UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 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 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, 1997 there were
1,486,355 shares of $1.50 par value common shares outstanding.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, December 31,
1997 1996
ASSETS
Utility Plant $109,447 $106,684
Less accumulated depreciation and
amortization 38,062 36,808
Net utility plant 71,385 69,876
Current Assets
Cash and overnight investments 398 841
Accounts receivable - net 6,645 8,062
Inventories and prepayments 3,355 4,079
Total 10,398 12,982
Investments Held in Escrow for
Environmental Costs 2,840 2,881
Deferred Charges 1,185 2,430
Deferred Income Taxes and
Regulatory Asset 2,844 2,825
Total $ 88,652 $ 90,994
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 25,331 $ 24,511
Preferred stock 600 600
Long-term debt 23,500 23,500
Total 49,431 48,611
Current Liabilities
Notes payable 6,100 7,900
Accounts payable 5,393 7,564
Taxes accrued 1,169 308
Other 4,762 4,677
Customer deposits 3,723 3,634
Total 21,147 24,083
Deferred Credits 7,163 6,975
Deferred Income Taxes and
Regulatory Liability 10,911 11,325
Total $ 88,652 $ 90,994
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,
1997 1996 1997 1996
Revenues
Natural gas $ 7,578 $ 6,862 $ 18,280 $17,898
Electric 8,891 9,611 18,451 20,004
Water 486 485 925 897
Propane gas 923 960 2,365 2,638
Total revenues $17,878 17,918 40,021 41,437
Cost of Fuel and Taxes
Based on Revenues 11,492 11,731 26,327 27,255
Operating Margin 6,386 6,187 13,694 14,182
Operating Expenses
Operations 3,451 3,447 6,921 6,829
Depreciation 1,003 964 1,997 1,923
Taxes other than income taxes 446 408 905 841
Income taxes 256 228 837 1,183
Total operating expenses 5,156 5,047 10,660 10,776
Operating Income 1,230 1,140 3,034 3,406
Interest Expense (723) (716) (1,482) (1,426)
Other Income (Expense) 19 (6) 20 2
Net Income 526 418 1,572 1,982
Preferred Stock Dividends 7 7 14 14
Earnings For Common Stock $ 519 $ 411 $ 1,558 $ 1,968
Earnings Per Common Share $ .35 $ .28 $ 1.05 $ 1.34
Dividends Per Common Share $ .30 $ .30 $ .60 $ .60
Weighted Average Common Shares
Outstanding 1,481,297 1,466,475 1,480,034 1,465,477
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended
June 30,
1997 1996
Cash Flows from Operating Activities
Net income $ 1,572 $ 1,982
Adjustments to reconcile net income to net
cash provided (used) by operating activities
Depreciation 1,997 1,923
Deferred income taxes (432) 579
Other 132 142
Changes in operating assets and liabilities
Accounts receivable 1,335 269
Inventories and prepayments 724 (372)
Accounts payable and accrued expenses (1,139) 1,003
Deferred credits (28) 66
Over/(under) recovery of fuel costs 1,420 (1,224)
Net cash provided by operating activities 5,581 4,368
Cash Flows from Investing Activities
Construction expenditures (3,591) (3,485)
Other 117 120
Net cash used by investing activities (3,474) (3,365)
Cash Flows from Financing Activities
Net change in short-term borrowings (1,800) 100
Dividends paid (900) (877)
Other 150 163
Net cash used by financing activities (2,550) (614)
Net Increase in Cash and Cash Equivalents (443) 389
Cash and Overnight Investments at Beginning
of Period 841 270
Cash and Overnight Investments at
End of Period $ 398 $ 659
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
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, 1997 under the most restrictive
provision, approximately $4,200,000 of retained earnings were
unrestricted.
FLORIDA PUBLIC UTILITIES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1997
Financial Condition The Company has a $15,000,000 line of credit with its
primary bank of which $6,100,000 is outstanding at June 30, 1997. The line
provides for interest at LIBOR plus 50 basis points. 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)
Six Months Ended June 30,
1997 1996 1995
Natural and Propane Gas
Operating margin $ 8,237 $ 8,749 $ 7,804
Less propane gas 1,286 1,518 1,440
Remainder $ 6,951 $ 7,231 $ 6,364
Electric
Operating margin $ 4,617 $ 4,616 $ 4,365
Less industrial 281 264 308
Remainder $ 4,336 $ 4,352 $ 4,057
Three Months Ended June 30,
1997 1996 1995
Natural and Propane Gas
Operating margin $ 3,651 $ 3,476 $ 3,259
Less propane gas 526 578 548
Remainder $ 3,125 $ 2,898 $ 2,711
Electric
Operating margin $ 2,294 $ 2,269 $ 2,206
Less industrial 148 139 147
Remainder $ 2,146 $ 2,130 $ 2,059
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.
