-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJ+BzTEBy4ta/JozrAI0Ip9eo5vNNjwK0dwaLrknmTAU0SQsumVEkZVPbwgRFG5b cNfQw9UNXyQKIwK85FgK6g== 0000019745-05-000041.txt : 20051104 0000019745-05-000041.hdr.sgml : 20051104 20051104155848 ACCESSION NUMBER: 0000019745-05-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051104 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051104 DATE AS OF CHANGE: 20051104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHESAPEAKE UTILITIES CORP CENTRAL INDEX KEY: 0000019745 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 510064146 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11590 FILM NUMBER: 051180413 BUSINESS ADDRESS: STREET 1: 909 SILVER LAKE BLVD STREET 2: PO BOX 615 CITY: DOVER STATE: DE ZIP: 19903-0615 BUSINESS PHONE: 3027346799 MAIL ADDRESS: STREET 1: 909 SILVER LAKE BLVD CITY: DOVER STATE: DE ZIP: 19904 8-K 1 sq05pr_8k.htm CHESAPEAKE UTILITIES CORPORATION - FORM 8-K - EARNINGS RELEASE Chesapeake Utilities Corporation - Form 8-K - Earnings Release

Securities and Exchange Commission
Washington, D.C. 20549
_______________________________
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 4, 2005


Chesapeake Utilities Corporation
(Exact name of registrant as specified in its charter)


Delaware
001-11590
51-0064146
(State or other jurisdiction of
(Commission
(I.R.S. Employer
incorporation or organization)
File Number)
Identification No.)
 

 
909 Silver Lake Boulevard, Dover, Delaware 19904
(Address of principal executive offices, including Zip Code)


(302) 734-6799
(Registrant's Telephone Number, including Area Code)


_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report.)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 

Item 2.02. Results of Operations and Financial Condition.

On November 4, 2005, the Company issued a press release announcing its financial results for the quarter, nine months and twelve months ended September 30, 2005. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.


Item 9.01. Financial Statements and Exhibits.

(c) Exhibit 99.1 — Press Release of Chesapeake Utilities Corporation, dated November 4, 2005.




SIGNATURE


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 hereunto duly authorized.


Chesapeake Utilities Corporation



/s/ Michael P. McMasters
—————————————
Michael P. McMasters
Senior Vice President and Chief Financial Officer


Date: November 4, 2005
 EX-99 2 sq05pr.htm CHESAPEAKE UTILITIES CORP - 3RD QUARTER EARNINGS RELEASE Chesapeake Utilities Corp - 3rd Quarter Earnings Release
Exhibit 99.1
[Chesapeake Utilities
Corporation Logo]

FOR IMMEDIATE RELEASE
November 4, 2005
NYSE Symbol: CPK

CHESAPEAKE UTILITIES CORPORATION REPORTS EARNINGS FOR THE PERIODS ENDED SEPTEMBER 30, 2005

Dover, Delaware— Chesapeake Utilities Corporation (NYSE: CPK) today announced results for the periods ended September 30, 2005. Chesapeake experienced a seasonal net loss of $694,000, or $0.12 per share (diluted), compared to a seasonal net loss for the third quarter of 2004 of $656,000, or $0.11 per share (diluted). Chesapeake’s Delmarva natural gas distribution and propane distribution operations typically experience losses during the third quarter, because heating customers do not require gas in the summer months. For the nine months ended September 30, 2005, net income was $6.3 million, or $1.07 per share (diluted), compared to $5.7 million, or $0.99 per share (diluted), for the same period in 2004. The primary factors contributing to higher earnings for the nine months were continued strong customer growth for natural gas distribution operations, improved gross margin for propane operations and colder weather on the Delmarva Peninsula.

“Year-to-date results continue to highlight the excellent growth potential in our natural gas and propane businesses,” stated John R. Schimkaitis, President and Chief Executive Officer of Chesapeake Utilities Corporation. “We are also encouraged by the improvements we have seen in margins in our propane business, which led to more than double the operating income for the first nine months of 2005 compared to the same period in the prior year.”

The discussions of the results use the term “gross margin.”“Gross margin” is a non-GAAP financial measure that management uses to evaluate the performance of its business segments. For an explanation of the calculation of “gross margin” see the footnote to the Supplemental Income Statement Data which follows. The discussions also refer to “other operating expenses.”“Other operating expenses” refer to the following expense categories: operations, maintenance, depreciation and amortization, and other taxes.


