##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2004 Commission file number: 000-50543 PORTEC RAIL PRODUCTS, INC. 
  West Virginia
    
    55-0755271(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 900 Old Freeport Road, Pittsburgh, Pennsylvania
    
    15238-8250(Address of principal executive offices)
    
    (Zip Code)
 (412) 782-6000 
  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.  Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  As of April 30, 2004, there were 8,618,002 shares of the registrants
common stock outstanding.




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PORTEC RAIL PRODUCTS, INC. INDEX TO FORM 10-Q ItemNumber
    
    
    
    Page NumberPART I  FINANCIAL INFORMATION1.
    
    Financial Statements:Condensed Consolidated Balance Sheets March 31, 2004 (Unaudited) and December 31, 2003
    
    
    3Condensed Consolidated Statements of Income (Unaudited) Three months ended March 31, 2004 and 2003
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 2004 and 2003
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    62.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    133.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    184.
    
    Controls and Procedures
    
    
    19PART II  OTHER INFORMATION2.
    
    Changes in Securities and Use of Proceeds
    
    
    196.
    
    Exhibits and Reports on Form 8-K
    
    
    20Signatures
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32




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PART I  FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS Portec Rail Products, Inc. 
 Condensed Consolidated Balance Sheets
 March 31
    
    December 312004
    
    2003(Unaudited)(In Thousands)AssetsCurrent assets
Cash and cash equivalents
    
    $
    10,766
    
    
    $
    418Accounts receivable, net
    
    
    8,693
    
    
    
    8,099Inventories, net
    
    
    12,509
    
    
    
    12,968Prepaid expenses and other current assets
    
    
    1,314
    
    
    
    1,394Deferred income taxes
    
    
    402
    
    
    
    401Total current assets
    
    
    33,684
    
    
    
    23,280Property, plant and equipment, net
    
    
    11,763
    
    
    
    11,841Other assets
    
    
    164
    
    
    
    170Goodwill
    
    
    5,150
    
    
    
    5,096Total assets
    
    $
    50,761
    
    
    $
    40,387Liabilities and Shareholders EquityCurrent liabilitiesCurrent maturities of long-term debt
    
    $
    913
    
    
    $
    8,555Accounts payable
    
    
    5,065
    
    
    
    4,939Accrued income taxes
    
    
    940
    
    
    
    1,049Customer deposits
    
    
    595
    
    
    
    395Accrued compensation
    
    
    348
    
    
    
    986Other accrued liabilities
    
    
    1,519
    
    
    
    1,201Total current liabilities
    
    
    9,380
    
    
    
    17,125Long-term debt, less current maturities
    
    
    662
    
    
    
    716Accrued pension costs
    
    
    1,828
    
    
    
    1,975Deferred income taxes
    
    
    1,218
    
    
    
    1,172Other long-term liabilities
    
    
    274
    
    
    
    266Total liabilities
    
    
    13,362
    
    
    
    21,254Commitments and Contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock, $1 par value, 50,000,000
shares authorized, 8,618,002 and
6,523,002 shares issued and outstanding
at March 31, 2004 and December 31, 2003,
respectively
    
    
    8,618
    
    
    
    6,523Additional paid-in capital
    
    
    18,633
    
    
    
    2,756Retained earnings
    
    
    11,447
    
    
    
    11,221Accumulated other comprehensive loss
    
    
    (1,299
    )
    
    
    (1,367
    )Total shareholders equity
    
    
    37,399
    
    
    
    19,133Total liabilities and shareholders equity
    
    $
    50,761
    
    
    $
    40,387
 See Notes to Condensed Consolidated Financial Statements 3




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Portec Rail Products, Inc. 
 Condensed Consolidated Statements of Income
 (Unaudited)
 Three Months EndedMarch 312004
    
    2003(Dollars in Thousands, ExceptEarnings Per Share Data)Net sales
    
    $
    15,193
    
    
    $
    14,130Cost of sales
    
    
    11,322
    
    
    
    9,971Gross profit
    
    
    3,871
    
    
    
    4,159Selling, general and administrative
    
    
    2,834
    
    
    
    2,626Amortization expense
    
    
    16
    
    
    
    19Operating income
    
    
    1,021
    
    
    
    1,514Interest expense
    
    
    46
    
    
    
    101Other expense, net
    
    
    18
    
    
    
    79Income before income taxes
    
    
    957
    
    
    
    1,334Provision for income taxes
    
    
    300
    
    
    
    516Net income
    
    $
    657
    
    
    $
    818Earnings per shareBasic
    
    $
    .08
    
    
    $
    .13Diluted
    
    $
    .08
    
    
    $
    .13Weighted average shares outstandingBasic
    
    
    8,586,335
    
    
    
    6,527,002Diluted
    
    
    8,586,335
    
    
    
    6,527,002Dividends per share
    
    $
    .05
    
    
    $
    
 See Notes to Condensed Consolidated Financial Statements 4




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Portec Rail Products, Inc. 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 312004
    
    2003(In Thousands)Operating ActivitiesNet income
    
    $
    657
    
    
    $
    818Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    364
    
    
    
    338Provision for doubtful accounts
    
    
    30
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (534
    )
    
    
    (3,037
    )Inventories
    
    
    485
    
    
    
    (1,976
    )Prepaid expenses and other assets
    
    
    40
    
    
    
    (339
    )Accounts payable
    
    
    74
    
    
    
    1,998Income tax payable
    
    
    (121
    )
    
    
    59Accrued expenses
    
    
    (286
    )
    
    
    366Net cash provided by (used in) operating activities
    
    
    709
    
    
    
    (1,773
    )Investing ActivitiesPurchases of property, plant and equipment
    
    
    (186
    )
    
    
    (253
    )Net cash used in investing activities
    
    
    (186
    )
    
    
    (253
    )Financing ActivitiesNet (decrease) increase in revolving credit agreement
    
    
    (5,718
    )
    
