| Document and Entity Information (USD $) | |||
| In Billions, except Share data | 3 Months Ended
Mar. 31, 2010 | Apr. 20, 2010
| Jun. 30, 2009
|
| Document and Entity Information [Abstract] | |||
| Entity Registrant Name | KANSAS CITY SOUTHERN | ||
| Entity Central Index Key | 0000054480 | ||
| Document Type | 10-Q | ||
| Document Period End Date | 2010-03-31 | ||
| Amendment Flag | false | ||
| Document Fiscal Year Focus | 2,010 | ||
| Document Fiscal Period Focus | Q1 | ||
| 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 | 1.49 | ||
| Entity Common Stock, Shares Outstanding (actual number) | 96,712,467 |
| Consolidated Statements of Operations (Unaudited) (USD $) | ||
| In Millions, except Share data in Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Consolidated Statements of Operations (Unaudited) [Abstract] | ||
| Revenues | 436.3 | $346 |
| Operating expenses: | ||
| Compensation and benefits | 90.7 | 78 |
| Purchased services | 44.9 | 45.6 |
| Fuel | 60.8 | 43.3 |
| Equipment costs | 38.7 | 39.1 |
| Depreciation and amortization | 45.8 | 46.9 |
| Casualties and insurance | 11.9 | 12.5 |
| Materials and other | 35.3 | 33 |
| Total operating expenses | 328.1 | 298.4 |
| Operating income | 108.2 | 47.6 |
| Equity in net earnings of unconsolidated affiliates | 6.4 | 1 |
| Interest expense | -44.4 | -41.8 |
| Debt retirement costs | -14.9 | -5.9 |
| Foreign exchange gain (loss) | 2.6 | -5.1 |
| Other income, net | 0.5 | 1.5 |
| Income (loss) before income taxes and noncontrolling interest | 58.4 | -2.7 |
| Income tax expense | 24.2 | 0.1 |
| Net income (loss) | 34.2 | -2.8 |
| Noncontrolling interest | -1.1 | -0.1 |
| Net income (loss) attributable to Kansas City Southern and subsidiaries | 35.3 | -2.7 |
| Preferred stock dividends | 2.7 | 5.4 |
| Net income (loss) available to common shareholders | 32.6 | -8.1 |
| Earnings (loss) per share: | ||
| Basic earnings (loss) per share | 0.34 | -0.09 |
| Diluted earnings (loss) per share | 0.34 | -0.09 |
| Average shares outstanding (in thousands): | ||
| Basic | 95,890 | 90,743 |
| Potentially dilutive common shares | 568 | |
| Diluted | 96,458 | 90,743 |
| Consolidated Balance Sheets (USD $) | |||||||||||||||||||
| In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 | |||||||||||||||||
| Current assets: | |||||||||||||||||||
| Cash and cash equivalents | 126.1 | [1] | 117.5 | ||||||||||||||||
| Accounts receivable, net | 169 | [1] | 139.4 | ||||||||||||||||
| Restricted funds | 34 | [1] | 35.8 | ||||||||||||||||
| Materials and supplies | 107.6 | [1] | 106.4 | ||||||||||||||||
| Deferred income taxes | 163.6 | [1] | 151.7 | ||||||||||||||||
| Other current assets | 61.5 | [1] | 63 | ||||||||||||||||
| Total current assets | 661.8 | [1] | 613.8 | ||||||||||||||||
| Investments | 53.5 | [1] | 46.8 | ||||||||||||||||
| Property and equipment (including concession assets), net | 4757.9 | [1] | 4722.4 | ||||||||||||||||
| Other assets | 75.9 | [1] | 71.3 | ||||||||||||||||
| Total assets | 5549.1 | [1] | 5454.3 | ||||||||||||||||
| Current liabilities: | |||||||||||||||||||
| Debt due within one year | 64.4 | [1] | 68.1 | ||||||||||||||||
| Accounts payable and accrued liabilities | 381.9 | [1] | 342.7 | ||||||||||||||||
| Total current liabilities | 446.3 | [1] | 410.8 | ||||||||||||||||
| Long-term debt | 1906.9 | [1] | 1911.9 | ||||||||||||||||
| Deferred income taxes | 583.1 | [1] | 558.6 | ||||||||||||||||
| Other noncurrent liabilities and deferred credits | 249.1 | [1] | 247.2 | ||||||||||||||||
| Total liabilities | 3185.4 | [1] | 3128.5 | ||||||||||||||||
| Commitments and contingencies | [1] | ||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||
| $.01 par, common stock, 400,000,000 shares authorized; 110,583,068 shares issued; 96,718,921 and 96,213,346 shares outstanding at March 31, 2010 and December 31, 2009, respectively | 1 | [1] | 0.9 | ||||||||||||||||
