<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1995.
Commission File No. 2-89530
FLORIDA EAST COAST INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
Florida 59-2349968
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1650 Prudential Drive, Jacksonville, FL 32201-1380
(Address of principal executive offices)
Registrant's telephone number, including area code (904) 396-6600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
Common Stock, $6.25 Par Value New York Stock Exchange
Collateral Trust 5% Bonds New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, or
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated into Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
Based on the closing sales price of March 1, 1996, the aggregate market value
of the voting stock held by non-affiliates of the Registrant was $324,667,639.
The number of shares of the Registrant's common stock, $6.25 par value, is
is 9,271,361 shares issued and 9,051,987 shares outstanding at March 1, 1996,
with 219,374 shares of treasury stock.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Florida East Coast Industries, Inc. (Registrant) was incorporated under the
laws of the State of Florida on December 9, 1983, for purposes of (a)
directly, or through the ownership of shares in any corporation, to acquire,
hold, manage, improve, develop, and dispose of real estate and property; (b)
only through the ownership of shares in any corporation, to engage in the
transportation industry; (c) directly, or through the ownership of shares in
any corporation, to purchase or otherwise acquire, hold, own, and dispose of
shares or other securities in any corporation; and (d) to engage in any other
lawful act or activity for which a corporation may be organized under the
Florida General Corporation Act.
Segments
Registrant is segmented into areas of Transportation (principally by rail)
and Realty (real estate ownership, development, leasing, and management).
Transportation: Registrant owns 100% of the stock of Florida East Coast
Railway Company (Railway) and 80% of the stock of International Transit, Inc.
(ITI).
Railway owns 100% of the stock of seven subsidiary corporations, all of which
are included in the consolidated Transportation segment and which, considered
in the aggregate, do not constitute a significant subsidiary.
Principal commodities carried by Transportation include automotive vehicles,
crushed stone, cement, trailers-on-flatcars, containers-on-flatcars, and basic
consumer goods such as foodstuffs. Movement is relatively stable throughout
the year with heaviest traffic ordinarily occurring during the first and last
quarters of the year.
Railway is the only railroad serving locations along the east coast of Florida
between Jacksonville and West Palm Beach. From West Palm Beach to Miami,
Railway is competitive with CSX Transportation (CSXT) for rail traffic,
excluding that of trailer-on-flatcar/container-on-flatcar traffic which is
handled exclusively by Railway under agreement with CSXT. Common motor
carriers and owner-operators are competitive throughout the entire
transportation system.
Railway is considered generally as a terminating railroad, meaning that there
is little or no rail traffic received from one carrier and delivered to
another. A significant portion of traffic handled is received from rail
connections, CSXT, and Norfolk Southern Railway at Jacksonville, destined to
points on Railway's line, whereas a less significant portion is forwarded to
those connections for destinations outside Florida. Railway has, in recent
years, experienced continuing growth in traffic originating and terminating
at points on its own line, and this local traffic is now generating in excess of
46% of rail traffic revenues.
ITI is a common motor carrier providing truckload service throughout most of
the southeastern United States which was acquired at the beginning of the
second quarter 1995. Since April 1, 1995, ITI's revenues and expenses have
been consolidated into the Company's financials and this consolidation has
affected period-to-period comparisons throughout the remainder of the year,
but did not significantly impact the consolidated net income of the Company.
Realty: Registrant owns 100% of the stock of Gran Central Corporation
(GCC).
GCC is engaged in the development, lease management, and sales of its property,
and general management of all real property included in the consolidated
financials. GCC is in competition with other developers and brokers throughout
its operating area.
Employees: As of December 31, 1995, the Registrant employed approximately
1,094 employees including 1,061 in Transportation; 28 in Realty; and 5 in
Corporate. Approximately 700 employees in Transportation are covered by
collective bargaining agreements.
Recent Events: The Registrant (FECI), in press release dated February 26, 1996,
announced that a Special Committee of the Board of Directors had previously
been appointed to review, in particular, a possible disposition of its Railway
subsidiary, Florida East Coast Railway (FEC). The Special Committee
recommended to the full Board that FECI should pursue a disposition of
FEC, but only in conjunction with a disposition of all of FECI's realty
subsidiary, Gran Central Corporation (GCC), and the Board of FECI concurred
with the recommendation.
The FECI Special Committee has advised St. Joe Paper Company that the Special
Committee will not pursue a disposition of the railroad unless the Committee
has adequate assurance that the remaining business of FECI, the real estate
operations conducted by its wholly-owned subsidiary, GCC, can also be disposed
of on acceptable terms. There can be no assurance when, if and on what terms
a disposition of FEC may be made.
The Special Committee has recognized that it might be possible for FECI to
merge with another company with substantial railroad operations in a
transaction in which no gain or loss would be recognized to FECI or its
shareholders. The Company believes that the likelihood of such a merger
is significantly lessened as long as GCC remains a FECI subsidiary. St. Joe
has indicated to FECI that, if a merger of FECI with another railroad
corporation would be facilitated by an exchange of GCC stock for the FECI
stock held by St. Joe, St. Joe would be willing to consider exchanging
shares of FECI stock it owns for all of the shares of GCC stock held by FECI
and in that regard has proposed acquiring all the issued and outstanding
shares of common stock per share of GCC in a tax free exchange of its shares
in FECI in return for 100% ownersip of GCC stock. St. Joe and FECI have each
hired an appraisal firm to assist in evaluating the property of GCC, and
St. Joe and FECI intend to see if they can negotiate terms of an exchange
that will be acceptable to both parties. As yet, there have been no purchase
price discussions, and FECI anticipates no such discussions would occur until
the completion of the appraisals. Accordingly, there can be no assurance when,
if and on what terms St. Joe may acquire GCC from FECI.
President Clinton's Proposed Fiscal 1997 Budget (the "Proposed Budget")
could have a substantial and adverse effect upon a merger of FECI with
another company subsequent to the acquisition of GCC common stock by St.
Joe in exchange for FECI common stock. The Proposed Budget would amend
current laws to provide that a merger of FECI with another company within
two years of the exchange of GCC common stock for FECI common stock,
pursuant to which the FECI shareholders would own less than fifty percent
of the voting power, and less than fifty percent of the value, of the stock
of the surviving company, could cause FECI to recognize gain on the exchange
of the GCC common stock. The gain would be measured by the difference
between the fair market value of the GCC common stock and FECI's adjusted
tax basis in such stock. Accordingly, there can be no assurance when, if,
and on what terms a merger of FECI with another corporation, or sale of FEC
or GCC, may be made. Also, there can be no assurance when, if, or on what
terms St. Joe may acquire GCC from FECI.
Registrant has no foreign operations.
Item 2. PROPERTIES
Transportation: Transportation owns approximately 12,000 acres of land
property, all located along the east coast of the state of Florida and
devoted to railroad operations. In addition to rail right-of-way between
Jacksonville and Miami and between Ft. Pierce and Lake Harbor, operating
property includes significant switching/classification yards, trailer/container
loading/unloading facilities, automobile marshaling yard, maintenance
facilities, etc., at major terminals throughout the system.
Transportation physical plant (i.e., track structure, shops, and office
buildings) is in excellent condition and includes 351 miles of main track, 91
miles of branch line track, 157 miles of yard switching track, and 184 miles of
other tracks, including second main and passing tracks. The main track is
generally constructed of 132# rail and other track materials on concrete
crossties providing a track structure meeting the needs of today's heavy
traffic loads. Certain of the branch line and yard tracks, though in good
physical condition, are constructed of materials lighter than the 112# and 115#
rail deemed necessary for this trackage, and programs are currently under way
to re-lay these tracks with heavier materials. These programs may be expected
to extend several years into the future.
Transportation owns 82 diesel electric locomotives, approximately 2,740 freight
cars, approximately 97 tractors, and 1,493 trailers for highway revenue service,
numerous pieces of rail-mounted and non-rail-mounted work equipment, and
numerous automotive vehicles used in maintenance and transportation operations.
All equipment owned is in good physical condition.
Realty - Realty owned and managed approximately 19,146 acres of land at year-
end 1995, including approximately 346 acres developed with buildings; 1,158
acres developed with infrastructure ready to receive buildings, and
approximately 16,511 acres of undeveloped properties including 1,131 acres
owned by Transportation but not required for operations. These properties are
held for lease, development, and/or sale, and have a situs in fourteen counties
of the state of Florida as follows:
Duval 1,534 acres
St. Johns 3,385 "
Putnam 87 "
Flagler 3,464 "
Volusia 3,581 "
Brevard 2,799 "
Orange 79 "
Indian River 3 "
St. Lucie 610 "
Martin 665 "
Palm Beach 296 "
Broward 62 "
Dade 1,684 "
Manatee 897 "
----------
Total 19,146 "
Realty also owned at year-end 1995 fifty (50) buildings as detailed below:
No. of Rentable Year
Location Bldgs. Type Square Ft. Built
- -------- ------ ---- ---------- -----
duPont Center
Jacksonville, FL 2 Offices 144,000 1987/88
Barnett Plaza
Jacksonville, FL 1 Office 59,000 1982
Gran Park at
Interstate South
Jacksonville, FL 6 Office/Showroom/
Warehouses 260,000 1987/89
Gran Park at the 2 Office/Showroom/
Avenues Warehouses 101,000 1992
Jacksonville, FL 3 Offices 225,000 1992/93/95
1 Office/Warehouse 147,000 1994
Gran Park at
Melbourne 1 Office/Showroom/
Melbourne, FL Warehouse 28,000 1989
Gran Park at 1 Office/Showroom/
Riviera Beach, FL Warehouse 62,000 1987
2 Rail Warehouses 176,000 1982/87
Lewis Terminals 4 Cross Docks 75,000 1987/91
Gran Park-McCahill
Miami, FL 2 Rail Warehouses 468,000 1992/94
Gran Park at Miami 5 Office/Showroom/
Miami, FL Warehouses 368,000 1988/90/92/94
4 Office/Warehouses 382,000 1990/91/92/93
4 Rail Warehouses 398,000 1989/90/93/94
7 Front Load
Warehouses 790,000 1991/92/93/95
1 Double Front Load
Warehouse 239,000 1993
1 Office/Service
Center 39,000 1994
Hialeah, FL 1 Cross Dock 20,000 1987
1 Transit Warehouse 30,000 1975
Pompano Beach, FL 1 Rail Warehouse 54,000 1987
-- ---------
TOTALS 50 4,065,000
Realty's holdings include lands adjacent to Railway's tracks which are suitable
for development into office and industrial parks offering both rail and non-
rail-served parcels. Certain other holdings are in urban or suburban locations
offering opportunities for development of office building structures or
business parks offering both office building sites and sites for flexible space
structure such as office/showroom/warehouse buildings. Wherever possible,
Realty intends to develop infrastructure and construct buildings for lease and
continued ownership.
