##### Table of Contents



UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File Number 001-08728
 FLORIDA EAST COAST INDUSTRIES, INC.
  Florida
    
    59-2349968(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 One Malaga Street
St. Augustine, Florida
(Address of principal executive offices)
    
    32084
(Zip Code)
 (904) 829-3421
 þ o
 þ o
 o þ
  Class
    
    Outstanding at September 30, 2005Common Stock-no par value
    
    32,903,943 shares




---



FLORIDA EAST COAST INDUSTRIES, INC.
 INDEX
  
 PageNumbersPART IFINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets  September 30, 2005 and December 31, 2004
    
    
    2Consolidated Statements of Income  Three Months and Nine Months Ended September 30, 2005 and 2004
    
    
    3Consolidated Statements of Cash Flows  Nine Months Ended September 30, 2005 and 2004
    
    
    4Notes to Consolidated Financial Statements
    
    
    5  12Item 2.
    
    Managements Discussion and Analysis of the Consolidated Financial Condition and Results of OperationsComparison of Third Quarter 2005 versus Third Quarter 2004 and Nine Months 2005 versus Nine Months 2004
    
    
    13  28Changes in Financial Condition, Liquidity and Capital Resources
    
    
    29  30Other Matters
    
    
    31  32Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    33PART IIOTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    34Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 6.
    
    Exhibits
    
    
    35EX-31.1EX-31.2EX-32.1




---



##### Table of Contents



Item 1. Financial Statements
 
 FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
 September 30
    
    
    December 312005
    
    
    2004(unaudited)AssetsCurrent Assets:Cash and cash equivalents (Note 12)
    
    
    58,774
    
    
    
    126,166Accounts receivable (net)
    
    
    36,610
    
    
    
    32,435Income tax receivable
    
    
    
    
    
    
    4,238Assets held for sale (Note 9)
    
    
    21,175
    
    
    
    6,900Prepaid expenses
    
    
    7,626
    
    
    
    5,008Materials and supplies
    
    
    2,607
    
    
    
    1,822Deferred income taxes
    
    
    754
    
    
    
    1,268Other current assets
    
    
    4,219
    
    
    
    3,133Total Current Assets
    
    
    131,765
    
    
    
    180,970Long Term Assets:Properties, less accumulated depreciation
    
    
    940,907
    
    
    
    853,458Straight line rent
    
    
    16,707
    
    
    
    12,525Prepaid commissions
    
    
    11,257
    
    
    
    8,658Building intangible assets, net (Note 9)
    
    
    10,105
    
    
    
    Other assets
    
    
    5,833
    
    
    
    7,582Total Long Term Assets
    
    
    984,809
    
    
    
    882,223Total Assets
    
    
    1,116,574
    
    
    
    1,063,193Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable and accrued expenses
    
    
    42,204
    
    
    
    47,578Taxes payable (Note 11)
    
    
    16,522
    
    
    
    1,281Deferred revenue
    
    
    4,658
    
    
    
    5,681Short-term debt (Note 7)
    
    
    5,121
    
    
    
    4,789Accrued casualty and other reserves
    
    
    811
    
    
    
    1,230Other accrued liabilities
    
    
    6,597
    
    
    
    8,962Total Current Liabilities
    
    
    75,913
    
    
    
    69,521Deferred Income Taxes
    
    
    179,312
    
    
    
    178,831Long-Term Debt, net of current portion(Note 7)
    
    
    334,088
    
    
    
    338,065Accrued Casualty and Other Long-Term Liabilities
    
    
    11,305
    
    
    
    11,850Shareholders EquityCommon Stock:
    
    
    137,949
    
    
    
    105,964Common stock; no par value; 150,000,000
shares authorized; 39,399,868 shares issued
and 32,903,943 shares outstanding at
September 30, 2005 and 38,553,495 shares
issued and 32,006,968 shares outstanding at
December 31, 2004.Retained earnings
    
    
    597,468
    
    
    
    573,808Restricted stock deferred compensation
    
    
    (12,214
    )
    
    
    (6,548
    )Treasury stock at cost (6,495,925 shares at
September 30, 2005 and 6,546,527 shares at
December 31, 2004) (Note 5)
    
    
    (207,247
    )
    
    
    (208,298
    )Total Shareholders Equity
    
    
    515,956
    
    
    
    464,926Total Liabilities and Shareholders Equity
    
    
    1,116,574
    
    
    
    1,063,193
 
 2




---



##### Table of Contents



FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
 Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 302005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenues:Railway operations
    
    
    59,902
    
    
    
    46,261
    
    
    
    175,336
    
    
    
    144,920Realty rental and services
    
    
    23,289
    
    
    
    18,196
    
    
    
    67,011
    
    
    
    53,811Realty sales
    
    
    3,482
    
    
    
    12,327
    
    
    
    10,261
    
    
    
    19,988Total revenues
    
    
    86,673
    
    
    
    76,784
    
    
    
    252,608
    
    
    
    218,719Operating expenses:Railway operations
    
    
    43,383
    
    
    
    38,439
    
    
    
    127,882
    
    
    
    113,324Realty rental and services
    
    
    19,084
    
    
    
    15,761
    
    
    
    54,783
    
    
    
    47,432Realty sales
    
    
    1,326
    
    
    
    1,898
    
    
    
    2,147
    
    
    
    6,015Corporate general & administrative
    
    
    3,451
    
    
    
    2,915
    
    
    
    19,105
    
    
    
    11,648Total expenses
    
    
    67,244
    
    
    
    59,013
    
    
    
    203,917
    
    
    
    178,419Operating profit
    
    
    19,429
    
    
    
    17,771
    
    
    
    48,691
    
    
    
    40,300Interest income
    
    
    374
    
    
    
    263
    
    
    
    1,117
    
    
    
    819Interest expense
    
    
    (5,074
    )
    
    
    (4,214
    )
    
    
    (14,821
    )
    
    
    (11,933
    )Other income (Note 6)
    
    
    2,383
    
    
    
    3,027
    
    
    
    11,632
    
    
    
    10,814(2,317
    )
    
    
    (924
    )
    
    
    (2,072
    )
    
    
    (300
    )Income before income taxes
    
    
    17,112
    
    
    
    16,847
    
    
    
    46,619
    
    
    
