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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-26115
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)
Registrant's telephone number, including area code 904/396-5733
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
(Title of class)
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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). Yes No X
At December 8, 2003 aggregate market value of the shares of Common
Stock held by non-affiliates of the registrant was $47,493,379. At
such date there were 2,934,108 shares of the registrant's stock
outstanding.
Documents Incorporated by Reference
Portions of the Patriot Transportation Holding, Inc. 2003 Annual
Report to Shareholders are incorporated by reference in Parts I and
II.
Portions of the Patriot Transportation Holding, Inc. Proxy Statement
dated December 31, 2003 are incorporated by reference in Part III.
PART I
Item 1. BUSINESS.
Patriot Transportation Holding, Inc., which was incorporated in
Florida in 1988, and its subsidiaries (the "Company") are
engaged in the transportation and real estate businesses.
The Company's transportation business is conducted through two
wholly owned subsidiaries, Florida Rock & Tank Lines, Inc.
("Tank Lines"), and SunBelt Transport, Inc. ("SunBelt"). Tank
Lines is a Southeastern U.S. based transportation company
concentrating in the hauling of primarily petroleum related
liquids and other liquids and dry bulk commodities by tank
trucks. SunBelt serves the flatbed portion of the trucking
industry in the Southeast, Midwest and Mid-Atlantic states,
hauling primarily construction materials. A third
transportation subsidiary, Patriot Transportation, Inc. ("PTI")
closed operations in September 2001.
The Company's real estate activities are conducted through
several wholly owned subsidiaries. Florida Rock Properties,
Inc. ("Properties") owns real estate of which a substantial
portion is under mining royalty agreements or leased to Florida
Rock Industries, Inc. ("FRI"), a related party. FRI accounted
for approximately 39% of the Company's real estate revenues for
Fiscal 2003. Properties also holds certain other real estate
for investment. FRP Development Corp. ("Development") owns,
manages and develops commercial warehouse/office rental
properties near Baltimore, Maryland. Substantially all of the
real estate operations are conducted within the Southeastern
and Mid-Atlantic United States.
The Company has two business segments: transportation and real
estate. Industry segment information is presented in Notes 2
and 10 to the consolidated financial statements included in the
accompanying 2003 Annual Report to Shareholders and is
incorporated herein by reference.
Revenues from royalties and from a portion of the trucking
operations are subject to factors affecting the level of
general construction activity. A decrease in the level of
general construction activity in any of the Company's market
areas may have an adverse effect on such revenues and income
derived therefrom.
Transportation. Tank Lines is engaged in hauling primarily
petroleum related liquids and other liquid and dry bulk
commodities by tank trucks. SunBelt is engaged primarily in
hauling building and construction materials on flatbed
trailers. Before closing its operations in September 2001, PTI
was engaged in the hauling of a variety of cargo through
independent agents and owner-operators.
During Fiscal 2003, Tank Lines operated from terminals in
Jacksonville, Orlando, Panama City, Pensacola, Port Everglades,
Tampa and White Springs, Florida; Albany, Atlanta, Augusta,
Bainbridge, Columbus, Dalton, Macon and Savannah, Georgia;
Knoxville, Tennessee; Charlotte and Wilmington, North Carolina;
and Charleston, South Carolina. Tank Lines has from two to six
major tank truck competitors in each of its markets.
On May 30, 2002, Tank Lines acquired substantially all of the
operating assets of Infinger Transportation Company, Inc.
(Infinger), a regional tank truck carrier based in Charleston,
South Carolina. The purpose of the acquisition was to enable
the Company to expand into new markets and increase capacity in
existing markets.
SunBelt's owned and leased flatbed fleet is based in
Jacksonville and Tampa, Florida; Atlanta and Savannah, Georgia;
and South Pittsburg, Tennessee and hauls primarily building and
construction materials in Southeastern, Midwestern and Mid-
Atlantic states. There are at least ten major competitors in
SunBelt's market area and numerous small competitors in the
various states served.
The Company discontinued the operation of its third-party
agent/owner-operator subsidiary, PTI, on September 30, 2001.
PTI hauled a variety of cargo, throughout the United States,
through independent contractors until it ceased operations. PTI
began operations in December 1999 and was a non-asset based
variable cost transportation company that provided
transportation services to shippers through a network of
independent sales agents and contractors. Independent sales
agents and contractors were compensated based on a percentage
of revenue generated by them. The Company decided to close PTI
due to declining operating margins, high administrative costs
to support this start up business, sharply higher liability
insurance costs and an adverse economic climate. PTI was
dissolved October 4, 2002 and ceased to exist as a legal
entity. Additional information is presented in Note 3 to the
consolidated financial statements included in the accompanying
2003 Annual Report to Shareholders and is incorporated herein
by reference.
The Company was committed at September 30, 2003 to purchase
nine trailers and no tractors and plans to continue its routine
fleet replacement and modernization program during 2004.
The transportation segment primarily serves customers in the
petroleum and building and construction industries. Petroleum
customers accounted for approximately 67% and building and
construction customers accounted for approximately 22% of
transportation segment revenues for the year ended September
30, 2003.
The Company hauls construction aggregates, diesel fuel and
supplies for FRI. Revenues from services provided to FRI
accounted for 1.6% of the transportation segment's revenues.
Price, service, and location are the major factors which affect
competition in the transportation segment within a given
market.
During Fiscal 2003, the transportation segment's ten largest
customers accounted for approximately 38% of the transportation
segment's revenue. The loss of any one of these customers could
have an adverse effect on the Company's revenues and income.
Real Estate. The Company's real estate and property development
activities are conducted through several wholly owned
subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, and Washington, D.C. The real estate owned falls
generally into one of three categories: (i) land and/or
buildings leased under rental agreements or being developed for
rental; (ii) construction aggregates properties with stone or
sand and gravel deposits, substantially all of which is leased
to FRI under mining royalty agreements, as to which the Company
is paid a percentage of the revenues generated by the material
mined and sold, or minimum royalties where there is no current,
or only limited, mining activity; and, (iii) land that is being
held for future appreciation or development.
Additional information about the Company's real estate segment
is contained on page 1 under the captions "Real Estate Group"
and in Notes 2 and 10 to the consolidated financial statements
included in the accompanying 2003 Annual Report to Shareholders
and is incorporated herein by reference.
The Company's real estate strategy of developing high quality,
flexible warehouse/office space continues to be successful as
average occupancy for the fiscal year for buildings in service
for more than 12 months was 92.7%. At September 30, 2003, 88.9%
of the total warehouse/office portfolio of approximately 1.7
million square feet was leased.
Price, location, rental space availability, flexibility of
design, and property management services are the major factors
that affect competition in the flexible warehouse/office rental
market. The Company experiences considerable competition in all
of its markets.
Real estate revenues in Fiscal 2003 were divided approximately
69% from rentals, 30% from mining and minimum royalties and 1%
from property sales. FRI accounted for approximately 39% of
total revenues. Tenants of flexible warehouse/office properties
are not concentrated in any one particular industry.
A subsidiary of the Company signed an Agreement in February
2002 to sell 108 acres of land located in Springfield, Virginia
to FRI for $15,000,000. Closing is subject to a title search
and surveys and is to occur within 45 days of FRI giving notice
to close. If FRI fails to close by December 31, 2004, 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 if the consummation
of the sale would cause a default in the Credit Agreement among
FRI and Wachovia Bank, N.A., 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 announced in May 2003 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 to occur no later than December 31, 2004. 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.
A subsidiary of the Company agreed on December 3, 2003 to sell
a parcel of land containing approximately 6,321 acres in
Suwannee and Columbia Counties, near Lake City, Florida, to FRI
for $13,000,000 in cash. The sale is subject to a definitive
agreement and the closing date is to be determined. The sales
price was approved by the Company's Audit Committee which is
composed of independent directors after considering among other
factors, an independent appraisal, the current use of the
property and consultation with management.
Environmental Matters. 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.
Employees. The Company employed approximately 845 people in its
transportation group, 11 people in its real estate group, and 4
people in its corporate offices at September 30, 2003.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office Position Since
Edward L. Baker 68 Chairman of the Board May 3, 1989
John E. Anderson 58 President & Chief Feb. 17, 1989
Executive Officer
David H.
DeVilliers, Jr. 52 Vice President of the Feb. 28, 1994
Company and President
of the Company's Real
Estate Group
Ray M. VanLandingham 60 Vice President, Finance Dec. 6, 2000
and Administration
and Chief Financial
Officer
Gregory B. Lechwar 36 Controller and Chief
Accounting Officer Oct. 2, 2002
Rick J. Copley 46 President of SunBelt Sept 16, 2002
Transport, Inc.
Robert E. Sandlin 42 President of Florida March 1, 2003
Rock & Tank Lines, Inc.
All of the above officers have been employed in their
respective positions for the past five years except as follows:
Ray Van Landingham was Vice President, Finance and
Administration of the Jacksonville Port Authority from December
1991 to November 2000; Gregory B. Lechwar has been employed by
the Company in various accounting positions since October 1999,
and from August 1991 until October 1999, Mr. Lechwar was
employed as a Certified Public Accountant with
PricewaterhouseCoopers LLP; Rick J. Copley was a Vice President
of SunBelt from 1993 to September 2002; and Robert E. Sandlin
was a Vice President of Florida Rock & Tank Lines from 1993
until March 2003.
John D. Baker II, who is the brother of Edward L. Baker, and
Thompson S. Baker II, who is the son of Edward L. Baker, are on
the Board of Directors of the Company.
All executive officers of the Company are elected by the Board
of Directors.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida,
Georgia, Virginia, Washington, D.C., and Maryland.
Transportation Properties. At September 30, 2003, the Company
operated and owned a fleet of approximately 563 trucks, and
owned a fleet of approximately 837 trailers. The Company has 21
sites for its trucking terminals in Florida, Georgia, North
Carolina, South Carolina and Tennessee. The Company owns 12 of
these sites and leases 9.
Development Properties. At September 30, 2003, the Company
owned nine parcels of land totaling 432 acres near Baltimore,
Maryland as follows:
Hillside Business Park in Anne Arundel County is a 59 acre
tract near the Baltimore-Washington International Airport. The
project will provide the Company an opportunity to develop
approximately 575,000 square feet of warehouse/office space.
Infrastructure work on the site is nearing completion and the
first two planned buildings within the park are completed and
contain 274,800 square feet of leaseable warehouse/office
space. One building with 200,200 square feet is leased to one
tenant for 15 years. The other building is available lease.
Lakeside Business Park in Harford County consists of 134 acres.
Seven warehouse/office buildings, totaling 671,918 square feet,
have been constructed and are 87% leased. The remaining 32.8
acres are available for future development and will offer an
additional 485,200 square feet of comparable product.
6920 Tudsbury Road in Baltimore County contains 5.3 acres with
83,100 square feet of warehouse/office space that is 100%
leased.
8620 Dorsey Run Road in Howard County contains 5.8 acres with
84,600 square feet of warehouse/office space that is 100%
leased.
Rossville Business Center in Baltimore County contains
approximately 10 acres with 190,517 square feet of
warehouse/office space and is 88% leased.
34 Loveton Circle in suburban Baltimore County contains 8.5
acres with 29,722 square feet of office space which is 100%
leased. The Company occupies 11% of the space and 23% is leased
to FRI.
Oregon Business Center in Anne Arundel County contains
approximately 17 acres with 195,615 square feet of
warehouse/office space which is 100% leased.
Arundel Business Center in Howard County contains approximately
11 acres with 162,796 square feet of warehouse/office space,
which is 100% leased.
Bird River in southeastern Baltimore County, Maryland, is a 179
acre tract of land held for future development. This development
tract has direct access to the proposed Maryland State Road 43
intended to connect I-95 with Martin State Airport. This
property is currently zoned for residential and commercial use
with 115.6 developable acres. The Company plans to develop and
lease approximately 502,000 square feet of multiple
warehouse/office buildings on the 42 developable acres zoned for
commercial use.
A subsidiary of the Company has entered into an agreement to
develop and sell to a major home builder a minimum of 292
residential lots on the residential portion of the Bird River
Property. The minimum aggregate purchase price for these lots is
$28,705,000.
The rights and obligations of the subsidiary under this
agreement are specifically contingent upon the approval by
Baltimore County of a Planned Unit Development (PUD) by July 1,
2006 which will permit the development of and use of the
property for a minimum of 292 residential lots. The
subsidiary's rights and obligations are also expressly
contingent upon the construction of the proposed Route 43 and
the subsidiary's ability to have vehicular, water and sewer
connection access to the property by July 1, 2007 at what the
subsidiary deems, in its sole discretion, to be a commercially
reasonable cost. The obligations of the builder under the
agreement also are subject to customary conditions precedent.
The Company owns approximately 120 acres of land in Virginia, 8
acres in Washington, D.C. and an office building with
approximately 69,000 square feet situated on approximately 6
acres in Jacksonville, Florida, all of which are leased to FRI.