ITEM 3. LEGAL PROCEEDINGS
The Registrant alleged the State, through its "unit assessment procedures," had
significantly over assessed the rail operating properties for 1994 and 1995.
During 1995, the Registrant settled its legal actions against the State of
Florida and several counties of the State concerning the ad valorem taxes for
1994 and 1995. The settlement was within management's estimate of the
Company's potential liability, and therefore, had no significant effect on net
income.
The Railway has been named as a potentially responsible party for the
remediation of a designated Superfund site near Jacksonville, Florida. The
USEPA has alleged the Railway caused certain materials to be disposed of at
the site over a period of years. The USEPA has offered all named PRP's an
opportunity to participate in a pilot allocation program. This program is
similar to binding arbitration. If the Company participates in this program,
its share of the liability for the remediation of the site will be fixed. The
USEPA has also offered to negotiate a separate settlement with certain parties,
including the Railway, whom the USEPA considers to be de minimis parties. The
Railway believes that, whichever alternative is chosen, its liability for the
remediation of the site will not be material.
The Railway has been named as a potentially responsible party for the
remediation of a designated Superfund Site in Portsmouth, Virginia. The USEPA
has alleged that the Railway caused certain materials to be sent to the site
over a period of years. These materials were utilized by the owner of the site
in the course of its business which the Railway believes caused the site to
become contaminated. The Railway is vigorously opposing any attempt to impose
any liability upon the Railway. The owner of the site filed suit in the
United States District Court for the Eastern District of Virginia, Norfolk
Division, seeking to impose liability upon the defendants, including the
Railway, for remediation of the site. Defendant railroad companies have formed
a joint defense group and continue to oppose the imposition of any liability
upon them. In the event the railroad defendants do not prevail upon the issue
of liability, the Railway believes its responsibility for the remediation of
the site will not be material.
There are no other legal or regulatory proceedings pending or known to be
contemplated which, in the opinion of the General Attorney of the Registrant,
are other than normal and incidental to the kinds of businesses conducted by
the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
a. Principal market on which Florida East Coast Industries, Inc., common stock
is traded: New York Stock Exchange, Symbol: FLA.
b. The table below presents the high and low market prices and dividend
information for Florida East Coast Industries, Inc., common shares:
1995
----
Quarter Ended Dec. 31 Sept. 30 June 30 March 31
High $72 1/8 $76 1/2 $79 3/4 $80 3/4
Low $64 1/8 $67 1/2 $70 3/8 $65 7/8
Dividends $.10 $.10 $.10 $.10
1994
----
Quarter Ended Dec. 31 Sept. 30 June 30 March 31
High $77 5/8 $77 1/4 $72 7/8 $67 1/8
Low $65 1/2 $65 1/4 $61 7/8 $57 5/8
Dividends $.10 $.10 $.10 $.10
c. The total number of holders of record of Florida East Coast Industries,
Inc., common stock as of December 31, 1995, was 829.
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
(Unaudited)
Years Ended December 31
1995 1994 1993
---- ---- ----
Revenues:
Operating Revenues $201,107 $199,544 $181,096
Other Income 7,924 9,117 5,103
-------- -------- --------
Total Revenues and
Other Income $209,031 $208,661 $186,199
Income before cumulative
effect of change in
accounting principle $ 26,637 $ 34,605 $ 20,779
Cumulative effect of
change in accounting
principle for income
taxes 0 0 1,504
-------- ------- -------
Net Income $ 26,637 $34,605 $22,283
======== ======= =======
Per Share Data
Cash Dividend $ 0.40 $ 0.40 $ 0.40
======== ======= =======
Income before cumulative
effect of change in
accounting principle $ 2.95 $ 3.85 $ 2.31
Cumulative effect of
change in accounting
principle for income
taxes $ 0.00 $ 0.00 $ .17
-------- ------- -------
Net Income Per Common
Share $ 2.95 $ 3.85 $ 2.48
At year-end:
Total Assets $756,210 $722,494 $688,445
Working Capital $ 38,010 $ 39,750 $ 42,552
Shareholders' Equity $581,860 $552,268 $523,038
Average Number of Employees 994 1,319 1,463
*Average Wage per Employee $ 42,215 $ 36,482 $ 33,936
The Items Below Pertain to Railway Operations Only (Not Consolidated)
Revenue Ton-Miles
(thousands) 4,122,000 4,388,000 4,257,000
*Freight Revenue Per
Ton-Mile $ 0.0345 $ 0.0338 $ 0.0342
Miles of Road Operated
at Year-End 442 442 442
Revenues: 1992 1991
---- ----
Operating Revenues $175,755 $166,561
Other Income 8,253 26,108
-------- --------
Total Revenues and
Other Income $184,008 $192,669
Income before cumulative effect of
change in accounting principle $ 24,045 $ 29,056
Cumulative effect of change in
accounting principle for income
taxes $ 0 $ 0
-------- --------
Net Income $ 24,045 $ 29,056
======== ========
Per Share Data
Cash Dividend $ 0.40 $ 0.40
Income before cumulative effect of
change in accounting principle $ 2.67 $ 3.21
Cumulative effect of change in
accounting principle for income
taxes $ 0.00 $ 0.00
-------- --------
Net Income Per Common Share $ 2.67 $ 3.21
At year-end:
Total Assets $670,419 $647,675
Working Capital $ 39,407 $ 38,476
Shareholders' Equity $503,464 $483,020
Average Number of Employees 1,448 1,507
*Average Wage per Employee $ 33,414 $ 32,428
The Items Below Pertain to Railway Operations Only (Not Consolidated)
Revenue Ton-Miles (thousands) 4,158,000 3,862,000
*Freight Revenue Per Ton-Mile $ 0.0340 $ 0.0344
Miles of Road Operated at Year-End 442 442
Quarterly Financial Data
(Dollars in thousands except per share amounts)
1995
----
Dec. 31 Sept. 30 June 30 March 31
Operating Revenues $51,839 $51,710 $51,979 $45,579
Other Income $ 2,176 $ 1,807 $ 2,765 $ 1,176
Operating Expenses $42,668 $42,069 $43,826 $37,916
Net Income $ 7,171 $ 7,142 $ 6,800 $ 5,524
Net Income Per Common Share $ 0.79 $ 0.78 $ 0.76 $ 0.62
1994
----
Dec. 31 Sept. 30 June 30 March 31
Operating Revenues $48,723 $45,729 $46,682 $58,410
Other Income $ 2,962 $ 3,447 $ 992 $ 1,716
Operating Expenses $37,177 $39,164 $38,421 $38,227
Net Income $ 8,568 $ 6,712 $ 5,119 $14,206
Net Income Per Common Share $ 0.95 $ 0.75 $ 0.57 $ 1.58
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT DISCUSSION AND ANALYSIS OF INCOME STATEMENTS
This statement summarizes the Company's consolidated income results for
the three-year period ending December 31, 1995. The purpose of this
discussion is to provide background information for the figures presented,
including the significant events which contributed thereto.
Operating revenues increased throughout the three-year period, with
increases of $1.6 million or .8% from year-end 1994 to year-end 1995 and
$18.4 million or 10.2% from year-end 1993 to year-end 1994.
The 1995 increase of $1.6 million in operating revenues was comprised of
increases of $10.4 million in transportation revenues and $4.4 million in
realty rental income with a decrease of $13.3 million in land sales. The 1994
increase of $18.4 million in operating revenues was comprised of an increase of
$.8 million in transportation revenues and $17.7 million in realty revenues
including an increase of $13.8 million in land sales.
As reported in the 10-Qs for 1995 beginning with the second quarter, the
composition of the revenues and expenses of the Transportation segment of the
Company has changed. The change is related primarily to the consolidation of
International Transit, Inc. (ITI) revenues and expenses into the financials as
of April 1, 1995. However, the contribution to net income by ITI did not
significantly impact the consolidated net income of the Company. Also
contributing to the change was the implementation on April 1, 1995, of a
haulage agreement with a connecting rail carrier whereby the connecting rail
carrier's intermodal shipments were handled in wholesale fashion to and from
the Company's south Florida intermodal terminals. The inclusion of ITI's
revenues and expenses into the consolidated financials increased the Company's
revenues and expenses, whereas the haulage agreement with the connecting
carrier reduced revenues and expenses in the consolidated financials.
The increase in transportation revenues of $10.4 million from 1994 to
1995 is primarily attributable to the consolidation of ITI's revenues of $19.1
million into the Company's finacials. Transportation revenues, discounting
ITI's revenues, declined and were attributable to the combination of the
haulage agreement previously discussed and the decline in shipments discussed
below.
