FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-17554
PATRIOT TRANSPORTATION HOLDING, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2924957
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices)
(Zip Code)
904/396-5733
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 1, 2000: 3,353,151 shares of $.10 par value common
stock.
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PATRIOT TRANSPORTATION HOLDINGS, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, September 30,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 1,478 2,593
Accounts receivable:
Affiliates 285 399
Other 11,587 8,336
Less allowance for doubtful accounts (498) (284)
Inventory of parts and supplies 619 503
Prepaid expenses and other 2,164 2,614
Total current assets 15,635 14,161
Other assets:
Real estate held for investment, at cost 5,674 5,674
Goodwill 1,177 1,207
Other 2,488 2,244
Total other assets 9,339 9,125
Property, plant and equipment, at cost 182,254 172,747
Less accumulated depreciation and
depletion (59,140) (57,378)
Net property, plant and equipment 123,114 115,369
$148,088 138,655
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term note payable to bank $ 7,900 3,000
Accounts payable:
Affiliates 335 166
Other 3,123 5,399
Federal and state income taxes 1,100 499
Accrued liabilities 4,354 3,866
Long-term debt due within one year 761 625
Total current liabilities 17,573 13,555
Long-term debt 42,224 37,936
Deferred income taxes 8,653 8,820
Accrued insurance reserves 4,662 4,644
Other liabilities 1,020 1,008
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,353,151 shares issued
(3,375,817 at September 30, 1999) 335 338
Capital in excess of par value 15,012 15,660
Retained earnings 58,609 56,694
Total stockholders' equity 73,956 72,692
$148,088 138,655
See accompanying notes.
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PATRIOT TRANSPORTATION HOLDING, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2000 1999 2000 1999
Revenues:
Affiliates $ 1,767 1,726 5,150 5,282
Non-affiliates 22,491 18,128 60,824 54,619
24,258 19,854 65,974 59,901
Cost of operations 19,573 15,472 53,863 45,587
Gross profit 4,685 4,382 12,111 14,314
Selling, general and
administrative expense:
Affiliates 60 421 346 1,261
Non-affiliates 2,274 1,491 6,114 4,416
2,334 1,912 6,460 5,677
Operating profit 2,351 2,470 5,651 8,637
Interest expense (944) (604) (2,538) (1,697)
Interest income 4 4 19 9
Other income, net 7 4 6 20
Income before income taxes 1,418 1,874 3,138 6,969
Provision for income taxes 553 731 1,224 2,718
Net income $ 865 1,143 1,914 4,251
Basic earnings per
common share $ .26 .33 .57 1.23
Diluted earnings per
common share $ .26 .33 .57 1.22
Number of shares used in computing:
Basic earnings per share 3,274 3,431 3,339 3,450
Diluted earnings per share 3,285 3,453 3,357 3,474
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(In thousands)
(Unaudited)
2000 1999
Cash flows from operating activities:
Net income $1,914 4,251
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization 8,304 7,281
Net changes in operating assets and liabilities:
Accounts receivable (3,217) (30)
Inventory of parts and supplies (115) (240)
Prepaid expenses 449 538
Accounts payable and accrued liabilities (935) (208)
Increase(decrease) in deferred income taxes (250) 68
Net change in insurance reserve and other
liabilities 29 361
Gain on disposition of real estate, property,
plant and equipment (954) (1,705)
Other, net 382 (17)
Net cash provided from operating activities 5,607 10,299
Cash flows from investing activities:
Purchase of property, plant and equipment (16,834) (14,258)
Additions to other assets (676) (294)
Purchase of real estate held for investment - (315)
Proceeds from sale of real estate held for investment,
property, plant and equipment, and other assets 2,114 2,393
Net cash used in investing activities (15,396) (12,474)
Cash flows from financing activities:
Proceeds from long-term debt 5,000 -
Net increase in short-term debt 4,900 10,000
Repayment of long-term debt (576) (5,400)
Repurchase of Company stock (889) (882)
Exercise of stock options 239 -
Net cash provided from financing activities 8,674 3,718
Net increase (decrease) in cash and cash equivalents (1,115) 1,543
Cash and cash equivalents at beginning of year 2,593 663
Cash and cash equivalents at end of the period $1,478 2,206
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense, net of amount capitalized $2,569 1,718
Income taxes $ 790 3,261
Non cash investing activities:
Additions to property, plant and equipment from exchanges $ 820 614
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
(1) Basis of Presentation. The accompanying consolidated
condensed financial statements include the accounts of the
Company and its subsidiaries. These statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions
to Form 10-Q and do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the results for the interim
periods have been included. Operating results for the three and
nine months ended June 30, 2000 are not necessarily indicative of
the results that may be expected for the fiscal year ended
September 30, 2000. The accompanying consolidated financial
statements and the information included under the heading
"Management's Discussion and Analysis" should be read in
conjunction with the consolidated financial statements and
related notes of Patriot Transportation Holding, Inc. for the
year ended September 30, 1999.
