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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, 1993.
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. ( )
Based on the closing sales price of March 11, 1994, the aggregate
market value of the voting stock held by non-affiliates of the
Registrant was $241,204,163.
The number of shares outstanding of the Registrant's common
stock, $6.25 par value, was 9,000,000 at March 11, 1994.
PART I
ITEM 1. BUSINESS
(a) 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.
Under terms of an Agreement and Plan of Merger and
Reorganization entered into on February 14, 1984, by and between
the Registrant, the Registrant's wholly-owned subsidiary, FEC
Acquisition, Inc., and Florida East Coast Railway Company, which
Plan was subsequently approved by the shareholders, the
Registrant became the 100% parent of Florida East Coast
Railway Company (Railway) effective May 30, 1984, and by dividend
action on May 31, 1984, became the 100% parent of Commercial
Realty and Development Company (Realty).
Railway was incorporated under the laws of Florida on
May 28, 1892, and was reorganized as of January 1, 1961, under
original Charter following the period September 1, 1931, to
December 31, 1960, during which period it was first in bankruptcy
and then under trusteeship. The principal business of Railway is
that of common carriage of goods by rail over 442 miles of main
and branch line track in the state of Florida. The main line
extends 351 miles from Jacksonville to the north, to Miami on the
south, with 91 miles of branch line extending west from Ft.
Pierce to Lake Harbor. Railway formerly operated branch lines
from Miami to Florida City and from St. Augustine to East
Palatka. Service from Miami to Florida City was discontinued in
1988 and discontinued from St. Augustine to East Palatka in 1989.
Subsequent to abandonment of service between Miami to Florida
City, Agreement was reached with the State of Florida Department
of Transportation (FDOT) under which FDOT purchased an
approximate 100-foot-wide right-of-way for extension of the
Miami-Dade County Rapid Transit System over the route of the
abandoned trackage. Agreement provided FDOT pay $35,525,000 over
a period of five years, with initial payment of $10,000,000 paid
in 1988. Additional payments of principal and interest amounting
to $6,250,000 in 1989, $8,857,000 in 1990, and $16,371,326 in
1991 have been received. As each incremental payment was made,
FDOT was vested with an incremental part of the total
right-of-way. The 1991 payment concluded purchase of the entire
contracted route. Some interest has been expressed by FDOT in
portions of the abandoned St. Augustine to East Palatka
right-of-way; however, no agreement has been reached, nor are
there any negotiations under way at this time.
Realty was incorporated as a 100%-owned subsidiary of
Railway under the laws of the state of Florida on August 17,
1981, for the general purpose related to dealing in and disposing
of real estate and real property. From date of incorporation
through May 30, 1984, Realty accrued only nominal revenues earned
from commissions on sales and/or purchases of property by
Railway; accrued virtually no expense other than income taxes;
and possessed only cash and cash equivalent assets in nominal
amounts. As result of May 31, 1984, dividend action by Railway
and contribution to capital action by Registrant, Realty was
vested with approximately 18,090 acres of real estate. As
additional parcels of land and buildings have been declared
surplus to needs of Railway and received as dividends by
Registrant, the Registrant has also contributed those properties
to Realty as contributions to capital. Registrant has further
made several cash contributions to capital of Realty to
provide funds for construction activities commenced since the May
1984 reorganization of the Company. Realty's name was changed in
1987 from Commercial Realty and Development Company to Gran
Central Corporation and is presently operating under that name.
(b) Registrant is segmented into areas of Transportation,
principally by rail, and Realty, real estate ownership,
development and management. As result of acquisitions and
construction of property by Realty in the period following the
1984 reorganization, Realty, in 1987, became a significant
business segment.
Consolidated financial information by segments appears
as:
1993 1992 1991
(in thousands)
---- -------------- ----
Operating Revenues:
Transportation $162,318 $156,955 $153,018
Realty 18,778 18,800 13,543
Operating Profit:
Transportation $ 28,843 $ 23,735 $ 16,312
Realty 4,295 6,168 2,708
Identifiable Assets:
Transportation $352,465 $351,850 $350,025
Realty 232,068 199,763 166,377
Corporate 107,556 118,806 131,273
Operating revenues represent revenues received from unaffiliated
entities as reported in the Registrant's consolidated income
statement.
Operating profit is operating revenue less directly traceable
costs and expenses. Interest income and expenses, dividends,
etc., are not segmented by Transportation and Realty, nor are
investments generating such income, but rather these type items
are classified as Other Income.
Corporate assets are primarily cash and investments accumulated
to fund operations and capital requirements, including Realty
construction, of the operating entities.
(c) Transportation: Registrant owns 100% of the stock of
Florida East Coast Railway Company which, in turn, 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. Included in the seven subsidiaries is one company
primarily engaged in the loading and unloading of trailers and
containers from flatcars; one company engaged in the loading and
unloading of automotive vehicles from multi-level rail cars; two
common motor carriers primarily engaged in the local drayage of
trailers having prior or subsequent rail moves; one common motor
carrier primarily involved in the movement of trailerload traffic
from Alabama, Georgia, and the Carolinas to Railway's
Jacksonville facility for subsequent carriage by Railway; one
company primarily engaged in contract maintenance of railway
track for third parties; and one company engaged in the
manufacture of concrete crossties, concrete grade crossings, and
other concrete products principally for sale to Railway, and in
the manufacture of concrete light poles for sale to utilities and
others.
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 between
Jacksonville and West Palm Beach. From West Palm Beach to Miami,
Railway is competitive with CSX Transportation for rail traffic,
excluding that of trailer-on-flatcar/container-on-flatcar
traffic. 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, CSX
Transportation, and Norfolk Southern Railway at Jacksonville,
with terminating 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 40% of rail traffic revenues.
Realty:
Registrant owns 100% of the stock of Gran Central
Corporation which,in turn, owns 100% of the stock of one
subsidiary corporation, which is included in the consolidated
Realty segment and which, considered in the aggregate, does not
constitute a significant subsidiary. The one subsidiary
is a corporation leasing and operating a trailer park owned by
Gran Central Corporation in Miami. Prior to year-end, Gran
Central Corporation also owned another subsidiary which was a
land holding corporation owning land property only in downtown
Jacksonville. On December 28, 1993, the Board of Directors of
Gran Central Corporation and the Atlantic and East Coast
Terminal Company (A&ECT) voted to merge the subsidiary A&ECT into
the parent. This merger had no significant effect on either
company.
Realty is engaged in the management of leases of its real
property; the development, lease and sales of its property; and
general management of all real property included in the
consolidated financials. Realty is in competition with other
developers and brokers throughout its operating area.
Registrant and its subsidiaries employ approximately 1,483
employees with approximately 1,017 of these covered by collective
bargaining agreements. Registrant employs 21 of the total,
Realty employs 17, and Transportation employs the balance.
Nothing in the above represents a significant change from prior
years.
(d) 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 marshalling 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 relay
these tracks with the heavier materials. These programs may be
expected to extend several years into the future.
Transportation owns 79 diesel electric locomotives, approximately
2,809 freight cars, approximately 155 tractors, and 1,594
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 19,320 acres of
land at year-end 1993, including approximately 1,450 acres
owned by Transportation but not required for operations. These
properties are held for lease, development and/or sale, and have
a situs in thirteen counties of the state of Florida as follows:
Duval 1,490 acres
St. Johns 3,540 "
Flagler 3,460 "
Volusia 3,570 "
Brevard 2,810 "
Indian River 30 "
St. Lucie 610 "
Martin 660 "
Palm Beach 300 "
Broward 50 "
Dade 1,740 "
Manatee 880 "
Putnam 180 "
----------
Total 19,320 "
Realty also owned at year-end 1993 forty-one 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 2 Offices 145,000 1992/93
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 2 Cross Docks 29,000 1987
2 Cross Docks 46,000 1991
Gran Park-McCahill
Miami, FL 1 Rail Warehouse 302,000 1992
Gran Park at Miami 4 Office/Showroom/
Miami, FL Warehouses 291,000 1988/90/92
4 Office/Warehouses 382,000 1990/91/92/
93
3 Rail Warehouses 258,000 1989/90/93
5 Front Load
Warehouses 604,000 1991/92/93
1 Double Front Load
Warehouse 239,000 1993
Hialeah, FL 1 Cross Dock 20,000 1987
Pompano Beach, FL 1 Rail Warehouse 54,000 1987
-- ---------
TOTALS 41 3,200,000
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, through its Transportation subsidiary,
Florida East Coast Railway (FEC), is involved in a legal action
versus CSX Transportation, Inc. (CSXT), alleging, in part,
violations of a 1978 Agreement between CSXT and FEC and, in part,
violations of the Sherman Act. The complaint alleges that CSXT
has, by its actions, placed FEC in position such that it cannot
fairly compete with CSXT for certain carload traffic destined to
or from South Florida points served by the two railroads. CSXT,
in early 1992, petitioned the ICC to reopen the merger
proceedings for the purpose of eliminating the merger conditions
set down by the ICC in the 1967 merger of ACL/SAL Railroads.
