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<SEC-DOCUMENT>0000844059-03-000011.txt : 20031224
<SEC-HEADER>0000844059-03-000011.hdr.sgml : 20031224
<ACCEPTANCE-DATETIME>20031224113849
ACCESSION NUMBER: 0000844059-03-000011
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 9
CONFORMED PERIOD OF REPORT: 20030930
FILED AS OF DATE: 20031224
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PATRIOT TRANSPORTATION HOLDING INC
CENTRAL INDEX KEY: 0000844059
STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING & COURIER SERVICES (NO AIR) [4210]
IRS NUMBER: 592924957
STATE OF INCORPORATION: FL
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-17554
FILM NUMBER: 031073166
BUSINESS ADDRESS:
STREET 1: 1801 ART MUSEUM DRIVE
CITY: JACKSONVILLE
STATE: FL
ZIP: 32207
BUSINESS PHONE: 9043965733
MAIL ADDRESS:
STREET 1: 1801 ART MUSEUM DRIVE
CITY: JACKSONVILLE
STATE: FL
ZIP: 32207
FORMER COMPANY:
FORMER CONFORMED NAME: FRP PROPERTIES INC
DATE OF NAME CHANGE: 19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>septtext.txt
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2003
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.)
1801 Art Museum Drive, Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 904/396-5733
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). Yes No X
At December 8, 2003 aggregate market value of the shares of Common
Stock held by non-affiliates of the registrant was $47,493,379. At
such date there were 2,934,108 shares of the registrant's stock
outstanding.
Documents Incorporated by Reference
Portions of the Patriot Transportation Holding, Inc. 2003 Annual
Report to Shareholders are incorporated by reference in Parts I and
II.
Portions of the Patriot Transportation Holding, Inc. Proxy Statement
dated December 31, 2003 are incorporated by reference in Part III.
PART I
Item 1. BUSINESS.
Patriot Transportation Holding, Inc., which was incorporated in
Florida in 1988, and its subsidiaries (the "Company") are
engaged in the transportation and real estate businesses.
The Company's transportation business is conducted through two
wholly owned subsidiaries, Florida Rock & Tank Lines, Inc.
("Tank Lines"), and SunBelt Transport, Inc. ("SunBelt"). Tank
Lines is a Southeastern U.S. based transportation company
concentrating in the hauling of primarily petroleum related
liquids and other liquids and dry bulk commodities by tank
trucks. SunBelt serves the flatbed portion of the trucking
industry in the Southeast, Midwest and Mid-Atlantic states,
hauling primarily construction materials. A third
transportation subsidiary, Patriot Transportation, Inc. ("PTI")
closed operations in September 2001.
The Company's real estate activities are conducted through
several wholly owned subsidiaries. Florida Rock Properties,
Inc. ("Properties") owns real estate of which a substantial
portion is under mining royalty agreements or leased to Florida
Rock Industries, Inc. ("FRI"), a related party. FRI accounted
for approximately 39% of the Company's real estate revenues for
Fiscal 2003. Properties also holds certain other real estate
for investment. FRP Development Corp. ("Development") owns,
manages and develops commercial warehouse/office rental
properties near Baltimore, Maryland. Substantially all of the
real estate operations are conducted within the Southeastern
and Mid-Atlantic United States.
The Company has two business segments: transportation and real
estate. Industry segment information is presented in Notes 2
and 10 to the consolidated financial statements included in the
accompanying 2003 Annual Report to Shareholders and is
incorporated herein by reference.
Revenues from royalties and from a portion of the trucking
operations are subject to factors affecting the level of
general construction activity. A decrease in the level of
general construction activity in any of the Company's market
areas may have an adverse effect on such revenues and income
derived therefrom.
Transportation. Tank Lines is engaged in hauling primarily
petroleum related liquids and other liquid and dry bulk
commodities by tank trucks. SunBelt is engaged primarily in
hauling building and construction materials on flatbed
trailers. Before closing its operations in September 2001, PTI
was engaged in the hauling of a variety of cargo through
independent agents and owner-operators.
During Fiscal 2003, Tank Lines operated from terminals in
Jacksonville, Orlando, Panama City, Pensacola, Port Everglades,
Tampa and White Springs, Florida; Albany, Atlanta, Augusta,
Bainbridge, Columbus, Dalton, Macon and Savannah, Georgia;
Knoxville, Tennessee; Charlotte and Wilmington, North Carolina;
and Charleston, South Carolina. Tank Lines has from two to six
major tank truck competitors in each of its markets.
On May 30, 2002, Tank Lines acquired substantially all of the
operating assets of Infinger Transportation Company, Inc.
(Infinger), a regional tank truck carrier based in Charleston,
South Carolina. The purpose of the acquisition was to enable
the Company to expand into new markets and increase capacity in
existing markets.
SunBelt's owned and leased flatbed fleet is based in
Jacksonville and Tampa, Florida; Atlanta and Savannah, Georgia;
and South Pittsburg, Tennessee and hauls primarily building and
construction materials in Southeastern, Midwestern and Mid-
Atlantic states. There are at least ten major competitors in
SunBelt's market area and numerous small competitors in the
various states served.
The Company discontinued the operation of its third-party
agent/owner-operator subsidiary, PTI, on September 30, 2001.
PTI hauled a variety of cargo, throughout the United States,
through independent contractors until it ceased operations. PTI
began operations in December 1999 and was a non-asset based
variable cost transportation company that provided
transportation services to shippers through a network of
independent sales agents and contractors. Independent sales
agents and contractors were compensated based on a percentage
of revenue generated by them. The Company decided to close PTI
due to declining operating margins, high administrative costs
to support this start up business, sharply higher liability
insurance costs and an adverse economic climate. PTI was
dissolved October 4, 2002 and ceased to exist as a legal
entity. Additional information is presented in Note 3 to the
consolidated financial statements included in the accompanying
2003 Annual Report to Shareholders and is incorporated herein
by reference.
The Company was committed at September 30, 2003 to purchase
nine trailers and no tractors and plans to continue its routine
fleet replacement and modernization program during 2004.
The transportation segment primarily serves customers in the
petroleum and building and construction industries. Petroleum
customers accounted for approximately 67% and building and
construction customers accounted for approximately 22% of
transportation segment revenues for the year ended September
30, 2003.
The Company hauls construction aggregates, diesel fuel and
supplies for FRI. Revenues from services provided to FRI
accounted for 1.6% of the transportation segment's revenues.
Price, service, and location are the major factors which affect
competition in the transportation segment within a given
market.
During Fiscal 2003, the transportation segment's ten largest
customers accounted for approximately 38% of the transportation
segment's revenue. The loss of any one of these customers could
have an adverse effect on the Company's revenues and income.
Real Estate. The Company's real estate and property development
activities are conducted through several wholly owned
subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, and Washington, D.C. The real estate owned falls
generally into one of three categories: (i) land and/or
buildings leased under rental agreements or being developed for
rental; (ii) construction aggregates properties with stone or
sand and gravel deposits, substantially all of which is leased
to FRI under mining royalty agreements, as to which the Company
is paid a percentage of the revenues generated by the material
mined and sold, or minimum royalties where there is no current,
or only limited, mining activity; and, (iii) land that is being
held for future appreciation or development.
Additional information about the Company's real estate segment
is contained on page 1 under the captions "Real Estate Group"
and in Notes 2 and 10 to the consolidated financial statements
included in the accompanying 2003 Annual Report to Shareholders
and is incorporated herein by reference.
The Company's real estate strategy of developing high quality,
flexible warehouse/office space continues to be successful as
average occupancy for the fiscal year for buildings in service
for more than 12 months was 92.7%. At September 30, 2003, 88.9%
of the total warehouse/office portfolio of approximately 1.7
million square feet was leased.
Price, location, rental space availability, flexibility of
design, and property management services are the major factors
that affect competition in the flexible warehouse/office rental
market. The Company experiences considerable competition in all
of its markets.
Real estate revenues in Fiscal 2003 were divided approximately
69% from rentals, 30% from mining and minimum royalties and 1%
from property sales. FRI accounted for approximately 39% of
total revenues. Tenants of flexible warehouse/office properties
are not concentrated in any one particular industry.
A subsidiary of the Company signed an Agreement in February
2002 to sell 108 acres of land located in Springfield, Virginia
to FRI for $15,000,000. Closing is subject to a title search
and surveys and is to occur within 45 days of FRI giving notice
to close. If FRI fails to close by December 31, 2004, at no
fault of the Company, the Company may retain the $100,000
binder deposit and be under no further obligation to close. FRI
has the right to terminate this Agreement if the consummation
of the sale would cause a default in the Credit Agreement among
FRI and Wachovia Bank, N.A., et. al. The Agreement was approved
by a committee of independent directors of the Company after
review of a development feasibility study and other materials,
consultation with management, and advice of independent
counsel.
The Company announced in May 2003 that a subsidiary has agreed
to sell a 935 acre parcel of property in Miami, Florida to FRI
for $1,638,000. The property is principally composed of mined-
out lakes, mitigation areas, 145 acres of mineable land and 32
acres of roads and railroad track right-of-ways. The closing of
the sale is to occur no later than December 31, 2004. The terms
of the agreement were approved by the Company's Audit
Committee, which is comprised of independent directors, after
considering, among other factors, the terms of the existing
lease agreement and consultation with management.
A subsidiary of the Company agreed on December 3, 2003 to sell
a parcel of land containing approximately 6,321 acres in
Suwannee and Columbia Counties, near Lake City, Florida, to FRI
for $13,000,000 in cash. The sale is subject to a definitive
agreement and the closing date is to be determined. The sales
price was approved by the Company's Audit Committee which is
composed of independent directors after considering among other
factors, an independent appraisal, the current use of the
property and consultation with management.
Environmental Matters. While the Company is affected by
environmental regulations, such regulations are not expected to
have a major effect on the Company's capital expenditures or
operating results.
Employees. The Company employed approximately 845 people in its
transportation group, 11 people in its real estate group, and 4
people in its corporate offices at September 30, 2003.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office Position Since
Edward L. Baker 68 Chairman of the Board May 3, 1989
John E. Anderson 58 President & Chief Feb. 17, 1989
Executive Officer
David H.
DeVilliers, Jr. 52 Vice President of the Feb. 28, 1994
Company and President
of the Company's Real
Estate Group
Ray M. VanLandingham 60 Vice President, Finance Dec. 6, 2000
and Administration
and Chief Financial
Officer
Gregory B. Lechwar 36 Controller and Chief
Accounting Officer Oct. 2, 2002
Rick J. Copley 46 President of SunBelt Sept 16, 2002
Transport, Inc.
Robert E. Sandlin 42 President of Florida March 1, 2003
Rock & Tank Lines, Inc.
All of the above officers have been employed in their
respective positions for the past five years except as follows:
Ray Van Landingham was Vice President, Finance and
Administration of the Jacksonville Port Authority from December
1991 to November 2000; Gregory B. Lechwar has been employed by
the Company in various accounting positions since October 1999,
and from August 1991 until October 1999, Mr. Lechwar was
employed as a Certified Public Accountant with
PricewaterhouseCoopers LLP; Rick J. Copley was a Vice President
of SunBelt from 1993 to September 2002; and Robert E. Sandlin
was a Vice President of Florida Rock & Tank Lines from 1993
until March 2003.
John D. Baker II, who is the brother of Edward L. Baker, and
Thompson S. Baker II, who is the son of Edward L. Baker, are on
the Board of Directors of the Company.
All executive officers of the Company are elected by the Board
of Directors.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida,
Georgia, Virginia, Washington, D.C., and Maryland.
Transportation Properties. At September 30, 2003, the Company
operated and owned a fleet of approximately 563 trucks, and
owned a fleet of approximately 837 trailers. The Company has 21
sites for its trucking terminals in Florida, Georgia, North
Carolina, South Carolina and Tennessee. The Company owns 12 of
these sites and leases 9.
Development Properties. At September 30, 2003, the Company
owned nine parcels of land totaling 432 acres near Baltimore,
Maryland as follows:
Hillside Business Park in Anne Arundel County is a 59 acre
tract near the Baltimore-Washington International Airport. The
project will provide the Company an opportunity to develop
approximately 575,000 square feet of warehouse/office space.
Infrastructure work on the site is nearing completion and the
first two planned buildings within the park are completed and
contain 274,800 square feet of leaseable warehouse/office
space. One building with 200,200 square feet is leased to one
tenant for 15 years. The other building is available lease.
Lakeside Business Park in Harford County consists of 134 acres.
Seven warehouse/office buildings, totaling 671,918 square feet,
have been constructed and are 87% leased. The remaining 32.8
acres are available for future development and will offer an
additional 485,200 square feet of comparable product.
6920 Tudsbury Road in Baltimore County contains 5.3 acres with
83,100 square feet of warehouse/office space that is 100%
leased.
8620 Dorsey Run Road in Howard County contains 5.8 acres with
84,600 square feet of warehouse/office space that is 100%
leased.
Rossville Business Center in Baltimore County contains
approximately 10 acres with 190,517 square feet of
warehouse/office space and is 88% leased.
34 Loveton Circle in suburban Baltimore County contains 8.5
acres with 29,722 square feet of office space which is 100%
leased. The Company occupies 11% of the space and 23% is leased
to FRI.
Oregon Business Center in Anne Arundel County contains
approximately 17 acres with 195,615 square feet of
warehouse/office space which is 100% leased.
Arundel Business Center in Howard County contains approximately
11 acres with 162,796 square feet of warehouse/office space,
which is 100% leased.
Bird River in southeastern Baltimore County, Maryland, is a 179
acre tract of land held for future development. This development
tract has direct access to the proposed Maryland State Road 43
intended to connect I-95 with Martin State Airport. This
property is currently zoned for residential and commercial use
with 115.6 developable acres. The Company plans to develop and
lease approximately 502,000 square feet of multiple
warehouse/office buildings on the 42 developable acres zoned for
commercial use.
A subsidiary of the Company has entered into an agreement to
develop and sell to a major home builder a minimum of 292
residential lots on the residential portion of the Bird River
Property. The minimum aggregate purchase price for these lots is
$28,705,000.
The rights and obligations of the subsidiary under this
agreement are specifically contingent upon the approval by
Baltimore County of a Planned Unit Development (PUD) by July 1,
2006 which will permit the development of and use of the
property for a minimum of 292 residential lots. The
subsidiary's rights and obligations are also expressly
contingent upon the construction of the proposed Route 43 and
the subsidiary's ability to have vehicular, water and sewer
connection access to the property by July 1, 2007 at what the
subsidiary deems, in its sole discretion, to be a commercially
reasonable cost. The obligations of the builder under the
agreement also are subject to customary conditions precedent.
The Company owns approximately 120 acres of land in Virginia, 8
acres in Washington, D.C. and an office building with
approximately 69,000 square feet situated on approximately 6
acres in Jacksonville, Florida, all of which are leased to FRI.
At September 30, 2003 certain developed real estate properties
having a carrying value of $44,432,000 were pledged on long-
term non-recourse notes with an outstanding principal balance
totaling $39,361,000. In addition, certain other properties
having a carrying value at September 30, 2003 of $876,000 were
encumbered by industrial revenue bonds that are the liability
of FRI. FRI has agreed to pay such debt when due (or sooner if
FRI cancels its lease of such property), and further has agreed
to indemnify and hold harmless the Company on account of such
debt.
The Company owns a 5.8 acre parcel of undeveloped real estate
in the southeast quadrant of Washington D.C. that fronts the
Anacostia River and has been working with the District of
Columbia Zoning Commission to obtain appropriate zoning for
development. The Zoning Commission granted in 2003 preliminary
approval of the size and use of a PUD and gave the Company
until May of 2004 to submit modified drawings that would
conform to the approved design guidelines. The design
guidelines provide for a maximum allowable commercial
development of 625,000 square feet and a minimum residential
development of 440,000 square feet. If approval of the redesign
is obtained, the Company will have an additional two years to
begin development of the site in accordance with the approved
PUD.
The Company also owns a 2.1 acre tract nearby on the same bank
of the Anacostia River. The two sites are currently leased to
FRI under leases expiring in April 2006. The Company will
continue to explore opportunities for eventual development of
these properties.
Construction Aggregates Properties. The following table
summarizes the Company's principal construction aggregates
locations and estimated reserves at September 30, 2003,
substantially all of which are leased to FRI.
Tons of
Tons Sold Estimated
in Year Reserves
Ended at
9/30/03 9/30/03 Approximate
(000's) (000's) Acres Owned
The Company owns eleven
locations currently being
mined in Brooksville,
Grandin, Gulf Hammock,
Keuka, Newberry and Airgrove/
Lake County, Florida;
Columbus, Macon, Forest Park
and Tyrone, Georgia;
and Manassas, Virginia. 9,805 508,590 17,135
The Company owns five locations
not currently being mined in
Ft. Myers, Miami, Marion County,
Astatula/Lake County and
Sandland/Polk County, Florida - 32,891 3,340
Other Properties. In addition to the development, mining and
rental sites, the Company owns approximately 8,373 acres of
investment and other real estate, of which approximately 6,321
acres are in Suwannee County and Columbia County, Florida and
are leased to FRI.
The Company continues permitting and preliminary horizontal
development work for a 50-acre, rail accessable site on
Commonwealth Avenue in Jacksonville, Florida near the western
beltway of Interstate-295. This site is planned for
approximately 500,000 square feet of eventual warehouse/office
build-out.
Item 3. LEGAL PROCEEDINGS.
Note 14 to the Consolidated Financial Statements included in
the accompanying 2003 Annual Report to Shareholders is
incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No reportable events.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.
There were approximately 718 holders of record of Patriot
Transportation Holding, Inc. common stock, $.10 par value, as
of December 8, 2003. The Company's common stock is traded on
the Nasdaq Stock Market (Symbol PATR). Information concerning
stock prices is included under the caption "Quarterly Results"
on page 5 of the Company's 2003 Annual Report to Shareholders,
and such information is incorporated herein by reference. The
Company has not paid a cash dividend in the past and it is the
present policy of the Board of Directors not to pay cash
dividends. Information concerning restrictions on the payment
of cash dividends is included in Note 4 to the consolidated
financial statements included in the accompanying 2003 Annual
Report to Shareholders and such information is incorporated
herein by reference. Information regarding securities
authorized for issuance under equity compensation plans is
included in Item 12 of Part III of this Annual Report on Form
10-K and such information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
Information required in response to this Item 6 is included
under the caption "Five Year Summary" on page 5 of the
Company's 2003 Annual Report to Shareholders and such
information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Information required in response to Item 7 is included under
the caption "Management Analysis" on pages 6, 7 and 8; under
the caption "Capital Expenditures" on page 1; and in Notes to
Consolidated Financial Statements included in the accompanying
2003 Annual Report to Shareholders. Such information is
incorporated herein by reference.
Item 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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
variable rate borrowings 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 borrowings under the credit agreement. 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 outstanding borrowings under the credit agreement
would have an immaterial impact on the Company's results of
operations and cash flows.
The following table provides information about the Company's
financial instruments that are sensitive to changes in interest
rates (dollars in thousands):
There Fair
Liabilities: 2004 2005 2006 2007 2008 after Total Value
Long-term debt:
Fixed Rate $ 1,545 1,607 1,732 1,848 1,996 30,636 39,360 41,795
Average
interest rate 7.2% 7.2 7.2 7.2 7.2 7.2
Variable Rate $20,000 20,000 20,000
Average
interest rate 3.2%
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included
under the caption "Quarterly Results" on page 5 and on pages 9
through 18 of the Company's 2003 Annual Report to Shareholders.
Such information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
On May 1, 2002, the Board of Directors of the Company, upon
recommendation of its Audit Committee, decided to dismiss
Deloitte & Touche LLP ("Deloitte & Touche") as the Company's
principal public accountants and engaged PricewaterhouseCoopers
LLP ("PricewaterhouseCoopers") to serve as the Company's
principal public accountants for a three year term beginning
with fiscal year 2002.
Deloitte & Touche's reports on the consolidated financial
statements of the Company and its subsidiaries for the two most
recent fiscal years ended September 30, 2001 did not contain
any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or
accounting principles.
During the Company's two fiscal years ended September 30, 2001
and the subsequent interim periods through March 31, 2002,
there were no disagreements between the Company and Deloitte &
Touche on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to Deloitte & Touche's
satisfaction, would have caused them to make reference to the
subject matter of the disagreement in connection with their
reports; and there were no reportable events as described in
Item 304(a)(1)(v) of Regulation S-K.
The Company provided Deloitte & Touche with a copy of the
foregoing disclosures.
During the Company's two fiscal years ended September 30, 2001,
the Company did not consult PricewaterhouseCoopers with respect
to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated
financial statements, or any other matters or reportable events
as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the executive officers of the Company is
set forth under the caption "Executive Officers of the Company"
in Part I of this Form 10-K.
Information concerning directors (including the disclosure
regarding audit committee financial experts), required in
response to this Item 10, is included under the captions
"Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement and such
information is incorporated herein by reference. The Proxy
Statement will be filed with the Securities and Exchange
Commission not later than December 31, 2003.
The Company has adopted a Financial Code of Ethical Conduct
applicable to its principal executive officers, principal
financial officers and principal accounting officers. A copy of
this Financial Code of Ethical Conduct is filed as an Exhibit
to this Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item 11 is included
under the captions "Executive Compensation," "Compensation
Committee Report," "Compensation Committee Interlocks and
Insider Participation," and "Shareholder Return Performance" in
the Company's Proxy Statement and such information is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information required in response to this Item 12 is included
under the captions "Common Stock Ownership of Certain
Beneficial Owners" and "Common Stock Ownership by Directors and
Officers" in the Company's Proxy Statement and such information
is incorporated herein by reference.
Equity Compensation Plan Information
Number of
Securities
remaining
available
for
Number of future
Securities Weighted issuance
to be Average under equity
issued upon exercise compensation
exercise of price of plans
outstanding outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
Plan Category (a) (b) (c)
Equity compensation
plans approved by
security holders 299,500 21.85 258,000
Equity compensation
plans not approved
by security holders 0 0 0
Total 299,500 21.85 258,000
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required in response to this Item 13 is included
under the captions "Compensation Committee Interlocks and
Insider Participation" and "Certain Relationships and Related
Transactions" in the Company's Proxy Statement and such
information is incorporated herein by reference.
Item 14. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. As required
by Rule 13a-15 under the Exchange Act, the Company carried out
an evaluation of the effectiveness of the design and operation
of the Company's disclosure controls and procedures as of
September 30, 2003. This evaluation was carried out under the
supervision and with the participation of the Company's
management, including the Company's President and Chief
Executive Officer, Chief Financial Officer and Chief Accounting
Officer. Based upon that evaluation, the Company's President
and Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer have concluded that the Company's disclosure
controls and procedures are effective in timely alerting them
to material information relating to the Company required to be
included in the Company's periodic SEC filings.
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information
required to be disclosed in Company reports filed or submitted
under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities
and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and
procedures designed to ensure that information required to be
disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the
Company's Chief Executive Officer, Chief Financial Officer and
Chief Accounting Officer as appropriate, to allow timely
decisions regarding required disclosures.
Changes in internal controls. There have been no changes in
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) (1) and (2) Financial Statements and Financial Statement
Schedules.
The response to this item is submitted as a separate
section. See Index to Financial Statements and Financial
Statement Schedules on page 21 of this Form 10-K.
(3) Exhibits.
The response to this item is submitted as a separate
section. See Exhibit Index on pages 18 through 20 of this
Form 10-K.
(b) Reports on Form 8-K.
On July 29, 2003, the Company filed a Form 8-K reporting
under Item 7, a press release announcing its earnings for
the third quarter of 2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Patriot Transportation Holding, Inc.
