EX-99 2 fe3189ex99.txt Exhibit 99 FLORIDA EAST COAST INDUSTRIES REPORTS STRONG SECOND QUARTER 2005 RESULTS - Railway Reports Record Results, Full-Year 2005 Outlook Increased - Railway * Second quarter 2005 Railway segment's revenues increased 18% to $58.9 million, compared to the prior year period, driven by increased demand and improved pricing. * Railway segment's operating profit increased 26% to $15.9 million, compared to the 2004 second quarter. The operating ratio for the second quarter of 2005 improved to 73.0% from 74.7% in the second quarter of 2004. * The Company increased its full-year 2005 outlook for Railway segment's revenues and operating profit as a result of stronger than expected demand in the second quarter. Realty Operations * Second quarter 2005 Flagler Development Company's (Flagler) rental and services' revenues increased 25% to $21.4 million compared to the 2004 second quarter, as a result of improvements in "same store" occupancy, new buildings delivered in 2004 and 2005, and recent building acquisitions. * Rental properties' operating profit increased to $6.4 million from $5.3 million in the 2004 comparable period, and rental properties' operating profit before depreciation and amortization expense(1) increased 25% to $13.5 million compared to the 2004 second quarter. * "Same store" occupancy rate increased to 96% in the second quarter, from 91% in second quarter 2004, and was flat compared to the 2005 first quarter. Realty Sales * Proceeds from realty sales were $1.9 million for the quarter and $6.8 million for the first six months of 2005. Realty sales under contract at June 30, 2005 totaled $52.8 million. (1) A reconciliation to the most comparable GAAP measures is provided in the reconciliation of NON-GAAP to GAAP measures table. ST. AUGUSTINE, Fla., July 28 /PRNewswire-FirstCall/ -- Florida East Coast Industries, Inc. (FECI) (NYSE: FLA) today announced results for the second quarter ended June 30, 2005. Adolfo Henriques, Chairman, President and Chief Executive Officer of Florida East Coast Industries, stated, "Our businesses delivered very strong results for the second quarter. The Railway posted double-digit percentage growth in revenues and operating profit. All of the carload commodities that the Railway moves enjoyed higher revenues and volumes with the bulk of the growth continuing to come from the Railway's movement of crushed stone which supports infrastructure and construction growth throughout Florida's vibrant economy. Intermodal revenues registered their eighth consecutive quarterly increase, up 16.7% in the second quarter compared to the second quarter of 2004. Given the strong performance of the Railway during the first half of the year, we are increasing the 2005 full-year outlook for the Railway's revenues and operating profit growth." Mr. Henriques continued, "Flagler's financial performance and occupancy ratios continue to remain strong as the Florida real estate market continues to strengthen. Rental revenues and rental properties' operating profit before depreciation and amortization were both up over 20% for the quarter, reflecting improved occupancy and new buildings delivered and acquired. Overall and "same store" occupancy remained very strong in the mid 90s, which we consider "functionally full." Flagler's development pipeline continues to be robust, with close to 1 million square feet in the lease-up and construction phases, and another 1.1 million square feet in the pre-development phase. The strength of the South Florida rental market and Flagler's leasing success has led to two recent building starts. During the quarter, Flagler leased nearly all of a newly constructed warehouse in Flagler Station and initiated development of another warehouse to meet additional demand. In addition, Flagler recently began construction on the first multi-tenant office building in Flagler Station. With Flagler's impressive leasing results and the purchase of two office buildings utilizing tax-deferred proceeds, and a robust development pipeline, Flagler is on track to meet its 2005 full-year outlook." Mr. Henriques concluded, "In the second quarter we increased the quarterly dividend by 20%, reflecting the confidence the Board and I have in FECI's future and financial strength. Both businesses continue to benefit from the growth in Florida and we expect favorable economic conditions for the balance of the year. In addition, we will continue to look for opportunities for growth, utilizing FECI's diverse asset