| Paid-in capital | 666.9 | [1] | 661.4 | ||||||||||||||||
| Retained earnings | 1411.3 | [1] | 1378.8 | ||||||||||||||||
| Accumulated other comprehensive loss | -3.5 | [1] | -4.4 | ||||||||||||||||
| Total stockholders' equity | 2,082 | [1] | 2,043 | ||||||||||||||||
| Noncontrolling interest | 281.7 | [1] | 282.8 | ||||||||||||||||
| Total equity | 2363.7 | [1] | 2325.8 | ||||||||||||||||
| Total liabilities and equity | 5549.1 | [1] | 5454.3 | ||||||||||||||||
| $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 $1000 per share | |||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||
| Preferred Stock | 0.2 | [1] | 0.2 | ||||||||||||||||
| [1]Unaudited | |||||||||||||||||||
| Consolidated Balance Sheets (Parenthetical) | |||||||||||||||||||
| Mar. 31, 2010
| Dec. 31, 2009
| 3 Months Ended
Mar. 31, 2010 $25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | 12 Months Ended
Dec. 31, 2009 $25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | Mar. 31, 2010
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | Dec. 31, 2009
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued, 242,170 shares outstanding | 3 Months Ended
Mar. 31, 2010 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 $1000 per share | 12 Months Ended
Dec. 31, 2009 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 $1000 per share | Mar. 31, 2010
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 $1000 per share | Dec. 31, 2009
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 $1000 per share | ||||||||||
| Stockholders' equity: | |||||||||||||||||||
| Preferred stock, par value | 25 | [1] | 25 | 1 | [1] | 1 | |||||||||||||
| Preferred stock, shares authorized (actual number) | 840,000 | [1] | 840,000 | 210,000 | [1] | 210,000 | |||||||||||||
| Preferred stock, shares issued (actual number) | 649,736 | [1] | 649,736 | 210,000 | [1] | 210,000 | |||||||||||||
| Preferred stock, shares outstanding (actual number) | 242,170 | [1] | 242,170 | 209,995 | [1] | 209,995 | |||||||||||||
| Cumulative perpetual preferred stock liquidation preference | 1,000 | [1] | 1,000 | ||||||||||||||||
| Preferred stock dividend rate | 4% | [1] | 4% | 5.125% | [1] | 5.125% | |||||||||||||
| 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] | 110,583,068 | ||||||||||||||||
| Common stock, shares outstanding (actual number) | 96,718,921 | [1] | 96,213,346 | ||||||||||||||||
| [1]Unaudited | |||||||||||||||||||
| Consolidated Statements of Cash Flows (Unaudited) (USD $) | |||||||||||||||||||
| In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 | |||||||||||||||||
| Operating activities: | |||||||||||||||||||
| Net income (loss) | 34.2 | -2.8 | |||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||
| Depreciation and amortization | 45.8 | 46.9 | |||||||||||||||||
| Deferred income taxes | 23.7 | -0.7 | |||||||||||||||||
| Equity in undistributed earnings of unconsolidated affiliates | -6.4 | (1) | |||||||||||||||||
| Share-based compensation | 3.2 | 2.1 | |||||||||||||||||
| Excess tax benefit from share-based compensation | -11.7 | ||||||||||||||||||
| Other deferred compensation | 1.5 | -1.6 | |||||||||||||||||
| Gain on sale of assets | (1) | ||||||||||||||||||
| Debt retirement costs | 14.9 | 5.9 | |||||||||||||||||
| Changes in working capital items: | |||||||||||||||||||
| Accounts receivable | -29.5 | 3.5 | |||||||||||||||||
| Materials and supplies | -0.9 | 1.2 | |||||||||||||||||
| Other current assets | 0.9 | 2.7 | |||||||||||||||||
| Accounts payable and accrued liabilities | 29.8 | 21.2 | |||||||||||||||||
| Other, net | 6 | 2.9 | |||||||||||||||||
| Net cash provided by operating activities | 111.5 | 79.3 | |||||||||||||||||
| Investing activities: | |||||||||||||||||||
| Capital expenditures | -52.3 | -115.4 | |||||||||||||||||
| Acquisition of an intermodal facility, net of cash acquired | (25) | ||||||||||||||||||
| Property investments in MSLLC | -4.8 | -17.8 | |||||||||||||||||