At September 30, 2003 certain developed real estate properties
having a carrying value of $44,432,000 were pledged on long-
term non-recourse notes with an outstanding principal balance
totaling $39,361,000. In addition, certain other properties
having a carrying value at September 30, 2003 of $876,000 were
encumbered by industrial revenue bonds that are the liability
of FRI. FRI has agreed to pay such debt when due (or sooner if
FRI cancels its lease of such property), and further has agreed
to indemnify and hold harmless the Company on account of such
debt.
The Company owns a 5.8 acre parcel of undeveloped real estate
in the southeast quadrant of Washington D.C. that fronts the
Anacostia River and has been working with the District of
Columbia Zoning Commission to obtain appropriate zoning for
development. The Zoning Commission granted in 2003 preliminary
approval of the size and use of a 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.
The Company also owns a 2.1 acre tract nearby on the same bank
of the Anacostia River. The two sites are currently leased to
FRI under leases expiring in April 2006. The Company will
continue to explore opportunities for eventual development of
these properties.
Construction Aggregates Properties. The following table
summarizes the Company's principal construction aggregates
locations and estimated reserves at September 30, 2003,
substantially all of which are leased to FRI.
Tons of
Tons Sold Estimated
in Year Reserves
Ended at
9/30/03 9/30/03 Approximate
(000's) (000's) Acres Owned
The Company owns eleven
locations currently being
mined in Brooksville,
Grandin, Gulf Hammock,
Keuka, Newberry and Airgrove/
Lake County, Florida;
Columbus, Macon, Forest Park
and Tyrone, Georgia;
and Manassas, Virginia. 9,805 508,590 17,135
The Company owns five locations
not currently being mined in
Ft. Myers, Miami, Marion County,
Astatula/Lake County and
Sandland/Polk County, Florida - 32,891 3,340
Other Properties. In addition to the development, mining and
rental sites, the Company owns approximately 8,373 acres of
investment and other real estate, of which approximately 6,321
acres are in Suwannee County and Columbia County, Florida and
are leased to FRI.
The Company continues permitting and preliminary horizontal
development work for a 50-acre, rail accessable site on
Commonwealth Avenue in Jacksonville, Florida near the western
beltway of Interstate-295. This site is planned for
approximately 500,000 square feet of eventual warehouse/office
build-out.
Item 3. LEGAL PROCEEDINGS.
Note 14 to the Consolidated Financial Statements included in
the accompanying 2003 Annual Report to Shareholders is
incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No reportable events.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.
There were approximately 718 holders of record of Patriot
Transportation Holding, Inc. common stock, $.10 par value, as
of December 8, 2003. The Company's common stock is traded on
the Nasdaq Stock Market (Symbol PATR). Information concerning
stock prices is included under the caption "Quarterly Results"
on page 5 of the Company's 2003 Annual Report to Shareholders,
and such information is incorporated herein by reference. The
Company has not paid a cash dividend in the past and it is the
present policy of the Board of Directors not to pay cash
dividends. Information concerning restrictions on the payment
of cash dividends is included in Note 4 to the consolidated
financial statements included in the accompanying 2003 Annual
Report to Shareholders and such information is incorporated
herein by reference. Information regarding securities
authorized for issuance under equity compensation plans is
included in Item 12 of Part III of this Annual Report on Form
10-K and such information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
Information required in response to this Item 6 is included
under the caption "Five Year Summary" on page 5 of the
Company's 2003 Annual Report to Shareholders and such
information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Information required in response to Item 7 is included under
the caption "Management Analysis" on pages 6, 7 and 8; under
the caption "Capital Expenditures" on page 1; and in Notes to
Consolidated Financial Statements included in the accompanying
2003 Annual Report to Shareholders. Such information is
incorporated herein by reference.
Item 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Company is exposed to market risk from changes in interest
rates. For its cash and cash equivalents, a change in interest
rates affects the amount of interest income that can be earned.
For its debt instruments with variable interest rates, changes
in interest rates affect the amount of interest expense
incurred. The Company prepared a sensitivity analysis of its
variable rate borrowings to determine the impact of
hypothetical changes in interest rates on the Company's results
of operations and cash flows. The interest-rate analysis
assumed a 50 basis point adverse change in interest rates on
all borrowings under the credit agreement. However, the
interest-rate analysis did not consider the effects of the
reduced level of economic activity that could exist in such an
environment. Based on this analysis, management has concluded
that a 50 basis point adverse move in interest rates on the
Company's outstanding borrowings under the credit agreement
would have an immaterial impact on the Company's results of
operations and cash flows.
The following table provides information about the Company's
financial instruments that are sensitive to changes in interest
rates (dollars in thousands):
There Fair
Liabilities: 2004 2005 2006 2007 2008 after Total Value
Long-term debt:
Fixed Rate $ 1,545 1,607 1,732 1,848 1,996 30,636 39,360 41,795
Average
interest rate 7.2% 7.2 7.2 7.2 7.2 7.2
Variable Rate $20,000 20,000 20,000
Average
interest rate 3.2%
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included
under the caption "Quarterly Results" on page 5 and on pages 9
through 18 of the Company's 2003 Annual Report to Shareholders.
Such information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
On May 1, 2002, the Board of Directors of the Company, upon
recommendation of its Audit Committee, decided to dismiss
Deloitte & Touche LLP ("Deloitte & Touche") as the Company's
principal public accountants and engaged PricewaterhouseCoopers
LLP ("PricewaterhouseCoopers") to serve as the Company's
principal public accountants for a three year term beginning
with fiscal year 2002.
Deloitte & Touche's reports on the consolidated financial
statements of the Company and its subsidiaries for the two most
recent fiscal years ended September 30, 2001 did not contain
any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or
accounting principles.
During the Company's two fiscal years ended September 30, 2001
and the subsequent interim periods through March 31, 2002,
there were no disagreements between the Company and Deloitte &
Touche on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to Deloitte & Touche's
satisfaction, would have caused them to make reference to the
subject matter of the disagreement in connection with their
reports; and there were no reportable events as described in
Item 304(a)(1)(v) of Regulation S-K.
The Company provided Deloitte & Touche with a copy of the
foregoing disclosures.
During the Company's two fiscal years ended September 30, 2001,
the Company did not consult PricewaterhouseCoopers with respect
to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated
financial statements, or any other matters or reportable events
as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the executive officers of the Company is
set forth under the caption "Executive Officers of the Company"
in Part I of this Form 10-K.
Information concerning directors (including the disclosure
regarding audit committee financial experts), required in
response to this Item 10, is included under the captions
"Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement and such
information is incorporated herein by reference. The Proxy
Statement will be filed with the Securities and Exchange
Commission not later than December 31, 2003.
The Company has adopted a Financial Code of Ethical Conduct
applicable to its principal executive officers, principal
financial officers and principal accounting officers. A copy of
this Financial Code of Ethical Conduct is filed as an Exhibit
to this Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item 11 is included
under the captions "Executive Compensation," "Compensation
Committee Report," "Compensation Committee Interlocks and
Insider Participation," and "Shareholder Return Performance" in
the Company's Proxy Statement and such information is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information required in response to this Item 12 is included
under the captions "Common Stock Ownership of Certain
Beneficial Owners" and "Common Stock Ownership by Directors and
Officers" in the Company's Proxy Statement and such information
is incorporated herein by reference.
Equity Compensation Plan Information
Number of
Securities
remaining
available
for
Number of future
Securities Weighted issuance
to be Average under equity
issued upon exercise compensation
exercise of price of plans
outstanding outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
Plan Category (a) (b) (c)
Equity compensation
plans approved by
security holders 299,500 21.85 258,000
Equity compensation
plans not approved
by security holders 0 0 0
Total 299,500 21.85 258,000
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required in response to this Item 13 is included
under the captions "Compensation Committee Interlocks and
Insider Participation" and "Certain Relationships and Related
Transactions" in the Company's Proxy Statement and such
information is incorporated herein by reference.
Item 14. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. As required
by Rule 13a-15 under the Exchange Act, the Company carried out
an evaluation of the effectiveness of the design and operation
of the Company's disclosure controls and procedures as of
September 30, 2003. 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. Based upon that evaluation, the Company's President
and Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer have concluded 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 rules 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 IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) (1) and (2) Financial Statements and Financial Statement
Schedules.
The response to this item is submitted as a separate
section. See Index to Financial Statements and Financial
Statement Schedules on page 21 of this Form 10-K.
(3) Exhibits.
The response to this item is submitted as a separate
section. See Exhibit Index on pages 18 through 20 of this
Form 10-K.
(b) Reports on Form 8-K.
On July 29, 2003, the Company filed a Form 8-K reporting
under Item 7, a press release announcing its earnings for
the third quarter of 2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Patriot Transportation Holding, Inc.
Date: December 23, 2003 By JOHN E. ANDERSON
John E. Anderson
President and Chief Executive
Officer (Principal Executive Officer)
By RAY M. VAN LANDINGHAM
Ray M. Van Landingham
Vice President, Finance &
Administration and Chief Financial
Officer (Principal Financial Officer)
By GREGORY B. LECHWAR
Gregory B. Lechwar
Controller and Chief Accounting
Officer(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on December 23, 2003.
JOHN E. ANDERSON DAVID H. DEVILLIERS, JR.
John E. Anderson David H. deVilliers, Jr.
Director, President, and Chief Director
Executive Officer
(Principal Executive Officer) LUKE E. FICHTHORN III
Luke E. Fichthorn III
Director
RAY M. VAN LANDINGHAM ___________ FRANCIS X. KNOTT
Ray M. Van Landingham Francis X. Knott
Vice President, Finance and Director
Administration
(Principal Financial Officer) ROBERT H. PAUL, III
Robert H. Paul, III
Director
GREGORY B. LECHWAR
Gregory B. Lechwar H. JAY SKELTON
Controller and Chief Accounting H. Jay Skelton
Officer (Principal Accounting Officer) Director
EDWARD L. BAKER MARTIN E. STEIN, JR.
Edward L. Baker Martin E. Stein, Jr.
Chairman of the Board Director
JOHN D. BAKER II JAMES H. WINSTON
John D. Baker II James H. Winston
Director Director
THOMPSON S. BAKER II
Thompson S. Baker II
Director
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003
EXHIBIT INDEX
[Item 14(a)(3)]
(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) Amendments to the Articles of Incorporation of Patriot
Transportation Holding, Inc. filed with the Secretary of
State 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.
(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, none of which 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. 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)(2) 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.,
incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended June 30, 2003. File
No. 33-26115.
(10)(j) Purchase and Sale Agreement dated August 25, 2003
between Florida Rock Properties, Inc. and Florida Rock
Industries, Inc.
(10)(k) Agreement of Purchase and Sale dated October 21, 2003
between FRP Bird River, LLC and The Ryland Group, Inc.
(11) Computation of Earnings Per Common Share.
(13) The Company's 2003 Annual Report to shareholders, portions
of which are incorporated by reference in this Form 10-K.
Those portions of the 2003 Annual Report to Shareholders
which are not incorporated by reference shall not be deemed
to be filed as part of this Form 10-K.
(14) Financial Code of Ethical Conduct between the Company, Chief
Executive Officers and Financial Managers, adopted December
4, 2002.
(22) Subsidiaries of Registrant at September 30, 2003: Florida
Rock & Tank Lines, Inc. (a Florida corporation); Florida
Rock Properties, Inc. (a Florida corporation); FRP
Development Corp. (a Maryland corporation); FRP Maryland,
Inc. (a Maryland corporation); 34 Loveton Center LLC (a
Maryland limited liability company); FRTL, Inc. (a Florida
corporation); SunBelt Transport, Inc. (a Florida
Corporation); Oz LLC(a Maryland limited liability company);
FRP Delaware, Inc. (a Delaware corporation); 1502 Quarry,
LLC(a Maryland limited liability company); FRP Lakeside LLC
#1 (a Maryland limited company); FRP Lakeside LLC #2 (a
Maryland limited liability company); FRP Lakeside LLC #3 (a
Maryland limited liability company); FRP Lakeside LLC #4 (a
Maryland limited liability company); FRP Lakeside LLC #5 (a
Maryland limited liability company); FRP Hillside LLC (a
Maryland limited liability company); FRP Windsor LLC (a
Maryland limited liability company); FRP Dorsey LLC (a
Maryland limited liability company); FRP Bird River LLC (a
Maryland limited liability company).
(23)(a) Consent of PricewaterhouseCoopers LLP, Independent Certified
Public Accountants, appears on page 22 of this Form 10-K.
(23)(b) Consent of Deloitte & Touche LLP, Independent Certified
Public Accountants, appears on page 22 of this Form 10-K.
(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.
