New Patriot Transportation Holding, Inc. 10-12B/A

Exhibit 99.1

(Subject to Completion, Dated October 30, 2014)

		[●], 2014

To Our Shareholders:

Earlier this year, we announced plans to separate into two independent publicly traded companies:

●         our real estate businesses, which after the separation will operate under the name FRP Holdings, Inc. (which we refer to as “FRP”); and

●         our transportation business, which after the separation will operate under the name Patriot Transportation Holding, Inc. (which we refer to as “New Patriot”).

Our board of directors approved a plan to implement this separation in two steps. First, we will complete an internal reorganization that will result in your shares of Patriot common stock being converted into shares of common stock of FRP, which will be the new publicly traded holding company. Following this reorganization, FRP will own our real estate business and own all of the stock of New Patriot, which will own our transportation business. Second, FRP will distribute all of the outstanding common stock of New Patriot to our shareholders of record as of the record date.

As a result of these steps, you will become a shareholder of two publicly traded companies: FRP and New Patriot. For each share of our stock that you own on the record date you will receive: (i) one share of FRP, the real estate company and (ii) one third of one share of New Patriot, the transportation company. FRP is authorized to list its shares of common stock on the NASDAQ Global Select Market under the ticker symbol “FRPH,” and New Patriot is authorized to list its shares of common stock on the NASDAQ Global Select Market under the ticker symbol “PATI.”

No fractional shares of New Patriot common stock will be issued. The distribution agent for the distribution will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing prices and distribute the net cash proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive fractional shares.

You do not need to take any action to receive the shares of FRP and New Patriot to which you are entitled. In addition, you do not need to pay any consideration or surrender your existing shares. I encourage you to read the attached information statement, which is being provided to all of our shareholders as of the close of business on [*], 2014. The information statement describes in detail the internal corporate reorganization and the separation and distribution and provides important business and financial information about New Patriot.

We remain committed to working on your behalf to continue to build long-term shareholder value.

Sincerely,

John D. Baker II

Executive Chairman

[●], 2014

Dear Future Shareholder:

It is our pleasure to welcome you as a future shareholder of our tank lines transportation company. Although we refer to our company as “New Patriot” in this document, we will retain the corporate name “Patriot Transportation Holding, Inc.” This information statement provides information primarily about New Patriot, our transportation business, and references such as “we” and “us” and “our” in this document refer to New Patriot.

While we will be a separate public company following the separation, our transportation business has a strong history of financial and operating performance. At June 30, 2014, we operated 20 terminals in six Southeastern states, and we employed 721 revenue-producing drivers.

We believe that the separation of our transportation business will enhance our opportunities to grow our business.

We are authorized to list our shares of common stock on the NASDAQ Global Select Market under the ticker symbol “PATI.”

Our management team is excited about the opportunities ahead of us, and we are committed to unlocking the full potential of our transportation business. We invite you to learn more about our company and our plans by reading the attached information statement. We look forward to your support as a shareholder.

Sincerely,

Thompson S. Baker II 

President and Chief Executive Officer

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Preliminary Information Statement 

(Subject to Completion, Dated October 30, 2014)

Information Statement

Patriot Transportation Holding, Inc.

Common Stock

This information statement is being furnished in connection with the separation of the transportation and real estate businesses of Patriot Transportation Holding, Inc. The separation will be achieved in two steps:

●         First, Patriot Transportation Holding, Inc. will undergo an internal corporate reorganization in which all of the shares of Patriot Transportation Holding, Inc., will be converted on a 1-for-1 basis into shares of a new holding company, FRP Holdings, Inc. (which we refer to as “FRP”). After the reorganization, FRP will be the publicly traded successor to Patriot Transportation Holding, Inc. and will own the real estate businesses. FRP is authorized to continue to trade its shares of common stock on the NASDAQ Global Select Market under the new trading symbol “FRPH.” Patriot Transportation Holding, Inc. will become a subsidiary of New Patriot Transportation Holding, Inc., a newly formed subsidiary of FRP that will own the transportation business.

●         Second, FRP will distribute to its shareholders 100% of the issued and outstanding shares of common stock of New Patriot Transportation Holding, Inc., in a manner that is intended to be tax-free in the United States, on the basis of one share of New Patriot Transportation Holding, Inc. common stock for every three outstanding shares of FRP common stock held by the shareholders at 5:00 p.m. on [*], 2014, the record date for the distribution.

To avoid confusion, we use the term “Existing Patriot” to refer to Patriot Transportation Holding, Inc. before the holding company merger, when it owns both the transportation and real estate businesses. We use the term “New Patriot” to refer to New Patriot Transportation Holding, Inc., a newly-formed Florida corporation that will own our transportation business after the internal corporate reorganization, when it will own only the transportation business. New Patriot will change its corporate name to Patriot Transportation Holding, Inc. after the holding company merger. References such as “we” and “us” and “our” in this information statement refer to New Patriot.

The distribution is expected to be completed after the closing of the NASDAQ Global Select Market on [*], 2014. Immediately after completion of the steps described above, New Patriot will be an independent, publicly traded company. We expect that, for U.S. federal income tax purposes, no gain or loss will be recognized by you, and no amount will be included in your income in connection with the distribution, except with respect to any cash received in lieu of fractional shares.

No vote of the shareholders of Existing Patriot is required in connection with these transactions. Existing Patriot shareholders will not be required to pay any consideration for the shares of FRP common stock that they receive in the internal corporate reorganization of the shares of New Patriot common stock that they receive in the distribution, and they will not be required to surrender or exchange shares of their Existing Patriot common stock or take any other action in connection with the internal corporate reorganization and distribution.

We are authorized to list New Patriot’s shares of common stock on the NASDAQ Global Select Market under the ticker symbol “PATI”. We anticipate that a limited market, commonly known as a “when-issued” trading market, for New Patriot’s common stock will commence on [*], 2014 and will continue up to and including the distribution date. We expect the “regular-way” trading of New Patriot’s common stock will begin on the first trading day following the distribution date.

In reviewing this Information Statement, you should carefully consider the matters described in “Risk Factors” beginning on page 14 of this Information Statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense.

This Information Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this Information Statement is [●], 2014.

Patriot first mailed this Information Statement to Patriot shareholders on or about [●], 2014.

TABLE OF CONTENTS

NOTE REGARDING THE USE OF CERTAIN TERMS

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement about New Patriot assumes completion of all of the transactions referred to in this information statement in connection with the internal corporate reorganization and the separation and distribution. Unless the context otherwise requires, we use the following terms to refer to the items indicated:

All trademarks or trade names referred to in this Information Statement are the property of their respective owners.

INDUSTRY DATA

The industry and market data used throughout this information statement was obtained from reports published by the U.S. Energy Information Administration (available at www.eia.gov), the 2013 Retail Fuels Report published by the National Association of Convenience Stores (available at www.nacsonline.com), the 2013 Bulk Transporter Gross Revenue Report (available at www.bulktransporter.com), and data published by the National Tank Truck Carriers (available at www.tanktruck.org). These publications, reports and surveys generally indicate that they have obtained their information from sources believed to be reliable but do not guarantee the accuracy or completeness of their information. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Although we have not independently verified the accuracy or completeness of the information contained in the industry publications and reports, based on our industry experience we believe that the publications and reports are reliable.

QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND THE DISTRIBUTION

SUMMARY

This summary highlights selected information from this Information Statement relating to New Patriot, the holding company merger, the separation of the transportation business from the real estate business and the distribution of New Patriot common stock. For a more complete understanding of our businesses and the separation and distribution, you should read the entire Information Statement carefully, particularly the discussion set forth under “Risk Factors” beginning on page 14 of this Information Statement, and our audited historical combined financial statements, our unaudited interim historical combined financial statements, our unaudited pro forma condensed combined financial statements and the respective notes to those statements appearing elsewhere in this Information Statement.

Except as otherwise indicated or unless the context otherwise requires, the information included in this Information Statement, including the combined financial statements of New Patriot for the nine months ended June 30, 2014 and 2013 and for the three years ended September 30, 2013, assumes the completion of all the transactions referred to in this Information Statement in connection with the holding company merger and the separation and distribution.

Our Business

We are a regional tank truck carrier specializing in hauling petroleum products, chemicals and dry bulk commodities. We conduct this business through our subsidiary, Florida Rock & Tank Lines, Inc. As of June 30, 2014, we employ 721 revenue-producing drivers and operate 20 terminals in six Southeastern states.

At June 30, 2014, we had $62.9 million in assets. For the year ended September 30, 2013, we generated $112.1 million in revenues and earned $5.2 million in net income. For the nine months ended June 30, 2014, we generated $97.1 million in revenue and earned $2.4 million in net income.

We were incorporated in Florida on August 5, 2014. Our headquarters are located at 200 W. Forsyth Street, 7^th Floor, Jacksonville, Florida 32202 and our general telephone number is (904) 396-5733. Our Internet website is www.patriottrans.com. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this Information Statement.

As a result of the distribution, Existing Patriot will be separated into two public companies. We will own and operate the transportation business, and FRP will own and operate the real estate businesses. In connection with the separation, FRP and New Patriot will enter into a number of agreements that will govern the relationship between FRP and New Patriot following the distribution. See “The Separation” included elsewhere in this Information Statement.

In connection with the separation, New Patriot will enter into a new $25 million unsecured line of credit and will use approximately $7 to $9 million to satisfy the existing long-term debt of the transportation group (which was $10.2 million as of June 30, 2014).

Our business is subject to various risks. For a description of these risks, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Information Statement.

Our Competitive Strengths

Strong Market Position

We believe that our size, geographic footprint, capabilities and industry reputation position us to grow our business through expansion of our key customer relationships, adding new customers, expanding into new product markets and strategic acquisitions of other tank truck carriers.

Our Commitment to Safety Leads to a Strong Industry Reputation

We devote significant resources to driver training, ongoing safety programs and investments in technology that help us improve safety. Our dedicated focus on operating safely enhances our reputation with customers and helps us control our costs.

Our Commitment to Customer Service Helps us Grow our Business

Our commitment to customer service is critical to growing our business and building key customer relationships, so we approach customer service in the same manner as safety.  We believe that our service reputation is responsible for the growth of our relationship with our key accounts.

Our Technology Helps us Improve our Customer Service and Monitor Safety Performance

We utilize transportation technology to improve safety and our service offerings to our customers to help us lower our customers’ costs. Our web portal, our OmniTracs system and our computer software allow us to streamline the ordering process, improve communications with customers regarding delivery status, monitor safety performance and expedite customer billing.

Our Management Team helps Position us for Growth

Our Chief Executive Officer, Tom Baker, and our Chief Financial Officer, John Milton, joined us after serving in senior leadership roles at Florida Rock Industries, Inc. Rob Sandlin has been with Florida Rock & Tank Lines for 30 years and has been President since 2003. Rob leads a seasoned transportation team with many years of experience. 

We have Strong Relationships with Key Customers

We rely on our customer service and safety record to grow our relationships with key convenience store and hypermarket accounts. While we provide our services to these customers under informal agreements or contracts that do not guarantee any specific volumes and generally are terminable by the customer on no more than 120 days’ notice, nine of our top ten accounts have been customers for more than ten years. We believe that we are well positioned to continue to grow our relationships with these customers as they continue to grow their businesses.

Our Business Strategy

Increase Business with Our Current Customers. We intend to focus on expanding our relationships with existing customers to add incremental business at our existing terminals.  We will also pursue business opportunities with our existing customers in new markets that are contiguous to our existing markets as those opportunities become available and meet our strategic requirements.

Expand our Service Offerings. We operate in a limited segment of the tank truck industry, focusing on hauling petroleum products and limited liquid and bulk commodities. Although we have no current plans to enter new product markets, we intend to explore diversifying our capabilities as a bulk tank carrier to pursue opportunities presented by our changing economy.

Pursue Strategic Acquisition Opportunities.  While our first focus will be on expanding our existing customer relationships and adding incremental business at existing terminals, we believe that changing market conditions will create opportunities for strategic acquisitions.  We believe that changes in our customer base and the way that they select carriers, as well as changes in the regulatory environment, will lead to more consolidation in our industry. Our ability to pursue strategic acquisition opportunities will be limited by covenants contained in our Tax Matters Agreement with FRP which requires that in certain transactions we provide to FRP an opinion of tax counsel reasonably satisfactory to FRP to the effect that the transaction will not cause the distribution to be taxable to FRP or its shareholders. In addition, our ability to finance strategic acquisition opportunities will be limited by financial covenants contained in our credit agreement.

The Separation

Overview

On May 7, 2014, the board of directors of Existing Patriot approved a plan to separate our real estate and transportation businesses into two independent publicly traded companies.  On [*], 2014, the board of directors of Existing Patriot approved the separation.  The separation will be accomplished in two steps:

As a result of the separation, holders of Existing Patriot common stock will be entitled to receive, for each share of Existing Patriot common stock that they hold on the record date, (i) one share of FRP common stock, and (ii) one-third of one share of New Patriot common stock. Following the separation, New Patriot will be an independent, publicly traded company, and FRP will retain no ownership interest in New Patriot.

Before the distribution, we will enter into a Separation and Distribution Agreement and several other agreements with FRP to effect the separation and provide a framework for our relationship with FRP after the separation. These agreements will govern the relationship between New Patriot and FRP subsequent to the separation (including with respect to transition services, employee matters, tax matters and certain other matters). FRP and New Patriot will also enter into a Transition Services Agreement which will provide for New Patriot to provide certain services to FRP.

The board of directors of Existing Patriot believes that separating the transportation business from the real estate business will accomplish a number of important business objectives and is in the best interests of the shareholders of Existing Patriot.

In particular, the board of directors of Existing Patriot believes the separation will:

The distribution of our common stock as described in this Information Statement is subject to the satisfaction or waiver of certain conditions. For more information, see “Risk Factors—Risks Relating to the Separation” and “The Separation” included elsewhere in this Information Statement.

TRANSACTION STRUCTURE

(simplified for illustrative purposes)

The diagram below shows the structure of Existing Patriot before the holding company merger and the separation and distribution:

After the holding company merger, the name of Existing Patriot will be changed to Patriot Transporation, Inc., and the name of New Patriot will be changed to Patriot Transporation Holding, Inc. The diagram below shows the structure of FRP as the publicly traded successor to Existing Patriot, immediately after completion of the holding company merger and name changes but before the transfer of the real estate subsidiaries to FRP and the contribution of Existing Patriot to New Patriot:

The diagram below shows the structure of FRP and its subsidiaries after the holding company merger and immediately following the contribution of Existing Patriot to New Patriot and the transfer of the real estate subsidiaries by Existing Patriot to FRP:

The diagram below shows the structure of FRP and New Patriot immediately after completion of the separation and distribution:

Summary Risk Factors

We are subject to a number of risks, including risks related to the separation, distribution and other related transactions. The following list of risk factors is not exhaustive. Please read “Risk Factors” carefully for a more thorough description of these and other risks.

Risks Relating to the Separation

Risks Relating to Our Business

Risks Relating to Our Common Stock

RISK FACTORS

You should carefully consider each of the following risks and all of the other information contained in this Information Statement. Some of these risks relate principally to our separation from the real estate business, while others relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock.

Our business, prospects, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.

Risks Relating to the Separation

The combined post-separation value of FRP and New Patriot shares may not equal or exceed the pre-separation value of Existing Patriot common shares.

As a result of the distribution, FRP expects the trading price of FRP common shares immediately following the distribution to be lower than the “regular-way” trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of the transportation business held by New Patriot. There can be no assurance that the aggregate market value of the FRP common stock and the New Patriot common stock following the separation will be equal to or higher than the market value of Existing Patriot common shares if the separation did not occur.

