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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, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17554
PATRIOT TRANSPORTATION HOLDING, 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.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices)
(Zip Code)
904/396-5733
(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______.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of April 30, 2003: 3,052,708 shares of
$.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 2003
CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 8
Item 3. Quantitative and Qualitative Disclosures about Market Risks 14
Item 4. Controls and Procedures 14
Part II. Other Information
Item 4. Submission of Matters To a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Certifications 22
Exhibit 11 - Computation of Earnings Per Share 25
Exhibit 99 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 26
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, September 30,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 687 529
Accounts receivable (including related
party of $316 and $107) 8,307 7,817
Less allowance for doubtful accounts (539) ( 474)
Prepaid expenses 2,865 2,977
Other current assets 643 641
Total current assets 11,963 11,490
Property, plant and equipment, at cost 218,684 209,275
Less accumulated depreciation and
depletion (72,269) (70,908)
Net property, plant and equipment 146,415 138,367
Other assets 5,869 5,606
Total assets $164,247 155,463
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (including related
party of $39 and $39) $ 3,172 5,771
Accrued liabilities 4,652 4,890
Long-term debt due within one year 1,361 1,311
Total current liabilities 9,185 11,972
Long-term debt 59,433 47,290
Deferred income taxes 10,301 10,062
Accrued insurance reserves 5,331 5,331
Other liabilities 1,660 1,648
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,052,708 and 3,159,008 shares issued
and outstanding, respectively 305 316
Capital in excess of par value 9,375 11,748
Retained earnings 68,657 67,096
Total shareholders' equity 78,337 79,160
Total liabilities and shareholders' equity $164,247 155,463
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
2003 2002 2003 2002
Revenues:
Related parties $ 1,668 2,284 3,275 4,300
Non-related parties 23,405 20,724 45,840 42,200
25,073 23,008 49,115 46,500
Cost of operations 21,158 18,042 40,870 36,467
Gross profit 3,915 4,966 8,245 10,033
Selling, general and
administrative expense:
Related parties 110 116 220 232
Non-related parties 1,900 1,678 3,768 3,606
2,010 1,794 3,988 3,838
Recovery of non-recurring charges
related to closed subsidiary - - (25) -
Operating profit 1,905 3,172 4,282 6,195
Interest expense, net (886) (799) (1,725) (1,580)
Income before income taxes 1,019 2,373 2,557 4,615
Provision for income taxes 397 949 997 1,846
Net income $ 622 1,424 1,560 2,769
Basic earnings per
common share $ .20 .45 .50 .88
Diluted earnings per
common share $ .20 .45 .50 .88
Number of common shares used
in computing:
Basic earnings per share 3,053 3,139 3,093 3,139
Diluted earnings per share 3,077 3,168 3,118 3,160
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2003 AND 2002
(In thousands)
(Unaudited)
2003 2002
Cash flows from operating activities:
Net income $1,560 2,769
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation, depletion and amortization 5,993 5,484
Deferred income taxes 171 265
Gain on disposition of real estate, property,
plant and equipment (124) (31)
Net changes in operating assets and liabilities:
Accounts receivable (416) 1,540
Prepaid expenses and other current assets 145 1,483
Assets held for sale - 1,191
Accounts payable and accrued liabilities (2,813) (1,924)
Net change in insurance reserve and other
liabilities 12 30
Other assets, net 24 16
Net cash provided by operating activities 4,552 10,823
Cash flows from investing activities:
Purchase of property, plant and equipment (14,759) (2,866)
Additions to other assets (422) (509)
Proceeds from sale of property, plant and
equipment, and other assets 977 192
Net cash used in investing activities (14,204) (3,183)
Cash flows from financing activities:
Proceeds from long-term debt 32,800 10,200
Net decrease in short-term debt - (7,800)
Repayment of long-term debt (20,607) (10,023)
Repurchase of Company stock (2,485) (32)
Exercise of employee stock options 102 14
Net cash provided by (used in) financing activities 9,810 (7,641)
Net increase (decrease) in cash and cash equivalents 158 (1)
Cash and cash equivalents at beginning of year 529 440
Cash and cash equivalents at end of the period $ 687 439
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(1) Basis of Presentation. The accompanying condensed
consolidated financial statements include the accounts of Patriot
Transportation Holding, Inc. and its subsidiaries (the "Company").
These statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for
interim financial information and the instructions to Form 10-Q
and do not include all the information and footnotes required by
accounting principles generally accepted in the United States of
America 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 months and six months ended March 31, 2003
are not necessarily indicative of the results that may be expected
for the fiscal year ended September 30, 2003. The accompanying
condensed consolidated financial statements and the information
included under the heading "Management's Discussion and Analysis"
should be read in conjunction with the Company's consolidated
financial statements and related notes included in the Company's
Form 10-K for the year ended September 30, 2002.
Certain reclassifications have been made to the Fiscal 2002
financial statements to conform to the presentation adopted in
Fiscal 2003.
(2) Recent Accounting Pronouncements. In June 2001, the FASB
issued Statement No. 142, "Goodwill and Other Intangible Asset"
(SFAS 142). This statement addresses the accounting for intangible
assets. The Company adopted SFAS No. 142 on October 1, 2002 and
has determined no impairment of goodwill exists and has ceased
amortization. Goodwill amortization in both the first and second
quarters of 2002 was $10,000. Included in other assets on the
Condensed Consolidated Balance Sheet is goodwill of $1,087,000 in
both periods.
In June 2001, the FASB issued Statement No. 143, "Accounting for
Asset Retirement Obligations" (SFAS 143), which addresses
financial accounting and reporting for obligations regarding the
retirement of tangible long-lived assets and the associated asset
retirement costs. The standard applies to legal obligations
associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or normal use
of the asset. The Company adopted the provisions of SFAS 143 in
the quarter ended December 31, 2002. Although the Company has
significant mining assets, all properties are mined by third
parties who are contractually responsible for the legal
obligations associated with the retirement of the mining
properties. As property owner, the Company is ultimately
responsible for any obligations arising from the retirement of the
mining properties. However, management has concluded that it is
not probable that the Company will incur liabilities associated
with retirement of the mines.
In December 2002, the FASB issued Statement No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure - an
amendment of FASB Statement 123" (SFAS 148). The Company has
adopted the provisions of SFAS 148 in the second quarter of 2003
and the required disclosures are contained in Footnote 7.
(3) Business Segments. The Company has identified two business
segments each of which is managed separately along product lines.
All the Company's operations are substantially in the Southeast
and mid-Atlantic states.
The transportation segment hauls liquid and dry commodities by
motor carrier. The real estate segment owns real estate of which
a substantial portion is under mining royalty agreements or
leased. The real estate segment also holds certain other real
estate for investment and is developing commercial and industrial
properties.
Operating results and certain other financial data for the
Company's business segments are as follows (in thousands):
Three Months ended Six Months ended
March 31, March 31
2003 2002 2003 2002
Revenues:
Transportation $21,312 19,181 41,978 38,959
Real estate (a) 3,761 3,827 7,137 7,541
$25,073 23,008 49,115 46,500
Operating profit
Transportation $ 323 1,263 1,068 2,545
Real estate (a) 1,978 2,262 3,976 4,356
Corporate expenses $ (396) (353) (762) (706)
$ 1,905 3,172 4,282 6,195
Identifiable assets:
March 31, Sept. 30,
2003 2002
Transportation $ 47,697 47,519
Real estate 114,363 105,850
Cash items 687 529
Unallocated corporate assets 1,500 1,565
$164,247 155,463
(a) The three months ended March 31, 2003 and 2002 and the six
months ended March 31, 2003 and 2002 include revenues of
$65,000, $0, $65,000 and $20,000, respectively, from the sale
of real estate and easements. Operating profit (loss) from the
sale or disposal of real estate was $65,000, ($10,000),
$65,000, and ($43,000) for the three months and six months
ended March 31, 2003 and 2002, respectively.
