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 September 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 October 31, 1996 there
were 1,473,647 shares of $1.50 par value common stock outstanding.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
September 30, December 31,
1996 1995
ASSETS
Utility Plant $105,180 $100,658
Less accumulated depreciation and
amortization 36,382 34,380
Net utility plant 68,798 66,278
Current Assets
Cash and overnight investments 963 270
Accounts receivable - net 6,985 7,296
Inventories and prepayments 3,451 3,155
Total 11,399 10,721
Investments Held in Escrow for
Environmental Costs 2,839 2,737
Deferred Charges 1,541 1,210
Deferred Income Taxes and
Regulatory Asset 4,371 4,294
Total $ 88,948 $ 85,240
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 24,484 $ 23,302
Preferred stock 600 600
Long-term debt 23,500 23,500
Total 48,584 47,402
Current Liabilities
Notes payable 5,300 5,600
Accounts payable 5,848 5,660
Taxes accrued 1,378 309
Other 4,720 3,727
Customer deposits 3,515 3,550
Total 20,761 18,846
Deferred Credits 7,035 6,777
Deferred Income Taxes and
Regulatory Liability 12,568 12,215
Total $ 88,948 $ 85,240
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues
Gas $ 6,752 $ 5,320 $27,288 $21,043
Electric 11,474 11,260 31,478 29,646
Water 530 443 1,427 1,230
Total revenues 18,756 17,023 60,193 51,919
Cost of Fuel and Taxes
Based on Revenues 12,579 11,043 39,834 33,019
Operating Margin 6,177 5,980 20,359 18,900
Operating Expenses
Operations 3,583 3,435 10,413 10,067
Depreciation 973 930 2,896 2,760
Taxes other than income taxes 433 399 1,273 1,200
Income taxes 119 181 1,302 1,008
Total operating expenses 5,108 4,945 15,884 15,035
Operating Income 1,069 1,035 4,475 3,865
Interest Expense (705) (689) (2,131) (2,074)
Other Income (Expense) (23) 7 (21) 28
Net Income 341 353 2,323 1,819
Preferred Stock Dividends 7 7 21 21
Earnings For Common Stock $ 334 $ 346 $ 2,302 $ 1,798
Earnings Per Common Share $ .23 $ .24 $ 1.57 $ 1.24
Dividends Per Common Share $ .30 $ .29 $ .90 $ .87
Weighted Average Common Shares
Outstanding 1,471,295 1,457,949 1,467,416 1,453,283
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash Flows from Operating Activities
Net income $ 2,323 $ 1,819
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 2,896 2,760
Other 477 353
Changes in operating assets and liabilities
Accounts receivable 199 (889)
Inventories and prepayments (295) (262)
Accounts payable and accrued expenses 2,196 2,514
Environmental insurance proceeds 103 715
Under recovery of fuel costs (305) (253)
Other (69) (153)
Net cash provided by operating activities 7,525 6,604
Cash Flows from Investing Activities
Construction expenditures (5,550) (5,292)
Customer advances for construction 141 113
Net cash used by investing activities (5,409) (5,179)
Cash Flows from Financing Activities
Short-term borrowings (repayments) - net (300)
Repayment of long-term debt (673)
Dividends paid (1,324) (1,281)
Other 201 207
Net cash used by financing activities 1,423) (1,747)
Net Increase (Decrease) in Cash and Overnight
Investments 693 (322)
Cash and Overnight Investments at Beginning of Period 270 2,840
Cash and Overnight Investments at End of Period $ 963 $ 2,518
<PAGE>
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 1996, under the most
restrictive provision, approximately $4,500,000 of retained earnings
were unrestricted.
<PAGE>
FLORIDA PUBLIC UTILITIES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1996
Financial Condition The Company has a $15,000,000 line of credit with its
primary bank of which $5,300,000 is outstanding at September 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 94% 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)
Nine Months Ended September 30,
1996 1995 1994
Natural and Propane Gas
Operating margin $11,846 $10,831 $ 9,746
Less propane gas 1,979 1,905 1,901
Remainder $ 9,867 $ 8,926 $ 7,845
Electric
Operating margin $ 7,214 $ 6,894 $ 6,507
Less industrial 407 462 427
Remainder $ 6,807 $ 6,432 $ 6,080
Three Months Ended September 30,
1996 1995 1994
Natural and Propane Gas
Operating margin $ 3,097 $ 3,027 $ 2,658
Less propane gas 462 464 463
Remainder $ 2,635 $ 2,563 $ 2,195
Electric
Operating margin $ 2,597 $ 2,529 $ 2,336
Less industrial 142 154 135
Remainder $ 2,455 $ 2,375 $ 2,201
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
accompanying income statement, natural gas revenues increased $6,245,000 for
the nine-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
$2,093,000 or a difference of $4,152,000. Such difference is a result of the
dramatic increase in natural gas prices during 1996.