New Patriot has no history of operating as an independent company, and our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

The historical information about New Patriot in this information statement refers to the transportation business as operated as part of the consolidated business of Existing Patriot. New Patriot’s historical and pro forma financial information included in this information statement is derived from the consolidated financial statements and accounting records of Existing Patriot. Accordingly, the historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that New Patriot would have achieved as a separate, publicly traded company during the periods presented or those that New Patriot will achieve in the future primarily as a result of the factors described below:

Other significant changes may occur in New Patriot’s cost structure, management, financing and business operations as a result of operating as a company separate from the real estate business. For additional information about the past financial performance of New Patriot’s business and the basis of presentation of the historical combined financial statements and the unaudited pro forma condensed combined financial statements of New Patriot’s business, see “Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Combined Financial Data of New Patriot,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and accompanying notes included elsewhere in this information statement.

There could be significant liability to New Patriot if the distribution is determined to be a taxable transaction.

The separation and distribution is conditioned on the receipt by Existing Patriot of an opinion from outside tax counsel to the effect that, among other things, (i) the holding company merger (together with the conversion of the shares of Existing Patriot common stock into shares of FRP common stock pursuant to the holding company merger) will qualify as a “reorganization” within the meaning of Section 368(a)(2)(E) of the Code and will not be integrated with the rest of the separation and distribution, and (ii) the separation and distribution will qualify as a “reorganization” for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Existing Patriot does not intend to obtain a private letter ruling from the IRS in connection with the holding company merger and the separation and distribution. The opinion of tax counsel is not binding on the IRS.  Moreover, the opinion will rely on facts, assumptions, representations and undertakings from Existing Patriot, FRP and New Patriot regarding the past and future conduct of the companies’ respective businesses and other matters. Notwithstanding receipt of the opinion of tax counsel, the IRS could determine on audit that the holding company merger and/or separation and distribution is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion, or for other reasons, including as a result of significant changes in the share ownership of FRP or New Patriot after the separation. If the holding company merger and/or separation and distribution is determined to be taxable for U.S. federal income tax purposes, FRP and its shareholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities and New Patriot could incur significant liabilities related thereto. For a description of the sharing of such liabilities between FRP and New Patriot, see “The Separation–Agreements with FRP.”

We may not realize the potential benefits from the separation, and the separation may adversely affect our business.

New Patriot may not be able to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be delayed or not occur at all. The separation and distribution is expected to provide the following benefits, among others:

New Patriot may not achieve these and other anticipated benefits for a variety of reasons, including, among others: (a) the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing New Patriot’s business; (b) following the separation, New Patriot may be more susceptible to market fluctuations and other adverse events than if it were still a part of a larger company; (c) following the separation, New Patriot’s business will be less diversified than Existing Patriot’s business prior to the separation; and (d) the other actions required to separate FRP’s and New Patriot’s respective businesses could disrupt New Patriot’s operations. If New Patriot fails to achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, the business, financial condition, and results of operations of New Patriot could be adversely affected.

We will incur increased ongoing costs in connection with being an independent public company.

Currently, we are not directly subject to the reporting and other requirements of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act.” Following the effectiveness of the registration statement of which this Information Statement forms a part, we will be directly subject to such reporting and other obligations under the Exchange Act, and we expect to be compliant with the applicable requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which will require, in the future, annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm addressing the effectiveness of these controls. These reporting and other obligations will place significant demands on our management and our administrative and operational resources, including accounting resources.

We may not be able to engage in certain corporate transactions after the separation.

To preserve the tax-free treatment to FRP of the separation and the distribution, under the tax matters agreement that New Patriot will enter into with FRP, New Patriot will be restricted from taking any action that prevents the distribution and related transactions from being tax-free for U.S. federal income tax purposes. Under the tax matters agreement, for the two-year period following the distribution, New Patriot will be prohibited, except in certain circumstances, from:

These restrictions may limit New Patriot’s ability to pursue certain strategic transactions or other transactions that it may believe to be in the best interests of its shareholders or that might increase the value of its business. In addition, under the tax matters agreement, New Patriot is required to indemnify FRP against any such tax liabilities as a result of the acquisition of New Patriot’s stock or assets, even if it did not participate in or otherwise facilitate the acquisition.

Until the distribution occurs, Existing Patriot has sole discretion to change the terms of the distribution in ways that may be unfavorable to us.

Although the distribution and separation was approved by the board of directors of Existing Patriot on [*], 2014, it remains subject to the satisfaction or waiver of certain conditions, some of which are in the sole and absolute discretion of Existing Patriot. Additionally, Existing Patriot has the sole and absolute discretion to change certain terms of the distribution, which changes could be unfavorable to us. In addition, Existing Patriot may decide at any time prior to the distribution not to proceed with the separation or the distribution.

The separation of our business from the real estate business may increase the overall cost of debt funding and decrease the overall debt capacity available to us.

The transportation business had access to the credit facilities previously made available to Existing Patriot. As a separate business, we will have fewer assets and will generate less cash flow, and this may impact the terms under which we can borrow from lenders. Our separation from the real estate business may increase the overall cost of debt funding and decrease the overall debt capacity available to us.

The separation of the transportation business from the real estate businesses will require significant management time and attention and could disrupt Existing Patriot’s operations.

The planning and implementation of the separation of the transportation business from the real estate businesses is a substantial undertaking that has required and will require substantial dedication of management resources. The management time and attention required to implement the separation may disrupt our ongoing business activities and may result in employee distraction.

Initially, we will share three of our executives with FRP so those executives will not devote their full time and attention to our business.

Under the terms of a Transition Services Agreement between us and FRP, we will provide the services of three of our executive officers to FRP. Thompson S. Baker II, our Chief Executive Officer, John D. Milton, Jr., our Chief Financial Officer, and John D. Klopfenstein, our Controller and Chief Accounting Officer, will serve in the same capacities with FRP under the Transition Services Agreement. We anticipate that these executives will spend approximately 50% of their time working with FRP during the term of the Transition Services Agreement, and FRP has agreed to reimburse us for 50% of the total costs associated with these executives (inclusive of overhead). Our business could be adversely impacted by lack of the full-time focus of these executives during the term of the Transition Services Agreement. In addition, these executives may face actual or apparent conflicts of interest if there are issues or disputes under the agreements between us and FRP.

We will have potential conflicts of interest with FRP after the separation.

We have common management with FRP, which may lead to conflicting interests. At the time of the spin off, three of our executive officers will also serve as executive officers of FRP. Our chief executive officer, Thompson S. Baker II, also will serve as a director of both companies. Our executive officers and members of our board of directors will have fiduciary duties to our shareholders. Likewise, any such persons who serve in similar capacities at FRP will have fiduciary duties to FRP’s shareholders. Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting each company. For example, there will be the potential for a conflict of interest if we and FRP look at acquisitions and other corporate opportunities that may be suitable for each of us. Moreover, after the separation, most of our directors and officers will continue to own FRP stock and options to purchase FRP stock, which they acquired prior to the spin off. These ownership interests could create, or appear to create, potential conflicts of interest when these individuals are faced with decisions that could have different implications for our company and FRP. From time to time, FRP may enter into transactions with us or our subsidiaries or other affiliates. Although the terms of any such transactions will be established based upon negotiations between employees of the companies involved, there can be no assurance that the terms of any such transactions will be as favorable to us or our subsidiaries or affiliates as would be the case where the parties are completely at arms’ length.

Our inter-company agreements were negotiated when we were a subsidiary of Existing Patriot. We have entered into agreements with Existing Patriot pursuant to which we will provide to FRP certain management, administrative, financial, treasury, accounting, tax, legal and other services, for which FRP will reimburse us on a cost basis. In addition, we have entered into a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement with FRP. The terms of these agreements were established while we were a wholly owned subsidiary of Existing Patriot, and hence were not the result of arms’ length negotiations. However, we and Existing Patriot believe that such terms are commercially reasonable and fair to both parties under the circumstances. Nevertheless, conflicts could arise in the interpretation or any extension or renegotiation of the foregoing agreements after the separation. See “The Separation – Agreements with FRP.”

Risks Relating to Our Business

Our business is subject to general economic and other factors that are largely out of our control and could affect our operations, profitability and cash flow.

Our business is dependent on various economic factors over which we have little control, that include:

As a result, we may experience periods of overcapacity, declining prices, lower profit margins and less availability of cash in the future. Our revenues and operating income could be materially adversely affected if we are unable to pass through to our customers the full amount of increased transportation costs.

We would be adversely affected by a decline in demand for hauling petroleum products in our markets.

We derive approximately 82% of our revenues from the hauling of petroleum products, including gasoline, diesel fuel and ethanol. The demand for these services is determined by motor fuel consumption in our markets, which is affected by general economic conditions, employment levels, consumer confidence, spending patterns and gasoline prices. Demand for our petroleum hauling services is also impacted by vehicle fuel efficiency, alternative fuel vehicles and government regulation relating to ethanol. The Energy Information Administration of the U.S. Department of Energy projects that U.S. motor gasoline consumption will decline at an average rate of 1.1% per year between 2012 and 2040 as improvements in fuel efficiency are expected to outpace increases in miles driven.

Advanced technology, improved fuel efficiency and increased use of “green” automobiles (e.g., those automobiles that do not use gasoline or that are powered by hybrid engines) would reduce demand for gasoline. Developments regarding climate change and the effects of greenhouse gas emissions on climate change may lead to increased use of “green” automobiles. Consequently, attitudes toward gasoline and its relationship to the environment may significantly affect our sales and ability to market our products. Reduced consumer demand for gasoline could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may be adversely affected by fluctuations in the price and availability of fuel.

We require large amounts of diesel fuel to operate our tractors. In 2011, 2012, 2013 and the nine months ended June 30, 2013 and 2014, fuel (including fuel taxes) represented approximately 22.9%, 23.4%, 22.9%, 23.0%, and 23.1%, respectively, of our total operating costs. The market price for fuel can be extremely volatile and can be affected by a number of economic and political factors. In addition, changes in federal or state regulations can impact the price of fuel, as well as increase the amount we pay in fuel taxes. We incorporate a fuel surcharge clause in substantially all customer contracts to pass most additional fuel costs above a specified level on to our customers. However, we may not be able to do so in the future.

The amount of the fuel surcharge each month is typically based on the average price of fuel for the prior month; accordingly, our recovery of fuel costs in excess of the levels specified in our contracts lags the actual increase in fuel prices, and we may never be fully reimbursed for increases in fuel prices above the levels specified in our contracts. We currently do not hedge our fuel purchases to protect against fluctuations in fuel prices that are not covered by fuel surcharges, and therefore are at risk to the extent that changes in the market price of fuel are not covered by the fuel surcharge provisions of our customer contracts. In addition, our customers may negotiate rates or contracts that minimize or eliminate our ability to continue passing on fuel price increases to our customers. If fuel prices increase and we are unable to pass the increased cost to our customers, the additional expense could have a material adverse effect on our business, results of operations and financial condition.

Our operations may also be adversely affected by any limit on the availability of fuel. Disruptions in the political climate in key oil producing regions in the world, particularly in the event of wars or other armed conflicts, could severely limit the availability of fuel in the United States. In the event our customers face significant difficulty in obtaining fuel, our business, results of operations and financial condition would be materially adversely affected.

Our business may be adversely affected by seasonal factors and harsh weather conditions.

Our business is subject to seasonal trends common in the refined petroleum products delivery industry. We typically encounter increased demand for fuels delivery services in Florida during the spring months. Further, operating costs and earnings are generally adversely affected by inclement weather conditions. These factors generally result in lower operating results during the first and fourth quarters of the year and cause our operating results to fluctuate from quarter to quarter. Our operating expenses also have been somewhat higher in the winter months, primarily due to decreased fuel efficiency, increased utility costs and increased maintenance costs for tractors and trailers in colder months. An occurrence of unusually harsh or long-lasting inclement weather could have an adverse effect on our operations and profitability.

We operate in a highly competitive industry, and competitive pressures may adversely affect our operations and profitability.

The tank lines transportation business is extremely competitive and fragmented. We compete with many other carriers and varying sizes as well as our customers’ private fleets. Numerous competitive factors could impair our ability to maintain our current level of revenues and profitability and adversely affect our financial condition. These factors include the following:

If we are unable to address these competitive pressures, our operations and profitability may be adversely affected.

The loss or bankruptcy of one or more significant customers may adversely affect our business.

We are dependent upon a limited number of large customers. Our ten largest customers accounted for approximately 55.1% of our total revenues during the nine months ended June 30, 2014 and 54.2% of our total revenues during the 2013 fiscal year. In particular, our largest customer, Murphy USA, accounted for 20.7% of our total revenues during the nine months ended June 30, 2014 and 20.0% of our total revenues during fiscal 2013. The loss of one or more of our major customers, or a material reduction in services performed for such customers, would have a material adverse effect on our results of operations. In addition, if one or more of our customers were to seek protection under the bankruptcy laws, we might not receive payment for services rendered and, under certain circumstances, might have to return payments made by these customers during the 90 days prior to the bankruptcy filing. If we were to lose one or more of our key customers, we might not be able to capture additional volume from other customers to offset the fixed costs historically covered by the lost revenue.

Difficulty in attracting and retaining drivers could negatively affect our operations and limit our growth.

There is substantial competition for qualified personnel, particularly drivers, in the trucking industry. Regulatory requirements, including electronic logging, and an improvement in the economy, could reduce the number of eligible drivers. We operate in many geographic areas where there is a shortage of drivers. Any shortage of drivers could result in temporary under-utilization of our equipment, difficulty in meeting our customers’ demands and increased compensation levels, each of which could have a material adverse effect on our business, results of operations and financial condition. A loss of qualified drivers could lead to an increased frequency in the number of accidents, potential claims exposure and, indirectly, insurance costs.

Difficulty in attracting qualified drivers could also require us to limit our growth. Our strategy is to grow in part by expanding existing customer relationships into new markets. However, we may have difficulty finding qualified drivers quickly when presented with new customer opportunities, which could result in our inability to accept or service this business or could require us to increase the wages we pay in order to attract drivers. If we are unable to hire qualified drivers to service business opportunities in new markets, we may have to temporarily send drivers from existing terminals to those new markets, causing us to incur significant costs relating to out-of-town driver pay and expenses. In making acquisitions and converting private fleets, some of the drivers in those fleets may not meet our standards, which would require us to find qualified drivers to replace them. If we are unable to find and retain such qualified drivers on terms acceptable to us, we may be forced to forego opportunities to expand or maintain our business.

If our relationship with our employees were to deteriorate, we may be faced with unionization efforts, labor shortages, disruptions or stoppages, which could adversely affect our business and reduce our operating margins and income.

Our operations rely heavily on our employees, and any labor shortage, disruption or stoppage caused by poor relations with our employees could reduce our operating margins and income. None of our employees are subject to collective bargaining agreements, although unions have traditionally been active in the U.S. trucking industry. Our workforce has been subject to union organization efforts from time to time, and we could be subject to future unionization efforts as our operations expand. Unionization of our workforce could result in higher compensation and working condition demands that could increase our operating costs or constrain our operating flexibility. In addition, we are from time to time subject to wage and hour claims relating to overtime pay where our drivers work more than eight hours in a day but less than 40 hours in a week. We believe we are exempt from overtime pay rules under regulations of the DOT. However, our operating costs would increase if this exemption were rescinded or if a court determined that we were not exempt from these overtime pay rules.

If we lose key members of our senior management, our business may be adversely affected.

Our ability to implement our business strategy successfully and to operate profitably depends in large part on the continued employment of our senior management team, led by Tom Baker, our president and chief executive officer, John Milton, our chief financial officer and Rob Sandlin, President of Florida Rock & Tank Lines, Inc. If Mr. Baker, Mr. Milton, Mr. Sandlin or the other members of senior management become unable or unwilling to continue in their present positions, our business or financial results could be adversely affected.

