UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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
incorporation or organization) Identification No.)
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, par value $1.50 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K(Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment of this Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price on March 13, 1998,
was $36,576,099.
APPLICABLE ONLY TO REGISTRANTS 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 section 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 REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. At March 13,
1998, there were 1,492,902 common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy statement for Annual Meeting of Stockholders, April 21, 1998. (Part
III)
PART I
Item 1. Business
General
The Company was incorporated on April 29, 1925 under the 1925 Florida
Corporation Law and is continuing its corporate existence pursuant to such
law and its Certificate of Reincorporation, as amended. The Company is
regulated by the Florida Public Service Commission (except for propane gas
service)and provides natural and propane gas service, electric service and
water service to consumers in Florida. The Company is comprised of the
following four divisions and number of customers as of December 31, 1997:
(1) West Palm Beach, located in southeast Florida, serves natural gas to
27,980 customers and propane gas to 5,551 customers; (2) Mid-Florida,
consisting of the Sanford and DeLand districts, serves 7,675 natural gas
customers and 4,302 propane customers; (3) Marianna, located in the Florida
panhandle, provides electricity to 11,819 customers; (4) Fernandina Beach,
located in extreme northeast Florida, serves 12,123 electric customers and
6,070 water customers. The economies of West Palm Beach, Sanford, and
DeLand rely somewhat on the migration of winter residents and tourists
during the winter season. Agriculture and citrus processing, together with
light industry, provide year-round stability. Marianna's economy is
predominantly agricultural including peanuts, soy beans, corn, pork and
beef. The area has many small industries. Fernandina's economy is centered
around two large paper mills; ITT Rayonier, Inc. and Container Corporation
of America. The beach area, Amelia Island, is noted for its fine beaches
and resort amenities.
The population by counties, as estimated by the University of Florida's
Bureau of Economic and Business Research, in which the service areas are
located, as of April 1, 1997, is as follows:
West Palm Beach (Palm Beach County) 1,004,000
Sanford (Seminole County) 337,000
DeLand (Volusia County) 414,000
Marianna (Jackson, Calhoun & Liberty Counties) 70,000
Fernandina Beach (Nassau County) 53,000
In Fernandina Beach, two large paper mills accounted for 15.4% of total
1997 electric division operating revenues and 7.6% of the Company's total
operating revenues. However, such mills accounted for 6.2% of total 1997
electric division operating margin and 2.1% of the Company's total
operating margin.
Sources of Gas and Electricity
Natural Gas
The Company receives its total supply of natural gas at eleven city gate
stations connected to Florida Gas Transmission Company's (FGT) pipeline
system. In 1997, the Company constructed its eleventh gate station, DeLand
South, to meet the increasing requirements of our DeLand distribution
territory. The DeLand South gate station also provides an alternate gas
supply in the event the other DeLand gate station malfunctions. The
Company now has adequate redundancy of gate stations in each distribution
system to assure continuous service to our customers.
FGT is the sole natural gas pipeline serving peninsular Florida and is
under the jurisdiction of the Federal Energy Regulatory Commission (FERC).
The Company utilizes FGT solely as a transporter of natural gas. All gas
supplies for the Company's traditional sales markets are independently
procured by the Company from gas marketers and producers. The Company's
transportation customers are responsible for obtaining their own gas
supplies and arranging for pipeline transportation.
During 1997, the Company has been actively involved in the settlement of
FGT's rate proceeding, FERC Docket No. RP96-366. This proceeding was
expected and was based on FGT's Phase III construction settlement filing.
FGT's Phase III construction increased the pipelines deliverable within
Florida by over 50%. The settlement set rates retroactive to March 1,
1997, which, over the next three years and continuing until FGT's next rate
proceeding, will result in lower payments of reservation charges to FGT.
Reservation rates will be as much as 5.6% lower than March 1997 levels.
During 1997, reservation charges accounted for approximately one-third of
the Company's $16.4 million gas cost.
The Company is in full compliance with the Gas Industry Standards Board's
(GISB) standards. The GISB was formed to develop a uniform nationwide
network of natural gas producers, marketers, gathering systems, pipelines,
distribution companies and customers. The standards put all participants
on the same time schedules for procurement, capacity transactions,
invoicing, etc. It caused the network to be fully available twenty-four
hours per day, 365 days per year. FGT implemented the GISB standards for
their customers, including the Company, on April 1, 1997. The additional
GISB tasks had a minimum incremental cost to the Company and our customers.
Over the last seven years, the Company has gained considerable experience
contracting directly with marketers and producers for gas supplies while
separately contracting for transportation services from FGT. This
experience appropriately postures the Company to be very effective in
operating within an unbundled industry environment. The Company lowered
its fuel cost substantially by directly purchasing gas supplies from
sources other than FGT. All fuel cost savings are passed along to our
traditional customers. Additionally, the Company has actively reduced the
demand charges it pays for the pipeline capacity by "subletting" unused
capacity to other shippers on FGT's system.
The Company continues to be active in Off-System Sales since receiving
approval of the appropriate tariff from the Florida Public Service
Commission (FPSC). Off-System Sales allows the Company to broaden its
market to include any customer within the state of Florida who currently
uses natural gas. Since inception, Off-Systems Sales have been transacted
between the Company and national marketers, electric generators, other gas
distributors and agricultural firms. The tariff requires the sharing of
any profits between the Company and its customers. Florida Public
Utilities Company continues to explore all potential opportunities to keep
its total cost of gas as low as possible.
The Company is expanding the installation of its Systems Control and Data
Acquisitions system (SCADA) terminals to new interruptible sales and
transportation customers' sites. This system effectively allows the
Company to closely monitor the usage of such customers to maximize sales
and avoid high pipeline penalties. New technologies and new generations of
equipment are evaluated for their potential to reduce the cost of
operating our SCADA system.
Electricity
The Company purchases most of its electrical power supply requirements at
wholesale rates from two nearby generating utilities. Less than 1% of the
Company's power supply is purchased on an "as available" basis from a self-
generating paper mill.