| Proceeds from disposal of property | 1.3 | 3.7 | |||||||||||||||||
| Other, net | (1) | -1.5 | |||||||||||||||||
| Net cash used for investing activities | -81.8 | (131) | |||||||||||||||||
| Financing activities: | |||||||||||||||||||
| Proceeds from issuance of long-term debt | 295.7 | 214 | |||||||||||||||||
| Repayment of long-term debt | -305.7 | -238.7 | |||||||||||||||||
| Debt costs | -20.6 | -9.3 | |||||||||||||||||
| Proceeds from employee stock plans | 0.5 | 0.3 | |||||||||||||||||
| Excess tax benefit from share-based compensation | 11.7 | ||||||||||||||||||
| Preferred stock dividends paid | -2.7 | -2.8 | |||||||||||||||||
| Net cash used for financing activities | -21.1 | -36.5 | |||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||
| Net increase (decrease) during each period | 8.6 | -88.2 | |||||||||||||||||
| At beginning of year | 117.5 | 229.9 | |||||||||||||||||
| At end of period | 126.1 | [1] | 141.7 | ||||||||||||||||
| [1]Unaudited | |||||||||||||||||||
| Accounting Policies, Interim Financial Statements and Basis of Presentation | |
| 3 Months Ended
Mar. 31, 2010 | |
| 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. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Companys Annual Report on Form10-K for the year ended December31, 2009. The results of operations for the three months ended March31, 2010 are not necessarily indicative of the results to be expected for the full year ending December31, 2010. 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 three months ended March31, 2010 presents capital expenditures on a cash basis. The accompanying consolidated cash flow statement for the three months ended March31, 2009 has been revised to present capital expenditures on a cash basis. This revision did not impact the change in cash and cash equivalents as previously reported, however, net cash provided by operating activities, capital expenditures and cash used by investing activities increased by $16.6million for the three months ended March31, 2009. This revision did not impact operating income or net income, working capital, or any earnings per share measures as previously reported. During the first quarter of 2010, the Company elected to change its accounting policy for rail grinding costs from a capitalization method to a direct expense method. Previously, the Company capitalized rail grinding costs as an improvement to the rail. The Company believes it is preferable to expense these costs as incurred to eliminate the subjectivity in determining the period of benefit associated with rail grinding over which to depreciate the associated capitalized costs. The Company has reflected this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Accounting Standards Codification 250 Accounting for Changes and Error Corrections. Comparative financial statements for all periods have been adjusted to apply the change in accounting principle retrospectively. The following line items in the consolidated statement of operations were affected by the change in accoun |
| Accounting Pronouncements | |
| 3 Months Ended
Mar. 31, 2010 | |
| Accounting Pronouncements [Abstract] | |
| Accounting Pronouncements | 2. Accounting Pronouncements Effective January1, 2010, the Company adopted the Financial Accounting Standards Board (the FASB) Accounting Standards Update (ASU) No.2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17). ASU 2009-17 addresses the elimination of certain exceptions to consolidating qualifying special-purpose entities, which means more entities will be subject to consolidation assessments and reassessments. The new guidance 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, ASU 2009-17 requires additional disclosures about a companys involvement with a VIE and any significant changes in risk exposure due to that involvement. The adoption of ASU 2009-17 did not have any impact on the Companys results of operations and financial condition. |