    40,000Provision for income taxes
    
    
    (6,387
    )
    
    
    (6,487
    )
    
    
    (17,402
    )
    
    
    (15,401
    )Income from continuing operations
    
    
    10,725
    
    
    
    10,360
    
    
    
    29,217
    
    
    
    24,599Discontinued Operations(Note 2)(Loss) income from operation of discontinued operations (net of taxes)
    
    
    
    
    
    
    (60
    )
    
    
    (17
    )
    
    
    104Gain on disposition of discontinued operations (net of taxes)
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    2,457Income (loss) from discontinued operations
    
    
    
    
    
    
    110
    
    
    
    (17
    )
    
    
    2,561Net income
    
    
    10,725
    
    
    
    10,470
    
    
    
    29,200
    
    
    
    27,160Earnings Per ShareIncome from continuing operations  basic
    
    $
    0.33
    
    
    $
    0.31
    
    
    $
    0.91
    
    
    $
    0.69Income from continuing operations  diluted
    
    $
    0.32
    
    
    $
    0.31
    
    
    $
    0.89
    
    
    $
    0.68Income from operation of discontinued operations  basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.01Income from operation of discontinued operations  diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on disposition of discontinued operations  basic
    
    
    
    
    
    $
    0.01
    
    
    
    
    
    
    $
    0.07Gain on disposition of discontinued operations  diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.07Net income  basic
    
    $
    0.33
    
    
    $
    0.32
    
    
    $
    0.91
    
    
    $
    0.77Net income  diluted
    
    $
    0.32
    
    
    $
    0.31
    
    
    $
    0.89
    
    
    $
    0.75Average shares outstanding  basic
    
    
    32,503,303
    
    
    
    33,161,016
    
    
    
    32,170,430
    
    
    
    35,467,893Average shares outstanding  diluted
    
    
    33,079,757
    
    
    
    33,864,172
    
    
    
    32,850,807
    
    
    
    36,165,628
  3




---



##### Table of Contents



FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine MonthsEnded September 302005
    
    
    2004Cash Flows from Operating ActivitiesNet income
    
    
    29,200
    
    
    
    27,160Adjustments to reconcile net income to cash generated by operating activities:Depreciation and amortization
    
    
    40,592
    
    
    
    36,668Gain on disposition of properties
    
    
    (8,114
    )
    
    
    (17,973
    )Tax benefit from exercise of stock options
    
    
    3,924
    
    
    
    Deferred taxes
    
    
    995
    
    
    
    8,798Stock compensation expense
    
    
    7,915
    
    
    
    4,878Changes in operating assets and liabilities:Accounts receivable
    
    
    (4,175
    )
    
    
    (406
    )Prepaid expenses
    
    
    (2,839
    )
    
    
    (852
    )Other current assets
    
    
    (1,871
    )
    
    
    (4,336
    )Other assets and deferred charges
    
    
    (7,690
    )
    
    
    (6,468
    )Accounts payable
    
    
    (5,212
    )
    
    
    (3,180
    )Taxes payable
    
    
    16,679
    
    
    
    16,156Income tax refund
    
    
    2,800
    
    
    
    Other current liabilities
    
    
    (2,821
    )
    
    
    (1,374
    )Accrued casualty and other long-term liabilities
    
    
    (964
    )
    
    
    (1,279
    )Net cash generated by operating activities
    
    
    68,419
    
    
    
    57,792Cash Flows from Investing ActivitiesPurchases of properties
    
    
    (152,256
    )
    
    
    (73,429
    )Proceeds from disposition of assets
    
    
    10,261
    
    
    
    36,713Net cash used in investing activities
    
    
    (141,995
    )
    
    
    (36,716
    )Cash Flows from Financing ActivitiesReceipt from issuance of mortgage debt (Note 7)
    
    
    
    
    
    
    105,000Payment of mortgage debt
    
    
    (3,645
    )
    
    
    (2,110
    )Payment of dividends
    
    
    (5,540
    )
    
    
    (4,899
    )Proceeds from exercise of options
    
    
    19,132
    
    
    
    10,416Stock repurchase program payments (Note 5)
    
    
    (2,289
    )
    
    
    (191,126
    )Purchase of common stock
    
    
    (1,474
    )
    
    
    (2,571
    )Net cash provided by (used in) financing activities
    
    
    6,184
    
    
    
    (85,290
    )Net Decrease in Cash and Cash Equivalents
    
    
    (67,392
    )
    
    
    (64,214
    )Cash and Cash Equivalents at Beginning of Period
    
    
    126,166
    
    
    
    125,057Cash and Cash Equivalents at End of Period
    
    
    58,774
    
    
    
    60,843Supplemental Disclosure of Cash Flow InformationCash paid for income taxes (net of refunds)
    
    
    7,200
    
    
    
    4,700Cash paid for interest
    
    
    16,521
    
    
    
    15,718
 
 4




---



##### Table of Contents



FLORIDA EAST COAST INDUSTRIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. General
   Note 2. Discontinued Operations
 Real Estate
   Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 30(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Summary of Operating Results of Discontinued OperationsFlagler realty rental revenues
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    739Flagler realty rental expenses
    
    
    
    
    
    
    104
    
    
    
    25
    
    
    
    569(Loss) income before income taxes
    
    
    
    
    
    
    (96
    )
    
    
    (25
    )
    
    
    170Income tax
    
    
    
    
    
    
    36
    
    
    
    8
    
    
    
    (66
    )(Loss) income from discontinued operations
    
    
    
    
    
    
    (60
    )
    
    
    (17
    )
    
    
    104Gain on disposition of discontinued operations (net of
taxes of $0.1 million for the three months ended
September 30, 2004, and $1.5 million for the nine
months ended September 30, 2004.)
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    2,457
 Note 3. Commitments and Contingencies
   5




---



##### Table of Contents



Note 4. Earnings Per Share
  6




---



##### Table of Contents



Note 5. Dividends and Stock Repurchase
   Note 6. Other Income
 Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 30(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Pipe & wire crossings/signboards
    
    
    869
    
    
    
    1,460
    
    
    
    3,812
    
    
    
    5,924Fiber lease income
    
    
    1,753
    
    
    
    1,612
    
    
    
    5,330
    
    
    
