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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 June 30, 2003
[ ] 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 August 4, 2003: 2,932,708 shares of
$.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 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 of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risks 14
Item 4. Controls and Procedures 14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 11 Computation of Earnings Per Share 21
Exhibit 31 Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 22
Exhibit 32 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 25
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, September 30,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 1,572 529
Accounts receivable (including related
party of $459 and $107) 7,881 7,817
Less allowance for doubtful accounts (552) (474)
Prepaid expenses 2,501 2,977
Other current assets 912 641
Total current assets 12,314 11,490
Property, plant and equipment, at cost 221,082 209,275
Less accumulated depreciation and
depletion (74,809) (70,908)
Net property, plant and equipment 146,273 138,367
Other assets 5,832 5,606
Total assets $164,419 155,463
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (including related
party of $0 and $39) $ 2,577 5,771
Accrued liabilities 6,150 4,890
Long-term debt due within one year 1,518 1,311
Total current liabilities 10,245 11,972
Long-term debt 60,692 47,290
Deferred income taxes 10,069 10,062
Accrued insurance reserves 5,331 5,331
Other liabilities 1,722 1,648
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
2,932,708 and 3,159,008 shares issued
and outstanding, respectively 293 316
Capital in excess of par value 6,064 11,748
Retained earnings 70,003 67,096
Total shareholders' equity 76,360 79,160
Total liabilities and shareholders' equity $164,419 155,463
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2003 2002 2003 2002
Revenues:
Related parties $ 2,034 1,335 5,309 5,349
Non-related parties 24,997 23,541 70,837 66,026
27,031 24,876 76,146 71,375
Cost of operations 21,913 19,418 62,783 55,884
Gross profit 5,118 5,458 13,363 15,491
Selling, general and
administrative expenses:
Related parties 110 116 330 232
Non-related parties 1,908 2,010 5,676 5,732
2,018 2,126 6,006 5,964
Recovery of non-recurring charges
related to closed subsidiary (5) (100) (29) (100)
Operating profit 3,105 3,432 7,386 9,627
Interest expense, net (899) (803) (2,623) (2,382)
Income before income taxes 2,206 2,629 4,763 7,245
Provision for income taxes 860 1,052 1,857 2,898
Net income $ 1,346 1,577 2,906 4,347
Basic earnings per
common share $ .45 .50 .95 1.38
Diluted earnings per
common share $ .44 .50 .94 1.37
Number of shares used in computing:
Basic earnings per share 3,015 3,145 3,067 3,141
Diluted earnings per share 3,054 3,178 3,098 3,166
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2003 AND 2002
(In thousands)
(Unaudited)
2003 2002
Cash flows from operating activities:
Net income $2,906 4,347
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation, depletion and amortization 8,963 8,182
Deferred income taxes (289) (273)
Gain on disposition of real estate, property,
plant and equipment (100) (251)
Net changes in operating assets and liabilities:
Accounts receivable 23 2,465
Prepaid expenses and other current assets 468 1,716
Assets held for sale - 1,191
Accounts payable and accrued liabilities (1,910) 2,266
Net change in insurance reserve and other
liabilities 74 123
Other assets, net 47 31
Net cash provided by operating activities 10,182 19,797
Cash flows from investing activities:
Purchase of property, plant and equipment (17,657) (10,678)
Additions to other assets (502) (726)
Proceeds from sale of property, plant and
Equipment, and other assets 1,117 562
Net cash used in investing activities (17,042) (10,842)
Cash flows from financing activities:
Proceeds from long-term debt 50,400 10,200
Net decrease increase in short-term debt - (7,800)
Repayment of long-term debt (36,791) (11,779)
Repurchase of Company stock (6,118) (31)
Exercise of employee stock options 412 123
Net cash provided by (used in) financing activities 7,903 (9,287)
Net increase (decrease) in cash and cash equivalents 1,043 (332)
Cash and cash equivalents at beginning of year 529 440
Cash and cash equivalents at end of the period $1,572 108
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 nine months ended June 30, 2003
are not necessarily indicative of the results that may be expected
for the fiscal year ending 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.
(2) Recent Accounting Pronouncements. In June 2001, the FASB issued
Statement No. 142, "Goodwill and Other Intangible Assets" (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 the third quarter and first
nine months of 2002 was $10,000 and $30,000, respectively. 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.
In May 2003, the Financial Accounting Standards Board issued FASB
Statement No. 150 (SFAS 150), "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity."
SFAS 150 specifies that instruments within its scope embody
obligations of the issuer and that, therefore, the issuer must
classify them as liabilities. The Company does not expect SFAS 150
to have any impact on its financial Statements.
