SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
COMMISSION FILE NUMBER: 001-11590
CHESAPEAKE UTILITIES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 51-0064146
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
909 Silver Lake Boulevard, Dover, Delaware 19904
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(Address of principal executive offices) (Zip Code)
(302) 734-6798
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(Registrant's Telephone Number, Including Area Code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ].
Common Stock, par value $.4867 - 4,467,121 shares issued as of June 30, 1997.
<PAGE>
PART I
FINANCIAL INFORMATION
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
ASSETS (UNAUDITED) (AS RESTATED)
----------- -----------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Natural gas distribution $73,137,536 $70,497,872
Natural gas transmission 32,908,712 30,655,492
Propane distribution 25,979,255 25,279,217
Advanced information services 688,593 1,003,850
Other plant 4,852,694 4,769,431
Gas plant acquisition adjustment 795,004 795,004
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Total property, plant and equipment 138,361,794 133,000,866
Less: Accumulated depreciation and amortization (41,512,353) (39,430,738)
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Net property, plant and equipment 96,849,441 93,570,128
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INVESTMENTS 2,248,880 2,263,068
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CURRENT ASSETS
Cash and cash equivalents 1,442,021 2,213,529
Accounts receivable, less allowance for uncollectibles 7,973,745 14,488,945
Materials and supplies, at average cost 1,323,562 1,284,876
Propane inventory, at average cost 1,402,579 2,345,531
Storage gas prepayments 2,264,975 3,731,680
Underrecovered purchased gas costs 442,054 2,192,170
Income taxes receivable 0 112,942
Prepaid expenses 643,083 942,359
Deferred income taxes 734,477 158,010
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Total current assets 16,226,496 27,470,042
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DEFERRED CHARGES AND OTHER ASSETS
Environmental cost 8,365,312 8,428,436
Order 636 transition cost 0 943,209
Other deferred charges and intangible assets 3,352,993 3,371,027
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Total deferred charges and other assets 11,718,305 12,742,672
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TOTAL ASSETS $127,043,122 $136,045,910
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
CAPITALIZATION AND LIABILITIES (UNAUDITED) (AS RESTATED)
----------- -----------
<S> <C> <C>
CAPITALIZATION
Stockholders' equity
Common Stock, par value $.4867 per share;
(authorized 12,000,000 shares; issued 4,467,121
and 4,439,516 shares, respectively) $2,174,064 $2,160,628
Additional paid-in capital 19,198,037 18,745,718
Retained earnings 28,773,677 26,957,049
Less:
Unearned compensation - restricted stock awards (277,810) (364,529)
Net unrealized gain on marketable securities 30,944 38,598
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Total stockholders' equity 49,898,912 47,537,464
Long-term debt, net of current portion 28,647,000 30,776,919
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Total capitalization 78,545,912 78,314,383
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CURRENT LIABILITIES
Current portion of long-term debt 717,368 1,285,938
Short-term borrowings 9,900,000 12,700,000
Accounts payable 7,389,991 14,426,983
Refunds payable to customers 241,049 353,734
Income taxes payable 2,036,844 0
Accrued interest 750,664 741,768
Dividends payable 1,083,277 883,621
Other accrued expenses 3,355,033 3,733,235
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Total current liabilities 25,474,226 34,125,279
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DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 10,191,835 9,798,676
Deferred investment tax credits 853,905 876,432
Environmental liability 6,539,084 6,650,088
Accrued pension costs 2,116,533 1,866,660
Order 636 transition liability 0 943,209
Other liabilities 3,321,627 3,471,183
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Total deferred credits and other liabilities 23,022,984 23,606,248
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TOTAL CAPITALIZATION AND LIABILITIES $127,043,122 $136,045,910
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
JUNE 30,
1997 1996
(UNAUDITED) (AS RESTATED)
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<S> <C> <C>
OPERATING REVENUES $24,725,489 $25,215,069
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OPERATING EXPENSES
Purchased gas costs 13,912,083 14,640,392
Operations 6,144,227 6,167,166
Maintenance 598,908 578,688
Depreciation and amortization 1,348,961 1,412,486
Other taxes 923,281 853,043
Income taxes 389,058 478,902
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Total operating expenses 23,316,518 24,130,677
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OPERATING INCOME 1,408,971 1,084,392
OTHER INCOME AND DEDUCTIONS 63,654 72,396
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INCOME BEFORE INTEREST CHARGES 1,472,625 1,156,788
INTEREST CHARGES 779,784 670,477
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NET INCOME $692,841 $486,311
============= =============
EARNINGS PER SHARE OF COMMON STOCK
Earnings per share $0.16 $0.11
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Average shares outstanding 4,463,213 4,408,718
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</TABLE>
The accompanying notes are an integral part of these financial statements.
(1) See Exhibit 11-Computation of Primary and Fully Diluted Earnings Per Share
<PAGE>
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
1997 1996
(UNAUDITED) (AS RESTATED)
------------- -------------
<S> <C> <C>
OPERATING REVENUES $68,371,075 $74,248,560
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OPERATING EXPENSES
Purchased gas costs 41,905,264 44,695,948
Operations 12,469,975 12,614,786
Maintenance 1,091,355 1,154,910
Depreciation and amortization 2,697,308 2,820,291
Other taxes 2,036,504 1,952,788
Income taxes 2,661,602 3,257,947
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Total operating expenses 62,862,008 66,496,670
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OPERATING INCOME 5,509,067 7,751,890
OTHER INCOME AND DEDUCTIONS 128,817 147,546
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INCOME BEFORE INTEREST CHARGES 5,637,884 7,899,436
INTEREST CHARGES 1,578,931 1,412,968
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NET INCOME $4,058,953 $6,486,468
============= =============
EARNINGS PER SHARE OF COMMON STOCK (1):
Primary:
Earnings per share $0.91 $1.47
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Average shares outstanding 4,481,467 4,414,307
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Fully diluted:
Earnings per share $0.88 $1.41
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Average shares outstanding 4,721,806 4,658,366
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</TABLE>
The accompanying notes are an integral part of these financial statements.
(1) See Exhibit 11-Computation of Primary and Fully Diluted Earnings Per Share
<PAGE>
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
1997 1996
(UNAUDITED) (AS RESTATED)
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<S> <C> <C>
OPERATING ACTIVITIES
Net Income $4,058,953 $6,486,468
Adjustments to reconcile net income to net operating cash
Depreciation and amortization 2,468,138 2,570,101
Deferred income taxes, net (176,775) (140,770)
Investment tax credit adjustments (22,527) (22,527)
Employee benefits 249,872 218,101
Employee compensation from lapsing stock restrictions 86,719 167,273
Other (149,555) 13,543
Changes in assets and liabilities:
Accounts receivable 6,515,199 5,465,583
Inventory, materials, supplies and storage gas 2,370,972 1,230,830
Prepaid expenses 299,278 245,601
Other deferred charges (89,823) (16,608)
Accounts payable (7,036,992) (4,981,099)
Refunds payable to customers (112,685) (221,971)
Over/(Under) recovered purchased gas costs 1,750,116 (267,456)
Other current liabilities 1,780,479 1,320,610
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Net cash provided by operating activities 11,991,369 12,067,679
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INVESTING ACTIVITIES
Property, plant and equipment expenditures, net (5,687,475) (5,106,967)
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Net cash used by investing activities (5,687,475) (5,106,967)
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FINANCING ACTIVITIES
Common stock dividends net of amounts reinvested of
$272,738 and $291,399, respectively (1,769,930) (1,342,571)
Net repayments under line of credit agreements (2,800,000) (5,225,000)
Proceeds from issuance of stock to Company 401(k) plan 193,017 159,089
Repayments of long-term debt (2,698,489) (595,953)
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Net cash used by financing activities (7,075,402) (7,004,435)
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NET DECREASE IN CASH (771,508) (43,723)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,213,529 1,395,614
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,442,021 $1,351,891
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. QUARTERLY FINANCIAL DATA
The financial information included herein is unaudited; however, the
financial information reflects normal recurring adjustments, which are,
in the opinion of management, necessary for a fair presentation of the
Company's interim results. Due to the seasonal nature of the Company's
business, there are substantial variations in the results of operations
reported on a quarterly basis. Certain amounts in 1996 have been
reclassified to conform with the 1997 presentation.
2. ACQUISITION
On March 6, 1997, the Company acquired all of the outstanding common
stock of Tri-County Gas Company, Inc. ("Tri-County") and associated
properties. The principal business of Tri-County is the distribution of
propane to both retail and wholesale customers on the Delmarva
Peninsula.
The transaction was effected through the exchange of 639,000 shares of
the Company's common stock and accounted for as a pooling of interests.
Accordingly, the financial statements for 1997 and 1996, as restated,
include the financial results of Tri-County along with the shares of
stock issued in connection with the acquisition as required by the
accounting rules.
The combined operations of the Company and Tri-County will serve
approximately 32,000 propane customers on the Delmarva Peninsula during
1997.
3. FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB") STATEMENTS ISSUED
SFAS NO. 128 -- EARNINGS PER SHARE
In February 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 128 regarding earnings per share, requiring the
dual presentation of basic and diluted earnings per share on the face of
the income statement for all entities with a complex capital structure.
