UNITED STATES
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, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-26115
PATRIOT TRANSPORTATION HOLDING, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2924957
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 904/396-5733
Securities registered pursuant to Section 12(b) of the Act:
Common Stock $.10 par value
(Title of class)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes No X
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes No X
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 or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See
definitions of "accelerated filer and large accelerated filer" in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer[ ] Accelerated filer[X] Non-accelerated filer[ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes No X
The number of shares of the registrant's stock outstanding as of November
14, 2006 was 3,011,629. The aggregate market value of the shares of
Common Stock held by non-affiliates of the registrant as of March 31,
2006, the last day of business of our most recently completed second
fiscal quarter, was $87,908,972. Solely for purposes of this calculation,
the registrant has assumed that all directors, officers and ten percent
(10%) shareholders of the Company are affiliates of the registrant.
Documents Incorporated by Reference
Portions of the Patriot Transportation Holding, Inc. 2006 Annual Report to
Shareholders are incorporated by reference in Parts I and II.
Portions of the Patriot Transportation Holding, Inc. Proxy Statement
which will be filed with the Securities and Exchange Commission not
later than December 31, 2006 are incorporated by reference in Part III.
PART I
Item 1. BUSINESS.
Patriot Transportation Holding, Inc., which was incorporated in
Florida in 1988, and its subsidiaries (the "Company") are engaged
in the transportation and real estate businesses.
The Company has two business segments: transportation and real
estate. Industry segment information is presented in Notes 2 and
11 to the consolidated financial statements included in the
accompanying 2006 Annual Report to Shareholders and is
incorporated herein by reference.
The Company's transportation business is conducted through two
wholly owned subsidiaries, Florida Rock & Tank Lines, Inc. ("Tank
Lines"), and SunBelt Transport, Inc. ("SunBelt"). Tank Lines is a
Southeastern U.S. based transportation company concentrating in
the hauling of primarily petroleum related bulk liquids and dry
bulk commodities by tank trailers. SunBelt serves the flatbed
portion of the trucking industry primarily in the Southeastern
U.S., hauling primarily construction materials.
The Company's real estate activities are conducted through two
wholly owned subsidiaries. Florida Rock Properties, Inc.
("Properties") and FRP Development Corp. ("Development").
Properties owns real estate of which a substantial portion is
under mining royalty agreements or leased to Florida Rock
Industries, Inc. ("FRI"), a related party. FRI accounted for
approximately 30% of the Company's real estate revenues for fiscal
2006. Properties also owns certain other real estate for
investment. Development owns, manages and develops commercial
warehouse/office rental properties near Baltimore, Maryland.
Substantially all of the real estate operations are conducted
within the Southeastern and Mid-Atlantic United States.
Revenues from royalties and from a portion of the trucking
operations are subject to factors affecting the level of general
construction activity. A decrease in the level of general
construction activity in any of the Company's market areas may
have an adverse effect on such revenues and income derived
therefrom.
Transportation. During fiscal 2006, Tank Lines operated from
terminals in Jacksonville, Orlando, Panama City, Pensacola, Tampa
and White Springs, Florida; Albany, Atlanta, Augusta, Bainbridge,
Columbus, Dalton, Macon and Savannah, Georgia; Knoxville,
Tennessee; Montgomery, Alabama; and Wilmington, North Carolina.
Tank Lines has from two to six major tank truck competitors in
each of its markets.
SunBelt's flatbed fleet is based in Jacksonville and Tampa,
Florida; Atlanta and Savannah, Georgia; South Pittsburg,
Tennessee; Mobile, Alabama; and Selma, North Carolina, and hauls
primarily building and construction materials in the Southeastern
U.S. There are at least ten major competitors in SunBelt's market
area and numerous small competitors in the various states served.
During fiscal 2006, the transportation group purchased 198 new
tractors and 89 new trailers and had commitments to purchase an
additional 60 tractors and 4 trailers at September 30, 2006.
Starting in January 2007, more stringent engine emissions
standards mandated by the Environmental Protection Agency will
become effective for all newly manufactured trucks. The Company
expects that the engines produced under the 2007 standards will be
less fuel-efficient and have a higher cost than the current
engines. The Company accelerated its normal tractor replacement
cycle so that the fiscal 2007 capital expenditure plan only
includes the 60 tractors on order at September 30, 2006 to be
received before January 1, 2007. The fiscal 2007 plan also
includes 20 new trailers. The fleet modernization program has
resulted in reduced maintenance expenses, improved operating
efficiencies and enhanced driver recruitment and retention. At
September 30, 2006, the Company owned and operated a fleet of 680
tractors and 997 trailers.
The transportation segment primarily serves customers in the
petroleum and building and construction industries. Petroleum
customers accounted for approximately 66% and building and
construction customers accounted for approximately 34% of
transportation segment revenues for the year ended September 30,
2006.
The Company hauls construction aggregates, diesel fuel and cement
for FRI. Revenues from services provided to FRI accounted for 1.6%
of the transportation segment's revenues.
Price, service, and location are the major factors which affect
competition in the transportation segment within a given market.
During fiscal 2006, the transportation segment's ten largest
customers accounted for approximately 47.3% of the transportation
segment's revenue. One of these customers accounted for 11.6% of
the transportation segment's revenue. The loss of any one of these
customers could have a material adverse effect on the Company's
revenues and income.
Real Estate. The Company's real estate and property development
activities are conducted through wholly owned subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, Delaware and Washington, D.C. The real estate owned
falls generally into one of three categories: (i) land and/or
buildings leased under rental agreements or being developed for
rental; (ii) construction aggregates properties with stone or sand
and gravel deposits, substantially all of which are leased to FRI
in exchange for either a percentage of the revenues generated by
the material mined and sold, or minimum royalties; and, (iii) land
that is being held for future appreciation or development.
The Company's real estate strategy of developing high quality,
flexible warehouse/office space continues to be successful as
average occupancy for the fiscal year for buildings in service for
more than 12 months was 91.7%. At September 30, 2006, 93.3% of the
total warehouse/office portfolio of approximately 2.4 million
square feet was leased.
Price, location, rental space availability, flexibility of design,
and property management services are the major factors that affect
competition in the flexible warehouse/office rental market. The
Company experiences considerable competition in all of its
markets.
Real estate revenues in fiscal 2006 were divided approximately 69%
from rentals on developed properties and 31% from mining
royalties. FRI accounted for approximately 30% of total real
estate revenues. Tenants of flexible warehouse/office properties
are not concentrated in any one particular industry.
During 2004, a subsidiary of the Company sold several parcels of
property to FRI, a related party. The properties were located in
Lake City, FL, Springfield, VA, and Miami, FL and the combined
sales price was $29,628,000. See Notes 2 and 3 to the consolidated
financial statements for more information.
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. Starting in January 2007, more stringent
engine emissions standards mandated by the Environmental
Protection Agency will become effective for all newly manufactured
trucks. The Company expects that the engines produced under the
2007 standards will be less fuel-efficient and have a higher cost
than the current engines.
Seasonality. The Company's business is subject to limited
seasonality due to the cyclical nature of business of our
customers, with revenues generally declining slightly during
winter months.
