FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17554
PATRIOT TRANSPORTATION HOLDING, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2924957
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices)
(Zip Code)
904/396-5733
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes ________
No _X______.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of July 27, 2004: 2,929,107 shares of
$.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED June 30, 2004
CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 8
Item 3. Quantitative and Qualitative Disclosures about Market Risks 14
Item 4. Controls and Procedures 14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 11 Computation of Earnings Per Share 21
Exhibit 31 Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 22
Exhibit 32 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 25
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, September 30,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 120 757
Cash held in escrow 17,959 1,795
Accounts receivable (including related
party of $557 and $359) 8,713 7,898
Less allowance for doubtful accounts (624) (566)
Inventory 606 670
Prepaid expenses and other 2,753 3,411
Total current assets 29,527 13,965
Property, plant and equipment, at cost 219,957 205,211
Less accumulated depreciation and depletion (73,035) (65,832)
Net property, plant and equipment 146,922 139,379
Assets held for sale - 5,883
Other assets 6,386 5,989
Total assets $182,835 165,216
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,459 4,728
Federal and state income taxes 6,112 6
Accrued liabilities 5,249 4,941
Liabilities associated with assets held for sale - 60
Long-term debt due within one year 4,445 1,485
Total current liabilities 19,265 11,220
Long-term debt 44,461 57,816
Deferred income taxes 15,234 10,760
Accrued insurance reserves 5,722 5,722
Other liabilities 1,606 1,669
Commitments and contingencies (Note 9)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
2,929,107 and 2,932,708 shares issued
and outstanding, respectively 293 293
Capital in excess of par value 5,338 6,065
Retained earnings 90,916 71,671
Total shareholders' equity 96,547 78,029
Total liabilities and shareholders' equity $182,835 165,216
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2004 2003 2004 2003
Revenues:
Related parties $ 1,680 1,830 4,503 4,650
Non-related parties 27,990 24,997 81,237 70,837
29,670 26,827 85,740 75,487
Cost of operations 23,681 21,850 69,519 62,593
Gross profit 5,989 4,977 16,221 12,894
Selling, general and
administrative expense 2,276 2,018 6,650 6,006
Recovery of non-recurring charges
related to closed subsidiary - (5) - (29)
Operating profit 3,713 2,964 9,571 6,917
Other income 284 - 378 -
Interest expense, net (915) (899) (2,869) (2,623)
Income before income taxes 3,082 2,065 7,080 4,294
Provision for income taxes (1,169) (805) (2,690) (1,674)
Income from continuing
operations 1,913 1,260 4,390 2,620
Discontinued operations (Note 6):
Income from operations,
net of tax 32 86 191 286
Gain on sale of properties,
net of tax 9,009 - 14,664 -
Net income $10,954 1,346 19,245 2,906
Earnings per common share:
Income from continuing
operations - basic $ .65 .42 1.50 .85
- diluted $ .64 .41 1.47 .85
Discontinued operations
- basic $ 3.09 .03 5.07 .10
- diluted $ 3.04 .03 4.99 .09
Net income-basic $ 3.74 .45 6.57 .95
Net income-diluted $ 3.68 .44 6.46 .94
Average shares outstanding
- basic 2,929 3,015 2,931 3,067
- diluted 2,979 3,054 2,977 3,098
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2004 AND 2003
(In thousands)
(Unaudited)
2004 2003
Cash flows from operating activities:
Net income $19,245 2,906
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 9,173 8,963
Deferred income taxes 4,342 (289)
Gain on disposition of property, plant and equipment (23,789) (100)
Net changes in operating assets and liabilities:
Accounts receivable (765) 23
Prepaid expenses and other current assets 730 468
Accounts payable and accrued liabilities 5,278 (1,910)
Net change in insurance reserve and other
liabilities (64) 74
Other, net 51 47
Net cash provided by operating activities 14,201 10,182
Cash flows from investing activities:
Purchase of property, plant and equipment (16,870) (17,657)
Additions to other assets (818) (502)
Cash held in escrow (16,164) -
Proceeds from sale of property, plant and
equipment, and other assets 30,196 1,117
Net cash used in investing activities (3,656) (17,042)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 8,500 4,600
Net (decrease) increase in revolving debt (17,512) 10,000
Repayment of long-term debt (1,443) (991)
Repurchase of Company stock (2,509) (6,118)
Exercise of employee stock options 1,782 412
Net cash (used in) provided by financing activities (11,182) 7,903
Net (decrease) increase in cash and cash equivalents (637) 1,043
Cash and cash equivalents at beginning of year 757 529
Cash and cash equivalents at end of the period $ 120 1,572
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004
(Unaudited)
(1) Basis of Presentation. The accompanying condensed consolidated
financial statements include the accounts of Patriot Transportation
Holding, Inc. and its subsidiaries (the "Company"). These statements
have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial
information and the instructions to Form 10-Q and do not include all the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements. In the opinion of management, all adjustments (primarily
consisting of normal recurring accruals) considered necessary for a fair
presentation of the results for the interim periods have been included.
