UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
WASHINGTON, D.C. 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 March 31, 2004 | ||
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 1-1055 | ||
Florida Public Utilities Company | ||
(Exact name of registrant as specified in its charter) | ||
Florida | 59-0539080 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
401 South Dixie Highway, West Palm Beach, FL | 33401 | |
(Address of principal executive offices) | (Zip Code) | |
(561) 832-0872 | ||
(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 [ ] No [ X ] | ||
On May 12, 2004, there were 3,931,438 shares of $1.50 par value common shares outstanding. | ||
INDEX
Florida Public Utilities Company (“FPU” or “Company”)
Part I.
Financial Information
Item 1.
Financial Statements
Condensed Consolidated Statements of Income
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
Part II.
Other Information
Item 1.
Legal Proceedings
Item 2.
Changes in Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Submission of Matters to a Vote of Security Holders
Item 5.
Other Information
Item 6.
Exhibits and Reports on Form 8-K
Signatures
PART I
Financial Information
Item 1. Financial Statements
FLORIDA PUBLIC UTILITIES COMPANY | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||
(dollars in thousands, except per share data) | ||||
Three Months Ended | ||||
March 31, | ||||
Revenues | 2004 | 2003 | ||
Natural gas | $ 17,063 | $ 18,385 | ||
Electric | 10,314 |
| 9,804 |
|
Propane gas | 3,348 | 2,960 | ||
Total revenues | 30,725 | 31,149 | ||
|
|
|
|
|
Cost of fuel and taxes based on revenues | 19,819 | 19,908 | ||
Gross Profit | 10,906 |
| 11,241 |
|
Operating Expenses |
|
|
|
|
Operations | 5,577 | 5,132 | ||
Depreciation and amortization | 1,504 |
| 1,328 |
|
Taxes other than income taxes | 706 | 646 | ||
Total operating expenses | 7,787 | 7,106 | ||
|
|
|
|
|
Operating income before income taxes | 3,119 | 4,135 | ||
Interest Charges and Other |
|
|
|
|
Merchandise and service revenue | 863 | 803 | ||
Merchandise and service expenses | (824) |
| (757) |
|
Other income (expenses) | 144 | (72) | ||
Interest expense | (1,107) |
| (1,177) | |
Total interest charges and other | (924) | (1,203) | ||
|
|
|
|
|
Income from continuing operations before income taxes | 2,195 |
| 2,932 | |
Income taxes | (782) |
| (1,119) |
|
Income from continuing operations | 1,413 |
| 1,813 | |
Discontinued operations | ||||
Income from discontinued operations – water Division | - | 149 | ||
Income taxes | - | (16) |
| |
Gain on disposal of water division, net of income taxes of $5,960 | - |
| 9,749 | |
Total income from discontinued operations | - |
| 9,882 | |
Net Income | 1,413 |
| 11,695 | |
|
|
|
|
|
Preferred Stock Dividends | 7 | 7 | ||
|
|
|
|
|
Earnings applicable to Common Stock | $ 1,406 | $ 11,688 | ||
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|
|
|
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Earnings Per Common Share (basic and diluted): | ||||
Continuing Operations | $ 0.36 | $ 0.46 | ||
Discontinued Operations | - | 2.54 | ||
Total | $ 0.36 | $ 3.00 | ||
Dividends Declared Per Common Share | $ 0.1475 | $ 0.1425 | ||
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|
|
|
|
Average Shares Outstanding | 3,928,889 | 3,894,978 | ||
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|
|
|
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The financial statements should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the most recent Form 10-K. | ||||
FLORIDA PUBLIC UTILITIES COMPANY | |||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||
(dollars in thousands) | |||
March 31, | December 31, | ||
| 2004 | 2003 | |
ASSETS | |||
Utility Plant | $ 163,386 | $ 160,644 | |
Less accumulated depreciation | 53,585 | 52,302 | |
Net utility plant | 109,801 | 108,342 | |
Current Assets | |||
Cash | 969 | 859 | |
Accounts receivable | 9,230 | 9,614 | |
Allowance for uncollectible accounts | (219) | (180) | |
Unbilled receivables | 1,563 | 1,673 | |
Notes receivable | 357 | 244 | |
Inventories (at average or unit cost) | 2,623 | 2,624 | |
Prepayments and deferrals | 4,384 | 5,518 | |
Total current assets | 18,907 | 20,352 | |
Other Assets | |||
Investments held for environmental costs | 3,169 | 3,149 | |
Other regulatory assets - environmental | 9,127 | 9,127 | |
Long term receivable and other investments | 5,562 | 5,672 | |
Deferred charges | 10,030 | 10,161 | |
Goodwill | 3,366 | 3,366 | |
Intangible assets (net) | 2,819 | 2,821 | |
Total other assets | 34,073 | 34,296 | |
Total | $ 162,781 | $ 162,990 | |
CAPITALIZATION AND LIABILITIES | |||
Capitalization | |||
Common shareholders' equity | $ 42,470 | $ 41,463 | |
Preferred stock | 600 | 600 | |
Long-term debt | 52,500 | 52,500 | |
Total capitalization | 95,570 | 94,563 | |
Current Liabilities | |||
Line-of-credit | 962 | 2,278 | |
Accounts payable | 7,536 | 8,864 | |
Insurance accrued | 2,068 | 2,238 | |
