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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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-26115
FRP PROPERTIES, 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.)
155 East 21st Street, Jacksonville, Florida 32206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 904/355-1781
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. [ ]
At December 1, 1999 aggregate market value of the shares of Common Stock
held by non-affiliates of the registrant was $47,114,410. At such date
there were 3,363,917 shares of the registrant's Stock outstanding.
Documents Incorporated by Reference
Portions of the FRP Properties, Inc. 1999 Annual Report to stockholders
are incorporated by reference in Parts I, II, III and IV.
Portions of the FRP Properties, Inc. Proxy Statement dated December 15,
1999 are incorporated by reference in Part III.
PART I
Item 1. BUSINESS.
FRP Properties, Inc., which was incorporated in Florida in 1988,
and its subsidiaries (the "Company") are engaged in the
transportation and real estate businesses. Florida Rock & Tank
Lines, Inc.("Tank Lines"), SunBelt Transport, Inc. ("SunBelt") and
Patriot Transportation, Inc.("Patriot"), wholly owned subsidiaries,
are southeastern transportation companies concentrating in the
hauling, by motor carrier, of liquid and dry bulk commodities and
materials on flatbed trailers. Another wholly owned subsidiary,
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"). The Company also
holds certain other real estate for investment. Other wholly owned
subsidiaries of the Company, own and are developing certain
industrial rental properties near Baltimore, Maryland.
Substantially all of the Company's operations are conducted within
the Southeastern and Mid-Atlantic United States.
The Company has two major business segments: transportation and
real estate. Industry segment information is presented in Notes 2
and 9 to the consolidated financial statements included in the
accompanying 1999 Annual Report to stockholders and is incorporated
herein by reference.
On December 1, 1999, the Board of Directors approved spinning off
to its shareholders a new company which would include the real
estate business while retaining the transportation business in FRP
Properties, Inc. It is anticipated that the spin-off will be
effective March 31, 2000. For additional information, see Note 13
to the Consolidated Financial Statements.
FRI accounted for approximately 8.5% of the Company's consolidated
revenues for fiscal 1999.
Revenues from royalties and from the dump and flatbed truck fleet
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 liquid and dry
bulk commodities in tank and dump trucks. SunBelt is engaged in
hauling building and construction materials on flatbed trailers.
Patriot was formed late in fiscal 1999, to develop business using
owner/operators and agents to haul various types of freight
throughout the United States. Information as to the Transportation
operations' revenue by principal markets is presented on page 5 of
the accompanying 1999 Annual Report to stockholders under the
caption, "Management Analysis" and is incorporated herein by
reference.
The Company's owned and leased dump truck fleet hauls principally
construction aggregates from terminals in Fort Myers, and Orlando,
Florida. There are from 8 to 12 major competitors in each of the
Company's markets and numerous small competitors in all markets.
The Company normally experiences considerable competition in all of
its markets.
The Company's owned and leased tank truck fleet hauls liquid and
dry bulk commodities, including petroleum and chemicals. It
operates from terminals in Jacksonville, Ft. Myers, Orlando, Panama
City, Pensacola, Port Everglades, Tampa and White Springs, Florida;
Albany, Atlanta, Augusta, Bainbridge, Columbus, Dalton, Macon and
Savannah, Georgia; Knoxville and Nashville, Tennessee; and
Birmingham, Alabama. It also has a central dispatch/office in
Montgomery, Alabama. The Company has from 4 to 8 major tank truck
competitors in each of its markets.
The Company's owned flatbed fleet is based at Jacksonville and
Tampa, Florida; Atlanta and Savannah, Georgia; Salisbury, North
Carolina and South Pittsburg, Tennessee and hauls building and
construction materials in 12 southeastern states. There are 10
major competitors in the Company's market area and numerous small
competitors in the various states served.
At September 30, 1999, the Company had placed orders and was
committed to purchasing tractors and trailers costing approximately
$7,660,000.
Price, service, and terminal location are the major factors which
affect competition within a given market.
During fiscal 1999 the transportation segment's ten largest
customers accounted for approximately 33% of transportation'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. The first is land with
stone or sand and gravel deposits, of which substantially all is
leased to Florida Rock Industries, Inc. under mining royalty
agreements whereby 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. The
second is land and/or buildings leased under rental agreements, and
the third is land and/or buildings which are being developed for
rental or held for future appreciation.
Additional information about the Company's Real Estate segment is
contained on page 1 under the captions "Real Estate Group" and in
Note 9 to the consolidated financial statements included in the
accompanying 1999 Annual Report to stockholders and is incorporated
herein by reference.
The Company's real estate strategy of developing high quality,
flexible warehouse/office space in the Baltimore-Washington markets
continues to be successful. One hundred percent of the
warehouse/office space built by the Company over the last several
years was leased at September 30, 1999.
Price, location, rental space availability, structural design and
flexibility are the major factors which affect competition in the
warehouse rental market. The Company experiences considerable
competition in all of its markets.
In fiscal 1999 real estate revenues, excluding the sale of real
estate, were divided approximately 60% from mining and minimum
royalties and 40% from rentals. FRI accounted for approximately
54% of such revenue.
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. Additional information concerning environmental
matters is presented in Note 11 to the consolidated financial
statements included in the accompanying 1999 Annual Report to
stockholders and in Item 3 "Legal Proceedings" of this Form 10-K,
and such information is incorporated herein by reference.
Employees. The Company employed approximately 856 people in its
Transportation Group, 19 people in its Real Estate Group, and 2
people in its Corporate offices at September 30, 1999.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida, Georgia,
Virginia, Washington, D.C., and Maryland.
Transportation Properties. At September 30, 1999 the Company
operated an owned (566) and leased (2) fleet of 568 trucks and had
20 sites for its trucking terminals in Florida, Georgia, Alabama
and Tennessee totaling approximately 94 acres. Of these acres, the
Company owned approximately 84 and leased approximately 10. The
Company also leases a central dispatch/office in Montgomery,
Alabama. The lease term runs from year-to-year.
Construction Aggregates Properties. The following table summarizes
the Company's principal construction aggregates locations and
estimated reserves at September 30, 1999, substantially all of
which are leased to FRI.
Tons of
Tons Mined Estimated
in Year Reserves
Ended at
9/30/99 9/30/99 Approximate
(000's) (000's) Acres Owned
The Company owns fourteen
locations currently being
mined located at
Brooksville, Astatula,
Miami, Grandin, Gulf
Hammock, Keuka, Lake Wales,
and in Marion and Lake
Counties, Florida; Forest
Park, Macon and Tyrone,
Georgia; St. Mary's County,
Maryland; and Manassas,
Virginia. 10,666 397,000 17,490
The Company owns four locations
being leased but not currently
being mined, located at Ft.
Myers and Newberry, Florida,
and Rome and Columbus, Georgia. - 254,000 3,688
Other Properties. The Company owns approximately 120 acres of land
in Virginia and Washington, D.C. and an office building and
approximately 6 acres in Florida which are leased to FRI. The
Company owns four parcels of land near Baltimore, Maryland. One
contains approximately 11 acres with a commercial warehouse and
office space (162,587 square feet), which at November 1, 1999 was
100% leased. The second contains approximately 17 acres with
195,615 square feet of commercial warehouse and office space of
which at November 1, 1999 was 100% leased. The third contains
approximately 10 acres with 187,517 square feet of
commercial/warehouse space that was 100% leased at November 1,
1999. The fourth contains 8.5 acres with an office building
(28,533 square feet) which is 6% occupied by the Company with the
balance 100% leased, including a portion leased to FRI. The
Company also owns 134 acres of land in Harford County, Maryland.
The site is being used for the development of the Lakeside Business
Park. A 5.2 acre section has been developed with 105,803 square
feet of commercial warehouse space that was 100% leased on November
1, 1999. Two sections of 4.15 acres each have been developed with
132,484 square feet of commercial warehouse space that was 100%
leased at November 1, 1999. A 7.33 acre site is being developed
with 96,800 square feet of commercial warehouse space under
construction at September 30, 1999. A 5.16 acre site, in Western
Baltimore County, is being developed with 83,100 square feet of
commercial warehouse space under construction at September 30,
1999. In addition, the Company owns approximately 11,183 acres of
investment and other real estate, of which approximately 7,738
acres are in Suwannee and Columbia Counties, Florida.
The Company purchased a 59 acre tract in Anne Arundel County,
Maryland near the Baltimore-Washington International Airport in May
1998. The project, Hillside Business Park, will provide the
Company an opportunity to develop 600,000 square feet of
warehouse/office space. Grading and infrastructure work on the
site will begin in the spring of 2000, and construction of the
first building is anticipated to commence during the summer of
2000.
As part of the Company's ongoing asset management activities, it
made application before the Zoning Commission of the District of
Columbia to re-zone its 5.8 acre site on the banks of the Anacostia
River from industrial to Plan Unit Development(PUD). Approval of
the application would allow the development of a 1.5 million square
foot commercial office component together with associated
waterfront enhancements in the Washington DC area. In November
1999, the Zoning Commission approved the Company's application.
At September 30, 1999 certain property, plant and equipment having
a carrying value of $21,911,000 was pledged on certain notes and
contracts with an outstanding principal balance totaling
$18,561,000 on such date.
In addition, certain properties having a carrying value at
September 30, 1999 of $1,519,000 were encumbered by industrial
revenue bonds which 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.