Operating results for the three months and nine months ended June 30,
2004 are not necessarily indicative of the results that may be expected
for the fiscal year ending September 30, 2004. The accompanying
condensed consolidated financial statements and the information included
under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" should be read in conjunction with
the Company's consolidated financial statements and related notes
included in the Company's Form 10-K for the year ended September 30,
2003.
Certain reclassifications have been made to the Fiscal 2003 consolidated
financial statements to conform to the presentation adopted in Fiscal
2004.
(2) Recent Accounting Pronouncements. In December 2003, the FASB revised
Statement No. 132 "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This Statement retains the disclosure
requirements of the original Statement, which it replaces, and requires
additional disclosures about the assets, obligations, cash flows and net
periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The annual financial statement disclosures
are effective for the Company for the fiscal year ended September 30,
2004. For the three and nine months ended June 30, 2004 and 2003, no
postretirement benefit income or expense was recorded. The Company does
not expect to be required to make cash contributions for fiscal 2004.
(3) Business Segments. The Company has identified two business segments
each of which is managed separately along product lines. The Company's
operations are substantially in the Southeastern and Mid-Atlantic
states.
The transportation segment hauls liquid and dry commodities by motor
carrier. The real estate segment owns real estate of which a
substantial portion is under mining royalty agreements or leased. The
real estate segment also holds certain other real estate for investment
and is developing commercial and industrial properties.
Operating results and certain other financial data for the Company's
business segments are as follows (in thousands):
Three Months ended Nine Months ended
June 30, June 30,
2004 2003 2004 2003
Revenues:
Transportation $25,585 23,079 73,637 65,057
Real estate 4,085 3,748 12,103 10,430
$29,670 26,827 85,740 75,487
Operating profit
Transportation $ 1,641 967 4,108 2,035
Real estate 2,435 2,346 6,609 5,993
Corporate expenses (363) (349) (1,146) (1,111)
$ 3,713 2,964 9,571 6,917
Identifiable assets:
June 30, Sept. 30,
2004 2003
Transportation $ 41,076 45,055
Real estate 140,472 116,269
Cash items 120 2,552
Unallocated corporate assets 1,167 1,340
$182,835 165,216
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
June 30, September 30,
2004 ____2003 ____
Revolving Credit,
Uncollateralized, payable
in 2005 $ 2,488 20,000
5.7% to 9.5% mortgage notes
payable in installments
through 2020 46,418 39,361
48,906 59,361
Less portion due in one year 4,445 1,545
$44,461 57,816
(5) Related Party Transactions. The Company, through its transportation
subsidiaries, hauls commodities by tank and flatbed trucks for Florida
Rock Industries, Inc. (FRI). Charges for these services are based on
prevailing market prices. Other wholly owned subsidiaries lease certain
construction aggregates mining and other properties to FRI. In addition,
the Company outsources certain administrative functions to FRI,
including some human resource, legal and other services.
During 2004, the Company closed on previously announced agreements to
sell three tracts of land to FRI as follows:
Lake City, Florida. On March 30, 2004, a subsidiary sold a parcel of
land and improvements containing approximately 6,321 acres in Suwannee
and Columbia Counties, near Lake City, Florida to a subsidiary of FRI
for $13,000,000 in cash, resulting in a gain of $5,655,000 after income
taxes of $3,465,000. The sales price was approved by the Company's Audit
Committee after considering among other factors, an independent
appraisal, the current use of the property and consultation with
management.
Springfield, Virginia. On May 7, 2004 a subsidiary of the Company sold
108 acres of land located in the northwest quadrant of I-395 and I-495
at Edsall Road in Springfield, Virginia to FRI for $15,000,000 in cash
resulting in a gain of $8,009,000, after income taxes of $4,909,000. The
sales price was approved by a committee of independent directors of the
Company after review of a development feasibility study and other
materials, consultation with management and advice of independent
counsel.
