FORM 10-Q
UNITED STATES
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 quarterly period ended June 30, 2008
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)
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 a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of "accelerated filer and large
accelerated filer" in Rule 12b-2 of the Exchange Act.
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 Exchange Act).
YES___ NO_X_
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of June 30, 2008:
3,033,375 shares of $.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2008
CONTENTS
Page No.
Preliminary Note Regarding Forward-Looking Statements 3
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Condensed Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risks 23
Item 4. Controls and Procedures 24
Part II. Other Information
Item 1A. Risk Factors 25
Item 6. Exhibits 25
Signatures 26
Exhibit 31 Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 28
Exhibit 32 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 31
Preliminary Note Regarding 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 those 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: freight demand for petroleum products including recessionary and
terrorist impacts on travel in the Company's markets; levels of construction
activity in the markets served by our mining properties and our flatbed
trucking subsidiary; the impact of fuel prices on our costs and on overall
demand for petroleum products in our markets; accident severity and frequency;
risk insurance markets; driver availability and cost; the impact of future
regulations regarding the transportation industry; availability and terms of
financing; competition; interest rates, inflation and general economic
conditions; demand for flexible warehouse/office facilities in the
Baltimore/Washington and Dulles Airport areas; and ability to obtain zoning and
entitlements necessary for property development. 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.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)
June 30, September 30,
Assets 2008 2007
Current assets:
Cash and cash equivalents $ 15,916 26,944
Accounts receivable (including related party of
$338 and $308 and net of allowance for doubtful
accounts of $240 and $207, respectively) 12,460 10,983
Inventory of parts and supplies 951 743
Deferred income taxes 1,063 455
Prepaid tires on equipment 2,046 2,028
Prepaid taxes and licenses 235 1,652
Prepaid insurance 1,141 1,601
Prepaid expenses, other 111 80
Total current assets 33,923 44,486
Property, plant and equipment, at cost 302,591 282,277
Less accumulated depreciation and depletion 97,594 89,754
Net property, plant and equipment 204,997 192,523
Real estate held for investment, at cost 1,229 1,274
Investment in joint venture 6,305 5,904
Goodwill 1,087 1,087
Unrealized rents 3,131 2,589
Other assets 4,713 5,667
Total assets $255,385 253,530
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 6,753 5,408
Federal and state income taxes payable 403 702
Accrued payroll and benefits 5,061 5,202
Accrued insurance reserves 4,269 4,119
Accrued liabilities, other 779 1,035
Long-term debt due within one year 3,953 3,762
Total current liabilities 21,218 20,228
Long-term debt 77,183 80,172
Deferred income taxes 17,155 15,274
Accrued insurance reserves 4,562 4,562
Other liabilities 1,544 2,833
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized; none issued - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,033,375 and 3,051,064 shares issued
and outstanding, respectively 303 305
Capital in excess of par value 34,084 32,154
Retained earnings 99,310 98,087
Accum. other comprehensive income (loss), net 26 (85)
Total shareholders' equity 133,723 130,461
Total liabilities and shareholders' equity $255,385 253,530
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2008 2007 2008 2007
Revenues:
Transportation $39,990 34,107 $107,647 98,419
Real estate 6,071 5,524 18,702 16,492
Total revenues (including revenue
from related parties of $1,964,
2,152, 6,198 and $6,239, respectively) 46,061 39,631 126,349 114,911
Cost of operations:
Transportation 34,417 29,312 96,086 83,451
Real estate 3,016 2,525 9,359 7,784
Total cost of operations 37,433 31,837 105,445 91,235
Gross profit:
Transportation 5,573 4,795 11,561 14,968
Real estate 3,055 2,999 9,343 8,708
Total gross profit 8,628 7,794 20,904 23,676
Selling, general and administrative
expense (including expenses paid to a
related party of $0, $48, $44, and
$143, respectively) 3,325 2,933 12,367 9,196
Operating profit 5,303 4,861 8,537 14,480
Gain on condemnation of land - - 2,507 -
Interest income and other 296 13 788 69
Equity in loss of joint venture (6) (27) (20) (128)
Interest expense (1,353) (868) (4,101) (2,639)
Income before income taxes 4,240 3,979 7,711 11,782
Provision for income taxes (1,466) (1,553) (2,906) (4,599)
Net income $ 2,774 2,426 $ 4,805 7,183
Earnings per common share:
Basic $ .92 .80 $ 1.58 2.38
Diluted $ .89 .77 $ 1.54 2.30
Number of shares (in thousands)
used in computing:
-basic earnings per common share 3,024 3,035 3,034 3,016
-diluted earnings per common share 3,114 3,142 3,130 3,125
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2008 AND 2007
(In thousands)
(Unaudited)
2008 2007
Cash flows from operating activities:
Net income $ 4,805 7,183
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 10,907 10,615
Deferred income taxes 1,273 887
Equity in loss of joint venture 20 128
Gain on sale of equipment and real estate (418) (1,035)
Gain on condemnation of land (2,507) -
Stock-based compensation 943 945
Net changes in operating assets and liabilities:
Accounts receivable (1,477) 1,158
Inventory of parts and supplies (208) 173
Prepaid expenses and other current assets 1,828 184
Other assets - (606)
Accounts payable and accrued liabilities 1,098 (2,327)
Income taxes payable (83) 326
Long-term insurance reserves and other long-term
liabilities (1,289) (416)
Net cash provided by operating activities 14,892 17,215
Cash flows from investing activities:
Purchase of transportation group property and equipment (10,330) (6,051)
Purchase of real estate group property and equipment (16,096) (6,014)
Investment in joint venture (425) (3,368)
Proceeds from the sale of property, plant and equipment 6,542 1,366
Net cash used in investing activities (20,309) (14,067)
Cash flows from financing activities:
Net decrease in revolving debt - (2,126)
Repayment of long-term debt (2,798) (1,916)
Repurchase of Company stock (4,388) -
Excess tax benefits from exercises of stock options
and vesting of restricted stock 614 644
Exercise of employee stock options 961 957
Net cash used in financing activities (5,611) (2,441)
Net (decrease) increase in cash and cash equivalents (11,028) 707
Cash and cash equivalents at beginning of period 26,944 154
Cash and cash equivalents at end of the period $ 15,916 861
During the quarter ended December 31, 2007 the Company recorded a non-cash
transaction for accounts receivable from condemnation in the amount of $5,860.