    
    1,451Principal payments on bank term loans
    
    
    (1,929
    )
    
    
    (521
    )Borrowings from Boone County Bank, Inc. (related party)
    
    
    
    
    
    
    100Principal payments to Boone County Bank, Inc. (related
party)
    
    
    (73
    )
    
    
    (60
    )Principal payments on capital leases
    
    
    (2
    )
    
    
    (9
    )Cash dividends paid to shareholders
    
    
    (431
    )
    
    
    Issuance of common stock
    
    
    17,972
    
    
    
    Net cash provided by financing activities
    
    
    9,819
    
    
    
    961Effect of exchange rate changes on cash and cash equivalents
    
    
    6
    
    
    
    69Increase (decrease) in cash and cash equivalents
    
    
    10,348
    
    
    
    (996
    )Cash and cash equivalents at beginning of period
    
    
    418
    
    
    
    1,431Cash and cash equivalents at end of period
    
    $
    10,766
    
    
    $
    435Supplemental Disclosures of Cash Flow InformationCash paid during the period for:Interest
    
    $
    46
    
    
    $
    100Income taxes
    
    $
    453
    
    
    $
    470
 See Notes to Condensed Consolidated Financial Statements 5




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Portec Rail Products, Inc. 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 Note 1: Organization Portec Rail Products, Inc. (sometimes herein referred to as we, our, us,
the Company, or Portec Rail Products) was incorporated in West Virginia in
1997. We manufacture, supply and distribute a broad range of railroad
products, including rail joints, rail anchors, rail spikes, railway friction
management products and systems and freight car securement devices. We also
manufacture material handling equipment through our United Kingdom operation.
We serve both domestic and international markets. We and our predecessors have
served the railroad industry since 1906. In 1997, a group of private investors
including several senior executives of Portec, Inc., our predecessor company,
purchased the rail-related assets and selected material handling assets of, and
assumed certain liabilities of, Portec, Inc. We operate through four global
business units consisting of Railway Maintenance Products Division (RMP),
Shipping Systems Division (SSD), Portec, Rail Products Ltd. (Canada) and
Portec Rail Products (UK) Ltd. (United Kingdom). Note 2: Basis of Presentation The accompanying condensed consolidated financial statements include the
accounts of Portec Rail Products, Inc., our wholly-owned Canadian subsidiary,
Portec, Rail Products Ltd. (Canada) and our wholly-owned United Kingdom
subsidiary, Portec Rail Products (UK) Ltd. (United Kingdom). All significant
intercompany accounts and transactions have been eliminated in consolidation.
The foregoing financial information has been prepared in accordance with the
accounting principles generally accepted in the United Sates of America
(GAAP) and rules and regulations of the Securities and Exchange Commission
for interim financial reporting. The preparation of the financial statements
in accordance with GAAP requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates. The results of
operations for the three months ended March 31, 2004 are not necessarily
indicative of the results to be expected for the full year. The accompanying
interim financial information is unaudited; however, we believe, the financial
information reflects all adjustments (consisting of items of a normal recurring
nature) necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with GAAP. These interim financial
statements should be read in conjunction with the 2003 Annual Report on Form
10-K. The balance sheet information as of December 31, 2003 was derived from
our audited balance sheet included in our 2003 Annual Report on Form 10-K. Certain amounts in the prior years consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on net earnings. Note 3: Inventories Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method for all inventories. Inventory
costs include material, labor and manufacturing overhead. The major components of inventories are as follows: March 31
    
    December 312004
    
    2003(In Thousands)Raw materials
    
    $
    5,731
    
    
    $
    5,825Work in process
    
    
    383
    
    
    
    363Finished goods
    
    
    6,720
    
    
    
    7,05612,834
    
    
    
    13,244Less reserve for slow-moving and obsolete inventory
    
    
    325
    
    
    
    276Net inventory
    
    $
    12,509
    
    
    $
    12,968
 6




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) Note 4: Long-Term Debt Long-term debt consists of the following: March 31
    
    December 312004
    
    2003(In Thousands)Senior Credit Facility :Revolving credit facility
    
    $
    
    
    
    $
    5,510Term loan
    
    
    
    
    
    
    1,2252002 Term loan
    
    
    
    
    
    
    625Revolving credit facility (Canada)
    
    
    591
    
    
    
    811Term loan (United Kingdom)
    
    
    336
    
    
    
    338Property loan (United Kingdom)
    
    
    188
    
    
    
    199Quodeck acquisition loan (United Kingdom)
    
    
    446
    
    
    
    474Overdraft credit facility (United Kingdom)
    
    
    
    
    
    
    Boone County Bank, Inc. (related party)
    
    
    
    
    
    
    73Capitalized lease obligations
    
    
    14
    
    
    
    161,575
    
    
    
    9,271Less current maturities
    
    
    913
    
    
    
