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, 2000
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, 2000 there were
2,824,431 shares of $1.50 par value common shares outstanding.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, December 31,
2000 1999
ASSETS
Utility Plant $127,072 $123,898
Less accumulated depreciation 46,981 45,626
Net utility plant 80,091 78,272
Current Assets
Cash 99 165
Accounts receivable 8,293 8,026
Inventories and prepayments 2,664 2,787
Total 11,056 10,978
Investments Held in Escrow for
Environmental Costs 2,891 2,877
Deferred Charges 5,241 4,416
Total $ 99,279 $ 96,543
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $ 27,022 $ 25,866
Preferred stock 600 600
Long-term debt 23,500 23,500
Total 51,122 49,966
Current Liabilities
Notes payable 14,000 13,000
Accounts payable 5,285 5,481
Other 7,001 6,160
Customer deposits 4,179 3,994
Total 30,465 28,635
Deferred Credits 9,266 9,224
Deferred Income Taxes and
Regulatory Liability 8,426 8,718
Total $ 99,279 $ 96,543
See notes to condensed consolidated financial statements.
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,
2000 1999 2000 1999
Revenues
Natural gas $ 8,292 $ 6,647 $18,516 $15,629
Electric 9,455 9,191 18,713 17,932
Propane gas 1,005 903 2,437 2,159
Water 787 648 1,341 1,176
Total revenues 19,539 17,389 41,007 36,896
Cost of Fuel and Taxes
Based on Revenues 12,238 10,450 25,085 21,918
Operating Margin 7,301 6,939 15,922 14,978
Operating Expenses
Operations 4,542 4,133 9,063 8,153
Depreciation 1,169 1,141 2,341 2,272
Income taxes 249 323 1,010 1,103
Total operating expenses 5,960 5,597 12,414 11,528
Operating Income 1,341 1,342 3,508 3,450
Interest Expense (851) (721) (1,681) (1,454)
Other Income 49 32 125 108
Gain from Sale of Non-Utility
Property -- 134 -- 134
Income Taxes on Above Gain -- (51) -- (51)
Net Income 539 736 1,952 2,187
Preferred Stock Dividends 7 7 14 14
Earnings For Common Stock $ 532 $ 729 $ 1,938 $ 2,173
Earnings Per Common Share $ .19 $ .24 $ .69 $ .72
Dividends Per Common Share $ .17 $ .16 $ .34 $ .32
Weighted Average Common Shares
Outstanding 2,815,001 3,010,324 2,812,901 3,008,333
See notes to condensed consolidated financial statements.
FLORIDA PUBLIC UTILITIES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended
June 30,
2000 1999
Cash Flows from Operating Activities
Net income $ 1,952 $ 2,187
Adjustments to reconcile net income to net
cash provided (used) by operating activities
Depreciation 2,341 2,272
Deferred income taxes (292) 197
Other (10) (126)
Changes in operating assets and liabilities
Accounts receivable (267) 126
Inventories and prepayments 124 75
Accounts payable and accrued expenses 1,099 162
Deferred items (393) (53)
Over/(under) recovery of fuel costs (183) 199
Area expansion program deferred costs (458) (343)
Net cash provided by operating activities 3,915 4,696
Cash Flows from Investing Activities
Construction expenditures (4,192) (4,402)
Other (24) 294
Net cash used by investing activities (4,216) (4,108)
Cash Flows from Financing Activities
Net change in short-term borrowings 1,000 500
Dividends paid (968) (975)
Other 203 163
Net cash provided/(used) by financing
by financing activities 235 (312)
Net Increase/(Decrease) in Cash (66) 276
Cash at Beginning of Period 165 564
Cash at End of Period $ 99 $ 840
See notes to condensed consolidated financial statements.
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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. Certain
amounts in the prior periods have been restated for comparison.
2. The First Mortgage Bond Indentures provide for restrictions on the
payment of cash dividends. At June 30, 2000 under the most restrictive
provision, approximately $4,900,000 of retained earnings were
unrestricted.
3. In May 1999, the Company sold non-utility, unimproved real property for
a gain after income taxes of $83,000, equal to $0.03 per share.
4. Segment information is summarized as follows:
Non-
Six months ended Regulated Regulated
June 30, Gas Electric Water Propane Gas Consolidated
2000
Revenues $18,516 $18,713 $1,341 $2,437 $41,007
Operating profit 2,364 1,474 436 244 4,518
1999
Revenues 15,629 17,932 1,176 2,159 36,896
Operating profit 2,275 1,520 379 379 4,553
Three Months ended
June 30,
2000
Revenues 8,292 9,455 787 1,005 19,539
Operating profit 588 664 316 22 1,590
1999
Revenues 6,647 9,191 648 903 17,389
Operating profit 531 786 235 113 1,665
Notes:
1. Operating profit consists of revenues less operating expenses and does not
include interest, income taxes, and other income.
2. Total assets have not changed materially from December 31, 1999.
FLORIDA PUBLIC UTILITIES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition. The Company has a $20,000,000 line of credit with its
primary bank of which $14,000,000 is outstanding at June 30, 2000. 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 $20,000,000 on a line
of credit basis, $19,000,000 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 a non-regulated operation, propane gas. The
water operations are not significant, approximating 3% of revenues.
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.
