<PAGE>
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, 1998.
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 3, 1998: 3,468,225 shares of $.10 par value common
stock.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, September 30,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 321 $ 429
Accounts receivable:
Affiliates 273 283
Other 6,437 5,506
Less allowance for doubtful accounts (270) (258)
Inventory of parts and supplies 420 469
Prepaid expenses and other 1,834 2,120
Total current assets 9,015 8,549
Other assets:
Real estate held for investment, at cost 5,771 5,771
Goodwill 1,258 1,288
Other 2,011 5,956
Total other assets 9,040 13,015
Property, plant and equipment, at cost 155,120 142,671
Less accumulated depreciation and
depletion (51,796) (47,653)
Net property, plant and equipment 103,324 95,018
$121,379 $116,582
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term note payable to bank $ 5,400 $ 4,000
Accounts payable:
Affiliates 69 77
Other 2,277 2,350
Federal and state income taxes 482 779
Accrued liabilities 3,156 3,439
Long-term debt due within one year 431 418
Total current liabilities 11,815 11,063
Long-term debt 30,320 30,647
Deferred income taxes 7,797 7,243
Other liabilities 3,998 3,895
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,461,230 shares issued
(3,439,235 at September 30, 1997) 346 344
Capital in excess of par value 17,756 17,333
Retained earnings 49,347 46,057
Total stockholders' equity 67,449 63,734
$121,379 $116,582
See accompanying notes.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
Revenues:
Affiliates $ 1,616 672 4,552 3,609
Non-affiliates 17,386 16,861 49,952 46,543
19,002 17,533 54,504 50,152
Cost of operations 14,665 13,456 42,417 39,468
Gross profit 4,337 4,077 12,087 10,684
Selling, general and
administrative expense:
Affiliates 384 355 1,152 1,087
Non-affiliates 1,441 1,149 3,861 3,446
1,825 1,504 5,013 4,533
Operating profit 2,512 2,573 7,074 6,151
Interest expense (574) (543) (1,694) (1,499)
Interest income 2 8 10 29
Other income, net 3 - 2 -
Income before income taxes 1,943 2,038 5,392 4,681
Provision for income taxes 758 795 2,103 1,826
Net income $ 1,185 $1,243 3,289 2,855
Basic earnings per
common share $ .34 .36 .95 .81
Diluted earnings per
common share $ .34 .35 .94 .80
Cash dividends NONE NONE NONE NONE
Number of shares used in computing:
Basic earnings per share 3,460 3,483 3,447 3,507
Diluted earnings per share 3,502 3,521 3,494 3,547
See accompanying notes.
FRP PROPERTIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands)
(Unaudited)
1998 1997
Cash flows from operating activities:
Net income $3,289 2,855
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization 6,771 6,123
Net changes in operating assets and liabilities:
Accounts receivable (919) (303)
Inventory of parts and supplies 49 (15)
Prepaid expenses 286 100
Accounts payable and accrued liabilities (536) 1,175
Increase in deferred income taxes 430 724
Net change in insurance reserve and other
liabilities 102 74
(Gain) loss on disposition of real estate, plant
and equipment (404) 61
Other, net 7 (26)
Net cash provided from operating activities 9,075 10,768
Cash flows from investing activities:
Purchase of property, plant and equipment (11,238) (10,700)
Additions to other assets (452) (404)
Proceeds from sale of real estate held for investment,
property, plant and equipment, and other assets 995 30
Net cash used in investing activities (10,695) (11,074)
Cash flows from financing activities:
Net increase in short-term debt 1,400 2,600
Repayment of debt (314) (218)
Repurchase of Company stock (34) (3,031)
Exercise of stock options 460 879
Net cash provided from financing activities 1,512 230
Net increase (decrease) in cash and cash equivalents (108) (76)
Cash and cash equivalents at beginning of year 429 313
Cash and cash equivalents at end of the period $ 321 237
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense, net of amount capitalized $1,706 1,485
Income taxes $1,648 784
Non cash investing activities:
Additions to property, plant and equipment from exchanges 621 391
Escrow cash included in other assets used to purchase
property, plant and equipment $3,811 -
See accompanying notes.
FRP PROPERTIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(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, 1998, are not necessarily indicative of the
results that may be expected for the fiscal year ended September
30, 1998. 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, 1997.
(2) Earnings Per Share. Effective December 31, 1997, the Company
adopted Statement of Financial Accounting Standard No. 128,
"Earnings per Share" ("SFAS 128"). SFAS 128 replaced the
presentation of primary earnings per share (EPS) and fully
diluted EPS with a presentation of basic and diluted EPS. Basic
earnings per share are based on the weighted average number of
common shares outstanding during the periods. Diluted earnings
per share are based on the weighted average number of common
shares and potential dilution of securities that could share in
earnings. Earnings per share for all prior periods have been
restated.
