Annual Report 2000
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
2000 1999 Change
Revenues $93,862 82,019 +14.4
Gross profit $16,239 19,994 -18.8
Operating profit $ 6,840 12,380 -44.7
Income before income taxes $ 3,435 10,093 -66.0
Net income $ 2,044 6,157 -66.8
Per common share:
Basic earnings per share $ .61 1.79 -65.9
Diluted earnings per share $ .61 1.78 -65.7
Stockholders' equity $ 22.06 21.53 + 2.5
<PAGE>
2000 CORPORATE HIGHLIGHTS
Revenues - up 14.4% to $93,862,000
Gross profit - down 18.8% to $16,239,000
Net income - down 66.8% to $2,044,000
Diluted earnings per share - down 65.7% to $ .61 per share
Gains from sale of real estate of $1,533,000
$23,400,000 of borrowing capacity is available under the Company's
credit agreements at September 30, 2000
BUSINESS. The Company is engaged in the transportation and real estate
businesses. The Company's transportation business is conducted through
three 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 and Mid-Atlantic States, hauling primarily construction
materials. Patriot Transportation, Inc. hauls a variety of cargo,
primarily in the United States, through independent sales agents and
owner/operators. 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
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 along with a growing network of third
party sales agents and owner/operators, emphasizing superior
service to customers in existing markets, developing new
transportation services for customers in current market
areas as well as expansion into new 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.
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.
To Our Stockholders:
As your Company began Fiscal 2000 expectations were focused to achieve
the previously announced Plan of Reorganization formally separating the
transportation and real estate operations. Consequently the Company
changed its name to Patriot Transportation Holding, Inc. on March 1
following shareholder approval at the February 2 Annual Meeting.
But as the year unfolded the Transportation Group began to rapidly
encounter challenges related to both operating conditions and information
system/administrative support. Chronic driver shortages retarded hauling
capacity, pressured labor costs, and increased turnover. Mushrooming
diesel fuel prices severely inflated fuel expenses beyond the industry's
ability to offset via surcharges. Trucking operating ratios suffered
accordingly.
Transition to new electronic information software in Transportation
billing proved costly to the Group, with associated disruptions in
personnel costs and productivity.
Notwithstanding these adversities, important progress was achieved in
the first full year of operations for the new variable-cost, third party
subsidiary, Patriot Transportation, Inc. This new growth engine favorably
tracked its business plan considering industry conditions and software
hurdles.
Also in positive contrast to transportation difficulties, the Company's
Real Estate Group enjoyed another year of encouraging performance. The
Group's expanding portfolio of income producing, flexible office warehouses
continued on plan regarding square-footage growth and ahead of plan for
occupancy. Strategic progress in asset management will assist in
structuring an expanding asset foundation for the future.
Nevertheless, continuing turbulence within the trucking industry and
the need to complete an internal information system for its Transportation
Group led the Company on August 2, 2000 to announce a delay of its
reorganization (spin-off) until some date beyond July 1, 2001 and subject
to reauthorization by its Board of Directors.
Consolidated Results. Consolidated revenues for fiscal 2000 increased
14.4% to $93,862,000. Transportation revenues increased 19.5% to
$80,152,000 primarily aided by growth at Patriot Transportation, Inc.
Modest increases in both miles hauled and prices were contributed by
Florida Rock & Tank Lines and SunBelt Transport. Total real estate
revenues declined 8.4% due primarily to lower property and timber sales
while revenues from the Company's development activities increased 20.3%.
Property sales in fiscal 2000 were $2,260,000 compared to $3,788,000 the
previous year.
Gross profit in 2000 declined 18.8% to $16,239,000 from $19,994,000
in 1999. The Transportation Group's gross profit in fiscal 2000
experienced an 18.2% decrease to $7,892,000 driven mainly by increases in
direct labor and fuel expense in the face of only modest price increases.
The Group also incurred approximately $600,000 in unanticipated health
claims expense occurring substantially in the fourth quarter. Real estate
gross profit fell 19.3% to $8,347,000. Gross profit from development
operations increased 17.3% but lower property sales in 2000 caused a 52.6%
decline from related gains to $1,533,000 in 2000 from $3,236,000 in 1999.
Selling, general and administrative expenses increased 23.4% from
$7,614,000 to $9,399,000 in 2000. This increase stemmed chiefly from
increased legal expenses and bad debt losses and other expenses at Florida
Rock & Tank Lines related to information software transition. The total
increase in selling, general and administrative expenses was also impacted
by administrative costs to support the new subsidiary, Patriot
Transportation, Inc., which was not in operation the previous fiscal year.
Net interest expense increased 48.9% from $2,311,000 in 1999 to
$3,415,000 in 2000 as the result of higher levels of debt and higher
interest rates. Net income decreased 66.8% from $6,157,000 in 1999 to
$2,044,000 in 2000. Diluted earnings per share also decreased 65.7% to
$0.61 in 2000 from $1.78 the previous year.
Capital Expenditures. Capital expenditures in 2000 for the transportation
business totaled $12,091,000 versus $12,010,000 in 1999. Capital
expenditures for the real estate segment in 2000 totalled $9,762,000 versus
$9,344,000 in 1999. Total depreciation and depletion for fiscal 2000 was
$11,144,000 versus $10,065,000 in 1999.
The fiscal 2001 capital expenditure plan for the transportation business
is $6,934,000 primarily for continued modernization of the tank truck and
flatbed fleets. The capital budget for the real estate segment for fiscal
2001 is $19,065,000 mainly for continued office/warehouse development.