Deregulation of the wholesale power market has enabled the Company to
negotiate long term power supply agreements which reduced our cost of
purchased power. Cost savings from these lower power supply costs are
passed on to our customers. The Company's residential and commercial
electric rates are lower than most of Florida's other electric utilities.
During 1996, the Company executed a power supply agreement with Gulf Power
Company to supply electric power for the Marianna Division. It is an
eleven-year agreement which became effective January 1, 1997.
The Jacksonville Electric Authority executed a new power supply agreement
with the Company which commenced on January 1, 1996. The contract has a
seven-year primary term and provides for substantial cost reductions.
The following table sets forth the revenues, operating profit and
identifiable assets of each of the Company's business segments.
(See "Segment Information" in the Notes to Financial Statements.)
1997 1996 1995
(in thousands)
Revenues
Natural gas $33,475 $31,854 $26,144
Electric 38,683 40,701 40,074
Water 1,911 1,854 1,674
Propane gas 4,065 4,401 4,135
Operating profit
Natural gas 3,288 3,250 2,902
Electric 3,065 3,141 3,078
Water 468 495 328
Propane gas (17) 138 212
Identifiable assets
Natural gas 35,227 33,977 32,115
Electric 34,021 33,038 32,155
Water 5,270 4,584 4,508
Propane gas 5,877 6,100 5,866
Regulation
The Florida Public Service Commission, pursuant to State Statutes, has
authority encompassing natural gas, electric and water rates, conditions
of service, the issuance of securities and certain other matters affecting
the operations of the Company.
Franchises
The Company holds franchises in each of the incorporated municipalities
where natural gas, electric and water operations take place. These
franchises generally have terms from 15 to 30 years and terminate at
various dates.
Employees
On December 31, 1997 the Company had 298 employees, of whom approximately
100 were covered under union contracts with two labor unions, the
International Brotherhood of Electrical Workers and the International
Chemical Workers Union. The Company does not engage in research activities.
Competition
Generally, in municipalities and other areas where the Company provides
natural gas, electric and water services, no other utility directly
renders such service.
Item 2. Properties
The Company's properties consist primarily of distribution systems and
related facilities. At December 31, 1997 the Company owned 22 miles of
electric transmission lines and 1,009 miles of electric distribution lines.
The gas properties distribute gas through 1,159 miles of 3" equivalent gas
main. The water property consists of deep wells, pumping equipment, water
treatment facilities and a distribution system. The propane gas systems
operated by the Company's subsidiary have bulk storage facilities and tank
installations on the customers' premises.
Certain properties of the Company and the shares of Flo-Gas Corporation, a
wholly-owned subsidiary, are subject to a lien collateralizing the funded
indebtedness of the Company under its Mortgage Indenture.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common shares are traded on the American Stock Exchange under
the symbol FPU.
1997 1996
Low High Low High
STOCK PRICES
Quarter ended
March 31 $19.63 - $21.00 $18.50 - $20.50
June 30 19.88 - 21.25 18.75 - 20.38
September 30 20.50 - 21.69 19.63 - 20.75
December 31 22.50 - 24.63 19.75 - 21.00
DIVIDENDS PAID
January 1 $.30 $.29
April 1 .30 .30
July 1 .30 .30
October 1 .30 .30
At March 13, 1998, there were 946 holders of record of the Registrant's
Common Stock.
See "Capitalization, Dividend Restriction" in the Notes to Financial
Statements for information concerning restriction on the payment
of cash dividends.
Item 6. Selected Financial Data (in thousands, except per share data)
Years Ended December 31,
1997 1996 1995 1994 1993
Revenues $78,134 $78,810 $72,027 $64,755 $68,626
Operating margin 26,679 26,937 25,514 23,293 22,742
Net income 3,191(1) 2,751 2,438 1,717 1,751
Earnings per common share 2.13(1) 1.85 1.66 1.18 1.22
Dividends per common share 1.20 1.20 1.16 1.16 1.12
Total assets 88,622 88,169 85,240 82,281 78,035
Utility plant - net 72,724 69,876 66,278 63,713 61,567
Current debt 7,600 7,900 5,600 4,673 4,028
Long-term debt 23,500 23,500 23,500 23,500 24,173
Common shareholders' equity 26,189 24,511 23,302 22,334 21,961
(1) 1997 includes a gain after income taxes from the sale of non-utility real
property of $522,000, $0.35 per share.
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
Overview. The Company is organized into three regulated business segments,
natural gas, electric and water and one non-regulated business segment,
propane gas. The gas and electric segments aggregate approximately 93% 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.
From the Florida Public Service Commission's (FPSC) perspective, the
Company operates four distinct "entities", i.e., Marianna electric,
Fernandina Beach electric, Fernandina Beach water and natural gas,
consisting of Palm Beach County, Sanford and DeLand. The Company last
received rate increases as follows: natural gas operations, May 1995;
Marianna electric division, February 1994; and Fernandina Beach electric
division, February 1989. The Company receives an increase each year for
its water operation through a price index mechanism provided by the FPSC.
The Company does not anticipate a need to file for a rate increase in any
of its regulated operations at the present time.
Summary of Operating Margins
(in thousands)
1997 1996 1995
Natural and Propane Gas
Operating margin $15,642 $15,958 $14,952
Less propane gas 2,300 2,573 2,488
Remainder $13,342 $13,385 $12,464
Electric
Operating margin $ 9,214 $ 9,210 $ 8,967
Less industrial 569 537 594
Remainder $ 8,645 $ 8,673 $ 8,373
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 fuel costs and taxes passed-through to customers have no
effect on results of operations.
Natural and Propane Gas Service. Total natural and propane gas service
operating margin decreased $316,000 or about 2% in 1997 as compared with
1996. Excluding propane gas operating margin from total gas operating
margin, remaining operating margin decreased $43,000 in 1997 as compared
with 1996. Propane gas operating margin decreased $273,000, or about 11%.
Two factors resulted in a net decrease in natural gas operating margin.