Results for the quarter ended September 30, 2005
Natural gas gross margin increased $476,000 for the third quarter of 2005 compared to 2004. The increase resulted from residential customer growth of 9 percent for Delmarva and 7 percent for Florida, as well as increases in Florida’s industrial customers’ gross margin and the natural gas transmission operation’s firm transportation services. Higher gross margin was more than offset by an increase of $1.1 million of operating expenses. Costs relating to higher health care claims, a non-recurring credit in 2004 for the restructuring of retirement benefits and increased incentive compensation, partially due to the higher stock price, generates $431,000 of the increase. The remaining increase in costs is attributable to supporting our current customer growth and future growth of the business.

The propane operations reduced their operating loss for the quarter by $123,000. The improvement was attributable to gross margin increases of $765,000 for propane distribution and propane wholesale marketing operations, which were partially offset by a $642,000 increase in other operating expenses. The increase in operating expenses reflects costs attributable to the start-up of operations in Pennsylvania, higher health insurance claims, and vehicle fuel and maintenance. The Company expanded its propane operations into Pennsylvania through the acquisition of the assets of J.O. Fenstermacher & Son, LLC in November 2004 and Spectrum Propane in July 2005.

Advanced information services experienced an increase in operating income of $142,000, as revenues increased $151,000, while cost of sales decreased slightly from the prior year. The receipt of performance revenue of $238,000 was partially offset by a decrease of $71,000 for externally developed software sales when compared to 2004. The performance revenue is related to the sale of a software product to QAD Inc. that took place in 2003. As part of the sale agreement, Chesapeake receives a percentage of revenues after certain annual revenue and performance targets have been reached by QAD.


Results for the nine months ended September 30, 2005
Net income for the nine months ended September 30, 2005 was $6.3 million or $1.07 per share (diluted) compared to $5.7 million or $0.99 per share (diluted) for the same period in 2004. Gross margin for the first nine months of 2005 increased $4.6 million, or 9 percent, as higher gross margin from the natural gas and propane operations more than offset a decline in gross margin from the advanced information services segment.

Gross margin from the natural gas distribution and transmission operations rose by $2.9 million, or 8 percent, when compared to the same period in 2004. The increase resulted from residential customer growth of 9 percent for Delmarva and 8 percent for Florida and an increase in the natural gas transmission operation’s firm transportation services. In addition, colder weather is estimated to have contributed $389,000 to natural gas gross margin in Delaware and Maryland. Other operating expenses increased by $2.4 million, or 11 percent, compared to the prior year. Costs relating to higher health care claims, a non-recurring credit in 2004 for the restructuring of retirement benefits and increased incentive compensation, partially due to the higher stock price, generates $631,000 of the increase. The remaining increase in costs is attributable to supporting our current customer growth and future growth of the business.

Gross margin from the propane segment increased $2.1 million, or 18 percent, for the first nine months of 2005. The Delmarva propane distribution operations increased gross margin by $1.4 million, or 15 percent, compared to the same period in 2004. The increase was primarily due to changes in purchasing and hedging strategies, colder weather and gross margin from the operation’s two start-up locations in Pennsylvania. The Florida propane distribution operation improved gross margin by $353,000 for the first nine months of 2005 compared to the same period in 2004. The increase in gross margin resulted from strong customer growth of 30 percent. The wholesale propane marketing operation contributed an increase of $223,000 in operating income compared to 2004. The increase is primarily due to the increase in volatility of wholesale propane prices that occurred during the third quarter. Other operating expenses for the propane segment increased $1.1 million, primarily due to costs associated with the Pennsylvania start-ups and costs relating to higher earnings and growth.

The advanced information services segment experienced a decrease of $454,000 in operating income compared to the first nine months of 2004. Gross margin decreased $371,000 primarily due to a drop in consulting revenues for the eBusiness group and lower product sales of Progress™ software licenses. Other operating expenses increased $83,000, primarily due to health insurance claims and office rent, which was partially offset by cost containment measures implemented in the second quarter of 2005 to reduce operating expenses.


Results for the twelve months ended September 30, 2005
Net income for the twelve months ended September 30, 2005 was $10.1 million, or $1.70 per share (diluted), compared to $8.5 million, or $1.46 per share (diluted), for the twelve months ended September 30, 2004. The increase in net income reflects higher income from continuing operations and the reduction of losses from discontinued operations. Net income from continuing operations increased $1.1 million, or 12 percent, to $10.1 million, or $1.71 per share (diluted), over the prior year.