Six Months Ended June 30, 1997 Compared With Six Months Ended June 30, 1996
Natural and Propane Gas Service. Total natural and propane gas service
operating margin decreased $512,000 or about 6% in 1997 as compared with 1996.
Excluding propane gas operating margin from total gas operating margin,
remaining operating margin decreased $280,000 or about 4% in 1997 as compared
with 1996. The decrease in natural gas operating margin is due principally to
a 60% decrease in heating degree days early in 1997. Propane gas operating
margin decreased $232,000, or about 15%. Similarly, the decrease in propane
gas operating margin is due principally to the warmer weather early in 1997.
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.
Electric Service. Total electric service operating margin remained unchanged
in 1997 as compared with 1996. Affecting the comparison of operating margin
are two industrial customers. Excluding these customers, operating margin
decreased $16,000. The effect on consumption of the warmer weather early in
1997 was greater than the 2.5% increase in customer growth.
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.
Operating Expenses. In 1997, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $229,000, or almost 2% in
relation to operating margin. Operating expenses increased marginally in all
classifications of expense due primarily to inflationary effects.
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.
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
principally to amortization of investment tax credits.
Interest expense increased in 1997 versus 1996 due primarily to greater
weighted average amounts outstanding at slightly greater rates in 1997 as
compared with 1996.
Cash Flows. Net cash provided by operating activities increased $1,213,000
due to major changes in almost every component of cash provided by operating
activities. The most significant of the changes occurred in over/under
recovery of fuel costs, a change of $2,644,000, due to increased natural gas
prices in 1996 that were not recovered from customers until 1997. Also, a
change of $2,142,000 occurred in accounts payable and accrued expenses, due
principally to increased off-system sales and increased gas and electric fuel
costs. The change in deferred taxes resulted from the changes in over/under
recovery of fuel costs.
Three Months Ended June 30, 1997 Compared with Three Months Ended June 30, 1996
Natural and Propane Gas Service. Total natural and propane gas service
operating margin increased $175,000 or about 5% in 1997 as compared with 1996.
Excluding propane gas operating margin from total gas operating margin,
remaining operating margin decreased $227,000 or about 8% in 1997 as compared
with 1996. The increase in natural gas operating margin is due principally to
an approximate 2% increase in customers and a 5% increase in average
consumption per customer. Propane gas operating margin decreased $52,000, or
about 9%, due primarily to a 2% decrease in customers (some of which were
converted to natural gas) and an 8% decrease in average consumption per
customer.
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.
Electric Service. Total electric service operating margin increased $25,000
or 1% in 1997 as compared with 1996. Affecting the comparison of operating
margin are two industrial customers. Excluding these customers, operating
margin increased $16,000 or less than 1%.
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.
Operating Expenses. In 1997, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $81,000, or about 1% in relation
to operating margin. Operating expenses increased marginally in all
classifications of expense, due primarily to inflationary pressures.
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.
Income taxes were provided for at approximately the same rate in both three-
month periods. The difference between the periods in the apparent rate is due
mainly to amortization of investment tax credits.
Interest expense increased in 1997 versus 1996 due primarily to greater
weighted average amounts outstanding at slightly greater rates in 1997 as
compared with 1996.
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, 1997.
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: August 13, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 71,385
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 10,398
<TOTAL-DEFERRED-CHARGES> 1,185
<OTHER-ASSETS> 5,684
<TOTAL-ASSETS> 88,652
<COMMON> 2,385
<CAPITAL-SURPLUS-PAID-IN> 11,113
<RETAINED-EARNINGS> 13,820
<TOTAL-COMMON-STOCKHOLDERS-EQ> 25,331
0
600
<LONG-TERM-DEBT-NET> 23,500
<SHORT-TERM-NOTES> 6,100
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 33,121
<TOT-CAPITALIZATION-AND-LIAB> 88,652
<GROSS-OPERATING-REVENUE> 40,021
<INCOME-TAX-EXPENSE> 837
<OTHER-OPERATING-EXPENSES> 9,823
<TOTAL-OPERATING-EXPENSES> 10,660
<OPERATING-INCOME-LOSS> 3,034
<OTHER-INCOME-NET> 20
<INCOME-BEFORE-INTEREST-EXPEN> 3,054
<TOTAL-INTEREST-EXPENSE> 1,482
<NET-INCOME> 1,572
14
<EARNINGS-AVAILABLE-FOR-COMM> 1,558
<COMMON-STOCK-DIVIDENDS> 886
<TOTAL-INTEREST-ON-BONDS> 1,118
<CASH-FLOW-OPERATIONS> 5,581
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