The condemnation proceeds were received in April 2008.
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008
(Unaudited)
(1) Basis of Presentation. The accompanying consolidated financial
statements include the accounts of Patriot Transportation Holding,
Inc. and its subsidiaries (the "Company"). Investment in the 50% owned
Brooksville Joint Venture is accounted for under the equity method of
accounting. 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 statement of the results for
the interim periods have been included. Operating results for the nine
months ended June 30, 2008 are not necessarily indicative of the
results that may be expected for the fiscal year ending September 30,
2008. The accompanying 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, 2007.
(2) Recent Accounting Pronouncements. In July 2006, the FASB issued
FASB Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in
Income Taxes" which prescribes a recognition threshold and measurement
process for recording in the financial statements uncertain tax
positions taken or expected to be taken in a tax return. Additionally,
FIN 48 provides guidance on derecognition, classification, accounting
in interim periods and disclosure requirements for uncertain tax
positions. The Company adopted the provisions of FIN 48 on October 1,
2007. As a result of the adoption of FIN 48, the Company recognized a
$216,000 reduction in the liability for unrecognized tax benefits,
which was accounted for as an increase to retained earnings. As of
October 1, the Company had a liability for unrecognized tax benefits
of $537,000, which is included in income taxes receivable, net. If
recognized, $337,000 of unrecognized tax benefits would impact the
Company's effective tax rate. Interest and penalties of $200,000 has
been reflected as a component of the total liability. It is the
Company's policy to recognize as additional income tax expense the
items of interest and penalties directly related to income taxes. For
the three and nine months ended June 30, 2008, there was a reduction
of $165,000 to the total amount of unrecognized tax benefits. The
Company expects a decrease in the liability of up to $135,000 for
uncertain tax positions during the next 12 months. The Company files
income tax returns in the U.S. and various states which are subject to
audit for up to five years after filing.
In September 2006, the FASB issued Statement No. 157, Fair Value
Measurement (SFAS 157). The Statement defines fair value, establishes
a framework for measuring fair value in generally accepted accounting
principles (GAAP), and expands disclosures about fair value
measurements. This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. Management believes that the
adoption of SFAS 157 will require additional disclosure on the fair
value of its goodwill, asset retirement obligations, and long-term
mortgage notes payable but will not have a material impact on the
consolidated financial results of the Company.
(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 primarily petroleum related bulk
liquids, dry bulk commodities and construction materials 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 develops 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,_____
2008 2007 2008 2007
Revenues:
Transportation $ 39,990 34,107 107,647 98,419
Real estate 6,071 5,524 18,702 16,492
$ 46,061 39,631 126,349 114,911
Operating profit
Transportation $ 3,318 2,600 4,940 8,452
Real estate 3,055 2,999 9,343 8,708
Corporate expenses (1,070) (738) (5,746) (2,680)
$ 5,303 4,861 8,537 14,480
Identifiable assets June 30, September 30,
2008 2007
Transportation $ 56,196 56,101
Real estate 178,234 168,587
Cash items 15,916 26,944
Unallocated corporate assets 5,039 1,898
$255,385 253,530
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
June 30, September 30,
2008 2007
5.6% to 8.6% mortgage notes
due in installments through 2027 81,136 83,934
Less portion due within one year 3,953 3,762
$ 77,183 80,172
The Company has a $37,000,000 uncollaterized Revolving Credit
Agreement (the Revolver) with four banks which is scheduled to
terminate on December 31, 2009. The Revolver currently bears interest
at a rate of 1.25% over the selected LIBOR and may change quarterly
based on the Company's ratio of Consolidated Total Debt to
Consolidated Total Capital, as defined in the Revolver. A commitment
fee of 0.2% per annum is payable quarterly on the unused portion of
the commitment. The commitment fee may also change quarterly based
upon the ratio described above. The Revolver contains restrictive
covenants including limitations on borrowing ability and on paying
cash dividends. Under these restrictions, as of June 30, 2008,
approximately $25,000,000 was available for borrowing. The Company is
in compliance with all restrictive covenants as of June 30, 2008. No
amounts were outstanding as of June 30, 2008 and September 30, 2007.
(5) Related Party Transactions. The Company was a related party to
Florida Rock Industries, Inc. (FRI) because four of the Company's
directors also served until November 16, 2007, as directors of FRI and
such directors owned approximately 24% of the stock of FRI and 47% of
the stock of the Company. The Company derived 5.4% of its consolidated
revenue from FRI in fiscal 2007. FRI merged with Vulcan Materials
Company ("Vulcan") in November 2007.
