Document and Company Informatio
Document and Company Information (USD $) | |||
In Billions, except Share data | 9 Months Ended
Sep. 30, 2009 | Oct. 22, 2009
| Jun. 30, 2008
|
Document and Company Information [Abstract] | |||
Entity Registrant Name | KANSAS CITY SOUTHERN | ||
Entity Central Index Key | 0000054480 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-09-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | 3.55 | ||
Entity Common Stock, Shares Outstanding (actual number) | 96,004,227 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) (USD $) | ||||
In Millions, except Share data in Thousands | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenues | 386.1 | 491.5 | 1073.4 | 1428.3 |
Operating expenses: | ||||
Compensation and benefits | 83.4 | 93.1 | 240.5 | 291.3 |
Purchased services | 36.4 | 51 | 126.9 | 155.7 |
Fuel | 49.7 | 90.1 | 133.2 | 259 |
Equipment costs | 41.8 | 44.6 | 122.1 | 135.4 |
Depreciation and amortization | 44.8 | 42.7 | 139.5 | 123.2 |
Casualties and insurance | 12 | 23.3 | 32.2 | 60.5 |
Materials and other | 33.6 | 35.7 | 102.7 | 104.2 |
Total operating expenses | 301.7 | 380.5 | 897.1 | 1129.3 |
Operating income | 84.4 | 111 | 176.3 | 299 |
Equity in net earnings of unconsolidated affiliates | 1.9 | 5 | 4.9 | 13.8 |
Interest expense | -41.2 | -35.5 | -128.4 | -102.7 |
Debt retirement costs | 0 | 0 | -5.9 | -5.6 |
Foreign exchange gain (loss) | -1.5 | -7.5 | -0.6 | 0.7 |
Other income, net | 0.3 | 3.8 | 4.7 | 7 |
Income before income taxes and noncontrolling interest | 43.9 | 76.8 | 51 | 212.2 |
Income tax expense | 14.9 | 25.1 | 16.9 | 67.2 |
Net income | 29 | 51.7 | 34.1 | 145 |
Noncontrolling interest | 0.4 | 0.1 | 0.8 | 0.3 |
Net income attributable to Kansas City Southern and subsidiaries | 28.6 | 51.6 | 33.3 | 144.7 |
Preferred stock dividends | 2.8 | 2.7 | 8.3 | 12.4 |
Net income available to common shareholders | 25.8 | 48.9 | $25 | 132.3 |
Earnings per share: | ||||
Basic earnings per share | 0.27 | 0.55 | 0.27 | 1.62 |
Diluted earnings per share | 0.27 | 0.52 | 0.27 | 1.46 |
Average shares outstanding (in thousands): | ||||
Basic | 94,683 | 88,400 | 92,462 | 81,618 |
Potentially dilutive common shares | 560 | 10,518 | 496 | 17,375 |
Diluted | 95,243 | 98,918 | 92,958 | 98,993 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | |||||||||||||||||||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | 108.9 | [1] | 229.9 | ||||||||||||||||
Accounts receivable, net | 159.1 | [1] | 163.8 | ||||||||||||||||
Restricted funds | 38.7 | [1] | 34 | ||||||||||||||||
Materials and supplies | 104.3 | [1] | 96.3 | ||||||||||||||||
Deferred income taxes | 102.4 | [1] | 62.8 | ||||||||||||||||
Other current assets | 28.7 | [1] | 98.8 | ||||||||||||||||
Total current assets | 542.1 | [1] | 685.6 | ||||||||||||||||
Investments | 52.8 | [1] | 60.5 | ||||||||||||||||
Property and equipment, net of accumulated depreciation of $891.8 million and $914.2 million at September 30, 2009 and December 31, 2008, respectively | 3581.4 | [1] | 3416.3 | ||||||||||||||||
Concession assets, net of accumulated amortization of $215.5 million and $186.5 million at September 30, 2009 and December 31, 2008, respectively | 1146.4 | [1] | 1182.1 | ||||||||||||||||
Deferred income taxes | 7.9 | [1] | 36.4 | ||||||||||||||||
Other assets | 75.7 | [1] | 58.3 | ||||||||||||||||
Total assets | 5406.3 | [1] | 5439.2 | ||||||||||||||||
Current liabilities: | |||||||||||||||||||
Debt due within one year | 107.4 | [1] | 637.4 | ||||||||||||||||
Accounts payable and accrued liabilities | 365.1 | [1] | 455.4 | ||||||||||||||||
Total current liabilities | 472.5 | [1] | 1092.8 | ||||||||||||||||
Long-term debt | 1913.8 | [1] | 1448.7 | ||||||||||||||||
Deferred income taxes | 509.5 | [1] | 492.4 | ||||||||||||||||
Other noncurrent liabilities and deferred credits | 206.4 | [1] | 220.1 | ||||||||||||||||
Total liabilities | 3102.2 | [1] | 3,254 | ||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
$.01 par, common stock, 400,000,000 shares authorized; 110,583,068 and 106,252,860 shares issued at September 30, 2009 and December 31, 2008, respectively; 96,006,526 and 91,463,762 shares outstanding at September 30, 2009 and December 31, 2008, respectively | 0.9 | [1] | 0.9 | ||||||||||||||||
Paid-in capital | 655 | [1] | 572.3 | ||||||||||||||||
Retained earnings | 1362.6 | [1] | 1337.6 | ||||||||||||||||