base." For the second quarter 2005, FECI reported consolidated revenues of $83.1 million, compared to $70.5 million for the second quarter 2004. Revenues for the second quarter 2005 included realty sales of $1.9 million, compared to $2.6 million in the second quarter 2004. FECI reported consolidated second quarter 2005 net income of $10.4 million, or $0.32 per diluted share, (which includes $1.0 million of after-tax profit from land sales), compared to $8.4 million, or $0.22 per diluted share, (which includes $0.4 million of after-tax profit from land sales), for the prior year quarter. The Company's outlook for full-year 2005 financial results assumes continued strength in the national and Florida economies during the second half of the year. Given the Railway's strong results for the first half of 2005, the Company is increasing its 2005 full-year outlook (previously provided in the first quarter 2005 press release). Railway segment revenues are now expected to range between $222 and $230 million, an increase of 11% to 15% over 2004, and Railway segment operating profit is now expected to range between $56 and $58 million, an increase of 18% to 23% over 2004. Capital expenditures for the Railway, before the purchase of any strategic land parcels to be used for industrial development activities, are expected to range between $32 and $36 million. The Company expects Flagler's 2005 rental and services' revenues to range between $81 and $85 million, an increase of 16% to 22% over 2004. Flagler's rental properties' operating profit before depreciation and amortization expense is expected to range between $54 and $56 million in 2005, an increase of 21% to 25% over 2004. Operating profit from operating properties' rents is expected to range between $27 and $29 million. Capital investment at Flagler for 2005 is expected to be between $145 and $165 million which includes approximately $75 million for land and building acquisitions. Railway Second Quarter Results -- Florida East Coast Railway (Railway) segment's revenues in the second quarter 2005 increased 17.5% to $58.9 million, reflecting improved pricing and robust customer demand from $50.1 million in the prior year period. Included in the second quarter 2005 revenues were $2.6 million of fuel surcharges, compared to $1.0 million in 2004. -- Total carload revenues grew 17.6%, primarily due to a 16.1% increase in aggregate revenues, reflecting a combination of strong construction demand, new business from existing customers and improved pricing. In addition, revenues derived from the movement of paper & lumber and construction materials were up significantly in the quarter due to the hurricane rebuilding efforts. -- Intermodal revenues (which include drayage) increased 16.7% compared to the prior year period, reflecting new customers, improved pricing, continued improvement in the parcel/LTL, retail and international segments, and the "Hurricane Train." -- Railway segment's operating profit increased 25.7% to $15.9 million in the second quarter 2005 versus $12.7 million in the second quarter of 2004 due to revenue growth, partially offset by higher compensation and benefits expense and increased expenses in support of higher revenue. Fuel expense was $2.2 million higher in the second quarter 2005 compared to the prior year's quarter. Approximately $0.5 million of the increase was related to volume and $1.7 million was related to price, which is generally recaptured through fuel surcharges. -- The Railway's operating ratio improved to 73.0% in the second quarter 2005, compared to 74.7% in the prior year quarter. Realty Second Quarter Results Rental Portfolio Results -- Flagler's rental and services' revenues increased 25.3% to $21.4 million for the second quarter 2005 versus $17.1 million in the second quarter of 2004. The increased revenues resulted from "same store" properties ($1.1 million), buildings delivered in 2004 ($0.8 million), buildings delivered in 2005 ($0.9 million) and newly acquired properties ($1.4 million). -- Rental properties' operating profit was $6.4 million for the second quarter 2005 versus $5.3 million in the prior year period. Rental properties' operating profit before depreciation and amortization expense for the quarter increased 25.5% to $13.5 million, compared to $10.8 million in the second quarter 2004 due to improvements in "same store" properties ($0.7 million), buildings delivered in 2004 ($0.6 million), buildings delivered in 2005 ($0.9 million) and newly acquired