Employees. The Company employed 955 people in its transportation
group, 21 people in its real estate group and 5 people in its
corporate offices at September 30, 2006.
Company Website. The Company's website may be accessed at
www.patriottrans.com. All of our filings with the Securities and
Exchange Commission can be accessed through our website promptly
after filing. This includes annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports filed or furnished
on Form 8-K and all related amendments.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Office Position Since
Edward L. Baker 71 Chairman of the Board May 3, 1989
John E. Anderson 61 President & Chief Feb. 17, 1989
Executive Officer
David H.
deVilliers, Jr. 55 Vice President of the Feb. 28, 1994
Company and President
of the Company's Real
Estate Group
Ray M. VanLandingham 63 Vice President, Dec. 6, 2000
Treasurer, Secretary
and Chief Financial
Officer
John D. Klopfenstein 43 Controller and Chief Feb. 16, 2005
Accounting Officer
Terry S. Phipps 42 President of SunBelt April 5, 2004
Transport, Inc.
Robert E. Sandlin 45 President of Florida March 1, 2003
Rock & Tank Lines, Inc.
All of the above officers have been employed in their respective
positions for the past five years except as follows: John D.
Klopfenstein served as Director, Business Development and Planning
of the Company, from June 2003 to February 2005, and as Manager,
Corporate Development of the Company, from July 1996 to May 2003;
Terry S. Phipps was a Vice President of SunBelt from May 2003 to
April 2004, and was employed with Coastal Transport, Inc. from
1990 to May 2003; and Robert E. Sandlin was a Vice President of
Florida Rock & Tank Lines from 1993 until March 2003.
John D. Baker II, who is the brother of Edward L. Baker, and
Thompson S. Baker II, who is the son of Edward L. Baker, are
directors of the Company.
All executive officers of the Company are elected by the Board
of Directors annually and serve until their resignation or
removal.
Item 1A. RISK FACTORS.
Our future results may be affected by a number of factors over
which we have little or no control. The following issues,
uncertainties, and risks, among others, should be considered in
evaluating our business and outlook. Also, note that additional
risks not currently identified or known to us could also
negatively impact our business or financial results.
Because certain shareholders have effective control of nearly a
majority of our common stock, investors likely will not be able
to affect the outcome of any shareholder vote.
As of December 1, 2006, three of our directors, Edward L. Baker,
John D. Baker II and Thompson S. Baker II, beneficially own
approximately 45% of the outstanding shares of our common stock.
As a result, these individuals effectively may have the ability
to direct the election of all members of our Board of Directors
and to exercise a controlling influence over our business and
affairs, including any determinations with respect to mergers or
other business combinations involving us, our acquisition or
disposition of assets, our borrowing of monies, our issuance of
any additional securities, our repurchase of common stock and our
payment of dividends. Because their interests may differ from
other shareholder's interests, actions taken by them with respect
to us may not be favorable to all shareholders.
Our charter, bylaws and shareholder rights agreement contain
anti-takeover provisions that may hinder a takeover or negatively
affect our stock price.
Our articles of incorporation, bylaws and shareholder rights
agreement contain several provisions that may make it more
difficult and expensive for a third party to acquire control of
us without the approval of our board of directors. Our articles
of incorporation and bylaws contain provisions dividing our board
of directors into four classes of directors serving four-year
terms and providing that directors may only be removed for cause.
Our articles of incorporation also provide that our shareholders
can take action only at a duly called annual or special meeting
of shareholders and require a supermajority vote to approve
certain matters. In addition, our board of directors is
authorized to issue additional shares of common stock or
preferred stock and to determine the rights and preferences of
any shares of preferred stock to be issued. Our shareholder
rights plan is designed to guard against coercive or unfair
tactics to gain control of us. The rights will cause substantial
dilution to any person or group who attempts to acquire a
significant amount of common stock without approval of our board
of directors. Because we can redeem the rights, the rights will
not interfere with a merger or other business combination
approved by our board.
We may be adversely impacted by rising fuels costs and limited
availability of fuel.
The market price for fuel, which recently rose to its highest
price in over a decade, can be extremely volatile and can be
affected by a number of economic and political factors. Rising
fuel prices adversely impact us in two ways. Our transportation
business requires large amounts of diesel fuel to operate our
tractors. Historically, we have been able to recover increases
in fuel prices from customers through fuel surcharges, but our
earnings will be reduced if we are not able to fully offset fuel
price increases with surcharges in the future. In addition,
increased fuel prices often reduce the consumer demand for the
petroleum products hauled by our tank lines subsidiary, adversely
impacting revenues. Continued disruptions in the political
climate in key oil producing regions in the world could limit the
availability of fuel in the United States, increasing our fuel
costs and possibly reducing revenues in our transportation
business. Our operations may also be adversely affected by any
limit on the availability of fuel.
Our business may be adversely affected by seasonal factors and
harsh weather conditions.
Our business is subject to seasonal trends common in the refined
petroleum products delivery industry. We typically face increased
demand for fuels delivery services in Florida during the spring
months. Our real estate group and our flatbed trucking
subsidiary are adversely affected by reduced construction
activity during periods of inclement weather. These factors can
cause our operating results to fluctuate from quarter to quarter.
An occurrence of unusually harsh or long-lasting inclement
weather such as hurricanes, tornadoes and heavy snowfalls could
have an adverse effect on our operations and profitability.
Our revenues depend in part on construction sector activity
levels, which tend to be cyclical.
One of our transportation subsidiaries hauls construction
materials. Our real estate group receives part of its revenues
from royalties on construction aggregates mined on our
properties. Thus, our results depend in part on residential,
commercial and infrastructure construction activity and spending
levels. The construction industry in our markets tends to be
cyclical. Construction activity and spending levels vary across
our markets and are influenced by interest rates, inflation,
consumer spending habits, demographic shifts, environmental laws
and regulations, employment levels and the availability of funds
for public infrastructure projects. Economic downturns may lead
to recessions in the construction industry, either in individual
markets or nationally.
We face great difficulty in recruiting and retaining qualified
drivers.
In recent years the transportation industry has had great
difficulty attracting and retaining qualified drivers (including
independent contractors), and competition for drivers is
increasingly intense. To compete for drivers, we may be forced
to increase driver compensation. We cannot be certain that we
could pass along the increased compensation costs to our
customers. If we are unable to continue to attract drivers and
contract with independent contractors, we could be required to
suffer downtime and lost revenue miles.
New tractors are more expensive and less fuel efficient.
New tractors are more expensive, primarily due to higher
commodity prices, better pricing power among equipment
manufacturers, and government regulations applicable to newly
manufactured tractors and diesel engines. Revised EPA regulations
decrease the amount of permitted air emissions that can be
released by tractor engines and affect tractors produced after
the effective date of the regulations. Compliance with these
regulations has increased the cost of our new tractors and
lowered fuel mileage. This will increase our capital expenses and
our operating expenses. These adverse effects combined with the
uncertainty as to the reliability of the vehicles equipped with
the newly designed diesel engines and the residual values that
will be realized from the disposition of these vehicles could
increase our costs or otherwise adversely affect our business or
operations.
