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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17554
PATRIOT TRANSPORTATION HOLDING, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2924957
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices)
(Zip Code)
904/396-5733
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes ________
No _X______.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of April 27, 2004: 2,929,108 shares of
$.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 2004
CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 8
Item 3. Quantitative and Qualitative Disclosures about Market Risks 13
Item 4. Controls and Procedures 13
Part II. Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 4. Submission of Matters To a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 11 Computation of Earnings Per Share 21
Exhibit 31 Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 22
Exhibit 32 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 25
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, September 30,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 435 757
Cash held in escrow 12,887 1,795
Accounts receivable (including related
party of $221 and $359) 8,563 7,898
Less allowance for doubtful accounts (590) (566)
Inventory 587 670
Prepaid expenses and other 3,184 3,411
Total current assets 25,066 13,965
Property, plant and equipment, at cost 217,263 216,640
Less accumulated depreciation and depletion (80,161) (75,290)
Net property, plant and equipment 137,102 141,350
Assets held for sale - 3,912
Other assets 6,259 5,989
Total assets $168,427 165,216
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,075 4,734
Accrued liabilities 4,798 4,941
Liabilities associated with assets held for sale - 60
Long-term debt due within one year 8,090 1,485
Total current liabilities 16,963 11,220
Long-term debt 44,976 57,816
Deferred income taxes 13,410 10,760
Accrued insurance reserves 5,722 5,722
Other liabilities 1,686 1,669
Commitments and contingencies (Note 9)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
2,929,108 and 2,932,708 shares issued
and outstanding, respectively 293 293
Capital in excess of par value 5,414 6,065
Retained earnings 79,963 71,671
Total shareholders' equity 85,670 78,029
Total liabilities and shareholders' equity $168,427 165,216
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
2004 2003 2004 2003
Revenues:
Related parties $ 1,959 1,668 3,995 3,275
Non-related parties 26,667 23,405 52,518 45,840
28,626 25,073 56,513 49,115
Cost of operations 23,503 21,158 46,027 40,870
Gross profit 5,123 3,915 10,486 8,245
Selling, general and
administrative expense 2,155 2,010 4,375 3,988
Recovery of non-recurring charges
related to closed subsidiary - - - (25)
Operating profit 2,968 1,905 6,111 4,282
Other income 95 - 95 -
Interest expense, net (969) (886) (1,954) (1,725)
Income before income taxes 2,094 1,019 4,252 2,557
Provision for income taxes (774) (397) (1,616) (997)
Income from continuing
operations 1,320 622 2,636 1,560
Discontinued operations:
Gain on sale of rental
property, net of tax 5,655 - 5,655 -
Net Income $ 6,975 622 8,291 1,560
Earnings per common share:
Income from continuing
operations - basic $ .45 .20 .90 .50
- diluted $ .44 .20 .89 .50
Gain on disposition of dis-
continued operations
- basic $ 1.93 - 1.93 -
- diluted $ 1.90 - 1.90 -
Net income-basic $ 2.38 .20 2.83 .50
Net income-diluted $ 2.34 .20 2.79 .50
Average shares outstanding
- basic 2,931 3,053 2,932 3,093
- diluted 2,979 3,077 2,976 3,118
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2004 AND 2003
(In thousands)
(Unaudited)
2004 2003
Cash flows from operating activities:
Net income $8,291 1,560
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation, depletion and amortization 6,152 5,993
Deferred income taxes 2,499 171
Gain on disposition of property, plant and equipment (9,233) (124)
Net changes in operating assets and liabilities:
Accounts receivable (649) (416)
Prepaid expenses and other current assets 318 145
Accounts payable and accrued liabilities (651) (2,813)
Net change in insurance reserve and other
liabilities 17 12
Other, net 114 24
Net cash provided by operating activities 6,858 4,552
Cash flows from investing activities:
Purchase of property, plant and equipment (1,824) (14,759)
Additions to other assets (619) (422)
Cash held in escrow (11,092) -
Proceeds from sale of property, plant and
equipment, and other assets 13,300 977