Total depreciation and depletion expense is expected to be approximately
$11,212,000 on a consolidated basis.
Financial Management. The Company's $34,000,000 unsecured revolver and
term facility has a final maturity of November 15, 2003. At September 30,
2000, $20,000,000 was outstanding leaving a balance of $14,000,000 in
availability under this committed facility. The Company also has
$15,000,000 of unsecured short term lines of credit under which $5,600,000
was outstanding at the end of fiscal 2000. In addition, $22,496,000 of
the Company's total debt outstanding is non-recourse, long-term fixed rate
mortgages secured primarily by the Company's flex warehouse/office
projects. At September 30, 2000 the Company's percentage of total funded
debt to equity was 66%.
Annual Meeting. At the Annual Stockholders Meeting on February 2, 2000,
the stockholders elected John D. Baker II, Luke E. Fichthorn III, Robert
H. Paul III, and James B. Shephard as directors to serve a four-year term
expiring in the year 2004.
Real Estate Group. Continuing healthy demand for well-located
distribution capacity, effective marketing, as well as a growing reputation
for quality design and follow-up property management, combined to produce
another year of noteworthy progress. The Group can be proud of a record
of achievement toward the key objective of developing flexible
warehouse/office square footage in targeted, distribution-friendly markets.
Evidence of such progress occurred during 2000 in four different
sub-markets within the greater Baltimore, Maryland area. A new 83,100
square-foot build-to-suit office/warehouse, 6920 Tudsbury Road, was
completed, occupied and long-term financed. This property is located near
the beltway on Baltimore's western fringe. Development also continued at
Lakeside Business Park, a 134-acre development adjacent to Interstate 95
north of Baltimore in Harford County. A 96,440 square-foot offering, 1504
Quarry Drive, was completed and occupied. At 8620 Dorsey Run Road, 85,100
square feet, was purchased, renovated and is now 75% occupied and financed.
Finally, active site grading is underway at Hillside Business Park, a
59-acre property in Anne Arundel County, Maryland near both the
Baltimore-Washington International Airport and the new regional Arundel Mall.
Hillside Business Park is projected for a final total build-out of about
575,000 square feet.
The Group's total portfolio of developed buildings at September 30,
2000 was comprised approximately 1.2 million square feet with a combined
occupancy of 95%. Final build-out at Lakeside and Hillside Business Parks
will bring the Group's total developed building capacity to approximately
2.77 million square feet.
Turning to the Group's other long-term focus, asset management, much
activity also occurred. Plans were finalized to construct a bulkhead along
the shoreline of the Group's 5.8 acre site on the banks of the Anacostia
River in the District of Columbia. This site, located about one mile from
the United States Capitol Building, was successfully re-zoned by the Group
early in fiscal 2000 from industrial to Planned Unit Development(PUD). The
new PUD zoning permits development of up to 1.5 million square feet of
commercial office space together with related public amenities and
waterfront enhancements. Bulkhead construction will secure the site by
adding a "hard edge" along the waterfront to prevent further shoreline
erosion and provide foundation stability for anchoring vertical
construction.
Asset management focus was also directed toward the Group's raw land
portfolio in Georgia and Florida. These holdings range from leased
long-term mining properties, which could offer future development
potential, to timberland, to scattered tracts with potential warehouse
distribution possibilities.
Finally, the Group made important progress toward implementing its own
in-house information software system tailored to its real estate core
business. Such progress will enable the Group to better define and conduct
itself as a distinct business unit.
Transportation Group. In contrast to the Real Estate Group the
Company's Transportation Group battled a chorus of adversities the full
year, both from within and external.
Several months before fiscal 2000 began the Transportation Group
initiated a planned program to achieve a level of cost-effective
administrative sufficiency. Previously it had depended wholly on
outsourcing for administrative support. Year 2000 (Y2K) compliance weighed
heavily on information software considerations, and the Group had earlier
selected core business support software. But serious system transition
problems unrelated to Y2K developed which caused tank truck billing/credit
issues. Unfortunately, the tank truck area suffered approximately $760,000
in bad debt losses during the transition.
The Group elected to implement its own in-house capability. Start-up
for the new software package is slated for about April 2001. The Group
anticipates that system shortcomings will be cured.
Turning to external conditions, the trucking industry confronted very
tight labor markets and high diesel fuel costs that keep operating ratios
under great pressure. To combat these forces both Florida Rock & Tank
Lines and SunBelt Transport are aggressively raising their permanent
freight rates while imposing fuel price surcharges to essentially halt
further profit erosion. If over the coming year operating expenses
continue under such pressure, each company is notifying its customer base
that additional permanent rate increases will be forthcoming.
In further response to industry conditions the Group began directing
emphasis in its tank and flatbed companies to non-asset, owner/operator
hauling capacity. This should reduce average capital employed, add
variable cost protection and encourage improved returns in the future.
Regarding owner/operators and third-party, independent freight agents,
Patriot Transportation, Inc. achieved good progress during the year.
Patriot successfully organized and launched into the industry despite the
operating climate. The new company continues to expand satisfactorily with
agents distributed in every geographic region of the United States along
with progress aimed at freight movements across borders into Canada and
Mexico. Patriot continues its expansion program as planned with only
modest capital outlays. Collateral traffic lane and customer service
efficiencies are developing with both Florida Rock & Tank Lines and SunBelt
Transport.