(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 in the United 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 Nine Months ended
June 30, June 30,
2003 2002 2003 2002
Revenues:
Transportation 23,079 21,280 65,057 60,239
Real estate (a) 3,952 3,596 11,089 11,136
27,031 24,876 76,146 71,375
Operating profit
Transportation 967 1,748 2,035 4,293
Real estate (b) 2,486 2,036 6,462 6,392
Corporate expenses (348) (352) (1,111) (1,058)
Operating profit 3,105 3,432 7,386 9,627
Identifiable assets June 30, Sept 30,
2003 2002
Transportation $ 45,540 47,519
Real estate 115,658 105,850
Cash items 1,572 529
Unallocated corporate assets 1,649 1,565
$164,419 155,463
(a) The three months ended June 30, 2003 and 2002 and the nine
months ended June 30, 2003 and 2002 include revenues of
$3,000, $199,000, $68,000 and $219,000, respectively, from
the sale of real estate.
(b) Operating profit from the sale or disposal of real estate
was ($18,000), $153,000, $47,000 and $110,000 for the three
months and the nine months ended June 30, 2003 and 2002,
respectively.
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
June 30, September 30,
2003 2002
Revolving Credit,
Uncollateralized, payable
in 2004 $ 22,500 12,500
5.7% to 9.5% mortgage note
payable in installments
through 2020 39,710 36,101
62,210 48,601
Less portion due in one year 1,518 1,311
$60,692 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 $2.52 per diluted share. The tract is being rented
to a subsidiary of FRI and the Company has received rental income
of approximately $488,000 for the nine months ended June 30, 2003.
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
FRI 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 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, 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. In the third quarter, the Company
repurchased and retired 135,000 shares of its common stock for
$3,633,000. As of August 6, 2003, the Board of Directors has
authorized Management to repurchase $3,000,000 of the Company's
common stock.
(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 Nine Months ended
June 30, June 30,
2003 2002 2003 2002
Net income, as reported $ 1,346 1,577 2,906 4,347
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects 129 87 423 269
Pro forma net income $ 1,217 1,490 2,483 4,078
Earnings per share:
Basic-as reported $ .45 .50 .95 1.38
Basic-pro forma $ .41 .47 .81 1.30
(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, based upon the advice of outside 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 third quarter of Fiscal 2003, consolidated revenues were
$27,031,000, an increase of $2,155,000 or 8.7% over the same
quarter last year.
The transportation segment's revenues for the third quarter of
Fiscal 2003 were $23,079,000, an increase of $1,799,000 or 8.5%
over the same quarter last year. Approximately $1,375,000 of this
increase was a result of a 6.7% increase in miles hauled in the
third quarter of 2003 over the same quarter last year. The balance
of the increase was primarily due to 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) and a 9.8% increase in miles in the
flatbed operations, from the same quarter last year.
Real estate revenues were $3,952,000 for the third quarter of
Fiscal 2003, an increase of $356,000 or 9.9% from the third quarter
of Fiscal 2002. Royalties from mining contracts increased $483,000
or 56.0% primarily resulting from a 31.3% increase in tons mined
and an increase in average royalty per ton mined as compared to the
same quarter last year. Revenues from flex office-warehouse
properties increased $56,000 or 2.7%, primarily due to an 8.2%
increase in average leased square feet and minimal price increases.
The real estate group had property sales of $3,000 in the third
quarter of 2003 compared to property sales of $199,000 in the third
quarter of 2002.
Consolidated gross profit for the third quarter of 2003 was
$5,118,000, a decrease of $340,000 or 6.2% from the third quarter
of last year. Gross profit in the transportation segment decreased
$790,000 or 23.1% primarily due to higher risk insurance premiums
and claims expense related to prior years' workers compensation
occurrences. Additionally, depreciation expense is higher as a
result of the Infinger asset additions and a newer trucking fleet.
Gross profit in the real estate segment increased $450,000 or 22.1%
from the third quarter of 2002 due to increased royalties from
mining operations and improved gross profit from developed
properties, partially offset by reduced profit from property sales.
Selling, general and administrative expense decreased $108,000 or
5.1% for the third quarter of 2003 compared to the same period last
year. Selling, general and administrative expenses, as a percent of
consolidated revenues excluding property sales, was 7.5% as
compared to 8.6% last year.
Interest expense, net of capitalized interest, increased $96,000
for the third quarter due primarily to an increase in the average
debt outstanding. The provision for income taxes was 39% of income
before taxes in the third quarter of 2003 and 40% in the third
quarter of 2002.
Net income was $1,346,000 or $.44 per diluted share for the third
quarter of Fiscal 2003 compared to $1,577,000 or $.50 per diluted
share for the same quarter last year.
Nine Months Operating Results.
For the nine months of Fiscal 2003, consolidated revenues were
$76,146,000, an increase of $4,771,000 or 6.7% over the same period
last year.