Date: December 23, 2003 By JOHN E. ANDERSON
John E. Anderson
President and Chief Executive
Officer (Principal Executive Officer)
By RAY M. VAN LANDINGHAM
Ray M. Van Landingham
Vice President, Finance &
Administration and Chief Financial
Officer (Principal Financial Officer)
By GREGORY B. LECHWAR
Gregory B. Lechwar
Controller and Chief Accounting
Officer(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on December 23, 2003.
JOHN E. ANDERSON DAVID H. DEVILLIERS, JR.
John E. Anderson David H. deVilliers, Jr.
Director, President, and Chief Director
Executive Officer
(Principal Executive Officer) LUKE E. FICHTHORN III
Luke E. Fichthorn III
Director
RAY M. VAN LANDINGHAM ___________ FRANCIS X. KNOTT
Ray M. Van Landingham Francis X. Knott
Vice President, Finance and Director
Administration
(Principal Financial Officer) ROBERT H. PAUL, III
Robert H. Paul, III
Director
GREGORY B. LECHWAR
Gregory B. Lechwar H. JAY SKELTON
Controller and Chief Accounting H. Jay Skelton
Officer (Principal Accounting Officer) Director
EDWARD L. BAKER MARTIN E. STEIN, JR.
Edward L. Baker Martin E. Stein, Jr.
Chairman of the Board Director
JOHN D. BAKER II JAMES H. WINSTON
John D. Baker II James H. Winston
Director Director
THOMPSON S. BAKER II
Thompson S. Baker II
Director
PATRIOT TRANSPORTATION HOLDING, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003
EXHIBIT INDEX
[Item 14(a)(3)]
(3)(a)(1) Articles of Incorporation of Patriot Transportation Holding,
Inc., incorporated by reference to the corresponding exhibit
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 incorporated by
reference to the corresponding exhibit 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, incorporated by
reference to an appendix to the Company's Proxy Statement
dated December 15, 1994. File No. 33-26115.
(3)(a)(4) Amendment to the Articles of Incorporation of Patriot
Transportation Holding, Inc., filed with the Florida
Secretary of State on May 6, 1999 incorporated by reference
to a form of such amendment 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, incorporated
by reference to the corresponding exhibit
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, incorporated by reference to the
corresponding exhibit 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, incorporated by
reference to the corresponding exhibit filed with Form 10-K
for the fiscal year ended September 30, 1994. File No. 33-
26115.
(3)(b)(3) Amendments to the Articles of Incorporation of Patriot
Transportation Holding, Inc. filed with the Secretary of
State of State of Florida on February 7, 1995, incorporated
by reference to an appendix to the Company's Proxy Statement
dated December 15, 1994. File No. 33-26115.
(4)(a) Articles III, VII and XII of the Articles of Incorporation
of Patriot Transportation Holding, Inc, incorporated by
reference to an exhibit filed with Form S-4 dated December
13, 1988. And amended Article III, incorporated by
reference to an exhibit filed with Form 10-K for the fiscal
year ended September 30, 1993. And Articles XIII and XIV,
incorporated by reference to an appendix filed with the
Company's Proxy Statement dated December 15, 1994. File
No. 33-26115.
(4)(b) Specimen stock certificate of Patriot Transportation
Holding, Inc, incorporated by reference to an exhibit filed
with Form S-4 dated December 13, 1988. File No. 33-26115.
(4)(c) Revolving Credit Agreement dated as of January 9, 2002 among
Patriot Transportation Holding, Inc. as Borrower, the
Lenders from time to time party hereto and SunTrust Bank as
Administrative Agent, incorporated by reference to an
exhibit filed with Form 10-Q for the quarter ended December
31, 2001. File No. 33-26115.
(4)(d) The Company and its consolidated subsidiaries have other
long-term debt agreements, none of which 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 Agreement, dated as May 5, 1999 between the Company
and First Union National Bank, incorporated by reference to
Exhibit 4 to the Company's Form 8-K dated May 5, 1999.
File No. 33-26115.
(10)(a) Various lease backs 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)(c)), but all of which may be material in the aggregate,
incorporated by reference to an exhibit filed with Form S-4
dated December 13, 1988. File No. 33-26115.
(10)(b) License Agreement, dated June 30, 1986, from Florida Rock
Industries, Inc. to Florida Rock & Tank Lines, Inc. to use
"Florida Rock" in corporate names, incorporated by
reference to an exhibit filed with Form S-4 dated December
13, 1988. File No. 33-26115.
(10)(c) Mining Lease Agreement, dated September 1, 1986, between
Florida Rock Industries, Inc. and Florida Rock Properties,
Inc., successor by merger to Grandin Land, Inc.,
incorporated by reference to an exhibit previously filed
with Form S-4 dated December 13, 1988. File No. 33-26115.
(10)(d) Summary of Medical Reimbursement Plan of Patriot
Transportation Holding, Inc., incorporated by reference to
an exhibit filed with Form 10-K for the fiscal year ended
September 30, 1993. File No. 33-26115.
(10)(e) Summary of Management Incentive Compensation Plans,
incorporated by reference to an exhibit filed with Form 10-K
for the fiscal year ended September 30, 1994. File No. 33-
26115.
(10)(f) Management Security Agreements between the Company and
certain officers, incorporated by reference to a form of
agreement previously filed (as Exhibit (10)(I)) with Form
S-4 dated December 13, 1988. File No. 33-26115.
(10)(g)(1) Patriot Transportation Holding, Inc. 1995 Stock Option Plan,
incorporated by reference to an appendix to the Company's
Proxy Statement dated December 15, 1994. File No. 33-26115.
(10)(g)(2) Patriot Transportation Holding, Inc. 2000 Stock Option Plan,
incorporated by reference to an appendix to the Company's
Proxy Statement dated December 15, 1999. File No. 33-26115.
(10)(h) Purchase and Sale Agreement dated February 6, 2002 between
Florida Rock Industries, Inc. and Florida Rock Properties,
Inc., incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended December 31, 2001. File No.
33-26115.
(10)(i) Purchase and Sale Agreement dated May 7, 2003 between
Maryland Rock Industries, Inc. and Florida Rock
Industries, Inc. and Florida Rock Properties, Inc.,
incorporated by reference to an exhibit filed with
Form 10-Q for the quarter ended June 30, 2003. File
No. 33-26115.
(10)(j) Purchase and Sale Agreement dated August 25, 2003
between Florida Rock Properties, Inc. and Florida Rock
Industries, Inc.
(10)(k) Agreement of Purchase and Sale dated October 21, 2003
between FRP Bird River, LLC and The Ryland Group, Inc.
(11) Computation of Earnings Per Common Share.
(13) The Company's 2003 Annual Report to shareholders, portions
of which are incorporated by reference in this Form 10-K.
Those portions of the 2003 Annual Report to Shareholders
which are not incorporated by reference shall not be deemed
to be filed as part of this Form 10-K.
(14) Financial Code of Ethical Conduct between the Company, Chief
Executive Officers and Financial Managers, adopted December
4, 2002.
(22) Subsidiaries of Registrant at September 30, 2003: Florida
Rock & Tank Lines, Inc. (a Florida corporation); Florida
Rock Properties, Inc. (a Florida corporation); FRP
Development Corp. (a Maryland corporation); FRP Maryland,
Inc. (a Maryland corporation); 34 Loveton Center LLC (a
Maryland limited liability company); FRTL, Inc. (a Florida
corporation); SunBelt Transport, Inc. (a Florida
Corporation); Oz LLC(a Maryland limited liability company);
FRP Delaware, Inc. (a Delaware corporation); 1502 Quarry,
LLC(a Maryland limited liability company); FRP Lakeside LLC
#1 (a Maryland limited company); FRP Lakeside LLC #2 (a
Maryland limited liability company); FRP Lakeside LLC #3 (a
Maryland limited liability company); FRP Lakeside LLC #4 (a
Maryland limited liability company); FRP Lakeside LLC #5 (a
Maryland limited liability company); FRP Hillside LLC (a
Maryland limited liability company); FRP Windsor LLC (a
Maryland limited liability company); FRP Dorsey LLC (a
Maryland limited liability company); FRP Bird River LLC (a
Maryland limited liability company).
(23)(a) Consent of PricewaterhouseCoopers LLP, Independent Certified
Public Accountants, appears on page 22 of this Form 10-K.
(23)(b) Consent of Deloitte & Touche LLP, Independent Certified
Public Accountants, appears on page 22 of this Form 10-K.
(31)(a) Certification of John E. Anderson.
(31)(b) Certification of Ray M. Van Landingham.
(31)(c) Certification of Gregory B. Lechwar.
(32) Certification of Chief Executive Officer, Chief Financial
Officer, and Chief Accounting Officer pursuant to 18 U.S.C.
Section 1350, adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
PATRIOT TRANSPORTATION HOLDING, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheets at September 30, 2003
and 2002 10(a)
For the years ended September 30, 2003, 2002 and 2001:
Consolidated statements of income 9(a)
Consolidated statements of cash flows 11(a)
Consolidated statements of shareholders' equity 12(a)
Notes to consolidated financial statements 12-18(a)
Reports of Independent Certified Public Accountants 19(a)
Selected quarterly financial data (unaudited) 5(a)
Consents of Independent Certified Public Accountants 22(b)
Independent Auditors' Reports on Financial Statement Schedules 23(b)
Consolidated Financial Statement Schedules:
II - Valuation and qualifying accounts 24(b)
III - Real estate and accumulated depreciation and
Depletion 25-26(b)
(a) Refers to the page number in the Company's 2003 Annual
Report to Shareholders. Such information is incorporated
by reference in Item 8 of this Form 10-K.
(b) Refers to the page number in this Form 10-K.
All other schedules have been omitted, as they are not required
under the related instructions, are inapplicable, or because the
information required is included in the consolidated financial
statements.
CONSENTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Exhibit 23(a)
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-43215, 33-18878 and 33-
55132) of Patriot Transportation Holding, Inc. of our report dated
December 16, 2003 relating to the financial statements and the
financial statement schedules, which appear in this Form 10-K.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 23, 2003
____________________
INDEPENDENT AUDITORS' CONSENT Exhibit 23(b)
We consent to the incorporation by reference in Registration
Statement Nos. 33-43215, 33-18878 and 33-55132 of Patriot
Transportation Holding, Inc. on Form S-8 of our report dated
December 10, 2001, appearing in this Annual Report on Form 10-K of
Patriot Transportation Holding, Inc. for the year ended September
30, 2003.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 23, 2003
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
STATEMENT SCHEDULES
To the Board of Directors
Patriot Transportation Holding, Inc.:
Our audit of the consolidated financial statements as of and for the
year ended September 30, 2003 referred to in our report dated
December 16, 2003 appearing in the 2003 Annual Report to
Shareholders of Patriot Transportation Holding, Inc., (which report
and consolidated financial statements are incorporated by reference
in this Annual Report on Form 10-K) also included an audit of the
financial statement schedules listed in Item 15 of this Form 10-K.
In our opinion, these financial statement schedules present fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.
PricewaterhouseCoopers LLP
Jacksonville, Florida
December 16, 2003
____________________
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Patriot Transportation Holding, Inc.
Jacksonville, Florida
We have audited the consolidated financial statements of Patriot
Transportation Holding, Inc. and subsidiaries ("Patriot") as of and
for the year ended September 30, 2001, and have issued our report
thereon dated December 10, 2001; such consolidated financial
statements and report are included in your 2003 Annual Report to
Stockholders and are incorporated herein by reference. Our audit
also included the financial statement schedules of Patriot, listed
in Item 15. These financial statement schedules are the
responsibility of Patriot's management. Our responsibility is to
express an opinion based on our audit. In our opinion, such
financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Jacksonville, Florida
December 10, 2001
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION
AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
ADDITIONS ADDITIONS
BALANCE CHARGED TO CHARGED TO BALANCE
AT BEGIN. COST AND OTHER AT END
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
Year Ended
September 30, 2003:
Allowance for
Doubtful accounts $ 474,000 $ 157,537 $ - $ 65,793(a) $ 565,744
Accrued risk
insurance $6,326,406 $ 7,989,574 - $ 7,536,635(b)$ 6,779,345
Accrued health
Insurance 1,111,808 2,755,090 - 2,610,053(b) 1,256,845
Totals -
insurance $7,438,214 $10,744,664 $ 0 $10,146,688 $8,036,190
Year Ended
September 30, 2002:
Allowance for
doubtful accounts $1,160,051 $ 140,000 - $ 826,051(a) $ 474,000
Accrued risk
insurance $6,032,351 $5,162,666 - $4,868,611(b) $6,326,406
Accrued health
insurance 1,078,152 2,834,763 - 2,801,107(b) 1,111,808
Totals -
insurance $7,110,503 $7,997,429 $ 0 $7,669,718 $7,438,214
Year Ended
September 30, 2001:
Allowance for
doubtful accounts $ 868,541 $1,177,379 - $ 885,869(a)$1,160,051
Accrued risk
insurance $5,397,442 $6,221,228 - $5,586,319(b)$6,032,351
Accrued health
insurance 989,608 2,517,708 - 2,429,164(b) 1,078,152
Totals -
insurance $6,387,050 $8,738,936 $ 0 $8,015,483 $7,110,503
(a) Accounts written off less recoveries
(b) Payments
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED)-REAL ESTATE & ACCUMULATED DEPRECIATION AND
DEPLETION
SEPTEMBER 30, 2003
(dollars in thousands)
<TABLE>
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Cost capi- Gross amount Year Deprecia-
Encumb- Initial cost talized at which Accumulated Of Date tion Life
County rances to subsequent carried at Depreciation Constr- Acquired Computed
Company to acqui- end of period tion on:
sition (a)
Construction Aggregates
Alachua, FL 1,442 0 1,442 83 n/a 4/86 unit
Clayton, GA 369 0 369 5 n/a 4/86 unit
Dade, FL 9,372 0 9,372 9,372 n/a 4/86 unit
Fayette, GA 55 685 0 685 51 n/a 4/86 unit
Hernando, FL 3,174 325 3,499 958 n/a 4/86 unit
Lake, FL 1,485 0 1,485 1,058 n/a 4/86 unit
Lee, FL 4,690 6 4,696 4 n/a 4/86 unit
Levy, FL 1,281 104 1,385 471 n/a 4/86 unit
Marion, FL 1,180 0 1,180 599 n/a 4/86 unit
Monroe, GA 792 0 792 241 n/a 4/86 unit
Muscogee, GA 369 0 369 88 n/a 4/86 unit
Polk, FL 121 0 121 75 n/a 4/86 unit
Prince Wil. VA 298 0 298 294 n/a 4/86 unit
Putnam , FL 15,002 49 15,051 3,034 n/a 4/86 unit
55 40,260 484 40,744 16,333
Other Rental Property
Wash D.C. 6,768 6,310 13,078 1,160 n/a 4/86 15 yr.
Fairfax, VA 2,035 23 2,058 0 n/a 4/86
Putnam, FL 326 50 376 329 n/a 4/86 10 yr.
Spalding, GA 20 0 20 0 n/a 4/86
Suwannee, FL 60 4,529 322 4,851 939 n/a 4/86 10 yr.
60 13,678 6,705 20,383 2,428
Commercial Property
Baltimore, MD 1,368 439 3,000 3,439 1,447 1990 10/89 31 yr.
Baltimore, MD 3,893 950 5,774 6,724 2,074 1994 12/91 31 yr.
Baltimore, MD 2,531 690 2,837 3,527 356 2000 7/99 31 yr.
Baltimore, MD 5,634 73 5,707 0 n/a 12/02 31 yr.
Duval, FL 2,416 529 2,945 2,322 n/a 4/86 25 yr.
Harford, MD 2,730 31 3,826 3,857 687 1998 8/95 31 yr.
Harford, MD 4,531 50 5,562 5,612 699 1999 8/95 31 yr.
Harford, MD 6,215 85 6,580 6,665 725 2001 8/95 31 yr.
Harford, MD 92 1,439 1,531 0 n/a 8/95 31 yr.
Harford, MD 4,569 88 5,801 5,889 381 2002 8/95 31 yr.
Harford, MD 3,538 155 4,966 5,121 454 2001 8/95 31 yr.
Howard, MD 4,117 2,859 3,545 6,404 1,873 1996 9/88 31 yr.
Howard, MD 2,287 2,473 332 2,805 316 2000 3/00 31 yr.
Anne Arun, MD 3,466 715 6,662 7,377 3,242 1989 9/88 31 yr.
Anne Arun, MD ______ 950 14,940 15,890 127 n/a 5/98 31 yr.
39,245 17,627 65,866 83,493 14,703
Investment Property 1,071 112 1,183 33
GRAND
TOTALS $39,360 $72,636 $73,167 $145,803 $33,497
(a) The aggregate cost for Federal income tax purposes is $141,587.
</TABLE>
PATRIOT TRANSPORTATION HOLDING, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND
ACCUMULATED DEPRECIATION AND DEPLETION
YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
(In thousands)
2003 2002 2001
Gross Carrying Cost of Real Estate:
Balance at beginning of period $133,925 127,174 115,229
Additions during period:
Amounts capitalized 13,319 7,053 13,037
Deductions during period:
Cost of real estate sold 1,441 302 -
Other (abandonments) - - 1,092
Balance at close of period $145,803 133,925 127,174
Accumulated Depreciation & Depletion:
Balance at beginning of period $ 31,395 28,934 25,968
Additions during period:
Charged to cost & expense 2,784 2,532 2,966
Deductions during period:
Real estate sold 682 71 -
Balance at close of period $33,497 31,395 28,934
Annual Report 2003
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
2003 2002 Change
Revenues $103,303 96,949 + 6.6
Gross profit $ 18,067 20,542 -12.0
Operating profit $ 9,915 12,413 -20.1
Income from continuing operations
before income taxes $ 6,423 9,270 -30.7
Gain on discontinued operations $ 657 - -
Net income $ 4,575 5,655 -19.1
Per common share:
Basic earnings $ 1.51 1.80 -16.1
Diluted earnings $ 1.49 1.79 -16.8
Total Assets $165,216 155,463 +6.3
Total Debt $ 59,361 48,601 +22.1
Shareholders' Equity $ 78,029 79,160 -1.4
Net book value per share $ 26.61 25.06 +6.2
BUSINESS. The Company is engaged in the transportation and real
estate businesses. The Company's transportation business is
conducted through two wholly owned subsidiaries. Florida Rock & Tank
Lines, Inc. (Tanklines) is a Southeastern U.S. based transportation
company concentrating in the hauling of primarily petroleum products
but also other liquid and dry bulk commodities by tank trucks.
SunBelt Transport, Inc. (SunBelt) serves the flatbed portion of the
trucking industry in the Southeast, Midwest and Mid-Atlantic states,
hauling primarily construction materials. The Company's real estate
group, through subsidiaries, acquires, constructs, leases, operates
and manages land and buildings to generate both current cash flows
and long-term capital appreciation. The real estate group also owns
real estate which is leased under mining royalty agreements or held
for investment.
OBJECTIVES. The Company's dual objectives are to build a major
transportation company and a real estate company which provides
sound long-term growth, cash generation and asset appreciation.
TRANSPORTATION
Internal growth is accomplished by a dedicated and competent
work force, emphasizing superior service to customers in
existing markets, developing new transportation services for
customers in current market areas and expanding into new market
areas.
External growth is designed to broaden the Company's geographic
market area and delivery services by acquiring related
businesses.
REAL ESTATE
The growth plan is based on the acquisition, development,
management and retention of commercial warehouse/office rental
properties to provide long-term positive cash flows and capital
appreciation.
TO OUR SHAREHOLDERS
Your company's Fiscal 2003 was characterized by both challenge and
progress. The Transportation Group completed the year with a decline
in operating profit compared to Fiscal 2002. On the other hand,
positive momentum continued within the Real Estate Group as both
development and asset management progress was made.
Fiscal 2003 operating profit was $9,915,000, a 20.1% decline from
the previous year. Consolidated net income after tax decreased 19.1%
to $4,575,000 compared to $5,655,000 for Fiscal 2002. After tax
profits from property sales were $686,000 in Fiscal 2003 compared to
$194,000 in Fiscal 2002.
Earnings per share on a diluted basis were $1.49 for Fiscal 2003
versus $1.79 per share in Fiscal 2002. The diluted number of shares
outstanding was 3.1% less for Fiscal 2003 compared to the previous
year.
Transportation Group. Both transportation subsidiaries had lower
operating profits for Fiscal 2003 compared to the previous year.
Revenue miles increased at Tanklines and SunBelt. On the other hand,
the effects of the war in Iraq and a still struggling national economy
hampered efforts to raise freight rates. Fuel price surcharges
aggressively implemented at both Companies helped to offset record
levels of diesel fuel costs in the early spring as a result of the war
in Iraq. So even though total revenue miles increased and variable
costs were generally held in line, the combined effect compared to the
previous year was to retard growth in variable contribution (the
amount remaining for fixed costs and profits after variable costs are
deducted from revenues). Restrained increases in variable contribution
left each Company's profitability exposed to higher fixed costs.
Each Company suffered significant increases in its costs for risk and
workers compensation insurance. These increases were driven by
increasing premium rates as a result of a continuing, difficult global
reinsurance market, as well as adverse claims development from prior
year occurrences. The combination of only moderately increased
variable contribution in the face of sharply increased fixed costs
contributed to lower operating profits within each Company compared to
the previous year.
Capital spending within the Transportation Group was approximately
$7,086,000 in 2003 compared to $11,430,000 during 2002. Accelerated
tractor purchasing had occurred during 2002 to anticipate adverse
operating efficiencies resulting from a 2002 EPA mandated diesel
engine emission standard. Widespread accelerated tractor purchases had
been occurring throughout the trucking industry because of concern
about operating disadvantages stemming from this 2002 Federal
emissions mandate.
Demand for hauling services continued uneven for Tanklines. Overall
demand for petroleum products remained negatively impacted from the
decline in travel patterns and petroleum consumption going back to the
September 11, 2001 national terrorist event. Airline jet fuel
consumption remained depressed along with altered patterns of business
and leisure travel. A weak and uncertain national economy contributed
to decreased petroleum consumption and lower demand.
In fact, virtually all of the revenue increase at Tanklines during
Fiscal 2003 resulted from its purchase on May 30, 2002 of the
operating assets of Infinger Transportation Company, Inc. and fuel
surcharges. Infinger was based in Charleston, South Carolina and the
acquisition included 111 trailers and 57 tractors operating from
terminals in Charleston and North Augusta, South Carolina; Charlotte
and Wilmington, North Carolina; Savannah, Georgia; and Jacksonville
and Tampa, Florida.
Tanklines had to overcome an additional hurdle beginning in the second
quarter of Fiscal 2003. The subsidiary lost one of its largest
customers as a result of competitive bidding from consolidation within
the multi-national, integrated oil industry. Although Tanklines
successfully replaced this lost revenue at acceptable price levels by
mid-year, the accompanying operating disruptions caused equipment
inefficiencies as hauling capacity had to be reallocated and balanced
for new customer accounts.
Ongoing structural changes within national retail petroleum
distribution also challenged the Company's tank truck operations. Non-
traditional retail gasoline outlets, "hyper-markets", are growing
rapidly and bringing new pricing pressures to retail distribution.
This dynamic is contributing to a soft transportation pricing
environment from customers seeking to adapt to this competitive
reality.
Notwithstanding changes and uncertainties within its operating
environment, Tanklines intends to successfully navigate these
challenges, building from its reputation for excellent customer
service and sound financial condition.