Related Developments and Outlook. Operating results for the
Transportation Group are clearly unacceptable. Our responses to challenges
within the trucking industry have been described, and they will be executed
vigorously. The Real Estate Group should enjoy another year of momentum
subject as always to continued strength in our domestic economy.
Finally, the Company has recently employed a Vice President, Finance
and Administration with broad multi-industry seasoning.
We extend our gratitude for your support. And we again salute the
enthusiasm, commitment and loyalty of the employees who represent the core
strength of this enterprise.
Respectfully yours,
Edward L. Baker
Chairman
John E. Anderson
President & Chief Executive Officer
<PAGE>
Operating Review
Transportation. During fiscal 2000 the Company's Transportation Group
operated through three wholly owned subsidiaries. Florida Rock & Tank
Lines, Inc. is engaged in hauling liquid and dry bulk commodities in tank
trucks. SunBelt Transport, Inc. is engaged in hauling mostly building and
construction materials on flatbed trailers. Patriot Transportation, Inc. is
engaged in hauling a variety of cargo through third party independent freight
agents and owner/operators.
The tank trucks operate from terminals in Jacksonville, Orlando, Panama
City, Pensacola, Port Everglades, Tampa and White Springs, Florida; Albany,
Atlanta, Augusta, Bainbridge, Columbus, Dalton, Macon and Savannah, Georgia;
Knoxville, Tennessee; and Birmingham, Alabama and has a central dispatch
office in Montgomery, Alabama. SunBelt operates in the Southeast and
Mid-Atlantic states where as Patriot operates through the United States.
Revenues and miles hauled were up 19.5% and 15.1%, respectively, in 2000 as
a result of expansion of flatbed and tank truck hauling and the start up of
the independent agent and owner/operator business.
Gross profit decreased 18.2% from fiscal 1999 primarily as a result of
increased labor costs due to driver shortages, increased fuel costs and
increased health claims.
During fiscal 2000, the Group purchased new tractors and new trailers.
The fiscal 2001 capital expenditure plan is based on maintaining a modernized
tank and flatbed fleet. The fleet modernization program has resulted
in reduced maintenance expenses and improved operating efficiencies.
Transportation labor, fuel and now risk insurance pressures are expected to
remain key factors. More comprehensive fuel price sucharges are now in
place at Florida Rock & Tank Lines and SunBelt Transport. Assertive steps
are underway at both carriers to significantly boost permanent freight rates.
The Transportation Group is now well on its way to implementing new
information systems specific to its core businesses. Patriot
Transportation, Inc., the Company's new third party agent/owner-operator
startup, should see its expansion momentum continue.
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 construction aggregates 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 or being developed for future rentals, and the
third is land and/or buildings which are being developed for future rental or
held for future appreciation or development.
Real estate revenues, excluding property sales, increased 2.4% over fiscal
1999 as a result increased royalties and rental revenue on the Company's real
estate projects partially offset by a decrease in timber sales. The fiscal
2000 real estate revenues, excluding the sale of real estate and timber, were
divided approximately 42% from mining and minimum royalties and 58% from
rental.
A brief description of FRP Development Corp.'s projects at September 30,
2000 follows:
8230 Preston Court, 72,182 square feet of flexible warehouse/office space
and 59% leased.
8240 Preston Court, 90,405 square feet of flexible warehouse/office space
and 100% leased.
810 Oregon Avenue, 113,280 square feet of flexible warehouse/office space
and 100% leased.
812 Oregon Avenue, 82,335 square feet of flexible warehouse/office space
and 100% leased.
Rossville Business Center, a two building complex consisting of 189,212
square feet of flexible warehouse/office space and 100% leased.
34 Loveton Center, a 28,533 square foot suburban office building and 100%
leased.
1502 Quarry Drive, 110,875 square feet of flexible warehouse/office space
and 100% leased.
1504 Quarry Drive, 96,800 square feet of flexible warehouse/office space
completed during fiscal 2000 and 100% leased.
1506 Quarry Drive, 93,340 square feet of flexible warehouse/office space
under construction.
2206 Lakeside Boulevard, 66,964 square feet of flexible warehouse/office
space completed during fiscal 1999 and 100% leased.
2208 Lakeside Boulevard, 65,520 square feet of flexible warehouse/office
space completed during fiscal 1999 and 100% leased.
6920 Tudsbury Road, 83,100 square feet, built to suit warehouse/office
under construction to be completed during fiscal 2000 and 100% pre-leased.
8620 Dorsey Run Road, 85,100 square feet, warehouse/office completed
during fiscal 2000 and 75% leased.
2203 Lakeside Boulevard, 99,100 square feet of flexible warehouse/office
space currently under construction and 100% pre-leased.
Lakeside Business Park is a 134 acre site capable of supporting 1,160,000
square feet of warehouse/office space. At September 30, 2000, 192,440 square
feet was under construction and expected to be completed during fiscal 2001.
Approximately 42 acres remain available for development and are capable of
supporting 631,000 square feet of new development.
Hillside Business Park, is a 59 acre site located in Anne Oriental County,
Maryland and capable of supporting 575,000 square feet of warehouse/office
space.
The Real Estate Group during fiscal 2001 will continue to focus on
buildings under construction and the continued development of the property at
Lakeside Business Park. Planning, development and permitting for Hillside
Business Park development will also continue.
At September 30, 2000 the Company owned approximately 1,200,000 square feet
of developed building capacity that was 95% leased. The Real Estate Group
will continue its asset management functions for the benefit of the Company's
land portfolio. These activities will also include but not be limited to the
Company's site on the Anacostia River in the District of Columbia. The
Company's long-term plan is to gradually build and own a portfolio of
successful rental properties.
