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 September 30, 2010
Commission File Number: 1-5447
PITTSBURGH & WEST VIRGINIA RAILROAD
Pennsylvania 25-6002536
(State of Organization) (I.R.S. Employer Identification No.)
(Address of principal executive offices)
2 Port Amherst Drive
Charleston, WV 25306
Telephone (304)926-1124*
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 by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company.
Large accelerated filer _____ Accelerated filer _____ Non-accelerated
filer ____ Smaller reporting Company __X____
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes _____ No __X__
PITTSBURGH & WEST VIRGINIA RAILROAD
FORM 10-Q
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
1,510,000 shares of beneficial interest, without par value.
* Notices and communications from the Securities and Exchange Commission
for the registrant may be sent to Robert R. McCoy, Secretary and Treasurer,
#2 Port Amherst Drive, Charleston, WV 25306.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STATEMENT OF INCOME
(Dollars in Thousands except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
INCOME AVAILABLE FOR
DISTRIBUTION:
Interest income from
capital lease $ 229 $ 229 $ 686 $ 686
Less general and
administrative expense 27 21 136 148
NET INCOME $ 202 $ 208 $ 550 $ 538
Per Share:
(1,510,000 average shares
outstanding)
Net Income $ .13 $ .14 $ .36 $ .36
Cash Dividends $ .13 $ .13 $ .37 $ .37
The accompanying notes are an integral part of these financial statements.
PITTSBURGH & WEST VIRGINIA RAILROAD
FORM 10-Q
BALANCE SHEET
(Dollars in Thousands)
(Unaudited) (Audited)
September 30, December 31
2010 2009
ASSETS
Net investment in capital lease $ 9,150 $ 9,150
Cash 31 40
$ 9,181 $ 9,190
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity:
Shares of beneficial interest, at no par
value , 1,510,000 shares issued
outstanding 9,145 9,145
Retained earnings 36 45
Total shareholders' equity 9,181 9,190
Total liabilities and shareholders'
equity $ 9,181 $ 9,190
The accompanying notes are an integral part of these financial statements.
PITTSBURGH & WEST VIRGINIA RAILROAD
FORM 10-Q
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
September 30,
2010 2009
Cash flows from operating activities:
Net income $ 550 $ 538
Net cash provided by operating activities $ 550 $ 538
Cash flows used in financing activities:
Dividends paid 559 559
Net decrease in cash (9) (20)
Cash, beginning of period 40 44
Cash, end of period $ 31 $ 24
The accompanying notes are an integral part of these financial statements.
PITTSBURGH & WEST VIRGINIA RAILROAD
FORM 10-Q
Notes to financial statements:
(1) The foregoing interim financial statements are unaudited but, in the
opinion of management, reflect all adjustments necessary for a fair
presentation of the results of operations for the interim periods presented.
All adjustments are of a normal recurring nature.
(2) Registrant has elected to be treated for tax purposes as a real estate
investment trust. As such, the Trust is exempt from paying federal corporate
income tax on any income that is distributed to shareholders. It has been
Registrant's policy to distribute annually all of its ordinary taxable income.
Consequently, no provision has been made for federal income tax. Furthermore,
in accordance with the terms of the lease, Norfolk Southern Corporation will
reimburse the lessor, in the form of additional rent, for all taxes and
governmental charges imposed upon the leased assets of the lessor except
for taxes relating to the cash rent payments made by the lessee. Due to the
treatment of the lease as a direct financing lease for GAAP purposes, the tax
basis of the leased property is higher than the GAAP basis in the leased
property.
(3) Under the terms of the lease, Norfolk Southern Corporation has
leased all of Pittsburgh & West Virginia Railroad's real properties, including
its railroad lines, for a term of 99 years, renewable by the lessee upon the
same terms for additional 99-year terms in perpetuity. The lease provides for
a cash rental of $915,000 per year for the current lease period and all renewal
periods. The net investment in capital lease, recognizing renewal options in
perpetuity, was estimated to have a current value of $9,150,000 assuming an
implicit interest rate of 10%.
(4) Under the provisions of the lease, the Trust may not issue, without
the prior written consent of Norfolk Southern, any shares or options to
purchase shares or declare any dividends on its shares of beneficial interest
in an amount exceeding the value of the assets not covered by the lease plus
the annual cash rent of $915,000 to be received under the lease, less any
expenses incurred for the benefit of shareholders. At September 30, 2010,
all net assets are covered by the lease. The Trust may not borrow any money
or assume any guarantees except with the prior written consent of Norfolk
Southern.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
All of Registrant's railroad properties are on long-term lease to Norfolk
Southern Corporation for the fixed, unvarying amount of $915,000 cash
rental per year. The lease also requires that additional amounts be accounted
for as noncash rent income to be settled or paid at lease termination.
Because this noncash income will not be settled until the expiration of the
lease, no values have been reported in the accompanying interim financial
statements for the balance of the account or the transactions affecting the
balance.
With fixed revenue and expenses relatively constant, there is very little
fluctuation in operating results between periods. In comparing the third
quarter of 2010 with the preceding second quarter of 2010 and the third
quarter of 2009, revenues totaled $229,000, $229,000, and $229,000,
respectively. Net income and income available for distribution was $202,000,
$190,000, and $208,000, respectively.
Since cash revenue is fixed in amount and outlays for general and
administrative expenses are relatively modest, inflation has had no material
impact on Registrant's reported net income for the past three years. Although
recent inflationary trends have been moderate, annual rental income is
a fixed amount for the current lease term and any renewal periods, and
inflation could affect the real dollar value of the rental income over time.
Changes in inflationary trends could also affect the general and
administration expenses.
Item 4T. CONTROLS AND PROCEDURES
Management is responsible for establishing and maintaining effective
disclosure controls and procedures. As of the end of the period covered
by this report, the Registrant carried out an evaluation under the
supervision and with the participation of the Registrant's management,
including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities and Exchange Act
of 1934, as amended. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that the Registrant's
disclosure controls and procedures are adequate and effective to ensure
that information required to be disclosed in the Registrant's required SEC
filings is recorded, processed, summarized and reported within the time
periods specified in the Commission's rules and forms.
There have been no significant changes in the Registrant's internal controls
or in other factors that that could significantly affect internal controls
subsequent to the date the Registrant carried out its evaluation.
We maintain a system of internal control over financial reporting that
is designed to provide reasonable assurance that our books and records
accurately reflect the transactions of the Registrant and that our
policies and procedures are followed. There have been no changes in
our internal control over financial reporting during the third quarter
that have materially affected, or are reasonable likely to materially
affect such controls.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
None
Item 6. Exhibits
o Exhibit 31.1 Section 302 Certification for Herbert E. Jones, III
o Exhibit 31.2 Section 302 Certification for Robert R. McCoy
o Exhibit 99 Section 906 Certification for Herbert E. Jones, III,
and Robert R. McCoy.
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.
PITTSBURGH & WV RAILROAD
/s/Herbert E. Jones, III
Herbert E. Jones, III
President and Chairman of the Board of Trustees
Date: November 3, 2010
/s/Robert R. McCoy
Robert R. McCoy
Secretary and Treasurer
Date: November 3, 2010