PATRIOT TRANSPORTATION HOLDING, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheets at September 30, 2003
and 2002 10(a)
For the years ended September 30, 2003, 2002 and 2001:
Consolidated statements of income 9(a)
Consolidated statements of cash flows 11(a)
Consolidated statements of shareholders' equity 12(a)
Notes to consolidated financial statements 12-18(a)
Reports of Independent Certified Public Accountants 19(a)
Selected quarterly financial data (unaudited) 5(a)
Consents of Independent Certified Public Accountants 22(b)
Independent Auditors' Reports on Financial Statement Schedules 23(b)
Consolidated Financial Statement Schedules:
II - Valuation and qualifying accounts 24(b)
III - Real estate and accumulated depreciation and
Depletion 25-26(b)
(a) Refers to the page number in the Company's 2003 Annual
Report to Shareholders. Such information is incorporated
by reference in Item 8 of this Form 10-K.
(b) Refers to the page number in this Form 10-K.
All other schedules have been omitted, as they are not required
under the related instructions, are inapplicable, or because the
information required is included in the consolidated financial
statements.
CONSENTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Exhibit 23(a)
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-43215, 33-18878 and 33-
55132) of Patriot Transportation Holding, Inc. of our report dated
December 16, 2003 relating to the financial statements and the
financial statement schedules, which appear in this Form 10-K.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 23, 2003
____________________
INDEPENDENT AUDITORS' CONSENT Exhibit 23(b)
We consent to the incorporation by reference in Registration
Statement Nos. 33-43215, 33-18878 and 33-55132 of Patriot
Transportation Holding, Inc. on Form S-8 of our report dated
December 10, 2001, appearing in this Annual Report on Form 10-K of
Patriot Transportation Holding, Inc. for the year ended September
30, 2003.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 23, 2003
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
STATEMENT SCHEDULES
To the Board of Directors
Patriot Transportation Holding, Inc.:
Our audit of the consolidated financial statements as of and for the
year ended September 30, 2003 referred to in our report dated
December 16, 2003 appearing in the 2003 Annual Report to
Shareholders of Patriot Transportation Holding, Inc., (which report
and consolidated financial statements are incorporated by reference
in this Annual Report on Form 10-K) also included an audit of the
financial statement schedules listed in Item 15 of this Form 10-K.
In our opinion, these financial statement schedules present fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 16, 2003
____________________
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Patriot Transportation Holding, Inc.
Jacksonville, Florida
We have audited the consolidated financial statements of Patriot
Transportation Holding, Inc. and subsidiaries ("Patriot") as of and
for the year ended September 30, 2001, and have issued our report
thereon dated December 10, 2001; such consolidated financial
statements and report are included in your 2003 Annual Report to
Stockholders and are incorporated herein by reference. Our audit
also included the financial statement schedules of Patriot, listed
in Item 15. These financial statement schedules are the
responsibility of Patriot's management. Our responsibility is to
express an opinion based on our audit. In our opinion, such
financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Jacksonville, Florida
December 10, 2001
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION
AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
ADDITIONS ADDITIONS
BALANCE CHARGED TO CHARGED TO BALANCE
AT BEGIN. COST AND OTHER AT END
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
Year Ended
September 30, 2003:
Allowance for
Doubtful accounts $ 474,000 $ 157,537 $ - $ 65,793(a) $ 565,744
Accrued risk
insurance $6,326,406 $ 7,989,574 - $ 7,536,635(b)$ 6,779,345
Accrued health
Insurance 1,111,808 2,755,090 - 2,610,053(b) 1,256,845
Totals -
insurance $7,438,214 $10,744,664 $ 0 $10,146,688 $8,036,190
Year Ended
September 30, 2002:
Allowance for
doubtful accounts $1,160,051 $ 140,000 - $ 826,051(a) $ 474,000
Accrued risk
insurance $6,032,351 $5,162,666 - $4,868,611(b) $6,326,406
Accrued health
insurance 1,078,152 2,834,763 - 2,801,107(b) 1,111,808
Totals -
insurance $7,110,503 $7,997,429 $ 0 $7,669,718 $7,438,214
Year Ended
September 30, 2001:
Allowance for
doubtful accounts $ 868,541 $1,177,379 - $ 885,869(a)$1,160,051
Accrued risk
insurance $5,397,442 $6,221,228 - $5,586,319(b)$6,032,351
Accrued health
insurance 989,608 2,517,708 - 2,429,164(b) 1,078,152
Totals -
insurance $6,387,050 $8,738,936 $ 0 $8,015,483 $7,110,503
(a) Accounts written off less recoveries
(b) Payments
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED)-REAL ESTATE & ACCUMULATED DEPRECIATION AND
DEPLETION
SEPTEMBER 30, 2003
(dollars in thousands)
Cost capi- Gross amount Year Deprecia-
Encumb- Initial cost talized at which Accumulated Of Date tion Life
County rances to subsequent carried at Depreciation Constr- Acquired Computed
Company to acqui- end of period tion on:
sition (a)
Construction Aggregates
Alachua, FL 1,442 0 1,442 83 n/a 4/86 unit
Clayton, GA 369 0 369 5 n/a 4/86 unit
Dade, FL 9,372 0 9,372 9,372 n/a 4/86 unit
Fayette, GA 55 685 0 685 51 n/a 4/86 unit
Hernando, FL 3,174 325 3,499 958 n/a 4/86 unit
Lake, FL 1,485 0 1,485 1,058 n/a 4/86 unit
Lee, FL 4,690 6 4,696 4 n/a 4/86 unit
Levy, FL 1,281 104 1,385 471 n/a 4/86 unit
Marion, FL 1,180 0 1,180 599 n/a 4/86 unit
Monroe, GA 792 0 792 241 n/a 4/86 unit
Muscogee, GA 369 0 369 88 n/a 4/86 unit
Polk, FL 121 0 121 75 n/a 4/86 unit
Prince Wil. VA 298 0 298 294 n/a 4/86 unit
Putnam , FL 15,002 49 15,051 3,034 n/a 4/86 unit
55 40,260 484 40,744 16,333
Other Rental Property
Wash D.C. 6,768 6,310 13,078 1,160 n/a 4/86 15 yr.
Fairfax, VA 2,035 23 2,058 0 n/a 4/86
Putnam, FL 326 50 376 329 n/a 4/86 10 yr.
Spalding, GA 20 0 20 0 n/a 4/86
Suwannee, FL 60 4,529 322 4,851 939 n/a 4/86 10 yr.
60 13,678 6,705 20,383 2,428
Commercial Property
Baltimore, MD 1,368 439 3,000 3,439 1,447 1990 10/89 31 yr.
Baltimore, MD 3,893 950 5,774 6,724 2,074 1994 12/91 31 yr.
Baltimore, MD 2,531 690 2,837 3,527 356 2000 7/99 31 yr.
Baltimore, MD 5,634 73 5,707 0 n/a 12/02 31 yr.
Duval, FL 2,416 529 2,945 2,322 n/a 4/86 25 yr.
Harford, MD 2,730 31 3,826 3,857 687 1998 8/95 31 yr.
Harford, MD 4,531 50 5,562 5,612 699 1999 8/95 31 yr.
Harford, MD 6,215 85 6,580 6,665 725 2001 8/95 31 yr.
Harford, MD 92 1,439 1,531 0 n/a 8/95 31 yr.
Harford, MD 4,569 88 5,801 5,889 381 2002 8/95 31 yr.
Harford, MD 3,538 155 4,966 5,121 454 2001 8/95 31 yr.
Howard, MD 4,117 2,859 3,545 6,404 1,873 1996 9/88 31 yr.
Howard, MD 2,287 2,473 332 2,805 316 2000 3/00 31 yr.
Anne Arun, MD 3,466 715 6,662 7,377 3,242 1989 9/88 31 yr.
Anne Arun, MD ______ 950 14,940 15,890 127 n/a 5/98 31 yr.
39,245 17,627 65,866 83,493 14,703
Investment Property 1,071 112 1,183 33
GRAND
TOTALS $39,360 $72,636 $73,167 $145,803 $33,497
(a) The aggregate cost for Federal income tax purposes is $141,587.
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND
ACCUMULATED DEPRECIATION AND DEPLETION
YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
(In thousands)
2003 2002 2001
Gross Carrying Cost of Real Estate:
Balance at beginning of period $133,925 127,174 115,229
Additions during period:
Amounts capitalized 13,319 7,053 13,037
Deductions during period:
Cost of real estate sold 1,441 302 -
Other (abandonments) - - 1,092
Balance at close of period $145,803 133,925 127,174
Accumulated Depreciation & Depletion:
Balance at beginning of period $ 31,395 28,934 25,968
Additions during period:
Charged to cost & expense 2,784 2,532 2,966
Deductions during period:
Real estate sold 682 71 -
Balance at close of period $33,497 31,395 28,934
Annual Report 2003
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
2003 2002 Change
Revenues $103,303 96,949 + 6.6
Gross profit $ 18,067 20,542 -12.0
Operating profit $ 9,915 12,413 -20.1
Income from continuing operations
before income taxes $ 6,423 9,270 -30.7
Gain on discontinued operations $ 657 - -
Net income $ 4,575 5,655 -19.1
Per common share:
Basic earnings $ 1.51 1.80 -16.1
Diluted earnings $ 1.49 1.79 -16.8
Total Assets $165,216 155,463 +6.3
Total Debt $ 59,361 48,601 +22.1
Shareholders' Equity $ 78,029 79,160 -1.4
Net book value per share $ 26.61 25.06 +6.2
BUSINESS. The Company is engaged in the transportation and real
estate businesses. The Company's transportation business is
conducted through two wholly owned subsidiaries. Florida Rock & Tank
Lines, Inc. (Tanklines) is a Southeastern U.S. based transportation
company concentrating in the hauling of primarily petroleum products
but also other liquid and dry bulk commodities by tank trucks.
SunBelt Transport, Inc. (SunBelt) serves the flatbed portion of the
trucking industry in the Southeast, Midwest and Mid-Atlantic states,
hauling primarily construction materials. The Company's real estate
group, through subsidiaries, acquires, constructs, leases, operates
and manages land and buildings to generate both current cash flows
and long-term capital appreciation. The real estate group also owns
real estate which is leased under mining royalty agreements or held
for investment.
OBJECTIVES. The Company's dual objectives are to build a major
transportation company and a real estate company which provides
sound long-term growth, cash generation and asset appreciation.
TRANSPORTATION
Internal growth is accomplished by a dedicated and competent
work force, emphasizing superior service to customers in
existing markets, developing new transportation services for
customers in current market areas and expanding into new market
areas.
External growth is designed to broaden the Company's geographic
market area and delivery services by acquiring related
businesses.
REAL ESTATE
The growth plan is based on the acquisition, development,
management and retention of commercial warehouse/office rental
properties to provide long-term positive cash flows and capital
appreciation.
TO OUR SHAREHOLDERS
Your company's Fiscal 2003 was characterized by both challenge and
progress. The Transportation Group completed the year with a decline
in operating profit compared to Fiscal 2002. On the other hand,
positive momentum continued within the Real Estate Group as both
development and asset management progress was made.
Fiscal 2003 operating profit was $9,915,000, a 20.1% decline from
the previous year. Consolidated net income after tax decreased 19.1%
to $4,575,000 compared to $5,655,000 for Fiscal 2002. After tax
profits from property sales were $686,000 in Fiscal 2003 compared to
$194,000 in Fiscal 2002.
Earnings per share on a diluted basis were $1.49 for Fiscal 2003
versus $1.79 per share in Fiscal 2002. The diluted number of shares
outstanding was 3.1% less for Fiscal 2003 compared to the previous
year.
Transportation Group. Both transportation subsidiaries had lower
operating profits for Fiscal 2003 compared to the previous year.
Revenue miles increased at Tanklines and SunBelt. On the other hand,
the effects of the war in Iraq and a still struggling national economy
hampered efforts to raise freight rates. Fuel price surcharges
aggressively implemented at both Companies helped to offset record
levels of diesel fuel costs in the early spring as a result of the war
in Iraq. So even though total revenue miles increased and variable
costs were generally held in line, the combined effect compared to the
previous year was to retard growth in variable contribution (the
amount remaining for fixed costs and profits after variable costs are
deducted from revenues). Restrained increases in variable contribution
left each Company's profitability exposed to higher fixed costs.
Each Company suffered significant increases in its costs for risk and
workers compensation insurance. These increases were driven by
increasing premium rates as a result of a continuing, difficult global
reinsurance market, as well as adverse claims development from prior
year occurrences. The combination of only moderately increased
variable contribution in the face of sharply increased fixed costs
contributed to lower operating profits within each Company compared to
the previous year.
Capital spending within the Transportation Group was approximately
$7,086,000 in 2003 compared to $11,430,000 during 2002. Accelerated
tractor purchasing had occurred during 2002 to anticipate adverse
operating efficiencies resulting from a 2002 EPA mandated diesel
engine emission standard. Widespread accelerated tractor purchases had
been occurring throughout the trucking industry because of concern
about operating disadvantages stemming from this 2002 Federal
emissions mandate.