If we fail to develop, integrate or upgrade our information technology systems, we may lose customers or incur costs beyond our expectations.

We rely heavily on information technology and communications systems to operate our business and manage our network in an efficient manner. We have equipped our tractors with various mobile communications systems and electronic logging devices that enable us to monitor our tractors and communicate with our drivers in the field and enable customers to track the location and monitor the progress of their cargo through the Internet. Despite redundancies and security measures, our information technology and communications systems remain susceptible to outages, computer viruses, break-ins, human error, data leakage and other disruptions and imperfections. Any of these could impair the efficiency of our operations, inhibit our customer service or reduce customer access to information. In addition, there could be a loss of confidential information, corruption of data, or damage to our reputation. Demand for our services or the profitability of operations could in turn be affected, which could have a negative impact on our results of operations or cash flows.

Increasingly, we compete for customers based upon the flexibility and sophistication of our technologies supporting our service. The failure of hardware or software that supports our information technology systems, the loss of data contained in the systems, or the inability of our customers to access or interact with our website, could significantly disrupt our operations and cause us to lose customers. If our information technology systems are unable to handle additional volume for our operations as our business and scope of service grow, our service levels and operating efficiency will decline. In addition, we expect customers to continue to demand more sophisticated fully-integrated information systems. If we fail to hire and retain qualified personnel to implement and maintain our information technology systems or if we fail to upgrade or replace these systems to handle increased volumes, meet the demands of our customers and protect against disruptions of our operations, we may lose customers, which could seriously harm our business.

To compete effectively, we must anticipate and adapt to technology changes. We may choose new technologies that later prove to be inadequate, or may be forced to implement new technologies, at substantial cost, to remain competitive. In addition, competitors may implement new technologies before we do, allowing such competitors to provide lower priced or enhanced services and superior quality compared to those we provide. This development could have a material adverse impact on our ability to compete.

We are self-insured and/or have deductible exposure to certain claims and are subject to the fluctuations of the insurance marketplace, all of which could affect our profitability.

The primary accident risks associated with our business are:

We currently maintain insurance for: 

Our insurance program includes a self-insured deductible of $250,000 per incident for bodily injury, property damage, and currently workers’ compensation (with a basket at $250,000 for all three). In addition, we currently maintain insurance policies with a total limit of $75 million, of which $74 million is provided under umbrella and excess liability policies and $1 million is provided under a primary liability policy. The $250,000 deductible per incident could adversely affect our profitability, particularly in the event of an increase in the frequency or severity of incidents. Additionally, we are self-insured for damage to the equipment that we own and lease, as well as for cargo losses and such self-insurance is not subject to any maximum limitation. In addition, even where we have insurance, our insurance policies may not provide coverage for certain claims against us or may not be sufficient to cover all possible liabilities.

Our self-insured retentions require us to make estimates of expected loss amounts and accrue such estimates as expenses. Changes in estimates may materially and adversely affect our financial results. In addition, our insurance does not cover claims for punitive damages. As a result of the increase in our self-insured retention, it is likely that we will increase our claims accrual as a result of a possible increase in our claims expense.

We are subject to changing conditions and pricing in the insurance marketplace that in the future could change dramatically the cost or availability of various types of insurance. To the extent these costs cannot be passed on to our customers in increased prices, increases in insurance costs could reduce our future profitability and cash flow.

In addition, our insurance carriers and the states in which we operate require us to post either letters of credit or surety bonds to collateralize our self-insured retention. We currently have letters of credit of $3.3 million outstanding to satisfy these obligations. If our insurance carriers or the states in which we operate require us to increase the amount of collateral we provide in the future, we could face increased costs, including the payment of additional fees to the providers of letters of credit. Since our letters of credit are considered debt under the financial covenants for our financing arrangements, increases in the amount of letters of credit we have outstanding to collateralize our self-insurance obligations will reduce borrowing availability under our credit agreement and reduce our capacity for additional borrowings.

Moreover, any accident or incident involving us, even if we are fully insured or not held to be liable, could negatively affect our reputation among customers and the public, thereby making it more difficult for us to compete effectively, and could significantly affect the cost and availability of insurance in the future. Because we provide “last mile” fuels delivery services, we generally perform our services in more crowded areas, which increases the possibility of an accident involving our trucks.

We operate in a highly regulated industry, and increased costs of compliance with, or liability for violation of, existing or future regulations could significantly increase our costs of doing business.

As a motor carrier, we are subject to regulation by the Federal Motor Carrier Safety Administration (“FMCSA”) and the Department of Transportation (“DOT”), and by various federal and state agencies. These regulatory authorities exercise broad powers governing various aspects such as operating authority, safety, hours of service, hazardous materials transportation, financial reporting and acquisitions. There are additional regulations specifically relating to the trucking industry, including testing and specification of equipment, product-handling requirements and drug testing of drivers. In 2003, Florida Rock & Tank Lines, Inc. underwent a compliance review by the FMCSA in which we retained our satisfactory DOT safety rating. Any downgrade in our DOT safety rating (as a result of new regulations or otherwise) could adversely affect our business.

The trucking industry is subject to possible regulatory and legislative changes that may affect the economics of the industry by requiring changes in operating practices, emissions or by changing the demand for common or contract carrier services or the cost of providing trucking services. Possible changes include:

From time to time, various legislative proposals are introduced, including proposals to increase federal, state, or local taxes, including taxes on motor fuels and emissions, which may increase our operating costs, require capital expenditures or adversely impact the recruitment of drivers.

Restrictions on emissions or other climate change laws or regulations could also affect our customers that use significant amounts of energy or burn fossil fuels in producing or delivering the products we carry. We also could lose revenue if our customers divert business from us because we have not complied with their sustainability requirements.

Our business may be adversely affected by terrorist attacks and anti-terrorism measures.

In the aftermath of the terrorist attacks of September 11, 2001, federal, state and municipal authorities have implemented and are implementing various security measures, including checkpoints and travel restrictions on large trucks and fingerprinting of drivers in connection with new hazardous materials endorsements on their licenses. Such measures may have costs associated with them which we are forced to bear. While we believe we are in compliance with these new regulations, if existing requirements are interpreted differently by governmental authorities or additional new security measures are required, the timing of our deliveries may be disrupted and we may fail to meet the needs of our customers or incur increased expenses to do so. Such developments could have a material adverse effect on our operating results. Moreover, large trucks containing petroleum products are potential terrorist targets, and we may be obligated to take measures, including possible capital expenditures intended to protect our trucks. In addition, the insurance premiums charged for some or all of the coverage maintained by us could continue to increase dramatically or such coverage could be unavailable in the future.

Our operations involve hazardous materials and could result in significant environmental liabilities and costs.

Our activities, which involve the transportation, storage and disposal of fuels and other hazardous substances and wastes, are subject to various federal, state and local health and safety laws and regulations relating to the protection of the environment, including, among others, those governing the transportation, management and disposal of hazardous materials, vehicle emissions, underground and above ground storage tanks and the cleanup of contaminated sites. Our operations involve risks of fuel spillage or seepage, hazardous waste disposal and other activities that are potentially damaging to the environment. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of or liable under applicable laws or regulations, it could significantly increase our cost of doing business.

Most of our truck terminals are located in industrial areas, where groundwater or other forms of environmental contamination may have occurred. Under environmental laws, we could be held responsible for the costs relating to any contamination at those or other of our past or present facilities and at third-party waste disposal sites, including cleanup costs, fines and penalties and personal injury and property damages. Under some of these laws, such as the Comprehensive Environmental Response Compensation and Liability Act (also known as the Superfund law) and comparable state statutes, liability for the entire cost of the cleanup of contaminated sites can be imposed upon any current or former owner or operator, or upon any party who sent waste to the site, regardless of the lawfulness of any disposal activities or whether a party owned or operated a contaminated property at the time of the release of hazardous substances. From time to time, we have incurred remedial costs and/or regulatory penalties with respect to spills and releases in connection with our operations and, notwithstanding the existence of our environmental management program, such obligations may be incurred in the future. The discovery of contamination or the imposition of additional obligations or liabilities in the future could result in a material adverse effect on our financial condition, results of operations or our business reputation.

Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time. If we fail to comply with applicable environmental laws and regulations, we could also be subject to substantial fines or penalties and to civil and criminal liability. As a result, our costs of complying with current or future environmental laws or liabilities arising from such laws may have a material adverse effect on our business, results of operations or financial condition.

We have significant ongoing capital requirements.

Our business requires substantial ongoing capital investment, particularly for tractors, trailers, terminals and technology. Our capital expenditures were approximately $10.5 million, $15.6 million and $11.9 million in 2012, 2013 and the first nine months of 2014, respectively, and we expect to make capital expenditures of approximately $1.0 million during the remainder of 2014. We expect that cash flow from operations and borrowings under our revolving credit facility will be our primary sources of financing for capital expenditures. If we are unable to generate sufficient cash from operations or borrow sufficient funds on terms that are acceptable to us, we may be forced to limit our growth and operate existing equipment for significant periods of time, each of which could have a material adverse effect on our business, results of operations and financial condition.

We may face difficulty in purchasing new equipment on a timely basis. Any delay in delivery of equipment could impair our ability to serve our customers, and, to the extent that we must obtain equipment from alternative sources at increased prices, could result in a significant increase in our anticipated capital expenditures and, accordingly, have a material adverse effect on our business, results of operations and financial condition.

Financing may not always be available to fund our activities.

We usually must spend and risk a significant amount of capital to fund our activities. Although most capital needs are funded from operating cash flow, the timing of cash flows from operations and capital funding needs may not always coincide, and the levels of cash flow may not fully cover capital funding requirements.

From time to time, we may need to supplement our cash generated from operations with proceeds from financing activities. Substantially concurrently with the separation, we expect to enter into a credit facility to provide us with available financing for working capital and other general corporate purposes. This credit facility is intended to meet any ongoing cash needs in excess of internally generated cash flows.

Our revolving credit agreement restricts our ability to engage in some business activities.

Our revolving credit agreement will contain customary negative covenants and other financial and operating covenants that will, among other things:

These restrictions could cause us to default on our credit agreement or negatively affect our operations.

Our growth will depend in part upon making acquisitions, which are subject to the uncertainties of evaluating potential liabilities, integration risks and other difficulties.

Our growth strategy depends in part upon our ability to acquire regional competitors in strategically desirable locations and to integrate them successfully into our existing operations.

Successful acquisitions require an assessment of a number of factors, many of which are beyond our control. These factors include operating costs and potential environmental and other liabilities of acquired companies and the extent to which such acquired companies would retain existing customers and add profitable routes to our geographic scope of coverage. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our assessments, we perform a review of the companies to be acquired that we believe is generally consistent with industry practices. However, such a review will not reveal all existing or potential problems. In addition, our review may not permit us to become sufficiently familiar with the companies to fully assess their deficiencies and capabilities.

In seeking acquisitions, we may be required to compete with other potential acquirors, some of which may have substantially greater financial and other resources than those available to us. We are unable to predict whether and when any prospective acquisition candidate will become available or the likelihood that any acquisition will be completed on acceptable terms. Further, if we make future acquisitions, we may issue shares of capital stock that dilute other stockholders, incur debt, assume significant liabilities and create additional expenses related to intangible assets, any of which might reduce our reported earnings or earnings per share. In addition, any financing that we might need for these acquisitions may only be available to us on terms that restrict our business and acquisition-related accounting charges may adversely affect our balance sheet and results of operations.

Additionally, we may encounter difficulties in integrating acquired companies into our existing operations and business because they may have substantially different operating characteristics or be in different geographic locations than our existing operations. Once integrated, acquired businesses may not achieve levels of revenues, profitability or productivity comparable to our existing business or otherwise perform as expected. Also, acquisitions may involve difficulties in the retention of personnel, diversion of management’s attention, risks of the customers of acquired companies allocating all or a portion of their business to our competitors while they evaluate the impact of the acquisition, unexpected legal liabilities, and tax and accounting issues. Any inability on our part to consummate and integrate future acquisitions successfully may have a material adverse effect on our results of operations and financial condition.

Risks Relating to Our Common Stock

Because there has not been any public market for our common stock, the market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our common stock following the distribution.

Prior to the distribution, there will have been no trading market for our common stock. An active trading market may not develop or be sustained for our common stock after the distribution, and we cannot predict the prices at which our common stock will trade after the distribution. The market price of our common stock could fluctuate significantly due to a number of factors, many of which are beyond our control, including:

A large number of our shares are or will be eligible for future sale, which may cause the market price for our common stock to decline.

Upon completion of the distribution, we estimate that we will have outstanding an aggregate of approximately 3,234,423 shares of our common stock (based on 9,703,270 shares of Existing Patriot common stock outstanding on September 30, 2014). All of those shares (other than those held by our “affiliates”) will be freely tradable without restriction or registration under the Securities Act of 1933, as amended. Shares held by our affiliates, which include our directors and executive officers, can be sold subject to volume, manner of sale and notice provisions under Rule 144. We estimate that our directors and executive officers, who may be considered “affiliates” for purposes of Rule 144, will beneficially own approximately 391,591 shares of our common stock immediately following the distribution. We are unable to predict whether large amounts of our common stock will be sold in the open market following the distribution. We are also unable to predict whether a sufficient number of buyers will be in the market at that time. In addition, other Patriot shareholders may sell the shares of our common stock they receive in the distribution for various reasons. For example, such shareholders may not believe our business profile or level of market capitalization as an independent company fits their investment objectives. A change in the level of analyst coverage following the distribution could also negatively impact demand for our shares. The sale of significant amounts of our common stock or the perception in the market that this will occur may lower the market price of our common stock.

Certain shareholders have effective control of a significant percentage of our common stock and likely will control the outcome of any shareholder vote.

As of September 30, 2014, two of our directors, Edward L. Baker and Thompson S. Baker II, beneficially own approximately 8% of the outstanding shares of our common stock and certain of their family members beneficially own an additional 25%. As a result, these individuals effectively may have the ability to direct the election of all members of our board of directors and to exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations involving us, our acquisition or disposition of assets, our borrowing of monies, our issuance of any additional securities, our repurchase of common stock and our payment of dividends.

Provisions in our articles of incorporation and bylaws and certain provisions of Florida law could delay or prevent a change in control of us.

The existence of some provisions of our articles of incorporation and bylaws and Florida law could discourage, delay or prevent a change in control of us that a shareholder may consider favorable. These include provisions:

These provisions apply even if a takeover offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in our and our shareholders’ best interests. See “Description of Capital Stock.”

We may issue preferred stock with terms that could dilute the voting power or reduce the value of our common stock.

Our articles of incorporation authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred stock having such designations, powers, preferences and relative, participating, optional and other rights, and such qualifications, limitations or restrictions as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or dividend, distribution or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock. See “Description of Capital Stock—Preferred Stock.”

SELECTED COMBINED FINANCIAL DATA OF NEW PATRIOT

The following selected financial data reflect the combined operations of New Patriot. We derived the selected combined income statement data for the years ended September 30, 2013, 2012 and 2011, and the selected combined balance sheet data as of September 30, 2013 and 2012, as set forth below, from New Patriot’s audited combined financial statements, which are included elsewhere in this Information Statement. We derived the selected combined income statement data for the nine months ended June 30, 2014 and 2013, and the selected combined balance sheet data as of June 30, 2014, as set forth below, from New Patriot’s unaudited combined financial statements, which are included elsewhere in this Information Statement. We derived the selected combined income statement data for the years ended September 30, 2010 and 2009, and the selected combined balance sheet data as of September 30, 2011, 2010 and 2009 and as of June 30, 2013, from New Patriot’s underlying financial records, which were derived from the financial records of Existing Patriot, and which are not included in this Information Statement. The historical results do not necessarily indicate the results expected for any future period.