Transportation rail revenues are derived from four major classifications
of traffic: shipments of rock, intermodal (containers and trailers),
automotive, and all other commodity type shipments. Brief discussions of the
volumes shipped in 1995 and the conditions impacting those volumes are presented
below.
Rock shipments in 1995 were flat when compared to 1994.
Intermodal shipments in 1995 decreased by 4,404 units or 1.4% when compared
to 1994. First quarter 1995 intermodal shipments began with an increase of
3,498 or 4.5% over 1994, but the remainder of 1995 produced a steady decline
in this classification of traffic with fourth quarter producing a 6.7% decrease
from fourth quarter 1994. The domestic market for intermodal shipments
became very competitive with the trucking industry pricing at low levels. As
a result, the number of intermodal shipments, both intrastate and interstate,
declined. Comparing 1994 with 1993, intermodal shipments decreased by 640 or
.2%. This decline was attributed to a combination of adverse weather
conditions, union strikes, and intracoastal barge competition.
Automotive shipments during 1994 and 1995 remained relatively unchanged.
All other shipments in 1995 increased by 5% over 1994. Sizable gains
were realized in the origination of shipments of raw sugar with modest gains
in shipments of beer, fructose, building materials, and other consumer goods
received from connecting carriers. When comparing 1994 with 1993, carload
traffic other than rock and automobile increased by 6.4% which was attributed
to positive trends in plywood and lumber reload traffic, bulk commodities, and
cement.
Realty land sales decreased by $13.3 million in 1995 when compared to
1994. This decrease was primarily attributable to the single sale of realty
property for approximately $11.3 million to the State of Florida in the first
quarter 1994. Discounting this single sale, land sales decreased by $2.0
million in 1995 when compared to 1994. When comparing land sales in 1994
versus 1993, land sales increased $13.8 million mainly because of the single
sale of realty property discussed previously.
Realty rental income increased by $4.4 million in 1995 compared to 1994
and $3.9 million in 1994 compared to 1993. These increases resulted primarily
from new buildings coming on-line during these periods.
As of year-end 1995, Gran Central Corporation owned fifty (50) buildings
with approximately 4.1 million square feet of leasable space. In 1995
approximately 300,000 square feet was added to the inventory of leasable space.
Approximately 95% of the 4.1 million square feet of leasable space was under
lease at year-end 1995 as compared to 90% in 1994 and 88% in 1993. The Company
expects rental revenue to continue to increase as new space is constructed and
added to inventory.
Under construction at year-end were five new buildings which, upon
completion, will add an additional .6 million square feet of leasable space.
Since the Company is primarily involved in ongoing development of land for
construction of buildings for lease, only occasional realty sales are
anticipated.
Operating expenses increased $13.5 million or 8.8% in 1995 from 1994 and
$5.0 million or 3.4% in 1994 from 1993. The 1995 increase of $13.5 million was
primarily related to the inclusion of ITI's expenses into the Company's
consolidated financials.
Discounting ITI's operating expenses of $18.9 million from the consolidated
operating expenses, operating expenses decreased $5.4 million or 3.5% when
comparing 1995 with 1994. When comparing 1994 with 1993, operating expenses
increased by $5.0 million or 3.4%. The operating expense changes were
primarily attributable to the out-sourcing of services previously performed by
Railway's subsidiaries and the implementation of the haulage agreement in
second quarter 1995. The 1994 operating expense increase of $5.0 million over
1993 was attributed generally to inflationary increases and an increase in
property taxes of $3.8 million as a result of a credit emanating from a
favorable tax settlement in 1993 reducing operating expenses in that year.
Other income decreased by $1.2 million in 1995 compared to 1994. This was
primarily attributed to the decrease in gains on sale of assets in the amount
of $2.8 million offset by the increase in other income of $1.3 million
representing gains on investments. Other income for the 1994 and 1993 periods
reflects gains on sales and other disposition of properties of $4.0 million
and $.5 million, respectively.
Income taxes decreased by $5.2 million in 1995 from 1994 and increased by
$3.6 million in 1994 from 1993 primarily due to changes in income before income
taxes for those comparative periods.
MANAGEMENT DISCUSSION AND ANALYSIS OF BALANCE SHEETS
The Consolidated Balance Sheets provide information about the nature and
amounts of the Company's investments, its obligations to creditors, and its
shareholders' equity at the end of the year. This information complements
data found in the Consolidated Statements of Income and Retained Earnings and
is designed to contribute to the shareholders' understanding of the Company.
Total current assets for 1995 decreased by $2.7 million when compared to
1994. This change is represented primarily by decreases of $5.4 million in
cash, cash equivalents, and short-term investments, $1.7 million in materials
and supplies, increases of $2.9 million in accounts receivable, and $1.5
million in other current assets. Large liquid reserves are maintained to meet
the Company's commitment to realty construction and development.
Other investments decreased by $10.3 million in 1995 from 1994 to a
total of $69.2 million. This decrease was attributed primarily to realty
development and construction in 1995. Other investments include approximately
$42.3 million of a portfolio managed actively in diversified investment funds
and the balance being invested in U.S. Treasury Bills and similar highly liquid
investments. These investments are classified as long-term because of
management's intent to use them to finance major realty construction projects.
At year-end 1995 and currently, the Company had four major realty
development projects in progress: Gran Park at Jacksonville, Gran Park at the
Avenues, Gran Park at Deerwood (all in Jacksonville), and Gran Park at Miami.
Construction activities in these parks contributed significantly to the
$47.0 million increase in properties from 1994 to 1995. The additions in 1995
amounted to approximately .3 million square feet of leasable space represented
by three new buildings.
Total current liabilities in 1995 decreased approximately $1.0 million
when compared to 1994. This change was primarily attributable to decreases of
$1.6 million in accounts payable, $.2 million in casualty and other reserves,
and $.2 million in income taxes. These decreases were offset by increases in
property taxes of $.2 million and other liabilities of $.8 million.
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.
As assessments and cleanups proceed, these accruals are reviewed and adjusted.
The estimated liability for environmental costs was determined without
consideration of possible recoverables through State reimbursement programs.
The only time environmental recoverables are recorded in the books of the
Company is at the time a claim is filed with the State.
Compliance with the federal, state, and local laws and regulations
relating to the protection of the environment has not affected the Company's
capital additions, earnings, or competitive position, nor does management
anticipate any future problems will adversely affect the Company's financial
situation based upon the information available today.
Environmental expenditures for capital improvements and infrequent
expenditures for ongoing operations and maintenance have historically been
significant to the operations of the Company. Management does not anticipate
any changes in these expenditures.
The Company's financial position continues to be strong as indicated by
the current ratios of 2.20 in 1994 and 2.19 in 1995. The Company has no long-
term debt or open lines of credit, nor does the Company anticipate that any
will be negotiated in the foreseeable future. The Company is not obligated
under any significant capital or operating-type leases, except for the short-
term leasing of locomotives, freight cars, trailers, and data processing
equipment.
As of December 31, 1995, the Company had authorized approximately $33.2
million for capital expenditures, of which 83% represented realty development
and construction. These expenditures are expected to be funded from current
operations supplemented, as necessary, by cash and investments currently on
hand.
MANAGEMENT DISCUSSION AND ANALYSIS OF STATEMENTS OF CASH FLOWS
The Statements of Cash Flows detail the Company's cash flow from
operating, investing, and financing activities during the year. Since the
Company does not use debt to finance its operations, the sources of funds
throughout the year are exclusively generated by operating and investing
activities. To date these sources have been sufficient to fund the purchases
and construction of properties and pay dividends.
Net income for 1995 decreased approximately $8.0 million when compared to
1994, and 1994 increased approximately $12.3 million when compared to 1993.
The changes in net cash generated by operating activities from 1994 to
1995 and from 1993 to 1994 were primarily attributable to changes in net incomes
and the associated timing differences of remitted cash receipts and payments
for those comparative periods.
The composition of gains on disposition of assets includes gains on non-
realty land sales of $1.3, $4.0, and $.5 million for the years 1995, 1994, and
1993, respectively.
The purchases of properties for 1995, 1994, and 1993 amounted to $70.6
million, $49.3 million, and $54.7 million, respectively. Purchases of
properties for the past three years have been financed primarily from cash
generated by operating activities with the balance of the funding being
applied from investments.
The Company is a capital intensive company and has approximately $830
million invested in such assets. Generally accepted accounting principles
require the use of historical costs in preparing financial statements. This
approach disregards the effect of inflation on the replacement cost of
property and equipment. Therefore, the replacement costs of these assets,
as well as the related depreciation expense, would be substantially greater
than the amounts reported on the basis of historical costs. The acquisition
of new assets will also result in higher depreciation charges and, in the case
of realty, higher taxes and operating costs.
Cash flows from financing activities for the past three years represent
dividend payments.
Cash dividends of $.40 per share were paid in each of the three years,
reflecting the Company's philosophy that shareholders receive a current benefit
at the same time that the Company is reinvesting most earnings in a debt-free
asset growth program.
The Company continues to believe that asset growth should be internally
funded by operating and investing activities rather than through the use of
debt. However, the Company is confident that if a need to access the market
for funds were to arise, such access would be readily available.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
The Board of Directors and Shareholders
Florida East Coast Industries, Inc.:
We have audited the consolidated financial statements of Florida East Coast
Industries, Inc., and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedules as listed in the accompanying
index. These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
signficiant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Florida East Coast
Industries, Inc., and subsidiaries as of December 31, 1995, and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in Note 3 to the consolidated financial statements, the Company
changed its method of accounting for investments to adopt the provisions of
the Financial Accounting Standards Board's Statement of Financial Accounting
Standard (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," at December 31, 1993. As discussed in Note 3, the Company
changed its method of accounting for income taxes effective January 1, 1993,
to adopt the provisions of the Financial Accounting Standards Board's SFAS No.
