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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 September 30, 2004

or

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

For the transition period from                                                              to                                                                                    &n bsp;.

Commission File Number:   001-10608                                                                                                                                         .

 

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 No.)

  

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 October 29, 2004, there were 3,950,019 shares of $1.50 par value common stock outstanding.










INDEX

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 6.

Exhibits

 

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

 

          Nine Months Ended

 

             September 30,

 

          September 30,

Revenues

               2004

 

         2003

 

       2004

 

         2003

   Natural gas

$        9,794 

 

$      8,965 

 

$       38,966 

 

 $      40,142 

   Electric

12,168 

 

        10,911 

 

          32,608 

 

         30,098 

   Propane gas

2,221 

 

          1,752 

 

    8,063 

 

           6,946 

      Total revenues

24,183 

 

21,628 

 

79,637 

 

77,186 

 

       

Cost of fuel and taxes based on revenues

15,035 

 

13,522 

 

50,222 

 

48,695 

        

Gross Profit

9,148 

 

8,106 

 

29,415 

 

28,491 

        

Operating Expenses

       

   Operations

5,749 

 

5,345 

 

16,871 

 

15,940 

   Depreciation and amortization

1,446 

 

1,367 

 

4,401 

 

4,070 

   Taxes other than income taxes

698 

 

687 

 

2,054 

 

1,988 

      Total operating expenses

7,893 

 

7,399 

 

23,326 

 

21,998 

 

       

Operating income before income taxes

1,255 

 

707 

 

6,089 

 

6,493 

        

Other Income and (Deductions)

       

   Merchandise and service revenue

625 

 

565 

 

2,251 

 

1,954 

   Merchandise and service expenses

(627)

 

(555)

 

(2,193)

 

(1,882)

   Other income

150 

 

144 

 

436 

 

228 

   Interest expense

(1,118)

 

(1,103)

 

(3,333)

 

(3,386)

      Total other deductions - net

(970)

 

(949)

 

(2,839)

 

(3,086)

 

       

Income (Loss) from continuing operations before

  income taxes

285 

 

(242)

 

3,250 

 


3,407 

Income taxes

(64)

 

160 

 

(1,094)

 

(1,194)

Income (Loss) from continuing operations

221 

 

(82)

 

2,156 

 

2,213 

        

Discontinued operations

       

   Income from discontinued operations – water

      division

-

 

-

 

                       -

 

             149

   Income taxes

-

 

-

 

                       -

 

             (16)

   Gain (loss) on disposal of water division, net of

      income taxes (benefits) of ($3) and $5,920,

      respectively

-

 

(5)

 

                        -

 

             9,683

       Total income (loss) from discontinued            

         operations

-

 

(5)

 

                        -

 

           9,816

        

Net Income (Loss)

221

 

(87)

 

2,156

 

          12,029

 

   

 

 

 

 

Preferred Stock Dividends

7

 

7

 

                21

 

                21

 

   

 

 

 

 

Earnings (Loss) for Common Stock

$           214

 

$           (94)

 

$         2,135

 

$      12,008

 

   

 

 

 

 

Earnings (Loss) Per Common Share

  (basic and diluted):

       

     Continuing Operations

$          0.05

 

$        (0.02)

 

$           0.54

 

$          0.56

     Discontinued Operations

-

 

-

 

              -  

 

           2.52

       Total

$          0.05

 

$        (0.02)

 

$           0.54

 

$          3.08

        

Dividends Declared Per Common Share

$      0.1500

 

$     0.1475

 

$       0.4475

 

$      0.4375

 

   

 

 

 

 

Average Shares Outstanding

3,944,798

 

3,912,398

 

     3,935,232

 

3,902,288

 

   

 

 

 

 

The financial statements should be read in conjunction with the Notes herein.



