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 [FEE REQUIRED]
For the fiscal year ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 33-26115
FRP PROPERTIES, 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.)
155 East 21st Street, Jacksonville, Florida 32206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 904/355-1781
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
(Title of class)
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. [ ]
At December 1, 1996 aggregate market value of the shares of Common
Stock held by non-affiliates of the registrant was $45,228,679. At
such date there were 3,548,619 shares of the registrant's Stock
outstanding.
Documents Incorporated by Reference
Portions of the FRP Properties, Inc. 1996 Annual Report to
stockholders are incorporated by reference in Parts I, II, III and
IV.
Portions of the FRP Properties, Inc. Proxy Statement dated December
16, 1996 are incorporated by reference in Part III.<PAGE>
Item 1. BUSINESS.
FRP Properties, Inc., which was incorporated in Florida in 1988,
and its subsidiaries (the "Company") are engaged in the
transportation and real estate businesses. Florida Rock & Tank
Lines, Inc.("Tank Lines") and SunBelt Transport, Inc. ("SunBelt"),
wholly owned subsidiaries, are southeastern transportation
companies concentrating in the hauling, by motor carrier, of liquid
and dry bulk commodities and materials on flatbed trailers.
Another wholly owned subsidiary, Florida Rock Properties, Inc.
("Properties"), owns real estate of which a substantial portion is
under mining royalty agreements or leased to Florida Rock
Industries, Inc. ("FRI"). It also holds certain other real estate
for investment. Other wholly owned subsidiaries of the Company,
own and are developing certain industrial rental properties near
Baltimore, Maryland. Substantially all of the Company's operations
are conducted within the Southeastern and Mid-Atlantic United
States.
The Company has two major business segments: transportation and
real estate. Industry segment information is presented in Notes 2
and 8 to the consolidated financial statements included in the
accompanying 1996 Annual Report to stockholders and is incorporated
herein by reference.
FRI accounted for approximately 10% of the Company's consolidated
revenues for fiscal 1996.
Revenues from royalties and from the dump and flatbed truck fleet
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. Tank Lines is engaged in hauling liquid and dry
bulk commodities in tank and dump trucks. SunBelt is engaged in
hauling building and construction materials on flatbed trailers.
Information as to the Transportation operations' revenue by
principal markets is presented on page 6 of the accompanying 1996
Annual Report to stockholders under the caption, "Management
Analysis" and is incorporated herein by reference.
The Company's owned and leased dump truck fleet hauls principally
construction aggregates from terminals in Fort Myers, and Orlando,
Florida. There are from 8 to 12 major competitors in each of the
Company's markets and numerous small competitors in all markets.
The Company normally experiences considerable competition in all of
its markets.
The Company's owned and leased tank truck fleet hauls liquid and
dry bulk commodities, including petroleum and chemicals. It
operates from terminals in Jacksonville, Ft. Myers, Orlando, Panama
City, Pensacola, Tampa and White Springs, Florida; Albany, Atlanta,
Augusta, Bainbridge, Columbus, Macon and Savannah, Georgia;
Knoxville and Nashville, Tennessee; and Birmingham, Alabama. It
also has a central dispatch/office in Greenville, South Carolina.
The Company has from 4 to 8 major tank truck competitors in each of
its markets.
The Company's owned flatbed fleet is based at Jacksonville and
Tampa, Florida and Savannah, Georgia and hauls building and
construction materials in 12 southeastern states. There are 10
major competitors in the Company's market area and numerous small
competitors in the various states served.
At September 30, 1996, the Company had placed orders and was
committed to purchasing tractors and trailers costing approximately
$3,776,000.
Price, service, and terminal location are the major factors which
affect competition within a given market.
During fiscal 1996 the transportation segment's ten largest
customers accounted for approximately 35% of transportation's
revenue. The loss of any one of these customers could have an
adverse effect on the Company's revenues and income.
Real Estate. The Company's real estate and property development
activities are conducted through several wholly owned subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, and Washington, D.C. The real estate owned falls
generally into one of three categories. The first is land with
stone or sand and gravel deposits, of which substantially all is
leased to Florida Rock Industries, Inc. under mining royalty
agreements whereby the Company is paid a percentage of the revenues
generated by the material mined and sold, or minimum royalties
where there is no current, or only limited, mining activity. The
second is land and/or buildings leased under rental agreements, and
the third is land and/or buildings which are being developed for
rental or held for future appreciation.
Additional information about the Company's Real Estate segment is
contained on page 2 under the captions "FRP Development Corp." and
"Lakeside Business Park" and in Note 11 to the consolidated
financial statements included in the accompanying 1996 Annual
Report to stockholders and is incorporated herein by reference.
The Company's real estate strategy of developing high quality,
flexible warehouse/office space in the Baltimore-Washington markets
continued to be successful. Ninety-nine percent of the
warehouse/office space built by the Company over the last several
years was leased at September 30, 1996. The 28,533 square foot
office building was fully leased at September 30, 1996.
Price, location, rental space availability, structural design and
flexibility are the major factors which affect competition in the
warehouse rental market. The Company experiences considerable
competition in all of its markets.
In fiscal 1996 real estate revenues, excluding the sale of real
estate, were divided approximately 50% from mining and minimum
royalties and 50% from rentals. FRI accounted for approximately
65% of such revenue.
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. Additional information concerning environmental
matters is presented in Note 10 to the consolidated financial
statements included in the accompanying 1996 Annual Report to
stockholders and in Item 3 "Legal Proceedings" of this Form 10-K,
and such information is incorporated herein by reference.
Employees. The Company employed approximately 648 people in its
Transportation Group, 15 people in its Real Estate Group, and two
people at Corporate at September 30, 1996.
<PAGE>
Item 2. PROPERTIES.
The Company's principal properties are located in Florida, Georgia,
Virginia, Washington, D.C., and Maryland.
Transportation Properties. At September 30, 1996 the Company
operated an owned (487) and leased (11) fleet of 498 trucks and had
17 sites for its trucking terminals in Florida, Georgia, Alabama
and Tennessee totaling approximately 80 acres. Of these acres, the
Company owned approximately 74 and leased approximately 6. The
Company also leases central dispatch/office space in Greenville,
South Carolina. The lease terms run from year-to-year.
Construction Aggregates Properties. The following table summarizes
the Company's principal construction aggregates locations and
estimated reserves at September 30, 1996, substantially all of
which are leased to FRI.
Tons of
Tons Mined Estimated
in Year Reserves
Ended at
9/30/96 9/30/96 Approximate
(000's) (000's) Acres Owned
The Company owns fourteen
locations currently being
mined located at
Brooksville, Astatula,
Miami, Grandin, Gulf
Hammock, Keuka, Lake Wales,
and in Marion and Lake
Counties, Florida; Forest
Park, Macon and Tyrone,
Georgia; St. Mary's County,
Maryland, and Manassas,
Virginia. 9,634 324,000 17,113
The Company owns three locations
being leased but not currently
being mined, located at Ft.
Myers and Newberry, Florida
and Columbus, Georgia. - 136,000 3,363
<PAGE>
Other Properties. The Company owns approximately 115 acres of land
in Virginia and Washington, D.C. and an office building and
approximately 6 acres in Florida which are leased to FRI. The
Company owns four parcels of land near Baltimore, Maryland. One
contains approximately 11 acres with a commercial warehouse and
office space (72,182 square feet), which at November 1, 1996 was
100% leased. The second contains approximately 17 acres with
195,615 square feet of commercial warehouse and office space of
which at November 1, 1996 was 98% leased. The third contains
approximately 10 acres with 187,517 square feet of
commercial/warehouse space that was 100% leased at November 1,
1996. The fourth contains 8.5 acres with an office building
(28,533 square feet) which is 6% occupied by the Company with the
balance 100% leased, including a portion leased to FRI. In October
1996, the Company purchased 134 acres of land in Harford County,
Maryland. The site is being used for the development of the
Lakeside Business Park. In addition, the Company owns
approximately 11,193 acres of investment and other real estate, of
which approximately 7,738 acres are in Suwannee and Columbia
Counties, Florida.
At September 30, 1996 certain property, plant and equipment having
a carrying value of $14,471,000 was pledged on certain notes and
contracts with an outstanding principal balance totaling
$11,455,000 on such date.
In addition, certain properties having a carrying value at
September 30, 1996 of $1,819,000 were encumbered by industrial
revenue bonds which 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.
Item 3. LEGAL PROCEEDINGS.
Part II, Item 1 of the Company's Form 10-Q for the quarter ended
March 31, 1996 and Note 10 to the Consolidated Financial Statements
included in the accompanying 1996 Annual Report to stockholders are
incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No reportable events.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office Position Since
Edward L. Baker 61 Chairman of the Board May 3, 1989
John E. Anderson 51 President & Chief Feb. 17, 1989
Executive Officer
John D. Baker II 48 Executive Vice President Feb. 2, 1989
and Treasurer
John R. Mabbett III 37 Vice President and Feb. 4, 1993
Secretary
Ish Copley 63 President of SunBelt Aug. 9, 1992
Transport, Inc., the
Company's flatbed
trucking operation
David H.
deVilliers, Jr. 45 Vice President June 1, 1989
Ruggles B. Carlson 62 Assistant Treasurer and Feb. 2, 1989
Assistant Secretary
All of the above officers have been employed in their respective
positions for the past five years, except John R. Mabbett III and
Ish Copley.
John R. Mabbett III joined the Company as Vice President of Florida
Rock & Tank Lines, Inc., a subsidiary, in October 1989 when the
Company purchased J.R. Mabbett & Son, Inc. Effective January 1,
1993, he became President of Florida Rock & Tank Lines, Inc. and in
February 1993 he became Vice President and Secretary of FRP
Properties, Inc. Prior to joining the Company, Mr. Mabbett was
Vice President of J.R. Mabbett & Son, Inc.
Prior to joining the Company in August 1992, Ish Copley was
President of Ploof Truck Lines, Inc.
Edward L. Baker and John D. Baker II are brothers and the sons of
Thompson S. Baker who is on the Board of Directors of the Company.
Thompson S. Baker II, who is on the Board of Directors of the
Company, is the son of Edward L. Baker.
All executive officers of the Company are elected annually by the
Board of Directors.<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There were approximately 904 holders of record of FRP Properties,
Inc. common stock, $.10 par value, as of December 1, 1996. The
Company's common stock is traded on the Nasdaq Stock Market (Symbol
FRPP). Information concerning stock prices is included under the
caption "Quarterly Results" on page 5 the Company's 1996 Annual
Report to stockholders, and such information is incorporated herein
by reference. The Company has not paid a cash dividend during the
past two years. 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 3 to the
consolidated financial statements included in the accompanying 1996
Annual Report to stockholders and such information is incorporated
herein by reference.
Item 6. SELECTED FINANCIAL DATA.
Information required in response to this Item 6 is included under
the caption "Five Year Summary" on page 5 of the Company's 1996
Annual Report to stockholders and such information is incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Information required in response to this Item 7 is included under
the caption "Management Analysis" on page 6; under the caption
"Capital Expenditures" on page 2; and in Notes 1 through 11 to the
consolidated financial statements included in the accompanying 1996
Annual Report to stockholders and in Item 3 "Legal Proceedings" of
this Form 10-K. Such information is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included under
the caption "Quarterly Results" on page 5 and on pages 7 through 16
of the Company's 1996 Annual Report to stockholders. Such
information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
No reportable events.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning directors, required in response to this Item
10, is included under the captions "Election of Directors" and
Section 16(a) Beneficial Ownership Reporting Compliance in the
Company's Proxy Statement dated December 16, 1996; and such
information is incorporated herein by reference.
Information concerning executive officers, required in response to
this Item 10, is included following Item 4 of this Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item 11 is included under
the captions "Executive Compensation," "Compensation Committee
Report," "Compensation Committee Interlocks and Insider
Participation," and "Shareholder Return Performance" in the
Company's Proxy Statement dated December 16, 1996; and such
information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
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 Officers" in the
Company's Proxy Statement dated December 16, 1996; and such
information is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required in response to this Item 13 is included under
the captions "Compensation Committee Interlocks and Insider
Participation" and "Certain Relationships and Related
Transactions" in the Company's Proxy Statement dated December 16,
1996 and in Note 2 captioned "Transactions with related parties" in
the Company's 1996 Annual Report to stockholders; and such
information is incorporated herein by reference.<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(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 14 of this Form 10-K.
(3)Exhibits.
The response to this item is submitted as a
separate section. See Exhibit Index on pages 11
through 13 of this Form 10-K.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the three
months ended September 30, 1996.
<PAGE>
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.
FRP PROPERTIES, INC.
Date: December 4, 1996 By RUGGLES B. CARLSON
Ruggles B.Carlson
Assistant Treasurer
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 4, 1996.
JOHN E. ANDERSON ALBERT D. ERNEST, JR.
John E. Anderson Albert D. Ernest, Jr.
Director, President, and Director
Chief Executive Officer
(Principal Executive Officer)
RUGGLES B. CARLSON L. E. FICHTHORN III
Ruggles B. Carlson Luke E. Fichthorn III
Assistant Treasurer Director
(Principal Financial and
Accounting Officer)
EDWARD L. BAKER FRANCIS X. KNOTT
Edward L. Baker Francis X. Knott
Director Director
JOHN D. BAKER II RADFORD D. LOVETT
John D. Baker II Radford D. Lovett
Director Director
THOMPSON S. BAKER JOHN R. MABBETT III
Thompson S. Baker John R. Mabbett III
Director Director
T. S. BAKER II ROBERT H. PAUL III
Thompson S. Baker II Robert H. Paul III
Director Director
ISH COPLEY MARTIN E. STEIN, JR.
Ish Copley Martin E. Stein, Jr.
Director Director
DAVID H. deVILLIERS, JR. JAMES H. WINSTON
David H. deVilliers, Jr. James H. Winston
Director Director
FRP PROPERTIES, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
EXHIBIT INDEX
[Item 14(a)(3)]
Page No. in
Sequential
Numbering
(3)(a)(1) Articles of Incorporation of FRP Properties, Inc.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(3)(a)(2) Amendment to the Articles of Incorporation of FRP
Properties, Inc. filed with the Secretary of
State of Florida on February 19, 1991.
Previously 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
FRP Properties, Inc. filed with the Secretary of
State of Florida on February 7, 1995. Previously
filed as appendix to the Company's Proxy
Statement dated December 15, 1994.
(3)(b)(1) Restated Bylaws of FRP Properties, Inc. adopted
December 1, 1993. Previously filed with Form 10-K
for the fiscal year ended September 30, 1993.
File No. 33-26115.
(3)(b)(2) Amendment to the Bylaws of FRP Properties, Inc.
adopted August 3, 1994. Previously filed with
Form 10-K for the fiscal year ended September 30,
1994. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of
Incorporation of FRP Properties, Inc. Previously
filed with Form S-4 dated December 13, 1988.
And amended Article III filed with Form 10-K for
the fiscal year ended September 30, 1993. And
Articles XIII and XIV previously filed as
appendix to the Company's Proxy Statement dated
December 15, 1994. File No. 33-026115.
(4)(b) Specimen stock certificate of FRP Properties,
Inc. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(4)(c) Credit Agreement dated as of November 15, 1995
among FRP Properties, Inc.; SunTrust Bank,
Central Florida, National Association; Bank of
America Illinois; Barnett Bank of Jacksonville,
N.A.; and First Union National Bank of Florida.