    5,111Air rights income
    
    
    
    
    
    
    
    
    
    
    3,049
    
    
    
    Other (net)
    
    
    (239
    )
    
    
    (45
    )
    
    
    (559
    )
    
    
    (221
    )2,383
    
    
    
    3,027
    
    
    
    11,632
    
    
    
    10,814
  Note 7. Debt
    7




---



##### Table of Contents



Note 8. Stock-Based Compensation
    Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 30(dollars in thousands, except per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net income  as reported
    
    
    10,725
    
    
    
    10,470
    
    
    
    29,200
    
    
    
    27,160Deduct: Total stock-based employee compensation
expense determined under the fair value based
method for all stock option awards (net of
related tax effects)
    
    
    (71
    )
    
    
    (189
    )
    
    
    (274
    )
    
    
    (569
    )Pro forma net income
    
    
    10,654
    
    
    
    10,281
    
    
    
    28,926
    
    
    
    26,591Earnings per share:Basic  as reported
    
    $
    0.33
    
    
    $
    0.32
    
    
    $
    0.91
    
    
    $
    0.77Basic  pro forma
    
    $
    0.33
    
    
    $
    0.31
    
    
    $
    0.90
    
    
    $
    0.75Diluted  as reported
    
    $
    0.32
    
    
    $
    0.31
    
    
    $
    0.89
    
    
    $
    0.75Diluted  pro forma
    
    $
    0.32
    
    
    $
    0.30
    
    
    $
    0.88
    
    
    $
    0.74
  8




---



##### Table of Contents



Note 9. Realty Acquisitions, Land Sales and Associated Costs
      Note 10. Segment Information
       9




---



##### Table of Contents



Information by industry segment:
 Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 30(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Operating RevenuesRailway operations
    
    
    59,902
    
    
    
    46,261
    
    
    
    175,336
    
    
    
    144,920Realty:Flagler realty rental and services
    
    
    22,343
    
    
    
    17,369
    
    
    
    64,356
    
    
    
    51,490Flagler realty sales
    
    
    1,307
    
    
    
    11,154
    
    
    
    2,780
    
    
    
    17,711Other rental
    
    
    946
    
    
    
    827
    
    
    
    2,655
    
    
    
    2,321Other sales
    
    
    2,175
    
    
    
    1,173
    
    
    
    7,481
    
    
    
    2,277Total realty
    
    
    26,771
    
    
    
    30,523
    
    
    
    77,272
    
    
    
    73,799Total revenues *
    
    
    86,673
    
    
    
    76,784
    
    
    
    252,608
    
    
    
    218,719Operating ExpensesRailway operations
    
    
    43,383
    
    
    
    38,439
    
    
    
    127,882
    
    
    
    113,324Realty:Flagler realty rental and services
    
    
    18,392
    
    
    
    15,134
    
    
    
    53,139
    
    
    
    44,919Flagler realty sales
    
    
    471
    
    
    
    1,898
    
    
    
    883
    
    
    
    6,015Other rental
    
    
    692
    
    
    
    627
    
    
    
    1,644
    
    
    
    2,513Other sales
    
    
    855
    
    
    
    
    
    
    
    1,264
    
    
    
    Total realty
    
    
    20,410
    
    
    
    17,659
    
    
    
    56,930
    
    
    
    53,447Corporate general & administrative
    
    
    3,451
    
    
    
    2,915
    
    
    
    19,105
    
    
    
    11,648Total expenses *
    
    
    67,244
    
    
    
    59,013
    
    
    
    203,917
    
    
    
    178,419Operating Profit (Loss)Railway operations
    
    
    16,519
    
    
    
    7,822
    
    
    
    47,454
    
    
    
    31,596Realty
    
    
    6,361
    
    
    
    12,864
    
    
    
    20,342
    
    
    
    20,352Corporate general & administrative
    
    
    (3,451
    )
    
    
    (2,915
    )
    
    
    (19,105
    )
    
    
    (11,648
    )Operating profit
    
    
    19,429
    
    
    
    17,771
    
    
    
    48,691
    
    
    
    40,300Interest income
    
    
    374
    
    
    
    263
    
    
    
    1,117
    
    
    
    819Interest expense
    
    
    (5,074
    )
    
    
    (4,214
    )
    
    
    (14,821
    )
    
    
    (11,933
    )Other income
    
    
    2,383
    
    
    
    3,027
    
    
    
    11,632
    
    
    
    10,814(2,317
    )
    
    
    (924
    )
    
    
    (2,072
    )
    
    
    (300
    )Income before income taxes
    
    
    17,112
    
    
    
    16,847
    
    
    
    46,619
    
    
    
    40,000Provision for income taxes
    
    
    (6,387
    )
    
    
    (6,487
    )
    
    
    (17,402
    )
    
    
    (15,401
    )Income from continuing operations
    
    
    10,725
    
    
    
    10,360
    
    
    
    29,217
    
    
    
    24,599Discontinued Operations(Loss) income from operation of discontinued operations (net
of taxes)
    
    
    
    
    
    
    (60
    )
    
    
    (17
    )
    
    
    104Gain on disposition of discontinued operations (net of taxes)
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    2,457Net Income
    
    
    10,725
    
    
    
    10,470
    
    
    
    29,200
    
    
    
    27,160
 
 *
 10




---



##### Table of Contents



Note 11. Taxes Payable
 (dollars in thousands)
    
    September 30, 2005
    
    
    December 31, 2004Federal income tax
    
    
    1,036
    
    
    
    State income tax
    
    
    
    
    
    
    Property taxes
    
    
    14,896
    
    
    
    855Other
    
    
    590
    
    
    
    426Taxes payable
    
    
    16,522
    
    
    
    1,281
   Note 12. Cash Deposits and §1031 Escrow Funds
   Note 13 Engineering Study
    11




---



##### Table of Contents



Note 14 Supplemental Employee Retirement Plan
   12




---



##### Table of Contents



Item 2.
 Managements Discussion and Analysis of the Consolidated
Financial Condition and Results of Operations
 Forward-Looking Statements
    13




---



##### Table of Contents



Results of Operations
 Consolidated Results  Third Quarter and Nine Months
   Railway  Third Quarter
  TRAFFIC  Three Months Ended September 30
 2005
    