The natural gas segment achieved an increase in gross margin of $3.4 million, or 7 percent, for the twelve-month period ended September 30, 2005. Residential customer growth of 3,776 customers, or 9 percent, for Delmarva and Florida, an increase in firm transportation services for the natural gas transmission segment and industrial growth in Florida contributed to the increase. Colder weather on the Delmarva Peninsula resulted in an increase of 233 heating degree-days compared to the same period in 2004, resulting in an estimated $521,000 of additional gross margin. Other operating expenses increased by $2.4 million, or 8 percent, compared to the prior year. Costs relating to higher health care claims, a non-recurring credit in 2004 for the restructuring of retirement benefits and increased incentive compensation, partially due to the higher stock price, generates $770,000 of the increase. The remaining increase in costs is attributable to supporting our current customer growth and future growth of the business.

The propane segment increased gross margin by $2.4 million, or 15 percent. This improvement reflects increased gross margin per retail gallon and increased sales volumes for the Delmarva distribution operations, gross margin from the Pennsylvania start-up locations, customer growth for the Florida distribution operations and improved wholesale marketing opportunities. The increase was partially offset by higher other operating expenses of $971,000, of which the Pennsylvania start-up locations account for $602,000, or 62%, of the increase.

Advanced information services’ gross margin decreased $602,000 for the twelve months ended September 30, 2005, compared to the same period ended September 30, 2004, reflecting a decline in Web consulting revenue. In addition, the results for 2004 included a non-recurring sale of software rights that increased gross margin $302,000. Other operating expenses increased $207,000, primarily driven by costs related to enhancements to the Lightweight Association Management Processing System (LAMPS™) software package.

Chesapeake successfully completed the divestiture of all of its water operations in October 2004, thus reducing the losses from discontinued operations. Losses for the twelve months ended September 30, 2005 were $34,000 compared to $562,000 for the twelve months ended September 30, 2004.


Condensed Consolidated Statements of Income
                          
For the Periods Ended September 30, 2005 and 2004
                          
Dollars in Thousands Except Per Share Amounts
                          
(Unaudited)
                          
                           
   
Third Quarter
  
Year to Date
  
Twelve Months Ended
  
   
2005
  
2004
  
2005
  
2004
  
2005
  
2004
  
Operating Revenues
  
$
35,155
  
$
26,615
  
$
155,221
  
$
124,670
  
$
208,506
  
$
170,267
  
                                       
Operating Expenses
                                      
Cost of sales, excluding costs below
    
21,931
   
14,800
   
101,396
   
75,442
   
135,579
   
102,588
 
Operations
    
9,842
   
8,209
   
29,383
   
26,000
   
38,530
   
34,750
 
Maintenance
    
462
   
460
   
1,280
   
1,256
   
1,543
   
1,703
 
Depreciation and amortization
    
1,889
   
1,842
   
5,701
   
5,464
   
7,495
   
7,260
 
Other taxes
    
1,130
   
1,021
   
3,731
   
3,363
   
4,804
   
4,567
 
Total operating expenses
    
35,254
   
26,332
   
141,491
   
111,525
   
187,951
   
150,868
 
                                       
Operating Income (Loss)
    
(99
)
  
283
   
13,730
   
13,145
   
20,555
   
19,399
 
                                       
Other income net of other expenses
    
19
   
38
   
330
   
214
   
665
   
391
 
                                       
Interest charges
    
1,272
   
1,325
   
3,823
   
3,980
   
5,111
   
5,372
 
                                       
Income (Loss) Before Income Taxes
    
(1,352
)
  
(1,004
)
  
10,237
   
9,379
   
16,109
   
14,418
 
                                       
Income taxes
    
(658
)
  
(420
)
  
3,902
   
3,578
   
6,025
   
5,399
 
                                       
Income (Loss) from Continuing Operations
    
(694
)
  
(584
)
  
6,335
   
5,801
   
10,084
   
9,019
 
                                       
Income (loss) from discontinued
                                      
operations, net of income taxes
    
-
   
(72
)
  
-
   
(87
)
  
(34
)
  
(562
)
                                       
Net Income (Loss)
  