Previously filed with Form 10-Q for the quarter
ended December 31, 1995. File No. 33-26115.
Page No. in
Sequential
Numbering
(4)(d) The Company and its consolidated subsidiaries
have other long-term debt agreements which do not
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)(a) Post Distribution Agreement, dated May 7, 1986,
by and between Florida Rock Industries, Inc. and
Florida Rock & Tank Lines, Inc. and amendments
thereto dated July 1, 1987 and September 27,
1988. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(b) Tax Sharing Agreement, dated May 7, 1986, between
Florida Rock Industries, Inc. and Florida Rock &
Tank Lines, Inc. Previously filed with Form S-4
dated December 13, 1988. File No. 33-26115.
10)(c) Various leasebacks 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)(e)), but all of
which may be material in the aggregate.
Previously filed with Form S-4 dated December 13,
1988. File No. 33-26115.
(10)(d) License Agreement, dated June 30, 1986, from
Florida Rock Industries, Inc. to Florida Rock &
Tank Lines, Inc. to use "Florida Rock" in corporate
names. Previously filed with Form S-4dated
December 13, 1988. File No. 33-26115.
(10)(e) Mining Lease Agreement, dated September 1, 1986, between
Florida Rock Industries,Inc. and Florida Rock Properties, Inc.
successor by merger to Grandin Land, Inc. Previously filed
with Form S-4 dated December 13, 1988. File No. 33-26115.
(10)(f) Summary of Medical Reimbursement Plan of FRP
Properties, Inc. Previously filed with Form 10-K
for the fiscal year ended September 30, 1993.
File No. 33-26115.
(10)(g) Split Dollar Agreement dated October 3, 1984,
between Edward L. Baker and Florida Rock
Industries, Inc. and assignment of such
agreement, dated January 31, 1986 from Florida
Rock Industries, Inc. to Florida Rock & Tank
Lines, Inc. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
Page No. in
Sequential
Numbering
(10)(h) Summary of Management Incentive Compensation
Plans. Previously filed with Form 10-K for the
fiscal year ended September 30, 1994. File No.
33-26115.
(10)(i) Management Security Agreements between the
Company and certain officers. Form of agreement
previously filed (as Exhibit (10)(I)) with Form
S-4 dated December 13, 1988. File No. 33-26115.
(10)(i)(1) FRP Properties, Inc. 1989 Employee Stock Option
Plan. Previously filed with Form S-4 dated
December 13, 1988. File No. 33-26115.
(10)(i)(2) FRP Properties, Inc. 1995 Stock Option Plan.
Previously filed as an appendix to the Company's
Proxy Statement dated December 15, 1994.
(11) Computation of Earnings Per Common Share.
(13) The Company's 1996 Annual Report to stockholders,
portions of which are incorporated by reference
in this Form 10-K. Those portions of the 1996
Annual Report to stockholders which are not
incorporated by reference shall not be deemed to
be filed as part of this Form 10-K.
(22) Subsidiaries of Registrant at September 30, 1996:
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 Limited
Partnership (a Maryland limited partnership)
FRTL, Inc. (a Florida corporation)SunBelt
Transport, Inc. (a Florida Corporation)Oz Limited
Partnership (a Maryland limited partnership)
(23)(a) Consent of Deloitte & Touche LLP, Independent
Certified Public Accountants, appears on page 15
of this Form 10-K.
(27) Financial Data Schedule<PAGE>
FRP PROPERTIES, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheet at September 30, 1996
and 1995 8(a)
For the years ended September 30, 1996, 1995 and 1994:
Consolidated statement of income 7(a)
Consolidated statement of stockholders' equity 10(a)
Consolidated statement of cash flows 9(a)
Notes to consolidated financial statements 11-15(a)
Selected quarterly financial data (unaudited) 5(a)
Independent Auditors' Report 16(a)
Consent of Independent Certified Public Accountants 15(b)
Consolidated Financial Statement Schedules:
Independent Auditors' Report
16(b)
II - Valuation and qualifying accounts 17(b)
III - Real estate and accumulated depreciation and
depletion 18-19(b)
(a) Refers to the page number in the Company's
1996 Annual Report to stockholders. 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.<PAGE>
Independent Auditors' Consent
We consent to the incorporation by reference in Registration
Statement (Form S-8 No. 33-43215) pertaining to the FRP Properties,
Inc. 1989 Stock Option Plan and in the related Prospectus of our
reports dated December 3, 1996, appearing in and incorporated by
reference in this Annual Report (Form 10-K) for the year ended
September 30, 1996.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 18, 1996
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
FRP Properties, Inc.
Jacksonville, Florida
We have audited the consolidated financial statements of FRP
Properties, Inc. and its subsidiary companies ("FRP") as of
September 30, 1996 and 1995, and for each of the three years in the
period ended September 30, 1996, and have issued our report thereon
dated December 3, 1996; such consolidated financial statements and
report are included in your 1996 Annual Report to Stockholders and
are incorporated herein by reference. Our audits also included the
financial statement schedules of FRP, listed in Item 14. These
financial statement schedules are the responsibility of FRP's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedules,
when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information
set forth therein.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 3, 1996<PAGE>
FRP PROPERTIES, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION
AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
Year Ended
September 30, 1996:
Allowance for
doubtful accounts $218,474 $18,000 - $2,937(a) $233,537
Accrued risk
insurance $2,736,665 $3,240,572 - $2,148,583(b) $3,828,654
Accrued health
insurance $817,487 750,842 - 791,130(b) 777,199
Totals -
insurance $3,554,152 $3,991,414 $0 $2,939,713 $4,605,853
Year Ended
September 30, 1995:
Allowance for
doubtful accounts $198,354 $26,000 - $5,880(a) $218,474
Accrued risk
insurance $3,578,170 $1,492,764 - $2,334,269(b) $2,736,665
Accrued health
insurance $711,693 1,231,740 - 1,125,946(b) 817,487
Totals -
insurance $4,289,863 $2,724,504 $0 $3,460,215 $3,554,152
Year Ended
September 30, 1994:
Allowance for
doubtful accounts $158,434 $41,000 - $1,080(a) $198,354
Accrued risk
insurance $2,824,976 $2,789,253 - $2,036,059(b) $3,578,170
Accrued health
insurance 724,586 779,185 - 792,078(b) 711,693
Totals -
insurance $3,549,562 $3,568,438 $0 $2,828,137 $4,289,863
(a) Accounts written off less recoveries
(b) Payments
<TABLE>
FRP PROPERTIES, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE & ACCUMULATED
DEPRECIATION AND DEPLETION
SEPTEMBER 30, 1996
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Cost capi- Gross amount Date Deprecia-
Encumb- cost talized at which Accumulated Of Date tion Life
County State rances to subsequent carried Depreciation Constr- Acquired Computed
Company to at end of ion:
acquisition of period (a)
Construction Aggregates
Alachua Florida $1,588,458 $18,140 $1,606,598 $53,784 n/a 4/86 unit
Clay Florida 964,972 15,666 980,638 - n/a 4/86 unit
Clayton Georgia 381,787 0 371,787 1,352 n/a 4/86 unit
Dade Florida 9,374,660 0 9,374,660 4,724,144 n/a 4/86 unit
Fayette Georgia 138,686 400,872 0 400,872 35,706 n/a 4/86 unit
Hernando Florida 2,127,533 1 2,127,534 1,082,776 n/a 4/86 unit
Lake Florida 1,464,625 20,528 1,485,153 990,754 n/a 4/86 unit
Lee Florida 4,690,269 0 4,690,269 - n/a 4/86 unit
Floyd Georgia 300,000 0 300,000 - n/a 4/86 -
Levy Florida 1,280,643 83,365 1,364,008 296,250 n/a 4/86 unit
Marion Florida 1,180,366 0 1,180,366 599,478 n/a 4/86 unit
Monroe Florida 840,442 0 840,442 131,384 n/a 4/86 unit
Muscogee Georgia 368,674 0 368,674 45,000 n/a 4/86 unit
Polk Florida 120,502 0 120,502 75,285 n/a 4/86 unit
Prince Wil.,
Virginia 298,463 0 298,463 219,987 n/a 4/86 unit
Putnam Florida 15,014,681 48,800 15,063,481 1,686,142 n/a 4/86 unit
St. Marys Maryland 1,269,878 0 1,269,878 476,103 n/a 4/86 unit
138,686 41,666,825 186,500 41,853,325 10,418,109
Land Rental Property
District of Columbia 2,901,869 207,423 3,109,292 750,755 n/a 4/86 15yr
Fairfax Virginia 2,035,013 0 2,035,013 - n/a 10/85 -
Putnam Florida 193,584 0 193,584 139,741 n/a 4/86 10 yr.
Spalding Georgia 19,572 0 19,572 - n/a 4/86 -
Suwannee Florida 4,252,091 39,743 4,291,834 592,455 n/a 4/86 10 yr.
9,402,129 247,166 9,649,295 1,482,951
Commercial Property
Baltimore Maryland 1,748,505 439,120 2,390,803 2,829,923 634,025 1990 10/89 31 yr
Baltimore Maryland 4,943,748 961,379 5,659,489 6,620,868 563,802 1992 12/91 31 yr
Duval Florida 2,804,344 140,519 2,944,863 1,517,119 n/a 4/86 20 yr
Harfor Maryland 1,754,300 0 1,754,300 0 1996 8/95 31 yr
Jessup Maryland 3,069,284 1,177,021 4,246,305 567,619 1987 9/88 31 yr
Linthicum Maryland 4,623,813 911,060 6,539,375 7,450,435 1,668,962 1989 9/88 31 yr
Orange Florida 57,047 0 57,047 12,046 n/a 4/86 10 yr.
11,316,066 9,996,534 15,907,207 25,903,741 4,963,573
Investment Property
Caroline Virginia 212,876 6,856 219,732 - n/a 4/86 unit
Duval Florida 693,553 0 693,553 - n/a 4/86 -
Fairfax Virginia 273,198 0 273,198 - n/a 4/86 -
Fayette Georgia 283,875 0 283,875 - n/a 4/86 -
Hillsborough
Florida 187,161 0 187,161 - n/a 4/86 -
Lee Florida 270,641 1,950 272,591 137,114 n/a 4/86 -
Suwannee Florida 557,694 0 557,694 98,052 n/a 4/86 unit
2,478,998 8,806 2,487,804 235,166
Miscellaneous 1,056,454 0 1,056,454 340,236
GRAND TOTALS $11,454,752 $64,600,940 $16,349,679 $80,950,619 $17,440,035
(a) The aggregate cost for Federal income tax purposes is $80,167,953
</TABLE>
FRP PROPERTIES, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND
ACCUMULATED DEPRECIATION AND DEPLETION
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
1996 1995 1994
Gross Carrying Cost of Real Estate:
Balance at beginning of period $78,633,725 $75,816,417 $75,412,609
Additions during period:
Acquisitions through foreclosure - - -
Other acquisitions 2,016,371 422,235 304,396
Improvements, etc. 811,488 2,804,019 512,014
Reclassification of deposit
Other (transfers from Transportation) - 19,680 24,552
Deductions during period:
Cost of real estate sold 510,965 428,626 355,594
Other (abandonments) - - 34,850
Other (transfers to Transportation) - - 46,800
Balance at close of period $80,950,619 $78,633,725 $75,816,417
Accumulated Depreciation & Depletion:
Balance at beginning of period $15,521,665 $13,687,821 $12,221,529
Additions during period:
Charged to cost & expense 1,994,854 2,132,551 1,655,734
Other (transfers from Transportation) - 6,765 24,551
Deductions during period:
Cost of real estate sold 76,484 305,472 201,167
Other (abandonments) - - 12,826
Balance at close of period $17,440,035 $15,521,665 $13,687,821
Annual Report 1996
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
1996 1995 Change
Revenues $64,403 $58,273 +10.5
Gross profit $14,615 $15,132 - 3.4
Operating profit $ 9,017 $ 9,440 - 4.5
Income before income taxes $ 6,827 $ 7,591 -10.1
Net income $ 4,165 $ 4,630 -10.0
Per common share:
Net income $ 1.13 $1.21 - 6.6
Stockholders' equity $ 17.72 $16.74 + 5.9
<PAGE>
1996 CORPORATE HIGHLIGHTS
Revenues - up 10.5% to $64,403,000
Gross profit - down 3.4% to $14,615,000
Net income - down 10.0% to $4,165,000
Common shares repurchased - 191,408
Earnings per share - down 6.6% to $1.13
Unusually high risk insurance costs from several severe accidents in
Transportation
Modernization of Tank Lines fleet completed
Continued expansion of SunBelt and Tank Lines
Construction started on 90,375 square feet of flexible warehouse/office
rental space in Baltimore/Washington Industrial Park
Development started on the 134 acre Lakeside Business Park site with
potential of 1,400,000 square feet of warehouse/office space
99% of 483,847 square feet total warehouse/office rental space leased as of
September 30, 1996
$19,000,000 unused of revolving credit agreement at September 30, 1996
BUSINESS. The Company is engaged in the transportation and real estate
businesses. The Company's transportation business is conducted through two
wholly owned subsidiaries. Florida Rock & Tank Lines, Inc. is a
Southeastern transportation company concentrating in the hauling by motor
carrier of liquid and dry bulk commodities. SunBelt Transport, Inc. serves
the flatbed portion of the trucking industry in the Southeast, hauling
primarily construction materials. The Company's Real Estate Group, through
subsidiaries, acquires, constructs, leases, operates and manages land and
buildings to generate both current cash flows and long-term capital
appreciation.
OBJECTIVES. The Company's dual objectives are to build a major
Southeastern transportation company and a real estate company which
provides sound long-term growth, cash generation and asset appreciation.
Transportation
Internal growth is accomplished by a dedicated, competent and loyal
work force emphasizing superior service to customers in existing
markets, developing new transportation services for customers in
current market areas and opening new terminals in other market areas.
External growth, through the acquisition program, is designed to
broaden the Company's geographic market area and delivery services by
acquiring related businesses in the Southeast.
Real Estate
The growth plan is based on the acquisition, management and retention
of real estate assets and the development of industrial rental
properties to provide long-term positive cash flows and capital
appreciation.<PAGE>
To Our Stockholders
Fiscal 1996 was another year of excellent progress in major projects
and programs consistent with the short and long-term goals in both the
Transportation and Real Estate businesses. Profitability compared to
fiscal 1995 was affected by the gross profit from timber sales and one-time
royalty totaling $863,000 in 1995 and unusually high risk insurance expense
in 1996. Absent these events, the percentage increase in operating profit
would have been greater than the percentage increase in revenue and would
have reflected the continuing improvement in both the Transportation and
Real Estate businesses.
Results. Revenues for fiscal 1996 were $64,403,000, a 10.5% increase over
$58,273,000 in fiscal 1995. Transportation revenues increased 13.4% due to
continued growth and expansion in SunBelt Transport, Inc. and Florida Rock
& Tank Lines, Inc. Real estate revenues decreased 5.2% as the increase in
lease revenue was offset by the absence of timber sales and a one-time
mining royalty of approximately $1,092,000 that occurred in 1995.
Gross profit of $14,615,000 decreased 3.4% from $15,132,000 in 1995.