Under the conditions set by the ICC prior to merger, the merged
company, CSXT, is required to cooperate with FEC in matters of
rates, routes, and service in a fashion allowing FEC to compete
effectively with CSXT on traffic to and from West Palm Beach
south. A tentative Order by the U.S. District Court dated
February 19, 1993, found that contract rates were included in the
1978 Agreements, but that CSXT cannot be required to establish an
equal joint-line contract rate since the Court views such action
as a form of price-setting which is illegal. This Order is being
appealed in U.S. District Court of Appeals, and oral arguments
were heard on February 11, 1994. The Company is awaiting the
results of that hearing. CSXT's request before the ICC for the
elimination of merger conditions is still in the opening evidence
and argument stage. CSXT introduced new evidence, and FEC
requested and received the right to rebuttal. The Company is in
the process of preparing its rebuttal. Both the Court Order and
the petition to reopen the merger proceedings by CSXT involve
complex issues and can be expected to be contested by the
respective parties into the future, barring an unexpected
amenable settlement being reached.
The Registrant, also through Florida East Coast Railway
(FEC), was involved in legal actions versus the State of Florida
and several counties of the state, in which it was alleged the
State, through its "unit assessment procedures," has
significantly over-assessed the rail operation properties of
FEC for the years 1987-1991, inclusive. Trial was held in the
State Circuit Court during 1991 on the assessments for the years
1987 and 1988, with decision rendered in favor of the State.
This decision was appealed. In the third quarter 1993, the State
of Florida and FEC reached a settlement of $13.5 million for the
years 1987 through 1991 as the total amount of ad valorem taxes
due.
The Registrant's Florida East Coast Railway (FEC) is a
party to various proceedings before state regulatory agencies
relating to environment issues. In addition, FEC, along with
many other companies, has been named a potentially responsible
party (PRP) in proceedings under federal statutes for the cleanup
of designated Superfund sites at Jacksonville, Florida, and
Portsmouth, Virginia.
The assessment of the required response and remedial
costs associated with these sites is extremely complex. Among
the variables that management must assess are imprecise
engineering estimates, continually evolving governmental
standards, potential recoveries from others, including
other PRP's, and laws which can impose joint and several
liability.
FEC has made an estimate of its likely costs
attributable to sites for which its cleanup responsibility is
probable, and a liability, therefore, has been recorded. Such
liability is not material to the financial position of the
Registrant. FEC is not aware of any monetary sanctions to
be proposed which, in the aggregate, are likely to exceed
$100,000, nor does it believe that corrections will necessitate
significant capital outlays or cause material changes in the
Registrant's business.
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 business 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:
1993
----
Quarter Ended Dec. 31 Sept. 30 June 30 March 31
High $70 1/4 $62 $51 1/2 $54
Low $61 1/8 $48 3/8 $46 $48 1/8
Dividends .10 .10 .10 .10
1992
----
Quarter Ended Dec 31 Sept. 30 June 30 March 31
High $49 5/8 $46 $47 $47
Low $41 5/8 $42 1/2 $41 3/4 $39 1/2
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, 1993, was
981.
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
(Unaudited)
Years Ended December 31
1993 1992 1991
---- ---- ----
Revenues:
Operating Revenues $181,096 $175,755 $166,561
Other Income 5,103 8,253 26,108
Total $186,199 $184,008 $192,669
Income before cumulative
effect of change in
accounting principle $ 20,779 $ 24,045 $ 29,056
Cumulative effect of
change in accounting
principle for income
taxes 1,504 0 0
Net Income $ 22,283 $24,045 $29,056
Per Share Data
Cash Dividend $ 0.40 $ 0.40 $ 0.40
Income before cumulative
effect of change in
accounting principle $ 2.31 $ 2.67 $ 3.21
Cumulative effect of
change in accounting
principle for income
taxes $ 0.17 $ 0 $ 0
Net Income Per Common
Share $ 2.48 $ 2.67 $ 3.21
At year-end:
Total Assets $692,089 $670,419 $647,675
Working Capital $ 42,552 $ 39,407 $ 38,476
Shareholders' Equity $523,038 $503,464 $483,020
Revenues: 1990 1989
---- ----
Operating Revenues $169,870 $167,980
Other Income 20,440 27,027
Total $190,310 $195,007
Income before cumulative effect of
change in accounting principle $ 31,352 $ 39,629
Cumulative effect of change in
accounting principle for income
taxes $ 0 $ 0
Net Income $ 31,352 $ 39,629
Per Share Data
Cash Dividend $ 0.40 $ 0.40
Income before cumulative effect of
change in accounting principle $ 3.39 $ 4.28
Cumulative effect of change in
accounting principle for income
taxes $ 0 $ 0
Net income Per Common Share $ 3.39 $ 4.28
At year-end:
Total Assets $622,835 $596,099
Working Capital $ 53,772 $ 49,285
Shareholders' Equity $469,294 $441,832
(1) As discussed in Note 7, the Company adopted Statement No.
109.
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, 1993. The
purpose of this discussion is to provide background information
for the figures presented, including the significant events which
contributed thereto.
Operating revenues were relatively stable throughout the
three-year period, with 1993's figures reflecting a $5.3 million
or a 3.0% increase over 1992 operating revenues and a $14.5
million or an 8.7% increase over 1991. The 1993 increase in
operating revenues was attributed to the $5.4 million increase in
transportation revenues which was primarily related to the
increase in the volume of rail traffic. Realty revenues for 1993
of $18.8 million remained at the same level as 1992, but when
compared to 1991, realty revenues increased by $5.2 million or
38.6%.
Because of the increased traffic brought about by the
aftermath of Hurricane Andrew in September 1992, the comparison
of the 1993 traffic data with the 1992 data is distorted.
Therefore, the following analysis of transportation data will
provide comparisons of information prior to September 1993 with
the same period in 1992 (pre-hurricane data), and the
analysis for the four-month period, Sept. through Dec. of 1993
versus 1992 (post-hurricane data).
Through August 1993, transportation revenues increased by
approximately $8.5 million or 8.6% when compared to the same
eight months of 1992. The composition of traffic for the first
eight months of 1993 compared to the same period in 1992
reflected increases of 5,880 shipments or 12.1% in aggregate
(rock), 436 shipments or 4.1% in automotive traffic, 11,499
shipments or 5.7% in intermodal, and 1,202 shipments or 5.9% in
all other traffic.
The post-hurricane comparison for the last four months of
1993 versus 1992 indicated that revenues decreased by $3.1
million or 5.3%. Total shipments for the last four months of 1993
when compared to 1992 decreased by 11,391 shipments or 6.6%.
This decrease in traffic was comprised of an increase in
aggregate (rock) of 4,232 shipments or 17.6% and decreases in
automobile traffic of 809 shipments or 11.6%, intermodal
shipments of 13,093 or 10.3%, and all other traffic of 1,721 or
14.2%.
Transportation revenues for 1992 reflected the net results
of an increase of 5.4% over 1991 for intermodal traffic which
moved by rail and highway. This increase in intermodal traffic,
along with rate and volume increases in other than automobile
traffic, offsets the loss of General Motors automobile traffic
which began in February 1992, and represented approximately 8%
of the total 1991 revenues. Shipments of aggregates (rock)
increased by 1,980 carloads or 2.7% above 1991. These traffic
increases can be attributed to the after effects of Hurricane
Andrew and the improvement in the economy during the fourth
quarter 1992.
Realty revenues for 1993 of $18.8 million remained the same
as 1992, but when comparing 1993 realty revenues with 1991,
realty revenues increased by $5.2 million or 38.6%. Included in
the 1993 realty revenues are sales of realty properties amounting
to $2.3 million compared with 1992 sales of realty properties of
$5.9 million. Realty revenues also include income from leasing
operations. Leasing revenues for 1993 increased by $3.6 million
or 28.0% over 1992 and by $2.9 million or 33.5% over 1991.
Increases in rental income are consistent with the increase in
the Company's inventory of space available for lease during these
periods. At year-end 1993, the Company had a total of 3.2
million square feet of space available for lease. Of the 3.2
million square feet available for lease, approximately 88% of
leasable space was under lease compared to 90% in 1992 and 91% in
1991. The Company expects that rental revenues will continue to
reflect increases as new space is constructed and added to
inventory.
Operating expenses increased in 1993 by $2.1 million or
1.4% when compared to 1992. This is substantially the result of
increases of $4.0 million in salaries and wages with associated
fringe benefits, $1.6 million in depreciation expense, and $3.3
million in other expenses offset by decreases of $4.2 million in
materials and supplies and $2.8 million in property taxes.