    
    2004
    
    
    Percent
    
    
    2005
    
    
    2004
    
    
    PercentCommodity
    
    Units
    
    
    Units
    
    
    Variance
    
    
    Revenues
    
    
    Revenues
    
    
    VarianceRail CarloadsCrushed stone (aggregate)
    
    
    35.3
    
    
    
    28.1
    
    
    
    25.6
    
    
    
    17,983
    
    
    
    13,495
    
    
    
    33.3Construction materials
    
    
    1.9
    
    
    
    1.4
    
    
    
    35.7
    
    
    
    1,385
    
    
    
    913
    
    
    
    51.7Vehicles
    
    
    4.8
    
    
    
    4.3
    
    
    
    11.6
    
    
    
    3,959
    
    
    
    3,509
    
    
    
    12.8Foodstuffs & kindred
    
    
    3.3
    
    
    
    3.0
    
    
    
    10.0
    
    
    
    2,851
    
    
    
    2,329
    
    
    
    22.4Chemicals & distillants
    
    
    0.8
    
    
    
    0.8
    
    
    
    
    
    
    
    1,114
    
    
    
    1,003
    
    
    
    11.1Paper & lumber
    
    
    1.7
    
    
    
    1.4
    
    
    
    21.4
    
    
    
    1,908
    
    
    
    1,408
    
    
    
    35.5Other
    
    
    3.1
    
    
    
    3.0
    
    
    
    3.3
    
    
    
    2,287
    
    
    
    1,813
    
    
    
    26.1Total carload
    
    
    50.9
    
    
    
    42.0
    
    
    
    21.2
    
    
    
    31,487
    
    
    
    24,470
    
    
    
    28.7Intermodal
    
    
    80.4
    
    
    
    68.6
    
    
    
    17.2
    
    
    
    27,254
    
    
    
    20,801
    
    
    
    31.0Total freight units/revenues
    
    
    131.3
    
    
    
    110.6
    
    
    
    18.7
    
    
    
    58,741
    
    
    
    45,271
    
    
    
    29.8Ancillary revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,161
    
    
    
    990
    
    
    
    17.3Railway segment revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,902
    
    
    
    46,261
    
    
    
    29.5
 14




---



##### Table of Contents



RAILWAY OPERATING EXPENSES
 Three Months Ended
    
    
    Three Months EndedSeptember 30
    
    
    September 302005
    
    
    2004Compensation & benefits
    
    
    14,889
    
    
    
    12,795Fuel
    
    
    6,562
    
    
    
    3,869Equipment rents (net)
    
    
    980
    
    
    
    835Car hire (net)
    
    
    (703
    )
    
    
    (1,162
    )Depreciation
    
    
    5,517
    
    
    
    5,006Purchased services
    
    
    2,263
    
    
    
    2,270Repairs to/by others (net)
    
    
    (1,003
    )
    
    
    (1,009
    )Load/unload
    
    
    2,351
    
    
    
    1,822Casualty & insurance
    
    
    1,524
    
    
    
    1,775Property taxes
    
    
    1,302
    
    
    
    1,462Materials
    
    
    3,019
    
    
    
    2,087General & administrative expenses
    
    
    1,965
    
    
    
    2,112Outside contractor delivery costs
    
    
    3,739
    
    
    
    3,019Other
    
    
    978
    
    
    
    3,558Total operating expenses
    
    
    43,383
    
    
    
    38,439
    15




---



##### Table of Contents



16




---



##### Table of Contents



Nine Months
  TRAFFIC  Nine Months Ended September 30
 2005
    
    
    2004
    
    
    Percent
    
    
    2005
    
    
    2004
    
    
    PercentCommodity
    
    Units
    
    
    Units
    
    
    Variance
    
    
    Revenues
    
    
    Revenues
    
    
    VarianceRail CarloadsCrushed stone (aggregate)
    
    
    107.8
    
    
    
    93.9
    
    
    
    14.8
    
    
    
    53,203
    
    
    
    44,268
    
    
    
    20.2Construction materials
    
    
    5.5
    
    
    
    4.0
    
    
    
    37.5
    
    
    
    4,025
    
    
    
    2,608
    
    
    
    54.3Vehicles
    
    
    16.9
    
    
    
    16.1
    
    
    
    5.0
    
    
    
    13,600
    
    
    
    12,715
    
    
    
    7.0Foodstuffs & kindred
    
    
    10.3
    
    
    
    9.0
    
    
    
    14.4
    
    
    
    8,880
    
    
    
    6,982
    
    
    
    27.2Chemicals & distillants
    
    
    2.7
    
    
    
    2.8
    
    
    
    (3.6
    )
    
    
    3,436
    
    
    
    3,293
    
    
    
    4.3Paper & lumber
    
    
    5.4
    
    
    
    4.0
    
    
    
    35.0
    
    
    
    5,893
    
    
    
    4,301
    
    
    
    37.0Other
    
    
    11.3
    
    
    
    10.3
    
    
    
    9.7
    
    
    
    7,717
    
    
    
    6,445
    
    
    
    19.7Total carload
    
    
    159.9
    
    
    
    140.1
    
    
    
    14.1
    
    
    
    96,754
    
    
    
    80,612
    
    
    
    20.0Intermodal
    
    
    231.2
    
    
    
    202.6
    
    
    
    14.1
    
    
    
    75,266
    
    
    
    61,639
    
    
    
    22.1Total freight units/revenues
    
    
    391.1
    
    
    
    342.7
    
    
    
    14.1
    
    
    
    172,020
    
    
    
    142,251
    
    
    
    20.9Ancillary revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,316
    
    
    
    2,669
    
    
    
    24.2Railway segment revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,336
    
    
    
    144,920
    
    
    
    21.0
 RAILWAY OPERATING EXPENSES
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 302005
    
    
    2004Compensation & benefits
    
    
    44,501
    
    
    
    40,057Fuel
    
    
    17,885
    
    
    
    11,318Equipment rents (net)
    
    
    3,234
    
    
    
    2,443Car hire (net)
    
    
    (2,015
    )
    
    
    (2,022
    )Depreciation
    
    
    16,287
    
    
    
    14,990Purchased services
    
    
    7,096
    
    
    
    6,929Repairs to/by others (net)
    
    
    (2,562
    )
    