The Company, through its transportation subsidiaries, hauls
commodities by tank and flatbed trucks for the Florida Rock Division
of Vulcan. Charges for these services are based on prevailing market
prices. The real estate subsidiaries lease certain construction
aggregates mining and other properties to Vulcan. The Company also
outsourced certain administrative functions to Vulcan. The cost of
these administrative functions was $44,000 and $143,000 for the nine
months ended June 30, 2008 and 2007, respectively.
On October 4, 2006, a subsidiary of the Company (FRP) entered into a
Joint Venture Agreement with Florida Rock Industries, Inc. (now
Vulcan) to form Brooksville Quarry, LLC, a real estate joint venture
to develop approximately 4,300 acres of land near Brooksville,
Florida. The venture is jointly controlled by Vulcan and FRP which
both have an obligation to fund capital contributions of up to $2
million. Capital contributions of $925,000 have been made by each
party as of June 30, 2008. Distributions will be made on a 50-50 basis
except for royalties and depletion specifically allocated to FRP.
Other income for the nine months ended June 30, 2008 includes a loss
of $20,000 representing the Company's equity in the loss of the joint
venture.
(6) Earnings per common share. The following details the computations
of the basic and diluted earnings per common share (in thousands,
except per share amounts):
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2008 2007 2008 2007
Weighted average common shares
outstanding during the
period - shares used for
basic earnings per share 3,024 3,035 3,034 3,016
Common shares issuable under
share based payment plans
which are potentially dilutive 90 107 96 109
Common shares used for diluted
earnings per share 3,114 3,142 3,130 3,125
Net income $ 2,774 2,426 4,805 7,183
Earnings per common share
Basic $ .92 .80 1.58 2.38
Diluted $ .89 .77 1.54 2.30
For the three and nine months ended June 30, 2008, 10,000 shares
attributable to outstanding stock options were excluded from the
calculation of diluted earnings per share because their inclusion
would have been anti-dilutive. For the three and nine months ended
June 30 2007, all outstanding stock options were included in the
calculation of diluted earnings per common share because the sum of
the hypothetical amount of future proceeds from the exercise price,
unrecorded compensation, and tax benefits to be credited to capital in
excess of par for all grants of stock options were lower than the
average price of the common shares, and therefore were dilutive. For
the three and nine months ended June 30, 2008 and 2007, all
outstanding restricted shares were included in the calculation of
diluted earnings per common share because the unrecorded compensation
and tax benefits to be credited to capital in excess of par for all
awards of restricted stock were lower than the average price of the
common shares, and therefore were dilutive.
(7) Stock-Based Compensation Plans. As more fully described in Note
7 to the Company's notes to the consolidated financial statements in
the Company's Annual Report on Form 10-K for the year ended
September 30, 2007, the Company's stock-based compensation plans
permit the grant of stock options, stock appreciation rights,
restricted stock awards, restricted stock units, and stock awards.
The number of common shares available for future issuance was
262,400 at June 30, 2008.
The Company recorded the following stock compensation expense in its
consolidated statements of income (in thousands):
Three Months ended Nine months ended
June 30,_ _ June 30, _
2008 2007 2008 2007
Stock options issued prior
to 123R adoption $ 60 132 226 394
Stock options issued after
123R adoption 4 - 4 -
Restricted stock awards
granted in 2006 51 54 156 167
Annual Director stock award - - 395 388
Shares repurchased in connection
with previous CEO retirement - - 162 -
Modification to accelerate
prior awards made in
connection with CEO retirement - - 216 -
115 186 1,159 949
Deferred income tax benefit 44 71 444 364
Stock compensation net of tax $ 71 115 715 585
A summary of changes in outstanding options is presented below (in
thousands, except per share amounts):
Weighted Weighted Weighted
Number Average Average Average
Of Exercise Remaining Grant Date
Options Shares Price Term (yrs) Fair Value
Outstanding at
September 30, 2007 266,611 $31.42 5.9
Granted 10,000 $86.24 $ 369
Exercised 33,820 $28.37 $ 479
Forfeited 5,000 $43.50
Outstanding at
June 30, 2008 237,791 $33.90 5.3 $ 4,010
Exercisable at
June 30, 2008 207,391 $30.56 5.0 $ 3,237
Vested during
nine months ended
June 30, 2008 38,500 $ 582
The aggregate intrinsic value of exercisable in-the-money options was
$10,254,000 and the aggregate intrinsic value of all outstanding
options was $10,962,000 based on the market closing price of $80.00 on
June 30, 2008 less exercise prices. Gains of $2,036,000 were realized
by option holders during the nine months ended June 30, 2008. The
realized tax benefit from options exercised for the nine months ended
June 30, 2008 was $781,000. Total compensation cost of options granted
but not yet vested as of June 30, 2008 was $694,000, which is expected
to be recognized over a weighted-average period of 2.9 years. The
first quarter of fiscal 2008 included stock compensation expense of
$183,000 related to the modification to accelerate the vesting of
4,000 shares in connection with the retirement benefits for John E.
Anderson, the Company's previous President and CEO, whose retirement
was effective February 6, 2008.
A summary of changes in restricted stock awards is presented below (in
thousands, except per share amounts):
Weighted Weighted Weighted
Number Average Average Average
Of Grant Remaining Grant Date
Restricted Stock Shares Price Term (yrs) Fair Value
Outstanding at
September 30, 2007 10,800 $63.65 2.3
Granted 0 $ 0
Vested 3,600 $63.65 $ 229
Forfeited 1,000 $63.54
Outstanding at
June 30, 2008 6,200 $63.67 1.5 $ 395
Total compensation cost of restricted stock granted but not yet vested
as of June 30, 2008 was $305,000 which is expected to be recognized
over a weighted-average period of 1.5 years. The first quarter of
fiscal 2008 included stock compensation expense of $36,000 related to
the modification to accelerate the vesting of 400 shares in connection
with retirement benefits for John E. Anderson, the Company's previous
President and CEO, whose retirement was effective February 6, 2008.