Item 3. LEGAL PROCEEDINGS.
Note 11 to the Consolidated Financial Statements included in the
accompanying 1999 Annual Report to stockholders 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
STOCKHOLDER MATTERS.
There were approximately 832 holders of record of FRP Properties,
Inc. common stock, $.10 par value, as of December 1, 1999. The
Company's common stock is traded on the Nasdaq Stock Market (Symbol
FRPP). Information concerning stock prices is included under the
caption "Quarterly Results" on page 4 the Company's 1999 Annual
Report to stockholders, and such information is incorporated herein
by reference. The Company has not paid a cash dividend during the
past two years. 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 3 to the
consolidated financial statements included in the accompanying 1999
Annual Report to stockholders 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 4 of the Company's 1999
Annual Report to stockholders 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 this Item 7 is included under
the caption "Management Analysis" on pages 5 and 6; under the
caption "Capital Expenditures" on page 1; and in Notes 1 through 13
to the consolidated financial statements included in the
accompanying 1999 Annual Report to stockholders and in Item 3
"Legal Proceedings" of this Form 10-K. Such information is
incorporated herein by reference.
Item 7.A QUANTITIVE AND QUALITATIVE 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 changes in interest rates affect the
amount of interest expense incurred.
The following table provides information about the Company's
financial instruments that are sensitive to changes in interest
rates:
Interest rate sensitivity
2000 2001 2002 2003 2004 Thereafter Total Fair Value
Liabilities:
Bank lines of credit $ 3,000 3,000 3,000
Weighted average
Interest rate 5.6%
Long-term debt at
Fixed rates $ 625 677 733 794 860 14,872 18,561 18,033
Weighted average
Interest rate 8.1% 8.1 8.0 8.0 8.0 8.1
Bank Revolving Credit
Variable interest $20,000 20,000 20,000
Rate
Weighted average
Interest 6.0%
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included under
the caption "Quarterly Results" on page 4 and on pages 7 through 15
of the Company's 1999 Annual Report to stockholders. Such
information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
No reportable events.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office Position Since
Edward L. Baker 64 Chairman of the Board May 3, 1989
John E. Anderson 54 President & Chief Feb. 17, 1989
Executive Officer
John R. Mabbett III 40 Vice President and Feb. 4, 1993
Secretary
Ish Copley 66 President of SunBelt Aug. 9, 1992
Transport, Inc., the
Company's flatbed
trucking operation
David H.
deVilliers, Jr. 48 Vice President June 1, 1989
James J. Gilstrap 52 Treasurer, Assistant Aug. 6, 1997
Secretary and Chief
Financial Officer
Wallace A. Patzke, 52 Controller and Chief Aug. 6, 1997
Jr. Accounting Officer
All of the above officers have been employed in their respective
positions for the past five years, except James J. Gilstrap and
Wallace A. Patzke,Jr.
James J. Gilstrap joined FRI in March 1997 and was elected Vice
President and Chief Financial Officer in May 1997. In August 1997
Mr. Gilstrap was elected Treasurer of FRI. From 1993 to 1997 he
was self-employed as a private investor. From 1984 to 1993 he was
a Partner and Executive Vice President and Chief Financial Officer
for The Regency Group, Inc., a holding company with interests and
operations in commercial real estate development, asset management,
brokerage and financial services.
Wallace A. Patzke, Jr. has been Vice President, Controller and
Chief Accounting Officer of FRI since August 1997. He was elected
Vice President of FRI in October 1996 and has served as controller
since December 1991.
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 annually by the
Board of Directors.
Information concerning directors, 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 dated December 15, 1999; and such
information is incorporated herein by reference.
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 dated December 15, 1999; 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 dated December 15, 1999; and such
information is incorporated herein by reference.
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 dated December 15,
1999 and in Note 2 captioned "Transactions with related parties" in
the Company's 1999 Annual Report to stockholders; and such
information is incorporated herein by reference.
PART IV
Item 14. 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 17 of this Form 10-K.
(3)Exhibits.
The response to this item is submitted as a
separate section. See Exhibit Index on pages 14
through 16 of this Form 10-K.
(b) Reports on Form 8-K.
During the three months ended September 30, 1999, the
Company filed a Form 8-K dated September 24, 1999
reporting a proposed spin-off of its real estate
business under Item 5, "Other Events".
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.
FRP PROPERTIES, INC.
Date: December 1, 1999 By JAMES J. GILSTRAP
James J. Gilstrap
Treasurer, Assistant Secretary and
Chief Financial Officer
By WALLACE A. PATZKE, JR.
Wallace A. Patzke, Jr.
Controller and Chief 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 1, 1999.
JOHN E. ANDERSON DAVID H. deVILLIERS, JR.
John E. Anderson David H. deVilliers, Jr.
Director, President, and Chief Director
Executive Officer
(Principal Executive Officer) ALBERT D. ERNEST, JR.
Albert D. Ernest, Jr.
JAMES J. GILSTRAP Director
James J. Gilstrap
Treasurer, Assistant Secretary LUKE E. FICHTHORN III
and Chief Financial Officer Luke E. Fichthorn III
(Principal Financial Officer) Director
WALLACE A. PATZKE, JR. FRANCIS X. KNOTT
Wallace A. Patzke, Jr. Francis X. Knott
Controller and Chief Accounting Director
Officer
(Principal Accounting Officer) RADFORD D. LOVETT
Radford D. Lovett
EDWARD L. BAKER Director
Edward L. Baker
Director JOHN R. MABBETT III
John R. Mabbett III
JOHN D. BAKER II Director
John D. Baker II
Director ROBERT H. PAUL III
Robert H. Paul III
THOMPSON S. BAKER II Director
Thompson S. Baker II
Director MARTIN E. STEIN
Martin E. Stein
ISH COPLEY Director
Ish Copley
Director JAMES H. WINSTON
James H. Winston
Director
FRP PROPERTIES, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
EXHIBIT INDEX
[Item 14(a)(3)]
(3)(a)(1) Articles of Incorporation of FRP Properties, Inc.
Previously filed with Form S-4 dated December 13,
1988. Filed No. 33-26155.
(3)(a)(2) Amendment to the Articles of Incorporation of FRP
Properties, Inc. filed with the Secretary of State
of Florida on February 19, 1991. Previously filed
with Form 10-K for the fiscal year ended September
30, 1993. Filed No. 33-26115.
(3)(a)(3) Amendments to the Articles of Incorporation of FRP
Properties, Inc. filed with the Secretary of State
of Florida on February 7, 1995. Previously filed
as appendix to the Company's Proxy Statement dated
December 15, 1994.
(3)(a)(4) Amendment to the Articles of Incorporation, filed
with the Florida Secretary of State on May 6, 1999.
A form of such amendment was previously filed as
Exhibit 4 to the Company's Form 8-K dated May 5,
1999. File No. 33-26115.
(3)(b)(1) Restated Bylaws of FRP Properties, Inc. adopted
December 1, 1993. Previously 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 FRP Properties, Inc.
adopted August 3, 1994. Previously filed with
Form 10-K for the fiscal year ended September 30,
1994. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of
Incorporation of FRP Properties, Inc. Previously
filed with Form S-4 dated December 13, 1988. And
amended Article III filed with Form 10-K for the
fiscal year ended September 30, 1993. And
Articles XIII and XIV previously filed as appendix
to the Company's Proxy Statement dated December 15,
1994. File No. 33-26115.
(4)(b) Specimen stock certificate of FRP Properties, Inc.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(4)(c) Credit Agreement dated as of November 15, 1995
among FRP Properties, Inc.; SunTrust Bank, Central
Florida, National Association; Bank of America
Illinois; Barnett Bank of Jacksonville, N.A.; and
First Union National Bank of Florida. Previously
filed with Form 10-Q for the quarter ended December
31, 1995. File No. 33-26115.
(4)(c)(1) First Amendment dated as of September 30, 1998
to the Credit Agreement dated as of November
15, 1995.
(4)(d) The Company and its consolidated subsidiaries have
other long-term debt agreements which do not exceed
10% of the total consolidated assets of the Company
and its subsidiaries, and the Company agrees to
furnish copies of such agreements and constituent
documents to the Commission upon request.
(4)(e) Rights Agreement, dated as May 5, 1999 between the
Company and First Union National Bank. Previously
filed as Exhibit 4 to the Company's Form 8-K dated
May 5, 1999. File No. 33-26115.
(10)(a) Post Distribution Agreement, dated May 7, 1986, by
and between Florida Rock Industries, Inc. and
Florida Rock & Tank Lines, Inc. and amendments
thereto dated July 1, 1987 and September 27, 1988.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(b) Tax Sharing Agreement, dated May 7, 1986, between
Florida Rock Industries, Inc. and Florida Rock &
Tank Lines, Inc. Previously filed with Form S-4
dated December 13, 1988. File No. 33-26115.
(10)(c) 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 Grand in Land, Inc. (see Exhibit
(10)(e)), but all of which may be material in the
aggregate. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(d) License Agreement, dated June 30, 1986, from
Florida Rock Industries, Inc. to Florida Rock &
Tank Lines, Inc. to use "Florida Rock" in corporate
names. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(e) Mining Lease Agreement, dated September 1, 1986,
between Florida Rock Industries, Inc. and Florida
Rock Properties, Inc., successor by merger to Grand
in Land, Inc. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(f) Summary of Medical Reimbursement Plan of FRP
Properties, Inc. Previously filed with Form 10-K
for the fiscal year ended September 30, 1993. File
No. 33-26115.
