SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 24, 2001
KANSAS CITY SOUTHERN INDUSTRIES, INC.
-------------------------------------
(Exact name of company as specified in its charter)
DELAWARE 1-4717 44-0663509
--------------------- ------------- -------------------
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) number) Identification Number)
114 West 11th Street, Kansas City, Missouri 64105
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code:
(816) 983 - 1303
Not Applicable
(Former name or former address if changed since last report)
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Document
(99) Additional Exhibits
99.1 Press Release issued by Kansas
City Southern Industries, Inc.
dated October 24, 2001 entitled,
"Kansas City Southern Industries
Reports Improved Third Quarter
Operating Results", is attached
hereto as Exhibit 99.1
99.2 The following schedules are
attached hereto as Exhibit 99.2-
Combined Kansas City Southern
Railway and Gateway Western
Operating Statements, Combined
Kansas City Southern
Railway/Gateway Western
Carloadings by Commodity and
Kansas City Southern Industries,
Inc. Preliminary Consolidated
Balance Sheets
Item 9. Regulation FD Disclosure
Kansas City Southern Industries, Inc. ("KCSI" or "Company") is furnishing under
Item 9 of this Current Report on Form 8-K the information included as Exhibit
99.1 and Exhibit 99.2 of this report. Exhibit 99.1 is the Company's press
release, dated October 24, 2001, announcing KCSI's third quarter and year to
date 2001 operating results. Included in Exhibit 99.2 are schedules regarding
certain financial information discussed at the Company's third quarter 2001
conference call.
The information included in this Current Report on Form 8-K, including Exhibit
99.1 and Exhibit 99.2, is furnished pursuant to Item 9 and shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that Section.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.
Kansas City Southern Industries, Inc.
Date: October 31, 2001 By: /s/ Louis G. Van Horn
----------------------------
Louis G. Van Horn
Vice President and Comptroller
(Principal Accounting Officer)
EXHIBIT 99.1
Date October 24, 2001
Kansas City Southern Media Contact: William Galligan 816-983-1551
Industries, Inc. william.h.galligan@kcsr.com
114 West 11th Street
Kansas City, MO 64105 NYSE Symbol: KSU
Kansas City Southern Industries Reports Improved
Third Quarter Operating Results
EARNINGS ANALYSIS AND COMMENTARY
KCSI reported third quarter 2001 income from continuing operations of $9.0
million (15(cent) per diluted share) compared to $2.6 million (5(cent) per
diluted share) in the third quarter of 2000. This $6.4 million (246%) quarter to
quarter increase resulted primarily from improvements in domestic operating
income of $1.5 million, equity earnings from Grupo Transportacion Ferroviaria
Mexicana S.A. de C.V. ("Grupo TFM") of $4.9 million and interest expense of $5.1
million. These improvements were partially offset by a $2.7 million increase in
the income tax provision. KCSI's consolidated third quarter 2001 revenue
increased $0.5 million and operating expenses declined $1.0 million compared to
the third quarter of 2000, resulting in the $1.5 million improvement in
operating income.
For the nine months ended September 30, 2001, income from continuing operations
was $20.0 million (33(cent) per diluted share) compared to $21.8 million
(37(cent) per diluted share) for the nine months ended September 30, 2000. This
$1.8 million period to period decline was primarily due to a $15.9 million
decrease in domestic operating income partially offset by a $4.7 million
increase in equity earnings from Grupo TFM, an $11.3 million decrease in
interest expense and a $3.4 million improvement in the income tax provision
(benefit). Our equity earnings for the nine months ended September 30, 2001
reflect the Company's proportionate share ($9.1 million) of the income recorded
by Grupo TFM relating to the reversion of certain concession assets to the
Mexican government.
DILUTED EARNINGS PER SHARE AND COMMON SHARES COMPARISONS (1)
Third Quarter Year to Date
------------- ------------
2001 2000 2001 2000
---- ---- ---- ----
Income from continuing operations:
U.S. operations $ 0.10 $ 0.09 $ 0.17 $ 0.31
Grupo TFM and PCRC (including
associated interest) 0.05 (0.04) 0.16 0.06
-------- -------- ------- -------
Income from continuing operations 0.15 0.05 0.33 0.37
Extraordinary debt retirement costs, net
of income tax - (0.05) - (0.15)
Cumulative effect of accounting change,
net of income tax(2) - - (0.01) -
-------- -------- ------- -------
Total diluted earnings per share
from continuing operations,
adjusted for the extraordinary
items and cumulative effect
of accounting change 0.15 0.00 $ 0.32 $ 0.22
-------- -------- ------- -------
Common Shares Outstanding
(thousands):
Weighted Average Diluted 61,171 58,858 60,934 58,104
Actual 58,776 58,123 58,776 58,123
(1)Earnings per share and common share information for each period presented
reflect a one-for-two reverse stock split that occurred on July 12, 2000 in
conjunction with the spin-off of Stilwell Financial Inc., the Company's
formerly owned financial services segment.