    
    (2,226
    )Load/unload
    
    
    6,818
    
    
    
    5,753Casualty & insurance
    
    
    4,137
    
    
    
    4,732Property taxes
    
    
    4,372
    
    
    
    4,324Materials
    
    
    9,343
    
    
    
    7,559General & administrative expenses
    
    
    6,177
    
    
    
    6,546Outside contractor delivery costs
    
    
    10,336
    
    
    
    8,239Other
    
    
    2,273
    
    
    
    4,682Total operating expenses
    
    
    127,882
    
    
    
    113,324
 17




---



##### Table of Contents



18




---



##### Table of Contents



Realty  Third Quarter
  FLAGLER DEVELOPMENT CONSOLIDATED  (EXCLUDING DISCONTINUED OPERATIONS)
 Three Months(dollars in thousands)
    
    Ended September 302005
    
    
    2004Revenues:Rental revenues
    
    
    18,406
    
    
    
    15,136Services fee revenues
    
    
    275
    
    
    
    76Rental income  straight-line rent adjustments
    
    
    1,109
    
    
    
    739Operating expense recoveries
    
    
    2,312
    
    
    
    1,261Rental revenues  undeveloped land
    
    
    126
    
    
    
    136Other rental revenues
    
    
    115
    
    
    
    21Total Realty Rental and Services Revenues
    
    
    22,343
    
    
    
    17,369Realty sales
    
    
    1,307
    
    
    
    11,154Total Flagler Revenues
    
    
    23,650
    
    
    
    28,523Expenses:Real estate taxes
    
    
    2,226
    
    
    
    1,783Repairs & maintenance
    
    
    765
    
    
    
    713Services, utilities, management costs
    
    
    4,315
    
    
    
    3,317Total recoverable expenses
    
    
    7,306
    
    
    
    5,813Real estate taxes  undeveloped land
    
    
    28
    
    
    
    1,195Repairs & maintenance
    
    
    313
    
    
    
    334Depreciation & amortization
    
    
    8,277
    
    
    
    6,222SG&A
    
    
    2,468
    
    
    
    1,570Total non-recoverable expenses
    
    
    11,086
    
    
    
    9,321Total Realty Rental and Services Expenses
    
    
    18,392
    
    
    
    15,134Realty sales expenses
    
    
    471
    
    
    
    1,898Total Flagler Expenses
    
    
    18,863
    
    
    
    17,032Operating Profit From Continuing Operations
    
    
    4,787
    
    
    
    11,491Interest Income
    
    
    425
    
    
    
    182Interest Expense
    
    
    (5,006
    )
    
    
    (4,097
    )Other Income
    
    
    (591
    )
    
    
    (379
    )(Loss) Income Before Income Taxes
    
    
    (385
    )
    
    
    7,197
   19




---



##### Table of Contents



FLAGLER DEVELOPMENT  SAME STORE
 Three Months(dollars in thousands)
    
    Ended September 302005
    
    
    2004Revenues:Rental revenues
    
    
    15,990
    
    
    
    14,812Services fee revenues
    
    
    
    
    
    
    Rental income  straight-line rent adjustments
    
    
    294
    
    
    
    659Operating expense recoveries
    
    
    1,703
    
    
    
    1,253Rental revenues  undeveloped land
    
    
    4
    
    
    
    4Other rental revenues
    
    
    28
    
    
    
    21Total Realty Rental and Services Revenues
    
    
    18,019
    
    
    
    16,749Realty sales
    
    
    
    
    
    
    Total Flagler Revenues
    
    
    18,019
    
    
    
    16,749Expenses:Real estate taxes
    
    
    1,858
    
    
    
    1,730Repairs & maintenance
    
    
    686
    
    
    
    699Services, utilities, management costs
    
    
    3,525
    
    
    
    3,230Total recoverable expenses
    
    
    6,069
    
    
    
    5,659Real estate taxes  undeveloped land
    
    
    
    
    
    
    Repairs & maintenance
    
    
    127
    
    
    
    98Depreciation & amortization
    
    
    5,354
    
    
    
    5,232SG&A
    
    
    5
    
    
    
    31Total non-recoverable expenses
    
    
    5,486
    
    
    
    5,361Total Realty Rental and Services Expenses
    
    
    11,555
    
    
    
    11,020Realty sales expenses
    
    
    
    
    
    
    Total Flagler Expenses
    
    
    11,555
    
    
    
    11,020Operating Profit From Continuing Operations
    
    
    6,464
    
    
    
    5,729
  Same Store
 20




---



##### Table of Contents



FLAGLER DEVELOPMENT  New in 2004, Developed in 2005,  Acquired in 2005, and Land & Corporate Overhead
 Three MonthsEnded September 30
    
    New in 2004
    
    
    Developed in 2005
    
    
    Acquired in 2005
    
    
    Land & Corporate Overhead(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues:Rental revenues
    
    
    723
    
    
    
    324
    
    
    
    778
    
    
    
    
    
    
    
    915
    
    
    
    
    
    
    
    
    
    
    
    Services fee revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275
    
    
    
    76Rental income  straight-line rent adjustments
    
    
    414
    
    
    
    80
    
    
    
    213
    
    
    
    
    
    
    
    188
    
    
    
    
    
    
    
    
    
    
    
    Operating expense recoveries
    
    
    41
    
    
    
    8
    
    
    
    14
    
    
    
    
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    Rental revenues  undeveloped land
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    130Other rental revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    86
    
    
    
    Total Realty Rental and Services Revenues
    
    
    1,180
    
    
    
    414
    
    
    
    1,005
    
    
    
    
    
    
    
    1,658
    
    
    
    
    
    
    
    481
    
    
    
    206Realty sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,307
    
    
    
    11,154Total Flagler Revenues
    
    
    1,180
    
    
    
    414
    
    
    
    1,005
    
    
    
    
    
    
    
    1,658
    
    
    
    
    
    
    
    1,788
    
    
    
    11,360Expenses:Real estate taxes
    
    
    (5
    )
    
    
    45
    
    
    
    9
    
    
    
    
    
    
    
    361
    
    
    
    
    
    
    
    3
    
    
    
    8Repairs & maintenance
    
    
    31
    
    
    
    13
    
    
    