The Company must adopt the requirements of this standard in its
financial statements for the year ended December 31, 1997. Adoption of
this standard is not expected to have a material impact on the financial
statements of the Company.
SFAS NO. 130 -- REPORTING COMPREHENSIVE INCOME
In June 1997, the FASB issued SFAS No. 130 regarding the reporting of
comprehensive income in the full set of financial statements. The
Company must adopt the requirements of the standard in its financial
statements for the year beginning January 1, 1998. The effects of the
adoption of the standard are currently under evaluation by the Company.
SFAS NO. 131 -- DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION
In June 1997, the FASB issued SFAS No. 131, establishing standards for
the way that public business enterprises report information about
operating segments in annual financial statements and requiring that
those enterprises report selected information about operating segments
in interim financial reports to shareholders. The Company will adopt
the requirements of this standard in the first quarter for the fiscal
year 1998.
4. COMMITMENTS AND CONTINGENCIES -- ENVIRONMENTAL MATTERS
DOVER GAS LIGHT SITE
In 1984, the State of Delaware notified the Company that a parcel of
land it purchased in 1949 from Dover Gas Light Company, a predecessor
gas company, contains hazardous substances. The State also asserted
that the Company is responsible for any cleanup and prospective
environmental monitoring of the site. The Delaware Department of
Natural Resources and Environmental Control ("DNREC") investigated the
site and surroundings, finding coal tar residue and some ground-water
contamination.
In October 1989, the Environmental Protection Agency Region III ("EPA")
listed the Dover Site on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or "Superfund"). Under CERCLA, both the State of Delaware and
the Company were named as potentially responsible parties ("PRP") for
clean up of the site at that time.
The EPA issued the site Record of Decision ("ROD") dated August 16,
1994. The remedial action selected by the EPA in the ROD addresses the
ground-water contamination with a combination of hydraulic containment
and natural attenuation. Remediation selected for the soil at the site
is to meet stringent cleanup standards for the first two feet of soil
and less stringent standards for the soil below two feet. The ROD
estimates the costs of selected remediation of ground-water and soil at
$2.7 million and $3.3 million, respectively.
On November 18, 1994, EPA issued a "Special Notice Letter" (the
"Letter") to Chesapeake and three other PRPs. The Letter includes,
inter alia, (1) a demand for payment by the PRPs of EPA's past costs
(estimated to be approximately $300,000) and future costs incurred
overseeing Site work; (2) notice of EPA's commencement of a 60-day
moratorium on certain EPA response activities at the Site; (3) a request
by EPA that Chesapeake and the other PRPs submit a "good faith proposal"
to conduct or finance the work identified in the ROD; and (4) proposed
consent orders by which Chesapeake and other parties may agree to
perform the good faith proposal.
In January 1995, Chesapeake submitted to the EPA a good faith proposal
to perform a substantial portion of the work set forth in the ROD, which
was subsequently rejected. The Company and the EPA each attempted to
secure voluntary performance of part of the remediation by other
parties. These parties include the State of Delaware, which is the
owner of the property and was identified in the ROD as a PRP, and a
business identified in the ROD as a PRP for having contributed to
ground-water contamination.
On March 6, 1995, the Company commenced litigation against the State of
Delaware for contribution to the remedial costs being incurred to carry
out the ROD. In December of 1995, this case was dismissed without
prejudice based on a settlement agreement between the parties (the
"Settlement"). Under the Settlement, the State agreed to support the
Company's proposal to reduce the soil remedy for the site, described
below, contribute $600,000 toward the cost of implementing the ROD and
to reimburse the EPA for $400,000 in oversight costs. The Settlement is
contingent upon a formal settlement agreement between EPA and the State
of Delaware being reached within the next two years. Upon satisfaction
of all conditions of the Settlement, the litigation will be dismissed
with prejudice.
On May 17, 1995, EPA issued an order to the Company under section 106 of
CERCLA (the "Order"), which requires the Company to fund or implement
the ROD. The Order was also issued to General Public Utilities
Corporation, Inc. ("GPU"), which both EPA and the Company believe is
liable under CERCLA. Other PRPs such as the State of Delaware were not
ordered to perform the ROD. EPA may seek judicial enforcement of its
Order, as well as significant financial penalties for failure to comply.
Although notifying EPA of objections to the Order, the Company agreed to
comply. GPU informed EPA that it did not intend to comply with the
Order.
On July 7, 1995, the Company submitted to EPA a study proposing to
reduce the level and cost of soil remediation from that identified in
the ROD. Although this proposal was supported by the State of Delaware,
as required by the Settlement, it was rejected by the EPA on January 30,
1996.
On June 25, 1996, the Company initiated litigation against GPU for
contribution to the remedial costs incurred by Chesapeake in connection
with complying with the ROD. At this time, management cannot predict
the outcome of the litigation or the amount of proceeds to be received,
if any.
The Company is currently engaged in investigations related to additional
parties who may be PRPs. Based upon these investigations, the Company
will consider suit against other PRPs. The Company expects continued
negotiations with PRPs in an attempt to resolve these matters.
In July 1996, the Company commenced the design phase of the ROD, which
consists of on-site pre-design and investigation. A pre-design
investigation report ("the report") was filed in October 1996 with the
EPA. The report, which requires EPA approval, provided up to date
status on the site, which the EPA will use to determine if the remedial
design selected in the ROD is still the appropriate remedy.
In the report, the Company proposed a modification to the soil cleanup
remedy selected in the ROD to take into account existing land use
restriction that bans future development at the site. In April of 1997,
the EPA issued a fact sheet stating that the EPA was considering the
proposed modification. The fact sheet included an overall cost estimate
of $5.7 million for the proposed modified remedy and a new overall cost
estimate of $13.2 million for the remedy selected in the ROD. On April
30, 1997, the EPA held a public meeting to receive comments concerning
the proposed modification. A statement on behalf of the Company
supporting a reduced level of soil remediation was filed at the meeting.
Attached to the Company's statement were letters from the State of
Delaware and DNREC supporting the Company's proposal. If the EPA elects
to modify the ROD, the EPA will file an Explanation of Significant
Differences ("ESD") for public comment before taking final action.
In the third quarter of 1994, the Company increased its accrued
liability recorded with respect to the Dover Site to $6.0 million. This
amount reflected the EPA's estimate, as stated in the ROD, for
remediation of the site according to the ROD. Current estimates for
remediation of the site range from $5.7 million to $13.2 million,
depending on the remedy selected by the EPA. At this time, it is
management's opinion that no one amount within the range can be
determined to be a better estimate of the cost to remediate the site.
Accordingly, the Company has not adjusted its $6.0 million accrual. The
recorded liability may be adjusted upward or downward, depending on the
outcome of the EPA's consideration of the remedy and the Company's
estimate of the cost of the remedy selected. The Company has also
recorded a regulatory asset of $6.0 million, corresponding to the
recorded liability. Management believes that in addition to the
$600,000 expected to be contributed by the State of Delaware under the
Settlement, the Company will be equitably entitled to contribution from
other responsible parties for a portion of the expenses to be incurred
in connection with the remedies selected in the ROD. Management also
believes that the amounts not so contributed will be recoverable in the
Company's rates.
As of June 30, 1997, the Company has incurred approximately $4.4 million
in costs relating to environmental testing and remedial action studies.
In 1990, the Company entered into settlement agreements with a number of
insurance companies resulting in proceeds to fund actual environmental
costs incurred over a five to seven-year period beginning in 1990. In
December 1995, the Delaware Public Service Commission authorized a
process to review and provide recovery of all current and future
unrecovered environmental costs incurred by a means of a rider
(supplement) to base rates, applicable to all firm service customers.
The costs would be recovered through a five-year amortization offset by
the deferred tax benefit associated with those environmental costs. The
deferred tax benefit equals the projected cash flow savings realized by
the Company in connection with a reduced income tax liability due to the
possibility of accelerated deductions allowed on certain environmental
costs when incurred. Each year a new rider rate will be calculated to
become effective December 1. The rider rate will be based on the
amortization of expenditures through September of the filing years plus
amortization of expenses from previous years. The rider reduces the
administrative costs of obtaining recovery of environmental
expenditures. As of June 30, 1997, the amount of environmental cost not
included in the rider, effective January 1, 1997 was $482,000. With the
rider mechanism established, it is management's opinion that these costs
and any future costs, net of the deferred income tax benefit, will be
recoverable in rates.
SALISBURY TOWN GAS LIGHT SITE
In cooperation with the Maryland Department of the Environment ("MDE"),
the Company has completed an assessment of the Salisbury manufactured
gas plant site. The assessment determined that there was localized
contamination of ground-water. A remedial design report was submitted
to MDE in November 1990 and included a proposal to monitor, pump and
treat any contaminated ground-water on-site. Through negotiations with
the MDE, the remedial action work plan was revised with final approval
from MDE obtained in early 1995. The remediation process for ground-water
was revised from pump-and-treat to Air Sparging and Soil-Vapor
Extraction, resulting in a substantial reduction in overall costs.
During 1996, the Company completed construction and began remediation
procedures at the Salisbury site and will be reporting the remediation
and monitoring results to the MDE on an ongoing basis.
