Form 10-Q PROVIDENCE & WORCESTER For: Jun 30
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 June 30, 2016
o 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 incorporation or organization) |
I.R.S. Employer Identification No. |
|
|
75 Hammond Street, Worcester, Massachusetts |
01610 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code (508) 755-4000
(Former name, former address and former fiscal year, if changed since last report)
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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such fields). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
o |
|
Accelerated filer |
o |
Non-accelerated filer |
o |
|
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 o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 1, 2016, the registrant had 4,866,593 shares of common stock, par value $.50 per share, outstanding.
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Index to Quarterly Report on Form 10-Q
Part I – Financial Information
PROVIDENCE AND WORCESTER RAILROAD COMPANY
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2016 |
|
|
2015 |
|
||
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,607 |
|
|
$ |
6,281 |
|
Accounts receivable, net of allowance for doubtful accounts of $160 in 2016 and 2015 |
|
|
5,466 |
|
|
|
4,977 |
|
Materials and supplies |
|
|
1,208 |
|
|
|
911 |
|
Prepaid expenses and other current assets |
|
|
146 |
|
|
|
621 |
|
Total Current Assets |
|
|
15,427 |
|
|
|
12,790 |
|
Property and Equipment, net |
|
|
91,328 |
|
|
|
88,910 |
|
Land Held for Development |
|
|
12,457 |
|
|
|
12,457 |
|
Total Assets |
|
$ |
119,212 |
|
|
$ |
114,157 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,909 |
|
|
$ |
4,251 |
|
Current portion of long-term debt |
|
|
162 |
|
|
|
20 |
|
Current portion of deferred grant and other income |
|
|
433 |
|
|
|
319 |
|
Accrued expenses |
|
|
1,939 |
|
|
|
1,653 |
|
Total Current Liabilities |
|
|
8,443 |
|
|
|
6,243 |
|
Long-Term Debt, net of current portion |
|
|
4,828 |
|
|
|
980 |
|
Deferred Income Taxes |
|
|
13,126 |
|
|
|
13,602 |
|
Deferred Grant and Other Income |
|
|
13,283 |
|
|
|
12,714 |
|
Shareholders’ Equity: |
|
|
|
|
|
|
|
|
Preferred stock, 10% noncumulative, $50 par value; authorized, issued and outstanding 640 shares in 2016 and 2015 |
|
|
32 |
|
|
|
32 |
|
Common stock, $.50 par value; authorized 15,000,000 shares; issued and outstanding 4,866,593 shares in 2016 and 4,862,693 shares in 2015 |
|
|
2,433 |
|
|
|
2,432 |
|
Additional paid-in capital |
|
|
38,172 |
|
|
|
38,050 |
|
Retained earnings |
|
|
38,895 |
|
|
|
40,104 |
|
Total Shareholders’ Equity |
|
|
79,532 |
|
|
|
80,618 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
119,212 |
|
|
$ |
114,157 |
|
The accompanying notes are an integral part of the financial statements.
3
PROVIDENCE AND WORCESTER RAILROAD COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues |
|
$ |
8,600 |
|
|
$ |
9,516 |
|
|
$ |
15,823 |
|
|
$ |
16,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance of way and structures |
|
|
1,255 |
|
|
|
1,229 |
|
|
|
2,798 |
|
|
|
2,762 |
|
Maintenance of equipment |
|
|
961 |
|
|
|
945 |
|
|
|
2,058 |
|
|
|
1,707 |
|
Transportation |
|
|
2,314 |
|
|
|
2,659 |
|
|
|
4,605 |
|
|
|
5,451 |
|
General and administrative |
|
|
1,238 |
|
|
|
1,108 |
|
|
|
2,606 |
|
|
|
2,489 |
|
Depreciation |
|
|
1,046 |
|
|
|
880 |
|
|
|
2,005 |
|
|
|
1,757 |
|
Taxes, other than income taxes |
|
|
783 |
|
|
|
830 |
|
|
|
1,589 |
|
|
|
1,563 |
|
Car hire, net |
|
|
333 |
|
|
|
525 |
|
|
|
720 |
|
|
|
908 |
|
Employee retirement plans |
|
|
57 |
|
|
|
56 |
|
|
|
113 |
|
|
|
113 |
|
Track usage fees |
|
|
383 |
|
|
|
179 |
|
|
|
638 |
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
|
8,370 |
|
|
|
8,411 |
|
|
|
17,132 |
|
|
|
16,969 |
|
Income (loss) from operations |
|
|
230 |
|
|
|
1,105 |
|
|
|
(1,309 |
) |
|
|
(192 |
) |
Other income |
|
|
40 |
|
|
|
103 |
|
|
|
49 |
|
|
|
110 |
|
Interest expense |
|
|
25 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
Income (loss) from operations prior to income taxes |
|
|
245 |
|
|
|
1,208 |
|
|
|
(1,290 |
) |
|
|
(82 |
) |
Provision for income taxes |
|
|
60 |
|
|
|
435 |
|
|
|
(476 |
) |
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
|
185 |
|
|
|
773 |
|
|
|
(814 |
) |
|
|
(70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Dividends |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Common Shareholders |
|
$ |
185 |
|
|
$ |
773 |
|
|
$ |
(817 |
) |
|
$ |
(73 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
.04 |
|
|
$ |
.16 |
|
|
$ |
(0.17 |
) |
|
$ |
(0.01 |
) |
Diluted |
|
$ |
.04 |
|
|
$ |
.16 |
|
|
$ |
(0.17 |
) |
|
$ |
(0.01 |
) |
Weighted-Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For basic |
|
|
4,867 |
|
|
|
4,861 |
|
|
|
4,865 |
|
|
|
4,860 |
|
For diluted |
|
|
4,989 |
|
|
|
4,935 |
|
|
|
4,865 |
|
|
|
4,860 |
|
The accompanying notes are an integral part of the financial statements.
4
PROVIDENCE AND WORCESTER RAILROAD COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2016 |
|
|
2015 |
|
||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(814 |
) |
|
$ |
(70 |
) |
Adjustments to reconcile the net loss to cash flows from operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,005 |
|
|
|
1,757 |
|
Amortization of deferred grant and other income |
|
|
(489 |
) |
|
|
(471 |
) |
Deferred grant and other income |
|
|
398 |
|
|
|
445 |
|
Deferred income taxes |
|
|
(476 |
) |
|
|
(12 |
) |
Share-based compensation |
|
|
93 |
|
|
|
96 |
|
Increase (decrease) in cash from: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
285 |
|
|
|
709 |
|
Materials and supplies |
|
|
(297 |
) |
|
|
(91 |
) |
Prepaid expenses and other current assets |
|
|
475 |
|
|
|
472 |
|
Accounts payable and accrued expenses |
|
|
(153 |
) |
|
|
(400 |
) |
Net cash flows provided by operating activities |
|
|
1,027 |
|
|
|
2,435 |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(2,326 |
) |
|
|
(1,128 |
) |
Net cash flows used in investing activities |
|
|
(2,326 |
) |
|
|
(1,128 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(395 |
) |
|
|
(392 |
) |
Issuance of common shares for stock options exercised and employee stock purchases |
|
|
30 |
|
|
|
32 |
|
Proceeds from long term debt |
|
|
4,000 |
|
|
|
— |
|
Repayments on long term debt |
|
|
(10 |
) |
|
|
— |
|
Net cash flows provided by (used in) financing activities |
|
|
3,625 |
|
|
|
(360 |
) |
|
|
|
|
|
|
|
|
|
Increase in Cash and Cash Equivalents |
|
|
2,326 |
|
|
|
947 |
|
Cash and Cash Equivalents, Beginning of Period |
|
|
6,281 |
|
|
|
6,414 |
|
Cash and Cash Equivalents, End of Period |
|
$ |
8,607 |
|
|
$ |
7,361 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
310 |
|
|
$ |
448 |
|
Deferred grant income in accounts receivable |
|
$ |
774 |
|
|
$ |
- |
|
Property and equipment included in accounts payable |
|
$ |
2,097 |
|
|
$ |
570 |
|
The accompanying notes are an integral part of the financial statements.