(2) Industry Segments. The Company has identified two business
segments each of which is managed separately along product lines.
All the company's operations are in the Southeastern and mid-Atlantic states.
The transportation segment hauls liquid and dry commodities by
motor carrier. The real estate segment owns 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.
Operating results and certain other financial data for the
Company's business segments are as follows (in thousands):
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Three Months ended Nine Months ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
Transportation $ 21,303 17,058 57,233 49,750
Real estate 2,955 2,796 8,741 10,151
$ 24,258 19,854 65,974 59,901
Operating profit(a)
Transportation $ 919 930 1,887 3,373
Real estate 1,756 1,773 4,920 6,414
Corporate expenses (324) (233) (1,156) (1,150)
Operating profit $ 2,351 2,470 5,651 8,637
Identifiable assets, at
quarter end
Transportation 55,979 48,307
Real estate 90,097 81,375
Cash items 1,478 2,206
Unallocated corporate
assets 534 532
148,088 132,420
(a) Operating profit is earnings before interest expense,
other income, interest income and income taxes.
(3) Spin-off of Real Estate Business. On August 2, 2000, the
Board of Directors approved a resolution to delay consummation of
the previously approved reorganization of the Company until some
date beyond July 1, 2001. The reorganization will require
reauthorization by the Board. The reorganization would result in
spinning off to its shareholders a new company which would
include the real estate business, while retaining the
transportation business in Patriot Transportation Holding, Inc.
The Company has obtained a tax ruling from the Internal Revenue
Service that confirms that the proposed transaction will be
tax-free to shareholders. Management has recommended delaying
the spin-off due to the turbulent conditions in the trucking
industry and the need to complete an internal information system
for its Transportation Group. The Company also wants to provide
additional time for development of its new agent/owner-operator
subsidiary.
(4) Name Change Approval. At the annual meeting on February 2,
2000, the shareholders approved a proposal to amend Article I of
the Company's Articles of Incorporation to change the name of the
Company to Patriot Transportation Holding, Inc. The name change
was effective on March 1,2000 upon filing of articles of
amendment to Articles of Incorporation with the State of Florida.
(5) Contingent Liabilities. The Company and its subsidiaries
are subject to legal proceedings and claims arising out of their
businesses that cover a wide range of matters. Additional
information concerning these matters is presented in Note 11 to
the consolidated financial statements included in the Company's
1999 Annual Report to stockholders. Such information is
incorporated herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
For the third quarter and first nine months of fiscal 2000,
consolidated revenues increased 22.2% and 10.1%, respectively,
over the same period last year. The Transportation segment
revenues for the third quarter and first nine months increased
24.9% and 15.0%, respectively, due primarily to an increase in
miles hauled, revenues from the new agent/owner-operator
operation, and a modest increase in pricing over the same quarter
last year. Real estate revenues increased 5.7% for the third
quarter and decreased 13.9% for the first nine months. The
increase in real estate revenues for the third quarter was due to
higher royalties and rental income partially offset by reduced
real estate and timber sales. There were $27,000 of real estate
and timber sales during the third quarter as compared to $158,000
same quarter last year. The real estate revenue decrease for the
nine months was primarily due to reduced sales of real estate and
timber sales. During the first nine months of 2000, the Company
had revenues from real estate and timber sales of $342,000 as
compared to $2,384,000 same period last year.
Consolidated gross profit increased $303,000 or 6.9% for the
third quarter and decreased $2,203,000 or 15.4% for the first
nine months as compared to last year. Gross profit in
Transportation increased $357,000 for the third quarter and
decreased $608,000 for the first nine months. The decrease in
gross profit for the nine months for the Transportation Group was
primarily attributable to sharply higher fuel costs, a tight
labor market for drivers resulting in increased costs to hire and
retain personnel and higher depreciation expense resulting from
an expanded and upgraded tractor fleet.
Gross profit in the Real Estate segment decreased $54,000 for the
third quarter and decreased $1,595,000 for the first nine months.
Real estate gross profit excluding real estate sales and timber
sales increased $77,000 for the third quarter and $447,000 for
the first nine months. Real estate gross profit was negatively
impacted by reduced real estate and timber sales discussed above.
Selling, general and administrative expense increased $422,000
for the third quarter and increased $783,000 for the first nine
months from the same periods last year. Selling, general and
administrative expense as a percent of sales was 9.6% for the
third quarter as compared to 9.6% last year and 9.8% for the
first nine months as compared to 9.5% last year. The increase
was primarily attributable to increased administrative expenses
related to formation of a third-party agent/owner-operator
transportation operation, legal and accounting fees associated
with the proposed spin-off of the real estate business, increased
bad debt expense and other legal expenses.
Interest expense increased $340,000 for the third quarter and
increased $841,000 for the first nine months due primarily to an
increase in the average debt outstanding and an increase in the
average interest rate.