Gross profit increased in the Transportation Group as a result of the
volume increases and efficiency improvements which were partially offset by
higher insurance costs. Risk insurance costs in the Transportation Group
in fiscal 1996 were up $1,760,000 over 1995 which were in turn down by
$933,000 from 1994. The Group experienced several severe accidents in
fiscal 1996 which pushed their risk insurance costs higher than normal
while exceptionally favorable experience in fiscal 1995 resulted in costs
lower than normal. The Real Estate Group's gross profit was slightly above
plan but down from last year due to the one-time gains in 1995 of $863,000.
In fiscal 1996 Real Estate gross profit was also reduced by the write-off
of approximately $349,000 in connection with the abandonment of certain
development costs.
Selling, general and administrative expenses were down 1.6% in 1996 as
compared to 1995. A slight increase in expenses related to volume
increases was more than offset by reduced incentive compensation due to
achieving a lower profitability than planned in Transportation.
Interest expense increased $301,000 or 15.6% to $2,234,000 in 1996
from $1,933,000 last year. The increase was due to a $5,390,000 increase
in average debt outstanding in 1996 which was only partially offset by a
lower average interest rate.
Net income decreased 10.0% to $4,165,000 from $4,630,000 in fiscal
1995. Earnings per share decreased 6.6% to $1.13 from $1.21 last year.
The average number of common shares decreased 3.8% due to ongoing stock
repurchases made by the Company.
FRP Development Corp. The Company's real estate strategy of developing
high quality, flexible warehouse/office space in carefully selected markets
continued to be successful. During the year lease renewals with an average
term of 4.3 years were executed on 85,564 square feet of space and 16,851
square feet of space was leased to new tenants with an average lease term
of 4.2 years. 99% of the total 483,847 square feet of completed
warehouse/office space was leased at September 30, 1996.
The second of two buildings at Preston Court in the
Baltimore/Washington Industrial Park, comprised of 90,375 square feet of
flexible warehouse/office space, was started in the third quarter of fiscal
1996. It is expected to be completed in 1997.
Lakeside Business Park. The Company continued land development
activities on Lakeside Business Park, a 134 acre site in Harford County,
Maryland. Phase one of the roads and infrastructure is under construction.
It is anticipated that construction of 108,000 square feet of flexible
warehouse/office space will begin in the first quarter of fiscal 1997.
Capital Expenditures. Capital expenditures in 1996 for the transportation
business totaled $13,174,000 versus $12,621,000 in 1995. The 1996 capital
expenditures were approximately 81% for replacements and 19% for expansion
of business. Capital expenditures for the real estate segment in 1996
totaled $2,782,000 versus $3,162,000 in 1995. Total depreciation and
depletion for fiscal 1996 was $7,456,000 versus $7,010,000 in 1995.
The 1997 planned capital expenditures for the transportation business
total $7,986,000 for continued expansion of both the flatbed and tank truck
fleets and to maintain the modernized fleet. The capital budget for the
real estate segment is $7,994,000. Total depreciation expense is expected
to be approximately $8,440,000.
Financial Management. The Company's $34,000,000 revolving credit term loan
facility has a final maturity in 2001. $15,000,000 was utilized at the end
of 1996. The Company also has available $20,000,000 in short-term lines of
credit of which $3,500,000 was borrowed at the end of fiscal 1996.
Approximately $11,316,000 of the Company's debt is long-term fixed rate
mortgages secured by selected developed real estate projects. At year end
debt was 31% of capital employed and the Company was in excellent financial
condition.
Stock Repurchase. Pursuant to the Board's authorization, the Company
purchased 191,408 shares of its common stock during the year. Management
remains authorized to repurchase shares of the Company's common stock from
time to time as opportunities may arise.
Annual Meeting. At the Annual Stockholders' Meeting on February 7, 1996,
the stockholders elected Ish Copley, John D. Baker II, Luke E. Fichthorn
III and Robert H. Paul III to serve a four-year term expiring in the year
2000.
Outlook. Fiscal 1997 is expected to be another year of growth and
progress. The economy is expected to continue its slow growth.
The Transportation Group is expected to continue to expand in 1997
through the growth of its existing customers as well as entries into new
markets.
Industrial real estate markets served by FRP Development Corp. in the
Baltimore area remain in good condition. The Company's high quality
buildings combined with good market locations have enabled the properties
to remain substantially fully leased. The favorable long-term outlook is
conducive to market acceptance of the new Baltimore/Washington Industrial
Park building and the multi-year Lakeside Business Park project.
Management intends to continue its careful blend of prudence coupled
with an aggressive search for new opportunities to grow both the
transportation and real estate segments of the business. The Company plans
to build on its financial strength and sound market positions.
The Company expects 1997 to be a year of continued improvement.
The dedication and support of our employees will continue to be the
key to the Company's future success. We extend our sincere thanks to these
loyal men and women for their efforts.
Respectfully yours,
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer<PAGE>
Operating Review
Transportation. The Company's Transportation Group operates through two
wholly owned subsidiaries, Florida Rock & Tank Lines, Inc., engaged in
hauling liquid and dry bulk commodities primarily in tank trucks, and
SunBelt Transport, Inc., engaged in flatbed hauling.
The Group operates from terminals in Jacksonville, Ft. Myers, Orlando,
Panama City, Pensacola, Tampa and White Springs, Florida; Albany, Atlanta,
Augusta, Bainbridge, Columbus, Macon and Savannah, Georgia; Knoxville and
Nashville, Tennessee; and Birmingham, Alabama and has a central dispatch
office in Greenville, South Carolina. During fiscal 1996 the owned and
leased fleet increased from 495 to 498 trucks.
Revenues and miles hauled were up 13% due to both continued expansion of
flatbed hauling and new and growing accounts for Florida Rock & Tank Lines,
Inc.
Gross profit increased 3.9% from fiscal 1995 primarily due to higher
revenues and improved efficiencies. A series of unusually severe accidents
offset much of the improved profit.
During fiscal 1996, including replacements and growth of SunBelt, the
Group purchased 161 new tractors and 82 new trailers. The fiscal 1997
capital expenditure plan is based on maintaining the modernized tank fleet
and also expanding the tank truck and flatbed fleets. The fleet
modernization program has resulted in reduced maintenance expenses and
improved operating efficiencies.
In response to several severe accidents which occurred in fiscal 1996,
the Company has reinforced its ongoing safety and accident prevention
program as a significant means of safeguarding it employees and equipment.
Our dedication to safety occupies a vital niche in the Group's commitment
to total quality assurance in all of its operations.
For fiscal 1997 Transportation expects another year of growth in its
existing bulk hauling business resulting from the continued penetration of
targeted market segments. With the anticipated continuing modest economic
growth, the outlook is for increases in the hauling of petroleum, dry bulk
and chemical products. Flatbed hauling is expected to have another year of
good growth in 1997.
Real Estate. The Real Estate Group operates the Company's real estate
and property development activities through subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia, Maryland, and
Washington, D.C. The real estate owned generally falls into one of three
categories. The first is land with stone or sand and gravel deposits,
substantially all of which is leased to Florida Rock Industries, Inc. under
mining royalty agreements, whereby the Company is paid a percentage of the
revenues generated or annual minimums. The second is land and/or buildings
leased under rental agreements, and the third is land and/or buildings
which are being developed for future rental or held for future
appreciation.
Real estate revenues declined 5.2% from 1995 principally due to the sale
of timber and one-time royalty totaling approximately $1,092,000 in 1995.
The fiscal 1996 real estate revenues, excluding the sale of real estate,
were divided approximately 50% from mining and minimum royalties and 50%
from rental.
Excluding the one-time events in 1995, Real Estate revenues increased
8.3% due to the receipt of rental income for the full year of 1996 from
properties which were leased during 1995, increases on releasing existing
space and from increased mining royalties.
Real estate development expenses have increased in 1996 and will continue
at higher levels during the development of the Company's two major new
projects.
The status of FRP Development Corp.'s projects at November 1, 1996 is as
follows:
8230 Preston Court, 72,182 square feet of flexible warehouse/office
space, is 100% leased.
810 Oregon Avenue, 113,280 square feet of flexible warehouse/office
space, is 100% leased.
812 Oregon Avenue, 82,335 square feet of flexible warehouse/office space,
is 96% leased.
Rossville Business Center, a two building complex consisting of 187,517
square feet of flexible warehouse/office space, is 100% leased.
TESSCO Center, a 28,533 square foot suburban office building, is 100%
leased.
8240 Preston Court, a 90,375 square foot flexible warehouse/office
building, is under construction with completion scheduled for 1997.
Lakeside Business Park is a 134 acre site capable of supporting 1,400,000
square feet of warehouse/office space. Engineering and site preparation
are under way. A 108,000 square foot speculative warehouse is expected to
be started in the first quarter of 1997.
The Group will focus on the development of the property at Lakeside and
the new building at Preston Court.
The Company's plan is to continue to gradually build a portfolio of
successful rental properties.<PAGE>
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
1996 1995(a) 1994 1993(b) 1992
Summary of Operations
Revenues $ 64,403 $ 58,273 $54,011 $46,599 $42,995
Gross profit(c) $ 14,615 $ 15,132 $12,255 $ 9,773 $ 9,669
Operating profit $ 9,017 $ 9,440 $ 7,264 $ 5,313 $ 5,694
Interest expense $ 2,234 $ 1,933 $ 1,105 $ 897 $ 1,059
Income before income taxes $ 6,827 $ 7,591 $ 6,219 $ 4,432 $ 4,668
Provision for income taxes $ 2,662 $ 2,961 $ 2,425 $ 1,735 $ 1,821
Net income $ 4,165 $ 4,630 $ 3,794 $ 2,697 $ 2,847
Per Common Share
Net income $ 1.13 $ 1.21 $ .94 $ .65 $ .67
Stockholders' equity $ 17.72 $ 16.74 $ 15.64 $ 14.75 $ 14.05
Financial Summary
Current assets $ 8,003 $ 8,495 $ 7,703 $ 7,247 $ 6,331
Current liabilities $ 9,595 $ 7,11 7 $10,234 $ 8,198 $ 7,133
Working capital (deficit) ($ 1,592) $ 1,378 ($ 2,531) ($ 951) ($ 802)
Property, plant and
equipment, net $ 90,058 $ 83,319 $74,697 $72,698 $71,129
Total assets $107,036 $101,357 $91,769 $89,026 $86,417
Long-term debt $ 26,170 $ 25,503 $16,108 $15,697 $15,282
Stockholders' equity $ 61,894 $ 61,622 $59,437 $59,972 $58,598
Other Data
Return on ending
stockholders' equity 6.7% 7.5% 6.4% 4.5% 4.9%
Return on capital employed 5.7% 6.2% 5.4% 4.0% 4.4%
Net cash flow provided from
operating activities $ 14,681 $ 10,131 $10,005 $ 8,452 $8,307
Additions to property,
plant and equipment $ 15,970 $ 15,805 $ 9,165 $ 7,450 $7,380
Depreciation, depletion
and amortization $ 7,667 $ 7,304 $ 6,945 $ 6,196 $5,531
Weighted average number
of shares 3,683 3,832 4,045 4,176 4,234
Number of employees at
end of year 665 644 556 527 480
Stockholders of record 913 939 975 1,032 1,047
(a) Effective October 1, 1994, the Company changed depreciation lives on
revenue equipment which resulted in an increase in gross profit of
$842,000 and net income of $525,000 ($.14 per share) for fiscal 1995.
(b) Effective October 1, 1992, the Company changed its method of accounting
for employee postretirement benefits in accordance with SFAS 106. The
effect on fiscal 1993 was to reduce net income by $252,000 ($.06 per share).
(c) Fiscal 1996, 1995 and 1994 include gains on the sale of
real estate of $93,000, $79,000 and $1,167,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
First Second Third Fourth
1996 1995 1996 1995 1996 1995 1996 1995
Revenues $15,321 $13,476 $15,949 $14,516 $16,706 $15,449 $16,427 $14,832
Gross
profit $ 3,848 $ 2,955 $ 3,366 $ 4,139 $ 4,050 $ 4,082 $ 3,351 $ 3,956
Operating
profit $ 2,391 $ 1,609 $ 1,858 $ 2,712 $ 2,569 $ 2,675 $ 2,199 $ 2,444
Income
before
income
taxes $ 1,852 $ 1,259 $ 1,304 $ 2,285 $ 1,992 $ 2,136 $ 1,679 $ 1,911
Net
income $ 1,130 $ 768 $ 795 $ 1,394 $ 1,215 $ 1,303 $ 1,025 $ 1,165
Per common
share:
Net income $.30 $.20 $.21 $.36 $ .33 $.34 $ .29 $.31
Market price:
High $22.50 $18.31 $22.00 $23.00 $ 21.50 $22.00 $ 22.00 $ 22.50
Low $17.00 $17.00 $19.69 $17.75 $ 19.75 $21.00 $ 20.50 $ 20.50
<PAGE>
Management Analysis
Operating Results. The Company's operations are influenced by a number of
external and internal factors. External factors include levels of economic
and industrial activity in the Southeast, petroleum product usage in the
Southeast, fuel costs, construction activity in certain Georgia and Florida
markets, Florida Rock Industries, Inc.'s sales from the Company's mining
properties, interest rates and demand for commercial warehouse space in the
Baltimore/Washington area. Internal factors include revenue mix, capacity
utilization, safety record, other operating factors, and construction costs
of new projects.
In fiscal 1996 and 1995, revenues increased 10% and 8% respectively. In
the Transportation segment revenue and miles hauled were up 13% in 1996 and
8% in 1995. In fiscal 1995 the Real Estate segment had revenue from timber
sales and a one-time royalty totaling $1,092,000 and in 1994 timber sales of
$187,000. Absent these infrequent and one-time revenues, the Real Estate
segment's revenues, exclusive of real estate sales, would have increased 8%
in 1996 and 10% in 1995. Such increases were principally due to increases in
rents and royalties.
The estimated contribution to Transportation revenues by principal markets
follows:
1996 1995 1994 1993 1992
Petroleum 68% 66% 45% 51% 59%
Construction 20% 19% 26% 13% 9%
Chemical 7% 10% 15% 12% 10%
Other 5% 5% 14% 24% 22%
In fiscal 1996, gross profit decreased $517,000 from 1995 and gross profit
margin decreased to 23% from 26%. The Transportation segment's gross profit
increased $366,000, principally due to higher revenues, while the gross
profit margin decreased to 17% from 19% principally due to an increase in
risk insurance cost of approximately $1,760,000 over 1995. In the Real
Estate segment gross profit decreased $897,000 in fiscal 1996 from last year.
The decrease was principally due to the timber sales and one-time royalty
which produced a gross profit in 1995 of approximately $863,000 and the
write-off in 1996 of $349,000 in connection with the abandonment of certain
development costs.
In fiscal 1995 gross profit increased $2,877,000 from 1994 and gross
profit margin increased to 26% from 23%. The Transportation segment's gross
profit and gross profit margin both increased from fiscal 1994 due to higher
revenues, closing unprofitable terminals, the change in depreciation lives on
revenue equipment (which increased gross profit in 1995 by $842,000),
improved efficiencies and an improved safety record resulting in lower risk
insurance costs of $933,000. In the Real Estate segment, gross profit and
gross profit margin increased due principally to the lease-up of the two
Rossville buildings and increased mining royalties and timber sales,
including those discussed above.