First, there was an approximate 42% decrease in heating days in 1997 which
was significantly mitigated by a 2% increase in customers, some of which
were our propane gas customers who converted to natural gas. The decrease
in propane gas operating margin is due principally to the decrease in
heating degree days and the conversion of customers to natural gas.
Total natural and propane gas service operating margin increased $1,006,000
or about 7% in 1996 as compared with 1995. Excluding propane gas operating
margin from total gas operation margin, remaining operating margin
increased $921,000 or about 7% compared with 1995. An increase of $124,000
of such increase, or 1%, is due to an industrial customer increasing its
consumption by about 240% in 1996. The remaining increase in natural gas
operating margin is due primarily to a 1% growth in customers, a 3% growth
in average consumption 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 $85,000, or about 3%. The increase in
propane gas operating margin is due principally to slightly higher prices
in 1996.
In 1997, operating expenses, excluding cost of fuel and taxes passed-
through to customers, decreased $199,000 or 1.3% in relation to operating
margin. The net decrease is attributable to decreases in two classifi-
cations of expense. Administrative and general expenses decreased as the
credit amortization of the net periodic pension cost increased by $90,000
in 1997 versus 1996 and casualty and workers' compensation insurance costs
decreased by $146,000 as compared with 1996. Also, maintenance expenses
decreased by $104,000, due principally to a reduction in maintenance
personnel in 1997. Other classifications of operating expenses increased
$192,000 or 1.2% due primarily to inflationary pressures.
In 1996, operating expenses, excluding cost of fuel and taxes passed-
through to customers, increased $702,000, about 4% in relation to operating
margin. Operating expenses have generally increased in all classifications
of expense due to inflationary pressures, with increased costs relating to
the Company's new billing system, increased payroll and related costs and
expenses related to the Company's natural gas mains and lines partially
offset by an increase in the credit amortization of the net periodic
pension cost.
Electric Service. Total electric service operating margin remained
virtually unchanged in 1997 as compared with 1996. Affecting the
comparison of operating margin are two industrial customers. Excluding
these customers, operating margin decreased $28,000. The effect on
consumption of the warmer weather early in 1997 more than offset customer
growth of 2.4%.
Total electric service operating margin increased $243,000, or about 2.7%
in 1996 as compared with 1995. Affecting the comparison of operating
margins are two industrial customers. Excluding these customers, operating
margin increased $300,000, or about 3.6%. Excluding these industrial
customers, the increase in operating margin is due principally to a 2%
growth in customers and a 1% growth in average consumption.
In 1997, total operating expenses increased $80,000, less than 1% of
operating margin. The net increase is due to two primary factors. The
credit amortization of the net periodic pension cost increased in 1997
versus 1996 by $33,000 and casualty and workers' compensation insurance
costs decreased by $89,000 as compared with 1996. All other classifi-
cations of operating expenses increased $237,000 or 2.6% of operating
margin. Approximately 60% of such increases occurred in the Fernandina
Beach division. Other than inflationary pressures, tree trimming expenses
accounted for most of the increase.
In 1996, operating expenses increased $167,000, about 2% in relation to
operating margin. Operating expenses have generally increased in all
classifications of expense due to inflationary pressures.
Interest Charges. Interest charges consist of interest on bonds, short-
term borrowings and customer deposits. The primary factor causing interest
amounts to fluctuate are changes in amounts borrowed under the line of
credit and related interest rate changes. See "Notes Payable" and "Capi-
talization" in the Notes for additional information.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows. Net cash provided by operating activities decreased $393,000
in 1997 as compared with 1996. Accounts receivable decreased in 1997, due
primarily to substantially increased gas and electric fuel costs, as
reflected in accounts receivable at December 1996. Inventories and
prepayments increased in 1996 versus 1995 as the casualty insurance renewal
date was changed in 1996 from March to September, resulting in an increase
in prepaid premiums in the December 1996 balance sheet. Accounts payable
and accruals decreased, due primarily to increased gas and electric fuel
costs in 1996 versus 1995, (such costs leveled off in 1997) and the effect
of not restoring outstanding checks to cash and accounts payable in
December 1997. The net under recovery of fuel costs in 1996 was over
compensated for in 1997 due principally to unanticipated warmer weather in
1997.
Cash used in investing activities usually fluctuates within a narrow range
as construction expenditures, excluding unusual items, have averaged about
$6.2 million over the last five years. Included in construction
expenditures in 1996 is $1,343,000 relating to the general office addition
and an additional $189,000 was incurred in 1997. Also, included in 1997
expenditures was approximately $500,000 for cost of removal of facilities.
Cash used by financing activities flucuated principally because of changes
in short-term borrowings and repayment of long-term debt in 1995.
The Company has a $15,000,000 line of credit with its primary bank of which
$7,600,000 is outstanding at December 31, 1997. The line provides for
interest at LIBOR plus one-half percent and expires in 2000. The Company
is approved by the FPSC 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.
The Company usually has no material commitments for construction
expenditures. Capital expenditures for 1998 have been budgeted for
$7,113,000; however, while the actual amount expended for construction is
influenced by many factors, the Company anticipates that expenditures for
1998 will not be significantly different from amounts historically
incurred. For additional information see "Notes Payable" and
"Capitalization" in the Notes.
The Company anticipates that its future construction expenditures and
commitments are likely to require additional debt and/or equity financing.
Issuance of Additional Bonds. The Company's 1942 Indenture of Mortgage and
Deed of Trust, which is a mortgage on all real and personal property,
permits the issuance of additional bonds based upon a calculation of
unencumbered net real and personal property. At December 31, 1997, such
calculation would permit the issuance of approximately $36,000,000 of
additional bonds.
OTHER
Year 2000. The Company is on schedule to be year 2000 compliant by the end
of 1998. The program modifications are being performed by the Company's
staff. All costs, consisting of programming salaries and related costs,
are being expenses in the period incurred.