Accumulated other comprehensive loss | -4.8 | [1] | -5.6 | ||||||||||||||||
Total stockholders' equity | 2,020 | [1] | 1911.5 | ||||||||||||||||
Noncontrolling interest | 284.1 | [1] | 273.7 | ||||||||||||||||
Total equity | 2304.1 | [1] | 2185.2 | ||||||||||||||||
Total liabilities and equity | 5406.3 | [1] | 5439.2 | ||||||||||||||||
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | |||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred Stock | 6.1 | [1] | 6.1 | ||||||||||||||||
Series D - cumulative convertible perpetual preferred stock, $1 par, 5.125%, 210,000 shares authorized and issued, 209,995 shares outstanding with a liquidation preference of $1,000 per share at September 30, 2009 and December 31, 2008, respectively | |||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred Stock | 0.2 | [1] | 0.2 | ||||||||||||||||
[1]Unaudited |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | |||||||||||||||||||
In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
ASSETS | |||||||||||||||||||
Accumulated depreciation on property and equipment | 891.8 | [1] | 914.2 | ||||||||||||||||
Accumulated amortization on Concession assets | 215.5 | [1] | 186.5 | ||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Common stock, par value | 0.01 | [1] | 0.01 | ||||||||||||||||
Common stock, shares authorized (actual number) | 400,000,000 | [1] | 400,000,000 | ||||||||||||||||
Common stock, shares issued (actual number) | 110,583,068 | [1] | 106,252,860 | ||||||||||||||||
Common stock, shares outstanding (actual number) | 96,006,526 | [1] | 91,463,762 | ||||||||||||||||
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | |||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred stock, par value | 25 | [1] | 25 | ||||||||||||||||
Preferred stock, shares authorized (actual number) | 840,000 | [1] | 840,000 | ||||||||||||||||
Preferred stock, shares issued (actual number) | 649,736 | [1] | 649,736 | ||||||||||||||||
Preferred stock, shares outstanding (actual number) | 242,170 | [1] | 242,170 | ||||||||||||||||
Preferred stock dividend rate | 4% | [1] | 4% | ||||||||||||||||
Series D - cumulative convertible perpetual preferred stock, $1 par, 5.125%, 210,000 shares authorized and issued, 209,995 shares outstanding with a liquidation preference of $1,000 per share at September 30, 2009 and December 31, 2008, respectively | |||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||
Preferred stock, par value | 1 | [1] | 1 | ||||||||||||||||
Preferred stock, shares authorized (actual number) | 210,000 | [1] | 210,000 | ||||||||||||||||
Preferred stock, shares issued (actual number) | 210,000 | [1] | 210,000 | ||||||||||||||||
Preferred stock, shares outstanding (actual number) | 209,995 | [1] | 209,995 | ||||||||||||||||
Cumulative perpetual preferred stock liquidation preference | 1,000 | [1] | 1,000 | ||||||||||||||||
Preferred stock dividend rate | 5.125% | [1] | 5.125% | ||||||||||||||||
[1]Unaudited |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) (USD $) | |||||||||||||||||||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||||
Operating activities: | |||||||||||||||||||
Net income | 34.1 | $145 | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 139.5 | 123.2 | |||||||||||||||||
Deferred income taxes | 16.2 | 66 | |||||||||||||||||
Equity in undistributed earnings of unconsolidated affiliates | -4.9 | -13.8 | |||||||||||||||||
Share-based compensation | 6.4 | 5.3 | |||||||||||||||||
Other deferred compensation | -1.7 | 8.3 | |||||||||||||||||
Distributions from unconsolidated affiliates | 0 | 14.3 | |||||||||||||||||
Gain on sale of assets | -3.7 | -1.9 | |||||||||||||||||
Excess tax benefit from share-based compensation | 0 | (2) | |||||||||||||||||
Debt retirement costs | 5.9 | 5.6 | |||||||||||||||||
Changes in working capital items: | |||||||||||||||||||
Accounts receivable | 4.7 | 24.5 | |||||||||||||||||
Materials and supplies | (8) | -8.1 | |||||||||||||||||
Other current assets | 36.2 | -49.1 | |||||||||||||||||
Accounts payable and accrued liabilities | -4.7 | 18.7 | |||||||||||||||||
Other, net | -11.3 | -2.9 | |||||||||||||||||
Net cash provided by operating activities | 208.7 | 333.1 | |||||||||||||||||
Investing activities: | |||||||||||||||||||
Capital expenditures | -299.2 | -415.6 | |||||||||||||||||
Proceeds from disposal of property | 13.6 | 17.6 | |||||||||||||||||
Contribution from NS for MSLLC | 0 | 15 | |||||||||||||||||
