SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1998 Commission File Number
1-5447
PITTSBURGH & WEST VIRGINIA RAILROAD
(Exact name of registrant as specified in its charter)
Pennsylvania 25-6002536
(State of organization) (I.R.S. Employer Identification No.)
#2 Port Amherst Drive, Charleston, WV 25306-6699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (304) 926-1124
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which
registered
Shares of beneficial interest, American Stock Exchange
without par value
Securities Registered Pursuant to Section 12(g) of the Act: None
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 requirement for the past 90 days:
Yes X No
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 2, 1999, was $12,036,800.
At March 2, 1999, there were 1,510,000 outstanding shares of beneficial
interest.
Notices and communications from the Securities and Exchange Commission for the
registrant may be sent to Robert A. Hamstead, Vice President and
Secretary-Treasurer, #2 Port Amherst Drive, Charleston, WV 25306.
This amendment is made because the following Financial Statements were
omitted from the original filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By /s/ Robert A. Hamstead
Robert A. Hamstead
Vice President and Secretary-Treasurer
Date: February 27, 2006
Audited Financial Statements
Pittsburgh & West Virginia Railroad
Years Ended December 31, 1998 and 1997
TABLE OF CONTENTS
Page
Independent Accountants' Report F-2
Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in
Shareholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
All schedules are omitted for the reason they are not required or are not
applicable.
F-1
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Shareholders
Pittsburgh & West Virginia Railroad
We have audited the accompanying balance sheet of Pittsburgh & West
Virginia Railroad as of December 31, 1998 and 1997, and the related statements
of operations, changes in shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pittsburgh & West
Virginia Railroad as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Gibbons & Kawash
January 15, 1999
Charleston, WV
F-2
PITTSBURGH & WEST VIRGINIA RAILROAD
BALANCE SHEET
December 31, 1998 and 1997
1998 1997
ASSETS
Rentals receivable under capital lease -
implicit interest rate of 10%
(Notes 1 and 2) $ 9,150,000 $ 9,150,000
Cash 41,812 39,214
$ 9,191,812 $ 9,189,214
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and
accrued liabilities $ 22,950 $ 21,950
Contingency (Note 5)
Shareholders' equity (Note 3):
Shares of beneficial interest,
without par value. Authorized
number of shares - unlimited;
issued and outstanding -
1,510,000 shares 9,145,359 9,145,359
Income retained in the business 23,503 21,905
9,168,862 9,167,264
$ 9,191,812 $ 9,189,214
The accompanying notes are an integral part
of these financial statements.
F-3
PITTSBURGH & WEST VIRGINIA RAILROAD
STATEMENT OF OPERATIONS
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Income available for
distribution:
Cash rental $ 915,000 $ 915,000 $ 915,000
Interest on
invested funds 189 204 233
915,189 915,204 915,233
Less general and
administrative
expenses 83,091 80,457 92,811
Net income $ 832,098 $ 834,747 $ 822,422
Per share:
Net income $ .55 $ .55 $ .54
Cash dividends paid $ .55 $ .54 $ .55
The accompanying notes are an integral part
of these financial statements.
F-4
PITTSBURGH & WEST VIRGINIA RAILROAD
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 1998, 1997 and 1996
Income
Shares of retained
beneficial in the
interest business
Balance at December 31, 1995 9,145,359 $ 10,636
Net income - 822,422
Cash dividends paid - (830,500)
Balance at December 31, 1996 9,145,359 2,558
Net income - 834,747
Cash dividends paid - (815,400)
Balance at December 31, 1997 9,145,359 21,905
Net income - 832,098
Cash dividends paid - (830,500)
Balance at December 31, 1998 9,145,359 $ 23,503
The accompanying notes are an integral part
of these financial statements.