<PAGE>
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
2000 1999 1998 1997 1996
Summary of Operations
Revenues $ 93,862 82,019 73,974 68,844 64,403
Gross profit(a) $ 16,239 19,994 16,493 14,908 14,615
Operating profit $ 6,840 12,380 9,625 8,977 9,017
Interest expense $ 3,438 2,357 2,300 2,061 2,234
Income before income taxes
$ 3,435 10,093 7,343 6,984 6,827
Provision for income taxes
$ 1,391 3,936 2,863 2,724 2,662
Net income $ 2,044 6,157 4,480 4,260 4,165
Per Common Share
Basic EPS $ .61 1.79 1.30 1.22 1.16
Diluted EPS $ .61 1.78 1.28 1.21 1.14
Stockholders' equity
$ 22.06 21.53 19.83 18.53 17.72
Financial Summary
Current assets $ 15,089 14,161 10,073 8,549 8,003
Current liabilities
$ 17,498 13,555 9,479 11,063 9,595
Working capital (deficit)
$ (2,409) 606 594 (2,514) (1,592)
Property, plant and
equipment, net $124,026 115,369 104,970 95,018 90,058
Total assets $148,011 138,655 123,965 116,582 107,036
Long-term debt $ 42,015 37,936 33,299 30,647 26,170
Stockholders' equity
$ 73,813 72,692 68,755 63,734 61,894
Other Data
Return on average
stockholders' equity
2.8% 8.7 6.7 6.8 6.7
Return on average capital
employed 1.6% 5.2 4.1 4.2 5.8
Net cash flow provided from
operating activities
$ 9,566 15,032 13,557 13,982 14,681
Additions to property,
plant and equipment
$ 21,861 21,359 19,901 13,746 15,970
Depreciation, depletion
and amortization
$ 11,144 10,065 9,146 8,356 7,667
Weighted average number
of shares - basic 3,334 3,444 3,452 3,490 3,588
Weighted average number
of shares - diluted 3,348 3,468 3,496 3,530 3,647
Number of employees at
end of year 829 877 753 721 665
Stockholders of record
801 834 850 873 913
(a) Fiscal 2000, 1999, 1998, 1997 and 1996 include gains on the
sale of real estate of $1,533,000, $3,236,000, $358,000, $817,000 and
$93,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
2000 1999 2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $20,150 19,031 21,566 21,016 24,258 19,854 27,888 22,118
Gross profit $ 3,607 4,393 3,819 5,539 4,685 4,382 4,128 5,680
Operating profit $ 1,645 2,299 1,655 3,868 2,351 2,470 1,189 3,743
Income before
income taxes $ 902 1,743 818 3,352 1,418 1,874 297 3,124
Net income $ 550 1,063 499 2,045 865 1,143 130 1,906
Per common share:
Basic EPS $.16 .31 .15 .59 .26 .33 .04 .56 Diluted
EPS $.16 .30 .15 .59 .26 .33 .04 .56
Market price:
High $25.00 30.00 26.88 28.88 23.50 26.00 20.00 26.00
Low $20.00 19.50 16.38 23.00 17.19 21.25 15.50 21.63
</TABLE>
<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 United States and the Southeast, petroleum product
usage in the Southeast, fuel costs, driver availability and cost, construction
activity, 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 records, other operating factors, administrative costs, and
construction costs of new projects.
In fiscal 2000 and 1999, revenues increased 14.4% and 10.9%, respectively.
In the Transportation segment revenues and miles hauled were up 19.5% and 15.1%,
respectively, in 2000 were up 4.7% and 4.7%, respectively, in 1999. The Real
Estate segment's revenues, exclusive of real estate sales, increased 2.4% and
17.3% in 2000 and 1999, respectively.
The estimated contribution to Transportation revenues by principal markets
follows:
2000 1999 1998 1997 1996
Petroleum 60% 65 67 68 68
Construction 22% 24 21 21 20
Chemical 6% 7 7 6 7
Other 12% 4 5 5 5
Gross profit for fiscal 2000 decreased $3,755,000 and gross margin decreased
to 17% from 24%. The Transportation segment's gross profit decreased
$1,760,000 and gross margin decreased to 10% from 14%. These decreases were
primarily attributable to sharply higher fuel costs, a tight labor market for
drivers resulting in increased costs to hire and retain personnel, unanticipated
health claims, higher depreciation expense resulting from an expanded and
upgraded tractor fleet and start up costs associated with owner/operator
business. Gross profit for the real estate segment decreased $1,955,000
primarily as a result of lower real estate and timber sales in 2000 partially
offset by increased rental income. Gross profit on real estate sales was
$1,533,000 as compared to $3,236,000 in 1999.
Gross profit for fiscal 1999 increased $3,501,000 and gross margin increased
to 24% from 22%. The Transportation segment gross profit decreased $360,000
and gross margin decreased to 14% from 15%. These decreases were due to
increased costs to attract and retain qualified drivers and increased
depreciation expense partially offset by reduced fuel costs. Gross profit for
the real estate segment increased $3,861,000 primarily as a result of real
estate sales, increased royalty income and increased rental income. Gross
profit on real estate sales was $3,236,000 in 1999 and $358,000 in 1998.