The cost of remediation is estimated to range from $140,000 to $190,000
per year for operating expenses. Based on these estimated costs, the
Company recorded both a liability and a deferred regulatory asset of
$650,088 on December 31, 1996, to cover the Company's projected
remediation costs for this site. The liability payout for this site is
expected to be over a five-year period. As of June 30, 1997, the
Company has incurred approximately $2.3 million for remedial actions and
environmental studies and has charged such costs to accumulated
depreciation. In January 1990, the Company entered into settlement
agreements with a number of insurance companies resulting in proceeds to
fund actual environmental costs incurred over a three to five-year
period beginning in 1990. The final insurance proceeds were requested
and received in 1992. In December 1995, the Maryland Public Service
Commission approved recovery of all environmental costs incurred through
September 30, 1995 less amounts previously amortized and insurance
proceeds. The amount approved for a 10-year amortization period was
$964,251. Of the $2.3 million in costs reported above, approximately
$528,000 has not been recovered through insurance proceeds or received
ratemaking treatment. It is management's opinion that these costs
incurred and future costs incurred, if any, will be recoverable in
rates.
WINTER HAVEN COAL GAS SITE
The Company is currently conducting investigations of a site in Winter
Haven, Florida, where the Company's predecessors manufactured coal gas
earlier this century. A Contamination Assessment Report ("CAR") was
submitted to the Florida Department of Environmental Protection ("FDEP")
in July 1990. The CAR contained the results of additional
investigations of conditions at the site. These investigations
confirmed limited soil and ground-water impacts to the site. In March
1991, FDEP directed the Company to conduct additional investigations
on-site to fully delineate the vertical and horizontal extent of soil and
ground-water impacts.
Additional contamination assessment activities were conducted at the
site in late 1992 and early 1993. In March 1993, a Contamination
Assessment Report Addendum ("CAR Addendum") was delivered to FDEP. The
CAR Addendum concluded that soil and ground-water impacts have been
adequately delineated as a result of the additional field work. The
FDEP approved the CAR and CAR Addendum in March of 1994. The next step
is a Risk Assessment ("RA") and a Feasibility Study ("FS") on the site.
A draft of the RA and FS were filed with the FDEP during 1995; however,
the RA and FS are not complete until accepted as final by the FDEP. On
May 10, 1996, the Company transmitted to FDEP an Air Sparging and Soil
Vapor Extraction Pilot Study Work Plan for FDEP's review and approval.
The Work Plan described the Company's proposal to undertake an Air
Sparging and Soil Vapor Extraction pilot study to evaluate the
effectiveness of air sparging as a ground-water remedy combined with
soil vapor extraction at the site. The Company is currently awaiting
FDEP's comments to the Work Plan. It is not possible to determine
whether remedial action will be required by FDEP and, if so, the cost of
such remediation.
The Company has spent approximately $668,000 on these investigations as
of June 30, 1997, and expects to recover these expenses, as well as any
future expenses, through base rates. These costs have been accounted
for as charges to accumulated depreciation. The Company requested and
received from the Florida Public Service Commission ("FPSC") approval to
amortize through base rates $359,659 of cleanup and removal costs
incurred as of December 31, 1986. As of December 31, 1992, these costs
were fully amortized. In January 1993, the Company received approval to
recover, through base rates, approximately $217,000 in additional costs
related to the former manufactured gas plant. This amount represents
recovery of $173,000 of costs incurred from January 1987 through
December 1992, as well as prospective recovery of estimated future costs
which had not yet been incurred at that time. The FPSC has allowed for
amortization of these costs over a three-year period and provided for
rate base treatment for the unamortized balance. In a separate docket
before the FPSC, the Company has requested and received approval to
apply a refund of 1991 over earnings of approximately $118,000 against
the balance of unamortized environmental charges incurred as of December
31, 1992. As a result, these environmental charges were fully amortized
as of June 1994. The FPSC issued an order in January 1997, applying a
refund of $292,000, pertaining to 1994 and 1995 over earnings, toward
the balance of unamortized environmental charges. Of the $668,000 in
costs reported above, all costs have received ratemaking treatment. The
FPSC has allowed the Company to continue to accrue for future
environmental costs. At June 30, 1997, the Company has $424,000
accrued. It is management's opinion that future costs, if any, will be
recoverable in rates.
SMYRNA COAL GAS SITE
On August 29, 1989 and August 4, 1993, representatives of DNREC
conducted sampling on property owned by the Company in Smyrna, Delaware.
This property is believed to be the location of a former manufactured
gas plant. Analysis of the samples taken by DNREC show a limited area
of soil contamination.
On November 2, 1993, DNREC advised the Company that it would require a
remediation of the soil contamination under the state's Hazardous
Substance Cleanup Act and submitted a draft Consent Decree to the
Company for its review. The Company met with DNREC personnel in
December 1993 to discuss the scope of any remediation of the site and in
January 1994, submitted a proposed work plan, together with comments on
the proposed Consent Decree. The final Work Plan was submitted on
September 27, 1994. DNREC has approved the Work Plan and the Consent
Decree. Remediation based on the Work Plan was completed in 1995, at a
cost of approximately $263,000. In June 1996, the Company received the
certificate of completion from DNREC. It is management's opinion that
these costs will be recoverable in rates.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE
QUARTER ENDED JUNE 30, 1997
The Company recognized net income of $692,841 for the three months ended
June 30, 1997, representing an increase in net income of $206,530 as
compared to the corresponding period in 1996. The financial results for
1997 and 1996 include the operating results of Tri-County Gas Company, Inc.
("Tri-County"), which was acquired on March 6, 1997 and was accounted for
as a pooling of interests. As indicated in the table below, the increase
in earnings before interest and taxes ("EBIT") is due to higher earnings by
the natural gas transmission and advanced information services segments
coupled with a reduction in loss before interest and taxes ("LBIT") by the
propane distribution segment. These were partially offset by a decrease in
EBIT contributed by the natural gas distribution segment.
FOR THE QUARTER ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Earnings Before Interest and Taxes
Natural Gas Distribution $ 998,202 $1,126,234 $(128,032)
Natural Gas Transmission 696,878 641,989 54,889
Propane Distribution (311,326) (633,923) 322,597
Advanced Information
Services 310,217 256,162 54,055
Eliminations & Other 104,058 172,831 (68,773)
---------- ---------- ---------
Total EBIT 1,798,029 1,563,293 234,736
Operating Income Taxes 389,058 478,902 (89,844)
Interest 779,784 670,477 109,307
Non-Operating Income, Net 63,654 72,397 (8,743)
---------- ---------- ---------
Net Income $ 692,841 $ 486,311 $ 206,530
========== ========== =========
NATURAL GAS DISTRIBUTION
The natural gas distribution segment reported EBIT of $998,202 for the
second quarter of 1997 as compared to EBIT of $1,126,234 for the
corresponding period last year -- a decrease of $128,032. The decrease in
EBIT is due to an increase in operating expenses mostly offset by an
increase in gross margin.
FOR THE QUARTER ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $15,811,302 $15,602,300 $ 209,002
Cost of Gas 10,669,854 10,727,790 (57,936)
----------- ----------- ---------
Gross Margin 5,141,448 4,874,510 266,938
Operations & Maintenance 2,736,605 2,426,999 309,606
Depreciation & Amortization 789,003 744,453 44,550
Other Taxes 617,638 576,824 40,814
----------- ----------- ---------
EBIT $ 998,202 $ 1,126,234 $(128,032)
=========== =========== =========
The increase in gross margin is primarily due to 8% colder than normal
temperatures in our northern service territory which resulted in a 4%
increase in deliveries to residential and commercial customers. Operations
expenses increased in the areas of distribution, legal, data processing,
uncollectibles, benefits and regulatory related expenses. Maintenance
expenses primarily increased in mains, meters and regulators. Depreciation
and amortization expense increased due to plant placed in service during
the past twelve months. Other taxes were higher due to revenue related
taxes and property taxes.
NATURAL GAS TRANSMISSION
The natural gas transmission segment reported EBIT of $696,878 for the
second quarter of 1997 as compared to EBIT of $641,989 for the
corresponding period last year -- an increase of $54,889. The increase in
EBIT is primarily due to an increase in gross margin somewhat offset by
higher expenses.
FOR THE QUARTER ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $6,673,540 $7,660,939 $(987,399)
Cost of Gas 4,877,330 6,016,536 (1,139,206)
---------- ---------- ---------
Gross Margin 1,796,210 1,644,403 151,807
Operations & Maintenance 774,055 707,824 66,231
Depreciation & Amortization 222,688 191,332 31,356
Other Taxes 102,589 103,258 (669)
---------- ---------- ---------
EBIT $ 696,878 $ 641,989 $ 54,889
========== ========== =========
The gross margin increase was primarily the result of a rate increase that
went into effect mid-April. The higher rates are subject to refund pending
the final outcome of Eastern Shore Natural Gas Company's ("Eastern Shore")
rate increase filing with the Federal Energy Regulatory Commission
("FERC"). Operations and maintenance expenses increased in the areas of
legal fees and maintenance of communication equipment. Depreciation and
amortization increased due to the capital additions placed in service
during the past twelve months.
As previously reported, Eastern Shore filed with FERC an abbreviated
application for a blanket certificate of public convenience to provide open
access transportation service. It is expected that open access
transportation service would be implemented in the second half of 1997.
