FORM 10-Q
UNITED STATES
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 quarterly period ended June 30, 2009
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-26115
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.)
|
501 Riverside Ave., Suite 500, Jacksonville, Florida 32202
(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 by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes[ ] No[ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of "accelerated filer and large
accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer[ ] Accelerated filer[X] Non-
accelerated filer[ ]
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
YES[ ] NO[X]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of June 30, 2009:
3,053,436 shares of $.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2009
CONTENTS
Page No.
Preliminary Note Regarding Forward-Looking Statements 3
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Condensed Notes to Consolidated Financial Statements 7
|
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures about Market Risks 27
Item 4. Controls and Procedures 27
Part II. Other Information
Item 1A. Risk Factors 28
Item 6. Exhibits 28
Signatures 29
Exhibit 31 Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 31
Exhibit 32 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 34
|
Preliminary Note Regarding 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 those 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 and others discussed in the Company's periodic reports and
filings with the Securities and Exchange Commission are among the principal
factors that could cause actual results to differ materially from the
forward-looking statements: freight demand for petroleum products including
recessionary and terrorist impacts on travel in the Company's markets; levels
of construction activity in the markets served by our mining properties and
our flatbed trucking subsidiary; fuel costs and the Company's ability to
recover fuel surcharges; accident severity and frequency; risk insurance
markets; driver availability and cost; the impact of future regulations
regarding the transportation industry; availability and terms of financing;
competition; interest rates, inflation and general economic conditions;
demand for flexible warehouse/office facilities in the Baltimore-Washington-
Northern Virginia area; and ability to obtain zoning and entitlements
necessary for property development. However, this list is not a complete
statement of all potential risks or uncertainties.
These forward-looking statements are made as of the date hereof based on
management's current expectations, and the Company does not undertake an
obligation to update such statements, whether as a result of new information,
future events or otherwise. Additional information regarding these and other
risk factors may be found in the Company's other filings made from time to
time with the Securities and Exchange Commission.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)
June 30, September 30,
Assets 2009 2008
Current assets:
Cash and cash equivalents $ 12,181 7,778
Accounts receivable (including related party of
$497 and $357 and net of allowance for doubtful
accounts of $137 and $176, respectively) 5,956 9,280
Accounts receivable from condemnation - 554
Inventory of parts and supplies 600 813
Deferred income taxes 1,089 -
Prepaid tires on equipment 1,255 1,304
Prepaid taxes and licenses 229 1,510
Prepaid insurance 1,051 3,224
Prepaid expenses, other 111 92
Assets of discontinued operations 11,238 17,297
Total current assets 33,710 41,852
Property, plant and equipment, at cost 290,225 281,173
Less accumulated depreciation and depletion 88,618 83,350
Net property, plant and equipment 201,607 197,823
Real estate held for investment, at cost 6,933 6,918
Investment in joint venture 6,735 6,395
Goodwill 1,087 1,087
Unrealized rents 3,333 3,208
Other assets 4,181 4,757
Total assets $257,586 262,040
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,584 6,933
Federal and state income taxes payable 1,075 -
Accrued payroll and benefits 4,765 5,164
Accrued insurance reserves 3,628 3,463
Accrued liabilities, other 649 1,158
Long-term debt due within one year 4,223 4,019
Liabilities of discontinued operations 5,829 7,874
Total current liabilities 22,753 28,611
Long-term debt, less current portion 72,960 76,153
Deferred income taxes 15,938 15,227
Accrued insurance reserves 3,112 3,158
Other liabilities 1,540 1,536
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized; none issued - -
Common stock, $.10 par value;
25,000,000 shares authorized,
3,053,436 and 3,039,086 shares issued
and outstanding, respectively 305 304
Capital in excess of par value 35,713 34,540
Retained earnings 105,227 102,473
Accum. other comprehensive income, net of tax 38 38
Total shareholders' equity 141,283 137,355
Total liabilities and shareholders' equity $257,586 262,040
|
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2009 2008 2009 2008
Revenues:
Transportation $22,604 28,067 69,108 76,415
Real estate 5,486 6,071 17,603 18,702
Total revenues (including revenue
from related parties of $1,600, $1,961,
$4,809 and $6,183, respectively) 28,090 34,138 86,711 95,117
Cost of operations:
Transportation 17,660 22,944 55,582 63,809
Real estate 3,249 3,016 9,698 9,359
Total cost of operations 20,909 25,960 65,280 73,168
Gross profit:
Transportation 4,944 5,123 13,526 12,606
Real estate 2,237 3,055 7,905 9,343
Total gross profit 7,181 8,178 21,431 21,949
Selling, general and administrative
expense 2,894 3,190 9,555 11,954
Operating profit 4,287 4,988 11,876 9,995
Gain on condemnation of land - - - 2,507
Interest income and other 2 296 30 788
Equity in loss of joint venture - (6) (5) (20)
Interest expense (892) (1,353) (2,542) (4,101)
Income before income taxes 3,397 3,925 9,359 9,169
Provision for income taxes (1,184) (1,345) (3,507) (3,466)
Income from continuing operations 2,213 2,580 5,852 5,703
Income from discontinued operations, net (2,615) 194 (3,098) (898)
Net income $ (402) 2,774 2,754 4,805
Earnings per common share:
Income from continuing operations -
Basic $ .73 .85 1.93 1.88
Diluted $ .70 .83 1.88 1.82
Discontinued operations including
loss on disposition (Note 12) -
Basic $ (.86) .07 (1.02) (.30)
Diluted $ (.83) .06 (1.00) (.28)
Net income - basic $ (.13) .92 .91 1.58
Net income - diluted $ (.13) .89 .88 1.54
Number of shares (in thousands)
used in computing:
-basic earnings per common share 3,044 3,024 3,039 3,034
-diluted earnings per common share 3,123 3,114 3,114 3,130
|
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2009 AND 2008
(In thousands)
(Unaudited)
2009 2008
Cash flows from operating activities:
Net income $ 2,754 4,805
Adjustments to reconcile net income to net cash
provided by continuing operating activities:
Depreciation, depletion and amortization 9,515 8,402
Deferred income taxes (425) 1,719
Equity in loss of joint venture 5 20
(Gain) loss on sale of equipment (718) (420)
Gain on condemnation of land - (2,507)
Loss from discontinued operations, net of tax 3,098 898
Stock-based compensation 726 943
Net changes in operating assets and liabilities:
Accounts receivable 3,878 (1,088)
Inventory of parts and supplies 213 (148)
Prepaid expenses and other current assets 3,484 1,570
Other assets (56) -
Accounts payable and accrued liabilities (5,045) 908
Income taxes payable 1,075 (83)
Long-term insurance reserves and other long-term
liabilities (42) (1,290)
Net cash provided by operating activities of
continuing operations 18,462 13,729
Net cash provided by operating activities of
discontinued operations 1,235 1,163
Net cash provided by operating activities 19,697 14,892
Cash flows from investing activities:
Purchase of transportation group property and equipment (3,064) (10,325)
Purchase and development of real estate group property (9,762) (16,096)
Investment in joint venture (350) (425)
Proceeds from the sale of property, plant and equipment 742 6,457
Net cash used in investing activities of continuing
operations (12,434) (20,389)
Net cash used in investing activities of discontinued
operations (319) 80
Net cash used in investing activities (12,753) (20,309)
Cash flows from financing activities:
Repayment of long-term debt (2,989) (2,798)
Repurchase of Company stock - (4,388)
Excess tax benefits from exercises of stock options
and vesting of restricted stock 77 614
Exercise of employee stock options 371 961
Net cash used in financing activities (2,541) (5,611)
Net increase (decrease) in cash and cash equivalents 4,403 (11,028)
Cash and cash equivalents at beginning of period 7,778 26,944
Cash and cash equivalents at end of the period $ 12,181 15,916
|
See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009
(Unaudited)
(1) Basis of Presentation. The accompanying consolidated financial
statements include the accounts of Patriot Transportation Holding,
Inc. and its subsidiaries (the "Company"). Investment in the 50%
owned Brooksville Joint Venture is accounted for under the equity
method of accounting. These statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial information and the
instructions to Form 10-Q and do not include all the information and
footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. In the
opinion of management, all adjustments (primarily consisting of normal
recurring accruals) considered necessary for a fair statement of the
results for the interim periods have been included. Operating results
for the nine months ended June 30, 2009 are not necessarily indicative
of the results that may be expected for the fiscal year ending
September 30, 2009. The accompanying consolidated financial
statements and the information included under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" should be read in conjunction with the
Company's consolidated financial statements and related notes included
in the Company's Form 10-K for the year ended September 30, 2008.