109, "Accounting for Income Taxes."
s/s KPMG Peat Marwick
Certified Public Accountants
Jacksonville, Florida
January 29, 1996
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Years ended December 31, 1995, 1994, and 1993
(Dollars in thousands except per share amounts)
Years ended December 31
1995 1994 1993
Operating Revenues:
Transportation $173,507 $163,098 $162,318
Realty - Land Sales 2,830 16,100 2,320
- Rents & Other 24,770 20,346 16,458
-------- -------- --------
Total Revenues 201,107 199,544 181,096
-------- -------- --------
Operating Expenses:
Transportation 129,618 120,147 117,789
Realty 17,025 16,796 13,403
General and Administrative 19,836 16,046 16,766
-------- -------- --------
Total Expenses 166,479 152,989 147,958
-------- -------- --------
Operating Profit 34,628 46,555 33,138
Other Income (Expense):
Dividends 440 320 326
Interest Income 5,359 4,614 3,920
Interest Expense (639) (48) 0
Gains on sales and other disposition of prop 1,280 4,038 535
Other (net) 1,484 193 322
-------- -------- --------
Total Other Income (Expense) 7,924 9,117 5,103
-------- -------- --------
Income before income taxes and cumulative
effect of change in accounting principle 42,552 55,672 38,241
Income Taxes: (Note 8)
Current 13,028 13,990 11,807
Deferred 2,887 7,077 5,655
-------- -------- --------
Total Income Taxes 15,915 21,067 17,462
-------- -------- --------
Income before cumulative effect of change
in accounting principle 26,637 34,605 20,779
Cumulative effect of change in accounting
principle for income taxes 0 0 1,504
-------- -------- --------
Net Income 26,637 34,605 22,283
-------- -------- --------
Balance at beginning of year $507,813 $476,808 $458,125
Cash dividends (3,616) (3,600) (3,600)
-------- -------- --------
Balance at Year-end $530,834 $507,813 $476,808
======== ======== ========
Per share data:
Cash dividends $ 0.40 $ 0.40 $ 0.40
-------- -------- --------
Income before cumulative effect of change
in accounting principle $ 2.95 $ 3.85 $ 2.31
Cumulative effect of change in accounting
principle for income taxes 0.00 0.00 0.17
-------- -------- --------
Net income $ 2.95 $ 3.85 $ 2.48
======== ======== ========
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
December 31, 1995, and 1994
(Dollars in thousands except per share amounts)
1995 1994
Assets
Current Assets:
Cash and cash equivalents $ 11,050 $ 15,235
Short-term investments (Note 6) 12,999 14,208
Accounts receivable, net 28,589 25,669
Materials and supplies 10,223 11,950
Other current assets (Note 8) 7,218 5,743
-------- --------
Total current assets 70,079 72,805
Other Investments (Note 6) 69,226 79,481
Properties, Less Accumulated Depreciation and
Amortization (Note 5) 608,640 561,637
Other Assets and Deferred Charges 8,265 8,571
-------- --------
Total Assets $756,210 $722,494
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 20,317 $ 21,945
Income taxes 593 824
Estimated property taxes 3,353 3,174
Accrued casualty and other reserves (Note 10) 5,226 5,400
Other accrued liabilities 2,580 1,712
-------- --------
Total current liabilities 32,069 33,055
Deferred Income Taxes (Note 8) 132,968 128,237
Reserves and Other Long-Term Liabilities (Note 10) 9,313 8,934
Commitments and Contingencies (Note 10)
Shareholders' Equity:
Common stock, $6.25 par value; 9,360,000 shares authorized;
9,271,361 shares issued and 9,051,987 shares
outstanding 57,946 57,946
Capital surplus 1,598 101
Retained earnings 530,834 507,813
Net unrealized gain (loss) on investments available-
for-sale (Note 6) 1,755 (884)
Treasury stock at cost (219,374 and 271,361 shares) (10,273) (12,708)
-------- --------
Total shareholders' equity 581,860 552,268
-------- --------
Total Liabilities and Shareholders' Equity $756,210 $722,494
======== ========
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994, and 1993
(Dollars in thousands)
Years ended December 31
1995 1994 1993
Cash Flows from Operating Activities:
Net Income $26,637 $34,605 $22,283
Adjustments to reconcile net income to cash
generated by operating activities:
Cumulative effect of change in
accounting principle for income taxes 0 0 (1,504)
Depreciation and amortization 22,292 21,747 20,335
Gains on disposition of assets (1,280) (4,038) (535)
Deferred taxes 2,887 7,077 5,655
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(1,541) 2,210 771
Decrease (increase) in other current assets 308 713 (559)
Decrease (increase) in other assets and
deferred charges 4,137 (1,311) (468)
(Decrease) increase in accounts payable (2,729) 54 (121)
Increase (decrease) in estimated
property taxes 179 (1,491) (1,742)
Increase (decrease) in other current
liabilities 143 (1,932) 216
(Decrease) increase in reserves and other
long-term liabilities (1,251) 2,471 (390)
------- ------- -------
Net cash generated by operating activities 49,782 60,105 43,941
------- ------- -------
Cash Flows from Investing Activities:
Purchases of properties (70,602) (49,274) (54,743)
Purchases of investments:
Available-for-sale (31,247) (17,364) (31,394)
Held-to-maturity (35,800) (58,349) (18,419)
Maturities and redemption of investments:
Available-for-sale 27,968 12,799 19,372
Held-to-maturity 54,839 49,847 44,992
Proceeds from disposition of assets 4,491 6,633 2,157
------- ------- -------
Net cash used in investing activities (50,351) (55,708) (38,035)
------- ------- -------
Cash Flows from Financing Activities:
Payment of dividends (3,616) (3,600) (3,600)
------- ------- -------
Net cash used in financing activities (3,616) (3,600) (3,600)
------- ------- -------
Net (Decrease) Increase in Cash and Cash
Equivalents (4,185) 797 2,306
Cash and Cash Equivalents at Beginning of Year 15,235 14,438 12,132
------- ------- -------
Cash and Cash Equivalents at End of Year $11,050 $15,235 $14,438
======= ======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for income taxes $13,810 $14,312 $11,166
Cash paid for interest $ 639 $ 0 $ 0
Notes to Consolidated Financial Statements
December 31, 1995, 1994, and 1993
1. Nature of Business
The principal operations of Florida East Coast Industries, Inc. (the
"Company") and its subsidiaries primarily relate to the transportation of goods
by rail and to the development, leasing management, and sale of real estate.
Both the transportation and realty operations are located within the state of
Florida.
2. Majority Stockholder
The Nemours Foundation, which is funded by the Alfred I. duPont
Testamentary Trust, owns approximately 5% of the Company's common stock. The
Alfred I. duPont Testamentary Trust owns approximately 69% of the common stock
of St. Joe Paper Company, which owns, through a subsidiary, approximately 54% of
the Company's common stock. The payment of dividends by the Company was the
only significant transaction with St. Joe Paper Company or its affiliates
in 1995, 1994, or 1993.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries, all but one of which are wholly-
owned. All significant intercompany transactions and balances have been
eliminated in consolidation.
Revenue Recognition
Transportation Revenues: Revenues are substantially recognized upon
completion of transportation services at destination.
Realty Land Sales: Revenue is recognized upon closing of sales contracts
for sale of land or upon settlement of legal proceedings such as condemnations.
Rental Income: Revenue is recognized upon completion of rental and lease
contracts. The Company uses the straight-line basis for recording the revenues
over the life of the lease contract.
Transportation Properties
Transportation properties are stated at historical cost and are
depreciated and amortized on the straight-line method at rates established by
the Interstate Commerce Commission (ICC). Gains and losses on normal
retirements of these items are credited or charged to accumulated depreciation.
Miscellaneous physical property consists principally of non-depreciable real
property.
Real Estate Properties
Real estate properties are stated at historical cost. Depreciation is
computed using the straight-line method over estimated asset lives of 15 years
for land improvements and 18 to 40 years for buildings.
Materials and Supplies
New materials and supplies are stated principally at average cost which
is not in excess of replacement cost. Used materials are stated at an amount
which does not exceed estimated realizable value.
Earnings Per Share
Earnings per common share is based on the weighted average number of
shares of common stock outstanding during the year (9,039,279 in 1995, and
9,000,000 in 1994 and 1993).
Cash and Cash Equivalents
For purposes of cash flows, cash and cash equivalents include cash on
hand, bank demand accounts, money market accounts, and overnight repurchase
agreements having original maturities of less than three months.
Income Taxes
The Company follows the asset and liability method of accounting for
income taxes in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes." Under Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Effective January 1,
1993, the Company adopted Statement 109 and has reported the cumulative effect
of that change in the method of accounting for income taxes in the 1993
consolidated statements of income.
Investments
Investments consist principally of municipal bonds, common stocks,
redeemable prefered stocks, and U.S. Government obligations. The Company
adopted the provisions of SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," as of December 31, 1993. Under Statement 115,
the Company classifies its debt and marketable equity securities in one of
three categories: trading, available-for-sale, or held-to-maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near-term. Held-to-maturity securities are those securities in which the
Company has the ability and intent to hold until maturity. All other
securities not included in trading or held-to-maturity are classified as
available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost, which represents
the adjustment for the amortization or accretion of premiums or discounts.