    8,555$
    662
    
    
    $
    716
 As a result of our initial public offering, all outstanding loans under the
Senior Credit Facility and Boone County Bank, Inc. (related party) were repaid
in January 2004. Under the Senior Credit Facility, we have a secured revolving credit facility
with a bank for borrowings to a maximum of $6,250,000. Borrowings under the
revolving credit facility can be in an amount up to 80% of the outstanding
eligible accounts receivable plus 50% of the aggregate value of eligible
inventory. Advances against eligible inventory are limited to $3,750,000. We
are required to pay a 0.25% fee on the average daily unused portion of the
revolving credit facility. Advances under the revolving credit facility accrue
interest, at our option, at the Eurodollar rate plus 1.75% to 2.50% or the
financial institutions prime rate plus 0.00% to 0.50%. The Senior Credit
Facility is collateralized by substantially all of our assets in the United
States. The Senior Credit Facility contains certain covenants which requires
us to maintain leverage ratios, current ratios, fixed charge coverage ratios
and minimum amounts of tangible net worth. The Senior Credit Facility further
limits capital expenditures, sales of assets, management bonuses, management
fees and additional indebtedness. The Senior Credit Facility also restricts
the sale of the capital stock of our wholly-owned subsidiaries. Borrowings on
the revolving credit facility accrued interest at 4.00% at December 31, 2003.
No borrowings were outstanding under the revolving credit facility at March 31,
2004. The revolving credit facility expires on December 31, 2006. Our Canadian subsidiary has a secured revolving demand credit facility with a
bank for borrowings to a maximum of 3,750,000 Canadian dollars ($2,860,000).
Borrowings under the revolving credit facility can be in an amount up to 80% of
the outstanding eligible accounts receivable plus 50% of the aggregate value of
eligible inventory. Advances against eligible inventory are limited to
1,875,000 Canadian dollars. The interest rate is the Canadian prime rate plus
1.00%. Borrowings on the revolving line of credit accrued interest at 5.00%
and 5.50% at March 31, 2004 and December 31, 2003, respectively. The credit
facility is secured by specific pledges of land, building, equipment, accounts
receivable and inventory. At March 31, 2004, borrowings under this credit
facility were 775,000 Canadian dollars ($591,000) and additional borrowings of
2,975,000 Canadian dollars ($2,269,000) were available. 7




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) Our United Kingdom subsidiary has a £400,000 ($737,000) overdraft facility on
its primary bank account with a financial institution in the United Kingdom.
The purpose of the overdraft facility is to provide for working capital
requirements. The interest rate on the overdraft facility is the financial
institutions base rate plus 1.625%. For any borrowings in excess of £400,000
($737,000) that the financial institution approves, the interest rate is the
financial institutions base rate plus 6.75%. The United Kingdom loans are
collateralized by substantially all of the assets of our United Kingdom
subsidiary and its wholly-owned subsidiaries. In addition, the loans contain
certain covenants, which require our United Kingdom subsidiary to maintain a
minimum tangible net worth, profitability, cash generation and limits
additional borrowings. The covenants also restrict any payments of dividends
and limit capital expenditures by our United Kingdom subsidiary. No borrowings
were outstanding under the overdraft facility at March 31, 2004. The overdraft
credit facility expires on March 19, 2005. Note 5: Retirement Plans In December 2003, the FASB issued revisions to SFAS 132, Employers Disclosures
about Pensions and Other Postretirement Benefits. The revised statement
includes new and revised disclosures for sponsors of defined benefit plans.
The revised disclosure rules require interim presentation of net periodic
benefit cost recognized, showing the component amounts separately. The revised
disclosure rules also have requirements regarding interim disclosure of
employer contributions paid and expected to be paid. The revised disclosure is
effective for interim periods beginning after December 15, 2003 for both
domestic and foreign plans. We have updated the following defined benefit
plans disclosures to incorporate these requirements. The components of net periodic pension cost (benefit) of our United States
defined benefit pension plan are as follows for the three months ended March
31, 2004 and 2003: Three Months EndedMarch 312004
    
    2003(In Thousands)Service cost
    
    $
    
    
    
    $
    65Interest cost
    
    
    128
    
    
    
    188Expected return on plan assets
    
    
    (178
    )
    
    
    (258
    )Amortization of transition and prior service cost
    
    
    
    
    
    
    1Pension benefit
    
    $
    (50
    )
    
    $
    (4
    )
 We previously disclosed in the financials statements for the year ended
December 31, 2003, that the required minimum contribution for the United States
defined benefit pension plan was approximately $147,000, which was funded in
February 2004. We do not anticipate any additional contributions will be made
to this pension plan for the remainder of 2004. 8




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) The components of net periodic pension cost (benefit) of our United Kingdom
defined benefit pension plans are as follows for the three months ended March
31, 2004 and 2003: Portec Rail
    
    Conveyors
    
    Portec Rail
    
    ConveyorsPlan
    
    Plan
    
    Plan
    
    Plan2004
    
    2004
    
    2003
    
    2003(In Thousands)Service cost
    
    $
    28
    
    
    $
    
    
    
    $
    
    
    
    $
    Less employee contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    70
    
    
    
    10
    
    
    
    
    
    
    
    Expected return on plan assets
    
    
    (76
    )
    
    
    (17
    )
    
    
    
    
    
    
    Amortization of transition
amount
    
    
    (14
    )
    
    
    (3
    )
    
    
    
    
    
    
    Amortization of unrecognized
loss (gain)
    
    
    19
    
    
    
    (1
    )
    
    
    
    
    
    
    Pension cost (benefit)
    
    $
    27
    
    
    $
    (11
    )
    
    $
    0
    
    
    $
    0
 During the third quarter of 2003, the Company recorded the full year net
periodic pension cost of approximately $34,000 for the Portec Rail plan and the
full year net periodic pension benefit of approximately $26,000 for the
Conveyors plan. The impact of this adjustment on the quarterly financial
statements for the year ended December 31, 2003 was not material. Future
pension plan funding for the United Kingdom defined benefit pension plans will
be dependent upon the performance of plan assets. As of March 31, 2004,
$15,000 and $0 in employer contributions have been made to the Portec Rail plan
and the Conveyors plan, respectively. For the remainder of 2004, we anticipate
making additional contributions of approximately £9,000 ($17,000), plus the
payment of certain plan administrative expenses, to the Portec Rail pension
plan. We do not anticipate making any contributions to the Conveyors pension
plan in 2004. Note 6: Comprehensive Income Comprehensive income for the three months ended March 31, 2004 and 2003 is as
follows: Three Months EndedMarch 312004
    
    2003(In Thousands)Net income
    
    $
    657
    
    
    $
    818Minimum pension liability adjustment, net of tax
    
    
    (39
    )
    
    
    8Foreign currency translation adjustments, net of tax
    
    
    107
    
    
    