Selling, general and administrative expense in 1996 decreased 2% from 1995
and increased 14% from 1994 to 1995. The 1996 decrease was due to a
reduction of $206,000 in profit sharing and incentive compensation. The 1995
increase was due to increased revenues and to an increase of $347,000 in
profit sharing and management incentive compensation.
In fiscal 1996 interest expense increased 16% over 1995 due to increased
borrowings which was partially offset by a lower average interest rate.
Interest expense in 1995 increased 75% over 1994 due to higher interest rates
from mortgage debt replacing short-term debt, increased borrowings and an
increase in short-term rates.
Liquidity and Capital Resources. The following key financial measurements
reflect the Company's sound financial position and capital resources at
September 30 (dollars in thousands):
1996 1995 1994
Cash $ 313 $ 392 $ 821
Total debt $30,003 $27,650 $20,376
Debt as a percent of
capital employed 31% 29% 25%
Unused lines of credit $35,500 $38,200 $28,000
During 1996, net cash flows from operating activities of $14,681,000 more
than covered the $13,220,000 net cash used in investing activities. The
excess cash from operating activities plus additional borrowing was used to
buy back $3,915,000 of the Company's common stock.
The Company is financially postured to be able to take advantage of
external and internal growth opportunities in real estate development and in
the motor carrier industry that may occur in the Southeast.
The Company has a $34,000,000 revolving credit agreement of which
$19,000,000 was available at fiscal year end. In addition, it has short-term
lines of credit under which it may borrow up to $20,000,000 of which
$16,500,000 was available at September 30, 1996.
The Company currently expects its fiscal 1997 capital expenditures to be
approximately $15,980,000 versus depreciation and depletion expense of
$8,440,000. The expenditures are expected to be financed from the cash flow
from operating activities and the $19,000,000 unused and available under its
revolving credit agreement.
The Company believes it will be able to renegotiate its present credit
facilities or obtain similar replacement credit facilities when necessary in
the future.
Inflation. Historically, the Company has been able to recover inflationary
cost increases through increased freight rates. It is expected that over
time justifiable and necessary rate increases will be obtained in the future,
although deregulation of intrastate trucking rates has made this more
difficult in the past two years. Substantially all of the Company's royalty
agreements are based on a percentage of the sales price. Minimum royalties
and substantially all lease agreements provide various escalation provisions.
<PAGE>
Consolidated Statement of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
1996 1995 1994
Revenues:
Transportation $ 55,801 $49,198 $45,316
Real Estate 8,434 8,877 7,247
Sale of real estate 168 198 1,448
Total revenues (including revenue from
related parties of $6,544; $5,869 and $6,834) 64,403 58,273 54,011
Cost of operations:
Transportation 46,153 39,916 38,528
Real estate 3,560 3,106 2,947
Cost of real estate sold 75 119 281
Gross profit 14,615 15,132 12,255
Selling, general and administrative expense
(including expenses paid to related party
of $1,383; $1,312 and $1,208) 5,598 5,692 4,991
Operating profit 9,017 9,440 7,264
Interest expense (2,234) (1,933) (1,105)
Interest income 34 49 23
Other income, net 10 35 37
Income before income taxes 6,827 7,591 6,219
Provision for income taxes 2,662 2,961 2,425
Net income $ 4,165 $ 4,630 $ 3,794
Earnings per common share $1.13 $1.21 $.94
Weighted average number of shares used in
computing earnings per common share 3,683 3,832 4,045
See accompanying notes.<PAGE>
Consolidated Balance Sheet September 30
(Dollars in thousands)
1996 1995
Assets
Current assets:
Cash and cash equivalents $ 313 $ 392
Accounts receivable, less allowance for doubtful
accounts of $234 ($218 in 1995) (including
related party of $376 and $300) 5,300 5,586
Inventory of parts and supplies 502 501
Prepaid expenses and other 1,888 2,016
Total current assets 8,003 8,495
Other assets:
Real estate held for investment, at cost 5,791 6,065
Goodwill, at cost less amortization of $282
($242 in 1995) 1,328 1,368
Other 1,856 2,110
Total other assets 8,975 9,543
Property, plant and equipment, at cost:
Land 52,888 51,161
Buildings 25,611 24,724
Plant and equipment 54,584 51,289
133,083 127,174
Less accumulated depreciation and depletion 43,025 43,855
Net property, plant and equipment 90,058 83,319
$107,036 $101,357
Liabilities and Stockholders' Equity
Current liabilities:
Short-term note payable to bank $ 3,500 $ 1,800
Accounts payable (including related party of
$93 and $136) 1,779 1,551
Federal and state income taxes 342 -
Accrued liabilities:
Payroll and benefits 1,047 1,108
Taxes 587 759
Interest 106 128
Insurance reserves 1,901 1,055
Other - 369
Long-term debt due within one year 333 347
Total current liabilities 9,595 7,117
Long-term debt 26,170 25,503
Deferred income taxes 6,240 4,220
Accrued insurance reserves 2,705 2,500
Other liabilities 432 395
Commitments and contingent liabilities (Notes 10 and 11)
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized, 3,492,186
shares issued (3,681,594 in 1995) 349 368
Capital in excess of par value 19,748 23,622
Retained earnings 41,797 37,632
Total stockholders' equity 61,894 61,622
$107.036 $101,357
See accompanying notes.<PAGE>
Consolidated Statement of Cash Flows Years ended September 30
(Dollars in thousands)
1996 1995 1994
Cash flows from operating activities:
Net income $ 4,165 $ 4,630 $ 3,794
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 7,667 7,304 6,945
Net changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 268 (1,192) (735)
(Increase) decrease in inventory of parts
and supplies (1) 136 87
(Increase) decrease in prepaid expenses 157 (191) (129)
Increase (decrease) in accounts payable and
accrued liabilities 1,161 (1,001) 291
Increase in deferred income taxes 1,622 1,717 367
Net change in insurance reserves and other
liabilities 242 (350) 833
Gain on sale of real estate, plant and
equipment (550) (749) (1,511)
Other, net (50) (173) 63
Net cash provided by operating activities 14,681 10,131 10,005
Cash flows from investing activities:
Purchase of property, plant and equipment (14,070) (15,516) (8,745)
Purchase of real estate held for investment (32) (43) -
Additions to other assets (130) (525) (663)
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 1,012 705 2,359
Net cash used in investing activities (13,220) (15,379) (7,049)
Cash flows from financing activities:
Proceeds from long-term debt 3,000 10,750 11,070
Net increase (decrease) in short-term debt 1,700 (2,200) 1,900
Repayment of long-term debt (2,347) (1,277) (11,107)
Exercise of employee stock options 22 22 66
Repurchase of Company stock (3,915) (2,476) (4,418)
Net cash provided by (used in) financing
activities (1,540) 4,819 (2,489)
Net increase (decrease) in cash and cash equivalents (79) (429) 467
Cash and cash equivalents at beginning of year 392 821 354
Cash and cash equivalents at end of year $ 313 $ 392 $ 821
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense, net of amount capitalized $ 2,257 $ 1,882 $ 1,123
Income taxes (received) ($ 216) $ 3,373 $ 1,354
Noncash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ 1,900 $ 526 $ 253
Issuing accounts payable - $ 239 $ 167
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with maturities of three months or less at time of
purchase to be cash equivalents.
See accompanying notes.<PAGE>
Consolidated Statement of Stockholders' Equity Years ended September 30
(Dollars in thousands)
Capital in
Common Stock Excess of Retained
Shares Amount Par Value Earnings
Balance at October 1, 1993 4,066,297 $407 $30,357 $29,208
Shares purchased and canceled
(including purchases from
affiliates of $232
(17,106 shares)) (271,578) (27) (4,391)
Compensation in the form of
stock options 23
Exercise of stock options 6,000 66
Net income 3,794
Balance at September 30, 1994 3,800,719 380 26,055 33,002
Shares purchased and canceled (121,125) (12) (2,464)
Compensation in the form of stock
options 9
Exercise of stock options 2,000 22
Net income 4,630
Balance at September 30, 1995 3,681,594 368 23,622 37,632
Shares purchased and canceled (191,408) (19) (3,896)
Exercise of stock options 2,000 22
Net income 4,165
Balance at September 30, 1996 3,492,186 $349 $19,748 $41,797
See accompanying notes.<PAGE>
Notes to Consolidated Financial Statements
1. Accounting polices. CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly owned. All significant intercompany transactions have been eliminated
in consolidation.
INVENTORY - Inventory of parts and supplies is valued at the lower of cost
(first-in, first-out) or market.
REVENUE AND EXPENSE RECOGNITION - Substantially all transportation revenue
is recognized when shipment is complete and transportation expenses are
recognized as incurred.
Real estate rental revenue and mining royalties are generally recognized
when due under the leases. The straight-line method is used to recognize
rental revenues under leases which provide for varying rents over their term.
DEPRECIATION, DEPLETION AND AMORTIZATION - Provision for depreciation of
plant and equipment is computed using the straight-line method based on the
following estimated useful lives:
Years
Buildings and improvements 8-32
Revenue equipment 5-10
Other equipment 3- 5
Furniture and fixtures 5-10
Depletion of sand and stone deposits is computed on the basis of units of
production in relation to estimated reserves. Goodwill is amortized over
forty years using the straight-line method.
After a review of actual revenue equipment lives versus the lives used for
depreciation purposes, effective October 1, 1994, for financial reporting
purposes, the Company extended the estimated useful lives of its tractors
from 5 to 7 years and substantially all trailers from 5-7 years to 10 years
and reduced the salvage values on such equipment. The effect for fiscal 1995
was to increase gross profit by $842,000 and net income by $525,000 ($.14 per
share).
RISK INSURANCE - The Company has a $250,000 to $500,000 self-insured
retention per occurrence in connection with its workers' compensation,
automobile liability, and general liability insurance programs ("Risk
Insurance"). The Company accrues monthly the estimated cost in connection
with its portion of its Risk Insurance losses. Claims paid by the Company
are charged against the reserve. Additionally, the Company maintains a
reserve for incurred but not reported claims based on historical analysis of
such claims.
INCOME TAXES - The Company uses an asset and liability approach to
financial reporting for income taxes. Under this method, deferred tax assets
and liabilities are recognized based on differences between financial
statement and tax bases of assets and liabilities using presently enacted tax
rates. Deferred income taxes result from temporary differences between pre-tax
income reported in the financial statements and taxable income.
EARNINGS PER COMMON SHARE - Earnings per common share are based on the
weighted average number of common shares outstanding and common stock
equivalents, where applicable.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
ENVIRONMENTAL - Environmental expenditures that benefit future periods are
capitalized. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimation of such liabilities is extremely complex.
Some factors that must be assessed are engineering estimates, continually
evolving governmental laws and standards, and potential involvement of other
potentially responsible parties.
FUTURE ACCOUNTING REQUIREMENTS - In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123 establishes
a fair value based method of accounting for stock-based employee compensation
plans; however, it also allows companies to continue to measure cost for such
plans using the method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25).
Companies that elect to continue with the accounting under APB 25 must
provide pro forma disclosures of net income and earnings per share, as if
SFAS 123 had been applied. The accounting and disclosure requirements of
SFAS 123 are effective for the Company for transactions entered into in
fiscal 1997. Pro forma disclosures required if the Company elects to
continue using APB 25 must include the effects of all awards granted in
fiscal 1996, but should be presented for fiscal years subsequent thereto for
fiscal 1996 financial statements presented for comparative purposes. The
Company will continue to measure cost for such plans using the method of
accounting prescribed by APB 25.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS 121).
SFAS 121, which is effective for years beginning after December 15, 1995,
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles
to be disposed of. Impairment is assessed by comparing the book value of
such assets to the estimated undiscounted future operating cash flows
expected to result from the use of the asset and its final disposition. If
the sum of the expected future cash flow is less than the carrying amount of
the asset, an impairment loss is recognized based on the fair value of the
asset. The Company has not completed its evaluation of the impact of
adoption of SFAS 121.
2. Transactions with related parties. As of September 30, 1996 eight of the
Company's directors were also directors of Florida Rock Industries, Inc.
("FRI"). Such directors own approximately 31% of the stock of FRI and 40% of
the stock of the Company. Accordingly, FRI and the Company are considered
related parties.
The Company, through its transportation subsidiaries, hauls construction
aggregates for FRI and customers of FRI. It also hauls diesel fuel and other
supplies for FRI. Charges for these services are based on prevailing market
prices. Other wholly owned subsidiaries lease certain construction
aggregates mining and other properties and provide construction management
services to FRI.
A summary of revenues derived from FRI follows (in thousands):
1996 1995 1994
Transportation $1,100 $ 759 $1,320
Real estate 5,444 5,110 4,709
$6,544 $5,869 $6,029
Under an agreement extending until September 30, 1998, FRI furnishes the
Company with certain management and related services, including financial,
tax, legal, administrative, accounting and computer. Charges for such
services were $1,383,000 in 1996, $1,312,000 in 1995 and $1,208,000 in
1994.
John R. Mabbett III, an officer and director of the Company, and two of
his family members (the "Mabbetts") sold on October 2, 1989 to a subsidiary
of the Company, all of the stock of J. R. Mabbett & Son, Inc. and various
real estate parcels used in the operation of a trucking business in Georgia.
At the same time, each of the Mabbetts entered into a non-competition
agreement providing for quarterly payments to each of $36,733 through
September 30, 1994. Separately, one family member entered into a consulting
agreement providing for consultation payments at an annual rate of $84,000
until September 30, 1994; and John R. Mabbett III and another family member
each entered into employment agreements providing for annual compensation of
$174,000 and $139,000, respectively, until September 30, 1994.
Messrs. Edward L. Baker and Albert D. Ernest, Jr. are directors of the
Company and directors of Regency Realty Corporation. Mr. Martin E. Stein,
Jr., who is President and Chief Executive Officer of Regency Realty
Corporation, is a director of the Company. Regency Realty Corporation
purchased on June 30, 1994 for $805,000 from the Company approximately three
acres adjacent to a shopping center which Regency Realty Corporation owned in
Clay County, Florida. The Board of Directors of the Company, without Mr.
Stein's participation, approved the sale.
On October 9, 1996 a wholly owned subsidiary of the Company purchased
134 acres of land from a subsidiary of Florida Rock Industries, Inc. for
$500,000 and the assumption of certain reclamation costs and benefits
relating to the site. An appraisal of the property was obtained. The
transaction was approved by the Company's Board of Directors with those
directors who are also directors of Florida Rock Industries, Inc. abstaining.
3. Lines of credit and debt. Long-term debt at September 30 is summarized as
follows (in thousands):
1996 1995
Revolving credit (unsecured) $15,000 $14,000
8% to 9.5% mortgage notes payable
in installments through 2015 11,455 11,724
5% unsecured notes payable in 1997 48 126
26,503 25,850
Less portion due within one year 333 347
$26,170 $25,503
The aggregate amount of principal payments, excluding the revolving
credit, due subsequent to September 30, 1996 is: 1997 - $333,000; 1998 -
$315,000; 1999 - $343,000; 2000 - $373,000; 2001 - $405,000; 2002 and
subsequent years - $9,734,000.