Unrealized holding gains and losses on trading securities are included in
earnings. Unrealized holding gains and losses, net of the related tax effect
on available-for-sale securities, are excluded from earnings and are reported
as a separate component of shareholders' equity until realized.
A decline in the market value of any available-for-sale or held-to-
maturity security below cost that is deemed other than temporary is charged to
earnings resulting in the establishment of a new cost basis for the security.
Realized gains and losses for securities classified as available-for-sale
and held-to-maturity are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
4. Acquisitions
On March 30, 1995, the Company purchased 80% of the outstanding stock of
International Transit, Inc., (ITI), a regional truckload carrier, through the
issuance of treasury stock. This non-cash transaction has been excluded from
the Statements of Cash Flows. ITI's gross revenues for 1995 and 1994 were
$25.2 million and $22.1 million, respectively. ITI's income is not material
to the consolidated financial statements. Operations of ITI are included in
the consolidated financial statements since the date of purchase.
5. Properties
Properties consist of (in thousands):
1995 1994
Transportation Properties:
Road $311,593 $302,625
Equipment 197,777 191,928
Miscellaneous Physical Property 5,435 5,435
Construction in Progess 5,673 3,007
-------- --------
520,478 502,995
Less Accumulated Depreciation & Amortization 196,244 187,906
-------- --------
$324,234 $315,089
======== ========
Real Estate Properties:
Land and Land Improvements $152,582 $113,615
Buildings 141,091 128,059
Construction in Progress 43,655 25,148
-------- --------
310,328 266,822
Less Accumulated Depreciation & Amortization 25,922 20,274
-------- --------
$284,406 $246,548
======== ========
Real estate properties having a net book value of $153.3 million at
December 31, 1995, are leased under non-cancelable operating leases with
expected aggregate rentals of $86.7 million which are due in years 1996-2000
in the amounts of $25.2, $21.9, $17.2, $12.9, and $9.5 million, respectively.
6. Investments
Other investments, including certain held-to-maturity investments which
mature within one year, are held as a development fund created to accumulate
capital expected to be required for future improvement of the Company's real
estate properties.
Investments at December 31, 1995, consist of (in thousands):
Unrealized Unrealized
Carrying Fair Holding Holding
Cost Value Value Gain (Loss)
-----------------------------------------------
Short-term investments
Held-to-maturity
U.S. Government securities $10,864 $10,864 $10,995 $ 131 $ 0
Tax exempt municipals 2,135 2,135 2,106 0 (29)
-----------------------------------------------
$12,999 $12,999 $13,101 $ 131 $ (29)
-----------------------------------------------
Other Investments
Available-for-sale
U.S. Government securities
Maturing in 1 to 5 years $ 303 $ 306 $ 306 $ 3 $ 0
Tax exempt municipals
Maturing in 1 to 5 years 6,968 7,181 7,181 213 0
Maturing in 5 to 10 years 20,093 20,953 20,953 860 0
Maturing in more than 10 years 5,610 5,820 5,820 210 0
Equity securities 10,114 11,685 11,685 1,831 (260)
-----------------------------------------------
$43,088 $45,945 $45,945 $ 3,117 $ (260)
-----------------------------------------------
Held-to-maturity
U.S. Government securities
Maturing in 1 to 5 years $16,923 $16,923 $17,067 $ 144 $ 0
Tax exempt municipals
Maturing in 1 to 5 years 5,556 5,556 5,688 132 0
Mortgage-backed securities
Maturing in 1 to 5 years 14 14 554 540 0
Other corporate debt securities
Maturing in 5 to 10 years 788 788 1,239 451 0
-----------------------------------------------
$23,281 $23,281 $24,548 $ 1,267 $ 0
-----------------------------------------------
$66,369 $69,226 $70,493 $ 4,384 $ (260)
-----------------------------------------------
Investments at December 31, 1994, consist of (in thousands):
Unrealized Unrealized
Carrying Fair Holding Holding
Cost Value Value Gain (Loss)
-----------------------------------------------
Short-term investments
Held-to-maturity
U.S. Government securities $11,035 $11,035 $11,500 $ 465 $ 0
Tax exempt municipals 3,157 3,157 3,091 0 (66)
Certificates of deposit 16 16 16 0 0
-----------------------------------------------
$14,208 $14,208 $14,607 $ 465 $ (66)
Other Investments
Available-for-sale
U.S. Government securities
Maturing in 1 to 5 years $ 1,220 $ 1,186 $ 1,186 $ 0 $ (34)
Tax exempt municipals
Maturing in 1 to 5 years 4,457 4,236 4,236 0 (221)
Maturing in 5 to 10 years 22,148 21,278 21,278 0 (870)
Maturing in more than 10 years 3,364 3,272 3,272 0 (92)
Equity securities 8,620 8,398 8,398 0 (222)
-----------------------------------------------
$39,809 $38,370 $38,370 $ 0 $(1,439)
Held-to-maturity
U.S. Government securities
Maturing within 1 year $40,080 $40,080 $41,136 $ 1,056 $ 0
Mortgage-backed securities
Maturing in 1 to 5 years 243 243 787 544 0
Other corporate debt securities
Maturing in 5 to 10 years 788 788 1,173 385 0
-----------------------------------------------
$41,111 $41,111 $43,096 $ 1,985 $ 0
-----------------------------------------------
$80,920 $79,481 $81,466 $ 1,985 $(1,439)
-----------------------------------------------
7. Collateral Trust 5% Bonds
There are outstanding at December 31, 1995, and 1994, $12,646,550 and
$12,880,575, respectively, of the Company's Collateral Trust 5% Bonds (the
"Bonds") due in 2001. Direct obligations of the U.S. Government, the cash
flows from which approximately coincide as to timing and amount with the
scheduled interest and principal payments on the Bonds, are held in trust for
the purpose of making such payments. Accordingly, the Bonds are considered to
be extinguished.
8. Income Taxes
Total income tax expense for the years ended December 31, 1995, 1994, and
1993, was allocated as follows (in thousands):
1995 1994 1993
-------------------------
Income from continuing operations $15,915 $21,067 $17,462
Shareholders' equity, for recognition of
unrealized holding gain (loss) on investments
available-for-sale 1,657 (1,115) 560
-------------------------
$17,572 $19,952 $18,022
=========================
Income tax expense attributable to income from continuing operations
differed from the amounts computed by applying the statutory federal income
tax rate to pre-tax income as a result of the following:
1995 1994 1993
-------------------------
Amount computed at statutory federal rate $14,894 $19,485 $13,384
Effect of dividends received exclusion and
tax free interest (835) (700) (538)
State taxes (net of federal benefit) 1,513 1,979 1,357
Adjustment to deferred tax assets and liabilities
for enacted changes in tax laws and rates 0 0 2,893
Other (net) 343 303 366
-------------------------
$15,915 $21,067 $17,462
=========================
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1995, 1994, and 1993 are as follows:
1995 1994 1993
---------------------------
Deferred tax assets:
Accrued casualty and other reserves $ 5,458 $ 5,395 $ 6,400
Amortization of fiber optic income 490 612 735
Unrealized holding loss on investments
available-for-sale 0 555 0
Other 637 285 349
----------------------------
Total deferred tax asset $ 6,585 $ 6,847 $ 7,484
----------------------------
Deferred tax liabilities:
Properties, principally due to
differences in depreciation $102,730 $ 99,361 $ 97,655
Deferred gain on land sales 29,114 29,183 24,893
Deferred profit on bonds extinguished 1,642 1,846 2,027
Unrealized holding gain on investments
available-for-sale 1,102 0 560
Other 1,183 1,099 1,029
----------------------------
Total deferred tax liabilities $135,771 $131,489 $126,164
----------------------------
Net deferred tax liabilities $129,186 $124,642 $118,680
============================
There was no valuation allowance provided for deferred tax assets as of
December 31, 1995, and 1994 as the Company believes the results of future
operations will generate sufficient taxable income to realize the deferred tax
assets.
Included in other current assets are deferred tax assets of $3,782 and
$3,595 at December 31, 1995, and 1994, respectively.
9. Segment Information
The Company operates principally in two industries: transportation and
realty. Its transportation operations consist primarily of railroad-related
activities and some trucking operations. Realty operations are involved in
real estate development, rentals, and related management, and operations of
properties. Operating revenues represent sales to unaffiliated customers, as
reported in the Company's Consolidated Statements of Income and Retained
Earnings. Operating profit is operating revenue less directly traceable costs
and expenses.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry.
Information by industry segment follows (in thousands):
1995 1994 1993
--------------------------------
Operating Revenue:
Transportation $173,507 $163,098 $162,318
Realty 27,600 36,446 18,778
--------------------------------
$201,107 $199,544 $181,096
================================
Operating Profit:
Transportation $ 26,155 $ 28,506 $ 29,346
Realty 8,473 18,049 3,792
--------------------------------
$ 34,628 $ 46,555 $ 33,138
================================
Identifiable Assets:
Transportation $361,862 $357,670 $352,465
Realty 289,727 251,348 232,068
Corporate 104,621 113,476 103,912
--------------------------------
$756,210 $722,494 $688,445
================================
Capital Expenditures:
Transportation $ 26,572 $ 21,259 $ 19,775
Realty 44,030 28,015 34,968
--------------------------------
$ 70,602 $ 49,274 $ 54,743
================================
Depreciation:
Transportation $ 16,644 $ 16,740 $ 16,356
Realty 5,648 5,007 3,979
--------------------------------
$ 22,292 $ 21,747 $ 20,335
================================
10. Commitments and Contingencies
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.
As assessments and cleanups proceed, these accruals are reviewed and adjusted.