(2)Reflects the adoption of Statement of Financial Accounting Standard No.
133, Accounting for Derivative Instruments and Hedging Activities.
THIRD QUARTER
KCSI is comprised of, among others, The Kansas City Southern Railway Company
("KCSR"), Gateway Western Railway Company ("Gateway Western") and equity
investments in Grupo TFM, Mexrail, Inc. ("Mexrail"), Southern Capital
Corporation ("Southern Capital") and Panama Canal Railway Company ("PCRC").
KCSI reported income from continuing operations of $9.0 million for the three
months ended September 30, 2001 compared to $2.6 million in the same 2000
period.
KCSI's consolidated third quarter 2001 revenues totaled $144.6 million compared
to $144.1 million in the third quarter of 2000. This increase resulted from
slightly higher KCSR/Gateway Western revenues ($0.2 million) and increases at
certain other subsidiaries ($0.3 million). KCSR/Gateway Western revenue growth
was driven primarily by strength in coal revenues, which improved 15% quarter to
quarter. Net tons of coal shipped increased approximately 8% quarter to quarter
due to certain utility plants that increased deliveries to replenish depleted
stockpiles and to satisfy weather-related demands. Additionally, a coal-burning
utility plant that had been out of service since January 1999 began taking
shipments in the second quarter of 2001. Quarter to quarter revenue increases
also occurred for certain lumber products, domestic grain, plastics, certain
chemical products and military shipments. These improvements were partially
offset by overall quarter to quarter revenue decreases for chemical and
petroleum products, agriculture and mineral products and intermodal products,
primarily reflecting the existing slow economic conditions.
KCSI's consolidated costs and expenses declined $1 million in the third quarter
of 2001 to $128.6 million compared to $129.6 million in the third quarter of
2000. This resulted from a $5.5 million decrease in KCSR/Gateway Western
expenses offset by a $4.5 million increase in expenses at certain other
subsidiaries (primarily comprised of a $3.0 million reduction to the allowance
for doubtful accounts recorded in the third quarter of 2000 at the KCSI Holding
Company). Quarter to quarter declines in salaries and wages ($1.5 million), fuel
($0.7 million), car hire ($0.6 million) and casualties and insurance ($6.0
million) were partially offset by increases in purchased services ($2.4
million), fringe benefits ($0.3 million) and other expenses ($0.6 million).
Lower costs for salaries and wages reflect the employee headcount reductions
effected in March 2001, while lower car hire expense reflects the continuing
reduction in foreign rail cars on the Company's system. Casualties and insurance
expense improved quarter to quarter primarily as a result of $4.2 million
recorded in the third quarter of 2000 for the adverse judgment in the Duncan
lawsuit. Excluding this $4.2 million, KCSR/Gateway Western costs and expenses
improved $1.3 million quarter to quarter. The KCSR/Gateway Western operating
ratio for third quarter 2001 was 85.9% compared to 89.9% (87.0% excluding the
impact of the Duncan case) in the same 2000 period.
Excluding the impact of the extraordinary item in 2000 discussed below, equity
earnings related to the Company's investment in Grupo TFM increased $4.9 million
to $7.5 million in the third quarter of 2001 from $2.6 million in the third
quarter of 2000. Grupo TFM revenues increased 2% to $168.0 million in the third
quarter of 2001 from $165.2 million in the third quarter of 2000, while total
costs and expenses dropped 3% quarter to quarter, leading to an improved
operating profit of nearly 20% (computed under accounting principles generally
accepted in the United States of America - "U.S. GAAP"). Lower costs for fuel,
car hire and losses associated with the sale of operating property were
partially offset by higher employee costs, purchased services and lease expense.
Under International Accounting Standards, TFM's operating ratio was 75.6% for
the third quarter of 2001 compared to 76.9% for the third quarter of 2000.
Additionally, third quarter 2001 results include a deferred tax benefit of $12.0
million (calculated under U.S. GAAP) compared to a deferred tax expense of $10.7
million for the third quarter of 2000. The variance in the deferred tax
calculation of Grupo TFM is mostly attributable to fluctuations in the peso
exchange rate and inflation in Mexico. The Company reports its equity in Grupo
TFM under U.S. GAAP while Grupo TFM reports under International Accounting
Standards.