(2) Recent Accounting Pronouncements. In September 2006, the FASB
issued Statement No. 157, "Fair Value Measurement" (SFAS 157). The
Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement is
effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal
years. In February 2008, the FASB agreed to a one-year delay of FAS
157 for certain nonfinancial assets and liabilities. Accordingly,
adoption of this standard is limited to financial assets and
liabilities, which primarily applies to the valuation of our long term
mortgage debt. Management believes that the adoption of SFAS 157 will
only require additional disclosure on the fair value of its goodwill,
asset retirement obligations, and long-term mortgages and as such will
not have a material impact on the consolidated financial results of
the Company. The Company adopted the applicable provisions of SFAS
157 on October 1, 2008 and its adoption had no affect on consolidated
financial results of the Company.
In February 2007, the FASB issued Statement No. 159 (SFAS 159), "The
Fair Value Option for Financial Assets and Financial Liabilities -
Including an Amendment of FASB Statement No 115." This Statement
permits an entity to choose to measure many financial instruments and
certain other items at fair value. A business entity will report
unrealized gains and losses on items for which the fair value option
has been elected in earnings. The fair value option (a) may be
applied instrument by instrument, (b) is irrevocable, and (c) is
applied to entire instruments and not to portions of instruments.
SFAS 159 is effective as of the beginning of an entity's first fiscal
year that begins after November 15, 2007. The Company adopted SFAS
159 on October 1, 2008 and, as of this time, has not elected to
measure financial instruments and other items at fair value that are
not required to be measured at fair value.
In December 2007 the FASB issued Statement No. 141(R) "Business
Combinations" (FAS 141(R)). FAS 141(R) requires the acquiring entity
in a business combination to recognize the full fair value of assets
acquired and liabilities assumed in the transaction (whether a full or
partial acquisition); establishes the acquisition-date fair value as
the measurement objective for all assets acquired and liabilities
assumed; requires expensing of most transaction and restructuring
costs; and requires the acquirer to disclose to investors and other
users all of the information needed to evaluate and understand the
nature and financial effect of the business combination. FAS 141(R)
applies prospectively to business combinations for which the
acquisition date is on or after October 1, 2009. The impact of FAS
No. 141R on the consolidated financial statements will depend upon the
nature, terms and size of any acquisitions consummated after the
effective date.
In April 2009, the FASB issued FASB Staff Position No. 107-1 (FSP FAS
107-1) and APB 28-1 (APB 28-1), which amends FASB Statement No. 107,
Disclosures about Fair Value of Financial Instruments and APB Opinion
No. 28, Interim Financial Reporting, to require disclosures about the
fair value of financial instruments for interim reporting periods.
FSP FAS 107-1 and APB 28-1 are effective for the interim reporting
periods ending after June 15, 2009. The Company adopted FSP FAS 107-1
and APB 28-1 for the period ending June 30, 2009.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" (SFAS
165). SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but
before financial statements are issued or are available to be
issued. SFAS 165 is effective for interim or annual financial periods
ending after June 15, 2009. We adopted SFAS 165 on issuance and it
had no material impact on our consolidated financial statements. We
evaluated all events or transactions that occurred after June 30, 2009
up through August 13, 2009, the date we issued these financial
statements. (See Note 13, Subsequent Events).
In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - a replacement of FASB Statement No. 162" (SFAS
168). SFAS 168 provides for the FASB Accounting Standards
Codification (the "Codification") to become the single official source
of authoritative, nongovernmental U.S. generally accepted accounting
principles (GAAP). The Codification did not change GAAP but
reorganizes the literature. SFAS 168 is effective for interim and
annual periods ending after September 15, 2009.
(3) Business Segments. 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 primarily petroleum related bulk
liquids, dry bulk commodities and construction materials by motor
carrier. The real estate segment owns real estate of which a
substantial portion is under mining royalty agreements or leased. The
real estate segment also holds certain other real estate for
investment and develops commercial and industrial properties.
Operating results and certain other financial data for the Company's
business segments are as follows (in thousands):
Three Months ended Nine Months ended
June 30,_ __ June 30, ___
2009 2008 2009 2008
Revenues:
Transportation $ 22,604 28,067 69,108 76,415
Real estate 5,486 6,071 17,603 18,702
$ 28,090 34,138 86,711 95,117
Operating profit
Transportation $ 2,961 3,003 7,238 6,398
Real estate 2,237 3,055 7,905 9,343
Corporate expenses (911) (1,070) (3,267) (5,746)
$ 4,287 4,988 11,876 9,995
Identifiable assets June 30, September 30,
2009 2008
Transportation $ 37,571 45,214
Discontinued Transportation Operations 11,238 17,297
Real estate 191,702 187,239
Cash items 12,181 7,778
Unallocated corporate assets 4,894 4,512
$257,586 262,040
|
(4) Long-Term debt. Long-term debt is summarized as follows (in
thousands):
June 30, September 30,
2009 2008
5.6% to 8.6% mortgage notes
due in installments through 2027 77,183 80,172
Less portion due within one year 4,223 4,019
$ 72,960 76,153
|
The Company has a $37,000,000 uncollaterized Revolving Credit
Agreement which was renewed on October 1, 2008 to extend the term
until December 31, 2013 and to amend the loan covenants. The Revolver
bears interest at a rate of 1.25% over the selected LIBOR, which may
change quarterly based on the Company's ratio of Consolidated Total
Debt to Consolidated Total Capital, as defined. A commitment fee of
0.2% per annum is payable quarterly on the unused portion of the
commitment. The commitment fee may also change quarterly based upon
the ratio described above. The Revolver contains limitations including
limitations on paying cash dividends. Under the terms of this amended
Revolver agreement, as of June 30, 2009, the full $37,000,000 amount
of the line was available for borrowing and $37,732,000 of
consolidated retained earnings was available for the payment of
dividends. The Company was in compliance with all covenants as of
June 30, 2009.