(10)(g) Split Dollar Agreement dated October 3, 1984,
between Edward L. Baker and Florida Rock
Industries, Inc. and assignment of such agreement,
dated January 31, 1986 from Florida Rock
Industries, Inc. to Florida Rock & Tank Lines, Inc.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(h) Summary of Management Incentive Compensation Plans.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1994. File No. 33-26115.
(10)(i) Management Security Agreements between the Company
and certain officers. Form of agreement previously
filed (as Exhibit (10)(I)) with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(I)(1) FRP Properties, Inc. 1989 Employee Stock Option
Plan. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115
(10)(I)(2) FRP Properties, Inc. 1995 Stock Option Plan.
Previously filed as an appendix to the Company's
Proxy Statement dated December 15, 1994.
(11) Computation of Earnings Per Common Share.
(13) The Company's 1999 Annual Report to stockholders,
portions of which are incorporated by reference in
this Form 10-K. Those portions of the 1999 Annual
Report to stockholders which are not incorporated
by reference shall not be deemed to be filed as
part of this Form 10-K.
(22) Subsidiaries of Registrant at September 30, 1999:
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 Limited
Partnership (a Maryland limited partnership) FRTL,
Inc. (a Florida corporation)SunBelt Transport, Inc.
(a Florida Corporation)Oz Limited Partnership (a
Maryland limited partnership) FRP Delaware, Inc. (a
Delaware corporation) FRP Lakeside L.P. (a Maryland
limited partnership) FRP Lakeside L.L.P. (a
Maryland limited partnership) FRP Lakeside L.L.C.
#2 (a Maryland limited liability corporation), FRP
Lakeside L.L.C. #3 (a Maryland limited liability
partnership), FRP Lakeside L.L.C. #4 (a Maryland
limited liability partnership), FRP Lakeside L.
L.C.#5 (a Maryland limited liability partnership),
FRP Hillside L.L.C. (a Maryland limited liability
corporation) FRP Windsor LLC (a Maryland limited
liability corporation), Patriot Transportation,
Inc.(a Florida corporation)
(23)(a) Consent of Deloitte & Touche LLP, Independent
Certified Public Accountants, appears on page 16 of
this Form 10-K.
(27) Financial Data Schedule
FRP PROPERTIES, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheet at September 30, 1999
and 1998 8(a)
For the years ended September 30, 1999, 1998 and 1997:
Consolidated statement of income 7(a)
Consolidated statement of stockholders' equity 10(a)
Consolidated statement of cash flows 9(a)
Notes to consolidated financial statements 11-15(a)
Independent Auditors' Report 16(a)
Selected quarterly financial data (unaudited) 4(a)
Consent of Independent Certified Public Accountants 18(b)
Consolidated Financial Statement Schedules:
Independent Auditors' Report 19(b)
II - Valuation and qualifying accounts 20(b)
III - Real estate and accumulated depreciation and
depletion 21-22(b)
(a) Refers to the page number in the Company's
1999 Annual Report to stockholders. 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.
Independent Auditors' Consent
We consent to the incorporation by reference in Registration Statement
(Form S-8 No. 33-43215) pertaining to the FRP Properties, Inc. 1989
Stock Option Plan and in the related Prospectus of our report dated
December 3, 1999, appearing in and incorporated by reference in this
Annual Report (Form 10-K) for the year ended September 30, 1999.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Jacksonville, Florida
December 21, 1999
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
FRP Properties, Inc.
Jacksonville, Florida
We have audited the consolidated financial statements of FRP
Properties, Inc. and subsidiaries ("FRP") as of September 30, 1999 and
1998, and for each of the three years in the period ended September 30,
1999, and have issued our report thereon dated December 3, 1999; such
consolidated financial statements and report are included in your 1999
Annual Report to Stockholders and are incorporated herein by reference.
Our audits also included the financial statement schedules of FRP,
listed in Item 14. These financial statement schedules are the
responsibility of FRP's management. Our responsibility is to express
an opinion based on our audits. 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 3, 1999
FRP PROPERTIES, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION
AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
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, 1999:
Allowance for
doubtful accounts $ 272,318 $ 12,000 - $ 284,318
Accrued risk
insurance $4,545,457 $4,016,846 - $3,176,910(b) $5,385,393
Accrued health
insurance $ 841,789 1,480,947 - 1,409,359(b) 913,377
Totals -
insurance $5,387,246 $5,497,793 $0 $4,586,269 $6,298,770
September 30, 1998:
Allowance for
doubtful accounts $257,952 $12,000 - ($2,366)(a) $272,318
Accrued risk
insurance $4,217,714 $4,401,537 - $4,073,794(b) $4,545,457
Accrued health
insurance $964,698 1,340,998 - 1,463,907(b) 841,789
Totals -
insurance $5,182,412 $5,742,535 $0 $5,537,701 $5,387,246
Year Ended
September 30, 1997:
Allowance for
doubtful accounts$233,537 $18,000 - ($6,415)(a) $257,952
Accrued risk
insurance $3,828,654 $3,113,219 - $2,724,159(b)$4,217,714
Accrued health
insurance $777,199 1,246,760 - 1,059,261(b) 964,698
Totals -
insurance $4,605,853 $4,359,979 $0 $3,783,420 $5,182,412
(a) Accounts written off less recoveries
(b) Payments
FRP PROPERTIES, INC.
SCHEDULE III(CONSOLIDATED)-REAL ESTATE & ACCUMULATED DEPRECIATION AND
DEPLETION
SEPTEMBER 30, 1999
Cost capi- Gross amount Date Deprecia-
Encumb- Initial cost talized at which Accumulated Of Date tion Life
County State rances to subsequent carried at Depreciation Constr- Acquired Computed
Company acquisition end period tion on:
(a)
Construction Aggregates
Alachua Florida $1,588,458 8,536 1,596,994 53,748 n/a 4/86 unit
Clay Florida 964,972 15,666 980,638 - n/a 4/86 unit
Clayton Georgia 381,787 0 381,787 3,236 n/a 4/86 unit
Dade Florida 9,374,660 0 9,374,660 7,180,001 n/a 4/86 unit
Fayette Georgia 109,342 400,872 0 400,872 42,349 n/a 4/86 unit
Hernando Florida 3,174,084 0 3,174,084 1,107,684 n/a 4/86 unit
Lake Florida 1,464,625 20,528 1,485,153 1,026,253 n/a 4/86 unit
Lee Florida 4,690,269 0 4,690,269 - n/a 4/86 unit
Floyd Georgia 300,000 0 300,000 - n/a 4/86 unit
Levy Florida 1,280,643 83,365 1,364,008 374,802 n/a 4/86 unit
Marion Florida 1,180,366 0 1,180,366 599,478 n/a 4/86 unit
Monroe Florida 840,442 0 840,442 201,628 n/a 4/86 unit
Muscogee Georgia 368,674 0 368,674 45,000 n/a 4/86 unit
Polk Florida 120,502 0 120,502 75,285 n/a 4/86 unit
Prince Wil. Virginia 298,463 0 298,463 241,184 n/a 4/86 unit
Putnam Florida 15,014,681 47,768 15,062,449 2,358,985 n/a 4/86 unit
St. Marys Maryland 1,269,818 0 1,269,818 508,104 n/a 4/86 unit
109,342 42,713,316 175,863 42,889,179 13,817,737
Land Rental Property
District of Columbia 6,712,973 2,152,586 8,865,559 911,687 n/a 4/86 15 yr.
Fairfax Virginia 2,035,013 0 2,035,013 - n/a 4/86 -
Putnam Florida 191,518 0 191,518 119,121 n/a 4/86 10 yr.
Spalding Georgia 19,572 0 19,572 - n/a 4/86 -
Suwannee Florida 268,536 4,567,382 371,294 4,938,676 759,316 n/a 4/86 10 yr.
268,536 13,526,458 2,523,880 16,050,338 1,790,124
Commercial Property
Baltimore Maryland 1,614,092 439,120 2,381,905 2,821,025 923,344 1990 10/89 31 yr.
Baltimore Maryland 4,572,886 961,379 5,768,186 6,729,565 1,228,091 1992 12/91 31 yr.
Baltimore Maryland 690,221 1,256,287 1,946,508 0 n/a 7/99 -
Duval Florida 2,804,344 142,461 2,946,805 1,858,905 n/a 4/86 20 yr.
Harford Maryland 1,754,300 14,209,359 15,963,659 246,252 1996 8/95 31 yr.
Howard Maryland 7,785,160 3,069,284 3,859,411 6,928,695 1,807,744 1987 9/88 31 yr.
Anne Arun Maryland 4,211,173 911,060 5,654,712 6,565,772 1,582,971 1989 9/88 31 yr.
Anne Arun Maryland 1,011,551 296,038 1,307,589 0 n/a 5/98 -
Orange Florida 57,047 0 57,047 12,046 n/a 4/86 10 yr.