Demand for hauling services continued uneven for Tanklines. Overall
demand for petroleum products remained negatively impacted from the
decline in travel patterns and petroleum consumption going back to the
September 11, 2001 national terrorist event. Airline jet fuel
consumption remained depressed along with altered patterns of business
and leisure travel. A weak and uncertain national economy contributed
to decreased petroleum consumption and lower demand.
In fact, virtually all of the revenue increase at Tanklines during
Fiscal 2003 resulted from its purchase on May 30, 2002 of the
operating assets of Infinger Transportation Company, Inc. and fuel
surcharges. Infinger was based in Charleston, South Carolina and the
acquisition included 111 trailers and 57 tractors operating from
terminals in Charleston and North Augusta, South Carolina; Charlotte
and Wilmington, North Carolina; Savannah, Georgia; and Jacksonville
and Tampa, Florida.
Tanklines had to overcome an additional hurdle beginning in the second
quarter of Fiscal 2003. The subsidiary lost one of its largest
customers as a result of competitive bidding from consolidation within
the multi-national, integrated oil industry. Although Tanklines
successfully replaced this lost revenue at acceptable price levels by
mid-year, the accompanying operating disruptions caused equipment
inefficiencies as hauling capacity had to be reallocated and balanced
for new customer accounts.
Ongoing structural changes within national retail petroleum
distribution also challenged the Company's tank truck operations. Non-
traditional retail gasoline outlets, "hyper-markets", are growing
rapidly and bringing new pricing pressures to retail distribution.
This dynamic is contributing to a soft transportation pricing
environment from customers seeking to adapt to this competitive
reality.
Notwithstanding changes and uncertainties within its operating
environment, Tanklines intends to successfully navigate these
challenges, building from its reputation for excellent customer
service and sound financial condition.
SunBelt, the Company's flatbed trucking subsidiary, benefited from
top-flight customer service and homebuilding construction demand,
notwithstanding the soft national economy. Though SunBelt could
anticipate positive demand for its hauling services, it was plagued
throughout the year by driver shortages, inadequate equipment
utilization and substantial workmen's compensation expense increases
from prior year claims development.
SunBelt is now aggressively overcoming its driver shortage
difficulties, with consequent benefits to revenue and equipment
utilization. A new accident prevention culture is being firmly
implanted throughout SunBelt.
Finally, an apparent recovery underway in commercial construction is
strengthening demand for SunBelt's hauling services in the face of
decreased flatbed trucking capacity. This is bringing opportunities to
raise freight rates and resulting variable contribution. The combined
effects should lead to improved operating results.
Real Estate Group. Fiscal 2003 marked another year of progress and
encouragement for the Company's real estate business.
Significant development activity occurred at the Group's 59 acre
Hillside Business Park in Anne Arundel County, Maryland. This new Park
is within two miles of the Baltimore-Washington International Airport.
The Group's largest flexible warehouse/office to date, 7021 Dorsey
Road, a 200,200 square foot build-to-suit warehouse/office, was
completed and occupied in August. A speculative flexible
warehouse/office, 7010 Dorsey Road, was also completed and placed in
service at the beginning of the second fiscal quarter. This is a
74,600 square foot facility which is available for occupancy.
The Group's developed building portfolio totaled approximately 1.7
million square feet at fiscal year end of which 88.9% was occupied.
Average occupancy for the fiscal year, excluding those buildings in
service less than 12 months, was 92.7%.
The Group purchased at mid-year 115 developable acres located on Bird
River Road north of the Martin State Airport in Greater Baltimore.
This new development tract will have direct access to the new Maryland
State Road 43 intended to connect Interstate 95 with Martin State
Airport. Construction for Route 43 is underway. The Bird River Road
tract is zoned commercial and residential. The commercial portion is
slated for approximately 502,000 square feet of warehouse/office
development while the residential portion will be simultaneously
developed into lots and sold.
Continued permitting and initial horizontal development occurred at
the Commonwealth Avenue fifty acre site located on Interstate 295 on
the west side of Jacksonville, Florida. Final build out for this tract
is still targeted for approximately 500,000 square feet of
warehouse/office product.
Following the Bird River Road purchase, the Real Estate Group's total
anticipated developed portfolio will result in approximately 3.3
million square feet of warehouse/office capacity.
As a continuation of the Group's strategic plan to build, lease and
own a portfolio of flexible warehouse/office, agreements were executed
during Fiscal 2003 for the sale to Florida Rock Industries, Inc.
("FRI") of two tracts of land for a total of approximately $3.5
million.
One tract is located near Miami, Florida and was a former mining site
under long-term lease to FRI. The second tract located on the Potomac
River in Maryland was sold to FRI in September. The proceeds from
sales of these two tracts, together with the previously announced
$15.0 million sale of the Group's 108 acre tract in Springfield,
Virginia to FRI, are expected to be reinvested in appropriate
properties to further the Real Estate Group's strategic expansion
plan. The Maryland land sale was closed late in the fourth quarter of
Fiscal 2003, producing an approximate after tax profit of $657,000.
The sale of the Springfield, Virginia tract, when closed, will produce
a net after tax gain of about $7,722,000, and the net after tax gain
from the Miami property sale, when closed, should produce
approximately $999,000. Combined after-tax profits anticipated from
the Virginia and Miami sales will yield approximately $2.86 per
diluted share.
The Group continued intensive asset management on its 5.8 acre tract
which fronts on the Anacostia River in the District of Columbia. This
tract had been rezoned in Fiscal 2000 from industrial to a planned
unit development ("PUD"). During Fiscal 2003 the Zoning Commission
granted preliminary approval of a change in the size and use of the
PUD and gave the Company until May, 2004 to submit modified drawings
that would conform to 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 2 years to begin development on the site in
accordance with the approved, modified PUD. In the meantime, the Real
Estate Group continues to evaluate opportunities for this property and
a nearby 2.1 acre tract on the same bank of the Anacostia River.
Capital expenditures for the Real Estate Group totaled approximately
$13,328,000 in Fiscal 2003 compared to about $7,179,000 the previous
year.
Outlook. Positive Real Estate development momentum should continue in
the markets we serve, enhanced by what appears to be a recovering
national economy at fiscal year end. An attractive low interest rate
environment should further reinforce a positive outlook for real
estate.
The Company's transportation business, assuming a recovering national
economy, anticipates improved results. An intense focus on accident
prevention will continue to be the number one priority at each
company. Both Florida Rock & Tank Lines, Inc. and SunBelt Transport,
Inc. will focus on increased equipment utilization and operating
efficiencies. Freight rate increases will be pursued, and strategic
expansion opportunities will be evaluated along the way.
We will also be monitoring two additional transportation issues as we
enter Fiscal 2004. Effective January, 2004 new U.S. Department of
Transportation hours-of-service regulations become applicable for our
drivers. Additionally, U.S. Transportation Security Administration
regulations governing issuance/renewal of Hazmat Commercial Drivers
Licenses go into effect. These new security restrictions affecting
our tanker drivers become effective beginning as early as April, 2004
according to individual state timetables. The two new federal
mandates may impact driver productivity, recruitment and retention,
with corresponding implications for operating efficiencies and costs.
You can be quite proud of the quality, commitment and loyalty of the
men and women at all levels who represent the backbone of your
company. We take this opportunity to express our sincerest
appreciation to them as well as for the loyalty and support of our
shareholders.
Respectfully yours,
Edward L. Baker
Chairman
John E. Anderson
President & Chief Executive Officer
OPERATING REVIEW
Transportation. During Fiscal 2003, the Company's transportation
group operated through two wholly owned subsidiaries. Florida Rock &
Tank Lines, Inc. is engaged in hauling petroleum and other liquid
and dry bulk commodities in tank trucks. SunBelt Transport, Inc. is
engaged primarily in hauling building and construction materials on
flatbed trailers. In September 2001, the Company closed the
operations of Patriot Transportation, Inc. (PTI) which was engaged
in hauling a variety of cargo through third-party independent
freight agents and owner/operators.
The tank trucks operate from terminals in Jacksonville, Orlando,
Panama City, Pensacola, Port Everglades, Tampa and White Springs,
Florida; Albany, Atlanta, Augusta, Bainbridge, Columbus, Dalton,
Macon and Savannah, Georgia; Knoxville, Tennessee; Charlotte and
Wilmington, North Carolina; and Charleston, South Carolina.
SunBelt's flatbed fleet is based in Jacksonville and Tampa, Florida;
Atlanta and Savannah, Georgia; and South Pittsburg, Tennessee and
operates primarily in the Southeastern, Midwestern and Mid-Atlantic
states.
Transportation revenues were up 7.4% in 2003 as a result of
expansion of tank truck hauling through the purchase of the assets
of Infinger Transportation, Inc. (Infinger) in May, 2002, higher
fuel surcharges, and modest price increases. Gross profit decreased
22.6% from Fiscal 2002 primarily due to higher costs associated with
the Company's risk programs.
During Fiscal 2003, the transportation group purchased 67 new
tractors and 49 new trailers and had commitments to purchase an
additional 9 trailers at September 30, 2003. The Fiscal 2004 capital
expenditure plan is based on maintaining a modernized tank and
flatbed fleet and includes the purchase of approximately 82 new
tractors and 80 new trailers in addition to the 9 trailers under
commitment at September 30, 2003. The fleet modernization program
has resulted in reduced maintenance expenses, improved operating
efficiencies and enhanced driver recruitment and retention.
Driver recruitment/retention, fuel, accident prevention and risk
insurance pressures are expected to remain key factors.
Comprehensive fuel price surcharges are in place and assertive steps
continue at both carriers to boost permanent freight rates.
Real Estate. The real estate group operates the Company's real
estate and property development activities through subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, and Washington, D.C. The real estate owned generally
falls into one of three categories: (i) land and/or buildings leased
under rental agreements or being developed for rental; (ii) land
with construction aggregates deposits, substantially all of which is
leased to Florida Rock Industries, Inc. under mining royalty
agreements, whereby the Company is paid a percentage of the revenues
generated or annual minimums; and, (iii) land held for future
appreciation or development.
Real estate revenues increased 2% over Fiscal 2002. Royalty revenue
declined by 3% in 2003 primarily due to completion of mining at the
Miami property but was offset by an increase of 14% in rental
revenues. Property sales were $486,000 less in 2003. The Fiscal
2003 real estate revenues were divided approximately 30% from mining
and minimum royalties, 69% from rental revenues and 1% from property
sales.
At September 30, 2003, the Company owned approximately 1.7 million
square feet of developed buildings in the Baltimore, Maryland area
that were 89% leased and approximately 58 acres of developed land
ready for building construction. Brief descriptions of FRP
Development Corp.'s projects in the Baltimore area at September 30,
2003 are as follows:
Hillside Business Park in Anne Arundel County is a 59 acre tract
near the Baltimore-Washington International Airport. The project
will provide the Company an opportunity to develop approximately
575,000 square feet of warehouse/office space. Infrastructure work
on the site is nearing completion and the first two buildings are
completed with 274,800 square feet of leaseable warehouse/office
space. One building with 200,200 square feet is leased to one
tenant for 15 years and the other building is available for
lease.
Lakeside Business Park in Harford County consists of 134 acres.
Seven warehouse/office buildings, totaling 671,918 square feet,
have been constructed and are 87% leased. The remaining 32.8 acres
are available for future development and will offer an
additional 485,200 square feet of comparable product.
6920 Tudsbury Road in Baltimore County contains 5.3 acres with
86,100 square feet of warehouse/office space that is 100% leased.
8620 Dorsey Run Road in Howard County contains 5.8 acres with
84,600 square feet of warehouse/office space that is 100% leased.
Rossville Business Center in Baltimore County contains
approximately 10 acres with 190,517 square feet of
warehouse/office space and is 88% leased.
34 Loveton Circle in suburban Baltimore County contains 8.5 acres
with 29,722 square feet of office space which is 100% leased. The
Company occupies 11% of the space and 23% is leased to FRI.
Oregon Business Center in Anne Arundel County contains
approximately 17 acres with 195,615 square feet of
warehouse/office space, which is 100% leased.
Arundel Business Center in Howard County contains approximately 11
acres with 162,796 square feet of warehouse/office space, which is
100% leased.
Bird River in southeastern Baltimore County is a 179 acre tract of
land for future development. This development tract has direct
access to the proposed Maryland State Road 43 intended to connect I-
95 with Martin State Airport. This property is currently zoned for
residential and commercial use with 115.6 developable acres. The
Company plans to develop and lease approximately 502,000 square feet
of multiple warehouse/office buildings on the 42 developable acres
zoned for commercial use. A subsidiary of the Company has entered
into an agreement to develop and sell to a major home builder a
minimum of 292 residential lots on the residential portion of the
Bird River Property.