You should read the selected combined financial data presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and accompanying notes included elsewhere in this Information Statement.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Information Statement contains forward-looking statements which express management’s current views concerning future events or results, including without limitation our plans to separate from the real estate business and the expected benefits therefrom and our anticipated growth strategy, and which are subject to inherent risks and uncertainties. Factors that could cause one or more of these forecasted events not to occur include, but are not limited to, a failure to obtain necessary regulatory approvals for the separation, a failure to obtain assurances of anticipated tax treatment of the separation, a deterioration in the business or prospects of the transportation business, adverse developments in the transportation business’s markets or adverse developments in the U.S. or global capital markets, credit markets or economies generally. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, but are not limited to, customer demand for our transportation services, the volatility and level of fuel prices, political and regulatory instability, and uncontrollable natural hazards. For further discussion of risk factors, see “Risk Factors” in this Information Statement. We undertake no duty to publicly update or revise any forward-looking statements.

THE SEPARATION

General

On May 7, 2014, the board of directors of Existing Patriot approved a plan to separate our real estate and transportation businesses into two independent publicly traded companies. On [*], 2014, the board of directors of Existing Patriot approved the separation. The separation will be accomplished in two steps.

First, Existing Patriot will complete a holding company merger that will result in shares of Existing Patriot common stock being converted into shares of a new publicly traded holding company known as FRP Holdings, Inc. (which we refer to as FRP). As a result of this reorganization, Existing Patriot will become a subsidiary of FRP and all of your shares of Existing Patriot common stock will be converted on a 1-for-1 basis into shares of FRP common stock. Immediately following the holding company merger, (i) Existing Patriot will distribute all of the real estate subsidiaries to FRP, and (ii) FRP will contribute all of the stock of Existing Patriot to New Patriot so that Existing Patriot will become a subsidiary of New Patriot.

Second, FRP will distribute all of the outstanding common stock of New Patriot, which will own the transportation business, to holders of Existing Patriot common stock as of the record date.

As a result of the separation, holders of Existing Patriot common stock will be entitled to receive, for each share of Existing Patriot common stock that they hold on the record date, (i) one share of FRP common stock, and (ii) one-third of one share of New Patriot common stock.

Following the distribution, New Patriot will operate as a regional tank lines transportation business focused in hauling petroleum, chemicals and dry bulk commodities. See “Our Business.”

The holding company merger and the separation of the real estate and transportation businesses and the distribution of New Patriot common stock as described in this Information Statement is subject to the satisfaction or waiver of certain conditions. We cannot provide any assurances that the distribution will be completed. For a more detailed description of these conditions, see “The Separation—Conditions to the Distribution” below.

Reasons for the Separation

The board of directors of Existing Patriot believes separating its transportation business from its real estate business is in the best interests of Existing Patriot and its shareholders and has concluded the separation will provide each business with a number of opportunities and benefits, including the following:

There can be no assurance that following the separation, any of the benefits described above or otherwise will be realized to the extent anticipated or at all.

The Existing Patriot board of directors also considered a number of potentially negative factors in evaluating the separation, including the following:

The Existing Patriot board of directors concluded that the potential benefits of the separation outweighed these negative factors.

Holding Company Merger Prior to the Distribution

Immediately prior to the distribution, Existing Patriot will complete an internal corporate reorganization to facilitate the separation of its real estate businesses and its transportation business in a manner intended to be tax-free to FRP. As part of the internal corporate reorganization, FRP will replace Existing Patriot as the publicly traded parent company by means of the holding company merger, which will be effected pursuant to Section 607.11045 of the FBCA. Pursuant to Section 607.11045 of the FBCA, by action of Existing Patriot’s board of directors and without the requirement for a shareholder vote, Existing Patriot will be merged with and into a newly formed subsidiary of FRP.

As a result of the holding company merger:

The articles of incorporation and by-laws of FRP following the holding company merger will be substantially identical to the articles of incorporation and by-laws of Existing Patriot as they exist today. The holding company merger is a condition to the distribution. See “The Separation—Conditions to the Distribution” below.

Immediately following the holding company merger, (i) Existing Patriot will distribute all of the real estate subsidiaries to FRP, and (ii) FRP will contribute all of the stock of Existing Patriot to New Patriot so that Existing Patriot will be a subsidiary of New Patriot.

No Surrender of Stock Certificates Required

In the holding company merger, shares of Existing Patriot common stock will be converted automatically into shares of FRP common stock. If you have stock certificates reflecting your shares of Existing Patriot common stock, these stock certificates will represent, after the holding company merger, an equal number of shares of FRP common stock, and no action with regard to stock certificates will be required on your part. If you hold certificates representing your shares of Existing Patriot common stock, within a reasonable period of time following the holding company merger, FRP will mail, or will cause to be mailed, to you (i) a letter of transmittal, in customary form, that will require you to specify certain information and (ii) instructions for use in effecting the surrender of your stock certificates from Existing Patriot, if you so choose, in exchange for a certificate representing an equal number of shares of FRP common stock.

The Distribution

Once the holding company merger is complete, FRP will distribute all of the issued and outstanding shares of New Patriot common stock to the shareholders of Existing Patriot as of the close of business on [*], 2014, the record date for the distribution, on the basis of one share of New Patriot common stock for every three shares of Existing Patriot common stock held as of the record date.

Diagrams of Transaction Structure

The following diagrams show the progression of Existing Patriot through the holding company merger and the structure of FRP and New Patriot after the separation and distribution, simplified for illustrative purposes only.

The diagram below shows the structure of Existing Patriot before the holding company merger and the separation and distribution:

After the holding company merger, the name of Existing Patriot will be changed to Patriot Transportation, Inc. and the name of New Patriot will be changed to Patriot Transportation Holding, Inc. The diagram below shows the structure of FRP as the publicly traded successor to Existing Patriot, immediately after completion of the holding company merger and name changes but before the transfer of the real estate subsidiaries to FRP and the contribution of Existing Patriot to New Patriot:

The diagram below shows the structure of FRP and its subsidiaries after the holding company merger and immediately following the contribution of Existing Patriot to New Patriot and the transfer of the real estate subsidiaries by Patriot to FRP:

The diagram below shows the structure of FRP and New Patriot immediately after completion of the separation and distribution:

The Number of Shares You Will Receive

For every three shares of Existing Patriot common stock you own at 5:00 p.m. New York City time on [*], 2014, the record date, you will receive one share of New Patriot common stock on the distribution date.

Treatment of Fractional Shares

The distribution agent will not distribute any fractional shares of our common stock. Instead, as soon as practicable on or after the distribution date, the distribution agent for the distribution will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing prices and distribute the net cash proceeds from the sales, net of brokerage fees and commissions, transfer taxes and other costs and after making appropriate deductions of the amounts required to be held for United States federal income tax purposes, if any, pro rata to each holder who would otherwise have been entitled to receive a fractional share in the distribution. The distribution agent will determine when, how, through which broker-dealers and at what prices to sell the aggregated fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payments made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders for U.S. federal income tax purposes as described below in “The Separation--Material U.S. Federal Income Tax Consequences of the Distribution.”

When and How You Will Receive the Distribution of New Patriot Shares

FRP, as successor to Existing Patriot in the holding company merger, will distribute the shares of our common stock on [*], 2014, to holders of record on the record date. The distribution is expected to be completed following the closing of the NASDAQ Global Select Market on the distribution date. Existing Patriot’s transfer agent and registrar, American Stock Transfer & Trust Company (“AST”), will serve as transfer agent and registrar for the New Patriot common stock and as distribution agent in connection with the distribution.

If you own Existing Patriot common stock as of 5:00 p.m. New York City time on the record date, the shares of New Patriot common stock that you are entitled to receive in the distribution will be issued electronically, as of the distribution date, to your account as follows:

Treatment of Outstanding Stock Option Grants

We expect that outstanding Existing Patriot stock option awards will be equitably adjusted pursuant to the terms of the applicable award and plan and the provisions of the Code. We expect that each outstanding option to purchase shares of Existing Patriot common stock will be equitably adjusted by converting the option into two separate stock options: (i) an option to purchase shares of FRP common stock and (ii) an option to purchase shares of New Patriot common stock. The two options will have a combined value equal to the intrinsic value of the original option.

For each option, the number of shares subject to the award and the applicable exercise or base price will be adjusted so that the aggregate spread value of the option immediately after the separation will be substantially equivalent to, but no more favorable to the award holder than, the aggregate spread immediately prior to the separation. For this purpose, spread value means the difference between the market value of the underlying shares as of the applicable date and the exercise or base price of the option.

Treatment of 401(k) Shares

Shares of Existing Patriot common stock held in the Profit Sharing and Deferred Earnings Plan maintained by Existing Patriot will be treated in the same manner as other outstanding shares of Existing Patriot common stock in the holding company merger and the distribution.

Results of the Distribution

After our separation from the real estate group, we will be an independent, publicly traded company. Immediately following the distribution, we expect to have approximately 482 shareholders of record, based on the number of registered shareholders of Existing Patriot common stock on September 30, 2014, and approximately 3,234,423 shares of New Patriot common stock outstanding. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of Existing Patriot stock options prior to the record date for the distribution.

Before the distribution, we will enter into a Separation and Distribution Agreement and several other agreements with FRP to effect the separation and provide a framework for our relationship with FRP after the separation. These agreements will provide for the allocation between FRP and New Patriot of Existing Patriot’s assets, liabilities and obligations subsequent to the separation (including with respect to transition services, employee matters and tax matters).

For a more detailed description of these agreements, see the section entitled “The Separation--Agreements with FRP” included below. The distribution will not affect the number of outstanding shares of FRP common stock or any rights of FRP shareholders.

New Credit Facilities

In connection with the separation and distribution, we expect to enter into a $25 million revolving line of credit facility. The credit facility is expected to become effective substantially concurrently with the separation. We expect to use the borrowing capacity under the credit facility from time to time for working capital and other general corporate purposes. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Credit Facilities” in this Information Statement.

Material U.S. Federal Income Tax Consequences of the Distribution

The following discussion outlines the material U.S. federal income tax consequences of (i) the holding company merger involving Merger Sub and Existing Patriot, together with the conversion of shares of Existing Patriot common stock into shares of FRP common stock (the holding company merger), and (ii) the distribution by FRP of all of the outstanding shares of New Patriot common stock to its shareholders. This summary is based on the Code, U.S. Treasury regulations promulgated thereunder and on judicial and administrative interpretations of the Code and the U.S. Treasury regulations, all as in effect on the date of this information statement, and is subject to changes in these or other governing authorities, any of which may have a retroactive effect.

This discussion assumes that the separation and distribution will be consummated in accordance with the separation and distribution agreement and as described in this information statement. This summary does not purport to be a complete description of all U.S. federal income tax consequences of the separation and the distribution nor does it address the effects of any state, local or foreign tax laws or U.S. federal tax laws other than those relating to income taxes on the separation and the distribution. The tax treatment of an Existing Patriot shareholder may vary depending upon that shareholder’s particular situation, and certain shareholders (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, partners in partnerships that hold common stock in Existing Patriot, pass-through entities, traders in securities who elect to apply a mark-to-market method of accounting, shareholders who hold their Existing Patriot common stock as part of a “hedge,” “straddle,” “conversion,” “synthetic security,” “integrated investment” or “constructive sale transaction,” individuals who received Existing Patriot common stock upon the exercise of employee stock options or otherwise as compensation, and shareholders who are subject to alternative minimum tax) may be subject to special rules not discussed below. In addition, this summary only addresses the U.S. federal income tax consequences to an Existing Patriot shareholder who, for U.S. federal income tax purposes, is a U.S. holder, as defined below. Finally, this summary does not address the U.S. federal income tax consequences to those Existing Patriot shareholders who do not hold their shares of Existing Patriot common stock as capital assets within the meaning of Section 1221 of the Code.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Existing Patriot common stock that is, for U.S. federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes or (4) an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source.

Each shareholder is urged to consult the shareholder’s tax advisor as to the specific tax consequences of the separation and distribution to that shareholder, including the effect of any U.S. federal, state or local or foreign tax laws and of changes in applicable tax laws.

Existing Patriot will receive an opinion of Nelson Mullins Riley & Scarborough LLP, counsel for Existing Patriot, to the effect that (i) the holding company merger will qualify as a reorganization within the meaning of Section 368(a)(2)(E) of the Code and (ii) the separation and distribution will qualify as a reorganization within the meaning of Sections 355 and 368(a)(1)(D) of the Code. Based on this opinion, and subject to the qualifications and limitations set forth herein, the material U.S. federal income tax consequences of the holding company merger to Existing Patriot FRP and the shares of Existing Patriot are as follows:

Based on such opinion and subject to the qualifications and limitations set forth herein, the material U.S. federal income tax consequences of the separation and distribution to FRP, New Patriot and the shareholders are as follows:

U.S. Treasury regulations provide that if an Existing Patriot shareholder holds different blocks of Existing Patriot common stock (generally Existing Patriot common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of Existing Patriot common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of New Patriot common stock received in the distribution and the shares of FRP common stock received in the holding company merger in respect of such block of Existing Patriot common stock, in proportion to their respective fair market values on the distribution date. The holding period of the shares of New Patriot common stock received in the distribution in respect of such block of Existing Patriot common stock will include the holding period of such block of Existing Patriot common stock. If an Existing Patriot shareholder is not able to identify which particular shares of New Patriot common stock are received in the distribution with respect to a particular block of Existing Patriot common stock, for purposes of applying the rules described above, the shareholder may designate which shares of New Patriot common stock are received in the distribution in respect of a particular block of Existing Patriot common stock, provided that such designation is consistent with the terms of the distribution. Existing Patriot shareholders are urged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

If a shareholder receives cash in lieu of a fractional share of common stock as part of the distribution, the shareholder will be treated as though it first received a distribution of the fractional share in the distribution and then sold it for the amount of cash actually received. Provided the fractional share is considered to be held as a capital asset on the date of the distribution, the shareholder will generally recognize capital gain or loss measured by the difference between the cash received for such fractional share and the shareholder’s tax basis in that fractional share, as determined above. Such capital gain or loss will be long-term capital gain or loss if the shareholder’s holding period for the Existing Patriot common stock is more than one year on the date of the distribution.

This opinion of counsel does not address any U.S. or local or foreign tax consequences of the holding company merger and the distribution. This opinion assumes that the distribution will be completed according to the terms of the Separation and Distribution Agreement, the Tax Matters Agreement, the Employee Matters Agreement and this Information Statement. In addition, the opinion is based on certain representations as to factual matters from and certain covenants by FRP and us. The opinion cannot be relied on if any of the assumptions, representations or covenants are incorrect, incomplete or inaccurate or are violated in any material respect.

The opinion of counsel is not binding on the IRS or the courts, and there can be no assurance that the IRS or a court will not take a contrary position. Existing Patriot has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the holding company merger or the distribution.

If the distribution were determined not to qualify for non-recognition of gain and loss, the above consequences would not apply and shareholders could be subject to tax. In this case, each shareholder who receives our common stock in the distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in:

U.S. Treasury regulations also require certain shareholders who receive New Patriot common stock in the distribution to attach to the shareholder’s U.S. federal income tax return for the year in which the stock is received a detailed statement setting forth certain information relating to the tax-free nature of the distribution.

Even if the distribution otherwise qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code, it could be taxable to FRP (but not its shareholders) under Section 355(e) of the Code if the distribution were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50 percent or greater interest by vote or value, in FRP or New Patriot. For this purpose, any acquisitions of Existing Patriot common stock or New Patriot common stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although FRP or New Patriot may be able to rebut that presumption.

