PATRIOT TRANSPORTATION HOLDING, INC.
1801 Art Museum Drive
Jacksonville, Florida 32207
March 19, 2008
Ms. Claire Erlanger
Division of Corporation Finance
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Re: Patriot Transportation Holding, Inc.
Form 10-K for the Year Ended September 30, 2007
Filed December 7, 2007
Filer No. 000-17554
Dear Ms. Erlanger:
This letter responds to the staff's comment letter dated March 7,
2008 (the "Comment Letter") regarding the above-referenced filing. For
your convenience, each of the comments has been duplicated below, followed
by our responses.
Quarterly Report on Form 10-Q for the quarter ended December 31, 2007
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Note (10) CEO Retirement
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1. We note from your response to our prior comment 2 that the
final payment for the repurchase of vested stock options and restricted
stock, and the expense recognized for the repurchase of unvested stock
options and unvested restricted stock, was based on the twenty day average
stock price of $88.53. Please tell us why you used a twenty day average
stock price rather than the fair value on the repurchase date. See
paragraph 55 of SFAS No. 123R. If a significant difference would result in
using the fair value of the equity instruments on the date of repurchase,
please quantify this difference and revise your financial statements as
necessary. Also, please clarify whether the stock options and restricted
shares which the Company repurchased from Mr. Anderson were subject to
repurchase by the Company under their original terms at the date of grant
or whether the repurchase was negotiated between the Company and Mr.
Anderson in connection with his retirement. We may have further comment
upon receipt of your response.
Company Response:
The repurchase of stock options and restricted stock from Mr.
Anderson was based upon the twenty day average closing stock price
preceding the retirement date of February 6, 2008 in
accordance with the December 5, 2007 letter agreement. The use of the
twenty day average price was determined to be a reasonable purchase price
by the Board of Directors as the Company's stock is thinly traded and
volatile. During the twenty day period the stock traded between $82.54
and $93.99.
The estimated repurchase price as included in the Quarterly Report
on Form 10-Q filed on February 5, 2008 was $89.23. The stock declined on
low volume from $89.00 on January 29, 2008 to close at $79.07 on the
retirement date. The difference between the twenty day average of $88.53
and the closing price on the retirement date of $79.07 is $9.46 per share.
Paragraph 55 of SFAS No. 123R states "The amount of cash or other
assets transferred (or liabilities incurred) to repurchase an equity award
shall be charged to equity, to the extent that the amount paid does not
exceed the fair value of the equity instruments repurchased at the
repurchase date. Any excess of the repurchase price over the fair value of
the instruments repurchased shall be recognized as additional compensation
cost". The Company believed that the twenty day average price paid for Mr.
Anderson's shares reflected the fair value of those shares on the repurchase
date more than a single day market price because of the thin trading and
volatility of its shares. However, the Company will record additional
compensation expense for the difference between the twenty day average of
$89.23 and the price on the retirement date of $79.07. The effect of this
on the 17,200 vested stock options and previously restricted shares is
$162,712. This excess repurchase cost will be recognized as additional
compensation expense in the quarter ending March 31, 2008.
The retirement agreement accelerated the vesting of the unvested
stock options and unvested restricted stock awards. The Company accounted
for this modification of the original grant by terminating the original
awards and issuing newly measured awards accounted for as a cash awards.
The liability and compensation expense for the cash award was measured
based upon the letter agreement and this award will not be presented as
issued and repurchased shares. As cash awards are recorded based upon the
actual payment, the excess of the cash awards over the fair value on the
repurchase date is already included in compensation expense.
The stock options were subject to purchase by the Company under
their original terms at the date of grant at the Company's discretion.
The restricted stock was not subject to repurchase under its original terms.
However, the stock award was no longer restricted at the time of repurchase.
The Company has not repurchased any other stock options or stock awards since
the adoption of SFAS 123R.
The Company hereby acknowledges that:
* the Company is responsible for the adequacy and accuracy of
the disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any
action with respect to the filing; and
* the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
The Company further acknowledges that the Division of Enforcement has
access to all information that it provides to the staff of the Division of
Corporation Finance in your review of its filings or in response to your
comments on its filings.
Please contact the undersigned if you have any additional comments
or questions.
Very truly yours,
/s/ Ray M. Van Landingham
_______________________________
Ray M. Van Landingham
Vice President and Chief Financial
Officer