Net cash used in investing activities (235) (14,204)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 8,500 -
Net (decrease) increase in revolving debt (13,833) 12,800
Repayment of long-term debt (962) (607)
Repurchase of Company stock (2,132) (2,485)
Exercise of employee stock options 1,482 102
Net cash (used in) provided by financing activities (6,945) 9,810
Net (decrease) increase in cash and cash equivalents (322) 158
Cash and cash equivalents at beginning of year 757 529
Cash and cash equivalents at end of the period $ 435 687
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004
(Unaudited)
(1) Basis of Presentation. The accompanying condensed consolidated
financial statements include the accounts of Patriot Transportation
Holding, Inc. and its subsidiaries (the "Company"). These
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for
interim financial information and the instructions to Form 10-Q and
do not include all the information and footnotes required by
accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the
results for the interim periods have been included. Operating
results for the three months and six months ended March 31, 2004
are not necessarily indicative of the results that may be expected
for the fiscal year ended September 30, 2004. The accompanying
condensed consolidated financial statements and the information
included under the heading "Management's Discussion and Analysis"
should be read in conjunction with the Company's consolidated
financial statements and related notes included in the Company's
Form 10-K for the year ended September 30, 2003.
Certain reclassifications have been made to the Fiscal 2003
financial statements to conform to the presentation adopted in
Fiscal 2004.
(2) Recent Accounting Pronouncements. In December of 2003, the FASB
revised Statement No. 132 "Employers' Disclosures about Pensions
and Other Postretirement Benefits." This Statement retains the
disclosure requirements of the original Statement, which it
replaces, and requires additional disclosures about the assets,
obligations, cash flows and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement
plans. The annual financial statement disclosures are effective for
the Company for the fiscal year ended September 30, 2004. For the
three and six months ended March 31, 2004 and 2003, no
postretirement benefit income or expense was recorded. Based on
current estimates, there is no requirement to make cash
contributions for fiscal 2004.
(3) 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 commodities by
motor carrier. The real estate segment owns real estate of which a
substantial portion is under mining royalty agreements or leased.
The real estate segment also holds certain other real estate for
investment and is developing commercial and industrial properties.
Operating results and certain other financial data for the
Company's business segments are as follows (in thousands):
Three Months ended Six Months ended
March 31, March 31,
2004 2003 2004 2003
Revenues:
Transportation $24,280 21,312 48,052 41,978
Real estate 4,346 3,761 8,461 7,137
$28,626 25,073 56,513 49,115
Operating profit
Transportation $ 1,121 323 2,467 1,068
Real estate 2,226 1,978 4,430 3,976
Corporate expenses (379) (396) (786) (762)
$ 2,968 1,905 6,111 4,282
Identifiable assets:
March 31, Sept. 30,
2004 2003
Transportation $ 42,200 45,055
Real estate 124,453 116,269
Cash items 435 2,552
Unallocated corporate assets 1,339 1,340
$168,427 165,216
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
March 31, September 30,
2004 2003
Revolving Credit,
Uncollateralized, payable
in 2005 $ 6,167 20,000
5.7% to 9.5% mortgage note
payable in installments
through 2020 46,899 39,361
53,066 59,361
Less portion due in one year 8,090 1,545
$44,976 57,816
(5) Related Party Transactions. The Company, through its
transportation subsidiaries, hauls commodities by tank and flatbed
trucks for Florida Rock Industries, Inc. (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. In addition, the Company outsources certain
functions to FRI, including some administrative, human resources,
legal and risk management services.
On March 30, 2004, a subsidiary sold a parcel of land and
improvements containing approximately 6,321 acres in Suwannee and
Columbia Counties, near Lake City, Florida to a subsidiary of FRI
for $13,000,000 in cash, resulting in a gain of $5,655,000 after
income taxes. The sales price was approved by the Company's Audit
Committee, 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. See
Note (6) for further information.
