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 Quarter ended June 30, 2007
Commission File Number 1-5447
PITTSBURGH & WEST VIRGINIA RAILROAD
Pennsylvania 25-6002536
(State of Organization) (I.R.S. Employer Identification No.)
#2 Port Amherst Drive, Charleston, West Virginia 25306
(Address of principal executive offices)
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, or a non-accelerated filer.
Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer _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 close of the period covered by this report.
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 Six Months Ended
June 30, June 30
2007 2006 2007 2006
INCOME AVAILABLE FOR
DISTRIBUTION:
Interest income from
capital lease $ 229 $ 229 $ 458 $ 458
Less general and
administrative expense 41 34 99 89
NET INCOME $ 188 $ 195 $ 359 $ 369
Per Share:
(1,510,000 average shares outstanding)
Net Income $ .12 $ .13 $ .24 $ .24
Cash Dividends $ .13 $ .13 $ .26 $ .26
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)
June 30 December 31
2007 2006
ASSETS
Net investment in capital lease $ 9,150 $ 9,150
Cash 15 49
$ 9,165 $ 9,199
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 20 54
Total shareholders equity 9,165 9,199
Total liabilities and shareholders
equity $ 9,165 $ 9,199
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)
Six Months Ended
June 30,
2007 2006
Cash flows from operating activities:
Net income $ 359 $ 369
Adjustment to reconcile net income to net
cash provided by operating activities:
Increase ( decrease) in accounts payable
and accrued liabilities - (5)
Net cash provided by operating activities $ 359 $ 364
Cash flows used in financing activities:
Dividends paid 393 393
Net increase ( decrease) in cash (34) (29)
Cash, beginning of period 49 54
Cash, end of period $ 15 $ 25
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.
(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 June 30, 2007, 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. MANAGEMENTS DISCUSSION AND ANALYSIS
All of Registrant's railroad properties are on long-term lease to Norfolk and
Western Railway Company 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 second
quarter of 2007 with the preceding first quarter of 2007 and the second
quarter of 2006, revenues totaled $229,000, $229,000, and $229,000,
respectively. Net income and income available for distribution was $188,000,
$171,000, and $195,000, 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 relatively low, 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 4. CONTROLS AND PROCEDURES
Management is responsible for establishing and maintaining effective internal
controls over financial reporting. Within 90 days prior to the date of 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-14
under the Securities 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 in timely alerting them to material information relating to the
Registrant required to be included in the Registrant's periodic filings with
the SEC.
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.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
None
Item 6. Exhibits and Reports on Form 8-K
An 8-K was filed on June 5, 2007 regarding the resignation of Robert A.
Hamstead as Vice President, Secretary and Treasurer and the election of
Robert R. McCoy to serve as Vice President, Secretary and Treasurer.
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, Jr.
Herbert E. Jones, Jr.
Chairman of the Board
/s/ Robert R. McCoy
Robert R. McCoy
Secretary and Treasurer
Date: August 10, 2007