Property investments in MSLLC | -18.2 | -19.4 | |||||||||||||||||
Other, net | (9) | -14.9 | |||||||||||||||||
Net cash used for investing activities | -312.8 | -417.3 | |||||||||||||||||
Financing activities: | |||||||||||||||||||
Proceeds from issuance of long-term debt | 189.8 | 399.9 | |||||||||||||||||
Repayment of long-term debt | -264.5 | -258.9 | |||||||||||||||||
Debt costs | -9.3 | -12.7 | |||||||||||||||||
Proceeds from common stock issuance | 73.9 | 0 | |||||||||||||||||
Proceeds from employee stock plans | 1.5 | 7.3 | |||||||||||||||||
Excess tax benefit from share-based compensation | 0 | 2 | |||||||||||||||||
Preferred stock dividends paid | -8.3 | -12.4 | |||||||||||||||||
Net cash provided by (used for) financing activities | -16.9 | 125.2 | |||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Net increase (decrease) during each period | (121) | 41 | |||||||||||||||||
At beginning of year | 229.9 | 55.5 | |||||||||||||||||
At end of period | 108.9 | [1] | 96.5 | ||||||||||||||||
[1]Unaudited |
Accounting Policies, Interim Fi
Accounting Policies, Interim Financial Statements and Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Accounting Policies, Interim Financial Statements and Basis of Presentation [Abstract] | |
Accounting Policies, Interim Financial Statements and Basis of Presentation | 1. Accounting Policies, Interim Financial Statements and Basis of Presentation In the opinion of the management of KCS, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the results for interim periods. All adjustments made were of a normal and recurring nature. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S.GAAP have been condensed or omitted. The Company has evaluated subsequent events through October29, 2009, the date that these financial statements were issued and determined that no subsequent events occurred that would require additional recognition or disclosure. These consolidated financial statements should be read in conjunction with the financial statements and accompanying notes included in the Companys Annual Report on Form10-K for the year ended December31, 2008. The results of operations for the three and nine months ended September30, 2009 are not necessarily indicative of the results to be expected for the full year ending December31, 2009. Certain prior year amounts have been reclassified to conform to the current year presentation. During the third quarter of 2009, the Company identified that changes in accounts payable and accrued liabilities related to capital spending had not been correctly presented in the Companys prior period consolidated cash flow statements. Changes in these accruals had previously been classified within cash flows from operating activities and should have been classified as capital expenditures within investing activities, in order to report capital expenditures on a cash basis rather than on an accrual basis. The accompanying consolidated cash flow statement for the nine months ended September30, 2009 presents capital expenditures on a cash basis. This misclassification was not material to net cash provided by operating activities, capital expenditures, and net cash used by investing activities for the nine months ended September30, 2008. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | 2. Recent Accounting Pronouncements Effective January1, 2009, the Company adopted, on a prospective basis, new accounting guidance on noncontrolling interests in consolidated financial statements except for the presentation and disclosure requirements, which apply retrospectively. As a result of the adoption, the Company reports noncontrolling interests as a separate component of equity in the consolidated balance sheets and the net income or loss attributable to noncontrolling interests is separately identified in the consolidated statements of operations. Prior period amounts have been reclassified to conform to the current period presentation as required under the accounting guidance. These reclassifications did not have any impact on the Companys previously reported results of operations. In June of 2009, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards No.167, Amendments to FASB Interpretation No.46(R) (SFAS167). SFAS167 addresses the elimination of FIN46(R)s exceptions to consolidating qualifying special-purpose entities, which means more entities will be subject to consolidation assessments and reassessments. The statement requires ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity (VIE) and clarifies characteristics that identify a VIE. In addition, SFAS167 requires additional disclosures about a companys involvement with a VIE and any significant changes in risk exposure due to that involvement. This statement is effective for the Company beginning on January1, 2010. The Company is currently evaluating the impact of the adoption of SFAS167 but does not anticipate it will have a material impact on its results of operations and financial condition. |
