FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 2000. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-17554 PATRIOT TRANSPORTATION HOLDING, INC. (Exact name of registrant as specified in its charter) Florida 59-2924957 (State or other jurisdiction of (I.R.S. Employer) incorporation or organization) Identification No.) 1801 Art Museum Drive, Jacksonville, Florida 32207 (Address of principal executive offices) (Zip Code) 904/396-5733 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of February 1, 2001: 3,145,566 shares of $.10 par value common stock.
PATRIOT TRANSPORTATION HOLDING, INC. CONSOLIDATED CONDENSED BALANCE SHEET (In thousands) (Unaudited) December 31, September 30, 2000 2000 ASSETS Current assets: Cash and cash equivalents $ 817 $ 633 Accounts receivable: Affiliates 353 233 Other 11,895 11,406 Less allowance for doubtful accounts (708) (869) Inventory of parts and supplies 684 650 Prepaid expenses and other 3,711 3,036 Total current assets 16,752 15,089 Other assets: Real estate held for investment, at cost 5,086 5,216 Goodwill 1,157 1,167 Other 2,542 2,513 Total other assets 8,785 8,896 Property, plant and equipment, at cost 187,538 184,583 Less accumulated depreciation and depletion (62,829) (60,557) Net property, plant and equipment 124,709 124,026 $150,246 $148,011 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term note payable to bank $ 4,700 $ 5,600 Accounts payable: Affiliates 181 569 Other 4,257 5,003 Federal and state income taxes 1,867 1,162 Accrued liabilities 4,032 4,368 Long-term debt due within one year 920 796 Total current liabilities 15,957 17,498 Long-term debt 46,853 42,015 Deferred income taxes 8,628 8,628 Accrued insurance reserves 4,884 4,884 Other liabilities 1,179 1,173 Stockholders' equity: Preferred stock, no par value; 5,000,000 shares authorized - - Common stock, $.10 par value; 25,000,000 shares authorized, 3,151,566 shares issued (3,346,351 at September 30, 2000) 315 335 Capital in excess of par value 11,563 14,740 Retained earnings 60,867 58,738 Total stockholders' equity 72,745 73,813 $150,246 $148,011 See accompanying notes.
PATRIOT TRANSPORTATION HOLDING, INC. CONSOLIDATED CONDENSED STATEMENT OF INCOME (In thousands except per share amounts) (Unaudited) THREE MONTHS ENDED DECEMBER 31, 2000 1999 Revenues: Affiliates $ 4,468 1,616 Non-affiliates 26,232 18,534 30,700 20,150 Cost of operations 23,692 16,543 Gross profit 7,008 3,607 Selling, general and administrative expense: Affiliates 132 207 Non-affiliates 2,410 1,755 2,542 1,962 Operating profit 4,466 1,645 Interest expense (923) (745) Interest income 5 2 Income before income taxes 3,548 902 Provision for income taxes 1,419 352 Net income $ 2,129 $ 550 Basic earnings per common share $ .66 .16 Diluted earnings per common share $ .66 .16 Cash dividends NONE NONE Number of shares used in computing: Basic earnings per share 3,205 3,366 Diluted earnings per share 3,205 3,387 See accompanying notes. PATRIOT TRANSPORTATION HOLDING, INC. CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 (In thousands) (Unaudited) 2000 1999 Cash flows from operating activities: Net income $2,129 550 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, depletion and amortization 2,881 2,642 Net changes in operating assets and liabilities: Accounts receivable (789) (1,126) Inventory of parts and supplies (34) (112) Prepaid expenses (675) (110) Accounts payable and accrued liabilities (766) (644) Net change in insurance reserve and other liabilities 7 26 Gain on disposition of real estate, plant and equipment (2,048) (252) Other, net 31 14 Net cash provided from operating activities 736 988 Cash flows from investing activities: Purchase of property, plant and equipment (4,058) (6,781) Additions to other assets (106) (183) Proceeds from sale of real estate held for investment, property, plant and equipment, and other assets 2,747 338 Net cash used in investing activities (1,417) (6,626) Cash flows from financing activities: Proceeds from long-term debt 5,140 5,000 Net increase in short-term debt (900) 1,600 Repayment of debt (178) (147) Repurchase of Company stock (3,197) (269) Net cash provided from financing activities 865 6,184 Net increase in cash and cash equivalents 184 546 Cash and cash equivalents at beginning of year 633 2,593 Cash and cash equivalents at end of the period $ 817 3,139 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest expense, net of amount capitalized $ 920 722 Income taxes $ 715 131 Non cash investing activities: Additions to property, plant and equipment from exchanges $ - 6 See accompanying notes. PATRIOT TRANSPORTATION HOLDING, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS DECEMBER 31, 2000 (Unaudited) (1) Basis of Presentation. The accompanying consolidated condensed financial statements include the accounts of the Company and its subsidiaries. These statements have been prepared in accordance with 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 (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included. Operating results for the three months ended December 31, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2001. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis" should be read in conjunction with the consolidated financial statements and related notes of Patriot Transportation Holding, Inc. for the year ended September 30, 2000. (2) Industry Segments. The Company has identified two business segments each of which is managed separately along product lines. All the Company's operations are in the United 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):