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
March 31, September 30,
2003 2002
Revolving Credit,
Uncollateralized, payable
in 2004 $ 25,300 12,500
6.5% to 9.5% mortgage note
payable in installments
through 2020 35,494 36,101
60,794 48,601
Less portion due in one year 1,361 1,311
$59,433 47,290
(5) Agreements to Sell Real Estate. In February 2002, a subsidiary
of the Company signed an Agreement to sell 108 acres of land
located in the northwest quadrant of I-395 and I-495 at Edsall
Road in Springfield, Virginia to Florida Rock Industries, Inc.
(FRI), a related party, for $15,000,000. Closing is subject to a
title search and surveys and may occur within 45 days of the
Company giving notice to FRI to close or, subsequent to June 30,
2003 within 45 days of either party giving notice to close. If FRI
fails to close by December 31, 2003, at no fault of the Company,
the Company may retain the $100,000 binder deposit and be under no
further obligation to close. FRI has the right to terminate this
Agreement prior to receiving the Company's notice to close if
there shall exist or the consummation of the sale would cause a
default in the Credit Agreement among FRI and Wachovia Bank, et.
al. The Agreement was approved by a committee of independent
directors of the Company after review of a development feasibility
study and other materials, consultation with management and advice
of independent counsel. The Company intends to structure this
transaction as a tax deferred exchange under Section 1031 of the
United States Internal Revenue Code and
the Treasury Regulations promulgated thereunder. If the
transaction closes, the Company will recognize a gain on the sale
of approximately $7,772,000 net of income taxes, or $2.49 per
diluted share. The tract has been rented to a subsidiary of FRI
and the Company received rental income of approximately $650,000
for the 2002 fiscal year.
In April, 2003, the Company announced that a subsidiary has agreed
to sell 796 acres of land located in St. Mary's County, Maryland
to Florida Rock Industries, Inc. (FRI), a related party, for
$1,836,000. FRI has 120 days to inspect and investigate the
property and may, in its sole discretion, terminate the Agreement
during the inspection period without penalty. If the Agreement is
not terminated during the inspection period or valid extensions
thereof, closing is to occur no later than December 15, 2003. The
Agreement was approved by a committee of independent directors of
the Company after receipt of an appraisal and consultation with
management. If this transaction closes, the Company will recognize
a gain on the sale of approximately $647,000 net of income taxes,
or $.21 per diluted common share.
On May 7, 2003, the Company announced that a subsidiary has agreed
to sell a 935 acre parcel of property in Miami, Florida to FRI, a
related party, for $1,638,000. The property is principally
composed of mined-out lakes, mitigation areas, 145 acres of
mineable land and 32 acres of roads and railroad track right-of-
ways. The closing of the sale is subject to a definitive agreement
with closing to occur no later than December 15, 2003. The terms
of the agreement were approved by the Company's Audit Committee
which is comprised of independent directors of the Company after
considering among other factors, the terms of the existing lease
agreement and consultation with management. If this transaction
closes, the Company will recognize a gain of approximately
$999,000, net of income taxes, or $.32 per diluted common share.
(6) Repurchase of Company Stock. During the first quarter of
Fiscal 2003, the Company repurchased and retired 111,300 shares of
its common stock for $2,485,000.
(7) Stock-Based Compensation Plan. The Company accounts for its
stock-based employee compensation plans under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. No stock-
based employee compensation cost is reflected in net income, as
all options granted under those plans had an exercise price equal
to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net income
and earnings per share if the company had applied the fair value
recognition provisions of FASB Statement No. 123, "Accounting for
Stock-Based Compensation", to stock-based employee compensation.
Three Months ended Six Months ended
March 31, March 31,
2003 2002 2003 2002
Net income, as reported $ 622 1,424 1,560 2,769
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects 136 72 294 182
Pro forma net income $ 486 1,352 1,266 2,587
Earnings per share:
Basic-as reported $ .20 .45 .50 .88
Basic-pro forma $ .16 .43 .41 .82
(8) Contingent Liabilities. Certain of the Company's subsidiaries
are involved in litigation on a number of matters and are subject
to certain claims that arise in the normal course of business.