We have significant ongoing capital requirements.
Our transportation business requires substantial ongoing capital
investment, particularly for tractors, trailers, terminals and
technology. For the past few years, we have depended on cash
from operations and our credit facilities to fund our revenue
equipment. We expect to continue to pay for projected capital
expenditures with cash flows from operations and borrowings under
our line of credit. If we are unable to generate sufficient cash
from operations and obtain financing on favorable terms in the
future, we may have to limit our growth, enter into less
favorable financing arrangements, or operate our revenue
equipment for longer periods, any of which could have a material
adverse effect on our profitability.
The loss of one of our major transportation customers could have
a materially adverse effect on our business.
A significant portion of our revenue is generated from our major
customers. For 2006, our top 10 customers, based on revenue,
accounted for approximately 47% of our revenue. A reduction in
or termination of our services by one or more of our major
customers could have a materially adverse effect on our business
and operating results.
The trucking industry is extremely competitive and fragmented.
The trucking industry is extremely competitive and fragmented. No
single truckload carrier has a significant market share. We
compete with many other truckload carriers of varying sizes,
customers' private fleets, and, to a lesser extent, with
railroads which may limit our growth opportunities and reduce
profitability. Some of our competitors periodically reduce their
freight rates to gain business, especially during times of
reduced growth rates in the economy, which may limit our ability
to maintain or increase freight rates or maintain our profit
margins. Many customers reduce the number of carriers they use
by selecting so-called "core carriers" as approved transportation
service providers, and in some instances we may not be selected.
Historically, competition has created downward pressure on the
truckload industry's pricing structure.
Our operations are subject to various environmental laws and
regulations, the violation of which could result in substantial
fines or penalties.
We are subject to various environmental laws and regulations
dealing with the handling of hazardous materials, fuel storage
tanks, air emissions from our vehicles and facilities, and engine
idling. Our operations involve the risks of fuel spillage or
seepage, environmental damage, and hazardous waste disposal,
among others. We also maintain bulk fuel storage and fuel islands
at several of our facilities. Although we have instituted
programs to monitor and control environmental risks and promote
compliance with applicable environmental laws and regulations, if
we are involved in a spill or other accident involving hazardous
substances or if we are found to be in violation of applicable
laws or regulations, we could be subject to liabilities,
including substantial fines or penalties or civil and criminal
liability, any of which could have a materially adverse effect on
our business and operating results.
Uninsured losses could significantly reduce our earnings.
We self-insure for a portion of our claims exposure resulting
from workers' compensation, auto liability, general liability,
cargo and property damage claims, as well as employees' health
insurance. We also are responsible for our legal expenses
relating to such claims. We maintain insurance above the amounts
for which we self-insure with licensed insurance carriers.
Although we believe the aggregate insurance limits should be
sufficient to cover reasonably expected claims, it is possible
that one or more claims could exceed our aggregate coverage
limits. Also, there are some types of losses such as from
hurricanes, terrorism, wars, or earthquakes where insurance is
limited and/or not economically justifiable. If an uninsured
loss occurs, we could lose both the invested capital and
anticipated revenues. We reserve currently for anticipated losses
and expenses. We periodically evaluate and adjust our claims
reserves to reflect our experience. However, ultimate results
may differ from our estimates, which could result in losses over
our reserved amounts.
Rising insurance costs could significantly reduce our earnings.
Insurance carriers have raised premiums for many businesses,
including trucking companies. As a result, our insurance and
claims expense could increase, or we could raise our self-insured
retention when our policies are renewed. If we are unable to
pass along this cost increase to customers, our earnings may be
significantly reduced.
Compliance with new or future transportation regulations may
significantly reduce earnings.
Our transportation operations are regulated and licensed by
various U.S. agencies. While the costs of compliance with
existing regulations generally is reflected in our prior results,
new regulations (such as the new tractor air emissions
regulations) and future laws and regulations may be more
stringent and require changes in our operating practices,
influence the demand for transportation services, or require us
to incur significant additional costs. Higher costs incurred by
us could adversely affect our results of operations.
We may be unable to renew leases or relet space as leases expire.
When a lease expires, a tenant may elect not to renew it. We may
not be able to relet the property on similar terms. The terms of
renewal or re-lease (including the cost of required renovations
and/or concessions to tenants) may be less favorable than the
prior lease. If we are unable to relet all or a substantial
portion of our properties, or if the rental rates upon such
reletting are significantly lower than expected rates, our cash
generated before debt repayments and capital expenditures may be
adversely affected. As of September 30, 2006, leases at our
properties representing approximately 16% and 13% of the total
square footage of our current portfolio were scheduled to expire
in fiscal 2007 and fiscal 2008, respectively.
The bankruptcy or insolvency of significant tenants with long-
term leases may adversely affect income produced by our
properties.
We have six buildings in our business parks that are single-
tenant occupied representing 34% of Developed property rentals
under long-term leases. We have three other tenants with leases
in excess of five years. Should tenants default on their
obligations, our cash flow would be adversely affected and we may
not be able to find another tenant to occupy the space under
similar terms or have to make expenditures to retrofit and/or
divide the space. In addition we may have to expense a
significant amount of deferred rent revenue generated from
straight-lining revenues. The bankruptcy or insolvency of a major
tenant may also adversely affect the income produced by a
property. If any of our tenants becomes a debtor in a case under
the U.S. Bankruptcy Code, we cannot evict that tenant solely
because of its bankruptcy. The bankruptcy court may authorize
the tenant to reject and terminate its lease with us. Our claim
against such a tenant for unpaid future rent would be subject to
a statutory limitation that might be substantially less than the
remaining rent actually owed to us under the tenant's lease. Any
shortfall in rent payments could adversely affect our cash flow.
Poor Economic Conditions in Baltimore Could Adversely Affect Our
Business.
All of our office/warehouse properties are located in the
Baltimore and Washington, D.C. areas. As a result of our
geographic concentration, we depend upon the local conditions in
these markets, including local real estate conditions. We are,
therefore, subject to increased exposure (positive or negative)
to economic and other competitive factors specific to markets in
confined geographic areas. Our operations may also be affected
if too many competing properties are built in these markets. An
economic downturn in these markets could adversely affect our
operation. We cannot assure you that these markets will continue
to grow or will continue to provide favorable demand for our
office/warehouse product.
Our inability to obtain necessary approvals for property
development could adversely affect our profitability.
We may be unable to obtain, or incur delays in obtaining,
necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations, which could
result in increased costs or abandonment of these projects.
Before we can develop a property, we must obtain a variety of
approvals from local and state governments with respect to such
matters as zoning, density, parking, subdivision, site planning
and environmental issues. Legislation could impose moratoriums on
new real estate development and/or land-use conversions from
mining to development. These factors may reduce our profit or
growth.
Real estate investments are not as liquid as other types of
assets.
The illiquid nature of real estate investments may limit our
ability to react promptly to changes in economic or other
conditions. In addition, significant expenditures associated with
real estate investments, such as mortgage payments, real estate
taxes and maintenance costs, are generally not reduced when
circumstances cause a reduction in income from the investments.