Equity earnings from the Company's investment in Mexrail declined $1.2 million
quarter to quarter, while equity earnings from Southern Capital improved
slightly. Additionally, the reconstruction of the rail line in Panama was
completed in July 2001 and the operations of PCRC have commenced. During the
third quarter of 2001, the Company recorded equity losses of approximately $0.9
million from its investment in PCRC relating mostly to costs associated with the
start-up of the business.
KCSI's consolidated interest expense for the third quarter of 2001 decreased
$5.1 million (28%) from the prior year quarter primarily as a result of lower
interest rates on our variable rate debt and lower amortization of debt issuance
costs due to the refinancing of debt in the third quarter of 2000 (see below).
During the third quarter of 2000, the Company refinanced $200 million of bank
debt with a $200 million offering of 8-year senior unsecured notes. In
connection with this refinancing, KCSI recorded extraordinary debt retirement
costs of approximately $1.1 million (net of income taxes). Additionally, during
the third quarter of 2000, Grupo TFM refinanced $300 million of bank debt with a
U.S. Commercial Paper program. KCSI recorded its proportionate share of
extraordinary debt retirement costs of $1.7 million (net of income taxes)
related to this refinancing by Grupo TFM. Total third quarter 2000 extraordinary
charges of $2.8 million, or 5(cent) per diluted share, reduced income from
continuing operations from $2.6 million to a loss of $0.2 million.
YEAR TO DATE
The Company's income from continuing operations for the nine months ended
September 30, 2001 totaled $20.0 million versus $21.8 million in the same 2000
period.
KCSI's consolidated revenues totaled $431.8 million for the nine months ended
September 30, 2001 compared to $437.4 million for the nine months ended
September 30, 2000. This $5.6 million decline resulted from lower KCSR/Gateway
Western revenues of approximately $7.8 million partially offset by higher
revenues from certain other subsidiaries. Year to date 2001 revenue growth
occurred in certain commodities, including coal (6%), automotive (102%),
plastics (13%), military/other (41%) and certain forest and chemical
commodities. These revenue improvements, however, were offset by overall
declines in chemical and petroleum products (3%), agriculture and mineral
products (9%), paper and forest products (4%) and intermodal revenues (12%)
resulting mostly from lower production due to the continued weakness in the U.S.
economy. Agriculture and mineral product revenues were also affected by lower
domestic grain shipments due a general decline in poultry production in the
United States, which resulted in decreased demand for grain deliveries to our
customers.
KCSI's consolidated costs and expenses increased $10.3 million (3%) to $396.8
million for the first nine months of 2001 compared to $386.5 million for the
same 2000 period, resulting from higher KCSR/Gateway Western expenses of $3.4
million and higher expenses at certain other subsidiaries of $6.9 million
(driven by the $3.0 million reduction of the allowance for doubtful accounts
discussed above in the third quarter analysis). The increase in KCSR/Gateway
Western expenses was mostly attributable to a $4.6 million increase in car hire
costs and a $3.1 million increase in casualties and insurance costs partially
offset by a $2.5 million decline in salaries and wages expense. Contributing to
the increase in car hire expense was a higher number of freight cars from other
railroads on the Company's rail line coupled with a lower number of KCSR freight
cars being used by other railroads. Also contributing to the increase in car
hire expense was the larger number of auto rack cars being used to serve the
increase in automotive traffic period to period. Casualty and insurance costs
rose primarily due to several significant first quarter 2001 derailments and the
settlement of personal injury claims. Excluding the impact of the $4.2 million
judgment in the Duncan case discussed above, casualty and insurance costs would
have risen $7.3 million period to period. Salaries and wage expense declined
period to period due mostly to employee headcount reductions in March 2001.
Excluding the impact of the extraordinary item in 2000 discussed above, equity
earnings from the Company's investment in Grupo TFM increased $4.7 million to
$23.5 million for the nine months ended September 30, 2001 versus $18.8 million
for the nine months ended September 30, 2000. During the first quarter of 2001,
TFM recorded approximately $54 million of pre-tax income relating to the
reversion of certain concession assets to the Mexican government. The Company's
year to date 2001 equity earnings from Grupo TFM reflect our proportionate share
of this income of approximately $9.1 million. Grupo TFM's revenues increased
4.4% to $496.0 million for the first nine months of 2001 from $475.2 million for
the first nine months of 2000. These higher revenues were offset by an
approximate 9% increase in operating expenses (exclusive of the income related
to the reversion of certain concession assets to the Mexican government)
resulting in a period to period decline in ongoing operating income of
approximately 9%. Under U.S. GAAP, the deferred tax expense for Grupo TFM was
$12.6 million for the nine months ended September 30, 2001 compared to a
deferred tax benefit of $18.9 million (excluding the impact of the extraordinary
item) for the same period in 2000.
