<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, 1995
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, 1995
Common Stock, $6.25 par value 9,051,987 shares
<PAGE>
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31 December 31
1995 1994
(Unaudited)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 4,648 $ 15,235
Short-term investments 10,531 14,208
Accounts receivable, net 25,133 25,669
Materials and supplies 11,646 11,950
Other 5,431 5,743
-------- --------
Total current assets 57,389 72,805
Other investments 95,238 79,481
Properties, less accumulated depreciation and
amortization 578,878 561,637
Other assets and deferred charges 11,227 8,571
-------- --------
$742,732 $722,494
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,142 $ 21,945
Income taxes 3,312 824
Estimated property taxes 3,261 3,174
Accrued casualty and other reserves 5,390 5,400
Other accrued liabilities 2,293 1,712
-------- --------
Total current liabilities 41,398 33,055
Deferred income taxes 129,205 128,237
Reserves and other long-term liabilities 9,832 8,934
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 1,598 101
Retained earnings 512,437 507,813
Net unrealized gain (loss) on debt and marketable
equity securities (589) (884)
Less:
Treasury stock at cost (219,374 & 271,361 shares) (10,273) (12,708)
-------- --------
Total shareholders' equity 562,297 552,268
-------- --------
$742,732 $722,494
======== ========
(See accompanying notes)
<PAGE>
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
1995 1994
---- ----
OPERATING REVENUES:
Transportation $ 39,823 $ 40,171
Realty - Land Sales 0 13,728
- Rents & Other 5,756 4,511
-------- ---------
Total revenues 45,579 58,410
OPERATING EXPENSES:
Transportation 29,077 29,414
Realty 4,296 4,739
General and Administrative 4,543 4,074
-------- ---------
Total expenses 37,916 38,227
Operating profit 7,663 20,183
OTHER INCOME (EXPENSE):
Dividends 92 85
Interest income 1,357 1,076
Interest expense (192) 0
Gains on sales and other disposition of properties 194 317
Other (net) (275) 238
-------- --------
Total other income (expense) 1,176 1,716
Income before income taxes 8,839 21,899
INCOME TAXES:
Current 3,272 3,283
Deferred 43 4,410
-------- --------
Total income taxes 3,315 7,693
Net income $ 5,524 $ 14,206
Retained earnings:
Balance at beginning of year 507,813 476,808
Cash dividends (900) (900)
-------- --------
Balance at end of period $512,437 $490,114
======== ========
Per Share Data:
Cash dividends $ 0.10 $ 0.10
======== ========
Earnings per common share $ 0.62 $ 1.58
======== ========
(See accompanying notes)
<PAGE>
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
QUARTER ENDED MARCH 31
1995 1994
---- ----
Cash flows from operating activities:
Net income $ 5,524 $ 14,206
Adjustments to reconcile net income to cash generated:
Depreciation and amortization 5,498 5,350
Gain on disposition of assets (194) (317)
Deferred taxes 43 4,410
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 536 (98)
Decrease in other current assets 616 1,506
Decrease in other assets and deferred charges 1,276 130
Increase (decrease) in accounts payable 5,197 (450)
Increase in income taxes payable 2,488 2,287
Increase (decrease) in estimated property taxes 87 (2,043)
Increase (decrease) in other current liabilities 571 (743)
Increase in reserves and other long-term liabilities 898 771
-------- --------
Net cash generated by operating activities 22,540 25,009
Cash flows from investing activities:
Purchases of properties (23,429) (16,477)
Purchases of investments:
Available-for-sale (9,845) (721)
Held-to-maturity (15,645) (16,302)
Maturities and redemption of investments:
Available-for-sale 8,502 1,061
Held-to-maturity 7,500 14,238
Proceeds from disposition of assets 690 319
-------- --------
Net cash used in investing activities (32,227) (17,882)
Cash flows from financing activities:
Payment of dividends (900) (900)
-------- --------
Net cash used in financing activities $ (900) $ (900)
Net (decrease) increase in cash and cash equivalents (10,587) 6,227
Cash and cash equivalents at beginning of quarter 15,235 14,438
-------- --------
Cash and cash equivalents at end of quarter $ 4,648 $ 20,665
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the quarter for income taxes $ 783 $ 1,001
======== ========
Cash paid during the quarter for interest $ 133 $ 0
======== ========
(See accompanying notes)
<PAGE>
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, 1995, and December 31, 1994, and the
results of operations and cash flows for the three month periods ended
March 31, 1995, and March 31, 1994.