Thus, the illiquid nature of our real estate investments could
adversely affect our profitability under certain economic
conditions.
Our Debt Service Obligation May Have Adverse Consequences on Our
Business Operations.
We use debt to finance our operations, including acquisitions of
properties. Our use of debt may have adverse consequences,
including the following:
? Our cash flow from operations may not be sufficient to
meet required payments of principal and interest.
? We may be forced to dispose of one or more of our
properties, possibly on disadvantageous terms, to make
payments on our debt.
? We may default on our debt obligations, and the lenders
or mortgages may foreclose on our properties that
secure those loans.
? A foreclosure on one of our properties could create
taxable income without any accompanying cash proceeds
to pay the tax.
? A default under a mortgage loan that has cross default
provisions may cause us to automatically default on
another loan.
? We may not be able to refinance or extend our existing
debt.
? The terms of any refinancing or extension may not be as
favorable as the terms of our existing debt.
? We may be subject to a significant increase in the
variable interest rates on our unsecured line of credit
or unsecured term loan, which could adversely impact
our operations.
As of September 30, 2006, we had outstanding mortgage
indebtedness of $50,672,000, secured by developed real estate
properties having a carrying value of $56,933,000, and
outstanding debt under our unsecured revolver of $12,452,000.
Our Unsecured Revolving Credit Agreement Restricts Our Ability to
Engage in Some Business Activities.
Our unsecured revolving credit agreement contains customary
negative covenants and other financial and operating covenants
that, among other things:
? restrict our ability to incur additional indebtedness;
? restrict our ability to make certain investments;
? restrict our ability to merge with another company;
? restrict our ability to pay dividends;
? require us to maintain financial coverage ratios; and
? require us to maintain a pool of unencumbered assets
approved by the lenders.
These restrictions could cause us to default on our unsecured
line of credit or negatively affect our operations.
Our real estate segment faces competition from numerous sources.
The ownership of flexible warehouse/office space is highly
fragmented. We compete with numerous developers, owners and
operators of real estate, many of which own properties similar to
ours in the same submarkets in which our properties are located.
If our competitors offer space at rental rates below current
market rates, or below the rental rates we currently charge our
tenants, we may lose potential tenants and we may be pressured to
reduce our rental rates below those we currently charge in order
to retain tenants when our tenants' leases expire. As a result,
our financial condition, results of operations, cash flow and
ability to satisfy our debt service obligations could be
materially adversely affected.
Construction costs may be more costly than anticipated.
Our business plan includes a number of construction projects.
The construction costs of these projects may exceed original
estimates and possibly make the completion of a property
uneconomical. Building material commodity shortages, construction
delays/stoppages and/or rapidly escalating construction costs may
out-pace market rents, adversely affecting profits. The market
environment and existing lease commitments may not allow us to
raise rents to cover these higher costs.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida,
Georgia, Virginia, Washington, D.C., Delaware and Maryland.
Real Estate Segment Properties. Principal properties held by
the Real Estate segment are discussed below under the captions
Developed Properties, Future Planned Development, Construction
Aggregates Properties, and Other Properties.
At September 30, 2006 certain developed real estate properties
having a carrying value of $56,933,000 were pledged on long-
term non-recourse notes with an outstanding principal balance
totaling $50,672,000. In addition, certain other properties
having a carrying value at September 30, 2006 of $103,000 were
encumbered by $1,300,000 of industrial revenue bonds that are
the liability of FRI. FRI has agreed to pay such debt when due
(or sooner if FRI cancels its lease of such property), and
further has agreed to indemnify and hold harmless the Company
on account of such debt.
Developed Properties. At September 30, 2006, the Company owned
10 developed parcels of land containing 219 usable acres in the
Mid-Atlantic region of the United States as follows:
1) Hillside Business Park in Anne Arundel County, Maryland
consists of 49 usable acres near the Baltimore-Washington
International Airport. Infrastructure work on the site is
substantially completed and four buildings with a total of
504,740 square feet are completed. Of the four existing
buildings, three are 100% leased/occupied and the fourth,
completed in September 2006 is 55% leased. Upon occupancy of the
55% tenant in November 2006, this park will be 92% occupied. The
Company plans to develop the final building with a minimum of
40,000 square feet.
2) Lakeside Business Park in Harford County, Maryland consists
of 83 usable acres. Seven warehouse/office buildings, totaling
671,241 square feet, have been constructed and are 100% leased.
A 73,200 square foot building is under construction with
completion scheduled for the summer of 2007. The remaining 26
acres are available for future development and have the
potential to offer an additional 343,000 square feet of
comparable product.
3) 6920 Tudsbury Road in Baltimore County, Maryland contains
5.3 acres with 86,100 square feet of warehouse/office space
that is 100% leased.
4) 8620 Dorsey Run Road in Howard County, Maryland contains 5.8
acres with 85,100 square feet of warehouse/office space that is
100% leased.
5) Rossville Business Center in Baltimore County, Maryland
contains approximately 10 acres with 190,517 square feet of
warehouse/office space and is 100% leased.
6) 34 Loveton Circle in suburban Baltimore County, Maryland
contains 8.5 acres with 29,921 square feet of office space,
which is 100% leased. The Company occupies 23% of the space and
23% is leased to FRI.
7) Oregon Business Center in Anne Arundel County, Maryland
contains approximately 17 acres with 195,615 square feet of
warehouse/office space, which is 85% leased.
8) Arundel Business Center in Howard County, Maryland contains
approximately 11 acres with 162,796 square feet of
warehouse/office space, which is 86% leased.
9) 100-400 Interchange Boulevard in New Castle County, Delaware
contains approximately 17 acres with 303,006 square feet of
warehouse/office space, which is 92% leased. The remaining 8.8
acres are available for future development and have the potential
to offer an additional 88,000 square feet of comparable product.
10) 1187 Azalea Garden Road in Norfolk, Virginia contains
approximately 12 acres with 188,093 square feet of
warehouse/office space, which is 100% leased.
Future Planned Developments. At September 30, 2006 the Company
owned the following future development parcels:
1) Windlass Run Business Park, formerly referred as Bird River,
located in southeastern Baltimore County, Maryland, is a 179-acre
tract of land that will have direct access to Maryland State Road
43 which was completed in October 2006 and will connect I-95 with
Martin State Airport. This property is currently zoned for
residential and commercial use with 104 developable acres. The
Company plans to develop and lease approximately 515,000 square
feet of multiple warehouse/office buildings on the 42 developable
acres zoned for commercial use. Land development efforts will
commence in the spring of 2007. Meanwhile plans are being
pursued to obtain residential zoning upgrade and eventual
maximization of the remaining 62 acres.
2) Patriot Business Park, located in Prince William County,
Virginia, is a 101-acre tract of land which is immediately
adjacent to the Prince William Parkway providing access to I-66.
The Company plans to develop and lease approximately 1,000,000
square feet of multiple warehouse/office buildings on the
property. Land development efforts are expected to commence in
the spring of 2008.
