<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 December 31, 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 February 1, 1999: 3,454,725 shares of $.10 par value
common stock.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
December 31, September 30,
1998 1998
ASSETS
Current assets:
Cash and cash equivalents $ 552 $ 663
Accounts receivable:
Affiliates 330 380
Other 6,504 6,402
Less allowance for doubtful accounts (275) (272)
Inventory of parts and supplies 540 552
Prepaid expenses and other 2,299 2,348
Total current assets 9,950 10,073
Other assets:
Real estate held for investment, at cost 5,703 5,703
Goodwill 1,238 1,248
Other 1,957 1,971
Total other assets 8,898 8,922
Property, plant and equipment, at cost 161,007 158,083
Less accumulated depreciation and
depletion (54,130) (53,113)
Net property, plant and equipment 106,877 104,970
$125,725 $123,965
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term note payable to bank $ 7,900 $ 1,600
Accounts payable:
Affiliates 241 85
Other 2,751 2,691
Federal and state income taxes 1,164 1,224
Accrued liabilities 2,790 3,346
Long-term debt due within one year 538 533
Total current liabilities 15,384 9,479
Long-term debt 28,167 33,299
Deferred income taxes 7,656 7,656
Accrued insurance reserves 4,134 4,129
Other liabilities 664 647
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,463,225 shares issued
(3,439,235 at September 30, 1998) 347 347
Capital in excess of par value 17,773 17,871
Retained earnings 51,600 50,537
Total stockholders' equity 69,720 68,755
$125,725 $123,965
See accompanying notes.<PAGE>
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS
ENDED DECEMBER 31,
1998 1997
Revenues:
Affiliates $ 1,767 1,462
Non-affiliates 17,264 16,209
19,031 17,671
Cost of operations 14,638 13,697
Gross profit 4,393 3,974
Selling, general and
administrative expense:
Affiliates 420 384
Non-affiliates 1,674 1,132
2,094 1,516
Operating profit 2,299 2,458
Interest expense (559) (569)
Interest income 3 5
Other income, net 0 -
Income before income taxes 1,743 1,894
Provision for income taxes 680 739
Net income $ 1,063 $1,155
Basic earnings per
common share $ .31 .34
Diluted earnings per
common share $ .30 .33
Cash dividends NONE NONE
Number of shares used in computing:
Basic earnings per share 3,464 3,439
Diluted earnings per share 3,490 3,491
See accompanying notes.
FRP PROPERTIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
(In thousands)
(Unaudited)
1998 1997
Cash flows from operating activities:
Net income $1,063 1,155
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization 2,336 2,214
Net changes in operating assets and liabilities:
Accounts receivable (52) (283)
Inventory of parts and supplies 12 (45)
Prepaid expenses 49 (126)
Accounts payable and accrued liabilities (400) (777)
Net change in insurance reserve and other
liabilities 22 20
(Gain) loss on disposition of real estate, plant
and equipment (186) (360)
Other, net 9 (9)
Net cash provided from operating activities 2,853 1,789
Cash flows from investing activities:
Purchase of property, plant and equipment (4,280) (2,905)
Additions to other assets (26) -
Proceeds from sale of real estate held for investment,
property, plant and equipment, and other assets 268 954
Net cash used in investing activities (4,038) (1,951)
Cash flows from financing activities:
Net increase in short-term debt 6,300 100
Repayment of debt (5,127) (99)
Repurchase of Company stock (99) (33)
Net cash provided from financing activities 1,074 (32)
Net increase (decrease) in cash and cash equivalents (111) (194)
Cash and cash equivalents at beginning of year 367 429
Cash and cash equivalents at end of the period $ 256 235
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense, net of amount capitalized $ 575 233
Income taxes $ 784 550
Non cash investing activities:
Additions to property, plant and equipment from exchanges $ 89 -
Escrow cash included in other assets used to purchase
property, plant and equipment $ - 3,777
See accompanying notes.
FRP PROPERTIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 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 three
months ended December 31, 1998, are not necessarily indicative of
the results that may be expected for the fiscal year ended
September 30, 1999. 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, 1998.
(2) 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
1998 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
Ended December 31,
1998 1997
Revenues:
Transportation $16,445 15,328
Real estate 2,586 2,343
$19,031 17,671
Cost of operations:
Transportation $13,595 12,851
Real estate 1,043 846
$14,638 13,697
Gross profit:
Transportation $ 2,850 2,477
Real estate 1,543 1,497
$ 4,393 3,974
For the first quarter of fiscal 1999, ended December 31, 1998, consolidated
revenues increased 7.7% over the same period last year. The Transportation
segment revenues for the first quarter increased 7.3% due primarily to an
increase in miles hauled. Real Estate revenues increased 10.4% for the
first quarter. The real estate revenue increase was due to higher
royalties and rental income.
Gross profit increased $419,000 or 10.5% as compared to last year. Gross
profit in Transportation increased $373,000 for the first quarter. The
increase was primarily due to higher revenues and lower fuel costs.