The Company has a revolving credit agreement under which it may borrow
from four banks up to $34,000,000 on term loans payable 25% on November 15,
1999, 25% on November 15, 2000 and the balance on November 15, 2001.
Interest is payable at SunTrust Bank, Central Florida, N.A.'s prime rate
until November 15, 1998, and at 1/4 of 1% above such prime rate thereafter.
Alternative interest rates based on the London interbank rate and/or the
reserve-adjusted certificate of deposit rate are available at the Company's
option. A commitment fee of 1/4 of 1% is payable on the unused amount of the
commitment until November 15, 1998.
The revolving credit agreement contains restrictive covenants, including
limitations on paying cash dividends. As of September 30, 1996 $8,883,000 of
consolidated retained earnings was not restricted as to payment of cash
dividends.
The mortgage notes payable are collateralized by real estate having a
carrying value of approximately $14,471,000 at September 30, 1996.
Certain properties having a carrying value at September 30, 1996 of
$1,819,000 were encumbered by industrial revenue bonds which 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.
The Company also has short-term lines of credit totaling $20,000,000
from three banks. Under these lines the Company can borrow funds for a
period from one to ninety days. There is no commitment fee and the banks can
terminate the lines at any time. The interest rate is determined at the time
of each borrowing. The weighted average interest rates of such borrowings on
September 30, 1996 and 1995 were 6.4% and 7.0%, respectively.
During fiscal 1996 and 1995 the Company capitalized interest cost of
$17,000 and $53,000, respectively.
4. Leases. At September 30, 1996, the total carrying value of property owned
by the Company which is leased or held for lease to others is summarized as
follows (in thousands):
Construction aggregates property $41,853
Commercial property 25,904
Land and other property 9,649
77,406
Less accumulated depreciation and depletion 16,865
$60,541
The minimum future rentals on noncancelable operating leases as of
September 30, 1996 are as follows: 1997 - $4,429,000; 1998 - $4,105,000;
1999 - $2,784,000; 2000 - $2,470,000; 2001 - $1,585,000 and 2002 and
subsequent years $9,972,000.
5. Stock option plan. The Company has a Stock Option Plan under which
options for shares of common stock may be granted to directors, officers and
key employees.
Option transactions for the fiscal years ended September 30 are
summarized as follows:
1996 1995 1994
Shares under option:
Outstanding at beginning of year 247,000 159,000 165,000
Issued - 90,000 -
Exercised ($11.00 per share) (2,000) (2,000) (6,000)
Outstanding at end of year 245,000 247,000 159,000
Aggregate option price $3,131,000 $3,153,000 $1,585,000
Shares available for future grant 85,000 85,000 75,000
Shares exercisable at end of year 184,300 161,000 147,000
Prices per share of common stock under options outstanding at September
30, 1996 range from $8.875 to $17.75. Options expire from 1996 to 2004. At
September 30, 1996 options for 184,300 shares are exercisable at any time
prior to their expiration and options for 60,700 shares become exercisable in
cumulative installments of 20% to 33% each year after a one year waiting
period from the date of grant. Of the options outstanding at September 30,
1996, options for 10,000 shares and 35,000 shares were issued at 72% and 74%,
respectively, of the fair market value of the shares on the dates of grant;
the balance was issued at 100%. The difference between the fair market value
of the Company's common stock and the option price on the date of grant is
recognized as compensation over the period from the date of grant until the
option becomes exercisable. When the option is exercised the proceeds are
credited to stockholders' equity.
6. Income taxes. The provision for income taxes for fiscal years ended
September 30 consisted of the following (in thousands):
1996 1995 1994
Current:
Federal $ 892 $1,063 $1,756
State 148 181 302
1,040 1,244 2,058
Deferred 1,622 1,717 367
Total $2,662 $2,961 $2,425
A reconciliation between the amount of tax shown above and the amount
computed at the statutory Federal income tax rate follows (in thousands):
1996 1995 1994
Amount computed at statutory
Federal rate $2,321 $2,581 $2,114
State income taxes (net of Federal
income tax benefit) 255 283 229
Other, net 86 97 82
Provision for income taxes $2,662 $2,961 $2,425
The types of temporary differences and their related tax effects that give
rise to deferred tax assets and deferred tax liabilities at September 30, are
presented below:
1996 1995
Deferred tax liabilities:
Basis difference in property,
plant and equipment $6,776 $4,859
Depletion 678 676
Prepaid expenses 737 793
Gross deferred tax liabilities 8,191 6,328
Deferred tax assets:
Insurance reserves 1,479 1,288
Accrued liabilities 4 103
Other, net 497 348
Gross deferred tax assets 1,980 1,739
Valuation allowance for deferred
tax assets - -
Net deferred tax assets 1,980 1,739
Net deferred tax liability $6,211 $4,589
7. Employee benefits. The Company and certain subsidiaries have a
savings/profit sharing plan for the benefit of qualified employees. The
savings feature of the plan incorporates the provisions of Section 401(k) of
the Internal Revenue Code. Under the savings feature of the plan, an
eligible employee may elect to save a portion (within limits) of their
compensation on a tax deferred basis. The Company contributes to a
participant's account an amount equal to 50% (with certain limits) of the
participant's contribution. Additionally, the Company may make an annual
contribution to the plan as determined by the Board of Directors, with
certain limitations. The plan provides for deferred vesting with benefits
payable upon retirement or earlier termination of employment. The Company's
cost was $419,000 in 1996, $464,000 in 1995 and $368,000 in 1994.
The Company provides certain health benefits for retired employees.
Employees may become eligible for those benefits if they were employed by the
Company prior to December 10, 1992, meet the service requirements and reach
retirement age while working for the Company. The plan is contributory and
unfunded. The Company accrues the estimated cost of retiree health benefits
over the years that the employees render service.
The following table sets forth the plan's status reconciled with the
accrued postretirement benefit cost included in the Company's consolidated
balance sheet at September 30 (in thousands):
1996 1995 1994
Accumulated postretirement benefit
obligation:
Retirees $ 133 $ 158 $ 187
Fully eligible active participants 62 99 96
Other active participants 307 293 200
Total APBO 502 550 483
Unrecognized net loss from past
experience different from that
assumed and from changes in
assumptions (68) (182) (216)
Unrecognized prior service cost 133 193 252
Accrued postretirement benefit cost $ 567 $ 561 $ 519
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
1996 1995 1994
Service cost of benefits earned during
the period $ 39 $ 49 $ 87
Interest cost on APBO 32 36 63
Net amortization and deferral (55) (40)
(40)
Amortization of transition obligation
over 20 years - - 20
Net periodic postretirement benefit
cost $ 16 $ 45 $ 130
The discount rate used in determining the Net Periodic Postretirement
Benefit Cost and the APBO was 7.25% at September 30, 1996 and 1995 and 8% at
September 30, 1994.
Effective January 1, 1994 the Company's share of retiree health care was
capped at the Company's 1993 cost level.
8. Industry segments. The Company has two major business segments:
transportation and real estate, both operated principally within the
Mid-Atlantic and Southeastern United States. The transportation segment is
operated through two wholly owned subsidiaries which are engaged in the
hauling of liquid and dry commodities by motor carrier. The real estate
segment is operated through wholly owned subsidiaries that own real estate of
which a substantial portion is under mining royalty agreements or leased.
They also hold certain other real estate for investment and are developing
commercial and industrial properties. The Company grants credit to customers
who are in the petroleum, chemical, convenience store, construction materials
and agricultural industries.
Financial data for industry segments is as follows (in thousands):
1996 1995 1994
Revenues:
Transportation (a) $55,801 $49,198 $46,121
Real estate (b) 8,602 9,075 7,890
$64,403 $58,273 $54,011
Segment profit:
Transportation (a) $ 4,947 $ 4,525 $ 3,240
Real estate (b) 4,908 5,759 4,819
9,855 10,284 8,059
Corporate expenses (794) (760) (735)
Interest expense (2,234) (1,933) (1,105)
Income before income taxes $ 6,827 $ 7,591 $ 6,219
Capital expenditures:
Transportation $ 13,174 $ 12,621 $ 8,349
Real estate 2,782 3,162 547
$ 15,956 $ 15,783 $ 8,896
Depreciation, depletion and
amortization:
Transportation $ 5,558 $ 5,066 $ 5,208
Real estate 2,065 2,195 1,709
$ 7,623 $ 7,261 $ 6,917
Identifiable assets at September 30:
Transportation $ 41,489 $ 35,116 $27,827
Real estate 64,972 64,837 63,518
General corporate 575 1,404 424
$107,036 $101,357 $91,769
(a) Fiscal 1994 includes revenue of $805 and segment profit of $674 from the
sale of real estate.
(b) Fiscal 1996, 1995 and 1994 includes revenue of $168, $198 and $643 and
segment profit of $93, $79 and $493, respectively, from the sale of real
estate.
General corporate assets consist principally of cash, receivables,
investments and equipment.
9. Fair values of financial instruments. At September 30, 1996, the carrying
amount reported in the balance sheet for cash and cash equivalents, short-term
notes payable to bank and revolving credit approximate their fair value.
The fair values of the Company's other long-term debt are estimated using
discounted cash flow analysis, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. At September
30, 1996 the carrying amount and fair value of such other long-term debt was
$11,503,000 and $11,025,000, respectively. At September 30, 1995 the
carrying amount and fair value of such other long-term debt was $11,850,000
and $11,739,000, respectively.
10. 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 materially adverse effect on the Company's
consolidated financial statements.
One of the Company's subsidiaries is a potentially responsible party in
connection with a Superfund Site. It is the policy of the Company to accrue
environmental contamination cleanup costs when it is probable that a
liability has been incurred and the amount of such liability is reasonably
estimable. The Company has made an estimate of its likely costs in
connection with this site and a liability has been recorded. Such liability
is not material to the financial statements of the Company.
11. Commitments. At September 30, 1996, the Company had placed orders and
was committed to purchase tractors and trailers costing approximately
$3,776,000 and had entered into various contracts to purchase and develop
real estate with remaining commitments totaling $2,118,000.<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders
FRP Properties, Inc.
We have audited the accompanying consolidated balance sheets of FRP
Properties, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of FRP Properties, Inc. and
subsidiaries at September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 3, 1996
<PAGE>
Directors and Officers
Directors
John E. Anderson (1)
President and Chief Executive
Officer of the Company
Edward L. Baker (1)
Chairman of the Board of the Company
John D. Baker II (1)
Executive Vice President and
Treasurer of the Company
Thompson S. Baker (1)
Chairman Emeritus of the Company
Thompson S. Baker II
Vice President of
Florida Rock Industries, Inc.
Ish Copley
President of SunBelt Transport, Inc.,
the Company's flatbed
trucking operations
David H. deVilliers, Jr.
Vice President of the Company and
President of FRP Development Corp.,
the Company's northern
real estate operations
Albert D. Ernest, Jr. (2)(3)
President of Albert Ernest Enterprises
Luke E. Fichthorn III (2)
Private Investment Banker,
Twain Associates and Chairman of the
Board and Chief Executive Officer of
Bairnco Corporation
Francis X. Knott (2)
Chief Executive Officer of
Partners Management Company
Radford D. Lovett (2)(3)
Chairman of the Board of
Commodores Point Terminal Corp.
John R. Mabbett III
Vice President and Secretary
of the Company and President of
Florida Rock & Tank Lines, Inc.,
the Company's tank and dump
trucking operations
Robert H. Paul III (3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
Martin E. Stein, Jr.
President and Chief Executive Officer of
Regency Realty Corporation
James H. Winston (2)
President of LPMC of Jax, Inc.
and President of
Omega Insurance Company
________________
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Officers
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer
John D. Baker II
Executive Vice President and Treasurer
John R. Mabbett III
Vice President and Secretary
President, Florida Rock & Tank Lines, Inc.
David H. deVilliers, Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
Ruggles B. Carlson
Assistant Treasurer and
Assistant Secretary
FRP PROPERTIES, Inc.
General Office: 155 East 21st Street
Jacksonville, Florida 32206
Telephone: (904) 355-1781
Annual Meeting
Shareholders are cordially invited to attend the Annual Stockholders Meeting
which will be held at 2 p.m. local time, on Wednesday, February 5, 1997, at
the general offices of the Company, 155 East 21st Street, Jacksonville,
Florida.
Transfer Agent
First Union National Bank
of North Carolina
230 South Tryon Street, 11th Floor
Charlotte, NC 28288-1154
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Jacksonville, Florida
Independent Auditors
Deloitte & Touche LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: FRPP)
Form 10-K
Stockholders may receive without charge a copy of FRP Properties, Inc.'s
annual report to the Securities and Exchange Commission on Form 10-K by
writing to the Assistant Treasurer at P.O. Box 4667, Jacksonville, Florida
32201.
EXHIBIT (11)
FRP PROPERTIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Years Ended September 30
1996 1995 1994
Net income $4,165,000 $4,630,000 $3,794,000
Common shares:
Weighted average shares
outstanding during the period 3,587,894 3,742,190 3,976,952
Shares issuable under stock
options which are potentially
dilutive and affect primary
earnings per share 95,378 90,135 68,146
Maximum potential shares
includable in computation of
primary earnings per share 3,683,272 3,832,325 4,045,098
Additional shares issuable
under stock options which
are potentially dilutive
and affect fully diluted
earnings per share - 6,092 3,424
Maximum potential shares
included in computation of
fully diluted earnings per
share 3,683,272 3,838,417 4,048,522
Primary earnings per common share $1.13 $1.21 $.94
Fully diluted earnings
per common share (a) $1.13 $1,21 $.94
(a) Fully diluted earnings per share are not presented on the income statement
since the potential effect would have been less than 3% dilutive.
<PAGE>
Annual Report 1996
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
1996 1995 Change
Revenues $64,403 $58,273 +10.5
Gross profit $14,615 $15,132 - 3.4
Operating profit $ 9,017 $ 9,440 - 4.5
Income before income taxes $ 6,827 $ 7,591 -10.1
Net income $ 4,165 $ 4,630 -10.0
Per common share:
Net income $ 1.13 $1.21 - 6.6
Stockholders' equity $ 17.72 $16.74 + 5.9
<PAGE>
1996 CORPORATE HIGHLIGHTS
Revenues - up 10.5% to $64,403,000
Gross profit - down 3.4% to $14,615,000
Net income - down 10.0% to $4,165,000
Common shares repurchased - 191,408
Earnings per share - down 6.6% to $1.13
Unusually high risk insurance costs from several severe accidents in
Transportation
Modernization of Tank Lines fleet completed
Continued expansion of SunBelt and Tank Lines
Construction started on 90,375 square feet of flexible warehouse/office
rental space in Baltimore/Washington Industrial Park
Development started on the 134 acre Lakeside Business Park site with
potential of 1,400,000 square feet of warehouse/office space
99% of 483,847 square feet total warehouse/office rental space leased as of
September 30, 1996
$19,000,000 unused of revolving credit agreement at September 30, 1996
BUSINESS. The Company is engaged in the transportation and real estate
businesses. The Company's transportation business is conducted through two
wholly owned subsidiaries. Florida Rock & Tank Lines, Inc. is a
Southeastern transportation company concentrating in the hauling by motor
carrier of liquid and dry bulk commodities. SunBelt Transport, Inc. serves
the flatbed portion of the trucking industry in the Southeast, hauling
primarily construction materials. The Company's Real Estate Group, through
subsidiaries, acquires, constructs, leases, operates and manages land and
buildings to generate both current cash flows and long-term capital
appreciation.
