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-- Railway and Real Estate Produce Solid Performances in 2006 --
JACKSONVILLE, Fla., Feb. 15 /PRNewswire-FirstCall/ --
Railway Results
-- Fourth quarter 2006 Florida East Coast Railway (Railway) revenues
increased 2% to $63.6 million compared to the 2005 fourth quarter.
Railway operating profit improved 7% to $17.4 million compared to
$16.3 million in the 2005 fourth quarter.
-- 2006 full-year Railway revenues and operating profit increased 11% and
23%, respectively. 2006 operating profit includes $5.3 million of
hurricane recoveries, net of expenses.
Realty Results
Operations
-- Fourth quarter 2006 Flagler Development Group (Flagler) realty rental
revenues increased 14% to $25.8 million compared to the 2005 fourth
quarter, primarily as a result of increased revenue contributions from
new buildings delivered in 2005 and 2006.
-- Fourth quarter 2006 Flagler realty rental operating profit was $7.6
million compared to $6.8 million in the 2005 comparable period.
Realty rental operating profit before depreciation and amortization
expense* increased 9% to $15.6 million compared to the fourth quarter
2005.
-- Fourth quarter 2006 Flagler realty services revenues were $16.0
million as a result of the Codina Group acquisition in April 2006.
Realty services operating profit was $1.8 million in the fourth
quarter.
-- 2006 full-year Flagler's realty rental revenues, rental properties
operating profit and rental properties operating profit before
depreciation and amortization* increased 13%, 17% and 12%,
respectively.
Sales
-- Fourth quarter 2006 realty sales revenues were $1.8 million, compared
to $23.4 million in the fourth quarter 2005. Realty sales under
contract at December 31, 2006 totaled $7.9 million. Revenues from
realty sales were $49.2 million for the full-year 2006.
* A reconciliation to the most comparable GAAP measures is provided at the
end of the release.
Florida East Coast Industries, Inc. (FECI) (NYSE:FLA) today announced results for the fourth quarter and year ended December 31, 2006.
Adolfo Henriques, Chairman, President and Chief Executive Officer of Florida East Coast Industries, Inc., stated, "Overall, FECI had a very successful year. Our commercial real estate arm, Flagler Development Group, did an outstanding job and registered double-digit increases in realty rental revenues and operating profit before depreciation and amortization and maintained functionally full occupancy levels. The Railway delivered record revenues and operating profit for the year, despite a slow down in residential construction in Florida during the second half of the year which dampened near-term demand for aggregate. After outperforming expectations in the first half of 2006, second half revenue growth at the Railway slipped as the housing and automotive markets weakened. However, we anticipate aggregate shipments will improve over the longer-term. Given current market conditions, our customers continue to shift their focus from residential projects to commercial and infrastructure opportunities. Decreased shipments from the domestic automotive manufacturers were partially offset by a slight increase in shipments from foreign manufacturers. For the quarter, Railway revenues were up slightly, benefiting primarily from improved pricing. Operating profit increased to $17.4 million from $16.3 million in the 2005 fourth quarter. We continue to believe that long-term fundamentals of the Railway and of the Florida market are strong. In 2007 we expect softness at the Railway in the first half of the year, however, we do expect improving fundamentals in the second half of the year."
Mr. Henriques added, "Flagler delivered a strong performance during 2006, increasing realty revenues and operating profit before depreciation and amortization and improving occupancy. The Codina acquisition was a highlight as our businesses provided strong results, significant joint venture activity and new construction in the second half of the year. Our strong presence and experience in the South Florida market is yielding significant opportunities, such as entering into a joint venture with TIAA-CREF and shortly after, announcing plans to design and develop Office Depot's new 624,000 square foot global headquarters in Boca Raton, which was the largest build-to-suit lease project in the U.S. during 2006. We will soon begin construction on Burger King's new headquarters, a 248,000 square foot build-to-suit located in Coral Gables, held in partnership with an affiliate of JP Morgan. Flagler's portfolio of Class-A buildings ended the year with an overall occupancy level of 96% as a result of strong tenant retention and solid leasing results. The fundamentals in our real estate business are trending favorably as rental rates continue to improve, demand remains strong and suitable land in many markets remains scarce. Our enhanced business capabilities in light of the Codina acquisition and integration are enabling us to pursue new opportunities that are in-line with market demand, and our pipeline of new construction and leasing activity has never been stronger. We anticipate continued strong results for Flagler during 2007."
