(The St. Augustine Record posted the following article by Peter Guinta on its website on May 29.)
ST. AUGUSTINE, Fla. — Florida East Coast Industries announced Wednesday that streamlining its operations last year would enable the company to pay stockholders a quarterly cash dividend of 4 cents per share.
That’s up from 2.5 cents a share in the previous quarter.
Robert W. Anestis, chairman, president and chief executive officer of FECI, spoke to stockholders at the company’s annual meeting, held at Flagler College.
He said the freight railroad generates more cash than it needs for operations and growth.
“The increased dividend demonstrates our confidence in the company’s financial strength and its focus on delivering value for shareholders,” Anestis said.
FEC Railway, with revenues of $166.8 million in 2002, has 351 miles of main line track from Jacksonville to Miami.
“This has been our best-ever year,” Anestis said.
Revenues were up 3 percent in a “soggy economy,” he said.
The company also owns a real estate arm, Flagler Development Company, which develops, leases and manages 6.9 million square feet of commercial and industrial space.
Flagler Development, with revenues of $60.8 million in 2002, also owns approximately 6,000 undeveloped acres, some in prime growth areas such as Jacksonville, Orlando, Fort Lauderdale and Miami.
The company plans to sell some of those parcels to residential developers and keep about 1,000 acres for commercial and industrial development, Anestis said.
“We anticipate a slight improvement this year,” he said.
FECI is currently involved in building two large commercial office buildings in Miami — one the headquarters for a large truck rental company.
But those are the only two office construction projects that are ongoing.
Anestis said these kind of projects are “demand-driven,” and added, “We’re being very cautious as we wait for the marketplace to return.”
To streamline, FECI divested itself of its trucking and telecommunications subsidiaries last year.
In October, the company announced it would sell Florida Express Carriers, a regional long-haul trucking operation it once believed could provide seamless service for freight customers.
But the company learned that trucking was incurring heavy losses due to a poor economy, overcapacity, high insurance costs and low rates. Leaving that business cost FECI $5 million, but also avoided further capital drain.
In December 2002, FECI sold its telecommunications subsidiary, EPIK Communications, to Odyssey Telecorp, a holding company specializing in telecom networks.
The sale financing was extremely complicated, but cost FECI millions. The only silver lining for FECI — other than dumping a huge money loser — was the ability to write off the loss and collect a tax refund of $72 million in 2002.
FECI spokesman Husein Cumber said the goal of divesting those two companies was to return to the FECI’s core operating businesses — railroad and real estate.
“That was the foundation to provide additional value to the stockholders,” Cumber said.
Anestis said the railroad division was not necessarily staking its future on passenger rail to Miami, a highly touted possibility last year.
“That is a situation that the public authorities have to initiate,” he said. “They have to determine how they want to do it and how they want to fund it.”
So far, no money has been allocated for the switching stations and extra track needed.
Amtrak, the proposed partner with FECI in this proposed passenger rail venture, is having severe fiscal problems.
“They can’t undertake any new initiatives,” Anestis said. “This is not going to happen next year or the year after.”
Anestis said in his annual report that the company made excellent progress in 2002, despite difficult economic circumstances.
“We enter 2003 with a clear focus on Florida real estate and rail transportation, a strong balance sheet and excellent cash flow,” he said.