OBJECTIVES. The Company's dual objectives are to build a major
Southeastern transportation company and a real estate company which
provides sound long-term growth, cash generation and asset appreciation.
Transportation
Internal growth is accomplished by a dedicated, competent and loyal
work force emphasizing superior service to customers in existing
markets, developing new transportation services for customers in
current market areas and opening new terminals in other market areas.
External growth, through the acquisition program, is designed to
broaden the Company's geographic market area and delivery services by
acquiring related businesses in the Southeast.
Real Estate
The growth plan is based on the acquisition, management and retention
of real estate assets and the development of industrial rental
properties to provide long-term positive cash flows and capital
appreciation.<PAGE>
To Our Stockholders
Fiscal 1996 was another year of excellent progress in major projects
and programs consistent with the short and long-term goals in both the
Transportation and Real Estate businesses. Profitability compared to
fiscal 1995 was affected by the gross profit from timber sales and one-time
royalty totaling $863,000 in 1995 and unusually high risk insurance expense
in 1996. Absent these events, the percentage increase in operating profit
would have been greater than the percentage increase in revenue and would
have reflected the continuing improvement in both the Transportation and
Real Estate businesses.
Results. Revenues for fiscal 1996 were $64,403,000, a 10.5% increase over
$58,273,000 in fiscal 1995. Transportation revenues increased 13.4% due to
continued growth and expansion in SunBelt Transport, Inc. and Florida Rock
& Tank Lines, Inc. Real estate revenues decreased 5.2% as the increase in
lease revenue was offset by the absence of timber sales and a one-time
mining royalty of approximately $1,092,000 that occurred in 1995.
Gross profit of $14,615,000 decreased 3.4% from $15,132,000 in 1995.
Gross profit increased in the Transportation Group as a result of the
volume increases and efficiency improvements which were partially offset by
higher insurance costs. Risk insurance costs in the Transportation Group
in fiscal 1996 were up $1,760,000 over 1995 which were in turn down by
$933,000 from 1994. The Group experienced several severe accidents in
fiscal 1996 which pushed their risk insurance costs higher than normal
while exceptionally favorable experience in fiscal 1995 resulted in costs
lower than normal. The Real Estate Group's gross profit was slightly above
plan but down from last year due to the one-time gains in 1995 of $863,000.
In fiscal 1996 Real Estate gross profit was also reduced by the write-off
of approximately $349,000 in connection with the abandonment of certain
development costs.
Selling, general and administrative expenses were down 1.6% in 1996 as
compared to 1995. A slight increase in expenses related to volume
increases was more than offset by reduced incentive compensation due to
achieving a lower profitability than planned in Transportation.
Interest expense increased $301,000 or 15.6% to $2,234,000 in 1996
from $1,933,000 last year. The increase was due to a $5,390,000 increase
in average debt outstanding in 1996 which was only partially offset by a
lower average interest rate.
Net income decreased 10.0% to $4,165,000 from $4,630,000 in fiscal
1995. Earnings per share decreased 6.6% to $1.13 from $1.21 last year.
The average number of common shares decreased 3.8% due to ongoing stock
repurchases made by the Company.
FRP Development Corp. The Company's real estate strategy of developing
high quality, flexible warehouse/office space in carefully selected markets
continued to be successful. During the year lease renewals with an average
term of 4.3 years were executed on 85,564 square feet of space and 16,851
square feet of space was leased to new tenants with an average lease term
of 4.2 years. 99% of the total 483,847 square feet of completed
warehouse/office space was leased at September 30, 1996.
The second of two buildings at Preston Court in the
Baltimore/Washington Industrial Park, comprised of 90,375 square feet of
flexible warehouse/office space, was started in the third quarter of fiscal
1996. It is expected to be completed in 1997.
Lakeside Business Park. The Company continued land development
activities on Lakeside Business Park, a 134 acre site in Harford County,
Maryland. Phase one of the roads and infrastructure is under construction.
It is anticipated that construction of 108,000 square feet of flexible
warehouse/office space will begin in the first quarter of fiscal 1997.
Capital Expenditures. Capital expenditures in 1996 for the transportation
business totaled $13,174,000 versus $12,621,000 in 1995. The 1996 capital
expenditures were approximately 81% for replacements and 19% for expansion
of business. Capital expenditures for the real estate segment in 1996
totaled $2,782,000 versus $3,162,000 in 1995. Total depreciation and
depletion for fiscal 1996 was $7,456,000 versus $7,010,000 in 1995.
The 1997 planned capital expenditures for the transportation business
total $7,986,000 for continued expansion of both the flatbed and tank truck
fleets and to maintain the modernized fleet. The capital budget for the
real estate segment is $7,994,000. Total depreciation expense is expected
to be approximately $8,440,000.
Financial Management. The Company's $34,000,000 revolving credit term loan
facility has a final maturity in 2001. $15,000,000 was utilized at the end
of 1996. The Company also has available $20,000,000 in short-term lines of
credit of which $3,500,000 was borrowed at the end of fiscal 1996.
Approximately $11,316,000 of the Company's debt is long-term fixed rate
mortgages secured by selected developed real estate projects. At year end
debt was 31% of capital employed and the Company was in excellent financial
condition.
Stock Repurchase. Pursuant to the Board's authorization, the Company
purchased 191,408 shares of its common stock during the year. Management
remains authorized to repurchase shares of the Company's common stock from
time to time as opportunities may arise.
Annual Meeting. At the Annual Stockholders' Meeting on February 7, 1996,
the stockholders elected Ish Copley, John D. Baker II, Luke E. Fichthorn
III and Robert H. Paul III to serve a four-year term expiring in the year
2000.
Outlook. Fiscal 1997 is expected to be another year of growth and
progress. The economy is expected to continue its slow growth.
The Transportation Group is expected to continue to expand in 1997
through the growth of its existing customers as well as entries into new
markets.
Industrial real estate markets served by FRP Development Corp. in the
Baltimore area remain in good condition. The Company's high quality
buildings combined with good market locations have enabled the properties
to remain substantially fully leased. The favorable long-term outlook is
conducive to market acceptance of the new Baltimore/Washington Industrial
Park building and the multi-year Lakeside Business Park project.
Management intends to continue its careful blend of prudence coupled
with an aggressive search for new opportunities to grow both the
transportation and real estate segments of the business. The Company plans
to build on its financial strength and sound market positions.
The Company expects 1997 to be a year of continued improvement.
The dedication and support of our employees will continue to be the
key to the Company's future success. We extend our sincere thanks to these
loyal men and women for their efforts.
Respectfully yours,
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer<PAGE>
Operating Review
Transportation. The Company's Transportation Group operates through two
wholly owned subsidiaries, Florida Rock & Tank Lines, Inc., engaged in
hauling liquid and dry bulk commodities primarily in tank trucks, and
SunBelt Transport, Inc., engaged in flatbed hauling.
The Group operates from terminals in Jacksonville, Ft. Myers, Orlando,
Panama City, Pensacola, Tampa and White Springs, Florida; Albany, Atlanta,
Augusta, Bainbridge, Columbus, Macon and Savannah, Georgia; Knoxville and
Nashville, Tennessee; and Birmingham, Alabama and has a central dispatch
office in Greenville, South Carolina. During fiscal 1996 the owned and
leased fleet increased from 495 to 498 trucks.
Revenues and miles hauled were up 13% due to both continued expansion of
flatbed hauling and new and growing accounts for Florida Rock & Tank Lines,
Inc.
Gross profit increased 3.9% from fiscal 1995 primarily due to higher
revenues and improved efficiencies. A series of unusually severe accidents
offset much of the improved profit.
During fiscal 1996, including replacements and growth of SunBelt, the
Group purchased 161 new tractors and 82 new trailers. The fiscal 1997
capital expenditure plan is based on maintaining the modernized tank fleet
and also expanding the tank truck and flatbed fleets. The fleet
modernization program has resulted in reduced maintenance expenses and
improved operating efficiencies.
In response to several severe accidents which occurred in fiscal 1996,
the Company has reinforced its ongoing safety and accident prevention
program as a significant means of safeguarding it employees and equipment.
Our dedication to safety occupies a vital niche in the Group's commitment
to total quality assurance in all of its operations.
For fiscal 1997 Transportation expects another year of growth in its
existing bulk hauling business resulting from the continued penetration of
targeted market segments. With the anticipated continuing modest economic
growth, the outlook is for increases in the hauling of petroleum, dry bulk
and chemical products. Flatbed hauling is expected to have another year of
good growth in 1997.
Real Estate. The Real Estate Group operates the Company's real estate
and property development activities through subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia, Maryland, and
Washington, D.C. The real estate owned generally falls into one of three
categories. The first is land with stone or sand and gravel deposits,
substantially all of which is leased to Florida Rock Industries, Inc. under
mining royalty agreements, whereby the Company is paid a percentage of the
revenues generated or annual minimums. The second is land and/or buildings
leased under rental agreements, and the third is land and/or buildings
which are being developed for future rental or held for future
appreciation.
Real estate revenues declined 5.2% from 1995 principally due to the sale
of timber and one-time royalty totaling approximately $1,092,000 in 1995.
The fiscal 1996 real estate revenues, excluding the sale of real estate,
were divided approximately 50% from mining and minimum royalties and 50%
from rental.
Excluding the one-time events in 1995, Real Estate revenues increased
8.3% due to the receipt of rental income for the full year of 1996 from
properties which were leased during 1995, increases on releasing existing
space and from increased mining royalties.
Real estate development expenses have increased in 1996 and will continue
at higher levels during the development of the Company's two major new
projects.
The status of FRP Development Corp.'s projects at November 1, 1996 is as
follows:
8230 Preston Court, 72,182 square feet of flexible warehouse/office
space, is 100% leased.
810 Oregon Avenue, 113,280 square feet of flexible warehouse/office
space, is 100% leased.
812 Oregon Avenue, 82,335 square feet of flexible warehouse/office space,
is 96% leased.
Rossville Business Center, a two building complex consisting of 187,517
square feet of flexible warehouse/office space, is 100% leased.
TESSCO Center, a 28,533 square foot suburban office building, is 100%
leased.
8240 Preston Court, a 90,375 square foot flexible warehouse/office
building, is under construction with completion scheduled for 1997.
Lakeside Business Park is a 134 acre site capable of supporting 1,400,000
square feet of warehouse/office space. Engineering and site preparation
are under way. A 108,000 square foot speculative warehouse is expected to
be started in the first quarter of 1997.
The Group will focus on the development of the property at Lakeside and
the new building at Preston Court.
The Company's plan is to continue to gradually build a portfolio of
successful rental properties.<PAGE>
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
1996 1995(a) 1994 1993(b) 1992
Summary of Operations
Revenues $ 64,403 $ 58,273 $54,011 $46,599 $42,995
Gross profit(c) $ 14,615 $ 15,132 $12,255 $ 9,773 $ 9,669
Operating profit $ 9,017 $ 9,440 $ 7,264 $ 5,313 $ 5,694
Interest expense $ 2,234 $ 1,933 $ 1,105 $ 897 $ 1,059
Income before income taxes $ 6,827 $ 7,591 $ 6,219 $ 4,432 $ 4,668
Provision for income taxes $ 2,662 $ 2,961 $ 2,425 $ 1,735 $ 1,821
Net income $ 4,165 $ 4,630 $ 3,794 $ 2,697 $ 2,847
Per Common Share
Net income $ 1.13 $ 1.21 $ .94 $ .65 $ .67
Stockholders' equity $ 17.72 $ 16.74 $ 15.64 $ 14.75 $ 14.05
Financial Summary
Current assets $ 8,003 $ 8,495 $ 7,703 $ 7,247 $ 6,331
Current liabilities $ 9,595 $ 7,11 7 $10,234 $ 8,198 $ 7,133
Working capital (deficit) ($ 1,592) $ 1,378 ($ 2,531) ($ 951) ($ 802)
Property, plant and
equipment, net $ 90,058 $ 83,319 $74,697 $72,698 $71,129
Total assets $107,036 $101,357 $91,769 $89,026 $86,417
Long-term debt $ 26,170 $ 25,503 $16,108 $15,697 $15,282
Stockholders' equity $ 61,894 $ 61,622 $59,437 $59,972 $58,598
Other Data
Return on ending
stockholders' equity 6.7% 7.5% 6.4% 4.5% 4.9%
Return on capital employed 5.7% 6.2% 5.4% 4.0% 4.4%
Net cash flow provided from
operating activities $ 14,681 $ 10,131 $10,005 $ 8,452 $8,307
Additions to property,
plant and equipment $ 15,970 $ 15,805 $ 9,165 $ 7,450 $7,380
Depreciation, depletion
and amortization $ 7,667 $ 7,304 $ 6,945 $ 6,196 $5,531
Weighted average number
of shares 3,683 3,832 4,045 4,176 4,234
Number of employees at
end of year 665 644 556 527 480
Stockholders of record 913 939 975 1,032 1,047
(a) Effective October 1, 1994, the Company changed depreciation lives on
revenue equipment which resulted in an increase in gross profit of
$842,000 and net income of $525,000 ($.14 per share) for fiscal 1995.
(b) Effective October 1, 1992, the Company changed its method of accounting
for employee postretirement benefits in accordance with SFAS 106. The
effect on fiscal 1993 was to reduce net income by $252,000 ($.06 per share).
(c) Fiscal 1996, 1995 and 1994 include gains on the sale of
real estate of $93,000, $79,000 and $1,167,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
First Second Third Fourth
1996 1995 1996 1995 1996 1995 1996 1995
Revenues $15,321 $13,476 $15,949 $14,516 $16,706 $15,449 $16,427 $14,832
Gross
profit $ 3,848 $ 2,955 $ 3,366 $ 4,139 $ 4,050 $ 4,082 $ 3,351 $ 3,956
Operating
profit $ 2,391 $ 1,609 $ 1,858 $ 2,712 $ 2,569 $ 2,675 $ 2,199 $ 2,444
Income
before
income
taxes $ 1,852 $ 1,259 $ 1,304 $ 2,285 $ 1,992 $ 2,136 $ 1,679 $ 1,911
Net
income $ 1,130 $ 768 $ 795 $ 1,394 $ 1,215 $ 1,303 $ 1,025 $ 1,165
Per common
share:
Net income $.30 $.20 $.21 $.36 $ .33 $.34 $ .29 $.31
Market price:
High $22.50 $18.31 $22.00 $23.00 $ 21.50 $22.00 $ 22.00 $ 22.50
Low $17.00 $17.00 $19.69 $17.75 $ 19.75 $21.00 $ 20.50 $ 20.50
<PAGE>
Management Analysis
Operating Results. The Company's operations are influenced by a number of
external and internal factors. External factors include levels of economic
and industrial activity in the Southeast, petroleum product usage in the
Southeast, fuel costs, construction activity in certain Georgia and Florida
markets, Florida Rock Industries, Inc.'s sales from the Company's mining
properties, interest rates and demand for commercial warehouse space in the
Baltimore/Washington area. Internal factors include revenue mix, capacity
utilization, safety record, other operating factors, and construction costs
of new projects.