| Earnings (Loss) Per Share Data | |
| 3 Months Ended
Mar. 31, 2010 | |
| Earnings (Loss) Per Share Data [Abstract] | |
| Earnings (Loss) Per Share Data | 3. Earnings (Loss) Per Share Data Basic earnings (loss) per common share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Nonvested stock awards granted to employees and officers are included in weighted average shares as they are earned for purposes of computing basic earnings (loss) per common share. Diluted earnings (loss) per share adjusts basic earnings (loss) 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 (loss) per share computation to the shares used for the diluted earnings (loss) per share computation (in thousands): Three Months Ended March31, 2010 2009 Basic shares 95,890 90,743 Effect of dilution 568 Diluted shares 96,458 90,743 For the three months ended March31, 2010, the Company excluded from the computation of dilutive shares the assumed conversion of preferred stock to 7,000,000shares of common stock which was anti-dilutive and approximately 281,000 stock options because the impact would have been anti-dilutive as the option price was higher than the average market price. For the three months ended March31, 2009, the assumed conversion of preferred stock to 7,000,000shares of common stock and approximately 561,000 stock options were excluded from the computation of diluted shares because the impact would have been anti-dilutive due to the loss reported in the period. There are no reconciling items between net income (loss) available to common stockholders for purposes of basic earnings (loss) per share and net income (loss) available to common stockholders for purposes of diluted earnings (loss) per share. |
| Property and Equipment (including Concession Assets) | |
| 3 Months Ended
Mar. 31, 2010 | |
| Property and Equipment (including Concession Assets) [Abstract] | |
| Property and Equipment (including Concession Assets) | 4. Property and Equipment (including Concession Assets) Property and Equipment.Property and equipment, including concession assets, and related accumulated depreciation and amortization are summarized below (in millions): March31, December31, 2010 2009 Land $ 176.3 $ 162.9 Concession land rights 137.6 137.6 Road property 4,719.9 4,644.4 Equipment 691.0 679.3 Technology and other 127.0 125.3 Construction in progress 120.5 165.6 Total property 5,972.3 5,915.1 Accumulated depreciation and amortization 1,214.4 1,192.7 Net property $ 4,757.9 $ 4,722.4 Concession assets, net of accumulated amortization of $264.7million and $259.4million, totaled $1,774.7million and $1,768.0million at March31, 2010 and December31, 2009, respectively. |
| Fair Value Measurements | |
| 3 Months Ended
Mar. 31, 2010 | |
| 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. 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 $2,050.9million and $2,031.1million at March31, 2010 and December31, 2009, respectively. The financial statement carrying value was $1,971.3million and $1,980.0million at March31, 2010 and December31, 2009, 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. The following tables present the Companys 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 March31, 2010 Interest rate contracts $ $ (3.9 ) $ $ (3.9 ) Fuel swap contracts 0.6 0.6 Net assets (liabilities), at fair value $ $ (3.3 ) $ $ (3.3 ) Fair Value Measurements Net Assets (Liabilities) Level 1 Level 2 Level 3 at Fair Value December31, 2009 Interest rate contracts $ $ (4.9 ) $ $ (4.9 ) Net assets (liabilities), at fair value $ $ (4.9 ) $ $ (4.9 ) The Company de |
| Derivative Instruments | |
| 3 Months Ended
Mar. 31, 2010 | |
