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, 2002 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 February 21, 2003 was $13,625,680.
At February 21, 2003, 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.
The information required by Part III hereof is incorporated by reference
from Registrant's Proxy Statement, which will be filed with the Securities and
Exchange Commission within 120 days after December 31, 2002.
PART I
Item 1 BUSINESS
Pittsburgh & West Virginia Railroad (the "Registrant") was organized in
Pennsylvania in 1967, as a business trust, for the purpose of acquiring the
business and property of a small leased railroad. The railroad was leased in
1964 to Norfolk and Western Railway Company ("N&W") by Registrant's predecessor
company for 99 years with the right of unlimited renewal.
Registrant's business consists solely of the ownership of the properties
subject to the lease, and of collection of rent thereon. The rent received
is $915,000 per year, in cash, which amount is fixed and unvarying for the life
of the lease. In addition, the lease provides that certain non-cash items be
recorded as rent income each year. These entries are equal in amount to the
sum of (1) Registrant's federal income tax deductions for depreciation,
retirements, and amortization of debt discount expense, and (2) all other
expenses of the Registrant, except those expenses incurred for the benefit of
its shareholders. For financial reporting purposes, only the cash income is
reported, as the non-cash items, although recorded under the terms of the
lease, have no financial value because of the indeterminate settlement date.
The Lease provided that N&W would assume payment of the principal of and
interest on Registrant's long-term debt. The debt was paid off during 1982.
Registrant has elected to be treated for tax purposes as a "real estate
investment trust." As such, the trust itself is exempt from federal income
tax, to the extent that its income is distributed to shareholders. However,
dividends paid by Registrant are taxable income to its shareholders. In order
to maintain qualified status, at least 95% of ordinary taxable income must be
distributed. It is Registrant's policy to distribute annually approximately
100% of ordinary taxable income.
Item 2 PROPERTIES
The properties leased to N&W consist of 112 miles of main line road
extending from Pittsburgh Junction, Ohio, through parts of West Virginia, to
Connellsville, Pennsylvania; approximately 20 miles of branch lines; and other
assets used in the operation of the railroad, such as real estate, machinery
and equipment, and supplies, but excluding rolling stock all of which was sold
to N&W prior to the effective date of the lease.
The more significant provisions of the lease applicable to the properties
are:
N&W at its own expense and without deduction from the rent, will maintain,
manage and operate the leased property and make such improvements thereto as it
considers desirable. Such improvements made by N&W become the property of the
Registrant, and the cost thereof constitutes a recorded indebtedness of
Registrant to N&W. The indebtedness is offset when non-cash rental is recorded
over the depreciable life of the improvements. Such part of the leased
property as is, in the opinion of N&W, not necessary, may be disposed of.
The proceeds of any disposition are retained by N&W and constitute an
indebtedness of N&W to Registrant. Because of the unlimited settlement date
for non-cash items, such transactions and balances have not been reported in
the financial statements since 1982.
If N&W should ever terminate the lease, all properties covered by the
lease would be returned to Registrant, together with sufficient cash and other
assets to permit operation of the railroad for one year.
Item 3 LEGAL PROCEEDINGS
There were no legal proceedings.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter to a vote of security
holders.
PART II
Item 5 MARKET FOR REGISTRANT(S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Registrant's shares are listed for trading on the American Stock Exchange.
At February 21, 2003, there were approximately 909 holders of record of
registrant's shares of beneficial interest.
Stock Market and Dividend information per share of beneficial interest.
2002 Quarters Ended
3/31 6/30 9/30 12/31
Sales price of traded shares
High $8.47 $8.80 $8.79 $9.15
Low 8.05 8.20 8.36 8.40
Dividends paid .13 .14 .14 .14
2001 Quarters Ended
3/31 6/30 9/30 12/31
Sales price of traded shares
High $7.65 $7.75 $8.80 $8.35
Low 7.15 7.21 8.06 7.85
Dividends paid .13 .14 .14 .14
Item 6 SELECTED FINANCIAL DATA
($Thousands, except per share amounts)
2002 2001 2000 1999 1998
Revenues $ 915 $ 915 $ 915 $ 915 $ 915
Income available for
distribution 821 830 837 832 832
Net income 821 830 837 832 832
Total assets 9,190 9,200 9,200 9,193 9,191
Per share amounts:
Net income .54 .55 .55 .55 .55
Income available for
distribution .54 .55 .55 .55 .55
Cash dividends .55 .55 .55 .55 .55
Item 7 MANAGEMENT(S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
All of the Registrant's railroad properties are leased to Norfolk and
Western Railway Company ("N&W") for 99 years, with unlimited renewals on the
same terms. Cash rental is a fixed amount of $915,000 per year, with no
provision for change. This cash rental, and small amounts of interest income,
are the only source of funds. Although the lease provides for additional
rentals to be recorded, these amounts do not increase cash flow as they are
charged to N&W's settlement account with no requirement for payment.