In connection with the distribution, New Patriot and FRP will enter into a tax matters agreement pursuant to which New Patriot will agree to be responsible for certain tax liabilities and obligations following the distribution. For a description of the tax matters agreement, see “The Separation — Tax Matters Agreement.”

The foregoing is a discussion of the material U.S. federal income tax consequences of the separation and the distribution under current law and particular circumstances. The foregoing does not purport to address all U.S. federal income tax consequences or tax consequences that may arise under the tax laws of other jurisdictions or that may apply to particular categories of shareholders. Each Existing Patriot shareholder should consult its own tax advisor as to the particular tax consequences of the distribution to such shareholder, including the application of U.S. federal, state or local and foreign tax laws, and the effect of possible changes in tax laws that may affect the tax consequences described above.

Market for Common Stock

There is not currently a public market for New Patriot common stock. We are authorized to list New Patriot’s shares of common stock on the NASDAQ Global Select Market under the ticker symbol “PATI.”

Trading Between Record Date and Distribution Date

Beginning on [*], 2014 and continuing up to and including the distribution date, we expect there will be two markets in Existing Patriot common stock: a “regular-way” market and an “ex-distribution” market. Shares of Existing Patriot common stock that trade on the “regular-way” market will trade with an entitlement to receive shares of New Patriot common stock in the distribution. Shares that trade on the “ex-distribution” market will trade without an entitlement to receive shares of New Patriot common stock in the distribution. Therefore, if you sell shares of Existing Patriot common stock in the “regular-way” market after 5:00 p.m. New York City time on the record date and up to and including through the distribution date, you will be selling your right to receive shares of New Patriot common stock in the distribution. If you own shares of Existing Patriot common stock at 5:00 p.m. New York City time on the record date and sell those shares in the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of New Patriot common stock that you would be entitled to receive in respect of your ownership, as of the record date, of the shares of Existing Patriot common stock that you sold.

Furthermore, beginning on [*], 2014 and continuing up to and including the distribution date, we expect there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of New Patriot common stock that will be distributed to Existing Patriot shareholders on the distribution date. If you own shares of Existing Patriot common stock at 5:00 p.m. New York City time on the record date, you will be entitled to receive shares of our common stock in the distribution. You may trade this entitlement to receive shares of New Patriot common stock, without trading the shares of Existing Patriot common stock you own, in the “when-issued” market. On the first trading day following the distribution date, we expect “when-issued” trading with respect to New Patriot common stock will end and “regular-way” trading in New Patriot common stock will begin.

Conditions to the Distribution

We expect the distribution will be effective on [*], 2014, the distribution date, provided that, among other conditions described in the Separation and Distribution Agreement, the following conditions shall have been satisfied or waived by Patriot in its sole discretion:

The fulfillment of the foregoing conditions will not create any obligations on Patriot’s part to effect the distribution, and Existing Patriot’s board of directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the distribution, including by accelerating or delaying the timing of the consummation of all or part of the distribution, at any time prior to the distribution date.

Agreements with FRP

Following the separation and distribution, New Patriot and FRP will operate separately, each as an independent public company. Prior to the separation and distribution, New Patriot and FRP will enter into a separation and distribution agreement and several other agreements to effect the separation and provide a framework for New Patriot’s relationship with FRP after the separation. These agreements will provide for the allocation between New Patriot and FRP of the assets, liabilities, and obligations of FRP and its subsidiaries, and will govern the relationships between New Patriot and FRP subsequent to the separation (including with respect to transition services, employee matters, real property matters, tax matters, and certain other commercial relationships). In addition to the Separation and Distribution Agreement (which contains many of the key provisions related to New Patriot’s separation from FRP and the distribution of New Patriot’s shares of common stock to FRP shareholders), these agreements include:

Forms of the primary separation agreements described below have been filed as exhibits to the registration statement on Form 10 of which this Information Statement is a part, and the summaries below set forth the terms of the agreements New Patriot believes are material.

The terms of the agreements described below that will be in effect following the separation have not yet been finalized. Changes to these agreements, some of which may be material, may be made prior to New Patriot’s separation from FRP. No changes may be made after the separation without New Patriot’s consent.

Separation and Distribution Agreement.

The Separation and Distribution Agreement will set forth New Patriot’s agreement with FRP regarding the principal transactions necessary to separate New Patriot from FRP. The parties intend to enter into the separation and distribution agreement immediately before the distribution of New Patriot’s common stock to FRP shareholders.

Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement will identify certain transfers of assets and assumptions of liabilities that are necessary in advance of New Patriot’s separation from FRP so that New Patriot and FRP retain the assets of, and the liabilities associated with, their respective businesses. The Separation and Distribution Agreement will require New Patriot and FRP to use reasonable efforts to obtain consents, approvals, and amendments required to novate or assign the assets and liabilities that are transferred.

Unless otherwise provided in the Separation and Distribution Agreement or any of the related ancillary agreements, all assets will be transferred on an “as is, where is” basis. Generally, if the transfer of any assets or any claim or right or benefit arising thereunder would be ineffective or would adversely affect the rights of the transferor thereunder so that the intended transferee would not in fact receive all such rights, each of New Patriot and FRP will cooperate in a mutually agreeable arrangement under which the intended transferee would obtain the benefits and assume the obligations thereunder (including sub-contract, sub-license, sub-lease to such transferee) or under which the transferor would enforce for the benefit of the transferee, with the transferee assuming the transferor’s obligations, the rights of the transferor against any third party.

The Distribution. The Separation and Distribution Agreement will also govern the rights and obligations of the parties regarding the proposed distribution. Prior to the distribution, FRP will deliver all of the issued and outstanding shares of New Patriot common stock to the Distribution Agent. FRP shall instruct the Distribution Agent to distribute, on or as soon as practicable after the Distribution Date, to each holder of record of Existing Patriot common stock as of the record date, by means of a pro rata dividend, one share of New Patriot common stock for every three shares of Existing Patriot common stock held on the record date. Fractional shares will be aggregated and sold in the market, and the net proceeds will be distributed to the shareholders.

Conditions. The Separation and Distribution Agreement will provide that the distribution is subject to several conditions that must be satisfied or waived by FRP in its sole discretion. For further information regarding the conditions relating to New Patriot’s separation from FRP, see the section entitled “The Separation—Conditions to the Distribution.” The board of directors of Existing Patriot may at any time prior to the completion of the spin-off decide to abandon or modify the spin-off.

Insurance Matters. New Patriot will be responsible for obtaining and maintaining at its own cost all of its own insurance coverage following the separation. Prior to the separation, FRP is permitted to make claims under any applicable liability policies maintained by New Patriot for events occurring before the separation without violating any anti-assignment provisions in the insurance policies. In no event shall either party (or their subsidiaries) have liability or obligation whatsoever to the other party (or its subsidiaries) in the event that any insurance policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

Releases and Indemnification. Except as otherwise provided in the Separation and Distribution Agreement, each party will release and forever discharge the other party and its subsidiaries and affiliates from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or any conditions existing or alleged to have existed on or before the separation. These releases will not extend to obligations or liabilities under any agreements between the parties that remain in effect following the separation pursuant to the Separation and Distribution Agreement or any ancillary services agreement.

In addition, the Separation and Distribution Agreement will provide for cross-indemnities that, except as otherwise provided in the Separation and Distribution Agreement, are principally designed to place financial responsibility for the obligations and liabilities of the transportation business with New Patriot and financial responsibilities for the obligations of liabilities of the real estate business with FRP. Each party will cause its subsidiaries and affiliates to indemnify, defend, and hold harmless the other party, its affiliates and subsidiaries and each of its officers, directors, employees and agents, for any losses arising out of or in connection with liabilities each such party assumed pursuant to the Separation and Distribution Agreement, the operation of each such party’s business, and any breach by such party of the Separation and Distribution Agreement or an ancillary agreement.

Tax Matters Agreement.

The Tax Matters Agreement will govern FRP’s and our respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the distribution and certain related transactions to qualify as tax-free for federal income tax purposes), tax attributes, tax returns, tax contests and certain other tax matters.

In general, under the Tax Matters Agreement, we expect that responsibility for taxes for periods prior to the distribution will be allocated in the following manner:

In addition, the Tax Matters Agreement will impose certain restrictions on us and our subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the distribution and certain related transactions. The Tax Matters Agreement will provide special rules allocating tax liabilities in the event the distribution, together with certain related transactions, is not tax-free. In general, under the Tax Matters Agreement, we will be responsible for any taxes imposed on FRP that arise from the failure of the distribution and certain related transactions to qualify as a tax-free transaction for federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code to the extent that the failure to qualify is attributable to actions, events, or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by us in the Tax Matters Agreement.

The Tax Matters Agreement will also set forth FRP’s and our obligations as to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters.

Employee Matters Agreement.

The Employee Matters Agreement will govern FRP’s and New Patriot’s compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company, and generally will allocate liabilities and responsibilities relating to employee compensation and benefit plans and programs. The Employee Matters Agreement will provide for the treatment of outstanding Existing Patriot equity awards and certain other outstanding annual and long-term incentive awards. The Employee Matters Agreement will provide that, after the effective date, employees of the transportation business will continue to participate in New Patriot’s existing employee benefit program. With respect to stock option plans, FRP will adopt New Patriot’s existing stock option plans, and New Patriot will adopt a new equity incentive plan.

The Employee Matters Agreement will also provide that (i) the distribution does not constitute a change in control under Existing Patriot’s plans, programs, agreements or arrangements and (ii) the distribution and the assignment, transfer or continuation of the employment of employees with another entity will not constitute a severance event under the applicable plans, programs, agreements or arrangements.

Transition Services Agreement.

The Transition Services Agreement will set forth the terms on which New Patriot will provide to FRP, on a temporary basis, certain services or functions that the companies historically have shared. Transition services will include various corporate services. The Transition Services Agreement will have a short term (12 to 24 months) with renewal options. FRP will compensate New Patriot at an agreed rate for the transition services, including an allocable share of their total compensation and benefit costs.

Transferability of Shares of Our Common Stock

The shares of our common stock that you will receive in the distribution will be freely transferable, unless you are considered an “affiliate” of ours under Rule 144 under the Securities Act of 1933, as amended (“the Securities Act”). Persons who can be considered our affiliates after the separation generally include individuals or entities that directly, or indirectly through one or more intermediaries, control, are controlled by or are under common control with us, and may include certain of our officers and directors. In addition, individuals who are affiliates of Existing Patriot on the distribution date may be deemed to be affiliates of ours. We estimate that our directors and executive officers, who may be considered “affiliates” for purposes of Rule 144, will beneficially own approximately 391,217 shares of our common stock immediately following the distribution. See “Stock Ownership” included elsewhere in this Information Statement for more information. Our affiliates may sell shares of our common stock received in the distribution only:

In general, under Rule 144 as currently in effect, an affiliate will be entitled to sell, within any three-month period, a number of shares of our common stock that does not exceed the greater of:

Rule 144 also includes notice requirements and restrictions governing the manner of sale. Sales may not be made under Rule 144 unless certain information about us is publicly available.

Reason for Furnishing This Information Statement

This Information Statement is being furnished solely to provide information to Existing Patriot shareholders who are entitled to receive shares of our common stock in the distribution. The Information Statement is not, and is not to be construed as, an inducement or encouragement to buy, hold or sell any of our securities. We believe the information contained in this Information Statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Existing Patriot nor we undertake any obligation to update such information except in the normal course of our respective public disclosure obligations.

DIVIDEND POLICY

New Patriot does not currently plan to pay a regular dividend on its common stock after the spin-off. The declaration and amount of all dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and other factors the board of directors deems relevant.

CAPITALIZATION

The following table sets forth (i) our actual capitalization as of June 30, 2014, and (ii) our as adjusted capitalization assuming the distribution (as discussed in “The Separation”) were effective June 30, 2014. As used in this capitalization table, “actual” as of June 30, 2014 reflects the combined historical financial position of the Existing Patriot subsidiaries and certain assets and liabilities of Existing Patriot that comprise New Patriot as if such companies and accounts had been combined as of June 30, 2014. The table should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical combined financial statements and accompanying notes included elsewhere in this Information Statement.

We are providing the capitalization table for information purposes only. The capitalization table below may not reflect the capitalization or financial condition that would have resulted had we been operating as a separate, independent entity on June 30, 2014 and is not necessarily indicative of our future capitalization or financial condition.

OUR INDUSTRY

Overview

Approximately 82% of our revenues are derived from the delivery of gasoline and other refined petroleum products used in transportation. Refined petroleum products are derived from crude oils. After being produced, crude oil is transported to refineries, where it is processed into refined petroleum products. From these refineries, refined petroleum products are moved over long distances to bulk terminals, generally via pipeline or barge. These products are then picked up from these bulk terminals by tank trucks such as ours and delivered to petroleum marketers such as convenience stores and hypermarkets.

Our industry is characterized by such barriers to entry as the time and cost required to develop the capabilities necessary to handle hazardous material, the resources required to recruit and train drivers, substantial industry regulatory and insurance requirements and the significant capital investments required to build a fleet of equipment and establish a network of terminals. Our industry experiences increased seasonal demand in periods of heightened driving activity.

Unlike most trucking companies, our core fuels delivery business operates in a radius of approximately 150 miles around each of our terminal locations and has an average one-way trip of 100 miles per load. We believe that this shorter length of haul minimizes our exposure to the difficulties of recruiting and retaining a high quality workforce, because we are able to offer our drivers scheduled shifts that allow them to return home each day and allow them regularly scheduled days off.

The Energy Information Administration estimates that approximately 32.3 billion gallons of petroleum products (excluding jet fuel) were consumed in transportation during 2012 in the six states in which we currently operate.  We believe that substantially all of these petroleum products were transported by tank truck carrier (for-hire carriers and private fleets) to the retail locations.  In 2012, we transported approximately 2.4 billion gallons of refined petroleum products (excluding jet fuel), or 7.4% of the total transported refined petroleum products consumed for purposes of transportation in the states in which we operate (excluding jet fuel). The consumption of refined petroleum products, such as gasoline, diesel and aviation fuels, drives the underlying demand for delivery of these products to fuel retailers.

Regional and Local Carriers

According to the National Tank Truck Carriers, the 218 tank truck carriers that are members of that trade association transport more than 80% of the volume hauled by the tank truck industry. The industry includes national and regional carriers as well as numerous local carriers and small private fleets. Because the fuels delivery and logistics industry is characterized by stringent customer requirements relating to safety, significant insurance requirements and substantial federal and state regulatory requirements relating to safety, driver training, equipment and product handling, many smaller carriers are facing increased pressure from escalating insurance, operating and capital costs. As a result, we believe that many of these small regional and local carriers may be forced to exit the industry or partner with a larger company better equipped to meet these strict customer, insurance and regulatory requirements.

We also believe that hypermarkets and large convenience store chains will continue to capture a larger share of the retail petroleum market. We believe these customers will increasingly seek a delivery services provider with the size, infrastructure, capabilities, scope of services and geographic reach to service their entire operation, and, as a result, smaller carriers will face increasing pressure to consolidate.

Retail Petroleum Marketers

The retail petroleum marketers consist of five distinct segments, as follows:

OUR BUSINESS

Our Company

We are one of the largest regional tank truck carriers in North America. According to the Tank Truck Carrier 2013 Gross Revenue Report issued by Bulk Transporter, we are the 12^th largest bulk tank carrier in North America by revenue.  Our business consists of hauling petroleum related products and dry bulk commodities and liquid chemicals. We delivered approximately 323,000 loads of petroleum products and 71,000 loads of dry bulk and liquid chemicals in 2013. We operate terminals in Florida, Georgia, Alabama, South Carolina, North Carolina and Tennessee. 