Included in the increase of $3.3 million in other expenses
was an increase of $1.4 million in casualty and insurance and an
increase of $.3 million in environmental. Materials and supplies
decreased by $4.2 million resulting primarily from efficiencies
achieved in the Maintenance of Way and Maintenance of Equipment
Departments by reduction in expenses of $2.7 and $1.1 million,
respectively.
Property taxes decreased by approximately $2.8 million in
1993 brought about by the favorable settlement of the ad valorem
tax case with the State of Florida for the years 1987 through
1991.
There were no substantial changes in total operating
expenses from 1991 to 1992 except for property taxes. Property
taxes declined by $4.0 million in 1992 when compared to 1991
because of the 1991 accruals made for the ad valorem tax case
discussed above.
Other income for the three-year period reflects gains on
sales and other disposition of properties of $.5, $1.5, and $15.2
million in 1993, 1992, and 1991, respectively. Of these amounts,
the 1991 figures reflect a series of purchases of right-of-way by
the Florida Department of Transportation, which began in 1988 and
was completed in 1991. Interest income from 1992 to 1993
declined $2.0 million because of the decrease in amount of
investment and the consistently low interest rates available.
The Company adopted Financial Accounting Standards Board
Statement 109 on January 1, 1993, which resulted in the
recognition of additional income of $1.5 million in the first
quarter 1993. Income taxes for 1993 increased by $3.4 million.
This was primarily the result of an increase in the federal tax
rate from 34% to 35% and the associated adjustments to deferred
tax assets and liabilities.
MANAGEMENT DISCUSSION AND ANALYSIS OF BALANCE SHEETS
The Consolidated Balance Sheet provides 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 Statement of Income and Retained Earnings and is
designed to contribute to the shareholders' understanding of the
Company.
Total current assets for 1993 increased by $1.5 million
when compared to 1992. This change is primarily represented by
increases of $1.5 million in Cash, Cash Equivalents, and
Short-term Investments, $1.2 million in Materials and Supplies,
and a decrease of $.4 million in Other Assets. Because of the
Company's commitment to realty construction and development, the
Company continues to maintain large liquid reserves to meet that
commitment.
Other investments decreased by $12.3 million in 1993 from
1992 to a total of $66.2 million. This decrease is comprised of
a $13.8 million reduction in investment principal used for realty
development in 1993 and the recognition of $1.5 million of
unrealized gains in the investment portfolio as required by
Financial Accounting Standards Board Statement No. 115.
Statement 115 was adopted December 31, 1993, and requires the
Company to record equity and debt securities, which are
classified as available-for-sale at fair market value (see Note
No. 5 to the financial statements). Other investments include
U.S. Treasury Bills and similar investments which are highly
liquid and are classified as long-term because of management's
intent to use the investment to finance major realty construction
projects. Currently, such major projects include infrastructure
development at Gran Park-Jacksonville and building construction
at Gran Park-Miami, and Gran Park at the Avenues (Jacksonville).
Properties increased approximately $54.7 million. The
additions in 1993 included new buildings at both Gran Park at the
Avenues in Jacksonville and Gran Park-Miami. Presently, the
Avenues complex consists of two office/showroom/warehouses and
two office buildings, with another office/warehouse under
construction. This park is planned for approximately 740,000
square feet of building construction at project completion, of
which 246,000 square feet is complete, and a new office/warehouse
consisting of 140,000 square feet is under construction.
The Gran Park-Miami project has not been completely demucked
and filled and is approximately 75% complete in terms of
authorized expenditure. This project has seventeen complete
buildings consisting of four office/warehouses, four
office/showroom/warehouses, three rail buildings, five front
load warehouses, and one double front load warehouse. The
seventeen buildings have approximately 1.8 million square feet of
leasable space, of which 88% is leased. At Gran Park-Miami, two
new buildings are under construction and will provide an
additional 181,000 square feet of leasable space.
Total current liabilities decreased $1.6 when compared to
1992. This is primarily attributable to the decrease in
estimated property taxes of $1.7 million. The adjustment in the
accrual for property taxes was the result of the favorable
outcome in the settlement for the ad valorem tax case with the
State of Florida for the years 1987 through 1991.
The Company is subject to substantial costs arising out of
environmental laws and regulations, which primarily relate to the
disposal and use of fuel and oil used in the transportation
business. It is the Company's policy to accrue and charge
against earnings environmental cleanup costs when it is
probable that a liability has been incurred and an amount can be
reasonably estimated.
The Company is currently a party to, or involved in, legal
proceedings directed at the cleanup of two Superfund sites. The
Company has accrued its allocated share of the total estimated
cleanup costs for these two sites. Based upon management's
evaluation of the other potentially responsible parties, the
Company does not expect to incur additional amounts even though
the Company has joint and several liability. Other proceedings
involving environmental matters such as alleged discharge of oil
or waste material into water or soil are pending against the
Company.
It is not possible to quantify future environmental costs
because many issues relate to actions by third parties or changes
in environmental regulation. However, based on information
presently available, management believes that the ultimate
disposition of currently known matters will not have a material
effect on the financial position or liquidity of the Company,
but could be material to the results of operations of the Company
in any one period. As of December 31, 1993, and 1992, the
aggregate environmental related accruals were $3,500,000.
Environmental liabilities are paid over an extended period and
the timing of such payments cannot be predicted with any
confidence.
The Company's financial position continues to be strong as
indicated by the improvement in the current ratios of 2.04 in
1992 and 2.17 in 1993. 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 freight cars and
data processing equipment.
As of December 31, 1993, the Company has authorized
approximately $33.4 million for capital expenditures, of which
67% represents 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 statement of cash flows details 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 source of funds throughout the year is
exclusively generated by operating and investing activities.
These sources have been sufficient to fund the purchases of
properties and pay dividends.
The composition of gains on disposition of assets includes
gains on land sales of $.5, $1.5, and $15.2 million for the years
1993, 1992, and 1991, respectively. The 1991 figure includes the
sale of right-of-way to the Florida Department of Transportation
in the amount of $15.0 million.
Net cash generated by operating activities increased by
$10.7 million in 1993 from 1992 and decreased $7.1 million in
1992 from 1991. These changes primarily reflect changes in
operating income levels and the timing of related cash receipts
and payments. Other substantial changes include a large good-
faith payment in 1992 related to the ad valorem tax case with the
State of Florida for the years 1989-1991.
Purchases of properties in 1993, 1992, and 1991 reflect
spending primarily in realty development. The Company continued
to defer the start of construction of the Gran Central Plaza
project in Miami, but is continuing to construct buildings such
as office/showroom/warehouses or any combination of the three as
the market dictates, principally in Jacksonville and Miami. Cash
received from dispositions of assets in 1991 include $16.4
million from sale of property to the Florida Department of
Transportation.
Because a large percentage of the Company's properties is
long-lived, asset replacement will be at a higher cost and will
take place over many years. The acquisition of new assets will
result in higher depreciation charges and, in the case of Realty,
higher taxes and operating costs. Purchases, maturities and
redemptions of investments vary depending upon the changes in
requirements for realty construction and development and cash
generated through operations. Other investments, including the
development fund, decreased $12.3 million in 1993 from 1992,
following a $9.4 million decrease in 1992 from 1991. This
decrease in 1993 in other investments was primarily attributable
to the increase in Realty's inventory of 818,000 square feet of
leasable space, which totals 3.2 million square feet as of
December 31, 1993.
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. In November 1990, the Company announced a stock
repurchase program, and in 1991, increased Treasury share
holdings to 271,361 shares.
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
The response to this item is incorporated under Item
14(a) - Index to Financial Statements and Financial
Statement Schedules.
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
Principal Occupation or Employment
for the Past Five Years-Positions
with Industries - Other
Name, Director Since, Age Directorships
_________________________ __________________________________
Jacob C. Belin Former Chairman of the Board, St.
Director since 1984 Joe Paper Company. Director, St.
Age 79 Joe Paper Company. Trustee,
Alfred I. duPont Trust.
Thomas S. Coldewey Retired Vice President, St. Joe
Director since 1984 Paper Company. Director, St. Joe
Age 81 Paper Company. Trustee, Alfred I.
duPont Trust.
William E. Durham Vice President, Industries.
Director since 1986
Age 62
Allen C. Harper Chairman/CEO, Esslinger-Wooten-
New Nominee Maxwell, Inc., Realtors, and
Age 49 President, First Reserve, Inc.
(1984-Present). Director, Tri-
County Railroad Authority (1989-
Present).
J. Nelson Fairbanks President and Director, U.S. Sugar
Director since 1989 Corporation.
Age 58
John H. Mercer, Jr. Retired President, John Mercer
Director since 1984 Terminal Warehouse Company.