Earnings Per Share Data
Earnings Per Share Data | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Earnings Per Share Data [Abstract] | |
Earnings Per Share Data | 3. Earnings Per Share Data Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Restricted stock granted to employees and officers is included in weighted average shares as it is earned for purposes of computing basic earnings per common share. Diluted earnings per share adjusts basic earnings per common share for the effects of potentially dilutive common shares, if the effect is not anti-dilutive. Potentially dilutive common shares include the dilutive effects of shares issuable upon the conversion of preferred stock to common stock and shares issuable under the Stock Option and Performance Award Plan. The following table reconciles the weighted average shares used for the basic earnings per share computation to the shares used for the diluted earnings per share computation (in thousands): Three Months Nine Months Ended September30, Ended September30, 2009 2008 2009 2008 Basic shares 94,683 88,400 92,462 81,618 Effect of dilution 560 10,518 496 17,375 Diluted shares 95,243 98,918 92,958 98,993 Potentially dilutive shares excluded from the calculation (in thousands): Three Months Nine Months Ended September30, Ended September30, 2009 2008 2009 2008 Stock options where the exercise price is greater than the average market price of common shares 49 15 75 15 Convertible preferred stock which is anti-dilutive 7,000 7,000 The following table reconciles net income available to common stockholders for purposes of basic earnings per share to net income available to common stockholders for purposes of diluted earnings per share (in millions): Three Months Nine Months Ended September30, Ended September30, 2009 2008 2009 2008 Net income available to common stockholders for purposes of computing basic earnings per share $ 25.8 $ 48.9 $ 25.0 $ 132.3 Effect of dividends on conversion of convertible preferred stock 2.7 12.3 Net income available to common stockholders for purposes of computing diluted earnings per share $ 25.8 $ 51.6 $ 25.0 $ 144.6 |
Goodwill
Goodwill | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Goodwill [Abstract] | |
Goodwil | 4. Goodwill The Company completes its impairment testing of goodwill annually, or more frequently as indicators warrant, with the most recent impairment test completed as of June30, 2009. In previous years the Company completed the annual test using a measurement date of September 30th. Effective for the quarter ended September30, 2009, the Company changed its impairment testing measurement date to November 30th to more closely align the impairment testing date with the Companys long-range planning and forecasting process, which is used as a basis for performing its annual impairment testing. The Company believes that the resulting change in accounting principle related to the annual impairment testing date will not delay, accelerate, or avoid an impairment charge. The Company determined that the change in accounting principle related to the impairment testing date is preferable under the circumstances. |
Fair Value Measurements