The Company has retained certain self-insurance risks with respect
to losses for third party liability and property damage. In the
opinion of management and advice of legal counsel, none of these
matters are expected to have a materially adverse effect on the
Company's consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months Operating Results
For the second quarter of Fiscal 2003, consolidated revenues were
$25,073,000, an increase of $2,065,000 or 9.0% over the same
quarter last year.
The transportation segment's revenues for the second quarter of
Fiscal 2003 were $21,312,000, an increase of $2,131,000 or 11.1%
over the same quarter last year. Approximately 60% of this
increase was a result of a 6.2% increase in miles hauled in the
second quarter of 2003 over the same quarter last year. The
balance of the increase was due to significantly higher fuel
surcharges billed to mitigate rising fuel costs. The increase in
miles hauled resulted primarily from new business generated from
the May 30, 2002 acquisition of the operating assets of Infinger
Transportation, Inc. (Infinger).
Real estate revenues were $3,761,000 for the second quarter of
Fiscal 2003, a decrease of $66,000 or 1.7% from the second quarter
of Fiscal 2002. Royalties from mining contracts decreased $391,000
or 21.9% primarily resulting from completion of mining at two
locations during the third quarter of 2002. Revenues from flex
office-warehouse properties increased $260,000 or 12.7%, primarily
due to a 7.6% increase in average leased square feet and, to a
lesser extent, minimal price increases. The real estate group had
property sales of $65,000 in the second quarter of 2003 and had no
property sales in the second quarter of 2002.
Consolidated gross profit for the second quarter of 2003 was
$3,915,000, a decrease of $1,051,000 or 21.2% from the second
quarter of last year. Gross profit in the transportation segment
decreased $767,000 or 28.4% as a result of higher fuel costs per
mile, net of fuel surcharges, and an 18.2% increase in overall
fixed expenses. The increase in fixed expenses was due to higher
depreciation expense resulting from the Infinger asset additions
and a newer trucking fleet as well as sharply higher expenses
related to risk insurance programs.
Gross profit in the real estate segment decreased $284,000 or 12.6%
from the second quarter of 2002 due to decreased royalties from
mining operations, partially offset by additional gross profit from
newly developed commercial properties.
Selling, general and administrative expense increased $216,000 or
12.0% for the second quarter of 2003 compared to the same period
last year. The increase is primarily attributed to a benefit in the
second quarter of last year of $180,000 related to the recovery of
a closed subsidiary's accounts receivable in excess of amounts
anticipated. On a comparative basis, selling, general and
administrative expenses, exclusive of the 2002 benefit, as a
percent of consolidated revenues excluding property sales, was 8.0%
as compared to 8.6% last year.
Interest expense, net of capitalized interest, increased $87,000
for the second quarter due to an increase in the average debt
outstanding. The provision for income taxes was 39% of income
before taxes in the second quarter of 2003 and 40% in the second
quarter of 2002.
Net income was $622,000 or $.20 per diluted share for the second
quarter of Fiscal 2003 compared to $1,424,000 or $.45 per diluted
share for the same quarter last year.
Six Months Operating Results.
For the first half of Fiscal 2003, consolidated revenues were
$49,115,000, an increase of $2,615,000 or 5.6% over the same period
last year.
The transportation segment's revenues for the first half of Fiscal
2003 were $41,978,000, an increase of $3,019,000 or 7.7% over the
same period last year. Approximately two-thirds of this increase
resulted from a 3.4% increase in miles hauled due to the Infinger
acquisition on May 30, 2002, partially offset by the loss of a
major customer. The balance of the increase was primarily due to
higher fuel surcharges as a result of rising fuel costs.
