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 March 31, 1998
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 April 30, 1998
there were 1,494,693 shares of $1.50 par value common shares outstanding.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
March 31, December 31,
1998 1997
ASSETS
Utility Plant $113,635 $112,356
Less accumulated depreciation 40,584 39,632
Net utility plant 73,051 72,724
Current Assets
Cash and overnight investments 642 123
Accounts receivable 7,402 7,621
Inventories and prepayments 3,831 4,063
Total 11,875 11,807
Investments Held in Escrow for
Environmental Costs 3,063 3,024
Deferred Charges 1,074 1,067
Total $ 89,063 $ 88,622
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 27,228 $ 26,189
Preferred stock 600 600
Long-term debt 23,500 23,500
Total 51,328 50,289
Current Liabilities
Notes payable 5,900 7,600
Accounts payable 4,875 5,596
Taxes accrued 1,366 146
Other 5,705 5,149
Customer deposits 3,770 3,782
Total 21,616 22,273
Deferred Credits 8,135 7,909
Deferred Income Taxes and
Regulatory Liability 7,984 8,151
Total $ 89,063 $ 88,622
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
Three Months Ended
March 31,
1998 1997
Revenues
Electric $ 9,096 $ 9,560
Natural gas 9,754 10,702
Propane gas 1,438 1,442
Water 424 439
Total revenues 20,712 22,143
Cost of fuel and taxes
based on revenues 12,793 14,835
Operating Margin 7,919 7,308
Operating Expenses
Operations 3,461 3,470
Depreciation 1,046 994
Taxes other than income taxes 542 459
Income taxes 782 581
Total operating expenses 5,831 5,504
Operating Income 2,088 1,804
Interest Expense (709) (759)
Other - Net 24 1
Net Income 1,403 1,046
Preferred Stock Dividends 7 7
Earnings for Common Stock $ 1,396 $ 1,039
Earnings Per Common Share $ .93 $ .70
Dividends Per Common Share $ .30 $ .30
Average Shares Outstanding 1,492,902 1,478,771
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended March 31,
1998 1997
Cash Flows from Operating Activities
Net income $1,403 $1,046
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 1,046 994
Other (144) (187)
Changes in operating assets and liabilities
Receivables 220 (287)
Inventories and prepayments 232 544
Accounts payable and accruals 1,042 (293)
Over recovery of fuel costs 195 1,180
Other 28 (9)
Net cash provided by operating activities 4,022 2,988
Cash Flows from Investing Activities
Construction expenditures (1,418) (1,726)
Other (22) (164)
Net cash used by investing activities (1,440) (1,890)
Cash Flows from Financing Activities
Net change in short-term borrowings (1,700) (700)
Dividends paid (454) (449)
Other 91 97
Net cash used by financing activities (2,063) (1,052)
Net Increase in Cash 519 46
Cash at Beginning of Period 123 841
Cash at End of Period $ 642 $ 887
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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 March 31, 1998, under the most
restrictive provision, approximately $5,800,000 of retained earnings
were unrestricted.
FLORIDA PUBLIC UTILITIES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
Financial Condition. The Company has a $15,000,000 line of credit with its
primary bank of which $5,900,000 is outstanding. The line provides for
interest at LIBOR plus fifty 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 operations: natural
gas, electric and water and a non-regulated operation, propane gas. The
water operations are not significant, approximating 2.5% of revenues and 6%
of net income.
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 Florida during the winter season.
1998 1997 1996
Natural and Propane Gas
Operating margin $ 5,143 $ 4,626 $ 5,313
Less propane gas 820 760 940
Remainder $ 4,323 $ 3,866 $ 4,373
Electric
Operating margin $ 2,371 $ 2,312 $ 2,333
Less industrial 142 133 125
Remainder $ 2,229 $ 2,179 $ 2,208
Operating Margin. Operating margin, defined as gross operating revenues less
cost of fuel and taxes based on revenues which are passed-through to
customers, provides a more meaningful basis for evaluating utility operations
since such items have no effect on results of operations.
Three Months Ended March 31, 1998 Compared
with Three Months Ended March 31, 1997
Natural and Propane Gas Service. Total natural and propane gas service
operating margin increased $517,000, about 11% in 1998 as compared with 1997.