PROPANE DISTRIBUTION
For the second quarter of 1997, the propane distribution segment
experienced a LBIT of $311,326. These results were more favorable than
those achieved for the corresponding quarter of 1996, with the segment
recognizing a decrease in LBIT of $322,597, or 51%, over the second quarter
1996 LBIT of $633,923. The decrease in LBIT was attributable to lower
operating expenses partially offset by a decrease in gross margin. The
1997 and 1996 financial results of the propane distribution segment include
the operating results of Tri-County.
FOR THE QUARTER ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $4,370,878 $4,350,153 $ 20,725
Cost of Gas 2,361,212 2,107,997 253,215
---------- ---------- ---------
Gross Margin 2,009,666 2,242,156 (232,490)
Operations & Maintenance 1,901,541 2,347,390 (445,849)
Depreciation & Amortization 298,622 427,482 (128,860)
Other Taxes 120,829 101,207 19,622
---------- ---------- ---------
EBIT $ (311,326) $ (633,923) $ 322,597
========== ========== =========
The decrease in gross margin is due primarily to a reduction in sales
prices partially offset by an increase in deliveries. Operations and
maintenance expenses declined primarily in the areas of legal fees, outside
services, compensation and insurance. Depreciation and amortization
expense decreased $128,860 which is primarily the result of a non-compete
agreement which became fully amortized in November of 1996. Other taxes
increased due to property taxes on capital additions in 1996.
ADVANCED INFORMATION SERVICES
The advanced information services segment recognized an EBIT of $310,217
and $256,162 for the quarters ended June 30, 1997 and 1996, respectively.
This increase in EBIT of $54,055 is attributable to higher revenue slightly
offset by increased operating expenses.
FOR THE QUARTER ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $1,911,836 $1,798,823 $ 113,013
Operations & Maintenance 1,502,886 1,441,970 60,916
Depreciation & Amortization 24,480 36,234 (11,754)
Other Taxes 74,253 64,457 9,796
---------- ---------- ---------
EBIT $ 310,217 $ 256,162 $ 54,055
========== ========== =========
The increase in revenue is due primarily to an increase in consulting and
resource services revenue. Operation expenses were higher, primarily
compensation expense.
INTEREST
The increase in interest expense is associated with higher short-term
borrowing balances, as compared to the same period last year.
OPERATING INCOME TAXES
Operating income taxes decreased by $89,844 because the 1996 LBIT for the
propane distribution segment does not include income tax benefits, since
Tri-County was a subchapter S corporation prior to the acquisition in the
first quarter of 1997.
RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1997
The Company recognized net income of $4,058,953 for the six months ended
June 30, 1997, representing a decrease in net income of $2,427,515 as
compared to the corresponding period in 1996. The financial results for
1997 and 1996 include the operating results of Tri-County. As indicated in
the table below, the decrease in EBIT is due to lower earnings in the
distribution and propane segments, offset by increased earnings in
transmission, advanced information services and other.
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Earnings Before Interest and Taxes
Natural Gas Distribution $4,419,765 $5,882,954 $(1,463,189)
Natural Gas Transmission 1,314,290 1,197,085 117,205
Propane Distribution 1,390,847 3,077,269 (1,686,422)
Advanced Information
Services 721,300 565,955 155,345
Eliminations & Other 324,467 286,574 37,893
---------- ---------- -----------
Total EBIT 8,170,669 11,009,837 (2,839,168)
Operating Income Taxes 2,661,602 3,257,947 (596,345)
Interest 1,578,931 1,412,968 165,963
Non-Operating Income, Net 128,817 147,546 (18,729)
---------- ---------- -----------
Net Income $4,058,953 $6,486,468 $(2,427,515)
========== ========== ===========
NATURAL GAS DISTRIBUTION
The natural gas distribution segment reported EBIT of $4,419,765 for the
first six months of 1997 as compared to EBIT of $5,882,954 for the
corresponding period last year. The decrease in EBIT is due to a reduction
in gross margin, coupled with increased expenses.
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $42,290,107 $43,318,721 $(1,028,614)
Cost of Gas 29,639,265 29,791,577 (152,312)
---------- ----------- -----------
Gross Margin 12,650,842 13,527,144 (876,302)
Operations & Maintenance 5,308,144 4,852,157 455,987
Depreciation & Amortization 1,576,489 1,486,506 89,983
Other Taxes 1,346,444 1,305,527 40,917
---------- ----------- -----------
EBIT $4,419,765 $5,882,954 $(1,463,189)
========== =========== ===========
The decrease in gross margin is primarily due to first quarter temperatures
which were 14% warmer than the first quarter in 1996, resulting in an 11%
reduction in deliveries during that period. Operations expenses increased
in the areas of distribution, legal, data processing, benefits and
regulatory related expenses. Maintenance expenses primarily increased in
mains, meters and regulators. Depreciation and amortization expense
increased due to plant placed in service during the last twelve months.
NATURAL GAS TRANSMISSION
The natural gas transmission segment reported EBIT of $1,314,290 for the
first six months of 1997 as compared to EBIT of $1,197,085 for the
corresponding period last year -- an increase of $117,205. The increase in
EBIT is due to an increase in gross margin slightly offset by an increase
in operating expenses.
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $18,733,593 $19,370,231 $(636,638)
Cost of Gas 15,254,182 16,020,684 (766,502)
---------- ---------- ---------
Gross Margin 3,479,411 3,349,547 129,864
Operations & Maintenance 1,510,372 1,558,369 (47,997)
Depreciation & Amortization 445,376 382,663 62,713
Other Taxes 209,373 211,430 (2,057)
---------- ---------- ---------
EBIT $1,314,290 $1,197,085 $ 117,205
========== ========== =========
The gross margin increase was primarily the result of a rate increase that
went into effect mid-April. The higher rates are subject to refund pending
the final outcome of the Eastern Shore rate increase filing with the FERC.
Operations and maintenance expenses decreased in the areas of compensation
and data processing. These reductions were somewhat offset by an increase
in legal fees. Depreciation and amortization increased due to the capital
additions placed in service during the past twelve months.
PROPANE DISTRIBUTION
The propane distribution segment recognized EBIT of $1,390,847 for the
first six months of 1997, as compared to $3,077,269 EBIT for the six
months ended June 30, 1996. The financial results for 1997 and 1996
include the operating results of Tri-County. The decrease in EBIT of
$1,686,422 was primarily due to a reduction in gross margin, somewhat
offset by lower expenses.
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $15,548,906 $19,104,053 $(3,555,147)
Cost of Gas 9,033,868 10,165,446 (1,131,578)
---------- ---------- ----------
Gross Margin 6,515,038 8,938,607 (2,423,569)
Operations & Maintenance 4,259,712 4,742,956 (483,244)
Depreciation & Amortization 587,877 854,040 (266,163)
Other Taxes 276,602 264,342 12,260
---------- ---------- ---------
EBIT $1,390,847 $3,077,269 $(1,686,422)
========== ========== =========
The decrease in gross margin occurred primarily during the first quarter
when sales volumes and margin earned per gallon sold declined 21% and 20%,
respectively. The declines resulted from warm temperatures experienced
during the first quarter of 1997. Operations and maintenance expenses
declined in the areas of legal fees, outside services, compensation and
insurance. Depreciation and amortization expense decreased $128,860 which
is primarily the result of a non-compete agreement which became fully
amortized in November 1996.
ADVANCED INFORMATION SERVICES
For the six months ended June 30, the advanced information services segment
recognized an EBIT of $721,300 and $565,955 for 1997 and 1996,
respectively. This increase in EBIT of $155,345 is the outcome of higher
revenue and lower operating expenses.
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996 Change
---- ---- ------
Revenue $3,903,552 $3,818,823 $ 84,729
Operations & Maintenance 2,955,967 3,022,919 (66,952)
Depreciation & Amortization 50,763 72,348 (21,585)
Other Taxes 175,522 157,601 17,921
---------- ---------- ---------
EBIT $ 721,300 $ 565,955 $ 155,345
========== ========== =========
The increase in revenue primarily occurred in consulting and resource
services revenues due to a rise in demand for progress training and
programmers.
INTEREST
The increase in interest expense is associated with higher short-term
borrowing balances, as compared to the same period last year.
OPERATING INCOME TAXES
Operating income taxes decreased $596,345 due to a reduction in EBIT and
the lack of income tax expense recorded by Tri-County in 1996, offset by a
one-time expense of $318,000 recorded during the first quarter. The one-time
expense was required to establish deferred income taxes for Tri-County
Gas Company, Inc., acquired during the first quarter of 1997. Prior to the
acquisition, Tri-County Gas Company, Inc. was a Subchapter S Corporation
for income tax reporting; therefore, no deferred income taxes were recorded
on their balance sheet. In addition, the Company's 1996 restated financial
statements do not include any income tax expense on EBIT reported for Tri-County
due to their 1996 Subchapter S status.
ENVIRONMENTAL MATTERS
The Company continues to work with federal and state environmental agencies
to assess the environmental impacts and explore corrective action at
several former gas manufacturing plant sites (see Note 4 to the
Consolidated Financial Statements). The Company believes that any future
costs associated with these sites will be recoverable in future rates.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements reflect the capital intensive nature of
its business and are attributable principally to its construction program and
the retirement of its outstanding debt. The Company relies on funds provided
by operations and short-term borrowings to meet normal working capital
requirements and temporarily finance capital expenditures. During the first
six months of 1997, the Company's net cash flow provided by operating
activities, net cash used by investing activities and net cash used by
financing activities were approximately $12.0 million, $5.7 million and $7.1
million, respectively. Due to the seasonal nature of the Company's business,
there are substantial variations in the results of operations reported on a
quarterly basis.