(8) Contingent liabilities. Certain of the Company's subsidiaries are
involved in litigation on a number of matters and are subject to
certain claims which arise in the normal course of business. The
Company has retained certain self-insurance risks with respect to
losses for third party liability and property damage. In the opinion
of management none of these matters are expected to have a material
adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
(9) Customer Concentration. The transportation segment primarily
serves customers in the petroleum and building and construction
industries. Petroleum customers accounted for approximately 71% and
building and construction customers accounted for approximately 29% of
transportation segment revenues for the nine months ended June 30,
2008.
During the first nine months of fiscal 2008, the transportation
segment's ten largest customers accounted for approximately 53.2% of
the transportation segment's revenue. One of these customers accounted
for 15.9% of the transportation segment's revenue. The loss of any one
of these customers would have an adverse effect on the Company's
revenues and income. Accounts receivable from the transportation
segment's ten largest customers was $5,825,000 and $4,242,000 at June
30, 2008 and 2007 respectively.
(10) CEO Retirement. On December 5, 2007, the board of directors
approved certain retirement benefits for John E. Anderson, the
Company's previous President and Chief Executive Officer effective
February 6, 2008. Upon Mr. Anderson's retirement, the Company paid
him $4,851,000 for his accrued benefit under the Management Security
Plan, the fair value of his outstanding stock options and restricted
stock and an additional bonus. The total impact of these payments on
the Company's earnings for fiscal 2008 was $2,503,000 before taxes
which is included in selling, general, and administrative expense
primarily in the three months ending December 31, 2007. On December
5, 2007, the Company's Board of Directors elected John D. Baker II to
succeed Mr. Anderson as President and Chief Executive Officer.
The following tables detail the expense incurred and payments made (in
thousands):
Expenses
Additional bonus paid $2,125
Repurchase of vested options and stock at 20 day
average market value per agreement which exceeded
the closing price on the date of repurchase 162
Accelerated vesting of options 180
Accelerated vesting of restricted stock 36
Total expense ($2,371 in quarter ending 12/31/07) $2,503
Payments
Total expense $2,503
Previously accrued benefit MSP Retirement Plan 1,331
Gain on vested stock options repurchased 999
Restricted shares vested 1/1/08 repurchased 18
Total payments $4,851
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview - The Company has two business segments: transportation and
real estate.
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 mainly
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 a number of
mining and other properties that are leased to Vulcan Materials
Company ("Vulcan"). Properties also owns certain other real estate for
investment. Development owns, manages and develops commercial
warehouse/office rental properties in the Mid-Atlantic United States.
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, driver
availability and cost, regulations regarding driver qualifications and
hours of service, petroleum product usage in the Southeast which is
driven in part by tourism and commercial aviation, fuel costs,
construction activity, Vulcan's sales from the Company's mining
properties, interest rates, market conditions and attendant prices for
casualty insurance, demand for commercial warehouse space in the Mid-
Atlantic area, and ability to obtain zoning and entitlements necessary
for property development. Internal factors include revenue mix,
capacity utilization, auto and workers' compensation accident
frequencies and severity, other operating factors, administrative
costs, group health claims experience, and construction costs of new
projects. Financial results of the Company for any individual quarter
are not necessarily indicative of results to be expected for the year.
Comparative Results of Operations for the Three Months Ended June
30, 2008 and 2007
Consolidated Results. - Net income for the third quarter of fiscal
2008 was $2,774,000, an increase of $348,000 or 14.3% compared to net
income of $2,426,000 for the same period last year. Diluted earnings
per common share for the third quarter of fiscal 2008 were $0.89
compared to $0.77 in the third quarter of fiscal 2007. Increased
revenue per mile in the transportation segment more than offset
reduced demand for flatbed trucking services and high fuel expenses.
Transportation Results
Three Months Ended June 30
(dollars in thousands) ___2008 % 2007 %_
Transportation revenue $ 31,212 78% 29,582 87%
Fuel surcharges 8,778 22% 4,525 13%
Revenues 39,990 100% 34,107 100%
Compensation and benefits 13,073 33% 12,755 37%
Fuel expenses 11,994 30% 7,673 23%
Insurance and losses 2,980 7% 2,769 8%
Depreciation expense 2,307 6% 2,226 7%
Other, net 4,063 10% 3,889 11%
Cost of operations 34,417 86% 29,312 86%
Gross profit $ 5,573 14% 4,795 14%
Transportation segment revenues were $39,990,000 in the third quarter
of 2008, an increase of $5,883,000 over the same quarter last year.
Revenue miles in the current quarter were down 2.6% compared to the
third quarter of 2007 due to reduced loads in the flatbed portion of
the transportation segment. Excluding fuel surcharges, revenue per
mile increased 8.4% over the same quarter last year. In addition to
general rate increases, a shift to new business in the flatbed
division was a significant factor in this increase.
The Transportation segment's cost of operations in the third quarter
of 2008 and 2007 were the same as a percentage of revenue.
Compensation and benefits increased $318,000 or 2.5% compared to the
same quarter last year due to pay increases and lower use of owner
operators. Average fuel cost per gallon in the third quarter of 2008
increased 58% over the same period last year. This resulted in an
increase in fuel cost of $68,000 in excess of the increase in fuel
surcharge revenue primarily in the flatbed portion. Insurance and
losses increased $211,000 primarily due the same quarter last year
including a larger reduction of expense for changes in estimated
retained loss reserves as of June 30 versus March 31 as calculated by
a third-party actuary. Other expense increased $174,000 due primarily
to an increase in expenses for vehicle tires and maintenance.