A subsidiary of the Company has an agreement 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. Closing of the sale is scheduled to
occur in early May, 2004. The Company will place the proceeds of
this transaction in escrow in anticipation of identifying suitable
exchange properties under Section 1031 of the United States
Internal Revenue Code. 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. When
this transaction closes, the Company will recognize a gain from
discontinued operations of approximately $999,000, net of income
taxes, or $.34 per diluted common share.
A subsidiary of the Company has an Agreement to sell 108 acres of
land located in the northwest quadrant of I-395 and I-495 at Edsall
Road in Springfield, Virginia to FRI for $15,000,000. Closing is
scheduled to occur by May 10, 2004. 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 will
place the proceeds of this transaction in escrow in anticipation of
identifying suitable exchange properties under Section 1031 of the
United States Internal Revenue Code. Upon closing, the Company will
recognize a gain from discontinued operations on the sale of
approximately $7,772,000 net of income taxes, or $2.61 per diluted
common share. The tract is rented to a subsidiary of FRI and the
Company recorded rental income of approximately $325,000 for the
first half of Fiscal 2004.
(6) Discontinued operations. On March 31, 2004, a subsidiary of the
Company sold a parcel of land and improvements to FRI for
$13,000,000 in cash. The property was leased to FRI under an
operating lease. The property is considered a component of the
entity and therefore its disposition is treated as a discontinued
operation. A gain on disposal of $5,655,000, net of income taxes of
$3,465,000, has been recorded as a gain from discontinued
operations. Prior to the sale, FRI was financially responsible for
all operations of the property and therefore, rental revenue and
expenses from the discontinued operations are not material. The
proceeds from the sale have been placed in an escrow account to
facilitate an IRC Section 1031 exchange.
In April 2004, $11,350,000 of the escrowed funds were used to
purchase two existing commercial warehouse/distribution buildings
totaling 303,000 square feet and an adjacent 8.75 acre lot located
in Newark, Delaware. One of the buildings is fully leased and the
other is available for lease. The adjacent lot will be held for
future development.
(7) Repurchase of Company Stock. During the second quarter of
Fiscal 2004, the Company repurchased and retired 66,500 shares of
its common stock for $2,132,000, under a plan approved by the Board
of Directors.
(8) Stock-Based Compensation Plan. The Company accounts for its
stock-based employee compensation plans under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for Stock
Issued to Employees", and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all
options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net income and
earnings per share if the company had applied the fair value
recognition provisions of FASB Statement No. 123, "Accounting for
Stock-Based Compensation", to stock-based employee compensation.
Three Months ended Six Months ended
(Amounts in thousands) March 31, March 31,
2004 2003 2004 2003
Net income, as reported $ 6,975 622 8,291 1,560
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
income taxes 121 136 338 294
Pro forma net income $ 6,854 486 7,953 1,266
Earnings per share:
Basic as reported $ 2.38 .20 2.83 .50
Basic pro forma $ 2.34 .16 2.71 .41
Diluted as reported $ 2.34 .20 2.79 .50
Diluted pro forma $ 2.30 .16 2.67 .41
(9) Contingencies and Commitments. Certain of the Company's
subsidiaries are involved in litigation on a number of matters and
are subject to certain claims that arise in the normal course of
business. The Company has retained certain self-insurance risks
with respect to losses for third party liability and property
damage. In the opinion of management and advice of legal counsel,
none of these matters are expected to have a materially adverse
effect on the Company's consolidated financial condition, results
of operations or cash flows.
In December 2003, the Company committed to develop a 145,000 square
foot build to suit warehouse/office building for a NYSE listed
company pursuant to a 15 year triple net lease. This project is
expected to cost approximately $14,900,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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, FRI
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.
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.