Miami, Florida. Also on May 7, 2004, a subsidiary of the Company sold a
935 acre parcel of property in Miami, Florida to FRI for $1,628,000 in
cash, resulting in a gain of $1,000,000, after income taxes of $614,000.
The property is principally composed of mined-out lakes, mitigation
areas, 145 acres of mineable land and 32 acres of roads and railroad
track right-of-ways. The terms of the sale were approved by the
Company's Audit Committee after considering, among other factors, the
terms of the existing lease agreement and consultation with management.
See Note (6) for further information regarding the accounting for the
sales of these properties as discontinued operations.
(6) Discontinued operations. As discussed in Note (5), during the nine
months ended June 30, 2004, the Company sold three tracts of land that
were accounted for as discontinued operations in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144).
The gains from the sales of these properties of $14,664,000, net of
income taxes of $8,988,000, have been recorded as discontinued
operations.
The results of operations of these properties, consisting of royalty and
rental income, operating expenses and depreciation, have been
reclassified to discontinued operations. Income from the disposed
properties, net of income taxes, was $32,000 and $191,000 for the
quarter and nine months ended June 30, 2004 and $86,000 and $286,000 for
the three and nine months ended June 30, 2003, respectively. All periods
presented have been restated accordingly.
(7) Cash held in escrow. The proceeds of the property sales discussed in
Note 5 were placed in escrow in anticipation of reinvesting these
proceeds in tax deferred exchanges under Section 1031 of the United
States Internal Revenue Code.
In April 2004, $11,350,000 of the escrowed funds from the Lake City
property sale were used to purchase two existing commercial
warehouse/distribution buildings totaling 303,000 square feet and an
adjacent 8.75 acre lot located in Newark, Delaware.
The Company has three escrow accounts, consisting of $1,468,000
remaining from the Lake City property sale, $1,614,000 from the Miami,
Florida property sale, and $14,877,000 from the Springfield, Virginia
property sale. The escrowed funds must remain in the escrow accounts in
order to preserve the Section 1031 opportunities until the earlier of
(i) the date the identified property is purchased, (ii) the date all the
identified properties in each account becomes unavailable, or (iii) the
expiration of the 180 day qualifying period. The qualifying period ends
on September 26, 2004, for $1,468,000 of the escrowed funds and November
2, 2004, for $16,491,000 of the escrowed funds.
(8) Repurchase of Company Stock. During the quarter and nine months
ended June 30, 2004, the Company repurchased and retired 11,001 and
77,501 shares of its common stock for $376,000 and $2,509,000,
respectively, under a plan approved by the Board of Directors.
(9) Stock-Based Compensation Plan. The Company accounts for its stock-
based employee compensation plans under the recognition and measurement
principles of APB Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. No stock-based employee
compensation cost is reflected in net income, as all options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table
illustrates the effect on net income and earnings per share if the
company had applied the fair value recognition provisions of FASB
Statement No. 123, "Accounting for Stock-Based Compensation", to stock-
based employee compensation.
Three Months ended Nine Months ended
(Amounts in thousands) June 30, June 30,
2004 2003 2004 2003
Net income, as reported $10,954 1,346 19,245 2,906
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
income taxes 121 125 338 417
Pro forma net income $10,833 1,221 18,907 2,489
Earnings per share:
Basic as reported $ 3.74 .45 6.57 .95
Basic pro forma $ 3.70 .40 6.45 .81
Diluted as reported $ 3.68 .44 6.46 .94
Diluted pro forma $ 3.64 .40 6.35 .80
(10) Contingencies and Commitments. Certain of the Company's
subsidiaries are involved in litigation on a number of matters and are
subject to certain claims that arise in the normal course of business.
The Company has retained certain self-insurance risks with respect to
losses for third party liability and property damage. In the opinion of
management, based in part on advice of legal counsel, none of these
matters are expected to have a materially adverse effect on the
Company's consolidated financial condition, results of operations or
cash flows.
In December 2003, the Company committed to develop a 145,000 square foot
build to suit warehouse/office building pursuant to a 15 year triple net
lease. This project is expected to cost approximately $14,900,000. The
Company is also committed to purchase approximately $4,000,000 in
transportation equipment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS. The Company's operations are influenced by a number
of external and internal factors. External factors include levels of
economic and industrial activity in the United States and the Southeast,
petroleum product usage in the Southeast which is driven in part by
tourism and commercial aviation, fuel costs, driver availability and
cost, regulations regarding driver qualifications and hours of service,
construction activity, FRI sales from the Company's mining properties,
interest rates and demand for commercial warehouse/office space in the
Baltimore/Washington area. Internal factors include revenue mix,
capacity utilization, auto and workers' compensation accident
frequencies and severity, other operating factors, administrative costs,
and construction costs of new projects.