(5) Related Party Transactions. The Company, through its
transportation subsidiaries, hauls commodities by tank and flatbed
trucks for Vulcan Materials Company (Vulcan). Charges for these
services are based on prevailing market prices. The real estate
subsidiaries lease certain construction aggregates mining and other
properties to Vulcan.
A subsidiary of the Company (FRP) has a Joint Venture Agreement with
Vulcan Materials Company (formerly Florida Rock Industries, Inc.),
Brooksville Quarry, LLC, to develop approximately 4,300 acres of land
near Brooksville, Florida. The venture is jointly controlled by
Vulcan and FRP, and they each have a mandatory obligation to fund
additional capital contributions of up to $2 million of which capital
contributions of $1,375,000 have been made by each party as of June
30, 2009. Distributions will be made on a 50-50 basis except for
royalties and depletion specifically allocated to FRP. Other income
for the nine months ended June 30, 2009 and 2008 includes a loss of
$5,000 and $20,000, respectively, representing the Company's equity in
the loss of the joint venture.
(6) Earnings per share. The following details the computations of the
basic and diluted earnings per common share (dollars in thousands,
except per share amounts):
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2009 2008 2009 2008
Weighted average common shares
outstanding during the period
- shares used for basic
earnings per common share 3,044 3,024 3,039 3,034
Common shares issuable under
share based payment plans
which are potentially dilutive 79 90 75 96
Common shares used for diluted
earnings per common share 3,123 3,114 3,114 3,130
Net income $ (402) 2,774 2,754 4,805
Earnings per common share
Basic $ (.13) .92 .91 1.58
Diluted $ (.13) .89 .88 1.54
|
For the three and nine months ended June 30, 2009, 20,000 shares
attributable to outstanding stock options were excluded from the
calculation of diluted earnings per share because their inclusion
would have been anti-dilutive. For the three and nine months ended
June 30 2008, 10,000 shares attributable to outstanding stock options
were excluded from the calculation of diluted earnings per common
share because their inclusion would have been anti-dilutive. For the
three and nine months ended June 30, 2009 and 2008, all outstanding
restricted shares were included in the calculation of diluted earnings
per common share because the unrecorded compensation and tax benefits
to be credited to capital in excess of par for all awards of
restricted stock were lower than the average price of the common
shares, and therefore were dilutive.
(7) Stock-Based Compensation Plans. As more fully described in Note
7 to the Company's notes to the consolidated financial statements in
the Company's Annual Report on Form 10-K for the year ended
September 30, 2008, the Company's stock-based compensation plan
permits the grant of stock options, stock appreciation rights,
restricted stock awards, restricted stock units, and stock awards.
The number of common shares available for future issuance was
258,600 at June 30, 2009.
Under provisions of SFAS 123R, the Company recorded the following
stock compensation expense in its consolidated statement of income
(in thousands):
Three Months ended Nine Months ended
June 30,_ June 30,__
2009 2008 2009 2008
Stock options issued prior
to 123R adoption $ 94 60 208 226
Stock options issued after
123R adoption 26 4 72 4
Restricted stock awards
granted in 2006 51 51 152 156
Annual director stock award - - 294 395
Shares repurchased in connection
with previous CEO retirement - - - 162
Modification to accelerate
prior awards made in
connection with CEO retirement - - - 216
171 115 726 1,159
Deferred income tax benefit 66 44 278 444
Stock compensation, net of tax $ 105 71 448 715
|
A summary of changes in outstanding options is presented below (in
thousands, except share and per share amounts):
Weighted Weighted Weighted
Number Average Average Average
Of Exercise Remaining Grant Date
Options Shares Price Term (yrs) Fair Value
Outstanding at
September 30, 2008 232,080 $33.73 5.0 $ 3,900
Granted 10,000 $73.35 $ 305
Exercised 10,550 $35.20 $ 180
Forfeited 1,100 $38.18 $ 20
Outstanding at
June 30, 2009 230,430 $35.36 4.5 $ 4,005
Exercisable at
June 30, 2009 204,030 $31.17 4.0 $ 3,235
Vested during
nine months ended
June 30, 2009 13,200 $ 291
|
The aggregate intrinsic value of exercisable in-the-money options was
$8,547,000 and the aggregate intrinsic value of all outstanding in-
the-money options was $8,795,000 based on the market closing price of
$72.93 on June 30, 2009 less exercise prices. Gains of $494,000 were
realized by option holders during the nine months ended June 30, 2009.
The realized tax benefit from options exercised for the nine months
ended June 30, 2009 was $190,000. Total compensation cost of options
granted but not yet vested as of June 30, 2009 was $678,000, which is
expected to be recognized over a weighted-average period of 1.8 years.
A summary of changes in restricted stock awards is presented below (in
thousands, except per share amounts):
Weighted Weighted Weighted
Number Average Average Average
Of Grant Remaining Grant Date
Restricted Stock Shares Price Term (yrs) Fair Value
Outstanding at
September 30, 2008 6,200 $63.67 1.3 $ 395
Granted - $ - $ -
Vested 3,050 $63.67 $ 194
Forfeited 200 $63.54 $ 13
Outstanding at
June 30, 2009 2,950 $63.68 .5 $ 188
|
Total compensation cost of restricted stock granted but not yet vested
as of June 30, 2009 was $102,000 which is expected to be recognized
over a weighted-average period of six months.
(8) 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 material
adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
(9) Concentrations. The transportation segment primarily serves
customers in the petroleum, other liquid and dry bulk commodities, and
construction industries in the Southeastern U.S. Petroleum and bulk
commodities accounted for approximately 79% and construction customers
accounted for approximately 21% of transportation segment revenues for
the nine months ended June 30, 2009. Significant economic disruption
or downturn in this geographic region or these industries could have
an adverse effect on our financial statements.
During the first nine months of fiscal 2009, the transportation
segment's ten largest customers accounted for approximately 56.1% of
the transportation segment's revenue. One of these customers
accounted for 20.3% of the transportation segment's revenue. The loss
of any one of these customers would have an adverse effect on the
Company's revenues and income. Accounts receivable from the
transportation segment's ten largest customers was $3,674,000 and
$5,255,000 at June 30, 2009 and September 30, 2008 respectively.