Real Estate Results
Three Months Ended June 30
(dollars in thousands) ___2008 % 2007 %_
Royalties and rent $ 1,935 32% 1,699 31%
Developed property rentals 4,136 68% 3,825 69%
Total Revenue 6,071 100% 5,524 100%
Mining and land rent expenses 788 13% 393 7%
Developed property expenses 2,228 37% 2,132 39%
Cost of Operations 3,016 50% 2,525 46%
Gross profit $ 3,055 50% 2,999 54%
Real Estate segment revenues for the third quarter of fiscal 2008 were
$6,071,000, an increase of $547,000 or 9.9% over the same quarter last
year. Lease revenue from developed properties increased $311,000 or
8.1%, due to an increase in occupied square footage, higher rental
rates on new leases, and increased revenue from reimbursed real estate
taxes. Royalties and rent increased $236,000 or 13.9% due to
increased reimbursements for real estate taxes and higher tons sold.
Real estate segment expenses increased $491,000 to $3,016,000 during
the third quarter of fiscal 2008 compared to $2,525,000 for the same
quarter last year. Expenses related to developed properties increased
as a result of new building additions, increased real estate tax
assessments, and increased staffing to facilitate continuing portfolio
expansion. Mining and land rent expenses increased $395,000 primarily
due to increased real estate tax assessments.
Consolidated Results
Gross Profit - Consolidated gross profit was $8,628,000 in the third
quarter of fiscal 2008, an increase of $834,000 or 10.7% compared to
$7,794,000 in the same period last year. Gross profit in the
transportation segment increased $778,000 or 16.2% as increased
revenue per mile more than offset reduced demand for flatbed trucking
services and high fuel expenses. Gross profit in the real estate
segment increased $56,000 or 1.9% from the third quarter 2007, due to
higher rental rates on new leases offset by increased real estate
taxes that could not be billed to tenants.
Selling, general and administrative expense - Selling, general and
administrative expenses increased $392,000 over the same quarter last
year. During the second quarter a corporate aircraft was purchased
increasing expense in the third quarter $247,000. Payroll and payroll
taxes increased $247,000 due to amounts paid to the Company's prior
CFO who retired June 16, 2008 along with additional staffing and
payroll taxes on stock option exercises. Stock compensation expense
decreased $71,000 due to reduced stock based compensation grants in
recent years. Donations decreased $49,000 for the quarter as a result
of the timing of such payments.
Interest expense - Interest expense increased $485,000 over the same
quarter last year due to interest on mortgage debt incurred July 2007
and $229,000 of capitalized interest in the prior year quarter.
Income taxes - Income tax expense decreased $87,000 over the same
quarter last year due to a $165,000 reduction of liability for
unrecognized tax benefits and $24,000 in other favorable adjustments
partially offset by increased earnings.
Net income - Net income for the third quarter of fiscal 2008 was
$2,774,000, an increase of $348,000 or 14.3% compared to net income of
$2,426,000 for the same period last year. Diluted earnings per common
share for the third quarter of fiscal 2008 were $0.89 compared to
$0.77 in the third quarter of fiscal 2007. Increased revenue per mile
in the transportation segment more than offset reduced demand for
flatbed trucking services and high fuel expenses.
Comparative Results of Operations for the Nine months Ended June 30,
2008 and 2007
Consolidated Results. - Net income for the first nine months of fiscal
2008 was $4,805,000, a decrease of $2,378,000 compared to net income
of $7,183,000 for the same period last year. Diluted earnings per
common share for the first nine months of fiscal 2008 were $1.54
compared to $2.30 in the first nine months of fiscal 2007. Net income
for the first nine months of fiscal 2008 benefited from a gain on
condemnation of land of $1,544,000, net of income taxes but was
adversely impacted by the accrual of retirement benefits of
$1,541,000, net of income tax benefits, for the Company's previous
President and CEO, whose retirement was effective February 6, 2008.
The transportation segment was negatively impacted in the first nine
months of fiscal 2008 by reduced demand for flatbed trucking services
and high fuel expenses. The first nine months of fiscal 2007
benefited from gains on equipment sales and reductions of estimated
prior year retained loss reserves.
Transportation Results
Nine months Ended June 30
(dollars in thousands) ___2008 % 2007 %_
Transportation revenue $ 87,689 81% 86,375 88%
Fuel surcharges 19,958 19% 12,044 12%
Revenues 107,647 100% 98,419 100%
Compensation and benefits 38,359 35% 37,491 38%
Fuel expenses 29,904 28% 21,311 22%
Insurance and losses 9,498 9% 7,708 8%
Depreciation expense 6,777 6% 6,786 7%
Other, net 11,548 11% 10,155 10%
Cost of operations 96,086 89% 83,451 85%
Gross profit $ 11,561 11% 14,968 15%
Transportation segment revenues were $107,647,000 in the first nine
months of 2008, an increase of $9,228,000 over the same period last
year. Revenue miles in the first nine months of fiscal 2008 were down
3.1% compared to the first nine months of fiscal 2007 due to reduced
loads in the flatbed portion of the transportation segment. Excluding
fuel surcharges, revenue per mile increased 5.3% over the same period
last year. In addition to general rate increases the addition of new
business in the flatbed division during the third quarter was a
significant factor in this increase. Until the third quarter
decreased construction material freight demand and pricing softness
from the downturn in housing pushed revenues down in the flatbed
operation compared to the same period last year.