(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
1997 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,
1998 1997 1998 1997
Revenues:
Transportation $16,699 15,364 47,700 44,064
Real estate 2,303 2,169 6,804 6,088
$19,002 17,533 54,504 50,152
Cost of operations:
Transportation $13,796 12,641 39,788 36,905
Real estate 869 815 2,629 2,563
$14,665 13,456 42,417 39,468
Gross profit:
Transportation $ 2,903 2,723 7,912 7,159
Real estate 1,434 1,354 4,175 3,525
$ 4,337 4,077 12,087 10,684
For the third quarter and first nine months of fiscal 1998, ended June 30,
1998, consolidated revenues increased 8.4% and 8.7%, respectively, over the
same periods last year. The Transportation segment revenues for the third
quarter and first nine months increased 8.7% and 8.3%, respectively, due an
increase in miles hauled. Real Estate revenues increased 6.2% for the third
quarter and 11.8% for the first nine months from the same period last year.
The real estate revenue increase for the third quarter was due to higher
royalties and rental income. For the first nine months the increase in
revenues was primarily due to $195,000 of timber sales in fiscal 1998,
lease up from a warehouse/office building that was under construction in
the first nine months of 1997, and increased mining royalties.
Gross profit in Transportation increased $180,000 for the third quarter and
$753,000 for the first nine months from the same periods last year. The
increase for the third quarter was primarily due to higher revenues. The
increase for the first nine months was due primarily to increased gains on
the sale of equipment and increased revenues. Increase in drivers wages
and benefits continue to negatively impact gross profit. Equipment sales
increased $323,000 for the nine months.
Gross profit in the Real Estate segment increased $80,000 for the third
quarter and $650,000 for the first nine months. The improvement for the
third quarter was primarily higher occupancy and income producing space
under management. For the first nine months the increase was primarily
due to gross profit of $188,000 on the sales of timber in the first nine
months of 1998, the first nine months of 1997 included a write off of
$134,000 in prior tenant improvement resulting from leasing existing space
to a new tenant and higher rental income due to leasing this space and
lease up of project under construction last year.
The selling, general and administrative expense increased $321,000 for the
third quarter and $480,000 for the first nine months from the same periods
last year. Selling, general and administrative expense as a percent of
sales was 9.6% for the third quarter as compared to 8.6% last year, and for
the first nine months was 9.2% compared to 9.0% last year. The increase
was primarily attributable to costs incurred for various special projects
and business development opportunities related to transportation.
Interest expense increased $31,000 for the third quarter, and $195,000 for
the first nine months due primarily to an increase in the average debt
outstanding and, to a lesser extent, an increase in the average interest
rate. These increases were partially offset by a greater capitalization
of interest in fiscal 1998.
Year 2000 Conversion
The Company, like most entities relying on automated data processing is
faced with the task of modifying systems to become Year 2000 compliant.
The Company has analyzed its Year 2000 exposure and developed plans for
addressing the Year 2000 exposure as well as reengineering selective
systems to enhance their functionality. As a result, the Company has
purchased new state of the art software and hardware for its tank truck
dispatching and maintenance system that is represented to be Year 2000
compliant to replace its existing systems.
The Company purchases from an affiliate, Florida Rock Industries, Inc.(FRI)
certain administrative services including automated data
processing(Purchased Services). FRI is in the process of updating its
systems to be Year 2000 compliant. The Company has reviewed FRI's plan and
is monitoring the progress of this plan as it relates to the Purchased
Services.
The costs associated with the purchase and installation of the tank truck
dispatching and maintenance software and hardware will be capitalized and
amortized over the estimated useful life of the software or equipment.
Other costs associated such as selection, training and reengineering of the
existing processing are being expensed as incurred. Based on current
information, the expected costs of the systems are not expected to be
material to the financial condition or results of operations of the
Company.
The Company presently feels it is addressing in a timely manner the major
issues related to the Year 2000 and any significant disruptive problems in
its ability to conduct its business as a result are unlikely. However,
despite efforts and initiatives undertaken by the Company, total assurances
can not be given that absolute compliance can be achieved. There can be no
guarantees that the computer systems of other entities on which the Company
relies will be converted in a timely manner or that their failure to
convert, or a conversion that is incompatible with the Company's system,
will not have an adverse effect on the Company's business, financial
condition and results of operations. The Company is considering other
steps to reduce these risks, including requests for assurances from third
parties concerning their Year 2000 compliance.
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 1997, the transportation segment's ten largest customers
accounted for approximately 31% 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 1997 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
1997 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, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 12, 1998 FRP PROPERTIES, INC.
JAMES J. GILSTRAP
James J. Gilstrap
Treasurer and Chief Financial
Officer
WALLACE A. PATZKE, JR.
Wallace A. Patzke, Jr.
Controller and Chief Accounting
Officer
<PAGE>
FRP PROPERTIES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998
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.
Page No. in
Sequential
Numbering
(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.
(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>
<PAGE>
Exhibit (11)
FRP PROPERTIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
Net income $1,185,000 1,243,000 3,289,000 2,855,000
Common shares:
Weighted average shares
outstanding during the
period - shares used for
basic earnings per share 3,459,768 3,483,347 3,446,699 3,507,311
Shares issuable under stock
options which are poten-
tially dilutive 42,254 37,422 47,655 39,534
Shares used for diluted earnings
per share 3,502,022 3,520,769 3,494,354 3,546,845
Basic earnings per
common share $.34 .36 .95 .81
Diluted earnings
per common share $.34 .35 .94 .80
<PAGE>
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<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 321
<SECURITIES> 0
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<BONDS> 30,320
0
0
<COMMON> 346
<OTHER-SE> 67,103
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