Fair Value Measurements | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements The Companys short term financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market. The fair value of the Companys debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities and credit quality. The fair value of the Companys debt was $2,004.8million and $1,911.5million at September30, 2009 and December31, 2008, respectively. The financial statement carrying value was $2,021.2million and $2,086.1million at September30, 2009 and December31, 2008, respectively. Assets and liabilities recognized at fair value are required to be classified into a three-level hierarchy. In general, fair values determined by Level1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Companys assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability. Assets and liabilities measured at fair value on a recurring basis (in millions): Fair Value Measurements Net Assets (Liabilities) Level 1 Level 2 Level 3 at Fair Value September30, 2009 Interest rate contracts $ $ (5.8 ) $ $ (5.8 ) Fuel swap contracts 0.2 0.2 Net assets (liabilities), at fair value $ $ (5.6 ) $ $ (5.6 ) Fair Value Measurements Net Assets (Liabilities) Level 1 Level 2 Level 3 at Fair Value December31, 2008 Investments(i) $ $ $ 12.4 $ 12.4 Interest rate contracts (5.7 ) (5.7 ) |
Derivative Instruments
Derivative Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Derivative Instruments [Abstract] | |
Derivative Instruments | 6. Derivative Instruments The Company does not engage in the trading of derivative financial instruments except where the Companys objective is to manage the variability of forecasted interest payments attributable to changes in interest rates or fuel price risk. In general, the Company enters into derivative transactions in limited situations based on managements assessment of current market conditions and perceived risks. Interest Rate Swaps.During 2008, the Company entered into five forward starting interest rate swaps, which have been designated as cash flow hedges. The forward starting interest rate swaps effectively convert interest payments from variable rates to fixed rates. The swaps are highly effective and as a result there will be deminimus earnings impact associated with ineffectiveness of these hedges. The hedging instruments have an aggregate notional amount of $250.0million at an average fixed rate of 2.71%, with forward starting settlements indexed to the three-month LIBOR occurring every quarter, expiring September 2010 through March 2011. Fuel Derivative Transactions.In January 2009, the Company entered into fuel swap agreements, which had been designated as cash flow hedges. The effective portion of the gain or loss on the derivative instruments was reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of the effectiveness were recognized in current earnings. During the second quarter of 2009, it became probable that the hedged transactions would not occur as forecasted. Therefore, the hedging relationship was dedesignated on May31, 2009 and hedge accounting was discontinued. Changes in the fair value of the derivative instrument after dedesignation are recorded in earnings. As of September30, 2009, $0.6million gain is remaining in accumulated other comprehensive income and will be reclassified into earnings as the fuel swap agreements settle through the remainder of the year. As of September30, 2009, the Company has outstanding fuel swap agreements for 3.8million gallons of diesel fuel purchases ratably through the end of 2009 at an average swap price of $1.79 per gallon. The following table presents the fair value of derivative instruments included in the consolidated balance sheet as of September30, 2009 (in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Location Value Location Value Derivatives designated as hedging instruments: Interest rate contracts Other assets $ Other non-current liabilities deferred credits $ 5.8 Total derivatives designated as hedging instruments 5.8 Derivatives not designated as hedgi |
Foreign Currency Balances
Foreign Currency Balances | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Foreign Currency Balances [Abstract] | |
Foreign Currency Balances | 7. Foreign Currency Balances At September30, 2009, KCSM had financial assets and financial liabilities denominated in Mexican pesos of Ps.1,372.2million and Ps.663.1million, respectively. At December31, 2008, KCSM had financial assets and financial liabilities denominated in Mexican pesos of Ps.1,377.4million and Ps.649.3million, respectively. At September30, 2009 and at December31, 2008, the exchange rate was Ps.13.5 per U.S.dollar. Gains and losses resulting from the remeasurement of financial assets and liabilities are included in the foreign exchange gain (loss) in the statement of operations. |
Common Stock
Common Stock | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Common Stock [Abstract] | |