5
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
2. |
Recent Accounting Pronouncements: |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. ASU 2014-09 anticipates companies using more judgment and estimates than under the current guidance. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09. ASU 2014-09 permits the use of retrospective application to period presented or a cumulative effect transition adjustment. The Company is currently evaluating the impact and method of implementing this new guidance on its financial statements and related disclosures.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which, effective for annual and interim reporting periods beginning after December 15, 2016, simplifies the presentation of deferred income taxes, requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. Since early application is permitted, the new standard has been applied in the Company’s financial statements as of December 31, 2015.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of our pending adoption of the new standard on our financial statements.
3. |
Changes in Shareholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
Total |
|
||
|
|
Preferred |
|
|
Common |
|
|
Paid-in |
|
|
Retained |
|
|
Shareholders’ |
|
|||||
|
|
Stock |
|
|
Stock |
|
|
Capital |
|
|
Earnings |
|
|
Equity |
|
|||||
Balance, December 31, 2015 |
|
$ |
32 |
|
|
$ |
2,432 |
|
|
$ |
38,050 |
|
|
$ |
40,104 |
|
|
$ |
80,618 |
|
Issuance of 1,905 common shares for stock options exercised, employee stock purchases, and other |
|
|
|
|
|
|
1 |
|
|
|
29 |
|
|
|
|
|
|
|
30 |
|
Share based compensation – options granted |
|
|
|
|
|
|
|
|
|
|
93 |
|
|
|
|
|
|
|
93 |
|
Dividends paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $5.00 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
|
(3 |
) |
Common stock, $.04 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(392 |
) |
|
|
(392 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(814 |
) |
|
|
(814 |
) |
Balance, June 30, 2016 |
|
$ |
32 |
|
|
$ |
2,433 |
|
|
$ |
38,172 |
|
|
$ |
38,895 |
|
|
$ |
79,532 |
|
6
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) — (Continued)
(Dollars in Thousands Except Per Share Amounts)
Revolving Line of Credit
The Company has a revolving line of credit facility in the amount of $5,000 from a commercial bank expiring on June 25, 2017. Borrowings under this line of credit are unsecured, due on demand and bear interest at either the bank's prime rate or one and three-quarters percent over the thirty, sixty or ninety day London Interbank Offered Rate ("LIBOR") with a LIBOR floor of one and one-quarter percent. The Company pays no commitment fee on this line of credit and has no compensating balance requirements. The Company is subject to financial and non-financial covenants including maintenance of a minimum net worth and restrictions as to the incurrence of additional indebtedness, as well as the sale or encumbrance of its assets. At June 30, 2016 and December 31, 2015, no amounts were outstanding.
Long-term Debt
The Company entered into a loan agreement with its commercial bank for $5 million in 2014, the majority of which was or will be utilized to rehabilitate four and replace one main line bridges. Once the rehabilitation and replacement are complete, the Company will have the ability to haul freight with a lading of 286,000 pounds on its main line from Worcester, MA to Davisville/Providence RI. As provided in the agreement, the loan requires payments of interest only for twelve months whereupon it converts to a ten year term loan with payments based upon a twenty year amortization. The loan will bear interest at 4.11% per annum for the life of the loan. The loan is unsecured and subjects the Company to certain financial and non-financial covenants, including the maintenance of certain tangible net worth levels. The Company drew down the remaining $4 million in April 2016.
Based upon amounts the Company currently has outstanding, the maturities of long-term debt are as follows:
2017 |
|
$ |
162 |
|
2018 |
|
$ |
169 |
|
2019 |
|
$ |
176 |
|
2020 |
|
$ |
183 |
|
2021 |
|
$ |
191 |
|
Thereafter |
|
$ |
4,109 |
|
5. |
Net Loss per Common Share: |
Basic income per common share is computed using the weighted-average number of common shares outstanding during each period. Diluted income per common share reflects the effect of the Company’s outstanding convertible preferred stock and stock options except where such items would be antidilutive.
A reconciliation of weighted-average shares used for the basic computation and that used for the diluted computation is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares for basic |
|
|
4,866,593 |
|
|
|
4,860,863 |
|
|
|
4,865,223 |
|
|
|
4,859,990 |
|
Dilutive effect of convertible preferred stock and stock options |
|
|
122,296 |
|
|
|
74,327 |
|
|
|
- |
|
|
|
- |
|
Weighted-average shares for diluted |
|
|
4,988,889 |
|
|
|
4,935,190 |
|
|
|
4,865,223 |
|
|
|
4,859,990 |
|
Options to purchase 103,465 and 67,063 shares of common stock were outstanding at June 30, 2016 and 2015, respectively. For the three month periods ended June 30, 2016 and 2015, 58,296 and 10,327 of outstanding options to purchase common shares were included in the computation of diluted earnings per share (EPS). For the six month period ended June 30, 2016 and 2015, no outstanding options were included as the effect would be antidilutive.
7
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) — (Continued)
(Dollars in Thousands Except Per Share Amounts)
Shares of preferred stock convertible into 64,000 shares of common stock were outstanding for the three and six-month periods ended June 30, 2016 and 2015. For the three month periods ended June 30, 2016 and 2015, the 64,000 shares were included in the calculation of diluted earnings per share. For the six month period ended June 30, 2016 and 2015, the 64,000 shares were not included in the calculation of diluted earnings per share as the effect would be antidilutive.
6. |
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.
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 to settle this suit in March 2006. This settlement covered investigation costs; not cleanup costs.
The Government has now selected a remedy for the Site and has indicated that it will negotiate with all of the PRPs at the site to take over and or pay for the cleanup. As it did before, the Company responded 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.
7. |
Amtrak Agreement |
On April 4, 2012, the Company and National Railroad Passenger Corporation (“Amtrak”) entered into the 2012 Settlement and Amendment Agreement (the “2012 Agreement”) which settles certain disputes between the parties and amends, in part, both an Agreement dated January 3, 1978 (the “1978 Agreement”) and an Agreement dated July 9, 1979 by and between Amtrak and the Company.
Pursuant to the Agreement, the Company received a credit for mileage travelled along the Northeast Corridor. The Company recognized the expense offset relative to Track Usage Fees as the expenses were incurred. As such, the Company did not record any related assets or liabilities relative to the mileage credit at the date of the settlement. The Company has recorded the following offsets to Track Usage expense. No credits remained outstanding as of June 30, 2016.