Selling, general and administrative expense increased 23.4% in 2000 and
increased 10.9% in 1999. The 2000 increase was due to additional staffing for
the owner/operator business, professional fees associated with the proposed
spin-off of the real estate business, increased bad debt expense and other legal
expenses. The 1999 increase was attributable to non-recurring retirement and
severance and systems upgrades for Year 2000 compliance.
Interest expense in 2000 increased 45.9% or $1,081,000 from 1999. This
increase was primarily as a result of an increase in the average debt
outstanding and an increase in the average interest rate. Interest expense in
1999 increased 2.5% or $57,000 from 1998.
Liquidity and Capital Resources. The following key financial measurements
reflect the Company's financial position and capital resources at September 30
(dollars in thousands):
2000 1999 1998
Cash $ 633 2,593 663
Total debt $48,411 41,561 35,432
Debt as a percent of
capital employed 37% 34 32
Unused lines of credit $23,400 31,000 37,400
During 2000, net cash flows from operating activities were $9,566,000 which
along with issuing additional long and short-term debt funded the Company's
investing activities of $17,453,000 and the repurchase of common stock of
$1,468,000. During 1999, net cash flows from operating activities were
$15,032,000 which along with exercise of stock options and issuing of debt
funded the Company's investing activities of $16,746,000.
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.
The Board of Directors has authorized management to repurchase shares of the
Company's common stock from time to time as opportunities may arise. Currently
the Company has approximately $4,177,000 available under this authorization.
The Company has a $34,000,000 revolving credit agreement of which $14,000,000
was available at fiscal year end. In addition, it has unsecured short-term
lines of credit under which it may borrow up to $15,000,000 of which $5,600,000
was outstanding at September 30, 2000.
The Company currently expects its fiscal 2001 capital expenditures to be
approximately $26,000,000 and depreciation and depletion expense to be
$11,212,000. The expenditures are expected to be financed from the cash flow
from operating activities, financing of new real estate projects, and the
$14,000,000 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.
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 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. For additional information, see Note 13 to the
Consolidated Financial Statements.
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.
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.
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 and
competition and may be indicated by words or phrases such as "anticipate,"
"estimate," "plans," "projects," "continuing," "ongoing," "expects,"
"management believes," "the Company believes," "the Company intends" and
similar words or phrases. The following factors are among the principal
factors that could cause actual results to differ materially from the
forward-looking statements: driver availability and cost; availability and
terms of financing; competition; levels of construction activity in FRI's
markets; fuel costs; and inflation.
<PAGE>
Consolidated Statement of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
2000 1999 1998
Revenues:
Transportation $ 80,152 67,048 64,014
Real estate 11,450 11,183 9,534
Sale of real estate 2,260 3,788 426
Total revenues (including revenue from
related parties of $7,178, $6,999 and
$6,256) 93,862 82,019 73,974
Cost of operations:
Transportation 72,260 57,396 54,002
Real estate 4,636 4,077 3,411
Cost of real estate sold 727 552 68
Gross profit 16,239 19,994 16,493
Selling, general and administrative expense
(including expenses paid to related party
of $582, $1,656 and $1,515) 9,399 7,614 6,868
Operating profit 6,840 12,380 9,625
Interest expense (3,438) (2,357) (2,300)
Interest income 24 46 13
Other income, net 9 24 5
Income before income taxes 3,435 10,093 7,343
Provision for income taxes 1,391 3,936 2,863
Net income $ 2,044 6,157 4,480
Earnings per share:
Basic $ .61 1.79 1.30
Diluted $ .61 1.78 1.28
Number of shares used in computing:
Basic earnings per share 3,334 3,444 3,452
Diluted earnings per share 3,348 3,468 3,496
See accompanying notes.
<PAGE>
Consolidated Balance Sheet September 30
(Dollars in thousands)
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 633 2,593
Accounts receivable, less allowance for doubtful
accounts of $869 ($284 in 1999) (including
related party of $233 and $399) 10,770 8,451
Inventory of parts and supplies 650 503
Prepaid expenses and other 3,036 2,614
Total current assets 15,089 14,161
Other assets:
Real estate held for investment, at cost 5,216 5,674
Goodwill, at cost less amortization of $443
($403 in 1999) 1,167 1,207
Other 2,513 2,244
Total other assets 8,896 9,125
Property, plant and equipment, at cost:
Land 60,886 56,937
Buildings 44,213 35,971
Plant and equipment 70,161 67,677
Construction in progress 9,323 12,162
184,583 172,747
Less accumulated depreciation and depletion 60,557 57,378
Net property, plant and equipment 124,026 115,369
$148,011 138,655
Liabilities and Stockholders' Equity
Current liabilities:
Short-term note payable to bank $ 5,600 3,000
Accounts payable (including related party of
$569 and $166) 5,572 5,565
Federal and state income taxes 1,162 499
Accrued liabilities:
Payroll and benefits 1,670 1,415
Taxes 1,040 604
Interest 154 193
Insurance reserves 1,504 1,654
Long-term debt due within one year 796 625
Total current liabilities 17,498 13,555
Long-term debt 42,015 37,936
Deferred income taxes 8,628 8,820
Accrued insurance reserves 4,884 4,644
Other liabilities 1,173 1,008
Commitments and contingent liabilities (Notes 11 and 12)
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized; 3,346,351
shares issued and outstanding
(3,375,817 shares in 1999) 335 338
Capital in excess of par value 14,740 15,660
Retained earnings 58,738 56,694
Total stockholders' equity 73,813 72,692
$148,011 138,655
See accompanying notes.