During Fiscal 2003, the transportation segment's ten largest customers
accounted for approximately 38% of the transportation segment's revenue.
The loss of any one of these customers could have an adverse effect on
the Company's revenues and income.
Financial results of the Company for any individual quarter are not
necessarily indicative of the results to be expected for the year.
Three Months Operating Results
For the third quarter of Fiscal 2004, consolidated revenues were
$29,670,000, an increase of $2,843,000 or 10.6% over the same quarter
last year.
The transportation segment's revenues for the third quarter of Fiscal
2004 were $25,585,000, an increase of $2,506,000 or 10.9% over the same
quarter last year. This increase was a result of a 5.0% increase in
miles hauled and improved revenue per mile over the same quarter last
year. The increase in miles hauled resulted primarily from a 12.1%
increase in miles hauled in the flatbed division, reflecting higher
demand, primarily for construction materials. Revenues per mile, net of
fuel surcharges, increased 3.2% in the tankline division and 8.5% in the
flatbed division, reflecting improved business conditions, and better
equipment utilization. Fuel surcharges accounted for $498,000 or 19.9%
of the overall increase in revenue.
Real estate revenues were $4,085,000 for the third quarter of Fiscal
2004, an increase of $337,000 or 9.0% from the third quarter of Fiscal
2003. Royalties from mining contracts decreased $77,000 or 4.8%
primarily due to a 4.5% decrease in tons of stone materials sold, as
compared to the same quarter last year. Revenues from flex office-
warehouse properties increased $416,000 or 19.3%, primarily due to a
28.0% increase in average leased square feet. The increase in leased
square feet is attributable to the completion of a 200,200 square foot
build-to-suit flex office/warehouse in August 2003 and the April 2004
purchase of two existing commercial warehouse/distribution buildings,
comprising 303,000 square feet. Of this new space, 352,200 average
square feet were leased during the quarter ended June 30, 2004.
Consolidated gross profit for the third quarter of 2004 was $5,989,000,
an increase of $1,012,000 or 20.3% from the third quarter of last year.
Gross profit in the transportation segment increased $922,000 or 35.0%
achieved by the increased revenue and a steady level of fixed costs.
Gross profit in the real estate segment increased $90,000 or 3.8% from
the third quarter of 2003 primarily due to the gross profit derived from
the additional leased space.
Selling, general and administrative expense increased $258,000 or 12.8%
for the third quarter of 2004 compared to the same period last year. The
increase is primarily due to the accrual of management incentive
compensation, which is based on the Company achieving certain
profitability targets. Selling, general and administrative expense as a
percent of consolidated revenues, was 7.7% in the third quarter of 2004
as compared to 7.5% the same quarter last year.
Income from continuing operations was $1,913,000 or $.64 per diluted
share for the third quarter of Fiscal 2004, an increase of $653,000 from
the same quarter last year.
Income from discontinued operations of $9,041,000 net of income taxes
was recorded during the quarter, primarily as a result of the net gain
on sale of properties to a related party for $16,628,000.
Net income was $10,954,000 or $3.68 per diluted share for the third
quarter of Fiscal 2004 compared to $1,346,000 or $.44 per diluted share
for the same quarter last year.
Nine Month's Operating Results.
For the first nine months of Fiscal 2004, consolidated revenues were
$85,740,000, an increase of $10,253,000 or 13.6% over the same period
last year.
The transportation segment's revenues for the first nine months of
Fiscal 2004 were $73,637,000, an increase of $8,580,000 or 13.2% over
the same period last year. The revenue increase is primarily due to a
5.6% increase in miles hauled in the tankline division and a 21.6%
increase in miles for the flatbed division. These increases reflect
higher customer demand over the same period last year. Revenue per mile,
net of fuel surcharges, increased 2.5%, reflecting moderate price
increases, particularly in the flatbed division. Fuel surcharges
accounted for $761,000 or 8.9% of the increased revenue.
Real estate revenues were $12,103,000 for the first nine months of 2004,
an increase of $1,673,000 or 16.0% from the first nine months of 2003.