Approximately 82% of our business consists of hauling petroleum related products used in transportation. Our petroleum clients include major convenience store and hypermarket accounts, fuel wholesalers and major oil companies.  We also make commercial deliveries of diesel fuel to truck stops and fuel depots and aviation fuel to airports. We offer our petroleum customers services that add value such as 24 hour inventory and supply management, delivery status monitoring and notification, integrated invoicing and document management tools and a network of terminals that allow our customers to optimize their source of fuel supply.

The remaining 18% of our business consists of hauling dry bulk commodities such as cement, lime and various industrial powder products and liquid chemicals such as sulfuric acid, caustic soda, methanol, water treatment materials and other industrial chemicals. Our dry bulk and chemical customers include large industrial companies including cement and concrete companies, industrial accounts and products distribution companies.

History of Our Business

Our transportation business was founded by a construction aggregates company known as Florida Rock Industries, Inc. Florida Rock Industries entered the trucking business in 1962, focusing on hauling sand and construction aggregates. In 1972, Florida Rock Industries entered the petroleum and chemicals hauling business through the acquisition of Petroleum Carrier Corporation of Florida, Inc., which was renamed Florida Rock & Tank Lines, Inc.

In 1986, Florida Rock Industries spun off its transportation business (as well as some real estate operations) by distributing to its shareholders all of the stock of Existing Patriot. We expanded our business in 1989 with the acquisition of J.R. Mabbett & Sons, a bulk tank carrier company operating six terminals in Georgia and Florida.

In recent years, we have grown organically by building key customer relationships and acquiring some small private fleets. Over the past ten years, we have expanded our operations into Alabama, Tennessee and the Carolinas while continuing to grow our heritage operations in Florida and Georgia.  This growth resulted in growing our revenues from $66 million in fiscal 2003 to $112 million in fiscal 2013, representing a 5.4% compound annual growth rate.  In November 2013, we acquired Pipeline Transportation, Inc., a bulk tank carrier operating in Florida and central Alabama.  We believe our size, conservative balance sheet, exceptional safety and service results and a strong management team position us well for continued growth opportunities that fit our strategic plan.

Our Competitive Strengths

Strong Market Position

We operate a network of 20 terminals and 10 satellite locations in Florida, Georgia, Alabama, South Carolina, North Carolina and Tennessee.  Our regional footprint provides us with the flexibility to successfully handle volume fluctuations, which benefits our customers by helping to eliminate service disruptions and the need to use backup carriers at higher rates during peak periods. We believe that our geographic footprint, capabilities and industry reputation position us to grow our business through expansion of our key customer relationships, adding new customers, expanding into new product markets and strategic acquisitions of other tank truck carriers.

Our Commitment to Safety Leads to a Strong Industry Reputation 

Safely delivering our customers’ products on-time and accurately is critical to our success.  We focus on safety first and have been successful reducing preventable accident and incident frequency through our ACE program (Achieve Continuous Excellence).  We received the Outstanding Performance Trophy, the top award in our industry, from the National Tank Truck Carriers in 2011 and Lockton Companies’ Presidential Award for Safety Excellence in 2009.  We focus significant resources on hiring qualified and experienced professional drivers and providing strong field and class room training.  We reward safe drivers through a safety incentive plan, annual safety awards when annual accident frequency goals are met and our annual grand prize award to one of our qualified drivers. We have been early adopters of electronic logging devices that allow us to review and monitor driver performance.

Our Commitment to Customer Service Helps us Grow our Business

Our commitment to customer service is critical to growing our business and building key customer relationships, so we approach customer service in the same manner as safety.  Murphy USA awarded Florida Rock & Tank Lines their Carrier of the Year trophy for the last three consecutive years based on our overall performance.  We believe that our service reputation is responsible for the customer retention results of our largest 10 accounts, nine of which have been with us for over 10 years.

Our Technology Helps us Improve our Customer Service and Monitor Safety Performance

We utilize transportation technology software and our document imaging system to improve safety and our service offerings to our customers to help us lower our customer’s cost:

Our Management Team helps Position us for Growth

Our Chief Executive Officer, Tom Baker, and our Chief Financial Officer, John Milton, joined us after serving in senior leadership roles at Florida Rock Industries, Inc. Rob Sandlin has been with Florida Rock & Tank Lines for 30 years and has been President since 2003. Rob leads a seasoned transportation team with many years of experience. 

We have Strong Relationships with Key Customers

We rely on our customer service and safety record to grow our relationships with key convenience store and hypermarket accounts. While we provide our services to these customers under informal agreements or contracts that do not guarantee any specific volumes and generally are terminable by the customer on no more than 120 days’ notice, nine of our top ten accounts have been customers for more than ten years. We believe that we are well positioned to continue to grow our relationships with these customers as they continue to grow their businesses.

Our Business Strategy

Increase Business with Our Current Customers. Many of our existing customers have delivery needs in markets where we operate but do not currently serve them. In addition, some of our customers ship other products that we do not currently haul for them in our markets, such as chemicals, lubricants, plastics, lime and cement. We intend to focus on expanding our relationships with existing customers to add incremental business at our existing terminals.  We will also pursue business opportunities with our existing customers in new markets that are contiguous with our existing markets and that are consistent with our strategic requirements.

Expand our Service Offerings. We operate in a fairly limited segment of the tank truck industry, focusing on hauling petroleum products and limited liquid and bulk commodities. Although we have no current plans to enter new product markets, we intend to explore diversifying our capabilities as a bulk tank carrier to pursue opportunities presented by our changing economy.

Pursue Strategic Acquisition Opportunities.  While our first focus will be on expanding our existing customer relationships and adding incremental business at existing terminals, we believe that changing market conditions will create opportunities for strategic acquisitions.  Although our industry is highly fragmented, we believe that changes in our customer base and the way that they select carriers, as well as changes in the regulatory environment, will lead to more consolidation in our industry.

The retail petroleum market is evolving, as hypermarkets continue to increase their market share.  The typical hypermarket sells nearly twice the motor fuel sold at the typical convenience store.  We also believe that the convenience store industry will see greater consolidation, increasing the market share of larger chains.  Many of these large chains and hypermarkets will focus on selecting one or two core carriers in each market.  We believe that smaller carriers with fewer resources will find it increasingly difficult to compete for this business.  At the same time, we believe the increasingly stringent regulatory environment, higher equipment costs and the continuing driver shortage will disproportionately impact smaller carriers and customer private fleets.  We believe that these factors, coupled with our ability to use stock as acquisition currency, will provide us with the opportunity to grow our business through strategic acquisitions.

In evaluating acquisition opportunities, we will focus on carriers with strong management teams that fit our safety and customer service culture.  We will evaluate acquisition opportunities that allow us to grow into new geographic markets as well as to expand into new segments of the tank truck business.  We also will consider opportunities to acquire customer-owned fleets in the petroleum, chemicals and dry bulk markets. 

Delivery Services

We are an important link in our customers’ fuel supply chain, transporting primarily from petroleum terminals to retail locations such as hypermarkets, convenience stores and truck stops. We can deliver up to 9,000 gallons in each load, and we delivered an average of 37,000 loads per month in the first nine months of fiscal 2014. Our team of over 700 drivers delivers petroleum 24 hours a day, 365 days per year from our network of 20 terminals and 10 satellite locations using our fleet of 502 tractors and 601 tank trailers.

We also provide the last mile of delivery service in the liquid chemical and dry bulk business primarily from distribution facilities or manufacturing facilities to the end user.  Cement and ash are delivered to concrete plants, powdered lime to industrial users and liquid chemicals primarily to the end user at a manufacturing plant or water treatment or storage facility. 

Our business culture is built around safety and customer service, and we invest considerable resources in modern equipment and technology and safety training to assure that we operate safely and provide the highest level of customer service. Our on-board computers help us to monitor performance and provide us and our customers with key information regarding load delivery status. Our commitment to customer service and value added services are designed to integrate ourselves into our customers’ operations to create long term partnerships that allow us to grow as our customers grow. 

Customers

Approximately 82% of our business consists of hauling petroleum related products. Our petroleum clients include major convenience store and hypermarket accounts, fuel wholesalers and major oil companies.  We strive to build long-term relationships with major customers by providing outstanding customer service. Our top ten customers in fiscal 2013 generated 54.2% of our total revenue and our largest customer, Murphy USA, accounted for 20% of our revenue. Our transportation services agreements with our customers generally are terminable upon 90-120 days’ notice, but nine of our top 10 accounts have been customers for at least 10 years.

Our dry bulk and chemical customers include large industrial companies including cement and concrete accounts and product distribution companies.  Our customer relationships are long-standing and have grown over time as a result of consistently high safety and service levels.

Terminal and Satellite Operations

As of June 30, 2014, we operated 20 terminals and maintained 10 satellite operations located in six southeastern states. Each location services a radius of approximately 100 to 150 miles within that geographic region. Our terminals are led by regional managers and a local terminal manager overseeing a team of local experienced employees. We have a Central Dispatch office located in Jacksonville, Florida which dispatches our business for most of Florida and a central night dispatch operation which provides night time dispatch and managerial coverage for our terminals that do not have night time staff. 

Our terminal managers’ responsibilities include the following:

Satellite operations are locations where we locate trucks and drivers but we have no management on site. These satellite operations cover regions where demand for our services has not yet reached a level where a terminal is cost-effective. Satellites are also established to improve our efficiency due to changes regarding the location of product availability and are often located at truck stops or garage facilities where fuel and maintenance are available.

Driver Recruitment and Retention

As of June 30, 2014, we employed 721 revenue-producing drivers and utilized three independent owner-operators.  Our drivers play a critical role in helping us build and enhance our customer relationships. We dedicate significant resources to recruiting and retaining our drivers. Driver recruitment and retention is a primary focus for all operations personnel. Each terminal manager has direct responsibility for hiring drivers with assistance from our central recruiting group.

The trucking industry is expected to continue to experience a shortage of qualified drivers. There is substantial competition for qualified personnel, particularly drivers, in the trucking industry. Regulatory requirements, including electronic logging, and an improvement in the economy, could reduce the number of eligible drivers. Any shortage of drivers could result in temporary under-utilization of our equipment, difficulty in meeting our customers’ demands and increased compensation levels, each of which could have a material adverse effect on our business, results of operations and financial condition.

We believe that we offer our drivers competitive pay levels and attractive benefit packages. Unlike most trucking companies, the short haul nature of our business allows drivers to be at home daily and schedule regular days off. We believe that this provides us with a recruiting advantage with many drivers over long-haul trucking companies.

Our drivers are hired in accordance with specific guidelines regarding safety records, driving experience and a personal evaluation by our staff. We employ only qualified tank truck drivers with a minimum of two years of highway tractor-trailer experience. These drivers are required to attend a rigorous training program conducted internally by driver trainers, local management and our safety staff. We dedicate significant time and resources to ensure our drivers have the proper experience and training, are supported by qualified field and terminal staff, have access to well-maintained equipment, operate in a safe and secure environment and are satisfied with their jobs. Our driver training exceeds federal and state requirements.

Traditionally, we have elected to employ drivers rather than use independent owner-operators. We believe that this allows us to more effectively manage our operations and our dedicated focus on safety and customer service. We will continue to evaluate the use of independent owner-operators in our business.

We are not a party to any collective bargaining agreement.

Other Personnel

In addition to our drivers, we employed 149 support personnel at our terminals and 66 individuals in corporate, sales or administrative roles as of June 30, 2014. Our terminal support personnel include terminal managers, dispatchers and mechanics. Our corporate staff includes our management team and our accounting, information technology, human resources and clerical staff.

Tractors and Trailers

As of June 30, 2014, we operated a fleet of 502 tractors and 601 tank trailers. We own all of our tank trailers and own all of our tractors except for 47 leased tractors that we took over in the acquisition of Pipeline Transportation and 3 tractors owned by owner-operators.

The majority of these tank trailers are multi-compartment petroleum trailers. The balance of the fleet is made up of single compartment trailers, dry bulk trailers and specialty use equipment. The petroleum transport units typically have a capacity of 9,000 gallons and are designed to meet DOT specifications for transporting hazardous materials.

A tractor has a typical useful life of seven years, and our trailers have a typical useful life of 8 to 20 years. New tractor prices have increased significantly in recent years due in part to EPA mandated engine emission requirements.

We have garage facilities at most of our terminals so that we can perform preventive maintenance and repairs for our equipment. Our maintenance facilities are registered with the DOT and are qualified to perform trailer inspections and repairs. We believe that operating these maintenance facilities is an important part of our safety program and helps us control our costs.

We believe that maintaining a modern tractor fleet helps us to operate more safely and efficiently and helps us with driver recruitment. The following table shows the age of our tractors and trailers we operated that were in service as of June 30, 2014. All numbers are approximate as of such date:

(1) These tractors were leased new, and the lease terms ranged from one to four years. 

(2) Age based upon original date of manufacture; tractor/trailer may be substantially refurbished.

Sales and Marketing

Our marketing activities are focused on building our relationships with existing customers as well as developing new business opportunities. Our senior management team has extensive experience in marketing specialized fuels delivery services. In addition, significant portions of our marketing activities are conducted locally by our regional managers, terminal managers and dispatchers who act as local customer service representatives. These managers and dispatchers maintain regular contact with customers and are well-positioned to identify the changing transportation needs of customers in their respective geographic areas. We also actively participate in various trade associations, including the National Tank Truck Carriers Association, various state petroleum marketing associations and the Society of Independent Gasoline Marketers Association.

Competition

The tank lines transportation business is extremely competitive and fragmented. We compete with many other carriers and varying sizes as well as our customers’ private fleets. Some of our competitors have greater financial resources and a more expansive geographic footprint than our company. Some of our competitors periodically reduce their prices to gain business, which may limit our ability to maintain or increase prices, implement new pricing strategies or maintain significant growth in our business. Numerous competitive factors could impair our ability to maintain our current level of revenues and profitability and adversely affect our financial condition. These factors include the following:

Our largest competitors include Kenan Advantage Group, Eagle Transport, Penn Tank Lines, CTL, and Commercial Carriers.  We also compete with smaller carriers in most of our markets. 

Our strategy is to build long-term partnerships with our customers based on the highest level of customer service and reliability. Among petroleum marketers, hypermarkets and super regional and national chains have emerged to replace many of the independent convenience stores and service stations served by many of our competitors. As our customers consolidate, we believe that they will increasingly seek a fuels delivery provider with the size, capabilities, scope of services and geographic reach to serve their entire operations. We believe that we will have a competitive advantage over smaller carriers with fewer terminals.

Risk Management and Safety

The primary accident risks associated with our business are:

We currently maintain insurance for:

Our insurance program includes a self-insured deductible of $250,000 per incident for bodily injury and property damage and a $250,000 deductible for workers’ compensation (with a basket of $200,000 for all three). In addition, we currently maintain insurance policies with a total limit of $75 million, of which $74 million is provided under umbrella and excess liability policies and $1 million is provided under a primary liability policy. The $250,000 deductible per incident could adversely affect our profitability, particularly in the event of an increase in the frequency or severity of incidents. Additionally, we are self-insured for damage to the equipment that we own and lease, as well as for cargo losses and such self-insurance is not subject to any maximum limitation. In addition, even where we have insurance, our insurance policies may not provide coverage for certain claims against us or may not be sufficient to cover all possible liabilities.

Our consistent focus on safety is critical to maintaining our customer relationships, mitigating accident risks and controlling our costs. We operate our own garage facilities to maintain and inspect our equipment. We utilize on-board electronic logging devices that allow us to review driver performance.  We focus significant resources on hiring qualified and experienced professional drivers and providing strong hands-on and class room training.  We conduct a number of safety programs designed to promote compliance with rules and regulations and to reduce accident frequency and cargo claims. These programs include training programs, driver recognition programs, safety awards, an ongoing substance abuse prevention program, driver safety meetings, distribution of safety bulletins to drivers and participation in state and national safety associations. We reward safe drivers through a safety incentive plan, annual safety awards when annual accident frequency goals are met and our annual grand prize award to one of our qualified drivers. In 2011, we received the Outstanding Performance Trophy, the top award in our industry, from the National Tank Truck Carriers, and in 2009 we were awarded Lockton Companies’ Presidential Award for Safety Excellence. 