properties ($0.5 million). -- Flagler's overall occupancy rate improved, increasing to 95% in the second quarter, compared to 91% in second quarter 2004 and slightly higher than the first quarter 2005. Development, Leasing and Sales Activity -- At quarter end, Flagler had seven projects in the lease-up and construction stages, totaling 993,000 square feet (313,000 square feet in the lease-up stage and 680,000 square feet in the construction stage), of which 43% has been leased and 1,110,000 square feet is in pre-development. -- Flagler commenced the construction of Building 1100, an 119,000-square- foot Class-A office building located in Flagler Station in Miami. Building 1100 at Flagler Station will be the first multi-tenant office building within the park. -- During the quarter, Flagler signed a seven-year lease, commencing in the fourth quarter of 2005, with Option One Mortgage Company for 59,690 square feet of Deerwood North Building 400, an 113,000-square-foot Class-A office building located in Jacksonville, which is scheduled to be completed in July. With the signing of this lease, Flagler has leased 78% of the building. -- On June 6, 2005, Flagler announced the leasing of 87% of Building 27, a 200,000-square-foot warehouse building recently completed at Flagler Station, and the commencement of the construction of Building 25, a 160,000-square-foot warehouse building also located at Flagler Station. Building 25 is expected to be completed and available for occupancy in November 2005. The major leases signed for space in Building 27 include: Meridian IQ, LLC, a subsidiary of Yellow Roadway Corporation, for more than 70,000 square feet, York International Corporation for over 38,700 square feet, and Customs and Trade Services, Inc. for more than 65,000 square feet. -- Property under sale contracts at June 30, 2005 totaled $52.8 million and other property was listed for sale at asking prices totaling $21.3 million. The Company expects full year 2005 realty sales of $20 to $40 million. Subsequent Events -- During July, Wachovia Bank and Humana executed leases for 40,927 and 16,046 square feet, respectively, in the Doral Concourse building (purchased in February 2005), increasing the building's leased space to 90% from 66% leased. Capitalization -- The Company's cash balance on June 30, 2005 was $49.7 million. Debt on June 30, 2005 was $340.4 million, composed of non-recourse, fixed-rate real estate mortgages. -- On June 2, the Company increased the quarterly cash dividend by 20% to $0.06 per share, reflecting the financial performance of its Railway and its ability to generate more cash than needed for its operations and anticipated growth. -- During the second quarter, the Company repurchased 52,500 shares, as part of its ongoing share repurchase program, at an average price of $42.01. The Company currently has a share repurchase authorization in place of $40 million, of which $37.7 million remains as of June 30, 2005. A copy of the Company's 2005 second quarter Supplemental Real Estate Information Package will be available before the Company's second 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 St. Augustine, FL, conducts operations through two wholly owned subsidiaries, Flagler Development Company (Flagler) and Florida East Coast Railway, L.L.C. (FECR). Flagler owns, leases and manages 7.6 million square feet of commercial and industrial space, as well as an additional 680,000 square feet under construction, and owns approximately 752 acres of entitled land and approximately 2,511 acres of additional 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 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 second quarter 2005 results this morning, Thursday, July 28, 2005, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). This call 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) 810-3139 or (517) 308-9004 and enter access code 6028425. A replay of the call will be available approximately two hours after completion of the call through Thursday, August 11, 2005 by dialing (866) 453-1995 or (203) 369-1221. 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," "will," "should," "could," "may," and other expressions that indicate future events and trends. The Company cautions that such 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, business, competitive, regulatory and market conditions (particularly in the state of Florida, the southeast U.S. and the Caribbean) 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)

