FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17554
FRP PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2924957
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
155 East 21st Street, Jacksonville, Florida 32206
(Address of principal executive offices)
(Zip Code)
904/355-1781
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of August 1, 1997: 3,449,235 shares of $.10 par value common
stock.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, September 30,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 237 $ 313
Accounts receivable:
Affiliate 250 376
Other 5,593 5,158
Less allowance for doubtful accounts (255) (234)
Inventory of parts and supplies 517 502
Prepaid expenses and other 1,806 1,888
Total current assets 8,148 8,003
Other assets:
Real estate held for investment, at cost 5,791 5,791
Goodwill 1,298 1,328
Other 2,222 1,856
Total other assets 9,311 8,975
Property, plant and equipment, at cost 141,637 133,083
Less accumulated depreciation and
depletion (46,982) (43,025)
Net property, plant and equipment 94,655 90,058
$112,114 $107,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term note payable to bank $ 6,100 $ 3,500
Accounts payable:
Affiliate 64 93
Other 2,491 1,686
Federal and state income taxes 301 342
Accrued liabilities 4,083 3,641
Long-term debt due within one year 354 333
Total current liabilities 13,393 9,595
Long-term debt 25,931 26,170
Deferred income taxes 6,982 6,240
Other liabilities 3,211 3,137
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,449,242 shares issued
(3,492,186 at September 30, 1996) 345 349
Capital in excess of par value 17,600 19,748
Retained earnings 44,652 41,797
Total stockholders' equity 62,597 61,894
$112,114 $107,036
See accompanying notes.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share and share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30 ENDED JUNE 30
1997 1996 1997 1996
Revenues:
Affiliates $ 672 $ 1,621 $ 3,609 $ 4,728
Non-affiliates 16,861 15,085 46,543 43,248
17,533 16,706 50,152 47,976
Cost of operations 13,456 12,656 39,468 36,712
Gross profit 4,077 4,050 10,684 11,264
Selling, general and
administrative expense:
Affiliate 355 351 1,087 1,053
Non-affiliates 1,149 1,130 3,446 3,393
1,504 1,481 4,533 4,446
Operating profit 2,573 2,569 6,151 6,818
Interest expense (543) (595) (1,499) (1,705)
Interest income 8 18 29 35
Income before income taxes 2,038 1,992 4,681 5,148
Provision for income taxes 795 777 1,826 2,008
Net income $1,243 $1,215 $ 2,855 $ 3,140
Earnings per common share $.35 $.33 $.80 $.84
Cash dividends NONE NONE NONE NONE
Number of shares used
in computing earnings
per common share 3,544,270 3,650,401 3,571,672 3,712,615
See accompanying notes.
FRP PROPERTIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands)
(Unaudited)
1997 1996
Cash flows from operating activities:
Net income $2,855 $3,140
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization 6,123 5,682
Net changes in operating assets and liabilities:
Accounts receivable (303) (36)
Inventory of parts and supplies (15) 110
Prepaid expenses 100 198
Accounts payable and accrued liabilities 1,175 (9)
Increase in deferred income taxes 724 1,500
Net change in insurance reserve and other
liabilities 74 28
(Gain) loss on disposition of real estate, plant
and equipment 61 (647)
Other, net (26) (38)
Net cash provided from operating activities 10,768 9,928
Cash flows from investing activities:
Purchase of property, plant and equipment (10,700) (12,069)
Purchase of real estate held for investment - (32)
Additions to other assets (404) (130)
Proceeds from sale of real estate held for investment,
property, plant and equipment, and other assets 30 720
Net cash used in investing activities (11,074) (11,511)
Cash flows from financing activities:
Net increase in short-term debt 2,600 3,600
Proceeds from long-term debt - 3,000
Repayment of debt (218) (2,238)
Repurchase of Company stock (3,031) (2,867)
Exercise of stock options 879 -
Net cash provided from financing activities 230 1,495
Net increase (decrease) in cash and cash equivalents (76) (88)
Cash and cash equivalents at beginning of year 313 392
Cash and cash equivalents at end of the period $ 237 $ 304
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense, net of amount capitalized $1,485 $1,724
Income taxes paid (received) $ 784 $ (28)
Noncash investing and financing activities:
Additions to property, plant and equipment from exchanges $ 391 $1,900
See accompanying notes.
FRP PROPERTIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
(1) Basis of Presentation. The accompanying consolidated
condensed financial statements include the accounts of the Company
and its subsidiaries. These statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and
do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation of the results for the interim periods have
been included. Operating results for the nine months ended June
30, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ended September 30, 1997. The
accompanying consolidated financial statements and the information
included under the heading "Management's Discussion and Analysis"
should be read in conjunction with the consolidated financial
statements and related notes of FRP Properties, Inc. for the year
ended September 30, 1996.
(2) Earnings Per Share. Earnings per share are based on the
weighted average number of shares outstanding and common stock
equivalents, where applicable, during the periods. Fully diluted
earnings per share are not reported because the effect would have
been less than 3% dilutive.