Real estate revenues were $7,137,000 for the first half of 2003, a
decrease of $404,000 or 5.4% from the first half of 2002. Royalties
from mining contracts decreased $861,000 or 23.4% primarily
resulting from completion of mining at two locations during the
third quarter of 2002. Revenues from flex office-warehouse
properties increased $412,000 or 10.7%, primarily due to a 7.5%
increase in average leased square feet and, to a lesser extent,
price increases. Property sales were $65,000 in the first half of
2003 as compared to property sales of $20,000 during the first half
of 2002.
Consolidated gross profit decreased $1,788,000 or 17.8% for the
first half as compared to the same period last year. Gross profit
in the transportation segment decreased $1,407,000 or 24.8% as a
result of higher fuel costs per mile, net of fuel surcharges, and a
16.3% increase in overall fixed expenses. The increase in fixed
expenses was due to higher depreciation expense resulting from the
Infinger asset additions and a newer trucking fleet and sharply
higher expenses related to risk insurance programs.
Gross profit in the real estate segment decreased $381,000 or 8.7%
from the first half of 2002 due to decreased royalties from mining
operations, partially offset by additional gross profits from newly
developed commercial properties.
Selling, general and administrative expense increased $150,000 or
3.9% for the first half of 2003 compared to the same period last
year. The increase is primarily attributed to a benefit in the
first half of last year of $180,000 related to the recovery of a
closed subsidiary's accounts receivable in excess of amounts
anticipated recorded in the first half of 2002. A similar benefit
of $41,000 was recorded in the first quarter of 2003. On a
comparative basis, selling, general and administrative expenses,
exclusive of these benefits, as a percent of consolidated revenues
excluding property sales was 8.2% compared to 8.6% last year.
Interest expense, net of capitalized interest, increased $145,000
for the first half due to an increase in the average debt
outstanding. The provision for income taxes was 39% of income
before taxes in the first half of 2003 and 40% in the first half of
2002.
Net income was $1,560,000 or $.50 per diluted share for the first
half of Fiscal 2003 compared to $2,769,000 or $.88 per diluted
share for the same period last year.
Summary and Outlook
The Company's real estate development has continued to benefit
from the prevailing low interest rate environment. Though demand
for the Company's flexible office-warehouse product softened
somewhat in some sub-markets, overall occupancy has remained
encouraging. Additional real estate development momentum appears
favorable.
A contrasting scenario has remained for the Company's trucking
operations. Supply concerns about the war in Iraq pushed average
diesel fuel prices up to record highs by early March compared to
the same period a year earlier. Fuel price escalation occurred so
rapidly that aggressive fuel price surcharges by the Company
still could not fully offset this impact. Weakened freight demand
from a still-struggling national and regional economy contributed
to challenges for efficient equipment utilization. Fuel prices
have recently abated with the end of the Iraqi conflict. On the
other hand, liability and health insurance costs remain on an
upward trend. Therefore significant profit margin progress from
better utilization and firmer freight rates will still hinge on
improved national and regional economic health.
Liquidity and Capital Resources
For the first six months of Fiscal 2003, a combination of
operating cash flow and additional borrowings under the
$37,000,000 revolving credit agreement (Revolver) funded the
Company's purchase of additional property, plant and equipment of
$14,759,000 and the repurchase of Company stock for $2,485,000.
At March 31, 2003, $11,700,000 was available under the Revolver.
In January 2003, the Company obtained a $2,280,000 one-year
irrevocable Letter of Credit which will be automatically extended
for additional one-year periods unless notified not less than
thirty days before the expiration date. The Letter of Credit
replaced cash collateral with an insurance company in a like
amount which was used to reduce the outstanding balance under the
Revolver.
As of March 31, 2003, the Company is committed to spend an
additional $4,788,000 to complete construction of a bulk
warehouse which is preleased to a tenant for 15 years.
Construction is expected to be completed by October 2003. These
expenditures will be financed in the interim from cash flows from
operating activities and funds available under the Revolver. The
Company has obtained a commitment for a first mortgage loan of
$8,500,000 to be collateralized by this building. The loan which
is subject to building completion and other normal conditions is
for a period of 15 years with level monthly payments of principal
and interest at 5.69%.