| 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. However, management intends to respond to evolving business and market conditions and in doing so, may enter into such transactions more frequently as deemed appropriate. Credit Risk.As a result of the use of derivative instruments, the Company is exposed to counterparty credit risk. The Company manages the counterparty credit risk by entering into contracts with large financial institutions with which the Company has an established banking relationship. As of March31, 2010, the Company did not expect any losses as a result of default of its counterparties. 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 the first quarter of 2010, the Company entered into fuel swap agreements, which have not been designated as hedging instruments. Gains and losses for derivatives which have not been designated as hedging instruments are recorded in fuel expense in the consolidated statement of operations. As of March31, 2010, the Company has outstanding fuel swap agreements for 19.7million gallons of diesel fuel purchases through the end of 2010 at an average swap price of $2.23 per gallon. 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 were recorded in earnings. The following table presents the fair value of derivative instruments included in the consolidated balance sheet (in millions): |
| Acquisition | |
| 3 Months Ended
Mar. 31, 2010 | |
| Acquisition [Abstract] | |
| Acquisition | 7. Acquisition On March3, 2010, the Company acquired an intermodal facility in Mexico. The aggregate purchase price for the intermodal facility was $25.0million, which was funded by existing cash reserves. The Company has determined that the acquisition is not material to the Companys consolidated financial statements; therefore, pro forma financial information is not presented. In addition, the Company has made a preliminary purchase allocation as of March31, 2010, based on incomplete valuations. The Company expects to complete the purchase valuation during the second quarter of 2010. |
| Long-Term Debt | |
| 3 Months Ended
Mar. 31, 2010 | |
| Long-Term Debt [Abstract] | |
| Long-Term Debt | 8. Long-Term Debt On January7, 2010, pursuant to an offer to purchase, Kansas City Southern de Mxico, S.A. de C.V. (KCSM), a wholly-owned subsidiary of KCS, commenced a cash tender offer for a portion of its 93/8%senior unsecured notes due May1, 2012 (the 93/8%Senior Notes). On January22, 2010, the Company purchased $290.0million of the tendered 93/8%Senior Notes in accordance with the terms and conditions of the tender offer set forth in the offer to purchase using the proceeds received from the issuance of $300.0million of KCSM 8.0%senior unsecured notes due February1, 2018 (the KCSM 8.0%Senior Notes). Additionally, on February1, 2010, KCSM purchased $6.3million of the 93/8%Senior Notes. KCSM recorded debt retirement costs of $14.9million in the first quarter of 2010. The remaining 93/8%Senior Notes mature on May1, 2012 and are redeemable by KCSM at its option. On January22, 2010, KCSM issued the $300.0million KCSM 8.0%Senior Notes, which bear interest semiannually at a fixed annual rate of 8.0%. The KCSM 8.0%Senior Notes were issued at a discount to par value, resulting in a $4.3million discount and a yield to maturity of 81/4%. KCSM used the net proceeds from the issuance of the KCSM 8.0%Senior Notes and cash on hand to purchase $290.0million in principal amount of the 93/8%Senior Notes tendered under an offer to purchase and pay all fees and expenses incurred in connection with the KCSM 8.0%Senior Notes offering and tender offer. The KCSM 8.0%Senior Notes are redeemable at KCSMs option, in whole or in part, on and after February1, 2014, at the following redemption prices (expressed as percentages of principal amount) plus any accrued and unpaid interest: 2014 104.000%, 2015 102.000%, 2016 100.000%. In addition, KCSM may redeem up to 35% of the KCSM 8.0%Senior Notes any time prior to February1, 2013 from the proceeds of the sale of capital stock in KCSM or KCS and are redeemable, in whole but not in part, at