    157Comprehensive income
    
    $
    725
    
    
    $
    983
 9




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) Note 7: Earnings Per Share Basic earnings per share (EPS) is computed as net income available to common
shareholders divided by the weighted average common shares outstanding.
Diluted earnings per share considers the potential dilution that occurs related
to issuance of common stock under stock option plans. At the present time, the
company does not have any stock option plans that would cause dilution. Note 8: Commitments and Contingencies Contractual Obligations The following is a summary of our contractual obligations as of March 31, 2004: NineMonthsEndingContractual Obligations
    
    12/31/2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    Thereafter
    
    Total(In thousands)Long term debt
    
    $
    235
    
    
    $
    314
    
    
    $
    237
    
    
    $
    55
    
    
    $
    55
    
    
    $
    74
    
    
    $
    970Revolving credit facilities
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591Capital leases and equipment loans
    
    
    6
    
    
    
    4
    
    
    
    1
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    14Operating leases
    
    
    559
    
    
    
    527
    
    
    
    464
    
    
    
    347
    
    
    
    176
    
    
    
    30
    
    
    
    2,103Total contractual obligations
    
    $
    800
    
    
    $
    1,436
    
    
    $
    702
    
    
    $
    404
    
    
    $
    232
    
    
    $
    104
    
    
    $
    3,678
 Litigation We are involved from time to time in lawsuits that arise in the normal course
of business. We actively and vigorously defend all lawsuits. We are named
with numerous other defendants in an environmental lawsuit. The plaintiff
seeks to recover costs, which it has incurred to investigate and remediate its
own property as required by the New York State Department of Environmental
Conservation (NYSDEC). We have not been named as a liable party by the NYSDEC
and believe we have no liability to the plaintiff in the case. We filed a
motion of summary judgment seeking a ruling to have us dismissed from the case.
On November 6, 2003, the motion of summary judgment was granted and we were
dismissed from the case. On March 25, 2004, the plaintiff filed a notice of
appeal. If the plaintiff wins on appeal, ongoing litigation may be protracted,
and we will incur additional ongoing legal expenses, which are not estimable at
this time. 10




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) Note 9: Segment Information We operate four business segments consisting of Railway Maintenance Products
Division (RMP), Shipping Systems Division (SSD), Portec, Rail Products Ltd.
(Canada) and Portec Rail Products (UK) Ltd. (United Kingdom), along with a
corporate functional shared service. The presentation of segment information
reflects the manner in which we organize our segments by geographic areas for
making operating decisions, assessing performance and allocating resources. Intersegment sales are accounted for at arms-length prices, reflecting
prevailing market conditions within the United States, Canada and the United
Kingdom. Such sales and associated costs are eliminated in the consolidated
financial statements. Three Months EndedMarch 312004
    
    2003(In Thousands)External SalesRMP
    
    $
    7,865
    
    
    $
    6,577SSD
    
    
    702
    
    
    
    1,687Canada
    
    
    3,842
    
    
    
    2,240United Kingdom
    
    
    2,784
    
    
    
    3,626Total
    
    $
    15,193
    
    
    $
    14,130Intersegment SalesRMP
    
    $
    265
    
    
    $
    410SSD
    
    
    
    
    
    
    Canada
    
    
    421
    
    
    
    450United Kingdom
    
    
    6
    
    
    
    22Total
    
    $
    692
    
    
    $
    882Total SalesRMP
    
    $
    8,130
    
    
    $
    6,987SSD
    
    
    702
    
    
    
    1,687Canada
    
    
    4,263
    
    
    
    2,690United Kingdom
    
    
    2,790
    
    
    
    3,648Total
    
    $
    15,885
    
    
    $
    15,012Operating Income (Loss)RMP
    
    $
    1,078
    
    
    $
    961SSD
    
    
    19
    
    
    
    280Canada
    
    
    424
    
    
    
    175United Kingdom
    
    
    (181
    )
    
    
    363Corporate
    
    
    (319
    )
    
    
    (265
    )Total
    
    
    1,021
    
    
    
    1,514Interest Expense
    
    
    46
    
    
    
    101Other Expense, net
    
    
    18
    
    
    
    79Income Before Income Taxes
    
    $
    957
    
    
    $
    1,334
 11




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Portec Rail Products, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited) Three Months EndedMarch 312004
    
    2003(In Thousands)Depreciation and AmortizationRMP
    
    $
    158
    
    
    $
    154SSD
    
    
    3
    
    
    
    3Canada
    
    
    81
    
    
    
    71United Kingdom
    
    
    121
    
    
    
    109Corporate
    
    
    1
    
    
    
    1Total
    
    $
    364
    
    
    $
    338Capital ExpendituresRMP
    
    $
    151
    
    
    $
    207SSD
    
    
    2
    
    
    
    21Canada
    
    
    23
    
    
    
    5United Kingdom
    
    
    10
    
    
    
    20Corporate
    
    
    
    
    
    
    Total
    
    $
    186
    
    
    $
    253
 March 31
    
    December 312004
    
    2003Total AssetsRMP
    
    $
    17,211
    
    
    $
    17,462SSD
    
    
    1,422
    
    
    
    1,525Canada
    
    
    11,276
    
    
    
    10,194United Kingdom
    
    
    9,940
    
    
    
    9,577Corporate
    
    
    10,912
    
    
    