Consolidated Results
For the 2006 fourth quarter, FECI reported consolidated revenues of $108.3 million, compared to $109.8 million for the fourth quarter 2005. The slight decrease in consolidated revenues relates to lower realty sales revenues partially offset by an increase in realty services revenues from the Codina acquisition. Fourth quarter 2006 realty sales revenues were $1.8 million, compared to $23.4 million in the fourth quarter 2005. FECI reported consolidated fourth quarter 2006 net income of $14.0 million, or $0.40 per diluted share, compared to $20.2 million, or $0.61 per diluted share, for the prior year quarter. The decline in net income was due to a decrease in fourth quarter realty sales partially offset by a $4.8 million gain on the sale of the Company's St. Augustine corporate offices.
For the full year 2006, FECI reported consolidated revenues of $458.2 million, compared to $362.3 million for 2005. 2006 revenues included realty sales revenues of $49.2 million compared to $33.6 million in 2005 and realty services revenues of $43.1 million as a result of the Codina Group acquisition completed in April 2006 compared to $0.7 million in 2005. FECI reported full year 2006 net income of $63.1 million or $1.83 per diluted share, compared to $49.4 million, or $1.52 per diluted share, in the prior year.
Railway Fourth Quarter Results
- Railway revenues in the fourth quarter 2006 increased $1.1 million to
$63.6 million from $62.5 million in the prior year period, reflecting
improved pricing (which includes higher fuel surcharges), partially
offset by decreased carload volume. Fourth quarter 2006 revenues
include $5.4 million of fuel surcharges, an increase of $0.5 million
over the prior year's quarter. 2005 fourth quarter revenues and
operating profit were impacted by Hurricane Wilma which resulted in 14
days of limited rail service.
- Total carload revenues were down 2.2% to $31.8 million, compared to the
2005 fourth quarter, as a result of a 6.3% decrease in volume partially
offset by improved pricing. The overall decline is primarily due to
reduced aggregate volumes, reflecting softness in the residential
construction market in Florida, and the reduced flow of vehicle traffic
from domestic manufacturers. Aggregate volumes and revenues were down
2.8% and 1.0%, respectively. Vehicle revenues decreased $0.3 million,
due to a decline in domestic vehicle shipments, which was partially
offset by an increase in shipments of foreign manufacturers' vehicles
and improved pricing.
- Intermodal revenues (which include drayage) increased 9.0% compared to
the prior year period, marking its fourteenth consecutive quarter of
revenue growth, reflecting improved pricing and higher volumes, due to
increased local business from the motor carrier, international and
retail segments.
- Railway operating profit increased 6.9% to $17.4 million in the fourth
quarter 2006 versus $16.3 million in the fourth quarter of 2005. The
Railway's operating ratio for the 2006 fourth quarter was 72.7%,
compared to 74.0% in the 2005 fourth quarter. 2005 fourth quarter
revenues and operating profit were impacted by Hurricane Wilma which
resulted in 14 days of limited rail service.
Realty Fourth Quarter Results
Rental Portfolio Results
- Realty rental revenues increased 13.9% to $25.8 million for the fourth
quarter 2006 versus $22.7 million in the fourth quarter of 2005. The
increased revenues resulted from buildings delivered in 2005 and 2006
($2.4 million) and "same store" properties ($0.7 million).
- Realty rental operating profit for the fourth quarter 2006 was $7.6
million, compared to $6.8 million in the 2005 comparable period.
Realty rental operating profit before depreciation and amortization
expense for the quarter increased 9.0% to $15.6 million, compared to
$14.3 million in the fourth quarter 2005 due to buildings delivered in
2005 and 2006 ($1.3 million).
- Flagler's overall occupancy rate at the end of the fourth quarter
improved to 96%, compared to 95% at the end of the fourth quarter 2005
and 94% at the end of the third quarter 2006.
- "Same store" occupancy improved slightly to 96% at the end of the
fourth quarter, compared to 95% at the end of the fourth quarter 2005
and the third quarter 2006.
Realty Services Results
- Fourth quarter 2006 realty services revenues, which includes
construction, brokerage, property management and development
activities, were $16.0 million as a result of the Codina Group
acquisition in April 2006. There were $0.2 million of services
revenues in the 2005 fourth quarter. Realty services operating profit
was $1.8 million in the fourth quarter of 2006.
Land & Overhead Expense
- Flagler's land and overhead expense increased $4.4 million to $8.3
million in the fourth quarter of 2006 due primarily to increased land
carry costs and overhead resulting from the Codina acquisition.
Development, Leasing and Sales Activity
At quarter end, Flagler had 14 projects in the lease-up and construction stages totaling 2,337,316 square feet (485,428 square feet in the lease-up stage and 1,851,888 square feet in the construction stage), and 13 projects totaling 1,918,211 square feet in pre-development.
- On October 17, 2006, we announced the commencement of construction of
Building 1200 in Flagler Station, an 118,296 square foot, four-story,
Class-A office building which is expected to be completed in mid-2007.