8
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) — (Continued)
(Dollars in Thousands Except Per Share Amounts)
|
Three Months Ended |
|
|
Six Months Ended |
|
|||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||
Mileage credit available |
|
$ |
- |
|
|
$ |
288 |
|
|
$ |
- |
|
|
$ |
418 |
|
Utilized |
|
|
- |
|
|
|
288 |
|
|
|
- |
|
|
|
418 |
|
Mileage credit remaining |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
8. |
Share-Based Compensation: |
In April 2015, the Company’s shareholders approved the Providence and Worcester Railroad Company 2015 Equity Incentive Plan (“Plan”), which replaced the Company’s non-qualified stock option plan (“SOP”). In January and April 2016, awards totaling 60,000 options and 70,500 restricted stock units (“RSU”) were issued under the Plan. The option awards vest in accordance with the term of the option agreements (mainly time vested over a 5 year period) and the RSUs are performance based. Each of the options and RSUs vest upon a change in control. Options issued but not exercised under both the SOP and the Equity Incentive Plan totaling 103,465 remain outstanding until they are either exercised or expire. |
On July 27, 2016, the Company declared a dividend of $.04 per share on its outstanding common stock payable August 24, 2016 to shareholders of record as of August 10, 2016.
9
PROVIDENCE AND WORCESTER RAILROAD COMPANY
ITEM 2-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. The following discussion should be read in conjunction with the Condensed Financial Statements and applicable notes to the Condensed Financial Statements, Item 1.
Critical Accounting Policies
The Securities and Exchange Commission (“SEC”) defines critical accounting policies as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
The Company’s significant accounting policies are described in Note 1 of the Notes to Financial Statements in its Annual Report on Form 10‑K. Not all of these significant accounting policies require management to make difficult, subjective or complex judgments or estimates. We continue to monitor our accounting policies to ensure proper application of current rules and regulations. There have been no significant changes to these policies as discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and during the first six months of 2016.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, including, without limitations, statements concerning the conditions in our industry and our operations, economic performance and financial condition, including, in particular, statements relating to our business and strategy. The words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe,” and other similar expressions are intended to identify forward-looking statements and information although not all forward-looking statements include these identifying words. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties.
In particular, our business might be affected by uncertainties affecting the railroad and transportation industry generally as well as the following, among other factors:
|
· |
general economic, financial and political conditions, including downturns affecting the railroad industry and credit markets; |
|
· |
our relationships with Class I railroads and other carriers; |
|
· |
legislative and regulatory developments by the Surface Transportation Board, Railroad Retirement Board or the Federal Railroad Administration; |
|
· |
our ability to comply with financial and non-financial covenants contained in our revolving line of credit and 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; and |
|
· |
our dependence upon our key customers, executives and other key employees and our ability to renegotiate our union contracts. |
Recent Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in
10
exchange for those goods or services. ASU 2014-09 anticipates companies using more judgment and estimates than under the current guidance. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09. ASU 2014-09 permits the use of retrospective application to period presented or a cumulative effect transition adjustment. The Company is currently evaluating the impact and method of implementing this new guidance on its financial statements and related disclosures.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which, effective for annual and interim reporting periods beginning after December 15, 2016, simplifies the presentation of deferred income taxes, requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. Since early application is permitted, the new standard has been applied in the Company’s financial statements as of December 31, 2015. Prior periods were not retrospectively adjusted.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.
The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of our pending adoption of the new standard on our financial statements.
Results of Operations
The following table sets forth the Company’s operating revenues, exclusive of rental operating revenues of $198 and $175 during the three months ended June 30, 2016 and 2015, respectively, and $372 and $346 during the six months ended June 30, 2016 and 2015, respectively, by category in dollars and as a percentage of operating revenues:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||||||||||||||||||
|
|
(In thousands, except percentages) |
|
|||||||||||||||||||||||||||||
Freight Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional carloads |
|
$ |
7,958 |
|
|
|
94.7 |
% |
|
$ |
8,497 |
|
|
|
91.0 |
% |
|
$ |
14,366 |
|
|
|
93.0 |
% |
|
$ |
14,981 |
|
|
|
91.2 |
% |
Containers |
|
|
166 |
|
|
|
2.0 |
|
|
|
318 |
|
|
|
3.4 |
|
|
|
361 |
|
|
|
2.3 |
|
|
|
619 |
|
|
|
3.8 |
|
Other freight related |
|
|
134 |
|
|
|
1.6 |
|
|
|
233 |
|
|
|
2.5 |
|
|
|
341 |
|
|
|
2.2 |
|
|
|
413 |
|
|
|
2.5 |
|
Other Operating Revenues |
|
|
144 |
|
|
|
1.7 |
|
|
|
293 |
|
|
|
3.1 |
|
|
|
383 |
|
|
|
2.5 |
|
|
|
419 |
|
|
|
2.5 |
|
Total |
|
$ |
8,402 |
|
|
|
100.0 |
% |
|
$ |
9,341 |
|
|
|
100.0 |
% |
|
$ |
15,451 |
|
|
|
100.0 |
% |
|
$ |
16,432 |
|
|
|
100.0 |
% |
11
The following table sets forth a comparison of the Company’s operating expenses expressed in dollars and as a percentage of operating revenues, exclusive of rental operating revenues:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
||||||||||||||||||||
|
|
(In thousands, except percentages) |
|
|||||||||||||||||||||||||||||
Salaries, wages, payroll taxes and employee benefits |
|
$ |
4,166 |
|
|
|
49.6 |
% |
|
$ |
3,954 |
|
|
|
42.4 |
% |
|
$ |
8,362 |
|
|
|
54.1 |
% |
|
$ |
8,039 |
|
|
|
48.9 |
% |
Casualties and insurance |
|
|
329 |
|
|
|
3.9 |
|
|
|
371 |
|
|
|
4.0 |
|
|
|
697 |
|
|
|
4.5 |
|
|
|
899 |
|
|
|
5.5 |
|
Depreciation |
|
|
1,046 |
|
|
|
12.4 |
|
|
|
880 |
|
|
|
9.4 |
|
|
|
2,005 |
|
|
|
13.0 |
|
|
|
1,757 |
|
|
|
10.7 |
|
Diesel fuel |
|
|
424 |
|
|
|
5.0 |
|
|
|
833 |
|
|
|
8.9 |
|
|
|
888 |
|
|
|
5.7 |
|
|
|
1,575 |
|
|
|
9.6 |
|
Car hire, net |
|
|
333 |
|
|
|
4.0 |
|
|
|
525 |
|
|
|
5.6 |
|
|
|
720 |
|
|
|
4.7 |
|
|
|
908 |
|
|
|
5.5 |
|
Purchased services, including legal and professional fees |
|
|
733 |
|
|
|
8.7 |
|
|
|
630 |
|
|
|
6.7 |
|
|
|
1,288 |
|
|
|
8.3 |
|
|
|
1,172 |
|
|
|
7.1 |
|
Repair and maintenance of equipment |
|
|
416 |
|
|
|
5.0 |
|
|
|
339 |
|
|
|
3.6 |
|
|
|
887 |
|
|
|
5.7 |
|
|
|
543 |
|
|
|
3.3 |
|
Track and signal materials |
|
|
825 |
|
|
|
9.8 |
|
|
|
189 |
|
|
|
2.0 |
|
|
|
1,049 |
|
|
|
6.8 |
|
|
|
416 |
|
|
|
2.5 |
|
Track usage fees |
|
|
383 |
|
|
|
4.6 |
|
|
|
467 |
|
|
|
5.0 |
|
|
|
638 |
|
|
|
4.1 |
|
|
|
637 |
|
|
|
3.9 |
|
Other materials and supplies |
|
|
358 |
|
|
|
4.3 |
|
|
|
430 |
|
|
|
4.6 |
|
|
|
795 |
|
|
|
5.1 |
|
|
|
816 |
|
|
|
5.0 |
|
Other |
|
|
459 |
|
|
|
5.5 |
|
|
|
704 |
|
|
|
7.6 |
|
|
|
1,169 |
|
|
|
7.6 |
|
|
|
1,505 |
|
|
|
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
9,472 |
|
|
|
112.8 |
|
|
|
9,322 |
|
|
|
99.8 |
|
|
|
18,498 |
|
|
|
119.6 |
|
|
|
18,267 |
|
|
|
111.1 |
|
Less capitalized and recovered costs, including amounts relating to the Amtrak Agreement |
|
|
1,102 |
|
|
|
13.1 |
|
|
|
911 |
|
|
|
9.7 |
|
|
|
1,366 |
|
|
|
8.8 |
|
|
|
1,298 |
|
|
|
7.9 |
|
Total |
|
$ |
8,370 |
|
|
|
99.7 |
% |
|
$ |
8,411 |
|
|
|
90.1 |
% |
|
$ |
17,132 |
|
|
|
110.6 |
% |
|
$ |
16,969 |
|
|
|
103.2 |
% |
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
Operating Revenues:
Operating revenues decreased by $900 thousand, or 5.4%, to $15.5 million in the six months ended June 30, 2016 from $16.4 million in 2015. This decrease is the result of a $615 thousand (4.1%) decrease in revenue from conventional carloads, a $258 thousand (41.6%) decrease in container freight revenues, a $72 thousand (17.4%) decrease in other freight related revenues, and a $36 thousand (8.5%) decrease in other operating revenues.