    1,629Total
    
    $
    50,761
    
    
    $
    40,387
 12




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the condensed
consolidated financial statements of Portec Rail Products, Inc. and the related
notes beginning on page 3. Unless otherwise specified, any reference to the
three months ended is to the three months ended March 31. Additionally, when
used in this Form 10-Q, unless the context requires otherwise, the terms we,
our and us refer to Portec Rail Products, Inc. and its business segments. Cautionary Statement Relevant to Forward-looking Statements This Form 10-Q contains or incorporates by reference forward-looking
statements relating to the Company. Forward-looking statements typically are
identified by the use of terms, such as may, will, plan, should,
expect, anticipate, believe, if, estimate, intend, and similar
words, although some forward-looking statements are expressed differently. You
should consider statements that contain these and similar words carefully
because they describe our expectations, plans, strategies, goals and beliefs
concerning future business conditions, our results of operations, our financial
position, and our business outlook, or state other forward-looking
information based on currently available information. Although we believe that
the expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors. We
undertake no obligation to update publicly or revise any forward-looking
statements. You should not place undue reliance on the forward-looking
statements. The Company identifies below important factors that could affect the
Companys financial performance and could cause the Companys actual results
for future periods to differ materially from any opinions or statements
expressed with respect to future periods in any current statements. In
particular, the Companys future results could be affected by a variety of
factors, such as:  
    
    customer demand;  
    
    competitive dynamics in the North American and worldwide
railroad and railway supply industries;  
    
    capital expenditures by the railway industry in North America and worldwide;  
    
    economic conditions, including changes in inflation rates or interest rates;  
    
    product development and the success of new products;  
    
    our ability to successfully pursue, consummate and integrate
attractive acquisition opportunities;  
    
    changes in laws and regulations;  
    
    the development and retention of sales representation and
distribution agreements with third parties;  
    
    limited international protection of our intellectual property;  
    
    the loss of key personnel;  
    
    fluctuations in the cost and availability of raw materials
and supplies, and any significant disruption of supplies;  
    
    foreign economic conditions, including currency rate fluctuations;  
    
    political unrest in foreign markets and economic uncertainty due to terrorism or war;  
    
    exposure to pension liabilities;  
    
    seasonal fluctuations in our sales;  
    
    technological innovations by our competitors; and  
    
    the importation of lower cost competitive products into our markets. The Company specifically declines to undertake any obligation to publicly
revise any forward-looking statements that have been made to reflect events or
circumstances after the date of those statements or to reflect the occurrence
of anticipated or unanticipated events. 13




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##### Table of Contents



Overview In the United States, Canada and the United Kingdom, we are a
manufacturer, supplier and distributor of a broad range of rail products,
including rail joints, rail anchors, rail spikes, railway friction management
systems and products and securement devices. End users of our rail products
include Class I railroads, short-line and regional railroads and transit
systems. Our three North American business segments along with the rail
division of our United Kingdom business segment serve these end users. In
addition, our United Kingdom business segment also manufactures and supplies
material handling products primarily to end users within the United Kingdom.
These products include overhead and floor conveyor systems, racking systems and
mezzanine flooring systems. The end users of our material handling products are
primarily in the manufacturing, distribution, garment and food industries. Results of Operations Three Months Ended March 31, 2004 compared to Three Months Ended March 31, 2003 Net Sales.Net sales increased to $15.2 million for the three months
ended March 31, 2004, an increase of $1.1 million or 7.5%, from $14.1 million
for the comparable period in the prior year. The increase in net sales is
primarily attributable to increased sales of $1.6 million at our Canadian
operation and $1.3 million at RMP offset by decreased sales of $985,000 at SSD
and $842,000 at our United Kingdom operation. The increase in sales at our
Canadian operation is primarily due to increased demand for our products by a
large Canadian customer along with the impact of a labor stoppage at a primary
steel supplier in late 2002, which negatively impacted the first quarter 2003
sales. Additionally, an increase in foreign currency translation of Canadian
sales dollars into U.S. dollars has favorably impacted sales in the current
period by approximately $437,000. The increase in sales at RMP is primarily
due to increased customer demand for our friction management products and
services. The increased sales volume at these two operations were partially
offset by a lower demand for our heavy-duty load securement systems at SSD
along with a program to refurbish military flatcars as a result of the war in
Iraq and our largest customer upgrading its fleet of flat cars that favorably
impacted SSDs first quarter 2003 sales. In addition, our United Kingdom
operation has experienced a downturn in rail sales as a result of our largest
customer, Network Rail, undergoing a significant reorganization that has
negatively impacted our United Kingdom rail sales during the first quarter of
2004. Gross Profit.Gross profit decreased to $3.9 million for the three months
ended March 31, 2004, a decrease of $288,000 or 7.1%, from $4.2 million for the
comparable period in the prior year. The decrease in gross profit is primarily
due to lower gross profit of $474,000 at our United Kingdom operation due
primarily to lower rail sales of our higher margin friction management products
and services along with workforce reduction severance costs. In addition,
gross profit was negatively impacted by $269,000 at SSD primarily due to the
lower sales volume of heavy-duty securement systems. The decreases in gross
profit at SSD and our United Kingdom operation were offset by increased gross
profit of $335,000 at our Canadian operation of which approximately $90,000 is
due to a favorable foreign currency translation adjustment and $121,000 at RMP
primarily due to increased sales volume at both of these business units. Selling, General and Administrative Expenses.Selling, general and
administrative expenses increased to $2.8 million for the three months ended
March 31, 2004, an increase of $208,000 or 7.9%, from $2.6 million for the
comparable period in the prior year. This increase is primarily due to
unfavorable foreign currency translation adjustments incurred at both our
Canadian and United Kingdom operations, which have negatively impacted expenses
during the first quarter 2004 by approximately $152,000. Additionally,
corporate shared service expenses have increased $54,000 in the current period,
primarily due to higher professional and legal fees and increased director and
officer insurance costs as a result of becoming a public company. Interest Expense.Interest expense decreased to $46,000 for the three
months ended March 31, 2004, a decrease of $55,000 or 54.5%, from $101,000 for
the comparable period in the prior year, primarily due to reduced debt levels.
Net proceeds from our initial public offering of common stock in January 2004
were used to repay outstanding domestic indebtedness of approximately $7.3
million in January 2004. Total long-term debt decreased to $1.6 million at
March 31, 2004, from $10.5 million at March 31, 2003. 14




