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, 2006
Commission File Number 1-5447
PITTSBURGH & WEST VIRGINIA RAILROAD
Pennsylvania 25-6002536
(State of Organization) (I.R.S. Employer Identification No.)
(Address of principal executive offices)
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 A. Hamstead, 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
2006 2005 2006 2005
INCOME AVAILABLE FOR
DISTRIBUTION:
Interest income from
capital lease $ 229 $ 229 $ 458 $ 458
Interest - - - -
Less general and
administrative
expense 34 27 89 92
NET INCOME $ 195 $ 202 $ 369 $ 366
Per Share:
(1,510,000 average shares outstanding)
Net Income $ .13 $ .13 $ .24 $ .24
Cash Dividends $ .13 $ .12 $ .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
2006 2005
ASSETS
Net investment in capital lease $ 9,150 $ 9,150
Cash 25 54
$ 9,175 $ 9,204
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued
liabilities $ 4 $ 9
Shareholders' equity:
Shares of beneficial interest,
at no par value , 1,510,000
shares issued & outstanding 9,145 9,145
Retained earnings 26 50
Total shareholders' equity 9,171 9,195
Total liabilities and
shareholders' equity $ 9,175 $ 9,204
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,
2006 2005
Cash flows from operating activities:
Net income $ 369 $ 366
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 $ 364 $ 366
Cash flows used in financing activities:
Dividends paid 393 393
Net increase ( decrease) in cash (29) (27)
Cash, beginning of period 54 59
Cash, end of period $ 25 $ 32
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, 2006, 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 2006 with the preceding first quarter of 2006 and the
second quarter of 2005, revenues totaled $229,000, $229,000, and $229,000,
respectively. Net income and income available for distribution was
$195,000, $173,000, and $202,000, 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
None
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 A. Hamstead
Robert A. Hamstead
Secretary and Treasurer
Date: August 11, 2006
I, Herbert E. Jones, Jr., Chairman of the Board, certify that;
1. I have reviewed this quarterly report on Form 10-Q of The Pittsburgh &
West Virginia Railroad;
2. Based on my knowledge, this quarterly 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 quarterly 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's board of directors (or persons
performing the equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant?s ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: 08/11/06
/s/ Herbert E. Jones, Jr.
Chairman of the Board
CERTIFICATION:
I, Herbert E. Jones, III, President, certify that;
1. I have reviewed this quarterly report on Form 10-Q of The Pittsburgh &
West Virginia Railroad;
2. Based on my knowledge, this quarterly 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 quarterly 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's board of directors (or
persons performing the equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant?s ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: 08/11/06
/s/ Herbert E. Jones, III
President
CERTIFICATION:
I, Robert A. Hamstead, Vice President, Secretary and Treasurer, certify that;
1. I have reviewed this quarterly report on Form 10-Q of The Pittsburgh &
West Virginia Railroad;
2. Based on my knowledge, this quarterly 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 quarterly 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's board of directors (or persons
performing the equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: 08/11/06
/s/ Robert A. Hamstead
VP, Secretary and Treasurer
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63
of Title 18, United States Code)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United
States Code), each of the undersigned officers of Pittsburgh & West
Virginia Railroad, does hereby certify that:
The Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
(the Form 10-Q) of the Pittsburgh & West Virginia Railroad fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and information contained in the Form 10-Q fairly represents
in all material respects, the financial condition and results of operations
of the Pittsburg & West Virginia Railroad.
Dated: 08/11/06
/s/ Herbert E. Jones, Jr.
Herbert E. Jones, Jr.
Chairman of the Board
Dated: 08/11/06
/s/ Herbert E. Jones, III
Herbert E. Jones, III
President
Dated: 08/11/06
/s/ Robert A. Hamstead
Robert A. Hamstead
Vice President, Secretary and Treasurer