The Company owns a 50-acre, rail accessable site on Commonwealth
Avenue in Jacksonville, Florida near the western beltway of
Interstate-295 capable of supporting approximately 500,000 square
feet of eventual warehouse/office build-out. Current efforts include
permitting and preliminary horizontal development planning work.
During Fiscal 2004 the real estate group will continue to focus on
the continued development of the property at Lakeside and Hillside
Business Parks near Baltimore and the Commonwealth site in
Jacksonville while continuing to search for additional developed and
undeveloped sites.
The real estate group will also continue its asset management
functions for the benefit of the Company's land portfolio. These
activities will include but not be limited to the Company's site on
the Anacostia River in the District of Columbia. The Company's
long-term plan is to continue to gradually expand its portfolio of
successful warehouse/office rental properties.
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
2003 2002 2001 2000 1999
Summary of Operations:
Revenues(a) $103,303 96,949 121,258 93,862 82,019
Gross profit(b) $ 18,067 20,542 21,792 16,239 19,994
Operating profit $ 9,915 12,413 7,878 6,840 12,380
Interest expense $ 3,492 3,143 3,372 3,438 2,357
Income before income taxes
$ 6,423 9,270 4,506 3,435 10,093
Provision for income taxes
$ 2,505 3,615 1,803 1,391 3,936
Gain from discontinued
operations $ 657 - - - -
Net income $ 4,575 5,655 2,703 2,044 6,157
Per Common Share:
Basic EPS $ 1.51 1.80 .86 .61 1.79
Diluted EPS $ 1.49 1.79 .86 .61 1.78
Shareholders' equity
$ 26.61 25.06 23.28 22.06 21.53
Financial Summary:
Current assets $ 13,965 11,490 16,248 15,089 14,161
Current liabilities
$ 11,220 11,972 16,728 17,498 13,555
Property, plant and
equipment, net $145,262 138,367 131,170 124,026 115,369
Total assets $165,216 155,463 152,759 148,011 138,655
Long-term debt $ 57,816 47,290 47,097 42,015 37,936
Shareholders' equity
$ 78,029 79,160 73,112 73,813 72,692
Other Data:
Return on average
Shareholders' equity
5.8% 7.4 3.7 2.8 8.7
Net cash flow provided by
operating activities
$ 16,056 24,947 9,626 9,566 15,032
Additions to property,
plant and equipment
$ 20,413 18,046 18,438 21,861 21,359
Depreciation, depletion
and amortization
$ 11,956 11,086 11,471 11,144 10,065
Weighted average number
of shares - basic 3,033 3,143 3,157 3,334 3,444
Weighted average number
of shares - diluted 3,066 3,165 3,158 3,348 3,468
Number of employees 845 861 850 829 877
Shareholders of record 745 767 788 801 834
(a) Fiscal 2001 and 2000 include revenues of $22,623,000 and
$7,689,000 and operating losses of $6,309,000 and $361,000,
respectively, attributed to Patriot Transportation, Inc. which
ceased operations in September, 2001.
(b) Fiscal 2003, 2002, 2001, 2000 and 1999 include gains on the
sale of real estate of $47,000, $323,000, $2,886,000,
$1,533,000, and $3,236,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
First Second Third Fourth
2003 2002 2003 2002 2003 2002 2003 2002
Revenues $24,042 23,492 25,073 23,008 27,031 24,876 27,157 25,573
Gross profit $ 4,329 5,067 3,915 4,966 5,118 5,458 4,704 5,051
Operating profit$ 2,377 3,023 1,905 3,172 3,105 3,432 2,528 2,786
Income before
income taxes $ 1,538 2,243 1,019 2,373 2,206 2,629 1,660 2,025
Gain from discontinued
operations $ - - - - - - 657 -
Net income $ 938 1,346 622 1,424 1,346 1,577 1,669 1,308
Per common share:
Basic EPS $.30 .43 .20 .45 .45 .50 .57 .42
Diluted EPS $.30 .43 .20 .45 .44 .50 .56 .41
Market price:
High $28.85 20.55 28.38 35.00 30.00 34.00 33.00 30.00
Low $19.00 16.70 20.00 20.44 21.00 26.15 28.00 21.30
MANAGEMENT ANALYSIS
OPERATING RESULTS. The Company's operations are influenced by a
number of external and internal factors. External factors include
levels of economic and industrial activity in the United States and
the Southeast, petroleum product usage in the Southeast which is
driven in part by tourism and commercial aviation, fuel costs, driver
availability and cost, regulations regarding driver qualifications and
hours of service, construction activity, Florida Rock Industries,
Inc.'s sales from the Company's mining properties, interest rates and
demand for commercial warehouse/office space in the
Baltimore/Washington area. Internal factors include revenue mix,
capacity utilization, auto and workers' compensation accident
frequencies and severity, other operating factors, administrative
costs, and construction costs of new projects.
The following detailed analysis of operations also presents the
revenue generated by our real estate segment excluding property sales.
Property sales include the sale of easements, right of ways, parcels
of real estate, and timber and other miscellaneous sales. We believe
that presenting some results excluding the effects of one-time
property sales is helpful to investors because it permits a comparison
of our core real estate operations. Such measures should only be
considered in conjunction with the total real estate revenues as
calculated and presented in accordance with U.S. GAAP.
During Fiscal 2003, the transportation segment's ten largest customers
accounted for approximately 38% of the transportation segment's
revenue. The loss of any one of these customers could have an adverse
effect on the Company's revenues and income.
Fiscal 2003 as compared to Fiscal 2002.
Revenues. Consolidated revenues for Fiscal 2003 were $103,303,000, an
increase of $6,354,000 or 6.6% from $96,949,000 from the previous
year.
Transportation segment revenues were $87,996,000, an increase of
$6,075,000 or 7.4% over last year. Transportation revenues increased
$3,490,000 due to an increase in revenue miles, resulting from the new
business generated from the May 2002 acquisition of the operating
assets of Infinger Transportation, Inc. (Infinger) and internal
growth, offset by the loss of a major customer in the first quarter of
2003. Of the remainder, $1,936,000 was due to an increase in billed
fuel surcharges over last year, as a result of increased diesel fuel
cost.
Real Estate revenues, excluding property sales, were $15,239,000, an
increase of 5.3% over last year. The increase was primarily due to an
11.1% increase in rental revenue from developed properties partially
offset by a 2.8% decrease in royalty revenues. Revenues from the
Company's developed operations increased due to a 9.2% increase in
average leased square feet, while royalty revenues from mining
operations decreased because of completion of aggregate mining at two
sites. Royalty revenues are expected to continue near the level
experienced in 2003. Property sales in Fiscal 2003 were $68,000 versus
$554,000 in Fiscal 2002.
Gross Profit. Consolidated gross profit for Fiscal 2003 decreased
12.0% to $18,067,000 from $20,542,000 for the previous year.
Transportation gross profit was $9,040,000, a decrease of $2,638,000
or 22.6%, in 2003 as compared to 2002. The decrease in gross profit
was primarily due to a $2,964,000 or 32.6% increase in expenses
related to higher insurance premiums and workers compensation claims.
The Company will continue to strive to operate safely and efficiently
and to increase freight rates and volumes to offset the continuing
increased insurance costs.
Real Estate gross profit excluding property sales increased $439,000
primarily due to the increase in rental revenues. Gross profit from
property sales in Fiscal 2003 was only $47,000 compared to $323,000 in
Fiscal 2002.
Operating Expenses. Selling, general and administrative expenses for
2003 were comparable to 2002, decreasing 0.6% from $8,229,000 in
Fiscal 2002 to $8,181,000 for Fiscal 2003.
Income Taxes. The Company recorded an income tax provision of
$2,505,000 in 2003, compared to a provision of $3,615,000 in 2002. The
effective tax rate was 39% in both years.
Discontinued Operations. During the fourth quarter of 2003, a
subsidiary of the Company sold a former mining property, located in
St. Mary's County, Maryland for $1,836,000. According to the
provisions of SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," the property is considered a component of the
entity, as defined by SFAS 144, and is therefore treated as a
discontinued operation. A gain on disposal of the property of
$657,000, net of income taxes of $420,000, has been recorded as
discontinued operations. Since there have been no active mining
operations on the property during the periods presented, revenues and
expenses from the discontinued operation are not material.
Net Income. Net income decreased 19.1% to $4,575,000 in Fiscal 2003
from $5,655,000 in 2002. Diluted earnings per share decreased 16.8% to
$1.49 in Fiscal 2003 from $1.79 in 2002. Diluted total shares
outstanding decreased 3.1% from 3,165,000 in 2002 to 3,066,000 in 2003
as a result of the repurchase and cancellation of 246,300 shares
during the year.
Fiscal 2002 as Compared to Fiscal 2001.
Revenues. Consolidated revenues for Fiscal 2002 decreased $24,309,000
or 20.0% to $96,949,000 from $121,258,000 for the previous year.
Transportation revenues decreased 20.6% to $81,921,000 driven mainly
by the closure of the PTI subsidiary in September 2001. Excluding
PTI's revenues in 2001, Transportation revenues increased $1,354,000
or 1.7%, due to modest price increases and expansion in Florida Rock &
Tank Lines by the purchase on May 30, 2002 of the Infinger assets,
offset by a slight reduction in miles driven (0.5%). The reduction in
miles resulted from lower demand for petroleum products due to
decreased tourism and reduced air travel.
Real Estate revenues excluding property sales increased 2.7% primarily
due to an increase in revenue from developed properties partially
offset by a decrease in royalties. Revenues from the company's
development operations climbed 16.5%, while royalty revenues from
mining operations decreased 10.1% because of completion of stone
mining at two sites. We expect royalty revenues to continue to
decrease, as mining assets are depleted. Property sales in Fiscal
2002 were $554,000 versus $3,978,000 in Fiscal 2001.
Gross Profit. Consolidated gross profit for Fiscal 2002 decreased 5.7%
to $20,542,000 from $21,792,000 for the previous year.
Transportation gross profits increased $1,456,000 or 14.2% in 2002 as
compared to 2001. Excluding PTI's gross loss of $498,000 in 2001,
gross profit increased $958,000 or 9.0% primarily due to the increased
revenues and control of expenses in the tankline operation for 2002.
This was partially offset by a reduction in gross profit of the
flatbed operations due to increased operating expenses and increased
insurance and casualty losses.
Real Estate gross profit excluding property sales decreased $144,000
due to a $1,058,000 reduction in royalty gross profit mostly offset by
an increase in rental income. Gross profit from property sales in
Fiscal 2002 was only $323,000 compared to $2,886,000 in Fiscal 2001.
Operating Expenses. Selling, general and administrative expenses
decreased 33.2% from $12,310,000 in Fiscal 2001 to $8,229,000 for
Fiscal 2002, almost entirely due to the closure of PTI which had
administrative expenses of $4,208,000 in 2001. During Fiscal 2001, the
Company recorded $1,604,000 in restructuring charges related to its
decision to shut down the operations of this subsidiary. In Fiscal
2002, a recovery of $100,000 in amounts previously charged to
restructuring was recorded due to a better than anticipated
disposition of owned and leased trailers, partially offset by higher
severance costs.
Income Taxes. The Company recorded an income tax provision of
$3,615,000 in 2002, compared to a provision of $1,803,000 in 2001.
The effective tax rate decreased 1% to 39% in 2002 primarily due to a
lower level of non-deductible expenses and higher levels of earnings.
Net Income. Net income increased 109.2% from $2,703,000 in 2001 to
$5,655,000 in Fiscal 2002. Diluted earnings per share increased
108.6% to $1.79 in Fiscal 2002 from $.86 in 2001. Diluted total shares
outstanding increased .2% from 3,158,000 in 2001 to 3,165,000 in 2002
as a result of the issuance of stock options during the year.
SUMMARY OF CRITICAL ACCOUNTING POLICIES.
Management of the Company considers the following accounting policies
critical to the reported operations of the Company:
Accounts Receivable Valuation. The Company is subject to customer
credit risk including bankruptcies, primarily in the Transportation
segment, that could affect the collection of outstanding accounts
receivable. To mitigate these risks, the Company performs credit
reviews on all new customers and periodic credit reviews on existing
customers. A detailed analysis of late and slow pay customers is at
least prepared monthly and reviewed by senior management. The overall
collectibility of outstanding receivables is evaluated and allowances
are recorded as appropriate.
Risk Insurance. The nature of the Transportation business subjects the
Company to risks arising from workers' compensation, automobile
liability, and general liability claims. The Company retains the
exposure on certain claims of $250,000 to $500,000 and has third party
coverage for amounts exceeding the retention. The Company expenses
during the year an estimate of risk insurance losses. Periodically,
an analysis is performed, using historical and projected data, to
determine exposure for claims incurred but not reported. On an annual
basis the Company obtains an independent actuarial analysis. The
Company attempts to mitigate losses from insurance claims by
maintaining safe operations and providing mandatory safety training.