The decrease in conventional freight revenues is attributable to a 5.1% decrease in traffic volume, offset in part by a 1.0% increase in the average revenue received per conventional carload. The Company’s conventional carloads decreased by 909 to 16,907 in the first six months of 2016 from 17,816 in 2015.
The number of shipments of most commodities handled by the Company decreased. The majority of the decrease was attributable to shipments of automobiles, plastics, metal and construction products, and other commodities. This decrease was offset, in part, by increases in shipments of chemicals (including ethanol). The increase in the average revenue received per conventional carload is due to a shift of the mix of commodities, the origin of the shipments, as well as some rate changes.
The decrease in container freight revenues is mainly the result of a 42.3% decrease in traffic volume. Container traffic volume decreased by 3,718 containers to 5,068 containers in the first six months of 2016 from 8,786 containers in 2015 as a result of more international freight being transloaded at the west coast ports to domestic containers.
The decrease in other freight-related revenues results from decreases in miscellaneous operating revenue while the decrease in other operating revenues reflects a decrease in maintenance department billings for services rendered to freight customers and other outside parties.
Operating Expenses:
Operating expenses for the six-month period ended June 30, 2016 increased by $160 thousand, or 0.9%, to $17.13 million from $16.97 million in 2015. The increase is attributable mainly to increases in payroll related expense ($323 thousand), depreciation expense ($248 thousand), purchased services ($116 thousand), repairs and maintenance expense ($344 thousand) and track and signal materials ($633 thousand). These increases were offset in part by decreases in casualty related expense ($202 thousand), diesel fuel expense
12
($687 thousand), car hire expense ($188 thousand), and other expenses ($336 thousand). The decrease in recovered costs was attributable to less works performed by the Company’s Maintenance of Way department for various state agencies.
Provision for Income Taxes (Benefit):
The income tax benefit for the first six months of 2016 and 2015 is equal to (36.8%) and (14.6%) of the pre-tax loss, resulting principally from the amounts of pre-tax loss for the periods ended. The income tax rate for 2015 represents the effective tax benefit, absent any changes to the valuation allowance against the Company’s deferred tax assets.
Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
Operating Revenues:
Operating revenues in the second quarter of 2016 decreased by $900 thousand, or 9.6%, to $8.4 million from $9.3 million in the second quarter of 2015.
The Company’s conventional carloads decreased by 1,083 (10.0%) to 9,697 in the second quarter of 2016 from 10,780 in 2015. The majority of the decrease was attributable to shipments of automobiles, plastics, metal and construction products, and other commodities. This decrease was offset, in part, by increases in shipments of chemicals (including ethanol). The increase in the average revenue received per conventional carload is due to a shift of the mix of commodities, the origin of the shipments, as well as some rate changes.
The decrease in container freight revenues is mainly the result of a 48.5% decrease in traffic volume. Container traffic volume decreased by 2,172 containers to 2,303 containers in the second quarter of 2016 from 4,475 containers in 2015. The reason for the decrease is as previously discussed for the six months ended June 30, 2016.
The decrease in other freight-related revenues results from decreases in miscellaneous operating revenue while the decrease in other operating revenues reflects a decrease in maintenance department billings for services rendered to freight customers and other outside parties.
Operating Expenses:
Operating expenses for the second quarter of 2016 decreased by $40 thousand, or 0.4%, to $8.37 million from $8.41 million in the second quarter of 2015. The decrease is attributable mainly to decreases in diesel fuel expense ($409 thousand), car hire expense ($192 thousand), and other expenses ($245 thousand). These decreases were offset in part by increases in payroll related expense ($212 thousand), depreciation expense ($166 thousand), purchased services ($103 thousand), and track and signal material expenses ($636). The decrease in recovered costs was attributable to less works performed by the Company’s Maintenance of Way department for various state agencies..
Provision for Income Taxes:
The income tax provision for the three month period ended June 30, 2016 and 2015 is equal to approximately 24.4% and 36.0% respectively of pre-tax income. The income tax rate for 2016 represents the effective tax benefit which the Company expects. The income tax rate for 2015 represents the effective tax benefit, absent any changes to the valuation allowance against the Company’s deferred tax assets.
Liquidity and Capital Resources
During the six months ended June 30, 2016, the Company generated $1.0 million of cash from operating activities, used $2.3 million in investing activities, and generated $3.6 million from financing activities.
On July 27, 2016, the Company declared a quarterly dividend of approximately $195 thousand ($.04 per common share) to be paid on August 24, 2016. The declaration of future dividends and the amount thereof will depend on the Company’s future earnings, financial factors and other events
The Company entered into a loan agreement with its commercial bank for $5 million in 2014, the majority of which was or will be utilized to rehabilitate four and replace one main line bridges. Once the rehabilitation and replacement are complete, the Company will have the ability to haul freight with a lading of 286,000 pounds on its main line from Worcester, MA to Davisville/Providence RI. As
13
provided in the agreement, the loan requires payments of interest only for twelve months whereupon it converts to a ten year term loan with payments based upon a twenty year amortization. The loan will bear interest at 4.11% per annum for the life of the loan. The loan is unsecured and subjects the Company to certain financial and non-financial covenants, including the maintenance of certain tangible net worth levels. The Company drew down the remaining $4 million in April 2016.
The Company’s $5 million revolving credit line expires on June 25, 2017.
Item 4. Controls and Procedures
Our management with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a–15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There was no significant change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting. The Company continues to enhance its internal controls over financial reporting, primarily by evaluating and enhancing process and control documentation. Management discusses with and discloses these matters to the Audit Committee of the Board of Directors and the Company’s auditors.