Age 80
J.J. Parrish, III President, Jesse J. Parrish, Inc.,
Director since 1993 Vice President and Director,
Age 40 Nevins Fruit Company. Director
and Treasurer, Parrish Medical
Center. Director, Barnett Bank of
Central Florida.
M.E. Rinker, Sr. Chairman and CEO, M.E. Rinker, Sr.
Director since 1984 Companies (1988). Former
Age 89 President and Chairman of the
Board of Rinker Materials
Corporation for more than five
years.
R. Eugene Taylor President, Mid-Atlantic Banking
Director since 1993 Group NationsBank (1993-Present).
Age 46 President, NationsBank Florida,
(1991-1993). Executive Vice
President, NationsBank, Florida
(1989-1991). Employed by
NationsBank since 1969 in various
management roles.
W.L. Thornton Chairman of the Board and
Director since 1984 President, Industries. Chairman
Age 65 and Director, St. Joe Paper
Company. Trustee, Alfred I.
duPont Trust.
Raymond W. Wyckoff Retired Vice President,
Director since 1984 Industries. Retired President,
Age 70 Florida East Coast Railway.
Carl F. Zellers, Jr. Vice President, Industries.
Director since 1984 President, Florida East Coast
Age 61 Railway and Gran Central
Corporation. Director, St. Joe
Industries, Inc.
With respect to each Executive Officer of the Registrant,
there are set forth below as of December 31, 1993, (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 18, 1994.
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.
Date First Held Such Positions
Name, Age, Positions, and and Offices Business Experience
Offices for the Past Five Years
_________________________ _______________________________
Winfred L. Thornton (65) Chairman and President of
Chairman, President, Chief Registrant for more than five
Executive Officer & Director years.
Carl F. Zellers, Jr. (61) Vice President of the Registrant
Vice President and Director and President of Gran Central
Corporation for more than five
years. President of Florida East
Coast Railway Company from June
10, 1992.
T. Neal Smith (54) May 15, 1992, elected Vice
Vice President & Secretary President & Secretary. Formerly
Treasurer and Assistant Secretary
for more than five years.
William E. Durham, Jr. (62) Vice President of Registrant for
Vice President & Director more than five years.
J. Richard Yastrzemski (51) Comptroller of Registrant for
Comptroller more than five years.
Gregory P. West (34) May 15, 1992, elected Treasurer.
Treasurer & Assistant Secretary Formerly Material Inventory and
Accounting Manager.
On December 27, 1993, the Alfred I. duPont Testamentary Trust,
which prior to that date directly owned 450,224 shares of the
Company's common stock or 5.0% (beneficially owned 3,872,032
shares or 43%) transferred 450,224 shares of this stock to
The Nemours Foundation (Nemours). Nemours is a beneficiary of
the Trust. The Trust did not file Form 4, Statement of Changes
of Beneficial Ownership of Securities, and Nemours did not file
Form 3, Initial Statement of Beneficial Ownership of Securities.
The Trust and Nemours both timely filed Form 5, Annual Statement
of Changes in Ownership, which was due by the 45th day after the
end of calendar year 1993.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the annual compensation
for Industries' Executive Officers whose 1993 total annual
compensation exceeded $100,000, as well as the total compensation
paid to those Executives for the past three years.
Summary Compensation Table
Name and Other Annual All Other
Principal Salary Compensation Compensation
Position Year ($) ($) ($)
- -------- ---- ------ ------------ ------------
W.L. Thornton 1993 30,976(a) 5,130(b) 2,923(c)
President and CEO 1992 29,930(a) 4,789(b) 2,782(c)
1991 29,200(a) 4,950(b) 2,719(c)
C.F. Zellers, Jr. 1993 129,372 1,668(b) 2,541(c)
Vice President 1992 118,100 2,061(b) 2,372(c)
1991 104,000 1,876(b) 2,160(c)
(a) This amount represents 20% of Mr. Thornton's salary. Under
arrangement approved by the Board of Directors, 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
President 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.
(d) Industries paid no bonuses nor had any stock award or option
programs.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of
Florida East Coast Industries, Inc. (Industries) is composed
entirely of directors who are not, and have never been, Officers
or employees of Industries. The Board designates the members of
such Committee.
The philosophy of the ownership and investors in Florida
East Coast Industries, Inc., has historically been to reinvest a
major portion of its earnings and cash flow back into the
Company, looking towards share appreciation and growth in long-
term value. This philosophy continues and is the current goal of
the Company. In light of this policy, short-term earnings and
stock values may not accurately reflect the real and long-term
results of the executive management of the Company. Therefore,
the Chief Executive Officer, based upon his personal assessment,
recommends salary increases to the Compensation Committee as
pertains to the various corporate officers.
The Compensation Committee members of the Board of Directors
were chosen because of their business experience including the
diversity of their industry backgrounds and to ensure that the
interests of our shareholders are being served as relates to all
matters of executive compensation. The Committee reviews the
recommendations of the CEO and either approves these
recommendations or makes adjustments based upon their judgment of
what is the appropriate level of compensation.
As pertained to the salary adjustments made in 1994 for
individual corporate officers, the Committee approved the
recommendations of the CEO, which on average represented a three
percent increase in the base salaries of the covered executives.
In like manner, the Committee reviewed the base salary of the CEO
and determined that an adjustment of three percent was
appropriate and in keeping with the long-term interests of the
Company and its shareholders.
The Committee recognizes the need to monitor the Company's
executive compensation strategy to ensure that management members
are rewarded appropriately for their contributions, and that the
strategy supports organization objectives and shareholder
interests. Program changes will be considered if and when deemed
appropriate within the context of these objectives and interests.
J. Nelson Fairbanks, Chairman M.E. Rinker, Sr., Member
Compensation Committee John H. Mercer, Jr., Member
December 28, 1993 R. Eugene Taylor, Member
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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, 1994. 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/Address 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, Sole Voting & 4,902,304 (4) 54.5%
Inc. (3) Dispositive
P.O. Box 1380 Power
Jacksonville, FL 32201
Heine Securities Sole Voting & 571,400 6.4%
Corp. (5) Dispositive
51 J.F.K. Parkway Power
Short Hills, NJ 07078
__________________
(1) All percentages shown are rounded to the nearest one-tenth
of one percent.
(2) As of March 1, 1994, the following persons were directors of
the Nemours Foundation: Jacob C. Belin, Thomas S. Coldewey,
Alfred duPont Dent, 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, 1994, the following persons were directors of
St. Joe Industries, Inc.: Jacob C. Belin, E.C. Brownlie, S.D.
Fraser, 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 therein 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, 1994. 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%
T.S. Coldewey Shared Voting/
Dispositive Power 5,352,528(2) 59.5%
W.E. Durham, Jr. Sole Voting 182 ---
Dispositive Power --- ---
J.N. Fairbanks ----------------- --- ---
A.C. Harper ----------------- --- ---
J.H. Mercer, Jr. Sole Voting/
Dispositive Power 100 ---
J.J. Parrish, III ----------------- --- ---
M.E. Rinker, Sr. ----------------- --- ---
R.E. Taylor ----------------- --- ---
W.L. Thornton Sole Voting/
Dispositive Power 5,589 ---
Shared Voting/
Dispositive Power 5,352,528(2) 59.5%
R.W. Wyckoff Sole Voting/
Dispositive Power 500 ---
C.F. Zellers, Jr. Sole Voting/
Dispositive Power 1,859 ---
Shared Voting/
Dispositive Power 4,902,304(3) 54.5%
12 directors & Sole Voting/
officers as a Dispositive Power 8,816 ---
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 (4,500 shares) of
all outstanding Industries' Common Stock.
(2) Included 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 Mr. Zellers is
director.
(4) Includes the 4,902,304 and 450,224 listed as beneficially
owned by Messrs. Belin, Coldewey, and Thornton, and the 4,902,304
listed as beneficially owned by Mr. Zellers, 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 Sheet at December 31, 1993, and 1992
Consolidated Statement of Income and Retained Earnings
for each of the three years in the period ended
December 31, 1993
Consolidated Statement of Cash Flows for each of the
three years in the period ended December 31, 1993
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Supplementary Information:
Quarterly Financial Data (Unaudited)
Financial Statement Schedules:
I-Marketable Securities and Other Security Investments
V-Property, Plant, and Equipment
VI-Accumulated Depreciation and Amortization of Property,
Plant, and Equipment
VIII-Valuation and Qualifying Accounts
X-Supplementary Income Statement Information
XI-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.
The financial statements listed in the above Index which are
included in the Annual Report to Stockholders for the year ended
December 31, 1993, are hereby incorporated and filed as part of
this Report. With the exception of the items listed in the above
Index and as mentioned specifically in responses to this and
other parts of this Report, the 1993 Annual Report to
Stockholders is not to be deemed filed as part of 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 16, 1994.