Real Estate Investments. All direct and indirect costs, including
interest and real estate taxes associated with the development,
construction, leasing or expansion of real estate investments are
capitalized as a cost of the property. Included in indirect costs is
an estimate of internal costs associated with development and rental
of real estate investments. All external costs associated with the
acquisition of real estate investments are capitalized as a cost of
the property.
Tires on Equipment. The Company accounts for the tires on its tractors
and trailers separately from fixed assets. The value of the tires is
accounted for as a prepaid expense and amortized over the estimated
life of the tires as a function of miles driven. The mile factors used
differ by geographic location and are determined based on historical
experience. Tires that are damaged due to road hazards are expensed
immediately using an estimated value based on remaining tread life.
LIQUIDITY AND CAPITAL RESOURCES. Net cash flow from operating during
2003 was $16,056,000, which together with $10,760,000 net cash inflow
from long term debt, funded the $20,413,000 purchase of property and
equipment and the repurchase of $6,118,000 in Company stock.
Net cash flow from operating activities during 2002 was $24,947,000
which funded the Company's investing activities of $17,978,000 and the
reduction of debt.
The Company has a $37,000,000 revolving credit agreement (the
Revolver) of which $17,000,000 was available at fiscal year end. The
Revolver contains restrictive covenants including limitations on
paying cash dividends. Under these restrictions, as of September 30,
2003, $13,048,000 of consolidated retained earnings was available for
payment of dividends.
On October 1, 2003, the company closed on a non-recourse first
mortgage loan of $8,500,000 secured by a 200,200 square foot completed
building that is leased to one tenant. The loan is for a period of 15
years with level monthly payments of principal and interest at 5.69%.
The proceeds were used to reduce amounts outstanding under the
Revolver.
The aggregate amounts due in each fiscal year on fully amortizing,
non-recourse long-term debt outstanding at September 30, 2003 is: 2004
- - $1,545,000; 2005 - $1,604,000; 2006 - $1,732,000; 2007 - $1,848,000;
2008 - $1,996,000; and thereafter - $30,636,000. In addition,
$20,000,000 outstanding under the Revolver at September 30, 2003 will
be due in January 2005, unless the Revolver is renewed or replaced.
The Company has a $7,500,000 Letter of Credit facility with SunTrust
Bank, N.A. under which the Company may issue letters of credit to
various beneficiaries. In addition, the Company has a $1,790,000
letter of credit with Wachovia Bank, N.A. Each letter of credit is
generally irrevocable for a period of one year and is automatically
extended for additional one-year periods unless notified by the
issuing bank not less than thirty days before the expiration date. At
September 30, 2003, $9,143,000 of irrevocable letters of credit were
outstanding. Substantially all of these were issued for workers'
compensation and liability insurance retentions. If these letters of
credit are not extended the Company will have to find alternative
methods of collateralizing or funding these obligations.
The Board of Directors has authorized management to repurchase shares
of the Company's common stock from time to time as opportunities may
arise. During Fiscal 2003, the company repurchased 246,300 shares for
approximately $6,119,000. At September 30, 2003 the Company had
approximately $3,000,000 authorized for repurchase of shares. On
December 3, 2003 the Board of Directors authorized an additional
$3,000,000 for the repurchase of shares bringing the total
authorization to $6,000,000.
The Company currently expects its Fiscal 2004 capital expenditures to
be approximately $18,600,000 ($8,500,000 for real estate development
expansion and $10,100,000 for transportation segment expansion) and
depreciation and depletion expense to be approximately $12,500,000.
The expenditures are expected to be financed from the cash flow from
operating activities, financing of a new real estate project, and the
funds available under its revolving credit agreement.
A subsidiary of the Company signed an Agreement in February 2002 to
sell 108 acres of land to FRI for $15,000,000. Closing is subject to a
title search and surveys and is to occur within 45 days of FRI giving
notice to close. If FRI fails to close by December 31, 2004, 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 closing 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 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 $2.54 per diluted share. The tract is rented to a subsidiary
of FRI and the Company received rental income of approximately
$650,000 for the 2003 fiscal year.
The Company announced on May 7, 2003 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 to occur no
later than December 31, 2004. The terms of the agreement were approved
by the Company's Audit Committee which (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 $.33 per diluted common share.
A subsidiary of the Company agreed on December 3, 2003 to sell a
parcel of land containing approximately 6,321 acres in Suwannee and
Columbia Counties, near Lake City, Florida, to FRI for $13,000,000 in
cash. The sale is subject to a definitive agreement and the closing
date is to be determined. The sales price was approved by the
Company's Audit Committee which is composed of independent Directors
of the Company after considering among other factors, an independent
appraisal, the current use of the property and consultation with
management. If the transaction closes, the Company will recognize a
gain of approximately $5,287,000, net of income taxes or $1.78 per
diluted common share. The Company expects to ultimately redeploy the
cash proceeds into commercial warehouse/office rental properties.
Management believes that the Company is financially postured to be
able to take advantage of external and internal growth opportunities
in both real estate development and the motor carrier industry.
INFLATION. Historically, the Company has been able to recover
inflationary cost increases in the transportation group through
increased freight rates. It is expected that over time, justifiable
and necessary rate increases will be obtained. Substantially all of
the Company's royalty agreements are based on a percentage of the
sales price. Minimum royalties and substantially all lease agreements
provide escalation provisions.
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 other risk factors
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; regulations
regarding driver qualifications and hours of service; availability and
terms of financing; freight demand for petroleum products and for
building and construction materials in the Company's markets; risk
insurance markets; competition; general economic conditions; demand
for flexible warehouse/office facilities; 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.
Consolidated Statements of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
2003 2002 2001
Revenues:
Transportation $ 87,996 81,921 103,189
Real estate 15,239 14,474 14,091
Sale of real estate 68 554 3,978
Total revenues (including revenue from
related parties of $7,305, $6,944 and
$10,693, respectively) 103,303 96,949 121,258
Cost of operations:
Transportation 78,956 70,243 92,968
Real estate 6,259 5,933 5,406
Cost of real estate sold 21 231 1,092
Gross profit 18,067 20,542 21,792
Selling, general and administrative expense
(including expenses paid to related party
of $440, $463 and $527, respectively) 8,181 8,229 12,310
Non-recurring charges (recoveries) related
to closed subsidiary (29) (100) 1,604
Operating profit 9,915 12,413 7,878
Interest expense, net (3,492) (3,143) (3,372)
Income from continuing operations
before income taxes 6,423 9,270 4,506
Provision for income taxes 2,505 3,615 1,803
Income from continuing operations 3,918 5,655 2,703
Gain from sale of discontinued
mining property (Note 11) 1,077 - -
Income tax provision (420) - -
Gain on discontinued operations 657 - -
Net income $ 4,575 5,655 2,703
Earnings per share:
Basic $ 1.51 1.80 .86
Diluted $ 1.49 1.79 .86
Number of shares used in computing:
Basic earnings per share 3,033 3,143 3,157
Diluted earnings per share 3,066 3,165 3,158
See accompanying notes.
Consolidated Balance Sheets
As of September 30,
(Dollars in thousands)
2003 2002
Assets
Current assets:
Cash and cash equivalents $ 757 529
Cash held in escrow 1,795 -
Accounts receivable (including related
party of $359 and $107, less allowance
for doubtful
accounts of $566 and $474, respectively) 7,332 7,343
Income taxes receivable - 8
Inventory of parts and supplies 670 633
Prepaid expenses and other 3,411 2,977
Total current assets 13,965 11,490
Property, plant and equipment, at cost:
Land 67,781 66,380
Buildings 69,438 55,420
Plant and equipment 72,941 72,489
Construction in progress 11,331 14,986
221,491 209,275
Less accumulated depreciation and depletion 76,229 70,908
145,262 138,367
Real estate held for investment, at cost 1,130 1,047
Goodwill, net of $523 amortization 1,087 1,087
Other assets 3,772 3,472
Total Assets $165,216 155,463
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable including related party of
$2 and $39, respectively 4,734 5,771
Accrued liabilities:
Payroll and benefits 1,798 2,229
Other accrued expenses 829 554
Accrued Insurance reserves 2,314 2,107
Long-term debt due within one year 1,545 1,311
Total current liabilities 11,220 11,972
Long-term debt 57,816 47,290
Deferred income taxes 10,760 10,062
Accrued insurance reserves 5,722 5,331
Other liabilities 1,669 1,648
Commitments and contingencies (Notes 14 and 15)
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 6,065 11,748
Retained earnings 71,671 67,096
Total shareholders' equity 78,029 79,160
Total Liabilities and Shareholders' equity $165,216 155,463
See accompanying notes.
Consolidated Statements of Cash Flows
Years ended September 30,
(Dollars in thousands)
Cash flows from operating activities: 2003 2002 2001
Net income $ 4,575 5,655 2,703
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 11,956 11,086 11,471
Non-cash portion of restructuring charge - - 968
Deferred income taxes 879 889 332
Gain on sale of real estate, plant and
equipment (210) (612) (3,008)
Net changes in operating assets and liabilities:
Accounts receivable 12 1,133 2,293
Income taxes receivable 8 994 (1,002)
Inventory of parts and supplies (37) (63) 80
Prepaid expenses and other (435) 1,509 (1,815)
Assets held for sale - 1,191 -
Accounts payable and accrued liabilities (1,167) 2,686 (2,915)
Net change in insurance reserves and other
liabilities 412 437 485
Other, net 63 42 34
Net cash provided by operating activities 16,056 24,947 9,626
Cash flows from investing activities:
Purchase of property, plant and equipment (20,413) (18,046)(18,438)
Additions to other assets (768) (942) (734)
Cash held in escrow (1,795) - -
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 2,094 1,010 5,294
Net cash used in investing activities (20,882) (17,978)(13,878)
Cash flows from financing activities:
Proceeds from long-term debt 4,600 10,200 5,140
Increase (decrease) in revolving debt 7,500 (8,500) 1,000
Net (decrease) increase in short-term debt - (7,800) 2,200
Repayment of long-term debt (1,340) (1,173) (877)
Exercise of employee stock options 412 425 -
Repurchase of Company stock (6,118) (32) (3,404)
Net cash provided by (used in) financing activities 5,054 (6,880) 4,059
Net increase(decrease)in cash and cash equivalents 228 89 (193)
Cash and cash equivalents at beginning of year 529 440 633
Cash and cash equivalents at end of year $ 757 529 440
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 3,477 3,179 3,480
Income taxes $ 2,004 1,720 3,399
Non cash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ - 563 -
See accompanying notes.
Consolidated Statements of Shareholders' Equity
(Dollars in thousands, except per share amounts)
Capital in
Common Stock Excess of Retained
Shares Amount Par Value Earnings
Balance at September 30, 2000 3,346,351 $335 $14,740 $58,738
Shares purchased and canceled (206,285) (21) (3,383) -
Net income - - - 2,703
Balance at September 30, 2001 3,140,066 314 11,357 61,441
Shares purchased and canceled (1,658) - (32) -
Exercise of stock options 20,600 2 423 -
Net income - - - 5,655
Balance at September 30, 2002 3,159,008 316 11,748 67,096
Shares purchased and canceled (246,300) (25) (6,093) -
Exercise of stock options 20,000 2 410 -
Net income - - - 4,575
Balance at September 30, 2003 2,932,708 $293 $ 6,065 $71,671
See accompanying notes.
Notes to Consolidated Financial Statements
1. Accounting policies. ORGANIZATION - Patriot Transportation Holding, Inc.
(Company) is engaged in the transportation and real estate businesses. The
Company's transportation business is conducted through two wholly owned
subsidiaries. Florida Rock & Tank Lines, Inc. (Tanklines) is a Southeastern
transportation company concentrating in the hauling by motor carrier of
primarily petroleum related liquids and other liquid and dry bulk
commodities. SunBelt Transport, Inc. (SunBelt) serves the flatbed portion of
the trucking industry in the Southeast, Midwest and Mid-Atlantic States,
hauling primarily construction materials. The Company's real estate group,
through subsidiaries, acquires, constructs, leases, operates and manages land
and buildings to generate both current cash flows and long-term capital
appreciation. The real estate group also owns real estate which is leased
under mining royalty agreements or held for investment.
CONSOLIDATION - The consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
instruments with maturities of three months or less at time of purchase to be
cash equivalents.
INVENTORY - Inventory of parts and supplies is valued at the lower of cost
(first-in, first-out) or market.
TIRES ON EQUIPMENT - The value of tires on tractors and trailers is accounted
for as a prepaid expense and amortized over the life of the tires as a
function of miles driven.
REVENUE AND EXPENSE RECOGNITION - Transportation revenue is recognized when
shipment is complete and transportation expenses are recognized as incurred.
Real estate rental revenue and mining royalties are generally recognized when
due under the leases. Rental income from leases with scheduled increases
during their term is recognized when due under the leases, except when
increases are deemed material (greater than 3% per annum), in which case,
rents are recognized on a straight-line basis over the term of the lease.