3) Brooksville Quarry, LLC. On October 4, 2006, a subsidiary of
the Company (FRP) entered into a Joint Venture Agreement with
Florida Rock Industries, Inc. (FRI) to develop approximately
4,400 acres of land near Brooksville, Florida. Under the terms
of the joint venture, FRP has contributed its fee interest in
approximately 3,500 acres that it leased to FRI under a long-term
mining lease. FRI will continue to mine the property and pay
royalties to FRP for as long as mining does not interfere with
the development of the property.
The joint venture will be jointly controlled by FRI and FRP.
Each party has a mandatory obligation to fund additional capital
contributions of up to $2 million. Distributions will be made on
a 50-50 basis.
The property does not yet have the necessary entitlements for
real estate development. Approval to develop real property in
Florida entails an extensive entitlements process involving
multiple and overlapping regulatory jurisdictions and the outcome
is inherently uncertain. The Company currently expects that the
entitlement process may take several years to complete.
4) Anacostia River. The Company owns a 5.8 acre parcel of
undeveloped real estate in Washington D.C. that fronts the
Anacostia River and is adjacent to the construction site for
the new Washington Nationals Baseball Stadium which is
scheduled for completion in 2008. The Company also owns a
nearby 2.1 acre tract on the same bank of the Anacostia River.
Currently, these properties are leased to Florida Rock
Industries, Inc., on a month-to-month basis.
The Company has been pursuing development efforts with respect
to the 5.8-acre parcel for several years. The Company
previously obtained a Planned Unit Development (PUD) Zoning
approval for development of the property and has been working
to obtain approval of a modified PUD that would allow up to
625,000 square feet of commercial development and up to 440,000
square feet of residential development. Consideration of a
proposed action by the Zoning Commission is anticipated at
their scheduled public meeting on January 8, 2007. The Company
remains optimistic that its zoning application will be approved
while at the same time recognizing that there is inherent
uncertainty in any zoning approval process.
5) Commonwealth Avenue in Jacksonville, Florida is a 50-acre, rail
accessible site near the western beltway of Interstate-295 capable
of supporting approximately 500,000 square feet of eventual
warehouse/office build-out.
Construction Aggregates Properties. The following table
summarizes the Company's principal construction aggregates
locations and estimated reserves at September 30, 2006,
substantially all of which are leased to FRI.
Tons of
Tons Sold Estimated
in Year Reserves
Ended at
9/30/06 9/30/06 Approximate
(000's) (000's) Acres Owned
The Company owns ten
locations currently being
mined in Grandin, Gulf Hammock,
Keuka, Newberry and Airgrove/
Lake County, Florida;
Columbus, Macon, Forest Park
and Tyrone, Georgia;
and Manassas, Virginia. 11,054(1) 428,129 12,994
The Company owns three locations
not currently being mined in
Ft. Myers, Marion County,
Astatula/Lake County - 32,891 2,881
(1) Tons sold in year ended 9/30/06 include Brooksville tons of
284,000. Tons of estimated reserves and acres owned do not
include Brooksville as the property was transferred October 4,
2006 to a joint venture with FRI for development.
Other Properties. In addition to the development, mining and
rental sites, the Company owns approximately 2,201 acres of
investment and other real estate. This includes a 1,844-acre
timberland site located in Caroline County, Virginia.
The Company owns an office building with approximately 69,000
square feet situated on approximately 6 acres in Jacksonville,
Florida, which is leased to FRI.
Transportation Segment Properties. The Company has 21 sites for
its trucking terminals in Alabama, Florida, Georgia, North
Carolina, and Tennessee. The Company owns 13 of these sites and
leases 8.
Item 3. LEGAL PROCEEDINGS.
Note 14 to the Consolidated Financial Statements included in
the accompanying 2006 Annual Report to Shareholders is
incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No reportable events.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
There were approximately 634 holders of record of Patriot
Transportation Holding, Inc. common stock, $.10 par value, as
of September 30, 2006. The Company's common stock is traded on
the Nasdaq Stock Market (Symbol PATR). Information concerning
stock prices is included under the caption "Quarterly Results"
on page 6 of the Company's 2006 Annual Report to Shareholders,
and such information is incorporated herein by reference. The
Company has not paid a cash dividend in the past and it is the
present policy of the Board of Directors not to pay cash
dividends. Information concerning restrictions on the payment
of cash dividends is included in Note 4 to the consolidated
financial statements included in the accompanying 2006 Annual
Report to Shareholders and such information is incorporated
herein by reference. Information regarding securities
authorized for issuance under equity compensation plans is
included in Item 12 of Part III of this Annual Report on Form
10-K and such information is incorporated herein by reference.
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)
July 1
through
July 31 0 $ 0 0 $ 3,490,000
August 1
through
August 31 0 $ 0 0 $ 3,490,000
September 1
through
September 30 0 $ 0 0 $ 3,490,000
Total 0 $ 0 0
(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. SELECTED FINANCIAL DATA.
Information required in response to this Item 6 is included
under the caption "Five Year Summary" on page 6 of the
Company's 2006 Annual Report to Shareholders and such
information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Information required in response to Item 7 is included under
the caption "Management Analysis" on pages 7 through 11 of the
Company's 2006 Annual Report to Shareholders and such
information is incorporated herein by reference.
Item 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
The Company is exposed to market risk from changes in interest
rates. For its cash and cash equivalents, a change in interest
rates affects the amount of interest income that can be earned.
For its debt instruments with variable interest rates, changes
in interest rates affect the amount of interest expense
incurred. The Company prepared a sensitivity analysis of its
variable rate borrowings to determine the impact of
hypothetical changes in interest rates on the Company's results
of operations and cash flows. The interest-rate analysis
assumed a 50 basis point adverse change in interest rates on
all borrowings under the credit agreement. However, the
interest-rate analysis did not consider the effects of the
reduced level of economic activity that could exist in such an
environment. Based on this analysis, management has concluded
that a 50 basis point adverse move in interest rates on the
Company's outstanding borrowings under the credit agreement
would have an immaterial impact on the Company's results of
operations and cash flows.
The following table provides information about the Company's
long-term debt (dollars in thousands):
There Fair
Liabilities: 2007 2008 2009 2010 2011 after Total Value
Scheduled
maturities of
long-term debt:
Fixed Rate $ 2,576 $2,761 $2,959 $3,172 $3,400 $35,804 $50,672 $51,895
Average
interest rate 6.8% 6.9% 6.9% 6.9% 6.9% 6.9%
Variable Rate $12,452
Average
Interest rate 6.3%
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included
under the caption "Quarterly Results" on page 6 and on pages 12
through 22 of the Company's 2006 Annual Report to Shareholders.
Such information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
On June 21, 2006, the Audit Committee of the Board of Directors
of Patriot Transportation Holding, Inc. (the "Company"),
dismissed PricewaterhouseCoopers LLP ("PWC") as the Company's
independent registered certified public accounting firm,
effective immediately. The Audit Committee also engaged
Hancock Askew & Co. ("Hancock Askew") to serve as the Company's
principal public accountants effective immediately.
PWC's reports on the consolidated financial statements of the
Company as of and for the fiscal years ended September 30, 2005
and 2004 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principle.