FLORIDA EAST COAST INDUSTRIES, INC.
(Registrant)
By:
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:
W.L. Thornton*
Chairman, President, Chief Executive Officer, Director - 3/26/94
C.F. Zellers, Jr.*
Vice President and Director - 3/26/94
W.E. Durham, Jr.*
Vice President and Director - 3/26/94
R.W. Wyckoff* J. Nelson Fairbanks*
Director - 3/26/94 Director - 3/26/94
J.C. Belin* John H. Mercer, Jr.*
Director - 3/26/94 Director - 3/26/94
T.S. Coldewey* M.E. Rinker, Sr.*
Director - 3/26/94 Director - 3/26/94
R.E. Taylor* J.J. Parrish, III*
Director - 3/26/94 Director - 3/26/94
G.P. West* J.R. Yastrzemski*
Treasurer - 3/26/94 Comptroller - 3/26/94
BY: T.N. Smith*
Attorney-in-Fact
*Such signature has been affixed pursuant to Power of Attorney.
CONSOLIDATED BALANCE SHEETS
December 31, 1993, and 1992
(Dollars in thousands except per share amounts)
1993 1992
---- ----
Assets
Current Assets
Cash and cash equivalents $ 14,438 $ 12,132
Short-term investments (Note 5) 18,009 18,797
Accounts receivable, net 27,879 28,650
Materials and supplies 11,974 10,803
Other current assets 6,676 7,096
Total current assets 78,976 77,478
Other Investments (Note 5) 66,233 78,545
Properties, less Accumulated Depreciation
and Amortization (Note 4) 535,976 503,190
Other Assets and Deferred Charges 10,904 11,206
Total Assets $692,089 $670,419
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 21,891 $ 22,012
Estimated property taxes 4,665 6,407
Accrued casualty and other reserves (Note 9) 7,680 7,292
Other accrued liabilities 2,188 2,360
Total current liabilities 36,424 38,071
Deferred Income Taxes (Note 7) 126,164 122,031
Reserves and Other Long-Term Liabilities
(Note 9) 6,463 6,853
Commitments and Contingencies (Note 9)
Shareholders' Equity
Common stock, $6.25 par value; 9,360,000 shares
authorized; 9,271,361 shares issued and out-
standing 57,946 57,946
Capital surplus 101 101
Retained earnings 476,808 458,125
Net unrealized gain on debt and
marketable equity securities (Note 5) 891 ---
Treasury stock at cost (271,361 shares) (12,708) (12,708)
Total shareholders' equity 523,038 503,464
Total Liabilities and Shareholders' Equity $692,089 $670,419
(See accompanying notes to consolidated financial statements.)
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands except per share amounts)
Years ended December 31
1993 1992 1991
--------------------------
Operating Revenues
Transportation $162,318 $156,955 $153,018
Realty 18,778 18,800 13,543
Total Revenues 181,096 175,755 166,561
Operating Expenses
Transportation 117,789 119,630 121,834
Realty 12,900 10,990 9,426
General and Administrative 17,269 15,232 16,281
Total Expenses 147,958 145,852 147,541
Operating Profit 33,138 29,903 19,020
Other Income(Expense):
Dividends 326 207 170
Interest income 3,920 5,899 10,175
Interest expense --- (1) (55)
Gains on sales and other
disposition of properties 535 1,540 15,243
Other (net) 322 608 575
Total Other Income (Expense): 5,103 8,253 26,108
Income before income taxes and
cumulative effect of change in
accounting principle 38,241 38,156 45,128
Income Taxes: (Note 7)
Current 11,807 12,542 14,351
Deferred 5,655 1,569 1,721
Total Income Taxes 17,462 14,111 16,072
Income before cumulative effect
of change in accounting principle 20,779 24,045 29,056
Cumulative effect of change in
accounting principle for income
taxes 1,504 --- ---
Net Income 22,283 24,045 29,056
Retained Earnings:
Balance at beginning of year $458,125 $437,681 $412,243
Cash dividends (3,600) (3,601) (3,618)
Balance at Year-end $476,808 $458,125 $437,681
Per share data:
Cash dividends $ 0.40 $ 0.40 $ 0.40
Income before cumulative effect
of change in accounting
principle $ 2.31 $ 2.67 $ 3.21
Cumulative effect of change in
accounting principle for
income taxes .17 --- ---
Net income $ 2.48 $ 2.67 $ 3.21
(See accompanying notes to consolidated financial statements.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1993, 1992, and 1991
(Dollars in thousands)
Years ended December 31
1993 1992 1991
-------------------------
Cash Flows from Operating
Activities:
Net Income $22,283 $24,045 $29,056
Adjustments to reconcile net
income to cash generated by
operating activities:
Cumulative effect of change
in accounting principle
for income taxes (1,504) --- ---
Depreciation & amortization 20,335 18,765 17,569
Gains on disposition of assets (535) (1,540) (15,243)
Deferred taxes 5,655 1,569 289
Changes in operating assets
and liabilities:
Decrease(increase) in A/R 771 (2,786) 1,770
(Increase)decrease in other
current assets (559) 978 (1,510)
Increase in other assets and
deferred charges (468) (436) (3,001)
(Decrease)increase in A/P (121) 1,930 2,201
(Decrease)increase in est.
property taxes (1,742) (5,738) 7,150
Increase(decrease) in other
current liabilities 216 (2,816) 2,234
Decrease in reserves and other
long-term liabilities (390) (707) (197)
Net cash generated by operating
activities 43,941 33,264 40,318
Cash Flows from Investing Activities:
Purchases of properties (54,743) (54,193) (40,060)
Purchases of investments (49,813) (92,074) (110,452)
Maturities & redemption of invest. 64,364 101,661 108,203
Proceeds from disposition of assets 2,157 4,024 16,546
Net cash used in investing
activities (38,035) (40,582) (25,763)
Cash Flows from Financing Activities:
Payment of dividends (3,600) (3,601) (3,618)
Acquisition of treasury shares --- --- (11,712)
Net cash used in financing
activities (3,600) (3,601) (15,330)
Net Increase (Decrease) in Cash
and Cash Equivalents 2,306 (10,919) (775)
Cash and Cash Equivalents at
Beginning of Year 12,132 23,051 23,826
Cash and Cash Equivalents at
End of Year $14,438 $12,132 $23,051
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the year for
income taxes $11,166 $14,200 $14,863
(See accompanying notes to consolidated financial statements.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992, and 1991
1. Nature of Business
The principal operations of Florida East Coast Industries,
Inc. (the "Company") and its subsidiaries relate directly to the
transportation of goods by rail and to the development, leasing,
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 1993, 1992, or 1991.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly-owned.
All significant intercompany transactions and balances have been
eliminated in consolidation.
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
(9,000,000 in 1993; 9,000,000 in 1992; and 9,062,174 in 1991).
Reclassification
Certain prior year amounts have been reclassified to conform
with the current year's presentation.
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.
Fair Value of Financial Instruments
The carrying amounts of the following financial instruments
approximate fair value because of their short maturity, cash and
cash equivalents, short-term investments, accounts receivable,
accounts payable, estimated property taxes, and other accrued
liabilities. The fair value of other investments differs from
the carrying value as disclosed in Note 5.
Income Taxes
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Statement 109 requires a change
from the deferred method of accounting for income taxes of APB
Opinion 11 to the asset and liability method of accounting for
income taxes. Under the asset and liability method of 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 statement of income.
Pursuant to the deferred method under APB Opinion 11, which
was applied in 1992 and prior years, deferred income taxes are
recognized for income and expense items that are reported in
different years for financial reporting purposes and income tax
purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes are not
adjusted for subsequent changes in tax rates.
Investments
Investments consist principally of municipal bonds, common
stocks, redeemable preferred stocks, and U.S. Government
obligations. The Company adopted the provisions of Statement of
Financial Accounting Standards 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, adjusted 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.
4. Properties
Properties consists of (in thousands):
1993 1992
---------------------
Transportation Properties
Road $291,436 $283,686
Equipment 189,897 186,080
Miscellaneous Physical Property 5,435 5,435
Construction in Progress 1,421 636
488,189 475,837
Less Accumulated Depreciation & Amortization 179,184 169,121
$309,005 $306,716
Real Estate Properties
Land and Land Improvements $106,832 $ 98,869
Buildings 107,915 85,696
Construction in Progress 27,515 23,219
242,262 207,784
Less Accumulated Depreciation & Amortization 15,291 11,310
$226,971 $196,474
Real Estate properties having a net book value of $120.6
million at December 31, 1993, are leased under non-cancelable
operating leases with aggregate rentals of $83.3 million, which
are due in years 1994-1998 in the amounts of $16.2, $15.1, $13.1,
$11.1, and $7.6 million, respectively.