Summary of Operating Margins
(in thousands) Six Months Ended June 30,
2000 1999 1998
Natural Gas $ 8,177 $ 7,571 $ 7,476
Propane gas 1,492 1,493 1,478
Electric 4,970 4,789 4,721
Three Months Ended June 30,
2000 1999 1998
Natural Gas $ 3,490 $ 3,233 $ 3,153
Propane gas 620 648 659
Electric 2,438 2,438 2,350
Operating Margin. Operating margin, defined as gross operating revenues less
fuel costs and taxes based on revenues which are passed-through to customers,
provides a more meaningful basis for evaluating utility operations. 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 (net revenues retained by the Company for
operating purposes).
Six Months Ended June 30, 2000 Compared With Six Months Ended June 30, 1999
Natural and Propane Gas Service. Natural gas service operating margin increased
$606,000 in 2000 as compared with 1999. Transportation revenues accounted for
$326,000 of the increase as certain customers are opting to purchase their own
gas and use our system to transport the gas to their location. The remaining
$280,000 increase in operating margin was due principally to an approximate 3.5%
increase in average customers as compared with 1999. Consumption didn?t
increase in proportion to the increase in customers as per customer average
consumption decreased by a similar percentage due to winter weather warmer than
normal in 2000. Propane gas operating margin was unchanged as compared with
1999. Average customers decreased 6% from 1999 to 2000, most of whom were
converted to our Mid-Florida natural gas system. The effect of the reduction
in average customers was offset by an increase in per customer average
consumption and greater margins.
Natural gas service operating margin increased $95,000 in 1999 as compared with
1998. The slight increase in natural gas operating margin was due principally
to an approximate 5% increase in average customers as compared with 1998, and
was partially reduced by weather 27% warmer than the six month period last year.
Propane gas operating margin increased $15,000 or about 1% versus 1999 and was
also affected by the warmer weather. Propane gas had an 11% decrease in average
customers for 1999, most of whom were converted to natural gas. Propane gas
operating margin per customer increased 13% versus 1998, due primarily to the
rate increase that became effective April 1998.
Electric Service. Electric service operating margin increased $181,000 as
compared with 1999. As compared with last year, average customers increased
2.6% which was the major factor contributing to the operating margin increase.
Electric service operating margin increased $68,000 versus 1998. Average
customers increased about 2% as compared with last year, however consumption
decreased about 4%, due mainly to a warmer winter in 1999 as compared with 1998.
Operating Expenses. In 2000, operating expenses increased $980,000, or 9.4%,
excluding cost of fuel and taxes passed-through to customers. Other than the
general increases in all classifications of expense, there were increases in gas
line locating expenses, expenses related to increasing the gas pressure in our
mains and services and expenses attributable to the implementation of a new
customer information system. Additional marketing staff and customer service
costs, including postage, also contributed to increased expenses.
In 1999, operating expenses, excluding fuel costs and taxes passed-through to
customers, increased $213,000 or about 1.4% in relation to operating margin.
Income taxes were provided for at approximately the same rate in both six-month
periods and are reduced by amortization of deferred investment tax credits.
Interest expense increased 16% in 2000 versus 1999 due to an increase in amounts
borrowed under the line of credit and interest rate increases.
Three Months Ended June 30, 2000 Compared with Three Months Ended
June 30, 1999
Natural and Propane Gas Service. Natural gas service operating margin increased
$257,000 in 2000 as compared with 1999. Transportation revenues accounted for
$147,000 of the increase as certain customers are opting to purchase their own
gas and use our system to transport the gas to their location. The remaining
$110,000 increase in operating margin was due principally to an approximate 3.5%
increase in average customers as compared with the second quarter last year.
Propane gas operating margin decreased $28,000 as compared with 1999 due
primarily to a reduction of 6% in average customers in the Mid-Florida division,
most of whom were converted to our natural gas system.
Natural gas service operating margin increased $80,000 or 2.5% in 1999 as
compared with 1998. The slight increase in natural gas operating margin was due
principally to a 5% increase in average customers as compared with 1998 and was
partially reduced by a decrease in average consumption per customer. Propane
gas operating margin decreased slightly versus 1998 due principally to an 11%
decrease in average customers for 1999, most of whom were converted to natural
gas.
Electric Service. Electric service operating margin was unchanged as compared
with 1999. As compared with the second quarter last year, average customers
increased 2.6%, which caused operating margin per customer to decrease.
Electric service operating margin increased $88,000 versus 1998. Average
customers increased 2% as compared with the second quarter last year.
Operating Expenses. In 2000, operating expenses increased $438,000, or 8.3%,
excluding cost of fuel and taxes passed-through to customers. Other than the
general increases in all classifications of expense, there were increases in gas
line locating expenses, expenses related to increasing the gas pressure in our
mains and services and expenses attributable to the implementation of a new
customer information system. Additional marketing staff and customer service
costs, including postage, also contributed to increased expenses.
In 1999, operating expenses, excluding fuel costs and taxes passed-through to
customers, increased $111,000 or about 2% in relation to operating margin.
Income taxes were provided for at approximately the same rate in both three-
month periods and are reduced by amortization of deferred investment tax
credits.
Interest expense increased 18% in 2000 versus 1999. See interest expense in the
six months discussion above.
PART II.
OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the quarter ending
June 30, 2000.
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 8, 2000
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