KCSMs option at their principal amount in the event of certain changes in the Mexican withholding tax rate. The KCSM 8.0%Senior Notes are denominated in dollars and are unsecured, unsubordinated obligations, rank pari passu in right of payment with KCSMs existing and future unsecured, unsubordinated obligations, and are senior in right of payment to KCSMs future subordinated indebtedness. In addition, the KCSM 8.0% Senior Notes include certain covenants which are customary for these types of debt instruments and borrowers with similar credit ratings. The KCSM 8.0%Senior Notes contain certain covenants that, among other things, prohibit or restrict KCSM from taking certain actions, including KCSMs ability to incur debt, pay dividends or make other distributions in respect of its stock, issue guarantees, enter into certain transaction with affiliates, make restricted payments, sell certain assets, create liens, engage in sale-leaseback transactions and engage in mergers, divestitures and consolidations. However, these limitations are subject to a number of important qualifications and exceptions. On March16, 2010, KCS and The Kansas City Southern Railway Company (KCSR), a wholly-owned subsidiary of KCS, en |
| Equity | |
| 3 Months Ended
Mar. 31, 2010 | |
| Equity [Abstract] | |
| Equity | 9. Equity The following table summarizes the changes in equity (in millions): Three Months Ended March31, 2010 Three Months Ended March31, 2009 Kansas City Kansas City Southern Southern Stockholders Noncontrolling Stockholders Noncontrolling Equity interest Total Equity Equity interest Total Equity Beginning Balance $ 2,043.0 $ 282.8 $ 2,325.8 $ 1,896.6 $ 273.7 $ 2,170.3 Comprehensive income (loss): Net income (loss) 35.3 (1.1 ) 34.2 (2.7 ) (0.1 ) (2.8 ) Unrealized gain (loss) on cash flow hedges, net of tax of $(0.2)million and $(0.9)million (0.4 ) (0.4 ) (1.4 ) (1.4 ) Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.6million and $0.5million 0.9 0.9 0.4 0.4 Cumulative translation adjustment FTVM, net of tax of $0.1million and $(0.4)million 0.4 0.4 0.1 0.1 Comprehensive income (loss) 36.2 (1.1 ) 35.1 (3.6 ) (0.1 ) (3.7 ) Dividends on $25par preferred stock (0.1 ) (0.1 ) (0.1 ) (0.1 ) Dividends on seriesD cumulative preferred stock (2.6 ) (2.6 ) (5.3 ) (5.3 ) Options exercised and stock subscribed, net of shares withheld for employee taxes (9.4 ) (9.4 ) 1.2 1.2 Tax benefit from share-based compensation 11.7 11.7 Share-based compensation 3.2 3.2 2.1 2.1 Ending Balance $ 2,082.0 $ 281.7 $ 2,363.7 $ 1,890.9 $ 273.6 $ 2,164.5 |
| Share-Based Compensation | |
| 3 Months Ended
Mar. 31, 2010 | |
| Share-Based Compensation [Abstract] | |
| Share-Based Compensation | 10. Share-Based Compensation Market Based Award.On March1, 2010 the Company granted approximately 191,000 stock options and 108,000 shares of nonvested stock (collectively, the Award) under the Kansas City Southern 2008 Stock Option and Performance Award Plan. The Award contains a market condition that accelerates the vesting in three tranches if the closing price of the Companys common stock is above certain target share prices, as set forth in the Award Agreement, for a period of thirty consecutive trading days. If the target share prices are not met, the Awards will vest in March 2013. The fair value and service period of each Award is estimated on the date of grant using the Monte Carlo simulation model. The weighted average fair value of stock options and nonvested stock granted during the three months ended March31, 2010 was $15.96 and $35.41, respectively, and the derived service period ranges from 1.1 to 3.0years. Stock Options.During the three months ended March31, 2010, 678,494 stock options with an intrinsic value of $16.6million were exercised. Cash received from option exercises during the period was $0.5million. Nonvested Stock.During the three months ended March31, 2010, 269,921shares vested and the fair value (at vest date) was $9.0million. |