Environmental Matters

Our activities, which involve the transportation, storage and disposal of fuels and other hazardous substances and wastes, are subject to various federal, state and local health and safety laws and regulations relating to the protection of the environment, including, among others, those governing the transportation, management and disposal of hazardous materials, vehicle emissions, underground and above ground storage tanks and the cleanup of contaminated sites. Our operations involve risks of fuel spillage or seepage, hazardous waste disposal and other activities that are potentially damaging to the environment. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of or liable under applicable laws or regulations, it could significantly increase our cost of doing business.

Most of our truck terminals are located in industrial areas, where groundwater or other forms of environmental contamination may have occurred. Under environmental laws, we could be held responsible for the costs relating to any contamination at those or other of our past or present facilities and at third-party waste disposal sites, including cleanup costs, fines and penalties and personal injury and property damages. Under some of these laws, such as the Comprehensive Environmental Response Compensation and Liability Act (also known as the Superfund law) and comparable state statutes, liability for the entire cost of the cleanup of contaminated sites can be imposed upon any current or former owner or operator, or upon any party who sent waste to the site, regardless of the lawfulness of any disposal activities or whether a party owned or operated a contaminated property at the time of the release of hazardous substances. From time to time, we have incurred remedial costs and/or regulatory penalties with respect to chemical or wastewater spills and releases relating to our facilities or operations, and, notwithstanding the existence of our environmental management program, we may incur such obligations in the future. The discovery of contamination or the imposition of additional obligations or liabilities in the future could result in a material adverse effect on our financial condition, results of operations or our business reputation. See “Risk Factors—Risks Related to Our Business—Our operations involve hazardous materials and could result in significant environmental liabilities and costs” for a discussion of certain risks of our being associated with transporting hazardous substances.

Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time. If we fail to comply with applicable environmental laws and regulations, we could also be subject to substantial fines or penalties and to civil and criminal liability. As a result, our costs of complying with current or future environmental laws or liabilities arising from such laws may have a material adverse effect on our business, results of operations or financial condition.

Our terminal managers are responsible for environmental compliance. Self-audits conducted by our safety staff are required to assess operations, safety training and procedures, equipment and grounds maintenance, emergency response capabilities and waste management. We may also contract with an independent environmental consulting firm that conducts periodic, unscheduled, compliance assessments which focus on conditions with the potential to result in releases of hazardous substances or petroleum, and which also include screening for evidence of past spills or releases. Our safety staff develops policies and procedures, including periodic audits of our terminals and historical operations, in an effort to avoid circumstances that could lead to future environmental exposure.

Regulation

As a motor carrier, we are subject to regulation by the FMCSA, which is a unit of the DOT. The FMCSA enforces comprehensive trucking safety regulations and performs certain functions relating to such matters as motor carrier registration, cargo and liability insurance, extension of credit to motor carrier customers, and leasing of equipment by motor carriers from independent owner-operators. There are additional regulations specifically relating to the tank truck industry, generally as well as the handling of hazardous materials, including testing and specifications of equipment and product handling requirements. The trucking industry is subject to possible and anticipated regulatory and legislative changes, including changes contemplated by the Moving Ahead for Progress in the 21^st Century Act (“Map-21”), that may affect the economics of the industry by requiring changes in operating practices, restricting and taxing emissions or by changing the demand for common or contract carrier services or the cost of providing services. Some of these possible changes may include increasingly more stringent environmental regulations, increasing control over the transportation of hazardous materials, changes in the hours-of-service regulations which govern the amount of time a driver may drive in any specific period of time, safety-based driver hiring restrictions, heightened bonding or insurance requirements, limits on vehicle weight and size and changes intended to address climate change. Map-21 requires the FMCSA to promulgate rules and regulations mandating the use of electronic logging devices (“ELDs”). The FMCSA has indicated that additional rules will be proposed in 2014 mandating the use of ELDs and updating ELD standards. We have already implemented ELDs within our business. Due to the proactive actions we have taken, we believe we are well-positioned to comply with any new regulations related to ELDs. New FMCSA rules regulating the hours-of-service requirements, which place certain restrictions on the length of time that drivers are allowed to operate, became effective July 2013. The new rules retained the 11-hour daily driving limit, but effectively reduced the total maximum work week for drivers from 82 hours to 70 hours. Furthermore, the rules require that drivers observe 30 minutes of off-duty time for every eight consecutive hours of driving. These new rules may result in a modest reduction in driver productivity.

Interstate motor carrier operations are subject to safety requirements prescribed by the DOT. To a large degree, intrastate motor carrier operations are subject to safety and hazardous material transportation regulations that mirror federal regulations. Such matters as weight and dimension of equipment are also subject to federal and state regulations. DOT regulations mandate drug and alcohol testing of drivers and other safety personnel. In 2003, we underwent a compliance review by the FMCSA in which we retained our satisfactory DOT safety rating. Any downgrade in our DOT safety rating (as a result of the new Compliance Safety and Accountability (“CSA”) regulations described below, or otherwise) could adversely affect our business.

The FMCSA rates individual driver safety performance inclusive of all driver violations over 3-year time periods under the CSA. CSA is an FMCSA initiative designed to provide motor carriers and drivers with attention from FMCSA and state partners about their safety profiles with an ultimate goal of achieving a greater reduction in large truck and bus crashes, injuries, and fatalities. Prior to these regulations, only carriers were rated by the DOT and the rating only included out-of-service violations and ticketed offenses associated with out-of-service violations. Under the CSA, the FMCSA may deem carriers with poor safety performance unfit to operate, which serves to prohibit the carrier from operating until its safety fitness determination improves.

Title VI of The Federal Aviation Administration Authorization Act of 1994 generally prohibits individual states, political subdivisions thereof and combinations of states from regulating price, entry, routes or service levels of most motor carriers. However, the states retained the right to continue to require certification of carriers, based upon two primary fitness criteria—safety and insurance—and retained certain other limited regulatory rights. Included in those rights, certain states require motor carriers to register with a state if operating on an intrastate basis within that state. In those states in which we operate on an intrastate basis and are required to obtain certifications or permits allowing us to so operate, we obtain those certifications or permits.

We are subject to compliance with cargo security and transportation regulations issued by the Transportation Security Administration and by the Department of Homeland Security, including regulation by the Bureau of Customs and Border Protection.

From time to time, various legislative proposals are introduced including proposals to increase federal, state, or local taxes, including taxes on motor fuels, which may increase our costs and adversely impact the recruitment of drivers. We cannot predict whether, or in what form, any increase in such taxes applicable to us will be enacted.

Legal Proceedings

We are subject to routine litigation arising in the ordinary course of business, none of which is expected to have a material adverse effect on our financial position, results of operations or cash flows.

Properties

As of June 30, 2014, our terminals and/or satellite locations were located in the following cities:

MANAGEMENT

Executive Officers

The following table sets forth information regarding the individuals who serve as our executive officers, each of whom was appointed to these positions on [*], 2014. Each of these individuals has served in the same positions with Existing Patriot. Each of the individuals listed below will serve in the same positions with FRP after the distribution except for Mr. Anderson and Mr. Sandlin, who will not hold any positions with FRP.

Thompson S. Baker II is the son of one of our directors.

All executive officers of the Company are elected by the board of directors annually and serve until their resignation or removal.

BOARD OF DIRECTORS

The following table sets forth information with respect to the members of New Patriot’s board of directors, all of whom also serve on the Existing Patriot board of directors. At the time of the separation and distribution, all of the New Patriot directors (other than Thompson S. Baker II) will be required to resign from the board of directors of Existing Patriot.

Each of our directors are elected annually to serve until the first annual meeting of shareholders following the distribution. Thereafter, our directors will be elected to staggered four-year terms. We have not yet set the date of the first annual meeting of shareholders to be held following the distribution.

Qualification of Directors

We believe our board of directors consists of individuals with appropriate skills and experiences to meet board governance responsibilities and contribute effectively to our company. The Nominating and Governance Committee will seek to ensure the board of directors reflects a range of talents, skills, expertise and leadership experience sufficient to provide sound and prudent guidance with respect to our operations and interests. Our board of directors will seek to build a diverse membership over time, but will not have a separate policy on diversity at the time of our separation from Patriot.

Director Independence

Our board of directors is committed to good business practices, transparency in financial reporting and the highest level of corporate governance. Our board of directors has determined that Messrs. Anderson, Fichthorn, and Paul, constituting a majority of our directors, are independent directors within the meaning of the listing standards of the NASDAQ Stock Market. Our board of directors also has determined that, at the time of the separation, Messrs. Anderson, Fichthorn, and Paul will meet the independence requirements to serve on the Audit, Compensation and Nominating and Corporate Governance Committees of the board of directors.

In order to determine that a director is independent under NASDAQ listing standards, the board must determine that the director has no relationship that, in the judgment of the board, would interfere with the exercise of independent judgment by the director in carrying out his or her responsibilities. The listing standards also specify certain relationships and transactions that disqualify a director from being considered an independent director. The listing standards also prohibit Audit Committee and Compensation Committee members from any direct or indirect financial relationship with the Company.

In determining that Messrs. Anderson, Fichthorn, and Paul do not have any relationships with the Company that would interfere with the exercise of independent judgment in carrying out their responsibilities as directors, our board of directors considered commercial, consulting, legal, accounting and charitable relationships between each director and his immediate family members and the Company.

Committees of the Board of Directors

Our board of directors has established four standing committees in connection with the discharge of its responsibilities. Our board of directors has formed an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The role and responsibilities of these committees are described below.

Audit Committee

The Audit Committee assists the board of directors in its oversight of the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements, the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, and the qualifications, independence, and performance of the Company’s independent auditor. In addition to other responsibilities, the Audit Committee also:

Mr. Fichthorn serves as Chair of the Audit Committee, and Messrs. Anderson and Paul serve on the Committee. The board of directors has determined that all Audit Committee members are independent and are able to read and understand financial statements.  The board of directors has also determined that Mr. Fichthorn qualifies as an “audit committee financial expert” within the meaning of SEC regulations.  The charter of the Audit Committee (as adopted on [*], 2014) is available on our website at www.patriottrans.com under Corporate Governance.

Compensation Committee

The primary functions of the Compensation Committee are to (1) discharge the responsibilities of the board of directors relating to the compensation of the Company’s executive officers, and (2) prepare an annual report on executive compensation to be included in the Company’s proxy statement.  In addition, the Compensation Committee:

Mr. Paul serves as Chair of the Compensation Committee, and Messrs. Anderson and Fichthorn serve on the Committee. The charter of the Compensation Committee (as adopted on [*], 2014) has been formally adopted by the Company and is available at www.patriottrans.com under Corporate Governance.

Nominating and Corporate Governance Committee

Under its charter, the principal functions of the Nominating and Corporate Governance Committee are to (1) identify individuals who are qualified to serve on the Company’s board of directors, (2) recommend for selection by the board of directors the director nominees for the next annual meeting of the shareholders, (3) review and recommend to the board changes to the corporate governance practices of the Company, and (4) oversee the annual evaluation of the board.  In addition, the Nominating and Corporate Governance Committee establishes criteria for board membership.

Mr. Anderson serves as Chair of the Nominating and Corporate Governance Committee, and Messrs. Fichthorn and Paul serve on the Committee. The charter of the Nominating and Corporate Governance Committee (as adopted on [*], 2014) is available at www.patriottrans.com under Corporate Governance.

Executive Committee 

Edward L. Baker, Thompson S. Baker II and John D. Milton, Jr., (ex officio) comprise the Executive Committee.  To the extent permitted by law, the Executive Committee exercises the powers of the board of directors between meetings of the board of directors.

Risk Management

While our Company’s management will be responsible for the day-to-day management of risks to New Patriot, the board of directors will have broad oversight responsibility for our risk management programs following the separation and distribution.

The board of directors will exercise risk management oversight and control both directly and through various board committees as discussed above. The board of directors will regularly review information regarding our credit, liquidity and operations, including the risks associated with each. The Compensation Committee will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. The Audit Committee will be responsible for oversight of financial risks, including the steps we have taken to monitor and mitigate these risks. The Nominating and Governance Committee, in its role of reviewing and maintaining our Corporate Governance Guidelines, will manage risks associated with the independence of the board of directors and potential conflicts of interest. While each committee will be responsible for evaluating certain risks and overseeing the management of such risks, the entire board of directors will be regularly informed through committee reports and by the chief executive officer about the known risks to the strategy and the business.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee (i) was an officer or employee of New Patriot or any of its subsidiaries during the 2013 fiscal year, or (ii) had any relationship requiring disclosure by New Patriot under the rules of the Securities and Exchange Commission requiring disclosure of certain relationships and related party transactions.  None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or Compensation Committee.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

As discussed above, New Patriot is currently part of Existing Patriot and not an independent company, and its compensation committee has not yet been formed. This Compensation Discussion and Analysis describes the historical compensation practices of Existing Patriot and attempts to outline certain aspects of New Patriot’s anticipated compensation structure for its senior executive officers following the separation. While New Patriot has discussed its anticipated programs and policies with the Compensation Committee of Existing Patriot’s board of directors (the “Existing Patriot Compensation Committee”), they remain subject to the review and approval of New Patriot’s own compensation committee (the “New Patriot Compensation Committee”).

For purposes of the following Compensation Discussion and Analysis and executive compensation disclosures, the individuals listed below are collectively referred to as New Patriot’s or our “named executive officers.” Their compensation is disclosed in the tables following this discussion and analysis. Each of these individuals is currently employed by Existing Patriot. The historical decisions relating to their compensation as executive officers of Existing Patriot in 2013 and prior years have been made by the Existing Patriot Compensation Committee. Following the separation, the compensation of New Patriot’s executive officers will be determined by the New Patriot Compensation Committee consistent with the compensation and benefit plans, programs and policies adopted by New Patriot.

Additional information about New Patriot’s expected senior executive team following the separation is set forth in the section of this information statement captioned “Management-Executive Officers.”

Initially, New Patriot’s compensation policies and practices will be substantially the same as those employed by Existing Patriot. The New Patriot Compensation Committee will review these policies and practices, and, it is expected, will make adjustments to support New Patriot’s strategies and to remain market competitive. The following sections of this Compensation Discussion and Analysis describe Existing Patriot’s compensation philosophy, policies and practices as they applied during fiscal 2013 to the five named executive officers identified above.

Sharing of Executive Officers with FRP

Initially, three of our named executive officers (Tom Baker, John Milton and John Klopfenstein) will serve in the same executive officer positions at FRP. As officers of FRP, Messrs. Tom Baker, Milton and Klopfenstein may receive, at the discretion of the Compensation Committee of FRP, stock option grants under equity compensation plans maintained by FRP and incentive compensation awards under the management incentive compensation plan maintained by FRP that are tied to the achievement of performance objectives relating to FRP.

Pursuant to the terms of a Transition Services Agreement, FRP will (i) reimburse to New Patriot one-half of the costs of the base salaries and benefits of Messrs. Tom Baker, Milton and Klopfenstein for as long as they remain officers of both companies, and (ii) reimburse to New Patriot or pay directly to such officers any amounts payable to such officers under any management incentive compensation plan maintained by FRP. The compensation information described in the tables below reflects historical information on amounts paid by Existing Patriot to the named executive officers.