5. Investments
As discussed in Note 3, the Company adopted Statement 115 as
of December 31, 1993. The cumulative effect of this change in
accounting for investments of $1,451,000 is determined as of
December 31, 1993, and is reported separately as a component of
shareholders' equity net of related tax of $560,000. Investments
at December 31, 1993, consist of (in thousands):
Short-term investments,
Held-to-maturity, at amortized cost $18,009
Other investments,
Held-to-maturity, at amortized cost $25,644
Available-for-sale, at fair value 40,589
Total other investments $66,233
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. The amortized cost and fair value for available-for-
sale and held-to-maturity securities by major security type at
December 31, 1993, were as follows:
Net
Unrealized
Amortized Fair Holding
Cost Value Gain(Loss)
--------- ----- ----------
Available-For-Sale:
Municipal Bonds* $29,961 $31,387 $1,426
Equity Securities 9,177 9,202 25
Total $39,138 $40,589 $1,451
Held-To-Maturity:
Certificates of Deposit** $ 2,259 $ 2,259 $ ---
Mortgage Backed Securities* 916 1,491 575
Municipal Bonds* 2,401 2,376 (25)
Corporate Debt Securities* 801 801 ---
U.S. Treasury Securities** 37,276 38,500 1,224
Total $43,653 $45,427 $1,774
**Due within one year.
*Due principally after five years.
Gross unrealized holding gains and gross unrealized holding
losses at December 31, 1993, were $3,667,000 and $442,000,
respectively. At December 31, 1992, investments are carried at
amortized cost ($97,342,000) which approximates quoted market
prices ($99,148,000).
6. Collateral Trust 5% Bonds
There are outstanding at December 31, 1993, and 1992
$13,135,325 and $13,362,425, 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.
7. Income Taxes
As discussed in Note 3, the Company adopted Statement 109 as
of January 1, 1993. The cumulative effect of this change in
accounting for income taxes of $1,504,000 is determined as of
January 1, 1993, and is reported separately in the consolidated
statement of income for the year ended December 31, 1993. Except
for the adjustments to deferred tax assets and liabilities for
enacted changes in the tax laws and rates, the accounting change
did not have a significant impact on the 1993 provision for
income taxes. Prior years' financial statements have not been
restated to apply the provisions of Statement 109. Total income
tax expense for the year ended December 31, 1993, was allocated
as follows (in thousands):
Income from continuing operations $17,462
Shareholders' equity, for recognition of unrealized
holding gain on debt and marketable equity
securities in connection with adoption of
Statement 115 560
$18,022
Income tax expense attributable to income from continuing
operations was $17,462, $14,111, and $16,072 for the years ended
December 31, 1993, 1992, and 1991, respectively, and differed
from the amounts computed by applying the U.S. federal income tax
rate of 35% in 1993 and 34% in 1992, and 1991 to pre-tax income
as a result of the following:
1993 1992 1991
---- ---- ----
Amount computed at statutory
federal rate $13,384 $12,973 $15,344
Effect of dividends received
exclusion and tax-free interest (538) (242) (765)
State taxes (net of federal benefit) 1,357 1,359 1,583
Adjustment to deferred tax assets
and liabilities for enacted changes
in tax laws and rates 2,893 --- ---
Other (net) 366 21 (90)
------- ------- -------
$17,462 $14,111 $16,072
For the years ended December 31, 1993, 1992, and 1991, deferred
income tax results from differences in the recognition of income
and expense for income tax and financial reporting purposes. The
sources and tax effects of those differences are presented below:
1993 1992 1991
---- ---- ----
Depreciation $1,325 $ 932 $1,776
Casualty Claims 586 1,072 (406)
Adjustment to deferred tax assets
and liabilities for enacted changes
in tax laws and rates 2,893 --- ---
Other (net) 851 (435) 351
______ ______ ______
$5,655 $1,569 $1,721
The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and deferred tax
liabilities at December 31, 1993, are as follows:
Deferred tax assets:
Accrued casualty and other reserves $ 6,400
Amortization of fiber optic income 735
Other 349
Total deferred tax assets $ 7,484
Deferred tax liabilities:
Properties, principally due to differences in
depreciation $ 97,655
Deferred gain on land sales 24,893
Deferred profit on bonds extinguished 2,027
Unrealized holding gain on debt and marketable
equity securities 560
Other 1,029
Total deferred tax liabilities $126,164
Net deferred tax liabilities $118,680
There was no valuation allowance provided for deferred tax
assets as of January 1, 1993, and December 31, 1993.
8. 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 Statement 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):
1993 1992 1991
---- ---- ----
Operating Revenue:
Transportation $162,318 $156,955 $153,018
Realty 18,778 18,800 13,543
$181,096 $175,755 $166,561
Operating Profit:
Transportation $ 28,843 $ 23,735 $ 16,312
Realty 4,295 6,168 2,708
$ 33,138 $ 29,903 $ 19,020
Identifiable Assets:
Transportation $352,465 $351,850 $350,025
Realty 232,068 199,763 166,377
Corporate 107,556 118,806 131,273
$692,089 $670,419 $647,675
Capital Expenditures:
Transportation $ 19,775 $ 18,040 $ 14,689
Realty 34,968 36,153 25,371
$ 54,743 $ 54,193 $ 40,060
Depreciation:
Transportation $ 16,356 $ 15,567 $ 15,170
Realty 3,979 3,198 2,399
$ 20,335 $ 18,765 $ 17,569
9. 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.
The Company is currently a party to, or involved in, legal
proceedings directed at the cleanup of two Superfund sites. The
Company has accrued its allocated share of the total estimated
cleanup costs for these two sites. Based upon management's
evaluation of the other potentially responsible parties, the
Company does not expect to incur additional amounts even though
the Company has joint and several liability. Other proceedings
involving environmental matters such as alleged discharge of oil
or waste material into water or soil are pending against the
Company.
It is not possible to quantify future environmental costs
because many issues relate to actions by third parties or changes
in environmental regulation. However, based on information
presently available, management believes that the ultimate
disposition of currently known matters will not have a material
effect on the financial position or liquidity of the Company, but
could be material to the results of operations of the Company in
any one period. As of December 31, 1993, and 1992, the aggregate
environmental related accruals were $3,500,000. Environmental
liabilities are paid over an extended period and the timing of
such payments cannot be predicted with any confidence.
10. Sale of Property
In 1988, the Company entered into an agreement with the
Florida Department of Transportation (DOT) for the sale of
approximately 20.7 miles of abandoned 100-foot-wide right-of-way.
The total sales price of $35,525,000 was divided into six
segments. The DOT made an initial payment of $10,000,000 and
issued an executory note for $25,525,000 at an interest rate of
9.01%. As the payments from DOT were received, the liens on the
pro rate portion of the succeeding segments were removed and
related gains recognized. Principal and interest payment of
$6,250,000 was received in 1989, a payment of $8,857,000 was
received in 1990, and a final payment of $16,371,326 was received
in 1991. The land sale gains recognized amounted to $15,018,000,
$6,884,000, $3,923,000, and $9,574,000 in 1991, 1990, 1989, and
1988, respectively.
Independent Auditors' Report
The Board of Directors and Shareholders
Florida East Coast Industries, Inc.:
We have audited the accompanying consolidated balance sheets of
Florida East Coast Industries, Inc., and subsidiaries as of
December 31, 1993, and 1992, and the related consolidated
statements of income and retained earnings, and cash flows for
each of the years in the three-year period ended December 31,
1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements 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
significant 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, 1993, and 1992, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in notes 3 and 5 to the consolidated financial
statements, the Company adopted 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 notes 3 and 7, the Company adopted the provisions of the
Financial Accounting Standards Board's SFAS No. 109, "Accounting
for Income Taxes," effective January 1, 1993.
