<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended March 31, 1994
Commission File Number 2-89530
FLORIDA EAST COAST INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2349968
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1650 Prudential Drive, Jacksonville, FL 32201-1380
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (904) 396-6600
N O N E
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ____X____ No _________
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at March 31, 1994
Common Stock, $6.25 par value 9,000,000 shares
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
March 31 December 31
1994 1993
(Unaudited)
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 20,665 $ 14,438
Short-term investments 18,259 18,009
Accounts receivable, net 27,977 27,879
Materials and supplies 11,685 11,974
Other 5,459 6,676
-------- --------
Total current assets 84,045 78,976
Other investments 66,265 66,233
Properties, less accumulated
depreciation and amortization 546,637 535,976
Other assets and deferred charges 10,774 10,904
-------- --------
$707,721 $692,089
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 21,441 $ 21,891
Income taxes 2,287 0
Estimated property taxes 2,622 4,665
Accrued casualty and other reserves 6,900 7,680
Other accrued liabilities 2,225 2,188
-------- --------
Total current liabilities 35,475 36,424
Deferred income taxes 129,838 126,164
Reserves and other long-term liabilities 7,234 6,463
Shareholders' equity:
Common stock, $6.25 par value; 9,360,000
shares authorized; 9,271,361 shares
issued and outstanding 57,946 57,946
Capital surplus 101 101
Retained earnings 490,114 476,808
Net unrealized gain (loss) on debt
and marketable equity securities (279) 891
Less:
Treasury stock at cost
(271,361 shares) (12,708) (12,708)
-------- --------
Total shareholders' equity 535,174 523,038
-------- --------
$707,721 $692,089
======== ========
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS
OF INCOME AND RETAINED EARNINGS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
QUARTER ENDED MARCH 31
1994 1993
---- ----
OPERATING REVENUES:
Transportation $ 40,171 $ 40,199
Realty 18,239 3,820
-------- --------
Total revenues 58,410 44,019
OPERATING EXPENSES:
Transportation 29,414 30,573
Realty 4,204 3,056
General and Administrative 4,609 4,014
-------- --------
Total expenses 38,227 37,643
Operating profit 20,183 6,376
OTHER INCOME (EXPENSE):
Dividends 85 73
Interest income 1,076 1,003
Gains on sales and other disposition
of properties 317 403
Other (net) 238 173
-------- --------
Total other income (expense) 1,716 1,652
Income before income taxes and
cumulative effect of change in
accounting principle 21,899 8,028
INCOME TAXES:
Current 3,283 1,856
Deferred 4,410 1,042
-------- --------
Total income taxes 7,693 2,898
Income before cumulative effect of
change in accounting principle 14,206 5,130
Cumulative effect of change in
accounting principle for income taxes 0 1,504
-------- --------
Net income $ 14,206 $ 6,634
Retained earnings:
Balance at beginning of year 476,808 458,125
Cash dividends (900) (900)
-------- --------
Balance at end of period $490,114 $463,859
======== ========
Per Share Data:
Cash dividends $ 0.10 $ 0.10
======== ========
Income before cumulative effect of
change in accounting principle $ 1.58 $ 0.57
Cumulative effect of change in
accounting principle for
income taxes 0.00 0.17
-------- --------
Net income $ 1.58 $ 0.74
======== ========
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
QUARTER ENDED MARCH 31
1994 1993
---- ----
Cash flows from operating activities:
Net income $14,206 $ 6,634
Adjustments to reconcile net income
to cash generated:
Cumulative effect of a change in
accounting principle 0 (1,504)
Depreciation and amortization 5,350 4,974
Gain on disposition of assets (317) (403)
Deferred taxes 4,410 1,042
Changes in operating assets and liabilities:
Increase (decrease) in accounts receivable (98) 2,104
Decrease in other current assets 1,506 2,551
Decrease in other assets and deferred charges 130 170
Decrease in accounts payable (450) (2,274)
Increase in income taxes payable 2,287 785
(Decrease) increase in estimated property taxes (2,043) 2,139
Decrease in other current liabilities (743) (409)
Increase in reserves and other long-term
liabilities 771 324
------ ------
Net cash generated by operating activities 25,009 16,133
Cash flows from investing activities:
Purchases of properties (16,477) (14,985)
Purchases of properties (17,023) (20,842)
Maturities and redemption of investments 15,299 20,984
Proceeds from disposition of assets 319 1,279
------- -------
Net cash used in investing activities (17,882) (13,564)
Cash flows from financing activities:
Payment of dividends (900) (900)
------- -------
Net cash used in financing activities (900) (900)
Net increase in cash and cash equivalents 6,227 1,669
Cash and cash equivalents at beginning of quarter 14,438 12,132
------- -------
Cash and cash equivalents at end of quarter $20,665 $13,801
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the quarter for income taxes $ 1,001 $ 0
======= =======
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of normal recurring accruals)
considered necessary to present fairly the financial position as
of March 31, 1994, and December 31, 1993, and the results of
operations and cash flows for the three month periods ended March
31, 1994, and March 31, 1993.
2. The results of operations for the three months ended March
31, 1994, and 1993, are not necessarily indicative of the results
that may be expected for the full year.