During the fiscal years ended September 30, 2005 and 2004 and
through June 21, 2006 there were no disagreements with PWC on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to PWC's satisfaction, would
have caused them to make reference thereto in their reports on
the financial statements for such years; and there were no
reportable events as described in Item 304(a)(1)(v) of
Regulation S-K.
During the fiscal years ended September 30, 2005 and 2004 and
through June 21, 2006, the Company did not consult Hancock
Askew with respect to the application of accounting principles
to a specified transaction, either completed or proposed, or
the type of audit opinion that might be rendered on the
Company's consolidated financial statements, or any other
matters or reportable events as set forth in Items 304(a)(2)(i)
and (ii) of Regulation S-K.
Item 9A. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be
disclosed in the Company's reports under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is
recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to management,
including the Company's Chief Executive Officer ("CEO"), Chief
Financial Officer ("CFO"), and Chief Accounting Officer
("CAO"), as appropriate, to allow timely decisions regarding
required disclosure.
The Company also maintains a system of internal accounting
controls over financial reporting that are designed to provide
reasonable assurance to the Company's management and Board of
Directors regarding the preparation and fair presentation of
published financial statements.
All control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving
the desired control objectives.
As of September 30, 2006, the Company, under the supervision
and with the participation of the Company's management,
including the CEO, CFO and CAO, carried out an evaluation of
the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on this evaluation,
the Company's CEO, CFO and CAO concluded that the Company's
disclosure controls and procedures are effective in alerting
them in a timely manner to material information required to be
included in periodic SEC filings.
There have been no changes in the Company's internal controls
over financial reporting during the fourth quarter that have
materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial
reporting.
Management's report on internal control over financial
reporting is included on page 23 of the Company's 2006 Annual
Report to Shareholders. Such information is incorporated
herein by reference.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the Company's executive officers is set
forth under the caption "Executive Officers of the Registrant"
in Part I of this Form 10-K. Information concerning directors
(including the disclosure regarding audit committee financial
experts), required in response to this Item 10, is included
under the captions "Election of Directors", "Board Structure
and Committee Membership - Audit Committee" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's
Proxy Statement and such information is incorporated herein by
reference. The Proxy Statement will be filed with the
Securities and Exchange Commission not later than December 31,
2006.
The Company has adopted a Financial Code of Ethical Conduct
applicable to its principal executive officers, principal
financial officers and principal accounting officers. A copy of
this Financial Code of Ethical Conduct is filed as Exhibit 14
to this Form 10-K. The Financial Code of Ethical Conduct is
available on our web site at www.patriottrans.com under the
heading Investor Relations - Corporate Governance.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item 11 is included
under the captions "Executive Compensation," "Compensation
Committee Report," "Board Structure and Committee Membership -
Compensation Committee," and "Shareholder Return Performance"
in the Company's Proxy Statement and such information is
incorporated herein by reference. The Proxy Statement will be
filed with the Securities and Exchange Commission not later
than December 31, 2006.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
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
Executive Officers" in the Company's Proxy Statement and such
information is incorporated herein by reference. The Proxy
Statement will be filed with the Securities and Exchange
Commission not later than December 31, 2006.
Equity Compensation Plan Information
Number of
Securities
remaining
available
for
Number of future
Securities Weighted issuance
to be Average under equity
issued upon exercise compensation
exercise of price of plans
outstanding outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
Plan Category (a) (b) (c)
Equity compensation
plans approved by
security holders 304,746 $31.03 279,900
Equity compensation
plans not approved
by security holders 0 0 0
Total 304,746 $31.03 279,900
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required in response to this Item 13 is included
under the caption "Related Party Transactions" in the Company's
Proxy Statement and such information is incorporated herein by
reference. The Proxy Statement will be filed with the Securities
and Exchange Commission not later than December 31, 2006.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Information required in response to this Item 14 is included
under the captions "Independent Auditor" and "Ratification of
Independent Registered Certified Public Accounting Firm" in the
Company's Proxy Statement and such information is incorporated
herein by reference. The Proxy Statement will be filed with the
Securities and Exchange Commission not later than December 31,
2006.
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(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 29 of this Form
10-K.
(3) Exhibits.
The response to this item is submitted as a separate
section. See Exhibit Index on pages 26 through 28 of
this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Patriot Transportation Holding, Inc.
Date: December 7, 2006 By JOHN E. ANDERSON
John E. Anderson
President and Chief Executive
Officer (Principal Executive Officer)
By RAY M. VAN LANDINGHAM
Ray M. Van Landingham
Vice President, Treasurer, Secretary
and Chief Financial Officer (Principal
Financial Officer)
By JOHN D. KLOPFENSTEIN
John D. Klopfenstein
Controller and Chief Accounting
Officer(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on December 7, 2006.
JOHN E. ANDERSON LUKE E. FICHTHORN III
John E. Anderson Luke E. Fichthorn III
Director, President, and Chief Director
Executive Officer
(Principal Executive Officer)
CHARLES E. COMMANDER III______
Charles E. Commander III
RAY M. VAN LANDINGHAM Director
Ray M. Van Landingham
Vice President, Treasurer,
Secretary and Chief Financial ROBERT H. PAUL III
Officer(Principal Financial Officer) Robert H. Paul III
Director
JOHN D. KLOPFENSTEIN ____________
John D. Klopfenstein H. W. SHAD III_____
Controller and Chief Accounting H. W. Shad III
Officer (Principal Accounting Officer) Director
EDWARD L. BAKER__________________ ___________________ ____
Edward L. Baker Martin E. Stein, Jr.
Chairman of the Board Director
JOHN D. BAKER II_________________ JAMES H. WINSTON _________
John D. Baker II James H. Winston
Director Director
THOMPSON S. BAKER II_____________
Thompson S. Baker II
Director
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006
EXHIBIT INDEX
[Item 14(a)(3)]
(3)(a)(1) Articles of Incorporation of Patriot Transportation Holding,
Inc., incorporated by reference to the corresponding exhibit
filed with Form S-4 dated December 13, 1988. File No. 33-
26115.
(3)(a)(2) Amendment to the Articles of Incorporation of Patriot
Transportation Holding, Inc. filed with the Secretary of
State of Florida on February 19, 1991 incorporated by
reference to the corresponding exhibit filed with Form 10-K
for the fiscal year ended September 30, 1993. File No. 33-
26115.
(3)(a)(3) Amendments to the Articles of Incorporation of Patriot
Transportation Holding, Inc. filed with the Secretary of
State of Florida on February 7, 1995, incorporated by
reference to an appendix to the Company's Proxy Statement
dated December 15, 1994. File No. 33-26115.
(3)(a)(4) Amendment to the Articles of Incorporation of Patriot
Transportation Holding, Inc., filed with the Florida
Secretary of State on May 6, 1999 incorporated by reference
to a form of such amendment filed as Exhibit 4 to the
Company's Form 8-K dated May 5, 1999. File No. 33-26115.