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, liquidity, or results of
operations of the Company. Environmental liabilities of $2.5 million and $3.5
million for 1995 and 1994, respectively, will be paid over an extended period
and the timing of such payments cannot be predicted with any confidence.
Gran Central Corporation, a wholly-owned subsidiary of the Company,
entered into an agreement with the State of Florida Department of Transportation
to furnish all land necessary for the construction of the N.W. 106th Street
Interchange on the Homestead Extension of the Florida Turnpike and to provide
security to the Department for 15 years to cover any annual operating deficit
related to the interchange which is not covered by toll revenues. The
maximum assessment amount over the 15 years would be approximately $9.3 million
with no annual assessment to exceed approximately $1.1 million.
11. Retirement Plans
The Company sponsors two 401(k) plans for its salaried and hourly wage
employees. Contributions are at the employees' discretion with upper limits
of 6% of compensation before taxes and 10% after taxes.
401(k) Plan for Salaried Employees
The amounts of matching contributions by the Company for this plan for the
years 1995, 1994, and 1993 were approximately $350,000, $350,000, and $380,000,
respectively. The expenses associated with this plan for 1995 were
approximately $13,000 and $11,000 in 1994 and 1993. In 1995, the Company
matched the employees' contributions $1 for $1 up to the first $1,200 and then
$.25 for each $1 contributed up to 6% of employees' contributions.
401(k) Plan for Hourly Wage Employees and/or Employees Covered by
Collective Bargaining Agreement
This plan is a non-contributory plan and was instituted in April 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
With respect to each Executive Officer of the Registrant, there are set
forth below as of December 31, 1995, (1) his name; (2) his age; (3) his
positions and offices with the Registrant; (4) the date on which he first held
office; and (5) a brief account of his business experience during the last five
years. Each Executive Officer has been elected to hold such positions and
offices until the next annual election of Directors and Officers of the
Registrant, which is to be held on May 22, 1996. To the best knowledge of
the Registrant, none of the persons named had any arrangement or understanding
with any other person pursuant to his election, and none of the persons named
have any family relationship with any other such person.
Name, Age, Positions, and Date First Held Such Positions and Offices and
Offices Business Experience for the Past Five Years
_________________________ ______________________________________________
Winfred L. Thornton (67) Chairman and CEO of Registrant. Prior to May
Chairman, Chief Executive 1995, Chairman, CEO, and President of Registrant
Officer, and Director for more than five years.
Carl F. Zellers, Jr. (63) President and COO of the Registrant since
President, Chief Operating May 1995. President of Gran Central
Officer, and Director Corporation for more than five years.
President of Florida East Coast Railway
Company since June 10, 1992.
T. Neal Smith (55) May 15, 1992, elected Vice President and
Vice President & Secretary Secretary. Formerly Treasurer and Assistant
Secretary for more than five years.
William E. Durham, Jr. (64) Vice President of Registrant for more than
Vice President five years.
Louis A. Manz (43) March 1, 1993, elected Vice President -
Vice President - Information Information Services. Formerly with Information
Services and Computing Services Company from 1989-1993.
J. Richard Yastrzemski (52) Comptroller of Registrant for more than five
Comptroller years.
Gregory P. West (36) May 15, 1992, elected Treasurer and Assistant
Treasurer & Assistant Secretary Secretary. Formerly Material Inventory and
Accounting Manager for the Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for Industries'
Executive Officers whose 1995 total annual compensation exceeded $100,000, as
well as the total compensation paid to those Executives for the past three
years. Industries paid no bonuses nor had any stock award or option programs.
Summary Compensation Table
Name and Other Annual All Other
Principal Salary Compensation Compensation
Position Year ($) ($) ($)
- -------- ---- ------ ------------ ------------
W.L. Thornton 1995 180,000(a) 8,160(b) 1,800(c)
Chairman and CEO 1994 159,550(a) 5,580(b) 1,800(c)
1993 154,900(a) 5,790(b) 1,800(c)
C.F. Zellers, Jr. 1995 157,500 3,332(b) 5,010(c)
President and COO 1994 133,260 3,700(b) 4,400(c)
1993 129,370 1,670(b) 4,340(c)
(a) This amount represents 100% of Mr. Thornton's salary. Under arrangement
approved by the Board of Directors of both St. Joe Paper Company and
Florida East Coast Industries, Inc., Mr. Thornton's salary and expenses
are paid by St. Joe Paper Company, with 20% of salary, fringe benefits,
and common expenses being billed to and paid by Industries as compensation
for his services as Chairman and CEO of Industries. Any expenses
incurred for the exclusive benefit of either Industries or St. Joe Paper
Company are borne 100% by the benefiting corporation.
(b) These amounts include life insurance premiums and the personal use of
vehicles owned by Industries.
(c) These amounts represent Industries' matching contribution to a 401(k)
Plan and directors' fees. Mr. Thornton was not a participant in the
401(k) Plan of Industries in 1995.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
has the responsibility of establishing and administering compensation
policies, plans, and programs for the Company and its subsidiaries ("the
Company"). The Committee and senior management initiated a comprehensive
review of management compensation during 1994 upon approval by the Board and
implemented a new program in 1995.
The study included an evaluation of existing compensation policies; a
review of compensation plans and practices prevailing at other companies; and
an analytical review of the costs and benefits of the proposed programs. The
philosophy and programs resulting from the study's analysis are outlined below
and were developed through the active involvement of management and the
Committee.
Executive Compensation Philosophy
The Committee adopted a compensation philosophy for the Company's
management to serve as guiding principles for program design and
administration. The overriding philosophy is that compensation should be tied
directly to the Company's stated business objectives and to the sustained
creation of stockholder value. The Committee believes that stockholder
interests and the Company's compensation programs should be closely aligned
and integrated. Therefore, the performance measures used to determine
compensation levels have been demonstrated to be primary, sustainable
drivers of stockholder value among other publicly-held companies including
companies having transportation interests.
The Company's performance compensation program consists of two
components: (1) Base Salary and (2) Award Opportunity. Each of these
components and its respective role in total direct compensation, as well as
the basis for determining the compensation of the Chairman and Chief Executive
Officer, is described below.
(1) Base Salary
Pursuant to the compensation philosophy of emphasizing risk-oriented pay
to encourage superior performance and consistent with the Company's business
strategy of controlling fixed costs, annual salary adjustments will be
determined by several factors, including: the Company's performance, the
individual's contribution to that performance, the individual's future
potential and competitive pay levels.
The 1994 study concluded that base salaries of the Company's senior
executives were not reflective of the responsibilities and performance of
the incumbents and recommended they be increased an average of approximately
9% in 1995, and an addtional 10% in 1996 to more closely reflect competitive
pay levels. Pursuant to the philosophy outlined above, the Committee also
believes incentives should be provided to encourage superior performance and
results, and awards granted those executives contributing to these goals.
In keeping with these recommendations, the senior executives were granted
the 1995 increases in base salary effective January 1, 1995; however, in meeting
in late-1995, the Committee suggested that the recommended 1996 changes in
base salaries for executives, other than the CEO and COO, not be implemented,
but rather that the CEO be authorized to grant a one-time payment to those
persons up to the amount of annual increase they otherwise would have received,
and recommended the CEO and COO be granted a one-time payment equal to the
suspended increase in base salary.
The Board approved these recommendations.
(2) Award Opportunity
In fiscal 1995, seventeen (17) senior executives were eligible to
participate in the Company's annual incentive program. Each participant was
assigned a Target Award Opportunity equal to the individual's level of
responsibility. Target Award levels range from 25% to 35% of annual
base salary. The CEO and COO target was 35% and the target for the three
other most highly-compensated officers was 25%. Actual award levels vary
depending upon the degree of achievement relative to specified Company and
individual performance objectives and can range in total from 0% to 100% of
target levels.
Performance awards under the program are contingent upon both Company
and individual performance for the year. Only those individuals who receive
a satisfactory or better performance rating in their annual performance
reviews are eligible to receive an annual Award Opportunity. The Company's
performance relates directly to operating profit. Specific performance
objectives have been set by the Committee in relation to the Company's fiscal
budget. For the CEO, COO, and certain other officers, Company performance
governs their entire performance award amount. For other participants, their
individual performance rating determines up to 60% of their award.
As example of the application of actual awards under this performance
program, a covered executive earning $100,000 having an assigned Target
Company Award Opportunity level of 25% has the opportunity to be awarded an
actual award of $12,500 if the "Threshold" Company objective is met or an
actual award of $25,000 if the "Target" Company objective is met.
No performance award was payable for 1995 since Company performance fell
below the "Threshold" level.
Non-deductible Compensation
The Senior Management Incentive Plan, if earned, will be fully deductible
for federal income tax purposes since it is not possible at this time for any
executive officer's compensation to total more than $1 million.
CEO Compensation
The Company's CEO, Mr. W.L. Thornton, is also the CEO of St. Joe Paper
Company and is employed under an arrangement approved by each Board which
provides that the Company will bear 20% of base salary. Base salary had been
the sole basis of compensation for the CEO and other executive officers
through 1994.
As discussed in (1) Base Salary, the Committee recommended that the base
salary of the CEO be increased in 1995 to a level of $180,000 and to $200,000
in 1996, and the Board authorized the $180,000 salary effective January 1, 1995.
Also as discussed above, the Committee recommended and the Board approved a
proposal under which the CEO's salary will remain the same in 1996 and a one-
time payment of $20,000 be granted subject to the arrangement with St. Joe
Paper Company.
Since Company performance fell below the "Threshold" level necessary to
trigger any incentive award, no such award was granted the CEO for 1995
performance. Any performance award granted in the future to the CEO under
the incentive plan will be based solely on that portion of base salary paid by
the Company under its arrangement with St. Joe Paper Company.