3. The Company has retained certain self-insurance risks with
respect to losses for third-party liability, property damage, and
group health insurance coverage provided employees. The Company
is the defendant and plaintiff in various lawsuits resulting
from its operations. In the opinion of management, adequate
provision has been made in the financial statements for the
estimated liability which may result from disposition of such
lawsuits.
The Company is subject to proceedings arising out of
environmental laws and regulations, which primarily relate to the
disposal and use of fuel and oil used in the transportation
business. It is the Company's policy to accrue and charge
against earnings environmental cleanup costs when it is probable
that a liability has been incurred and an amount can be
reasonably estimated.
The Company is currently a party to, or involved in, legal
proceedings directed at the cleanup of two Superfund sites. The
Company has accrued its allocated share of the total estimated
cleanup costs for these two sites. Based upon management's
evaluation of the other potentially responsible parties, the
Company does not expect to incur additional amounts even though
the Company has joint and several liability. Other proceedings
involving environmental matters such as alleged discharge of oil
or waste material into water or soil are pending against the
Company.
It is not possible to quantify future environmental costs
because many issues relate to actions by third parties or changes
in environmental regulation. However, based on information
presently available, management believes that the ultimate
disposition of currently known matters will not have a material
effect on the financial position or liquidity of the Company in
any one period. As of March 31, 1994, and December 31, 1993, the
aggregate environmental related accruals were $3,500,000.
Environmental liabilities are paid over an extended period, and
the timing of such payments cannot be predicted with any
confidence.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
FEC's operating revenues for the quarter ended March 31, 1994, as
compared with same period 1993 reflect an increase of $14.4
million or 32.7%. In the first quarter 1994, transportation
revenues remained at the same level as first quarter 1993 or
$40.2 million. Realty revenues increased from $3.8 million in
the first quarter 1993 to $18.2 million in the first quarter
1994, but included in the 1994 realty revenues were sales of
realty property of $13.7 million. Discounting the sales of
realty property, 1994 realty revenues increased by $.7 million or
18.4% over first quarter 1993 realty revenues. Operating
expenses in the 1994 first quarter reflect an increase of
1.6% or $.6 million when compared to 1993's first quarter.
Operating profits increased $13.8 million in the first quarter
1994 when compared to first quarter 1993.
ANALYSIS
Revenues - When comparing the first quarter 1994 transportation
revenues with the same period 1993, the 1994 transportation
revenues remained relatively flat. However, comparable 1993
figures included some traffic attributable to rebuilding after
Hurricane Andrew. This traffic steadily declined during the
final three quarters of 1993 and is no longer a factor in revenue
comparisons.
Realty revenues for the comparative quarters reflected increased
first quarter 1994 revenues of $14.4 million of which $13.7
million represents the sales of realty properties. Of the $13.7
million, $11.3 million represents a condemnation of realty
properties by the State of Florida. Rental income from buildings
totaled $4.5 million in the first quarter 1994 versus $3.8
million in first quarter 1993.
Operating Expenses - Operating expenses in the first quarter 1994
reflect an increase of 1.6% or $.6 million as compared to the
same period in 1993. Operating expenses in first quarter 1994,
when compared to first quarter 1993, decreased by $1.2 million or
3.8% for transportation and increased by $1.1 million or 37.6%
for realty. General and administrative operating expenses
increased by $.6 million or 14.8%.
Other Income - Interest income in first quarter 1994 reflects the
continuing low rates available on quality interest earning
securities.
Net Income - Of the $14.2 million net income, $6.7 million is
related to the sale of realty property to State of Florida.
LIQUIDITY AND CAPITAL RESOURCES
FEC's principal sources of liquidity include cash generated by
operations; earnings on invested cash; and earnings on its
investment portfolio, consisting largely of U.S. Treasury
securities with maturities less than twelve months.
Current cash generations are used for capital expenditures in the
Transportation and Realty sectors and in payment of dividends.
The investment portfolio is informally dedicated to major
real estate development.
Cash and short-term investments increased $6.5 million to $38.9
million at March 31, 1994, from $32.4 million at year-end 1993.
The investment portfolio increased $.1 million to $66.3
million at March 31, 1994, from $66.2 million at year-end 1993.
The Company's working capital position changed from a ratio of
2.17 to 1.00 at year-end 1993 to a ratio of 2.37 to 1.00 at
March 31, 1994.
There was no significant change in debt, reserves or other
liabilities during the three-month period and authorized capital
projects at March 31, 1994, remained relatively unchanged from
the approximately $33.4 million authorized and outstanding at
December 31, 1993, which is to be financed from operating cash.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
No change from 10-K for the year ended
December 31, 1993.
Item 5. Other Information
The Company is not aware of any other matters
of significance to be reported hereunder.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FLORIDA EAST COAST INDUSTRIES, INC.
(Registrant)
Date: May 5, 1994 /s/ T. Neal Smith
________________________________
Vice President & Secretary
Date: May 5, 1994 /s/ J.R. Yastrzemski
_________________________________
Comptroller
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1994
<CASH> 20,665
<SECURITIES> 18,259
<RECEIVABLES> 27,977
<ALLOWANCES> 0
<INVENTORY> 11,685
<CURRENT-ASSETS> 84,045
<PP&E> 746,323
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<TOTAL-ASSETS> 707,721
<CURRENT-LIABILITIES> 35,475
<BONDS> 0
<COMMON> 57,946
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 707,721
<SALES> 58,410
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<CGS> 0
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