SunBelt, the Company's flatbed trucking subsidiary, benefited from
top-flight customer service and homebuilding construction demand,
notwithstanding the soft national economy. Though SunBelt could
anticipate positive demand for its hauling services, it was plagued
throughout the year by driver shortages, inadequate equipment
utilization and substantial workmen's compensation expense increases
from prior year claims development.
SunBelt is now aggressively overcoming its driver shortage
difficulties, with consequent benefits to revenue and equipment
utilization. A new accident prevention culture is being firmly
implanted throughout SunBelt.
Finally, an apparent recovery underway in commercial construction is
strengthening demand for SunBelt's hauling services in the face of
decreased flatbed trucking capacity. This is bringing opportunities to
raise freight rates and resulting variable contribution. The combined
effects should lead to improved operating results.
Real Estate Group. Fiscal 2003 marked another year of progress and
encouragement for the Company's real estate business.
Significant development activity occurred at the Group's 59 acre
Hillside Business Park in Anne Arundel County, Maryland. This new Park
is within two miles of the Baltimore-Washington International Airport.
The Group's largest flexible warehouse/office to date, 7021 Dorsey
Road, a 200,200 square foot build-to-suit warehouse/office, was
completed and occupied in August. A speculative flexible
warehouse/office, 7010 Dorsey Road, was also completed and placed in
service at the beginning of the second fiscal quarter. This is a
74,600 square foot facility which is available for occupancy.
The Group's developed building portfolio totaled approximately 1.7
million square feet at fiscal year end of which 88.9% was occupied.
Average occupancy for the fiscal year, excluding those buildings in
service less than 12 months, was 92.7%.
The Group purchased at mid-year 115 developable acres located on Bird
River Road north of the Martin State Airport in Greater Baltimore.
This new development tract will have direct access to the new Maryland
State Road 43 intended to connect Interstate 95 with Martin State
Airport. Construction for Route 43 is underway. The Bird River Road
tract is zoned commercial and residential. The commercial portion is
slated for approximately 502,000 square feet of warehouse/office
development while the residential portion will be simultaneously
developed into lots and sold.
Continued permitting and initial horizontal development occurred at
the Commonwealth Avenue fifty acre site located on Interstate 295 on
the west side of Jacksonville, Florida. Final build out for this tract
is still targeted for approximately 500,000 square feet of
warehouse/office product.
Following the Bird River Road purchase, the Real Estate Group's total
anticipated developed portfolio will result in approximately 3.3
million square feet of warehouse/office capacity.
As a continuation of the Group's strategic plan to build, lease and
own a portfolio of flexible warehouse/office, agreements were executed
during Fiscal 2003 for the sale to Florida Rock Industries, Inc.
("FRI") of two tracts of land for a total of approximately $3.5
million.
One tract is located near Miami, Florida and was a former mining site
under long-term lease to FRI. The second tract located on the Potomac
River in Maryland was sold to FRI in September. The proceeds from
sales of these two tracts, together with the previously announced
$15.0 million sale of the Group's 108 acre tract in Springfield,
Virginia to FRI, are expected to be reinvested in appropriate
properties to further the Real Estate Group's strategic expansion
plan. The Maryland land sale was closed late in the fourth quarter of
Fiscal 2003, producing an approximate after tax profit of $657,000.
The sale of the Springfield, Virginia tract, when closed, will produce
a net after tax gain of about $7,722,000, and the net after tax gain
from the Miami property sale, when closed, should produce
approximately $999,000. Combined after-tax profits anticipated from
the Virginia and Miami sales will yield approximately $2.86 per
diluted share.
The Group continued intensive asset management on its 5.8 acre tract
which fronts on the Anacostia River in the District of Columbia. This
tract had been rezoned in Fiscal 2000 from industrial to a planned
unit development ("PUD"). During Fiscal 2003 the Zoning Commission
granted preliminary approval of a change in the size and use of the
PUD and gave the Company until May, 2004 to submit modified drawings
that would conform to approved design guidelines. The design
guidelines provide for a maximum allowable commercial development of
625,000 square feet and a minimum residential development of 440,000
square feet. If approval of the redesign is obtained the Company will
have an additional 2 years to begin development on the site in
accordance with the approved, modified PUD. In the meantime, the Real
Estate Group continues to evaluate opportunities for this property and
a nearby 2.1 acre tract on the same bank of the Anacostia River.
Capital expenditures for the Real Estate Group totaled approximately
$13,328,000 in Fiscal 2003 compared to about $7,179,000 the previous
year.
Outlook. Positive Real Estate development momentum should continue in
the markets we serve, enhanced by what appears to be a recovering
national economy at fiscal year end. An attractive low interest rate
environment should further reinforce a positive outlook for real
estate.
The Company's transportation business, assuming a recovering national
economy, anticipates improved results. An intense focus on accident
prevention will continue to be the number one priority at each
company. Both Florida Rock & Tank Lines, Inc. and SunBelt Transport,
Inc. will focus on increased equipment utilization and operating
efficiencies. Freight rate increases will be pursued, and strategic
expansion opportunities will be evaluated along the way.
We will also be monitoring two additional transportation issues as we
enter Fiscal 2004. Effective January, 2004 new U.S. Department of
Transportation hours-of-service regulations become applicable for our
drivers. Additionally, U.S. Transportation Security Administration
regulations governing issuance/renewal of Hazmat Commercial Drivers
Licenses go into effect. These new security restrictions affecting
our tanker drivers become effective beginning as early as April, 2004
according to individual state timetables. The two new federal
mandates may impact driver productivity, recruitment and retention,
with corresponding implications for operating efficiencies and costs.
You can be quite proud of the quality, commitment and loyalty of the
men and women at all levels who represent the backbone of your
company. We take this opportunity to express our sincerest
appreciation to them as well as for the loyalty and support of our
shareholders.
Respectfully yours,
Edward L. Baker
Chairman
John E. Anderson
President & Chief Executive Officer
OPERATING REVIEW
Transportation. During Fiscal 2003, the Company's transportation
group operated through two wholly owned subsidiaries. Florida Rock &
Tank Lines, Inc. is engaged in hauling petroleum and other liquid
and dry bulk commodities in tank trucks. SunBelt Transport, Inc. is
engaged primarily in hauling building and construction materials on
flatbed trailers. In September 2001, the Company closed the
operations of Patriot Transportation, Inc. (PTI) which was engaged
in hauling a variety of cargo through third-party independent
freight agents and owner/operators.
The tank trucks operate from terminals in Jacksonville, Orlando,
Panama City, Pensacola, Port Everglades, Tampa and White Springs,
Florida; Albany, Atlanta, Augusta, Bainbridge, Columbus, Dalton,
Macon and Savannah, Georgia; Knoxville, Tennessee; Charlotte and
Wilmington, North Carolina; and Charleston, South Carolina.
SunBelt's flatbed fleet is based in Jacksonville and Tampa, Florida;
Atlanta and Savannah, Georgia; and South Pittsburg, Tennessee and
operates primarily in the Southeastern, Midwestern and Mid-Atlantic
states.
Transportation revenues were up 7.4% in 2003 as a result of
expansion of tank truck hauling through the purchase of the assets
of Infinger Transportation, Inc. (Infinger) in May, 2002, higher
fuel surcharges, and modest price increases. Gross profit decreased
22.6% from Fiscal 2002 primarily due to higher costs associated with
the Company's risk programs.
During Fiscal 2003, the transportation group purchased 67 new
tractors and 49 new trailers and had commitments to purchase an
additional 9 trailers at September 30, 2003. The Fiscal 2004 capital
expenditure plan is based on maintaining a modernized tank and
flatbed fleet and includes the purchase of approximately 82 new
tractors and 80 new trailers in addition to the 9 trailers under
commitment at September 30, 2003. The fleet modernization program
has resulted in reduced maintenance expenses, improved operating
efficiencies and enhanced driver recruitment and retention.
Driver recruitment/retention, fuel, accident prevention and risk
insurance pressures are expected to remain key factors.
Comprehensive fuel price surcharges are in place and assertive steps
continue at both carriers to boost permanent freight rates.
Real Estate. The real estate group operates the Company's real
estate and property development activities through subsidiaries.
The Company owns real estate in Florida, Georgia, Virginia,
Maryland, and Washington, D.C. The real estate owned generally
falls into one of three categories: (i) land and/or buildings leased
under rental agreements or being developed for rental; (ii) land
with construction aggregates deposits, substantially all of which is
leased to Florida Rock Industries, Inc. under mining royalty
agreements, whereby the Company is paid a percentage of the revenues
generated or annual minimums; and, (iii) land held for future
appreciation or development.
Real estate revenues increased 2% over Fiscal 2002. Royalty revenue
declined by 3% in 2003 primarily due to completion of mining at the
Miami property but was offset by an increase of 14% in rental
revenues. Property sales were $486,000 less in 2003. The Fiscal
2003 real estate revenues were divided approximately 30% from mining
and minimum royalties, 69% from rental revenues and 1% from property
sales.
At September 30, 2003, the Company owned approximately 1.7 million
square feet of developed buildings in the Baltimore, Maryland area
that were 89% leased and approximately 58 acres of developed land
ready for building construction. Brief descriptions of FRP
Development Corp.'s projects in the Baltimore area at September 30,
2003 are as follows:
Hillside Business Park in Anne Arundel County is a 59 acre tract
near the Baltimore-Washington International Airport. The project
will provide the Company an opportunity to develop approximately
575,000 square feet of warehouse/office space. Infrastructure work
on the site is nearing completion and the first two buildings are
completed with 274,800 square feet of leaseable warehouse/office
space. One building with 200,200 square feet is leased to one
tenant for 15 years and the other building is available for
lease.
Lakeside Business Park in Harford County consists of 134 acres.
Seven warehouse/office buildings, totaling 671,918 square feet,
have been constructed and are 87% leased. The remaining 32.8 acres
are available for future development and will offer an
additional 485,200 square feet of comparable product.
6920 Tudsbury Road in Baltimore County contains 5.3 acres with
86,100 square feet of warehouse/office space that is 100% leased.
8620 Dorsey Run Road in Howard County contains 5.8 acres with
84,600 square feet of warehouse/office space that is 100% leased.
Rossville Business Center in Baltimore County contains
approximately 10 acres with 190,517 square feet of
warehouse/office space and is 88% leased.
34 Loveton Circle in suburban Baltimore County contains 8.5 acres
with 29,722 square feet of office space which is 100% leased. The
Company occupies 11% of the space and 23% is leased to FRI.
Oregon Business Center in Anne Arundel County contains
approximately 17 acres with 195,615 square feet of
warehouse/office space, which is 100% leased.
Arundel Business Center in Howard County contains approximately 11
acres with 162,796 square feet of warehouse/office space, which is
100% leased.
Bird River in southeastern Baltimore County is a 179 acre tract of
land for future development. This development tract has direct
access to the proposed Maryland State Road 43 intended to connect I-
95 with Martin State Airport. This property is currently zoned for
residential and commercial use with 115.6 developable acres. The
Company plans to develop and lease approximately 502,000 square feet
of multiple warehouse/office buildings on the 42 developable acres
zoned for commercial use. A subsidiary of the Company has entered
into an agreement to develop and sell to a major home builder a
minimum of 292 residential lots on the residential portion of the
Bird River Property.
The Company owns a 50-acre, rail accessable site on Commonwealth
Avenue in Jacksonville, Florida near the western beltway of
Interstate-295 capable of supporting approximately 500,000 square
feet of eventual warehouse/office build-out. Current efforts include
permitting and preliminary horizontal development planning work.
During Fiscal 2004 the real estate group will continue to focus on
the continued development of the property at Lakeside and Hillside
Business Parks near Baltimore and the Commonwealth site in
Jacksonville while continuing to search for additional developed and
undeveloped sites.
The real estate group will also continue its asset management
functions for the benefit of the Company's land portfolio. These
activities will include but not be limited to the Company's site on
the Anacostia River in the District of Columbia. The Company's
long-term plan is to continue to gradually expand its portfolio of
successful warehouse/office rental properties.
Five Year Summary Years ended September 30
(Dollars and shares in thousands except per share amounts)
2003 2002 2001 2000 1999
Summary of Operations:
Revenues(a) $103,303 96,949 121,258 93,862 82,019
Gross profit(b) $ 18,067 20,542 21,792 16,239 19,994
Operating profit $ 9,915 12,413 7,878 6,840 12,380
Interest expense $ 3,492 3,143 3,372 3,438 2,357
Income before income taxes
$ 6,423 9,270 4,506 3,435 10,093
Provision for income taxes
$ 2,505 3,615 1,803 1,391 3,936
Gain from discontinued
operations $ 657 - - - -
Net income $ 4,575 5,655 2,703 2,044 6,157
Per Common Share:
Basic EPS $ 1.51 1.80 .86 .61 1.79
Diluted EPS $ 1.49 1.79 .86 .61 1.78
Shareholders' equity
$ 26.61 25.06 23.28 22.06 21.53
Financial Summary:
Current assets $ 13,965 11,490 16,248 15,089 14,161
Current liabilities
$ 11,220 11,972 16,728 17,498 13,555
Property, plant and
equipment, net $145,262 138,367 131,170 124,026 115,369
Total assets $165,216 155,463 152,759 148,011 138,655
Long-term debt $ 57,816 47,290 47,097 42,015 37,936
Shareholders' equity
$ 78,029 79,160 73,112 73,813 72,692
Other Data:
Return on average
Shareholders' equity
5.8% 7.4 3.7 2.8 8.7
Net cash flow provided by
operating activities
$ 16,056 24,947 9,626 9,566 15,032
Additions to property,
plant and equipment
$ 20,413 18,046 18,438 21,861 21,359
Depreciation, depletion
and amortization
$ 11,956 11,086 11,471 11,144 10,065
Weighted average number
of shares - basic 3,033 3,143 3,157 3,334 3,444
Weighted average number
of shares - diluted 3,066 3,165 3,158 3,348 3,468
Number of employees 845 861 850 829 877
Shareholders of record 745 767 788 801 834
(a) Fiscal 2001 and 2000 include revenues of $22,623,000 and
$7,689,000 and operating losses of $6,309,000 and $361,000,
respectively, attributed to Patriot Transportation, Inc. which
ceased operations in September, 2001.
(b) Fiscal 2003, 2002, 2001, 2000 and 1999 include gains on the
sale of real estate of $47,000, $323,000, $2,886,000,
$1,533,000, and $3,236,000, respectively.
Quarterly Results (unaudited)
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
<s> <c> <c> <c> <c> <c> <c> <c> <c>
First Second Third Fourth
2003 2002 2003 2002 2003 2002 2003 2002
Revenues $24,042 23,492 25,073 23,008 27,031 24,876 27,157 25,573
Gross profit $ 4,329 5,067 3,915 4,966 5,118 5,458 4,704 5,051
Operating profit$ 2,377 3,023 1,905 3,172 3,105 3,432 2,528 2,786
Income before
income taxes $ 1,538 2,243 1,019 2,373 2,206 2,629 1,660 2,025
Gain from discontinued
operations $ - - - - - - 657 -
Net income $ 938 1,346 622 1,424 1,346 1,577 1,669 1,308
Per common share:
Basic EPS $.30 .43 .20 .45 .45 .50 .57 .42
Diluted EPS $.30 .43 .20 .45 .44 .50 .56 .41
Market price:
High $28.85 20.55 28.38 35.00 30.00 34.00 33.00 30.00
Low $19.00 16.70 20.00 20.44 21.00 26.15 28.00 21.30
</TABLE>
MANAGEMENT ANALYSIS
OPERATING RESULTS. The Company's operations are influenced by a
number of external and internal factors. External factors include
levels of economic and industrial activity in the United States and
the Southeast, petroleum product usage in the Southeast which is
driven in part by tourism and commercial aviation, fuel costs, driver
availability and cost, regulations regarding driver qualifications and
hours of service, construction activity, Florida Rock Industries,
Inc.'s sales from the Company's mining properties, interest rates and
demand for commercial warehouse/office space in the
Baltimore/Washington area. Internal factors include revenue mix,
capacity utilization, auto and workers' compensation accident
frequencies and severity, other operating factors, administrative
costs, and construction costs of new projects.
The following detailed analysis of operations also presents the
revenue generated by our real estate segment excluding property sales.
Property sales include the sale of easements, right of ways, parcels
of real estate, and timber and other miscellaneous sales. We believe
that presenting some results excluding the effects of one-time
property sales is helpful to investors because it permits a comparison
of our core real estate operations. Such measures should only be
considered in conjunction with the total real estate revenues as
calculated and presented in accordance with U.S. GAAP.
During Fiscal 2003, the transportation segment's ten largest customers
accounted for approximately 38% of the transportation segment's
revenue. The loss of any one of these customers could have an adverse
effect on the Company's revenues and income.
Fiscal 2003 as compared to Fiscal 2002.
Revenues. Consolidated revenues for Fiscal 2003 were $103,303,000, an
increase of $6,354,000 or 6.6% from $96,949,000 from the previous
year.
Transportation segment revenues were $87,996,000, an increase of
$6,075,000 or 7.4% over last year. Transportation revenues increased
$3,490,000 due to an increase in revenue miles, resulting from the new
business generated from the May 2002 acquisition of the operating
assets of Infinger Transportation, Inc. (Infinger) and internal
growth, offset by the loss of a major customer in the first quarter of
2003. Of the remainder, $1,936,000 was due to an increase in billed
fuel surcharges over last year, as a result of increased diesel fuel
cost.
Real Estate revenues, excluding property sales, were $15,239,000, an
increase of 5.3% over last year. The increase was primarily due to an
11.1% increase in rental revenue from developed properties partially
offset by a 2.8% decrease in royalty revenues. Revenues from the
Company's developed operations increased due to a 9.2% increase in
average leased square feet, while royalty revenues from mining
operations decreased because of completion of aggregate mining at two
sites. Royalty revenues are expected to continue near the level
experienced in 2003. Property sales in Fiscal 2003 were $68,000 versus
$554,000 in Fiscal 2002.
Gross Profit. Consolidated gross profit for Fiscal 2003 decreased
12.0% to $18,067,000 from $20,542,000 for the previous year.
Transportation gross profit was $9,040,000, a decrease of $2,638,000
or 22.6%, in 2003 as compared to 2002. The decrease in gross profit
was primarily due to a $2,964,000 or 32.6% increase in expenses
related to higher insurance premiums and workers compensation claims.
The Company will continue to strive to operate safely and efficiently
and to increase freight rates and volumes to offset the continuing
increased insurance costs.
Real Estate gross profit excluding property sales increased $439,000
primarily due to the increase in rental revenues. Gross profit from
property sales in Fiscal 2003 was only $47,000 compared to $323,000 in
Fiscal 2002.
Operating Expenses. Selling, general and administrative expenses for
2003 were comparable to 2002, decreasing 0.6% from $8,229,000 in
Fiscal 2002 to $8,181,000 for Fiscal 2003.
Income Taxes. The Company recorded an income tax provision of
$2,505,000 in 2003, compared to a provision of $3,615,000 in 2002. The
effective tax rate was 39% in both years.
Discontinued Operations. During the fourth quarter of 2003, a
subsidiary of the Company sold a former mining property, located in
St. Mary's County, Maryland for $1,836,000. According to the
provisions of SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," the property is considered a component of the
entity, as defined by SFAS 144, and is therefore treated as a
discontinued operation. A gain on disposal of the property of
$657,000, net of income taxes of $420,000, has been recorded as
discontinued operations. Since there have been no active mining
operations on the property during the periods presented, revenues and
expenses from the discontinued operation are not material.
Net Income. Net income decreased 19.1% to $4,575,000 in Fiscal 2003
from $5,655,000 in 2002. Diluted earnings per share decreased 16.8% to
$1.49 in Fiscal 2003 from $1.79 in 2002. Diluted total shares
outstanding decreased 3.1% from 3,165,000 in 2002 to 3,066,000 in 2003
as a result of the repurchase and cancellation of 246,300 shares
during the year.
Fiscal 2002 as Compared to Fiscal 2001.
Revenues. Consolidated revenues for Fiscal 2002 decreased $24,309,000
or 20.0% to $96,949,000 from $121,258,000 for the previous year.
Transportation revenues decreased 20.6% to $81,921,000 driven mainly
by the closure of the PTI subsidiary in September 2001. Excluding
PTI's revenues in 2001, Transportation revenues increased $1,354,000
or 1.7%, due to modest price increases and expansion in Florida Rock &
Tank Lines by the purchase on May 30, 2002 of the Infinger assets,
offset by a slight reduction in miles driven (0.5%). The reduction in
miles resulted from lower demand for petroleum products due to
decreased tourism and reduced air travel.
Real Estate revenues excluding property sales increased 2.7% primarily
due to an increase in revenue from developed properties partially
offset by a decrease in royalties. Revenues from the company's
development operations climbed 16.5%, while royalty revenues from
mining operations decreased 10.1% because of completion of stone
mining at two sites. We expect royalty revenues to continue to
decrease, as mining assets are depleted. Property sales in Fiscal
2002 were $554,000 versus $3,978,000 in Fiscal 2001.
Gross Profit. Consolidated gross profit for Fiscal 2002 decreased 5.7%
to $20,542,000 from $21,792,000 for the previous year.
Transportation gross profits increased $1,456,000 or 14.2% in 2002 as
compared to 2001. Excluding PTI's gross loss of $498,000 in 2001,
gross profit increased $958,000 or 9.0% primarily due to the increased
revenues and control of expenses in the tankline operation for 2002.
This was partially offset by a reduction in gross profit of the
flatbed operations due to increased operating expenses and increased
insurance and casualty losses.
Real Estate gross profit excluding property sales decreased $144,000
due to a $1,058,000 reduction in royalty gross profit mostly offset by
an increase in rental income. Gross profit from property sales in
Fiscal 2002 was only $323,000 compared to $2,886,000 in Fiscal 2001.
Operating Expenses. Selling, general and administrative expenses
decreased 33.2% from $12,310,000 in Fiscal 2001 to $8,229,000 for
Fiscal 2002, almost entirely due to the closure of PTI which had
administrative expenses of $4,208,000 in 2001. During Fiscal 2001, the
Company recorded $1,604,000 in restructuring charges related to its
decision to shut down the operations of this subsidiary. In Fiscal
2002, a recovery of $100,000 in amounts previously charged to
restructuring was recorded due to a better than anticipated
disposition of owned and leased trailers, partially offset by higher
severance costs.
Income Taxes. The Company recorded an income tax provision of
$3,615,000 in 2002, compared to a provision of $1,803,000 in 2001.
The effective tax rate decreased 1% to 39% in 2002 primarily due to a
lower level of non-deductible expenses and higher levels of earnings.
Net Income. Net income increased 109.2% from $2,703,000 in 2001 to
$5,655,000 in Fiscal 2002. Diluted earnings per share increased
108.6% to $1.79 in Fiscal 2002 from $.86 in 2001. Diluted total shares
outstanding increased .2% from 3,158,000 in 2001 to 3,165,000 in 2002
as a result of the issuance of stock options during the year.
SUMMARY OF CRITICAL ACCOUNTING POLICIES.
Management of the Company considers the following accounting policies
critical to the reported operations of the Company:
Accounts Receivable Valuation. The Company is subject to customer
credit risk including bankruptcies, primarily in the Transportation
segment, that could affect the collection of outstanding accounts
receivable. To mitigate these risks, the Company performs credit
reviews on all new customers and periodic credit reviews on existing
customers. A detailed analysis of late and slow pay customers is at
least prepared monthly and reviewed by senior management. The overall
collectibility of outstanding receivables is evaluated and allowances
are recorded as appropriate.