(10) CEO Retirement. On December 5, 2007, the board of directors
approved certain retirement benefits for John E. Anderson, the
Company's previous President and Chief Executive Officer effective
February 6, 2008. Upon Mr. Anderson's retirement, the Company paid
him $4,851,000 for his accrued benefit under the Management Security
Plan, the fair value of his outstanding stock options and restricted
stock and an additional bonus. The total impact of these payments on
the Company's earnings for fiscal 2008 was $2,503,000 before taxes
which is included in selling, general, and administrative expense
primarily in the three months ending December 31, 2007. On December
5, 2007, the Company's Board of Directors elected John D. Baker II to
succeed Mr. Anderson as President and Chief Executive Officer. The
following tables detail the expense incurred and payments made (in
thousands):
Expenses
Additional bonus paid in cash $2,125
Repurchase of vested options and stock at 20 day
average market value per agreement which exceeded
the closing price on the date of repurchase 162
Accelerated vesting of options 180
Accelerated vesting of restricted stock 36
Total expense ($2,371 in quarter ending 12/31/07) $2,503
Payments
Total expense $2,503
Previously accrued benefit MSP Retirement Plan 1,331
Gain on vested stock options repurchased 999
Restricted shares vested 1/1/08 repurchased 18
Total payments $4,851
|
(11) Fair Values of Financial Instruments. At June 30, 2009 and 2008,
the carrying amount reported in the consolidated balance sheets for
cash and cash equivalents, short-term notes payable and revolving
credit approximate their fair value based upon the short-term nature
of these items. The fair values of the Company's other mortgage notes
payable were estimated based on current rates available to the Company
for debt of the same remaining maturities. At June 30, 2009, the
carrying amount and fair value of such other long-term debt was
$77,183,000 and $71,736,000, respectively. At September 30, 2008, the
carrying amount and fair value of other long-term debt was $80,172,000
and $78,839,000, respectively.
(12) Discontinued operations. In June 2009 the Company offered for
sale its flatbed trucking company, SunBelt Transport, Inc.
("SunBelt"). Discussions progressed such that an agreement of sale was
completed August 12, 2009 and closed August 13, 2009. Under the
agreement, the Buyer purchased all of SunBelt's tractors and
trailers, leased the Sunbelt terminal facilities in Jacksonville,
Florida for 36 months at a rental of $5,000 per month and leased the
terminal facilities in South Pittsburgh, Tennessee for 60 months at a
rental of $5,000 per month with an option to purchase those Tennessee
facilities at the end of the lease for payment of an additional
$100,000. The purchase price received for the tractors and trailers
and inventories was a $1 million cash payment and the delivery of a
Promissory Note requiring 60 monthly payments of $130,000 each,
secured by the assets of the business conveyed. The Company retained
all pre-closing receivables and liabilities. SunBelt has been
accounted for as discontinued operations in accordance with Statement
of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144). All periods
presented have been restated accordingly.
A summary of discontinued operations is as follows:
Three months Nine months
Ended June 30, Ended June 30,
2009 2008 2009 2008
Revenue $ 5,849 11,923 18,391 31,232
Operating expenses 6,831 11,608 20,158 32,690
Income (loss) before taxes (982) 315 (1,767) (1,458)
Income taxes 377 (121) 679 560
Income (loss) from
discontinued operations $ (605) 194 (1,088) (898)
Loss on sale before taxes $(3,263) - (3,263) -
Income taxes 1,253 - 1,253 -
Loss from pending sale of
discontinued operations $(2,010) - (2,010) -
|
Total discontinued
operations and loss on sale $(2,615) 194 (3,098) (898)
The components of the balance sheet are as follows:
June 30, September 30,
2009 2008
Accounts receivable $ 2,310 3,084
Inventories 86 78
Prepaid expenses 696 1,146
Other assets 52 52
Deferred income taxes 333 -
Property and equipment, net 7,761 12,937
Assets of discontinued operations $ 11,238 17,297
Accounts payable $ 312 730
Accrued payroll and benefits 535 697
Accrued liabilities, other 39 68
Insurance reserves 3,132 2,721
Deferred income taxes 1,811 3,658
Liabilities of discontinued operations $ 5,829 7,874
|
In the quarter ending September 30, 2009 the Company will recognize
$261,000 in severance costs related to a change-in-control agreement
triggered by the sale of SunBelt.
(13) Subsequent Events. See Note 12 regarding subsequent event. In
addition the Company made the decision to discontinue use and place up
for sale the corporate aircraft in July 2009 to reduce overhead
expenses. The aircraft is included in net property, plant and
equipment at $2.75 million at July 31, 2009. The Company will
recognize a loss of $900,000 for the estimated write-down to fair
value less cost to sell in the quarter ending September 30, 2009.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview - The Company has two business segments: transportation and
real estate.
The Company's transportation business is conducted through Florida
Rock & Tank Lines, Inc. ("Tank Lines") which operates in the
Southeastern United States. Tank Lines hauls petroleum and other bulk
liquids and dry bulk commodities by tank trailers.
The Company's real estate activities are conducted through two wholly
owned subsidiaries. Florida Rock Properties, Inc. ("Properties") and
FRP Development Corp. ("Development"). Properties owns mining
properties and other properties held for investment or future
development. Development owns, manages and develops commercial
warehouse/office rental properties in the Baltimore-Washington-
Northern Virginia area. Substantially all of the real estate
operations are conducted within the Southeastern and Mid-Atlantic
United States.
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, driver
availability and cost, regulations regarding driver qualifications and
hours of service, petroleum product usage in the Southeast which is
driven in part by tourism and commercial aviation, fuel costs,
construction activity, aggregates sales by lessees from the Company's
mining properties, interest rates, market conditions and attendant
prices for casualty insurance, demand for commercial warehouse space
in the Baltimore-Washington-Northern Virginia area, and ability to
obtain zoning and entitlements necessary for property development.
Internal factors include revenue mix, capacity utilization, auto and
workers' compensation accident frequencies and severity, other
operating factors, administrative costs, group health claims
experience, and construction costs of new projects. Financial results
of the Company for any individual quarter are not necessarily
indicative of results to be expected for the year.
Discontinued Operation. In June 2009 the Company offered for sale its
flatbed trucking company, SunBelt Transport, Inc. ("SunBelt").
Discussions progressed such that an agreement of sale was completed
August 12, 2009 and closed August 13, 2009. Under the agreement, the
Buyer purchased all of SunBelt's tractors and trailers, leased the
Sunbelt terminal facilities in Jacksonville, Florida for 36 months at
a rental of $5,000 per month and leased the terminal facilities in
South Pittsburgh, Tennessee for 60 months at a rental of $5,000 per
month with an option to purchase those Tennessee facilities at the end
of the lease for payment of an additional $100,000. The purchase
price received for the tractors and trailers and inventories was a $1
million cash payment and the delivery of a Promissory Note requiring
60 monthly payments of $130,000 each, secured by the assets of the
business conveyed. The Company retained all pre-closing receivables
and liabilities. SunBelt has been accounted for as discontinued
operations in accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" (SFAS 144). All periods presented have been restated
accordingly.