The occupancy rate of existing stabilized buildings at Flagler Station
in Miami, is 99%.
- On October 25, 2006, we announced plans to begin construction on
Lakeside Three, which is expected to be completed in September 2007.
Lakeside Four and Two at Flagler Center in Jacksonville are both 100%
leased. All three of these Class-A office buildings are approximately
112,000 square feet.
- Property under sale contracts at December 31, 2006 totaled $7.9
million. 2006 realty sale proceeds were $59.2 million, which includes
the sale of the St. Augustine headquarters buildings (shown as Gain on
Sale of Asset of $4.8 million).
Joint Venture Activity
- On November 1, 2006, Flagler announced the pre-sale of 6 industrial
condos currently under construction in Beacon Village at Beacon Lakes,
and the start of a second 8-unit building. The Villages at Beacon
Lakes is a joint venture with AMB Property Corporation.
- On November 20, 2006, Flagler announced a build-to-suit transaction to
develop Office Depot's new 624,000 square foot global headquarters.
The headquarters complex will be on 29 acres within the 55-acre
Flagler/TIAA joint venture site in Boca Raton, Florida. This
transaction was the nation's largest build-to-suit lease in 2006.
Occupancy is projected for the fourth quarter of 2008.
- On December 19, 2006, Flagler and AMB Property Corporation announced
plans to develop a 100,000 square foot build-to-suit for sale building
within the Beacon Lakes business park for Commercebank N.A., one of the
largest privately-held banks in South Florida. Completion is expected
in late 2007.
Balance Sheet
- The Company's available cash balance on December 31, 2006 was $5.1
million. Debt on December 31, 2006 was $334.2 million, composed
primarily of non-recourse, fixed-rate real estate mortgages.
- During the fourth quarter 2006, the Company made capital investments of
approximately $41 million, including $15 million at the Railway, and
$26 million at Flagler.
- On November 16, 2006, the Company declared a quarterly cash dividend of
$0.07 per share.
2007 Outlook
Railway Outlook
The Company's expectations for the Railway's full-year 2007 operating results assume continued weakness in residential housing construction and domestic vehicle shipments during the first half of 2007, with modest recovery in the second half of the year.
- Revenue is expected to range between $265 - $280 million; flat to an
increase of 6% over 2006
- Operating profit is expected to range between $72 - $76 million; a
decrease of 2% to an increase of 4% over 2006 excluding hurricane
recoveries, net of expenses, of $5.3 million in 2006
- Capital expenditures, before the purchase of any strategic land
parcels, is expected to range between $42 - $47 million
Lake Belt Ruling
As previously announced, in March 2006 a federal judge for the Southern District of Florida ruled that several mining permits for aggregate quarries were not adequately evaluated by the United States Army Corps of Engineers. The court conducted hearings to consider whether to issue any interim orders pending additional evaluation by the Corps of Engineers. The hearings were completed in the fourth quarter of 2006 and briefs have been filed. It is unknown when a ruling regarding current mining activities will be issued and if one is issued, what the scope of it would be and what the impact on our Railway's business would be. The outlook provided above does not include the impact, if any, of an interruption or suspension of aggregate mining that may be mandated if such an order were issued.
Flagler Outlook
The Company's expectations for Flagler's full-year 2007 operating results assume continued strength in the national and Florida commercial and industrial real estate rental markets.
- Realty rental revenues are expected to range between $105 - $115
million; an increase of 8 - 18% over 2006
- Realty rental operating profit before depreciation and amortization
expense is expected to range between $65 - $69 million; an increase of
7 - 14% over 2006 excluding hurricane recoveries, net of expenses of
$1.8 million in 2006
- Realty rental operating profit is expected to range between $32 - $35
million
- Capital investment (which includes investments in joint ventures),
before any land acquisitions, is expected to range between $90 - $115
million
Reported results are preliminary and not final until the filing of our form 10-K with the SEC, and therefore remain subject to adjustment.
A copy of the Company's 2006 year end Supplemental Real Estate Information Package will be available before the Company's fourth quarter conference call in the Investor Relations' section of our website at http://www.feci.com/.
About Florida East Coast Industries, Inc.
