UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 0-1055
FLORIDA PUBLIC UTILITIES COMPANY
(Exact name of registrant as specified in its charter)
Florida 59-0539080
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
401 South Dixie Highway, West Palm Beach, FL 33401
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (561) 832-2461
(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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. At July 31, 1996 there were
1,471,295 shares of $1.50 par value common stock outstanding.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, December 31,
1996 1995
ASSETS
Utility Plant $103,320 $100,658
Less accumulated depreciation and
amortization 35,574 34,380
Net utility plant 67,746 66,278
Current Assets
Cash and overnight investments 659 270
Accounts receivable - net 6,952 7,296
Inventories and prepayments 3,527 3,155
Total 11,138 10,721
Investments Held in Escrow for
Environmental Costs 2,807 2,737
Deferred Charges 2,412 1,210
Deferred Income Taxes and
Regulatory Asset 4,303 4,294
Total $ 88,406 $ 85,240
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 24,553 $ 23,302
Preferred stock 600 600
Long-term debt 23,500 23,500
Total 48,653 47,402
Current Liabilities
Notes payable 5,700 5,600
Accounts payable 5,663 5,660
Taxes accrued 1,010 309
Other 4,077 3,727
Customer deposits 3,516 3,550
Total 19,966 18,846
Deferred Credits 6,984 6,777
Deferred Income Taxes and
Regulatory Liability 12,803 12,215
Total $ 88,406 $ 85,240
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues
Natural gas $ 6,862 $ 6,519 $17,898 $13,272
Electric 9,611 9,211 20,004 18,386
Water 485 430 897 787
Propane gas 960 895 2,638 2,451
Total revenues 17,918 17,055 41,437 34,896
Cost of fuel and taxes
based on revenues 11,731 11,179 27,255 21,976
Operating Margin 6,187 5,876 14,182 12,920
Operating Expenses
Operations 3,447 3,392 6,829 6,632
Depreciation 964 896 1,923 1,830
Taxes other than income taxes 408 384 841 800
Income taxes 228 169 1,183 828
Total operating expenses 5,047 4,841 10,776 10,090
Operating Income 1,140 1,035 3,406 2,830
Interest Expense (716) (685) (1,426) (1,385)
Other Income (Expense) (6) 2 2 20
Net Income 418 352 1,982 1,465
Preferred Stock Dividends 7 7 14 14
Earnings For Common Stock $ 411 $ 345 $ 1,968 $ 1,451
Earnings Per Common Share $ .28 $ .24 $ 1.34 $ 1.00
Dividends Per Common Share $ .30 $ .29 $ .60 $ .58
Weighted Average Common Shares
Outstanding 1,466,475 1,452,093 1,465,477 1,450,950
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended
June 30,
1996 1995
Cash Flows from Operating Activities
Net income $ 1,982 $ 1,465
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 1,923 1,830
Other 721 8
Changes in operating assets and liabilities
Accounts receivable 269 (318)
Inventories and prepayments (372) (434)
Accounts payable and accrued expenses 1,003 1,372
Deferred credits 66 370
Under recovery of fuel costs (1,224) (966)
Net cash provided by operating activities 4,368 3,327
Cash Flows from Investing Activities
Construction expenditures (3,485) (3,594)
Other 120 90
Net cash used by investing activities (3,365) (3,504)
Cash Flows from Financing Activities
Short-term borrowings 100 1,800
Dividends paid (877) (853)
Other 163 173
Repayment of long-term debt (673)
Net cash provided (used) by financing
activities (614) 447
Net Increase in Cash and Cash Equivalents 389 270
Cash and Overnight Investments at Beginning
of Period 270 2,840
Cash and Overnight Investments at
End of Period $ 659 $ 3,110
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
1. In the opinion of the Company, the accompanying condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial
information contained therein. The results of operations are not
necessarily indicative of the results expected for the full year.
2. The First Mortgage Bond Indentures provide for restrictions on the
payment of cash dividends. At June 30, 1996, under the most restrictive
provision, approximately $4,600,000 of retained earnings were
unrestricted.