The Transportation segment's cost of operations in the first nine
months of 2008 increased as a percentage of revenue compared to the
same period last year. Compensation and benefits increased $868,000
or 2.3% compared to the same quarter last year due to pay increases
and lower use of owner operators. Average fuel cost per gallon in the
first nine months of 2008 increased 41% over the same period last
year. This resulted in an increase in fuel cost of $679,000 in excess
of the increase in fuel surcharge revenue in the flatbed portion.
Insurance and losses increased $1,790,000 primarily due to the same
period last year including a reduction of expense for changes in
estimated prior year retained loss reserves as of June 30, 2007 along
with a $357,000 of prior year insurance recoveries recorded in the
three months ended December 31, 2006. Other expense increased
$1,393,000 due to $752,000 higher gains on equipment sales the same
period last year along with an increase of $708,000 in vehicle tires
and maintenance.
Real Estate Results
Nine months Ended June 30
(dollars in thousands) ___2008 % 2007 %_
Royalties and rent $ 5,912 32% 4,827 29%
Developed property rentals 12,790 68% 11,665 71%
Total Revenue 18,702 100% 16,492 100%
Mining and land rent expenses 2,312 12% 1,239 7%
Developed property expenses 7,047 38% 6,545 40%
Cost of Operations 9,359 50% 7,784 47%
Gross profit $ 9,343 50% 8,708 53%
Real Estate segment revenues for the first nine months of fiscal 2008
were $18,702,000, an increase of $2,210,000 or 13.4% over the same
period last year. Lease revenue from developed properties increased
$1,125,000 or 9.6%, due to an increase in occupied square footage
along with higher rental rates on new leases. Royalties and rent
increased $1,085,000 or 22.5% despite reduced tons mined because of an
increase of $359,000 in revenues from timber harvesting, revenue of
$383,000 for reimbursement of higher real estate taxes, and increases
in royalties per ton.
Real estate segment expenses increased $1,575,000 to $9,359,000 during
the first nine months of fiscal 2008 compared to $7,784,000 for the
same period last year. Expenses related to developed properties
increased $502,000 as a result of new building additions, increased
real estate tax assessments, and increased staffing to facilitate
continuing portfolio expansion. Mining and land rent expenses
increased $1,073,000 primarily due to increased real estate tax
assessments.
Consolidated Results
Gross Profit - Consolidated gross profit was $20,904,000 in the first
nine months of fiscal 2008, a decrease of $2,772,000 or 11.7% compared
to $23,676,000 in the same period last year. Gross profit in the
transportation segment decreased $3,407,000 or 22.8% due to the
increase in cost of operations along with decreased freight demand,
resulting in reduced revenue miles in the flatbed portion. Gross
profit in the real estate segment increased $635,000 or 7.3% from the
first nine months 2007, due to higher rental rates on new leases and
$359,000 increased gross profit from timber harvesting offset by
increased real estate taxes that could not be billed to tenants.
Selling, general and administrative expense - Selling, general and
administrative expenses increased $3,171,000 over the same period last
year. The current year includes $2,503,000 accrual of retirement
benefits for the Company's previous President and CEO. In March 2008,
a corporate aircraft was purchased increasing expense $308,000.
Payroll and payroll taxes increased $352,000 due to amounts paid to
the Company's prior CFO who retired June 16, 2008 along with
additional staffing and payroll taxes on stock option exercises.
Estimated allowance for doubtful accounts expense increased $78,000
primarily due to the inclusion in the prior year of a reversal of
prior accruals. Audit and legal fees increased $89,000 due to various
projects. Stock compensation expense excluding amounts associated
with the Company's prior President and CEO decreased $216,000 due to
reduced stock based compensation grants in recent years.
Gain from condemnation of land - Gain from condemnation of land was
$2,507,000 in the first nine months of fiscal 2008 resulting from the
taking by the Virginia Department of Transportation ("VDOT") of 28
acres on December 13, 2007 by filing a Certificate of Take and
depositing with the Court $5,860,000, representing VDOT's estimate of
the fair market value of the property. The Prince William County
Property was purchased in December 2005 and the cost of the 28 acres
taken by VDOT was $3,353,000.
Interest expense - Interest expense increased $1,462,000 over the same
period last year due to interest on mortgage debt incurred July 2007
and $782,000 of capitalized interest in the same period last year.
Income taxes - Income tax expense decreased $1,693,000 over the same
period last year due to reduced earnings, a $165,000 reduction of
liability for unrecognized tax benefits, and $24,000 in other
favorable adjustments, partially offset by $70,000 of tax expense
related to a permanent tax difference on surrender of a policy on the
life of the previous CEO that the Company owned.
Net income - Net income for the first nine months of fiscal 2008 was
$4,805,000, a decrease of $2,378,000 compared to net income of
$7,183,000 for the same period last year. Diluted earnings per common
share for the first nine months of fiscal 2008 were $1.54 compared to
$2.30 in the first nine months of fiscal 2007. Net income for the
first nine months of fiscal 2008 benefited from a gain on condemnation
of land of $1,544,000, net of income taxes but was adversely impacted
by the accrual of retirement benefits of $1,541,000, net of income tax
benefits, for the Company's previous President and CEO, whose
retirement was effective February 6, 2008. The transportation segment
was negatively impacted in the first nine months of fiscal 2008 by
reduced demand for flatbed trucking services and high fuel expenses.
