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 June 30, 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 August 2, 1999: 3,428,717 shares of $.10 par value common stock.
FRP PROPERTIES, INC. CONSOLIDATED CONDENSED BALANCE SHEET (In thousands) (Unaudited) June 30, September 30, 1999 1998 ASSETS Current assets: Cash and cash equivalents $ 2,206 663 Accounts receivable: Affiliates 332 380 Other 6,480 6,402 Less allowance for doubtful accounts (281) (272) Inventory of parts and supplies 792 552 Prepaid expenses and other 1,810 2,348 Total current assets 11,339 10,073 Other assets: Real estate held for investment, at cost 5,809 5,703 Goodwill 1,217 1,248 Other 2,194 1,971 Total other assets 9,220 8,922 Property, plant and equipment, at cost 168,222 158,083 Less accumulated depreciation and depletion (56,361) (53,113) Net property, plant and equipment 111,861 104,970 $132,420 123,965 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term note payable to bank $ 11,600 1,600 Accounts payable: Affiliates 92 85 Other 2,493 2,691 Federal and state income taxes 414 1,224 Accrued liabilities 3,940 3,346 Long-term debt due within one year 612 533 Total current liabilities 19,151 9,479 Long-term debt 28,084 33,299 Deferred income taxes 7,924 7,656 Accrued insurance reserves 4,140 4,129 Other liabilities 996 647 Stockholders' equity: Preferred stock, no par value; 5,000,000 shares authorized - - Common stock, $.10 par value; 25,000,000 shares authorized, 3,428,717 shares issued (3,468,225 at September 30, 1998) 343 347 Capital in excess of par value 16,994 17,871 Retained earnings 54,788 50,537 Total stockholders' equity 72,125 68,755 $132,420 123,965 See accompanying notes.
FRP PROPERTIES, INC. CONSOLIDATED CONDENSED STATEMENT OF INCOME (In thousands except per share amounts) (Unaudited) THREE MONTHS NINE MONTHS ENDED JUNE 30, ENDED JUNE 30, 1999 1998 1999 1998 Revenues: Affiliates $ 1,726 1,616 5,282 4,552 Non-affiliates 18,128 17,386 54,619 49,952 19,854 19,002 59,901 54,504 Cost of operations 15,472 14,665 45,587 42,417 Gross profit 4,382 4,337 14,314 12,087 Selling, general and administrative expense: Affiliates 421 384 1,261 1,152 Non-affiliates 1,491 1,441 4,416 3,861 1,912 1,825 5,677 5,013 Operating profit 2,470 2,512 8,637 7,074 Interest expense (604) (574) (1,697) (1,694) Interest income 4 2 9 10 Other income, net 4 3 20 2 Income before income taxes 1,874 1,943 6,969 5,392 Provision for income taxes 731 758 2,718 2,103 Net income $ 1,143 1,185 4,251 3,289 Basic earnings per common share $ .33 .34 1.23 .95 Diluted earnings per common share $ .33 .34 1.22 .94 Number of shares used in computing: Basic earnings per share 3,431 3,460 3,450 3,447 Diluted earnings per share 3,453 3,502 3,474 3,494 See accompanying notes. FRP PROPERTIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (In thousands) (Unaudited) 1999 1998 Cash flows from operating activities: Net income $4,251 3,289 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, depletion and amortization 7,281 6,771 Net changes in operating assets and liabilities: Accounts receivable (30) (919) Inventory of parts and supplies (240) 49 Prepaid expenses 538 286 Accounts payable and accrued liabilities (208) (536) Increase(decrease) in deferred income taxes 68 430 Net change in insurance reserve and other liabilities 361 102 Gain on disposition of real estate, property, plant and equipment (1,705) (404) Other, net (17) 7 Net cash provided from operating activities 10,299 9,075 Cash flows from investing activities: Purchase of property, plant and equipment (14,258) (11,238) Purchase of real estate held for investment (315) - Additions to other assets (294) (452) Proceeds from sale of real estate held for investment, property, plant and equipment, and other assets 2,393 995 Net cash used in investing activities (12,474) (10,695) Cash flows from financing activities: Net increase in short-term debt 10,000 1,400 Repayment of long-term debt (5,400) (314) Repurchase of Company stock (882) (34) Exercise of stock options - 460 Net cash provided from financing activities 3,718 1,512 Net increase (decrease) in cash and cash equivalents 1,543 (108) Cash and cash equivalents at beginning of year 663 429 Cash and cash equivalents at end of the period $2,206 321 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest expense, net of amount capitalized $1,718 1,706 Income taxes $3,261 1,648 Non cash investing activities: Additions to property, plant and equipment from exchanges $ 614 621 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 JUNE 30, 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 nine months ended June 30, 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. (3) Preferred Shareholder Rights Plan. On May 5, 1999, the Board of Directors of the Company declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The dividend was payable on June 2, 1999. Each right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 per share (The "Preferred Shares"), at a price of $96 per one one-hundredth of a Preferred Share, subject to adjustment. In the event that any Person or group of affiliated or associated Persons (an "Acquiring Person") acquires beneficial ownership of 15% or more of the Company's outstanding common stock each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise that number of Common Shares having a market value of two times the exercise price of the Right. An Acquiring Person excludes any Person or group of affiliated or associated Persons who were beneficial owners, individually or collectively, of 15% or more of the Company's Common Shares on May 4, 1999. The rights will initially trade together with the Company's common stock and will not be exercisable. However, if an Acquiring Person acquires 15% or more of the Company's common stock the rights may become exercisable and trade separately in the absence of future board action. The Board of Directors may, at its option, redeem all rights for $.01 per right, at any time prior to the rights becoming exercisable. The rights will expire September 30, 2009 unless earlier redeemed, exchanged or amended by the Board. 