14
(a)Reports on Form 8-K were appropriately filed during the quarter ended June 30, 2016.
|
4.1 |
Notice of long-term debt of the Company that is less than 10% of the assets of the Company |
|
10.7 |
Restricted Stock Unit Award Agreement – Officers |
|
10.8 |
2015 Equity Incentive Plan Non-qualified Stock Option Agreement – Officers |
|
10.9 |
2015 Equity Incentive Plan Non-qualified Stock Option Agreement - Directors |
|
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 June 30, 2016, filed with the Securities and Exchange Commission on August 12, 2016, formatted in eXtensible Business Reporting Language: |
|
(i) |
Balance Sheets as of June 30, 2016 and December 31, 2015; |
|
(ii) |
Statements of Operations for the Three Months and Six Months ended June 30, 2016 and 2015; |
|
(iii) |
Statements of Cash Flows for the Six Months ended June 30, 2016 and 2015; and |
|
(iv) |
Notes to Financial Statements. |
15
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.
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PROVIDENCE AND WORCESTER |
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RAILROAD COMPANY |
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By: |
/s/ Robert H. Eder |
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Robert H. Eder |
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Chairman of the Board and Chief Executive Officer |
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By: |
/s/ Daniel T. Noreck |
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Daniel T. Noreck |
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Treasurer and Chief Financial Officer |
DATED: August 11, 2016
16
EXHIBIT 4.1
August 11, 2016
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
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Re: |
Providence and Worcester Railroad Company – Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016 |
Ladies and Gentlemen:
Providence and Worcester Railroad Company, a Rhode Island corporation (the “Registrant”), is today filing its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016 (the “Form 10-Q”).
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of certain long-term debt obligations of the Registrant under which the total amount of long-term debt authorized does not exceed ten percent (10%) of the total assets of the Registrant and its subsidiaries on a consolidated basis are not filed with the 10-Q. In accordance with the provisions of Item 601(b)(4)(iii) of Regulation S-K, the Registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each such instrument or agreement.
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Very truly yours, |
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PROVIDENCE AND WORCESTER RAILROAD COMPANY |
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/s/ Daniel T. Noreck |
Name: Daniel T. Noreck |
Title: Treasurer and Chief Financial Officer |
EXHIBIT 10.7
PROVIDENCE AND WORCESTER RAILROAD COMPANY
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Restricted Stock Unit Award Agreement (“Agreement”) is by and between PROVIDENCE AND WORCESTER RAILROAD COMPANY, a Rhode Island corporation with an office at 75 Hammond Street, Worcester, Massachusetts 01610 (the “Company”) and ________________ (the “Grantee”). Capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning as set forth in the Providence and Worcester Railroad Company 2015 Equity Incentive Plan (the “Plan”).
W I T N E S S E T H:
WHEREAS, the Company and the Grantee entered into a Restricted Stock Agreement dated January 18, 2016 (the “Original Award Agreement”) pursuant to which the Company granted _____ shares of Restricted Stock to the Grantee pursuant to the terms and conditions thereof;
WHEREAS, the award granted to the Grantee pursuant to the Original Award Agreement was intended to be in the form of Restricted Stock Units (as was reported in the Form 4 of the Grantee filed with the Securities and Exchange Commission) rather than Restricted Stock;
WHEREAS, in order to accurately reflect the foregoing, the Company and the Grantee seek to amend and restate the Original Award Agreement to provide for the grant of Restricted Stock Units, instead of Restricted Stock, upon the terms and conditions of this Agreement; and
WHEREAS, this Agreement shall replace the Original Award Agreement entirely.
NOW, THEREFORE, for the mutual promises contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Grantee hereby agree as follows:
1.Grant of Restricted Stock Units. Pursuant to the provisions of the Plan, on January 18, 2016 (the “Grant Date”), the Company awarded to the Grantee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein, __________ Restricted Stock Units (the “Restricted Stock Units”) to be earned and vest as set forth in Section 2(b).
2.Terms and Conditions. In addition to the terms and conditions contained in the Plan, it is understood and agreed that the grant of Restricted Stock Units evidenced hereby is subject to the following additional terms and conditions:
(a)Performance Goals and Vesting. The Restricted Stock Units shall be earned upon the Company achieving at least a 1% reduction in its Operating Ratio (as hereinafter defined) (the “Annual Performance Metric”) as compared to the prior Fiscal Year each (as hereinafter defined)
year during the five Fiscal Years commencing with Fiscal Year 2016; provided, however, that if in any Fiscal Year the Company fails to achieve the Annual Performance Metric and in a subsequent Fiscal Year it achieves an improvement in its Operating Ratio which brings the aggregate improvement in its Operating Ratio for all Fiscal Years commencing after December 31, 2015 to an amount equal to or greater than the product of one and the number of completed Fiscal Years occurring after December 31, 2015, then there shall vest a number of Restricted Stock Units equal to the number of shares to be vested for such Fiscal Year and each prior completed Fiscal Year to the extent then unvested. For each Fiscal Year in which the Company achieves an Annual Performance Metric, the number of Restricted Stock Units which will vest are as follows (each a “Vesting Date”):
Fiscal Year Number of Shares
2016 [10%]
2017 [10%]
2018 [20%]
2019 [30%]
2020 [30%]
Notwithstanding the foregoing, if for any Fiscal Year commencing in 2016 the Company shall achieve in such year, when combined with all prior Fiscal Years, a 5% aggregate reduction in its Operating Ratio as compared to its Operating Ratio for Fiscal Year 2015, then all Restricted Stock Units shall be earned and vest immediately.
For purposes of this Agreement,
“Fiscal Year” means the twelve month period commencing on January 1 and ending on the following December 31.
“Operating Ratio” means, as determined by the Committee for any Fiscal Year, the percentage resulting from dividing Railroad Operating Expenses by Railroad Operating Revenues for such Fiscal Year.
“Railroad Operating Expenses” means in any Fiscal Year as determined by the Committee and reported on the Company’s Form 10-K as filed with the United States Securities and Exchange Commission all expenses incurred in operating its railroad but excluding any tax credits such as those allowed by Section 45G of the Code, and any settlements with third parties (other than States and Federal agencies providing grants in aid of railroad construction) which pursuant United States Generally Accepted Accounting Principles are treated as a reduction in operating expenses.
“Railroad Operating Revenues” means, as determined by the Committee and as reported on the Company’s Form 10-k as filed with the United States Securities and Exchange Commission, the total revenue from railroad operations, excluding rental revenue to the extent included therein.
Upon determination by the Committee of the Operating Ratio for the 2020 Fiscal Year, all Restricted Stock Units which do not vest as a result of such determination, or have not previously vested, shall be forfeited.
(c)Issuance of Shares. As soon as practicable after a Vesting Date, and consistent with Section 409A of the Code, the Company shall issue and deliver to the Grantee, or the Grantee’s beneficiary or estate as the case may be, certificates for the number of shares of Stock equal to the number of Restricted Stock Units which have vested. The number of shares delivered shall be net of the number of shares withheld, if any, pursuant to Section 6.
If the Grantee is deemed a "specified employee" within the meaning of Section 409A of the Code, as determined by the Committee, at a time when the Grantee becomes eligible for settlement of the Restricted Stock Units upon his "separation from service" within the meaning of Section 409A of the Code, then to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code, such settlement will be delayed until the earlier of: (a) the date that is six months following the Grantee's separation from service and (b) the Grantee's death.