Three Months Ended December 31 2000 1999 Revenues: Transportation $ 24,940 17,523 Real estate 5,760 2,627 $ 30,700 20,150 Operating profit Transportation $ 904 561 Real estate 3,955 1,455 Corporate expenses (393) (371) Operating profit $ 4,466 1,645 Identifiable assets, at quarter end Transportation $ 54,574 53,735 Real estate 94,347 89,411 Cash items 817 1,117 Unallocated corporate assets 508 509 $150,246 144,772 (3) Spin-off of Real Estate Business. On August 2, 2000, the Board of Directors approved a resolution to delay consummation of the previously approved reorganization of the Company until some date beyond July 1, 2001. The reorganization will require reauthorization by the Board. The reorganization would result in spinning off to its shareholders a new company which would include the real estate business, while retaining the transportation business in Patriot Transportation Holding, Inc. The Company has obtained a tax ruling from the Internal Revenue Service that confirms that the proposed transaction will be tax-free to the shareholders. Management has recommended delaying the spin-off due to the turbulent conditions in the trucking industry and the need to complete separate internal information systems for its Transportation and Real Estate Groups. The Company also wants to provide additional time for development of its new agent/owner-operator subsidiary. For information concerning selected information concerning real estate business, see Note 2. (4) Related Party Transaction. In November 2000, the Company sold two parcels of land to Florida Rock Industries, Inc., an affiliate for $2,607,000 and recognized a pre-tax gain of $2,034,000. The transaction including the purchase price were reviewed and approved on behalf of the Company by a committee of independent directors after obtaining independent appraisals. (5) Contingent Liabilities. The Company and its subsidiaries are subject to legal proceedings and claims arising out of their businesses that cover a wide range of matters. Additional information concerning these matters is presented in Note 11 to the consolidated financial statements included in the Company's 2000 Annual Report to Stockholders. Such information is incorporated herein by reference. MANAGEMENT'S DISCUSSION AND ANALYSIS Operating Results For the first fiscal quarter, ending December 31, 2000, consolidated revenues increased 52.4% to $30,770,000 from $20,150,000 last year. The Transportation Group revenues for the first quarter increased 42.3% to $24,940,000 from $17,523,000 last year as a result of a 30% increase in miles hauled and a modest increase in pricing over the same quarter last year. Three-fourths of the increase in miles hauled resulted from growth at the Company's new third-party agent/owner-operator subsidiary which started operations in December 1999. Most of the balance of the increase in miles hauled came from growth in the tank line operations which also benefited from modest price increases. Real estate revenues for the first quarter of fiscal 2001 were $5,760,000, an increase of $3,133,000 from the same quarter last year primarily as a result of property sales of $2,607,000. The Company did not have any property sales during the first quarter of fiscal 2000. Consolidated gross profit increased $3,401,000 to $7,008,000 for the first fiscal quarter of 2001 due to gross profit from property sales of $2,034,000, an increase in the Transportation Group's gross profit and an increase in the real estate operations. The Transportation Group's gross profit for the first quarter of fiscal 2001 was $3,048,000, an increase of 42% over the same quarter last year. This increase was primarily attributed to the increased miles and improved gross margins and fuel surcharges in the tank line business along with gross profits generated by the new transportation subsidiary. The Real Estate Group's gross profit excluding property sales increased 32% from the same quarter last year to $1,926,000 as a result of increased royalties from the mining properties and increased rentals from additional developed properties. Administrative expense for the quarter increased to $2,542,000 from $1,962,000 in the same quarter last year. This increase is primarily due to additional administrative support for the start up the new transportation subsidiary which began operations at the end of the first quarter last year. Costs have also increased as the Company began establishing its own in-house information technology resources. Administrative expense as a percentage of consolidated revenues, excluding property sales, was 9% compared to 9.7% in the same quarter last year. Interest expense increased 23.9% to $923,000 from $745,000 last year, due to an increase in the average debt outstanding and an