Environmental Matters. The Company has several contamination sites in
various stages of assessment investigation, see "Contingencies" in the
Notes. Due to the rate relief granted the Company for environmental costs
and insurance settlement proceeds for environmental costs received by the
Company which are being held in escrow, the Company believes that any
future contamination assessment and remedial costs will not be material to
the Company's operating results or liquidity.
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of Florida Public Utilities Company:
We have audited the accompanying consolidated balance sheets and statements
of capitalization of Florida Public Utilities Company and its wholly-owned
subsidiary, Flo-Gas Corporation, as of December 31, 1997 and 1996, and the
related consolidated statements of income, common shareholders' equity and
cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Florida Public Utilities
Company and its wholly-owned subsidiary, Flo-Gas Corporation, at December
31, 1997 and 1996, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
February 20, 1998
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Years Ended December 31
Revenues 1997 1996 1995
Electric $38,683 $40,701 $40,073
Natural gas 33,475 31,854 26,144
Propane gas 4,065 4,401 4,136
Water 1,911 1,854 1,674
Total revenues 78,134 78,810 72,027
Cost of fuel and taxes based on revenues 51,455 51,873 46,513
Operating Margin 26,679 26,937 25,514
Operating Expenses
Operations 11,283 11,533 11,118
Maintenance 2,512 2,526 2,409
Depreciation and amortization 4,029 3,876 3,694
Taxes other than income taxes 2,051 1,978 1,773
Income taxes 1,286 1,396 1,356
Total operating expenses 21,161 21,309 20,350
Operating Income 5,518 5,628 5,164
Interest Charges and Other
Long-term debt 2,235 2,235 2,248
Short-term borrowings 407 348 273
Customer deposits and other interest 253 275 246
Other-net (46) 19 (41)
Gain from sale of non-utility property (837)
Income taxes on above gain 315
Total interest charges and other 2,327 2,877 2,726
Net Income 3,191 2,751 2,438
Preferred Stock Dividends 29 29 29
Earnings for Common Stock $ 3,162 $ 2,722 $ 2,409
Earnings Per Common Share $ 2.13 $ 1.85 $ 1.66
Dividends Per Common Share $ 1.20 $ 1.20 $ 1.16
Average Shares Outstanding 1,483,752 1,468,974 1,454,986
See Notes to Financial Statements.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
ASSETS 1997 1996
Utility Plant
Electric $ 47,085 $ 44,758
Natural gas 47,498 45,367
Propane gas 7,292 7,156
Water 7,188 6,315
Common 3,293 3.088
Total 112,356 106,684
Less accumulated depreciation 39,632 36,808
Net utility plant 72,724 69,876
Current Assets
Cash 123 841
Accounts receivable 7,686 8,153
Allowance for uncollectible accounts (65) (91)
Inventories (at average or unit cost) 2,587 2,494
Prepayments and deferrals 1,476 1,585
Total current assets 11,807 12,982
Other Assets
Investments held in escrow for
environmental costs 3,024 2,881
Deferred charges 1,067 1,101
Under recovery of fuel costs 1,329
Total other assets 4,091 5,311
Total $ 88,622 $ 88,169
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 26,189 $ 24,511
Preferred stock 600 600
Long-term debt 23,500 23,500
Total capitalization 50,289 48,611
Current Liabilities
Notes payable 7,600 7,900
Accounts payable 5,596 7,564
Dividends declared 454 449
Taxes accrued 146 308
Interest accrued 517 575
Tax collections payable 553 532
Insurance accrued 2,688 2,325
Other 937 796
Customer deposits 3,782 3,634
Total current liabilities 22,273 24,083
Other Liabilities
Customer advances for construction 1,269 982
Deferred income taxes 5,825 6,222
Unamortized investment tax credits 1,342 1,462
Environmental insurance proceeds and
related earnings 4,833 4,531
Regulatory liabilities-tax 2,326 2,278
Over recovery of fuel costs 393
Other 72
Commitments and contingencies
Total other liabilities 16,060 15,475
Total $ 88,622 $ 88,169
See Notes to Financial Statements.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(dollars in thousands)
December 31,
1997 1996
Common Shareholders' Equity
Common stock, $1.50 par value, authorized
2,000,000 shares; issued 1,594,352 shares
in 1997; 1,585,478 shares in 1996 $ 2,392 $ 2,379
Paid-in capital 11,233 10,992
Retained earnings 14,532 13,151
Treasury stock - at cost (105,766 shares
in 1997; 111,831 shares 1996) (1,968) (2,011)
Total common shareholders' equity 26,189 24,511
Preferred Stock
4 3/4% Series A, $100 par value, redemption
price $106.00, authorized and outstanding
6,000 shares 600 600
Long-Term Debt
First mortgage bonds
Series
9.57% due 2018 10,000 10,000
10.03% due 2018 5,500 5,500
9.08% due 2022 8,000 8,000
Total long-term debt 23,500 23,500
Total Capitalization $50,289 $48,611
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(dollars in thousands)
Common Stock
Shares Aggregate Paid-in Retained Treasury Stock
Issued Par Value Capital Earnings Shares Cost
Balance,
December 31, 1994 1,567,119 $2,351 $10,597 $11,469 121,860 $(2,083)
Net income 2,438
Dividends (1,716)
Stock plans 10,663 16 200 (4,174) 30
Balance,
December 31, 1995 1,577,782 2,367 10,797 12,191 117,686 (2,053)
Net income 2,751
Dividends (1,791)
Stock plans 7,696 12 195 (5,855) 42
Balance,
December 31, 1996 1,585,478 2,379 10,992 13,151 111,831 (2,011)
Net income 3,191
Dividends (1,810)
Stock plans 8,874 13 241 (6,065) 43
Balance
December 31, 1997 1,594,352 $2,392 $11,233 $14,532 105,766 $(1,968)
See Notes to Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996 1995
Cash Flows from Operating Activities
Net income $ 3,191 $ 2,751 $ 2,438
Adjustments to reconcile net income to
net cash from operating activities
Depreciation 4,029 3,876 3,694
Deferred income taxes (347) 578 367
Investment tax credits (120) (121) (121)
Other 382 406 338
Gain on sale of non-utility property (837)
Effects of changes in
Receivables 269 (936) (1,396)
Inventories and prepayments 16 (924) (192)
Accounts payable and accruals (1,514) 2,918 2,606
Environmental insurance proceeds
and related earnings 301 145 1,201
Over/(under) recovery of fuel costs 1,722 (1,197) (1,400)
Other (68) (79) (110)
Net cash provided by operating
activities 7,024 7,417 7,425
Cash Flows from Investing Activities
Construction expenditures (7,034) (7,653) (6,401)
Customer advances for construction 287 175 (319)
Purchase of long-term investments (143) (145) (2,737)
Other 70
Proceeds from sale of non-utility property 886
Net cash used by investing
activities (5,934) (7,623) (9,457)