(d)Fractional Shares. The Company shall not be required to deliver any fractional shares of Stock, but will pay in lieu thereof the fair market value (determined as the applicable Vesting Date) of the fractional share to which the Grantee or the Grantee’s beneficiary or estate, as the case may be, is entitled. No payment will be required from the Grantee upon the issuance or delivery of any Restricted Stock Units except that any amount necessary to satisfy applicable federal, state or local tax requirements shall be withheld or paid promptly upon notification of the amount due and prior to or concurrently with the issuance or delivery of a certificate representing such shares.
(e)Forfeiture. In the event of the termination of Grantee’s employment with the Company for any reason, those Restricted Stock Units which have not vested as provided in Section 2(b) hereof shall be forfeited. An employment relationship between the Company and the Grantee shall be deemed to exist during any period in which the Grantee is employed by the Company or any parent or subsidiary of the Company. Whether authorized leave of absence, or absence on military or government service, shall constitute termination of the employment relationship between the Company and the Grantee shall be determined by the Committee at the time thereof.
(f)Change in Control.In the event of a Change in Control (as defined in the Plan), the provisions of Section 12.3 shall govern the Restricted Stock Units granted under this Agreement.
(g)Nontransferability. None of the Restricted Stock Units may be sold, transferred or assigned, pledged or otherwise encumbered or disposed prior to vesting except as set forth in the Plan.
(h)Share Adjustments. In the event of any change in the Stock of the Company by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or any rights offering to purchase share of Stock at a price substantially below fair market value, or of any similar change affecting the Stock, then the Committee shall, in accordance with the terms and provisions of the Plan, make or provide for such adjustments to the number and kind of shares subject hereto as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights granted to the Grantee hereunder. Any adjustment so made shall be final and binding upon the Grantee.
(i)Rights As a Shareholder. The Grantee shall not have any rights of a shareholder of the Company holding shares of Stock, unless and until the Restricted Stock Units vest and are settled by the issuance of such shares of Stock. Notwithstanding the foregoing, with respect to any vested Restricted Stock Units, the Grantee shall have the right to participate in any dividend of the Stock that has a record date on or after the applicable Vesting Date.
(j)Effect Upon Employment and Benefits. By accepting the Restricted Stock Units, the Grantee acknowledges, understands, and agrees that: (i) the Plan is established voluntarily by the Company, is discretionary in nature, and may be modified, amended, suspended or terminated by the Company at any time; (ii) the grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future restricted stock units, or benefits in lieu of restricted stock units, even if Restricted Stock Units have been granted repeatedly in the past; (iii) all decisions with respect to future awards, if any, will be at the sole discretion of the Company; (iv) the Grantee’s acceptance of the Restricted Stock Units and participation under the Plan is voluntary; (v) the Grantee’s participation in the Plan shall not create a right to further employment with the Company and shall not interfere with the ability of the Company to terminate the Grantee’s employment at any time subject to any terms and conditions of any employment agreement between the Company and the Grantee, if any; (vi) the grant of the Restricted Stock Units and the Grantee’s participation in the Plan shall not be interpreted to form an employment contract or relationship with the Company or any affiliate; and (vii) subject to any rights of the Grantee under any employment agreement, no claim or entitlement to compensation or damages shall arise from forfeiture of any portion of the Restricted Stock Units resulting from termination of the Grantee’s employment by the Company (for any reason whatsoever and regardless of whether in breach of local labor laws) (“Forfeiture Claim”) and, in consideration of the grant of the Restricted Stock Units, the Grantee irrevocably agrees never to institute any claim against the Company, waives the Grantee’s ability, if any, to bring any such Forfeiture Claim, and releases the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Grantee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim.
(k)Compliance with Laws and Regulations. The obligation of the Company to deliver shares hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Stock prior to (i) the listing of such shares on any stock exchange on which the Stock may then be listed, and (ii) the completion of any registration or qualification of such shares under any federal or state law, or any rule or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable.
3.Investment Representation. The Committee may require the Grantee to furnish to the Company, prior to the issuance of any shares of Stock, an agreement (in such form as the
Committee may specify) in which the Grantee represents that the shares of Stock acquired by the Grantee are being acquired for investment and not with a view to the sale or distribution thereof.
4.Grantee Bound by Plan. The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
5.Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of non-compliance with Section 409A of the Code.
6.Withholding Taxes. Grantee acknowledges and agrees that, upon vesting, the Company shall have the right to withhold from the distribution of the shares of Stock to the Grantee, in order to meet the Company’s obligations for the payment of withholding taxes, Stock with a Fair Market Value (as defined in the Plan) equal to the minimum statutory withholding for taxes (including federal and state income taxes and payroll taxes applicable to the supplemental taxable income relating to such distribution) and any other tax liabilities for which the Company has an obligation relating to such distribution. Any shares of Stock withheld in accordance with this Section 6 shall be treated as if issued and sold by the Grantee when determining any share retention requirements applicable to the Grantee under the share ownership and/or retention guidelines of the Company.
7.Notices. Any notice hereunder to the Company shall be addressed to Providence and Worcester Railroad Company, 75 Hammond Street, Worcester, Massachusetts, 01610, Attn: General Counsel and any notice hereunder to the Grantee shall be addressed to the Grantee at the address reflected on the payroll records of the Company, subject to the right of either party to designate at any time hereafter in writing some other address.
8.Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties, and supersede all prior agreements and understandings, relating to the subject matter of this Agreement, including without limitation the Original Award Agreement.
9.Rhode Island Law to Govern. This Agreement shall be construed and administered in accordance with and governed by the laws of the State of Rhode Island.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Grantee has executed this Agreement as of this ___________.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By:___________________________
Name:
Title:
GRANTEE
By:___________________________
Name:
Restricted Stock Unit Award – Number of Shares
Name |
Restricted Stock Units |
P. Scott Conti |
12,000 |
Frank K. Rogers |
10,500 |
Charles D. Rennick |
10,500 |
Daniel T. Noreck |
10,500 |
TOTAL |
43,500 |
EXHIBIT 10.8
PROVIDENCE AND WORCESTER RAILROAD COMPANY
2015 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This Non-Qualified Stock Option Agreement (“Agreement”) is by and between PROVIDENCE AND WORCESTER RAILROAD COMPANY, a Rhode Island corporation with an office at 75 Hammond Street, Worcester, Massachusetts 01610 (the “Company”) and _________________________, the Company’s _______________________ (the “Optionee”).
W I T N E S S E T H:
1.Grant of Option. Pursuant to the provisions of the Providence and Worcester Railroad Company 2015 Equity Incentive Plan dated April 30, 2015 (the “Plan”), effective _______________________ (“Grant Date”), the Company granted to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein, the right and option to purchase from the Company all or any part of an aggregate of __________ shares of the common stock ($.50 par value) of the Company (“Common Shares”), at a purchase price equal to $___________ per share, being the fair market value of the Common Shares on the Grant Date, such option to be exercised as hereinafter provided. It is intended that the option evidenced hereby constitute a non-qualified stock option. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning as set forth in the “Plan.”
2.Terms and Conditions. In addition to the terms and conditions contained in the Plan, it is understood and agreed that the option evidenced hereby is subject to the following additional terms and conditions:
(a)Expiration Date. The option shall expire __________________.