Sales of real estate are recognized when the collection of the sales price is
reasonably assured and when the Company has fulfilled its obligations, which
are typically as of the closing date.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is recorded at
cost less accumulated depreciation. Provision for depreciation of property,
plant and equipment is computed using the straight-line method based on the
following estimated useful lives:
Years
Buildings and improvements 7-39
Revenue equipment 5-10
Other equipment 3- 5
Furniture and fixtures 5-10
Depletion of sand and stone deposits is computed on the basis of units of
production in relation to estimated reserves.
The Company periodically reviews property, plant and equipment and
intangible assets for potential impairment. If this review indicates that
the carrying amount of the asset may not be recoverable, the Company
estimates the future cash flows expected with regards to the asset and its
eventual disposition. If the sum of these future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the
assets, the Company records an impairment loss based on the fair value of
the asset.
All direct and indirect costs, including interest and real estate taxes
associated with the development, construction, leasing or expansion of real
estate investments are capitalized as a cost of the property. Included in
indirect costs is an estimate of internal costs associated with development
and rental of real estate investments. All external costs associated with
the acquisition of real estate investments are capitalized as a cost of the
property.
INSURANCE - The Company has a $250,000 to $500,000 self-insured retention
per occurrence in connection with certain of its workers' compensation,
automobile liability, and general liability insurance programs ("risk
insurance"). The Company is self-insured for its employee health insurance
benefits and carries a stop loss coverage of $200,000 per covered
participant per year. The Company accrues monthly the estimated cost in
connection with its portion of its risk and health insurance losses. Claims
paid by the Company are charged against the reserve. Additionally, the
Company maintains a reserve for incurred but not reported claims based on
historical analysis of such claims.
INCOME TAXES - The Company uses an asset and liability approach to
financial reporting for income taxes. Under this method, deferred tax
assets and liabilities are recognized based on differences between
financial statement and tax bases of assets and liabilities using presently
enacted tax rates. Deferred income taxes result from temporary differences
between pre-tax income reported in the financial statements and taxable
income.
STOCK OPTION AWARDS - The Company accounts for its employee stock
compensation plans under APB Opinion No. 25. See Footnote 7 for pro forma
disclosures of net earnings and earnings per share, as if the fair value
based method of accounting defined in SFAS No. 123 had been applied.
EARNINGS PER COMMON SHARE - Basic earnings per share are based on the
weighted average number of common shares outstanding during the periods.
Diluted earnings per share are based on the weighted average number of
common shares and potential dilution of securities that could share in
earnings. The only difference between basic and diluted shares used for
the calculation is the effect of employee and director stock options.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
ENVIRONMENTAL - Environmental expenditures that benefit future periods are
capitalized. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimation of such liabilities includes an
assessment of engineering estimates, continually evolving governmental laws
and standards, and potential involvement of other potentially responsible
parties.
NEW ACCOUNTING REQUIREMENTS - 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. In accordance with this statement, the Company
completed the transitional goodwill impairment test resulting in no
impairment of goodwill. Goodwill amortization for 2003, 2002, and 2001,
was $0, $40,000 and $40,000, respectively.
In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations" (SFAS 143), which addresses financial accounting and
reporting for obligations with 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 for the quarter ending
December 31, 2002 with no material affect on its financial statements.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144). This statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of". SFAS 144 retains the
fundamental provisions of SFAS 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement
of long-lived assets to be disposed of by sale. SFAS 144 is effective for
fiscal years beginning after December 15, 2001. The Company adopted this
statement October 1, 2002.
RECLASSIFICATIONS - Certain reclassifications have been made to the 2002
and 2001 financial statements to conform to the presentation adopted in
2003.
2. Transactions with related parties. As of September 30, 2003, five of
the Company's directors were also directors of Florida Rock Industries,
Inc. ("FRI"). Such directors own approximately 27.6% of the stock of FRI
and 47.1% of the stock of the Company. Accordingly, FRI and the Company
are considered related parties.
The Company, through its transportation subsidiaries, hauls commodities by
tank and flatbed trucks for FRI. Charges for these services are based on
prevailing market prices. Other wholly owned subsidiaries lease certain
construction aggregates mining and other properties to FRI.
A summary of revenues derived from FRI follows (in thousands):
2003 2002 2001
Transportation $ 1,367 986 950
Real estate 5,938 5,958 9,743
$ 7,305 6,944 10,693
The Company outsources certain functions to FRI, including some
administrative, human resources, legal and risk management. Charges for
services provided by FRI were $440,000 in 2003, $463,000 in 2002, and
$527,000 in 2001.
A subsidiary of the Company sold, in September 2003, 796 acres of land
located in St. Mary's County, Maryland to FRI for $1,836,000. The sale was
approved by a committee of independent directors of the Company after
receipt of an appraisal and consultation with management. The Company
recognized a gain on the sale of approximately $1,078,000 before income
taxes. The Company plans to defer the gain for tax purposes under Section
1031 of the Internal Revenue Code. See Footnote 11 for more information.
The Company sold, during Fiscal 2001, two parcels of land to FRI, for
$2,607,000 and recognized a pre-tax gain of $2,034,000. The transactions
including the purchase price were reviewed and approved on behalf of the
Company by a committee of independent directors after obtaining independent
appraisals.
The Company announced on May 7, 2003 that a subsidiary 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 to occur no later than December 31, 2004.
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 $.33 per diluted
common share.
A subsidiary of the Company signed an Agreement in February 2002 to sell
108 acres of land located in the northwest quadrant of I-395 and I-495 at
Edsall Road in Springfield, Virginia to FRI for $15,000,000. Closing is
subject to a title search and surveys and is to occur within 45 days of FRI
giving notice to close. If FRI fails to close by December 31, 2004, 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 closing 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 $2.54 per diluted share. The tract is rented to a subsidiary of
FRI and the Company received rental income of approximately $650,000 for
the 2003 fiscal year.
3. Non-recurring charges related to closed subsidiary. In the quarter ended
September 30, 2001, the Company recorded restructuring and other one-time
charges of $3,435,000 resulting from the decision to shut down its third
party agent/owner-operator subsidiary, Patriot Transportation, Inc., which
began operation in Fiscal 2000. The shutdown charge was comprised of
$2,051,000 for asset write-offs, $968,000 for fixed asset impairments,
$285,000 for employee severance and termination benefit costs, $90,000 for
remaining lease obligations and $41,000 for additional costs associated
with exiting the third party agent/owner-operator business. The $3,435,000
charge was recorded in the Consolidated Statement of Income as cost of
operations of $26,000, selling, general and administrative expense of
$1,805,000 and restructuring and other charges of $1,604,000.
The Company continued its attempts to recover amounts written off related
to the closure of the subsidiary. As a result, recovery of restructuring
charges of $29,000 and $100,000 was recorded in 2003 and 2002,
respectively. The recoveries were due to better than expected disposition
of owned and leased trailers. Recoveries of $49,000 and $194,000 in amounts
previously charged to administrative expense were also recorded in 2003 and
2002, respectively, primarily due to recovery of accounts receivable in
excess of amounts anticipated.
At September 30, 2003 and 2002, $82,000 and $113,000 was included in
accounts payable and accrued liabilities, representing the portion of
various charges not yet expended.
Revenue and operating profit (loss) related to Patriot Transportation, Inc.
for the years ended September 30 are as follows:
2003 2002 2001
Revenue $ 0 $ 0 $22,623,000
Operating profit (loss) $ 78,000 $ 294,000 $(6,309,000)
4. Long-term debt. Long-term debt at September 30 is summarized as follows
(in thousands):
2003 2002
Revolving credit (unsecured) $20,000 12,500
5.7% to 9.5% mortgage notes,
due in installments through 2020 39,361 36,101
59,361 48,601
Less portion due within one year 1,545 1,311
$57,816 47,290
The aggregate amount of principal payments, excluding the revolving credit,
due subsequent to September 30, 2003 is: 2004 - $1,545,000; 2005 -
$1,604,000; 2006 - $1,732,000; 2007-$1,848,000; 2008-$1,996,000; 2009 and
subsequent years - $30,636,000.
In January 2002, the Company and four banks signed a $37,000,000
uncollateralized revolving credit agreement (the Revolver) for a term of
three years. The Revolver currently bears interest at a margin rate of
1.675% over the selected LIBOR or alternatively, 0.25% over the prime rate
of SunTrust Bank, N.A. The margin rate may change quarterly based on the
Company's ratio of consolidated adjusted debt to earnings before interest,
taxes, depreciation, amortization and rent for the previous four quarters.
The Revolver contains a $5,000,000 swing line which may be used for daily
borrowings. An annual commitment fee of one-quarter of one percent per
annum is payable on the unused amount of the commitment during the term of
the loan. The commitment fee may also change quarterly based upon the ratio
described above. The Revolver contains restrictive covenants including
limitations on paying cash dividends. Under these restrictions, as of
September 30, 2003, $13,048,000 of consolidated retained earnings would be
available for payment of dividends or repurchase of common stock.
The non-recourse fully amortizing mortgage notes payable are collateralized
by real estate having a carrying value of approximately $43,852,000 at
September 30, 2003.
Certain properties having a carrying value at September 30, 2003 of
$876,000 were encumbered by industrial revenue bonds that are the liability
of FRI. FRI has agreed to pay such debt when due (or sooner if FRI cancels
its lease of such property) and further has agreed to indemnify and hold
harmless the Company.
During Fiscal 2003, 2002 and 2001 the Company capitalized interest cost of
$182,000, $194,000 and $412,000, respectively.
5. Leases. At September 30, 2003, the total carrying value of property
owned by the Company which is leased or held for lease to others is
summarized as follows (in thousands):
Construction aggregates property $ 40,744
Commercial property 103,875
Land and other property 1,621
146,240
Less accumulated depreciation and depletion 33,757
$112,483
The minimum future rentals due the Company on noncancelable leases as of
September 30, 2003 are as follows: 2004 - $9,881,000; 2005 - $8,733,000;
2006 - $6,664,000; 2007 - $5,306,000; 2008 - $5,037,000; 2009 and
subsequent years $23,653,000.
6. Preferred Shareholder Rights Plan. On May 5, 1999, the Board of
Directors of the Company declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock.
The dividend was payable on June 2, 1999. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share
of Series A Junior Participating Preferred Stock of the Company, par value
$.01 per share (the "Preferred Shares"), at a price of $96 per one one-
hundredth of a Preferred Share, subject to adjustment.
In the event that any Person or group of affiliated or associated Persons
(an "Acquiring Person") acquires beneficial ownership of 15% or more of the
Company's outstanding common stock, each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of
the Right. An Acquiring Person excludes any Person or group of affiliated
or associated Persons who were beneficial owners, individually or
collectively, of 15% or more of the Company's Common Shares on May 4, 1999.
The Rights initially trade together with the Company's common stock and are
not exercisable. However, if an Acquiring Person acquires 15% or more of
the Company's common stock, the Rights may become exercisable and trade
separately in the absence of future board action. The Board of Directors
may, at its option, redeem all Rights for $.01 per right, at any time prior
to the Rights becoming exercisable. The Rights will expire September 30,
2009 unless earlier redeemed, exchanged or amended by the Board.
7. Stock Option Plans. The Company has two Stock Option Plans (the 1995
Stock Option Plan and the 2000 Stock Option Plan) under which options for
shares of common stock have been granted to directors, officers and key
employees. Currently, only the 2000 Plan has options available for grant.
The options awarded under the two plans have similar characteristics.
All stock options expire ten years from the date of grant. Options awarded
to directors are exercisable immediately and options awarded to officers
and employees become exercisable in cumulative installments of 20% each
year after a one year waiting period from date of grant. Options awarded in
2003 included 140,000 to officers and key employees. The remaining options
issued in 2003 and all awards in 2002 and 2001 were to directors.
At September 30, 2003, the number of shares available for issuance is
158,880 shares.