The transportation segment's revenues for the nine months of Fiscal
2003 were $65,057,000, an increase of $4,818,000 or 8.0% over the
same period last year. Approximately $2,771,000 of this increase
resulted from a 4.5% increase in miles hauled primarily 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 $11,089,000 for the first nine months of
2003, a decrease of $47,000 or 0.4% from the first nine months of
2002. Royalties from mining contracts decreased $365,000 or 7.3%
primarily resulting from completion of mining at two locations
during the third quarter of 2002. Revenues from flex office-
warehouse properties increased $468,000 or 7.9%, primarily due to a
7.9% increase in leased square feet and modest price increases.
Property sales were $68,000 in the nine months of 2003 as compared
to property sales of $219,000 during the nine months of 2002.
Consolidated gross profit decreased $2,128,000 or 13.7% for the
nine months as compared to the same period last year. Gross profit
in the transportation segment decreased $2,198,000 or 24.2% as a
result of higher fuel costs per mile and higher risk insurance
premiums and claims expense related to prior years' workers
compensation occurrences. Additionally, depreciation expense was
higher as a result of the Infinger asset additions and a newer
trucking fleet.
Gross profit in the real estate segment increased $70,000 or 1.1%
from the nine months of 2002 due to a $458,000 increase in gross
profit from newly developed properties, which was mostly offset by
decreased royalties from mining operations.
Selling, general and administrative expense increased $42,000 or
0.7% for the nine months of 2003 compared to the same period last
year. The increase is primarily attributed to a benefit in the
first nine months of last year of $177,000 related to the recovery
of a closed subsidiary's accounts receivable in excess of amounts
anticipated. A similar benefit of $49,000 was recorded in the first
nine months 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 8.0% compared
to 8.6% last year.
Interest expense, net of capitalized interest, increased $241,000
for the nine months due to an increase in the average debt
outstanding. The provision for income taxes was 39% of income
before taxes in the first nine months of 2003 and 39% in the first
nine months of 2002.
Net income was $2,906,000 or $.94 per diluted share for the first
nine months of 2003 compared to $4,347,000 or $1.37 per diluted
share for the same period last year.
Summary and Outlook
The Company's real estate development operations have continued to
benefit from a favorable national interest rate environment and
encouraging tenant occupancy. Positive market acceptance continues
for the Company's flexible office-warehouse product, implying
further development expansion.
Overall freight demand for the Company's transportation group has
gradually strengthened, though still somewhat muted in markets
served by the tank truck operations as an uncertain national
economy has dampened travel and resulting fuel consumption. Freight
rate increases and improved efficiencies from equipment utilization
will both be pursued to offset chronic increases in risk and health
insurance expenses.
Liquidity and Capital Resources
For the first nine months of Fiscal 2003, a combination of
operating cash flow, additional long term debt, and borrowings
under the $37,000,000 revolving credit agreement (Revolver) funded
the Company's purchase of additional property, plant and equipment
of $17,657,000 and the repurchase of Company stock for $6,118,000.
At June 30, 2003, $14,500,000 was available under the Revolver.
As of June 30, 2003, the Company is committed to spend an
additional $2,731,000 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 flow 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 proceeds will be used to reduce amounts owed on the
Revolver.
During the third quarter of 2003, a subsidiary of the Company
obtained a first mortgage loan in the amount of $4,600,000
collateralized by a building. The loan is for a period of 20 years
with level monthly payments of principal and interest at 5.68%. The
proceeds were used to reduce amounts owed on 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.
The Board of Directors has authorized Management to repurchase
shares of the Company's common stock from time to time as
opportunities arise. During Fiscal 2003, the Company repurchased
246,300 shares of its common stock for $6,118,000. On August 6,
2003 the Board of Directors increased the current authorization to
repurchase the Company's common stock up to $3,000,000.
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 own 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
$2.52 per diluted share. 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. Reinvestment of the proceeds from these
transactions is expected to facilitate the Company's long-term plan
to build and own a portfolio of successful rental properties. 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 was
moving a majority of the business it was 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 has had an
adverse effect on the Company's operating income in 2003, but has
been mostly offset by additional revenues from existing and new
customers as well as revenue generated from the acquisition of the
operating assets of Infinger 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 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 11.
(b) Reports on Form 8-K. On April 29, 2003, the Company
filed a Form 8-K reporting under Item 7, a press
release announcing its earnings for the second quarter
of 2003.
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 7, 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 JUNE 30, 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
hereto 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. File No. 33-26115.
(10)(i) Purchase and Sale Agreement dated May 7, 2003
between Maryland Rock Industries, Inc. and Florida
Rock Industries, Inc. and Florida Rock Properties,
Inc.
(11) Computation of Earnings Per Common Share.
(31)(a) Certification of John E. Anderson.
(31)(b) Certification of Ray M. Van Landingham.
(31)(c) Certification of Gregory B. Lechwar.
(32) 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.
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