Florida East Coast Industries, Inc., headquartered in Coral Gables, FL, conducts operations through two distinct businesses, Flagler Development Group (Flagler), its commercial real estate arm, and Florida East Coast Railway, L.L.C. (FECR). Flagler owns, develops, leases and holds in joint ventures, approximately 8.6 million square feet of Class-A office and industrial space, as well as an additional 1,851,888 square feet under construction. Flagler space consists of Class-A office and industrial properties, primarily in Jacksonville, Orlando, Ft. Lauderdale and Miami. In addition, Flagler provides construction, consulting, third party brokerage and property management (approximately 10.5 million square feet) services and owns and holds in joint ventures 853 acres of entitled land in Florida, which is available for development of up to an additional 16.1 million square feet of office, industrial and retail space and Flagler owns approximately 3,089 acres of other Florida properties. FECR is a regional freight railroad that operates 351 miles of mainline track from Jacksonville to Miami and provides intermodal drayage services at terminals located in Atlanta, Jacksonville, Ft. Pierce, Ft. Lauderdale and Miami. For more information, visit the Company's Web site at http://www.feci.com/.
Florida East Coast Industries, Inc. will hold a conference call to discuss fourth quarter 2006 results this morning, Thursday, February 15, 2007, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). This call and accompanying slide presentation will be webcast live by CCBN and can be accessed at the Company's website, http://www.feci.com/, with an archived version of the webcast available approximately two hours after completion of the call. The dial-in numbers for the call are (888) 560-8501 or (210) 234-0000, and entering passcode 021407. A replay of the call will be available approximately one hour after completion of the call through March 1, 2007 by dialing (800) 262- 4966 or (402) 220-9709.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include the Company's present expectations or beliefs concerning future events. These statements may be identified by the use of words like "plan," "expect," "aim," "believe," "project," "anticipate," "intend," "estimate," "may," "will," "should," "could," and other expressions that indicate future events and trends. Such forward-looking statements may include, without limitation, statements that the Company does not expect that lawsuits, environmental costs, commitments, including future contractual obligations, contingent liabilities, financing availability, labor negotiations or other matters will have a material adverse effect on its consolidated financial condition. Also, forward-looking statements may include statements concerning future capital needs and sources of such capital funding, statements concerning future intentions with respect to the payment of dividends, execution of a share repurchase program, and other potential capital distributions, number of shares to be repurchased, availability of cash to fund the stock repurchase, ability to reinvest (tax-deferred) sales proceeds into qualifying §1031 properties, future level of traffic volumes, future growth potential of the Company's lines of business, performance of the Company's product offerings, intention to entitle and develop real estate, ability to complete planned acquisitions, ability of each party to an announced transaction to satisfy the closing conditions in the agreement, expected completion dates, issuance of contingent consideration, completion of existing and future projects, statements regarding accessibility, visibility, expansion opportunities, ability to complete transactions within specified time frame; failure or inability of third parties to fulfill their commitments or to perform their obligations under agreements; costs and availability of land and construction materials; the intentions to close the construction and demolition debris (C&D) facility at Beacon Countyline at the current estimated cost, the resolution of litigation involving mining in South Florida and other similar expressions concerning matters that are not historical facts, and projections relating to the Company's financial results. The Company cautions that such forward-looking statements are necessarily based on certain assumptions, which are subject to risks and uncertainties that could cause actual results to materially differ from those contained in these forward- looking statements. Important factors that could cause such differences include, but are not limited to, the changing general economic conditions and the residential real estate market in the state of Florida as well as the southeast US and the Caribbean as they relate to economically sensitive products in freight service and building rental activities; ability to manage through economic recessions or downturns in customers' business cycles; ability to pass through fuel surcharges to customers; a slow down in construction activities in Florida, including the residential market; the impact of interim or final orders related to mining activities in South Florida issued by courts or regulatory agencies including the United States District Court and the US Army Corps of Engineers on the Company's rail volumes; industry competition; consolidation within industries of the Company's customers; ongoing challenges in the US domestic auto makers ability to be competitive; possible future changes in the Company's structure, lines of business, business and investment strategies, and related implementation; legislative or regulatory changes; technological changes; volatility of fuel prices (including volatility caused by military actions); the Railway's ability to purchase low sulfur diesel fuel; changes in levels of preventive and capital maintenance, asset replacement and depreciation rates resulting from assumptions in the Railway right-of-way and equipment life studies; changes in the ability of the Company to complete its financing plans, changes in interest rates, the settlement of future contractual obligations as estimated in time and amount (customary to the Company's historical cost structure) including labor negotiations and recoveries from damage claims in a satisfactory way; changes in insurance markets, including availability of windstorm coverage, increases in insurance premiums and deductibles; the availability and costs of attracting and retaining qualified independent third party contractors; timing and amount of issuance of contingent consideration; liability for environmental remediation and changes in environmental laws and regulations; the ultimate outcome of environmental investigations or proceedings and other types of claims and litigation, natural events such as weather conditions, hurricanes, floods, earthquakes and forest fires; discretionary government decisions affecting the use of land and delays resulting from weather conditions and other natural occurrences, like hurricanes, that may affect construction or cause damage to assets; the ability of buyers to terminate contracts to purchase real estate from the Company prior to the expiration of inspection periods; failure or inability of third parties to fulfill their commitments or to perform their obligations under agreements; failure of one or all parties to meet requirements, terms and conditions for closing; ability to complete transactions within a specified time frame; costs and availability of land and construction materials; buyers' inability or unwillingness to close transactions, particularly where buyers only forfeit deposits upon failure to close; the ability of the Company to close the Beacon Countyline C&D facility at the current estimated costs; the ability to accomplish certain zoning changes or other land use changes by the Company or others; the Company's future taxable income and other factors that may affect the availability and timing of utilization of the Company's deferred tax assets; uncertainties, changes or litigation related to tax laws, regulations; and other risks inherent in the real estate and other businesses of the Company. Further information on these and other risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's most recently filed Forms 10-K and 10-Q. The Company assumes no obligation to update the information contained in this news release, which speaks only as of its date.