Risk Insurance. The nature of the Transportation business subjects the
Company to risks arising from workers' compensation, automobile
liability, and general liability claims. The Company retains the
exposure on certain claims of $250,000 to $500,000 and has third party
coverage for amounts exceeding the retention. The Company expenses
during the year an estimate of risk insurance losses. Periodically,
an analysis is performed, using historical and projected data, to
determine exposure for claims incurred but not reported. On an annual
basis the Company obtains an independent actuarial analysis. The
Company attempts to mitigate losses from insurance claims by
maintaining safe operations and providing mandatory safety training.
Real Estate Investments. All direct and indirect costs, including
interest and real estate taxes associated with the development,
construction, leasing or expansion of real estate investments are
capitalized as a cost of the property. Included in indirect costs is
an estimate of internal costs associated with development and rental
of real estate investments. All external costs associated with the
acquisition of real estate investments are capitalized as a cost of
the property.
Tires on Equipment. The Company accounts for the tires on its tractors
and trailers separately from fixed assets. The value of the tires is
accounted for as a prepaid expense and amortized over the estimated
life of the tires as a function of miles driven. The mile factors used
differ by geographic location and are determined based on historical
experience. Tires that are damaged due to road hazards are expensed
immediately using an estimated value based on remaining tread life.
LIQUIDITY AND CAPITAL RESOURCES. Net cash flow from operating during
2003 was $16,056,000, which together with $10,760,000 net cash inflow
from long term debt, funded the $20,413,000 purchase of property and
equipment and the repurchase of $6,118,000 in Company stock.
Net cash flow from operating activities during 2002 was $24,947,000
which funded the Company's investing activities of $17,978,000 and the
reduction of debt.
The Company has a $37,000,000 revolving credit agreement (the
Revolver) of which $17,000,000 was available at fiscal year end. The
Revolver contains restrictive covenants including limitations on
paying cash dividends. Under these restrictions, as of September 30,
2003, $13,048,000 of consolidated retained earnings was available for
payment of dividends.
On October 1, 2003, the company closed on a non-recourse first
mortgage loan of $8,500,000 secured by a 200,200 square foot completed
building that is leased to one tenant. The loan is for a period of 15
years with level monthly payments of principal and interest at 5.69%.
The proceeds were used to reduce amounts outstanding under the
Revolver.
The aggregate amounts due in each fiscal year on fully amortizing,
non-recourse long-term debt outstanding at September 30, 2003 is: 2004
- - $1,545,000; 2005 - $1,604,000; 2006 - $1,732,000; 2007 - $1,848,000;
2008 - $1,996,000; and thereafter - $30,636,000. In addition,
$20,000,000 outstanding under the Revolver at September 30, 2003 will
be due in January 2005, unless the Revolver is renewed or replaced.
The Company has a $7,500,000 Letter of Credit facility with SunTrust
Bank, N.A. under which the Company may issue letters of credit to
various beneficiaries. In addition, the Company has a $1,790,000
letter of credit with Wachovia Bank, N.A. Each letter of credit is
generally irrevocable for a period of one year and is automatically
extended for additional one-year periods unless notified by the
issuing bank not less than thirty days before the expiration date. At
September 30, 2003, $9,143,000 of irrevocable letters of credit were
outstanding. Substantially all of these were 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 may
arise. During Fiscal 2003, the company repurchased 246,300 shares for
approximately $6,119,000. At September 30, 2003 the Company had
approximately $3,000,000 authorized for repurchase of shares. On
December 3, 2003 the Board of Directors authorized an additional
$3,000,000 for the repurchase of shares bringing the total
authorization to $6,000,000.
The Company currently expects its Fiscal 2004 capital expenditures to
be approximately $18,600,000 ($8,500,000 for real estate development
expansion and $10,100,000 for transportation segment expansion) and
depreciation and depletion expense to be approximately $12,500,000.
The expenditures are expected to be financed from the cash flow from
operating activities, financing of a new real estate project, and the
funds available under its revolving credit agreement.
A subsidiary of the Company signed an Agreement in February 2002 to
sell 108 acres of land to FRI for $15,000,000. Closing is subject to a
title search and surveys and is to occur within 45 days of FRI giving
notice to close. If FRI fails to close by December 31, 2004, at no
fault of the Company, the Company may retain the $100,000 binder
deposit and be under no further obligation to close. FRI has the right
to terminate this Agreement prior closing if there shall exist or the
consummation of the sale would cause a default in the Credit Agreement
among FRI and Wachovia Bank, et. al. The Company intends to structure
this transaction as a tax deferred exchange under Section 1031 of the
United States Internal Revenue Code and the Treasury Regulations
promulgated thereunder. If the transaction closes, the Company will
recognize a gain on the sale of approximately $7,772,000 net of income
taxes, or $2.54 per diluted share. The tract is rented to a subsidiary
of FRI and the Company received rental income of approximately
$650,000 for the 2003 fiscal year.
The Company announced on May 7, 2003 that a subsidiary has agreed to
sell a 935 acre parcel of property in Miami, Florida to FRI for
$1,638,000. The property is principally composed of mined-out lakes,
mitigation areas, 145 acres of mineable land and 32 acres of roads and
railroad track right-of-ways. The closing of the sale is to occur no
later than December 31, 2004. The terms of the agreement were approved
by the Company's Audit Committee which (comprised of independent
directors) after considering, among other factors, the terms of the
existing lease agreement and consultation with management. If this
transaction closes, the Company will recognize a gain of approximately
$999,000, net of income taxes, or $.33 per diluted common share.
A subsidiary of the Company agreed on December 3, 2003 to sell a
parcel of land containing approximately 6,321 acres in Suwannee and
Columbia Counties, near Lake City, Florida, to FRI for $13,000,000 in
cash. The sale is subject to a definitive agreement and the closing
date is to be determined. The sales price was approved by the
Company's Audit Committee which is composed of independent Directors
of the Company after considering among other factors, an independent
appraisal, the current use of the property and consultation with
management. If the transaction closes, the Company will recognize a
gain of approximately $5,287,000, net of income taxes or $1.78 per
diluted common share. The Company expects to ultimately redeploy the
cash proceeds into commercial warehouse/office rental properties.
Management believes that the Company is financially postured to be
able to take advantage of external and internal growth opportunities
in both real estate development and the motor carrier industry.
INFLATION. Historically, the Company has been able to recover
inflationary cost increases in the transportation group through
increased freight rates. It is expected that over time, justifiable
and necessary rate increases will be obtained. Substantially all of
the Company's royalty agreements are based on a percentage of the
sales price. Minimum royalties and substantially all lease agreements
provide escalation provisions.
FORWARD-LOOKING STATEMENTS. Certain matters discussed in this report
contain forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially
from these indicated by such forward-looking statements. These
forward-looking statements relate to, among other things, capital
expenditures, liquidity, capital resources and competition and may be
indicated by words or phrases such as "anticipate," "estimate,"
"plans," "projects," "continuing," "ongoing," "expects," "management
believes," "the Company believes," "the Company intends" and similar
words or phrases. The following factors and other risk factors
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: driver availability and cost; regulations
regarding driver qualifications and hours of service; availability and
terms of financing; freight demand for petroleum products and for
building and construction materials in the Company's markets; risk
insurance markets; competition; general economic conditions; demand
for flexible warehouse/office facilities; interest rates; levels of
construction activity in FRI's markets; fuel costs; and inflation.
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.
Consolidated Statements of Income Years ended September 30
(Dollars and shares in thousands except per share amounts)
2003 2002 2001
Revenues:
Transportation $ 87,996 81,921 103,189
Real estate 15,239 14,474 14,091
Sale of real estate 68 554 3,978
Total revenues (including revenue from
related parties of $7,305, $6,944 and
$10,693, respectively) 103,303 96,949 121,258
Cost of operations:
Transportation 78,956 70,243 92,968
Real estate 6,259 5,933 5,406
Cost of real estate sold 21 231 1,092
Gross profit 18,067 20,542 21,792
Selling, general and administrative expense
(including expenses paid to related party
of $440, $463 and $527, respectively) 8,181 8,229 12,310
Non-recurring charges (recoveries) related
to closed subsidiary (29) (100) 1,604
Operating profit 9,915 12,413 7,878
Interest expense, net (3,492) (3,143) (3,372)
Income from continuing operations
before income taxes 6,423 9,270 4,506
Provision for income taxes 2,505 3,615 1,803
Income from continuing operations 3,918 5,655 2,703
Gain from sale of discontinued
mining property (Note 11) 1,077 - -
Income tax provision (420) - -
Gain on discontinued operations 657 - -
Net income $ 4,575 5,655 2,703
Earnings per share:
Basic $ 1.51 1.80 .86
Diluted $ 1.49 1.79 .86
Number of shares used in computing:
Basic earnings per share 3,033 3,143 3,157
Diluted earnings per share 3,066 3,165 3,158
See accompanying notes.
Consolidated Balance Sheets
As of September 30,
(Dollars in thousands)
2003 2002
Assets
Current assets:
Cash and cash equivalents $ 757 529
Cash held in escrow 1,795 -
Accounts receivable (including related
party of $359 and $107, less allowance
for doubtful
accounts of $566 and $474, respectively) 7,332 7,343
Income taxes receivable - 8
Inventory of parts and supplies 670 633
Prepaid expenses and other 3,411 2,977
Total current assets 13,965 11,490
Property, plant and equipment, at cost:
Land 67,781 66,380
Buildings 69,438 55,420
Plant and equipment 72,941 72,489
Construction in progress 11,331 14,986
221,491 209,275
Less accumulated depreciation and depletion 76,229 70,908
145,262 138,367
Real estate held for investment, at cost 1,130 1,047
Goodwill, net of $523 amortization 1,087 1,087
Other assets 3,772 3,472
Total Assets $165,216 155,463
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable including related party of
$2 and $39, respectively 4,734 5,771
Accrued liabilities:
Payroll and benefits 1,798 2,229
Other accrued expenses 829 554
Accrued Insurance reserves 2,314 2,107
Long-term debt due within one year 1,545 1,311
Total current liabilities 11,220 11,972
Long-term debt 57,816 47,290
Deferred income taxes 10,760 10,062
Accrued insurance reserves 5,722 5,331
Other liabilities 1,669 1,648
Commitments and contingencies (Notes 14 and 15)
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized - -
Common stock, $.10 par value;
25,000,000 shares authorized; 2,932,708
and 3,159,008 shares issued and
outstanding, respectively 293 316
Capital in excess of par value 6,065 11,748
Retained earnings 71,671 67,096
Total shareholders' equity 78,029 79,160
Total Liabilities and Shareholders' equity $165,216 155,463
See accompanying notes.
Consolidated Statements of Cash Flows
Years ended September 30,
(Dollars in thousands)
Cash flows from operating activities: 2003 2002 2001
Net income $ 4,575 5,655 2,703
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 11,956 11,086 11,471
Non-cash portion of restructuring charge - - 968
Deferred income taxes 879 889 332
Gain on sale of real estate, plant and
equipment (210) (612) (3,008)
Net changes in operating assets and liabilities:
Accounts receivable 12 1,133 2,293
Income taxes receivable 8 994 (1,002)
Inventory of parts and supplies (37) (63) 80
Prepaid expenses and other (435) 1,509 (1,815)
Assets held for sale - 1,191 -
Accounts payable and accrued liabilities (1,167) 2,686 (2,915)
Net change in insurance reserves and other
liabilities 412 437 485
Other, net 63 42 34
Net cash provided by operating activities 16,056 24,947 9,626
Cash flows from investing activities:
Purchase of property, plant and equipment (20,413) (18,046)(18,438)
Additions to other assets (768) (942) (734)
Cash held in escrow (1,795) - -
Proceeds from the sale of real estate held for
investment, property, plant and equipment, and
other assets 2,094 1,010 5,294
Net cash used in investing activities (20,882) (17,978)(13,878)
Cash flows from financing activities:
Proceeds from long-term debt 4,600 10,200 5,140
Increase (decrease) in revolving debt 7,500 (8,500) 1,000
Net (decrease) increase in short-term debt - (7,800) 2,200
Repayment of long-term debt (1,340) (1,173) (877)
Exercise of employee stock options 412 425 -
Repurchase of Company stock (6,118) (32) (3,404)
Net cash provided by (used in) financing activities 5,054 (6,880) 4,059
Net increase(decrease)in cash and cash equivalents 228 89 (193)
Cash and cash equivalents at beginning of year 529 440 633
Cash and cash equivalents at end of year $ 757 529 440
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 3,477 3,179 3,480
Income taxes $ 2,004 1,720 3,399
Non cash investing and financing activities:
Additions to property, plant and equipment from:
Exchanges $ - 563 -
See accompanying notes.
Consolidated Statements of Shareholders' Equity
(Dollars in thousands, except per share amounts)
Capital in
Common Stock Excess of Retained
Shares Amount Par Value Earnings
Balance at September 30, 2000 3,346,351 $335 $14,740 $58,738
Shares purchased and canceled (206,285) (21) (3,383) -
Net income - - - 2,703
Balance at September 30, 2001 3,140,066 314 11,357 61,441
Shares purchased and canceled (1,658) - (32) -
Exercise of stock options 20,600 2 423 -
Net income - - - 5,655
Balance at September 30, 2002 3,159,008 316 11,748 67,096
Shares purchased and canceled (246,300) (25) (6,093) -
Exercise of stock options 20,000 2 410 -
Net income - - - 4,575
Balance at September 30, 2003 2,932,708 $293 $ 6,065 $71,671
See accompanying notes.
Notes to Consolidated Financial Statements
1. Accounting policies. ORGANIZATION - Patriot Transportation Holding, Inc.
(Company) is engaged in the transportation and real estate businesses. The
Company's transportation business is conducted through two wholly owned
subsidiaries. Florida Rock & Tank Lines, Inc. (Tanklines) is a Southeastern
transportation company concentrating in the hauling by motor carrier of
primarily petroleum related liquids and other liquid and dry bulk
commodities. SunBelt Transport, Inc. (SunBelt) serves the flatbed portion of
the trucking industry in the Southeast, Midwest and Mid-Atlantic States,
hauling primarily construction materials. The Company's real estate group,
through subsidiaries, acquires, constructs, leases, operates and manages land
and buildings to generate both current cash flows and long-term capital
appreciation. The real estate group also owns real estate which is leased
under mining royalty agreements or held for investment.
CONSOLIDATION - The consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
instruments with maturities of three months or less at time of purchase to be
cash equivalents.
INVENTORY - Inventory of parts and supplies is valued at the lower of cost
(first-in, first-out) or market.
TIRES ON EQUIPMENT - The value of tires on tractors and trailers is accounted
for as a prepaid expense and amortized over the life of the tires as a
function of miles driven.
REVENUE AND EXPENSE RECOGNITION - Transportation revenue is recognized when
shipment is complete and transportation expenses are recognized as incurred.
Real estate rental revenue and mining royalties are generally recognized when
due under the leases. Rental income from leases with scheduled increases
during their term is recognized when due under the leases, except when
increases are deemed material (greater than 3% per annum), in which case,
rents are recognized on a straight-line basis over the term of the lease.
Sales of real estate are recognized when the collection of the sales price is
reasonably assured and when the Company has fulfilled its obligations, which
are typically as of the closing date.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is recorded at
cost less accumulated depreciation. Provision for depreciation of property,
plant and equipment is computed using the straight-line method based on the
following estimated useful lives:
Years
Buildings and improvements 7-39
Revenue equipment 5-10
Other equipment 3- 5
Furniture and fixtures 5-10
Depletion of sand and stone deposits is computed on the basis of units of
production in relation to estimated reserves.
The Company periodically reviews property, plant and equipment and
intangible assets for potential impairment. If this review indicates that
the carrying amount of the asset may not be recoverable, the Company
estimates the future cash flows expected with regards to the asset and its
eventual disposition. If the sum of these future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the
assets, the Company records an impairment loss based on the fair value of
the asset.
All direct and indirect costs, including interest and real estate taxes
associated with the development, construction, leasing or expansion of real
estate investments are capitalized as a cost of the property. Included in
indirect costs is an estimate of internal costs associated with development
and rental of real estate investments. All external costs associated with
the acquisition of real estate investments are capitalized as a cost of the
property.
INSURANCE - The Company has a $250,000 to $500,000 self-insured retention
per occurrence in connection with certain of its workers' compensation,
automobile liability, and general liability insurance programs ("risk
insurance"). The Company is self-insured for its employee health insurance
benefits and carries a stop loss coverage of $200,000 per covered
participant per year. The Company accrues monthly the estimated cost in
connection with its portion of its risk and health insurance losses. Claims
paid by the Company are charged against the reserve. Additionally, the
Company maintains a reserve for incurred but not reported claims based on
historical analysis of such claims.
INCOME TAXES - The Company uses an asset and liability approach to
financial reporting for income taxes. Under this method, deferred tax
assets and liabilities are recognized based on differences between
financial statement and tax bases of assets and liabilities using presently
enacted tax rates. Deferred income taxes result from temporary differences
between pre-tax income reported in the financial statements and taxable
income.
STOCK OPTION AWARDS - The Company accounts for its employee stock
compensation plans under APB Opinion No. 25. See Footnote 7 for pro forma
disclosures of net earnings and earnings per share, as if the fair value
based method of accounting defined in SFAS No. 123 had been applied.
EARNINGS PER COMMON SHARE - Basic earnings per share are based on the
weighted average number of common shares outstanding during the periods.
Diluted earnings per share are based on the weighted average number of
common shares and potential dilution of securities that could share in
earnings. The only difference between basic and diluted shares used for
the calculation is the effect of employee and director stock options.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
ENVIRONMENTAL - Environmental expenditures that benefit future periods are
capitalized. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimation of such liabilities includes an
assessment of engineering estimates, continually evolving governmental laws
and standards, and potential involvement of other potentially responsible
parties.
NEW ACCOUNTING REQUIREMENTS - In June 2001, the FASB issued Statement No.
142, "Goodwill and Other Intangible Assets" (SFAS 142). This statement
addresses the accounting for intangible assets. The Company adopted SFAS
No. 142 on October 1, 2002. In accordance with this statement, the Company
completed the transitional goodwill impairment test resulting in no
impairment of goodwill. Goodwill amortization for 2003, 2002, and 2001,
was $0, $40,000 and $40,000, respectively.
In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations" (SFAS 143), which addresses financial accounting and
reporting for obligations with the retirement of tangible long-lived assets
and the associated asset retirement costs. The standard applies to legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and (or) normal use of the
asset. The Company adopted the provisions of SFAS 143 for the quarter ending
December 31, 2002 with no material affect on its financial statements.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144). This statement
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of". SFAS 144 retains the
fundamental provisions of SFAS 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement
of long-lived assets to be disposed of by sale. SFAS 144 is effective for
fiscal years beginning after December 15, 2001. The Company adopted this
statement October 1, 2002.
RECLASSIFICATIONS - Certain reclassifications have been made to the 2002
and 2001 financial statements to conform to the presentation adopted in
2003.
2. Transactions with related parties. As of September 30, 2003, five of
the Company's directors were also directors of Florida Rock Industries,
Inc. ("FRI"). Such directors own approximately 27.6% of the stock of FRI
and 47.1% of the stock of the Company. Accordingly, FRI and the Company
are considered related parties.
The Company, through its transportation subsidiaries, hauls commodities by
tank and flatbed trucks for FRI. Charges for these services are based on
prevailing market prices. Other wholly owned subsidiaries lease certain
construction aggregates mining and other properties to FRI.
A summary of revenues derived from FRI follows (in thousands):
2003 2002 2001
Transportation $ 1,367 986 950
Real estate 5,938 5,958 9,743
$ 7,305 6,944 10,693
The Company outsources certain functions to FRI, including some
administrative, human resources, legal and risk management. Charges for
services provided by FRI were $440,000 in 2003, $463,000 in 2002, and
$527,000 in 2001.
A subsidiary of the Company sold, in September 2003, 796 acres of land
located in St. Mary's County, Maryland to FRI for $1,836,000. The sale was
approved by a committee of independent directors of the Company after
receipt of an appraisal and consultation with management. The Company
recognized a gain on the sale of approximately $1,078,000 before income
taxes. The Company plans to defer the gain for tax purposes under Section
1031 of the Internal Revenue Code. See Footnote 11 for more information.
The Company sold, during Fiscal 2001, two parcels of land to FRI, for
$2,607,000 and recognized a pre-tax gain of $2,034,000. The transactions
including the purchase price were reviewed and approved on behalf of the
Company by a committee of independent directors after obtaining independent
appraisals.
The Company announced on May 7, 2003 that a subsidiary agreed to sell a 935
acre parcel of property in Miami, Florida to FRI for $1,638,000. The
property is principally composed of mined-out lakes, mitigation areas, 145
acres of mineable land and 32 acres of roads and railroad track right-of-
ways. The closing of the sale is to occur no later than December 31, 2004.
The terms of the agreement were approved by the Company's Audit Committee
which, is comprised of independent directors, after considering, among
other factors, the terms of the existing lease agreement and consultation
with management. If this transaction closes, the Company will recognize a
gain of approximately $999,000, net of income taxes, or $.33 per diluted
common share.
A subsidiary of the Company signed an Agreement in February 2002 to sell
108 acres of land located in the northwest quadrant of I-395 and I-495 at
Edsall Road in Springfield, Virginia to FRI for $15,000,000. Closing is
subject to a title search and surveys and is to occur within 45 days of FRI
giving notice to close. If FRI fails to close by December 31, 2004, at no
fault of the Company, the Company may retain the $100,000 binder deposit
and be under no further obligation to close. FRI has the right to
terminate this Agreement prior to closing if there shall exist or the
consummation of the sale would cause a default in the Credit Agreement
among FRI and Wachovia Bank, et. al. The Agreement was approved by a
committee of independent directors of the Company after review of a
development feasibility study and other materials, consultation with
management and advice of independent counsel. The Company intends to
structure this transaction as a tax deferred exchange under Section 1031 of
the United States Internal Revenue Code and the Treasury Regulations
promulgated thereunder. If the transaction closes, the Company will
recognize a gain on the sale of approximately $7,772,000 net of income
taxes, or $2.54 per diluted share. The tract is rented to a subsidiary of
FRI and the Company received rental income of approximately $650,000 for
the 2003 fiscal year.
3. Non-recurring charges related to closed subsidiary. In the quarter ended
September 30, 2001, the Company recorded restructuring and other one-time
charges of $3,435,000 resulting from the decision to shut down its third
party agent/owner-operator subsidiary, Patriot Transportation, Inc., which
began operation in Fiscal 2000. The shutdown charge was comprised of
$2,051,000 for asset write-offs, $968,000 for fixed asset impairments,
$285,000 for employee severance and termination benefit costs, $90,000 for
remaining lease obligations and $41,000 for additional costs associated
with exiting the third party agent/owner-operator business. The $3,435,000
charge was recorded in the Consolidated Statement of Income as cost of
operations of $26,000, selling, general and administrative expense of
$1,805,000 and restructuring and other charges of $1,604,000.
The Company continued its attempts to recover amounts written off related
to the closure of the subsidiary. As a result, recovery of restructuring
charges of $29,000 and $100,000 was recorded in 2003 and 2002,
respectively. The recoveries were due to better than expected disposition
of owned and leased trailers. Recoveries of $49,000 and $194,000 in amounts
previously charged to administrative expense were also recorded in 2003 and
2002, respectively, primarily due to recovery of accounts receivable in
excess of amounts anticipated.
At September 30, 2003 and 2002, $82,000 and $113,000 was included in
accounts payable and accrued liabilities, representing the portion of
various charges not yet expended.