(3)(a)(5) Amendment to the Articles of Incorporation of Patriot
Transportation Holding, Inc. filed with the Secretary of
State of Florida on February 21, 2000, incorporated
by reference to the corresponding exhibit
filed with Form 10-Q for the quarter ended
March 31, 2000. File No. 33-26115.
(3)(b)(1) Amended and Restated Bylaws of Patriot Transportation
Holding, Inc. adopted August 3, 2005, incorporated by
reference to Exhibit 3.1 to the Company's Form 8-K dated
August 3, 2005. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of Incorporation
of Patriot Transportation Holding, Inc, incorporated by
reference to an exhibit filed with Form S-4 dated December
13, 1988. And amended Article III, incorporated by
reference to an exhibit filed with Form 10-K for the fiscal
year ended September 30, 1993. And Articles XIII and XIV,
incorporated by reference to an appendix filed with the
Company's Proxy Statement dated December 15, 1994. File
No. 33-26115.
(4)(b) Specimen stock certificate of Patriot Transportation
Holding, Inc, incorporated by reference to an exhibit filed
with Form S-4 dated December 13, 1988. File No. 33-26115.
(4)(c) 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)(g)(3) Patriot Transportation Holding, Inc. 2006 Stock Incentive
Plan, incorporated by reference to an appendix to the
Company's Proxy Statement dated December 29, 2005. File No.
33-26115.
(10)(h) Amended and Restated Revolving Credit Agreement dated
November 10, 2004 among Patriot Transportation Holding, Inc.
as Borrower, the Lenders from time to time party hereto and
Wachovia Bank, National Association as Administrative Agent,
incorporated by reference to the Company's Form 8-K dated
November 16, 2004. File No. 33-26115.
(10)(i) 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.
(10)(j) Letter of Credit Facility between Patriot Transportation
Holding, Inc. and SunTrust Bank, N.A. dated February 16,
2005, incorporated by reference to the Company's Form 8-K
dated February 16, 2005. File No. 33-26115.
(10)(k) Joint Venture Agreement between Florida Rock Industries,
Inc. and Florida Rock Properties, filed herewith.
(13) The Company's 2006 Annual Report to shareholders, portions
of which are incorporated by reference in this Form 10-K.
Those portions of the 2006 Annual Report to Shareholders
which are not incorporated by reference shall not be deemed
to be filed as part of this Form 10-K.
(14) Financial Code of Ethical Conduct between the Company, Chief
Executive Officers and Financial Managers, adopted December
4, 2002, incorporated by reference to an exhibit filed
with Form 10-K for the year ended September 30, 2003. File
No. 33-26115.
(21) Subsidiaries of Registrant at September 30, 2006: Florida
Rock & Tank Lines, Inc. (a Florida corporation); Florida
Rock Properties, Inc. (a Florida corporation); FRP
Development Corp. (a Maryland corporation); FRP Maryland,
Inc. (a Maryland corporation); 34 Loveton Center LLC (a
Maryland limited liability company); FRTL, Inc. (a Florida
corporation); SunBelt Transport, Inc. (a Florida
Corporation); Oz LLC(a Maryland limited liability company);
1502 Quarry, LLC(a Maryland limited liability company); FRP
Lakeside LLC #1 (a Maryland limited company); FRP Lakeside
LLC #2 (a Maryland limited liability company); FRP Lakeside
LLC #3 (a Maryland limited liability company); FRP Lakeside
LLC #4 (a Maryland limited liability company); FRP Lakeside
LLC #5 (a Maryland limited liability company); FRP Hillside
LLC (a Maryland limited liability company); FRP Hillside LLC
#2 (a Maryland limited liability company); FRP Hillside LLC
#3 (a Maryland limited liability company); FRP Windsor LLC
(a Maryland limited liability company); FRP Dorsey LLC (a
Maryland limited liability company); FRP Bird River LLC (a
Maryland limited liability company); FRP Interchange LLC (a
Maryland limited liability company); FRP Azalea LLC (a
Maryland limited liability company); FRP Manassas LLC (a
Maryland limited liability company).
(23)(a) Consent of Hancock Askew & Co., Inc., Independent Registered
Certified Public Accounting Firm, appears on page 30 of this
Form 10-K.
(23)(b) Consent of PricewaterhouseCoopers LLP, Independent
Registered Certified Public Accounting Firm, appears on page
30 of this Form 10-K.
(31)(a) Certification of John E. Anderson.
(31)(b) Certification of Ray M. Van Landingham.
(31)(c) Certification of John D. Klopfenstein.
(32) Certification of Chief Executive Officer, Chief Financial
Officer, and Chief Accounting Officer under Section 906 of
the Sarbanes-Oxley Act of 2002.
PATRIOT TRANSPORTATION HOLDING, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 15(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheets at September 30, 2006
and 2005 13(a)
For the years ended September 30, 2006, 2005 and 2004:
Consolidated statements of income 12(a)
Consolidated statements of cash flows 14(a)
Consolidated statements of shareholders' equity 15(a)
Notes to consolidated financial statements 15-23(a)
Reports of Independent Registered Certified Public
Accounting Firms 24-25(a)
Selected quarterly financial data (unaudited) 6(a)
Consents of Independent Registered Certified Public
Accounting Firms 30(b)
Reports of Independent Registered Certified Public
Accounting Firms on Financial Statement Schedules 31(b)
Consolidated Financial Statement Schedules:
II - Valuation and qualifying accounts 32(b)
III - Real estate and accumulated depreciation and
depletion 33-34(b)
(a) Refers to the page number in the Company's 2006 Annual
Report to Shareholders. Such information is incorporated
by reference in Item 8 of this Form 10-K.
(b) Refers to the page number in this Form 10-K.
All other schedules have been omitted, as they are not required
under the related instructions, are inapplicable, or because the
information required is included in the consolidated financial
statements.
Exhibit 23
CONSENTS OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRMS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 333-18878, 333-55132, 333-
125099 and 333-131475) of Patriot Transportation Holding, Inc. of our
report dated December 1, 2006 relating to the consolidated financial
statements and the effectiveness of Patriot Transportation Holding,
Inc's internal controls over financial reporting as of and for the
year ended September 30, 2006, which appears in the Annual Report to
Shareholders, which is incorporated by reference. We also consent to
the incorporation by reference of our report dated December 1, 2006,
relating to the financial statement schedules, which appear in this
Form 10-K.
Our report dated December 1, 2006 on the consolidated financial
statements includes an explanatory paragraph stating that, as
discussed in Note 8 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 123
(Revised 2004), Share-based Payment, effective October 1, 2005 for
accounting for share-based payments.
Hancock Askew & Co., LLP
Savannah, Georgia
December 7, 2006
____________________
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 333-18878, 333-55132, 333-
125099 and 333-131475) of Patriot Transportation Holding, Inc. of our
report dated December 22, 2005 relating to the financial statements,
which appears in the Annual Report to Shareholders, which is
incorporated in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report dated December 22, 2005,
relating to the financial statement schedules, which appear in this
Form 10-K.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 11, 2006
____________________
REPORTS OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
Patriot Transportation Holding, Inc.:
Our audit of the consolidated financial statements referred to in
our report dated December 1, 2006 appearing in the 2006 Annual
Report to Shareholders of Patriot Transportation Holding, Inc.