Consolidated Statement of Cash Flows Years ended September 30
(Dollars in thousands)
Cash flows from operating activities: 2000 1999 1998
Net income $ 2,044 6,157 4,480
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 11,144 10,065 9,146
Net changes in operating assets and liabilities:
Accounts receivable (3,177) (1,953) (993)
Inventory of parts and supplies (147) 49 (83)
Prepaid expenses (423) (265) (228)
Accounts payable and accrued liabilities 1,219 2,659 492
Increase in deferred income taxes (238) 1,089 620
Net change in insurance reserves and other
liabilities 405 876 879
Gain on sale of real estate, plant and
equipment (2,220) (3,638) (778)
Other, net 959 (7) 22
Net cash provided by operating activities 9,566 15,032 13,557
Cash flows from investing activities:
Purchase of property, plant and equipment (21,041) (20,475)(15,323)
Purchase of real estate held for investment - (315) -
Additions to other assets (777) (737) (451)
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 4,365 4,781 1,542
Net cash used in investing activities (17,453) (16,746)(14,232)
Cash flows from financing activities:
Proceeds from long-term debt 5,000 5,000 3,200
Net increase (decrease) in short-term debt 2,600 1,400 (2,400)
Repayment of long-term debt (750) (535) (432)
Exercise of employee stock options 545 - 574
Repurchase of Company stock (1,468) (2,221) (33)
Net cash provided by financing activities 5,927 3,644 909
Net increase (decrease) in cash and cash equivalents(1,960) 1,930 234
Cash and cash equivalents at beginning of year 2,593 663 429
Cash and cash equivalents at end of year $ 633 2,593 663
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense, net of amount capitalized $ 3,477 2,340 2,288
Income taxes $ 920 3,459 1,759
Noncash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ 820 620 767
Other assets $ - - 3,811
Issuance of debt $ - 264 -
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.
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 September 30, 1997 3,439,235 $344 17,333 46,057
Shares purchased and canceled (1,010) - (33) -
Exercise of stock options 30,000 3 571 -
Net income - - - 4,480
Balance at September 30, 1998 3,468,225 347 17,871 50,537
Shares purchased and canceled (92,408) (9) (2,211) -
Net income - - - 6,157
Balance at September 30, 1999 3,375,817 338 15,660 56,694
Shares purchased and canceled (69,466) (7) (1,461) -
Exercise of stock options 40,000 4 541 -
Net income - - - 2,044
Balance at September 30, 2000 3,346,351 $335 14,740 58,738
See accompanying notes.
<PAGE>
Notes to Consolidated Financial Statements
1. Accounting policies. 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.
Sales of real estate are recognized when the collection of the sales price
is reasonably assured and when the Company has fulfilled its obligation which
is typically as of the closing date.
PROPERTY, PLANT AND EQUIPMENT - 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.
The Company periodically reviews property and equipment for potential
impairment. If this review indicates that the carrying amount of the asset
may not be recoverable, the Company estimates the future cash flows expected
with regards to the asset and its eventual disposition. If the sum of these
future cash flows (undiscounted and without interest charges) is less than the
carrying amount of the assets, the Company records an impairment loss based
on the fair value of the asset.
RISK INSURANCE - The Company has a $100,000 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 - Basic earnings per share are based on the
weighted average number of common shares outstanding during the periods.
Diluted earnings per share are based on the weighted average number of common
shares and potential dilution of securities that could share in earnings. The
only difference between basic and diluted shares used for the calculation is
the effect of employee stock options.
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.
NEW ACCOUNTING REQUIREMENTS - In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", effective for
fiscal years beginning after June 15, 1999. In June 1999, the FASB issued
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of Effective Date SFAS No. 133" which deferred the effective date to
fiscal years beginning after June 15, 2000. SFAS 133 requires companies to
record derivatives on the balance sheet as assets and liabilities, measured
at fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivatives and
whether it qualifies for hedge accounting. The Company will adopt this
statement effective October 1, 2000 and it will have no impact.
2. Transactions with related parties. As of September 30, 2000 six of the
Company's directors were also directors of Florida Rock Industries, Inc.
("FRI"). Such directors own approximately 30% of the stock of FRI and 44% 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):
2000 1999 1998
Transportation $1,202 931 839
Real estate 5,976 6,068 5,417
$7,178 6,999 6,256
Prior to October 1, 1999, FRI furnished certain management and related
services, including financial, tax, legal, administrative, accounting and
computer to the Company and its subsidiaries under an agreement expiring
September 30, 2000. Effective October 1, 1999, the Company and FRI agreed
to amend the agreement. Under the amended agreement, Patriot assumed
responsibility for accounting, credit and certain computer functions.
Charges for services provided by FRI were $582,000 in 2000, $1,656,000 in 1999
and $1,515,000 in 1998.
3. Lines of credit and debt. Long-term debt at September 30 is summarized as
follows (in thousands):
2000 1999
Revolving credit (unsecured) $20,000 20,000
6.9% to 9.5% mortgage notes payable
in installments through 2015 22,811 18,561
42,811 38,561
Less portion due within one year 796 625
$42,015 37,936
The aggregate amount of principal payments, excluding the revolving
credit, due subsequent to September 30, 2000 is: 2001 - $796,000; 2002 -
$862,000; 2003 - $933,000; 2004 - $1,010,000; 2005-$1,030,000; 2006 and
subsequent years - $18,180,000.