The Company also obtained a commitment for a first mortgage loan
of $4,600,000 to be secured by another building. This loan which
is expected to close by early June, 2003, is for a period of 20
years with level monthly payments of principal and interest at an
initial rate of 5.68%. The proceeds will be used to reduce
balances outstanding under the Company's Revolver.
The Board of Directors has authorized Management to repurchase
shares of the Company's common stock from time to time as
opportunities arise. During the first quarter of Fiscal 2003, the
Company repurchased 111,300 shares for $2,485,000. In January
2003, an additional $2,500,000 was authorized giving the Company
approximately $3,600,000 available for the repurchase of the
Company's common stock.
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.
Based on current expectations, management believes that its
internally generated cash flow and access to existing credit
facilities are sufficient to meet the liquidity requirements
necessary to fund operations, capital requirements and debt
service.
Related Party Transactions
Five of the Company's directors are also directors of Florida
Rock Industries, Inc. ("FRI"). Such directors owned approximately
27.6% of the stock of FRI and 46.6% of the stock of the Company.
Accordingly, FRI and the Company are considered related parties.
The Company, through its transportation subsidiaries, hauls
commodities in tank trucks for FRI and customers of FRI. It also
hauls diesel fuel and other supplies for FRI. Charges for these
services are based on prevailing market prices. Other wholly
owned subsidiaries lease certain construction aggregates mining
and other properties and provides construction management
services to FRI. In addition, the Company outsources certain
functions to FRI, including some administrative, human resources,
legal and risk management services.
A subsidiary of the Company signed an agreement to sell land to
FRI for $15,000,000. If the sale occurs, the Company will
recognize a gain on the sale of approximately $7,722,000 net of
income taxes or $2.48 per diluted share. Reinvestment of the
proceeds from this transaction is expected to facilitate the
Company's long-term plan to build and own a portfolio of
successful rental properties. A subsidiary of the Company has
also agreed to sell two other parcels of land to FRI for
$1,836,000 and $1,638,000, respectively. If these sales occur,
the Company will recognize a gain, net of income taxes, of
$647,000 or $.21 per share and $999,000 or $.32 per share,
respectively. For additional information see Note 5 of Notes to
Condensed Consolidated Financial Statements.
Other
During Fiscal 2002, the transportation segment's ten largest
customers accounted for approximately 45.5% of the transportation
segment's revenue. The loss of one or more of any one of these
customers could have an adverse effect on the Company's revenue
and income. During the fourth quarter of fiscal 2002, the Company
reported that one of its ten largest customers indicated it is
moving a majority of the business it is currently doing with the
Company to other carriers. The Company estimates lost revenues
from this customer to be approximately 6% of the transportation
segment's revenues for Fiscal 2002. The loss of this revenue will
have an adverse effect on the Company's operating income, at
least in the short term. The Company anticipates this lost
revenue will be offset by revenues generated from the acquisition
of the operating assets of Infinger Transportation, Inc. which
was acquired by the Company on May 30, 2002.
The Company owns two parcels of undeveloped real estate in the
southeast quadrant of Washington D.C. on the banks of the
Anacostia River and has been working with the District of
Columbia Zoning Commission to obtain appropriate zoning for
development. In 2003, the Zoning Commission granted preliminary
approval of the size and scope of a proposed Planned Unit
Development (PUD) and gave the Company until May of 2004 to
submit modified drawings that would conform to the approved
design guidelines. The design guidelines provide for a maximum
allowable commercial development of 625,000 square feet and a
minimum residential development of 440,000 square feet. If
approval of the redesign is obtained, the Company will have an
additional two years to begin development of the site in
accordance with the approved PUD. For more information on this
property see Item 2 of the Company's Annual Report on Form 10-K.
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
and competition 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 and others discussed in the
Company's periodic reports and filings with the Securities and
Exchange Commission are among the principal factors that could
cause actual results to differ materially from the forward-
looking statements: driver availability and cost; availability
and terms of financing; freight demand for petroleum products
including recessionary and terrorist impacts on travel in the
Company's markets; freight demand for building and construction
materials in the Company's markets; risk insurance markets;
competition; general economic conditions; demand for flexible
warehouse/office facilities; restructuring charges; interest
rates; levels of construction activity in FRI's markets; fuel
costs; and inflation. However, this list is not a complete
statement of all potential risks or uncertainties.