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)
Three Months Year Ended
Ended December 31 December 31
2006 2005 2006 2005
Operating revenues:
Railway operations $63,617 $62,534 $264,093 $237,870
Realty rental and services 42,872 23,509 144,594 90,495
Flagler CAM recoveries
associated with hurricane
costs 25 343 337 343
Total realty rental and
services 42,897 23,852 144,931 90,838
Realty sales 1,813 23,377 49,223 33,638
Total revenues (segment) 108,327 109,763 458,247 362,346
Intersegment revenues (45) - (45) -
Total revenues (consolidated) 108,282 109,763 458,202 362,346
Operating expenses:
Railway operations 46,214 44,573 190,946 172,152
Hurricane costs (recoveries)
(net) 5 1,686 (5,324) 1,989
Total railway operations 46,219 46,259 185,622 174,141
Realty rental and services 40,972 19,522 134,223 74,025
Hurricane costs (recoveries)
(net) 157 963 (1,484) 1,243
Total realty rental
and services 41,129 20,485 132,739 75,268
Realty sales 774 6,139 33,186 8,286
Corporate general &
administrative 4,770 3,283 16,259 22,388
Total expenses (segment) 92,892 76,166 367,806 280,083
Intersegment expenses (45) - (45) -
Total expenses 92,847 76,166 367,761 280,083
Operating profit 15,435 33,597 90,441 82,263
Minority interest 43 - 81 -
Loss from investment in
unconsolidated joint ventures (979) - (970) -
Interest income 301 542 1,565 1,659
Interest expense (5,061) (5,284) (20,378) (20,105)
Gain on sale of asset 4,787 - 4,787 -
Other income 3,203 2,923 11,478 14,555
2,294 (1,819) (3,437) (3,891)
Income before income taxes 17,729 31,778 87,004 78,372
Provision for income taxes (3,689) (11,612) (29,598) (29,006)
Income from continuing
operations 14,040 20,166 57,406 49,366
Discontinued Operations
Gain on disposition of
discontinued operations
(net of taxes) - - 5,713 -
Net income $14,040 $20,166 $63,119 $49,366
Earnings Per Share
Income from continuing
operations - basic $0.40 $0.62 $1.67 $1.53
Income from continuing
operations - diluted $0.40 $0.61 $1.66 $1.52
Gain on disposition of
discontinued operations -
basic & diluted - - $0.17 -
Net income - basic $0.40 $0.62 $1.84 $1.53
Net income - diluted 0.40 0.61 $1.83 $1.52
Average shares
outstanding - basic 35,076,818 32,611,165 34,380,070 32,280,614
Average shares
outstanding - diluted 35,223,272 32,797,695 34,532,570 32,583,528
(Prior year's results have been reclassified to conform to current year's
presentation, including discontinued operations.)
