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):
MARCH 30, 2004
KANSAS CITY SOUTHERN
(Exact name of company as specified in its charter)
DELAWARE 1-4717 44-0663509
---------------------------- ------------------------ ----------------------
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification Number)
427 WEST 12TH STREET, KANSAS CITY, MISSOURI 64105
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(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 dated March 30, 2004 entitled,
"KCS Files 2003 Form 10-K with SEC; Reports
Final Earnings for 2003. KCS to seek
Renewed Authority From Mexican Competition
Commission," is attached hereto as Exhibit
99.1
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Kansas City Southern ("KCS" or "Company") is filing under Item 12 of this
Current Report on Form 8-K the information included as Exhibit 99.1 of this
report. Exhibit 99.1 is the Company's press release, dated March 30, 2004,
announcing that KCS has filed its 2003 Form 10-K reporting final earnings for
2003. Additionally, in an unrelated matter, the press release announced that the
Company is seeking renewed authority from the Mexican Competition Commission.
See Exhibit 99.1 for further information. Included in Exhibit 99.1 are schedules
regarding certain financial information contained within the Company's press
release dated March 30, 2004.
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
Date: March 31, 2004 By: /S/ RONALD G. RUSS
----------------------------------
Ronald G. Russ
Executive Vice President and Chief Financial Officer
EXHIBIT 99.1
KANSAS CITY SOUTHERN PRESS RELEASE
Cathedral Square - 427 West 12TH Street - P.O. Box 219335
Kansas City, Missouri 64121-9335 NYSE SYMBOL: KSU
Date: March 30, 2004
Media Contact: William H. Galligan Phone: 816/983-1551
william.h.galligan@kcsr.com
KCS FILES 2003 FORM 10-K WITH SEC; REPORTS FINAL EARNINGS RESULTS FOR 2003
KCS TO SEEK RENEWED AUTHORITY FROM MEXICAN COMPETITION COMMISSION
Kansas City Southern (KCS or the Company) (NYSE: KSU) today filed its Annual
Report on Form 10-K with the Securities and Exchange Commission (SEC), and
released its final earnings for the year ended December 31, 2003.
On January 29, 2004, KCS released its financial earnings results for 2003, which
included estimated equity earnings from Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V. (Grupo TFM). The 10-K filing today reflects an increase
in net income to $12.2 million from $11.2 million reported earlier, and a
corresponding $0.02 increase in 2003 annual earnings per share to $0.10 from
$0.08. These adjustments in earnings primarily resulted from additional U.S.
GAAP deferred tax adjustments at Grupo TFM.
Attached to this release is KCS's revised Consolidated Statement of Income for
2003. Also attached are further details of Grupo TFM's U.S. GAAP earnings, and a
reconciliation of these earnings to equity earnings reported by KCS. The Company
believes the additional information provides the investor with a better
understanding of those components of Grupo TFM's earnings and how they impact
KCS's net income.
In a separate matter, KCS announced it intends to seek renewed authority from
the Mexican Competition Commission (FCC) for the proposed NAFTA Rail
transaction. The FCC granted that authority on June 19, 2003, and the authority
was previously extended for 180 days by the Executive Secretary of the FCC. As a
procedural matter, the Executive Secretary of the FCC declined to
provide an
additional extension, consistent with past practice.
KCS is continuing to review its alternatives in light of the recent decision by
the AAA International Centre for Dispute Resolution that the Acquisition
Agreement remains valid and in effect. KCS remains committed to completing the
acquisition in accordance with the terms of the Acquisition Agreement.
KCS is comprised of, among others, The Kansas City Southern Railway Company, and
equity investments in Grupo TFM, Southern Capital Corporation, and Panama Canal
Railway Company.