These forward-looking statements are made as of the date hereof
based on management's current expectations, and the Company does
not undertake an obligation to update such statements, whether as
a result of new information, future events or otherwise.
Additional information regarding these and other risk factors may
be found in the Company's other filings made from time to time
with the Securities and Exchange Commission.
ITEM 3. 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, 2002 with respect to
this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. As required by
Rule 13A-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an
evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures. This
evaluation was carried out under the supervision and with the
participation of the Company's management, including the
Company's President and Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer. The evaluation conducted by
the Company's President and Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer has provided them
with reasonable assurance that the Company's disclosure controls
and procedures are effective in timely alerting them to material
information relating to the Company required to be included in
the Company's periodic SEC filings.
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required
to be disclosed in Company reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commission's rule and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in Company
reports filed under the Exchange Act is accumulated and
communicated to management, including the Company's Chief
Executive Officer, Chief Financial Officer and Chief Accounting
Officer as appropriate, to allow timely decisions regarding
required disclosures.
Changes in internal controls. There have been no changes in
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On February 5, 2003, the Company held its annual shareholders
meeting. At the meeting, the shareholders elected the following
directors by the vote shown.
Term Votes Votes Broker/
Ending For Withheld Non-Votes
H. Jay Skelton 2004 2,798,175 107 -
Francis X. Knott 2007 2,798,172 110 -
James H. Winston 2007 2,798,172 110 -
Robert H. Paul III 2007 2,701,372 96,910 -
The directors whose terms of office as a director have continued
after the meeting are John D. Baker, II, Luke E. Fichthorn, III,
John E. Anderson, David H. deVilliers, Jr., Edward L. Baker,
Thompson S. Baker II, and Martin E. Stein, Jr.
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 18.
(b) Reports on Form 8-K. During the three months ended
March 31, 2003, no reports on a Form 8-K were filed by
the Company.
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 9, 2003 PATRIOT TRANSPORTATION HOLDING, INC.
John E. Anderson
John E. Anderson
President and Chief Executive
Officer
Ray M. Van Landingham_
Ray M. Van Landingham
Vice President Finance &
Administration and Chief
Financial Officer
GREGORY B. LECHWAR
Gregory B. Lechwar
Controller and Chief
Accounting Officer
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003
EXHIBIT INDEX
(3)(a)(1) Articles of Incorporation of Patriot Transportation
Holding Inc., incorporated by reference to the
corresponding exhibit filed with Form S-4 dated
December 13,1988. File No. 33-26115.
(3)(a)(2) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 19, 1991
incorporated by reference to the corresponding
exhibit 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
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 7,1995,
incorporated by reference to an appendix to the
Company's Proxy Statement dated December 15, 1994.
File No. 33-26115.
(3)(a)(4) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc., filed with
the Florida Secretary of State on May 6, 1999
incorporated by reference to a form of such
amendment filed as Exhibit 4 to the Company's Form
8-K dated May 5, 1999. File No. 33-26115.
(3)(a)(5) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 21, 2000,
incorporated by reference to the corresponding
exhibit filed with Form 10-Q for the quarter ended
March 31, 2000. File No. 33-26115.
(3)(b)(1) Restated Bylaws of Patriot Transportation Holding,
Inc. adopted December 1, 1993, incorporated by
reference to the corresponding exhibit 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 Patriot Transportation
Holding, Inc. adopted August 3, 1994, incorporated
by reference to the corresponding exhibit filed
with Form 10-K for the fiscal year ended September
30, 1994. File No. 33-26115.