INFORMATION BY INDUSTRY SEGMENT
(dollars in thousands)
(unaudited)
Three Months Year Ended
Ended Dec. 31 Dec. 31
2006 2005 2006 2005
Operating Revenues
Railway operations:
Total Railway $63,617 $62,534 $264,093 $237,870
Flagler:
Realty rental revenues 25,817 22,344 97,091 85,508
CAM recoveries associated with
hurricane costs 25 343 337 343
Total realty rental revenues 25,842 22,687 97,428 85,851
Realty services revenues 16,036 200 43,146 704
Land use revenues 177 132 667 795
Total Flagler realty rental
and services revenues 42,055 23,019 141,241 87,350
Flagler realty sales - 22,040 42,618 24,820
Railway realty rental revenues 842 833 3,690 3,488
Railway realty sales 1,813 1,337 6,605 8,818
Total realty 44,710 47,229 194,154 124,476
Total Revenues (segment) 108,327 109,763 458,247 362,346
Intersegment revenues (45) - (45) -
Total Revenues (consolidated) 108,282 109,763 458,202 362,346
Operating Expenses
Railway operations:
Railway operations 46,214 44,573 190,946 172,152
Hurricane recoveries,
net of expenses 5 1,686 (5,324) 1,989
Total Railway 46,219 46,259 185,622 174,141
Flagler:
Realty rental expenses 18,064 15,013 66,496 57,238
Hurricane recoveries,
net of expenses 157 908 (1,466) 959
Total realty rental expenses 18,221 15,921 65,030 58,197
Realty services expenses 14,279 164 39,320 481
Land & overhead expenses 8,315 3,867 26,951 14,413
Total Flagler realty rental and
services expenses 40,815 19,952 131,301 73,091
Flagler realty sales - 6,139 31,126 7,022
Railway realty rental expenses 314 478 1,456 1,893
Hurricane costs - 55 (18) 284
Total Railway realty rental
expenses 314 533 1,438 2,177
Railway realty sales 774 - 2,060 1,264
Total realty 41,903 26,624 165,925 83,554
Corporate general
& administrative 4,770 3,283 16,259 22,388
Total Expenses (segment) 92,892 76,166 367,806 280,083
Intersegment expenses (45) - (45) -
Total Expenses (consolidated) 92,847 76,166 367,761 280,083
Operating Profit (Loss)
Railway operations 17,398 16,275 78,471 63,729
Realty 2,807 20,605 28,229 40,922
Corporate general & administrative (4,770) (3,283) (16,259) (22,388)
Segment & consolidated
operating profit 15,435 33,597 90,441 82,263
Minority interest 43 - 81 -
Loss from investment in
unconsolidated joint ventures (979) - (970) -
Interest income 301 542 1,565 1,659
Interest expense (5,061) (5,284) ( 20,378) (20,105)
Gain on sale of assets 4,787 - 4,787 -
Other income 3,203 2,923 11,478 14,555
2,294 (1,819) (3,437) (3,891)
Income before income taxes $17,729 $31,778 $87,004 $78,372
(Prior year's results have been reclassified to conform to current year's
presentation.)
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
December 31 December 31
2006 2005
(unaudited)
Assets
Cash and equivalents $5,096 $75,990
Restricted Cash 424 -
Other current assets 73,520 61,834
Properties, less accumulated depreciation 1,179,641 955,395
Other assets and deferred charges 136,145 44,525
Total Assets 1,394,826 1,137,744
Liabilities and Shareholders' Equity
Short-term debt 5,519 5,198
Other current liabilities 100,632 62,934
Deferred income taxes 205,365 187,241
Long-term debt 328,638 332,760
Other liabilities 35,865 11,449
Minority interest in joint ventures 5,571 -
Shareholders' equity 713,236 538,162
Total liabilities and shareholders' equity $1,394,826 $1,137,744
(Prior year's amounts have been reclassified to conform to current year's
presentation)
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Year Ended
December 31
2006 2005
Cash Flows from Operating Activities
Net income $63,119 $49,366
Adjustments to reconcile net income to cash
generated by operating activities 45,321 52,725
Changes in operating assets and liabilities 5,080 (17,197)
Net cash generated by operating activities 113,520 84,894
Cash Flows from Investing Activities
Purchase of properties and equipment (152,905) (174,752)
Acquisition of Codina Group, Inc. and related
interests, net of cash acquired (65,844) -
Investment in unconsolidated joint ventures,
net of distributions (11,563) -
Decrease in restricted cash 1,382 -
Proceeds from hurricane related
insurance settlement 3,343 -
Proceeds from disposition of assets, including
those discontinued 71,271 35,202
Net cash used in investing activities (154,316) (139,550)
Cash Flows from Financing Activities
Borrowings from long term debt 389 -
Payments of mortgage debt (5,199) (4,896)
Payments of acquired debt (30,117) -
Payment of dividends (9,489) (7,518)
Other 14,318 16,894
Net cash (used in)/provided by
financing activities (30,098) 4,480
Net Decrease in Cash and Cash Equivalents (70,894) (50,176)
Cash and Cash Equivalents at Beginning of Period 75,990 126,166
Cash and Cash Equivalents at End of Period $5,096 $75,990
(Prior year's results have been reclassified to conform to current year's
