Patriot Transportation Holding, Inc. Announces Results for the Second Quarter and First Half of Fiscal Year 2008

By Patriot Transportation Holding, Inc.

Net income for the first six months of fiscal 2008 benefited from a gain on condemnation of land of $1,544,000, net of income taxes but was adversely impacted by the accrual of retirement benefits of $1,541,000, net of income tax benefits, for the Company's previous President and CEO, whose retirement was effective February 6, 2008. The transportation segment was negatively impacted in the first six months of fiscal 2008 from continuing adverse demand, fuel expense and operating disruptions for the flatbed trucking operations. The first six months of fiscal 2007 benefited from gains on equipment sales and prior period insurance recoveries.

Second Quarter Operating Results. For the second quarter of fiscal 2008, consolidated revenues were $41,088,000, an increase of $2,932,000 or 7.7% over the same quarter last year.

Transportation segment revenues were $34,738,000 in the second quarter of 2008, an increase of $2,150,000 over the same quarter last year primarily due to fuel surcharges. Excluding fuel surcharges, revenue per mile increased 3.2% over the same quarter last year. Decreased construction material freight demand and pricing softness from the downturn in housing pushed revenues down in the flatbed operation compared to the same quarter last year. Revenue miles in the current quarter were down 3.7% compared to the second quarter of 2007 due to reduced loads in the flatbed portion of the transportation segment.

Real Estate segment revenues for the second quarter of fiscal 2008 were $6,350,000, an increase of $782,000 or 14.0% over the same quarter last year. Lease revenue from developed properties increased $307,000 or 7.6%, due to an increase in occupied square footage, higher rental rates on new leases, and increased revenue from reimbursed real estate taxes. Royalties and rent increased $475,000 or 31.1% despite reduced tons mined because of an increase of $54,000 in revenues from timber harvesting, revenue of $262,000 for reimbursement of higher real estate taxes, and increases in minimum rent requirements effective in August 2007 and October 2007 pursuant to terms contained in several mining leases.

Consolidated gross profit was $6,053,000 in the second quarter of fiscal 2008, a decrease of $2,370,000 or 28.1% compared to $8,423,000 in the same period last year. Gross profit in the transportation segment decreased $2,373,000 or 42.5% due to increases in cost of operations along with decreased freight demand, resulting in reduced revenue miles and lower pricing in the flatbed portion. Average fuel cost per gallon in the second quarter of 2008 increased 43% over the same period last year. This resulted in an increase in fuel cost of $331,000 in excess of the increase in fuel surcharge revenue in the flatbed portion. Insurance and losses increased $1,182,000 primarily due the same quarter last year including a reduction of expense for changes in estimated prior year retained loss reserves as of March 31, 2007 versus estimates as of September 30, 2006 as calculated by a third-party actuary. Other expense increased $670,000 due to $295,000 higher gains on equipment sales the same quarter last year along with an increase of $344,000 in vehicle tires and maintenance. Gross profit in the real estate segment increased $3,000 or 0.1% from the second quarter 2007, due to higher rental rates on new leases, $54,000 increased gross profit from timber harvesting offset by increased real estate taxes that could not be billed to tenants.

Selling, general and administrative expenses increased $450,000 over the same quarter last year. The current quarter includes $132,000 accrual of retirement benefits for the Company's previous President and CEO. Estimated allowance for doubtful accounts expense increased $85,000 primarily due to inclusion in the prior year of a reversal of prior accruals. Audit and legal fees increased $93,000 due to various projects. Stock compensation expense excluding amounts associated with the Company's prior President and CEO decreased $66,000. During the quarter a corporate aircraft was purchased increasing expense $62,000. Donations increased $65,000 due to donations made earlier than the same donations were made in the prior year. Payroll taxes increased $44,000 due to stock option exercises.

Six Months Operating Results. For the first six months of fiscal 2008, consolidated revenues were $80,288,000, an increase of $5,008,000 or 6.7% over the same period last year.