Cash Flows from Financing Activities
Net short-term borrowings (repayments) (300) 2,300 1,600
Proceeds from common stock plans 297 250 246
Dividends paid (1,805) (1,773) (1,711)
Repayments of long-term debt (673)
Net cash provided (used) by
financing activities (1,808) 777 (538)
Net Increase (Decrease) in Cash (718) 571 (2,570)
Cash at Beginning of Year 841 270 2,840
Cash at End of Year $ 123 $ 841 $ 270
Supplemental Cash Flow Information
Cash was paid during the years as follows:
Interest $ 2,719 $ 2,585 $ 2,511
Income Taxes 1,845 1,534 1,006
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
Summary of Significant Accounting and Reporting Policies
Business and Regulation. Florida Public Utilities Company (the Company) is an
operating public utility engaged principally in the purchase, transmission,
distribution and sale of electricity and in the purchase, transmission,
distribution, sale and transportation of natural gas. The Company is subject to
the jurisdiction of the Florida Public Service Commission (FPSC) with respect to
its electric, natural gas and water operations. The suppliers of electrical
power to the Marianna division and of natural gas to the natural gas divisions
are subject to the jurisdiction of the Federal Energy Regulatory Commission
(FERC). The Fernandina Beach division is supplied most of its electrical power
by a municipality which is exempt from FERC and FPSC regulation. The Company
also distributes propane gas through a non-regulated subsidiary. The Company's
accounting policies and practices conform to generally accepted accounting
principles as applied to regulated public utilities and are in accordance with
the accounting requirements and rate making practices of the FPSC.
The Company prepares its financial statements in accordance with the provisions
of Statement of Financial Accounting Standards No. 71 - "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71). In general, SFAS 71
recognizes that accounting for rate regulated enterprises should reflect the
relationship of costs and revenues introduced by rate regulation. As a result,
a regulated utility may defer recognition of a cost (a regulatory asset) or
recognize an obligation (a regulatory liability) if it is probable that,
through the rate making process, there will be a corresponding increase or
decrease in revenues.
Accordingly, the Company has recognized certain regulatory assets and
liabilities. Such regulatory items relate to deferred income taxes, unamortized
debt reacquisition costs, unamortized rate case expense and property damage
self-insurance reserves. The Company believes that the FPSC will continue to
allow the Company to recover such items through its rates.
The Company has agreed with the FPSC staff to limit its earned return on equity
for its regulated electric and natural gas operations. The disposition of any
excess earnings is left to the discretion of the FPSC, with alternatives
including a refund to customers, additional contributions to storm damage
reserves, or the reduction of any depreciation reserve deficiency. Excess
earnings for 1996 at one of the Company's electric divisions was ordered by
the FPSC to be added to that division's storm damage reserve. The Company
believes it has adequately reserved for 1997 excess earnings.
Following FPSC rules for water utilities, the Company filed for and was
granted a price index revenue increase in the Fernandina Beach water division.
This increase, approximating $19,000 on an annual basis, was placed into effect
in July, 1997. A similar price index filing is planned for 1998.
Various states, other than Florida, have enacted or are considering enacting
legislation or other initiatives that would provide utility customers with the
ability to choose their supplier, thus establishing competition between the
suppliers of utility services. No such proposals are currently being
considered in Florida.
Revenues. The Company records utility revenues as service is provided and bills
its customers monthly on a cycle billing basis. Accordingly, at the end of each
month, the Company accrues for estimated unbilled revenues.
The rates of the Company include base revenues, fuel adjustment charges and the
pass-through of certain governmental imposed taxes based on revenues. The base
revenues are determined by the FPSC and remain constant until a request for an
increase in such rates is filed and approved by the FPSC. From the FPSC
perspective, the Company operates four distinct "entities", i.e., Marianna
electric, Fernandina Beach electric, Fernandina Beach water, and natural gas,
consisting of Palm Beach County, Sanford and DeLand. Thus, for the Company to
recover through rate relief the effects of inflation for all such "entities", a
request for an increase in base revenues would require the filing of four
separate rate cases. Fuel adjustment charges are estimated for customer
billing purposes and any under/over-recovery difference between the incurred
cost of fuel and estimated amounts billed to customers is deferred for future
recovery or refund and either charged or credited to customers. Interest
accrues on such under/over-recoveries and is included in the subsequent
adjustment.
Consolidation. The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Flo-Gas Corporation. All
significant intercompany balances and transactions have been eliminated.
Certain reclassifications have been made to the prior years' financial
statements and other financial information contained herein to conform with the
1997 presentation.
Utility Plant and Depreciation. Utility plant is stated at original cost. The
costs of additions to utility plant include contracted services, direct labor
and materials. The costs of units of property retired are removed from utility
plant, and such costs plus removal costs, less salvage, are charged to
accumulated depreciation. Maintenance and repairs of property and replacement
and renewal of items determined to be less than units of property are charged
to operating expenses. Substantially all of the utility plant and the shares
of Flo-Gas Corporation collateralize the Company's First Mortgage Bonds.
Depreciation is computed using the composite straight-line method at rates
prescribed by the FPSC for financial accounting purposes. Such rates are
based on estimated service lives of the various classes of property.
Depreciation provisions on average depreciable property approximate 3.7% per
year.