    (2
    )
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    1Services, utilities, management costs
    
    
    200
    
    
    
    74
    
    
    
    125
    
    
    
    
    
    
    
    478
    
    
    
    
    
    
    
    (13
    )
    
    
    13Total recoverable expenses
    
    
    226
    
    
    
    132
    
    
    
    132
    
    
    
    
    
    
    
    889
    
    
    
    
    
    
    
    (10
    )
    
    
    22Real estate taxes  undeveloped land
    
    
    
    
    
    
    (12
    )
    
    
    (36
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    1,208Repairs & maintenance
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    183
    
    
    
    228Depreciation & amortization
    
    
    420
    
    
    
    159
    
    
    
    510
    
    
    
    30
    
    
    
    875
    
    
    
    
    
    
    
    1,118
    
    
    
    801SG&A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,463
    
    
    
    1,539Total non-recoverable expenses
    
    
    420
    
    
    
    152
    
    
    
    476
    
    
    
    32
    
    
    
    876
    
    
    
    
    
    
    
    3,828
    
    
    
    3,776Total Realty Rental Services Expenses
    
    
    646
    
    
    
    284
    
    
    
    608
    
    
    
    32
    
    
    
    1,765
    
    
    
    
    
    
    
    3,818
    
    
    
    3,798Realty sales expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    471
    
    
    
    1,898Total Flagler Expenses
    
    
    646
    
    
    
    284
    
    
    
    608
    
    
    
    32
    
    
    
    1,765
    
    
    
    
    
    
    
    4,289
    
    
    
    5,696Operating Profit (Loss)
From Continuing Operations
    
    
    534
    
    
    
    130
    
    
    
    397
    
    
    
    (32
    )
    
    
    (107
    )
    
    
    
    
    
    
    (2,501
    )
    
    
    5,664
  New in 2004
 New in 2005
 Acquired in 2005
 Results from Continuing Operations
  21




---



##### Table of Contents



Other Realty Rental and Sales
  22




---



##### Table of Contents



Nine Months
  FLAGLER DEVELOPMENT CONSOLIDATED  (EXCLUDING DISCONTINUED OPERATIONS)
 Nine Months(dollars in thousands)
    
    Ended September 302005
    
    
    2004Revenues:Rental revenues
    
    
    51,511
    
    
    
    44,250Services fee revenues
    
    
    504
    
    
    
    126Rental income  straight-line rent adjustments
    
    
    5,240
    
    
    
    2,620Operating expense recoveries
    
    
    6,327
    
    
    
    3,773Rental revenues  undeveloped land
    
    
    593
    
    
    
    564Other rental revenues
    
    
    181
    
    
    
    157Total Realty Rental and Services Revenues
    
    
    64,356
    
    
    
    51,490Realty sales
    
    
    2,780
    
    
    
    17,711Total Flagler Revenues
    
    
    67,136
    
    
    
    69,201Expenses:Real estate taxes
    
    
    7,157
    
    
    
    5,951Repairs & maintenance
    
    
    2,157
    
    
    
    1,950Services, utilities, management costs
    
    
    12,333
    
    
    
    9,428Total recoverable expenses
    
    
    21,647
    
    
    
    17,329Real estate taxes  undeveloped land
    
    
    2,025
    
    
    
    3,100Repairs & maintenance
    
    
    844
    
    
    
    885Depreciation & amortization
    
    
    22,910
    
    
    
    19,505SG&A
    
    
    5,713
    
    
    
    4,100Total non-recoverable expenses
    
    
    31,492
    
    
    
    27,590Total Realty Rental and Services Expenses
    
    
    53,139
    
    
    
    44,919Realty sales expenses
    
    
    883
    
    
    
    6,015Total Flagler Expenses
    
    
    54,022
    
    
    
    50,934Operating Profit From Continuing Operations
    
    
    13,114
    
    
    
    18,267Interest Income
    
    
    1,408
    
    
    
    260Interest Expense
    
    
    (14,513
    )
    
    
    (11,611
    )Other Income
    
    
    (1,444
    )
    
    
    (587
    )(Loss) Income Before Income Taxes
    
    
    (1,435
    )
    
    
    6,329
   23




---



##### Table of Contents



FLAGLER DEVELOPMENT  SAME STORE
 Nine Months(dollars in thousands)
    
    Ended September 302005
    
    
    2004Revenues:Rental revenues
    
    
    46,476
    
    
    
    43,606Services fee revenues
    
    
    
    
    
    
    Rental income  straight-line rent adjustments
    
    
    1,772
    
    
    
    2,220Operating expense recoveries
    
    
    4,834
    
    
    
    3,747Rental revenues  undeveloped land
    
    
    11
    
    
    
    9Other rental revenues
    
    
    66
    
    
    
    65Total Realty Rental and Services Revenues
    
    
    53,159
    
    
    
    49,647Realty sales
    
    
    
    
    
    
    Total Flagler Revenues
    
    
    53,159
    
    
    
    49,647Expenses:Real estate taxes
    
    
    6,084
    
    
    
    5,840Repairs & maintenance
    
    
    1,928
    
    
    
    1,926Services, utilities, management costs
    
    
    10,317
    
    
    
    9,226Total recoverable expenses
    
    
    18,329
    
    
    
    16,992Real estate taxes  undeveloped land
    
    
    
    
    
    
    Repairs & maintenance
    
    
    224
    
    
    
    298Depreciation & amortization
    
    
    15,985
    
    
    
    17,103SG&A
    
    
    55
    
    
    
    67Total non-recoverable expenses
    
    
    16,264
    
    
    
    17,468Total Realty Rental and Services Expenses
    
    
    34,593
    
    
    
    34,460Realty sales expenses
    
    
    
    
    
    
    Total Flagler Expenses
    
    
    34,593
    
    
    
    34,460Operating Profit From Continuing Operations
    
    
    18,566
    
    
    
    15,187
  Same Store
 24




---



##### Table of Contents



FLAGLER DEVELOPMENT  New in 2004, Developed in 2005,  Acquired in 2005, and Land & Corporate Overhead
 Nine MonthsEnded September 30
    
    New in 2004
    
    
    Developed in 2005
    
    
    Acquired in 2005
    
    
    Land & Corporate Overhead(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues:Rental revenues
    