The Board of Directors has authorized the Company to borrow up to $20 million
from banks and trust companies. As of June 30, 1997, the Company had four $8
million unsecured bank lines of credit. Funds provided from these lines of
credit are used for short-term cash needs to meet seasonal working capital
requirements and to fund portions of its capital expenditures. The
outstanding balances of short-term borrowings at June 30, 1997 and 1996 were
$9.9 million and $175,000, respectively.
During the six months ended June 30, 1997 and 1996, net property, plant and
equipment expenditures were approximately $5.7 million and $5.4 million,
respectively. For 1997, the Company has budgeted $18.9 million for capital
expenditures. The components of this amount include $8.5 million for natural
gas distribution, $4.5 million for natural gas transmission, $3.8 million for
environmental related expenditures, $1.8 million for propane distribution,
$150,000 for advanced information services, with the remaining $150,000 for
computer, office equipment and general plant. The natural gas and propane
expenditures are for expansion and improvement. Natural gas transmission
expenditures are to improve the pipeline system and completion of the
Delaware City compressor station. Financing of the 1997 construction will be
provided primarily by short-term borrowings and cash from operations and the
issuance of the long-term debt. In the fourth quarter of 1997, the Company
expects to finalize the issuance of $10.0 million of senior notes due in
December 2007. The construction program is subject to continuous review and
modification by management. Actual construction expenditures may vary from
the above estimates due to a number of factors including inflation, changing
economic conditions, regulation, load growth and the cost and availability of
capital.
The Company expects to incur environmental related expenditures in the future
(see Note 4 to the Consolidated Financial Statements), a portion of which may
need to be financed through external sources. Management does not expect
such financing to have a material adverse effect on the financial position or
capital resources of the Company.
The Company is continually evaluating new business opportunities and
acquisitions such as Tri-County. The Company may need to obtain financing in
conjunction with any future opportunities or acquisitions. Management will
consider the impact of such financing on the financial position of the
Company in its evaluation of the business opportunity or acquisition. Such
financings are not expected to have a material adverse effect on the
financial position or capital resources of the Company.
As of June 30, 1997, common equity represented 63.5% of permanent
capitalization, compared to 60.7% as of December 31, 1996. The Company
remains committed to maintaining a sound capital structure and strong credit
ratings in order to provide the financial flexibility needed to access the
capital markets when required. This commitment, along with adequate and
timely rate relief for the Company's regulated operations, helps to ensure
that the Company will be able to attract capital from outside sources at a
reasonable cost. The achievement of these objectives will provide benefits
to customers and creditors, as well as the Company's investors.
PART II
OTHER INFORMATION
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
Item 1: Legal Proceedings
See Note 2 to the Consolidated Financial Statements
Item 2: Changes in Securities
None
Item 3: Defaults Upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on May 20, 1997.
Proposals as submitted in the proxy statement were voted on as
follows:
1. All Board of Director nominees were elected to the classes
indicated in the proxy statement.
2. Ratification of the selection of the Company's independent
auditors through the fiscal year ending December 31, 1997
was approved.
Item 5: Other Information
None
Item 6(a): Exhibits
Exhibit 3 - Amendments to the Bylaws of Chesapeake Utilities
Corporation, effective July 11, 1997, are filed
herewith.
Exhibit 10 - Form of the Executive Employment Agreement dated March
26, 1997, by and between Chesapeake Utilities
Corporation and each of Ralph J. Adkins and John R.
Schimkaitis, is submitted herewith.
Exhibit 11 - Computation of Primary and Fully Diluted Earnings Per
Share is submitted herewith.
Item 6 (b): Reports on Form 8-K
None
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.
CHESAPEAKE UTILITIES CORPORATION
/s/ Michael P. McMasters
- ----------------------------
Michael P. McMasters
Vice President, Chief Financial Officer and Treasurer
Date: August 13, 1997
3.2 COMPOSITION OF THE BOARD. The number of Directors which
shall constitute the Board shall be nine, divided into three classes,
as specified in the Certificate of Incorporation. Directors shall be
elected at the annual meeting of the stockholders, and each Director
shall be elected to serve until such Director's successor shall be
elected and shall qualify; provided, however, no person who shall have
attained the age of 75 years by the date of election shall be eligible
for election as a Director of the Corporation. If not already a
stockholder at the time of assuming office, each Director shall
purchase at least one share of the Corporation's common stock within a
reasonable time thereafter. The Board of Directors at its first
meeting after each annual meeting of stockholders shall elect the
Chair of the Board who shall perform such duties as are specified in
these Bylaws or are properly required of the Chair by the Board of
Directors. The Board may designate the Chair as the Chief
Executive Officer of the Corporation.
5.1 OFFICERS. The Officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Vice
President, a Secretary, and a Treasurer , and, if the Board has
designated the Chair as the Chief Executive Officer of the Corporation
pursuant to Section 3.2 of these Bylaws, the Chair. The Board of
Directors may also choose additional Vice Presidents, and one or more
Assistant Secretaries and Assistant Treasurers, and may appoint such
other Officers and agents as it shall deem necessary. Two or more
offices may be held by the same person, except that where the
officer designated as the Chief Executive Officer and the
Secretary are the same person, such person shall not hold any other
office.
5.2 ELECTION; TERM OF OFFICE; REMOVAL. The Board of Directors
at its first meeting after each annual meeting of stockholders shall
elect the President, one or more Vice Presidents, the Secretary, the
Treasurer, and such other Officers as it shall deem necessary, who
shall hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time by
the Board. The Officers of the Corporation shall hold office until
their successors are chosen and qualify in their stead, or until such
time as they may resign or be removed from office. Any Officer
elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the whole Board of
Directors. If the office of any Officer becomes vacant for any
reason, the vacancy shall be filled by the Board of Directors. In the
case of any office other than that of the Chair, President,
Secretary or Treasurer, the officer designated as the Chief
Executive Officer may appoint a person to serve in such office,
on a temporary basis, until the vacancy is filled by the Board.
5.4 THE CHAIR, THE PRESIDENT AND THE CHIEF EXECUTIVE
OFFICER. The Chair shall be the Chief Executive Officer
of the Corporation if, and only if, the Chair has been so designated
pursuant to Section 3.2 of these Bylaws. If the Chair has not been so
designated, the President shall hereby be designated as the Chief
Executive Officer. The Chief Executive Officer shall report
directly to the Board of Directors , and shall perform such
duties as are incident to the office of the Chief Executive Officer or
are properly specified and authorized by the Board of Directors.
If the Chair has been designated as the Chief Executive Officer, the
President shall be the Chief Operating Officer. In such case, the
President shall report to the Chief Executive Officer and shall
perform such duties as are incident to the office of the Chief
Operating Officer or are properly specified and authorized by the
Board of Directors; in the absence or disability of the Chair, the
President shall perform the duties and exercise the powers of the
Chief Executive Officer.
6.1 CERTIFICATES OF STOCK. The certificates of stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name
and number of shares and shall be signed by the officer designated
as the Chief Executive Officer, the President or a Vice President
and the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary. Any or all of the signatures on the certificate
may be a facsimile. In the event that any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be used
by the Corporation with the same effect as if such person were such
officer, transfer agent, or registrar at the date of issue.
8.3 VOTING SECURITIES OF OTHER CORPORATIONS. Subject to any
specific direction from the Board of Directors, the officer
designated as the Chief Executive Officer of the Corporation, or
any other person or persons who may from time to time be designated by
the Board of Directors, shall have the authority to vote on behalf of
the Corporation the securities of any other corporation which are
owned or held by the Corporation and may attend meetings of
stockholders or execute and deliver proxies or written consents for
such purpose.
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
AN EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated this
26th day of March, 1997, by and between Chesapeake Utilities
Corporation, a Delaware corporation (the "Company"), and
XXXXXXXXXX ("Executive").
WITNESSETH:
WHEREAS, the Company is currently obtaining the benefit of
Executive's services as a full-time executive employee in the
capacity of XXXXXXXXXX;
WHEREAS, the Company's Board of Directors (the "Board") has
authorized the Company to agree to provide for Executive's con-
tinued employment pursuant to the terms of this Agreement; and
WHEREAS, Executive is willing, in consideration of the
covenants hereinafter provided, to continue to be employed by the
Company in the capacity of XXXXXXXXXX and to render services
incident to such position during the term of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the Company and Executive hereby agree
as follows:
1. EMPLOYMENT. The Company agrees to employ Executive, and
Executive agrees to accept employment, as an executive officer of
the Company in the capacity of XXXXXXXXXX, with such reasonable
duties and responsibilities as are consistent with the By-laws of
the Company as of the date hereof, including, but not limited to
being in compliance with goals, policies, and objectives
established by the Chief Executive Officer and the Board of
Directors. Directs, coordinates, and administers all aspects of
Company operations or subsidiary operations. Recommends short and
long-term plans to achieve organization growth and
diversification. Responsible for recommending to or advising
management on potential mergers, acquisitions, divestitures, new
ventures and research in both energy and non-energy related
fields.
