PWX Providence And Worcester Railroad Company

Providence and Worcester Railroad Company (NASDAQ: PWX) announced its net income for the year ended December 31, 2008. The Company�s net income for 2008 was $166,000 compared to a net loss of $652,000 in 2007. The diluted income per common share for 2008 was $0.03 compared to a diluted loss per common share of $0.14 in 2007.

Operating revenues for 2008 increased $3.6 million, or 13.7% from 2007. Increases in conventional freight revenues totaling approximately $4.6 million were partially offset by a $1.0 million decrease in container freight revenues.

Increased shipments of ethanol and automobiles, two commodities which the Company began handling during the second half of 2007, as well as increased shipments of coal and steel ingots, account for the increase in conventional freight revenues. That increase was offset somewhat by decreases in shipments of construction aggregates, chemicals, building products and other commodities during the year, which appear to be largely attributable to the slowdown experienced by the United States economy. The sharp decrease in container revenue resulted from a continuing decline in container traffic volume which began midway through 2007.

Operating expenses for 2008 increased by $2.6 million from 2007. Higher expenditures for diesel fuel accounted for $1.5 million of this increase.

(in thousands, except per share amounts)

� �

Years Ended December 31,

� �

2008

� �

2007

� Income Statement Data: �

Operating Revenues

$

29,736

$

26,164

Other Income � 1,050 � 890 � Total Revenues 30,786 27,054 Total Operating Expenses � 30,485 � 27,856 � Income (Loss) Before Income Taxes 301 (802 ) Provision for Income Taxes (Benefit) � 135 � (150 ) Net Income (Loss) $ 166 $ (652 )

Diluted Income (Loss) Per Share

$ .03 $ (.14 ) Weighted Average Shares � Diluted � 4,866 � 4,545 � �

(in thousands)

2008

2007

Balance Sheet Data: �

Total assets

$

99,010

$

95,158

Shareholders� equity 74,797 69,675

_________________

This release contains �forward-looking statements� within the meaning of section 21E of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company�s present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties, including, but not limited to, changes in general economic conditions, and changing competition which could cause actual results to differ materially from those indicated herein. Further information on these risk factors is included in the Company�s filings with the Securities and Exchange Commission.