Royalties from mining contracts increased $393,000 or 9.9% primarily
resulting from an increase in mined materials sold. Revenues from flex
office-warehouse properties increased $1,349,000 or 21.1%, primarily due
to a 20.2% increase in average leased square feet. The increase in
leased square feet is attributable to the completion of a 200,200 square
foot build-to-suit flex office/warehouse in August 2003 and the April
2004 purchase of two existing commercial warehouse/distribution
buildings, comprising 303,000 square feet. Of this new space, 251,000
average square feet were leased during the nine months ended June 30,
2004.
Consolidated gross profit increased $3,327,000 or 25.8% for the first
nine months as compared to the same period last year. Gross profit in
the transportation segment increased $2,710,000 or 39.3% as a result of
the increased revenue and steady level of fixed costs.
Gross profit in the real estate segment increased $617,000 or 10.3% from
the first nine months of 2004 due to increased royalties from mining
operations, as well as gross profits from the additional leased space.
Selling, general and administrative expense increased $644,000 or 10.7%
for the first nine months of 2004 compared to the same period last year.
The increase is primarily due to the accrual of management incentive
compensation, which is based on the Company achieving certain
profitability targets. Selling, general and administrative expense as a
percent of consolidated revenues was 7.8% compared to 8.0% last year.
The Company recorded an income tax provision of $2,690,000 in the first
nine months of 2004 compared to $1,674,000 in the same period last year.
The effective tax rate decreased to 38% in 2004 from 39% in 2003.
Income from continuing operations was $4,390,000 or $1.47 per diluted
share for the first nine months of Fiscal 2004 compared to $2,620,000 or
$.85 per diluted share for the same period last year.
Income from discontinued operations for the nine months ended June 30,
2004 was $14,855,000 net of income taxes, primarily as a result of the
net gain from sale of two rental properties and a mining property to a
related party for $26,628,000.
Net income was $19,245,000 or $6.46 per diluted share for the first nine
months of Fiscal 2004 compared to $2,906,000 or $.94 per diluted share
for the same period last year.
Summary and Outlook
The Company's real estate and transportation businesses are both
experiencing an improved economic climate as the result of a
strengthening regional and national economy. While low interest rates
continue to enhance overall business conditions, the Company's real
estate development operations are encountering stronger levels of
inquiry from prospective tenants for the Company's flexible
office/warehouse product.
Demand for hauling services has also strengthened for the Company's
transportation business. Improved demand and pricing is especially
occurring for the Company's flatbed trucking operations, which haul
primarily construction materials. Operating pressures from volatile
diesel fuel costs, tight driver availability, and burdensome health and
liability insurance costs will continue to challenge the trucking
industry. Such expense pressure in the face of improving freight demand
should lead to continued price increases for hauling services.
Liquidity and Capital Resources
For the first nine months of Fiscal 2004, operating cash flow of
$14,201,000 and $8,500,000 from a secured borrowing allowed the Company
to repay $18,955,000 in long term debt and to repurchase Company stock
for $2,509,000. At June 30, 2004, $34,512,000 was available under the
$37 million Revolver.
The Board of Directors has authorized Management to repurchase shares of
the Company's common stock from time to time as opportunities arise.
During the first nine months of Fiscal 2004, the Company repurchased
77,501 shares for $2,509,000. The Company has approximately $3,492,000
authorized for the repurchase of the Company's common stock as of June
30, 2004.
In December 2003, the Company committed to develop a 145,000 square foot
build-to-suit warehouse/office building pursuant to a 15 year triple net
lease. This project is expected to cost approximately $14,900,000. The
Company intends to finance the project through a construction loan and
the Company's existing Revolver. The terms of the construction financing
are for borrowings not to exceed $11,800,000 for a period not to exceed
18 months converting to a 15 year non-recourse mortgage at project
completion. Interest rate is 6.12% for both the construction and
mortgage loans.
As of June 30, 2004, the Company is committed to purchase approximately
$4,000,000 in transportation equipment, for replacement and fleet
expansion purposes. These purchases are expected to occur over the next
six months.
During the second quarter of 2004, approximately $1,795,000 in funds
held in escrow at September 30, 2003 received from the sale of a mining
property in September 2003 became unrestricted, as a suitable 1031
exchange property was not found. The cash was used to repay amounts due
under the Revolver and the related tax liability was transferred to
current taxes payable.