INFORMATION BY INDUSTRY SEGMENT (dollars in thousands) (unaudited)

FLORIDA EAST COAST INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (dollars in thousands)

FLORIDA EAST COAST INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)

(Prior year's results have been reclassified to conform to current year's presentation) RAILWAY OPERATING RESULTS (dollars in thousands) (unaudited)

TRAFFIC Three Months Ended June 30 (dollars and units in thousands)

REALTY SEGMENT REVENUES Three Months Three Months Ended Ended June 30 June 30 (dollars in thousands) 2005 2004 --------------------------------------------- ------------- ------------- Rental revenues - Flagler 16,941 14,791 Services fee revenues 201 50 Rental income - straight-line rent adjustments 2,073 766 Operating expense recoveries 1,999 929 Rental revenues - undeveloped land 208 210 Other rental revenues 18 360 Total Flagler realty rental and services revenues 21,440 17,106 Rental revenues - other realty operations 827 692 Total rental revenues 22,267 17,798 Building and land sales - Flagler 1,273 2,526 Building and land sales - other realty operations 621 87 Total building and land sales revenues 1,894 2,613 Total realty segment revenues 24,161 20,411 (Prior year's results have been reclassified to conform to current year's presentation.) REALTY SEGMENT EXPENSES Three Months Three Months Ended Ended June 30 June 30 (dollars in thousands) 2005 2004 --------------------------------------------- ------------- ------------- Real estate taxes - developed 2,562 2,070 Repairs & maintenance - recoverable 721 711 Services, utilities, management costs 4,100 3,102 Total expenses subject to recovery - Flagler properties 7,383 5,883 Real estate taxes - Flagler undeveloped land 1,080 900 Repairs & maintenance - non-recoverable 336 253 Depreciation & amortization - (operating property -Flagler) 7,179 5,448 Depreciation & amortization - (non-op property - Flagler) 412 578 SG&A - non-recoverable - Flagler 1,783 1,380 Total - non-recoverable expenses - Flagler properties 10,790 8,559 Total Flagler realty and rental services expenses 18,173 14,442 Real estate taxes - other undeveloped land 67 64 Depreciation & amortization - other 14 10 SG&A - non-recoverable - other 488 985 Total rental expenses - other realty operations 569 1,059 Total rental expenses 18,742 15,501 Realty sales expenses - Flagler 357 1,918 Realty sales expenses - Other realty operations -- -- Total realty sales 357 1,918 Total operating expenses 19,099 17,419 (Prior year's results have been reclassified to conform to current year's presentation.) FLAGLER REAL ESTATE STATISTICS Three Months Ended June 30 ----------------------------- 2005 2004 ------------- ------------- Property types Office (sq. ft. in 000's) 2,881 2,047 Industrial (sq. ft. in 000's) 4,310 4,312 100%-owned properties Rentable square feet (in 000's) 7,191 6,359 Occupied square feet (in 000's) 6,812 5,804 Number of buildings owned 63 58 Ending occupancy rate 95% 91% Same store statistics Same store square footage (in 000's) 6,357 6,359 Same store occupancy (sq. ft. in 000's) 6,098 5,804 Same store buildings 58 58 Same store revenues (in 000's) $ 17,576 $ 16,459 Ending same store occupancy rate 96% 91% Properties in pipeline Number of projects 15 8 Lease-up (sq. ft. in 000's) 313 113 In construction (sq. ft. in 000's) 680 490 Predevelopment (sq. ft. in 000's) 1,110 567 Total 2,103 1,170 Entitlements pipeline* Acres 752 813 Total square feet (in 000's) 10,949 13,319 Office (sq. ft. in 000's) 8,165 7,487 Industrial (sq. ft. in 000's) 2,186 5,383 Commercial (sq. ft. in 000's) 598 449 Multi-family (in units) 500 -- Hotel Rooms 500 -- * Includes land currently on the market or under contract to be sold. RECONCILIATION OF NON-GAAP TO GAAP MEASURES (dollars in thousands) (unaudited)

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 businesses, 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. SOURCE Florida East Coast Industries, Inc. -0- 07/28/2005 /CONTACT: Media, Husein A. Cumber, +1-904-826-2280, or Investors, Bradley D. Lehan, +1-904-819-2128, both for Florida East Coast Industries, Inc./ /Web site: http://www.feci.com / -

FLORIDA EAST COAST INDUSTRIES INC 8-K