Similar to the third quarter of 2001, the Company's interest expense for the
nine months ended September 30, 2001 declined $11.3 million compared to the nine
months ended September 30, 2000 due to lower borrowing rates.
Effective January 1, 2001 the Company implemented Statement of Financial
Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FAS 133"). As a result of this change in the method of accounting
for derivative financial instruments, the Company recorded an after-tax charge
to earnings of $0.4 million in the first quarter of 2001. This charge is
presented as a cumulative effect of an accounting change in the accompanying
consolidated condensed statements of income for the nine months ended September
30, 2001. In the first quarter of 2000, the Company completed a debt refinancing
whereby it retired approximately $400 million of its debt securities prior to
maturity. Accordingly, the Company recorded debt retirement costs of
approximately $5.9 million (after-tax) in the first quarter of 2000. This is
presented as an extraordinary item in the accompanying consolidated condensed
statements of income for the nine months ended September 30, 2000. During the
third quarter of 2000, the Company and Grupo TFM refinanced certain debt
instruments and recorded extraordinary debt retirement costs of $1.1 million and
$1.7 million, respectively, as further described above in the third quarter
analysis. These items are presented as extraordinary items in the accompanying
consolidated condensed statements of income for the nine months ended September
30, 2000.
BUSINESS OUTLOOK
Michael R. Haverty, KCSI Chairman, President and Chief Executive Officer said,
"Despite the economic turmoil currently facing our country, our domestic
revenues and cost structure showed signs of improvement during the third quarter
of 2001 compared to the third quarter of 2000 and the previous two quarters of
2001. Leading the way has been the strength of our coal revenues, which
increased 15% for the third quarter of 2001 and 6% for the first nine months of
2001 compared to the same periods in 2000. Overall, however, most commodities
have remained weak in the midst of the slumping economy and we expect fourth
quarter revenues to remain relatively flat compared to the third quarter of
2001. A significant improvement in our various commodity sectors is not expected
to occur until an economic recovery begins.
As the year has unfolded, our cost structure has continued to improve. Third
quarter costs and expenses for KCSR/Gateway Western have improved 4% compared to
the third quarter of 2000 and 1% and 7% compared to the second and first
quarters of 2001, respectively. Consequently, the operating ratio for the third
quarter of 2001 improved compared to the third quarter of 2000 and the first two
quarters of 2001. We expect continued improvement in costs and expenses during
the fourth quarter.
Equity earnings from our investment in Grupo TFM continue to provide a
significant contribution to our earnings. During the third quarter and year to
date 2001, equity earnings from our investment in Grupo TFM increased $4.9
million and $4.7 million, respectively. Grupo TFM increased its revenues
approximately 2% during the third quarter of 2001 and 4% during year to date
2001 compared to the same periods in 2000, despite the current economic
slowdown, which affects not only the United States but has also had a profound
impact on the Mexican economy. During this tough economic environment, it is an
accomplishment that Grupo TFM has continued to increase its revenues while at
the same time has managed its cost structure to maintain an operating ratio in
the mid-70% range. Grupo TFM reduced its cost structure during the third quarter
of 2001 compared to the third quarter of 2000 and the first two quarters of 2001
and we expect Grupo TFM management to continue to focus on cost containment in
the fourth quarter.
We and our partner, Transportacion Maritima Mexicana, S.A. de C.V., have
announced our intention to exercise our call and cause TFM to purchase the 24.6%
interest in Grupo TFM currently held by the Mexican government. This transaction
was delayed due to the events of September 11, 2001, and we currently expect TFM
to complete the purchase of the Mexican government's 24.6% ownership in Grupo
TFM during the fourth quarter of 2001. We believe this is an opportunity to add
value to a vital component of our NAFTA franchise. Additionally, we are excited
about the commencement of operations in Panama in July 2001, which should
provide us with opportunities for future earnings growth beginning in the latter
part of 2002.