(b)Period of Exercise. Subject to the other terms of this Agreement regarding the exercisability of this option, this option shall become exercisable in cumulative installments in accordance with the following schedule:
Number of Shares
On or After Exercisable
(c)Exercise of Option. This option shall be exercised by submitting a written notice to the Committee appointed pursuant to Section 3.1 of the Plan (the “Committee”) or such other delegate or designee as the Committee may identify signed by the Optionee and specifying the number of Common Shares as to which the option is being exercised. Such notice shall be
accompanied by the payment of the full option price for such shares. Payment shall be made either (i) in cash, by check or cash equivalent, or (ii) subject to the approval of the Committee, by payment in already owned shares of Common Shares (to the extent permitted by law), which shall be valued for this purpose at the fair market value on the date of transfer to the Company as determined in accordance with the Plan, or (iii) subject to the approval of the Committee, by such other consideration as may be acceptable to the Committee, or (iv) a combination of all three methods. Options may also be exercised in accordance with a cashless exercise program (through broker accommodation), if any, established by the Committee.
(d)Termination of Employment or Death of Optionee. Except as may be otherwise expressly provided herein, any portion of the option which is not exercisable on the date of Optionee’s termination from employment with the Company shall immediately terminate and any remaining portion of the option evidenced hereby shall terminate on the earlier of:
(i)the date of expiration as provided in Section 2(a) hereof;
(ii)the date of termination of the Optionee’s employment with or services to the Company by it for Cause (as defined in the Plan);
(iii)thirty (30) days after the date of termination of the Optionee’s employment with or services to the Company voluntarily by the Optionee;
(iv)ninety (90) days after the date of termination of the Optionee’s employment with or services to the Company by it without Cause;
(v)one (1) year after the date of termination of the Optionee’s employment with or services to the Company resulting from retirement from active employment at or after age 65, as determined by the Committee in its good faith discretion; or
(vi)on the date the Optionee accepts employment with any person, firm or corporation whose business in the sole opinion of the Committee competes with the then business of the Company.
An employment relationship between the Company and the Optionee shall be deemed to exist during any period in which the Optionee is employed by the Company or any parent or subsidiary of the Company. Whether authorized leave of absence, or absence on military or government service, shall constitute termination of the employment relationship between the Company and the Optionee shall be determined by the Committee at the time thereof.
In the event of the death or Disability (as defined in the below) of the Optionee prior to termination of the Optionee’s employment with or services to the Company and before the date of expiration of such option, the Optionee, or the Optionee’s legal representatives or persons who acquired the Optionee’s rights hereunder by will or by the laws of descent and distribution
(“Survivor”), may exercise such option to the extent exercisable but not exercised prior thereto; provided, however, that such option shall terminate on the earlier of such date of expiration as provided in Section 2(a) hereof or one year following the date of such death or Disability.
For purposes of this Agreement, a “Disability” shall be deemed to have occurred upon a determination from the Company’s long term disability insurance carrier that the Optionee is disabled and entitled to receive benefits under the Company’s Long Term Disability Insurance Plan.
(e)Change in Control.In the event of a Change in Control (as defined in the Plan), the provisions of Section 12.1 of the Plan shall govern the options granted pursuant to this Agreement.
(f)Non-Transferability. This option and all rights hereunder shall be exercisable during the Optionee’s lifetime only by the Optionee and shall be non-assignable and non-transferable by the Optionee except, in the event of the Optionee’s death, by Optionee’s will or by the laws of descent and distribution. In the event the death of the Optionee occurs, the designated beneficiary (as defined in Section 2.1 of the Plan) or, if a designated beneficiary has not been designated, the legal representative of the estate, may exercise this option prior to the expiration of the applicable exercise period, as specified in Paragraph 2(d) above.
(g)Share Adjustments. In the event of any change in the Common Shares of the Company by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or any rights offering to purchase Common Shares at a price substantially below fair market value, or of any similar change affecting the Common Shares, then the Committee shall, in accordance with the terms and provisions of the Plan, make or provide for such adjustments to the number and kind of shares subject to this option and their purchase price per share as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Optionee hereunder. Any adjustment so made shall be final and binding upon the Optionee.
(h)No Rights as Shareholder. The Optionee shall have no rights as a shareholder with respect to any Common Shares subject to this option prior to the date of issuance to the Optionee of a certificate or certificates for such shares.
(i)No Right to Continued Employment. This option shall not confer upon the Optionee any right with respect to continuance of employment by the Company or any subsidiary, nor shall it interfere in any way with the right of Optionee’s employer to terminate Optionee’s employment at any time.
(j)Compliance with Law and Regulations. This option and the obligation of the Company to sell and deliver shares hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may
be required. The Company shall not be required to issue or deliver any certificates for shares of Common Shares prior to (i) the listing of such shares on any stock exchange on which the Common Shares may then be listed, and (ii) the completion of any registration or qualification of such shares under any federal or state law, or any rule or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Moreover, this option may not be exercised if its exercise, or the receipt of Common Shares pursuant thereto, would be contrary to applicable law.
3.Investment Representation. The Committee may require the Optionee to furnish to the Company, prior to the issuance of any shares upon the exercise of all or any part of this option, an agreement (in such form as such Committee may specify) in which the Optionee represents that the shares acquired by the Optionee upon exercise are being acquired for investment and not with a view to the sale or distribution thereof.
4.Optionee Bound by Plan. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
5.Withholding Taxes. Optionee acknowledges and agrees that the Company and its subsidiaries have the right to deduct from payments of any kind otherwise due to Optionee any federal, state or local taxes of any kind required by law to be withheld with respect to the exercise of this option hereunder.
6.Notices. Any notice hereunder to the Company shall be addressed to Providence and Worcester Railroad Company, 75 Hammond Street, Worcester, Massachusetts, 01610, Attn: General Counsel and any notice hereunder to the Optionee shall be addressed to the Optionee at the address reflected on the payroll records of the Company, subject to the right of either party to designate at any time hereafter in writing some other address.
7.Rhode Island Law to Govern. This Agreement shall be construed and administered in accordance with and governed by the laws of the State of Rhode Island.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Optionee has executed this Agreement as of _________________.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By:___________________________
Name:
Title:
OPTIONEE
By:___________________________
Name:
2015 Equity Incentive Plan – Number of Shares – Officers
Name |
Stock Options |
P. Scott Conti |
8,000 |
Frank K. Rogers |
7,000 |
Charles D. Rennick |
7,000 |
Daniel T. Noreck |
7,000 |
TOTAL |
29,000 |
EXHIBIT 10.9
PROVIDENCE AND WORCESTER RAILROAD COMPANY
2015 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
GRANTED TO |
Number of Shares Granted |
Price Per Share |
Social Security Number |
____________ |
____________ |
$_____ |
____________ |
|
|
|
|
|
Grant |
Expiration |
|
|
Date |
Date |
|
(“Optionee”) |
____________ |
____________ |
|
This Non-Qualified Stock Option Agreement (“Agreement”) is by and between PROVIDENCE AND WORCESTER RAILROAD COMPANY, a Rhode Island corporation with an office at 75 Hammond Street, Worcester, Massachusetts 01610 (the “Company”) and Optionee.
W I T N E S S E T H:
1.Grant of Option. Pursuant to the provisions of the Providence and Worcester Railroad Company 2015 Equity Incentive Plan dated April 30, 2015 (the “Plan”), effective ____________ (“Grant Date”), the Company granted to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein, the right and Option to purchase from the Company all or any part of ____________ shares of the common stock ($.50 par value) of the Company (“Common Shares”), at a purchase price equal to $___________ per share, being the fair market value of the Common Shares on the Grant Date, such Option to be exercised as hereinafter provided. It is intended that the Option evidenced hereby constitutes a non-qualified stock option. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meaning as set forth in the “Plan.”
