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, 1998. 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 4, 1998: 3,459,230 shares of $.10 par value common stock.
FRP PROPERTIES, INC. CONSOLIDATED CONDENSED BALANCE SHEET (In thousands) (Unaudited) March 31, September 30, 1998 1997 ASSETS Current assets: Cash and cash equivalents $ 325 $ 429 Accounts receivable: Affiliates 174 283 Other 5,711 5,506 Less allowance for doubtful accounts (267) (258) Inventory of parts and supplies 536 469 Prepaid expenses and other 1,999 2,120 Total current assets 8,478 8,549 Other assets: Real estate held for investment, at cost 5,771 5,771 Goodwill 1,268 1,288 Other 1,966 5,956 Total other assets 9,005 13,015 Property, plant and equipment, at cost 150,685 142,671 Less accumulated depreciation and depletion (50,540) (47,653) Net property, plant and equipment 100,145 95,018 $117,628 $116,582 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term note payable to bank $ 4,100 $ 4,000 Accounts payable: Affiliates 264 77 Other 1,646 2,350 Federal and state income taxes 571 779 Accrued liabilities 2,826 3,439 Long-term debt due within one year 426 418 Total current liabilities 9,833 11,063 Long-term debt 30,438 30,647 Deferred income taxes 7,195 7,243 Other liabilities 3,976 3,895 Stockholders' equity: Preferred stock, no par value; 5,000,000 shares authorized - - Common stock, $.10 par value; 25,000,000 shares authorized, 3,458,230 shares issued (3,439,235 at September 30, 1997) 346 344 Capital in excess of par value 17,678 17,333 Retained earnings 48,162 46,057 Total stockholders' equity 66,186 63,734 $117,628 $116,582 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, 1998 1997 1998 1997 Revenues: Affiliates $ 1,473 1,409 2,936 2,937 Non-affiliates 16,358 14,812 32,566 29,682 17,831 16,221 35,502 32,619 Cost of operations 14,055 12,977 27,752 26,012 Gross profit 3,776 3,244 7,750 6,607 Selling, general and administrative expense: Affiliates 384 366 768 732 Non-affiliates 1,288 1,144 2,420 2,297 1,672 1,510 3,188 3,029 Operating profit 2,104 1,734 4,562 3,578 Interest expense (551) (473) (1,120) (956) Interest income 3 14 8 21 Other income, net (1) (1) (1) - Income before income taxes 1,555 1,274 3,449 2,643 Provision for income taxes 606 497 1,345 1,031 Net income $ 949 777 2,104 1,612 Basic earnings per common share $ .28 .22 .61 .46 Diluted earnings per common share $ .27 .22 .60 .45 Cash dividends NONE NONE NONE NONE Number of shares used in computing: Basic earnings per share 3,441 3,516 3,440 3,519 Diluted earnings per share 3,489 3,554 3,491 3,561 See accompanying notes. FRP PROPERTIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 1998 AND 1997 (In thousands) (Unaudited) 1998 1997 Cash flows from operating activities: Net income $2,104 1,612 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, depletion and amortization 4,462 3,988 Net changes in operating assets and liabilities: Accounts receivable (93) (381) Inventory of parts and supplies (67) 47 Prepaid expenses 121 (76) Accounts payable and accrued liabilities (1,607) 481 Increase in deferred income taxes (61) 570 Net change in insurance reserve and other liabilities 79 54 (Gain) loss on disposition of real estate, plant and equipment (368) 131 Other, net (3) (19) Net cash provided from operating activities 4,567 6,407 Cash flows from investing activities: Purchase of property, plant and equipment (5,238) (6,133) Additions to other assets (371) (199) Proceeds from sale of real estate held for investment, property, plant and equipment, and other assets 690 72 Net cash used in investing activities (4,919) (6,260) Cash flows from financing activities: Net increase in short-term debt 100 1,000 Repayment of debt (201) (137) Repurchase of Company stock (33) (1,904) Exercise of stock options 382 879 Net cash provided from financing activities 248 (162) Net increase (decrease) in cash and cash equivalents (104) (15) Cash and cash equivalents at beginning of year 429 313 Cash and cash equivalents at end of the period $ 325 298 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest expense, net of amount capitalized $ 716 940 Income taxes $1,438 745 Non cash investing activities: Additions to property, plant and equipment from exchanges 284 20 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, 1998 (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 six months ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 1998. 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, 1997. (2) Earnings Per Share. Effective December 31, 1997, the Company adopted Statement of Financial Accounting Standard No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 replaced the presentation of primary earnings per share (EPS) and fully diluted EPS with a presentation of basic and diluted EPS. Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share are based on the weighted average number of common shares and potential dilution of securities that could share in earnings. Earnings per share for all prior periods have been restated. (3) 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 1997 Annual Report to stockholders. Such information is incorporated herein by reference. MANAGEMENT'S DISCUSSION AND ANALYSIS 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, 1998 1997 1998 1997 Revenues: Transportation $15,673 14,318 31,001 28,700 Real estate 2,158 1,903 4,501 3,919 $17,831 16,221 35,502 32,619 Cost of operations: Transportation $13,141 12,147 25,992 24,264 Real estate 914 830 1,760 1,748 $14,055 12,977 27,752 26,012 Gross profit: Transportation $ 2,532 2,171 5,009 4,436 Real estate 1,244 1,073 2,741 2,171 $ 3,776 3,244 7,750 6,607 For the second quarter and first six month of fiscal 1998, ended March 31, 1998, consolidated revenues increased 9.9% and 8.8%, respectively, over the same periods last year. The Transportation segment revenues for the second quarter and first half increased 9.5% and 8.0%, respectively, due principally to an increase in miles hauled coupled with a slight increase in the average hauling price. Real Estate revenues increased 13.4% for the second quarter and 14.9% for the first half from the same period last year. Real Estate increase in revenues was primarily due to $195,000 of timber sales in fiscal 1998, lease up from a warehouse/office building that was under construction in the first half of 1997, and increased mining royalties. Gross profit in Transportation increased $361,000 for the second quarter and $573,000 for the first six months from the same periods last year. The increase was due primarily to increased gains on the sale of equipment and increased revenues. Variances in fuel costs continued to be positive but were largely offset by an increase in drivers wages. Equipment sales increased $191,000 for the second quarter and $363,000 for the six months. Gross profit in the Real Estate segment increased $171,000 for the second quarter and $570,000 for the first six months. The improvement for the second quarter was primarily due to one warehouse being vacated for two months of last year and lease up of a warehouse/office building that was under construction last year. For the first six months the increase was primarily due to gross profit of $188,000 on the sales of timber in the first half of 1998, the first half of 1997 included a write off of $134,000 in prior tenant improvement resulting from leasing existing space to a new tenant and higher rental income due to leasing this space and lease up of project under construction last year. The selling, general and administrative expense increased $162,000 for the second quarter, and $159,000 for the first six months from the same periods last year. Selling, general and administrative expense as a percent of sales was 9.4% for the second quarter which was level with the same period last year, and for the first six months was 9.0% compared to 9.3% last year. Interest expense increased $78,000 for the second quarter, and $164,000 for the first six months due primarily to an increase in the average debt outstanding and, to a lesser extent, an increase in the average interest rate. These increases were partially offset by a greater capitalization of interest in fiscal 1998. Financial Condition The Company continues to maintain its sound financial condition with sufficient resources to meet anticipated capital expenditures and other operating requirements. Other. During fiscal 1997, the transportation segment's ten largest customers accounted for approximately 31% of transportation's revenue. The loss of any one 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 1997 Annual Report to stockholders. Such information is incorporated herein by reference. PART II OTHER INFORMATION Item 1. Legal Proceedings Note 10 to the consolidated financial statements included in the Company's 1997 Annual Report to stockholders is incorporated herein by reference. Item 4. Submission of Matters to a Vote of Security Holders On February 4, 1998, 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 ABSTAIN NONVOTES Edward L. Baker 2002 3,164,667 525 -0- Thompson S. Baker, II 2002 3,164,664 528 -0- Radford D. Lovett 2002 3,164,667 525 -0- Martin E. Stein, Jr. 2002 3,164,667 525 -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, 1998. 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 4, 1998 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, 1998 EXHIBIT INDEX Page No. in Sequential Numbering (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. Page No. in Sequential Numbering (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)(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. Page No. in Sequential Numbering (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)(j)(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