18,183,311 11,698,306 33,568,359 45,266,665 7,659,353
Investment Property
Caroline Virginia 212,876 6,858 219,734 - n/a 4/86 unit
Duval Florida 640,310 0 640,310 - n/a 4/86 -
Fairfax Virginia 273,198 0 273,198 - n/a 4/86 -
Fayette Georgia 283,875 0 283,875 - n/a 4/86 -
Hillsborough Florida 187,161 0 187,161 - n/a 4/86 -
Suwannee Florida 400,313 0 400,313 106,525 n/a 4/86 unit
1,997,733 6,858 2,004,591 106,525
Miscellaneous 720,088 0 720,088 303,225
GRAND TOTALS $18,561,189 70,655,901 36,274,960 106,930,861 23,676,964
(a) The aggregate cost for Federal income tax purposes is $105,327,346.
FRP PROPERTIES, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND
ACCUMULATED DEPRECIATION AND DEPLETION
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
1999 1998 1997
Gross Carrying Cost of Real Estate:
Balance at beginning of period $ 98,302,279 86,939,335 80,950,619
Additions during period:
Acquisitions through foreclosure - - -
Other acquisitions 9,663,944 2,241,837 3,500,646
Improvements, etc. - 5,480,287 2,725,828
Reclassification of deposit - - -
Other (transfers) - 3,811,104 -
Deductions during period:
Cost of real estate sold 704,062 170,284 237,758
Other (abandonments) - - -
Other (transfers
to Transportation) 331,300 - -
Balance at close of period $106,930,861 98,302,279 86,939,335
Accumulated Depreciation & Depletion:
Balance at beginning of period $ 21,655,393 19,463,097 17,440,035
Additions during period:
Charged to cost & expense 2,446,115 2,278,379 2,108,105
Other (transfers from
Transportation) - - -
Deductions during period:
Cost of real estate sold 233,134 86,083 85,043
Other(transfer to Transp.) 191,410 - -
Balance at close of period $23,676,964 21,655,393 19,463,097
Annual Report 1999
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
1999 1998 Change
Revenues $82,019 73,974 +10.9
Gross profit $19,994 16,493 +21.2
Operating profit $12,380 9,625 +28.6
Income before income taxes $10,093 7,343 +37.5
Net income $ 6,157 4,480 +37.4
Per common share:
Basic earnings per share $ 1.79 1.30 +37.7
Diluted earnings per share $ 1.78 1.28 +39.1
Stockholder's equity $ 21.53 19.83 + 8.6
1999 CORPORATE HIGHLIGHTS
Revenues - up 10.9% to $82,019,000
Gross profit - up 21.2% to $19,994,000
Net income - up 37.4% to $6,157,000
Diluted earnings per share - up 39.1% to $1.78 per share
Gains from the sale of real estate of $3,788,000
$31,000,000 of borrowing capacity is available under the Company's
credit agreements at September 30, 1999
Formed Patriot Transportation, Inc to enter into the non-asset
based segment of the domestic trucking industry
Approved a Plan of Reorganization and Distribution to separate the
transportation and real estate operations during fiscal 2000
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. is a Southeastern transportation company
concentrating in the hauling by motor carrier of liquid and dry
bulk commodities. SunBelt Transport, Inc. serves the flatbed
portion of the trucking industry in the Southeast, 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.
OBJECTIVES. The Company's dual objectives are to build a major
Southeastern 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, competent and
loyal work force emphasizing superior service to customers in
existing markets, developing new transportation services for
customers in current market areas and opening new terminals in
other market areas.
External growth, through the acquisition program, is designed
to broaden the Company's geographic market area and delivery
services by acquiring related businesses in the Southeast.
Real Estate
The growth plan is based on the acquisition, management and
retention of real estate assets and the development of
industrial rental properties to provide long-term positive
cash flows and capital appreciation.
To Our Stockholders:
Fiscal 1999 will prove to be a milestone in the continued
progress and evolution of your Company. Our two primary business
groups, Transportation and Real Estate, have coexisted successfully
since the formation of the Company in the mid 1980's but have now
progressed in size and scope to warrant sharpened strategic focus.
Accordingly, your Board approved a Plan of Reorganization and
Distribution to formally separate the transportation and real estate
operations in the coming year.
Consolidated Results. Revenues for fiscal 1999 were $82,019,000, a
10.9% increase over $73,974,000 in fiscal 1998. Transportation
revenues increased 4.7% due to an increase in miles hauled in both
Florida Rock and Tank Lines and SunBelt. Real estate revenues
excluding property sales increased 17.3% principally as the result
of increased royalties, rental income and timber sales. Real estate
property sales approximated $3,788,000 in fiscal 1999 versus
$426,000 in 1998.
Gross profit of $19,994,000 increased 21.2% from $16,493,000 in
fiscal 1998. The Transportation Group's gross profit for fiscal
1999 decreased 3.6% from last year as result of an increase in
operating costs. The Real Estate Group's gross profit excluding
gains from property sales was 16.0% above last year principally
because of increased timber, royalty and rental income on the
Company's real estate projects. Gains from property sales were
$3,236,000 compared to $358,000 last year.
Selling, general and administrative expenses were $7,614,000 as
compared to $6,868,000 in 1998. The increase is primarily attributed
to non-recurring costs incurred for retirement and severance
compensation and higher variable costs related to increased sales.
Net income increased 37.4% to $6,157,000 from $4,480,000 in
fiscal 1998. Diluted earnings per share increased 39.1% to $1.78
from $1.28 last year.
Capital Expenditures. Capital expenditures in 1999 for the
transportation business totaled $9,344,000 versus $8,368,000 in
1998. Capital expenditures for the real estate segment in 1999
approximated $12,010,000 versus $11,504,000 in 1998. Total
depreciation and depletion for fiscal 1999 was $10,065,000 versus
$9,146,000 in 1998.
The fiscal 2000 capital expenditure plan for the
transportation business approximate $12,868,000 for continued
expansion of both the flatbed and tank truck fleets and to maintain
the modernized fleet. The capital budget for the real estate
segment is $13,855,000. Total depreciation and depletion expense is
expected to be approximately $11,063,000.
Financial Management. The Company's $34,000,000 unsecured revolver
and term facility has a final maturity of November 2003. At
September 30, 1999, $20,000,000 was outstanding leaving a balance of
$14,000,000 in availability under the facility. The Company also
has $20,000,000 of credit facilities in overnight unsecured demand
loans of which $3,000,000 was borrowed and outstanding at the end of
fiscal 1999. $18,561,000 of the Company's total debt outstanding is
non-recourse long-term fixed rate mortgages secured by real estate
projects. At September 30, 1999 the Company had $31,000,000 of
available credit and a funded debt to equity rate of 57%.
The Company is currently evaluating and pursuing additional
financing alternatives for each business group and expects to modify
the existing credit facilities prior to the effective date of the
proposed reorganization.
Annual Meeting. At the Annual Stockholders Meeting on February 3,
1999, the stockholders elected Francis X. Knott, John R. Mabbett
III, and James H. Winston as directors to serve a four-year term
expiring in the year 2003.
Real Estate Group. Success continued to be achieved toward the twin
strategies of developing high-quality, flexible warehouse/office
space in carefully selected markets and progressive asset management
to enhance the Group's land portfolio.
The Group maintained development momentum at its Lakeside
Business Park, a 134 acre site in Harford County, Maryland north of
Baltimore. Two new buildings in this park, 2206 and 2208 Lakeside
Boulevard, totaling 132,484 square feet, were successfully
leased-up. An additional 96,800 square foot warehouse is slated for
completion and marketing during fiscal 2000.
Continuing pre-development and infrastructure related
activities are underway at Hillside Business Park, a 59 acre tract
in Anne Arundel County, Maryland near the Baltimore-Washington
International Airport. Final build out on this site is anticipated
at approximately 600,000 square feet of flexible warehouse/office
product.
An additional 83,100 square feet of build-to-suit
office/warehouse space is underway in a separate market segment to
the west of Greater Baltimore.
Combined developed buildings should total slightly over one
million square feet of capacity by the end of fiscal 2000.
Excluding the build-to-suit the Group had in excess of 812,000
square feet of its rental properties fully leased at September 30,
1999.
Additionally, the Group achieved final zoning approvals, during
first quarter fiscal 2000, to re-zone its 5.8 acre site on the banks
of the Anacostia River in Washington, D.C. from industrial to
Planned Unit Development(PUD). This action by the Zoning Commission
of the District of Columbia represents the culmination of
approximately six years of constant advocacy by the company. The
approved re-zoning allows development of a 1.5 million square foot
commercial office component together with associated waterfront
enhancements. The Group is now exploring options for highest and
best use of this site.
Transportation Group. Florida Rock & Tank Lines, Inc. and SunBelt
Transport, Inc. continued their growth in both miles and revenue
while new strategic initiatives occurred in the Transportation Group
this past fiscal year.
The Group formed a third new venture during the year, Patriot
Transportation, Inc. Patriot marks the Group's entry into the
non-asset based segment of the domestic trucking industry. In
addition to being large and highly fragmented, this segment offers
the opportunity of faster revenue growth at significantly lower
levels of capital investment. A number of operating synergies should
accrue by linking Patriot's freight movements in coordination with
the existing operations and facilities of Florida Rock & Tank Lines
and SunBelt Transport.
During the year, the Group added key senior management who have
been instrumental in spearheading the development of an
administrative infrastructure to support the operational diversity
and growth of the Group. In addition, management is focused on
identifying and consummating strategic acquisitions alongside a
stepped up focus on internal development for the coming year.