FLORIDA PUBLIC UTILITIES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

 

September 30,

 

December 31,

  

2004

 

2003

ASSETS

Utility Plant

$    169,731 

 

$    160,644 

   Less accumulated depreciation

54,595 

 

52,302 

      Net utility plant

115,136 

 

108,342 

    

Current Assets

   

   Cash

710 

 

859 

   Accounts receivable

7,113 

 

9,614 

   Allowance for uncollectible accounts

(210)

 

(180)

   Unbilled receivables

1,547 

 

1,673 

   Notes receivable

357 

 

244 

   Inventories (at average or unit cost)

2,968 

 

2,624 

   Prepayments and deferrals

2,644 

 

5,518 

        Total current assets

15,129 

 

20,352 

    

Other Assets

   

   Investments held for environmental costs

3,192 

 

3,149 

   Other regulatory assets

9,501 

 

9,127 

   Long term receivable and other investments

5,689 

 

5,672 

   Deferred charges

9,981 

 

10,161 

   Goodwill

3,366 

 

3,366 

   Intangible assets (net)

2,816 

 

2,821 

      Total other assets

34,545 

 

34,296 

          Total

$    164,810 

 

$    162,990 

 

CAPITALIZATION AND LIABILITIES

Capitalization

   Common shareholders' equity

$      42,304 

 

$      41,463 

   Preferred stock

600 

 

600 

   Long-term debt

52,500 

 

52,500 

      Total capitalization

95,404 

 

94,563 

 

Current Liabilities

    Line-of-credit

3,241 

 

2,278 

   Accounts payable

5,841 

 

8,864 

   Insurance accrued

418 

 

421 

   Interest accrued

1,614 

 

935 

   Taxes accrued

1,529 

 

359 

   Other accruals and payables

3,390 

 

3,824 

   Over recovery of fuel costs

1,112 

 

1,740 

   Over recovery of conservation and unbundling

236 

 

71 

   Customer deposits

6,731 

 

6,134 

      Total current liabilities

24,112 

 

24,626 

    

Other Liabilities

   

   Deferred income taxes and regulatory tax liability

18,929 

 

17,882 

   Environmental liabilities and other

24,644 

 

24,102 

   Long term medical and pension reserve

1,721 

 

1,817 

      Total other liabilities

45,294 

 

43,801 

          Total

$    164,810 

 

$    162,990 

The financial statements should be read in conjunction with the Notes herein.

 



FLORIDA PUBLIC UTILITIES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

    
 

Nine Months Ended

 

September 30,

 

2004

 

       2003

Net cash flow provided by

   

   continuing operating activities

$       10,429 

 

$     4,905 

    

Net cash flow used in discontinued operations

- 

 

(98)

    

Cash flows from investing activities

   

   Construction expenditures

(10,603)

 

(5,918)

   Taxes on long term investments, net of interest

(43)

 

(324)

   Proceeds from sale of discontinued operations

130 

 

19,307 

   Other

277 

 

83 

      Net cash (used in) provided by investing activities

(10,239)

 

13,148 

    

Cash flows from financing activities

   

   Net change in short-term borrowings

963 

 

(18,413)

   Dividends paid

(1,769)

 

(1,705)

   Other

467 

 

410 

      Net cash used in financing activities

(339)

 

(19,708)

    

Net decrease in cash

(149)

 

(1,753)

    

Cash at beginning of period

859 

 

3,200 

    

Cash at end of period

$          710 

 

$     1,447 

    

The financial statements should be read in conjunction with the Notes herein.







FLORIDA PUBLIC UTILITIES COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004


1.

Basis of Presentation

In the opinion of Management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments necessary for fair presentation have been included.  Due to the seasonal nature of Florida Public Utilities’ (“the Company” or “FPU”) 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 footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.


2.

Collateralized Assets

Substantially all of the Company’s utility plant and the shares of Flo-Gas Corporation collateralize the Company’s First Mortgage Bonds (long-term debt).   Balances in cash, accounts receivable and inventory are collateral for the line of credit.


3.

Restriction on Dividends

FPU’s Fifteenth Supplemental Indenture of Mortgage and Deed of Trust restricts the amount that is available for cash dividends.  At September 30, 2004, approximately $4.7 million of retained earnings were free of such restriction and therefore available for the payment of dividends.   The line of credit agreement contains covenants that, if violated, could restrict or prevent the payment of dividends; however, the Company is not in violation of these covenants.

 

4.

Summary of Revenues and Operating Income Before Income Taxes

The following is a summary of revenues and operating income before income taxes (dollars in thousands):


 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2004 

 

2003 

 

2004