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 March 31, 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, WV 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 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
March 31,
2007 2006
INCOME AVAILABLE FOR DISTRIBUTION:
Interest income from capital lease $ 229 $ 229
Less: general and administrative
expenses 58 56
NET INCOME $ 171 $ 173
Per Share:
(1,510,000 average shares outstanding)
Net Income $ .11 $ .11
Cash Dividends $ .13 $ .13
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)
March 31 December 31
2007 2006
ASSETS
Net investment in capital lease $ 9,150 $ 9,150
Cash 24 49
$ 9,174 $ 9,199
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued
liabilities $ - $ -
Shareholders' equity:
Shares of beneficial interest,
at no par value , 1,510,000
shares issued outstanding 9,145 9,145
Retained earnings 29 54
Total shareholders' equity 9,174 9,199
Total liabilities and
shareholders' equity $ 9,174 $ 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)
Three Months Ended
March 31,
2007 2006
Cash flows from operating activities:
Net income $ 171 $ 173
Changes in operating assets
and liabilities:
Increase (decrease) in
accounts payable - 16
Cash provided by operating activities $ 171 $ 189
Cash flows used in financing activities:
Dividends paid 196 196
Net increase (decrease) in cash (25) (7)
Cash, beginning of period 49 54
Cash, end of period $ 24 $ 47
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
March 31, 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 Southern Corporation for the fixed, unvarying amount of
$915,000 cash rental per year. The lease also requires that
additional amounts be accounted for as noncash rent income to be
settled or paid at lease termination. Because this noncash income
will not be settled until the expiration of the lease, no values have
been reported in the accompanying interim financial statements for the
balance of the account or the transactions affecting the balance.
With fixed revenue and expenses relatively constant, there is
very little fluctuation in operating results between periods. In
comparing the first quarter of 2007 with the preceding fourth quarter
of 2006 and the first quarter of 2006, revenues totaled $229,000,
$229,000, and $229,000, respectively. Net income and income available
for distribution was $171,000, $211,000, and $173,000, 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
(a) Exhibits
Exhibit 31.1 Section 302 Certification for Herbert E. Jones, Jr.
Exhibit 31.2 Section 302 Certification for Herbert E. Jones, III
Exhibit 31.3 Section 302 Certification for Robert A. Hamstead
Exhibit 99 Section 906 Certification for Herbert E. Jones, Jr.,
Herbert E. Jones, III, and Robert A. Hamstead
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 & WEST VIRGINIA 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: May 10, 2007