presentation)
RAILWAY OPERATING RESULTS
(dollars in thousands)
(unaudited)
Three Months Year
Ended December 31 Ended December 31
2006 2005 2006 2005
Operating revenues $63,617 $62,534 $264,093 $237,870
Operating expenses 46,219 46,259 185,622 174,141
Operating profit $17,398 $16,275 $78,471 $63,729
Operating ratio 72.7% 74.0% 70.3% 73.2%
Railway segment's
operating profit
before depreciation 23,113 21,808 100,901 85,549
Total FECR legal
entity EBITDA 32,988 26,691 124,825 110,206
TRAFFIC
Three Months Ended December 31
(dollars and units in thousands)
(unaudited)
2006 2005 Percent 2006 2005 Percent
Commodity Units Units Variance Revenues Revenues Variance
Rail Carloads
Crushed stone (aggregate) 31.6 32.5 (2.8) $16,525 $16,694 (1.0)
Construction materials 1.5 1.7 (11.8) 1,191 1,308 (8.9)
Vehicles 5.5 6.6 (16.7) 5,130 5,425 (5.4)
Foodstuffs & kindred 3.5 3.4 2.9 3,439 3,092 11.2
Chemicals & distillants 0.9 0.8 12.5 1,253 1,053 19.0
Paper & lumber 1.5 2.0 (25.0) 1,644 2,199 (25.2)
Other 3.0 3.7 (18.9) 2,649 2,769 (4.3)
Total carload 47.5 50.7 (6.3) 31,831 32,540 (2.2)
Intermodal 80.7 78.1 3.3 30,248 27,742 9.0
Total freight
units/revenues 128.2 128.8 (0.5) 62,079 60,282 3.0
Ancillary revenue - - - 1,538 2,252 (31.7)
Railway segment revenues - - - $63,617 $62,534 1.7
TRAFFIC
Years Ended December 31
(dollars and units in thousands)
(unaudited)
2006 2005 Percent 2006 2005 Percent
Commodity Units Units Variance Revenues Revenues Variance
Rail carloads
Crushed stone (aggregate) 145.1 140.3 3.4 $76,468 $69,897 9.4
Construction materials 7.2 7.2 - 5,766 5,333 8.1
Vehicles 22.2 23.5 (5.5) 20,059 19,025 5.4
Foodstuffs & kindred 13.4 13.7 (2.2) 12,611 11,972 5.3
Chemicals & distillants 3.4 3.5 (2.9) 4,988 4,489 11.1
Paper & lumber 7.0 7.4 (5.4) 8,050 8,092 (0.5)
Other 14.0 15.0 (6.7) 11,422 10,486 8.9
Total carload 212.3 210.6 0.8 139,364 129,294 7.8
Intermodal 322.2 309.3 4.2 118,584 103,008 15.1
Total freight
units/revenues 534.5 519.9 2.8 257,948 232,302 11.0
Ancillary revenue - - - 6,145 5,568 10.4
Railway segment revenue - - - $264,093 $237,870 11.0
REALTY SEGMENT REVENUES
(unaudited)
Three Months Three Months
Ended Dec. 31 Ended Dec. 31
(dollars in thousands) 2006 2005
Rental revenues - Flagler $20,943 $18,487
Rental income - straight-line rent adjustments 838 1,418
Operating expense recoveries 3,988 2,392
Operating expense recoveries - hurricane related 25 343
Rental revenues - undeveloped land 7 7
Other rental revenues 41 40
Total rental revenues - Flagler Properties 25,842 22,687
Construction revenues 8,935 -
Brokerage revenues 4,687 200
Property management 1,697 -
Development & other services 717 -
Total realty services revenues 16,036 200
Land use revenues 177 132
Total rental and services revenues -
Flagler Properties 42,055 23,019
Rental revenues - Railway 842 833
Total rental and services revenues 42,897 23,852
Building and land sales - Flagler - 22,040
Building and land sales - Railway 1,813 1,337
Total building and land sales revenues 1,813 23,377
Total realty segment revenues $44,710 $47,229
(Prior year's results have been reclassified to conform to current year's
presentation.)
REALTY SEGMENT EXPENSES
(unaudited)
Three Months Three Months
Ended Dec. 31 Ended Dec. 31
(dollars in thousands) 2006 2005
Real estate taxes - developed $2,705 $2,159
Repairs & maintenance - recoverable 958 714
Recoverable Expenses - hurricane related 58 691
Services, utilities, management costs 6,200 4,242
Total expenses subject to recovery -
Flagler properties 9,921 7,806
Real estate taxes - Flagler undeveloped land - 94
Repairs & maintenance - non-recoverable 141 231
Non-recoverable expenses - hurricane related 99 217
Depreciation & amortization 7,983 7,546
SG&A - non-recoverable - Flagler 77 27
Total - non-recoverable expenses -
Flagler properties 8,300 8,115
Gain on involuntary conversion of assets,
hurricane related - -
Total rental expenses - Flagler properties 18,221 15,921
Construction expenses 9,027 -
Brokerage expenses 3,263 164
Property management 1,062 -
Development & other services 927 -
Total realty services expenses 14,279 164
Land use expenses 8,315 3,867
Total rental and services expenses -
Flagler properties 40,815 19,952
Real estate taxes - Railway 21 117
Depreciation & amortization - Railway 33 37
Non-recoverable expenses - hurricane related - 55
SG&A - non-recoverable - Railway 260 324
Total rental expenses - Railway 314 533
Total rental & services expenses 41,129 20,485
Realty sales expenses - Flagler properties - 6,139
Realty sales expenses - Railway 774 -
Total realty sales expenses 774 6,139
Total operating expenses $41,903 $26,624
(Prior year's results have been reclassified to conform to current year's
presentation.)