Income Taxes. Deferred income taxes are provided on all significant temporary
differences between the financial statement and tax basis of assets and
liabilities at currently enacted tax rates. Investment tax credits have been
deferred and are amortized based upon the average useful life of the related
property in accordance with the rate treatment.
Deferred Charges. Deferred charges consist principally of unamortized debt
issuance expense and early extinguishment premium. Such expenses are being
amortized over the lives of the issues to which they pertain.
Use of Estimates. Inherent in the accounting process is the use of estimates
when preparing financial statements in accordance with generally accepted
accounting principles. Accordingly, the Company has used estimates in the
preparation of its financial statements including the accrual for uninsured
liability claims. The Company is self-insured for the first $250,000 of
each liability claim and therefore accrues for estimated losses occurring
from both asserted and unasserted claims. The estimate for unasserted
claims arising from unreported incidents is based on an analysis of historical
claims data. The Company's portion of liability claims incurred for the ten
year period ended in 1997 averaged approximately $85,000 per year and the
accrual for such claims was approximately $1,000,000 at December 31, 1997.
The Company believes that its accrual for potential liability claims is
adequate.
Notes Payable
The Company has a line of credit agreement with its primary bank providing for a
$15,000,000 loan with interest at LIBOR plus one-half percent. $14,000,000 of
such loan 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. At December 31, 1997 there was a balance outstanding of
$7,600,000. The weighted-average interest rates at December 31, 1997 and 1996
were approximately 6.2%.
Capitalization
Common Shares Reserved. The Company has reserved 18,498 common shares for
issuance under the Dividend Reinvestment Plan and 16,992 common shares for
issuance under the Employee Stock Purchase Plan.
Dividend Restriction. The Indenture of Mortgage and Deed of Trust and
supplements thereto provide for restriction of the payment of cash dividends.
At December 31, 1997 approximately $5,900,000 of retained earnings were free
of such restriction.
Maturities of Long-Term Debt. Sinking fund payments are scheduled to begin in
2008.
Segment Information
The Company operates distribution systems providing natural and propane gas
service in three locations in central and southern Florida, electric service
in two locations in northern Florida and water service in one location in
northern Florida. There are no material intersegment sales or transfers.
Operating profit consists of revenues less operating expenses and does not
include other income, interest income, interest expense and income taxes.
Identifiable assets are those assets used in the Company's operations in each
business segment. Common assets are principally cash and overnight investments,
deferred tax assets and common plant.
Business segment information for 1997, 1996, and 1995 is summarized as follows
(in thousands):
Non-
Regulated Regulated
1997 Gas Electric Water Common Propane Gas Consolidated
Revenues $33,475 $38,683 $1,911 $ $4,065 $78,134
Operating profit 3,288 3,065 468 (17) 6,804
Identifiable assets 35,227 34,021 5,270 8,227 5,877 88,622
Depreciation 1,733 1,629 208 116 343 4,029
Construction
expenditures 2,925 2,641 866 323 279 7,034
1996
Revenues 31,854 40,701 1,854 4,401 78,810
Operating profit 3,250 3,141 495 138 7,024
Identifiable assets 33,977 33,038 4,584 10,470 6,100 88,169
Depreciation 1,654 1,540 201 137 344 3,876
Construction
expenditures 3,369 2,360 257 1,324 343 7,653
1995
Revenues 26,144 40,074 1,674 4,135 72,027
Operating profit 2,902 3,078 328 212 6,520
Identifiable assets 32,115 32,155 4,508 10,596 5,866 85,240
Depreciation 1,578 1,453 204 125 334 3,694
Construction
expenditures 3,245 2,533 (17 312 328 6,401
Income Taxes
The provision (credit) for operating income taxes consists of the following (in
thousands):
1997 1996 1995
Current payable
Federal $1,547 $ 751 $ 871
State 208 188 239
1,755 939 1,110
Deferred
Federal (378) 532 387
State 29 46 (20)
(349) 578 367
Investment tax credit (120) (121) (121)
Total - operating $1,286 $1,396 $1,356
The difference between the effective income tax rate and the statutory federal
income tax rate applied to pretax income is accounted for as follows (in
thousands):
1997 1996 1995
Federal income tax at
statutory rate $1,642 $1,406 $1,298
State income taxes,
net of federal benefit 156 154 145
Investment tax credit (120) (121) (121)
Other (77) (43) 34
Total provision for income taxes* $1,601 $1,396 $1,356
*Includes income tax of $315,000 on gain from the sale of non-utility property.
The tax effects of temporary differences producing accumulated deferred income
tax assets and liabilities in the accompanying consolidated balance sheets are
as follows (in thousands):
1997 1996
Deferred tax assets
Environmental $1,983 $1,806
Alternative minimum tax credit 177 210
Other 307 345
Total deferred tax assets 2,467 2,361
Deferred tax liabilities
Utility plant related 7,850 7,625
Under recovery of fuel costs 208 667
Other 234 291
Total deferred tax
liabilities 8,292 8,583
Net deferred income taxes $5,825 $6,222
Employee Benefit Plans
Pension Plan. The Company has a noncontributory defined benefit pension plan
covering substantially all its employees. The benefits are based on the
employee's credited service and average compensation, generally during the last
three years before retirement. The Company's policy is to fund pension costs
in accordance with contribution guidelines established by The Employee
Retirement Income Security Act of 1974. Plan assets consist of stocks, bonds
and short-term investments.
