PATRIOT TRANSPORTATION HOLDING, INC.
1801 Art Museum Drive
Jacksonville, Florida 32207
March 28, 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 20, 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 that
the retirement agreement accelerated the vesting of the unvested stock
options and unvested restricted stock awards and you accounted for this
modification of the original grant by terminating the original awards
and issuing newly measured awards accounted for as cash awards. In
light of the fact that it appears you accounted for this transaction as
the cancellation and replacement of awards of equity instruments, please
tell us how you applied the guidance in paragraph in paragraph 56 of SFAS
No. 123R in calculating or determining the amount of compensation expense
recognized for the unvested awards.
Company Response:
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.
Paragraph 56 of SFAS No. 123R states that "incremental
compensation cost shall be measured as the excess of the fair value of
the replacement award or other valuable consideration over the fair
value of the cancelled award at the cancellation date in accordance
with paragraph 51." Paragraph 51 of SFAS No. 123R provides in pertinent
part that:
Incremental compensation cost shall be measured as the
excess, if any, of the fair value of the modified award
determined in accordance with the provisions of this Statement
over the fair value of the original award immediately before
its terms are modified, measured based on the share price and
other pertinent factors at that date... Thus, the total
compensation cost measured at the date of a modification shall
be (1) the portion of the grant-date fair value of the original
award for which the requisite service is expected to be rendered
(or has already been rendered) at that date plus (2) the
incremental cost resulting from the modification....
"Illustrations 12-14 (paragraphs A149-A189) provide
additional guidance on, and illustrate the accounting for,
modifications of both vested and nonvested awards, including a
modification that changes the classification of the related
financial instruments from equity to liability or vice versa,
and modifications of vesting conditions.
Paragraph A175 of SFAS No. 123R also provides in pertinent part.
Paragraph 51(b) of this Statement specifies that total recognized
compensation cost for an equity award shall at least equal the
fair value of the award at the grant date unless at the date of the
modification the service or performance conditions of the original
award are not expected to be satisfied. In accordance with that
principle, Entity T will ultimately recognize cumulative
compensation cost equal to the greater of (a) the grant-date fair
value of the original equity award and (b) the fair value of the
modified liability award when it is settled. To the extent that
the fair value of the modified liability award exceeds the
recognized compensation cost associated with the grant-date fair
value of the original equity award, changes in the liability
award's fair value are recognized as compensation cost"
(emphasis added)
The total grant-date fair value of the unvested awards was
approximately $106,000 all of which was unrecognized as the vesting
periods were about to commence. The fair value of the modified
liability award when it was settled was $215,528. Accordingly the
Company concluded that the compensation expense recognized for the
unvested awards was $215,528. which represents the greater of the
grant-date fair value of approximately $106,000 and the fair value
of the modified award when it was settled of $215,528.
Form 10-Q/A for the quarter ended December 31, 2007
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2. We note from your disclosure that in relation to
the taking of your 101 acre tract of land in Prince William County,
Virginia, VDOT deposited $5,860,000 with the Court. Please tell us,
and disclose in future filings, how you have determined that you are
fully entitled to the $5,860,000 deposited with the Court. Also,
please tell us, and disclose when you expect to receive the proceeds.
On or about December 13, 2007, the Virginia Department of
Transportation ("VDOT") recorded a certificate of take with respect
to 28 acres of the Company's 101 acre tract in Prince William County,
Virginia and deposited $5,860,000 with the Court. The Company has
been advised by counsel that under Virginia law, the recording of a
certificate of take transfers title to the land to VDOT, and the
former property owner is deemed to have such interest in the funds
held in deposit as he had in the property taken. The Company determined
that it was fully entitled to the funds based upon these facts and advice.
The Company has petitioned the Court for disbursement of the funds and
expects to receive the funds prior to filing of the Form 10-Q for the
quarter ended March 31, 2008. The Company will update relevant
disclosures in future filings.
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
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Ray M. Van Landingham
Vice President and Chief Financial
Officer