Following the tragic events of September 11, we, like most other industries,
have experienced a period of uncertainty. During this time of national crisis,
our team of security personnel has done an excellent job of ensuring the
security and integrity of our operations and we commend them for their continued
efforts. As we move forward in these uncertain economic times, we will respond
appropriately. Our physical plant is currently in excellent condition, partly
because of the substantial capital expenditures made from 1996-2000, which
averaged approximately 17% of revenues during that time span. Because of this,
until the economy begins to recover, we expect to be able to limit the amount
and nature of our capital expenditures without compromising the quality and
safety of our physical plant. Additionally, we will continue to focus our
efforts on reducing costs without disrupting our service quality. As always, we
will continue to look for opportunities to increase our revenue base and reduce
our debt load. As evidenced by the cost reduction strategy we implemented during
the first quarter of 2001, we have been proactive in response to a difficult and
changing environment.
During these volatile times in the equity markets, we appreciate the support and
long-term commitment of our shareholders and will continue to take the actions
that we believe are necessary to improve the value of our NAFTA franchise and
build long-term shareholder value."
(Note: Unless otherwise indicated above, the operating results and related
amounts included herein for the three and nine months ended September 30, 2000
were derived from the Form 10-Q/A for the third quarter of 2000. These amounts
reflect the adjustment made related to the Duncan legal case verdict, which was
received subsequent to our third quarter 2000 earnings press release.)
This press release includes statements concerning potential future events
involving the Company, which could materially differ from the events that
actually occur. The differences could be caused by a number of factors including
those factors identified in KCSI's December 31, 2000 Form 10-K and the Current
Report on Form 8-K/A dated June 3, 1997, each filed by the Company with the
Securities and Exchange Commission ("SEC") (Commission file no. 1-4717) and
those factors identified in the "Risk Factors" section of the Company's
Registration Statement on Form S-4, as amended and declared effective on March
15, 2001, which is on file with the SEC (File No. 333-54262), and those factors
identified in the "Risk Factors" section of the Company's Registration Statement
on Form S-3, as amended and declared effective on June 5, 2001, which is on file
with the SEC (File No. 333-61006). The Company will not update any
forward-looking statements in this press release to reflect future events or
developments.
(Financial Information Attached)
KANSAS CITY SOUTHERN INDUSTRIES, INC. and SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(excludes Stilwell Financial Inc.)
(dollars in millions, except per share data)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
2001 2000 2001 2000
----------- ---------- ---------- ----------
Revenues $ 144.6 $ 144.1 $ 431.8 $ 437.4
Costs and expenses 113.9 115.8 353.2 344.1
Depreciation and amortization 14.7 13.8 43.6 42.4
----------- ---------- ---------- ----------
Operating income 16.0 14.5 35.0 50.9
Equity in net earnings (losses) of unconsolidated affiliates:
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.
(preliminary) 7.5 2.6 23.5 18.8
Other (0.6) 1.5 (0.2) 3.3
Interest expense (13.2) (18.3) (42.9) (54.2)
Other, net 0.9 1.2 3.0 4.8
----------- ---------- ---------- ----------
Income from continuing operations before income taxes,
extraordinary items and cumulative effect of accounting change 10.6 1.5 18.4 23.6
Income tax provision (benefit) 1.6 (1.1) (1.6) 1.8
----------- ---------- ---------- ----------
Income from continuing operations before extraordinary items
and cumulative effect of accounting change 9.0 2.6 20.0 21.8
Extraordinary items, net of income taxes:
Debt retirement costs - (1.1) - (7.0)
Debt retirement costs - TFM - (1.7) - (1.7)
Cumulative effect of accounting change, net of income taxes - - (0.4) -
----------- ---------- ---------- ----------
Income from continuing operations, net of extraordinary items
and cumulative effect of accounting change $ 9.0 $ (0.2) $ 19.6 $ 13.1
----------- ---------- ---------- ----------
Per Share Data:
Basic Weighted Average Common shares outstanding (in thousands) 58,656 57,478 58,442 56,353
Basic Earnings (Loss) per Common share from continuing operations $ 0.15 $ 0.05 $ 0.34 $ 0.38
Extraordinary items - (0.05) - (0.15)
Cumulative effect of accounting change - - (0.01) -
----------- ---------- ---------- ----------
Basic Earnings per Common share, net of extraordinary
items and cumulative effect operations
of accounting change $ 0.15 $ 0.00 $ 0.33 $ 0.23
----------- ---------- ---------- ----------
Diluted Weighted Average Common shares outstanding (in thousands) 61,171 58,858 60,934 58,104