F-5
PITTSBURGH & WEST VIRGINIA RAILROAD
STATEMENT OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash flows from operating
activities:
Net income $ 832,098 $ 834,747 $ 822,422
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Increase (decrease) in
accounts payable and
accrued liabilities 1,000 - 3,600
Net cash provided by
operating activities 833,098 834,747 826,022
Cash flows used in financing
activities:
Dividends paid (830,500) (815,400) (830,500)
Net increase
(decrease)
in cash 2,598 19,347 (4,478)
Cash, beginning of year 39,214 19,867 24,345
Cash, end of year $ 41,812 $ 39,214 $ 19,867
The accompanying notes are an integral part
of these financial statements.
F-6
PITTSBURGH & WEST VIRGINIA RAILROAD
NOTES TO FINANCIAL STATEMENTS
1 - Under the terms of a lease which became effective October 16, 1964 (the
"lease"), Norfolk and Western Railway Company ("Norfolk and Western")
- (the "lessee") leased all of Pittsburgh & West Virginia Railroad's
(the "Trust") 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 annum.
The lease may be terminated by the lessee either by expiration of the
initial or any renewal term, or by default of Norfolk and Western. In the
event of termination, Norfolk and Western is obligated to return to the
Trust all properties covered by the lease, together with sufficient cash
and other assets to permit operation of the railroad for a period of one
year.
Under the terms of the lease, a noncash settlement account is maintained
to record amounts due to or due from Norfolk and Western upon termination
of the lease. The amount is credited with noncash rent equivalent to:
(a) the deductions allowable to the Trust, for tax purposes for
depreciation, amortization or retirements of the leased properties and
amortization of debt discount and expense; and (b) all other expenses of
the Trust, except those incurred for the benefit of the shareholders.
The settlement account is charged with the cost of capital asset
acquisitions and expenses of the Trust paid for by Norfolk and Western on
behalf of the Trust (see Note 2).
2 - Prior to 1983, the lease was accounted for as an operating lease in
accordance with the Statement of Financial Accounting Standards (SFAS)
No. 13, "Accounting for Leases", because the railroad assets as accounted
for under "betterment accounting" were considered similar to land.
Effective January 1, 1983, the Interstate Commerce Commission (ICC) changed
the method of accounting for railroad companies from "betterment
accounting" (which was previously used by the Trust and most railroads)
to "depreciation accounting." The leased assets, under "depreciation
accounting," are no longer similar to land; and, effective January 1, 1983,
under the provisions of Statement No. 13, the lease is considered a
capital lease and the property deemed sold in exchange for rentals
receivable under the lease. The preparation of financial statements in
conformity with generally accepted accounting principles requires
estimates by management. Accordingly, as of January 1, 1983, the rentals
receivable of $915,000 per annum, recognizing renewal options by the
lessee to perpetuity, were estimated to have a present value of
$9,150,000, assuming an implicit interest rate of 10%.
SFAS 107 requires disclosure of the fair value of financial
instruments for which it is practicable to estimate that value.
Management has determined it is not practicable to estimate the fair value
of rentals receivable under capital lease due to the lack of comparable
financial instruments.
At December 31, 1998 and 1997, the noncash settlement account (see
Note 1) had a balance of $11,285,542 and $10,740,209 respectively,
receivable from Norfolk and Western; however, because the account will
not be settled until the expiration of the lease, no values have been
reported in the accompanying financial statements for the balance of the
account or the transactions affecting the balance.
F-7
PITTSBURGH & WEST VIRGINIA RAILROAD
NOTES TO FINANCIAL STATEMENTS
(Continued)
3 - Under the provisions of the lease, the Trust may not issue, without the
prior written consent of Norfolk and Western, 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
December 31, 1997, 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 and Western.
4 - The Trust was organized in Pennsylvania in 1967 as a business trust and
has elected to be treated under the Internal Revenue Code as a real estate
investment trust. As such, the Trust is exempt from Federal taxes on
taxable income and capital gains to the extent that they are distributed
to shareholders. In order to maintain qualified status, at least 95% of
ordinary taxable income must be distributed; it is the intention of the
Trustees to continue to make sufficient distributions of ordinary taxable
income.
5 - The Company is a defendant in a personal injury suit seeking
unspecified damages. Although the eventual outcome of this matter cannot
be determined, management is of the opinion the claim is without merit and
intends to vigorously defend the Company.
F-8