Excluding propane gas operating margin from total gas operating margin,
remaining operating margin increased $457,000, about 12%. The increase in
natural gas operating margin was due to a 1.3% increase in average customers
for the quarter ended March 31, 1998 and an increase in per customer
consumption of about 12%, resulting from an increase in heating degree days
of approximately 60%. Propane gas operating margin increased $60,000 or about
8% as compared with 1997. Propane gas had an 0.8% decrease in average
customers for the quarter ended March 31, 1998, some of whom were converted
to natural gas. The net increase in average consumption per customer is
primarily due to the increase in heating degree days.
Electric Service. Total electric service operating margin increased $59,000,
or 2.6% versus the first quarter of 1997. Affecting the comparison of
operating margins are two industrial customers. Excluding these customers,
operating margin increased $50,000 or about 2.3%. There was an 0.8% decrease
in average consumption per customer which was more than compensated for by a
2.3% growth in average customers for the quarter.
Operating Expenses. In 1998, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $78,000, or about 1% in relation
to operating margin. Generally, operating expenses have increased marginally
due to inflationary pressures with depreciation accounting for approximately
two-thirds of the overall increase. Most of the increase in depreciation is
attributable to growth in utility plant.
Three Months Ended March 31, 1997 Compared
with Three Months Ended March 31, 1996
Natural and Propane Gas Service. Total natural and propane gas service
operating margin decreased $687,000 or about 13% in 1997 as compared with
1996. Excluding propane gas operating margin from total gas operating
margin, remaining operating margin decreased $507,000, about 12%. The
decrease in natural gas operating margin is principally due to a 64% decrease
in heating degree days. Propane gas service was similarly affected by the
warmer weather in 1997, sustaining a decrease of $180,000 in operating
margin.
Electric Service. Total electric service operating margin decreased $21,000
or 1% in 1997 as compared with 1996. Affecting the comparison of operating
margin are two industrial customers. Excluding these customers, operating
margin decreased $29,000. The effect on consumption of the warmer weather in
1997 as compared with last year was greater than the effect on consumption of
the 2.5% increase in customer growth.
Operating Expenses. In 1997, operating expenses, excluding cost of fuel and
taxes passed-through to customers, increased $149,000, or about 2% in
relation to operating margin. Operating expenses have generally increased in
all classifications of expense, except for propane delivery costs, due
primarily to inflationary pressures. Propane delivery costs decreased due to
warmer weather, thereby reducing deliveries.
PART II.
OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders.
(a) The annual meeting of stockholders was held on April 21, 1998.
(b) Not applicable.
(c) Proposal to approve and adopt an amendment to the Certificate
of Reincorporation, to increase the number of authorized shares
of common stock from 2,000,000 to 3,500,000 shares. Shares
were voted as follows:
For 1,229,622
Withheld/against 56,506
Exceptions/abstain 19,037
Total shares voted 1,305,165
Broker no vote - - -
Total shares eligible to vote 1,492,902
(d) None.
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
March 31, 1998.
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: May 6, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 73,051
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 11,875
<TOTAL-DEFERRED-CHARGES> 1,074
<OTHER-ASSETS> 3,063
<TOTAL-ASSETS> 89,063
<COMMON> 2,395
<CAPITAL-SURPLUS-PAID-IN> 11,303
<RETAINED-EARNINGS> 15,480
<TOTAL-COMMON-STOCKHOLDERS-EQ> 27,228
0
600
<LONG-TERM-DEBT-NET> 23,500
<SHORT-TERM-NOTES> 5,900
<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> 31,835
<TOT-CAPITALIZATION-AND-LIAB> 89,063
<GROSS-OPERATING-REVENUE> 20,712
<INCOME-TAX-EXPENSE> 782
<OTHER-OPERATING-EXPENSES> 5,049
<TOTAL-OPERATING-EXPENSES> 18,624
<OPERATING-INCOME-LOSS> 2,088
<OTHER-INCOME-NET> 24
<INCOME-BEFORE-INTEREST-EXPEN> 2,112
<TOTAL-INTEREST-EXPENSE> 709
<NET-INCOME> 1,403
7
<EARNINGS-AVAILABLE-FOR-COMM> 1,396
<COMMON-STOCK-DIVIDENDS> 447
<TOTAL-INTEREST-ON-BONDS> 559
<CASH-FLOW-OPERATIONS> 4,022
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.93
</TABLE>