FLAGLER REAL ESTATE STATISTICS
Three Months
Ended December 31
2006 2005
Property types
Office (sq. ft. in 000's) 3,475 3,112
Industrial (sq. ft. in 000's) 4,383 4,237
Retail (sq. ft. in 000's) 43 43
100%-owned properties *
Rentable square feet (in 000's) 7,901 7,392
Occupied square feet (in 000's) 7,613 7,033
Number of buildings owned 68 64
Ending occupancy rate 96% 95%
Buildings held in Partnership *
Rentable SF (in 000's) 206 -
Occupied SF (in 000's) 206 -
Number of Buildings Owned 1 -
Occupancy Rate 100% 0%
Same store statistics
Same store square footage (in 000's) 6,602 6,602
Same store occupancy (sq. ft. in 000's) 6,329 6,287
Same store buildings 60 60
Same store revenues (in 000's) $19,980 $19,301
Ending same store occupancy rate 96% 95%
Properties in pipeline **
Number of projects 27 14
Lease-up (sq. ft. in 000's) 485 674
In construction (sq. ft. in 000's) 1,852 119
Predevelopment (sq. ft. in 000's) 1,918 1,133
Total 4,255 1,926
Entitlements pipeline ***
Acres 853 643
Total square feet (in 000's) 16,105 10,060
Office (sq. ft. in 000's) 7,992 7,282
Industrial (sq. ft. in 000's) 7,296 2,186
Commercial (sq. ft. in 000's) 817 592
Multi-family (in units) 980 500
Hotel Rooms 253 380
* Excludes properties in the lease-up and construction phases.
** Includes buildings held in joint ventures.
*** Includes land currently on the market or under contract to be sold, as
well as property held in joint ventures.
RECONCILIATION OF NON-GAAP TO GAAP MEASURES
(dollars in thousands)
(unaudited)
Three Months Years
Ended Dec. 31 Ended Dec. 31
2006 2005 2006 2005
Railway segment's operating profit* $17,398 $16,275 $78,471 $63,729
Railway segment's depreciation
expense 5,715 5,533 22,430 21,820
Railway segment's operating profit
before depreciation 23,113 21,808 100,901 85,549
Total FECR legal entity net income 21,523 14,205 71,718 57,640
Depreciation expense - legal entity 5,787 5,608 22,668 22,054
Interest income (2,137) (1,101) (7,364) (3,338)
Income tax expense 7,815 7,979 37,803 33,850
Total FECR legal entity EBITDA $32,988 $26,691 $124,825 $110,206
* Includes $3.7 million in the full year 2006 related to utility service
interruption insurance settlement related to Hurricane Wilma.
(in millions)
Three Months Years Outlook
Ended Dec. 31 Ended Dec. 31 Full Year
2006 2005 2006 2005 2007
Realty rental revenues $25,842 $22,687 $97,428 $85,851 $105-115
Realty rental expenses 18,221 15,921 65,030 58,197
Realty rental operating
profit 7,621 6,766 32,398 27,654 $32-35
Realty rental
depreciation and
amortization expense 7,983 7,546 30,148 27,943 $33-34
Realty rental operating
profit before
depreciation and
amortization $15,604 $14,312 $62,546 $55,597 $65-69
The Company reports certain non-GAAP measures for the Company's railway
business and a portion of its real estate business. The Company believes
these measures to be performance measures that investors commonly use to
value the relevant businesses and to evaluate their ongoing performance.
The Company operates in two distinctly different lines of business,
railway and realty, which many investors value and evaluate separately,
using metrics similar to the non-GAAP financial measures provided by the
Company. The Company also uses some of these measures internally as part
of its incentive compensation plans for management employees.
(Prior year's results have reclassified to conform to current year's
presentation.)
DATASOURCE: Florida East Coast Industries, Inc.
CONTACT: Bradley D. Lehan, Vice President-Treasurer of Florida East Coast
Industries, Inc., +1-904-996-2817
Web site: http://www.feci.com/