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##### Table of Contents



Provision for Income Taxes.Provision for income taxes decreased to
$300,000 for the three months ended March 31, 2004, from $516,000 for the
comparable period in the prior year, reflecting a decrease in income before
taxes to $957,000 for the three months ended March 31, 2004 from $1.3 million
in the prior period. The effective tax rate on reported taxable income was
31.4% and 38.7% for the three months ended March 31, 2004 and 2003,
respectively. During the first quarter of 2004, our Canadian operation
received research and development tax credits, which helped lower our effective
tax rate by approximately 2.7%. In addition, our consolidated tax rate for the
first three months of 2004 was reduced by approximately 2.3% as a result of an
increase in pre-tax income from our Canadian operation being taxed at a lower
tax rate than our domestic operations. Net Income.Net income decreased to $657,000 for the three months ended
March 31, 2004, a decrease of $161,000 or 19.7%, from $818,000 for the
comparable period in the prior year for the reasons set forth above. Our basic
and diluted net income per share decreased to $.08 for the three month period
ended March 31, 2004, from $.13 for the comparable period in the prior year. Business Segment Review Our operations are organized into four business segments consisting of the
Railway Maintenance Products Division (RMP), the Shipping Systems Division
(SSD), Portec, Rail Products Ltd. (Canada) and Portec Rail Products (UK)
Ltd. (United Kingdom), along with a corporate functional shared service. The
presentation of segment information reflects the manner in which we organize
segments by geographic areas for making operating decisions, assessing
performance and allocating resources. Intersegment sales do not have an impact
on our consolidated financial condition or results of operations. Railway Maintenance Products Division  RMP.RMP manufactures and
assembles track components and related products, friction management products,
and provides services to railroads, transit systems and railroad contractors.
We are also a distributor and reseller of purchased track components,
lubricants and friction modifiers manufactured by third parties. Our
manufactured and assembled track component and friction management products
consist primarily of standard and insulated rail joints and friction management
systems. Our purchased and distributed products consist primarily of various
lubricants and friction modifiers. Three Months EndedMarch 312004
    
    2003(In thousands)External sales
    
    $
    7,865
    
    
    $
    6,577Intersegment sales
    
    
    265
    
    
    
    410Operating income
    
    
    1,078
    
    
    
    961Sales by product line(1)Rail joints and related products
    
    $
    4,504
    
    
    $
    4,195Friction management products and services
    
    
    3,334
    
    
    
    2,500Other products and services
    
    
    292
    
    
    
    292Total product and service sales
    
    $
    8,130
    
    
    $
    6,987
   (1)
    
    Includes intersegment sales. For the three months ended March 31, 2004, RMPs external sales increased
by $1.3 million or 19.6%, to $7.9 million from $6.6 million during the same
period in 2003. The increase in external customer sales is primarily related to
increases in sales of friction management products and services as customer
spending for these products and services continued to increase during the
current period. Operating income for the three months ended March 31, 2004
increased to $1.1 million from $961,000 for the same period in 2003, an
increase of $117,000 or 12.2%. As a percentage of total external sales,
operating income was 13.7% for the three months ended March 31, 2004, a
decrease of .9% or 6.2%, from 14.6% for the same period in 2003. This slight
decrease in operating income as a percentage of sales is primarily related to
product mix, as sales of our lower margin lubricants and rail joint related
products increased during the three-month period ended March 31, 2004. 15




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##### Table of Contents



Shipping Systems Division  SSD.SSD engineers and sells load
securement systems to the railroad freight car market. These systems are used
to secure a wide variety of products and lading onto freight cars. Three Months EndedMarch 312004
    
    2003(In thousands)External sales
    
    $
    702
    
    
    $
    1,687Intersegment sales
    
    
    
    
    
    
    Operating income
    
    
    19
    
    
    
    280Sales by product line(1)Heavy duty load securement systems
    
    $
    310
    
    
    $
    1,215All other load securement systems
    
    
    392
    
    
    
    472Total product and service sales
    
    $
    702
    
    
    $
    1,687
   (1)
    
    Includes intersegment sales. For the three months ended March 31, 2004, SSDs external sales of
$702,000 decreased by $985,000 or 58.4%, from $1.7 million during the same
period in 2003. This decrease in external sales is primarily due to lower
demand for heavy duty load securement systems during the first quarter of 2004.
Sales for the first quarter of 2003 were favorably impacted by the
refurbishment of military flat cars as a result of the war in Iraq and our
largest customer upgrading its fleet of flat cars. Operating income for the
three months ended March 31, 2004 decreased to $19,000 from $280,000 during the
same period in 2003, a decrease of $261,000 or 93.2%, primarily related to the
decrease in sales volume. Portec, Rail Products Ltd.  Canada.At our Canadian operation, we
manufacture rail anchors and rail spikes and assemble friction management
products primarily for the two largest Canadian railroads. Rail anchors and
spikes are devices to secure rails to the ties to restrain the movement of the
rail tracks. Three Months EndedMarch 312004
    
    2003(In thousands)External sales
    
    $
    3,842
    
    
    $
    2,240Intersegment sales
    
    
    421
    
    
    
    450Operating income
    
    
    424
    
    
    
    175Average translation rate of Canadian dollar
to United States dollar
    
    
    0.7553
    
    
    
    0.6694Sales by product line(1)Rail anchors and spikes
    
    $
    3,408
    
    
    $
    2,103Friction management products and services
    
    
    722
    
    
    
    481Other products and services
    
    
    133
    
    
    
    106Total product and service sales
    
    $
    4,263
    
    
    $
    2,690
   (1)
    
    Includes intersegment sales. For the three months ended March 31, 2004, Canadas external sales of $3.8
million increased by $1.6 million or 71.5%, from $2.2 million during the same
period in 2003. The increase in external sales is primarily attributable to
increased demand for our products by our largest customer along with a
favorable increase in foreign currency translation of Canadian dollar sales to
U.S. dollar sales of approximately $437,000. In addition, a labor stoppage at
our primary steel supplier in late 2002 negatively impacted rail anchor and
spike sales during the first quarter of 2003. Operating income for the three
months ended March 31, 2004 increased to $424,000 from $175,000 during the same
period in 2003, an increase of $249,000 or 142%, primarily due to the
additional gross profit generated on the increased sales volume. Also, a
favorable increase in the foreign currency translation of 16