Diluted Earnings (Loss) per Common share from continuing $ 0.15 $ 0.05 $ 0.33 $ 0.37
operations
Extraordinary items - (0.05) - (0.15)
Cumulative effect of accounting change - - (0.01) -
----------- ---------- ---------- ----------
Diluted Earnings per Common share, net of
extraordinary items and cumulative effect
of accounting change $ 0.15 $ 0.00 $ 0.32 $ 0.22
----------- ---------- ---------- ----------
KANSAS CITY SOUTHERN INDUSTRIES, INC. and SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(includes discontinued operations (1))
(dollars in millions, except per share data)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
2001 2000 2001 2000
----------- ---------- ---------- ----------
Revenues $ 144.6 $ 144.1 $ 431.8 $ 437.4
Costs and expenses 113.9 115.8 353.2 344.1
Depreciation and amortization 14.7 13.8 43.6 42.4
----------- ---------- ---------- ----------
Operating income 16.0 14.5 35.0 50.9
Equity in net earnings (losses) of unconsolidated affiliates:
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.(preliminary) 7.5 2.6 23.5 18.8
Other (0.6) 1.5 (0.2) 3.3
Interest expense (13.2) (18.3) (42.9) (54.2)
Other, net 0.9 1.2 3.0 4.8
----------- ---------- ---------- ----------
Income from continuing operations before income taxes,
extraordinary items and cumulative effect of accounting change 10.6 1.5 18.4 23.6
Income tax provision (benefit) 1.6 (1.1) (1.6) 1.8
----------- ---------- ---------- ----------
Income from continuing operations before extraordinary items
and cumulative effect of accounting change 9.0 2.6 20.0 21.8
Income from discontinued operations (1) (net of income taxes) - 23.4 - 363.8
----------- ---------- ---------- ----------
Income before extraordinary items and cumulative effect of
accounting change 9.0 26.0 20.0 385.6
Extraordinary items, net of income taxes:
Debt retirement costs - (1.1) - (7.0)
Debt retirement costs - TFM - (1.7) - (1.7)
Cumulative effect of accounting change, net of income taxes - - (0.4) -
----------- ---------- ---------- ----------
Net income $ 9.0 $ 23.2 $ 19.6 $ 376.9
----------- ---------- ---------- ----------
Per Share Data:
Basic Weighted Average Common shares outstanding (in thousands) 58,656 57,478 58,442 56,353
Basic Earnings per Common share
Continuing operations $ 0.15 $ 0.05 $ 0.34 $ 0.38
Discontinued operations - 0.40 - 6.46
----------- ---------- ---------- ----------
Basic Earnings (Loss) per Common share before extraordinary items
and cumulative effect of accounting change 0.15 0.45 0.34 6.84
Extraordinary items - (0.05) - (0.15)
Cumulative effect of accounting change - - (0.01) -
----------- ---------- ---------- ----------
Basic Earnings per Common share $ 0.15 $ 0.40 $ 0.33 $ 6.69
----------- ---------- ---------- ----------
Diluted Weighted Average Common shares outstanding (in thousands) 61,171 58,858 60,934 58,104
Diluted Earnings per Common share
Continuing operations $ 0.15 $ 0.05 $ 0.33 $ 0.37
Discontinued operations - 0.39 - 6.17
----------- ---------- ---------- ----------
Diluted Earnings (Loss) per Common share before extraordinary items
and cumulative effect of accounting change 0.15 0.44 0.33 6.54
Extraordinary items - (0.05) - (0.15)
Cumulative effect of accounting change - - (0.01) -
----------- ---------- ---------- ----------
Diluted Earnings per Common share $ 0.15 $ 0.39 $ 0.32 $ 6.39
(1) - Stilwell Financial Inc., the Company's formerly owned financial services segment
EXHIBIT 99.2
Combined KCSR and Gateway Western
Operating Statements
Dollars in Millions
Third Quarter Third Quarter Nine Months Nine Months
2001 2000* 2001 2000*
------------------- ------------------- ------------------- ------------------
Revenues
Freight Revenue $ 87.0 $ 87.5 $ 253.4 $ 265.9
Intermodal and Automotive Revenue 14.3 15.7 50.9 46.4
Unit Coal Revenue 30.3 26.7 84.8 81.4
Haulage Revenue 3.4 2.9 9.6 9.0
Other Revenue 7.7 9.7 24.3 28.1
------------------- ------------------- ------------------- ------------------
Total Revenues 142.7 142.5 423.0 430.8
------------------- ------------------- ------------------- ------------------
Operating Expenses
Salaries & Wages 33.5 35.0 101.1 103.6
Fringe Benefits 14.1 13.8 40.4 41.3
Fuel 11.5 12.2 35.3 35.3
Material and Supplies 7.5 7.5 22.1 23.6
Car Hire 3.5 4.1 15.7 11.1
Purchased Services 13.5 11.1 37.0 35.9
Casualties & Insurance 5.8 11.8 27.6 24.5
Other 2.6 2.0 7.6 6.1
------------------- ------------------- ------------------- ------------------
Net Operating Expenses 92.0 97.5 286.8 281.4
------------------- ------------------- ------------------- ------------------
Fixed Expenses
Leases, Net 13.6 13.9 40.9 42.5
Depreciation 13.7 13.0 40.7 39.4
Taxes (Other Than Income) 3.3 3.7 9.5 11.2
------------------- ------------------- ------------------- ------------------
Total Fixed Expenses 30.6 30.6 91.1 93.1
------------------- ------------------- ------------------- ------------------
Total Expenses 122.6 128.1 377.9 374.5
------------------- ------------------- ------------------- ------------------
Operating Income $ 20.1 $ 14.4 $ 45.1 $ 56.3
* 2000 Casualites and Insurance Expense includes $4.2 million adjustment related to Duncan legal case.