Financial results of the Company for any individual quarter are not
necessarily indicative of the results to be expected for the year.
Three Months Operating Results
For the second quarter of Fiscal 2004, consolidated revenues were
$28,626,000, an increase of $3,553,000 or 14.2% over the same
quarter last year.
The transportation segment's revenues for the second quarter of
Fiscal 2004 were $24,280,000, an increase of $2,968,000 or 13.9%
over the same quarter last year. This increase was a result of a
12.8% increase in miles hauled over the same quarter last year. The
increase in miles hauled resulted primarily from a 9.3% increase in
miles hauled in the tankline division and a 19.7% increase in miles
hauled in the flatbed division, reflecting higher customer demand.
Real estate revenues were $4,346,000 for the second quarter of
Fiscal 2004, an increase of $585,000 or 15.6% from the second
quarter of Fiscal 2003. Royalties from mining contracts increased
$219,000 or 15.7% primarily due to a 23.6% increase in tons mined.
Revenues from flex office-warehouse properties increased $432,000
or 18.8%, primarily due to a 16.4% increase in average leased
square feet and, to a lesser extent, minimal price increases. Real
estate revenues included property sales of $65,000 in the second
quarter of 2003 and no property sales in the second quarter of
2004.
Consolidated gross profit for the second quarter of 2004 was
$5,123,000, an increase of $1,208,000 or 30.9% from the second
quarter of last year. Gross profit in the transportation segment
increased $959,000 or 49.5% achieved by the increased revenue and a
steady level of fixed costs. Gross profit in the real estate
segment increased $249,000 or 12.6% from the second quarter of 2003
due to increased royalties from mining operations and additional
gross profit from newly developed commercial properties.
Selling, general and administrative expense increased $145,000 or
7.2% for the second quarter of 2004 compared to the same period
last year. On a comparative basis, selling, general and
administrative expense as a percent of consolidated revenues, was
7.8% as compared to 8.0% last year.
Income from continuing operations was $1,320,000 or $.44 per
diluted share for the second quarter of Fiscal 2004, an increase of
$698,000 from the same quarter last year.
A gain from discontinued operations of $5,655,000 net of income
taxes was recorded during the quarter, as a result of the sale of
land and improvements to a related party for $13,000,000.
Net income was $6,975,000 or $2.34 per diluted share for the second
quarter of Fiscal 2004 compared to $622,000 or $.20 per diluted
share for the same quarter last year.
Six Month's Operating Results.
For the first half of Fiscal 2004, consolidated revenues were
$56,513,000, an increase of $7,398,000 or 15.1% over the same
period last year.
The transportation segment's revenues for the first half of Fiscal
2004 were $48,052,000, an increase of $6,074,000 or 14.5% over the
same period last year. The revenue increase is primarily due to a
7.9% increase in miles hauled in the tankline division and a 27.1%
increase in miles for the flatbed division. These increases reflect
higher customer demand over the same period last year.
Real estate revenues were $8,461,000 for the first half of 2004, an
increase of $1,324,000 or 18.6% from the first half of 2003.
Royalties from mining contracts increased $457,000 or 16.2%
primarily resulting from a 38.2% increase in tons sold. Revenues
from flex office-warehouse properties increased $933,000 or 21.9%,
primarily due to a 16.3% increase in average leased square feet
and, to a lesser extent, price increases. Real estate revenues
included property sales of $65,000 in the first half of 2003 and no
property sales during the first half of 2004.
Consolidated gross profit increased $2,241,000 or 27.2% for the
first half as compared to the same period last year. Gross profit
in the transportation segment increased $1,788,000 or 41.9% as a
result of the increased revenue and steady level of fixed costs.
Gross profit in the real estate segment increased $453,000 or 11.4%
from the first half of 2004 due to increased royalties from mining
operations, as well as additional gross profits from newly
developed commercial properties.