The first nine months of fiscal 2007 benefited from gains on equipment
sales and prior period insurance recoveries.
Liquidity and Capital Resources. For the first nine months of fiscal
2008, the Company used cash provided by operating activities of
$14,892,000, proceeds from the sale of plant, property and equipment
of $6,542,000, proceeds from the exercise of employee stock options of
$961,000, excess tax benefits from the exercise of stock options of
$614,000 and cash balances to purchase $26,426,000 in property and
equipment, to invest $425,000 in the Brooksville Joint Venture, to
make $2,798,000 scheduled payments on long-term debt and to repurchase
Company stock for $4,388,000. Cash decreased $11,028,000.
Cash flows from operating activities for the first nine months of
fiscal 2008 were $2,323,000 lower than the same period last year. The
Company made cash payments of retirement benefits to the Company's
prior President and CEO of $4,851,000 during the second quarter of
fiscal 2008. Cash payments on accounts payable and other current
liabilities were $3,425,000 lower than the same period last year
primarily due to the timing of payments for equipment and materials.
The transportation segment was negatively impacted in the third
quarter of fiscal 2008 from continuing adverse demand, fuel expense
and operating disruptions for the flatbed trucking operations.
Cash flows used in investing activities for the first nine months of
fiscal 2008 were $6,242,000 higher than the same period last year
primarily due to $3,395,000 for the purchase of a corporate aircraft
and $4,333,000 for the purchase of 118 acres in Carroll County,
Maryland for future warehouse/office development along with higher
construction levels on the remainder of the portfolio.
Cash flows from financing activities for the first nine months of
fiscal 2008 were $3,170,000 lower than the same period last year due
to repurchase of Company stock of $4,388,000, an increase of $882,000
in mortgage payments, and the prior year including $2,126,000 of
payments under the revolving credit agreement.
The Company has a $37,000,000 revolving credit agreement (the
Revolver) which had a zero balance as of June 30, 2008. The Revolver
contains restrictive covenants including limitations on paying cash
dividends. Under these restrictions, as of June 30, 2008,
approximately $25,000,000 was available for borrowing. The Revolver
will expire on December 31, 2009.
On July 31, 2007, the Company borrowed $36,000,000 from Prudential
Insurance Company of America. The non-recourse mortgage loans fully
amortize on a level term over 20 years and bear interest at a fixed
rate of 5.74%. The loans are secured by seven developed properties
with an aggregate net book value of $31,074,000 at June 30, 2007. A
portion of the proceeds were used to repay balances outstanding under
the Company's Revolver and the remaining proceeds will be used to fund
new construction, purchase land for future development, and for
general corporate purposes. Net interest expense for fiscal 2008 is
expected to increase versus fiscal 2007 by approximately $1,100,000
due to lower capitalized interest and interest rates on mortgage debt
exceeding short-term cash investments.
The Company had $17,909,000 of irrevocable letters of credit
outstanding as of June 30, 2008. Most of the letters of credit are
irrevocable for a period of one year and are automatically extended
for additional one-year periods until notice of non-renewal is
received from the issuing bank. Substantially all of these are issued
for workers' compensation and liability insurance retentions. If
these letters of credit are not extended, the Company will have to
find alternative methods of collateralizing or funding these
obligations.
The Board of Directors has authorized Management to repurchase shares
of the Company's common stock from time to time as opportunities
arise. During the first nine months of fiscal 2008 the Company
repurchased 55,509 shares for $4,388,000. As of June 30, 2008,
$5,625,000 was authorized for future repurchases of common stock. The
Company does not currently pay any dividends on common stock.
The Company has committed to make additional capital contributions of
up to $1,075,000 to Brooksville Quarry, LLC in connection with a joint
venture with Vulcan.
The Virginia Department of Transportation took title to 28 acres of
the Company's land on December 13, 2007 by filing a Certificate of
Take and depositing with the Court $5,860,000. The Company received
these funds in April 2008. A portion of these funds that were
receivable were used to purchase replacement property in March and the
Company intends to use the balance of the funds for general corporate
purposes until the Company identifies and purchases replacement
property under IRS involuntary conversion rules.
On May 07, 2008, the Company's tank line subsidiary entered into an
agreement to sell approximately 1.5 acres of land located in Escambia
County, Florida for $2,375,000. The contract is subject to a 120 day
due diligence period during which the buyer may cancel the contract
for any reason. If the contract closes in accordance with its terms,
the Company would recognize a gain of approximately $2,327,000 before
income taxes. The Company estimates the after-tax gain from the sale
would be $1,433,000, or approximately $.46 per diluted share. The
sale would not affect the Company's tank line operations as the
Company would relocate its truck terminal to another site in the area.
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.
Recent Accounting Pronouncements. In July 2006, the FASB issued FASB
Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in Income
Taxes" which prescribes a recognition threshold and measurement
process for recording in the financial statements uncertain tax
positions taken or expected to be taken in a tax return. Additionally,
FIN 48 provides guidance on derecognition, classification, accounting
in interim periods and disclosure requirements for uncertain tax
positions. The Company adopted the provisions of FIN 48 on October 1,
2007. As a result of the adoption of FIN 48, the Company recognized a
$216,000 reduction in the liability for unrecognized tax benefits,
which was accounted for as an increase to retained earnings. As of
October 1, the Company had a liability for unrecognized tax benefits
of $537,000, which is included in income taxes receivable, net. If
recognized, $337,000 of unrecognized tax benefits would impact the
Company's effective tax rate. Interest and penalties of $200,000 has
been reflected as a component of the total liability. It is the
Company's policy to recognize as additional income tax expense the
items of interest and penalties directly related to income taxes. For
the three and nine months ended June 30, 2008, there was a reduction
of $165,000 to the total amount of unrecognized tax benefits. The
Company expects a decrease in the liability of up to $135,000 for
uncertain tax positions during the next 12 months. The Company files
income tax returns in the U.S. and various states which are subject to
audit for up to five years after filing.