2. TERM.
(a) TERM OF AGREEMENT. The term of this Agreement
("Term") shall be the Initial Term (as defined in Paragraph 2(b)
hereof), and, if applicable, the Extended Term (as defined in
Paragraph 2(c) hereof).
(b) INITIAL TERM. Subject to Paragraph 2(c) hereof,
the Initial Term of this Agreement shall extend for five (5) years
commencing on the date of this Agreement.
(c) EXTENDED TERM. Upon the occurrence of a Change in
Control (as defined in Paragraph 2(d) hereof), the Initial Term
shall end and the Term of this Agreement shall thereupon
automatically be extended, commencing on the date of such Change
in Control, for the shorter of five (5) years or the period until
Executive attains the earliest age, if any, at which his
compulsory retirement is permitted under section 12(c) of the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
section 631(c), or its successor (such extended five-year or shorter
term constituting the "Extended Term").
(d) CHANGE IN CONTROL. For the purposes of this
Agreement, Change in Control shall mean a change in the control of
the Company during the Term of this Agreement, which shall be
deemed to have occurred if:
(i) The registration of the Company's voting
securities under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), terminates or the Company
shall have fewer than 300 stockholders of record; or
(ii) any person or group (within the meaning of
Sections 13(d) and 14(d) of the 1934 Act), other than
the Company or any of its majority-controlled
subsidiaries, becomes the beneficial owner (within the
meaning of Rule 13d-3 under the 1934 Act) of 30 percent
or more of the combined voting power of the Company's
then outstanding voting securities; or
(iii) a tender offer or exchange offer (other than
an offer by the Company or a majority-controlled
subsidiary), pursuant to which 30 percent or more of the
combined voting power of the company's then outstanding
voting securities was purchased, expires; or
(iv) the stockholders of the Company approve an
agreement to merge or consolidate with another
corporation (other than a majority-controlled subsidiary
of the Company) unless the stockholders of the Company
immediately before the merger or consolidation are to
own more than 70 percent of the combined voting power of
the resulting entity's voting securities; or
(v) the Company's stockholders approve an
agreement (including, without limitation, a plan of
liquidation) to sell or otherwise dispose of all or
substantially all of the business or assets of the
Company; or
(vi) during any period of two consecutive years,
individuals who, at the beginning of such period,
constituted the Board cease for any reason to constitute
at least a majority thereof, unless the election or the
nomination for election by the Company's stockholders of
each new director was approved by a vote of at least
two-thirds of the directors then still in office who
were directors at the beginning of the period; or
(vii) the acquisition of direct or indirect
beneficial ownership of more than 15 percent of the
Company's then outstanding voting securities by any
person or group is approved over the formal objection of
the Company by the Securities and Exchange Commission
pursuant to Section 9 of the Public Utility Holding
Company Act of 1935, as amended.
However, no Change in Control shall be deemed to have occurred by
reason of any event involving a transaction in which Executive, or
a group of persons or entities with which Executive acts in
concert, acquires, directly or indirectly, more than 30 percent of
the common stock or the business or assets of the Company; any
event involving or arising out of a proceeding under Title 11 of
the United States Code (or the provisions of any future United
States bankruptcy law), an assignment for the benefit of creditors
or an insolvency proceeding under state or local law; or any event
constituting approval by the Company's stockholders of a merger or
consolidation if a majority of the group consisting of the
President and Vice Presidents of the Company who are parties to
agreements conferring rights upon a Change in Control shall have
agreed in writing prior to such approval that approval shall be
deemed not to constitute a Change in Control.
3. TIME. Executive agrees to devote all reasonable full
time and best efforts for the benefit of the Company and any
subsidiary of the Company, and not to serve any other business
enterprise or organization in any capacity during the Term hereof
without the prior written consent of the Company, which consent
shall not be unreasonably withheld.
4. OFFICE.
(a) INITIAL TERM. During the Initial Term, the Company
shall elect Executive XXXXXXXXXX.
(b) EXTENDED TERM. During the Extended Term of this
Agreement:
(i) Executive shall hold and perform an office
with the responsibility, importance and scope within the
Company at least equal to that of the office described
and contemplated in Paragraph 1 hereof; and
(ii) Executive's office shall be located in Dover,
Delaware, and Executive shall not be required, without
his written consent, to change his office location or to
be absent therefrom on business for more than 60 working
days in any year.
5. COMPENSATION.
(a) INITIAL TERM. The Company shall compensate
Executive for his services hereunder during the Initial Term at a
rate of $XXXXX per annum, payable in equal semi-monthly
installments, or such greater or lesser amount as the Board may
determine ("Base Compensation"). The Base Compensation rate shall
be reviewed annually and may be increased or decreased from time
to time.
(b) EXTENDED TERM. During the Extended Term, the
Company shall compensate Executive for his services hereunder at a
rate per annum, payable in equal semi-monthly installments, equal
to his Base Compensation at the time the Extended Term commences,
increased:
(i) effective on each anniversary of the date of
this Agreement during the Extended Term by an amount
equal to the product of such Base Compensation times the
increase in the preceding calendar year of the Consumer
Price Index for Urban Wage Earners and Clerical Workers
for the Philadelphia metropolitan region as reported by
the U.S. Department of Labor (or, if such index is no
longer reported, the corresponding increase in a
comparable index); and
(ii) by such additional amounts as the Board may
determine from time to time based, in part, on an annual
review of Executive's compensation.
6. EXPENSES. During the Term of this Agreement, the
Company shall pay all necessary and reasonable business expenses
incurred by Executive on behalf of the Company in the course of
his employment hereunder, including, without limitation, expenses
incurred in the conduct of the Company's business while away from
his domicile and expenses for travel, meals, lodging,
entertainment and related expenses that are for the benefit of the
Company.
7. OTHER BENEFITS.
(a) Executive shall be entitled to participate in all
profit-sharing, insurance, medical and retirement benefit plans,
together with vacation and other employee benefits of the Company,
now in effect or as hereafter amended or established, in which the
Company executive employees are permitted to participate. The
Executive's participation shall be in accordance with the terms
and provisions of such plans.
(b) The Company shall furnish Executive with a suitable
office, necessary administrative support and customary furniture
and furnishings for such office. The Company further agrees that
Executive shall have the use of a Company-owned or Company-leased
and Company-maintained automobile, new every three years, of a
kind and model appropriate to his position with the Company.
(c) Nothing in this Agreement shall preclude the
Company from amending or terminating any employee benefit plan or
practice, but, it being the intent of the parties that the
Executive shall continue to be entitled during the Extended Term
to benefits and perquisites as set forth in Paragraphs 7(a) and
7(b) hereof at least equal to those attached to his position on
the date of this Agreement, nothing in this Agreement shall
operate as, or be construed to authorize, a reduction during the
Extended Term without Executive's written consent in the level of
such benefits or perquisites as in effect on the date of a Change
in Control. If and to the extent that such benefits or
perquisites are not payable or provided to Executive under any
such plan or practice by reason of an amendment thereto or
termination thereof during the Extended Term, the Company shall
pay or provide such benefits or perquisites to Executive.
8. TERMINATION.
(a) TERMINATION FOR CAUSE. This Agreement and
Executive's employment hereunder may be terminated by the Company
at any time for Cause. In the event of termination for Cause, the
Executive shall not be entitled to any severance benefits under
this agreement. During the Initial Term, Cause shall be as the
Board may reasonably determine. During the Extended Term,
termination of this Agreement and the Executive's employment shall
be deemed to have been for Cause only if it shall have been the
result of:
(i) conduct by Executive that constitutes a felony
under the laws of the United States or a state in which
Executive works or resides;
(ii) an act or acts of dishonesty by Executive
resulting or intended to result directly or indirectly
in material gain to or personal enrichment of Executive
at the Company's expense;
(iii) a deliberate and intentional refusal by
Executive during the Extended Term (except by reason of
incapacity due to illness or accident) to comply with
the provisions of Paragraph 1 hereof, provided that such
breach shall have resulted in demonstrably material
injury to the Company and the Executive shall have
failed to remedy such breach within thirty days after
notice from the Secretary of the Company demanding that
the Executive remedy such breach; or
(iv) the engagement in conduct by Executive that
is materially injurious to the Company if such conduct
was undertaken without good faith and the reasonable
belief that such conduct was in the best interest of the
Company.