Selling, general and administrative expense increased $387,000 or
9.7% for the first half of 2004 compared to the same period last
year. On a comparative basis, selling, general and administrative
expense as a percent of consolidated revenues, was 7.7% compared to
8.1% last year.
The Company recorded an income tax provision of $1,616,000 in the
first half of 2004 compared to $997,000 in the same period last
year. The effective tax rate decreased to 38% in 2004 from 39% in
2003.
Income from continuing operations was $2,636,000 or $.89 per
diluted share for the first half of Fiscal 2004 compared to
$1,560,000 or $.50 per diluted share for the first half of last
year.
Discontinued operations reflects a gain of $5,655,000 net of income
taxes, as a result of the sale of land and improvements to a
related party for $13,000,000.
Net income was $8,291,000 or $2.79 per diluted share for the first
half of Fiscal 2004 compared to $1,560,000 or $.50 per diluted
share for the same period last year.
Summary and Outlook
The Company's real estate and transportation businesses are both
experiencing an improved economic climate as the result of a
strengthening regional and national economy. While low interest
rates continue to enhance overall business conditions, the
Company's real estate development operations are encountering
stronger levels of inquiry from prospective tenants for the
Company's flexible office/warehouse product.
Demand for hauling services has also strengthened for the Company's
transportation business. Improved demand and pricing is especially
occurring for the Company's flatbed trucking operations which haul
primarily construction materials. Adverse impacts from escalating
diesel fuel costs, driver availability, and burdensome health and
liability insurance costs will continue to challenge the trucking
industry.
Liquidity and Capital Resources
For the first six months of Fiscal 2004, operating cash flow
allowed the Company to repay $6,295,000 in long term debt and to
repurchase Company stock for $2,132,000. At March 31, 2004,
$30,833,000 was available under the Revolver.
The Board of Directors has authorized Management to repurchase
shares of the Company's common stock from time to time as
opportunities arise. During the second quarter of Fiscal 2004, the
Company repurchased 66,500 shares for $2,132,000. The Company has
approximately $3,868,000 available for the repurchase of the
Company's common stock as of March 31, 2004.
On March 30, 2004, a subsidiary of the Company sold a parcel of
land and improvements to FRI for $13,000,000 in cash, the proceeds
from which were placed in escrow in anticipation of utilizing the
funds for an IRS Section 1031 exchange. In April 2004, a subsidiary
of the Company purchased two existing commercial
warehouse/distribution buildings totaling 303,000 square feet and
an adjacent 8.75 acre building lot located in Newark, Delaware. The
purchase used $11,350,000 of the amounts held in escrow. The
Company plans to use the remaining escrowed funds for additional
1031 exchange property, as yet undetermined. If a suitable exchange
property cannot be found the funds will be made available for
general use.
During the second quarter of 2004, approximately $1,795,000 in
funds held in escrow received from the sale of a mining property in
September 2003 became unrestricted, as a suitable 1031 exchange
property was not found. The cash was used to repay amounts due
under the Revolver.
In December 2003, the Company committed to develop a 145,000 square
foot build to suit warehouse/office building for a NYSE listed
company pursuant to a 15 year triple net lease. This project is
expected to cost approximately $14,900,000. Construction costs will
be funded through the Company's Revolver. The Company expects to
obtain permanent non-recourse financing of approximately
$11,000,000 upon completion of the project to be fully amortized
over 15 years with level monthly payments of principal and
interest.
While the Company is affected by environmental regulations, such
regulations are not expected to have a major effect on the
Company's capital expenditures or operating results.
Based on current expectations, management believes that its
internally generated cash flow and access to existing credit
facilities are sufficient on a current and long term basis to meet
the liquidity requirements necessary to fund operations, capital
requirements and debt service.
