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):
January 31, 2002
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
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code:
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(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 January 31, 2002 entitled,
"Kansas City Southern Industries
Reports Improved Fourth Quarter
and Year to Date Earnings", is
attached hereto as Exhibit 99.1
99.2 The following schedules are
attached hereto as Exhibit 99.2 -
Kansas City Southern Railway
Operating Statements, Kansas City
Southern Railway Carloadings by
Commodity, Kansas City Southern
Industries, Inc. Consolidated
Balance Sheets and Kansas City
Southern Industries, Inc.
Statement of Cash Flows
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 January 31, 2001, announcing KCSI's fourth quarter and year to
date 2001 operating results. Included in Exhibit 99.2 are schedules regarding
certain financial information discussed at the Company's fourth 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: February 7, 2002 By: /s/ Louis G. Van Horn
----------------------------
Louis G. Van Horn
Vice President and Comptroller
(Principal Accounting Officer)
EXHIBIT 99.1
Date January 31, 2002
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
Fourth Quarter and Year to Date Earnings
EARNINGS ANALYSIS AND COMMENTARY
KCSI reported fourth quarter 2001 income from continuing operations of $11.1
million (18(cent) per diluted share) compared to $3.6 million (6(cent) per
diluted share) in the fourth quarter of 2000. This $7.5 million (208%) quarter
to quarter increase resulted primarily from an improvement in domestic operating
income of $13.5 million, a $2.2 million increase in equity earnings (based upon
preliminary information) from Grupo Transportacion Ferroviaria Mexicana, S.A. de
C.V. ("Grupo TFM") and a decline in interest expense of $1.7 million. These
improvements were partially offset by a $9.8 million increase in the income tax
provision. KCSI's consolidated fourth quarter 2001 revenue increased $10.7
million and operating expenses declined $2.8 million compared to the fourth
quarter of 2000, resulting in the $13.5 million improvement in operating income.
For the year ended December 31, 2001, income from continuing operations was
$31.1 million (51(cent) per diluted share) compared to $25.4 million (43(cent)
per diluted share) for the year ended December 31, 2000. This $5.7 million
period to period increase was primarily due to a $6.9 million increase in equity
earnings from Grupo TFM and a $13.0 million decrease in interest expense
partially offset by a $2.4 million decrease in domestic operating income, a $3.6
million decrease in equity earnings from other unconsolidated affiliates and a
$6.4 million increase in the income tax provision. Equity earnings for the year
ended December 31, 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.
As previously announced, NAFTA Rail, a wholly-owned Mexican subsidiary of KCSI,
filed an action in a Mexican court challenging, among other items, a resolution
purportedly approved by the shareholders of Grupo TFM ordering the payment of a
dividend to the shareholders of Grupo TFM. The CEO's of both KCSI and Grupo TMM,
S.A. de C.V. ("Grupo TMM") have met and are currently working to settle the
issues surrounding the litigation and KCSI hopes to resolve these matters prior
to the filing of the Company's Form 10-K for the year ended December 31, 2001.
NAFTA Rail has not received this dividend. If, however, the dividend is
determined to be a 2001 transaction at the time of KCSI's filing of its Form
10-K, or if these matters are resolved unfavorably to KCSI, the Company will
record a $6.7 million charge (11(cent) per diluted share) for the fourth quarter
and year ended December 31, 2001. This charge would represent the Company's
proportionate decline in its investment in Grupo TFM arising from the accounting
for a tax recorded by Grupo TFM as a result of the dividend. This charge is not
reflected in the attached financial information.
DILUTED EARNINGS PER SHARE AND COMMON SHARES COMPARISONS (1)
Fourth Quarter Year to Date
--------------------- ---------------------
2001 2000 2001 2000
---- ---- ---- ----
Income from continuing operations:
U.S. operations $ 0.16 $ 0.10 $ 0.33 $ 0.41
Grupo TFM and PCRC (including
associated interest) 0.02 (0.04) 0.18 0.02
--------- --------- --------- ---------
Income from continuing operations 0.18 0.06 0.51 0.43
Extraordinary debt retirement costs,
net of income tax - - - (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 $ 0.18 $ 0.06 $ 0.50 $ 0.28
--------- --------- --------- ---------
Common Shares Outstanding
(thousands):
Weighted Average Diluted 61,099 59,839 60,984 58,390
Actual 59,243 58,147 59,243 58,147
(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.