The combination of a major liquid and dry bulk carrier with an
existing network of eighteen terminals, a rapidly expanding flatbed
company and a non-asset, owner-operator carrier provides the nucleus
for a more versatile strategic focus. As a result, the Group
anticipates an array of expansion, utilization and efficiency
options.
Related Developments and Outlook. Fiscal 2000 is expected to be
another year of growth and progress for our businesses. As
previously announced, the Board of Directors approved a Plan of
Reorganization and Distribution (Plan) at its December, 1999
scheduled meeting. When executed, the Plan will allow separate
managements to better focus on its core business and to pursue
opportunities for each business segment independently.
The Plan creates a new company that will include all the assets
and operations of the Real Estate Group. The new company will be
distributed on a share for share basis in a tax free transaction to
existing shareholders at the date of reorganization and will trade
on the NASDAQ as a public company. The Transportation Group's
assets and operations will remain with the Company and assuming a
name change approval at the Annual Meeting on February 2, 2000, the
Company will become Patriot Transportation Holding, Inc.
Management anticipates with enthusiasm and excitement this new
chapter in your company's development. We extend sincere
appreciation to our hard working and dedicated employees for their
crucial roles in helping to enable this new direction.
Respectfully yours,
Edward L. Baker
Chairman
John E. Anderson
President & Chief Executive Officer
Operating Review
Transportation. During fiscal 1999 the Company's Transportation
Group operated through two wholly owned subsidiaries, Florida Rock
& Tank Lines, Inc., engaged in hauling liquid and dry bulk
commodities primarily in tank trucks, and SunBelt Transport, Inc.,
engaged in flatbed hauling. During the year the Company also formed
Patriot Transportation, Inc. that will conduct the Company's entry
into owner operator hauling.
The Group operates from terminals in Jacksonville, Ft. Myers,
Orlando, Panama City, Pensacola, Port Everglades, Tampa and White
Springs, Florida; Albany, Atlanta, Augusta, Bainbridge, Columbus,
Dalton, Macon and Savannah, Georgia; Knoxville and Nashville,
Tennessee; and Birmingham, Alabama. The Group also has a central
dispatch office in Montgomery, Alabama. During fiscal 1999 the
owned and leased fleet increased from 546 to 568 trucks.
Revenues for miles hauled were up 4.7% due to both continued
expansion of flatbed and tank truck hauling.
Gross profit decreased 3.6% from fiscal 1998 primarily as a result
of increased expansion in both SunBelt Transport, Inc. and Florida
Rock & Tank Lines, Inc.
During fiscal 1999, the Group purchased 109 new tractors and 112
new trailers. The fiscal 2000 capital expenditure plan is based on
maintaining a modernized tank fleet and also expanding the tank
truck and flatbed fleets. The fleet modernization program has
resulted in reduced maintenance expenses and improved operating
efficiencies.
For fiscal 2000 the Transportation Group expects a year of growth
in its existing business resulting from the continued penetration of
targeted market segments. The near term outlook is for increases in
the hauling of petroleum, dry bulk and chemical products given
modest economic growth. Flatbed hauling is expected to see strong
year over year growth during fiscal 2000. The startup of owner
operator hauling conducted through Patriot Transportation in the
coming year will also make a positive contribution.
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. The first is land with stone or
sand and gravel 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. The second is land and/or buildings leased
under rental agreements, and the third is land and/or buildings
which are being developed for future rental or held for future
appreciation or development.
Real estate revenues, excluding property sales increased 17.3%
over fiscal 1999 as a result of higher timber sales and increased
royalties and rental revenue on the Company's real estate projects.
The fiscal 1999 real estate revenues, excluding the sale of real
estate and timber, were divided approximately 46% from mining and
minimum royalties and 54% from rental.
A brief description of FRP Development Corp.'s projects at
September 30, 1999 follows:
8230 Preston Court, 72,182 square feet of flexible
warehouse/office space and 100% leased.
8240 Preston Court, 90,405 square feet of flexible
warehouse/office space and 100% leased.
810 Oregon Avenue, 113,280 square feet of flexible
warehouse/office space and 100% leased.
812 Oregon Avenue, 82,335 square feet of flexible warehouse/office
space and 100% leased.
Rossville Business Center, a two building complex consisting of
187,517 square feet of flexible warehouse/office space and 100%
leased.
TESSCO Center, a 28,533 square foot suburban office building and
100% leased.
1502 Quarry Drive, 105,803 square feet of flexible
warehouse/office space and 100% leased.
1504 Quarry Drive, 96,800 square feet of flexible warehouse/office
space under construction to be completed during fiscal 2000.
2206 Lakeside Boulevard, 66,964 square feet of flexible
warehouse/office space completed during fiscal 1999 and 100% leased.
2208 Lakeside Boulevard, 65,520 square feet of flexible
warehouse/office space completed during fiscal 1999 and 100% leased.
6920 Tudsbury Road, 83,100 square feet, built to suit
warehouse/office under construction to be completed during fiscal
2000 and 100% pre-leased.
Lakeside Business Park is a 134 acre site capable of supporting
1,250,000 square feet of warehouse/office space. At September 30,
1999, 96,800 square feet was under construction and expected to be
completed during fiscal 2000. Approximately 63 acres remain
available for development and capable of supporting 900,000 square
feet of new development.
Hillside Business Park, is a 59 acre site located in Anne Arundel
County, Maryland and capable of supporting 600,000 square feet of
warehouse/office space.
The Real Estate Group during fiscal 2000 will continue to focus on
buildings under construction and the continued development of the
property at Lakeside Business Park. In addition, planning,
development and permitting for Hillside Business Park development
will continue.
At September 30, 1999 the Company owns approximately 812,000
square feet of rental properties that were fully leased. The Real
Estate Group will continue its asset management functions for the
benefit of the Company's land portfolio. These activities will also
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 gradually build and own a portfolio of successful rental
properties.
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
1999 1998 1997 1996 1995
Summary of Operations
Revenues $ 82,019 73,974 68,844 64,403 58,273
Gross profit(a) $ 19,994 16,493 14,908 14,615 15,132
Operating profit $ 12,380 9,625 8,977 9,017 9,440
Interest expense $ 2,357 2,300 2,061 2,234 1,933
Income before income taxes
$ 10,093 7,343 6,984 6,827 7,591
Provision for income taxes
$ 3,936 2,863 2,724 2,662 2,961
Net income $ 6,157 4,480 4,260 4,165 4,630
Per Common Share
Basic EPS $ 1.79 1.30 1.22 1.16 1.24
Diluted EPS $ 1.78 1.28 1.21 1.14 1.22
Stockholders' equity
$ 21.53 19.83 18.53 17.72 16.74
Financial Summary
Current assets $ 14,161 10,073 8,549 8,003 8,495
Current liabilities
$ 13,555 9,479 11,063 9,595 7,117
Working capital (deficit)
$ 606 594 (2,514) (1,592) 1,378
Property, plant and
equipment, net $115,369 104,970 95,018 90,058 83,319
Total assets $138,655 123,965 116,582 107,036 101,357
Long-term debt $ 37,936 33,299 30,647 26,170 25,503
Stockholders' equity
$ 72,692 68,755 63,734 61,894 61,622
Other Data
Return on average
stockholders' equity
8.7% 6.7 6.8 6.7 7.6
Return on average capital
employed 5.2% 4.1 4.2 5.8 6.6
Net cash flow provided from
operating activities
$ 15,032 13,557 13,982 14,681 10,131
Additions to property,
plant and equipment
$ 21,359 19,901 13,746 15,970 15,805
Depreciation, depletion
and amortization
$ 10,065 9,146 8,356 7,667 7,304
Weighted average number
of shares - basic 3,444 3,452 3,490 3,588 3,742
Weighted average number
of shares - diluted 3,468 3,496 3,530 3,647 3,798
Number of employees at
end of year 877 753 721 665 644
Stockholders of record
834 850 873 913 939
(a) Fiscal 1999, 1998, 1997, 1996 and 1995 include gains on the
sale of real estate of $3,236,000, $358,000, $817,000, $93,000
and $79,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
First Second Third Fourth
1999 1998 1999 1998 1999 1998 1999 1998
Revenues $19,031 17,671 21,016 17,831 19,854 19,002 22,118 19,470
Gross profit $ 4,393 3,974 5,539 3,776 4,382 4,337 5,680 4,406
Operating profit $ 2,299 2,458 3,868 2,104 2,470 2,512 3,743 2,551
Income before
income taxes $ 1,743 1,894 3,352 1,555 1,874 1,943 3,124 1,951
Net income $ 1,063 1,155 2,045 949 1,143 1,185 1,906 1,191
Per common share:
Basic EPS $.31 .34 .59 .28 .33 .34 .56 .34
Diluted EPS $.30 .33 .59 .27 .33 .34 .56 .34
Market price:
High $30.00 38.00 28.88 33.75 26.00 37.25 26.00 33.00
Low $19.50 31.37 23.00 30.00 21.25 32.00 21.63 20.50
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 Southeast, petroleum
product usage in the Southeast, fuel costs, construction activity in
certain Georgia and Florida markets, Florida Rock Industries, Inc.'s
sales from the Company's mining properties, interest rates and demand
for commercial warehouse space in the Baltimore/Washington area.
Internal factors include revenue mix, capacity utilization, safety
record, other operating factors, and construction costs of new
projects.
In fiscal 1999 and 1998, revenues increased 10.9% and 7.5%,
respectively. In the Transportation segment revenues and miles hauled
were both up 4.7% in 1999 and up 7.5% and 6.9%, respectively, in 1998.