A subsidiary of the Company signed an agreement to sell land to FRI
for $15,000,000. The Company will recognize a gain on the sale of
approximately $7,722,000, net of income taxes, or $2.61 per diluted
common share. A subsidiary of the Company has also agreed to sell a
parcel of land to FRI for $1,638,000. The Company will recognize a
gain on the sale of approximately $999,000, net of income taxes, or
$.34 per diluted common share. Both of these transactions are
expected to close in May 2004. Proceeds from the sale will be
placed in escrow in anticipation of redeploying the proceeds in a
tax deferred exchange under Section 1031 of the Internal Revenue
Code.
Reinvestment of the proceeds from these transactions is expected to
facilitate the Company's long term plan to build and own a
portfolio of successful rental properties. For additional
information see Note 5 of Notes to Condensed Consolidated Financial
Statements.
Forward-Looking Statements. Certain matters discussed in this
report contain forward-looking statements that are subject to risks
and uncertainties that could cause actual results to differ
materially from these indicated by such forward-looking statements.
These forward-looking statements relate to, among other things,
capital expenditures, liquidity, capital resources and competition
and may be indicated by words or phrases such as "anticipate",
"estimate", "plans", "projects", "continuing", "ongoing",
"expects", "management believes", "the Company believes", ?the
Company intends? and similar words or phrases. The following
factors and others discussed in the Company's periodic reports and
filings with the Securities and Exchange Commission are among the
principal factors that could cause actual results to differ
materially from the forward-looking statements: driver availability
and cost; regulations regarding driver qualification and hours of
service; availability and terms of financing; freight demand for
petroleum products including recessionary and terrorist impacts on
travel in the Company's markets; freight demand for building and
construction materials in the Company's markets; risk insurance
markets; competition; general economic conditions; demand for
flexible warehouse/office facilities in the Baltimore/Washington
D.C. area; interest rates; levels of construction activity in FRI's
markets; fuel costs; and inflation. However, this list is not a
complete statement of all potential risks or uncertainties.
These forward-looking statements are made as of the date hereof
based on management's current expectations, and the Company does
not undertake an obligation to update such statements, whether as a
result of new information, future events or otherwise. Additional
information regarding these and other risk factors may be found in
the Company's other filings made from time to time with the
Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There are no material changes to the disclosures made in Form 10-K
for the fiscal year ended September 30, 2003 with respect to this
item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. As required by
Rule 13A-15 under the Exchange Act, as of the end of the period
covered by this report, the Company carried out an evaluation of
the effectiveness of the design and operation of the Company's
disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of the
Company's management, including the Company's President and Chief
Executive Officer, Chief Financial Officer and Chief Accounting
Officer. The evaluation conducted by the Company's President and
Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer has provided them with reasonable assurance that
the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the
Company required to be included in the Company's periodic SEC
filings.
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to
be disclosed in Company reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commission's rule and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in Company reports
filed under the Exchange Act is accumulated and communicated to
management, including the Company's Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer as appropriate, to
allow timely decisions regarding required disclosures.
Changes in internal controls. There have been no changes in
internal controls or in other factors that could significantly
affect these controls during the quarter, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 9 to the Condensed Consolidated Financial Statements
included in this Form 10-Q.
Item 2. Changes in Securities and use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
(c)
Total
Number of
Shares (d)
Purchased Approximate
(a) As Part of Dollar Value of
Total (b) Publicly Shares that May
Number of Average Announced Yet Be Purchased
Shares Price Paid Plans or Under the Plans
Period Purchased per Share Programs or Programs
January 1
through
January 31 - - - -
February 1
through
February 29 62,900 32.093 62,900 $3,981,000
March 1
through
March 31 3,600 31.534 3,600 $3,868,000
Total 66,500 32.062 66,500
(1) In December, 2003, the Board of Directors authorized management
to expend up to $6,000,000 to repurchase shares of the Company's
common stock from time to time as opportunities arise.
Item 4. Submission of Matters to a Vote of Security Holders
On February 4, 2004, the Company held its annual shareholders
meeting. At the meeting, the shareholders elected the following
directors by the vote shown.