Transportation segment revenues were $67,657,000 in the first six months of 2008, an increase of $3,345,000 over the same period last year primarily due to fuel surcharges. Excluding fuel surcharges, revenue per mile increased 2.6% over the same period last year. Decreased construction material freight demand and pricing softness from the downturn in housing pushed revenues down in the flatbed operation compared to the same period last year. Revenue miles in the first six months of fiscal 2008 were down 3.4% compared to the first six months of fiscal 2007 due to reduced loads in the flatbed portion of the transportation segment.

Real Estate segment revenues for the first six months of fiscal 2008 were $12,631,000, an increase of $1,663,000 or 15.2% over the same period last year. Lease revenue from developed properties increased $814,000 or 10.4%, due to an increase in occupied square footage along with higher rental rates on new leases. Royalties and rent increased $849,000 or 27.1% despite reduced tons mined because of an increase of $365,000 in revenues from timber harvesting, revenue of $262,000 for reimbursement of higher real estate taxes, and increases in minimum rent requirements effective in August 2007 and October 2007 pursuant to terms contained in several mining leases.

Consolidated gross profit was $12,276,000 in the first six months of fiscal 2008, a decrease of $3,606,000 or 22.7% compared to $15,882,000 in the same period last year. Gross profit in the transportation segment decreased $4,185,000 or 41.1% due to increases in cost of operations along with decreased freight demand, resulting in reduced revenue miles and lower pricing in the flatbed portion. Average fuel cost per gallon in the first six months of 2008 increased 38% over the same period last year. This resulted in an increase in fuel cost of $611,000 in excess of the increase in fuel surcharge revenue in the flatbed portion. Insurance and losses increased $1,580,000 primarily due to the same period last year including a reduction of expense for changes in estimated prior year retained loss reserves as of March 31, 2007 versus estimates as of September 30, 2006 as calculated by a third-party actuary along with a $357,000 of prior year insurance costs recorded in the three months ended December 31, 2006. Other expense increased $1,219,000 due to $750,000 higher gains on equipment sales over the same period last year along with an increase of $501,000 in vehicle tires and maintenance. Gross profit in the real estate segment increased $579,000 or 10.1% from the first six months 2007, due to higher rental rates on new leases, $365,000 increased gross profit from timber harvesting offset by increased real estate taxes that could not be billed to tenants.

Selling, general and administrative expenses increased $2,779,000 over the same period last year. The current year includes $2,503,000 accrual of retirement benefits for the Company's previous President and Chief Executive Officer. Estimated allowance for doubtful accounts expense increased $89,000 primarily due to the inclusion in prior year of a reversal of prior accruals. Audit and legal fees increased $100,000 due to various projects. Stock compensation expense excluding amounts associated with the Company's prior President and CEO decreased $97,000. During the quarter a corporate aircraft was purchased increasing expense $62,000. Donations increased $65,000 due to donations made earlier than the same donations were made in the prior year. Payroll taxes increased $45,000 due to stock option exercises.

Summary and Outlook. The flatbed portion of the transportation segment continues to face severe industry over capacity and significant disruptions to profitability from poor freight demand, utilization disruption and pricing softness resulting from the housing downturn as well as high fuel expenses. This downturn is expected to continue to impact the operations of the flatbed portion of our transportation business throughout calendar 2008.

The Company's real estate development business continues to expand its portfolio of warehouse-office products consistent with maintaining a watchful eye on national and regional economic health. The Company is evaluating alternative proposals from residential developers in an effort to obtain a Planned Unit Development and Record Plat along with the eventual disposition of the 62 developable acre residential portion of Windlass Run, located in southeastern Baltimore County, Maryland.

The Company has a rezoning application before the Zoning Commission of the District of Columbia for its 5.8 acre undeveloped site currently leased on the Anacostia River in Washington, D.C. This tract is adjacent to the new Washington Nationals Baseball Stadium. If the rezoning application is granted, the Company would be permitted to develop up to 545,800 square feet of commercial use and an additional 569,600 square feet for residential use. At a March 20, 2008 hearing, the Company received approval for Proposed Action subject to a review by the National Capital Planning Commission (NCPC) and final approval by the Zoning Commission. The NCPC reviewed the proposed development plan at its meeting on May 1, 2008 and agreed that the proposed project was not inconsistent with the Federal interests there by finding no objection to the Zoning Commission taking Final Action to approve the zoning application at a meeting expected in the third or fourth quarter of Fiscal year 2008.

