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Securities and Exchange Commission
Washington, D.C. 20549
_______________________________
FORM 10-Q


[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2005

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: 001-11590


Chesapeake Utilities Corporation
(Exact name of registrant as specified in its charter)
 
 

Delaware
51-0064146
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 


909 Silver Lake Boulevard, Dover, Delaware 19904
(Address of principal executive offices, including Zip Code)


(302) 734-6799
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

Common Stock, par value $.4867 — 5,799,920 shares outstanding as of March 31, 2005.
 
 
 
 

TABLE OF CONTENTS
 
 
 
 Page
 Part I -- Financial Information
 3
 Item 1. Financial Statements
 3
 Notes to Condensed Consolidated Financial Statements
 8
 1. Quarterly Financial Data
 8
 2. Calculation of Earnings Per Share
 8
 3. Commitments and Contingencies
 8
 Environmental Matters
 8
 Other Commitments and Contingencies
 10
 4. Recent Authoritative Pronouncements on Financial Reporting and Accounting
 11
 5. Segment Information
 12
 6. Employee Benefit Plans
 13
 7. Stockholders' Equity
 13
 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 14
 Business Description
 14
 Results of Operations for the Quarter Ended March 31, 2005
 14
 Consolidated Overview
 14
 Natural Gas Distribution and Transmission
 15
 Propane
 16
 Advanced Information Services
 17
 Other Business Operations and Eliminations
 17
 Discontinued Operations
 17
 Income Taxes
 17
 Interest Expense
 18
 Financial Position, Liquidity and Capital Resources
 18
 Off-Balance Sheet Arrangements
18
 Contractual Obligations
19
 Environmental Matters
19
 Other Matters
20
 Regulatory Matters
20
 Competition
22
 Recent Pronouncements
23
 Inflation
23
 Cautionary Statement
23
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 24
 Item 4. Controls and Procedures
 25
 Evaluation of Disclosure Controls and Procedures
25
 Changes in Internal Control Over Financial Reporting
25
 Part II -- Other Information
 27
 Signatures
 29
 
 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements
 

Chesapeake Utilities Corporation and Subsidiaries
         
Condensed Consolidated Statements of Income (Unaudited)
         
           
For the Three Months Ended March 31,
 
2005
  
2004
  
Operating Revenues
 
$
77,845,249
  
$
63,762,360
  
               
Operating Expenses
             
Cost of sales, excluding costs below
   
52,552,930
   
40,397,011
 
Operations
   
10,107,515
   
9,167,655
 
Maintenance
   
329,575
   
380,570
 
Depreciation and amortization
   
1,900,971
   
1,810,624
 
Other taxes
   
1,449,915
   
1,307,193
 
Total operating expenses
   
66,340,906
   
53,063,053
 
Operating Income
   
11,504,343
   
10,699,307
 
               
Other income net of other expenses
   
82,380
   
102,476
 
               
Interest charges
   
1,277,778
   
1,326,766
 
               
Income Before Income Taxes
   
10,308,945
   
9,475,017
 
               
Income taxes
   
4,076,149
   
3,701,483
 
               
Income from Continuing Operations
   
6,232,796
   
5,773,534
 
               
Loss from discontinued operations, net of tax benefit of $18,491
   
-
   
(34,335
)
               
Net Income
 
$
6,232,796
  
$
5,739,199
  
               
Earnings Per Share of Common Stock:
             
Basic
             
From continuing operations
 
$
1.08
  
$
1.01
  
From discontinued operations
   
-
   
-
 
Basic
 
$
1.08
  
$
1.01
  
Diluted
             
From continuing operations
 
$
1.05
  
$
0.99
  
From discontinued operations
   
-
   
(0.01
)
Diluted
 
$
1.05
  
$
0.98
  
               
Cash Dividends Declared Per Share of Common Stock:
 
$
0.280
  
$
0.275
  
               
 The accompanying notes are an integral part of these financial statements.
  
 
 
- 3 - -
 

Chesapeake Utilities Corporation and Subsidiaries
         
Condensed Consolidated Statements of Cash Flows (Unaudited)
         
           
For the Three Months Ended March 31,
 
2005
  
2004
  
           
Operating Activities
          
Net Income
  
$
6,232,796
  
$
5,739,199
  
Adjustments to reconcile net income to net operating cash:
              
Depreciation and amortization 
    
1,900,971
   
1,810,624
 
Depreciation and accretion included in other costs 
    
657,933
   
629,787
 
Deferred income taxes, net 
    
(1,105,438
)
  
(409,568
)
Mark-to-market adjustments 
    
(334,668
)
  
174,743
 
Employee benefits and compensation 
    
412,783
   
462,582
 
Other, net 
    
614
   
3,796
 
Changes in assets and liabilities:
              
Accounts receivable and accrued revenue 
    
2,044,547
   
840,055
 
Propane inventory, storage gas and other inventory 
    
5,781,964
   
3,682,438
 
Regulatory assets 
    
1,105,743
   
3,025,443
 
Prepaid expenses and other current assets 
    
58,893
   
586,339
 
Other deferred charges 
    
5,375
   
(1,776
)
Long-term receivables 
    
71,812
   
49,761
 
Accounts payable and other accrued liabilities 
    
(8,125,481
)
  
(946,175
)
Income taxes receivable 
    
5,079,522
   
3,829,922
 
Accrued interest 
    
976,494
   
981,715
 
Customer deposits and refunds 
    
(1,265,284
)
  
(956,968
)
Accrued compensation 
    
(653,247
)
  
(1,694,446
)
Regulatory liabilities 
    
3,083,871
   
(579,061
)
Environmental and other liabilities 
    
130,134
   
32,627
 
Net cash provided by operating activities
    
16,059,334
   
17,261,037
 
               
Investing Activities
              
Property, plant and equipment expenditures
    
(3,535,006
)
  
(2,688,001
)
Other and environmental recoveries
    
126,362
   
237,806
 
Net cash used by investing activities
    
(3,408,644
)
  
(2,450,195
)
               
Financing Activities
              
Common stock dividends
    
(1,474,663
)
  
(1,364,807
)
Issuance of stock for Dividend Reinvestment Plan
    
26,255
   
54,825
 
Change in cash overdrafts due to outstanding checks
    
(301,758
)
  
(445,478
)
Net repayment under line of credit agreements
    
(4,443,417
)
  
(3,515,258
)
Repayment of long-term debt
    
(1,005,140
)
  
(1,000,199
)
Net cash used by financing activities
    
(7,198,723
)
  
(6,270,917
)
               
Net Increase in Cash and Cash Equivalents
    
5,451,967
   
8,539,925
 
Cash and Cash Equivalents — Beginning of Period
    
1,611,761
   
3,108,501
 
Cash and Cash Equivalents — End of Period
  
$
7,063,728
  
$
11,648,426
  
               
 The accompanying notes are an integral part of these financial statements.
  
 
 
- 4 - -

 
Chesapeake Utilities Corporation and Subsidiaries
         
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
         
           
   
For the Three Months Ended March 31, 2005
  
For the Twelve Months Ended December 31, 2004
  
Common Stock