FOURTH QUARTER
KCSI is comprised of, among others, The Kansas City Southern Railway Company
("KCSR") and equity investments in Grupo TFM, Mexrail, Inc. ("Mexrail"),
Southern Capital Corporation ("Southern Capital") and Panama Canal Railway
Company ("PCRC"). Effective October 1, 2001, Gateway Western Railway Company
("Gateway Western") was merged into KCSR. Discussions of KCSR herein include
consideration of the operations and operating results of Gateway Western.
KCSI's consolidated fourth quarter 2001 revenues totaled $145.5 million compared
to $134.8 million in the fourth quarter of 2000. This 8% increase resulted from
higher KCSR revenues, which increased $11.1 million to $143.4 million, partially
offset by a slight decrease in revenues from certain other subsidiaries. KCSR
revenue growth was driven primarily by strength in coal revenues, which improved
$9.1 million (40%) quarter to quarter. Net tons of coal shipped increased
approximately 35% quarter to quarter due to demand driven increases at certain
utility plants compared to the prior year fourth quarter resulting from higher
than usual deliveries to replenish 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 paper products, export grain,
certain chemical and plastics products and military shipments. These
improvements were partially offset by quarter to quarter revenue declines for
domestic grain, food products, ore and mineral products, steel and scrap metal
shipments and intermodal products, primarily reflecting the existing slow
economic conditions. Quarter to quarter revenues increased 3% for all non-coal
commodity groups on a combined basis.
KCSI's consolidated costs and expenses declined $2.8 million in the fourth
quarter of 2001 to $125.1 million compared to $127.9 million in the fourth
quarter of 2000. This resulted from a $1.2 million decrease in KCSR expenses
coupled with a $1.6 million decrease in expenses at certain other subsidiaries.
At KCSR, quarter to quarter declines in salaries and wages ($3.0 million), fuel
($4.2 million), materials and supplies ($1.5 million) and purchased services
($1.3 million) were partially offset by increases in fringe benefits ($2.3
million) and casualties and insurance ($3.4 million). Lower costs for salaries
and wages reflect the employee headcount reductions effected in March 2001 and
operating efficiency at KCSR, while lower fuel costs reflect the reduction in
the market price of fuel. Fringe benefits expense increased as a result of
higher health care costs and casualties and insurance expense increased quarter
to quarter primarily as a result of an increase in the personal injury reserves
arising from the Company's annual actuarial study. The KCSR operating ratio for
the fourth quarter of 2001 improved to 84.7% compared to 92.7% in the same 2000
period.
Equity earnings related to the Company's investment in Grupo TFM increased $2.2
million to $5.0 million in the fourth quarter of 2001 from $2.8 million in the
fourth quarter of 2000. Grupo TFM revenues were $171.8 million in the fourth
quarter of 2001, a 4% increase compared to the fourth quarter of 2000. Total
costs and expenses at Grupo TFM increased 2% quarter to quarter, while operating
profit increased 9% (computed under accounting principles generally accepted in
the United States of America - "U.S. GAAP"). Under International Accounting
Standards, TFM's operating ratio was 76.9% for the fourth quarter of 2001
compared to 78.6% for the fourth quarter of 2000. Additionally, Grupo TFM's
fourth quarter 2001 results include a deferred tax benefit of $1.7 million
(calculated under U.S. GAAP) compared to a deferred tax expense of $0.3 million
for the fourth quarter of 2000. The favorable change 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 $0.1 million
quarter to quarter, while equity earnings from Southern Capital improved by
approximately $0.5 million. Additionally, the reconstruction of the rail line in
Panama was completed in July 2001 and the operations of PCRC have commenced.
During the fourth quarter of 2001, the Company recorded equity losses of
approximately $0.6 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 fourth quarter of 2001 decreased
$1.7 million (15%) from the prior year quarter primarily as a result of lower
interest rates on our variable rate debt.
YEAR TO DATE
KCSI's consolidated revenues totaled $577.3 million for the year ended December
31, 2001 compared to $572.2 million for the year ended December 31, 2000. This
$5.1 million increase resulted from higher KCSR revenues of approximately $3.3
million partially coupled with higher revenues from certain other subsidiaries.