The Committee believes that the philosophy described above will help to
ensure that executive officers are rewarded appropriately for their services
and the Committee is satisfied that the strategy supports corporate objectives
and shareholder interests; however, additional changes can and will be
considered if and when deemed appropriate within the context of these
objectives and interests.
The Compensation Committee is appointed by the Board of Directors and
is composed entirely independent of non-employee directors having no
interlocking relationship as defined by the Securities and Exchange
Commission.
J. Nelson Fairbanks, Chairman
D.M. Foster, Member
Allen C. Harper, Member
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 1, 1996, with respect
to persons known to Industries to be the beneficial owners of more than 5%
of its outstanding Common Stock:
Nature of
Beneficial Percent of
Names/Addresses Ownership No. of Shares Class (1)
- ------------- ---------- ------------- ----------
Nemours Foundation (2) Sole Voting & 450,224 5.0%
P.O. Box 1380 Dispositive
Jacksonville, FL 32201 Power
St. Joe Industries, Inc. (3) Sole Voting & 4,902,304 (4) 54.5%
P.O. Box 1380 Dispositive
Jacksonville, FL 32201 Power
Heine Securities Corp. (5) Sole Voting & 911,300 10.1%
51 J.F.K. Parkway Dispositive
Short Hills, NJ 07078 Power
__________________
(1) All percentages shown are rounded to the nearest one-tenth of one percent.
(2) As of March 1, 1996, the following persons were directors of the Nemours
Foundation: Jacob C. Belin, Alfred duPont Dent, H.H. Peyton, J.F. Porter,
W.T. Thompson, Winfred L. Thornton, and corporate director, NationsBank
of Florida, represented by J.S. Lord. In such capacities, these
directors collectively share voting and dispositive power with respect
to Industries' Common Stock owned by the Nemours Foundation and, as such,
may be deemed to be beneficial owners of that stock.
(3) As of March 1, 1996, the following persons were directors of St. Joe
Industries, Inc.: Jacob C. Belin, E.C. Brownlie, R.E. Nedley, Winfred L.
Thornton, and C.F. Zellers, Jr. In such capacities, all directors
collectively share dispositive and voting power with respect to Industries'
Common Stock owned by St. Joe Industries, Inc. All directors may be
deemed to be beneficial owners of Industries' Common Stock owned by St.
Joe Industries, Inc.
(4) By virtue of its ownership of approximately 54.5% of the outstanding
Industries' Common Stock, St. Joe Industries, Inc., may be deemed to be
not only an "affiliate" but also a "parent" of Industries.
(5) Mr. Michael F. Price is President of Heine Securities Corporation ("HSC")
in which capacity he exercises voting control and dispositive power over
these securities. Mr. Price, therefore, may be deemed to have indirect
beneficial ownership over such securities. Mr. Price advises he has no
interest in dividends or proceeds from the sale of such securities, owns
no such securities for his own account, and disclaims beneficial
ownership of all the securities reported herein by HSC.
(b) SECURITY OWNERSHIP OF MANAGEMENT
Shown below is information concerning beneficial ownership of Industries'
Common Stock for each director and for all directors and officers as a group
as of March 1, 1996. Under rules of the Commission, "beneficial ownership"
is deemed to include shares for which the individual, directly or indirectly,
has or shares voting and/or dispositive power:
Nature of
Beneficial Percent of
Names Ownership No. of Shares Class (1)
- ----- ---------- ------------- ----------
J.C. Belin Shared Voting/
Dispositive Power 5,352,528(2) 59.5%
J.N. Fairbanks --------- ----- -----
D.M. Foster --------- ----- -----
A.C. Harper --------- ----- -----
J.H. Mercer, Jr. Sole Voting/
Dispositive Power 100 -----
R.E. Nedley Shared Voting/
Dispositive Power 4,902,304 (3) 54.5%
J.J. Parrish, III --------- ----- -----
W.L. Thornton Sole Voting/
Dispositive Power 5,850 0.1%
Shared Voting/
Dispositive Power 5,352,528(2) 59.5%
C.F. Zellers, Jr. Sole Voting/
Dispositive Power 2,219 -----
Shared Voting/
Dispositive Power 4,902,304(3) 54.5%
9 directors & Sole Voting/
officers as a Dispositive Power 10,168 0.1%
group Shared Voting/
Dispositive Power 5,352,528(4) 59.5%
____________________
(1) All percentages shown are rounded to the nearest one-tenth of one
percent. Where no percentage is shown, the amount of Industries'
Common Stock owned by the beneficial owner listed is less than one-half
of one-tenth of one percent (4,526 shares) of all outstanding
Industries' Common Stock.
(2) Includes 4,902,304 shares or 54.5% of Industries' Common Stock owned by
St. Joe Industries, Inc., and 450,224 shares or 5.0% of Industries'
Common Stock owned by the Nemours Foundation.
(3) Includes 4,902,304 shares or 54.5% of Industries' Common Stock owned by
St. Joe Industries, Inc., of which Messrs. Zellers and Nedley are
directors.
(4) Includes the 4,902,304 and 450,224 listed as beneficially owned by
Messrs. Belin and Thornton, and the 4,902,304 listed as beneficially
owned by Messrs. Zellers and Nedley, however, reports the same number of
shares beneficially owned by these persons only once.
(c) CHANGES IN CONTROL
The Company knows of no contractual arrangements which may, at a
subsequent date, result in a change of control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The financial statements and schedules listed in the accompanying
Index to Financial Statements and Financial Statement Schedules are
filed as part of this Annual Report.
2. EXHIBITS
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report.
(b) REPORTS ON FORM 8-K
None.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
[ITEM 14(a)]
Consolidated Balance Sheets at December 31, 1995, and 1994
Consolidated Statements of Income and Retained Earnings for each of the three
years in the period ended December 31, 1995
Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 1995
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Supplementary Information:
Quarterly Financial Data (Unaudited)
Financial Statement Schedules:
II-Valuation and Qualifying Accounts
III-Real Estate and Accumulated Depreciation
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or the notes thereto.
Financial statements and schedules of Florida East Coast Industries, Inc.
(not consolidated) are omitted since it is primarily a holding company and
all subsidiaries included in the consolidated financial statements being
filed, in the aggregate, do not have minority equity interests and/or
indebtedness to any person other than the Company or its consolidated
subsidiaries in amounts which together exceed five percent of the total
assets as shown by the consolidated balance sheet at the end of any year
covered by this Report.
INDEX TO EXHIBITS
(ITEM 13[a] 3.)
S-K
Item 601 Documents
- -------- ------------
(3) (a) Articles of Incorporation*
(3) (b) By-Laws*
(21) Subsidiaries of Florida East Coast Industries, Inc.
(24) Power of Attorney
*Incorporated herein by reference to Exhibits filed in connection with Florida
East Coast Industries, Inc.'s Registration Statement on Form S-14 as filed
with the Securities and Exchange Commission on February 17, 1984 (File No.
2-89530).
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized on
February 14, 1996.
FLORIDA EAST COAST INDUSTRIES, INC.
(Registrant)
By: s/s T.N. Smith, Vice President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
s/s W.L. Thornton*
Chairman, Chief Executive Officer, and Director - 3/15/96
s/s C.F. Zellers, Jr.*
President, Chief Operating Officer, and Director - 3/15/96
s/s J. Nelson Fairbanks*
Director - 3/15/96
s/s J.C. Belin*
Director - 3/15/96
s/s D.M. Foster*
Director - 3/15/96
s/s R.E. Nedley*
Director - 3/15/96
s/s J.H. Mercer, Jr.*
Director - 3/15/96
s/s A.C. Harper*
Director - 3/15/96
s/s J. J. Parrish, III*
Director - 3/15/96
s/s G. P. West*
Treasurer - 3/15/96
s/s J.R. Yastrzemski*
Comptroller - 3/15/96
BY: s/s T. Neal Smith*
Attorney-in-Fact
*Such signature has been affixed pursuant to Power of Attorney.
<PAGE>
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(Dollars in thousands)
Balance at Additions
Beginning Charged Balance at
of Year to Expense Payments End of Year
---------- ---------- -------- -----------
RESERVES INCLUDED IN LIABILITIES
1995
Casualty & other reserves $11,605 $4,742 $5,126 $11,221[a]
1994
Casualty & other reserves $14,143 $2,584 $5,122 $11,605[a]
1993
Casualty & other reserves $14,145 $2,443 $2,445 $14,143[a]
[a] Includes $5,226, $5,400, and $7,680 in current liabilities at December 31,
1995, December 31, 1994, and December 31, 1993, respectively. The
remainder is included in "Reserves and Other Long-Term Liabilities."