    
    2,036
    
    
    
    644
    
    
    
    886
    
    
    
    
    
    
    
    2,113
    
    
    
    
    
    
    
    
    
    
    
    Services fee revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504
    
    
    
    126Rental income  straight-line rent adjustments
    
    
    1,358
    
    
    
    400
    
    
    
    1,672
    
    
    
    
    
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    Operating expense recoveries
    
    
    113
    
    
    
    11
    
    
    
    57
    
    
    
    
    
    
    
    1,323
    
    
    
    
    
    
    
    
    
    
    
    15Rental revenues  undeveloped land
    
    
    4
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    578
    
    
    
    553Other rental revenues
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    110
    
    
    
    91Total Realty Rental and Services Revenues
    
    
    3,511
    
    
    
    1,058
    
    
    
    2,615
    
    
    
    
    
    
    
    3,879
    
    
    
    
    
    
    
    1,192
    
    
    
    785Realty sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,780
    
    
    
    17,711Total Flagler Revenues
    
    
    3,511
    
    
    
    1,058
    
    
    
    2,615
    
    
    
    
    
    
    
    3,879
    
    
    
    
    
    
    
    3,972
    
    
    
    18,496Expenses:Real estate taxes
    
    
    217
    
    
    
    115
    
    
    
    23
    
    
    
    
    
    
    
    840
    
    
    
    
    
    
    
    (7
    )
    
    
    (4
    )Repairs & maintenance
    
    
    128
    
    
    
    25
    
    
    
    (2
    )
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )Services, utilities, management costs
    
    
    595
    
    
    
    187
    
    
    
    203
    
    
    
    1
    
    
    
    1,231
    
    
    
    
    
    
    
    (13
    )
    
    
    14Total recoverable expenses
    
    
    940
    
    
    
    327
    
    
    
    224
    
    
    
    1
    
    
    
    2,176
    
    
    
    
    
    
    
    (22
    )
    
    
    9Real estate taxes  undeveloped land
    
    
    
    
    
    
    (18
    )
    
    
    (93
    )
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    2,118
    
    
    
    3,104Repairs & maintenance
    
    
    1
    
    
    
    5
    
    
    
    17
    
    
    
    6
    
    
    
    1
    
    
    
    
    
    
    
    601
    
    
    
    576Depreciation & amortization
    
    
    1,330
    
    
    
    419
    
    
    
    991
    
    
    
    88
    
    
    
    2,091
    
    
    
    
    
    
    
    2,513
    
    
    
    1,895SG&A
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    5,636
    
    
    
    4,026Total non-recoverable expenses
    
    
    1,331
    
    
    
    413
    
    
    
    915
    
    
    
    108
    
    
    
    2,114
    
    
    
    
    
    
    
    10,868
    
    
    
    9,601Total Realty Rental and Services Expenses
    
    
    2,271
    
    
    
    740
    
    
    
    1,139
    
    
    
    109
    
    
    
    4,290
    
    
    
    
    
    
    
    10,846
    
    
    
    9,610Realty sales expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    883
    
    
    
    6,015Total Flagler Expenses
    
    
    2,271
    
    
    
    740
    
    
    
    1,139
    
    
    
    109
    
    
    
    4,290
    
    
    
    
    
    
    
    11,729
    
    
    
    15,625Operating Profit (Loss)
From Continuing Operations
    
    
    1,240
    
    
    
    318
    
    
    
    1,476
    
    
    
    (109
    )
    
    
    (411
    )
    
    
    
    
    
    
    (7,757
    )
    
    
    2,871
  New in 2004
 New in 2005
 Acquired in 2005
 Results from Continuing Operations
  25




---



##### Table of Contents



Other Realty Rental and Sales
   Results from Discontinued Operations
  26




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30
    
    
    Ended September 30(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Summary of Operating Results of
Discontinued OperationsFlagler realty rental revenues
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    739Flagler realty rental expenses
    
    
    
    
    
    
    104
    
    
    
    25
    
    
    
    569(Loss) income before income taxes
    
    
    
    
    
    
    (96
    )
    
    
    (25
    )
    
    
    170Income tax
    
    
    
    
    
    
    36
    
    
    
    8
    
    
    
    (66
    )(Loss) income from discontinued operations
    
    
    
    
    
    
    (60
    )
    
    
    (17
    )
    
    
    104Gain on disposition of discontinued operations (net of
taxes of $0.1 million for the three months ended
September 30, 2004, and $1.5 million for the nine
months ended September 30, 2004.)
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    2,457
 Corporate Expenses  Third Quarter and Nine Months
    Interest Expense  Third Quarter and Nine Months
  27




---



##### Table of Contents



Other Income  Third Quarter and Nine Months
  Income Tax
  28




---



##### Table of Contents



Financial Condition, Liquidity and Capital Resources
  FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine MonthsEnded September 302005
    
    
    2004Cash Flows from Operating ActivitiesNet income
    
    
    29,200
    
    
    
    27,160Adjustments to reconcile net income to cash generated by operating activities:Depreciation and amortization
    
    
    40,592
    
    
    
    36,668Gain on disposition of properties
    
    
    (8,114
    )
    
    
    (17,973
    )Tax benefit from exercise of stock options
    
    
    3,924
    
    
    
    Deferred taxes
    
    
    995
    
    
    
    8,798Stock compensation expense
    
    
    7,915
    
    
    
    4,878Changes in operating assets and liabilities:Accounts receivable
    
    
    (4,175
    )
    
    
    (406
    )Prepaid expenses
    
    
    (2,839
    )
    
    
    (852
    )Other current assets
    
    
    (1,871
    )
    
    
    (4,336
    )Other assets and deferred charges
    
    
    (7,690
    )
    
    
    (6,468
    )Accounts payable
    
    
    (5,212
    )
    
    
    (3,180
    )Taxes payable
    
    
    16,679
    
    
    
    16,156Income tax refund
    
    
    2,800
    
    
    
    Other current liabilities
    
    
    (2,821
    )
    
    
    (1,374
    )Accrued casualty and other long-term liabilities
    
    
    (964
    )
    
    
    (1,279
    )Net cash generated by operating activities
    
    
    68,419
    
    
    
    57,792Cash Flows from Investing ActivitiesPurchases of properties
    
    
    (152,256
    )
    