FLORIDA PUBLIC UTILITIES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
Financial Condition The Company has a $15,000,000 line of credit with its
primary bank of which $5,700,000 is outstanding at June 30, 1996. The line
provides for interest at LIBOR plus one-half percent. The Company is approved
by the Florida Public Service Commission to borrow up to $15,000,000 on a line
of credit basis, $14,000,000 of which is available for general corporate
purposes with the remaining $1,000,000 reserved as a contingency for major
storm repairs in the Marianna electric division.
Overview The Company is organized into three regulated business segments,
natural gas, electric and water and one non-regulated segment, propane gas.
The gas and electric segments aggregate approximately 98% of total operating
margin.
Contributing to variations in operating margins are the effects of seasonal
weather conditions, the timing of rate increases and the migration of winter
residents and tourists to central and southern Florida during the winter
season.
Summary of Operating Margins
(in thousands)
Six Months Ended June 30,
1996 1995 1994
Natural and Propane Gas
Operating margin $ 8,749 $ 7,804 $ 7,088
Less propane gas 1,518 1,440 1,437
Remainder $ 7,231 $ 6,364 $ 5,651
Electric
Operating margin $ 4,616 $ 4,365 $ 4,171
Less industrial 264 308 292
Remainder $ 4,352 $ 4,057 $ 3,879
Three Months Ended June 30,
1996 1995 1994
Natural and Propane Gas
Operating margin $ 3,476 $ 3,259 $ 2,962
Less propane gas 578 548 549
Remainder $ 2,898 $ 2,711 $ 2,413
Electric
Operating margin $ 2,269 $ 2,206 $ 2,137
Less industrial 139 147 138
Remainder $ 2,130 $ 2,059 $ 1,999
Operating Margin Operating margin, defined as gross operating revenues less
cost of fuel and taxes passed-through to customers which are based on
revenues, provides a more meaningful basis for evaluating utility operations
since fuel costs and taxes passed-through to customers have no effect on
results of operations and fluctuations in such costs distort the relationship
of gross operating revenues and operating margin (revenues retained by the
Company for operating purposes). For instance, as reflected in the accompany
- -ing income statement, natural gas revenues increased $4,626,000 for the six-
month period in 1996 versus 1995. Had the unit cost of fuel remained constant
from 1995 to 1996, natural gas revenues would have increased by only
$1,719,000 or a difference of $2,907,000. Such difference is a result of the
dramatic increase in natural gas prices during the first half of 1996.
Six Months Ended June 30, 1996 Compared With Six Months Ended June 30, 1995
Natural and Propane Gas Service Total natural and propane gas service
operating margin increased $945,000 or about 12% in 1996 as compared with
1995. Excluding propane gas operating margin from total gas operating margin,
remaining operating margin increased $867,000, or about 14% as compared with
1995. The increase in natural gas operating margin is due primarily to an
approximate 45% increase in heating degree days from the comparable period in
1995 and the effect of an approved final increase in base rates of $1,282,000
annually, which commenced last May (approved lesser interim rates were in
effect for the year until May 5th of 1995). Propane gas operating margin
increased $78,000, or about 5%. Similarly, the increase in propane gas
operating margin is due principally to the colder weather in 1996.
Total natural and propane gas service operating margin increased $716,000 or
about 10% in 1995 as compared with 1994. Excluding propane gas operating
margin, remaining operating margin increased $713,000 or about 13% as compared
with 1994. Such remaining increase in operating margin is attributable
principally to cooler weather in the first quarter of 1995 as compared with
1994 and the interim increase in natural gas base rates, which was effective
from late 1994 until May 5th and an approved final increase in base rates of
$1,282,000 annually, which became effective May 6th.
Electric Service Total electric service operating margin increased $251,000,
or about 6% as compared with 1995. Affecting the comparison of operating
margins are two industrial customers. Excluding these customers, operating
margin increased $295,000, about 7%. Other than industrial customers, the
increase in operating margin is due principally to a 2% growth in customers
and a 4% increase in average consumption per customer. A portion of the
increase in average consumption per customer is attributable to the colder
weather in 1996 as compared with 1995.
In 1995, total electric service operating margin increased $194,000 or about
5% as compared with 1994. Excluding the two industrial interruptible
customers, operating margin increased $178,000 or approximately 5%. Other
than industrial customers, the increase is principally due to a 2% increase in
customers and an increase of about 4% in consumption.