(b) TERMINATION DURING EXTENDED TERM. During the
Extended Term of this Agreement, the term "Termination" shall
mean:
(i) Termination by the Company of Executive's
employment; or
(ii) Termination by Executive of his employment
following the occurrence of any of the following events:
(A) Failure to elect or re-elect Executive
to, or removal of Executive from, the office or
offices set forth in Paragraph 1 hereof, or the
Board if Executive shall have been a member of the
Board immediately prior to a Change in Control of
the Company;
(B) Executive's good-faith determination that
there has been a significant change in the nature
or scope of his authorities, powers, functions,
duties or responsibilities attached to the
positions contemplated in Paragraph 1 hereof or a
reduction in his compensation as provided in
Paragraph 5 hereof or his benefits as provided in
Paragraph 7, which change or reduction is not
remedied within thirty days after notice to the
Company by Executive;
(C) Any other breach by the Company of any
provision of this Agreement (including, without
limitation, relocation of Executive in violation of
Paragraph 4(b) hereof), which breach is not
remedied within thirty days after notice to the
Company by Executive; or
(D) The liquidation, dissolution,
consolidation or merger of the Company or transfer
of all or a significant portion of its assets
unless a successor or successors (by merger,
consolidation or otherwise) to which all or a
significant portion of its assets has been
transferred shall have assumed all duties and
obligations of the Company under this Agreement;
provided that in any event set forth in this Paragraph
8(b)(ii), Executive shall have elected to terminate his
employment under this Agreement upon not less than forty (40)
and not more than ninety (90) days' notice to the Board,
attention of the Secretary, given, except in the case of a
continuing breach, within three calendar months after (1)
failure to be so elected or reelected, or such removal, (2)
expiration of the 30-day cure period with respect to such
event, or (3) the closing date of such liquidation,
dissolution, consolidation, merger or transfer of assets.
An election by Executive to terminate his employment under
the provisions of this Paragraph shall not be deemed a voluntary
termination of employment by Executive for the purpose of this
Agreement or any plan or practice of the Company.
(c) PAYMENT UPON TERMINATION DURING EXTENDED TERM. In
the event of a Termination of this Agreement during the Extended
Term hereof for any reason other than Cause or Executive's death,
the Company shall, subject to Paragraph 9 hereof, pay to Executive
(or, in the event of his death following the Termination, his
legal representative) in cash within thirty (30) days after the
date of such Termination (the "Termination Date"):
(i) An amount equal to the product of multiplying
the monthly rate of Base Compensation to which Executive
was entitled under Paragraph 5(b) hereof on the day
immediately prior to the Termination Date by the lesser
of (A) twenty-four (24) months or (B) the number of
months remaining in the Term of this Agreement (the
shorter of such periods constituting the "Covered
Period");
(ii) An amount equal to the present value of the
additional benefits that would have been paid Executive
under the Company's retirement plans if he had continued
to be employed pursuant to this Agreement during the
Covered Period and the retirement plans had continued
during such period without change from the date of the
Change in Control;
(iii) For each share of Company stock subject to a
stock option that was awarded to Executive under a
Company stock option plan, was held by Executive on the
day immediately prior to his Termination Date, was not
exercisable on that date but would have become
exercisable during the Covered Period if Executive's
employment with the Company had continued during that
period, an amount equal to the excess of (A) the daily
average closing price for a share of the Company's stock
on the New York Stock Exchange, or such other national
securities exchange on which such stock may be listed,
during the 30-day period ending upon the date of the
Change in Control, or, if higher, during the 30-day
period ending upon the Termination Date (adjusted as
appropriate for any changes in the capital structure of
the Company) over (B) the option price for a share of
the Company's stock subject to the option; and
(iv) An amount equal to the aggregate of the
Company's contributions to the Company's savings plan in
respect of Executive that were not vested on the day
immediately prior to the Termination Date but that would
have been vested at the end of the Covered Period if
Executive had remained employed by the Company for the
duration of that period.
For purposes of calculating the present value specified in
Paragraph 8(c)(ii), the discount rate shall equal the PBGC
interest rate for immediate annuities, as provided in 29 C.F.R.
Part 4044, Appendix B, Table II or its successor, in effect for a
valuation date coinciding with the Termination Date. If that rate
should no longer be published, the discount rate shall be such
closely comparable interest rate as the Company may reasonably
determine.
(d) PAYMENT UPON TERMINATION DURING INITIAL TERM. In
the event that the Company terminates this Agreement during, or
elects pursuant to Paragraph 17 hereof not to renew this Agreement
at the end of, the Initial Term hereof for any reason other than
Cause or Executive's death, the Company shall continue to pay to
Executive (or in the event of his death following such
termination, his legal representative) his Base Compensation under
Paragraph 5(a) hereof, at the semi-monthly rate in effect
immediately prior to the date of such termination ("Termination
Date"), for a period of six months following the Termination Date.
9. MAXIMUM PAYMENT UPON TERMINATION. Notwithstanding any
other provision of this Agreement, if the Company should
determine, in consultation with tax advisors satisfactory to
Executive, that any amount payable to Executive pursuant to
Paragraph 8 of this Agreement during the extended term, either
alone or in conjunction with any payments or benefits to or on
behalf of Executive pursuant to this Agreement or otherwise, would
not be deductible by the Company, in whole or in part, for federal
income tax purposes by reason of section 280G of the Internal
Revenue Code or its successor, then the aggregate amount payable
to Executive pursuant to Paragraph 8 shall be reduced to the
largest amount that, in the opinion of such tax advisors, the
Company could pay Executive under Paragraph 8 without any part of
that amount being nondeductible by the Company as a result of
Section 280G or its successor.
10. MITIGATION. Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement either by
seeking other employment or otherwise. The amount of any payment
provided for herein shall not be reduced by any remuneration that
Executive may earn from employment with another employer or
otherwise following his Termination Date.
11. NONCOMPETITION COVENANT. For a period of one year
following the Termination Date and, if Executive has given a
notice pursuant to Paragraph 8(b)(ii) hereof, for a period of 15
months following the giving of such notice, Executive shall assist
no individual or entity other than the Company to acquire any
entity with respect to which a proposal to acquire was presented
to the Board prior to the beginning of the period.
12. INDEMNIFICATION. The Company shall indemnify Executive
to the fullest extent permitted by applicable Delaware law (as may
be amended from time to time), including the advance of expenses
permitted herein.
13. PERFORMANCE. The failure of either party to this
Agreement to insist upon strict performance of any provision
hereof shall not constitute a waiver of its rights subsequently to
insist upon strict performance of such provision or any other
provision of this Agreement.
14. NON-ASSIGNABILITY. Neither party shall have the right
to assign this Agreement or any rights or obligations hereunder
without the consent of the other party.
15. INVALIDITY. If any provisions of this Agreement shall
be found to be invalid by any court of competent jurisdiction,
such finding shall not affect the remaining provisions of this
Agreement, all of the which shall remain in full force and effect.
16. ARBITRATION AND LEGAL FEES. In the event of any dispute
regarding a refusal or failure by the Company to make payments or
provide benefits hereunder for any reason, Executive shall have
the right, in addition to all other rights and remedies provided
by law, to arbitration of such dispute under the rules of the
American Arbitration Association, which right shall be invoked by
serving upon the Company a notice to arbitrate, stating the place
of arbitration, within ninety (90) days of receipt of notice in
any form (including, without limitation, failure by the Company to
respond to a notice from Executive within thirty (30) days) that
the Company is withholding or proposes to withhold payments or
provisions of benefits. In the event of any such dispute, whether
or not Executive exercises his right to arbitration, if it shall
ultimately be determined that the Company's refusal or failure to
make payments or provide benefits hereunder was wrongful or
otherwise inconsistent with the terms of this Agreement, the
Company shall indemnify and hold harmless Executive from and
against any and all expenses incurred in connection with such
determination, including legal and other fees and expenses.
Without limitation of or by the foregoing, the Company shall,
within ten (10) days after notice from Executive, provide
Executive with an irrevocable letter of credit in the amount of
$100,000 from a bank satisfactory to Executive against which
Executive may draw to pay legal fees and other fees and expenses
in connection with any attempt by Executive to enforce any of his
rights under this Agreement during the Extended Term. Said letter
of credit shall not expire before ten (10) years following the
date of this Agreement.
17. RENEWAL. If the Initial Term of this Agreement expires
without there having been a Change in Control, this Agreement
shall be renewed, as of the day following such expiration, unless,
during the period beginning ninety (90) days prior and ending
thirty (30) days prior to such day, either the Company or
Executive shall have given notice to the other that this Agreement
will not be renewed. If this Agreement is renewed as provided
under this Paragraph, the new Agreement shall be identical to this
Agreement (except insofar as the Company and Executive may
otherwise agree in writing) except that the date of the new
Agreement shall be as of the day following the expiration of the
Initial Term of this Agreement.
18. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the Executive (and his personal
representative), the Company and any successor organization or
organizations that shall succeed to substantially all of the
business and property of the Company, whether by means of merger,
consolidation, acquisition of substantially all of the assets of
the Company or otherwise, including by operation of law.
19. SET-OFF. The Company shall have no right of set-off or
counterclaim in respect of any claim, debt or obligation against
any payments or benefits provided for in this Agreement.
20. AMENDMENTS. No Amendment to this Agreement shall be
effective unless in writing and signed by both the Company and
Executive.
21. GOVERNING LAW. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Delaware.
22. NOTICES. Unless otherwise stated herein, all notices
hereunder shall be in writing and shall be deemed to be given when
personally delivered or mailed by United States registered or
certified mail, postage prepaid, to, if to the Company, 909 Silver
Lake Boulevard, Dover, Delaware 19904, and, if to Executive, the
last address therefore shown on the records of the Company.
Either the Company or Executive may, by notice to the other,
designate an address other than the foregoing for the receipt of
subsequent notices.
23. WITHHOLDING. The Company may withhold from any amounts
payable to Executive hereunder all federal, state, city or other
taxes that the Company may reasonably determine are required to be
withheld pursuant to any applicable law or regulation.