The components of net pension cost (income) are as follows (in thousands):
1997 1996 1995
Service cost $ 549 $ 539 $ 513
Interest cost 963 935 875
Actual return on assets (5,809) (3,278) (4,499)
Net amortization and deferral 3,976 1,636 3,061
Net periodic pension income $ (321) $ (168) $ (50)
The Plan's funded status at December 31, 1997 and 1996, is as follows (in
thousands):
1997 1996
Actuarial present value of benefit
obligations:
Vested benefit obligation $(11,408) $(10,938)
Accumulated benefit obligation $(11,949) $(11,599)
Projected benefit obligation $(14,803) $(14,403)
Plan assets at fair value 29,080 24,178
Plan assets in excess of projected
benefit obligation 14,277 9,775
Unrecognized net gain (13,933) (9,720)
Unrecognized prior service cost 1,362 1,513
Unrecognized net asset at January 1,
1986 being recognized over 15 years (550) (733)
Prepaid pension cost $ 1,156 $ 835
Actuarial assumptions:
Discount rate 7% 7%
Rate of increase in future
compensation levels 5.5% 5.5%
Expected long-term rate of
Return on assets 8% 8%
Health Plan. The Company is principally self-insured for its employee and
retiree medical insurance plan. The Company's health care liability under the
plan is limited to $60,000 per individual per year, with a maximum total
liability of $875,000.
A reserve for future benefit payments for active employees is maintained at a
level sufficient to provide for estimated outstanding claims under the plan
net of amounts contributed by employees. Net health care benefits paid by the
Company for active employees were approximately $457,000, $408,000 and $493,000
for 1997, 1996 and 1995, respectively.
Other Postretirement Benefits. SFAS No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions" requires accrual of postretirement
benefits during the years an employee provides service. The Company provides
postretirement health care benefits for certain retired employees and their
eligible dependents and reduced postretirement life insurance benefits for
retired employees. The accumulated health care postretirement benefit
obligation (transition obligation) under SFAS No. 106 is being amortized
over 20 years beginning 1993. The Company is not accruing for reduced
postretirement life insurance benefits as the actual outlay by the Company
is offset by employee contributions.
The components of postretirement benefit costs are as follows (in thousands):
1997 1996 1995
Service Cost $ 65 $ 66 $ 69
Interest cost 83 78 76
Amortization of transition obligation 43 43 43
Periodic postretirement benefit cost $191 $187 $188
The Plan's funded status at December 31, 1997 and 1996, is as follows (in
thousands):
1997 1996
Accumulated postretirement benefit
obligation (APBO):
Retirees $ (332) $ (253)
Fully eligible active plan participants (148) (135)
Other active plan participants (838) (860)
Total APBO (1,318) (1,248)
Plan assets 0 0
APBO less than plan assets (1,318) (1,248)
Unamortized transition obligation 644 686
Unrecognized (gain) loss (37) 1
Accrued post benefit obligation $ (711) $ (561)
The measurement of the APBO assumes a 7% discount rate each year and a health
care cost trend rate of 8.9% in 1997 decreasing to 5.5% by the year 2007 and
beyond. A one-percentage point increase in the assumed health care cost trend
rate would increase the APBO and the periodic cost by about 13%.
Employee Stock Purchase Plan. The Company's Employee Stock Purchase Plan
offers common stock at a discount to qualified employees. During 1997, 1996
and 1995, 5,665, 5,455 and 3,774 shares, respectively, were issued under the
Plan for aggregate consideration of $103,000, $90,000 and $55,000,
respectively.
Financial Instruments
The carrying amounts reported in the balance sheet for investments held in
escrow for environmental costs, notes payable, taxes accrued and other accrued
liabilities' approximate fair value. The Company does not enjoy a debt rating
and therefore the Company has no reasonable way of estimating the current rate
at which similar first mortgage bonds would be made to borrowers with similar
debt ratings and maturities. However, the current bonds outstanding were
issued in 1988 and 1992 and since that time interest rates have declined, and
thus it is reasonable to assume that the fair value of existing first mortgage
bonds would be more than their carrying value.
Contingencies
The Company is subject to federal and state legislation with respect to soil,
groundwater and employee health and safety matters and to environmental
regulations issued by the Florida Department of Environmental Protection
(FDEP), the United States Environmental Protection Agency (EPA)and other
federal and state agencies. Except as discussed below, the Company does
not expect to incur material future expenditures for compliance with existing
environmental laws and regulations.
West Palm Beach Site. The Company is currently conducting a contamination
assessment investigation of a parcel of property owned by it in West Palm
Beach, Florida. After a preliminary contamination assessment investigation
indicated soil and groundwater impacts, the Company entered into a consent
order with the FDEP. The consent order requires the Company to delineate
the extent of soil and groundwater impacts associated with the prior operation
of a gasification plant on the property and requires the Company to remediate
any soil and groundwater impacts, if necessary. In June 1993 the Company
commenced the contamination assessment investigation. At this time,
contamination assessment activities are still being performed under the direct
oversight of FDEP. Prior to the completion of this work, it is not possible
to determine to an acceptable degree of certainty the complete extent or cost
of remedial action, if any, which may be required. However, a preliminary
estimate from the Company's environmental consultant suggested that total
contamination assessment and remediation costs for this site may reach
approximately $3,250,000. Until the FDEP concludes that the contamination
assessment investigation is complete, it is not possible to determine whether
remediation is necessary and, if so, when and how much of such costs the
Company will have to pay. A portion of the on-site impacts have been
determined to be eligible for reimbursement from a state fund and the FDEP has
determined that a portion of the work conducted off-site is eligible for
reimbursement under state law.
Sanford Site. The Company owns a parcel of property located in Sanford,
Florida. Prior to the Company's acquisition of this property, it had been
the site of a gasification plant. The FDEP issued a Warning Notice to the
Company which required the Company to conduct a contamination assessment
investigation of the property. A preliminary investigation revealed that
soil was impacted throughout the center of the property.
Thereafter, in cooperation with four former owners and operators of the
gasification plant, the Company participated in the funding of an initial
contamination assessment investigation, the results of which are set forth
in a Contamination Assessment Report delivered to FDEP on February 4, 1994.
On July 11, 1997, EDP notified the Company of its potential liability under
applicable federal laws for assessment and remediation of the site. Similar
notices were sent by EPA to the four former owners and operators who are
currently negotiating with EPA on the scope and extent of additional assessment
work that may be required to enable all parties to determine the appropriate
remediation strategy for the site. Prior to the completion of these
negotiations and the implementation of the additional field work, the Company
is unable to determine, to an acceptable degree of certainty, the extent or
cost of remediation that may be required by EPA or FDEP at this site.