(3)(b)(3) Amendment to the Bylaws of Patriot Transportation
Holding, Inc. adopted December 5, 2001,
incorporated by reference to the corresponding
exhibit filed with Form 10-Q for the quarter ended
December 31, 2001. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of
Incorporation of Patriot Transportation Holding,
Inc., incorporated by reference to an exhibit filed
with Form S-4 dated December 13, 1988. And
amended Article III, incorporated by reference to
an exhibit filed with Form 10-K for the fiscal year
ended September 30, 1993. And Articles XIII and
XIV, incorporated by reference to an appendix filed
with the Company's Proxy Statement dated December
15, 1994. File No. 33-26115.
(4)(b) Specimen stock certificate of Patriot
Transportation Holding, Inc., incorporated by
reference to an exhibit filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(4)(c) Revolving Credit Agreement dated as of January 9,
2002 among Patriot Transportation Holding, Inc. as
Borrower, the Lenders from time to time party
thereto and SunTrust Bank as Administrative Agent,
incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended December 31, 2001.
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 May 5, 1999 between the
company and First Union National Bank, incorporated
by reference to Exhibit 4 to the Company's Form 8-K
dated May 5, 1999. File No. 33-26115.
(10)(a) Various lease backs 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)(c)), but all of which may be material in the
aggregate, incorporated by reference to an exhibit
filed with Form S-4 dated December 13, 1988. File
No. 33-26115.
(10)(b) License Agreement, dated June 30, 1986, from
Florida Rock Industries, Inc. to Florida Rock &
Tank Lines, Inc. to use "Florida Rock" in corporate
names, incorporated by reference to an exhibit
filed with Form S-4 dated December 13, 1988. File
No. 33-26115.
(10)(c) Mining Lease Agreement, dated September 1, 1986,
between Florida Rock Industries, Inc. and Florida
Rock Properties, Inc., successor by merger to
Grandin Land, Inc., incorporated by reference to an
exhibit previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(d) Summary of Medical Reimbursement Plan of Patriot
Transportation Holding, Inc., incorporated by
reference to an exhibit filed with Form 10-K for
the fiscal year ended September 30, 1993. File No.
33-26115.
(10)(e) Summary of Management Incentive Compensation Plans,
incorporated by reference to an exhibit filed with
Form 10-K for the fiscal year ended September 30,
1994. File No. 33-26115.
(10)(f) Management Security Agreements between the Company
and certain officers, incorporated by reference to
a form of agreement previously filed (as Exhibit
(10)(I)) with Form S-4 dated December 13, 1988.
File No. 33-26115.
(10)(g)(1) Patriot Transportation Holding, Inc. 1989 Employee
Stock Option Plan, incorporated by reference to an
exhibit filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(g)(2) Patriot Transportation Holding, Inc. 1995 Stock
Option Plan, incorporated by reference to an
appendix to the Company's Proxy Statement dated
December 15, 1994. File No. 33-26115.
(10)(g)(3) Patriot Transportation Holding, Inc. 2000 Stock
Option Plan, incorporated by reference to an
appendix to the Company's Proxy Statement dated
December 15, 1999. File No. 33-26115.
(10)(h) Purchase and Sale Agreement dated February 6, 2002
between Florida Rock Industries, Inc. and Florida
Rock Properties, Inc., incorporated by reference to
an exhibit filed with Form 10-Q for the quarter
ended December 31, 2001.
(11) Computation of Earnings Per Common Share.
(99) Certification of Chief Executive Officer, Chief
Financial Officer, and Chief Accounting Officer
pursuant to 18 U.S.C. Section 1350, Adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
CERTIFICATIONS
I, John E. Anderson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Patriot
Transportation Holding, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 9, 2003 /s/John E. Anderson
President and Chief Executive
Officer
CERTIFICATIONS
I, Ray M. Van Landingham, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Patriot
Transportation Holding, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 9, 2003 /s/Ray M. Van Landingham
Vice President, Finance and
Administration and Chief
Financial Officer
CERTIFICATIONS
I, Gregory B. Lechwar, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Patriot
Transportation Holding, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
d) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
e) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 9, 2003 /s/Gregory B. Lechwar
Controller and Chief
Accounting Officer
24