At June 30, 2004, the Company had $17,959,000 of cash held in escrow
resulting from the sales of property to FRI. The Company has three
escrow accounts, consisting of $1,468,000 remaining from the Lake City,
Florida property sale, $1,614,000 from the Miami, Florida property sale,
and $14,877,000 from the Springfield, Virginia property sale. It was the
intention of the Company to reinvest these proceeds in tax deferred
exchanges under Section 1031 of the Internal Revenue Code. Several
exchange properties were identified for each sale and the Company is
currently evaluating each of the remaining available properties. The
period allowed under Section 1031 for reinvestment ends on September 26,
2004, for $1,468,000 of the escrowed funds and November 2, 2004, for
$16,491,000 of the escrowed funds.
Subsequent to June 30, 2004, three of the four properties identified for
the Springfield, Virginia proceeds became unavailable. As a result,
approximately $7,700,000 of the gain recognized from that sale will not
be tax deferred and the related tax liability of $2,926,000 has been
reclassified as current taxes payable in the accompanying balance sheet
as of June 30, 2004. However, the Company intends to keep the associated
funds in the escrow account until the earlier of (i) the date the
remaining identified property is purchased, (ii) the date the remaining
identified property becomes unavailable, or (iii) the expiration of the
180 day qualifying period on November 2, 2004.
Reinvestment of the proceeds from these transactions is expected to
facilitate the Company's long term plan to build and own a portfolio of
successful rental properties. For additional information see Note 5 of
Notes to Condensed Consolidated Financial Statements.
While the Company is affected by environmental regulations, such
regulations are not expected to have a major effect on the Company's
capital expenditures or operating results.
Based on current expectations, management believes that its internally
generated cash flow and access to credit facilities are sufficient on a
current and long term basis to meet the liquidity requirements necessary
to fund operations, capital requirements and debt service. The $37
million Revolver matures in January 2005 and the Company expects to
renew the credit facility under substantially the same terms and
conditions.
Forward-Looking Statements. Certain matters discussed in this report
contain forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from
these indicated by such forward-looking statements. These forward-
looking statements relate to, among other things, capital expenditures,
liquidity, capital resources and competition and may be indicated by
words or phrases such as "anticipate", "estimate", "plans", "projects",
"continuing", "ongoing", "expects", "management believes", "the Company
believes", "the Company intends" and similar words or phrases. The
following factors and others discussed in the Company's periodic reports
and filings with the Securities and Exchange Commission are among the
principal factors that could cause actual results to differ materially
from the forward-looking statements: driver availability and cost;
regulations regarding driver qualifications and hours of service;
availability and terms of financing; freight demand for petroleum
products including recessionary and terrorist impacts on travel in the
Company's markets; freight demand for building and construction
materials in the Company's markets; risk insurance markets; competition;
general economic conditions; demand for flexible warehouse/office
facilities in the Baltimore/Washington D.C. area; interest rates; levels
of construction activity in FRI's markets; fuel costs; and inflation.
However, this list is not a complete statement of all potential risks or
uncertainties.
These forward-looking statements are made as of the date hereof based on
management's current expectations, and the Company does not undertake an
obligation to update such statements, whether as a result of new
information, future events or otherwise. Additional information
regarding these and other risk factors may be found in the Company's
other filings made from time to time with the Securities and Exchange
Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There are no material changes to the disclosures made in Form 10-K for
the fiscal year ended September 30, 2003 with respect to this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. As required by Rule
13A-15 under the Exchange Act, as of the end of the period covered by
this report, the Company carried out an evaluation of the effectiveness
of the design and operation of the Company's disclosure controls and
procedures. This evaluation was carried out under the supervision and
with the participation of the Company's management, including the
Company's President and Chief Executive Officer, Chief Financial Officer
and Chief Accounting Officer. The evaluation conducted by the Company's
President and Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer has provided them with reasonable assurance that the
Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required
to be included in the Company's periodic SEC filings.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in
Company reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in
the Securities and Exchange Commission's rule and forms. Disclosure
controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed
in Company reports filed under the Exchange Act is accumulated and
communicated to management, including the Company's Chief Executive
Officer, Chief Financial Officer and Chief Accounting Officer as
appropriate, to allow timely decisions regarding required disclosures.
Changes in internal controls. There have been no changes in internal
controls or in other factors that could significantly affect these
controls during the quarter, including any corrective actions with
regard to significant deficiencies and material weaknesses.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 9 to the Condensed Consolidated Financial Statements included
in this Form 10-Q.