The Company has a revolving credit agreement as amended on October 31,
2000 under which it may borrow from three banks up to $34,000,000 on term
loans payable 25% on November 15, 2002 and the balance on November 15, 2003.
Interest is payable at SunTrust Bank, Central Florida, N.A.'s prime rate until
November 15, 2001, 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, 2001.
The revolving credit agreement contains restrictive covenants, including
limitations on paying cash dividends. As of September 30, 2000 $14,924,000
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 $26,778,000 at September 30, 2000.
Certain properties having a carrying value at September 30, 2000 of
$1,118,000 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 $15,000,000 from
two banks. At September 30, 2000, $5,600,000 was borrowed. 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, 2000 and 1999 were
7.2% and 5.6%, respectively.
During fiscal 2000, 1999 and 1998 the Company capitalized interest cost
of $279,000, $315,000 and $331,000, respectively.
4. Leases. At September 30, 2000, 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 $ 42,272
Commercial property 54,487
Land and other property 13,110
109,869
Less accumulated depreciation and depletion 25,936
$ 83,933
The minimum future rentals on noncancelable operating leases as of
September 30, 2000 are as follows: 2001 - $6,541,000; 2002 - $6,173,000; 2003
- $5,739,000; 2004 - $5,301,000; 2005 - $4,424,000; 2006 and subsequent years
$16,455,000.
5. Preferred Shareholder Rights Plan. On May 5, 1999, the Board of Directors
of the Company declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock. The dividend was
payable on June 2, 1999. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company, par value $.01 per share (The
"Preferred Shares"), at a price of $96 per one one-hundredth of a
Preferred Share, subject to adjustment.
In the event that any Person or group of affiliated or associated Persons (an
"Acquiring Person") acquires beneficial ownership of 15% or more of the
Company's outstanding common stock each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of Common
Shares having a market value of two times the exercise price of the Right.
An Acquiring Person excludes any Person or group of affiliated or associated
Persons who were beneficial owners, individually or collectively, of 15% or
more of the Company's Common Shares on May 4, 1999.
The Rights will initially trade together with the Company's common stock and
will not be exercisable. However, if an Acquiring Person acquires 15% or
more of the Company's common stock the Rights may become exercisable and trade
separately in the absence of future board action. The Board of Directors
may, at its option, redeem all Rights for $.01 per right, at any time prior
to the Rights becoming exercisable. The Rights will expire September 30,
2009 unless earlier redeemed, exchanged or amended by the Board.
6. 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. At September 30, 2000 the number of shares available for issuance
is 560,400 shares.
Option transactions for the fiscal years ended September 30 are
summarized as follows:
2000 1999 1998
Average Average Average
Options Price(1) Options Price(1) Options Price(1)
Shares under option:
Beginning of year 144,600 17.62 120,000 16.31 150,000 15.25
Issued - - 24,600 24.00 - -
Cancelled (2,000) 24.00 - - - -
Exercised (40,000) 13.63 - - (30,000) 11.00
End of year 102,600 19.05 144,600 17.62 120,000 16.31
Options exercisable
at end of year 84,520 109,000 98,000
(1) Weighted average exercise price
The following table summarizes information concerning stock options
outstanding at September 30, 2000:
Options Options Weighted-Average
Exercise Price Outstanding Exercisable Remaining Life
17.25 15,000 15,000 4.2 years
17.75 65,000 65,000 4.1 years
24.00 22,600 4,520 8.2 years
Remaining non-exercisable options as of September 30, 2000 become exercisable
4,520 shares each year through 2004.
The options expire ten years from the date of grant and become
exercisable in cumulative installments of 20% to 33% each year after a one
year waiting period from date of grant.
If compensation cost for stock option grants had been determined based
on the Black-Scholes option pricing model value at the grant date for the
awards granted subsequent to October 1, 1996 consistent with the provisions
of SFAS No. 123, the Company's 2000 net income, basic and diluted earnings per
share would have been $2,001,000, $.60 and $.60, respectively, and 1999 net
income, basic and diluted earnings per share would have been $6,121,000, $1.78
and $1.76, respectively. The SFAS 123 method has not been applied to options
granted prior to October 1, 1996, and the pro forma compensation expense may
not be indicative of pro forma expense in future years. The fair value of
options granted in 1999 was estimated to be $14.40 on the date of grant using
the following assumptions; no dividends yield, expected volatility of 54.8%,
risk-free interest rates of 4.3% and expected lives of 7 years.
7. Income taxes. The provision for income taxes for fiscal years ended
September 30 consists of the following (in thousands):
2000 1999 1998
Current:
Federal $1,399 2,445 1,914
State 236 402 329
1,635 2,847 2,243
Deferred (244) 1,089 620
Total $1,391 3,936 2,863
A reconciliation between the amount of tax shown above and the amount
computed at the statutory Federal income tax rate follows (in thousands):
2000 1999 1998
Amount computed at statutory
Federal rate $1,168 3,432 2,497
State income taxes (net of Federal
income tax benefit) 135 370 277
Other, net 88 134 89
Provision for income taxes $1,391 3,936 2,863
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:
2000 1999
Deferred tax liabilities:
Basis difference in property,
plant and equipment $10,333 10,241
Depletion 592 630
Prepaid expenses 1,079 980
Gross deferred tax liabilities 12,004 11,851
Deferred tax assets:
Insurance reserves 2,168 2,107
Other, net 972 641
Gross deferred tax assets 3,140 2,748
Net deferred tax liability $ 8,864 9,103
8. 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 $433,000 in 2000, $458,000
in 1999 and $429,000 in 1998.