Revenue and operating profit (loss) related to Patriot Transportation, Inc.
for the years ended September 30 are as follows:
2003 2002 2001
Revenue $ 0 $ 0 $22,623,000
Operating profit (loss) $ 78,000 $ 294,000 $(6,309,000)
4. Long-term debt. Long-term debt at September 30 is summarized as follows
(in thousands):
2003 2002
Revolving credit (unsecured) $20,000 12,500
5.7% to 9.5% mortgage notes,
due in installments through 2020 39,361 36,101
59,361 48,601
Less portion due within one year 1,545 1,311
$57,816 47,290
The aggregate amount of principal payments, excluding the revolving credit,
due subsequent to September 30, 2003 is: 2004 - $1,545,000; 2005 -
$1,604,000; 2006 - $1,732,000; 2007-$1,848,000; 2008-$1,996,000; 2009 and
subsequent years - $30,636,000.
In January 2002, the Company and four banks signed a $37,000,000
uncollateralized revolving credit agreement (the Revolver) for a term of
three years. The Revolver currently bears interest at a margin rate of
1.675% over the selected LIBOR or alternatively, 0.25% over the prime rate
of SunTrust Bank, N.A. The margin rate may change quarterly based on the
Company's ratio of consolidated adjusted debt to earnings before interest,
taxes, depreciation, amortization and rent for the previous four quarters.
The Revolver contains a $5,000,000 swing line which may be used for daily
borrowings. An annual commitment fee of one-quarter of one percent per
annum is payable on the unused amount of the commitment during the term of
the loan. The commitment fee may also change quarterly based upon the ratio
described above. The Revolver contains restrictive covenants including
limitations on paying cash dividends. Under these restrictions, as of
September 30, 2003, $13,048,000 of consolidated retained earnings would be
available for payment of dividends or repurchase of common stock.
The non-recourse fully amortizing mortgage notes payable are collateralized
by real estate having a carrying value of approximately $43,852,000 at
September 30, 2003.
Certain properties having a carrying value at September 30, 2003 of
$876,000 were encumbered by industrial revenue bonds that are the liability
of FRI. FRI has agreed to pay such debt when due (or sooner if FRI cancels
its lease of such property) and further has agreed to indemnify and hold
harmless the Company.
During Fiscal 2003, 2002 and 2001 the Company capitalized interest cost of
$182,000, $194,000 and $412,000, respectively.
5. Leases. At September 30, 2003, the total carrying value of property
owned by the Company which is leased or held for lease to others is
summarized as follows (in thousands):
Construction aggregates property $ 40,744
Commercial property 103,875
Land and other property 1,621
146,240
Less accumulated depreciation and depletion 33,757
$112,483
The minimum future rentals due the Company on noncancelable leases as of
September 30, 2003 are as follows: 2004 - $9,881,000; 2005 - $8,733,000;
2006 - $6,664,000; 2007 - $5,306,000; 2008 - $5,037,000; 2009 and
subsequent years $23,653,000.
6. Preferred Shareholder Rights Plan. On May 5, 1999, the Board of
Directors of the Company declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock.
The dividend was payable on June 2, 1999. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share
of Series A Junior Participating Preferred Stock of the Company, par value
$.01 per share (the "Preferred Shares"), at a price of $96 per one one-
hundredth of a Preferred Share, subject to adjustment.
In the event that any Person or group of affiliated or associated Persons
(an "Acquiring Person") acquires beneficial ownership of 15% or more of the
Company's outstanding common stock, each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of
the Right. An Acquiring Person excludes any Person or group of affiliated
or associated Persons who were beneficial owners, individually or
collectively, of 15% or more of the Company's Common Shares on May 4, 1999.
The Rights initially trade together with the Company's common stock and are
not exercisable. However, if an Acquiring Person acquires 15% or more of
the Company's common stock, the Rights may become exercisable and trade
separately in the absence of future board action. The Board of Directors
may, at its option, redeem all Rights for $.01 per right, at any time prior
to the Rights becoming exercisable. The Rights will expire September 30,
2009 unless earlier redeemed, exchanged or amended by the Board.
7. Stock Option Plans. The Company has two Stock Option Plans (the 1995
Stock Option Plan and the 2000 Stock Option Plan) under which options for
shares of common stock have been granted to directors, officers and key
employees. Currently, only the 2000 Plan has options available for grant.
The options awarded under the two plans have similar characteristics.
All stock options expire ten years from the date of grant. Options awarded
to directors are exercisable immediately and options awarded to officers
and employees become exercisable in cumulative installments of 20% each
year after a one year waiting period from date of grant. Options awarded in
2003 included 140,000 to officers and key employees. The remaining options
issued in 2003 and all awards in 2002 and 2001 were to directors.
At September 30, 2003, the number of shares available for issuance is
158,880 shares.
Option transactions for the fiscal years ended September 30 are summarized
as follows:
Shares under Weighted Average
Option Exercise Price
Balance at September 30, 2000 102,600 $ 19.05
Granted 29,000 17.31
Cancelled - -
Exercised - -
Balance at September 30, 2001 131,600 18.67
Granted 37,000 22.99
Cancelled (7,000) 21.29
Exercised (20,600) 17 93
Balance at September 30, 2002 141,000 19.78
Granted 182,000 22.87
Cancelled (3,500) 22.48
Exercised (20,000) 17.75
Balance at September 30, 2003 299,500 $ 21.85
The following table summarizes information concerning stock options
outstanding at September 30, 2003:
Shares Weighted Weighted
Range of Exercise under Average Average
Prices per Share Option Exercise Price Remaining Life
Outstanding:
$22.23 - $24.00 140,620 $ 24.64 9.0
Exercisable:
$15.13 - $19.87 82,000 17.49 4.5
$21.60 - $30.44 76,880 26.52 8.4
158,880 $ 21.85 6.4
If compensation cost for stock option grants had been determined based on
the Black-Scholes option pricing model value at the grant date for the
awards consistent with the provisions of SFAS No. 123, the Company's net
income, basic and diluted earnings per share would have been (in thousands,
except per share amounts):
2003 2002 2001
Net income
As reported $ 4,575 5,655 2,703
Deduct: Total stock-based
employee compensation expense
determined under fair value based
method, net of tax effects $ 540 348 203
Pro forma $ 4,035 5,307 2,500
Basic earnings per share
As reported $ 1.51 1.80 0.86
Pro forma $ 1.33 1.69 0.79
Diluted earnings per share
As reported $ 1.49 1.79 0.86
Pro forma $ 1.32 1.68 0.79
The fair value of options granted in 2003 was estimated to be $11.94 on the
date of grant using the following assumptions; no dividend yield, expected
volatility of 45.3%, risk-free interest rates of 3.7% and expected lives of
7 years. The weighted average fair value of options granted in 2002 was
estimated to be $13.51 on the date of grant using the following assumptions;
no dividend yield, expected volatility of 52.6%, risk-free interest rates of
4.5% and expected lives of 7 years.
8. Income taxes. The provision for income taxes for fiscal years ended
September 30 consists of the following (in thousands):
2003 2002 2001
Current:
Federal $1,755 2,366 1,260
State 289 360 211
2,044 2,726 1,471
Deferred
Federal 390 728 284
State 71 161 48
461 889 332
Total $2,505 3,615 1,803
A reconciliation between the amount of tax shown above and the amount computed
at the statutory Federal income tax rate follows (in thousands):
2003 2002 2001
Amount computed at statutory
Federal rate $2,184 3,152 1,532
State income taxes (net of Federal
income tax benefit) 279 338 169
Other, net 42 125 102
Provision for income taxes $2,505 3,615 1,803
The types of temporary differences and their related tax effects that give
rise to deferred tax assets and deferred tax liabilities at September 30,
are presented below:
2003 2002
Deferred tax liabilities:
Property, plant and equipment $12,839 11,944
Depletion 570 570
Prepaid expenses 1,144 1,000
Gross deferred tax liabilities 14,553 13,514
Deferred tax assets:
Insurance reserves 2,659 2,573
Other, net 929 855
Gross deferred tax assets 3,588 3,428
Net deferred tax liability $10,965 10,086
9. Employee benefits. The Company and certain subsidiaries have a
savings/profit sharing plan for the benefit of qualified employees. The
savings feature of the plan incorporates the provisions of Section 401(k)
of the Internal Revenue Code. Under the savings feature of the plan, an
eligible employee may elect to save a portion (within limits) of their
compensation on a tax deferred basis. The Company contributes to a
participant's account an amount equal to 50% (with certain limits) of the
participant's contribution. Additionally, the Company may make an annual
contribution to the plan as determined by the Board of Directors, with
certain limitations. The plan provides for deferred vesting with benefits
payable upon retirement or earlier termination of employment. The
Company's cost was $591,000 in 2003, $545,000 in 2002 and $517,000 in 2001.
The Company provides certain health benefits for retired employees.
Employees may become eligible for those benefits if they were employed by
the Company prior to December 10, 1992, meet the service requirements and
reach retirement age while working for the Company. The plan is
contributory and unfunded. The Company accrues the estimated cost of
retiree health benefits over the years that the employees render service.
The following table sets forth the plan's status reconciled with the
accrued postretirement benefit cost included in the Company's consolidated
balance sheet at September 30 (in thousands):
2003 2002
Change in benefit obligation:
Balance beginning of year $ 374 424
Service cost 16 19
Interest cost 20 24
Plan participants' contribution 14 11
Actuarial loss(gain) (40) (69)
Benefits paid (25) (35)
Balance end of year $ 359 374
Change in plan assets:
Balance beginning of year $ - -
Employer contributions 11 24
Plan participants' contribution 14 11
Benefits paid (25) (35)
Balance end of year $ 0 0
Funded status $(359) (374)
Unrecognized net gain (236) (227)
Unrecognized prior service cost - -
Accrued postretirement benefit costs $(595) (601)
Net periodic postretirement benefit cost for fiscal years ended September 30
includes the following components (in thousands):
2003 2002 2001
Service cost of benefits earned during
the period $ 16 19 24
Interest cost on APBO 20 24 29
Net amortization and deferral (31) (28) (21)
Net periodic postretirement benefit
cost $ 5 15 32
The discount rate used in determining the Net Periodic Postretirement Benefit
Cost and the APBO was 5.75% for 2003, 7.0% for 2002 and 7.5% for 2001. No
medical trend is applicable because the Company's share of the cost is
frozen.
10. 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 liquid and dry bulk commodities 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 is developing
commercial and industrial properties.
Operating results and certain other financial data for the Company's business
segments are as follows (in thousands):
2003 2002 2001
Revenues:
Transportation (a) $ 87,996 81,921 103,189
Real estate (b) 15,307 15,028 18,069
$103,303 96,949 121,258
Operating profit:
Transportation (a) $ 2,360 5,057 (2,248)
Real estate (b) 9,028 8,864 11,550
Corporate expenses (1,473) (1,508) (1,424)
$ 9,915 12,413 7,878
Capital expenditures:
Transportation $ 7,086 11,430 5,011
Real estate 13,327 7,179 12,920
Other 0 0 497
$ 20,413 18,609 18,428
Depreciation, depletion and
amortization:
Transportation $ 8,510 7,876 8,175
Real estate 3,211 2,961 3,259
Other 235 249 37
$ 11,956 11,086 11,471
Identifiable assets at September 30:
Transportation $ 45,055 47,519 48,987
Real estate 116,269 105,850 101,274
Cash 2,552 529 440
Unallocated corporate assets 1,340 1,565 2,058
$165,216 155,463 152,759
(a) Fiscal 2001 includes revenues of $22,623,000 and operating losses of
$6,309,000 attributed to Patriot Transportation, Inc. which ceased operations
in September, 2001.
(b) Fiscal 2003, 2002 and 2001 includes revenue of $68,000, $554,000, and
$3,978,000 and operating profit of $47,000, $323,000, and $2,886,000,
respectively, from the sale of real estate.
11. Discontinued operations. During the fourth quarter of 2003, a subsidiary
of the Company sold a mining property, located in St. Mary's County, Maryland
to FRI for $1,836,000. According to the provisions of SFAS 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the property is
considered a component of the entity, as defined by SFAS 144, and should
therefore be treated as a discontinued operation. A gain on disposal of the
property of $657,000, net of income taxes of $420,000, has been recorded
after income from continuing operations. Since there have been no active
mining operations on the property during the periods presented, revenues and
expenses from the discontinued operations are not material.
12. Acquisition. On May 30, 2002, the Company acquired substantially all of
the operating assets of Infinger Transportation Company, Inc. (Infinger), a
regional tank truck carrier based in Charleston, South Carolina. The
acquisition was accounted for as a purchase. The purchase price was
approximately $3,698,000, including costs associated with the acquisition.
The purchase price, which was financed through the revolving credit facility,
has been allocated to the assets acquired based on their respective fair
values. The purpose of the acquisition was to enable the Company to expand
into new markets and increase capacity in existing markets. No goodwill was
recorded in the transaction.
13. Fair values of financial instruments. At September 30, 2003 and 2002, the
carrying amount reported in the consolidated balance sheet for cash and cash
equivalents, short-term notes payable to bank and revolving credit
approximate their fair value. The fair values of the Company's other long-
term debt are estimated based on current rates available to the Company for
debt of the same remaining maturities. At September 30, 2003, the carrying
amount and fair value of such other long term debt was $39,361,000 and
$41,795,000, respectively.
14. 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.
In addition, a transportation subsidiary of the Company is a defendant in a
pending vehicular accident case that is scheduled to go to trial in January
2004. The plaintiff in that case is seeking compensatory and punitive
damages. Although the Company, through its subsidiary, is vigorously
defending the litigation and believes that there is no basis for an award of
punitive damages, the Company believes that there is a significant risk that
the Company's subsidiary will incur losses in connection with such case, a
portion of which (any punitive damages award) may or may not be covered by
insurance, depending in part on the findings at trial. At this time neither
the Company nor its counsel can reasonably predict the amount or the range of
such loss, if any. However, if punitive damages are awarded and are not
covered by insurance, and such amounts are material, such award could have a
material adverse impact on the Company's financial condition, results of
operations or cash flows.
15. Commitments. The Company, at September 30, 2003, had entered into various
contracts to develop real estate with remaining commitments totaling
$930,000, and to purchase transportation equipment for approximately
$548,000.
A subsidiary of the Company has entered into an agreement to develop and sell
to a major home builder a minimum of 292 residential lots on 73.6 acres of the
Bird River Property currently zoned for residential. The minimum aggregate
purchase price for these lots is $28,705,000.
The rights and obligations of the subsidiary under this agreement are
specifically contingent upon the approval by Baltimore County of a Planned
Unit Development (PUD) by July 1, 2006 which will permit the development of
and use of the property for a minimum of 292 residential lots. The
subsidiary's rights and obligations are also expressly contingent upon the
construction of the proposed Route 43 and the subsidiary's ability to have
vehicular and water and sewer connection access to the property by July 1,
2007, at what the subsidiary deems in its sole discretion to be a commercially
reasonable cost. The obligations of the builder under the agreement also are
subject to customary conditions precedent.
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders of
Patriot Transportation Holding, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity, and cash flows
present fairly, in all material respects, the financial position of Patriot
Transportation Holding, Inc. and its subsidiaries at September 30, 2003 and
2002, and the results of their operations and their cash flows for each of
the two years in the period ended September 30, 2003 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
December 16, 2003
Jacksonville, Florida
Independent Auditors' Report
To the Board of Directors and Shareholders
Patriot Transportation Holding, Inc.
We have audited the consolidated statements of income, shareholders'
equity, and cash flows of Patriot Transportation Holding, Inc. and
subsidiaries for the year ended September 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of Patriot Transportation Holding, Inc.
and subsidiaries' operations and cash flows for the year ended September
30, 2001, in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche, LLP
Certified Public Accountants
Jacksonville, Florida
December 10, 2001
Directors and Officers
Directors
John E. Anderson (1)
President and Chief Executive
Officer of the Company
Edward L. Baker (1)
Chairman of the Board of the Company
and of Florida Rock Industries, Inc.
John D. Baker II (1)
President and Chief Executive
Officer of Florida Rock Industries, Inc.
Thompson S. Baker II
Vice President of
Florida Rock Industries, Inc.
David H. deVilliers, Jr.
Vice President of the Company and
President of the Company's Real Estate Group
Luke E. Fichthorn III (3)
Private Investment Banker,
Twain Associates and Chairman of the
Board and Chief Executive Officer of
Bairnco Corporation
Francis X. Knott (2)
Chairman of Partner Management Co., LLC
and of Partners Realty Trust, Inc.
Robert H. Paul III (2)(3)
Chairman of the Board, President
and Chief Executive Officer of
Southeast-Atlantic Beverage Corporation
H. Jay Skelton (2)
President and Chief Executive Officer of
DDI, Inc.
Martin E. Stein, Jr. (3)
Chairman and Chief Executive Officer of
Regency Centers Corporation and
Chairman of the Regency Group, Inc.
James H. Winston (3)
President of LPMC of Jax, Inc.,
Omega Insurance Company and Citadel
Life & Health Insurance Co.
________________
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Officers
Edward L. Baker
Chairman of the Board
John E. Anderson
President and Chief Executive Officer
David H. deVilliers, Jr.
Vice President
President, FRP Development Corp.,
the Company's northern real estate
operations
Ray M. Van Landingham
Vice President, Finance and Administration
and Chief Financial Officer
Gregory B. Lechwar
Controller and Chief Accounting Officer
Rick J. Copley
President, SunBelt Transport, Inc.
Robert E. Sandlin
President, Florida Rock & Tank Lines, Inc.
Patriot Transportation Holding, Inc.
General Office: 1801 Art Museum Drive
Jacksonville, Florida 32207
Telephone: (904) 396-5733
Annual Meeting
Shareholders are cordially invited to attend the Annual Shareholders Meeting
which will be held at 2 p.m. local time, on Wednesday, February 4, 2004, 155
East 21st Street, Jacksonville, Florida, 32206.
Transfer Agent
Wachovia Bank, N.A.
Corporate Trust Client Services NC-1153
1525 West W. T. Harris Boulevard - 3C3
Charlotte, NC 28288-1153
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
McGuireWoods LLP
Jacksonville, Florida
Independent Auditors
PricewaterhouseCoopers LLP
Jacksonville, Florida
Common Stock Listed
The Nasdaq Stock Market
(Symbol: PATR)
Form 10-K
Shareholders may receive without charge a copy of Patriot Transportation
Holding, Inc.'s annual report on Form 10-K for the fiscal year ended
September 30, 2003 as filed with the Securities and Exchange Commission by
writing to the Treasurer at 1801 Art Museum Drive Suite 300, Jacksonville,
Florida 32207.
25
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>dadeps.txt
<TEXT>
Exhibit No. ____
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") made as
of the Effective Date (as hereinafter defined), by and between
FLORIDA ROCK PROPERTIES, INC., a Florida corporation, the address
of which for notices hereunder is P. O. Box 45243, Jacksonville,
Florida 32232 ("Seller") and FLORIDA ROCK INDUSTRIES, INC., a
Florida corporation, the address of which for notices hereunder
is P. O. Box 4667, Jacksonville, Florida 32201-4667 ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of certain real property
located in Sections 25, 26 and 35 Township 53 S Range 39 East,
Dade County, Florida, more particularly described on Exhibit A
attached hereto, consisting of approximately 935 acres
principally composed of mined-out lakes, mitigation areas,
approximately 144.6 acres of mineable lands and approximately
32.5 acres of land for railroad tracks and roads, all of which is
leased by Seller to Buyer under the Mining Lease as defined
below.
WHEREAS, Seller desires to sell to Buyer and Buyer desires
to purchase from Seller all of Seller's right, title and interest
in and to said land with all improvements thereon, as hereinafter
more particularly described, and at closing the parties desire to
terminate the Mining Lease, all on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged by Seller, and
the respective undertakings of the parties hereinafter set forth,
the undersigned agree as follows:
1. DEFINITIONS. In addition to any other terms defined by
this Agreement, each of the following defined terms, when used in
this Agreement with an initial capital letter or initial capital
letters, shall have the meaning ascribed by this Article 1:
1.1. "Agreement" means this Purchase and Sale Agreement
between Seller and Buyer concerning the purchase and sale of the
real property described on Exhibit A attached hereto.
1.2. "Closing" means the consummation of the purchase
and sale contemplated by this Agreement.
1.3. "Earnest Money" means the cash to be deposited by
Buyer with Seller as earnest money as provided in Section 4.1
hereof. The term "Earnest Money" includes all interest or income
earned on the Earnest Money, if any.
1.4. "Effective Date" means when this Agreement is
fully executed, the last date of execution by a party to this
Agreement, the date of each party's execution being set forth
after each party's signature below.
<PAGE>
1.5. Intentionally Deleted.
1.6. "Improvements" means any improvements located on
the land described on Exhibit A.
1.7 "Land" means that certain tract or parcel of real
property located in Dade County, Florida, and containing
approximately 935 acres in the aggregate, as more particularly
described in Exhibit A attached hereto and by this reference made
a part hereof, together with all of Seller's right, title and
interest in and to all appurtenances, rights, easements,
tenements, and hereditaments incident thereto.
1.8. "Mining Lease" means that certain Mining Lease
Agreement dated April 1, 1986 between Florida Rock Properties,
Inc., as Landlord, and Florida Rock Industries, Inc., as Tenant,
pursuant to which Buyer currently leases the Land from Seller.
1.9. "Property" means collectively, the Real Property.
1.10. "Real Property" means collectively, the Land and the
Improvements.
2. SALE AND PURCHASE OF PROPERTY AND TERMINATION OF MINING
LEASE.
On the terms and conditions hereinafter set forth, Seller
shall sell the Property to Buyer and Buyer shall purchase the
Property from Seller, and simultaneously with the closing of the
sale, the parties shall terminate the Mining Lease.
3. PURCHASE PRICE.
3.1. Purchase Price. The purchase price for the
Property shall be $1,628,231.00 (the "Purchase Price"). Buyer
shall be entitled to a credit against the Purchase Price in the
amount of $4,500.00 previously paid to purchase an isolated lot
owned by Seller which otherwise would have been included in this
transaction. The Purchase Price, as adjusted for credits
provided herein and to reflect any prorations and other
adjustments provided for herein, shall be paid by Buyer to Seller
at the Closing. As part of the consideration for the conveyance
of the Property, the rights and obligations of the parties under
the Mining Lease shall be terminated at Closing without the
payment or refund of any additional fees, royalties or costs; and
the Mining Lease shall be no longer effective.
3.2 Condition. Seller agrees to deliver the
Property in its PRESENT "AS IS" CONDITION with no
representations or warranties on the part of Seller
except as otherwise specifically set forth in this
Agreement. Buyer will have the opportunity to inspect
the Property and HAS NOT RELIED UPON ANY REPRESENTATIONS
MADE BY Seller in describing the Property, and Buyer
accepts the Property in its PRESENT, AS IS CONDITION.
Buyer acknowledges and agrees that Buyer has caused its
engineers, surveyors, and other professionals as may be
deemed necessary in Buyer's opinion to investigate the
Property before making its decision to purchase the
Property.
2
<PAGE>
4. EARNEST MONEY.
4.1. Earnest Money. Within three (3) business day
after the Effective Date of this Agreement, Buyer shall deposit
cash or readily available funds with Seller in the amount of
Forty Five Thousand and No/100 Dollars ($45,000.00) as the
Earnest Money hereunder. The Earnest Money shall be refunded to
Buyer only in those circumstances where this Agreement provides
for a refund of the Earnest Money, to the extent provided herein.
The Earnest Money will be held by Seller in the terms set forth
in this Agreement for the mutual benefit of the parties to this
Agreement. The Earnest Money may be commingled with other funds
of Seller in Seller's sole discretion. Buyer shall not be
entitled to interest on the Earnest Money.