Item 2. Changes in Securities and use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
(c)
Total
Number of
Shares (d)
Purchased Approximate
(a) As Part of Dollar Value of
Total (b) Publicly Shares that May
Number of Average Announced Yet Be Purchased
Shares Price Paid Plans or Under the Plans
Period Purchased per Share Programs or Programs (1)
April 1
through
April 30 3,600 $ 31.606 3,600 $ 3,754,000
May 1
through
May 31 300 $ 31.641 300 $ 3,745,000
June 1
through
June 30 7,100 $ 35.700 7,100 $ 3,492,000
Total 11,000 $ 34.249 11,000
(1) In December, 2003, the Board of Directors authorized management to
expend up to $6,000,000 to repurchase shares of the Company's common
stock from time to time as opportunities arise.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The response to this item is submitted as a separate
Section entitled "Exhibit Index", starting on page 18.
(b) Reports on Form 8-K. On April 27, 2004, the Company filed a
Form 8-K reporting under Items 7, 9 and 12, a press release
announcing its earnings for the second quarter of the Fiscal
year ending September 30, 2004.
On April 5, 2004, the Company filed a Form 8-K reporting under
Item 5 that a subsidiary of the Company closed on the sale of a
parcel of land and improvements containing approximately 6,321
acres in Suwannee and Columbia Counties, Florida.
On May 7, 2004, the Company filed a Form 8-K reporting under
Items 5 and 7 that a subsidiary of the Company closed on the
sale of two parcels of property.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
July 29, 2004 PATRIOT TRANSPORTATION HOLDING, INC.
John E. Anderson
John E. Anderson
President and Chief Executive
Officer
Ray M. Van Landingham_
Ray M. Van Landingham
Vice President Finance &
Administration and Chief
Financial Officer
Gregory B. Lechwar
Gregory B. Lechwar
Controller and Chief
Accounting Officer
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2004
EXHIBIT INDEX
(3)(a)(1) Articles of Incorporation of Patriot Transportation
Holding Inc., incorporated by reference to the
corresponding exhibit filed with Form S-4 dated
December 13,1988. File No. 33-26115.
(3)(a)(2) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 19, 1991
incorporated by reference to the corresponding
exhibit filed with Form 10-K for the fiscal year
ended September 30, 1993. File No. 33-26115.
(3)(a)(3) Amendments to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 7,1995,
incorporated by reference to an appendix to the
Company's Proxy Statement dated December 15, 1994.
File No. 33-26115.
(3)(a)(4) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc., filed with
the Florida Secretary of State on May 6, 1999
incorporated by reference to a form of such
amendment filed as Exhibit 4 to the Company's Form
8-K dated May 5, 1999. File No. 33-26115.
(3)(a)(5) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of Florida on February 21, 2000,
incorporated by reference to the corresponding
exhibit filed with Form 10-Q for the quarter ended
March 31, 2000. File No. 33-26115.
(3)(b)(1) Restated Bylaws of Patriot Transportation Holding,
Inc. adopted December 1, 1993, incorporated by
reference to the corresponding exhibit filed with
Form 10-K for the fiscal year ended September 30,
1993. File No. 33-26115.
(3)(b)(2) Amendment to the Bylaws of Patriot Transportation
Holding, Inc. adopted August 3, 1994, incorporated
by reference to the corresponding exhibit filed
with Form 10-K for the fiscal year ended September
30, 1994. File No. 33-26115.
(3)(b)(3) Amendment to the Articles of Incorporation of
Patriot Transportation Holding, Inc. filed with the
Secretary of State of State of Florida on February
7, 1995, incorporated by reference to an appendix
to the Company's Proxy Statement dated December 15,
1994. File No. 33-26115.
(3)(b)(4) Amendment to the Restated Bylaws of Patriot
Transportation Holding, Inc. adopted May 5, 2004.
(4)(a) Articles III, VII and XII of the Articles of
Incorporation of Patriot Transportation Holding,
Inc., incorporated by reference to an exhibit filed
with Form S-4 dated December 13, 1988. And
amended Article III, incorporated by reference to
an exhibit filed with Form 10-K for the fiscal year
ended September 30, 1993. And Articles XIII and
XIV, incorporated by reference to an appendix filed
with the Company's Proxy Statement dated December
15, 1994. File No. 33-26115.