Combined Kansas City Southern Railway/Gateway Western
Carloadings By Commodity - Year to Date September 30, 2001
Dollars in Thousands
Carloadings Revenue
Year to Date Year to Date
----------------------------------------------- ---------------------------------------------
2001 2000 % Change 2001 2000 % Change
--------------- -------------- ------------ ------------- ------------- -----------
Coal
144,267 141,498 2.0% Unit Coal $ 84,836 $ 81,406 4.2%
3,726 2,302 61.9% Other Coal 2,120 866 144.8%
--------------- -------------- ------------- -------------
147,993 143,800 2.9% Total 86,956 82,272 5.7%
Chemical & Petroleum Products
4,927 6,989 (29.5)% Agri Chemicals 3,913 4,934 (20.7)%
8,404 10,516 (20.1)% Gases 7,674 9,547 (19.6)%
16,779 19,697 (14.8)% Organic 16,864 18,651 (9.6)%
14,594 12,933 12.8% Inorganic 15,373 15,077 2.0%
45,882 47,572 (3.6)% Petroleum 28,870 29,536 (2.3)%
20,006 19,810 1.0% Plastics 20,257 17,999 12.5%
--------------- -------------- ------------- -------------
110,592 117,517 (5.9)% Total 92,951 95,744 (2.9)%
--------------- -------------- ------------- -------------
Agriculture and Minerals
35,809 38,208 (6.3)% Domestic Grain 24,569 27,746 (11.5)%
8,471 8,386 1.0% Export Grain 5,595 5,912 (5.4)%
19,766 22,264 (11.2)% Food Products 16,260 17,631 (7.8)%
17,951 20,018 (10.3)% Ores and Minerals 9,570 10,056 (4.8)%
11,479 12,925 (11.2)% Stone, Clay & Glass 8,482 9,511 (10.8)%
--------------- -------------- ------------- -------------
93,476 101,801 (8.2)% Total 64,476 70,856 (9.0)%
--------------- -------------- ------------- -------------
Paper & Forest Products
63,248 68,974 (8.3)% Pulp/Paper 44,665 48,067 (7.1)%
5,078 5,243 (3.1)% Scrap Paper 2,740 2,846 (3.7)%
26,946 26,038 3.5% Pulpwood/Logchips 11,185 10,336 8.2%
19,967 21,688 (7.9)% Lumber/Plywood 17,364 19,092 (9.1)%
16,286 19,519 (16.6)% Metal/Scrap 12,661 14,559 (13.0)%
6,858 5,960 15.1% Military/Other Carloads 8,692 6,182 40.6%
--------------- -------------- ------------- -------------
138,383 147,422 (6.1)% Total 97,307 101,082 (3.7)%
--------------- -------------- ------------- -------------
Intermodal & Automotive
28,642 14,987 91.1% Automotive 17,743 8,771 102.3%
192,042 179,678 6.9% Intermodal 33,137 37,617 (11.9)%
--------------- -------------- ------------- -------------
220,684 194,665 13.4% Total 50,880 46,388 9.7%
--------------- -------------- ------------- -------------
711,128 705,205 0.8% TOTAL FOR BUSINESS UNITS 392,570 396,342 (1.0)%
25,565 32,636 (21.7)% Haulage 9,644 9,021 6.9%
(7,028) (5,840) 20.3% Adjustments (3,479) (2,665) 30.5%
--------------- -------------- ------------- -------------
729,665 732,001 (0.3)% TOTAL $ 398,735 $ 402,698 (1.0)%
=============== ============== ============= =============
Combined Kansas City Southern Railway/Gateway Western
Carloadings By Commodity - Third Quarter 2001
Dollars in Thousands
Carloadings Revenue
Third Quarter Third Quarter
----------------------------------------------- ---------------------------------------------
2001 2000 % Change 2001 2000 % Change
--------------- -------------- ------------ ------------- ------------- -----------
Coal
51,953 48,522 7.1% Unit Coal $ 30,321 $ 26,689 13.6%
1,322 734 80.1% Other Coal 773 334 131.4%
--------------- -------------- ------------- -------------