Comparative Results of Operations for the Three Months Ended June
30, 2009 and 2008
Consolidated Results - Net loss for the third quarter of fiscal 2009
was $402,000 compared to net income of $2,774,000 for the same period
last year. Diluted earnings per common share for the third quarter of
fiscal 2009 were ($0.13) compared to $0.89 the same quarter last year.
Increased loss from discontinued operations accounted for the majority
of the decrease in earnings. Reduced miles driven in the
transportation segment and lower fuel surcharges were mostly offset by
improved insurance and loss experience and other cost management. The
real estate segment's results were impacted by lower royalty revenues,
increased depreciation and maintenance expense for new buildings that
are not leased, and severance costs but were assisted by increased
capitalization of property taxes and interest expense.
Transportation Results
Three Months Ended June 30
(dollars in thousands) ___2009 % 2008 %_
Transportation revenue $ 20,796 92% 21,834 78%
Fuel surcharges 1,808 8% 6,233 22%
Revenues 22,604 100% 28,067 100%
Compensation and benefits 8,855 39% 9,707 35%
Fuel expenses 3,443 15% 7,134 25%
Insurance and losses 1,447 7% 1,914 7%
Depreciation expense 1,633 7% 1,498 5%
Other, net 2,282 10% 2,691 10%
Cost of operations 17,660 78% 22,944 82%
Gross profit $ 4,944 22% 5,123 18%
|
Transportation segment revenues were $22,604,000 in the third quarter
of 2009, a decrease of $5,463,000 over the same quarter last year.
Revenue miles in the current quarter were down 8.0% compared to the
third quarter of 2008 due to the economic environment. Excluding fuel
surcharges, revenue per mile increased 3.4% over the same quarter last
year. The average price paid per gallon of diesel fuel decreased by
$2.07 or 49.2% over the same quarter in fiscal 2008. Fuel surcharge
revenue decreased $4,425,000.
The Transportation segment's cost of operations was $17,660,000 in the
third quarter of 2009, a decrease of $5,284,000 over the same quarter
last year. The Transportation segment's cost of operations in the
third quarter of 2009 as a percentage of revenue was 78% versus 82% in
the third quarter of 2008. Compensation and benefits decreased
$852,000 or 8.8% compared to the same quarter last year due to the
decrease in miles driven and lower driver turnover related pay. Fuel
cost decreased $734,000 less than the decrease in fuel surcharge
revenue due to less favorable recovery of fuel costs when the fuel
price is lower. Insurance and losses decreased $467,000 due to the
reduction in miles driven and improved loss experience partially
offset by higher health insurance claims. Other expense decreased
$409,000 primarily due to the decrease in miles driven, reduced
vehicle maintenance, reduced hiring costs, and other cost management.
Real Estate Results
Three Months Ended June 30
(dollars in thousands) ___2009 % 2008 %_
Royalties and rent $ 1,509 28% 1,935 32%
Developed property rentals 3,977 72% 4,136 68%
Total Revenue 5,486 100% 6,071 100%
Mining and land rent expenses 538 10% 788 13%
Developed property expenses 2,711 49% 2,228 37%
Cost of Operations 3,249 59% 3,016 50%
Gross profit $ 2,237 41% 3,055 50%
|
Real Estate segment revenues for the third quarter of fiscal 2009 were
$5,486,000, a decrease of $585,000 or 9.6% over the same quarter last
year. Lease revenue from developed properties decreased $159,000 or
3.8% due to reduced occupancy. Royalties and rent decreased $426,000
or 22.0% due to decreased demand for mined tons and a $120,000
decrease in revenues from timber sales.
Real estate segment expenses increased $233,000 to $3,249,000 during
the third quarter of fiscal 2009 compared to $3,016,000 for the same
quarter last year. Developed property expenses increased $483,000 as
a result of new buildings placed in service and severance costs.
Mining and land rent expenses decreased $250,000 primarily due to
capitalization of property taxes on property under development.
Consolidated Results
Gross Profit - Consolidated gross profit was $7,181,000 in the third
quarter of fiscal 2009, a decrease of $997,000 or 12.2% compared to
$8,178,000 in the same period last year. Gross profit in the
transportation segment decreased $179,000 or 3.5% due to reduced miles
driven and lower fuel surcharges mostly offset by improved insurance
and loss experience and other cost management. Gross profit in the
real estate segment decreased $818,000 or 26.8% from the third quarter
2008, due to decreased demand for tons mined, reduced occupancy of
developed properties, increased cost from new buildings placed in
service and severance costs partially offset by higher capitalization
of real estate taxes.
Selling, general and administrative expense - Selling, general and
administrative expenses decreased $296,000 (9.3%) over the same
quarter last year primarily due to amounts paid to the Company's prior
CFO who retired in the same quarter last year.
Interest expense - Interest expense decreased $461,000 over the same
quarter last year due to higher capitalized interest.
Income taxes - Income tax expense decreased $659,000 over the same
quarter last year due to decreased earnings. Income tax expense for
the quarter was reduced by $135,000 due to a reduction of liability
for unrecognized tax benefits while the same quarter last year
included a similar reduction of $165,000.
Income from continuing operations - Income from continuing operations
was $2,213,000 or $.70 per diluted share in the third quarter of
fiscal 2009, a decrease of 14.2% compared to $2,580,000 or $.83 per
diluted share for the same period last year.
Discontinued operations - The after tax loss from discontinued
operations for the third quarter of fiscal 2009 was $2,615,000 versus
income of $194,000 for the same period last year. Diluted loss on
discontinued operations for the third quarter of fiscal 2009 was $.83
compared to diluted earnings of $.06 in the third quarter of fiscal
2008. The third quarter of fiscal 2009 includes a loss on the sale of
$2,010,000 after tax or $.64 per diluted share.
Net income - Net loss for the third quarter of fiscal 2009 was
$402,000 compared to net income of $2,774,000 for the same period last
year. Diluted earnings per common share for the third quarter of
fiscal 2009 were ($0.13) compared to $0.89 the same quarter last year.
Increased loss from discontinued operations accounted for the majority
of the decrease in earnings. Reduced miles driven in the
transportation segment and lower fuel surcharges were mostly offset by
improved insurance and loss experience and other cost management. The
real estate segment's results were impacted by lower royalty revenues,
increased depreciation and maintenance expense for new buildings that
are not leased, and severance costs but were assisted by increased
capitalization of property taxes and interest expense.
Comparative Results of Operations for the Nine Months Ended June 30,
2009 and 2008
Consolidated Results - Net income for the first nine months of fiscal
2009 was $2,754,000 compared to net income of $4,805,000 for the same
period last year. Diluted earnings per common share for the first
nine months of fiscal 2009 were $.88 compared to $1.54 in fiscal 2008.