(which report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 15(a)(2)
of this Form 10-K. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statement schedules based
on our audit. In our opinion, these financial statement schedules
present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements.
Hancock Askew & Co., LLP
Savannah, Georgia
December 1, 2006
____________________
To the Board of Directors of
Patriot Transportation Holding, Inc.:
Our audits of the consolidated financial statements referred to in
our report dated December 22, 2005 appearing in the 2005 Annual
Report to Shareholders of Patriot Transportation Holding, Inc.
(which report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 15(a)(2)
of this Form 10-K. In our opinion, these financial statement
schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related
consolidated financial statements.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 22, 2005
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION
AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
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, 2006:
Allowance for
doubtful accounts $ 525,255 $ (39,910)$ - $ 126,118(a) $ 359,227
Accrued risk
insurance $7,576,789 $ 2,381,943 $ - $ 1,750,162(b) $8,208,570
Accrued health
insurance 1,196,162 3,100,234 - 3,103,457(b) 1,192,939
Totals -
insurance $8,772,951 $ 5,482,177 $ 0 $ 4,853,619 $9,401,509
Year Ended
September 30, 2005:
Allowance for
doubtful accounts $ 638,320 $ 177,000 $ - $ 290,065(a) $ 525,255
Accrued risk
insurance $6,653,657 $ 3,710,925 $ - $ 2,787,793(b) $7,576,789
Accrued health
insurance 1,205,334 2,938,379 - 2,947,551(b) 1,196,162
Totals -
insurance $7,858,991 $ 6,649,304 $ 0 $ 5,735,344 $8,772,951
Year Ended
September 30, 2004:
Allowance for
doubtful accounts $ 565,744 $ 168,000 $ - $ 95,423(a) $ 638,320
Accrued risk
insurance $6,779,345 $ 3,562,400 $ - $ 3,688,088(b) $6,653,657
Accrued health
insurance 1,256,845 3,075,521 - 3,127,032(b) 1,205,334
Totals -
insurance $8,036,190 $ 6,637,921 $ 0 $ 6,815,120 $7,858,991
(a) Accounts written off less recoveries
(b) Payments
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED)-REAL ESTATE & ACCUMULATED DEPRECIATION AND
DEPLETION (dollars in thousands)
SEPTEMBER 30, 2006
Cost capi- Gross amount Year Deprecia-
Encumb- Initial talized at which Accumulated Of Date tion Life
County rances cost to subsequent carried at Depreciation Constr- Acquired Computed
Company to acqui- end of period tion on:
sition (a)
Construction Aggregates
Alachua, FL $ 1,442 $ 0 $ 1,442 $ 102 n/a 4/86 unit
Clayton, GA 369 0 369 5 n/a 4/86 unit
Fayette, GA 685 0 685 57 n/a 4/86 unit
Hernando, FL (b) 3,115 410 3,525 976 n/a 4/86 unit
Lake, FL 1,485 0 1,485 1,099 n/a 4/86 unit
Lee, FL 4,690 6 4,696 6 n/a 4/86 unit
Levy, FL 1,281 104 1,385 515 n/a 4/86 unit
Marion, FL 1,180 0 1,180 600 n/a 4/86 unit
Monroe, GA 792 0 792 256 n/a 4/86 unit
Muscogee, GA 369 0 369 175 n/a 4/86 unit
Polk, FL 121 0 121 75 n/a 4/86 unit
Prince Wil. VA 298 0 298 298 n/a 4/86 unit
Putnam, FL 15,002 49 15,051 3,686 n/a 4/86 unit
0 30,829 569 31,398 7,850
Other Rental Property
Wash D.C. 2,957 7,731 10,688 1,935 n/a 4/86 15 yr.
Wash D.C. 3,811 0 3,811 0 n/a 10/97
Putnam, FL 326 50 376 347 n/a 4/86 5 yr.
Spalding, GA 20 0 20 0 n/a 4/86
0 7,114 7,781 14,895 2,282
Commercial Property
Baltimore, MD 0 439 3,710 4,149 1,763 1990 10/89 31.5 yr.
Baltimore, MD 1,766 950 6,359 7,309 2,749 1994 12/91 31.5 yr.
Baltimore, MD 2,300 690 2,837 3,527 655 2000 7/99 31.5 yr.
Baltimore, MD 0 5,634 3,132 8,766 0 2003 12/02 31.5 yr.
Duval, FL 0 2,416 529 2,945 2,577 n/a 4/86 25 yr.
Harford, MD 2,374 31 3,826 3,857 1,067 1998 8/95 31.5 yr.
Harford, MD 4,055 50 5,552 5,602 1,166 1999 8/95 31.5 yr.
Harford, MD 5,660 85 6,665 6,750 1,507 2001 8/95 31.5 yr.
Harford, MD 0 92 1,506 1,598 0 n/a 8/95 31.5 yr.
Harford, MD 4,158 88 7,199 7,287 1,115 n/a 8/95 31.5 yr.
Harford, MD 3,222 155 5,013 5,168 1,017 2001 8/95 31.5 yr.
Howard, MD 3,568 2,859 3,865 6,724 2,448 1996 9/88 31.5 yr.
Howard, MD 2,078 2,473 920 3,393 606 2000 3/00 31.5 yr.
Anne Arun, MD 2,741 715 6,710 7,425 3,822 1989 9/88 31.5 yr.
Anne Arun, MD 7,325 950 13,055 14,005 1,322 n/a 5/98 31.5 yr.
Anne Arun, MD 11,425 1,525 10,762 12,287 397 2001 8/04 31.5 yr.
Anne Arun, MD 0 1,307 4,830 6,137 14 2006 1/03 31.5 yr.
Norfolk, VA 0 7,512 0 7,512 445 1971 10/04 31.5 yr.
Prince Wil. VA 0 10,200 32 10,232 0 n/a 12/05 31.5 yr.
Newcastle Co. DE 0 11,559 1,006 12,565 832 n/a 4/04 31.5 yr.
50,672 49,730 87,508 137,238 23,502
Investment Property 1,092 112 1,204 37 n/a 4/86 n/a
GRAND
TOTALS $50,672 $88,765 $95,970 $184,735 $33,671
(a) The aggregate cost for Federal income tax purposes is $167,825.
(b) This property was contributed on October 4, 2006 to the Brooksville Quarry, LLC, a 50% owned joint venture.
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND
ACCUMULATED DEPRECIATION AND DEPLETION
YEARS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
(In thousands)
2006 2005 2004
Gross Carrying Cost of Real Estate:
Balance at beginning of period $164,233 146,995 145,803
Additions during period:
Amounts capitalized 20,502 17,330 17,510
Deductions during period:
Cost of real estate sold - 92 16,318
Other (abandonments) - - -
Balance at close of period $184,735 164,233 146,995
Accumulated Depreciation & Depletion:
Balance at beginning of period $ 29,816 26,328 33,497
Additions during period:
Charged to cost & expense 3,855 3,580 3,229
Deductions during period:
Real estate sold - 92 10,398
Balance at close of period $33,671 29,816 26,328