Investors are cautioned that any statements in this press release which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These include general economic conditions; competitive factors; political, economic, regulatory and climatic conditions; driver availability and cost; the impact of future regulations regarding the transportation industry; freight demand for petroleum product and levels of construction activity in the Company's markets; fuel costs; risk insurance markets; demand for flexible warehouse/office facilities; ability to obtain zoning and entitlements necessary for property development; interest rates; levels of mining activity; pricing; energy costs and technological changes. Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission.

Patriot Transportation Holding, Inc. 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. is a Southeastern transportation company concentrating in the hauling by motor carrier of liquid and dry bulk commodities. SunBelt Transport, Inc. serves the flatbed portion of the trucking industry in the Southeastern states, hauling primarily construction materials. The Company's real estate group, comprised of FRP Development Corp. and Florida Rock Properties, Inc., 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.

                     PATRIOT TRANSPORTATION HOLDING, INC.
          Summary of Consolidated Revenues and Earnings (unaudited)
                   (In thousands except per share amounts)
                                            Three Months         Six Months
                                               Ended                Ended
                                              March 31             March 31
                                           2008     2007        2008     2007
    Revenues                            $ 41,088   38,156    $ 80,288   75,280
    Gross profit                        $  6,053    8,423    $ 12,276   15,882
    Income before income taxes          $  1,192    4,261    $  3,471    7,803
    Net income                          $    626    2,597    $  2,031    4,757
    Earnings per common share:
                           Basic           $0.21     0.86       $0.67     1.58
                           Diluted         $0.20     0.83       $0.65     1.53
    Weighted average common shares
     outstanding:
       Basic                               3,037    3,017       3,039    3,007
       Diluted                             3,128    3,125       3,138    3,117
                     PATRIOT TRANSPORTATION HOLDING, INC.
                     Condensed Balance Sheets (unaudited)
                            (Amounts in thousands)
                                                 March 31        September 30
                                                   2008              2007
    Cash and cash equivalents                $     8,428       $    26,944
    Accounts receivable, net                      12,154            10,983
    Other current assets                          13,177             6,559
    Property, plant and equipment, net           202,783           192,523
    Investment in Brooksville Joint Venture        6,238             5,904
    Other non-current assets                       9,977            10,617
                 Total Assets                $   252,757       $   253,530
    Current liabilities                      $    20,663       $    20,228
    Long-term debt (excluding current             78,196            80,172
     maturities)
    Deferred income taxes                         17,154            15,274
    Other non-current liabilities                  6,148             7,395
    Shareholders' equity                         130,596           130,461
                 Total Liabilities and
                  Shareholders' Equity       $   252,757       $   253,530
                     PATRIOT TRANSPORTATION HOLDING, INC.
                        Business Segments (unaudited)
                            (Amounts in thousands)

The Company has identified two business segments, Transportation and Real Estate, each of which is managed separately along product lines. All of the Company's operations are located in the Southeastern and Mid-Atlantic states. Operating results for the Company's business segments are as follows:

                                      Three Months Ended     Six Months Ended
                                           March 31              March 31
                                         2008    2007          2008    2007
    Transportation Revenues           $ 34,738  32,588      $ 67,657  64,312
    Real Estate Revenues                 6,350   5,568        12,631  10,968
    Total Revenues                    $ 41,088  38,156      $ 80,288  75,280
    Transportation Operating Profit   $    976   3,440      $  1,622   5,852
    Real Estate Operating Profit         2,848   2,845         6,288   5,709
    Corporate Expenses                  (1,426) (1,067)       (4,676) (1,942)
    Total Operating Profit            $  2,398   5,218      $  3,234   9.619

SOURCE Patriot Transportation Holding, Inc.