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##### Table of Contents



Canadian dollars into U.S. dollars increased operating income by
approximately $48,000 during the first quarter of 2004. Portec Rail Products (UK) Ltd.- United Kingdom.In the United Kingdom,
we operate and serve our customers in two markets. The United Kingdoms rail
business is primarily driven by sales of friction management products and
services to the United Kingdom passenger rail network. The United Kingdoms
material handling business includes product lines such as overhead and floor
conveyor systems, racking systems and mezzanine flooring systems. The end users
of our material handling products are primarily United Kingdom-based companies
in the manufacturing, distribution, garment and food industries. Three Months EndedMarch 312004
    
    2003(In thousands)External sales
    
    $
    2,784
    
    
    $
    3,626Intersegment sales
    
    
    6
    
    
    
    22Operating (loss) income
    
    
    (181
    )
    
    
    363Average translation rate of British
pound sterling to United States dollar
    
    
    1.8453
    
    
    
    1.5996Sales by product line(1)Material handling products sales
    
    $
    1,949
    
    
    $
    2,103Friction management products and services
    
    
    841
    
    
    
    1,545Total product sales
    
    $
    2,790
    
    
    $
    3,648
   (1)
    
    Includes intersegment sales. For the three months ended March 31, 2004, United Kingdoms external sales
of $2.8 million decreased by $842,000 or 23.2%, from $3.6 million during the
same period in 2003. This decrease in external sales is primarily attributable
to our largest rail customer, Network Rail, undergoing a significant
restructuring program that has negatively impacted our United Kingdom rail
business. In addition, our material handling product line sales have decreased
by $154,000 in the current period, as this product line is primarily dependent
on original equipment manufacturers capital spending programs. The downturn
in sales volume on both these product lines has been partially offset by
favorable foreign currency translation of British Pound Sterling to U.S.
dollars of approximately $371,000. As a result of the downturn in our rail
business in the United Kingdom, we reduced our workforce and began to outsource
certain rail related manufacturing functions in February 2004. Due to lower
demand for our higher margin rail products and workforce reduction costs of
approximately $100,000, our United Kingdom operation incurred an operating loss
of $181,000 during the first quarter of 2004, a decrease of $544,000 from
operating income of $363,000 during the same period in 2003. Liquidity and Capital Resources Our cash flow from operations is the primary source of financing for
internal growth, capital expenditures, repayments of long-term contractual
obligations, dividends to our shareholders, and other commercial commitments.
The most significant risk associated with our ability to generate sufficient
cash flow from operations is the overall level of demand for our products. In
addition, we have cash invested in short-term government money market funds of
approximately $10.3 million at March 31, 2004 primarily as a result of our
initial public offering and subsequent underwritten over-allotment exercise.
We may use this cash for acquisitions, product line expansions, and other
general corporate purposes. We believe we can manage our working capital and
control costs to meet our cash flow needs for the next twelve months to meet
our growth objectives. In addition to cash generated from operations, we have
revolving and overdraft credit facilities in place to support the working
capital needs of each of our business segments. We believe that cash flow from
operations and the ability to borrow additional cash under our credit and
overdraft facilities along with the proceeds from our initial public offering
will be sufficient to meet our cash flow requirements over the next twelve
months. 17




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##### Table of Contents



Cash Flow Analysis.During the quarter ended March 31, 2004, we generated
$709,000 in cash flow from operations compared to using $1.8 million in cash
flow from operations during the same 2003 period. The primary reasons for this
increase of $2.5 million in cash generated from operations are related to
timing differences in inventory levels, accounts receivable balances, and
accounts payable balances. Inventory levels, accounts receivable and accounts
payable balances in the first quarter of 2003 were primarily impacted by a
labor stoppage at our primary steel supplier that significantly reduced our
inventory levels at our Canadian operation in late 2002. Net cash used in investing activities was $186,000 for the three months
ended March 31, 2004, compared to $253,000 during the same period in 2003. We
estimate 2004 total capital expenditures to approximate $750,000 to $1,000,000,
which will be used to upgrade our machinery and equipment, support new
strategic initiatives or develop new products. The majority of our capital
spending is discretionary. We believe that the overall level of capital
spending for our business segments is sufficient to remain competitive. Net cash provided by financing activities was $9.8 million for the three
months ended March 31, 2004, compared to $961,000 during the same period in
2003. Cash provided by financing activities during 2004 is primarily due to
the net proceeds received from our initial public offering of common stock in
January 2004, and subsequent exercising of an over-allotment option by the
underwriter, which provided approximately $18.0 million in net proceeds. These
net proceeds were used to repay short and long-term debt obligations of
approximately $7.3 million during January 2004. Cash dividends of $431,000
were paid during the first quarter of 2004. Financial Condition At March 31, 2004, total assets were $50.8 million, an increase of $10.4
million or 25.7%, from December 31, 2003. The increase at March 31, 2004 is
primarily due to an increase of $10.3 million in cash, primarily due to the
issuance of common stock as a result of our initial public offering. At March
31, 2004, net working capital (defined as current assets minus current
liabilities) was $24.3 million, an increase of $18.1 million or 292%, from $6.2
million at December 31, 2003. The increase in working capital at March 31,
2004 is primarily due to the cash proceeds from the initial public offering and
the repayment of certain indebtedness during the first quarter of 2004. The products we manufacture and sell, such as our joint bars, rail anchors
and rail spikes, require steel as a major element in the production process.
During the first quarter of 2004, worldwide steel scrap prices have spiked
upwards resulting in surcharges being added to our overall raw material costs.
As a result, these steel surcharges increased our raw material costs and we are
continuing to work with our customers on the overall absorption of these higher
raw material costs. We believe that the impact of the higher material costs
have not been material through the first quarter of 2004. If a prolonged
increase in steel prices should continue and we are unable to pass on these
added costs to our customers, our future earnings could be negatively impacted. In addition, our largest rail customer in the United Kingdom, Network
Rail, has recently undertaken a significant restructuring program. According
to published reports, Network Rail plans to take direct control over all of its
track maintenance work, which was previously handled by third party maintenance
contractors. As a result of this restructuring program, we have experienced
lower demand for our rail products over the past several months at our United
Kingdom operation. We believe that the demand for our products by Network
Rail will improve when its restructuring program is completed; however, if
demand for our products does not improve, our future earnings could be
negatively impacted. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate risk on our contractual long-term debt
obligations and our working capital facilities are under floating interest rate
arrangements. We have determined that these risks are not significant enough to
warrant hedging programs. A significant portion of our floating interest rate
long-term debt obligations were repaid in January 2004, in conjunction with our
initial public offering. 18