24. NATURE OF PAYMENTS UPON TERMINATION. All payments to
Executive pursuant to Paragraphs 8 and 9 of this Agreement shall
be considered as liquidated damages or, in the case of certain
payments pursuant to Paragraph 8(d), as severance payments in
consideration of Executive's past services to the Company, and no
such payment shall be regarded as a penalty to the Company.
25. ACKNOWLEDGMENT. The parties hereto each acknowledge
that each has read this Agreement and understands the same and
that each enters into this Agreement freely and voluntarily.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
CHESAPEAKE UTILITIES CORPORATION
[CORPORATE SEAL] By: _______________________________
Title:
ATTEST:
__________________________
Secretary EXECUTIVE
____________________________________
_____________
CHESAPEAKE UTILITIES CORPORATION AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, (1) ENDED JUNE 30,
------------------------ ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary earnings per share calculation:
Weighted average number of shares 4,486,966 4,428,860 4,481,467 4,414,307
======================== ========================
Consolidated net income $692,841 $486,311 $4,058,953 $6,486,468
======================== ========================
Primary earnings per share $0.15 $0.11 $0.91 $1.47
======================== ========================
Fully diluted earings per share calculation:
Weighted average number of shares 4,486,966 4,428,860 4,481,467 4,414,307
Contingent shares related to assumed
conversion of convertible debt 240,137 242,761 240,339 244,059
------------------------ ------------------------
Weighted average number of shares assuming
full dilution 4,727,103 4,671,621 4,721,806 4,658,366
======================== ========================
Adjusted net income
Consolidated net income $692,841 $486,311 $4,058,953 $6,486,468
Interest on convertible debt 84,030 84,715 167,275 170,338
Less: Applicable federal income taxes (32,772) (33,039) (65,237) (66,432)
------------------------ ------------------------
Adjusted net income $744,099 $537,987 $4,160,991 $6,590,374
======================== ========================
Fully diluted earnings per share $0.16 $0.12 $0.88 $1.41
======================== ========================
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11), although it is contrary to paragraph 40 of APB Opinion
No. 15, because it produces an anti-dilutive result for the quarters
ended June 30, 1997 and 1996.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
the Balance Sheet, Income Statements and Statement of Cash Flows of
Chesapeake Utilities Corporation and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 76180847
<OTHER-PROPERTY-AND-INVEST> 22917474
<TOTAL-CURRENT-ASSETS> 16226496
<TOTAL-DEFERRED-CHARGES> 11718305
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 127043122
<COMMON> 2174064
<CAPITAL-SURPLUS-PAID-IN> 19198037
<RETAINED-EARNINGS> 28773677
<TOTAL-COMMON-STOCKHOLDERS-EQ> 49898912
0
0
<LONG-TERM-DEBT-NET> 28647000
<SHORT-TERM-NOTES> 9900000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 717368
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 37879842
<TOT-CAPITALIZATION-AND-LIAB> 127043122
<GROSS-OPERATING-REVENUE> 68371075
<INCOME-TAX-EXPENSE> 2661602
<OTHER-OPERATING-EXPENSES> 60200406
<TOTAL-OPERATING-EXPENSES> 62862008
<OPERATING-INCOME-LOSS> 5509067
<OTHER-INCOME-NET> 128817
<INCOME-BEFORE-INTEREST-EXPEN> 5637884
<TOTAL-INTEREST-EXPENSE> 1578931
<NET-INCOME> 4058953
0
<EARNINGS-AVAILABLE-FOR-COMM> 4058953
<COMMON-STOCK-DIVIDENDS> 2042668
<TOTAL-INTEREST-ON-BONDS> 2357022
<CASH-FLOW-OPERATIONS> 11991369
<EPS-PRIMARY> .91
<EPS-DILUTED> .88
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
the restated Balance Sheets, Income Statements and Statements of Cash
Flows of Chesapeake Utilities Corporation for fiscal year 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<BOOK-VALUE> PER-BOOK PER-BOOK PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 66317043 67797800 69425920 73217386
<OTHER-PROPERTY-AND-INVEST> 21747264 21656697 22224712 22615810
<TOTAL-CURRENT-ASSETS> 22084813 15628964 17418178 27470042
<TOTAL-DEFERRED-CHARGES> 13304858 13143986 13006492 12742672
<OTHER-ASSETS> 0 0 0 0
<TOTAL-ASSETS> 123453978 118227447 122075302 136045910
<COMMON> 2139973 2147199 2154544 2160628
<CAPITAL-SURPLUS-PAID-IN> 18051687 18301137 18534116 18745718
<RETAINED-EARNINGS> 28387382 27884859 26169270 26957049
<TOTAL-COMMON-STOCKHOLDERS-EQ> 47944657 47790657 46445878 47537464
0 0 0 0
0 0 0 0
<LONG-TERM-DEBT-NET> 31377823 31026736 31036043 30776919
<SHORT-TERM-NOTES> 2000000 175000 6225000 12700000
<LONG-TERM-NOTES-PAYABLE> 0 0 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 1277938 1277938 1277938 1285938
0 0 0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0 0 0
<LEASES-CURRENT> 0 0 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 40853560 37957116 37090443 43745589
<TOT-CAPITALIZATION-AND-LIAB> 123453978 118227447 122075302 136045910
<GROSS-OPERATING-REVENUE> 49033492 74248560 93896237 130279277
<INCOME-TAX-EXPENSE> 2779045 3257947 2872281 3947056
<OTHER-OPERATING-EXPENSES> 39586948 63238723 83432487 116222216
<TOTAL-OPERATING-EXPENSES> 42365993 66496670 86304768 120169272
<OPERATING-INCOME-LOSS> 6667499 7751890 7591469 10110005
<OTHER-INCOME-NET> 75150 147546 261748 458249
<INCOME-BEFORE-INTEREST-EXPEN> 6742649 7899436 7853217 10568254
<TOTAL-INTEREST-EXPENSE> 742492 1412968 2114528 2963339
<NET-INCOME> 6000157 6486468 5738689 7604915
0 0 0 0
<EARNINGS-AVAILABLE-FOR-COMM> 6000157 6486468 5738689 7604915
<COMMON-STOCK-DIVIDENDS> 837333 1633970 2131310 3574694
<TOTAL-INTEREST-ON-BONDS> 2397876 2544882 2587391 2574802
<CASH-FLOW-OPERATIONS> 6856702 12067679 12044651 11294238
<EPS-PRIMARY> 1.36 1.47 1.30 1.72
<EPS-DILUTED> 1.30 1.41 1.26 1.67
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
the restated Balance Sheets, Income Statements and Statement of Cash
Flows of Chesapeake Utilities Corporation for fiscal year 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> MAR-31-1995 JUN-30-1995 SEP-30-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PER-BOOK PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 61582716 63528927 63907305 65419372
<OTHER-PROPERTY-AND-INVEST> 19647027 19813276 20305020 21127028
<TOTAL-CURRENT-ASSETS> 14733770 14611747 14977055 22699647
<TOTAL-DEFERRED-CHARGES> 13203962 12944917 13876248 14092681
<OTHER-ASSETS> 0 0 0 0
<TOTAL-ASSETS> 109167475 110898867 113065628 123338728
<COMMON> 2107272 2112040 2117966 2122212
<CAPITAL-SURPLUS-PAID-IN> 17040158 17198828 17366900 17489109
<RETAINED-EARNINGS> 22384332 22316693 22470077 23458776
<TOTAL-COMMON-STOCKHOLDERS-EQ> 40637229 40807271 41292978 42582151
0 0 0 0
0 0 0 0
<LONG-TERM-DEBT-NET> 26078657 25733156 27943157 31618657
<SHORT-TERM-NOTES> 3600000 4100000 2391000 5400000
<LONG-TERM-NOTES-PAYABLE> 0 0 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 1653470 1666470 5289970 1281970
0 0 0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0 0 0
<LEASES-CURRENT> 0 0 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 37198120 38591971 36148524 42455950
<TOT-CAPITALIZATION-AND-LIAB> 109167476 110898868 113065629 123338728
<GROSS-OPERATING-REVENUE> 33955208 57188083 78635067 111853705
<INCOME-TAX-EXPENSE> 2030851 2489157 2979229 4025274
<OTHER-OPERATING-EXPENSES> 26734047 48200772 67974172 97761891
<TOTAL-OPERATING-EXPENSES> 28764898 50689929 70953401 101787165
<OPERATING-INCOME-LOSS> 5190311 6498154 7681666 10066540
<OTHER-INCOME-NET> 52794 148746 251011 391450
<INCOME-BEFORE-INTEREST-EXPEN> 5243104 6646900 7932677 10457990
<TOTAL-INTEREST-EXPENSE> 762377 1500638 2144032 2864484
<NET-INCOME> 4480727 5146262 5788645 7593506
0 0 0 0
<EARNINGS-AVAILABLE-FOR-COMM> 4480727 5146262 5788645 7593506
<COMMON-STOCK-DIVIDENDS> 949863 1924152 2902018 3882966
<TOTAL-INTEREST-ON-BONDS> 2480262 2447159 2418288 2464591
<CASH-FLOW-OPERATIONS> 8349970 12032665 10949216 12997955
<EPS-PRIMARY> 1.04 1.20 1.35 1.75
<EPS-DILUTED> 1.00 1.15 1.31 1.70
</TABLE>