The Real Estate segment's revenues, exclusive of real estate sales,
increased 17.3% and 12.5% in 1999 and 1998, respectively. The increase
in real estate revenues is the result of higher timber sales and
increased rental and royalty income.
The estimated contribution to Transportation revenues by principal
markets follows:
1999 1998 1997 1996 1995
Petroleum 65% 67 68 68 66
Construction 24% 21 21 20 19
Chemical 7% 7 6 7 10
Other 4% 5 5 5 5
Gross profit for fiscal 1999 increased $3,501,000 and gross margin
increased to 24% from 22%. The Transportation segment gross profit
decreased $360,000 and gross margin decreased to 14% from 15%. These
decreases were due to increased costs to attract and retain qualified
drivers and increased depreciation expense partially offset by reduced
fuel costs. Gross profit for the real estate segment increased
$3,861,000 primarily as a result of real estate sales, increased
royalty income and increased rental income. Gross profit on real
estate sales was $3,236,000 in 1999 and $358,000 in 1998. Gross profit
for fiscal 1998 increased $1,585,000 and gross margin remained stable
from the prior year. The Transportation segment gross profit
increased $969,000 principally as a result of higher miles hauled.
Gross margin remained stable. In the Real Estate segment, gross
profit increased $616,000 primarily as a result of increased rental
income and timber sales partially offset by a decrease in property
sales.
Selling, general and administrative expense increased 10.9% in 1999
and increased 15.8% in 1998. The 1999 increase was attributable to
non-recurring retirement and severence and systems upgrades for Year
2000 compliance. The 1998 increase results from non-recurring costs
incurred for various projects, business development opportunities
related to Transportation, incentive compensation, staffing and
consulting related to systems upgrades necessary for Year 2000
compliance.
Interest expense in 1999 increased 3% or $57,000 from 1998.
Interest expense in 1998 increased 12% or $239,000 from 1997. These
increases were primarily as a result of an increase in the average
debt outstanding and an increase in the average interest rate. The
1998 increase was partially offset by an increase in the amount of
interest capitalized.
Year 2000 Conversion. The Company, like most entities relying on
automated data processing was faced with the task of modifying systems
to become Year 2000 compliant. The Company analyzed its Year 2000
exposure and developed plans for addressing the Year 2000 exposure as
well as reengineering selective systems to enhance their
functionality.
The Company purchased new software and hardware for its truck
dispatching and maintenance system that is represented to be Year 2000
compliant to replace its existing systems. The Company completed the
installation of this software during the fourth quarter of 1999.
The Company purchases from an affiliate, Florida Rock Industries, Inc.
("FRI") certain administrative services including automated data
processing ("Purchased Services"). FRI is in the process of updating
its systems to be Year 2000 compliant. The Company has reviewed
FRI's plan and is monitoring the progress of this plan as it relates
to the Purchased Services. FRI has completed updating the systems
used by the Company.
The Company has identified operating equipment which may be effected
by Year 2000. Once the equipment was identified, testing was done to
determine if such equipment is Year 2000 compliant. When equipment
was identified as not Year 2000 compliant, the equipment was replaced.
Vendors, suppliers and customers that are critical to the Company's
operations were identified. Questionnaires were sent to these
entities to determine their state of readiness for Year 2000. The
Company identified alternative vendors and suppliers if any of the
current suppliers are not Year 2000 compliant.
The costs associated with the purchase and installation of the truck
dispatching and maintenance software and hardware was capitalized and
is amortized over the estimated useful life of the software or
equipment. Other costs associated such as selection, training and
reengineering of the existing processing are being expensed as
incurred. The expected costs of the systems was not expected to be
material to the financial condition or results of operations of the
Company.
The Company feels it has addressed in a timely manner the major issues
related to the Year 2000 and any significant disruptive problems in
its ability to conduct its business as a result are unlikely. The
Company has contingency plans in place if there is a disruption.
This plan assesses the risks and possible countermeasures. However,
despite efforts and initiatives undertaken by the Company, total
assurances can not be given that absolute compliance can be achieved.
There can be no guarantees that the computer systems of other entities
on which the Company relies will be converted in a timely manner or
that their failure to convert, or a conversion that is incompatible
with the Company's system, will not have an adverse effect on the
Company's business, financial condition and results of operations.
Liquidity and Capital Resources. The following key financial
measurements reflect the Company's financial position and capital
resources at September 30 (dollars in thousands):
1999 1998 1997
Cash $ 2,593 663 429
Total debt $41,561 35,432 35,065
Debt as a percent of
capital employed 34% 32 33
Unused lines of credit $31,000 37,400 35,500
During 1999, net cash flows from operating activities were
$15,032,000 which along with issuing additional long and short-term
debt funded the Company's investing activities of $16,746,000 and the
repurchase of common stock. During 1998, net cash flows from
operating activities were $13,557,000 which along with exercise of
stock options and issuing of debt funded the Company's investing
activities of $14,232,000.
The Company is financially postured to be able to take advantage of
external and internal growth opportunities in real estate development
and in the motor carrier industry that may occur.
The Board of Directors has authorized management to repurchase
shares of the Company's common stock from time to time as
opportunities may arise.
The Company has a $34,000,000 revolving credit agreement of which
$14,000,000 was available at fiscal year end. In addition, it has
unsecured short-term lines of credit under which it may borrow up to
$20,000,000 of which $3,000,000 was outstanding at September 30, 1999.
The Company currently expects its fiscal 2000 capital expenditures
to be approximately $26,746,000 and depreciation and depletion expense
to be $11,063,000. The expenditures are expected to be financed from
the cash flow from operating activities and the $14,000,000 unused and
available under its revolving credit agreement.
The Company believes it will be able to renegotiate its present
credit facilities or obtain similar replacement credit facilities when
necessary in the future.
Spin-off of Real Estate Business. As discussed in Note 13 to the
Consolidated Financial Statements, the Board of Directors approved
spinning off to its shareholders a new company which would include the
real estate business, while retaining the transportation business in
FRP Properties, Inc. It is anticipated that the spin-off would be
effective at the end of the Company's second quarter, ending March 31,
2000.
Inflation. Historically, the Company has been able to recover
inflationary cost increases through increased freight rates. It is
expected that over time justifiable and necessary rate increases will
be obtained in the future, although deregulation of intrastate
trucking rates has made this more difficult in the past four years.
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 various 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, competition and the Year
2000 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 are among the
principal factors that could cause actual results to differ materially
from the forward-looking statements: Year 2000 technology issues;
availability and terms of financing; competition; levels of
construction activity in FRI's markets; fuel costs; and inflation.
Consolidated Statement of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
1999 1998 1997
Revenues:
Transportation $ 67,048 64,014 59,530
Real estate 11,183 9,534 8,477
Sale of real estate 3,788 426 837
Total revenues (including revenue from
related parties of $6,999, $6,256, and
$6,006) 82,019 73,974 68,844
Cost of operations:
Transportation 57,396 54,002 50,487
Real estate 4,077 3,411 3,429
Cost of real estate sold 552 68 20
Gross profit 19,994 16,493 14,908
Selling, general and administrative expense
(including expenses paid to related party
of $1,656, $1,515 and $1,414) 7,614 6,868 5,931
Operating profit 12,380 9,625 8,977
Interest expense (2,357) (2,300) (2,061)
Interest income 46 13 46
Other income, net 24 5 22
Income before income taxes 10,093 7,343 6,984
Provision for income taxes 3,936 2,863 2,724
Net income $ 6,157 4,480 4,260
Earnings per share:
Basic $ 1.79 1.30 1.22
Diluted $ 1.78 1.28 1.21
Number of shares used in computing:
Basic earnings per share 3,444 3,452 3,490
Diluted earnings per share 3,468 3,496 3,530
See accompanying notes.
Consolidated Balance Sheet September 30
(Dollars in thousands)
1999 1998
Assets
Current assets:
Cash and cash equivalents $ 2,593 663
Accounts receivable, less allowance for doubtful
accounts of $284 ($272 in 1998) (including
related party of $399 and $380) 8,451 6,510
Inventory of parts and supplies 503 552
Prepaid expenses and other 2,614 2,348
Total current assets 14,161 10,073
Other assets:
Real estate held for investment, at cost 5,674 5,703
Goodwill, at cost less amortization of $403
($362 in 1998) 1,207 1,248
Other 2,244 1,971
Total other assets 9,125 8,922
Property, plant and equipment, at cost:
Land 56,937 55,284
Buildings 35,971 30,953
Plant and equipment 67,677 62,134
Construction in progress 12,162 9,712
172,747 158,083
Less accumulated depreciation and depletion 57,378 53,113
Net property, plant and equipment 115,369 104,970
$138,655 123,965
Liabilities and Stockholders' Equity
Current liabilities:
Short-term note payable to bank $ 3,000 1,600
Accounts payable (including related party of
$166 and $85) 5,565 2,776
Federal and state income taxes 499 1,224
Accrued liabilities:
Payroll and benefits 1,415 1,500
Taxes 604 412
Interest 193 176
Insurance reserves 1,654 1,258
Long-term debt due within one year 625 533
Total current liabilities 13,555 9,479
Long-term debt 37,936 33,299
Deferred income taxes 8,820 7,656
Accrued insurance reserves 4,644 4,129
Other liabilities 1,008 647
Commitments and contingent liabilities (Notes 11 and 12)
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized; 3,375,817
shares issued (3,468,225 shares in 1998) 338 347
Capital in excess of par value 15,660 17,871
Retained earnings 56,694 50,537
Total stockholders' equity 72,692 68,755
$138,655 123,965
See accompanying notes.