KPMG Peat Marwick
Certified Public Accountants
Jacksonville, Florida
February 11, 1994
SUPPLEMENTARY INFORMATION
1993
Dec. 31 Sept. 30 June 30 March 31
------ -------- ------- --------
QUARTERLY FINANCIAL DATA
Operating Revenues $47,544 $43,891 $45,642 $44,019
Other Income $ 1,226 $ 2,186 $ 39 $ 1,652
Operating Expenses $37,605 $33,908 $38,802 $37,643
Income before cumulative
effect of change in
accounting principle $ 6,770 $ 4,459 $ 4,420 $ 5,130
Cumulative effect of change
in accounting principle
for income taxes (1) $ --- $ --- $ --- $ 1,504
Net Income $ 6,770 $ 4,459 $ 4,420 $ 6,634
Per Common Share
Income before cumulative
effect of change in
accounting principle $ 0.75 $ 0.50 $ 0.49 $ 0.57
Cumulative effect of change
in accounting principle
for income taxes (1) $ --- $ --- $ --- $ 0.17
Net Income Per Common Share $ 0.75 $ 0.50 $ 0.49 $ 0.74
1992
Dec. 31 Sept. 30 June 30 March 31
------- -------- ------- --------
QUARTERLY FINANCIAL DATA
Operating Revenues $47,445 $42,778 $45,463 $40,069
Other Income $ 2,931 $ 2,018 $ 1,672 $ 1,632
Operating Expenses $38,001 $37,357 $35,905 $34,589
Income before cumulative
effect of change in
accounting principle $ 7,823 $ 4,699 $ 6,961 $ 4,562
Cumulative effect of change
in accounting principle
for income taxes (1) $ --- $ --- $ --- $ ---
Net Income $ 7,823 $ 4,699 $ 6,961 $ 4,562
Per Common Share
Income before cumulative
effect of change in
accounting principle $ 0.87 $ 0.52 $ 0.77 $ 0.51
Cumulative effect of change
in accounting principle
for income taxes (1) $ --- $ --- $ --- $ ---
Net Income Per Common Share $ 0.87 $ 0.52 $ 0.77 $ 0.51
(1) As discussed in Note 7 of the Financial Statements, the
Company adopted Statement No. 109, effective January 1,
1993. Accordingly, the cumulative effect of this change in
accounting principle was recorded in the first quarter of
1993.
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE I (CONSOLIDATED)
MARKETABLE SECURITIES AND OTHER SECURITY INVESTMENTS
DECEMBER 31, 1993
(Dollars in Thousands Except for Number of Shares)
NO. OF SHARES AMOUNT
OR PRINCIPAL CARRIED IN
AMOUNT BALANCE
DESCRIPTION (Par Value) COST MKT. VALUE SHEET
- ----------- ------------- ---- ---------- ----------
Short-Term Invest.
Certificates of Deposit $ 2,063 $ 2,063 $ 2,063 $ 2,063
U.S. Government Sec. $ 14,000 13,545 14,000 13,545
Tax Exempt Municipals(1) $ 2,375 2,401 2,376 2,401
Total Current Assets $18,009
Other Investments
Certificates of Deposit $ 196 $ 196 $ 196 $ 196
Various Common & Pref.
Stocks (1) 230,383 9,177 9,202 9,202
U.S. Government Sec. $ 24,500 23,731 24,500 23,731
Tax Exempt Municipals(1) $ 29,665 29,961 31,387 31,387
Mortgage Backed Securities 6,132 916 1,491 916
Other Corporate Debt
Securities (1) $ 1,326 801 801 801
Total Other Investments $66,233
Total Marketable Securities & Other Investments $84,242
(1) Securities of any one individual issuer do not constitute 2%
or more of total assets of the Registrant.
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE V (CONSOLIDATED) - PROPERTY, PLANT, AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(Dollars in thousands)
Balance at Additions
Beginning Charged to Adjustments/ Balance
of Year Expenses Retirements End of Yr.
---------- ---------- ------------ ----------
1993
Transportation Property
Road $283,686 $10,049 $(2,299) $291,436
Equipment 186,080 8,941 (5,124) 189,897
Misc. Phy. Prop. 5,435 --- --- 5,435
Const. in Prog. 636 785 --- 1,421
Total $475,837 $19,775 $(7,423) $488,189
Real Estate Property
Land/Land Improv. $ 98,869 $ 8,454 $ (490) $106,833
Buildings 85,696 22,218 --- 107,914
Const. in Prog. 23,219 4,296 --- 27,515
Total $207,784 $34,968 $ (490) $242,262
Grand Total $683,621 $54,743 $(7,913) $730,451
1992
Transportation Property
Road $274,937 $10,568 $(1,819) $283,686
Equipment 176,627 9,739 (286) 186,080
Misc. Phy. Prop. 5,432 3 --- 5,435
Const. in Prog. 2,906 (2,270)[1] --- 636
Total $459,902 $18,040 $(2,105) $475,837
Real Estate Property
Land/Land Improv. $ 91,815 $ 7,192 $ (138) $ 98,869
Buildings 63,436 22,260 --- 85,696
Const. in Prog. 16,518 6,701 --- 23,219
Total $171,769 $36,153 $ (138) $207,784
Grand Total $631,671 $54,193 $(2,243) $683,621
1991
Transportation Property
Road $264,998 $11,654 $(1,715) $274,937
Equipment 175,434 2,248 (1,055) 176,627
Misc. Phy. Prop. 5,017 417 (2) 5,432
Const. in Prog. 4,028 370 (1,492) 2,906
Total $449,477 $14,689 $(4,264) $459,902
Real Estate Property
Land/Land Improv. $ 81,101 $11,159 $ (445) $ 91,815
Buildings 52,502 10,934 --- 63,436
Const. in Prog. 13,240 3,278 --- 16,518
Total $146,843 $25,371 $ (445) $171,769
Grand Total $596,320 $40,060 $(4,709) $631,671
[1] Reduction in additions attributed to amounts reclassified
into primary accounts in excess of current year
expenditures.
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE VI (CONSOLIDATED) - ACCUMULATED DEPRECIATION AND
AMORTIZATION - YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(Dollars in thousands)
Balance at Additions
Beginning Charged to Adjustments/ Balance at
of Year Expenses Retirements End of Yr.
---------- ---------- ----------- ----------
1993
Transportation Property
Road $ 74,855 $ 6,631 $(2,398) $ 79,088
Equipment 93,091 9,581 (3,895) 98,777
Other Property 1,175 144 --- 1,319
Total $169,121 $16,356 $(6,293) $179,184
Real Estate Property
Land/Land Improv. $ 2,863 $ 950 $ --- $ 3,813
Buildings 8,447 3,029 2 11,478
Total $ 11,310 $ 3,979 $ 2 $ 15,291
Grand Total $180,431 $20,335 $(6,291) $194,475
1992
Transportation Property
Road $ 69,723 $ 6,464 $(1,332) $ 74,855
Equipment 82,559 8,959 1,573 93,091
Other Property 1,031 144 --- 1,175
Total $153,313 $15,567 $ 241 $169,121
Real Estate Property
Land/Land Improv. $ 2,049 $ 814 $ --- $ 2,863
Buildings 6,063 2,384 --- 8,447
Total $ 8,112 $ 3,198 $ --- $ 11,310
Grand Total $161,425 $18,765 $ 241 $180,431
1991
Transportation Property
Road $ 65,930 $ 6,253 $(2,460) $ 69,723
Equipment 74,723 8,784 (948) 82,559
Other Property 898 133 --- 1,031
Total $141,551 $15,170 $(3,408) $153,313
Real Estate Property
Land/Land Improv. $ 1,406 $ 641 $ 2 $ 2,049
Buildings 4,305 1,758 --- 6,063
Total $ 5,711 $ 2,399 $ 2 $ 8,112
Grand Total $147,262 $17,569 $(3,406) $161,425
Registrant's track structure and other transportation properties
are depreciated on a straight-line basis using annual composite
rates approved by the Interstate Commerce Commission using data
drawn from Registrant's historical records and special studies.
Depreciable lives for road properties range from 9 to 60 years
and for equipment properties from 8 to 33 years. Depreciable
lives for real estate properties range from 3 to 40 years.
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE VIII (CONSOLIDATED) - VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(Dollars in Thousands)
Balance at Additions
Beginning Charged Balance at
of Year to Expense Payments End of Year
---------- ---------- -------- -----------
RESERVES INCLUDED IN LIABILITIES
1993
Casualty & other
reserves $14,145 $2,443 $2,445 $14,143[a]
1992
Casualty & other
reserves $16,691 $ 724 $3,270 $14,145[a]
1991
Casualty & other
reserves $15,819 $2,378 $1,506 $16,691[a]
[a] Includes $7,680, $7,292, and $9,131 in current liabilities at
December 31, 1993, December 31, 1992, and December 31, 1991,
respectively. The remainder is included in "Reserves and
Other Long-Term Liabilities."
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE X (CONSOLIDATED) - SUPPLEMENTARY INCOME STATEMENT
INFORMATION - YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(Dollars in Thousands)
CHARGES TO COST AND EXPENSES
1993 1992 1991
-----------------------------
Maintenance and repairs:
Track Structure $13,725 $15,254 $20,674
Equipment $18,478 $18,533 $17,690
Taxes other than payroll & income taxes:
Property $ 5,420 $ 7,668 $11,511
Other $ 275 $ 107 $ 446
$ 5,695 $ 7,775 $11,957
FLORIDA EAST COAST INDUSTRIES, INC.