Income available for distribution in 2002 and in 2001 was approximately
$821,000 and $830,000, respectively.
Registrant's only cash outlays, other than dividend payments, are for
general and administrative expenses, which were slightly higher in 2002 than
in 2001. The leased properties are maintained entirely at N&W's expense.
Since cash revenue is fixed in amount and outlays for expenses are
relatively modest, inflation has had no material impact on Registrant's
reported net income.
Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Quarterly financial data (in $thousands, except per share amounts)
2002 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Revenues $ 229 $ 229 $ 229 $ 228
Net income 208 196 208 209
Per share .13 .13 .14 .14
2001
Revenues $ 229 $ 229 $ 229 $ 228
Net income 211 199 209 211
Per share .13 .14 .14 .14
Detailed financial statements of Registrant appear on pages F-3 through F-8
of this report. Per share data for the year is slightly different from the
sum of four quarters due to rounding.
Item 9 CHANGES IN AND DISAGREEMENTS WITH AUDITORS' ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The current audit firm, Gibbons & Kawash, declined to stand for re-election
effective March 17, 2003. The auditors' reports for the past two years were
unqualified. During the two most recent audit engagements there were no
disagreements with Gibbons & Kawash on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure.
No other reportable events regarding our relationship with Gibbons & Kawash
were applicable for disclosure.
PART III
Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Item 11 EXECUTIVE COMPENSATION
Not applicable.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Management's ownership of Registrant's shares of beneficial interest as
of February 21, 2003.
Shares Percent of
Name of Beneficially Outstanding
Trustee Owned Shares
Herbert E. Jones, Jr. 4,000 0.264
Charles T. Jones 200 0.013
Virgil E. Wenger 200 0.013
All trustees and officers
as a group (3 persons) 4,400 0.290
PART IV
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by items 10, 11, and 13 is set forth in Registrant's
2002 Proxy Statement, which is incorporated herein by reference.
PART V
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. A list of all financial statements and financial statement
schedules filed as part of this report is set forth on page F-1
herein.
2. Exhibits - all the exhibits listed below are incorporated
herewith by reference to Form 8 Amendment to Annual Report on
Form 10-K for the year ended December 31, 1988:
3.1 Pittsburgh & West Virginia Railroad Declaration of
Trust dated February 18, 1967.
3.2 Pittsburgh & West Virginia Railroad Regulations.
3.3 Plan and Agreement of Reorganization, dated February 18,
1967, between Pittsburgh & West Virginia Railroad and
The Pittsburgh and West Virginia Railway Company.
3.4 Amendment No. 1 to Plan and Agreement of Reorganization
dated February 18, 1967, between The Pittsburgh and West
Virginia Railway Company and Pittsburgh & West Virginia
Railroad.
10.1 Lease of railroad properties, dated July 12, 1962,
between the Pittsburgh and West Virginia Railway Company
and Norfolk and Western Railway Company.
10.2 Assignment of lease by The Pittsburgh and West Virginia
Railway Company to Pittsburgh & West Virginia Railroad.
(b) No report on Form 8-K was filed during the fourth quarter of 2002.
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: March 18, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Herbert E. Jones, Jr. /s/ Virgil E. Wenger
Herbert E. Jones, Jr. Virgil E. Wenger
Chairman of the Board and Trustee Assistant Secretary, Assistant
Treasurer and Trustee
/s/ Charles T. Jones
Charles T. Jones
Alternate Chairman, President and
Trustee
Date: March 18, 2003
CERTIFICATION:
I, Herbert E. Jones, Jr, Chairman of the Board, certify that;
1. I have reviewed this annual report on Form 10-K of The Pittsburgh & West
Virginia Railroad;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
report (the "Evaluation Date"); and
c) presented in this annual 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 auditors and the audit
committee of 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
annual 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: March 18, 2003
/s/ Herbert E. Jones, Jr.
(Signature)
Chairman of the Board
CERTIFICATION:
I, Charles T. Jones, President, certify that;
1. I have reviewed this annual report on Form 10-K of The Pittsburgh & West
Virginia Railroad;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
report (the "Evaluation Date"); and
c) presented in this annual 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 auditors and the audit
committee of 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
annual 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: March 18, 2003
/s/ Charles T. Jones
(Signature)
President
CERTIFICATION:
I, Robert A. Hamstead, Vice President, Secretary and Treasurer, certify that;
1. I have reviewed this annual report on Form 10-K of The Pittsburgh & West
Virginia Railroad;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
report (the "Evaluation Date"); and
c) presented in this annual 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 auditors and the audit
committee of 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
annual 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: March 18, 2003
/s/ Robert A. Hamstead
(Signature)
Vice President , Secretary and Treasurer