Increased loss from discontinued operations accounted for the decrease
in earnings. Reduced miles driven in the transportation segment were
more than offset by increased revenue per mile, higher gains on
equipment sales and cost management. The real estate segment's
results were impacted by lower royalty revenues, increased
depreciation and maintenance expense for new buildings that are not
leased, and severance costs but were assisted by increased
capitalization of property taxes and interest expense. Net income for
the first nine months of fiscal 2008 benefited from a gain on
condemnation of land of $1,544,000, net of income taxes but was
adversely impacted by the accrual of retirement benefits of
$1,541,000, net of income tax benefits, for the Company's former
President and CEO, whose retirement was effective February 6, 2008.
Transportation Results
Nine Months Ended June 30
(dollars in thousands) ___2009 % 2008 %_
Transportation revenue $ 61,661 89% 62,016 81%
Fuel surcharges 7,447 11% 14,399 19%
Revenues 69,108 100% 76,415 100%
Compensation and benefits 27,036 39% 27,983 37%
Fuel expenses 11,156 16% 17,905 23%
Insurance and losses 6,063 9% 6,323 8%
Depreciation expense 4,928 7% 4,304 6%
Other, net 6,399 9% 7,294 10%
Cost of operations 55,582 80% 63,809 84%
Gross profit $ 13,526 20% 12,606 16%
|
Transportation segment revenues were $69,108,000 in the first nine
months of 2009, a decrease of $7,307,000 over the same period last
year. Revenue miles in the first nine months of fiscal 2009 were down
5.1% compared to the first nine months of 2008 due to the economic
environment. Excluding fuel surcharges, revenue per mile increased
4.8% over the same period last year. The average price paid per
gallon of diesel fuel decreased by $1.32 or 37.1% over the same period
last year. Fuel surcharge revenue decreased $6,952,000.
The Transportation segment's cost of operations was $55,582,000 in the
first nine months of 2009, a decrease of $8,227,000 over the same
period last year. The Transportation segment's cost of operations in
the first nine months of 2009 was 80% versus 84% in the first nine
months of 2008. Compensation and benefits decreased $947,000 or 3.4%
compared to the same period last year due to the decrease in miles
driven. Fuel cost decreased $203,000 less than the decrease in fuel
surcharge revenue due to less favorable recovery of fuel costs when
the fuel price is lower. Insurance and losses decreased $260,000 due
to the reduction in miles driven and improved loss experience
partially offset by higher health insurance claims. Other expense
decreased $895,000 due to the higher gains on equipment sales, the
decrease in miles driven, and other cost management.
Real Estate Results
Nine Months Ended June 30
(dollars in thousands) ___2009 % 2008 %_
Royalties and rent $ 4,963 28% 5,912 32%
Developed property rentals 12,640 72% 12,790 68%
Total Revenue 17,603 100% 18,702 100%
Mining and land rent expenses 1,716 10% 2,312 12%
Developed property expenses 7,982 45% 7,047 38%
Cost of Operations 9,698 55% 9,359 50%
Gross profit $ 7,905 45% 9,343 50%
|
Real Estate segment revenues for the first nine months of fiscal 2009
were $17,603,000, a decrease of $1,099,000 or 5.9% over the same
period last year. Lease revenue from developed properties decreased
$150,000 or 1.2%. Royalties and rent decreased $949,000 or 16.1% due
to decreased demand for mined tons.
Real estate segment expenses increased $339,000 to $9,698,000 during
the first nine months of fiscal 2009 compared to $9,359,000 for the
same period last year. Developed property expenses increased $935,000
as a result of new buildings placed in service and severance costs.
Mining and land rent expenses decreased $596,000 primarily due to
capitalization of property taxes on property under development.
Consolidated Results
Gross Profit - Consolidated gross profit was $21,431,000 in the first
nine months of fiscal 2009, a decrease of $518,000 or 2.4% compared to
$21,949,000 in the same period last year. Gross profit in the
transportation segment increased $920,000 or 7.3% due to higher gains
on equipment sales, increased revenue per mile, and cost management
offsetting the reduced miles driven. Gross profit in the real estate
segment decreased $1,438,000 or 15.4% from the first nine months of
fiscal 2008, due to reduced demand for mined tons, expenses related to
new building additions, and severance costs.
Selling, general and administrative expense - Selling, general and
administrative expenses decreased $2,399,000 over the same period last
year. Fiscal year 2008 included $2,503,000 accrual of retirement
benefits for the Company's previous President and Chief Executive
Officer.
Gain from condemnation of land - Gain from condemnation of land was
$2,507,000 in the first nine months of fiscal 2008 resulting from the
taking by the Virginia Department of Transportation ("VDOT") of 28
acres on December 13, 2007. The Prince William County Property was
purchased in December 2005 and the cost of the 28 acres taken by VDOT
was $3,282,000.
Interest expense - Interest expense decreased $1,559,000 over the same
period last year due to higher capitalized interest.
Income taxes - Income tax expense decreased $78,000 over the same
period last year due to decreased earnings.
Income from continuing operations - Income from continuing operations
was $5,852,000 or $1.88 per diluted share for the first nine months of
fiscal 2009, an increase of 2.6% compared to $5,703,000 or $1.82 per
diluted share for the same period last year.
Discontinued operations - The after tax loss from discontinued
operations for the first nine months of fiscal 2009 was $3,098,000
compared to the after tax loss of $898,000 for the same period last
year. Diluted loss per share on discontinued operations for the first
nine months of fiscal 2009 was $1.00 compared to a loss of $.28 in the
first nine months of fiscal 2008. The first nine months of fiscal
2009 includes a loss on the sale of $2,010,000 after tax or $.65 per
diluted share.
Net income - Net income for the first nine months of fiscal 2009 was
$2,754,000 compared to net income of $4,805,000 for the same period
last year. Diluted earnings per common share for the first nine
months of fiscal 2009 were $.88 compared to $1.54 in fiscal 2008.
Increased loss from discontinued operations accounted for the decrease
in earnings. Reduced miles driven in the transportation segment were
more than offset by increased revenue per mile, higher gains on
equipment sales and cost management. The real estate segment's
results were impacted by lower royalty revenues, increased
depreciation and maintenance expense for new buildings that are not
leased, and severance costs but were assisted by increased
capitalization of property taxes and interest expense. Net income for
the first nine months of fiscal 2008 benefited from a gain on
condemnation of land of $1,544,000, net of income taxes but was
adversely impacted by the accrual of retirement benefits of
$1,541,000, net of income tax benefits, for the Company's former
President and CEO, whose retirement was effective February 6, 2008.
Liquidity and Capital Resources. For the first nine months of fiscal
2009, the Company used cash provided by operating activities of
continuing operations of $18,462,000, proceeds from the sale of plant,
property and equipment of $742,000, proceeds from the exercise of
employee stock options of $371,000, excess tax benefits from the
exercise of stock options of $77,000 and cash balances to purchase
$3,064,000 in transportation equipment, to expend $9,762,000 in real
estate development, to invest $350,000 in the Brooksville Joint
Venture and to make $2,989,000 scheduled payments on long-term debt.
