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 March 31, 1999.
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 May 3, 1999: 3,428,717 shares of $.10 par value common
stock.
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
March 31, September 30,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 2,096 663
Accounts receivable:
Affiliates 339 380
Other 6,435 6,402
Less allowance for doubtful accounts (278) (272)
Inventory of parts and supplies 571 552
Prepaid expenses and other 2,127 2,348
Total current assets 11,290 10,073
Other assets:
Real estate held for investment, at cost 5,494 5,703
Goodwill 1,228 1,248
Other 2,094 1,971
Total other assets 8,816 8,922
Property, plant and equipment, at cost 164,165 158,083
Less accumulated depreciation and
depletion (54,642) (53,113)
Net property, plant and equipment 109,523 104,970
$129,629 123,965
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term note payable to bank $ 8,400 1,600
Accounts payable:
Affiliates 174 85
Other 3,337 2,691
Federal and state income taxes 326 1,224
Accrued liabilities 3,363 3,346
Long-term debt due within one year 543 533
Total current liabilities 16,143 9,479
Long-term debt 28,032 33,299
Deferred income taxes 9,075 7,656
Accrued insurance reserves 4,136 4,129
Other liabilities 691 647
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,454,717 shares issued
(3,439,235 at September 30, 1998) 345 347
Capital in excess of par value 17,562 17,871
Retained earnings 53,645 50,537
Total stockholders' equity 71,552 68,755
$129,629 123,965
See accompanying notes.
FRP PROPERTIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1999 1998 1999 1998
Revenues:
Affiliates $ 1,789 1,473 3,556 2,936
Non-affiliates 19,227 16,358 36,491 32,566
21,016 17,831 40,047 35,502
Cost of operations 15,477 14,055 30,115 27,752
Gross profit 5,539 3,776 9,932 7,750
Selling, general and
administrative expense:
Affiliates 420 384 840 768
Non-affiliates 1,251 1,288 2,925 2,420
1,671 1,672 3,765 3,188
Operating profit 3,868 2,104 6,167 4,562
Interest expense (534) (551) (1,093) (1,120)
Interest income 2 3 5 8
Other income, net 16 (1) 16 (1)
Income before income taxes 3,352 1,555 5,095 3,449
Provision for income taxes 1,307 606 1,987 1,345
Net income $ 2,045 949 3,108 2,104
Basic earnings per
common share $ .59 .28 .90 .61
Diluted earnings per
common share $ .59 .27 .89 .60
Cash dividends NONE NONE NONE NONE
Number of shares used in computing:
Basic earnings per share 3,455 3,441 3,459 3,440
Diluted earnings per share 3,483 3,489 3,487 3,491
See accompanying notes.
FRP PROPERTIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1999 AND 1998
(In thousands)
(Unaudited)
1999 1998
Cash flows from operating activities:
Net income $3,108 2,104
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization 4,780 4,462
Net changes in operating assets and liabilities:
Accounts receivable 8 (93)
Inventory of parts and supplies (19) (67)
Prepaid expenses 221 121
Accounts payable and accrued liabilities (114) (1,607)
Increase(decrease) in deferred income taxes 1,386 (61)
Net change in insurance reserve and other
liabilities 51 79
(Gain)on disposition of real estate, plant
and equipment (1,670) (368)
Other, net 21 (3)
Net cash provided from operating activities 7,772 4,567
Cash flows from investing activities:
Purchase of property, plant and equipment (9,680) (5,238)
Additions to other assets (204) (371)
Proceeds from sale of real estate held for investment,
property, plant and equipment, and other assets 2,313 690
Net cash used in investing activities (7,571) (4,919)
Cash flows from financing activities:
Net increase in short-term debt 6,800 100
Repayment of long-term debt (5,256) (201)
Repurchase of Company stock (312) (33)
Exercise of stock options - 382
Net cash provided from financing activities 1,232 248
Net increase (decrease) in cash and cash equivalents 1,433 (104)
Cash and cash equivalents at beginning of year 663 429
Cash and cash equivalents at end of the period $2,096 325
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense, net of amount capitalized $1,113 716
Income taxes $1,830 1,438
Non cash investing activities:
Additions to property, plant and equipment from exchanges $ 327 284
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
MARCH 31, 1999
(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 and
six months ended March 31, 1999 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 OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
The following table summarizes the Company's revenues, cost of operations,
and gross profit by its business segments (in thousands):
Three Months Six Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
Revenues:
Transportation $16,247 15,673 32,692 31,001
Real estate 4,769 2,158 7,355 4,501
$21,016 17,831 40,047 35,502
Cost of operations:
Transportation $13,881 13,141 27,476 25,992
Real estate 1,596 914 2,639 1,760
$15,477 14,055 30,115 27,752
Gross profit:
Transportation $ 2,366 2,532 5,216 5,009
Real estate 3,173 1,244 4,716 2,741
$ 5,539 3,776 9,932 7,750
For the second quarter and first half of fiscal 1999, consolidated revenues
increased 17.9% and 12.8%, respectively, over the same periods last year.