4.2. Application of Earnest Money. At the Closing, the
Earnest Money shall be applied and credited toward payment of
the Purchase Price. If the Closing does not occur, the Earnest
Money shall be retained by Seller or refunded to Buyer, as
provided in the relevant provisions of this Agreement.
Notwithstanding any provision of this Agreement to the contrary,
if under the applicable provisions of this Agreement, Seller
shall nonetheless retain Fifty and No/100 Dollars ($50.00) of the
Earnest Money as Seller's consideration for this Agreement and
the balance of the Earnest Money shall be refunded to Buyer.
5. CLOSING.
5.1. Time and Place of Closing. If the conditions
precedent to Closing as set forth herein have been fulfilled, the
Closing shall occur on a mutually agreeable date, but not later
than December 15, 2003, (the "Closing Date") at such location in
Jacksonville, Florida as is agreed upon by Buyer and Seller.
5.2. Deliveries at Closing. At the Closing, the
following items are to be delivered:
5.2.1. Items to be Delivered by Seller. Seller
shall deliver to Buyer:
5.2.1.1. Deed. A duly executed, witnessed and
notarized Special Warranty Deed ("Deed") in favor of Buyer
conveying the Real Property, free and clear of liens,
encumbrances or other title matters created or arising during
Seller's ownership of the Real Property (and not caused as a
result of an act or omission of Buyer).
5.2.1.2. Seller's Affidavit. An affidavit dated
as of the Closing Date, addressed to Buyer and Buyer's title
insurer, duly executed on behalf of Seller by a duly authorized
officer of Seller, sufficient to any title insurance underwriter
issuing the title commitment to delete the standard gap
exception, and the standard exceptions for parties in possession
and mechanics' liens.
5.2.1.3. Certificate of Non-Foreign Status. A
certificate dated as of the Closing Date, addressed to Buyer,
duly executed by Seller, stating that Seller is not a foreign
person within the meaning in Section 1445 of the Internal Revenue
Code.
5.2.1.4. Evidence of Authority. Evidence that
Seller has the requisite power and authority to execute, deliver
and perform under this Agreement and all closing
3
<PAGE>
documents to be signed by Seller. Additionally, Seller shall provide
evidence of authority and good standing of Seller, including a
certified copy (in recordable form) of a corporate resolution of Seller
authorizing the person signing the Deed to do so.
5.2.2. Items to be Delivered by Buyer. Buyer shall
deliver to Seller the net Purchase Price in the amount at the
time and in the manner specified in Article 3 on the Closing Date
(less credit for the Earnest Money and other credits provided
herein, and adjusted for any prorations as provided herein).
5.2.3. Items to be Jointly Delivered by Seller and
Buyer. Buyer and Seller shall jointly deliver to one another at
Closing (i) a Closing Statement, duly executed by Seller and
Buyer, setting forth the prorations and other adjustments
provided for herein, the disbursement of the sales proceeds, and
such other matters as Seller and Buyer shall mutually deem
appropriate, and (ii) a written Termination and Release of the
Mining Lease.
5.3. Closing Costs. Buyer and Seller shall each pay one-
half the costs of the following at closing: documentary stamp
tax due on deed; recording costs; closing attorneys fee
(including preparation of this Agreement and all required closing
documents, and settlement of closing transaction.). If Buyer
elects to obtain title insurance or a survey of the Property,
Buyer shall pay all costs thereof.
5.4. Adjustments and Prorations. Real estate taxes have
been the responsibility of Buyer to pay pursuant to the Mining
Lease. Accordingly, real estate taxes will not be prorated at
Closing and Buyer shall have the responsibility to pay the same
for the year 2003 and all prior years during the term of the
Mining Lease. All special assessments against the Property which
are due and payable prior to Closing, if any, shall be paid by
Seller at Closing.
6. TITLE EXAMINATION AND OBJECTIONS; FAILURE TO CLOSE.
6.1. Title Examination and Survey. Prior to Closing,
Buyer, at its option may obtain a title insurance commitment to
insure transfer of title to Buyer in the amount of the Purchase
Price, subject only to the matters set forth in Exhibit B
attached hereto which were matters affecting the Property at the
time of its conveyance to Seller (the "Permitted Exceptions"),
and real property taxes which are the obligation of Buyer under
the Mining Lease. Buyer shall have until Closing Date to examine
Seller's title to the Real Property, to cause a survey of the
Real Property to be made, if Buyer elects, and to furnish Seller
with a written statement of defects shown by the title insurance
commitment or the survey. Buyer shall also have until the
Closing Date the right to update the title search, and to update
the survey, and to give Seller written notice of any new title
objections appearing of record between the effective date of the
initial commitment or the date of the survey and the Closing
Date. If Buyer furnishes the aforesaid written notice or notices
within the permitted time, Seller shall have until the earlier of
the Closing Date or ten (10) days after receipt thereof in which
to indicate to Buyer which of the title objections raised by
Buyer Seller will cure and those which it declines to cure;
provided, however, Seller must cure all monetary encumbrances
affecting title to the real property as a result of any act or
omission of Seller such as security deeds, mortgages, judgment
liens, liens for materialmen or mechanics resulting from any work
undertaken by Seller, but not taxes, which are the responsibility
of Buyer under the Mining Lease. Seller shall have until the
Closing Date
4
<PAGE>
the right, but not the obligation (except for those items Seller
expressly elects in writing to cure and all monetary encumbrances),
to satisfy or cure all title objections of which it was timely
notified by Buyer; provided, however, that Seller, upon written
notice to Buyer, may postpone the Closing by ten (10) days in order
that such title objections might be cured.
6.2. Failure to Cure Title Objections. Should Seller
fail to satisfy or cure all such title objections by the Closing
Date, as postponed, if appropriate, then Buyer shall have as its
sole right and remedy, at Buyer's election to be made on or
before the Closing Date, (i) in the case of an uncured monetary
encumbrance, to proceed to close the purchase of the Property
with such portion of the Purchase Price as is necessary being
used to satisfy the monetary encumbrances; or (ii) to terminate
this Agreement and thereupon be entitled to a refund of the
Earnest Money from Escrow Agent; or (iii) to waive those title
objections which Seller failed to satisfy or cure and proceed to
close the sale of the Property contemplated herein and accept the
Real Property subject to such title objections with no reduction
in the Purchase Price, except as required to satisfy monetary
encumbrances as described in clause (i) above. Notwithstanding
anything contained in this Article 6, if Seller's failure to
convey marketable and insurable title to the Property subject
only to title conditions existing prior to Seller taking title to
the Property results from a willful act or omission of Seller in
default of its obligations hereunder, Buyer shall be entitled to
all remedies available to Buyer under Section 13.1.
7. REAL PROPERTY DOCUMENTS.
7.1. Property Documents. On or before five (5) business
days after the Effective Date, Seller shall deliver or make
available to Buyer for review and inspection copies of all tests,
surveys, soil tests, geotechnical reports, environmental reports,
title policies or commitments, traffic studies, concurrency
information, plans, permits or any other information in Seller's
possession with respect to the Property and will disclose to
Buyer any commitments (such as leases, options or rights of first
refusal) which Seller has with respect to the Property. If the
transaction contemplated herein fails to close for any reason
whatsoever, Buyer shall return to Seller all of the documents
which Seller has delivered to Buyer.
8. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer the following:
8.1. Due Authorization. Seller represents that it is a
corporation, validly existing under the laws of the State of
Florida. Seller has full power and authority to execute and
deliver this Agreement and all other documents executed and
delivered, or to be executed and delivered, by it
(contemporaneously herewith or at the Closing) in connection with
the transactions described herein and to perform all of its
obligations arising under this Agreement and such other
documents. All consents required to effect this transaction have
been obtained or will be obtained prior to Closing. The parties
executing this Agreement and such other documents on behalf of
Buyer have authority to bind Buyer hereunder and thereunder. The
execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby will not
violate any provision of the Seller's organizational documents or
result in the creation of any lien, charge, claim or encumbrance
on any part of the Property.
5
<PAGE>
8.2. Compliance. Seller has not received any notice
that the Real Property is in violation of any law, ordinance,
regulation, or governmental requirement, including, without
limitation, matters relating to zoning, construction, fire
protection, environmental requirements, building code, health
code, housing code, subdivision ordinance, traffic, flood
control, fire safety or the use and operation of the Real
Property, and no order, directive, complaint, request for
information or other communication as been made or issued to
Seller by any governmental authority with respect to any such
alleged violation in connection with the Property.
8.3. Condemnation. Seller has received no notice
from any public authority, of any eminent domain, condemnation
proceeding or intention to take or condemn the Property or any
part thereof.
8.4. Legal Proceedings. There is no legal action, suit
or other legal, administrative or governmental proceeding pending
or to the best of Seller's knowledge, threatened against or
relating to the Seller or the Property, the result of which would
have an adverse effect on the Property or Seller's ability to
perform its obligations hereunder.
8.5. Special Assessments. Seller has received no
notice that any portion of the Property is subject to or affected
by any special assessments or obligations for roads or other
improvements.
8.6. Contracts. Other than the Mining Lease, Seller
has entered into no contracts, service contracts, leases or other
obligations regarding the use, operation or maintenance of the
Real Property that cannot be terminated on thirty (30) days
notice..
8.7. Survival. The representations and warranties of
Seller contained in this Article 8 shall survive Closing for a
period of one year.
9. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER.
Buyer represents and warrants to Seller, as follows:
9.1. Due Authorization. Buyer has full power and
authority to execute and deliver this Agreement and all other
documents executed and delivered, or to be executed and
delivered, by it (contemporaneously herewith or at the Closing)
in connection with the transactions described herein and to
perform all of its obligations arising under this Agreement and
such other documents. All consents required for Buyer to effect
this transaction have been obtained or will be obtained prior to
Closing.
9.2. Survival. The representations and warranties of
Seller contained in this Article 9 shall survive Closing for a
period of one year.
6
<PAGE>
10. CONDITIONS.
10.1. Buyer's Conditions. In addition to any other
conditions provided in this Agreement, Buyer's obligation to
purchase the Property pursuant to this Agreement is subject to
the satisfaction of each of the following conditions at or prior
to the Closing Date.
10.1.1. Seller's Performance. Seller shall have
complied with and performed all of its obligations and covenants
set forth in this Agreement.
10.1.2. Seller's Execution and Delivery. On or
before the Closing Date, Seller shall have executed and delivered
all documents required to be delivered by Seller pursuant to the
terms of this Agreement.
10.1.3. Representations and Warranties. All of
the representations and warranties made by Seller in Article 8
shall be true correct at and as of the Closing Date though such
representations and warranties were made both at and as of the
Effective Date and at and as of the Closing Date.
10.1.4. Buyer's Benefit. The contingencies set
forth in this Section 10.1. are for the sole benefit of Buyer,
and Buyer may elect to waive any such contingency reserved for
its benefit and proceed to consummate the transaction
contemplated hereby. If Buyer accepts the Deed to the Real
Property, Buyer shall be deemed to have satisfied or waived each
of the conditions to Buyer's obligations under this Agreement.
If any of the other conditions set forth in Subsection 10.1.1. or
10.1.2. have not been satisfied, or if the condition set forth in
Subsection 10.1.3. has not been satisfied due to Seller's
default, Buyer shall be entitled to pursue its remedies hereunder
as provided in Section 13.1.
10.2. Seller's Conditions. In addition to any
other conditions provided in this Agreement, Seller's obligation
to sell the Property is subject to the satisfaction of each of
the following conditions:
10.2.1. Buyer's Performance. Buyer shall have
complied with and performed all of its obligations and covenants
set forth in this Agreement; and
10.2.2. Buyer's Execution and Delivery. On or
before the Closing Date, Buyer shall have executed and delivered
all documents required to be delivered by Buyer pursuant to the
terms of this Agreement, and shall have paid the Purchase Price
in the manner set forth in Article 3.
10.2.3. Seller's Benefit. The contingencies set
forth in this Section 10.2. are for the sole benefit of Seller,
and Seller may elect to waive any such contingency reserved for
its benefit and proceed to consummate the transaction
contemplated hereby. If Seller accepts payment of the amounts
provided in Subsection 10.2.2., Seller shall be deemed to have
satisfied or waived each of the conditions to Seller's
obligations under this Agreement. If any contingency set forth
in Subsections 10.2.1. or 10.2.2. has not been satisfied or
waived within the required time period, Seller shall be entitled
to pursue its remedies hereunder as provided in Section 13.2.
7
<PAGE>
11. FIRE AND CASUALTY. Seller shall bear the risk of loss
of the Property until Closing. If the Property is the subject of
a loss, Buyer shall have the right, at its sole option, to
terminate this Agreement. If Buyer terminates this Agreement
pursuant to this Section then Buyer shall receive a refund of the
Earnest Money from Escrow Agent and this Agreement shall
terminate and the parties hereto shall have no further rights or
obligations hereunder. If Buyer does not terminate this
Agreement, the proceeds of any insurance with respect to the
Property paid between the date of this Agreement and the Closing
Date, and the amount of any deductible applicable to the claim,
shall be paid to Buyer at the time of Closing and all unpaid
claims and rights in connection with the property damage to the
Property shall be assigned to Buyer at Closing without in any
manner affecting the Purchase Price.
12. EMINENT DOMAIN. In the event of taking by condemnation
or eminent domain proceedings of any portion of the Property
prior to the Closing Date, Seller shall promptly give written
notice thereof to Buyer and Buyer shall have the right, at its
sole option, of terminating this Agreement by written notice
given to Seller on or before the earlier to occur of the Closing
Date or the tenth (10th) business day following receipt of such
notice. If Buyer so terminates this Agreement, then Buyer shall
receive a refund of the Earnest Money from Escrow Agent and this
Agreement shall terminate and the parties hereto shall have no
further rights or obligations hereunder. If Buyer does not
terminate the Agreement pursuant to this Article 12, then Seller
shall pay over to Buyer on the Closing Date all monies received
or collected by Seller by reason of such taking, and Seller shall
further assign and transfer to Buyer all of Seller's right, title
and interest of, in and to any awards that have been or may be
made for such condemnation or eminent domain proceedings and the
additional money that may be payable when the same is and becomes
assignable as a matter of law.
13. DEFAULT.
13.1. Seller's Default. If the sale and purchase
of the Property contemplated by this Agreement is not consummated
on account of the Seller's default hereunder, the Buyer shall
have the right to terminate this Agreement by written notice to
Seller and receive a full refund of the Earnest Money or,
alternatively, the right to seek specific performance of any of
Seller's obligations under this Agreement. The foregoing shall be
Buyer's sole remedies for Seller's default, and Seller agrees
that it shall have no right to sue Buyer for damages for failure
to consummate the transaction described herein.
13.2. Buyer's Default. If the sale and purchase of
the Property, contemplated by this Agreement is not consummated
because of Buyer's default, then Escrow Agent shall pay over the
Earnest Money to Seller, as Seller's sole and exclusive remedy
hereunder (except as otherwise provided in Section 7.1 or 14.1),
the parties hereto acknowledging that it is impossible to
estimate more precisely the damages which might be suffered by
Seller upon Buyer's default. Seller's retention of said Earnest
Money is intended not as a penalty, but as full liquidated
damages, which are otherwise not ascertainable. The right to
retain such sums as full liquidated damages is Seller's sole and
exclusive remedy in the event of default hereunder by Buyer
(other than with respect to claims by Seller arising under
Sections 7.1 or 14.1), and Seller hereby waives and releases any
right to sue and hereby covenants that it shall not sue Buyer
either for specific performance of this Agreement, or to recover
actual damages in excess of the Earnest Money.
8
<PAGE>
14. BROKERAGE AND OTHER FEES.
14.1. Representations Regarding Brokers. Seller
and Buyer each represent and warrant to the other that it has not
employed, retained, or consulted any broker, agent, or finder in
connection with this Agreement or the purchase and sale referred
to herein. Seller and Buyer each hereby indemnify and agree to
hold the other harmless from and against any and all claims,
demands, causes of action, debts, liabilities, judgments and
damages (including costs and reasonable attorneys' fees incurred
in connection with the enforcement of this indemnity) which may
be asserted or recovered against the indemnified party for or on
account of any brokerage fee, commission, or other compensation
arising by reason of the indemnitor's breach of this
representation and warranty.
14.2. Survival. This Article 14 shall survive the
Closing or any termination, cancellation, or rescission of this
Agreement.
15. MISCELLANEOUS.
15.1. Successors and Assigns. Buyer may not
assign, sell, convey or otherwise transfer any or all its rights
under this Agreement without the prior written consent of Seller,
except to a corporation, limited partnership, limited liability
company or other entity, related to or affiliated with Buyer or
any entity resulting from a merger with Buyer. Seller shall not
assign, sell, convey, or otherwise transfer any or all of the
Property or its rights under this Agreement. No such assignment
by Seller or Buyer shall relieve or release the assigning party
of any liability hereunder. Notwithstanding the foregoing,
either party shall have the right to assign this Agreement as may
be reasonably required to consummate a tax deferred exchange
under Section 1031 of the Internal Revenue Code, as provided in
Section 15.11 hereof. Subject to the foregoing, this Agreement
and the terms and provisions hereof shall inure to the benefit of
and be binding upon the successors and assigns of the parties.
15.2. Waiver, Consent. This Agreement supersedes
all prior agreements between the parties hereto with respect
thereto. No claim of waiver, modification, consent or
acquiescence with respect to any of the provisions of this
Agreement shall be made against either party, except on the basis
of a written instrument executed by or on behalf of such parties.
15.3. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Florida.
15.4. Headings. The headings of the several
articles, sections, and subsections of this Agreement are
inserted solely for convenience of reference and are not a part
of and are not intended to govern, limit, or aid in the
construction of any term or provision hereof.
15.5. Notices. Any notice, request or other
communication (a "notice") required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or
overnight courier (such as Federal Express) or by facsimile
transmission or mailed by Untied States registered or certified
mail, return receipt requested, postage prepaid and addressed to
each party at its address as set forth below. Any such notice
shall be considered given on the date of such hand or courier
delivery, deposit with such overnight courier for next business
day delivery, or upon transmission by facsimile with confirmation
or deposit in the United States mail. By giving
9
<PAGE>
at least five (5) days' prior written notice thereof, any party may
from time to time and at any time change its mailing address hereunder.
Any notice of any party may be given by such party's counsel.
The parties respective notice addresses are as follows:
Buyer:
Florida Rock Industries, Inc.
P. O. Box 4667
Jacksonville, Florida 32201-4667
Attention: John D. Baker II
Phone: (904) 355-1781
Seller:
Florida Rock Properties, Inc.
P. O. Box 45243
Jacksonville, Florida 32232
Attention: John E. Anderson
Phone: (904) 396-5733
15.6. Severability. If any provision of this
Agreement or the application thereto to any person or
circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such
provisions to the other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.
15.7. Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed shall be
deemed an original; such counterparts together shall constitute
the one agreement.
15.8. Time is Of the Essence. Time is of the
essence of this Agreement; provided, however, that if the time
within which any action, consent, approval, or other activity
herein contemplated, expires on a Saturday, Sunday, or legal
holiday, such time period shall automatically be deemed extended
to the first day after the scheduled termination of such time
period which is not a Saturday, Sunday, or legal holiday.
15.9. Delay Not A Waiver. No failure or delay by a
party to exercise any right it may have by reason of the default
of the other party shall operate as a waiver of default or
modification of this Agreement or shall prevent the exercise of
any right by the first party while the other party continues to
be so in default.
15.10. Attorney Fees. In the event of a breach of
this Agreement by either party, the non-breaching party shall be
entitled to recover all costs associated with enforcing this
Agreement, including reasonable attorneys' fees and expenses.
15.11. Exchange. As part of the inducement to each
party to enter into this Agreement, each party agrees that the
other shall have the right to effectuate this transaction as a
tax-deferred exchange in accordance with Section 1031 of the
Internal Revenue Code. Accordingly each party agrees to
cooperate with the other as required to effectuate an exchange,
10
<PAGE>
including executing and delivering any and all documents required
by the exchange trustee or qualified intermediary; provided
however, that the cooperating party shall have no obligation to
execute any document, enter any transaction or arrangement or
take or omit any other action, if such party determines in its
sole discretion that the same would result in any liability, cost
or expense to the cooperating party.
16. TRANSFER OF DRAINAGE RIGHTS. Turnpike Commerce Park
LLC is currently the owner of a parcel adjoining Seller's
Property, consisting of approximately 64 acres located in the
Northeast corner of Section 25, Township 53S, Range 39 East, Dade
County Florida (the "Adjoining Parcel"). So long as Buyer or an
affiliate of Buyer owns the Property, if Buyer or its affiliate
sells or transfers to the owner of the Adjoining Parcel the right
to use any lakes on the subject Property for drainage of such
Adjoining Parcel, then the net cash proceeds (i.e. the cash
proceeds received, net of direct costs incurred by Buyer or its
affiliate in connection with such sale such as engineering,
permitting, survey, environmental investigation and remediation,
legal expense, transfer tax, brokerage fees or any other costs of
sale) received by Buyer or its affiliate for such drainage
rights shall be paid to Seller. The foregoing rights of Seller
to receive any cash proceeds from the sale of drainage rights to
benefit the Adjoining Parcel shall automatically terminate as to
any portion of the Property which Buyer conveys to a party not
affiliated with Buyer. The provisions of this Section 16
specifically shall survive the Closing of the transaction
contemplated by this Agreement
17. INDEMNITY. Buyer shall defend, hold harmless and
indemnify Seller from any and all claims, demands, causes of
action or liability, costs and expenses (including reasonable
attorneys fees and other litigation expenses) arising out of or
in connection with Buyer's ownership, occupancy or operation of
the Property and improvements subsequent to the date of closing,
including without limitation, those arising out of or in
connection with hazardous materials, substances or waste or
Buyer's failure to comply with applicable federal, state and
local environmental laws and regulations. The provisions of this
Section 17 specifically shall survive the closing of the
transaction contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the dates set forth below.
FLORIDA ROCK PROPERTIES, INC.,
a Florida corporation
By:/s/ David H. deVilliers Jr.
___________________________
Print: David H. deVilliers Jr.
________________________
Its President
___________________________
Date: August 25, 2003
_________________
"SELLER"
11
<PAGE>
FLORIDA ROCK INDUSTRIES, INC.,
a Florida corporation
By:/s/ John D. Baker II
_____________________________
Print: John D. Baker II
___________________________
Its President/CEO
________________________________
Date: July 23, 2003
_______________
"BUYER"
12
<PAGE>
EXHIBIT A
_________
LAND DESCRIPTION
13
<PAGE>
EXHIBIT B
_________
PERMITTED EXCEPTIONS
14
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>birdriver.txt
<TEXT>
Exhibit No. 10(i)
AGREEMENT OF PURCHASE AND SALE
(FINISHED SF, CONDOMINIUM AND TH LOTS-BIRD RIVER,
BALTIMORE COUNTY, MARYLAND)
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement"), the
Effective Date of which is October 21, 2003, is entered into by
FRP BIRD RIVER, LLC, a Maryland limited liability company
("Seller") and THE RYLAND GROUP, INC., a Maryland corporation
("Buyer"). In consideration of the sum of Ten Dollars ($10.00)
paid by the Parties each to the other, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
promises contained in this Agreement, Buyer and Seller (sometimes
collectively referred to as "Parties") agree as follows:
1. DEFINITIONS: Capitalized terms that are not defined when
first used in this Agreement have the meanings set forth below.
BROKER: H. Francies LeBrun & Company, Inc.
CLOSING: The act of settlement of the
purchase and sale of one or more
Lots at which Seller conveys title
to Buyer by delivery of a deed and
Buyer delivers the Purchase Price
for the Lots to Seller. The
Parties contemplate that there will
be multiple Closings.