Term Votes Votes Broker/
Ending For Withheld Non-Votes
H. Jay Skelton 2008 2,710,051 30,995 -
John D. Baker II 2008 2,713,446 27,600 -
Luke E. Fichthorn 2008 2,710,051 30 995 -
Charles E. Commander III 2005 2,713,446 27,600 -
The directors whose terms of office as a director have continued
after the meeting are Edward L. Baker, Thompson S. Baker II, James
H. Winston, Robert H. Paul III, and Martin E. Stein, Jr.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The response to this item is submitted as a
separate Section entitled "Exhibit Index", starting on page
18.
(b) Reports on Form 8-K. On January 29, 2004, the Company filed
a Form 8-K reporting under Items 7, 9 and 12, a press
release announcing its earnings for the first quarter of the
Fiscal year ending September 30, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
April 29, 2004 PATRIOT TRANSPORTATION HOLDING, INC.
John E. Anderson
John E. Anderson
President and Chief Executive
Officer
Ray M. Van Landingham_
Ray M. Van Landingham
Vice President Finance &
Administration and Chief
Financial Officer
Gregory B. Lechwar
Gregory B. Lechwar
Controller and Chief
Accounting Officer
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2004
EXHIBIT INDEX
(3)(a)(1) Articles of Incorporation of Patriot Transportation
Holding Inc., incorporated by reference to the
corresponding exhibit filed with Form S-4 dated
December 13,1988. File No. 33-26115.
(3)(a)(2) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 19, 1991
incorporated by reference to the corresponding
exhibit filed with Form 10-K for the fiscal year
ended September 30, 1993. File No. 33-26115.
(3)(a)(3) Amendments to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 7,1995,
incorporated by reference to an appendix to the
Company's Proxy Statement dated December 15, 1994.
File No. 33-26115.
(3)(a)(4) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc., filed with
the Florida Secretary of State on May 6, 1999
incorporated by reference to a form of such
amendment filed as Exhibit 4 to the Company's Form
8-K dated May 5, 1999. File No. 33-26115.
(3)(a)(5) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 21, 2000,
incorporated by reference to the corresponding
exhibit filed with Form 10-Q for the quarter ended
March 31, 2000. File No. 33-26115.
(3)(b)(1) Restated Bylaws of Patriot Transportation Holding,
Inc. adopted December 1, 1993, incorporated by
reference to the corresponding exhibit filed with
Form 10-K for the fiscal year ended September 30,
1993. File No. 33-26115.
(3)(b)(2) Amendment to the Bylaws of Patriot Transportation
Holding, Inc. adopted August 3, 1994, incorporated
by reference to the corresponding exhibit filed
with Form 10-K for the fiscal year ended September
30, 1994. File No. 33-26115.
(3)(b)(3) Amendment to the 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
thereto and SunTrust Bank as Administrative Agent,
incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended December 31, 2001.
File No. 33-26115.
(4)(d) The Company and its consolidated subsidiaries have
other long-term debt agreements 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.
(10)(i) Purchase and Sale Agreement dated August 25, 2003
between Florida Rock Properties, Inc. and Florida
Rock Industries, Inc., incorporated by reference to
an exhibit filed with Form 10-K for the year ended
September 30, 2003.
(10)(j) Agreement of Purchase and Sale dated October 21,
2003 between FRP Bird River, LLC and The Ryland
Group, Inc., incorporated by reference to an
exhibit filed with form 10-K for the year ended
September 30, 2003.
(10)(k) Purchase and Sale Agreement dated March 30, 2004
between Florida Rock Properties, Inc. and Mule Pen
Quarry Corporation.
(11) Computation of Earnings Per Common Share.
(14) Financial Code of Ethical Conduct between the
Company, Chief Executive Officers and Financial
Managers, adopted December 4, 2002, incorporated by
reference to an exhibit filed with Form 10-K for
the year ended September 30, 2003.
(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.