| Commitments and Contingencies | |
| 3 Months Ended
Mar. 31, 2010 | |
| Commitments and Contingencies [Abstract] | |
| Commitments and Contingencies | 11. 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 months ended March31, 2010 and 2009, the concession duty expense, which is recorded within operating expenses, amounted to $1.0million and $0.7million, respectively. 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 against companies that violate environmental laws, and temporarily |
| Geographic Information | |
| 3 Months Ended
Mar. 31, 2010 | |
| Geographic Information [Abstract] | |
| Geographic Information | 12. Geographic Information The Company strategically manages its rail operations as one reportable business segment over a single 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 Companys strategic initiatives, which drive its operational direction, are developed and managed at the Companys headquarters and targets are communicated to its various regional activity centers. Corporate management is responsible for, among others, KCS marketing strategy, the oversight of large cross-border customer accounts, overall planning and control of infrastructure and rolling stock, the allocation of capital resources based upon growth and capacity constraints over the coordinated network, and other functions such as financial planning, accounting, and treasury. The role of each region is to manage the operational activities and monitor and control costs over the coordinated rail network. Such cost control is required to ensure that pre-established efficiency standards set at the corporate level are attained. The regional activity centers are responsible for executing the overall corporate strategy and operating plan established by corporate management as a coordinated system. The following tables (in millions) provide information by geographic area in accordance with the accounting guidance on segment reporting: Three Months Ended March31, Revenues 2010 2009 U.S. $ 245.5 $ 208.7 Mexico 190.8 137.3 Total revenues $ 436.3 $ 346.0 Property and equipment March31, December31, (including concession assets), net 2010 2009 U.S. $ 2,497.2 $ 2,482.7 Mexico 2,260.7 2,239.7 Total property and equipment (including concession assets), net $ 4,757.9 $ 4,722.4 |
| Condensed Consolidating Financial Information | |
| 3 Months Ended
Mar. 31, 2010 | |
| Condensed Consolidating Financial Information [Abstract] | |
| Condensed Consolidating Financial Information | 13. 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, which 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. The 8.0%Senior Notes were registered by means of an amendment to KCS shelf registration statement filed and automatically effective as of May23, 2008. The 13.0%Senior Notes were registered under KCS shelf registration statement filed and automatically effective as of November21, 2008. CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS Three Months Ended March31, 2010 Guarantor Non-Guarantor Consolidating Consolidated Parent KCSR Subsidiaries Subsidiaries Adjustments KCS Revenues $ $ 217.0 $ 4.0 $ 221.9 $ (6.6 ) $ 436.3 Operating expenses 1.1 163.1 6.7 164.4 (7.2 ) 328.1 Operating income (loss) (1.1 ) 53.9 (2.7 ) 57.5 0.6 108.2 Equity in net earnings of unconsolidated affiliates 31.8 3.4 9.3 (38.1 ) 6.4 Interest expense (0.1 ) (27.4 ) (28.0 ) 11.1 (44.4 ) Debt retirement costs (14.9 ) (14.9 ) Foreign exchange gain 2.6 2.6 Other income, net 10.3 1.0 0.9 (11.7 ) 0.5 Income (loss) before income taxes and noncontrolling interest 40.9 30.9 (2.7 ) 27.4 (38.1 ) 58.4 Income tax expense (benefit) 5.6 12.2 (1.0 ) 7.4 24.2 Net income (loss) 35.3 18.7 (1.7 ) 20.0 (38.1 ) 34.2 Noncontrolling interest (1.1 ) (1.1 ) Net income (loss) attributable to Kansas City Southern and subsidiaries $ 35.3 $ 18.7 $ (1.7 ) $ 21.1 $ (38.1 ) $ 35.3 |