Operating Expenses In 1996, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $331,000, or 2% in relation to
operating margin. Operating expenses have generally increased in all
classifications of expense due primarily to inflationary pressures.
In 1995, operating expenses, excluding cost of fuel and taxes passed-through
to customers, increased $417,000, about 3% in relation to operating margin.
Administrative and general expenses and other operating expenses have
generally increased in all classifications of expense. Contributing to such
increase was an increase in payroll costs, expensing of overheads no longer
appropriate to capitalize, an increase in property insurance premiums, an
increase in pension expense, and fees for an electrical power study for the
Fernandina Beach Division. Taxes other than income taxes decreased due
principally to a reduction in ad valorem taxes.
Income taxes were provided for at approximately the same rate in both six-
month periods. The difference between the periods in the apparent rate is due
mainly to amortization of investment tax credits.
Interest expense increased in 1996 versus 1995 due principally to the line of
credit increase in weighted average amounts outstanding, the effect of which
was mitigated by a 9% decrease in the weighted average interest rate.
Cash Flows Net cash provided by operating activities increased $1,041,000 due
primarily to an increase in deferred income taxes of $579,000, which relates
primarily to an increase of $1,224,000 in underrecovery of fuel costs and an
increase in net income of $517,000.
Three Months Ended June 30, 1996 Compared with Three Months Ended
June 30, 1995
Natural and Propane Gas Service Total natural and propane gas service
operating margin increased $217,000 or about 7% as compared with 1995.
Excluding propane gas operating margin from total gas operating margin,
remaining operating margin increased $187,000, or about 7% as compared to
1995. The increase in natural gas operating margin is due primarily to cooler
weather in 1996 as compared with 1995 and the effect of an approved final
increase in base rates in the natural gas divisions, which commenced last May
(approved lesser interim rates were in effect for the 1995 year until May
5th). Propane gas operating margin increased $30,000, about 5%. Similarly,
the increase in propane gas operating margin is due principally to the cooler
weather in 1996.
Total natural and propane gas service operating margin increased $297,000 or
10% in 1995 as compared with 1994. Excluding propane gas operating margin
from total gas operating margin, remaining operating margin increased $298,000
or about 12% as compared with 1994. The improvement in operating margin is
attributable principally to the interim increase in natural gas base rates,
which was effective until May 5th and an approved final increase in base rates
of $1,282,000 annually, which became effective May 6th.
Electric Service Total electric service operating margin increased $63,000,
about 3% in 1996, as compared with 1995. Affecting the comparison of
operating margins are two industrial customers. Excluding these customers,
operating margin increased $71,000, about 3%. Other than industrial
customers, the increase in operating margin is due primarily to a 2% growth in
customers.
In 1995, total electric service operating margin increased $69,000 or 3% as
compared with 1994. Excluding the two industrial interruptible customers,
operating margin increased $60,000 or 3% as compared with 1994. Other than
industrial customers, the increase is due principally to a 2% increase in
customers and a 5% increase in consumption.
Operating Expenses In 1996, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $147,000, about 2% in relation to
operating margin. Operating expenses have increased in all classifications of
expense due primarily to inflationary pressures.
In 1995, operating expenses, excluding cost of fuel and taxes passed-through
to customers, increased $224,000, about 4% in relation to operating margin.
Administrative and general expenses and other operating expenses have
generally increased in all classifications of expense. Refer to the
discussion above for the major reasons contributing to such increase.
Depreciation decreased in the natural gas divisions as a result of the final
tariff rates going into effect on May 6th. Taxes other than income taxes
decreased due principally to a reduction in ad valorem taxes.
Income taxes were provided for at approximately the same rate in both six-
month periods. The difference between the periods in the apparent rate is due
mainly to amortization of investment tax credits.
Interest expense increased slightly in 1996 from 1995. Weighted average
amounts outstanding were greater in 1996 compared with 1995; however, the
resultant interest effect was partially offset by lower weighted average rates
in the 1996 period.
PART II.
OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
(a) None.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the quarter ending
June 30, 1996.
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.
FLORIDA PUBLIC UTILITIES COMPANY
(Registrant)
By /s/ Jack Brown
Jack Brown
Treasurer
(DULY AUTHORIZED OFFICER
AND
CHIEF FINANCIAL OFFICER)
Date: August 8, 1996
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