Letter from NYRR prez (and one from Chairman Sal in 3 weeks):
NEW YORK REGIONAL RAIL CORPORATION
4302 First Avenue
Brooklyn, N.Y. 11232
August 4, 2000
Dear Fellow Shareholders,
It is with the greatest of pride and enthusiasm that I report to you, Our Shareholders, our results during this past year. As most of you will recall, in my last letter of June 5, 1999 I accepted the challenge to increase the revenue and profitability of New York Regional Rail (“NYRR”). The results of OUR Company, NYRR, during this last year prove that “ we are on the right track”.
We identified the divestiture of Conrail, and the ensuing entrance of Norfolk Southern (“NS”) and CSX Transportation (“CSX”), as the key to OUR future success. Thus, during the period prior to June of 1999, we focused on OUR preparation for the implementation of the operational control of Conrail by NS and CSX. As most of you are aware, this change took place on June 1, 1999. However, in addition to the entrance of NS and CSX, we also received the unexpected benefit of a new participant, Canadian Pacific Railway (CP), into our markets.
Our investment, (over $2 million dollars) in upgrading OUR rail and facilities at Bush Terminal, Brooklyn NY and Greenville, NJ, the reconstruction of OUR float bridge at Bush Terminal, repairs to OUR fleet of locomotives, and major repairs and renovations to OUR float #29, has begun to pay off!
Since many of you are new to OUR Company, I will highlight some important facts about OUR Company. First, the operating rights to the New England and “East of Hudson” Corridor, (formerly owned by Conrail), were obtained by CSX. This is EXTREMELY IMPORTANT as there are only three options for rail freight movement destined to NYC, Long Island and Southern New England. Option One: to route any rail freight destined for the New York Market up the west side of the Hudson River to Selkirk, (140 miles, to the nearest crossing), then travel back down the east side of the Hudson to New York City. This trip takes 3-5 days. Utilization of OUR SERVICE enables rail freight to reach NYC in ONLY 45 minutes. In addition to significant timesavings, use of OUR Cross Harbor service results in major cost savings. These include daily charges for car hire, increased track, locomotives, and rail car maintenance expenses, additional rail-switching fees, and the extra fuel needed for this 280 mile detour. Option Two: to transload the freight from rail into trucks in New Jersey for delivery to New York. Option Three: to use OUR System.
With the entrance of NS, CSX and CP into our area, there is a growing need for trans-load and intermodal facilities. These facilities will be used to off-load freight products that have been shipped by rail from throughout the U.S. and are destined for the Metropolitan New York market. Once here, they need to be off-loaded to trucks for local deliveries. Shortly, we will apply for the re-classification of our yards in Brooklyn and Greenville as intermodal terminal yards, which will allow us to capture a portion of this new and growing business.
The City of New York was granted “$14 million for a cross harbor rail car-float operation” in 1998 by Act of Congress. As we are the only ICC licensed rail car-float operation in New York Harbor, we are going forward to request the release of this grant money to continue our infrastructure improvements. We estimate that the use of these funds will enable us to increase Our capacity to over 75,000 cars a year.
As most of you are aware, NYC continues to have a growing problem with the disposal of its Municipal Solid Waste. The main destination for this MSW has been the Fresh Kills Landfill, located on Staten Island, New York. Currently this Landfill is being phased out and will totally shut down by 2002. For those of you not from the New York area, Staten Island is one of the five boroughs which makes up NYC. With the closure of this facility, two major questions arise. Where does the City dispose of the 26,000 tons of commercial and municipal waste it produces daily? How does it get it there? Although no one method will be used (i.e. rail, barge or truck, exclusively); we do expect that we will begin to see a significant amount of this MSW utilizing OUR System. We have been in serious discussions with numerous waste companies, desirous of using OUR facilities and are optimistic that these discussions will result in a positive outcome for OUR Company.
In April of 1999, we announced the acquisition of JS Transportation ("JST"), a short haul trucking concern, whose clients consist of the largest “Waste Companies” in the U.S. and whose fleet consists of waste hauling vehicles, as well as, vehicles for hauling food grade products. The company currently serves a six-state area, including New York, New Jersey, Maryland, Delaware, Connecticut and Pennsylvania. We expected that this business would immediately add to the bottom line of OUR Company. It did! In 1998, Our Company posted $1.2 million in sales; in 1999 this number increased almost 400% to about $5 million. I am please to report that for the quarter ended March 31, 2000, OUR sales were approximately $2.5 million. Historically this is OUR Company’s slowest quarter because of the harsh weather conditions. In fact, this period had brought us the worst weather in my three-year tenure as your President. Annualized with no increase, would mean OUR Company should achieve $10 million in sales for 2000. However, OUR projected numbers indicate about $15 million in sales.
We have consolidated OUR ownership in CH Partners, (OUR equipment subsidiary) to over 91%, and New York Cross Harbor (“NYCH,” OUR operations subsidiary) to over 94 %.
During the last year, there have been many other accomplishments such as the completion of our 1996, 1997 and 1998 audits. We are currently completing FY ’99 audit. We have also become a SEC fully reporting company. We are in the process of taking over the remaining 49% of JST, and are finalizing the acquisition of another synergistic regional trucking company. In addition, we have resolved or converted over 4 million dollars in debt since December of 1999.
As you can see, we have made great strides for OUR Company in this last year and with your support we expect to continue in the coming year.
Sincerely,
W. Robert Bentley
President, New York Regional Rail |