Consolidated Statement of Cash Flows Years ended September 30
(Dollars in thousands
Cash flows from operating activities: 1999 1998 1997
Net income $ 6,157 4,480 4,260
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 10,065 9,146 8,356
Net changes in operating assets and liabilities:
Accounts receivable (1,953) (993) (250)
Inventory of parts and supplies 49 (83) 33
Prepaid expenses (265) (228) (261)
Accounts payable and accrued liabilities 2,659 492 732
Increase in deferred income taxes 1,089 620 1,181
Net change in insurance reserves and other
liabilities 876 879 759
Gain on sale of real estate, plant and
equipment (3,638) (778) (792)
Other, net (7) 22 (36)
Net cash provided by operating activities 15,032 13,557 13,982
Cash flows from investing activities:
Purchase of property, plant and equipment (20,475) (15,323)(13,470)
Purchase of real estate held for investment (315) - -
Additions to other assets (737) (451) (4,156)
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 4,781 1,542 1,118
Net cash used in investing activities (16,746) (14,232)(16,508)
Cash flows from financing activities:
Proceeds from long-term debt 5,000 3,200 4,900
Net increase (decrease) in short-term debt 1,400 (2,400) 500
Repayment of long-term debt (535) (432) (338)
Exercise of employee stock options - 574 879
Repurchase of Company stock (2,221) (33) (3,299)
Net cash provided by financing activities 3,644 909 2,642
Net increase in cash and cash equivalents 1,930 234 116
Cash and cash equivalents at beginning of year 663 429 313
Cash and cash equivalents at end of year $ 2,593 663 429
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense, net of amount capitalized $ 2,340 2,288 1,997
Income taxes $ 3,459 1,759 898
Noncash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ 620 767 276
Other assets $ - 3,811 -
Issuance of debt $ 264
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with maturities of three months or less at
time of purchase to be cash equivalents.
See accompanying notes.
Consolidated Statement of Stockholders' Equity Years ended September 30
(Dollars in thousands)
Capital in
Common Stock Excess of Retained
Shares Amount Par Value Earnings
Balance at October 1, 1996 3,492,186 $349 19,748 41,797
Shares purchased and canceled (147,951) (14) (3,285) -
Exercise of stock options 95,000 9 870 -
Net income - - - 4,260
Balance at September 30, 1997 3,439,235 344 17,333 46,057
Shares purchased and canceled (1,010) - (33) -
Exercise of stock options 30,000 3 571 -
Net income - - - 4,480
Balance at September 30, 1998 3,468,225 347 17,871 50,537
Shares purchased and canceled (92,408) (9) (2,211) -
Net income - - - 6,157
Balance at September 30, 1999 3,375,817 $338 15,660 56,694
See accompanying notes.
Notes to Consolidated Financial Statements
1. Accounting polices. 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.
INVENTORY - Inventory of parts and supplies is valued at the lower of cost
(first-in, first-out) or market.
REVENUE AND EXPENSE RECOGNITION - Substantially all 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. The straight-line method is used to recognize
rental revenues under leases which provide for varying rents over their term.
PROPERTY, PLANT AND EQUIPMENT - Provision for depreciation of plant and
equipment is computed using the straight-line method based on the following
estimated useful lives:
Years
Buildings and improvements 8-32
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. Goodwill is amortized
over forty years using the straight-line method.
The Company periodically reviews property and equipment 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.
RISK INSURANCE - The Company has a $100,000 to $500,000 self-insured
retention per occurrence in connection with its workers' compensation,
automobile liability, and general liability insurance programs ("Risk
Insurance"). The Company accrues monthly the estimated cost in connection
with its portion of its Risk 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.
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 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 is
extremely complex. Some factors that must be assessed are engineering
estimates, continually evolving governmental laws and standards, and
potential involvement of other potentially responsible parties.
NEW ACCOUNTING REQUIREMENTS - Effective October 1, 1998, the Company
adopted Statement of Financial Accounting Standard ("SFAS") No. 130
"Reporting Comprehensive Income". SFAS 130 requires that all items
recognized under accounting standards as components of comprehensive
earnings be reported in an annual financial statement that is displayed
with the same prominence as other annual financial statements.
There are no items that require disclosure.
Effective October 1, 1998, the Company adopted SFAS No. 132, "Employer's
Disclosures about Pensions and Other Postretirement Benefits", effective
for fiscal years beginning after December 15, 1997. SFAS 132 revised
employer disclosures about pension and other postretirement benefit plans.
It does not change the measurement or recognition of those plans. This
statement standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan
assets that will facilitate financial analysis, and eliminates certain
disclosures.
2. Transactions with related parties. As of September 30, 1999 seven of
the Company's directors were also directors of Florida Rock Industries,
Inc. ("FRI"). Such directors own approximately 29% of the stock of FRI and
41% of the stock of the Company. Accordingly, FRI and the Company are
considered related parties.
The Company, through its transportation subsidiaries, hauls construction
aggregates for FRI and customers of FRI. It also hauls diesel fuel and
other supplies for FRI. Charges for these services are based on prevailing
market prices. Other wholly owned subsidiaries lease certain construction
aggregates mining and other properties and provide construction management
services to FRI.
A summary of revenues derived from FRI follows (in thousands):
1999 1998 1997
Transportation $ 931 839 883
Real estate 6,068 5,417 5,123
$6,999 6,256 6,006
Under an agreement extending until September 30, 2000, FRI furnishes
the Company with certain management and related services, including
financial, tax, legal, administrative, accounting and computer. Charges
for such services were $1,656,000 in 1999, $1,515,000 in 1998 and
$1,414,000 in 1997. The Company and FRI agreed to amend the agreement
effective October 1, 1999. Under the amended agreement, the Company will
assume responsibility for accounting, credit and certain MIS functions.
3. Lines of credit and debt. Long-term debt at September 30 is summarized
as follows (in thousands):
1999 1998
Revolving credit (unsecured) $20,000 15,000
6.9% to 9.5% mortgage notes payable
in installments through 2015 18,561 18,832
38,561 33,832
Less portion due within one year 625 533
$37,936 33,299
The aggregate amount of principal payments, excluding the revolving
credit, due subsequent to September 30, 1999 is: 2000 - $625,000; 2001 -
$677,000; 2002 - $733,000; 2003 - $794,000; 2004-$860,000; 2005 and
subsequent years - $14,872,000.
The Company has a revolving credit agreement under which it may borrow
from three banks up to $34,000,000 on term loans payable 25% on November
15, 2001, 25% on November 15, 2002 and the balance on November 15, 2003.
Interest is payable at SunTrust Bank, Central Florida, N.A.'s prime rate
until November 15, 2000, and at 1/4 of 1% above such prime rate thereafter.
Alternative interest rates based on the London interbank rate and/or the
reserve-adjusted certificate of deposit rate are available at the Company's
option. A commitment fee of 1/4 of 1% is payable on the unused amount of
the commitment until November 15, 2000.
The revolving credit agreement contains restrictive covenants,
including limitations on paying cash dividends. As of September 30, 1999
$14,477,000 of consolidated retained earnings was not restricted as to
payment of cash dividends.
The mortgage notes payable are collateralized by real estate having a
carrying value of approximately $21,911,000 at September 30, 1999.
Certain properties having a carrying value at September 30, 1999 of
$1,519,000 were encumbered by industrial revenue bonds which 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.
The Company also has short-term lines of credit totaling $20,000,000
from three banks. Under these lines the Company can borrow funds for a
period from one to ninety days. There is no commitment fee and the banks
can terminate the lines at any time. The interest rate is determined at
the time of each borrowing. The weighted average interest rates of such
borrowings on September 30, 1999 and 1998 were 5.6% and 6.1%, respectively.
During fiscal 1999, 1998 and 1997 the Company capitalized interest
cost of $315,000, $331,000 and $223,000, respectively.
4. Leases. At September 30, 1999, 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 $ 42,889
Commercial property 45,267
Land and other property 16,050
104,206
Less accumulated depreciation and depletion 23,267
$ 80,939
The minimum future rentals on noncancelable operating leases as of
September 30, 1999 are as follows: 2000 - $5,210,000; 2001 - $4,436,000;
2002 - $3,853,000; 2003 - $3,293,000; 2004 - $3,163,000; 2005 and
subsequent years $10,744,000.
5. 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 will initially trade together with the Company's common stock
and will not be 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.
6. Stock option plan. The Company has a Stock Option Plan under which
options for shares of common stock may be granted to directors, officers
and key employees. At September 30, 1999 the number of shares available
for issuance is 60,400 shares.