Common Stock | 8. Common Stock On July31, 2009, the Company entered into a Common Stock Purchase Agreement with certain institutional investors in which the Company issued 1,125,308shares of the Companys common stock at a purchase price of $20.00 per share on August3, 2009 for aggregate net proceeds of $22.5million. For the nine months ended September30, 2009, the Company issued 4,330,208shares totaling $73.9million in net proceeds under the Common Stock Purchase Agreement and the previously-announced ATM Equity Offeringsm Sales Agreement (the Equity Offering) with Bank of America Merrill Lynch, Pierce, Fenner Smith, Incorporated. This completed the Companys offering of common stock under the Equity Offering and Common Stock Purchase Agreement. |
Equity
Equity | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Equity [Abstract] | |
Equity | 9. Equity The following tables summarize the changes in stockholders equity (in millions): Three Months Ended September30, 2009 Three Months Ended September30, 2008 Kansas City Kansas City Southern Southern Stockholders Noncontrolling Stockholders Noncontrolling Equity Interest Total Equity Equity Interest Total Equity Beginning Balance $ 1,970.1 $ 283.7 $ 2,253.8 $ 1,819.0 $ 261.9 $ 2,080.9 Comprehensive income: Net income 28.6 0.4 29.0 51.6 0.1 51.7 Unrealized gain (loss) on cash flow hedges, net of tax of $(0.5)million and $0.1million (1.1 ) (1.1 ) 0.1 0.1 Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.2million 0.6 0.6 Amortization of prior service credit, net of tax of $(0.1)million (0.1 ) (0.1 ) (0.1 ) (0.1 ) Cumulative translation adjustment FTVM, net of tax of $(0.1)million (0.2 ) (0.2 ) Comprehensive income 27.8 0.4 28.2 51.6 0.1 51.7 Contribution from noncontrolling interests 0.1 0.1 Common stock issued 22.6 22.6 Dividends on $25par preferred stock (0.1 ) (0.1 ) Dividends on seriesD cumulative preferred stock (2.7 ) (2.7 ) (2.7 ) (2.7 ) Options exercised and stock subscribed 0.8 0.8 6.1 6.1 Share-based compensation 1.5 1.5 2.1 2.1 Ending Balance $ 2,020.0 $ 284.1 $ 2,304.1 $ 1,876.1 $ 262.1 $ 2,138.2 Nine Months Ended September30, 2009 Nine Months Ended September30, 2008 Kansas City Kansas City Southern Southern Stockholders Noncontrolling Stockholders Noncontrolling Equity Interest Total Equity Equity Interest Total Equity Beg |
Commitments and Contingencies
Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Concession Duty.Under KCSMs railroad concession from the Mexican government (the Concession), the Mexican government has the right to receive a payment from the Company equivalent to 0.5% of the gross revenue during the first 15years of the Concession period and 1.25% of the gross revenue during the remaining years of the Concession period. For the three and nine months ended September30, 2009, the concession duty expense, which is recorded within operating expenses, amounted to $0.8million and $2.3million, compared to $1.1million and $3.4million for the same periods in 2008. Litigation.The Company is a party to various legal proceedings and administrative actions, all of which, except as set forth below, are of an ordinary, routine nature and incidental to its operations. Included in these proceedings are various tort claims brought by current and former employees for job-related injuries and by third parties for injuries related to railroad operations. KCS aggressively defends these matters and has established liability reserves, which management believes are adequate to cover expected costs. Although it is not possible to predict the outcome of any legal proceeding, in the opinion of management, other than those proceedings described in detail below, such proceedings and actions should not, individually, or in the aggregate, have a material adverse effect on the Companys financial condition and liquidity. However, a material adverse outcome in one or more of these proceedings could have a material adverse impact on the results of operations in a particular quarter or fiscal year. Environmental Liabilities.The Companys U.S.operations are subject to extensive federal, state and local environmental laws and regulations. The major U.S.environmental laws to which the Company is subject include, among others, the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, also known as the Superfund law), the Toxic Substances Control Act, the Federal Water Pollution Control Act, and the Hazardous Materials Transportation