2. The results of operations for the three months ended March 31, 1995, and
1994, 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 difficult 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, 1995, and
December 31, 1994, the aggregate environmentally-related accruals were
$3.4 and $3.5 million, respectively. Environmental liabilities are paid
over an extended period, and the timing of such payments cannot be
predicted with any confidence.
4. On March 30, 1995, the Company purchased 80% of the outstanding stock of
International Transit, Inc., through the issuance of treasury stock.
International Transit, Inc., is a regional truck load carrier. The
transaction has been excluded from the Statements of Cash Flows as it
did not result in the payment or receipt of cash.
<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, 1995, as compared
with same period 1994 reflected a decrease of $12.8 million. Discounting the
sales of realty property of $13.7 million in 1994, 1995 operating revenues
increased by $.9 million or 2.0% over first quarter 1994. Operating expenses
in the first quarter 1995 reflected a decrease of $.3 million or .8% from
first quarter 1994. Operating profits decreased by $12.5 million from first
quarter 1994 to first quarter 1995 primarily because of the first quarter 1994
sales of realty property of $13.7 million.
ANALYSIS
Revenues - When comparing the first quarter 1995 revenues with the same period
1994, the 1995 transportation revenues decreased by $.3 million or .9%. Realty
revenues for first quarter 1995 reflected no land sales, but did show an
increase of $1.2 million in rents and other income.
Operating Expenses - Operating expenses in the first quarter 1995 reflected a
decrease of $.3 million or .8% as compared to the same period in 1994. When
compared to first quarter 1994, transportation operating expenses in first
quarter 1995 decreased by $.3 million, realty operating expenses decreased by
$.4 million, and general and administrative operating expenses increased by
$.4 million.
Other Income - Other income in the first quarter 1995 reflected a decrease of
$.5 million represented by increases in other expenses of $.7 million and
decreases in gains on sales and other disposition of property of $.1 million
offset by increases in dividends and interest income of $.3 million.
Net Income - Net income decreased by $8.7 million in first quarter 1995 when
compared to first quarter 1994. Discounting the sales of realty property in
the first quarter 1994, and the income taxes applicable to those sales, net
income increased approxiamtely $.5 million in the first quarter 1995 when
compared to first quarter 1994.
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 decreased $14.2 million to $15.2 million at
March 31, 1995, from $29.4 million at year-end 1994. The investment portfolio
increased $15.7 million to $95.2 million at March 31, 1995, from $79.5 million
at year-end 1994. The Company's working capital position changed from a ratio
of 2.20 to 1.00 at year-end 1994 to a ratio of 1.39 to 1.00 at March 31, 1995,
primarily due to change in portfolio from short-term investments to long-term
investments.
There was no significant change in debt, reserves, or other liabilities
during the three-month period and capital projects at March 31, 1995,
amounted to approximately $28.9 million authorized and outstanding from
$36.2 million authorized and outstanding at December 31, 1994.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
No change from 10-K for the year ended December 31, 1994,
except as previously discussed regarding the ad valorem tax
case with the State of Florida.
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 3, 1995 /s/ T. Neal Smith
________________________________
Vice President & Secretary
Date: May 3, 1995 /s/ J.R. Yastrzemski
_________________________________
Comptroller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> MAR-31-1995 DEC-31-1995
<CASH> 4,648 15,235
<SECURITIES> 10,531 14,208
<RECEIVABLES> 25,133 25,669
<ALLOWANCES> 0 0
<INVENTORY> 11,646 11,950
<CURRENT-ASSETS> 57,389 72,805
<PP&E> 791,896 769,817
<DEPRECIATION> 213,018 208,180
<TOTAL-ASSETS> 742,732 722,494
<CURRENT-LIABILITIES> 41,398 33,055
<BONDS> 0 0
<COMMON> 57,946 57,946
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 742,732 722,494
<SALES> 45,579 199,544
<TOTAL-REVENUES> 46,947 208,661
<CGS> 0 0
<TOTAL-COSTS> 37,916 152,989
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 192 0
<INCOME-PRETAX> 8,839 55,672
<INCOME-TAX> 3,315 21,067
<INCOME-CONTINUING> 5,524 34,605
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,524 34,605
<EPS-PRIMARY> 0.62 3.85
<EPS-DILUTED> .0 .0
</TABLE>