$
(694
)
$
(656
)
$
6,335
  
$
5,714
  
$
10,050
  
$
8,457
  
                                       
Average Shares Outstanding
    
5,851,926
   
5,752,623
   
5,823,144
   
5,723,178
   
5,810,208
   
5,705,777
 
                                       
Earnings Per Share - Basic
                                      
From continuing operations
  
$
(0.12
)
$
(0.10
)
$
1.09
  
$
1.01
  
$
1.74
  
$
1.58
  
From discontinued operations
    
-
   
(0.01
)
  
-
   
(0.01
)
  
(0.01
)
  
(0.10
)
Net Income (Loss)
  
$
(0.12
)
$
(0.11
)
$
1.09
  
$
1.00
  
$
1.73
  
$
1.48
  
                                       
Earnings Per Share - Diluted
                                      
From continuing operations
  
$
(0.12
)
$
(0.10
)
$
1.07
  
$
1.00
  
$
1.71
  
$
1.56
  
From discontinued operations
    
-
   
(0.01
)
  
-
   
(0.01
)
  
(0.01
)
  
(0.10
)
Net Income (Loss)
  
$
(0.12
)
$
(0.11
)
$
1.07
  
$
0.99
  
$
1.70
  
$
1.46
  
                                       


Supplemental Income Statement Data
                          
For the Periods Ended September 30, 2005 and 2004
                          
Dollars in Thousands
                          
(Unaudited)
                          
                           
   
Third Quarter
  
Year to Date
  
Twelve Months Ended
  
   
2005
  
2004
  
2005
  
2004
  
2005
  
2004
  
Gross Margin (1)
                                      
Natural Gas
  
$
9,353
  
$
8,877
  
$
36,704
  
$
33,845
  
$
49,650
  
$
46,240
  
Propane
    
2,486
   
1,721
   
13,432
   
11,366
   
18,410
   
16,022
 
Advanced Information Services
    
1,444
   
1,270
   
3,816
   
4,187
   
5,041
   
5,642
 
Other
    
(59
)
  
(53
)
  
(127
)
  
(170
)
  
(174
)
  
(225
)
Total Gross Margin
  
$
13,224
  
$
11,815
  
$
53,825
  
$
49,228
  
$
72,927
  
$
67,679
  
                                       
Operating Income
                                      
Natural Gas
  
$
1,131
  
$
1,760
  
$
12,117
  
$
11,674
  
$
17,534
  
$
16,498
  
Propane
    
(1,425
)
  
(1,548
)
  
1,814
   
892
   
3,286
   
1,869
 
Advanced Information Services
    
186
   
45
   
(77
)
  
377
   
(67
)
  
742
 
Other
    
9
   
26
   
(124
)
  
202
   
(198
)
  
290
 
Total Operating Income
  
$
(99
)
$
283
  
$
13,730
  
$
13,145
  
$
20,555
  
$
19,399
  
                                       
Heating Degree-Days — Delmarva Peninsula
                                      
Actual
    
31
   
43
   
3,138
   
2,964
   
4,727
   
4,494
 
10-year average (normal)
    
60
   
63
   
2,853
   
2,840
   
4,436
   
4,383
 
                                       
(1) "Gross margin" is determined by deducting the cost of sales from operating revenue. Cost of sales includes the purchased gas cost for natural gas and propane and the cost of labor spent on direct revenue-producing activities. Gross margin should not be considered an alternative to operating income or net income, which are determined in accordance with Generally Accepted Accounting Principles ("GAAP"). Chesapeake believes that gross margin, although a non-GAAP measure, is useful and meaningful to investors as a basis for making investment decisions. It provides investors with information that demonstrates the profitability achieved by the Company under its allowed rates for regulated operations and under its competitive pricing structure for non-regulated segments. Chesapeake's management uses gross margin in measuring its business units' performance and has historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner.
  



Matters discussed in this release may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements. Please refer to the Cautionary Statement in the Company’s report on Form 10-K for further information on the risks and uncertainties related to the Company’s forward-looking statements.

Chesapeake Utilities Corporation is a diversified utility company engaged in natural gas distribution, transmission and marketing, propane distribution and wholesale marketing, advanced information services and other related businesses. Information about Chesapeake's businesses is available at www.chpk.com.

For more information, contact:
Michael P. McMasters
Senior Vice President & Chief Financial Officer
302.734.6799
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