DEPOSIT: $3,000,000, to be paid as provided
in Section 3 below.
EFFECTIVE DATE: The date on which both Parties have
delivered to the other a fully
executed original of this
Agreement. The Effective Date
shall be filled in above upon
establishment of the Effective
Date.
ESCALATOR: 4% per annum, simple interest
ESCROW AGENT: Maryland Commercial Title Company
22 Light Street
Baltimore, Maryland 21202
Attention: George Sybert
FEASIBILITY PERIOD: The period commencing on the
Effective Date and ending ten (10)
days thereafter.
HOA DOCUMENTS: The documents creating or otherwise
relating to the homeowners'
association for the Property,
including the declaration and any
other related documents required by
law to establish the homeowners'
association and any amendments,
modifications
<PAGE>
or supplements to
such documents which documents
shall be subject to Buyer's
reasonable prior approval.
LOTS: Lot descriptions are to be
determined based on final approved
PUD (hereinafter defined) and
subdivision plat for the Property.
The tentative plan is as follows:
-One hundred seven (107) 60'x100'
Single family detached lots. ("Type
A")
-Seventy-seven (77) 28' x 90'
garage townhome lots ("Type B")
-Sixty-four (64) 20' x 70' rear
entry garage townhome lots ("Type
C")
-Eighty-eight (88) 25' x 70'
stacked townhome condominium lots
("Type D")
MINIMUM BUILDING ENVELOPE: The building envelope for each
lot. Type A shall be 40 feet wide
and 52 feet deep. Type B shall be
28 feet wide and 54 feet deep. Type
C shall be 20 feet wide and 40 feet
deep. Type D shall be 25 feet wide
and 52 feet deep for each unit.
PROPERY: The real property containing
approximately 121.033 acres located
in Baltimore County, Maryland as
more particularly described on
Exhibit A attached hereto, which is
or will be subdivided into a
minimum of 292 lots and all
easements, rights of way, permits,
approvals, privileges and
entitlements appurtenant thereto
and all right, title and interest
in and to all streets and water
courses adjacent to, abutting or
serving the real property.
PURCHASE PRICE: To be determined based on the per
Lot purchase price set forth on
Exhibit B, multiplied by the actual
number of approved Lots for each
product type. In no event,
however, shall the aggregate
Purchase Price, without escalation,
be an amount less than $28,705,000
(the "Minimum Price"). In the
event that the aggregate Purchase
Price of the Lots is less than the
Minimum Price, the Buyer shall pay
the difference between the Purchase
Price and the Minimum Price at the
Final Closing (hereinafter
defined).
<PAGE>
PURCHASE PRICE PER LOT: See Exhibit B
PURCHASE SCHEDULE: See Exhibit B
RECREATIONAL LOT: Designated on Exhibit A attached
hereto. The Recreational Lot shall
be transferred to the homeowner's
association, condominium
association or master association
to be created for no consideration
following the sale of all Lots in
the first pod (as shown tentatively
on Exhibit A) and once the
Recreational Lot is no longer
necessary for the completion of
Seller's development obligations
under this Agreement.
RYLAND PRODUCT: The home types that Buyer intends
to build on the Lots.
SCHEDULE OF DEVELOPMENT: Exhibit G, which details the
Parties' responsibilities with
regard to the development of the
Lots.
SUBDIVISION: The residential subdivision known
as Windless Run located in
Baltimore County, Maryland of which
the Property is a part.
2. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase from Seller, the Property in fee simple.
3. DEPOSIT.
(a) Delivery of Deposit. The Deposit shall be paid in
installments as follows:
i) Within five (5) days following the Effective Date, Buyer
shall deliver to the Escrow Agent a deposit in the amount of
$100,000.00 in the form of an irrevocable letter of credit in the
form attached hereto as Exhibit J from a lending institution
acceptable to Buyer and Seller (the "Letter of Credit").
ii) Within five (5) days following the date that Baltimore
County grants preliminary plan approval for the subdivision as
acceptable to Buyer, Buyer shall deliver to the Escrow Agent an
additional deposit of $725,000.00. in the form of a Letter of
Credit.
iii) Within five (5) days following the date that Seller has
filed a Record Plat for the Property (as defined in Section 8(c)
hereof) as acceptable to Buyer, Buyer shall deliver to the Escrow
Agent an additional deposit of $725,000.00 in the form of a
Letter of Credit.
<PAGE>
iv) Within five (5) days following the date that Seller has
commenced utility installation work at the Property following
obtaining all necessary permits and posting all required bonds
with Baltimore County, Buyer shall deliver to the Escrow Agent an
additional deposit of $725,000.00 in the form of a Letter of
Credit.
v) Within five (5) days following the date that Seller has
commenced the installation of curb and gutter for the Property
following obtaining all necessary permits and posting all
required bonds with Baltimore County, Buyer shall deliver to the
Escrow Agent an additional deposit of $725,000.00 in the form of
a Letter of Credit.
(b) TERMS OF ESCROW. If a dispute arises between Seller and
Buyer as to whether, when or to whom the Deposit is to be
disbursed by Escrow Agent, Escrow Agent may, in the exercise of
its sole discretion, in lieu of disbursing the Deposit to a party
hereto, pay the Deposit to the Clerk of the Circuit Court for
Baltimore County or any other court having jurisdiction over
disputes between the parties hereto with respect to this
Agreement, under such interpleader action or other legal or
equitable proceeding as Escrow Agent deems appropriate, pending
such court's resolution of such dispute. If Escrow Agent takes
such action, it shall have no further obligation hereunder
concerning the Deposit or otherwise. Escrow Agent shall have no
personal liability on account of its duties hereunder in the
absence of its negligence, fraud or willful misconduct, and
Seller and Buyer shall jointly and severally defend, indemnify
and hold harmless Escrow Agent against and from the same. Buyer
and Seller shall share equally the cost, if any, incurred by
Escrow Agent in performing its duties hereunder (except that if
any such interpleader action or other proceeding is initiated in
any such court by Escrow Agent or any party hereto to determine,
inter alia, to whom Escrow Agent is to deliver the Deposit, then
all of the attorneys' fees and other costs incurred by Escrow
Agent in connection therewith shall be paid (a) by Seller, if
such court determines that Buyer is entitled to the Deposit; or
(b) by Buyer, if such court determines that Seller is entitled to
the Deposit). Escrow Agent shall be entitled to no fee for
performing its duties hereunder. The respective rights and
obligations of the parties hereto under this subsection shall
survive Closing or any termination of this Agreement before
Closing.
4. PRELIMINARY MATTERS.
(a) FEASIBILITY STUDY. Buyer shall have the right during the
Feasibility Period, to investigate title and to make sure
investigations, studies and tests with respect to the Property as
Buyer deems necessary or appropriate to determine the feasibility
of purchasing the property. At any time prior to the expiration
of the Feasibility Period, Buyer may, in its sole discretion,
terminate this Agreement by written notice to Seller. Buyer's
failure to provide notice to Seller of Buyer's intention to
terminate or to continue under the terms of this Agreement before
the expiration of the Feasibility Period shall be deemed to be
Buyer's election to terminate this Agreement. Upon termination
of this Agreement, any Deposit shall be refunded to Buyer.
Thereafter no Party hereto shall have any further obligation or
liability to the other with respect to the transactions
contemplated by this Agreement except for Buyer's indemnification
of Seller pursuant to subsection 4(e) hereof, which shall survive
termination of this Agreement. No
<PAGE>
examination of the Property will be deemed to constitute a waiver or
relinquishment on Buyer's part of its rights to rely on the covenants,
representations, warranties and agreements made by Seller or upon
the tests, reports, plans, drawings and agreements provided to
Buyer by Seller.
(b) CREATION OF PUD. The rights and obligations of Seller under
this Agreement are specifically contingent upon the approval by
Baltimore County of a Planned Unit Development ("PUD") with
respect to the Property which will permit the development and use
of the Property for a minimum of 292 Lots. Commencing with the
completion of the comprehensive zoning map process, Seller shall
use commercially reasonable efforts to obtain approval of a PUD
which will permit the development and use of the Property in
accordance with the terms of this Agreement. In the event that
Seller is unable to have an approved PUD which will permit the
minimum number of Lots and the types of Ryland Product
contemplated by this Agreement on or before July 1, 2006, Seller
shall have the right to terminate this Agreement by providing
Buyer with written notice thereof at any time prior to the
approval, and the Deposit shall be immediately returned to Buyer.
(c) CONSTRUCTION OF ROUTE 43; PUBLIC WATER AND SEWER LINES. The
rights and obligations of the Seller under this Agreement are
expressly contingent upon the construction of the proposed Route
43 and Seller's ability to have vehicular and water and sewer
connection access from the Property to the completed Route 43 at
a commercially reasonable cost, in Seller's sole discretion. In
the event that Route 43 is not completed, or if Seller is unable
to have sufficient or appropriate vehicular access or connections
for public water and sewer lines from the Property to Route 43 to
support the development of the Property as contemplated by this
Agreement by July 1, 2007, at a commercially reasonable cost, in
Seller's sole discretion, Seller shall have the right, at its
option, to terminate this Agreement at any time thereafter by
providing Buyer with written notice of its election, and the
Deposit shall be immediately returned to Buyer, such termination
must occur prior to the satisfaction of the conditions contained
in this Section 4(c). Notwithstanding the foregoing, should
Seller choose to terminate this Agreement pursuant to this
Section 4(c), Seller shall be prohibited for a period of thirty-
six (36) months from the date of termination from entering into
any agreement for the sale of residential lots on the Property
without first giving Buyer thirty (30) days' notice and allowing
Buyer at Buyer's sole discretion within such thirty (30) day
period, to reinstate this Agreement without alteration.
Notwithstanding anything else in this Agreement, this section
shall survive for three (3) years after termination of this
Agreement
(d) WATER AND SEWER FACILITIES CHARGES. It is the intention of
Seller to subject the Lots to one or more Declaration(s) of
Deferred Water and Sewer Charges (the "Declarations"), which
Declarations shall give Seller or its assigns the right to
receive certain payments to cover or defray the cost of
installing all or part of the public water or sewer facilities
constructed by Seller not to exceed Seven Hundred Fifty Dollars
($750.00) annually over a forty (40) year period. The
Declarations which will affect any Lot will be recorded prior to
the sale of such Lot. Buyer agrees that the sale of Lots to any
builder or to a homebuyer will disclose the existence of the
Declarations and will include an addendum to any contract of sale
in the form attached hereto as Exhibit D, which has been
completed to conform to the Declarations. In addition, any plat
of the Property shall include a notice stating that "the Lots
created by this subdivision plat are
<PAGE>
subject to a fee or assessment to cover or defray all or part of the
developer's cost of installation of water and sewer facilities, pursuant
to 26-246 of the Baltimore County Code." In the event that Buyer bills
any homeowner for such water and sewer assessments, the invoice
shall include the annual amount due, the remaining term, the
total amount of any outstanding principal balance, and notice
that all or part of the assessments can be prepaid at any time
and without penalty by discounting the amortized payments at an
interest rate of six percent (6%) to determine their equivalent
present value. The Buyer shall immediately turn over to Seller
any such amounts received by Buyer. Buyer shall indemnify Seller
for any losses Seller may incur as a result of Buyer's failure to
comply with the terms of this section. The rights and
obligations contained in this section shall survive Closing.
(e) RIGHT OF ENTRY. Seller shall permit Buyer, its employees,
agents, contractors and subcontractors to enter upon the Property
and while thereon make surveys, take measurements, perform test
borings or other tests of surface and subsurface conditions, make
engineering, environmental and other studies and inspect the
Property. Seller shall cooperate with Buyer and shall provide to
Buyer within five (5) days after the Effective Date at no cost to
Seller, all engineering, environmental, economic, marketing,
soils and other studies, surveys, maps, drawings, plans, reports
and appraisals that relate in any way to the Property and other
pertinent information relating to the Property which are in
Seller's possession or control ("Seller's Information"). Seller
makes no representations or warranties as to the accuracy or
completeness of the Seller's Information, it being understood
that Seller is providing this information only for Buyer's
convenience. Buyer will rely on information obtained from its
own sources and shall independently verify the accuracy of
Seller's Information. If Buyer exercises its rights under the
provisions of this subsection, it shall (i) keep the Property
free of any liens or third-party claims resulting therefrom; (ii)
indemnify Seller against any liability or expense for injuries to
or death of persons or damage to property arising from the
exercise of the rights hereunder that are not the result of any
act or omission of Seller or Seller's agents, employees or
contractors and (iii) if Closing does not occur for any reason
(other than a default by Seller in performing its obligations
hereunder) on any Lot affected by such entry, restore as nearly
as practicable such Lot substantially to its condition
immediately before such exercise. Before the entry by Buyer, its
agents, employees or contractors upon the Property, Buyer shall
deliver to Seller a certificate from its liability insurance
company naming Seller as an additional insured under Buyer's
public liability and property damage insurance policy covering
the Property against claims for personal injury or death and
property damage occurring upon, in or about the Property, which
insurance shall afford protection to the limit of not less than
$2,000,000.00 arising out of any one occurrence and against
property damage to afford protection to the limit of not less
than $2,000,000.00, or such insurance may be for a combined
single limit of $3,000,000.00 per occurrence. If Buyer elects to
terminate this Agreement for any reason, other than a default by
Seller, Buyer shall, within three (3) days following such
termination, deliver to Seller all tests, studies, reports and
other information obtained by Buyer with respect to the Property,
all without charge to Seller and without representation or
warranty.
(f) SIGNS; SALES TRAILER; STORAGE OF EQUIPMENT. Buyer shall
have the right to place signs and a sales trailer on the Property
and to conduct marketing activities thereon, all in accordance
with the requirements of any applicable governmental authority,
and in areas
<PAGE>
approved by the Seller, in Seller's reasonable discretion. Seller
shall also provide, at no cost to Buyer, adequate space on the Property
for storage of construction equipment and materials and temporary power
that Buyer and its contractors and their subcontractors may from time to
time require, which power shall be used at the sole cost of Buyer.
Such space shall be located in an area mutually acceptable to
Buyer and Seller, easily accessible to Buyer and its contractors
and their subcontractors and located so as not to be detrimental
to the marketing of Seller's or Buyer's homes or unreasonably
interfere with the Schedule of Development. In connection with
Buyer's exercise of its rights hereunder, Buyer shall (i) keep
the Property free of any liens or third-Party claims resulting
therefrom and shall bond any such liens which are not removed
within ten (10) days of their imposition, (ii) clean up any
debris from the Property and restore the Property after Buyer's
use if Buyer does not purchase it, and (iii) indemnify Seller
against any liability or expense for injuries to or death of
persons or damage to property arising therefrom that are not the
result of any act or omission of Seller or Seller's agents,
employees or contractors.
(g) SURVIVAL. The indemnification provisions of this section
shall survive the termination of this Agreement.
5. CLOSING.
(a) Closings on Lots shall take place in accordance with the
schedule attached hereto as Exhibit B (the "Purchase Schedule")
within thirty (30) days after all conditions precedent to Closing
described in Section 8 have been satisfied. Closing shall occur
at the offices of Buyer or Buyer's title insurance company during
normal business hours or at such other location upon which the
Parties agree.
(b) Subject to the adjustments provided for herein, Buyer shall
pay at each Closing the Purchase Price Per Lot, plus
reimbursements for sewer and water allocations for each Lot and
actual fees paid to Baltimore Gas and Electric allocated on a per-
Lot basis by certified, cashier's or title company check or wired
funds and any fees paid by Seller which are the responsibility of
Buyer. None of the Deposit shall be credited against the
payments due at Closing. Upon the sale of the one hundred
fiftieth (150th) Lot, and provided that Buyer is not in default
under this Agreement, Escrow Agent shall return to Buyer Letters
of Credit representing One Million Dollars ($1,000,000) of the
Deposit. Upon the sale of seventy-five percent (75%) of the
final approved Lots, and provided that Buyer is not in default
under this Agreement, the Escrow Agent is authorized to return to
Buyer Letters of Credit representing another One Million Dollars
($1,000,000) of the deposit. Upon the sale of the last Lot and
the satisfaction of all of Buyer's obligations under this
Agreement, the Escrow Agent is authorized to release to Buyer the
balance of the Letters of Credit that represent the Deposit.
Buyer shall not be entitled to sell a Lot which is not improved
by a completed residential unit (a unit without an occupancy
permit) without the prior written consent of Seller, which may be
withheld in its sole discretion. Such a sale without the written
consent of Seller shall constitute a default hereunder. If Buyer
purchases a Lot and the Buyer subsequently sells the Lot without
a completed residential unit (a unit without an occupancy
permit), the Buyer agrees to pay Seller one hundred percent
(100%) of every dollar it receives in excess of the Purchase
Price per Lot, less Buyer's settlement costs for the sale of the
Lot to the subsequent purchaser and any actual costs of improving
the Lot. This portion of the
<PAGE>
Purchase Price will be paid to the Seller upon the settlement of a
Lot between the Buyer and the purchaser of a Lot or Lots and the
provisions of this section shall survive the termination of this
Agreement and any transfer of title of the Lots to Buyer.
(c) Upon payment of the Purchase Price Per Lot, Seller shall
execute, acknowledge, and deliver to Buyer for each Lot
purchased, the closing documents set forth on Exhibit E.
(d) Each Party shall execute, acknowledge, enseal and deliver,
after the Effective Date, including at or after Closing, such
further assurances, instruments and documents as the other may
reasonably request in order to fulfill the intent of this
Agreement and the transactions contemplated hereby.
(e) All real estate taxes, and all other public or governmental
charges and public or private assessments against the Lots being
closed which are or may be payable on an annual basis (including
metropolitan district, sanitary commission, benefit charges,
liens or encumbrances for sewer, water, drainage or other public
improvements whether completed or commenced on or prior to the
Effective Date or subsequent thereto), shall be adjusted and
prorated between the Parties as of the day prior to Closing and
shall thereafter be assumed and paid by Buyer, whether or not
assessments have been levied as of the date of Closing. Any tax
proration based on an estimate shall be subsequently readjusted
upon receipt of a tax bill. The obligations to adjust shall
survive Closing.
(f) The cost of documentary stamps, transfer taxes and recording
fees shall be split equally between the Parties. Notwithstanding
the foregoing, Seller shall pay at each Closing, without any
contribution from Buyer, (i) any agricultural land, rezoning,
recapture or roll-back tax due in connection with the conveyance
or deed under any law, regulation or ordinance (or any similar
tax or assessment), and (ii) the cost of preparing release
documents, if any, and the recording thereof for any lien
releases required to be obtained by Seller in order to convey
title to the Property in accordance with Section 6.
(g) Seller agrees to have developed and have an inventory and
ready for immediate purchase by and conveyance to Buyer in
accordance with this Agreement, thirty (30) days prior to the
first Closing and within sixty (60) days of each Closing
thereafter, the minimum number of Lots and product types which
Buyer is obligated to consummate at each respective Closing, as
set forth on Exhibit B (collectively, the "Inventory Lots");
provided, however, that, (i) in no event shall Seller be required
to develop and have in such inventory an amount of Lots in excess
of the number of such Lots remaining to be purchased by Buyer
hereunder, and (ii) it shall not constitute a default by Seller
under this Agreement in the event that Seller's failure to comply
with this requirement results from Buyer's purchase of Lots in
excess of the number of Lots required to be purchased by Buyer
during the preceding Purchase Schedule time period(s). In the
event that Seller fails to have the required number of completed
Inventory Lots for any reason, then, in addition to any remedies
to which Buyer may be entitled hereunder if such failure is
considered a default under the first sentence of this paragraph,
the dates by which Buyer must acquire Lots hereunder shall
automatically be extended for an amount of time equal in duration
to the amount of time during which Seller's failure to maintain
such Inventory Lots
<PAGE>
continues, plus seven (7) days. The Parties mutually agree that,
during any such extension of a Purchase Schedule time period, as
aforesaid, the Escalator shall be suspended. At least thirty (30)
days prior to any Closing, Seller shall notify Buyer in writing of
the location and legal description of the Inventory Lots which shall
be available to the Buyer at such Closing.
6. TITLE. Title to the Property shall be good and marketable
of record and in fact, and insurable at standard market rates,
free and clear of all liens, encumbrances, encroachments and
violation notices from any applicable governmental authority.
The Property to be conveyed to Buyer shall be properly subdivided
in accordance with all laws and regulations of governmental
authorities having jurisdiction. Funds payable by Buyer at
Closing may be used to pay off any existing liens, encumbrances
or violation penalties, including accrued interest thereon,
subject, however to items which are set forth in Exhibit "B" to
Schedule B, Section 2 of the title insurance commitment attached
to and made a part of this Agreement as Exhibit C, and subject to
the PUD, Condominium Documents (hereinafter defined) and HOA
Documents which are to be established in accordance with this
Agreement.
7. CONDEMNATION. If after the Effective Date and prior to any
Closing, all or a substantial part of the Property is taken or
threatened to be taken by eminent domain or condemnation, Buyer
may elect either (a) to terminate this Agreement, as to some or
all of the Lots, in which event the Deposit shall be returned or
reduced prorata based on the number of Lots deleted from the
Agreement, and the Agreement as to any Lots deleted, shall be
null and void and of no further force or effect, or (b) to
consummate Closings as herein provided, in which event Seller
shall pay or assign all condemnation awards or payments in
respect of the Lots purchased to Buyer at the Closings. If this
Agreement is terminated in full pursuant to this section, neither
Party shall have any further rights, duties, obligations or
liabilities, at law or in equity, arising out of or relating to
this Agreement except for those that specifically survive
termination of this Agreement pursuant to other sections hereof.
8. CONDITIONS PRECEDENT TO CLOSING. Buyer's obligation to
complete each Closing shall be conditioned upon the satisfaction
(or Buyer's written waiver thereof) of each of the conditions
precedent set forth in this Section 8 as to each Lot on which
Closing is to occur. Buyer shall be entitled proceed to Closing
on any Lot, notwithstanding that each or any of the conditions
precedent that affect any particular Lot remain unsatisfied.
Buyer's election to close despite that fact that any such
conditions precedent remains unsatisfied shall constitute a
waiver of any condition precedent with respect to such Lots, but
shall not constitute a waiver of such conditions precedent
insofar as any Lots for which Buyer has not consummated Closing
are concerned and (ii) shall not be deemed a release of the
Seller of any of its obligations to perform development work or
any other obligation hereunder, as to which Buyer may require the
establishment of a post closing escrow to assure such
performance. The conditions precedent are as follows:
(a) TITLE. Title to the Property shall be as set forth in
Section 6.
(b) DEVELOPMENT. Seller shall have completed the Improvements
to the Inventory Lots (hereinafter defined), shall have delivered
the Completion Certificate therefor (as defined in
<PAGE>
Exhibit G), and shall have completed any repairs required by the
Inspection Report therefor (as defined in Exhibit G).
(c) SUBDIVISION. Seller shall have, at Seller's expense, caused
the parcel of real property from which the Lots are to be created
to be subdivided in accordance with all of the laws, ordinances,
regulations and codes of any governmental authority pursuant to a
final subdivision plat(s) (the "Record Plat"). Buyer shall have
approved the Record Plat, which shall provide for all Lots to
have access to and from a public roadway and access to all
utilities intended to service each of the Lots, including,
without limitation, any and all storm water facilities and
drainage easements associated therewith.
(d) REPRESENTATIONS. Each of Seller's representations and
warranties as set forth in Section 15 shall be true as of the
date of Closing.