Interest accrued | 1,444 | 935 | |
Taxes accrued | 770 | 359 | |
Other accruals and payables | 3,702 | 3,824 | |
Over recovery of fuel costs | 1,778 | 1,740 | |
Over recovery of conservation and unbundling | 312 | 71 | |
Customer deposits | 6,548 | 6,134 | |
Total current liabilities | 25,120 | 26,443 | |
Other Liabilities | |||
Deferred income taxes and regulatory tax liability | 17,669 | 17,882 | |
Environmental liabilities and other | 24,422 | 24,102 | |
Total other liabilities | 42,091 | 41,984 | |
Total | $ 162,781 | $ 162,990 | |
The financial statements should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the most recent Form 10-K. | |||
FLORIDA PUBLIC UTILITIES COMPANY | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||
(dollars in thousands) | |||
Three Months Ended | |||
March 31, | |||
2004 | 2003 | ||
Net Cash Flow provided by | |||
Continuing Operating Activities | $ 4,515 | $ 1,889 | |
Net Cash Flow used in Discontinued Operations | - | (98) | |
Cash Flows from Investing Activities | |||
Construction expenditures | (2,858) | (398) | |
Taxes on long term investments, net of interest | (20) | - | |
Proceeds from sale of discontinued operations | 4 | 19,242 | |
Other | 190 | 29 | |
Net cash (used in) provided by investing activities | (2,684) | 18,873 | |
Cash Flows from Financing Activities | |||
Net change in short-term borrowings | (1,316) | (19,183) | |
Dividends paid | (585) | (560) | |
Other | 180 | 165 | |
Net cash used in financing activities | (1,721) | (19,578) | |
Net Increase in cash | 110 | 1,086 | |
Cash at beginning of period | 859 | 3,200 | |
Cash at end of period | $ 969 | $ 4,286 | |
The financial statements should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the most recent Form 10-K. | |||
FLORIDA PUBLIC UTILITIES COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004
1.
In the opinion of Management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Due to the seasonal nature of the Company's business, the operating results for the period are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the audited consolidated financial statements and foo tnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.
2.
Substantially all of the utility plant and the shares of Flo-Gas Corporation collateralize FPU's First Mortgage Bonds. Investments held for environmental costs, accounts receivable, and inventory are collateral for the line of credit.
3.
The First Mortgage Bond Indentures provide for restrictions on the payment of cash dividends. As of March 31, 2004, under the most restrictive provision, approximately $5,200,000 of retained earnings were unrestricted. The line of credit agreement contains covenants that, if violated, could restrict the issuance of dividends. The Company is not in violation of these covenants; however, if a material violation occurs in the future and is not rectified, it could prohibit the issuance of dividends.
4.
Summary of Revenues and Operating income before income taxes (dollars in thousands):
Three Months Ended March 31, | ||
Revenues | 2004 | 2003 |
Natural gas | $ 17,063 | $ 18,385 |
Electric | 10,314 | 9,804 |
Propane gas | 3,348 | 2,960 |
Total revenues | $ 30,725 | $ 31,149 |
Operating income before income taxes | ||
Natural gas | $ 2,067 | $ 2,965 |
Electric | 670 | 724 |
Propane gas | 382 | 446 |
Total operating income before income taxes | $ 3,119 | $ 4,135 |
5.
Goodwill and Other Intangible Assets
Effective January 1, 2002, FPU adopted SFAS No. 142, "Goodwill and Other Intangible Assets." Under this statement, the amortization of goodwill is no longer permitted and intangible assets with an indefinite life will not be amortized. The standard requires goodwill to be periodically tested for impairment and written down to fair value if considered impaired. The reporting segments subject to impairment testing are propane gas and natural gas.
Intangible assets associated with FPU’s acquisitions have been identified and are shown as separate line items on the balance sheet. Such intangibles are principally customer distribution rights of $1.9 million and customer relationships of $900,000, both of which have indefinite lives and are not subject to amortization.
All goodwill relates to the natural and propane gas acquisitions and accordingly, there is no amortization of goodwill reported in the accompanying consolidated financial statements. Goodwill is $1.5 million in the natural gas segment and $1.9 million in the propane gas segment. The impairment test performed as of January 1, 2003 showed no impairment for either reporting segment. The 2004 impairment test is as of January 1, 2004 and has not been finalized.
6.
Environmental Contingencies
The Company is subject to federal and state legislation with respect to soil, groundwater and employee health and safety matters and to environmental regulations issued by the Florida Department of Environmental Protection (FDEP), the United States Environmental Protection