2.Terms and Conditions. In addition to the terms and conditions contained in the Plan, it is understood and agreed that the Option evidenced hereby is subject to the following additional terms and conditions:
(a)Expiration Date. The Option shall expire on ____________.
(b)Period of Exercise. Subject to the other terms of this Agreement regarding the exercisability of this Option, this Option shall not become exercisable until immediately prior to the ____________ Annual Meeting.
(c)Exercise of Option. This Option shall be exercised by submitting a written notice to the Committee appointed pursuant to Section 3.1 of the Plan (the “Committee”) or such other delegate or designee as the Committee may identify signed by the Optionee and specifying the number of Common Shares as to which the Option is being exercised. Such notice shall be accompanied by the payment of the full Option price for such shares. Payment shall be made either (i) in cash, by check or cash equivalent, or (ii) subject to the approval of the Committee, by payment in already owned shares of Common Shares (to the extent permitted by law), which shall be valued for this purpose at the fair market value on the date of transfer to the Company as determined in accordance with the Plan, or (iii) subject to the approval of the Committee, by such other consideration as may be acceptable to the Committee, or (iv) a combination of all three methods. Options may also be exercised in accordance with a cashless exercise program (through broker accommodation), if any, established by the Committee.
(d)Termination of Directorship or Death of Optionee. Except as may be otherwise expressly provided herein, any portion of the Option which is not exercisable on the date of Optionee’s termination from Directorship with the Company shall immediately terminate and any remaining portion of the Option evidenced hereby shall terminate on the earlier of:
(i)the date of expiration as provided in Section 2(a) hereof;
(ii) twenty-four (24) months after the date of termination of the Optionee’s directorship with the Company by reason of failure to be re-elected to the Board of Directors, resignation or otherwise, with the exception of death or Disability;
In the event of the death or Disability (as defined in the below) of the Optionee prior to termination of the Optionee’s directorship with or services to the Company and before the date of expiration of such option, the Optionee, or the Optionee’s legal representatives or persons who acquired the Optionee’s rights hereunder by will or by the laws of descent and distribution (“Survivor”), may exercise such option to the extent exercisable but not exercised prior thereto; provided, however, that such option shall terminate on the earlier of such date of expiration as provided in Section 2(a) hereof or twenty-four (24) months following the date of such death or Disability.
For purposes of this Agreement, “Disability” shall mean permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(e)Change in Control. In the event of a Change in Control (as defined in the Plan), the provisions of Section 12.1 of the Plan shall govern the options granted pursuant to this Agreement.
(f)Non-Transferability. This option and all rights hereunder shall be exercisable during the Optionee’s lifetime only by the Optionee and shall be non-assignable and non-transferable by the Optionee except, in the event of the Optionee’s death, by Optionee’s will
or by the laws of descent and distribution. In the event the death of the Optionee occurs, the designated beneficiary (as defined in Section 2.1 of the Plan) or, if a designated beneficiary has not been designated, the legal representative of the estate, may exercise this option prior to the expiration of the applicable exercise period, as specified in Paragraph 2(d) above.
(g)Share Adjustments. In the event of any change in the Common Shares of the Company by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or any rights offering to purchase Common Shares at a price substantially below fair market value, or of any similar change affecting the Common Shares, then the Committee shall, in accordance with the terms and provisions of the Plan, make or provide for such adjustments to the number and kind of shares subject to this option and their purchase price per share as the Committee may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Optionee hereunder. Any adjustment so made shall be final and binding upon the Optionee.
(h)No Rights as Shareholder. The Optionee shall have no rights as a shareholder with respect to any Common Shares subject to this option prior to the date of issuance to the Optionee of a certificate or certificates for such shares.
(i)No Right to Continued Employment. This option shall not confer upon the Optionee any right with respect to continuance of employment by the Company or any subsidiary, nor shall it interfere in any way with the right of Optionee’s employer to terminate Optionee’s employment at any time.
(j)Compliance with Law and Regulations. This Option and the obligation of the Company to sell and deliver shares hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Common Shares prior to (i) the listing of such shares on any stock exchange on which the Common Shares may then be listed, and (ii) the completion of any registration or qualification of such shares under any federal or state law, or any rule or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Moreover, this Option may not be exercised if its exercise, or the receipt of Common Shares pursuant thereto, would be contrary to applicable law.
3.Investment Representation. The Committee may require the Optionee to furnish to the Company, prior to the issuance of any shares upon the exercise of all or any part of this Option, an agreement (in such form as such Committee may specify) in which the Optionee represents that the shares acquired by the Optionee upon exercise are being acquired for investment and not with a view to the sale or distribution thereof.
4.Optionee Bound by Plan. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
5.Withholding Taxes. Optionee acknowledges and agrees that the Company and its subsidiaries have the right to deduct from payments of any kind otherwise due to Optionee any federal, state or local taxes of any kind required by law to be withheld with respect to the exercise of this Option hereunder.
6.Notices. Any notice hereunder to the Company shall be addressed to Providence and Worcester Railroad Company, 75 Hammond Street, Worcester, Massachusetts, 01610, Attn: General Counsel and any notice hereunder to the Optionee shall be addressed to the Optionee at the address reflected on the payroll records of the Company, subject to the right of either party to designate at any time hereafter in writing some other address.
7.Rhode Island Law to Govern. This Agreement shall be construed and administered in accordance with and governed by the laws of the State of Rhode Island.
[Signatures Appear on Following Page]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Optionee has executed this Agreement as of ____________.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By:___________________________
Name:
Title:
OPTIONEE
By:___________________________
Name:
2015 Equity Incentive Plan – Number of Shares – Directors
Name |
Stock Options |
Richard W. Anderson |
1,000 |
Frank W. Barrett |
1,000 |
Roger N. Begin |
1,000 |
James C. Garvey |
1,000 |
John J. Healy |
1,000 |
David J. McQuade |
1,000 |
TOTAL |
6,000 |
EXHIBIT 31.1
Providence and Worcester Railroad Company
Certification Pursuant to
Section 302 of the Sarbanes‑Oxley Act of 2002
I, ROBERT H. EDER, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Providence and Worcester Railroad Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
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 |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
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. |
DATE: August 11, 2016
|
By: |
/s/ Robert H. Eder |
|
|
Robert H. Eder |
|
|
Chairman of the Board and Chief Executive Officer |
EXHIBIT 31.2
Providence and Worcester Railroad Company
Certification Pursuant to
Section 302 of the Sarbanes‑Oxley Act of 2002
I, DANIEL T. NORECK certify that:
1. I have reviewed this quarterly report on Form 10-Q of Providence and Worcester Railroad Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
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 |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
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. |
DATE: August 11, 2016
|
By: |
/s/ Daniel T. Noreck |
|
|
Daniel T. Noreck |
|
|
Treasurer and Chief Financial Officer |
EXHIBIT 32
PROVIDENCE AND WORCESTER RAILROAD COMPANY
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Providence and Worcester Railroad Company (the Company) on form 10-Q for the quarterly period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert H. Eder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(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 |
|
|
|
August 11, 2016 |
EXHIBIT 32.1
PROVIDENCE AND WORCESTER RAILROAD COMPANY
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Providence and Worcester Railroad Company (the Company) on form 10-Q for the quarterly period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Daniel T. Noreck, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(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 |
|
|
August 11, 2016 |
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