(e) APPROVAL OF RYLAND PRODUCT. Seller, any applicable
governmental authority and any Homeowners' Association that have
the right to approve the design of the houses to be constructed
by Buyer on the Property have done so. Buyer intends to
construct four (4) types of residential dwellings on the Property
which are described as follows: on Type A lots forty foot wide
single family homes, on Type B lots 28 foot wide two car garage
front entry townhomes, on Type C lots 20 foot wide rear entry two
car garage townhomes, on Type D lots 25 foot wide two car rear
entry stacked townhome condominiums. Buyer shall use
commercially reasonable efforts to complete the plans and to
diligently pursue all necessary approvals immediately upon the
final approval of the PUD.
(f) MORATORIUM. There shall be no general moratorium imposed by
any governmental authority or utility supplier with respect to
the issuance of building permits affecting the Property or
sanitary sewer, water, natural gas, electricity or telephone
connections with respect to the Property.
(g) SATISFACTION OF CONDITIONS PRECEDENT. If the conditions
precedent to Closing on the first Lot are not satisfied on or
before September 30, 2008, Seller shall have the right to
terminate this Agreement by providing Buyer with written notice
of such election at any time prior to the satisfaction of the
conditions precedent.
9. RISK OF LOSS. Each Lot shall be held at the risk of Seller
until Closing thereon.
10. POSSESSION. At each Closing, Seller shall deliver
exclusive possession and occupancy of the Lots to Buyer, at which
time Buyer shall be entitled to place model units and related
signage on any Lot purchased and may conduct sales and marketing
activities from such model units.
11. DEFAULT.
(a) BUYER DEFAULT. If Buyer is the defaulting party, Seller's
sole remedy shall be limited to the right to call and retain the
Letters of Credit representing the Deposit as liquidated damages.
The expiration of Letters of Credit shall be an automatic default
and Seller shall be entitled to pursue Buyer for the amounts
represented by an expired or deficient Letter of Credit.
<PAGE>
Other than the specific remedy expressly set forth in this paragraph,
Seller hereby waives any and all right and remedy, at law or in
equity, to which Seller may otherwise have been entitled by
reason of Buyer's default, including any right in equity to seek
specific performance of this Agreement by Buyer and any right at
law to seek damages from Buyer.
(b) SELLER DEFAULT. If Seller is the defaulting party, Buyer
shall be entitled to terminate this Agreement and/or exercise any
and all rights and seek any and all remedies which Buyer may hold
or to which it may be entitled at law or in equity, exclusive of
the right to seek consequential damages. In the event of any
default by Seller hereunder, or in the event Buyer shall be
entitled to terminate this Agreement, or this Agreement shall
otherwise terminate in accordance with the provisions hereof, the
Deposit shall immediately be returned to Buyer, with the
exception of any portion of Damage Fund which the Seller is
entitled to retain in order to repair the Property pursuant to
the terms of this Agreement.
(c) CURE PERIOD. Notwithstanding the provisions of subsections
(a) and (b) above, no default by either party hereto shall result
in a termination or limitation of any rights of such party
hereunder unless and until the other party shall have notified
the defaulting party in writing of said default, and the
defaulting party shall have failed to cure said default within
thirty (30) days after the receipt of said written notice;
provided, however, that the cure period shall not be applicable
to Buyer's obligations to settle on Lots in accordance with the
Purchase Schedule.
12. NOTICES. Any notice to be given pursuant to this Agreement
shall be given in accordance with Exhibit F.
13. DEFECTIVE LOT. Following any Closing, in the event that
Buyer, through no fault of Buyer, discovers fill materials
unsuitable to support standard house footings; then such Lot
shall be deemed a "Defective Lot" and Buyer shall have the right
to reconvey such Lot to Seller, provided that Buyer has expended
a minimum of Five Thousand Dollars ($5,000) to cure the
unsuitable fill problem. The purchase price to be paid by Seller
to Buyer for any such Defective Lot shall be the Purchase Price
per Lot paid therefore by Buyer. In the event a reconveyance to
Seller of a Defective Lot occurs hereunder, the parties shall
share equally the cost of any (a) recording fee and lien
certificate and (b) state, county or other recordation tax,
documentary stamp tax or other transfer tax incurred in recording
the deed to any such Defective Lot. This Section 13 shall
survive each Settlement.
14. BROKERS. Each Party represents and warrants to the other
that it has not used the services of any real estate agent,
broker or finder with respect to the transactions contemplated
hereby except for the broker identified in Subsection 1, if any.
Buyer shall pay the Broker in accordance with a agreement. Each
Party agrees to indemnify and hold harmless the other against and
from any inaccuracy in such Party's representation under this
section. This indemnification shall survive the delivery of the
deed and shall not merge therein.
<PAGE>
15. REPRESENTATIONS AND WARRANTIES.
(a) MUTUAL REPRESENTATIONS. To induce each other to enter into
this Agreement, each Party hereby represents and warrants to the
other, except as provided in Subsection 17(n) that (i) it has
been duly authorized and empowered to enter into this Agreement
and to perform fully its obligations hereunder, (ii) such
obligations constitute the valid and binding obligations of such
Party, enforceable in accordance with their terms, and (iii) that
no further consents of any other person, entity, public body or
court are required in connection with this Agreement and the
performance of all obligations hereunder.
(b) SELLER'S WARRANTIES AND REPRESENTATIONS. To induce Buyer to
enter into this Agreement, Seller represents and warrants to
Buyer that as of the date of this Agreement and at each Closing:
(i) CONDEMNATION, REZONING OR RECLASSIFICATION. There is not
pending, or to Seller's actual knowledge, without implying any
obligation to investigate, threatened, any (A) condemnation
proceeding or other litigation relating to or otherwise affecting
Seller and/or any or all of the Lots, or (B) except as
contemplated by this Agreement, reclassification of any or all of
the Property for local zoning purposes, or (C) reassessment or
reclassification of any or all of the Property for state or local
real property taxation purposes.
(ii) VIOLATIONS. (A) There is not pending, or to Seller's actual
knowledge, threatened, from any federal, state, city or local
authority any notice, suit or judgment relating to any violation
at the Lots; and (B) there is no condition existing with respect
to the Property that violates any statute, ordinance, law or code
regarding zoning, building, fire, air-pollution, or health law,
or requiring any improvement, alteration, addition, correction or
other work on or about the Property, whether related to the
Property or to the activities of any owner or occupant thereof.
(iii)ENVIRONMENTAL CONDITION. To Seller's actual knowledge,
and based solely on a phase I environmental report attached
hereto as Exhibit I, the Property including the land, surface
water, ground water, and any improvements is free of
"contamination" from (A) any "hazardous waste," any "hazardous
substance," and any "oil, petroleum products, and their by-
products," as such terms are defined by any federal, state,
county or local law, ordinance, regulation or requirement
applicable to any portion of the Property, as the same may be
amended from time to time, and including any regulations
promulgated thereunder, and (B) any substance the presence of
which on the Property is regulated or prohibited by any law
(collectively, "Hazardous Substances"). "Contamination" means
the uncontained presence of Hazardous Substances at the Property
or arising from the Property that may require remediation or
cleanup under any
<PAGE>
applicable law. Seller has not used any Hazardous Substances
on, from or affecting the Property in any manner that violates
any applicable law, and to the best of Seller's knowledge, no
prior owner or user of the Property has used such substances
on, from, or affecting the Property in any manner which
violates any applicable law. To the best of Seller's knowledge,
and except as disclosed in any environmental reports delivered
by Seller to Buyer prior to the date hereof, there is not now,
nor has there ever been on or in the Property underground
storage tanks or surface impoundments, asbestos-containing
materials, or any material spills of polychlorinated biphenyls,
including those used in hydraulic oils, electric transformers
or other equipment. The copies of any environmental report that
may have been delivered by Seller to Buyer, are, to the best of
Seller's knowledge, complete and accurate copies of the same
and Seller has no other environmental reports, tests or
audits in its possession or under its control, and Seller
has no knowledge of any other environmental reports, tests or
audits regarding any portion of the Property existing elsewhere.
(iv) LITIGATION. There is no litigation, arbitration or
proceeding pending, or to Seller's actual knowledge, without
implying an obligation to investigate, threatened, before any
court or administrative agency or any other condition that
relates to or affects the Property, Seller's performance
hereunder, or Buyer's intended use of the Property, or which
will result in a lien, charge, encumbrance or judgment against
any part of or any interest in the Property.
(v) ACCESS. Each Lot will front on and will have on or before
the Closing direct access to a dedicated public roadway.
(vi) ORGANIZATION. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws
of the state of Maryland and has full power and authority to
sell the Property.
(vii)TITLE. The title to each Lot is subject to no tenancy
or other right of use or occupancy which will remain in effect at
or after the initial Closing. Seller is the fee simple owner of
and is lawfully seized and possessed of the Property.
(viii) RESTRICTIONS. To Seller's actual knowledge, there are
no existing or alleged restrictions to the development of the
Property as contemplated hereunder known to Seller except for the
HOA Documents, Condominium Documents and the PUD and except as
set forth in Exhibit C.
(ix) NO BREACH. The execution and delivery of this Agreement by
Seller, the execution and delivery of every other document and
instrument delivered pursuant hereto by or on behalf of Seller,
and the consummation of the
<PAGE>
transactions contemplated hereby will not (A) constitute or
result in the breach of or default under any oral or written
agreement to which Seller is a Party or which affects the
Property; (B) constitute or result in a violation of any order,
decree, or injunction with respect to which the Seller and/or
the Property is bound; (C) cause or entitle any Party to have
a right to accelerate or declare a default under any oral or
written agreement to which Seller is a Party or which affects
the Property; and/or (D) violate any provision of any municipal,
state or federal law, statutory or otherwise, to which Seller
or the Property is or may be subject.
(x) NO ASSESSMENTS. There are no public improvements which have
been ordered to be made or assessed, and there are no special,
general, or other assessments pending, threatened against or
affecting the Property. All installments of any pending
assessments will be paid by Seller. The payment of any impact
fees charged by any governmental agency with respect to the Lots
shall be the responsibility of the Buyer.
(xi) NO CONTRACTS. Seller has not entered into any other
contracts, agreements or understandings, verbal or written, for
the sale or transfer of any portion of the Property. Between the
date of this Agreement and all Closings hereunder, no part of the
Property will be alienated, encumbered or transferred except as
contemplated by this Agreement.
(xii) NO COMMITMENTS. Seller has not made and has no actual
knowledge of any commitments to any governmental authority,
school board, church or other religious body, or any other
organization, group or individual relating to the Property which
would impose any obligations upon Buyer to make any contributions
of money or land or to install or maintain any improvements.
(c) SURVIVAL. The representations and warranties of the Parties
set forth herein shall be true as of the Effective Date and the
date of each Closing and shall survive the Closings. Seller
shall notify Buyer in writing immediately if any representation
becomes untrue or misleading in light of information obtained by
Seller after the Effective Date. Each Party agrees to reimburse ,
indemnify, defend and hold harmless the other and their
respective successors and assigns, from and against all
liability, damages (excluding consequential or punitive damages)
and losses whatsoever, including reasonable attorneys' fees
resulting from any intentional misrepresentation made by the
indemnifying Party herein or in any document, certificate or
exhibit given or delivered in connection herewith. This
indemnification is in addition to any remedies set forth in
Section 11.
16. ARBITRATION. The parties agree that except for equitable
remedies, which Buyer may pursue in court, all disputes hereunder
shall be settled by binding arbitration conducted by a neutral
arbitrator selected by the American Arbitration Association, or
other third party arbitration organization agreed upon by the
Parities, at its offices closest to the Property. The
<PAGE>
arbitration shall be conducted according to the American
Arbitration Association Commercial Arbitration Rules or such
other procedures as may be agreed upon by the parties. The
parties agree to (a) join into the arbitration proceeding
hereunder or (b) join any other arbitration proceeding being
conducted by, persons or entities related to the dispute that may
be necessary to completely resolve the dispute. The arbitration
shall determine all rights and obligations under this Agreement
and the award of the arbitrator shall be final, binding and
enforceable in the absence of fraud. The arbitrator shall have
the authority, power and right to award damages and provide for
other remedies as are available at law or in equity in accordance
with the laws of such State, except that the arbitrator shall
have no authority to award incidental or punitive damages under
any circumstances (whether they be exemplary damages, treble
damages or any other penalty or punitive type of damages)
regardless of whether such damages may be available under the
laws of such State. The parties hereby waive their right, if
any, to recover punitive and/or consequential damages in
connection with any arbitrated dispute or controversy.
17. GENERAL.
(a) ENTIRE AGREEMENT. This Agreement constitutes the final and
entire Agreement between the Parties and they shall not be bound
by any terms, covenants, conditions, representations or
warranties not expressly contained herein. This Agreement may
not be amended except by written instrument executed by both
Parties.
(b) PARTIAL INVALIDITY. If any one or more of the provisions
contained in this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been
contained herein.
(c) TIME OF THE ESSENCE. Time is of the essence of this
Agreement and the performance of the terms and conditions hereof.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their
respective legal representatives, successors and assigns.
Neither party may assign this Agreement or its rights hereunder
to any other person or entity without the prior written consent
of the other, which may be withheld in its sole discretion,
provided that Seller may assign this Agreement to an entity
controlled by Seller.
(e) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.
(f) HEADINGS. The headings of the sections, subsections,
paragraphs and subparagraphs hereof are provided for convenience
of reference only, and shall not be considered in construing
their contents.
<PAGE>
(g) EXHIBITS. Each writing or plat or plan referred to herein
as being attached hereto as an exhibit or otherwise designated
herein as an exhibit is incorporated herein by reference and made
a part hereof. The following exhibits are attached hereto:
Exhibit Matter
A. Description of the Property
B. Purchase Price and Schedule
C. Title Exceptions
D. Form of Contract Disclosure
E. Closing Documents
F. Notice Addresses
G. Schedule of Development
H. Development Responsibility Checklist
I. Phase I Environmental Report
J. Letter(s) of Credit
(h) TIME PERIODS. Any and all references in this Agreement to
time periods which are specified by reference to a certain number
of days refer to calendar days, unless "business days" is
otherwise expressly provided. Therefore, if (a) the last date by
which a Closing is permitted to occur hereunder, or (b) any date
by which a Party is required to provide the other Party with
notice hereunder, occurs on a Saturday or a Sunday or a banking
holiday in the jurisdiction where the Property is located, then
and in any of such events, such applicable dates shall be deemed
to occur, for all purposes of this Agreement, on that calendar
day which is the next, succeeding day, which is not a Saturday,
Sunday or banking holiday.
(i) RULE AGAINST PERPETUITIES. It is the parties' intent that
this contract not violate the rule against perpetuities. If
Closing has not occurred hereunder before ten years following the
date hereof, then this contract shall at that time be terminated,
with each party reserving against the other any rights and
remedies it may have against the other for any breach or default
hereunder.
(j) NO PARTNERSHIP. Nothing in this Agreement shall be deemed
in any way to create between the Parties any relationship of
partnership, joint venture or association, and the Parties
disclaim the existence thereof.
(k) WAIVERS. No Party shall be deemed to have waived the
exercise of any right which it holds hereunder unless such waiver
is made expressly and in writing (and no delay or omission by any
Party hereto in exercising any such right shall be deemed a
waiver of its future exercise). No such waiver made as to any
instance involving the exercise of any such right shall be deemed
a waiver as to any other such instance, or any other such right.
(l) CHOICE OF LAW. This Agreement shall be given effect and
construed by application of the law of the jurisdiction in which
the Property is located.
<PAGE>
(m) ATTORNEYS' FEES. In the event of any legal action or
arbitration proceeding between the Parties regarding this
Agreement or the Property (an "Action"), the prevailing Party
shall be entitled to payment by the non-prevailing Party of its
reasonable attorneys' fees and litigation or ration expenses as
determined in the course of the proceeding.
(n) BUYER'S CORPORATE POLICY. Seller hereby acknowledges to and
confirms with Buyer that Seller has been apprised of the
corporate policy of Buyer to the effect that Buyer shall not be
bound hereunder unless this Agreement (or counterparts hereof) is
executed by both Buyer's Regional President and Division
President for the region in which the Property is located, who in
this case are currently Kip W. Scott and Edward W. Gold,
respectively. If Buyer delivers this Agreement executed by one
such officer and not the other, and thereafter fails to deliver a
counterpart hereof executed by the other such officer within
three (3) business days, Seller may, by delivery of notice of its
election to Buyer on or prior to receipt of such counterpart,
elect to terminate this Agreement and its obligations hereunder.
(o) CONSTRUCTION. Seller and Buyer agree that this Agreement
has been thoroughly negotiated in good faith and that if any
ambiguity shall arise hereunder, there shall be no presumption
that either party drafted this Agreement and neither party shall
have such ambiguity resolved against simply by virtue of its role
in drafting or preparing this Agreement.
(p) FORCE MAJEURE. If Seller is delayed in its performance of
any of the development work contemplated hereunder by force
majeure, as described below, the Seller's performance of such
work shall be excused for the period of the delay. For the
purposes of this Agreement, force majeure shall consist of
strikes, lockouts, labor troubles, inability to procure materials
if promptly ordered, failure of power, restrictive governmental
laws or regulations, riots, insurrection, war adverse weather
conditions not reasonably anticipated, lack of timely action by
any applicable governmental authority or utility company
(assuming permits and approvals are timely applied for an
diligently pursued by the Seller), or any other matter beyond
the reasonable control of the Seller.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed under
seal this Agreement as of the Effective Date.
WITNESS OR ATTEST: FRP BIRD RIVER LLC
__________________________ By:____________________________(Seal)
Name:___________________________
Title:____________________________
Date:____________________________
THE RYLAND GROUP, INC.
___________________________ By:____________________________(Seal)
Name:___________________________
Title:____________________________
Date:____________________________
____________________________ By:____________________________(Seal)
Name:___________________________
Title:____________________________
Date:____________________________
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>5
<FILENAME>septeps.txt
<TEXT>
EXHIBIT 11
PATRIOT TRANSPORTATION HOLDING, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Years Ended September 30
2003 2002 2001
Net income $4,575,000 5,655,000 2,703,000
Common shares:
Weighted average shares
outstanding during the period -
shares used for basic earnings
per share 3,033,239 3,142,742 3,157,317
Shares issuable under stock
options which are potentially
dilutive 32,264 22,667 449
Shares used for diluted earnings
per share 3,065,503 3,165,409 3,157,766
Basic earnings per common share $1.51 $1.80 $ .86
Diluted earnings per common share $1.49 $1.79 $ .86
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14
<SEQUENCE>6
<FILENAME>financialcode.txt
<TEXT>
Exhibit No. 14
PATRIOT TRANSPORTATION HOLDING, INC.
FINANCIAL CODE OF ETHICAL CONDUCT
Patriot Transportation Holding, Inc. (the "Company") is
committed to adhering to the highest ethical standards with
respect to its financial management and the disclosure of
financial information in connection with the business and
operations of the Company. The Company's Chief Executive
Officer and the Presidents and Chief Executive Officers of
subsidiaries of the Company (the "Chief Executive Officers")
and the financial officers and other financial managers of the
Company and its subsidiaries (the "Financial Managers") play a
critical role in assuring that the Company adheres to these high
ethical standards. This Financial Code of Ethical Conduct sets
forth principles to which the Chief Executives Officers and the
Financial Managers are expected to adhere and advocate. The
Company intends to enforce vigorously the provisions of this
Code. Violations may lead to disciplinary action, including
dismissal, and may have other legal consequences.
Accordingly, the Chief Executive Officers and all Financial
Managers, to the best of their knowledge and ability, are
required to:
1. Act with honesty and integrity and at all times avoid
all actual or apparent conflicts of interests between
his or her personal and business relationships.
2. Comply with the conflict of interest and other policies
and guidelines set forth in any other code of business
conduct or ethics code adopted by the Company or in the
Company's Employee Handbook or Policies and Procedures
Manual.
3. Report all potential or apparent conflicts of interest
to the corporate secretary or general counsel of the
Company.
4. Provide full, fair, accurate, timely and understandable
disclosure to the President and Chief Financial Officer
and the Audit Committee of the Company's Board of
Directors of all material information known to them
regarding the current or future financial condition or
financial performance or the business of the Company.
5. Promote and help to assure full, fair, accurate timely
and understandable disclosure in all reports and
documents that the Company files with the Securities and
Exchange Commission and in other public communications by
the Company.
6. Comply with all laws, statutes, rules, regulations and
stock exchange listing standards, to the extent applicable
to the conduct of their duties and responsibilities.
7. In performing their duties and responsibilities, act in
good faith, with due care, competence and diligence,
responsibly, without misrepresenting any material fact,
and without allowing his or her independent judgment to be
compromised or subordinated.
<PAGE>
8. Respect the confidentiality of information acquired in
the course of their work except when authorized or
otherwise legally obligated to make disclosure and not
use such confidential information for personal advantage.
9. Promptly report all violations of this Code to the
corporate secretary or general counsel of the Company.
All persons subject to this Financial Code of Ethical
Conduct may be required to execute a certification affirming that
they have read and agree to comply with the provisions of this
Code.
I have been given a copy of this Code, have read it and
agree to comply with its provisions.
Date: ___________________ Signed:____________________
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>7
<FILENAME>septja.txt
<TEXT>
CERTIFICATIONS Exhibit 31(a)
I, John E. Anderson, certify that:
1. I have reviewed this annual report on Form 10-K of Patriot
Transportation Holding, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
a) designed such disclosure controls and procedures, or caused
such disclosure controls to be designed under our supervision,
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
per8iod in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosures
controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal annual that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial report; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: December 23, 2003 /s/John E. Anderson
President and Chief Executive
Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>8
<FILENAME>septrvl.txt
<TEXT>
CERTIFICATIONS Exhibit 31(b)
I, Ray M. Van Landingham, certify that:
1. I have reviewed this annual report on Form 10-K of Patriot Transportation
Holding, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls to be designed under our supervision, ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the per8iod in which this report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosures controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal annual that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial report; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize
and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: December 23, 2003 /s/Ray M. Van Landingham
Vice President, Finance and
Administration and Chief
Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>9
<FILENAME>septgbl.txt
<TEXT>
CERTIFICATIONS Exhibit 31(c)
I, Gregory B. Lechwar, certify that:
1. I have reviewed this annual report on Form 10-K of Patriot Transportation
Holding, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls to be designed under our supervision, ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the per8iod in which this report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosures controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal annual that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial report; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize
and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: December 23, 2003 /s/Gregory B. Lechwar
Controller and Chief Accounting
Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>10
<FILENAME>septcert.txt
<TEXT>
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND
CHIEF ACCOUNTING OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned individuals certify pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Annual Report of Patriot Transportation Holding, Inc. on Form 10-K for the
fiscal year ended September 30, 2003 fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the
information contained in such Annual Report on Form 10-K fairly presents in all
material respects the financial condition and results of operations of Patriot
Transportation Holding, Inc.
PATRIOT TRANSPORTATION HOLDING, INC.
December 23, 2003 JOHN E. ANDERSON_______________
John E. Anderson
President and Chief Executive Officer
RAY M. VAN LANDINGHAM__________
Ray M. Van Landingham
Vice President, Finance and
Administration and Chief
Financial Officer
GREGORY B. LECHWAR_____________
Gregory B. Lechwar
Controller and Chief
Accounting Officer
A signed original of this written statement required by Section 906 has been
provided to Patriot Transportation Holding, Inc. and will be retained by
Patriot Transportation Holding, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.
The foregoing certification accompanies the issuer's Annual Report on Form
10-K and is not filed as provided in SEC Release Nos. 33-8212, 34-4751 and
IC-25967, dated June 30, 2003.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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