In fiscal 1996 and 1995, revenues increased 10% and 8% respectively. In
the Transportation segment revenue and miles hauled were up 13% in 1996 and
8% in 1995. In fiscal 1995 the Real Estate segment had revenue from timber
sales and a one-time royalty totaling $1,092,000 and in 1994 timber sales of
$187,000. Absent these infrequent and one-time revenues, the Real Estate
segment's revenues, exclusive of real estate sales, would have increased 8%
in 1996 and 10% in 1995. Such increases were principally due to increases in
rents and royalties.
The estimated contribution to Transportation revenues by principal markets
follows:
1996 1995 1994 1993 1992
Petroleum 68% 66% 45% 51% 59%
Construction 20% 19% 26% 13% 9%
Chemical 7% 10% 15% 12% 10%
Other 5% 5% 14% 24% 22%
In fiscal 1996, gross profit decreased $517,000 from 1995 and gross profit
margin decreased to 23% from 26%. The Transportation segment's gross profit
increased $366,000, principally due to higher revenues, while the gross
profit margin decreased to 17% from 19% principally due to an increase in
risk insurance cost of approximately $1,760,000 over 1995. In the Real
Estate segment gross profit decreased $897,000 in fiscal 1996 from last year.
The decrease was principally due to the timber sales and one-time royalty
which produced a gross profit in 1995 of approximately $863,000 and the
write-off in 1996 of $349,000 in connection with the abandonment of certain
development costs.
In fiscal 1995 gross profit increased $2,877,000 from 1994 and gross
profit margin increased to 26% from 23%. The Transportation segment's gross
profit and gross profit margin both increased from fiscal 1994 due to higher
revenues, closing unprofitable terminals, the change in depreciation lives on
revenue equipment (which increased gross profit in 1995 by $842,000),
improved efficiencies and an improved safety record resulting in lower risk
insurance costs of $933,000. In the Real Estate segment, gross profit and
gross profit margin increased due principally to the lease-up of the two
Rossville buildings and increased mining royalties and timber sales,
including those discussed above.
Selling, general and administrative expense in 1996 decreased 2% from 1995
and increased 14% from 1994 to 1995. The 1996 decrease was due to a
reduction of $206,000 in profit sharing and incentive compensation. The 1995
increase was due to increased revenues and to an increase of $347,000 in
profit sharing and management incentive compensation.
In fiscal 1996 interest expense increased 16% over 1995 due to increased
borrowings which was partially offset by a lower average interest rate.
Interest expense in 1995 increased 75% over 1994 due to higher interest rates
from mortgage debt replacing short-term debt, increased borrowings and an
increase in short-term rates.
Liquidity and Capital Resources. The following key financial measurements
reflect the Company's sound financial position and capital resources at
September 30 (dollars in thousands):
1996 1995 1994
Cash $ 313 $ 392 $ 821
Total debt $30,003 $27,650 $20,376
Debt as a percent of
capital employed 31% 29% 25%
Unused lines of credit $35,500 $38,200 $28,000
During 1996, net cash flows from operating activities of $14,681,000 more
than covered the $13,220,000 net cash used in investing activities. The
excess cash from operating activities plus additional borrowing was used to
buy back $3,915,000 of the Company's common stock.
The Company is financially postured to be able to take advantage of
external and internal growth opportunities in real estate development and in
the motor carrier industry that may occur in the Southeast.
The Company has a $34,000,000 revolving credit agreement of which
$19,000,000 was available at fiscal year end. In addition, it has short-term
lines of credit under which it may borrow up to $20,000,000 of which
$16,500,000 was available at September 30, 1996.
The Company currently expects its fiscal 1997 capital expenditures to be
approximately $15,980,000 versus depreciation and depletion expense of
$8,440,000. The expenditures are expected to be financed from the cash flow
from operating activities and the $19,000,000 unused and available under its
revolving credit agreement.
The Company believes it will be able to renegotiate its present credit
facilities or obtain similar replacement credit facilities when necessary in
the future.
Inflation. Historically, the Company has been able to recover inflationary
cost increases through increased freight rates. It is expected that over
time justifiable and necessary rate increases will be obtained in the future,
although deregulation of intrastate trucking rates has made this more
difficult in the past two years. Substantially all of the Company's royalty
agreements are based on a percentage of the sales price. Minimum royalties
and substantially all lease agreements provide various escalation provisions.
<PAGE>
Consolidated Statement of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
1996 1995 1994
Revenues:
Transportation $ 55,801 $49,198 $45,316
Real Estate 8,434 8,877 7,247
Sale of real estate 168 198 1,448
Total revenues (including revenue from
related parties of $6,544; $5,869 and $6,834) 64,403 58,273 54,011
Cost of operations:
Transportation 46,153 39,916 38,528
Real estate 3,560 3,106 2,947
Cost of real estate sold 75 119 281
Gross profit 14,615 15,132 12,255
Selling, general and administrative expense
(including expenses paid to related party
of $1,383; $1,312 and $1,208) 5,598 5,692 4,991
Operating profit 9,017 9,440 7,264
Interest expense (2,234) (1,933) (1,105)
Interest income 34 49 23
Other income, net 10 35 37
Income before income taxes 6,827 7,591 6,219
Provision for income taxes 2,662 2,961 2,425
Net income $ 4,165 $ 4,630 $ 3,794
Earnings per common share $1.13 $1.21 $.94
Weighted average number of shares used in
computing earnings per common share 3,683 3,832 4,045
See accompanying notes.<PAGE>
Consolidated Balance Sheet September 30
(Dollars in thousands)
1996 1995
Assets
Current assets:
Cash and cash equivalents $ 313 $ 392
Accounts receivable, less allowance for doubtful
accounts of $234 ($218 in 1995) (including
related party of $376 and $300) 5,300 5,586
Inventory of parts and supplies 502 501
Prepaid expenses and other 1,888 2,016
Total current assets 8,003 8,495
Other assets:
Real estate held for investment, at cost 5,791 6,065
Goodwill, at cost less amortization of $282
($242 in 1995) 1,328 1,368
Other 1,856 2,110
Total other assets 8,975 9,543
Property, plant and equipment, at cost:
Land 52,888 51,161
Buildings 25,611 24,724
Plant and equipment 54,584 51,289
133,083 127,174
Less accumulated depreciation and depletion 43,025 43,855
Net property, plant and equipment 90,058 83,319
$107,036 $101,357
Liabilities and Stockholders' Equity
Current liabilities:
Short-term note payable to bank $ 3,500 $ 1,800
Accounts payable (including related party of
$93 and $136) 1,779 1,551
Federal and state income taxes 342 -
Accrued liabilities:
Payroll and benefits 1,047 1,108
Taxes 587 759
Interest 106 128
Insurance reserves 1,901 1,055
Other - 369
Long-term debt due within one year 333 347
Total current liabilities 9,595 7,117
Long-term debt 26,170 25,503
Deferred income taxes 6,240 4,220
Accrued insurance reserves 2,705 2,500
Other liabilities 432 395
Commitments and contingent liabilities (Notes 10 and 11)
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized, 3,492,186
shares issued (3,681,594 in 1995) 349 368
Capital in excess of par value 19,748 23,622
Retained earnings 41,797 37,632
Total stockholders' equity 61,894 61,622
$107.036 $101,357
See accompanying notes.<PAGE>
Consolidated Statement of Cash Flows Years ended September 30
(Dollars in thousands)
1996 1995 1994
Cash flows from operating activities:
Net income $ 4,165 $ 4,630 $ 3,794
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 7,667 7,304 6,945
Net changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 268 (1,192) (735)
(Increase) decrease in inventory of parts
and supplies (1) 136 87
(Increase) decrease in prepaid expenses 157 (191) (129)
Increase (decrease) in accounts payable and
accrued liabilities 1,161 (1,001) 291
Increase in deferred income taxes 1,622 1,717 367
Net change in insurance reserves and other
liabilities 242 (350) 833
Gain on sale of real estate, plant and
equipment (550) (749) (1,511)
Other, net (50) (173) 63
Net cash provided by operating activities 14,681 10,131 10,005
Cash flows from investing activities:
Purchase of property, plant and equipment (14,070) (15,516) (8,745)
Purchase of real estate held for investment (32) (43) -
Additions to other assets (130) (525) (663)
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 1,012 705 2,359
Net cash used in investing activities (13,220) (15,379) (7,049)
Cash flows from financing activities:
Proceeds from long-term debt 3,000 10,750 11,070
Net increase (decrease) in short-term debt 1,700 (2,200) 1,900
Repayment of long-term debt (2,347) (1,277) (11,107)
Exercise of employee stock options 22 22 66
Repurchase of Company stock (3,915) (2,476) (4,418)
Net cash provided by (used in) financing
activities (1,540) 4,819 (2,489)
Net increase (decrease) in cash and cash equivalents (79) (429) 467
Cash and cash equivalents at beginning of year 392 821 354
Cash and cash equivalents at end of year $ 313 $ 392 $ 821
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense, net of amount capitalized $ 2,257 $ 1,882 $ 1,123
Income taxes (received) ($ 216) $ 3,373 $ 1,354
Noncash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ 1,900 $ 526 $ 253
Issuing accounts payable - $ 239 $ 167
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with maturities of three months or less at time of
purchase to be cash equivalents.
See accompanying notes.<PAGE>
Consolidated Statement of Stockholders' Equity Years ended September 30
(Dollars in thousands)
Capital in
Common Stock Excess of Retained
Shares Amount Par Value Earnings
Balance at October 1, 1993 4,066,297 $407 $30,357 $29,208
Shares purchased and canceled
(including purchases from
affiliates of $232
(17,106 shares)) (271,578) (27) (4,391)
Compensation in the form of
stock options 23
Exercise of stock options 6,000 66
Net income 3,794
Balance at September 30, 1994 3,800,719 380 26,055 33,002
Shares purchased and canceled (121,125) (12) (2,464)
Compensation in the form of stock
options 9
Exercise of stock options 2,000 22
Net income 4,630
Balance at September 30, 1995 3,681,594 368 23,622 37,632
Shares purchased and canceled (191,408) (19) (3,896)
Exercise of stock options 2,000 22
Net income 4,165
Balance at September 30, 1996 3,492,186 $349 $19,748 $41,797
See accompanying notes.<PAGE>
Notes to Consolidated Financial Statements
1. Accounting polices. CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly owned. All significant intercompany transactions have been eliminated
in consolidation.
INVENTORY - Inventory of parts and supplies is valued at the lower of cost
(first-in, first-out) or market.
REVENUE AND EXPENSE RECOGNITION - Substantially all transportation revenue
is recognized when shipment is complete and transportation expenses are
recognized as incurred.
Real estate rental revenue and mining royalties are generally recognized
when due under the leases. The straight-line method is used to recognize
rental revenues under leases which provide for varying rents over their term.
DEPRECIATION, DEPLETION AND AMORTIZATION - Provision for depreciation of
plant and equipment is computed using the straight-line method based on the
following estimated useful lives:
Years
Buildings and improvements 8-32
Revenue equipment 5-10
Other equipment 3- 5
Furniture and fixtures 5-10
Depletion of sand and stone deposits is computed on the basis of units of
production in relation to estimated reserves. Goodwill is amortized over
forty years using the straight-line method.
After a review of actual revenue equipment lives versus the lives used for
depreciation purposes, effective October 1, 1994, for financial reporting
purposes, the Company extended the estimated useful lives of its tractors
from 5 to 7 years and substantially all trailers from 5-7 years to 10 years
and reduced the salvage values on such equipment. The effect for fiscal 1995
was to increase gross profit by $842,000 and net income by $525,000 ($.14 per
share).
RISK INSURANCE - The Company has a $250,000 to $500,000 self-insured
retention per occurrence in connection with its workers' compensation,
automobile liability, and general liability insurance programs ("Risk
Insurance"). The Company accrues monthly the estimated cost in connection
with its portion of its Risk Insurance losses. Claims paid by the Company
are charged against the reserve. Additionally, the Company maintains a
reserve for incurred but not reported claims based on historical analysis of
such claims.
INCOME TAXES - The Company uses an asset and liability approach to
financial reporting for income taxes. Under this method, deferred tax assets
and liabilities are recognized based on differences between financial
statement and tax bases of assets and liabilities using presently enacted tax
rates. Deferred income taxes result from temporary differences between
pre-tax income reported in the financial statements and taxable income.
EARNINGS PER COMMON SHARE - Earnings per common share are based on the
weighted average number of common shares outstanding and common stock
equivalents, where applicable.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
ENVIRONMENTAL - Environmental expenditures that benefit future periods are
capitalized. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimation of such liabilities is extremely complex.
Some factors that must be assessed are engineering estimates, continually
evolving governmental laws and standards, and potential involvement of other
potentially responsible parties.
FUTURE ACCOUNTING REQUIREMENTS - In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123 establishes
a fair value based method of accounting for stock-based employee compensation
plans; however, it also allows companies to continue to measure cost for such
plans using the method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25).
Companies that elect to continue with the accounting under APB 25 must
provide pro forma disclosures of net income and earnings per share, as if
SFAS 123 had been applied. The accounting and disclosure requirements of
SFAS 123 are effective for the Company for transactions entered into in
fiscal 1997. Pro forma disclosures required if the Company elects to
continue using APB 25 must include the effects of all awards granted in
fiscal 1996, but should be presented for fiscal years subsequent thereto for
fiscal 1996 financial statements presented for comparative purposes. The
Company will continue to measure cost for such plans using the method of
accounting prescribed by APB 25.
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS 121).
SFAS 121, which is effective for years beginning after December 15, 1995,
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles
to be disposed of. Impairment is assessed by comparing the book value of
such assets to the estimated undiscounted future operating cash flows
expected to result from the use of the asset and its final disposition. If
the sum of the expected future cash flow is less than the carrying amount of
the asset, an impairment loss is recognized based on the fair value of the
asset. The Company has not completed its evaluation of the impact of
adoption of SFAS 121.
2. Transactions with related parties. As of September 30, 1996 eight of the
Company's directors were also directors of Florida Rock Industries, Inc.
("FRI"). Such directors own approximately 31% of the stock of FRI and 40% of
the stock of the Company. Accordingly, FRI and the Company are considered
related parties.
The Company, through its transportation subsidiaries, hauls construction
aggregates for FRI and customers of FRI. It also hauls diesel fuel and other
supplies for FRI. Charges for these services are based on prevailing market
prices. Other wholly owned subsidiaries lease certain construction
aggregates mining and other properties and provide construction management
services to FRI.
A summary of revenues derived from FRI follows (in thousands):
1996 1995 1994
Transportation $1,100 $ 759 $1,320
Real estate 5,444 5,110 4,709
$6,544 $5,869 $6,029
Under an agreement extending until September 30, 1998, FRI furnishes the
Company with certain management and related services, including financial,
tax, legal, administrative, accounting and computer. Charges for such
services were $1,383,000 in 1996, $1,312,000 in 1995 and $1,208,000 in
1994.
John R. Mabbett III, an officer and director of the Company, and two of
his family members (the "Mabbetts") sold on October 2, 1989 to a subsidiary
of the Company, all of the stock of J. R. Mabbett & Son, Inc. and various
real estate parcels used in the operation of a trucking business in Georgia.