SCHEDULE XI (CONSOLIDATED) - REAL ESTATE AND ACCUMULATED
DEPRECIATION - DECEMBER 31, 1993, 1992, AND 1991 (in thousands)
Initial Cost to Company
Description Encumbrances Land
- ----------- ------------ ----
Duval County
Office Bldgs. (4) -0- $ 1,153
Office/Showroom/Wareh. (8) -0- 1,502
Land w/Infrastructure -0- 1,773
Unimproved Land & Misc. Assets -0- 5,735
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 -0- 73
Land w/Infrastructure -0- 3,797
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- 7
Palm Beach County
Office/Showroom/Warehouse -0- 113
Rail Warehouses (2) -0- 449
Cross Docks (2) -0- 117
Land w/Infrastructure -0- 1,269
Unimproved Land -0- 1,605
Broward County
Rail Warehouse -0- 85
Unimproved Land -0- 733
Manatee County
Unimproved Land -0- 14
Dade County
Cross Dock -0- 137
Double Front Load Warehouse -0- 768
Rail Warehouses (4) -0- 808
Office/Showroom/Warehouses (4) -0- 1,003
Office Warehouses (4) -0- 1,462
Front Load Warehouses (4) -0- 1,943
Land w/Infrastructure -0- 2,577
Unimproved Land & Misc. Assets -0- 16,010
-------
TOTALS $63,007
Initial Cost to Company
Costs
Capitalized
Buildings & Subsequent to
Description Improvements Acquisition
- ----------- ------------ -------------
Duval County
Office Bldgs. (4) $6,200 $ 25,374
Office/Showroom/Wareh. (8) 18,700
Land w/Infrastructure 968
Unimproved Land & Misc. Assets 4,325
St. Johns County
Unimproved Land 411
Flagler County
Unimproved Land 1,008
Volusia County
Unimproved Land 499
Brevard County
Office/Showroom/Warehouse 1,890
Land w/Infrastructure
Unimproved Land 191
Indian River County
Unimproved Land 156
St. Lucie County
Unimproved Land 8
Martin County
Unimproved Land 2,344
Putnam County
Unimproved Land
Palm Beach County
Office/Showroom/Warehouse 2,641
Rail Warehouses (2) 4,097
Cross Docks (2) 3,763
Land w/Infrastructure 87
Unimproved Land
Broward County
Rail Warehouse 1,584
Unimproved Land 701
Manatee County
Unimproved Land 3
Dade County
Cross Dock 1,018
Double Front Load Warehouse 5,376
Rail Warehouses (4) 13,998
Office/Showroom/Warehouses (4) 11,774
Office Warehouses (4) 12,468
Front Load Warehouses (4) 11,269
Land w/Infrastructure 8,993
Unimproved Land & Misc. Assets 11,894
------ --------
TOTALS $6,200 $145,540
Carried at Close of Period
Land & Bldgs. &
Description Land Improv. Improv. Total
- ----------- ------------ -------- -----
Duval County
Office Bldgs. (4) $ 3,525 $ 29,202 $ 32,727
Office/Showroom/Wareh. (8) 3,930 16,272 20,202
Land w/Infrastructure 2,741 2,741
Unimproved Land & Misc. Assets 9,863 197 10,060
St. Johns County
Unimproved Land 3,042 3,042
Flagler County
Unimproved Land 4,226 4,226
Volusia County
Unimproved Land 4,150 4,150
Brevard County
Office/Showroom/Warehouse 438 1,525 1,963
Land w/Infrastructure 3,797 3,797
Unimproved Land 5,037 5,037
Indian River County
Unimproved Land 374 374
St. Lucie County
Unimproved Land 647 647
Martin County
Unimproved Land 7,015 7,015
Putnam County
Unimproved Land 7 7
Palm Beach County
Office/Showroom/Warehouse 599 2,155 2,754
Rail Warehouses (2) 544 4,002 4,546
Cross Docks (2) 1,262 2,618 3,880
Land w/Infrastructure 1,356 1,356
Unimproved Land 1,605 1,605
Broward County
Rail Warehouse 405 1,264 1,669
Unimproved Land 1,434 1,434
Manatee County
Unimproved Land 17 17
Dade County
Cross Dock 137 1,018 1,155
Double Front Load Warehouse 1,409 4,735 6,144
Rail Warehouses (4) 2,398 12,408 14,806
Office/Showroom/Warehouses (4) 2,419 10,358 12,777
Office Warehouses (4) 2,838 11,092 13,930
Front Load Warehouses (4) 2,476 10,736 13,212
Land w/Infrastructure 11,570 11,570
Unimproved Land & Misc. Assets 27,571 333 27,904
------- -------- --------
TOTALS $106,832 $107,915 $214,747
Life on Which
Depreciation in
Date First Latest Income
Accumulated Started or Statement is
Description Depreciation Acquired Computed
- ----------- ------------ ---------- ---------------
Duval County
Office Buildings (4) $ 4,074 1985 3 to 40 years
Office/Showroom/Ware.(8) 2,707 1987 3 to 40 years
Land w/Infrastructure Various
Unimproved Land &
Misc. Assets 123 Various 3 to 40 years
St. Johns County
Unimproved Land Various
Flagler County
Unimproved Land Various
Volusia County
Unimproved Land Various
Brevard County
Office/Showroom/Warehouse 287 1988 3 to 40 years
Land w/Infrastructure Various
Unimproved Land Various
Indian River County
Unimproved Land Various
St. Lucie County
Unimproved Land Various
Martin County
Unimproved Land Various
Putnam County
Unimproved Land Various
Palm Beach County
Office/Showroom/Warehouse 549 1986 3 to 40 years
Rail Warehouses (2) 927 1982 3 to 40 years
Cross Docks (2) 604 1987 3 to 40 years
Land w/Infrastructure Various
Unimproved Land Various
Broward County
Rail Warehouse 428 1986 3 to 40 years
Unimproved Land Various
Manatee County
Unimproved Land Various
Dade County
Cross Dock 182 1987 3 to 40 years
Double Front Load Warehouse 132 1993 3 to 40 years
Rail Warehouses (4) 885 1988 3 to 40 years
Office/Showroom/Ware. (4) 1,395 1988 3 to 40 years
Office/Warehouses (4) 913 1990 3 to 40 years
Front Load Warehouses (4) 460 1991 3 to 40 years
Land w/Infrastructure 1,560 Various
Unimproved Land &
Misc. Assets 65 Various 3 to 40 years
-------
TOTALS $15,291
Notes:
(A) The aggregate cost of real estate owned at December 31,
1993, for federal income tax purposes is approximately
$123,400,065.
(B) Reconciliation of real estate owned:
1993 1992 1991
---- ---- ----
Balance at Start of Year $184,565 $155,251 $133,603
Amounts Capitalized 30,672 29,452 22,093
Amounts Retired/Adjusted (490) (138) (445)
Balance at Close of Period $214,747 $184,565 $155,251
(C) Reconciliation of accumulated depreciation:
1993 1992 1991
---- ---- ----
Balance at Start of Year $ 11,310 $ 8,112 $5,711
Depreciation Expense 3,979 3,198 2,399
Amounts Retired/Adjusted 2 0 2
Balance at Close of Period $ 15,291 $ 11,310 $8,112
Independent Auditors' Report
The Board of Directors and Shareholders
Florida East Coast Industries, Inc.:
Under date of February 11, 1994, we reported on the consolidated
balance sheets of Florida East Coast Industries, Inc., and
subsidiaries as of December 31, 1993, and 1992, and the related
consolidated statements of income and retained earnings, and cash
flows for each of the years in the three-year period ended
December 31, 1993, as contained in the 1993 Annual Report to
Stockholders. These consolidated financial statements and our
report thereon are incorporated by reference in the Annual Report
on Form 10-K for the year 1993. In connection with our audits of
the aforementioned consolidated financial statements, we also
have audited the related financial statement schedules as listed
in the accompanying index. These financial statement schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statement schedules based on our audits.
In our opinion, such 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 notes 3 and 5 to the consolidated financial
statements, the Company adopted 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 notes 3 and 7, the Company adopted the provisions of the
Financial Accounting Standards Board's SFAS No. 109, "Accounting
for Income Taxes," effective January 1, 1993.
KPMG PEAT MARWICK
Certified Public Accountants
Jacksonville, Florida
February 11, 1994
22. 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.
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, 1993, 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 1993
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:
Winfred L. Thornton, Chairman, T.N. Smith, Vice President
President, CEO, and Director and Secretary
J. Nelson Fairbanks, Director J.C. Belin, Director
T.S. Coldewey, Director R.W. Wyckoff, Director
M.E. Rinker, Sr., Director J.H. Mercer, Jr., Director
J.J. Parrish, III, Director R.E. Taylor, Director
W.E. Durham, Jr., Director C.F. Zellers, Jr., Vice
President and Director
Dated: March 26, 1994