(3) Contingent Liabilities. The Company and its subsidiaries are
subject to legal proceedings and claims arising out of their
businesses that cover a wide range of matters. Additional
information concerning these matters is presented in Note 10 to the
consolidated financial statements included in the Company's 1996
Annual Report to stockholders. Such information is incorporated
herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
The following table summarizes the Company's revenues, cost of operations,
and gross profit by its business segments (in thousands):
Three Months Nine Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Revenues:
Transportation $15,364 $14,402 $44,064 $41,529
Real estate 2,169 2,144 6,088 6,279
Sale of real estate - 160 - 168
$17,533 $16,706 $50,152 $47,976
Cost of operations:
Transportation $12,641 $11,722 $36,905 $33,876
Real estate 815 863 2,563 2,761
Sale of real estate - 71 - 75
$13,456 $12,656 $39,468 $36,712
Gross profit:
Transportation $ 2,723 $ 2,680 $ 7,159 $ 7,653
Real estate 1,354 1,281 3,525 3,518
Sale of real estate - 89 - 93
$ 4,077 $ 4,050 $10,684 $11,264
For the third quarter and first nine months of fiscal 1997, ended June 30,
1997, consolidated revenues increased 5.0% and 4.5%, respectively, over the
same periods last year.
The Transportation segment had increased revenue for the third quarter and
first nine months of 6.7% and 6.1%, respectively, due principally in the
quarter and in the first nine month period due to a 5.6% and 4.4% increase in
miles hauled coupled with a 1.1% and 1.7% increase in the average hauling
price, respectively.
Real estate revenues for the third quarter remained about level with the same
quarter last year and decreased $191,000 or 3.0% for the first nine months
from the same period last year. The decrease in revenue resulted principally
from a decrease in royalty income of approximately $207,000. The decrease in
royalty income was due principally to a decrease in mining activities on two
of the Company's properties.
For the third quarter, excluding the $89,000 gain on the sale of real estate
reported last year, gross profit increased $116,000 or 2.9% over the third
quarter last year. For the first nine months, excluding the $93,000 gain on
the sale of real estate reported last year, gross profit decreased $487,000
or 4.4% from the same period last year.
Gross profit in the Transportation segment increased $43,000 or 1.6% for the
third quarter and decreased $494,000 or 6.4% for the first nine months from
the same periods last year. The per gallon fuel cost has been trending down
since October 1996. The average per gallon cost for the third quarter was
4.1% lower and for the first nine months was 7.0% higher than the respective
periods last year. The Transportation segment's gross profit for the third
quarter and first nine months of fiscal 1996 included a net gain from the
sale of revenue equipment of $211,000 and $623,000, respectively, over the
same periods in fiscal 1997.
Gross profit in the Real Estate segment, excluding the sale of real estate,
increased $73,000 and $7,000 for the third quarter and first nine months,
respectively, from the same periods last year.
Selling, general and administrative expense increased 1.6% in the third
quarter and 2.0% in the first nine months over the same periods last year.
The increases were due principally to the increased revenue. Selling,
general and administrative expense decreased slightly as a percent of sales
in the current periods from the same periods last year.
In the third quarter and first nine months of this year the Company
capitalized $36,000 and $164,000, respectively, in interest expense as part
of the cost of two projects which are under construction. This was the
principal reason that interest expense declined $52,000 and $206,000 from the
same periods last year.
Financial Condition
The Company continues to maintain its sound financial condition with
sufficient resources to meet anticipated capital expenditures and other
operating requirements.
Other.
During fiscal 1996, the transportation segment's ten largest customers
accounted for approximately 35% of transportation's revenue. The loss of any
one of these customers could have an adverse effect on the Company's revenue
and income.
While the Company is affected by environmental regulations, such regulations
are not expected to have a major effect on the Company's capital expenditures
or operating results. Additional information concerning environmental
matters is presented in Note 10 to the consolidated financial statements
included in the Company's 1996 Annual Report to stockholders. Such
information is incorporated herein by reference.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Note 10 to the consolidated financial statements included in the Company's
1996 Annual Report to stockholders is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The response to this item is submitted as a separate
Section entitled "Exhibit Index", starting on page 8.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
during the three months ended 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.
August 5, 1997 FRP PROPERTIES, INC.
RUGGLES B. CARLSON
Ruggles B. Carlson
Assistant Treasurer
(Principal Financial and Accounting
Officer)<PAGE>
FRP PROPERTIES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
EXHIBIT INDEX
Page No. in
Sequential
Numbering
(3)(a)(1) Articles of Incorporation of FRP Properties, Inc.
Previously filed with Form S-4 dated December 13, 1988.
File No. 33-26115.
(3)(a)(2) Amendment to the Articles of Incorporation of FRP
Properties, Inc. filed with the Secretary of State of
Florida on February 19, 1991. Previously filed with
Form 10-K for the fiscal year ended September 30, 1993.
file No. 33-26115.
(3)(a)(3) Amendments to the Articles of Incorporation of FRP
Properties, Inc. filed with the Secretary of State of
Florida on February 7, 1995. Previously filed as
appendix to the Company's Proxy Statement dated December
15, 1994.