increase in average interest rate. Income tax expense was $1,419,000 as compared to $352,000 last year primarily as a result of higher income before tax. Income tax expense was 40% of income before income taxes as compared to 39% last year. Summary and Outlook A deteriorating economy will accentuate challenges already faced by the U.S. domestic trucking industry. While labor markets loosen somewhat and driver hiring becomes less of an obstacle, freight demand is slowing markedly, risk insurance markets remain challenging and fuel pricing continues as a critical issue. Corresponding softening within the national manufacturing and distribution sectors could result in decreased demand for flexible warehouse office capacities. While the Company's growth objectives remain unchanged for both Transportation and Real Estate, a slowing national economic picture could result in reduced progress until firming occurs. Financial Condition For the first quarter of fiscal 2001, net cash flows from operating activities were $736,000 which along with issuing long-term debt and sales of real estate funded the Company's purchase of additional property, plant and equipment of $4,058,000 and repurchase of 195,785 shares of common stock for $3,197,000. For the first quarter of fiscal 2000, net cash flows from operating activities were $988,000 which along with issuing addition long and short term debt funded the Company's investing activities of $6,626,000 and repurchase of common stock of $269,000. The Company continues to maintain its sound financial condition with sufficient resources to meet anticipated capital expenditures and other operating requirements. The Company's revolving credit facility will convert to a term loan on November 15, 2001 if not modified before then. The Company will be evaluating and discussing its long-term credit needs with its bank group and anticipates it will be extended or modified before it converts to a term loan. Other During fiscal 2000, the transportation segment's ten largest customers accounted for approximately 36% of transportation's revenue. The loss of any one of these customers could have an adverse effect on the Company's revenue and income. While the Company is affected by environmental regulations, such regulations are not expected to have a major effect on the Company's capital expenditures or operating results. Additional information concerning environmental matters is presented in Note 11 to the consolidated financial statements included in the Company's 2000 Annual Report to Stockholders. Such information is incorporated herein by reference. Forward-Looking Statements. Certain matters discussed in this report contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements. These forward-looking statements relate to, among other things, capital expenditures, liquidity, capital resources, competition and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "management believes," "the Company believes," "the Company intends" and similar words or phrases. The following factors are among the principal factors that could cause actual results to differ materially from the forward-looking statements: deteriorating economy; availability and terms of financing; competition; labor market for drivers; freight demand; risk insurance markets; demand for flexible warehouse office capacities; national economic picture; fuel costs; and inflation. Quantitative and Qualitative Disclosure About Market Risks. There are no material changes to the disclosures made in Form 10-K for the fiscal year ended September 30, 2000 on this matter. PART II OTHER INFORMATION Item 1. Legal Proceedings Note 11 to the consolidated financial statements included in the Company's 2000 Annual Report to Stockholders is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The response to this item is submitted as a separate Section entitled "Exhibit Index", starting on page 10. (b) Reports on Form 8-K. During the three months ended December 31, 2000, no reports on Form 8-K were filed by the Company. 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. February 7, 2001 PATRIOT TRANSPORTATION HOLDING, INC. John E. Anderson President and Chief Executive Officer Ray M. Van Landingham Vice President Finance & Administration and Chief Financial Officer
PATRIOT TRANSPORTATION HOLDING, INC. FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2000 EXHIBIT INDEX (3)(a)(1) Articles of Incorporation of FRP Properties, Inc. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (3)(a)(2) Amendment to the Articles of Incorporation of Patriot Transportation Holding, Inc. filed with the Secretary of State of Florida on February 19, 1991. Previously filed with Form 10-K for the fiscal year ended September 30, 1993. file No. 33-26115. (3)(a)(3) Amendments to the Articles of Incorporation of Patriot Transportation Holding, Inc. filed with the Secretary of State of Florida on February 7, 1995. Previously filed as appendix to the Company's Proxy Statement dated December 15, 1994. (3)(a)(4) Amendment to the Articles of Incorporation, filed with the Florida Secretary of State on May 6, 1999. A form of such amendment was previously filed as Exhibit 4 to the Company's Form 8-K dated May 5, 1999. File No. 33-26115. (3)(a)(5) Amendment to the Articles of Incorporation of Patriot Transportation Holding, Inc. filed with the Secretary of State of Florida on February 21, 2000. Previously filed with Form 10-Q for the quarter ended March 31, 2000. File No. 33-26115. (3)(b)(1) Restated Bylaws of Patriot Transportation Holding, Inc. adopted December 1, 1993. Previously filed with Form 10-K for the fiscal year ended September 30, 1993. File No. 33-26115. (3)(b)(2) Amendment to the Bylaws of Patriot Transportation Holding, Inc. adopted August 3, 1994. Previously filed with Form 10-K for the fiscal year ended September 30, 1994. File No. 33-26115. (4)(a) Articles III, VII and XII of the Articles of Incorporation of Patriot Transportation Holding, Inc. Previously filed with Form S-4 dated December 13, 1988. And amended Article III filed with Form 10-K for the fiscal year ended September 30, 1993. And Articles XIII and XIV previously filed as appendix to the Company's Proxy Statement dated December 15, 1994. File No. 33-026115. (4)(b) Specimen stock certificate of Patriot Transportation Holding, Inc. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (4)(c) Credit Agreement dated as of November 15, 1995 among Patriot Transportation Holding, Inc.; SunTrust Bank, Central Florida, National Association; Bank of America Illinois; Barnett Bank of Jacksonville, N.A.; and First Union National Bank of Florida. Previously filed with Form 10-Q for the quarter ended December 31, 1995. File No. 33-26115. (4)(c)(1) First Amendment dated as of September 30, 1998 to the Credit Agreement dated as of November 15, 1995. Previously filed with Form 10-K for the year ended September 30, 1998. File No. 33-26115. (4)(c)(2) Second Amendment dated as of October 31, 2000 to the Credit Agreement dated as of November 15, 1995. File No. 33-26115. (4)(d) The Company and its consolidated subsidiaries have other long-term debt agreements which do not exceed 10% of the total consolidated assets of the Company and its subsidiaries, and the Company agrees to furnish copies of such agreements and constituent documents to the Commission upon request. (4)(e) Rights Amendment, dated as May 5, 1999 between the Company and First Union National Bank. Previously filed as Exhibit 4 to the Company's Form 8-K dated May 5, 1999. File No. 33-26115. (10)(a) Post Distribution Agreement, dated May 7, 1986, by and between Florida Rock Industries, Inc. and Florida Rock & Tank Lines, Inc. and amendments thereto dated July 1, 1987 and September 27, 1988. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(b) Tax Sharing Agreement, dated May 7,1986, between Florida Rock Industries, Inc. and Florida Rock & Tank Lines, Inc. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(c) Various leasebacks and mining royalty agreements with Florida Rock Industries, Inc., none of which are presently believed to be material individually, except for the Mining Lease Agreement dated September 1, 1986, between Florida Rock Industries Inc. and Florida Rock Properties, Inc., successor by merger to Grandin Land, Inc. (see Exhibit (10)(e)), but all of which maybe material in the aggregate. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(d) License Agreement, dated June 30, 1986, from Florida Rock Industries, Inc. to Florida Rock & Tank Lines, Inc. to use "Florida Rock" in corporate names. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(e) Mining Lease Agreement, dated September 1, 1986, between Florida Rock Industries, Inc. and Florida Rock Properties, Inc., successor by merger to Grandin Land, Inc. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(f) Summary of Medical Reimbursement Plan of Patriot Transportation Holding, Inc. Previously filed with Form 10-K for the fiscal year ended September 30, 1993. File No. 33-26115. (10)(g) Split Dollar Agreement dated October 3, 1984, between Edward L. Baker and Florida Rock Industries, Inc. and assignment of such agreement, dated January 31, 1986 from Florida Rock Industries, Inc. to Florida Rock & Tank Lines, Inc. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(h) Summary of Management Incentive Compensation Plans. Previously filed with Form 10-K for the fiscal year ended September 30, 1994. File No. 33-26115. (10)(I) Management Security Agreements between the Company and certain officers. Form of agreement previously filed as Exhibit (10)(I) with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(I)(1) Patriot Transportation Holding, Inc. Employee Stock Option Plan. Previously filed with Form S-4 dated December 13, 1988. File No. 33-26115. (10)(I)(2) Patriot Transportation Holding, Inc. 1995 Stock Option Plan. Previously filed as an appendix to the Company's Proxy Statement dated December 15, 1994. File No. 33-26115. (10)(I)(3) Patriot Transportation Holding, Inc. 2000 Stock Option Plan. Previously filed as an appendix to the Company's Proxy Statement dated December 15, 1999. File No. 33-26115. (11) Computation of Earnings Per Common Share. (27) Financial Data Schedule (99) Note 11 of the Notes to Financial Statements included in the Company's Form 10-K for the year ended September 30, 2000.