Option transactions for the fiscal years ended September 30 are
summarized as follows:
1999 1998 1997
Average Average Average
Options Price(1) Options Price(1) Options Price(1)
Shares under option:
Beginning of year 120,000 16.31 150,000 15.25 245,000 12.78
Issued 24,600 24.00 - - - -
Exercised - - (30,000) 11.00 (95,000) 8.88
End of year 144,600 17.62 120,000 16.31 150,000 15.25
Options exercisable
at end of year 109,000 98,000 108,600
(1) Weighted average exercise price
The following table summarizes information concerning stock options
outstanding at September 30, 1999:
Options Options Weighted-Average
Exercise Price Outstanding Exercisable Remaining Life
12.25 30,000 30,000 .8 years
17.25 15,000 12,000 5.2 years
17.75 75,000 67,000 5.1 years
24.00 24,600 - 9.2 years
Remaining non-exercisable options as of September 30, 1999 become
exercisable as follows: 2000 - 15,920; 2001 - 4,920; 2002 - 4,920; 2003 -
4,920 and 2004 - 4,920.
The options expire ten years from the date of grant and become
exercisable in cumulative installments of 20% to 33% each year after a one
year waiting period from date of grant.
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
1999 awards consistent with the provisions of SFAS No. 123, the Company's
1999 net income, basic and diluted earnings per share would have been
$6,121,000, $1.78 and $1.76, respectively. The SFAS 123 method has not
been applied to options granted prior to October 1, 1996, and the pro forma
compensation expense may not be indicative of pro forma expense in future
years. The fair value of options granted was estimated to be $14.40 on
the date of grant using the following assumptions; no dividends yield,
expected volatility of 54.8%, risk-free interest rates of 4.3% and expected
lives of 7 years.
7. Income taxes. The provision for income taxes for fiscal years ended
September 30 consists of the following (in thousands):
1999 1998 1997
Current:
Federal $2,445 1,914 1,317
State 402 329 226
2,847 2,243 1,543
Deferred 1,089 620 1,181
Total $3,936 2,863 2,724
A reconciliation between the amount of tax shown above and the amount
computed at the statutory Federal income tax rate follows (in thousands):
1999 1998 1997
Amount computed at statutory
Federal rate $3,432 2,497 2,374
State income taxes (net of Federal
income tax benefit) 370 277 263
Other, net 134 89 87
Provision for income taxes $3,936 2,863 2,724
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:
1999 1998
Deferred tax liabilities:
Basis difference in property,
plant and equipment $10,241 8,758
Depletion 630 630
Prepaid expenses 980 930
Gross deferred tax liabilities 11,851 10,318
Deferred tax assets:
Insurance reserves 2,107 1,798
Other, net 641 505
Gross deferred tax assets 2,748 2,303
Net deferred tax liability $ 9,103 8,015
8. 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 $458,000 in 1999, $429,000 in 1998, $403,000 in 1997.
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):
1999 1998
Change in benefit obligation
Balance beginning of year $ 471 496
Service cost 30 32
Interest cost 29 30
Actuarial gain (76) (66)
Benefits paid (5) (21)
Balance end of year $ 449 471
Change in plan assets
Balance beginning of year $ 0 0
Employer contributions 5 21
Benefits paid (5) (21)
Balance end of year $ 0 0
Funded status $(449) (471)
Unrecognized net gain (136) (68)
Unrecognized prior service cost - (15)
Accrued postretirement benefit costs $(585) (554)
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
1999 1998 1997
Service cost of benefits earned during
the period $ 30 33 38
Interest cost on APBO 29 30 32
Net amortization and deferral (23) (62) (59)
Net periodic postretirement benefit
cost $ 36 1 11
The discount rate used in determining the Net Periodic Postretirement
Benefit Cost and the APBO was 7.25%.
9. Business segments. On September 30, 1999, the Company adopted SFAS No.
131, "Disclosure about Segments of an Enterprise and Related Information".
SFAS 131 established standards for reporting information about segments in
annual financial statements and requires selected information about segments
in interim financial reports issued to stockholders. In addition, SFAS 131
established standards for related disclosures about products and services,
and geographic areas. Segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in accessing performance.
The Company has identified two business segments each of which is managed
separately along product lines. All the Company's operations are 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. They also hold certain other real
estate for investment and are developing commercial and industrial
properties.
Operating results and certain other financial data for the Company's business
segments are as follows (in thousands):
1999 1998 1997
Revenues:
Transportation $ 67,048 64,014 59,530
Real estate (a) 14,971 9,960 9,314
$ 82,019 73,974 68,844
Operating profit(b):
Transportation $ 3,589 4,371 4,188
Real estate (a) 10,177 6,357 5,777
Corporate expenses (1,386) (1,103) (988)
Operating profit $ 12,380 9,625 8,977
Capital expenditures:
Transportation $ 9,344 8,368 7,497
Real estate 12,010 11,504 6,226
Other 5 29 23
$ 21,359 19,901 13,746
Depreciation, depletion and
amortization:
Transportation $ 7,398 6,740 6,136
Real estate 2,612 2,356 2,173
Other 55 50 47
$ 10,065 9,146 8,356
Identifiable assets at September 30:
Transportation $ 49,816 43,976 42,841
Real estate 85,720 78,807 72,806
Cash items 2,593 663 429
Unallocated corporate assets 526 519 506
$138,655 123,965 116,582
(a) Fiscal 1999, 1998 and 1997 includes revenue of $3,788,000, $426,000, and
$837,000 and operating profit of $3,236,000, $358,000 and $817,000,
respectively, from the sale of real estate.
(b) Operating profit is earnings before interest expense, other income,
interest income and income taxes.
10. Fair values of financial instruments. At September 30, 1999 and 1998,
the carrying amount reported in the 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 using discounted cash flow analysis, based on
the Company's current incremental borrowing rates for similar types of
borrowing arrangements. At September 30, 1999 the carrying amount and fair
value of such other long-term debt was $18,562,000 and $18,033,000,
respectively. At September 30, 1998 the carrying amount and fair value of
such other long-term debt was $18,832,000 and $19,996,000, respectively.
11. 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 materially adverse effect on the Company's
consolidated financial statements.
One of the Company's subsidiaries is a potentially responsible party in
connection with a Superfund Site. It is the policy of the Company to accrue
environmental contamination cleanup costs when it is probable that a
liability has been incurred and the amount of such liability is reasonably
estimable. The Company has made an estimate of its likely costs in
connection with this site and a liability has been recorded. Such liability
is not material to the financial statements of the Company.
12. Commitments. At September 30, 1999, the Company had placed orders and
was committed to purchase tractors and trailers costing approximately
$7,660,000 and had entered into various contracts to purchase and develop
real estate with remaining commitments totaling $2,159,000.
13. Spin-off of Real Estate Business. On December 1, 1999, the Board of
Directors approved a reorganization of the Company which would result in
spinning off to its shareholders a new company which would include the real
estate business, while retaining the transportation business in FRP
Properties, Inc. The Company has obtained a tax ruling from the Internal
Revenue Service which allows the proposed transaction to be tax-free to
shareholders. It is anticipated that the spin-off will be made effective by
the end of the Company's second quarter, ending March 31, 2000. For
information concerning the selected information concerning the real estate
business, see Note 9.
Independent Auditors' Report
To the Board of Directors and Stockholders
FRP Properties, Inc.
We have audited the accompanying consolidated balance sheets of FRP
Properties, Inc. and subsidiaries as of September 30, 1999 and 1998, and
the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended September 30,
1999. 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 in accordance with generally accepted auditing
standards. 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 audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of FRP Properties, Inc. and
subsidiaries at September 30, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1999 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Jacksonville, Florida
December 3, 1999
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
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.
Ish Copley
President of SunBelt Transport, Inc.,
the Company's flatbed
trucking operations
David H. deVilliers, Jr.
Vice President of the Company and
President of FRP Development Corp.,
the Company's northern
real estate operations
Albert D. Ernest, Jr. (2)(3)
President of Albert Ernest Enterprises
Luke E. Fichthorn III (2)
Private Investment Banker,
Twain Associates and Chairman of the
Board and Chief Executive Officer of
Bairnco Corporation
Francis X. Knott (2)
Chief Executive Officer of
Partners Realty Trust, Inc.
Radford D. Lovett (3)
Chairman of the Board of
Commodores Point Terminal Corp.
John R. Mabbett III
Vice President and Secretary
of the Company and President of
Florida Rock & Tank Lines, Inc.,
the Company's tank and dump
trucking operations
Robert H. Paul III (3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
Martin E. Stein, Jr.
Chairman and Chief Executive Officer of
Regency Realty Corporation
James H. Winston (2)
President of LPMC of Jax, Inc.
and President of
Omega Insurance Company
________________
(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
John R. Mabbett III
Vice President and Secretary
President, Florida Rock & Tank Lines, Inc.
David H. deVilliers, Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
James J. Gilstrap
Treasurer and Chief Financial Officer
Wallace A. Patzke, Jr.
Controller and Chief Accounting Officer
FRP PROPERTIES, Inc.
General Office: 155 East 21st Street
Jacksonville, Florida 32206
Telephone: (904) 355-1781
Annual Meeting
Shareholders are cordially invited to attend the Annual Stockholders Meeting
which will be held at 2 p.m. local time, on Wednesday, February 2, 2000, at
the general offices of the Company, 155 East 21st Street, Jacksonville,
Florida.
Transfer Agent
First Union Customer Information Center
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
Martin, Ade, Birchfield & Mickler L.L.P.
Jacksonville, Florida
Independent Auditors
Deloitte & Touche LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: FRPP)
Form 10-K
Stockholders may receive without charge a copy of FRP Properties, Inc.'s
annual report to the Securities and Exchange Commission on Form 10-K by
writing to the Treasurer at P.O. Box 4667, Jacksonville, Florida 32201.