(3)(b)(1) Restated Bylaws of FRP Properties, Inc. adopted December
1, 1993. Previously filed with Form 10-K for the fiscal
year ended September 30, 1993. File No. 33-26115.
(3)(b)(2) Amendment to the Bylaws of FRP Properties, Inc. adopted
August 3, 1994. Previously filed with Form 10-K for the
fiscal year ended September 30, 1994. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of
Incorporation of FRP Properties, Inc. Previously filed
with Form S-4 dated December 13, 1988. And amended
Article III filed with Form 10-K for the fiscal year
ended September 30, 1993. And Articles XIII and XIV
previously filed as appendix to the Company's Proxy
Statement dated December 15, 1994. File No. 33-026115.
(4)(b) Specimen stock certificate of FRP Properties, Inc.
Previously filed with Form S-4 dated December 13, 1988.
File No. 33-26115.
Page No. in
Sequential
Numbering
(4)(c) Credit Agreement dated as of November 15, 1995 among FRP
Properties, Inc.; SunTrust Bank, Central Florida,
National Association; Bank of America Illinois; Barnett
Bank of Jacksonville, N.A.; and First Union National
Bank of Florida. Previously filed with Form 10-Q for
the quarter ended December 31, 1995. File No. 33-26115.
(4)(d) The Company and its consolidated subsidiaries have other
long-term debt agreements which do not exceed 10% of the
total consolidated assets of the Company and its
subsidiaries, and the Company agrees to furnish copies
of such agreements and constituent documents to the
Commission upon request.
(10)(a) Post Distribution Agreement, dated May 7, 1986, by and
between Florida Rock Industries, Inc. and Florida Rock
& Tank Lines, Inc. and amendments thereto dated July 1,
1987 and September 27, 1988. Previously filed with Form
S-4 dated December 13, 1988. File No. 33-26115.
(10)(b) Tax Sharing Agreement, dated May 7,1986, between Florida
Rock Industries, Inc. and Florida Rock & Tank Lines,
Inc. Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(c) Various leasebacks and mining royalty agreements with
Florida Rock Industries, Inc., none of which are
presently believed to be material individually, except
for the Mining Lease Agreement dated September 1, 1986,
between Florida Rock Industries Inc. and Florida Rock
Properties, Inc., successor by merger to Grandin Land,
Inc. (see Exhibit (10)(e)), but all of which maybe
material in the aggregate. Previously filed with Form
S-4 dated December 13, 1988. File No. 33-26115.
(10)(d) License Agreement, dated June 30, 1986, from Florida
Rock Industries, Inc. to Florida Rock & Tank Lines, Inc.
to use "Florida Rock" in corporate names. Previously
filed with Form S-4 dated December 13, 1988. File No.
33-26115.
(10)(e) Mining Lease Agreement, dated September 1, 1986, between
Florida Rock Industries, Inc. and Florida Rock
Properties, Inc., successor by merger to Grandin Land,
Inc. Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
Page No. in
Sequential
Numbering
(10)(f) Summary of Medical Reimbursement Plan of FRP Properties,
Inc. Previously filed with Form 10-K for the fiscal
year ended September 30, 1993. File No. 33-26115.
(10)(g) Split Dollar Agreement dated October 3, 1984, between
Edward L. Baker and Florida Rock Industries, Inc. and
assignment of such agreement, dated January 31, 1986
from Florida Rock Industries, Inc. to Florida Rock & Tank Lines,
Inc. Previously filed with Form S-4 dated December 13, 1988.
File No. 33-26115.
(10)(h) Summary of Management Incentive Compensation Plans.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1994. File No. 33-26115.
(10)(i) Management Security Agreements between the Company and
certain officers. Form of agreement previously filed as
Exhibit (10)(I) with Form S-4 dated December 13, 1988.
File No. 33-26115.
(10)(i)(1) FRP Properties, Inc. 1989 Employee Stock Option Plan.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(j)(2) FRP Properties, Inc. 1995 Stock Option Plan.
Previously filed as an appendix to the Company's Proxy
Statement dated December 15, 1994.
(11) Computation of Earnings Per Common Share.
(27) Financial Data Schedule<PAGE>
Exhibit (11)
FRP PROPERTIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1997 1996 1997 1996
Net income $1,243,000 $1,215,000 $2,855,000 $3,140,000
Common shares:
Weighted average shares
outstanding during the
period 3,483,347 3,557,276 3,507,311 3,617,348
Shares issuable under stock
options which are poten-
tially dilutive and affect
primary earnings per share 60,923 93,125 64,361 95,267
Maximum potential shares
includable in computation
of primary earnings per
share 3,544,270 3,650,401 3,571,672 3,712,615
Additional shares issuable
under stock options which
are potentially dilutive
and affect fully diluted
earnings per share 2,756 91 8,001 -
Maximum potential shares
included in computation
of fully diluted earnings
per share 3,547,026 3,650,492 3,579,673 3,712,615
Primary earnings per
common share $.35 $.33 $.80 $.84
Fully diluted earnings
per common share (a) $.35 $.33 $.80 $.84
(a) Fully diluted earnings per common share are not presented on the
income statement since the potential effect would have been less
than 3% dilutive.<PAGE>
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