Act. CERCLA can impose joint and several liabilities for cleanup and investigation costs, without regard to fault or legality of the original conduct, on current and predecessor owners and operators of a site, as well as those who generate, or arrange for the disposal of, hazardous substances. The Company does not believe that compliance with the requirements imposed by the environmental legislation will impair its competitive capability or result in any material additional capital expenditures, operating or maintenance costs. The Company is, however, subject to environmental remediation costs as described below. The Companys Mexico operations are subject to Mexican federal and state laws and regulations relating to the protection of the environment through the establishment of standards for water discharge, water supply, emissions, noise pollution, hazardous substances and transportation and handling of hazardous and solid waste. The Mexican government may bring administrative and criminal proceedings and impose economic sanctions again |
Geographic Information
Geographic Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Geographic Information [Abstract] | |
Geographic Information | 11. Geographic Information The Company strategically manages its rail operations as one reportable business segment over a coordinated rail network that extends from the midwest and southeast portions of the United States south into Mexico and connects with other ClassI railroads. Financial information reported at this level, such as revenues, operating income and cash flows from operations, is used by corporate management, including the Companys chief operating decision-maker, in evaluating overall financial and operational performance, market strategies, as well as the decisions to allocate capital resources. The following tables (in millions) provide information by geographic area in accordance with the accounting guidance on segment reporting: Three Months Nine Months Ended September30, Ended September30, Revenues 2009 2008 2009 2008 U.S. $ 227.8 $ 276.3 $ 634.9 $ 786.1 Mexico 158.3 215.2 438.5 642.2 Total revenues $ 386.1 $ 491.5 $ 1,073.4 $ 1,428.3 September30, December31, Long-lived assets 2009 2008 U.S. $ 2,482.5 $ 2,342.1 Mexico 2,245.3 2,256.3 Total long-lived assets $ 4,727.8 $ 4,598.4 |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Condensed Consolidating Financial Information [Abstract] | |
Condensed Consolidating Financial Information | 12. Condensed Consolidating Financial Information KCSR has outstanding $275.0million of 8.0%Senior Notes due 2015 and $190.0million of 13.0%Senior Notes due 2013, which are unsecured obligations of KCSR and are also jointly and severally and fully and unconditionally guaranteed on an unsecured senior basis by KCS and certain wholly-owned domestic subsidiaries. As a result, the following accompanying condensed consolidating financial information (in millions) has been prepared and presented pursuant to SEC RegulationS-X Rule3-10 Financial statements of guarantors and issuers of guaranteed securities registered or being registered. This condensed information is not intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with U.S.GAAP. The 8.0%Senior Notes were registered by means of an amendment to KCS shelf registration statement filed and declared effective by the SEC on May23, 2008. The 13.0%Senior Notes were registered under KCS shelf registration statement filed and declared effective by the SEC on November21, 2008. CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS Three Months Ended September30, 2009 Guarantor Non-Guarantor Consolidating Consolidated Parent KCSR Subsidiaries Subsidiaries Adjustments KCS Revenues $ $ 200.3 $ 4.6 $ 189.4 $ (8.2 ) $ 386.1 Operating expenses 0.7 157.3 4.5 148.0 (8.8 ) 301.7 Operating income (loss) (0.7 ) 43.0 0.1 41.4 0.6 84.4 Equity in net earnings of unconsolidated affiliates 29.8 0.3 10.7 (38.9 ) 1.9 Interest income (expense) (0.1 ) (14.6 ) 1.6 (28.7 ) 0.6 (41.2 ) Foreign exchange loss (1.5 ) (1.5 ) Other income, net 0.1 0.7 0.7 (1.2 ) 0.3 Income before income taxes and noncontrolling interest 29.1 29.4 1.7 22.6 (38.9 ) 43.9 Income tax expense 0.5 10.0 0.7 3.7 14.9 Net income 28.6 19.4 1.0 18.9 (38.9 ) 29.0 Noncontrolling interest 0.4 0.4 Net income attributable to Kansas City Southern and subsidiaries $ 28.6 $ 19.4 $ 1.0 $ 18.5 $ (38.9 ) $ 28.6 |