Cash provided by operating activities of discontinued operations was
$1,235,000, proceeds from the sale of plant, property and equipment of
discontinued operations was $698,000 and transportation equipment of
discontinued operations was purchased for $1,017,000. Cash increased
$4,403,000.
In June 2009 the Company offered for sale its flatbed trucking
company, SunBelt Transport, Inc. ("SunBelt"). Discussions progressed
such that an agreement of sale was completed August 12, 2009 and
closed August 13, 2009. The purchase price received for the tractors
and trailers and inventories was a $1 million cash payment and the
delivery of a Promissory Note requiring 60 monthly payments of
$130,000 each, secured by the assets of the business conveyed. The
Company retained all pre-closing receivables and liabilities. SunBelt
has been accounted for as discontinued operations in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" (SFAS 144). All
periods presented have been restated accordingly.
Cash flows from operating activities for the first nine months of
fiscal 2009 were $4,805,000 higher than the same period last year
primarily reflecting prepayment of Fiscal 2009 insurance premiums in
September 2008 along with a reduction in accounts receivable due to
lower revenues and lower days sales outstanding.
Cash flows used in investing activities for the first nine months of
fiscal 2009 were $7,556,000 lower due to decreased purchases of
equipment and land. Last year included $3,395,000 for the purchase of
a corporate aircraft and $4,333,000 for the purchase of 118 acres in
Carroll County, Maryland for future warehouse/office development.
Cash flows used in financing activities for the first nine months of
fiscal 2009 were $3,070,000 lower than the same period last year due
to an increase of $191,000 in mortgage payments and reduced stock
options exercised by employees and the prior year including $4,388,000
for the repurchase of Company stock.
The Company has a $37,000,000 uncollaterized Revolving Credit
Agreement which was renewed on October 1, 2008 to extend the term
until December 31, 2013 and to amend the loan covenants. The Revolver
contains limitations including limitations on paying cash dividends.
Under the terms of this amended Revolver agreement, as of June 30,
2009, the full $37,000,000 amount of the line was available for
borrowing and $37,732,000 of consolidated retained earnings was
available for the payment of dividends. The Company was in compliance
with all covenants as of June 30, 2009.
The Company had $16,626,000 of irrevocable letters of credit
outstanding as of June 30, 2009. Most of the letters of credit are
irrevocable for a period of one year and are automatically extended
for additional one-year periods until notice of non-renewal is
received from the issuing bank. Substantially all of these are issued
for workers' compensation and liability insurance retentions. If
these letters of credit are not extended, the Company will have to
find alternative methods of collateralizing or funding these
obligations.
The Board of Directors has authorized Management to repurchase shares
of the Company's common stock from time to time as opportunities
arise. As of June 30, 2009, $5,625,000 was authorized for future
repurchases of common stock. The Company does not currently pay any
dividends on common stock.
The Company has committed to make additional capital contributions of
up to $625,000 to Brooksville Quarry, LLC in connection with a joint
venture with Vulcan.
The Virginia Department of Transportation took title to 28 acres of
the Company's land on December 13, 2007 by filing a Certificate of
Take and depositing with the Court $5,860,000. The Company received
these funds in April 2008. A portion of these funds that were
receivable were used to purchase replacement property in March and the
Company intends to use the balance of the funds for general corporate
purposes until the Company identifies and purchases replacement
property under IRS involuntary conversion rules. On October 15, 2008
the Company agreed to total compensation for the condemnation of
$6,414,000 resulting in an additional amount of $554,000 received
February 2009.
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.
Recent Accounting Pronouncements. In September 2006, the FASB issued
Statement No. 157, Fair Value Measurement (SFAS 157). The Statement
defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This Statement is
effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal
years. In February 2008, the FASB agreed to a one-year delay of FAS
157 for certain nonfinancial assets and liabilities. Accordingly,
adoption of this standard is limited to financial assets and
liabilities, which primarily applies to the valuation of our long term
mortgage debt. Management believes that the adoption of SFAS 157 will
only require additional disclosure on the fair value of its goodwill,
asset retirement obligations, and long-term mortgages and as such will
not have a material impact on the consolidated financial results of
the Company. The Company adopted the applicable provisions of SFAS
157 on October 1, 2008 and its adoption had no affect on consolidated
financial results of the Company.
In February 2007, the FASB issued Statement No. 159 ("SFAS 159"), "The
Fair Value Option for Financial Assets and Financial Liabilities -
Including an Amendment of FASB Statement No 115." This Statement
permits an entity to choose to measure many financial instruments and
certain other items at fair value. A business entity will report
unrealized gains and losses on items for which the fair value option
has been elected in earnings. The fair value option (a) may be
applied instrument by instrument, (b) is irrevocable, and (c) is
applied to entire instruments and not to portions of instruments.
SFAS 159 is effective as of the beginning of an entity's first fiscal
year that begins after November 15, 2007. The Company adopted SFAS
159 on October 1, 2008 and, as of this time, has not elected to
measure financial instruments and other items at fair value that are
not required to be measured at fair value.
In December 2007 the FASB issued Statement No. 141(R) "Business
Combinations" ("FAS 141(R)"). FAS 141(R) requires the acquiring entity
in a business combination to recognize the full fair value of assets
acquired and liabilities assumed in the transaction (whether a full or
partial acquisition); establishes the acquisition-date fair value as
the measurement objective for all assets acquired and liabilities
assumed; requires expensing of most transaction and restructuring
costs; and requires the acquirer to disclose to investors and other
users all of the information needed to evaluate and understand the
nature and financial effect of the business combination. FAS 141(R)
applies prospectively to business combinations for which the
acquisition date is on or after October 1, 2009. The impact of FAS
No. 141R on the consolidated financial statements will depend upon the
nature, terms and size of any acquisitions consummated after the
effective date.
In April 2009, the FASB issued FASB Staff Position No. 107-1 (FSP FAS
107-1) and APB 28-1 (APB 28-1), which amends FASB Statement No. 107,
Disclosures about Fair Value of Financial Instruments and APB Opinion
No. 28, Interim Financial Reporting, to require disclosures about the
fair value of financial instruments for interim reporting periods.
FSP FAS 107-1 and APB 28-1 are effective for the interim reporting
periods ending after June 15, 2009. The Company FSP FAS 107-1 and APB
28-1 for the period ending June 30, 2009.
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS
165"). SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but
before financial statements are issued or are available to be
issued. SFAS 165 is effective for interim or annual financial periods
ending after June 15, 2009. The adoption of SFAS 165 did not impact
our financial position or results of operations. We evaluated all
events or transactions that occurred after June 30, 2009 up through
August 13, 2009, the date we issued these financial statements. (See
Note 13, Subsequent Events).
In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - a replacement of FASB Statement No. 162"
("SFAS 168"). SFAS 168 provides for the FASB Accounting Standards
Codification (the "Codification") to become the single official source
of authoritative, nongovernmental U.S. generally accepted accounting
principles (GAAP). The Codification did not change GAAP but
reorganizes the literature. SFAS 168 is effective for interim and
annual periods ending after September 15, 2009.