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##### Table of Contents



In addition, we are exposed to foreign currency translation fluctuations
with our two international operations. We do not have any foreign exchange
derivative contracts to hedge against foreign currency exposures. Therefore, we
are exposed to the related effects when foreign currency exchange rates
fluctuate. If the U.S. dollar strengthens against the Canadian dollar and/or
the British pound sterling, the translation rate for these foreign currencies
will decrease, which will have a negative impact on our operating income. For
example, for the three months ended March 31, 2004, for every 1/100 change in
the exchange rate of the Canadian dollar to the U.S. dollar, our Canadian
operations operating income would have changed by approximately $5,600.
Further, for every 1/100 change in the exchange rate of the British pound
sterling to the U.S. dollar, the impact on operating income for our United
Kingdom operation for the three months ended March 31, 2004 would have been
approximately $1,000. Foreign currency translation fluctuations have no impact
on cash flows as long as we continue to reinvest any profits back into the
respective foreign operations. 
 ITEM 4. CONTROLS AND PROCEDURES Under the supervision and with the participation of the Companys
management, including the Chief Executive Officer and Chief Financial Officer,
the Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) as of the end of the period covered by this quarterly
report on Form 10-Q (the Evaluation Date). Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that, as of the
Evaluation Date, the Companys disclosure controls and procedures are effective
to ensure that information required to be disclosed in the reports that the
Company files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. There has been no change
in the Companys internal control over financial reporting during the most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 PART II  OTHER INFORMATION 
 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On January 15, 2004, the Companys registration statement on Form S-1
(Registration No. 333-110288) was declared effective. Pursuant to the
registration statement, as amended, the Company registered 2,300,000 shares of
common stock, par value $1.00 per share, with a proposed maximum aggregate
offering price of $29,900,000. The stock was first offered to the public
pursuant to a preliminary prospectus dated January 6, 2004. On January 28,
2004, the Company completed the sale of 2,000,000 shares of common stock at a
price to the public of $10.00 per share. Ferris, Baker Watts, Incorporated, of
Baltimore, Maryland, acted as sole underwriter for the offering. On February
26, 2004, the Company completed the sale of an additional 95,000 shares of its
common stock at a price to the public of $10.00 per share upon the exercise by
Ferris, Baker Watts, Incorporated of its over-allotment option to purchase
additional shares. The stock offering, including the exercise of the
over-allotment option, resulted in gross proceeds of $20,950,000. Expenses
related to the offering were as follows: $1,467,000 for underwriting discounts
and commissions, $367,000 for expenses paid to or for the underwriter
(including a $105,000 financial advisory fee), and $1,144,000 for other
expenses. Total expenses were $2,978,000. No finders fees were paid in
connection with the offering. None of the expenses were direct or indirect
payment to directors, officers, general partners of the Company or their
associates, to persons owning 10% or more of the Companys common stock or to
affiliates of the Company. Net proceeds of the offering were approximately
$17,972,000. As of March 31, 2004, the net proceeds of the offering were used as
follows: $7,313,000 was used to repay indebtedness; $548,000 was used for
working capital; and $10,111,000 was used for temporary investments, consisting
of short-term government money market funds. The repayment of debt included a
payment of $73,000 to pay off our outstanding loan balance to Boone County
Bank, Inc. Marshall T. Reynolds, our chairman of the board, may be deemed an
associate of Boone County Bank, Inc. 19




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##### Table of Contents



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibits filed as part of this Form 10-Q:  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer
and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002  (b)
    
    The following reports on Form 8-K were filed during the quarter for
which this report is filed:Form 8-K dated January 22, 2004, filed January 23, 2004 regarding
Portec Rail Products, Inc.s press release titled Portec Rail
Products, Inc. Announces Pricing Of Its Initial Public Offering.Form 8-K dated January 28, 2004, filed February 3, 2004 regarding
Portec Rail Products, Inc.s press release titled Portec Rail
Products, Inc. Completes Sale of Two Million Shares of Common
Stock.Form 8-K dated February 10, 2004, filed February 11, 2004 regarding
Portec Rail Products, Inc.s press release titled Portec Rail
Products, Inc. Reports 2003 Annual and Fourth Quarter Operating
Results (unaudited).Form 8-K dated February 26, 2004, filed March 1, 2004 regarding
Portec Rail Products, Inc.s press release titled Portec Rail
Products, Inc. Completes Additional Sale of Ninety-Five Thousand
Shares of Common Stock. 20




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##### Table of Contents



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. PORTEC RAIL PRODUCTS, INC.Date: May 12, 2004
    
    By:
    
    /s/ John S. CooperJohn S. Cooper, Chief ExecutiveOfficer and PresidentDate: May 12, 2004
    
    By:
    
    /s/ Michael D. BornakMichael D. Bornak, Chief Financial Officerand Chief Accounting Officer
 21




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##### Table of Contents



EXHIBIT INDEX  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 22