However, a preliminary estimate from the group's environmental consultant
suggested that interim remedial costs for removal of the visible extent of
impacted soils at the site and adjacent thereto may reach approximately
$3,340,000. Pending the completion of the Remedial Investigation/ Feasibility
Study (RI/FS) task that is currently under negotiation with EPA, the Company
is unable to determine whether the interim remedy identified by the
consultant will be appropriate or, if so, what the Company's share of those
costs would be. The Company has agreed to pay approximately 13.7% of the cost
for the RI/FS and limited remediation, assuming the total cost for the RI/FS
and limited remediation does not exceed $1.5 million.
Insurance Claims and Rate Relief. The Company notified its insurance carriers
ofenvironmental impacts detected at the former manufactured gas plant (MGP)
sites discussed above.
As a result of negotiations with the Company's major insurance carriers that
concluded in 1997, such carriers agreed to pay settlement proceeds totaling
approximately $4,300,000 for certain environmental costs. In addition, the
Florida Public Service Commission has allowed the Company to recover through
rate relief environmental expenses of approximately $2,400,000 over a ten-year
period at the rate of approximately $240,000 per year.
Due to the rate relief granted the Company for environmental costs and
insurance settlement proceeds for environmental costs received by the
Company which are being held in escrow, the Company believes that any
future contamination assessment and remedial costs will not be material
to the Company's operating results or liquidity.
Quarterly Financial Data (Unaudited)
The quarterly financial data presented below reflects the influence of, among
other things, 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 (in thousands, except per share amounts):
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
1997
Revenues $22,143 $17,878 $18,732 $19,381
Operating margin 7,357 6,386 6,309 6,627
Operating profit 2,385 1,486 1,279 1,654
Net income1 1,046 526 917 702
Earnings per share1 .70 .35 .61 .47
1996
Revenues $23,519 $17,918 $18,756 $18,617
Operating margin 8,038 6,224 6,226 6,449
Operating profit 3,221 1,368 1,188 1,247
Net income 1,564 418 341 428
Earnings per share2 1.06 .28 .23 .29
1The third quarter includes a gain after income taxes from the sale of
non-utility real property of $522,000, $0.35 per share.
2The sum of the quarterly earnings per share amounts does not equal the annual
earnings per share amount reflected in the consolidated statement of income due
to the effect of changes in average common shares outstanding during the fiscal
year.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and nominees of the Registrant is included
under the caption "Nominees and Continuing Directors" in the Registrant's
Proxy Statement for the 1998 Annual Meeting of Shareholders and is
incorporated by reference herein.
The following table sets forth certain information about the executive
officers of the Registrant as of March 13, 1998.
Name Age Position Date
Robert L. Terry 78 Chairman of the Executive
Committee 1985 - Present
Franklin C. Cressman 64 Chairman of the Board 1997 - Present
Chief Executive Officer 1991 - Present
John T. English 54 President 1997 - Present
Chief Operating Officer 1997 - Present
Charles L. Stein 48 Senior Vice President 1997 - Present
Darryl L. Troy 56 Vice President 1993 - Present
Jack R. Brown 63 Treasurer 1988 - Present
Corporate Secretary 1995 - Present
Mr. Cressman was President from 1985 preceding his appointment as Chairman
of the Board.
Mr. English was Senior Vice President from 1993 preceding his appointment as
President and Chief Operating Officer.
Mr. Stein was Vice President from 1993 preceding his appointment as Senior
Vice President.
There are no family relationships between the executive officers.
All executive officers are elected for a one year term.
Item 11. Executive Compensation
Information concerning executive compensation is included under the caption
"Executive Compensation" in the Registrant's Proxy Statement and is
incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information concerning the security ownership of certain of the
Registrant's beneficial owners and management is included under the
captions "Security Ownership of Certain Beneficial Owners" and "Nominees
and Continuing Directors" in the Registrant's Proxy Statement and is
incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
included under the caption "Transactions with Management" in the
Registrant's Proxy Statement and is incorporated by reference herein.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Florida Public
Utilities Company are included herein and in the Registrant's
1997 Annual Report to Shareholders.
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Capitalization
Consolidated Statements of Common Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
Independent Auditors' Report
2. Financial Statement Schedules
All schedules are omitted because of the absence of the conditions
under which they are required or because the required information is
included in the financial statements and related notes thereto.
3. Exhibits
See Exhibit Index following signatures.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By /s/ Jack R. Brown Date: March 20, 1998
Jack R. Brown
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
/s/ Robert L. Terry Date: March 20, 1998
Robert L. Terry
Chairman of the Executive Committee and Director
/s/ Franklin C. Cressman Date: March 20, 1998
Franklin C. Cressman
Chairman of the Board, Chief Executive Officer and Director
/s/ E. James Carr, Jr. Date: March 20, 1998
E. James Carr, Jr.
Director
/s/ Daniel Downey Date: March 20, 1998
Daniel Downey
Director
/s/ John T. English Date: March 20, 1998
John T. English
President, Chief Operating Officer and Director
/s/ Richard C. Hitchins Date: March 20, 1998
Richard C. Hitchins
Director
/s/ Gordon O. Jerauld Date: March 20, 1998
Gordon O. Jerauld
Director
FLORIDA PUBLIC UTILITIES COMPANY
EXHIBIT INDEX
(a) Exhibits
Regulation S-K
Item Number 21. Subsidiary of the registrant
23. Independent auditors' consent
27. Financial data schedule
EXHIBIT 21
Subsidiary of the registrant
Name Jurisdiction of Incorporation
Flo-Gas Corporation Florida
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
2-79935 on Form S-3 and Post-Effective Amendment No. 16 to Registration
Statement No. 2-24986 on Form S-8 of Florida Public Utilities Company,
of our report dated February 20,1998, appearing in this Annual Report
on Form 10-K of Florida Public Utilities Company for the year ended
December 31, 1997.
DELOITTE & TOUCHE LLP
Certified Public Accountants
West Palm Beach, Florida
March 20, 1998
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