Option transactions for the fiscal years ended September 30 are summarized
as follows:
Shares under Weighted Average
Option Exercise Price
Balance at September 30, 2000 102,600 $ 19.05
Granted 29,000 17.31
Cancelled - -
Exercised - -
Balance at September 30, 2001 131,600 18.67
Granted 37,000 22.99
Cancelled (7,000) 21.29
Exercised (20,600) 17 93
Balance at September 30, 2002 141,000 19.78
Granted 182,000 22.87
Cancelled (3,500) 22.48
Exercised (20,000) 17.75
Balance at September 30, 2003 299,500 $ 21.85
The following table summarizes information concerning stock options
outstanding at September 30, 2003:
Shares Weighted Weighted
Range of Exercise under Average Average
Prices per Share Option Exercise Price Remaining Life
Outstanding:
$22.23 - $24.00 140,620 $ 24.64 9.0
Exercisable:
$15.13 - $19.87 82,000 17.49 4.5
$21.60 - $30.44 76,880 26.52 8.4
158,880 $ 21.85 6.4
If compensation cost for stock option grants had been determined based on
the Black-Scholes option pricing model value at the grant date for the
awards consistent with the provisions of SFAS No. 123, the Company's net
income, basic and diluted earnings per share would have been (in thousands,
except per share amounts):
2003 2002 2001
Net income
As reported $ 4,575 5,655 2,703
Deduct: Total stock-based
employee compensation expense
determined under fair value based
method, net of tax effects $ 540 348 203
Pro forma $ 4,035 5,307 2,500
Basic earnings per share
As reported $ 1.51 1.80 0.86
Pro forma $ 1.33 1.69 0.79
Diluted earnings per share
As reported $ 1.49 1.79 0.86
Pro forma $ 1.32 1.68 0.79
The fair value of options granted in 2003 was estimated to be $11.94 on the
date of grant using the following assumptions; no dividend yield, expected
volatility of 45.3%, risk-free interest rates of 3.7% and expected lives of
7 years. The weighted average fair value of options granted in 2002 was
estimated to be $13.51 on the date of grant using the following assumptions;
no dividend yield, expected volatility of 52.6%, risk-free interest rates of
4.5% and expected lives of 7 years.
8. Income taxes. The provision for income taxes for fiscal years ended
September 30 consists of the following (in thousands):
2003 2002 2001
Current:
Federal $1,755 2,366 1,260
State 289 360 211
2,044 2,726 1,471
Deferred
Federal 390 728 284
State 71 161 48
461 889 332
Total $2,505 3,615 1,803
A reconciliation between the amount of tax shown above and the amount computed
at the statutory Federal income tax rate follows (in thousands):
2003 2002 2001
Amount computed at statutory
Federal rate $2,184 3,152 1,532
State income taxes (net of Federal
income tax benefit) 279 338 169
Other, net 42 125 102
Provision for income taxes $2,505 3,615 1,803
The types of temporary differences and their related tax effects that give
rise to deferred tax assets and deferred tax liabilities at September 30,
are presented below:
2003 2002
Deferred tax liabilities:
Property, plant and equipment $12,839 11,944
Depletion 570 570
Prepaid expenses 1,144 1,000
Gross deferred tax liabilities 14,553 13,514
Deferred tax assets:
Insurance reserves 2,659 2,573
Other, net 929 855
Gross deferred tax assets 3,588 3,428
Net deferred tax liability $10,965 10,086
9. Employee benefits. The Company and certain subsidiaries have a
savings/profit sharing plan for the benefit of qualified employees. The
savings feature of the plan incorporates the provisions of Section 401(k)
of the Internal Revenue Code. Under the savings feature of the plan, an
eligible employee may elect to save a portion (within limits) of their
compensation on a tax deferred basis. The Company contributes to a
participant's account an amount equal to 50% (with certain limits) of the
participant's contribution. Additionally, the Company may make an annual
contribution to the plan as determined by the Board of Directors, with
certain limitations. The plan provides for deferred vesting with benefits
payable upon retirement or earlier termination of employment. The
Company's cost was $591,000 in 2003, $545,000 in 2002 and $517,000 in 2001.
The Company provides certain health benefits for retired employees.
Employees may become eligible for those benefits if they were employed by
the Company prior to December 10, 1992, meet the service requirements and
reach retirement age while working for the Company. The plan is
contributory and unfunded. The Company accrues the estimated cost of
retiree health benefits over the years that the employees render service.
The following table sets forth the plan's status reconciled with the
accrued postretirement benefit cost included in the Company's consolidated
balance sheet at September 30 (in thousands):
2003 2002
Change in benefit obligation:
Balance beginning of year $ 374 424
Service cost 16 19
Interest cost 20 24
Plan participants' contribution 14 11
Actuarial loss(gain) (40) (69)
Benefits paid (25) (35)
Balance end of year $ 359 374
Change in plan assets:
Balance beginning of year $ - -
Employer contributions 11 24
Plan participants' contribution 14 11
Benefits paid (25) (35)
Balance end of year $ 0 0
Funded status $(359) (374)
Unrecognized net gain (236) (227)
Unrecognized prior service cost - -
Accrued postretirement benefit costs $(595) (601)
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
2003 2002 2001
Service cost of benefits earned during
the period $ 16 19 24
Interest cost on APBO 20 24 29
Net amortization and deferral (31) (28) (21)
Net periodic postretirement benefit
cost $ 5 15 32
The discount rate used in determining the Net Periodic Postretirement Benefit
Cost and the APBO was 5.75% for 2003, 7.0% for 2002 and 7.5% for 2001. No
medical trend is applicable because the Company's share of the cost is
frozen.
10. Business segments. The Company has identified two business segments,
each of which is managed separately along product lines. The Company's
operations are substantially in the Southeastern and Mid-Atlantic states.
The transportation segment hauls liquid and dry bulk 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):
2003 2002 2001
Revenues:
Transportation (a) $ 87,996 81,921 103,189
Real estate (b) 15,307 15,028 18,069
$103,303 96,949 121,258
Operating profit:
Transportation (a) $ 2,360 5,057 (2,248)
Real estate (b) 9,028 8,864 11,550
Corporate expenses (1,473) (1,508) (1,424)
$ 9,915 12,413 7,878
Capital expenditures:
Transportation $ 7,086 11,430 5,011
Real estate 13,327 7,179 12,920
Other 0 0 497
$ 20,413 18,609 18,428
Depreciation, depletion and
amortization:
Transportation $ 8,510 7,876 8,175
Real estate 3,211 2,961 3,259
Other 235 249 37
$ 11,956 11,086 11,471
Identifiable assets at September 30:
Transportation $ 45,055 47,519 48,987
Real estate 116,269 105,850 101,274
Cash 2,552 529 440
Unallocated corporate assets 1,340 1,565 2,058
$165,216 155,463 152,759
(a) Fiscal 2001 includes revenues of $22,623,000 and operating losses of
$6,309,000 attributed to Patriot Transportation, Inc. which ceased operations
in September, 2001.
(b) Fiscal 2003, 2002 and 2001 includes revenue of $68,000, $554,000, and
$3,978,000 and operating profit of $47,000, $323,000, and $2,886,000,
respectively, from the sale of real estate.
11. Discontinued operations. During the fourth quarter of 2003, a subsidiary
of the Company sold a mining property, located in St. Mary's County, Maryland
to FRI for $1,836,000. According to the provisions of SFAS 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the property is
considered a component of the entity, as defined by SFAS 144, and should
therefore be treated as a discontinued operation. A gain on disposal of the
property of $657,000, net of income taxes of $420,000, has been recorded
after income from continuing operations. Since there have been no active
mining operations on the property during the periods presented, revenues and
expenses from the discontinued operations are not material.
12. Acquisition. On May 30, 2002, the Company acquired substantially all of
the operating assets of Infinger Transportation Company, Inc. (Infinger), a
regional tank truck carrier based in Charleston, South Carolina. The
acquisition was accounted for as a purchase. The purchase price was
approximately $3,698,000, including costs associated with the acquisition.
The purchase price, which was financed through the revolving credit facility,
has been allocated to the assets acquired based on their respective fair
values. The purpose of the acquisition was to enable the Company to expand
into new markets and increase capacity in existing markets. No goodwill was
recorded in the transaction.
13. Fair values of financial instruments. At September 30, 2003 and 2002, the
carrying amount reported in the consolidated balance sheet for cash and cash
equivalents, short-term notes payable to bank and revolving credit
approximate their fair value. The fair values of the Company's other long-
term debt are estimated based on current rates available to the Company for
debt of the same remaining maturities. At September 30, 2003, the carrying
amount and fair value of such other long term debt was $39,361,000 and
$41,795,000, respectively.
14. Contingent liabilities. Certain of the Company's subsidiaries are
involved in litigation on a number of matters and are subject to certain
claims which 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 none of these matters are
expected to have a material adverse effect on the Company's consolidated
financial condition, results of operations or cash flows.
In addition, a transportation subsidiary of the Company is a defendant in a
pending vehicular accident case that is scheduled to go to trial in January
2004. The plaintiff in that case is seeking compensatory and punitive
damages. Although the Company, through its subsidiary, is vigorously
defending the litigation and believes that there is no basis for an award of
punitive damages, the Company believes that there is a significant risk that
the Company's subsidiary will incur losses in connection with such case, a
portion of which (any punitive damages award) may or may not be covered by
insurance, depending in part on the findings at trial. At this time neither
the Company nor its counsel can reasonably predict the amount or the range of
such loss, if any. However, if punitive damages are awarded and are not
covered by insurance, and such amounts are material, such award could have a
material adverse impact on the Company's financial condition, results of
operations or cash flows.
15. Commitments. The Company, at September 30, 2003, had entered into various
contracts to develop real estate with remaining commitments totaling
$930,000, and to purchase transportation equipment for approximately
$548,000.
A subsidiary of the Company has entered into an agreement to develop and sell
to a major home builder a minimum of 292 residential lots on 73.6 acres of the
Bird River Property currently zoned for residential. The minimum aggregate
purchase price for these lots is $28,705,000.
The rights and obligations of the subsidiary under this agreement are
specifically contingent upon the approval by Baltimore County of a Planned
Unit Development (PUD) by July 1, 2006 which will permit the development of
and use of the property for a minimum of 292 residential lots. The
subsidiary's rights and obligations are also expressly contingent upon the
construction of the proposed Route 43 and the subsidiary's ability to have
vehicular and water and sewer connection access to the property by July 1,
2007, at what the subsidiary deems in its sole discretion to be a commercially
reasonable cost. The obligations of the builder under the agreement also are
subject to customary conditions precedent.
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders of
Patriot Transportation Holding, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity, and cash flows
present fairly, in all material respects, the financial position of Patriot
Transportation Holding, Inc. and its subsidiaries at September 30, 2003 and
2002, and the results of their operations and their cash flows for each of
the two years in the period ended September 30, 2003 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
December 16, 2003
Jacksonville, Florida
Independent Auditors' Report
To the Board of Directors and Shareholders
Patriot Transportation Holding, Inc.
We have audited the consolidated statements of income, shareholders'
equity, and cash flows of Patriot Transportation Holding, Inc. and
subsidiaries for the year ended September 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of Patriot Transportation Holding, Inc.
and subsidiaries' operations and cash flows for the year ended September
30, 2001, in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche, LLP
Certified Public Accountants
Jacksonville, Florida
December 10, 2001
Directors and Officers
Directors
John E. Anderson (1)
President and Chief Executive
Officer of the Company
Edward L. Baker (1)
Chairman of the Board of the Company
and of Florida Rock Industries, Inc.
John D. Baker II (1)
President and Chief Executive
Officer of Florida Rock Industries, Inc.
Thompson S. Baker II
Vice President of
Florida Rock Industries, Inc.
David H. deVilliers, Jr.
Vice President of the Company and
President of the Company's Real Estate Group
Luke E. Fichthorn III (3)
Private Investment Banker,
Twain Associates and Chairman of the
Board and Chief Executive Officer of
Bairnco Corporation
Francis X. Knott (2)
Chairman of Partner Management Co., LLC
and of Partners Realty Trust, Inc.
Robert H. Paul III (2)(3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
H. Jay Skelton (2)
President and Chief Executive Officer of
DDI, Inc.
Martin E. Stein, Jr. (3)
Chairman and Chief Executive Officer of
Regency Centers Corporation and
Chairman of the Regency Group, Inc.
James H. Winston (3)
President of LPMC of Jax, Inc.,
Omega Insurance Company and Citadel
Life & Health Insurance Co.
________________
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Officers
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer
David H. deVilliers, Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
Ray M. Van Landingham
Vice President, Finance and Administration
and Chief Financial Officer
Gregory B. Lechwar
Controller and Chief Accounting Officer
Rick J. Copley
President, SunBelt Transport, Inc.
Robert E. Sandlin
President, Florida Rock & Tank Lines, Inc.
Patriot Transportation Holding, Inc.
General Office: 1801 Art Museum Drive
Jacksonville, Florida 32207
Telephone: (904) 396-5733
Annual Meeting
Shareholders are cordially invited to attend the Annual Shareholders Meeting
which will be held at 2 p.m. local time, on Wednesday, February 4, 2004, 155
East 21st Street, Jacksonville, Florida, 32206.
Transfer Agent
Wachovia Bank, N.A.
Corporate Trust Client Services NC-1153
1525 West W. T. Harris Boulevard - 3C3
Charlotte, NC 28288-1153
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
McGuireWoods LLP
Jacksonville, Florida
Independent Auditors
PricewaterhouseCoopers LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: PATR)
Form 10-K
Shareholders may receive without charge a copy of Patriot Transportation
Holding, Inc.'s annual report on Form 10-K for the fiscal year ended
September 30, 2003 as filed with the Securities and Exchange Commission by
writing to the Treasurer at 1801 Art Museum Drive Suite 300, Jacksonville,
Florida 32207.
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