
increases in transportation costs, including fuel prices, which in some instances may not be passed on to customers;
|
·
|
competitive pressures, including changes in competitors’ pricing;
|
·
|
our ability to generate cash flows to invest in the operation of our business;
|
·
|
our dependence upon our key customers, executives and other key employees and our ability to renegotiate our union contracts.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||
2011
|
2010
|
2011
|
2010
|
|||||
(In thousands, except percentages)
|
||||||||
Freight Revenues:
|
||||||||
Conventional carloads
|
$7,791
|
93.6%
|
$7,133
|
95.5%
|
$21,130
|
92.1%
|
$19,624
|
92.4%
|
Containers
|
179
|
2.2
|
208
|
2.8
|
570
|
2.5
|
515
|
2.4
|
Other freight related
|
152
|
1.8
|
54
|
0.7
|
485
|
2.1
|
431
|
2.0
|
Other Operating Revenues
|
199
|
2.4
|
72
|
1.0
|
760
|
3.3
|
674
|
3.2
|
Total
|
$8,321
|
100.0%
|
$7,467
|
100.0%
|
$22,945
|
100.0%
|
$21,244
|
100.0%
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||
2011
|
2010
|
2011
|
2010
|
|||||
(In thousands, except percentages)
|
||||||||
Salaries, wages, payroll taxes and employee benefits
|
$4,097
|
49.2%
|
$4,147
|
55.5%
|
$11,994
|
52.3%
|
$11,811
|
55.6%
|
Casualties and insurance
|
214
|
2.6
|
119
|
1.6
|
524
|
2.3
|
710
|
3.3
|
Depreciation
|
817
|
9.8
|
776
|
10.4
|
2,392
|
10.4
|
2,328
|
11.0
|
Diesel fuel
|
911
|
10.9
|
626
|
8.4
|
3,026
|
13.2
|
1,896
|
8.9
|
Car hire, net
|
230
|
2.8
|
238
|
3.2
|
820
|
3.6
|
612
|
2.9
|
Purchased services, including legal and professional fees
|
860
|
10.3
|
792
|
10.6
|
2,336
|
10.2
|
1,951
|
9.2
|
Repair and maintenance of equipment
|
204
|
2.5
|
276
|
3.7
|
899
|
3.9
|
848
|
4.0
|
Track and signal materials
|
798
|
9.6
|
353
|
4.7
|
1,225
|
5.3
|
1,084
|
5.1
|
Track usage fees
|
200
|
2.4
|
198
|
2.6
|
585
|
2.5
|
449
|
2.1
|
Other materials and supplies
|
289
|
3.5
|
288
|
3.9
|
895
|
3.9
|
634
|
3.0
|
Other
|
492
|
5.9
|
429
|
5.7
|
1,546
|
6.7
|
1,404
|
6.6
|
Total
|
9,112
|
109.5
|
8,242
|
110.3
|
26,242
|
114.3
|
23,727
|
111.7
|
Less capitalized and recovered costs
|
1,393
|
16.7
|
899
|
12.0
|
2,644
|
11.5
|
1,564
|
7.4
|
Total
|
$7,719
|
92.8%
|
$7
,
343
|
98.3%
|
$23,598
|
102.8%
|
$22,163
|
104.3%
|
Item 5.
|
Other information
|
Item 6.
|
Exhibits
|
(31.1)
|
Rule 13a-14(a) Certification of Chairman of the Board and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
(31.2)
|
Rule 13a-14(a) Certification of Treasurer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
(32)
|
Certifications of Chairman of the Board and Chief Executive Officer and Treasurer and Principal Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
(32.1) Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
|
101
†
|
The following financial information from the Company’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2011, filed with the Securities and Exchange Commission on November 18, 2011, formatted in eXtensible Business Reporting Language:
|
(i)
|
Balance Sheets as of September 30, 2011 and December 31, 2010;
|
(ii)
|
Statements of Operations for the Three and Nine Months ended September 30, 2011 and 2010;
|
(iii)
|
Statements of Cash Flows for the Nine Months ended September 30, 2011 and 2010; and
|
(iv)
|
Notes to Financial Statements.
|
By: /s/ Robert H. Eder
|
|
_____________________________________
|
|
Robert H. Eder
|
|
Chairman of the Board and Chief Executive Officer
|
By: /s/ Daniel T. Noreck
|
|
_____________________________________
|
|
Daniel T. Noreck
|
|
Treasurer and Chief Financial Officer
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By: /s/ Robert H. Eder
|
|
_____________________________________
|
|
Robert H. Eder
|
|
Chairman of the Board and Chief Executive Officer
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By: /s/ Daniel T. Noreck
|
|
_____________________________________
|
|
Daniel T. Noreck
|
|
Treasurer and Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robert H. Eder
|
|
_____________________________________
|
|
Robert H. Eder
|
|
Chairman of the Board and Chief Executive Officer
|
|
November 18, 2011
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Daniel T. Noreck
|
|
_____________________________________
|
|
Daniel T. Noreck
|
|
Treasurer and Chief Financial Officer
|
|
November 18, 2011
|
1 Year Providence And Worcester Railroad Company Chart |
1 Month Providence And Worcester Railroad Company Chart |
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