Roles of the Existing Patriot Compensation Committee, Management and Advisors

Historically

The Existing Patriot Compensation Committee has responsibility for establishing Existing Patriot’s compensation philosophy and for monitoring adherence to it. The Existing Patriot Compensation Committee reviews and approves compensation levels for all Existing Patriot executive officers, including our named executive officers, as well as all compensation, retirement, perquisite and benefit programs applicable to such officers. All of these functions are set forth in the Existing Patriot Compensation Committee Charter, which appears on Existing Patriot’s website (www.patriottrans.com) and is reviewed annually by the Existing Patriot Compensation Committee.

Each member of the Compensation Committee qualifies as an independent director under the listing standards of the NASDAQ Stock Market; and a non-employee director for purposes of Rule 16b-3 of the Exchange Act; and as outside directors for purposes of Section 162(m) of the Internal Revenue Code. No member of the Compensation Committee accepts, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or its subsidiaries (other than fees received for services on the board and its committees or fixed amounts of compensation under the Company’s retirement plans for prior service with the Company).

The Existing Patriot Compensation Committee’s work is accomplished through committee meetings. Working with the Existing Patriot Compensation Committee Chair, Existing Patriot’s Chief Executive Officer and Chief Financial Officer prepare an agenda and supporting materials for each meeting. These executives generally attend the Existing Patriot Compensation Committee meetings by invitation, but are excused for executive sessions. The Existing Patriot Compensation Committee invites other members of management to attend meetings as it deems necessary to cover issues within their specific areas of expertise or responsibility.

The Compensation Committee receives and reviews a variety of information throughout the year to assist it in carrying out its responsibilities.  The Committee reviews financial reports comparing performance on a year-to-date basis versus budget and receives operating reports at each regular board meeting. The Chief Executive Officer provides the Compensation Committee with an assessment of our achievements and performance, his evaluation of individual performance and his recommendations for annual compensation, and annual performance targets and equity compensation awards. The Committee makes all final decisions regarding the compensation of executive officers. When making individual compensation decisions for executive officers, the Committee takes many factors into account, including the individual’s performance, tenure, experience and responsibilities; our financial performance; retention considerations; the recommendations of management; the individual’s historic compensation and the results of the previous year’s shareholder advisory vote on executive compensation.

Going Forward

As noted above, following the separation, the New Patriot Compensation Committee that will be responsible for establishing the programs and policies applicable to the New Patriot executive officers, including the applicable performance goals, and making the compensation decisions thereunder. Immediately following the separation, it is expected that the New Patriot Compensation Committee Charter will be substantially similar to the Existing Patriot Compensation Committee Charter.

Compensation Philosophy and Objectives

Historically

The compensation program for our executive officers is designed to attract, motivate, reward and retain highly qualified individuals who can contribute to our growth with the ultimate objective of improving shareholder value.   Our compensation program consists of several forms of compensation:  base salary, cash incentive bonuses, equity compensation and other benefits and perquisites.

The compensation program is designed to integrate with our business plan and the opportunities and challenges we face in an ever-evolving business environment. Accordingly, the Compensation Committee does not use predetermined guidelines or benchmarking to determine the elements and levels of compensation for our executive officers or to allocate between cash and long term or equity incentives.

The Compensation Committee does strive to assure that a significant portion of the potential compensation of the named executive officers is contingent, performance-based compensation linked to the achievement of specific objectives. To achieve this goal, incentive bonuses are established as a percentage of their base salaries.

The compensation philosophy for Existing Patriot incorporates the following core principles:

Going Forward

As noted above, since the New Patriot Compensation Committee has not yet been formed, the policies and executive compensation philosophy at New Patriot will be developed and established by the New Patriot Compensation Committee after the separation. It is, however, currently expected that after the separation, the executive compensation philosophy and framework of New Patriot’s executive compensation program will be similar to the compensation philosophy and compensation framework adopted by the Compensation Committee of Existing Patriot.

Components of Executive Compensation

Historically

Base Salary

General. Base pay is a critical element of executive compensation because it provides executives with a base level of monthly income. In determining base salaries, we consider the executive’s qualifications and experience, scope of responsibilities and future potential, the goals and objectives established for the executive, the executive’s past performance, internal pay equity and the tax deductibility of base salary. As part of determining annual increases, the Committee also considers the Chief Executive Officer’s written recommendations, the observations of the Chief Executive Officer and of the Committee members regarding individual performance and internal pay equity considerations.

Fiscal 2013 and 2014 Actions. We set base salaries on a calendar year basis. The following table reflects the adjustments made to the base salaries of the named executive officers for calendar years 2013 and 2014.

Analysis. The Committee increased the base salaries of Messrs. Tom Baker, Sandlin, Klopfenstein and Anderson for fiscal 2014 in light of their management performance. The Committee did not increase Mr. Milton’s base salary based on the Committee’s view that his existing base salary was adequate in light of his total compensation package.

Cash Incentive Compensation

Management Incentive Compensation Plan. The Management Incentive Compensation Plan (the “MIC Plan”) provides officers and key employees an opportunity to earn an annual cash bonus for achieving specified, performance-based goals established for the fiscal year. Performance goals under the MIC Plan are tied to measures of operating performance rather than appreciation in stock price.

The Compensation Committee traditionally has established performance objectives for the transportation subsidiaries based on targeted levels of after-tax return on average capital employed. The Compensation Committee believes that after-tax return-on-capital employed (ROCE) is an important measure of performance in an asset-intensive business, both to evaluate management’s performance and to demonstrate to shareholders that capital has been used wisely over the long term. For purposes of this bonus calculation, ROCE is defined as the transportation business’ net income excluding the after-tax cost of financing, divided by its total monthly average capital employed.

Fiscal 2013 and 2014 Actions. The following chart describes the performance objectives and potential bonuses for the named executive officers for fiscal years 2013 and 2014.

Analysis. Cash-based incentive compensation comprises a significant portion of the potential total compensation of the named executive officers. For fiscal 2013, cash-based incentive compensation comprised 37% of the total compensation of the named executive officers. We believe that these incentives play a significant role in helping the Company achieve its business objectives.

Equity Compensation Awards

General. Long-term equity incentives help to motivate executives to make decisions that focus on long-term growth and thus increase shareholder value. The Committee believes that such grants help align our executive officers’ interests with the Company’s shareholders. When our executives deliver sustained returns to our shareholders, equity incentives permit an increase in their own compensation.

Traditionally, the Committee has made equity compensation awards in the form of stock options. All stock options incorporate the following features: the term of the grant does not exceed 10 years; the grant price is not less than the market price on the date of grant; grants do not include “reload” provisions; re-pricing of options is prohibited, unless approved by the shareholders; and to encourage employee retention, most options vest over a period of years. In determining the amount of each award, the Committee considers such factors as the performance of the executive and his importance of the executive to the Company, the Black-Scholes value of the award, the relation of the value of the award to the executive’s total compensation and prior option grants to the executive.

Fiscal 2013 and 2014 Actions.

In each of fiscal 2013 and 2014, the Committee approved the award to Mr. Tom Baker of options having a Black-Scholes value of $200,000 (17,840 option shares in fiscal 2013 and 10,700 option shares in fiscal 2014). In making the grant, the Compensation Committee considered the performance of Mr. Baker, his total compensation package and his importance to the Company, Mr. Baker’s prior stock option grants and the Black-Scholes value of the award.

In each of fiscal 2013 and 2014, the Committee approved the award to Mr. Sandlin of options having a Black-Scholes value of $100,000 (8,920 option shares in fiscal 2013 and 5,350 option shares in fiscal 2014). In making the grant, the Compensation Committee considered the performance of Mr. Sandlin, his total compensation package and his importance to the Company, prior stock option grants to Mr. Sandlin and the Black-Scholes value of the award.

In fiscal 2013, the Committee approved the award of options to acquire 3,000 shares to Mr. Klopfenstein. In fiscal 2014, the Committee approved the award of options to acquire 2,890 shares to Mr. Klopfenstein. In making such grants, the Compensation Committee considered the past performance of Mr. Klopfenstein, his total compensation packages and importance to the Company, prior stock option grants to Mr. Klopfenstein and the Black-Scholes value of the award.

In each of fiscal 2013 and fiscal 2014, the Committee approved the award to Mr. Milton of options to acquire 7,500 shares. In making this grant, the Compensation Committee considered Mr. Milton’s past performance, base salary and bonus, his qualifications and responsibilities and his ability to impact the future performance of the Company, as well as the Black-Scholes value of the award.

All of the options described above vest 20% per year beginning the first anniversary of the grant date, except that Mr. Milton’s options vest immediately. All options expire on the tenth anniversary of the grant date. The per share option price for all options is the closing price of the Company’s common stock on the grant date.

Analysis. The Committee believes that equity compensation is an important element of overall compensation. At the same time, the Committee recognizes that equity grants impose a dilution cost to the shareholders. The Committee made grants to the named executive officers because the Committee believes that equity incentives should be a significant part of their compensation package. The Committee plans to continue to evaluate the use of equity compensation as a tool to motivate management.

Going Forward

After the separation, the New Patriot Compensation Committee will adopt and develop practices and procedures with respect to compensation decisions relating to base salary, annual bonus opportunities and long-term incentives within the framework of the compensation plans adopted by New Patriot, which at least initially will be substantially similar to Existing Patriot’s compensation plans.

Severance and Change of Control Agreements

Historically

Until December 2007, none of our named executive officers had any arrangements that provide for payment of severance payments or payment of any benefits upon a change-in-control of Patriot, except for change-in-control provisions that accelerate vesting of stock options or restricted stock under our equity compensation plans.

On December 5, 2007, the Company entered into change-in-control agreements with Messrs. Sandlin and Klopfenstein. The agreements are “double trigger” agreements that will pay benefits to the executives, under certain circumstances, if they are terminated following a change-in-control of the Company or a sale of their particular business unit.

These agreements provide that each of Messrs. Sandlin and Klopfenstein will be entitled to receive an amount equal to two times his base salary plus maximum bonus if, during the two years after a change-in-control or sale of Florida Rock & Tank Lines, Inc. his employment is terminated other than for “cause” or he resigns for “good reason.” In addition, each of them will become fully vested in his stock options and restricted stock.

For this purpose, cause is generally defined as (i) conviction for commission of a felony, (ii) willful misconduct or gross negligence or material violation of policy resulting in material harm to his employer, (iii) repeated and continued failure by the executive to carry out, in all material respects, the employer’s reasonable and lawful directions, or (iv) fraud, embezzlement, theft or material dishonesty. Good reason is generally defined as (i) a material reduction in compensation or benefits, (ii) a requirement that the executive relocate, or (iii) any material diminution in the executive’s duties, responsibilities, reporting obligations, title or authority.

We believe these change-in-control arrangements, the value of which are contingent on a change of control transaction, effectively create incentives for our executive team to build shareholder value and to obtain the highest value possible should we be acquired in the future, despite the risk of losing employment. These change of control arrangements for our executive officers are “double trigger,” meaning that acceleration of vesting is not awarded upon a change of control unless the executive’s employment is terminated involuntarily (other than for cause) or by the executive for good reason within 24 months following the transaction. We believe this structure strikes a proper balance by not providing these benefits to executives who continue to enjoy employment with an acquiring company in the event of a change of control transaction. We also believe this structure is more attractive to potential acquiring companies, who may place significant value on retaining members of our executive team and who may perceive this goal to be undermined if executives receive significant acceleration payments in connection with such a transaction and are no longer required to continue employment.

Going Forward

After the separation, the change-in-control agreements with Messrs. Sandlin and Klopfenstein will remain in place.

Perquisites and Personal Benefits

Historically

In addition to participating in the same health and welfare plans, including our 401(k) plan, as our other salaried employees, our executive officers participate in a supplemental medical expense reimbursement plan. Our executives also receive a limited number of personal benefits certain of which are considered taxable income to them and which are described in the footnotes to the section of this information statement entitled “Summary Compensation Table.”

Going Forward

After the separation, the perquisite and personal benefit programs in place at New Patriot will initially be substantially similar to those in place at Existing Patriot prior to the separation.

Additional Compensation Policies

Historically

Internal Pay Equity

We believe that internal pay equity is an important factor to be considered in establishing compensation for the officers. We have not established a policy regarding the ratio of total compensation of the Chief Executive Officer to that of the other officers, but we do review compensation levels to ensure that appropriate equity exists.

Compensation Risk Assessment

The Committee considers the risks that may result from the Company’s compensation policies and practices.  The Committee believes that our compensation policies and practices for our executives are reasonable and properly align their interests with those of our shareholders. The Committee believes that there are a number of factors that cause our compensation policies and practices to not have a material adverse effect on the Company. The fact that our executive officers have their annual incentive compensation tied to return on capital employed encourages actions that promote profitability. Our equity-based incentives further align the interest of our executives with the long term interests of our shareholders. In addition, we believe that there are significant checks in place so that employees whose compensation may have a shorter term focus are managed by employees and officers whose compensation has a longer term focus.

Tax Deductibility of Compensation Should be Maximized Where Appropriate

The Company generally seeks to maximize the deductibility for tax purposes of all elements of compensation. For example, the Company always has issued nonqualified stock options that result in a tax deduction to the Company upon exercise. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for non-qualifying compensation in excess of $1.0 million paid to any such persons in any fiscal year. We review compensation plans in light of applicable tax provisions, including Section 162(m), and may revise compensation plans from time to time to maximize deductibility. However, we may approve compensation that does not qualify for deductibility when we deem it to be in the best interests of the Company.

Financial Restatement

It is the board of directors’ policy that the Compensation Committee will, to the extent permitted by governing law, have the sole and absolute authority to make retroactive adjustments to any cash or equity based incentive compensation paid to executive officers and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, the Company will seek to recover any amount determined to have been inappropriately received by the individual executive.

Going Forward

After the separation, the New Patriot board of directors will adopt similar policies that will be driven by the considerations described above with respect to Existing Patriot’s policies.

EXECUTIVE COMPENSATION

Historical Compensation of Executive Officers Prior to the Separation

The New Patriot named executive officers listed above were employed by Existing Patriot prior to the separation; therefore, the information provided for the fiscal years 2013, 2012 and 2011 below reflects compensation earned at Existing Patriot and the design and objectives of the Existing Patriot executive compensation programs in place prior to the separation. Each of these named executive officers is currently, and was as of [*], 2014, an executive officer of Existing Patriot. Accordingly, the compensation decisions regarding our named executive officers were made by the Existing Patriot Compensation Committee. Executive compensation decisions following the separation will be made by the New Patriot Compensation Committee. All references in the following tables to stock options and performance shares relate to awards granted by Existing Patriot in respect of shares of Existing Patriot common stock.

Summary Compensation Table

Fiscal 2013 Grants of Plan-Based Awards

The following table sets forth information concerning option grants and estimated future payouts under cash incentive plans for the named executive officers.

Grants of Plan-Based Awards

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning stock options and restricted stock held by the named executive officers at September 30, 2013. Each of the stock options listed below represents an option to purchase shares of Existing Patriot common stock. In connection with the distribution, all outstanding options to purchase Existing Patriot common stock will be adjusted as described in “The Separation – Treatment of Outstanding Stock Option Grants.”

Fiscal 2013 Option Exercises

The following table provides information regarding stock option exercises by the named executive officers and vesting of restricted stock during fiscal 2013.

Option Exercises and Stock Vested

Pension Benefits

None of our named executive officers participates in any supplemental retirement plan.

Nonqualified Deferred Compensation

None of the named executive officers receives any nonqualified deferred compensation.

Potential Payments Upon Termination or Change in Control

The following table reflects potential termination or change in control payments to named executive officers if a triggering event were to have occurred on June 30, 2014. All payments are as provided under the severance agreements discussed in the Compensation Discussion and Analysis or the stock option grants listed under “Executive Compensation—Outstanding Equity Awards at Fiscal Year End.”