KANSAS CITY SOUTHERN
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31, DECEMBER 31,
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2003 2002 2003 2002
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(UNAUDITED)
REVENUES $ 148.5 $ 144.2 $ 581.3 $ 566.2
OPERATING EXPENSES
Compensation and benefits 51.4 50.7 197.8 197.8
Depreciation and amortization 16.2 16.1 64.3 61.4
Purchased services 17.4 16.1 63.5 59.6
Casualties and insurance 30.2 3.2 56.4 25.2
Operating leases 13.8 13.9 57.2 55.0
Fuel 12.1 10.7 47.4 38.4
Car hire 1.5 4.8 10.0 19.7
Other 12.7 14.8 55.6 61.1
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TOTAL OPERATING EXPENSES 155.3 130.3 552.2 518.2
OPERATING INCOME (LOSS) (6.8) 13.9 29.1 48.0
Equity in net earnings (losses) of
unconsolidated affiliates
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V. 6.1 18.2 12.3 45.8
Other (0.3) (0.5) (1.3) (2.4)
Gain on sale of Mexrail, Inc. - - - 4.4
Interest expense (11.6) (11.7) (46.4) (45.0)
Debt retirement costs - - - (4.3)
Other income 2.0 2.3 6.8 17.6
------------ ------------ ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (10.6) 22.2 0.5 64.1
Income tax provision (benefit) (5.4) 1.8 (2.8) 6.9
------------ ------------ ------------ -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (5.2) 20.4 3.3 57.2
Cumulative effect of accounting change,
net of income taxes - - 8.9 -
------------ ------------ ------------ -----------
NET INCOME (LOSS) $ (5.2) $ 20.4 $ 12.2 $ 57.2
PREFERRED STOCK DIVIDENDS 1.2 0.1 5.9 0.2
------------ ------------ ------------ -----------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS $ (6.4) $ 20.3 $ 6.3 $ 57.0
============ ============ ============ ===========
PER SHARE DATA
---------------
Basic weighted average Common shares
outstanding (IN THOUSANDS) 62,053 60,987 61,725 60,336
Basic earnings (loss) per Common share
Income (loss) before cumulative
effect of accounting change $ (0.10) $ 0.33 $ (0.04) $ 0.94
Cumulative effect of accounting
change - - 0.14 -
------------ ------------ ------------ -----------
Net income (loss) $ (0.10) $ 0.33 $ 0.10 $ 0.94
Diluted weighted average Common shares
outstanding (IN THOUSANDS) 62,053 62,642 61,725 62,318
Diluted earnings (loss) per Common share
Income (loss) before cumulative
effect of accounting change $ (0.10) $ 0.32 $ (0.04) $ 0.91
Cumulative effect of accounting
change - - 0.14 -
------------ ------------ ------------ -----------
Net income (loss) $ (0.10) $ 0.32 $ 0.10 $ 0.91
GRUPO TRANSPORTACION FERROVIARIA MEXICANA S.A. DE C.V.
CONSOLIDATED INCOME STATEMENT
U.S. GAAP BASIS
(DOLLARS IN MILLIONS)
YEAR ENDED DECEMBER 31,
2003 2002
Transportation revenues $ 698.5 $ 712.1
Costs and expenses 558.4 541.2
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Income on transportation 140.1 170.9
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Other expenses, net (32.5) (11.7)
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Operating income 107.6 159.2
Interest expense (111.2) (95.9)
Exchange gain (loss) (13.7) (17.4)
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Income (loss) before taxes and minority interest (17.3) 45.9
Income tax provision (benefit) (51.5) (91.5)
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Income before minority interest 34.2 137.4
Minority interest (6.9) (27.2)
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Net income $ 27.3 $ 110.2
============= ==========
U.S. GAAP Operating Ratio 84.6% 77.6%
============= ==========
KCS Equity in Net Earnings of Grupo TFM $ 12.3 $ 45.8
Less: Allocation of Interest (15.1) (14.7)
Adjusted Contribution to Net Income of KCS 1 $ (2.8) $ 31.1
1This schedule includes a measurement that is not presented under U.S. GAAP. The
adjusted contribution of Grupo TFM to the net income of KCS includes an internal
allocation of interest expense applied against the equity in net earnings of the
Company's investment in Grupo TFM. Management believes this interest expense
allocation results in a more accurate reflection of the contribution of Grupo
TFM to the consolidated net income of KCS. The interest expense allocation is
based upon the initial amount of capital invested by KCS in Grupo TFM and is
calculated utilizing a blended interest rate applicable to the Company's
indebtedness composition. This measurement is presented to provide the reader of
these financial statements with a better understanding of the impact of
financing costs on the contribution of Grupo TFM to the consolidated net income
of KCS. The nearest U.S. GAAP measurement is included in the consolidated
statements of income included in this 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 THE "RISK FACTORS" AND THE "CAUTIONARY INFORMATION"
SECTIONS OF THE COMPANY'S FORM 10-K FOR THE YEAR-ENDED DECEMBER 31, 2003 FILED
BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") (COMMISSION
FILE NO. 1-4717). THE COMPANY WILL NOT UPDATE ANY FORWARD-LOOKING STATEMENTS IN
THIS PRESS RELEASE TO REFLECT FUTURE EVENTS OR DEVELOPMENTS.