Nine Months Ended September 30, 1996 Compared With Nine Months Ended
September 30, 1995
Natural and Propane Gas Service. Total natural and propane gas service
operating margin increased $1,014,000 or about 9% in 1996 as compared with
1995. Excluding propane gas operating margin from total gas operating margin,
remaining operating margin increased $941,000, or about 11% 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 May 1995 (approved lesser interim rates were in
effect for the year until May 5th of 1995). Propane gas operating margin
increased $74,000, or about 4%. 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 $1,085,000 or
about 11% in 1995 as compared with 1994. Excluding propane gas operating
margin from total gas operating margin, remaining operating margin increased
$1,081,000, or about 14% as compared with 1994. Such increase in remaining
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 $320,000,
or about 5% as compared with 1995. Affecting the comparison of operating
margins are two industrial customers. Excluding these customers, operating
margin increased $375,000, or about 6%. Other than industrial customers, the
increase in operating margin is due principally to a 2% growth both in
customers and in average consumption per customer.
In 1995, total electric service operating margin increased $387,000 or about
6% as compared with 1994. Excluding the two industrial interruptible
customers, remaining operating margin increased $352,000 or approximately 6%.
Other than industrial customers, the increase is due principally 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 $555,000, or almost 3% 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 $573,000, about 3% in relation to operating margin.
Contributing to the increase was payroll costs, expensing of overheads no
longer appropriate to capitalize, an increase in property insurance premiums,
an increase in pension expense, and an increase in maintenance costs and fees
for an electrical power study for the Fernandina Beach Division. Partially
offsetting these increases, taxes other than income taxes decreased due
principally to reduced ad valorem taxes.
Income taxes were provided for at approximately the same rate in both nine
month periods. The difference between the periods in the apparent rate is due
principally 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 an 8% decrease in the weighted average interest rate.
Cash Flows. Net cash provided by operating activities increased $921,000 due
primarily to an increase in net income of $504,000, an increase of $260,000 in
non-cash charges and changes in other operating assets and liabilities
comprising the remainder.
Three Months Ended September 30, 1996 Compared with Three Months Ended
September 30, 1995
Natural and Propane Gas Service. Total natural and propane gas service
operating margin increased $70,000 or about 2% as compared with 1995.
Excluding propane gas operating margin from total gas operating margin,
remaining operating margin increased $72,000, or about 3% as compared to 1995.
The increase in natural gas operating margin is due primarily to customer
growth.
Total natural and propane gas service operating margin increased $369,000 or
14% in 1995 as compared with 1994. Excluding propane gas operating margin
from total gas operating margin, remaining operating margin increased $368,000
or about 17% as compared with 1994. The improvement in operating margin is
attributable principally to the approved final increase in natural gas base
rates of $1,282,000 annually, which became effective May 6, 1995.
Electric Service. Total electric service operating margin increased $68,000,
almost 3% in 1996, as compared with 1995. Affecting the comparison of
operating margins are two industrial customers. Excluding these customers,
operating margin increased $80,000, more than 3%. Other than industrial
customers, the increased in operating margin is due primarily to a growth in
customers of more than 2%.
In 1995, total electric service operating margin increased $193,000 or 8% as
compared with 1994. Excluding the two industrial interruptible customers,
operating margin increased $174,000 or 8% as compared with 1994. Other than
industrial customers, the increase is due principally to a 2% increase in
customers and a 9% increase in the average consumption per customer.
Operating Expenses. In 1996, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $225,000, less than 4% 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 $157,000, about 3% in relation to operating margin.
Refer to the 1995 Operating Expenses discussion above for the major reasons
contributing to such increase.
Income taxes were provided for at approximately the same rate in both three
month periods. The provisions were adjusted by a credit in 1996 and a debit
in 1995, according to accounting principles established by the Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", for the
net amortization of deferred taxes that were never provided for and the turn
around of deferred taxes at current rates that were originally provided for at
higher rates.
Interest expense increased in 1996 versus 1995 due principally to line of
credit increases in weighted average amounts outstanding, the effect of which
was mitigated by an 8% decrease in the weighted average interest rate.
<PAGE>
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
September 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 R. Brown
Jack R. Brown
Treasurer
(DULY AUTHORIZED OFFICER AND
CHIEF FINANCIAL OFFICER)
Date: November 7, 1996
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