At the same time, each of the Mabbetts entered into a non-competition
agreement providing for quarterly payments to each of $36,733 through
September 30, 1994. Separately, one family member entered into a consulting
agreement providing for consultation payments at an annual rate of $84,000
until September 30, 1994; and John R. Mabbett III and another family member
each entered into employment agreements providing for annual compensation of
$174,000 and $139,000, respectively, until September 30, 1994.
Messrs. Edward L. Baker and Albert D. Ernest, Jr. are directors of the
Company and directors of Regency Realty Corporation. Mr. Martin E. Stein,
Jr., who is President and Chief Executive Officer of Regency Realty
Corporation, is a director of the Company. Regency Realty Corporation
purchased on June 30, 1994 for $805,000 from the Company approximately three
acres adjacent to a shopping center which Regency Realty Corporation owned in
Clay County, Florida. The Board of Directors of the Company, without Mr.
Stein's participation, approved the sale.
On October 9, 1996 a wholly owned subsidiary of the Company purchased
134 acres of land from a subsidiary of Florida Rock Industries, Inc. for
$500,000 and the assumption of certain reclamation costs and benefits
relating to the site. An appraisal of the property was obtained. The
transaction was approved by the Company's Board of Directors with those
directors who are also directors of Florida Rock Industries, Inc. abstaining.
3. Lines of credit and debt. Long-term debt at September 30 is summarized as
follows (in thousands):
1996 1995
Revolving credit (unsecured) $15,000 $14,000
8% to 9.5% mortgage notes payable
in installments through 2015 11,455 11,724
5% unsecured notes payable in 1997 48 126
26,503 25,850
Less portion due within one year 333 347
$26,170 $25,503
The aggregate amount of principal payments, excluding the revolving
credit, due subsequent to September 30, 1996 is: 1997 - $333,000; 1998 -
$315,000; 1999 - $343,000; 2000 - $373,000; 2001 - $405,000; 2002 and
subsequent years - $9,734,000.
The Company has a revolving credit agreement under which it may borrow
from four banks up to $34,000,000 on term loans payable 25% on November 15,
1999, 25% on November 15, 2000 and the balance on November 15, 2001.
Interest is payable at SunTrust Bank, Central Florida, N.A.'s prime rate
until November 15, 1998, and at 1/4 of 1% above such prime rate thereafter.
Alternative interest rates based on the London interbank rate and/or the
reserve-adjusted certificate of deposit rate are available at the Company's
option. A commitment fee of 1/4 of 1% is payable on the unused amount of the
commitment until November 15, 1998.
The revolving credit agreement contains restrictive covenants, including
limitations on paying cash dividends. As of September 30, 1996 $8,883,000 of
consolidated retained earnings was not restricted as to payment of cash
dividends.
The mortgage notes payable are collateralized by real estate having a
carrying value of approximately $14,471,000 at September 30, 1996.
Certain properties having a carrying value at September 30, 1996 of
$1,819,000 were encumbered by industrial revenue bonds which 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.
The Company also has short-term lines of credit totaling $20,000,000
from three banks. Under these lines the Company can borrow funds for a
period from one to ninety days. There is no commitment fee and the banks can
terminate the lines at any time. The interest rate is determined at the time
of each borrowing. The weighted average interest rates of such borrowings on
September 30, 1996 and 1995 were 6.4% and 7.0%, respectively.
During fiscal 1996 and 1995 the Company capitalized interest cost of
$17,000 and $53,000, respectively.
4. Leases. At September 30, 1996, the total carrying value of property owned
by the Company which is leased or held for lease to others is summarized as
follows (in thousands):
Construction aggregates property $41,853
Commercial property 25,904
Land and other property 9,649
77,406
Less accumulated depreciation and depletion 16,865
$60,541
The minimum future rentals on noncancelable operating leases as of
September 30, 1996 are as follows: 1997 - $4,429,000; 1998 - $4,105,000;
1999 - $2,784,000; 2000 - $2,470,000; 2001 - $1,585,000 and 2002 and
subsequent years $9,972,000.
5. Stock option plan. The Company has a Stock Option Plan under which
options for shares of common stock may be granted to directors, officers and
key employees.
Option transactions for the fiscal years ended September 30 are
summarized as follows:
1996 1995 1994
Shares under option:
Outstanding at beginning of year 247,000 159,000 165,000
Issued - 90,000 -
Exercised ($11.00 per share) (2,000) (2,000) (6,000)
Outstanding at end of year 245,000 247,000 159,000
Aggregate option price $3,131,000 $3,153,000 $1,585,000
Shares available for future grant 85,000 85,000 75,000
Shares exercisable at end of year 184,300 161,000 147,000
Prices per share of common stock under options outstanding at September
30, 1996 range from $8.875 to $17.75. Options expire from 1996 to 2004. At
September 30, 1996 options for 184,300 shares are exercisable at any time
prior to their expiration and options for 60,700 shares become exercisable in
cumulative installments of 20% to 33% each year after a one year waiting
period from the date of grant. Of the options outstanding at September 30,
1996, options for 10,000 shares and 35,000 shares were issued at 72% and 74%,
respectively, of the fair market value of the shares on the dates of grant;
the balance was issued at 100%. The difference between the fair market value
of the Company's common stock and the option price on the date of grant is
recognized as compensation over the period from the date of grant until the
option becomes exercisable. When the option is exercised the proceeds are
credited to stockholders' equity.
6. Income taxes. The provision for income taxes for fiscal years ended
September 30 consisted of the following (in thousands):
1996 1995 1994
Current:
Federal $ 892 $1,063 $1,756
State 148 181 302
1,040 1,244 2,058
Deferred 1,622 1,717 367
Total $2,662 $2,961 $2,425
A reconciliation between the amount of tax shown above and the amount
computed at the statutory Federal income tax rate follows (in thousands):
1996 1995 1994
Amount computed at statutory
Federal rate $2,321 $2,581 $2,114
State income taxes (net of Federal
income tax benefit) 255 283 229
Other, net 86 97 82
Provision for income taxes $2,662 $2,961 $2,425
The types of temporary differences and their related tax effects that give
rise to deferred tax assets and deferred tax liabilities at September 30, are
presented below:
1996 1995
Deferred tax liabilities:
Basis difference in property,
plant and equipment $6,776 $4,859
Depletion 678 676
Prepaid expenses 737 793
Gross deferred tax liabilities 8,191 6,328
Deferred tax assets:
Insurance reserves 1,479 1,288
Accrued liabilities 4 103
Other, net 497 348
Gross deferred tax assets 1,980 1,739
Valuation allowance for deferred
tax assets - -
Net deferred tax assets 1,980 1,739
Net deferred tax liability $6,211 $4,589
7. Employee benefits. The Company and certain subsidiaries have a
savings/profit sharing plan for the benefit of qualified employees. The
savings feature of the plan incorporates the provisions of Section 401(k) of
the Internal Revenue Code. Under the savings feature of the plan, an
eligible employee may elect to save a portion (within limits) of their
compensation on a tax deferred basis. The Company contributes to a
participant's account an amount equal to 50% (with certain limits) of the
participant's contribution. Additionally, the Company may make an annual
contribution to the plan as determined by the Board of Directors, with
certain limitations. The plan provides for deferred vesting with benefits
payable upon retirement or earlier termination of employment. The Company's
cost was $419,000 in 1996, $464,000 in 1995 and $368,000 in 1994.
The Company provides certain health benefits for retired employees.
Employees may become eligible for those benefits if they were employed by the
Company prior to December 10, 1992, meet the service requirements and reach
retirement age while working for the Company. The plan is contributory and
unfunded. The Company accrues the estimated cost of retiree health benefits
over the years that the employees render service.
The following table sets forth the plan's status reconciled with the
accrued postretirement benefit cost included in the Company's consolidated
balance sheet at September 30 (in thousands):
1996 1995 1994
Accumulated postretirement benefit
obligation:
Retirees $ 133 $ 158 $ 187
Fully eligible active participants 62 99 96
Other active participants 307 293 200
Total APBO 502 550 483
Unrecognized net loss from past
experience different from that
assumed and from changes in
assumptions (68) (182) (216)
Unrecognized prior service cost 133 193 252
Accrued postretirement benefit cost $ 567 $ 561 $ 519
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
1996 1995 1994
Service cost of benefits earned during
the period $ 39 $ 49 $ 87
Interest cost on APBO 32 36 63
Net amortization and deferral (55) (40)
(40)
Amortization of transition obligation
over 20 years - - 20
Net periodic postretirement benefit
cost $ 16 $ 45 $ 130
The discount rate used in determining the Net Periodic Postretirement
Benefit Cost and the APBO was 7.25% at September 30, 1996 and 1995 and 8% at
September 30, 1994.
Effective January 1, 1994 the Company's share of retiree health care was
capped at the Company's 1993 cost level.
8. Industry segments. The Company has two major business segments:
transportation and real estate, both operated principally within the
Mid-Atlantic and Southeastern United States. The transportation segment is
operated through two wholly owned subsidiaries which are engaged in the
hauling of liquid and dry commodities by motor carrier. The real estate
segment is operated through wholly owned subsidiaries that own real estate of
which a substantial portion is under mining royalty agreements or leased.
They also hold certain other real estate for investment and are developing
commercial and industrial properties. The Company grants credit to customers
who are in the petroleum, chemical, convenience store, construction materials
and agricultural industries.
Financial data for industry segments is as follows (in thousands):
1996 1995 1994
Revenues:
Transportation (a) $55,801 $49,198 $46,121
Real estate (b) 8,602 9,075 7,890
$64,403 $58,273 $54,011
Segment profit:
Transportation (a) $ 4,947 $ 4,525 $ 3,240
Real estate (b) 4,908 5,759 4,819
9,855 10,284 8,059
Corporate expenses (794) (760) (735)
Interest expense (2,234) (1,933) (1,105)
Income before income taxes $ 6,827 $ 7,591 $ 6,219
Capital expenditures:
Transportation $ 13,174 $ 12,621 $ 8,349
Real estate 2,782 3,162 547
$ 15,956 $ 15,783 $ 8,896
Depreciation, depletion and
amortization:
Transportation $ 5,558 $ 5,066 $ 5,208
Real estate 2,065 2,195 1,709
$ 7,623 $ 7,261 $ 6,917
Identifiable assets at September 30:
Transportation $ 41,489 $ 35,116 $27,827
Real estate 64,972 64,837 63,518
General corporate 575 1,404 424
$107,036 $101,357 $91,769
(a) Fiscal 1994 includes revenue of $805 and segment profit of $674 from the
sale of real estate.
(b) Fiscal 1996, 1995 and 1994 includes revenue of $168, $198 and $643 and
segment profit of $93, $79 and $493, respectively, from the sale of real
estate.
General corporate assets consist principally of cash, receivables,
investments and equipment.
9. Fair values of financial instruments. At September 30, 1996, the carrying
amount reported in the balance sheet for cash and cash equivalents,
short-term notes payable to bank and revolving credit approximate their fair
value. The fair values of the Company's other long-term debt are estimated
using discounted cash flow analysis, based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements.
At September 30, 1996 the carrying amount and fair value of such other
long-term debt was $11,503,000 and $11,025,000, respectively.
At September 30, 1995 the carrying amount and fair value of such other
long-term debt was $11,850,000and $11,739,000, respectively.
10. 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 materially adverse effect on the Company's
consolidated financial statements.
One of the Company's subsidiaries is a potentially responsible party in
connection with a Superfund Site. It is the policy of the Company to accrue
environmental contamination cleanup costs when it is probable that a
liability has been incurred and the amount of such liability is reasonably
estimable. The Company has made an estimate of its likely costs in
connection with this site and a liability has been recorded. Such liability
is not material to the financial statements of the Company.
11. Commitments. At September 30, 1996, the Company had placed orders and
was committed to purchase tractors and trailers costing approximately
$3,776,000 and had entered into various contracts to purchase and develop
real estate with remaining commitments totaling $2,118,000.<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders
FRP Properties, Inc.
We have audited the accompanying consolidated balance sheets of FRP
Properties, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of FRP Properties, Inc. and
subsidiaries at September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 3, 1996
<PAGE>
Directors and Officers
Directors
John E. Anderson (1)
President and Chief Executive
Officer of the Company
Edward L. Baker (1)
Chairman of the Board of the Company
John D. Baker II (1)
Executive Vice President and
Treasurer of the Company
Thompson S. Baker (1)
Chairman Emeritus of the Company
Thompson S. Baker II
Vice President of
Florida Rock Industries, Inc.
Ish Copley
President of SunBelt Transport, Inc.,
the Company's flatbed
trucking operations
David H. deVilliers, Jr.
Vice President of the Company and
President of FRP Development Corp.,
the Company's northern
real estate operations
Albert D. Ernest, Jr. (2)(3)
President of Albert Ernest Enterprises
Luke E. Fichthorn III (2)
Private Investment Banker,
Twain Associates and Chairman of the
Board and Chief Executive Officer of
Bairnco Corporation
Francis X. Knott (2)
Chief Executive Officer of
Partners Management Company
Radford D. Lovett (2)(3)
Chairman of the Board of
Commodores Point Terminal Corp.
John R. Mabbett III
Vice President and Secretary
of the Company and President of
Florida Rock & Tank Lines, Inc.,
the Company's tank and dump
trucking operations
Robert H. Paul III (3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
Martin E. Stein, Jr.
President and Chief Executive Officer of
Regency Realty Corporation
James H. Winston (2)
President of LPMC of Jax, Inc.
and President of
Omega Insurance Company
________________
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Officers
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer
John D. Baker II
Executive Vice President and Treasurer
John R. Mabbett III
Vice President and Secretary
President, Florida Rock & Tank Lines, Inc.
David H. deVilliers, Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
Ruggles B. Carlson
Assistant Treasurer and
Assistant Secretary
FRP PROPERTIES, Inc.
General Office: 155 East 21st Street
Jacksonville, Florida 32206
Telephone: (904) 355-1781
Annual Meeting
Shareholders are cordially invited to attend the Annual Stockholders Meeting
which will be held at 2 p.m. local time, on Wednesday, February 5, 1997, at
the general offices of the Company, 155 East 21st Street, Jacksonville,
Florida.
Transfer Agent
First Union National Bank
of North Carolina
230 South Tryon Street, 11th Floor
Charlotte, NC 28288-1154
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Jacksonville, Florida
Independent Auditors
Deloitte & Touche LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: FRPP)
Form 10-K
Stockholders may receive without charge a copy of FRP Properties, Inc.'s
annual report to the Securities and Exchange Commission on Form 10-K by
writing to the Assistant Treasurer at P.O. Box 4667,
Jacksonville, Florida 32201.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 313
<SECURITIES> 0
<RECEIVABLES> 5,534
<ALLOWANCES> 234
<INVENTORY> 502
<CURRENT-ASSETS> 8,003
<PP&E> 133,083
<DEPRECIATION> 43,025
<TOTAL-ASSETS> 107,036
<CURRENT-LIABILITIES> 9,595
<BONDS> 26,170
0
0
<COMMON> 349
<OTHER-SE> 61,545
<TOTAL-LIABILITY-AND-EQUITY> 107,036
<SALES> 64,403
<TOTAL-REVENUES> 64,403
<CGS> 49,788
<TOTAL-COSTS> 49,788
<OTHER-EXPENSES> 5,598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,234
<INCOME-PRETAX> 6,827
<INCOME-TAX> 2,234
<INCOME-CONTINUING> 4,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,165
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.13
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