Newspaper article The Florida Times Union

Railroad Remains Profitable Florida East Coast Is Chugging Along

Newspaper article The Florida Times Union

Railroad Remains Profitable Florida East Coast Is Chugging Along

Article excerpt

Byline: Mark Basch, Times-Union business writer

Florida East Coast Industries Inc. put its railroad up for sale six years ago, with analysts saying the relatively short 351-mile rail line from Jacksonville to Miami was too small to continue operating on its own.

But the St. Augustine-based company was unable to make a deal and Chairman and Chief Executive Officer Robert W. Anestis, who joined the company three years ago, has no plans to sell the Florida East Coast Railway now.

"The railroad is a great business stand-alone," Anestis told shareholders yesterday at the company's annual meeting.

Florida East Coast also operates commercial real estate developer Flagler Development Co., telecommunications company EPIK Communications Inc. and intermodal trucking company Florida Express Carriers. But the railroad provided more than half of the company's $299 million in 2001 revenue and is the most significant source of its cash flow, Anestis said.

The company's other three businesses evolved from what Anestis called the "hidden assets" of the railroad, which are basically the land along and close to the 351-mile right of way. For example, EPIK built a fiber-optics communications network along the right of way and extended the fiber-optic network throughout Florida and to Atlanta.

However, because of weak demand for telecommunications services, Florida East Coast had to write off some of EPIK's assets, and the subsidiary recorded an operating loss of $151.6 million last year. That caused Florida East Coast to report an overall net loss of $61.4 million.

Anestis told shareholders the company's $350 million in capital expenditures for EPIK has not affected spending plans for its other businesses. "Nobody has suffered from what we're doing here," he said.

Florida East Coast is continuing to look at opportunities to unlock the value of its other hidden assets. …

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