<PAGE>
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995, 1994, AND 1993
(in thousands)
Initial Cost to Company
Description Encumbrances Land
- ----------- ------------ ----
Duval County
Office Buildings (6) -0- $ 1,153
Office/Showroom/Warehouses (8) -0- 1,502
Office/Warehouse (1) -0- 0
Land w/Infrastructure -0- 6,593
Unimproved Land & Misc. Assets -0- 915
St. Johns County
Unimproved Land -0- 2,631
Flagler County
Unimproved Land -0- 3,218
Volusia County
Unimproved Land -0- 3,651
Brevard County
Office/Showroom/Warehouse (1) -0- 73
Land w/Infrastructure -0- 3,633
Unimproved Land -0- 4,846
Indian River County
Unimproved Land -0- 218
St. Lucie County
Unimproved Land -0- 639
Martin County
Unimproved Land -0- 4,671
Putnam County
Unimproved Land -0- 2
Palm Beach County
Office/Showroom/Warehouse (1) -0- 113
Rail Warehouses (2) -0- 449
Cross Docks (4) -0- 117
Land w/Infrastructure -0- 1,251
Unimproved Land -0- 1,596
Broward County
Rail Warehouse (1) -0- 85
Unimproved Land -0- 733
Manatee County
Unimproved Land & Misc. Assets -0- 14
Dade County
Cross Dock (1) -0- 137
Double Front Load Warehouse (1) -0- 768
Rail Warehouses (6) -0- 808
Office/Showroom/Warehouses (5) -0- 1,003
Office/Warehouses (4) -0- 1,462
Front Load Warehouses (7) -0- 1,943
Office/Service Center (1) -0- 285
Land w/Infrastructure -0- 2,577
Unimproved Land & Misc. Assets -0- 15,725
Orange County
Land w/Infrastructure
-------
TOTALS $62,811
Initial Cost to Company
Costs
Capitalized
Buildings & Subsequent to
Description Improvements Acquisition
- ----------- ------------ -------------
Duval County
Office Buildings (6) $6,200 $ 32,513
Office/Showroom/Warehouses (8) 0 19,555
Office/Warehouse (1) 0 4,753
Land w/Infrastructure 0 6,794
Unimproved Land & Misc. Assets 0 1,548
St. Johns County
Unimproved Land 0 407
Flagler County
Unimproved Land 0 1,184
Volusia County
Unimproved Land 0 528
Brevard County
Office/Showroom/Warehouse (1) 0 2,184
Land w/Infrastructure 0 0
Unimproved Land 0 191
Indian River County
Unimproved Land 0 189
St. Lucie County
Unimproved Land 0 5
Martin County
Unimproved Land 0 2,493
Putnam County
Unimproved Land 0 0
Palm Beach County
Office/Showroom/Warehouse (1) 0 2,984
Rail Warehouses (2) 0 4,164
Cross Docks (4) 0 3,786
Land w/Infrastructure 0 0
Unimproved Land 0 9
Broward County
Rail Warehouse (1) 0 1,708
Unimproved Land 0 1,848
Manatee County
Unimproved Land & Misc. Assets 0 87
Dade County
Cross Dock (1) 0 1,018
Double Front Load Warehouse (1) 0 5,735
Rail Warehouses (6) 0 25,077
Office/Showroom/Warehouses (5) 0 16,344
Office/Warehouses (4) 0 13,363
Front Load Warehouses (7) 0 21,888
Office/Service Center (1) 0 2,191
Land w/Infrastructure 0 5,915
Unimproved Land & Misc. Assets 0 11,575
Orange County
Land w/Infrastructure 7,626
------ ---------
TOTALS $6,200 $197,662
Carried at Close of Period
Land & Bldgs. &
Description Land Improv. Improv. Total
- ----------- ------------ -------- -----
Duval County
Office Buildings (6) $ 4,972 $ 34,894 $ 39,866
Office/Showroom/Warehouses (8) 3,930 17,127 21,057
Office/Warehouse (1) 1,074 3,679 4,753
Land w/Infrastructure 13,387 0 13,387
Unimproved Land & Misc. Assets 2,289 174 2,463
St. Johns County
Unimproved Land 3,038 0 3,038
Flagler County
Unimproved Land 4,402 0 4,402
Volusia County
Unimproved Land 4,179 0 4,179
Brevard County
Office/Showroom/Warehouse (1) 438 1,819 2,257
Land w/Infrastructure 3,633 0 3,633
Unimproved Land 5,037 0 5,037
Indian River County
Unimproved Land 407 0 407
St. Lucie County
Unimproved Land 644 0 644
Martin County
Unimproved Land 7,164 0 7,164
Putnam County
Unimproved Land 2 0 2
Palm Beach County
Office/Showroom/Warehouse (1) 599 2,498 3,097
Rail Warehouses (2) 557 4,056 4,613
Cross Docks (4) 1,262 2,641 3,903
Land w/Infrastructure 1,251 0 1,251
Unimproved Land 1,605 0 1,605
Broward County
Rail Warehouse (1) 405 1,388 1,793
Unimproved Land 2,581 0 2,581
Manatee County
Unimproved Land & Misc. Assets 101 0 101
Dade County
Cross Dock (1) 137 1,018 1,155
Double Front Load Warehouse (1) 1,449 5,054 6,503
Rail Warehouses (6) 4,948 20,937 25,885
Office/Showroom/Warehouses (5) 4,004 13,343 17,347
Office/Warehouses (4) 2,877 11,948 14,825
Front Load Warehouses (7) 5,439 18,392 23,831
Office/Service Center (1) 680 1,796 2,476
Land w/Infrastructure 8,492 0 8,492
Unimproved Land & Misc. Assets 26,973 327 27,300
Orange County
Land w/Infrastructure 7,626 0 7,626
-------- -------- ---------
TOTALS $125,582 $141,091 $266,673
Life on Which
Depreciation in
Date First Latest Income
Accumulated Started or Statement is
Description Depreciation Acquired Computed
- ----------- ------------ ---------- ---------------
Duval County
Office Buildings (6) $ 6,302 1985 3 to 40 years
Office/Showroom/Warehouses (8) 4,069 1987 3 to 40 years
Office/Warehouse (1) 280 1994 3 to 40 years
Land w/Infrastructure 0 Various
Unimproved Land & Misc. Assets 457 Various 3 to 40 years
St. Johns County
Unimproved Land 0 Various
Flagler County
Unimproved Land 0 Various
Volusia County
Unimproved Land 0 Various
Brevard County
Office/Showroom/Warehouse (1) 424 1988 3 to 40 years
Land w/Infrastructure 0 Various
Unimproved Land 0 Various
Indian River County
Unimproved Land 0 Various
St. Lucie County
Unimproved Land 0 Various
Martin County
Unimproved Land 0 Various
Putnam County
Unimproved Land 0 Various
Palm Beach County
Office/Showroom/Warehouse (1) 754 1986 3 to 40 years
Rail Warehouses (2) 1,144 1982 3 to 40 years
Cross Docks (4) 890 1987 3 to 40 years
Land w/Infrastructure 0 Various
Unimproved Land 0 Various
Broward County
Rail Warehouse (1) 556 1986 3 to 40 years
Land w/Infrastructure 0 Various
Unimproved Land 0 Various
Manatee County
Unimproved Land & Misc. Assets 0 Various
Dade County
Cross Dock (1) 235 1987 3 to 40 years
Double Front Load Warehouse (1) 517 1993 3 to 40 years
Rail Warehouses (6) 2,343 1988 3 to 40 years
Office/Showroom/Warehouses (5) 2,380 1988 3 to 40 years
Office/Warehouses (4) 1,823 1990 3 to 40 years
Front Load Warehouses (7) 1,687 1991 3 to 40 years
Office/Service Center (1) 137 1994 3 to 40 years
Land w/Infrastructure 0 Various
Unimproved Land & Misc. Assets 1,924 Various
Orange County
Land w/Infrastructure 0 1995
-------
TOTALS $25,922
Notes:
(A) The aggregate cost of real estate owned at December 31, 1995, for
federal income tax purposes is approximately $156,834,000.
(B) Reconciliation of real estate owned (in thousands of dollars):
1995 1994 1993
---- ---- ----
Balance at Beginning of Year $241,674 $214,747 $184,565
Amounts Capitalized 25,523 28,015 30,672
Amounts Retired or Adjusted (524) (1,088) (490)
--------------------------------
Balance at Close of Period $266,673 $241,674 $214,747
(C) Reconciliation of accumulated depreciation (in thousands of dollars):
1995 1994 1993
---- ---- ----
Balance at Beginning of Year $ 20,274 $ 15,291 $ 11,310
Depreciation Expense 5,648 5,007 3,979
Amounts Retired or Adjusted 0 (24) 2
--------------------------------
Balance at Close of Period $25,922 $ 20,274 $ 15,291
<PAGE>
21. Listing of parent and subsidiaries
Parent - Florida East Coast Industries, Inc.
Subsidiaries - Florida East Coast Railway Company
Florida East Coast Highway Dispatch Company
Florida East Coast Inspections, Inc.
Florida East Coast Deliveries, Inc.
Railroad Concrete Crosstie Corporation
Railroad Track Construction Company
Operations Unlimited, Inc.
Florida Express Carrier, Inc.
Gran Central Corporation
Dade County Land Holding Company, Inc.
International Transit, Inc.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each of the undersigned Directors of
Florida East Coast Industries, Inc., a Florida corporation ("Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
DC 20549, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1995, hereby constitutes and appoints Winfred L. Thornton and T.N. Smith as
his true and lawful attorneys-in-fact and agent, and each of them with full
power to act, without the other in his stead, in any and all capacities, to
sign the 1995 Annual Report of Florida East Coast Industries, Inc., on Form
10-K and to file on behalf of the Corporation such Annual Report and
amendments with all exhibits thereto, and any and all other information and
documents in connection therewith, with the Securities and Exchange
Commission, hereby granting unto said attorneys-in-fact and agent, and each
of them, full power and authority to do and perform any and all acts and things
requisite and ratifying and confirming all that each said attorneys-in-fact
and agent or any one of them, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the date
indicated below:
s/s Winfred L. Thornton, Chairman, s/s T.N. Smith, Vice President
CEO, and Director and Secretary
s/s J. Nelson Fairbanks, Director s/s J.C. Belin, Director
s/s A.C. Harper, Director s/s D.M. Foster, Director
s/s J.H. Mercer, Jr., Director s/s J.J. Parrish, III, Director
s/s R.E. Nedley, Director s/s C.F. Zellers, Jr., President,
COO, and Director
Dated: March 15, 1996
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<PAGE>
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