(4)(b) Specimen stock certificate of Patriot
Transportation Holding, Inc., incorporated by
reference to an exhibit filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(4)(c) Revolving Credit Agreement dated as of January 9,
2002 among Patriot Transportation Holding, Inc. as
Borrower, the Lenders from time to time party
thereto and SunTrust Bank as Administrative Agent,
incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended December 31, 2001.
File No. 33-26115.
(4)(d) The Company and its consolidated subsidiaries have
other long-term debt agreements none of which
exceed 10% of the total consolidated assets of the
Company and its subsidiaries, and the Company
agrees to furnish copies of such agreements and
constituent documents to the Commission upon
request.
(4)(e) Rights Agreement, dated as May 5, 1999 between the
Company and First Union National Bank, incorporated
by reference to Exhibit 4 to the Company's Form 8-K
dated May 5, 1999. File No. 33-26115.
(10)(a) Various lease backs and mining royalty agreements
with Florida Rock Industries, Inc., none of which
are presently believed to be material individually,
except for the Mining Lease Agreement dated
September 1, 1986, between Florida Rock Industries
Inc. and Florida Rock Properties, Inc., successor
by merger to Grandin Land, Inc. (see Exhibit
(10)(c)), but all of which may be material in the
aggregate, incorporated by reference to an exhibit
filed with Form S-4 dated December 13, 1988. File
No. 33-26115.
(10)(b) License Agreement, dated June 30, 1986, from
Florida Rock Industries, Inc. to Florida Rock &
Tank Lines, Inc. to use "Florida Rock" in corporate
names, incorporated by reference to an exhibit
filed with Form S-4 dated December 13, 1988. File
No. 33-26115.
(10)(c) Mining Lease Agreement, dated September 1, 1986,
between Florida Rock Industries, Inc. and Florida
Rock Properties, Inc., successor by merger to
Grandin Land, Inc., incorporated by reference to an
exhibit previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(d) Summary of Medical Reimbursement Plan of Patriot
Transportation Holding, Inc., incorporated by
reference to an exhibit filed with Form 10-K for
the fiscal year ended September 30, 1993. File No.
33-26115.
(10)(e) Summary of Management Incentive Compensation Plans,
incorporated by reference to an exhibit filed with
Form 10-K for the fiscal year ended September 30,
1994. File No. 33-26115.
(10)(f) Management Security Agreements between the Company
and certain officers, incorporated by reference to
a form of agreement previously filed (as Exhibit
(10)(I)) with Form S-4 dated December 13, 1988.
File No. 33-26115.
(10)(g)(1) Patriot Transportation Holding, Inc. 1995 Stock
Option Plan, incorporated by reference to an
appendix to the Company's Proxy Statement dated
December 15, 1994. File No. 33-26115.
(10)(g)(2) Patriot Transportation Holding, Inc. 2000 Stock
Option Plan, incorporated by reference to an
appendix to the Company's Proxy Statement dated
December 15, 1999. File No. 33-26115.
(10)(h) Purchase and Sale Agreement dated February 6, 2002
between Florida Rock Industries, Inc. and Florida
Rock Properties, Inc., incorporated by reference to
an exhibit filed with Form 10-Q for the quarter
ended December 31, 2001.
(10)(i) Purchase and Sale Agreement dated August 25, 2003
between Florida Rock Properties, Inc. and Florida
Rock Industries, Inc., incorporated by reference to
an exhibit filed with Form 10-K for the year ended
September 30, 2003.
(10)(j) Agreement of Purchase and Sale dated October 21,
2003 between FRP Bird River, LLC and The Ryland
Group, Inc., incorporated by reference to an
exhibit filed with form 10-K for the year ended
September 30, 2003.
(10)(k) Purchase and Sale Agreement dated March 30, 2004
between Florida Rock Properties, Inc. and Mule Pen
Quarry Corporation, incorporated by reference to an
exhibit filed with Form 10-Q for the quarter ended
March 31, 2004.
(11) Computation of Earnings Per Common Share.
(14) Financial Code of Ethical Conduct between the
Company, Chief Executive Officers and Financial
Managers, adopted December 4, 2002, incorporated by
reference to an exhibit filed with Form 10-K for
the year ended September 30, 2003.
(31)(a) Certification of John E. Anderson.
(31)(b) Certification of Ray M. Van Landingham.
(31)(c) Certification of Gregory B. Lechwar.
(32) Certification of Chief Executive Officer, Chief
Financial Officer, and Chief Accounting Officer
pursuant to 18 U.S.C. Section 1350, Adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.