Income tax expense decreased $178,000 for the third quarter and
$1,494,000 for the first nine months as a result of reduced
income before taxes. Income tax expense as a percentage of
income before income tax expense was 39% for all periods.
Summary and Outlook
A tight labor market combined with higher fuel costs and interest
rates will continue to make for a challenging transportation
environment. Aggressive steps are being taken to increase unit
revenues and to counteract increased expenses within the
Transportation Group. The Company's third-party
agent/owner-operator startup, Patriot Transportation, Inc.,
continues to make progress against its plan.
The Company's operating real estate properties are 94% leased and
the industrial market in Baltimore-Washington area remains
favorable for development opportunities with low vacancy and
steady rent levels. The Real Estate Group continues to actively
move forward with its efforts to develop additional properties
and secure well-located sites for future development.
For information on the proposed reorganization of the Company see
Note 3.
Financial Condition
For first nine months of 2000, net cash flows from operating
activities were $5,607,000, which along with issuing additional
long and short term debt funded the Company's investing
activities of $15,396,000 and the repurchase of shares. For the
first nine months of 1999, net cash flows from operating
activities were $10,299,000 which along with issuing additional
short term debt funded the Company's investing activities of
$12,474,000 and the repurchase of shares.
The Company continues to maintain its financial condition with
sufficient resources to meet anticipated capital expenditures and
other operating requirements. The Company's revolving credit
facility will convert to a term loan if not modified by November
15, 2000. The Company is negotiating an extension of the
revolving and term phase of the existing credit agreement with
its bank group and anticipates that it will complete the
extension and/or modification of its credit facility before the
revolving credit facility converts to a term loan.
Other
During fiscal 1999, the transportation segment's ten largest
customers accounted for approximately 33% of transportation's
revenue. The loss of one or more of these customers could have
an adverse effect on the Company's revenue and income.
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
11 to the consolidated financial statements included in the
Company's 1999 Annual Report to stockholders. Such information
is incorporated herein by reference.
Forward-Looking Statements. Certain matters discussed in this
report contain forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from these indicated by such forward-looking
statements. These forward-looking statements relate to, among
other things, capital expenditures, liquidity, capital resources,
competition and may be indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing,"
"ongoing," "expects," "management believes," "the Company
believes," "the Company intends" and similar words or phrases.
The following factors are among the principal factors that could
cause actual results to differ materially from the
forward-looking statements: availability and terms of financing;
competition; levels of construction activity in FRI's markets;
labor market for drivers; fuel costs; and inflation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There are no material changes to the disclosures made in Form
10-K for the fiscal year ended September 30, 1999 on this matter.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Note 11 to the consolidated financial statements included in the
Company's 1999 Annual Report to stockholders is incorporated
herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The response to this item is submitted as a
separate Section entitled "Exhibit Index", starting on
page 11.
(b) Reports on Form 8-K. During the three months ended
June 30, 2000, no reports on a Form 8-K were filed by
the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
August 9, 2000 PATRIOT TRANSPORTATION HOLDING, INC.
JAMES J. GILSTRAP
James J. Gilstrap
Treasurer and Chief Financial
Officer
WALLACE A. PATZKE, JR.
Wallace A. Patzke, Jr.
Controller and Chief Accounting
Officer
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PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000
EXHIBIT INDEX
(3)(a)(1) Articles of Incorporation of Patriot
Transportation Holding, 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 Patriot Transportation Holding, 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 Patriot Transportation Holding, 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)(a)(4) Amendment to the Articles of Incorporation,
filed with the Florida Secretary of State
on May 6, 1999. A form of such amendment
was previously filed as Exhibit 4 to the
Company's Form 8-K dated May 5, 1999. File
No. 33-26115.
(3)(a)(5) Amendment to the Articles of Incorporation
of Patriot Transportation Holding, Inc.
filed with the Secretary of State of
Florida on February 21, 2000.
(3)(b)(1) Restated Bylaws of Patriot Transportation
Holding, 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 Patriot
Transportation Holding, 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 Patriot Transportation
Holding, 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 Patriot
Transportation Holding, 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 Patriot Transportation Holding,
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.
(4)(c)(1) First Amendment dated as of September 30,
1998 to the Credit Agreement dated as of
November 15, 1995. Previously filed with
Form 10-K for the year ended September 30,
1998. File No. 33-26115.
(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.
(4)(e) Rights Amendment, dated as May 5, 1999
between the Company and First Union
National Bank. Previously filed as
Exhibit 4 to the Company's Form 8-K dated
May 5, 1999. File No. 33-26115.
(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-4 dated
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
Patriot Transportation Holding, 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.
(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) Patriot Transportation Holding, Inc. 1989
Employee Stock Option Plan. Previously
filed with Form S-4 Dated December 13,
1988. File No. 33-26115.
(10)(I)(2) Patriot Transportation Holding, Inc. 1995
Employee 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.
(27) Financial Data Schedule
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