The Transportation segment revenues for the second quarter and first half
increased 3.7% and 5.5%, respectively, due primarily to an increase in
miles hauled. Real Estate revenues increased to $4,769,000 from $2,158,000
for the second quarter and to $7,355,000 from $4,501,000 for the first half
principally as a result of real estate and timber sales. During the second
quarter and first half of 1999 the Company had $1,760,000 of land sales.
There were no land sales in the 1998 periods. For the second quarter of
1999, timber sales were $397,000. There were no timber sales during the
second quarter of 1998. For the first half of 1999, timber sales were
$466,000 as compared to $195,000 last year. The remaining increases were
due to higher royalties and rental income.
Gross profit increased $1,763,000 for the second quarter and $2,182,000 for
the first half as compared to the same periods last year. These increases
were primarily due to the sale of land and timber. Gross profit in
Transportation decreased $166,000 for the second quarter and increased
$207,000 for the first half of fiscal 1999. The decrease in the second
quarter was due to lower revenue per mile, increased costs to attract and
retain qualified drivers and increased depreciation expense. These items
were partially offset by reduced fuel costs. The increase for the first
half was due to reduced fuel costs partially offset by increased drivers
wages and benefits. Revenue per mile remained stable for the first half.
Gross profit in the Real Estate segment increased $1,929,000 for the second
quarter and $2,075,000 for the first half. The improvement was primarily
due to sale of real estate and timber during the second quarter. For the
second quarter gross profit on land and timber sales was $1,753,000 as
compared to no sales last year. For the first half, gross profit on these
sales were $1,821,000 as compared to $188,000 last year.
Selling, general and administrative expense for the second quarter remained
stable and increased $577,000 for the first half. Selling, general and
administrative expense as a percent of sales was 8.0% for the second
quarter as compared to 9.4% last year and 9.4% for the first half as
compared to 9.0% 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.
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 May 1999 and have the
total system installed in August 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 affected by Year 2000. Once the equipment has been identified, testing
will begin to determine if such equipment is Year 2000 compliant.
Suppliers and customers that are critical to the Company's operations are
being identified. Questionnaires have been sent to these entities to
determine their state of readiness for Year 2000. The Company will
identify alternative suppliers as a contingency if any of the current
suppliers do not appear to be taking corrective actions 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 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
one or more 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There are no material changes to the disclosures made in Form 10-K for the
fiscal year ended September 30, 1998 on this matter.
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 4. Submission of Matters to a Vote of Security Holders
On February 2, 1999, the Company held its annual shareholders meeting. At
the meeting the stockholders elected the following directors by the vote
shown:
Term Votes Votes Broker/
Ending For Withheld Non-Votes
Francis X. Knott 2003 3,146,128 1,317 -0-
John R. Mabbett III 2003 3,146,128 1,317 -0-
James H. Winston 2003 3,145,828 1,617 -0-
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 March 31, 1999.
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.
May 10, 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
FRP PROPERTIES, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
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.