    
    (73,429
    )Proceeds from disposition of assets
    
    
    10,261
    
    
    
    36,713Net cash used in investing activities
    
    
    (141,995
    )
    
    
    (36,716
    )Cash Flows from Financing ActivitiesReceipt from issuance of mortgage debt (Note 7)
    
    
    
    
    
    
    105,000Payment of mortgage debt
    
    
    (3,645
    )
    
    
    (2,110
    )Payment of dividends
    
    
    (5,540
    )
    
    
    (4,899
    )Proceeds from exercise of options
    
    
    19,132
    
    
    
    10,416Stock repurchase program payments (Note 5)
    
    
    (2,289
    )
    
    
    (191,126
    )Purchase of common stock
    
    
    (1,474
    )
    
    
    (2,571
    )Net cash provided by (used in) financing activities
    
    
    6,184
    
    
    
    (85,290
    )Net Decrease in Cash and Cash Equivalents
    
    
    (67,392
    )
    
    
    (64,214
    )Cash and Cash Equivalents at Beginning of Period
    
    
    126,166
    
    
    
    125,057Cash and Cash Equivalents at End of Period
    
    
    58,774
    
    
    
    60,843Supplemental Disclosure of Cash Flow InformationCash paid for income taxes (net of refunds)
    
    
    7,200
    
    
    
    4,700Cash paid for interest
    
    
    16,521
    
    
    
    15,718
 
 29




---



##### Table of Contents



30




---



##### Table of Contents



OTHER MATTERS
 Critical Accounting Policies
  Real Estate Allocation of Acquisition Costs
  Impairment of Long-lived Assets
 Income Tax Provisions
 Revenue Recognition  Realty Rental Revenues
 31




---



##### Table of Contents



Real Estate Infrastructure Costs
   Contingencies
 
 Item 3.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   32




---



##### Table of Contents



Item 4.
 CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   33




---



##### Table of Contents



PART II
 
 Item 1.
 LEGAL PROCEEDINGS
  
 Item 2.
 UNREGISTERED SALES OF EQUITY SECURITIES  AND USE OF PROCEEDS
   Total Number of
    
    Maximum Amount ofAverage Price
    
    Shares Purchased as
    
    Value that may yetPaid Per Share
    
    Part of Publicly
    
    be Purchased underTotal Number of
    
    (including
    
    Announced Plans or
    
    the Plans orShares Purchased
    
    commissions)
    
    Programs
    
    ProgramsJuly
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,711,048August
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,711,048September
    
    
    6,113
    *
    
    $
    43.27
    *
    
    
    
    
    
    
    37,711,048
 *
 34




---



##### Table of Contents



Item 6.
 EXHIBITS
 (a)
    
    ExhibitsThe Exhibits listed on the accompanying Index to Exhibits are filed as part of this Report or
furnished with this Report.
 35




---



##### Table of Contents



SIGNATURES
  
 FLORIDA EAST COAST INDUSTRIES, INC.
          (Registrant)Dated: October 26, 2005
    /s/ Mark A. LeiningerMark A. LeiningerVice President and ControllerDated: October 26, 2005
    /s/ Daniel H. PopkyDaniel H. Popky, Executive Vice Presidentand Chief Financial Officer 36




---



##### Table of Contents



INDEX TO EXHIBITS
 PAGES-K ITEM 601
    
    DOCUMENTS
    
    NUMBERS3 (i)
    
    Second Amended and Restated Articles of Incorporation
    
    *3 (ii)
    
    Amended and Restated By-Laws of FECI through February 26, 2004
    
    #3 (iii)
    
    Amended and Restated Articles of Amendment Relating to Designation
of Series A Participating Cumulative Preferred Stock
    
    **4
    
    Amended and Restated Rights Agreement dated as of September 22, 2003
    
    **10 (a)
    
    Representative Amendment, made as of February 26, 2004, to the
Employment Agreements dated February 2, 1999 between FECI and
certain Executive Officers (Vice Chairman, Executive Vice
President-Rail Operations and Executive Vice President, General
Counsel and Secretary)
    
    ##10 (b)
    
    Termination Agreement, made as of February 10, 2005 between FECI
and Robert W. Anestis.
Employment and Change in Control Agreements dated February 10,
2005, effective March 28, 2005, and Restricted Stock and
    
    ###10 (c).1 
10 (c).4
    
    Employment and Change in
Control Agreements dated February 10, 2005, effective
March 28, 2005, and Restricted Stock and Supplemental Employee
Retirement Plan (SERP) Participant Agreements, dated March 28,
2005 between FECI and Adolfo Henriques
    
    ###10 (d)
    
    $150 million Unsecured Revolving Credit Agreement with a 5-year
term between FECI and a syndication of financial institutions with
Bank of America, N.A. as Lead Arranger
    
    ***10 (e)
    
    Supplemental Employee Retirement Plan (SERP) dated as of March 28,
2005.
    
    ###10 (f)
    
    Amended 2002 Stock Incentive Plan.
    
    ****31.1  31.2
    
    Section 302 Certifications32.1
    
    Section 906 Certification
 *
    
    Amended and Restated Articles of Incorporation and Amendment and Restated By-Laws of
the Registrant, incorporated by reference to Appendices D and E, respectively, to the
definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange
Commission on February 4, 2000 (Registration No. 001-08728).#
    
    This document, as amended through February 26, 2004, is filed as an exhibit to Form
10-Q with the Securities and Exchange Commission on April 29, 2004.**
    
    These documents, dated effective as of September 22, 2003, were filed as exhibits to
Form 8-A/A with the Securities and Exchange Commission on September 22, 2003.##
    
    This document, dated February 26, 2004, is filed as an exhibit to Form 10-Q with the
Securities and Exchange Commission on April 29, 2004.***
    
    This document, dated February 22, 2005, is filed as an exhibit to Form 8-K with the
Securities and Exchange Commission on February 24, 2005.###
    
    These documents, dated February 10, 2005 and March 28, 2005, are filed as an exhibit to
Form 10-Q with the Securities and Exchange Commission on April 22, 2005.****
    
    This document, dated June 2, 2005, is filed as an exhibit to Form 8-K with the
Securities and Exchange Commission on June 3, 2005.
 37