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):
2000 1999
Change in benefit obligation
Balance beginning of year $ 449 471
Service cost 23 30
Interest cost 26 29
Plan participants contribution 16 -
Actuarial gain (109) (76)
Benefits paid (25) (5)
Balance end of year $ 380 449
Change in plan assets
Balance beginning of year $ 0 0
Employer contributions 9 5
Plan participants contribution 16 -
Benefits paid (25) (5)
Balance end of year $ 0 0
Funded status $(380) (449)
Unrecognized net gain (224) (136)
Unrecognized prior service cost - -
Accrued postretirement benefit costs $(604) (585)
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
2000 1999 1998
Service cost of benefits earned during
the period $ 23 30 33
Interest cost on APBO 26 29 30
Net amortization and deferral (20) (23) (62)
Net periodic postretirement benefit
cost $ 29 36 1
The discount rate used in determining the Net Periodic Postretirement Benefit
Cost and the APBO was 7.75% for 2000 and 7.25% for 1999 and 1998.
9. Business segments. On September 30, 1999, the Company adopted SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information". SFAS 131
established standards for reporting information about segments in annual
financial statements and requires selected information about segments in interim
financial reports issued to stockholders. In addition, SFAS 131 established
standards for related disclosures about products and services, and geographic
areas. Segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in accessing
performance.
The Company has identified two business segments each of which is managed
separately along product lines. The Company's operations are substantially in
the Southeastern and Mid-Atlantic states.
The transportation segment hauls 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):
2000 1999 1998
Revenues:
Transportation $ 80,152 67,048 64,014
Real estate (a) 13,710 14,971 9,960
$ 93,862 82,019 73,974
Operating profit(b):
Transportation $ 118 3,589 4,371
Real estate (a) 8,258 10,177 6,357
Corporate expenses (1,536) (1,386) (1,103)
Operating profit $ 6,840 12,380 9,625
Capital expenditures:
Transportation $ 12,091 12,010 8,368
Real estate 9,762 9,344 11,504
Other 8 5 29
$ 21,861 21,359 19,901
Depreciation, depletion and
amortization:
Transportation $ 8,191 7,398 6,740
Real estate 2,897 2,612 2,356
Other 56 55 50
$ 11,144 10,065 9,146
Identifiable assets at September 30:
Transportation $ 54,836 49,816 43,976
Real estate 92,166 85,720 78,807
Cash items 633 2,593 663
Unallocated corporate assets 376 526 519
$148,011 138,655 123,965
(a) Fiscal 2000, 1999 and 1998 includes revenue of $2,260,000, $3,788,000 and
$426,000 and operating profit of $1,533,000, $3,236,000 and $358,000,
respectively, from the sale of real estate.
(b) Operating profit is earnings before interest expense, other income, interest
income and income taxes.
10. Fair values of financial instruments. At September 30, 2000 and 1999, 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,
2000 the carrying amount and fair value of such other long-term debt was
$22,811,000 and $22,555,000, respectively. At September 30, 1999 the carrying
amount and fair value of such other long-term debt was $18,562,000 and
$18,033,000, respectively.
11. 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 potentially a 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.
12. Commitments. At September 30, 2000, the Company had entered into various
contracts to purchase and develop real estate and to purchase computer software
with remaining commitments totaling $3,192,000 and $69,000, respectively.
13. 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. For information concerning selected
information concerning the real estate business, see Note 9.
<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders
Patriot Transportation Holding, Inc.
We have audited the accompanying consolidated balance sheets of Patriot
Transportation Holding, Inc. and subsidiaries as of September 30, 2000 and
1999, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended
September 30, 2000. 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 auditing standards generally
accepted in the United States of America. 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 Patriot Transportation Holding,
Inc. and subsidiaries at September 30, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years in the
period ended September 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Jacksonville, Florida
December 8, 2000
<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)
President and Chief Executive
Officer of Florida Rock Industries,
Inc.
Thompson S. Baker II
Vice President of
Florida Rock Industries, Inc.
David H. deVilliers, Jr.
Vice President of the Company and
President of FRP Development Corp.,
the Company's northern
real estate operations
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 Realty Trust, Inc.
Radford D. Lovett (2)(3)
Chairman of the Board of
Commodores Point Terminal Corp.
Robert H. Paul III (3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
James B. Shephard
Vice President and Secretary
of the Company
Martin E. Stein Jr. (3)
Chairman 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
James B.Shephard
Vice President and Secretary
David H. deVilliers Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
James J. Gilstrap
Treasurer and Chief Financial Officer
Wallace A. Patzke Jr.
Controller and Chief Accounting Officer
Patriot Transportation Holding, Inc.
General Office: 1801 Art Museum Drive
Jacksonville, Florida 32207
Telephone: (904) 396-5733
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 7, 2001, 155
East 21st Street, Jacksonville, Florida.
Transfer Agent
First Union Customer Information Center
Corporate Trust Client Services NC-1153
1525 West W. T. Harris Boulevard - 3C3
Charlotte, NC 28288-1153
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
McGuireWoods LLP
Jacksonville, Florida
Independent Auditors
Deloitte & Touche LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: PATR)
Form 10-K
Stockholders may receive without charge a copy of Patriot Transporation Holding,
Inc.'s annual report to the Securities and Exchange Commission on Form 10-K by
writing to the Treasurer at P.O. Box 4667, Jacksonville, Florida 32201.