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 Nine Months Ended June 30, Ended June 30, 1999 1998 1999 1998 Revenues: Transportation $17,058 16,699 49,750 47,700 Real estate 2,796 2,303 10,151 6,804 $19,854 19,002 59,901 54,504 Cost of operations: Transportation $14,491 13,796 41,967 39,788 Real estate 981 869 3,620 2,629 $15,472 14,665 45,587 42,417 Gross profit: Transportation $ 2,567 2,903 7,783 7,912 Real estate 1,815 1,434 6,531 4,175 $ 4,382 4,337 14,314 12,087 For the third quarter and first nine months of fiscal 1999, consolidated revenues increased 4.5% and 9.9%, respectively, over the same periods last year. The Transportation segment revenues for the third quarter and first nine months increased 2.1% and 4.3%, respectively, due primarily to an increase in miles hauled. Real Estate revenues increased to $2,796,000 from $2,303,000 for the third quarter and to $10,151,000 from $6,804,000 for the first nine months. For the third quarter the increase was principally as a result of increased rental income and $158,000 in timber sales. For the nine months, the increase was principally a result of real estate and timber sales. During the first nine months of 1999 the Company had $1,760,000 of land sales. There were no land sales in the 1998 period. For the first nine months of 1999, timber sales were $624,000 as compared to $195,000 last year. The remaining increases were due to higher royalties and rental income. Gross profit increased $45,000 for the third quarter and $2,227,000 for the first nine months as compared to the same periods last year. Gross profit in Transportation decreased $336,000 for the third quarter and $129,000 for the first nine months of fiscal 1999. For the third quarter the decrease was due to increased costs to attract and retain qualified drivers and increased depreciation expense. The decrease for the first nine months was due to increased drivers wages and benefits partially offset by reduced fuel costs. Revenue per mile remained stable for the first nine months. Gross profit in the Real Estate segment increased $381,000 for the third quarter and $2,356,000 for the first nine months. For the first nine months the improvement was primarily due to sale of real estate and timber. For the first nine months, gross profit on these sales were $1,821,000 as compared to $188,000 last year. Selling, general and administrative expense increased $87,000 for the third quarter and $664,000 for the first nine months. 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. Selling, general and administrative expense as a percent of sales was 9.6% for the third quarter as compared to 9.6% last year and 9.5% for the first nine months as compared to 9.2% last year. 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 began phasing in this software during this quarter and will have the total system installed by the end of September 1999. The Company purchases from an affiliate, Florida Rock Industries, Inc. (FRI) certain administrative services including automated data processing (Purchased Services). FRI is in process of updating its systems to be Year 2000 compliant. FRI has implemented the general ledger, fixed assets and accounts payable modules. During August and September, FRI will be implementing accounts receivable and payroll modules. The Company has reviewed FRI's plan and is monitoring the progress of this plan as it relates to the Purchased Services. The Company has completely surveyed all its locations to identify operating equipment which may be affected by Year 2000. The Company is in process of testing such equipment to determine if such equipment is Year 2000 compliant. When equipment has been identified as not Year 2000 compliant, the Company is determining remediation steps to be taken including replacing the equipment. Vendors, suppliers and customers that are critical to the Company's operations have been identified. Questionnaires were sent to these entities to determine their state of readiness for Year 2000. The Company is evaluating responses from these questionnaires and contacting vendors and suppliers where necessary. The Company will identify alternative vendors and suppliers as a contingency if any of the current suppliers do not appear to be taking corrective actions and 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 plan is substantially completed and will be finalized during the third 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 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 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. During the three months ended June 30, 1999, the Company filed a Form 8-K(A) dated May 5, 1999 reporting a dividend of one preferred share purchase right for each share of common stock under Item 5, "Other Events". 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. August 11, 1999 FRP PROPERTIES, INC. \s\James J. GILSTRAP James J. Gilstrap Treasurer and Chief Financial Officer \s\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. File No. 33-26115 (3)(a)(4) Amendment to Articles of Incorporation, filed with the Florida Secretary of State on May 6, 1999. A form of such amendment was previously filed as Exhibit 4 to the Company's Form 8-K dated May 5, 1999. File No. 33-26115 (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. (4)(e) Rights Agreement, dated as of May 5, 1999 between the Company and First Union National Bank. Previously filed as Exhibit 4 to the Company's Form 8-K dated May 5, 1999. File No. 33-26115. (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 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.