Increases in drivers wages and benefits continue to impact gross profit.
Gross profit in the Real Estate segment increased $46,000 for the first
quarter. The improvement was primarily due to higher income producing
space under management. Gross profit for the first quarter of fiscal 1999
was reduced by lower timber sales this quarter as compared to the same
quarter last year.
Selling, general and administrative expense increased $578,000 for the
first quarter from the same period last year. Selling, general and
administrative expense as a percent of sales was 11.6% for the first
quarter as compared to 8.6% last year. The increase was primarily
attributable to severance compensation and staffing and consulting expenses
related to systems upgrades to bring the Company compliant with the Year
2000 issues.
Interest expense increased $10,000 for the first quarter, due primarily to
an increase in the average debt outstanding. This increase was partially
offset by a decrease in average interest rate and a greater capitalization
of interest in fiscal 1999.
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 has
developed plans for addressing the Year 2000 exposure as well as
reengineering selective systems to enhance their functionality.
The Company is in various stages of modifying or replacing both internally
developed and purchased software. The Company has purchased new software
and hardware for its truck dispatching and maintenance system that is
represented to be Year 2000 compliant to replace its existing systems.
The Company will begin to phase in this software in January 1999 and have
the total system installed in June 1999.
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 Company is in the process of identifying operating equipment which may
be effected by Year 2000. Once the equipment has been identified, testing
will begin to determine if such equipment is Year 2000 compliant.
Vendors, suppliers and customers that are critical to the Company's
operations are in the process of being identified. Questionnaires will be
sent to these entities to determine their state of readiness for Year 2000.
The Company will identify alternative vendors and suppliers if any of the
current suppliers do not appear to be taking corrective actions and as a
contingency in case these entities are not Year 2000 compliant.
The costs associated with the purchase and installation of the 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 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. The Company's
contingency plans will be finalized during the second quarter of calendar
1999. This plan will assess the risks and possible countermeasures.
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.
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 1998, the transportation segment's ten largest customers
accounted for approximately 33% 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 1998 Annual
Report to stockholders. Such information is incorporated herein by
reference.
Forward-Looking Statements. Certain matters discussed in this report
contain forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from
these indicated by such forward-looking statements. These forward-looking
statements relate to, among other things, capital expenditures, liquidity,
capital resources, competition and the Year 2000 and may be indicated by
words or phrases such as "anticipate," "estimate," "plans," "projects,"
"continuing," "ongoing," "expects," "management believes," "the Company
believes," "the Company intends" and similar words or phrases. The
following factors are among the principal factors that could cause actual
results to differ materially from the forward-looking statements: Year 2000
technology issues; availability and terms of financing; competition; levels
of construction activity in the FRI's markets; fuel costs; and inflation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Note 10 to the consolidated financial statements included in the Company's
1998 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 December 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
February 5, 1999 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 DECEMBER 31, 1998
EXHIBIT INDEX
(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.
(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)(c)(1) First Amendment dated as of September 30, 1998 to the
Credit Agreement dated as of November 15, 1995.
Previously filed with Form 10-K for the year ended
September 30, 1998. 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.
(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)(i)(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
(99)(a) Information Concerning Environmental Matters and Legal
Proceedings. Previously filed as Item 3 "Legal
Proceedings" of FRP Properties, Inc.'s, Form 10-K for
fiscal year ended September 30, 1998. File No. 33-26115.
(99)(b) Information Concerning Legal Proceedings. Previously
filed as Note 10 to the Consolidated Financial
Statements in the Company's 1998 Annual Report to
Stockholders. File No. 33-26115.
<PAGE>
<PAGE>
Exhibit (11)
FRP PROPERTIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS
ENDED DECEMBER 31,
1998 1997
Net income $1,063,000 1,155,000
Common shares:
Weighted average shares
outstanding during the
period - shares used for
basic earnings per share 3,463,660 3,438,898
Shares issuable under stock
options which are poten-
tially dilutive 25,910 51,845
Shares used for diluted earnings
per share 3,489,570 3,490,743
Basic earnings per
common share $.31 .34
Diluted earnings
per common share $.30 .33
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 552
<SECURITIES> 0
<RECEIVABLES> 6,834
<ALLOWANCES> 275
<INVENTORY> 540
<CURRENT-ASSETS> 9,950
<PP&E> 161,007
<DEPRECIATION> 54,130
<TOTAL-ASSETS> 125,725
<CURRENT-LIABILITIES> 15,384
<BONDS> 28,167
0
0
<COMMON> 347
<OTHER-SE> 69,373
<TOTAL-LIABILITY-AND-EQUITY> 125,725
<SALES> 19,031
<TOTAL-REVENUES> 19,031
<CGS> 14,638
<TOTAL-COSTS> 14,638
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (559)
<INCOME-PRETAX> 1,743
<INCOME-TAX> 680
<INCOME-CONTINUING> 1,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,063
<EPS-PRIMARY> .31
<EPS-DILUTED> .30
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