53,275 49,256 8.2% 31,094 27,023 15.1%
Chemical & Petroleum Products
1,336 2,281 (41.4)% Agri Chemicals 1,067 1,613 (33.8)%
2,743 3,442 (20.3)% Gases 2,509 3,096 (19.0)%
5,392 6,400 (15.8)% Organic 5,514 6,050 (8.9)%
4,933 4,228 16.7% Inorganic 5,424 4,893 10.9%
12,697 16,168 (21.5)% Petroleum 9,064 9,599 (5.6)%
6,503 6,822 (4.7)% Plastics 6,605 6,328 4.4%
--------------- -------------- ------------- -------------
33,604 39,341 (14.6)% Total 30,183 31,579 (4.4)%
--------------- -------------- ------------- -------------
Agriculture and Minerals
11,313 11,417 (0.9)% Domestic Grain 8,120 8,054 0.8%
3,422 3,419 0.1% Export Grain 2,397 2,623 (8.6)%
6,557 7,719 (15.1)% Food Products 5,609 6,005 (6.6)%
6,366 6,841 (6.9)% Ores and Minerals 3,276 3,319 (1.3)%
3,923 4,069 (3.6)% Stone, Clay & Glass 2,906 2,958 (1.8)%
--------------- -------------- ------------- -------------
31,581 33,465 (5.6)% Total 22,308 22,959 (2.8)%
--------------- -------------- ------------- -------------
Paper & Forest Products
22,217 22,855 (2.8)% Pulp/Paper 16,230 16,567 (2.0)%
1,658 1,839 (9.8)% Scrap Paper 968 1,026 (5.7)%
9,214 7,984 15.4% Pulpwood/Logs/Chips 3,788 3,102 22.1%
7,143 6,996 2.1% Lumber/Plywood 6,293 6,145 2.4%
4,997 5,612 (11.0)% Metal/Scrap 3,931 4,200 (6.4)%
2,602 2,050 26.9% Military/Other carloads 3,625 2,550 42.2%
--------------- -------------- ------------- -------------
47,831 47,336 1.0% Total 34,835 33,590 3.7%
--------------- -------------- ------------- -------------
Intermodal & Automotive
4,899 4,969 (1.4)% Automotive 3,044 3,104 (1.9)%
65,469 68,414 (4.3)% Intermodal 11,278 12,612 (10.6)%
--------------- -------------- ------------- -------------
70,368 73,383 (4.1)% Total 14,322 15,716 (8.9)%
--------------- -------------- ------------- -------------
236,659 242,781 (2.5)% TOTAL FOR BUSINESS UNITS 132,742 130,867 1.4%
8,361 9,990 (16.3)% Haulage 3,353 2,904 15.5%
(2,031) (2,240) (9.3)% Adjustments (1,127) (932)
--------------- -------------- ------------- -------------
242,989 250,531 (3.0)% TOTAL $ 134,968 $ 132,839 1.6%
=============== ============== ============= =============
Kansas City Southern Industries, Inc.
Consolidated Balance Sheets Preliminary
Unaudited
(Dollars in Millions)
September 30, 2001 December 31, 2000
--------------------------- ---------------------------
Assets
Cash $ 26.9 $ 21.5
Accounts receivable 141.4 135.0
Inventories 28.8 34.0
Other current assets 19.0 25.9
--------------------------- ---------------------------
Total current assets 216.1 216.4
Investments held for operating purposes 379.9 358.2
Properties, net of depreciation 1,323.0 1,327.8
Other assets 43.4 42.1
--------------------------- ---------------------------
Total assets $ 1,962.4 $ 1,944.5
=========================== ===========================
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 42.8 $ 36.2
Accounts payable 48.3 52.9
Accrued liabilities 120.7 159.9
--------------------------- ---------------------------
Total current liabilities 211.8 249.0
Long-term debt 642.0 638.4
Deferred income taxes 347.4 332.2
Other 96.2 81.5
Stockholders' equity 665.0 643.4
--------------------------- ---------------------------
Total liabilities and stockholders' equity $ 1,962.4 $ 1,944.5
=========================== ===========================