In September 2006, the FASB issued Statement No. 157, Fair Value
Measurement (SFAS 157). The Statement defines fair value, establishes
a framework for measuring fair value in generally accepted accounting
principles (GAAP), and expands disclosures about fair value
measurements. This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. Management believes that the
adoption of SFAS 157 will require additional disclosure on the fair
value of its goodwill, asset retirement obligations, and long-term
mortgage notes payable but will not have a material impact on the
consolidated financial results of the Company.
Related Party Transactions. The Company was a related party to Florida
Rock Industries, Inc. (FRI) because four of the Company's directors
also served until November 16, 2007, as directors of FRI and such
directors owned approximately 24% of the stock of FRI and 47% of the
stock of the Company. The Company derived 5.4% of its consolidated
revenue from FRI in fiscal 2007. FRI merged with Vulcan Materials
Company ("Vulcan") in November 2007.
The Company, through its transportation subsidiaries, hauls
commodities by tank and flatbed trucks for the Florida Rock Division
of Vulcan. Charges for these services are based on prevailing market
prices. The real estate subsidiaries lease certain construction
aggregates mining and other properties to Vulcan. In April 2008,
Vulcan divested two of these quarry operations leased from the Company
to competitors. Those properties generated $351,000 in royalties for
the nine months ended June 30, 2008. The Company also outsourced
certain administrative functions to Vulcan. The cost of these
administrative functions was $44,000 and $143,000 for the nine months
ended June 30, 2008 and 2007, respectively.
On October 4, 2006, a subsidiary of the Company (FRP) entered into a
Joint Venture Agreement with Florida Rock Industries, Inc. (now
Vulcan) to form Brooksville Quarry, LLC, a real estate joint venture
to develop approximately 4,300 acres of land near Brooksville,
Florida. The venture is jointly controlled by Vulcan and FRP, and
they each have an obligation to fund capital contributions of up to $2
million. Capital contributions of $925,000 have been made by each
party as of June 30, 2008. Distributions will be made on a 50-50 basis
except for royalties and depletion specifically allocated to FRP.
Other income for the nine months ended June 30, 2008 includes a loss
of $20,000 representing the Company's equity in the loss of the joint
venture.
Summary and Outlook. The flatbed portion of the transportation
segment continues to face poor freight demand from the housing
downturn as well as high fuel expenses. During the third quarter of
fiscal 2008, increased revenue per mile in the transportation segment
more than offset reduced demand for flatbed trucking services and high
fuel expenses.
The Company's real estate development business continues to expand its
portfolio of warehouse-office products consistent with maintaining a
watchful eye on national and regional economic health.
In July 2008, a subsidiary of the Company, FRP Bird River, LLC,
entered into an agreement to sell approximately 121 acres of land in
Baltimore County, Maryland to Mackenzie Investment Group, LLC. The
purchase price for the property is $25,265,000, subject to certain
potential purchase price adjustments. The agreement of sale is
subject to certain contingencies, including the satisfactory
completion of the buyer's inspection period. Closing is dependent
upon several conditions including additional government approvals and
may be two or more years away.
In May 2008, the Company received final approval from the Zoning
Commission of the District of Columbia of its planned unit development
application for the Company's 5.8 acre undeveloped waterfront site on
the Anacostia River in Washington, D.C. This site is located adjacent
to the recently opened Washington Nationals Baseball Park. The site
currently is leased to a subsidiary of Vulcan Materials Company under
a short-term lease. The approved planned unit development permits
the Company to develop a four building, mixed use project, containing
approximately 545,800 square feet of office and retail space and
approximately 569,600 square feet of additional space for residential
and hotel uses. The approved development would include numerous
publicly accessible open spaces and a waterfront esplanade along the
Anacostia River.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
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 cash and cash equivalents 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 cash
and cash equivalents. 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 cash and cash equivalents would have
an immaterial impact on the Company's results of operations and cash
flows.
ITEM 4. 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 June 30, 2008, 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 third quarter that have materially
affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1A. RISK FACTORS
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, "Item 1A.
Risk Factors" in our Annual Report on Form 10-K for the year ended
September 30, 2007, which could materially affect our business,
financial condition or future results. The risks described in our
Annual Report on Form 10-K are not the only risks facing our
Company. Additional risks and uncertainties not currently known to
us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and/or operating
results.
Item 6. EXHIBITS
(a) Exhibits. The response to this item is submitted as a
separate Section entitled "Exhibit Index", on page 27.
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.
August 6, 2008 PATRIOT TRANSPORTATION HOLDING, INC.
John D. Baker II
John D. Baker II
President and Chief Executive
Officer
John D. Milton, Jr.
John D. Milton
Executive Vice President, Treasurer,
Secretary and Chief
Financial Officer
John D. Klopfenstein
John D. Klopfenstein
Controller and Chief
Accounting Officer
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2008
EXHIBIT INDEX
(14) Financial Code of Ethical Conduct between the
Company, Chief Executive Officers and Financial
Managers, as revised on January 28, 2004, which
is available on the Company's website at
www.patriottrans.com.
(31)(a) Certification of John D. Baker II.
(31)(b) Certification of John D. Milton, Jr.
(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.