Related Party Transactions. The Company, through its transportation
subsidiaries, hauls commodities by tank and flatbed trucks for Vulcan
Materials Company (Vulcan). Charges for these services are based on
prevailing market prices. The real estate subsidiaries lease certain
construction aggregates mining and other properties to Vulcan.
On October 4, 2006, a subsidiary of the Company (FRP) entered into a
Joint Venture Agreement with Vulcan Materials Company (formerly
Florida Rock Industries, Inc.) to form Brooksville Quarry, LLC, to
develop approximately 4,300 acres of land near Brooksville, Florida.
The venture is jointly controlled by Vulcan and FRP, and they each
have a mandatory obligation to fund additional capital contributions
of up to $2 million of which capital contributions of $1,375,000 have
been made by each party as of June 30, 2009. Distributions will be
made on a 50-50 basis except for royalties and depletion specifically
allocated to FRP. Other income for the nine months ended June 30, 2009
and 2008 includes a loss of $5,000 and $20,000, respectively,
representing the Company's equity in the loss of the joint venture.
Summary and Outlook. The flatbed and dry bulk tank portions of the
transportation segment continue to face poor freight demand from the
housing and commercial construction downturns. During the first six
months of fiscal 2009, increased revenue per mile in the
transportation segment and lower fuel expenses offset reduced demand
for flatbed trucking services. However, the comparison was to a weak
first half of the prior year. Business picked up in the second half
of last year and comparable increases did not occur in the third
quarter and are not anticipated during the next months. In the real
estate segment, revenues from mining royalties are expected to be down
versus the prior year. Revenues from the leasing of developed
buildings likewise are expected to weaken from existing levels as our
three new buildings brought into service in the past twelve months
continue to contribute no revenue (but now add their fair share of
depreciation and maintenance expense) and expiring leases, if renewed,
will entail rent concessions from the existing levels. Prospective
tenants for vacant space are significantly fewer than in the past few
years, competition for their contracts are more intense and rental
rates continue to decline from existing levels. The Company is not
presently engaged in the construction of any new buildings.
On March 23, 2009, the Company's tank line subsidiary entered into an
agreement to sell approximately 1.5 acres of land located in Escambia
County, Florida for $1,950,000. The agreement of sale was subject to
certain contingencies, including the satisfactory completion of the
buyer's inspection period. The buyer elected to terminate the
agreement on August 3, 2009.
In July 2008, a subsidiary of the Company, FRP Bird River, LLC,
entered into an agreement to sell approximately 121 acres of land in
Baltimore County, Maryland to Mackenzie Investment Group, LLC. The
purchase price for the property is $25,265,000, subject to certain
potential purchase price adjustments. The agreement of sale is
subject to certain contingencies including government approvals and
closing may be two or more years away. The purchaser has placed non-
refundable deposits of $1,000,000 under this contract in escrow
including $650,000 in March 2009. Preliminary zoning approval for the
number of residential units originally contemplated under the
agreement's pricing contingencies has now been received and the time
for any appeals from that approval expired during the last days of
July 2009.
In May 2008, the Company received final approval from the Zoning
Commission of the District of Columbia of its planned unit development
application for the Company's 5.8 acre undeveloped waterfront site on
the Anacostia River in Washington, D.C. This site is located adjacent
to the recently opened Washington Nationals Baseball Park. The site
currently is leased to a subsidiary of Vulcan Materials Company under
a short-term lease. The approved planned unit development permits
the Company to develop a four building, mixed use project, containing
approximately 545,800 square feet of office and retail space and
approximately 569,600 square feet of additional space for residential
and hotel uses. The approved development would include numerous
publicly accessible open spaces and a waterfront esplanade along the
Anacostia River.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company is exposed to market risk from changes in interest rates.
For its cash and cash equivalents, a change in interest rates affects
the amount of interest income that can be earned. For its debt
instruments with variable interest rates, changes in interest rates
affect the amount of interest expense incurred. The Company prepared
a sensitivity analysis of its cash and cash equivalents to determine
the impact of hypothetical changes in interest rates on the Company's
results of operations and cash flows. The interest-rate analysis
assumed a 50 basis point adverse change in interest rates on all cash
and cash equivalents. However, the interest-rate analysis did not
consider the effects of the reduced level of economic activity that
could exist in such an environment. Based on this analysis,
management has concluded that a 50 basis point adverse move in
interest rates on the Company's cash and cash equivalents would have
an immaterial impact on the Company's results of operations and cash
flows.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the
Company's reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms, and that such information is accumulated and communicated to
management, including the Company's Chief Executive Officer ("CEO"),
Chief Financial Officer ("CFO"), and Chief Accounting Officer ("CAO"),
as appropriate, to allow timely decisions regarding required
disclosure.
The Company also maintains a system of internal accounting controls
over financial reporting that are designed to provide reasonable
assurance to the Company's management and Board of Directors regarding
the preparation and fair presentation of published financial
statements.
All control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance of achieving the desired control
objectives.
As of June 30, 2009, the Company, under the supervision and with the
participation of the Company's management, including the CEO, CFO and
CAO, carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based
on this evaluation, the Company's CEO, CFO and CAO concluded that the
Company's disclosure controls and procedures are effective in alerting
them in a timely manner to material information required to be
included in periodic SEC filings.
There have been no changes in the Company's internal controls over
financial reporting during the first nine months that have materially
affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1A. RISK FACTORS
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, "Item 1A.
Risk Factors" in our Annual Report on Form 10-K for the year ended
September 30, 2008, which could materially affect our business,
financial condition or future results. The risks described in our
Annual Report on Form 10-K are not the only risks facing our
Company. Additional risks and uncertainties not currently known to
us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and/or operating
results.
Item 6. EXHIBITS
(a) Exhibits. The response to this item is submitted as a
separate Section entitled "Exhibit Index", on page 27.
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 13, 2009 PATRIOT TRANSPORTATION HOLDING, INC.
John D. Baker II
John D. Baker II
President and Chief Executive
Officer
|
John D. Milton, Jr.
John D. Milton
Executive Vice President, Treasurer,
Secretary and Chief
Financial Officer
John D. Klopfenstein
John D. Klopfenstein
Controller and Chief
Accounting Officer
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2009
EXHIBIT INDEX
(14) Financial Code of Ethical Conduct between the
Company, Chief Executive Officers and Financial
Managers, as revised on January 28, 2004, which
is available on the Company's website at
www.patriottrans.com.
(31)(a) Certification of John D. Baker II.
(31)(b) Certification of John D. Milton, Jr.
(31)(c) Certification of John D. Klopfenstein.
(32) Certification of Chief Executive Officer, Chief
Financial Officer, and Chief Accounting Officer
under Section 906 of the Sarbanes-Oxley Act of
2002.
Grafico Azioni FRP (NASDAQ:FRPH)
Storico
Da Lug 2024 a Ago 2024
Grafico Azioni FRP (NASDAQ:FRPH)
Storico
Da Ago 2023 a Ago 2024