Revenue growth in 2001 occurred primarily in coal (13%), automotive (72%),
plastics (10%), military/other (49%), export grain (19%) and certain forest
products. These revenue improvements were partially offset by overall declines
in chemical and petroleum products (1%), agriculture and mineral products (6%),
paper and forest products (2%) and intermodal revenues (10%) primarily as a
result of lower production due to the weakness in the U.S. economy. Agriculture
and mineral product revenues were affected by lower domestic grain shipments due
a general decline in poultry production in the United States. This decline in
poultry production in the United States resulted in decreased demand for grain
deliveries to our customers during 2001.
KCSI's consolidated costs and expenses increased $7.5 million (1%) to $521.9
million for the year ended December 31, 2001 compared to $514.4 million for the
year ended December 31, 2000 resulting from higher KCSR expenses of $2.3 million
and higher expenses at certain other subsidiaries of $5.2 million. Costs at
other subsidiaries in 2001 were higher primarily as a result of a $3.0 million
reduction to the allowance for doubtful accounts recorded in 2000 at the KCSI
Holding Company. Higher KCSR expenses were mostly attributable to a $5.0 million
increase in car hire costs and a $6.6 million increase in casualties and
insurance costs. These costs were partially offset by a $4.2 million decline in
salaries, wages and fringe benefits expense, a $4.2 million decrease in fuel
expense and a $3.0 million decline in materials and supplies 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 also rose primarily due to several significant first quarter
2001 derailments as well as increases made to the personal injury reserve
arising from the Company's annual actuarial study. Salaries and wage expense
declined period to period due mostly to employee headcount reductions in March
2001 and operating efficiencies. The decline in fuel expense resulted primarily
from lower market prices per gallon. The KCSR operating ratio for 2001 was 88.2%
compared to 88.3% for 2000.
Excluding the impact of the extraordinary item in 2000 discussed below, equity
earnings from the Company's investment in Grupo TFM increased $6.9 million to
$28.5 million for the year ended December 31, 2001 versus $21.6 million for the
year ended December 31, 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 equity earnings for
the year ended December 31, 2001 from Grupo TFM reflect our proportionate share
of this income of approximately $9.1 million.
Grupo TFM's revenues increased 4% to $667.8 million for the year ended December
31, 2001 from $640.6 million for the year ended December 31, 2000. These higher
revenues were offset by an approximate 7% 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 5%. Under U.S. GAAP, the deferred tax expense
for Grupo TFM was $10.9 million for the year ended December 31, 2001 compared to
a deferred tax benefit of $13.2 million (excluding the impact of the
extraordinary item) for the year ended December 31, 2000.
Equity earnings from the Company's investment in Mexrail declined $2.3 million
period to period, while equity earnings from Southern Capital improved by
approximately $1.0 million. Additionally, during 2001 the Company recorded
equity losses of approximately $1.6 million from its investment in PCRC relating
mostly to start-up costs.
Similar to the fourth quarter of 2001, the Company's interest expense for the
year ended December 31, 2001 declined $13.0 million compared to the year ended
December 31, 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 (1(cent) per diluted share) 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 year ended
December 31, 2001. During the first quarter of 2000, the Company completed a
debt refinancing whereby it retired approximately $400 million of its debt
securities prior to maturity. Also, 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 these debt-refinancing
transactions, KCSI recorded extraordinary debt retirement costs of approximately
$7.0 million (net of income taxes). Additionally, during the third quarter of
2000, Grupo TFM refinanced approximately $285 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 KCSI and Grupo TFM debt retirement related
extraordinary charges for 2000 were $8.7 million (15(cent) per diluted share).
These items are presented as extraordinary items in the accompanying
consolidated condensed statements of income for the year ended December 31,
2000.
BUSINESS OUTLOOK
Michael R. Haverty, KCSI Chairman, President and Chief Executive Officer said,
"in light of the current economic environment facing North America, we are
encouraged by our operating results for the fourth quarter. Domestically, KCSR's
fourth quarter revenues increased approximately 8% versus the fourth quarter of
2000. KCSR's cost structure has continued to benefit from cost reduction actions
taken in March 2001 and the synergies of an efficient and well-operating
railroad.
Grupo TFM continues to provide significant value as part of our NAFTA rail
network. Revenues for Grupo TFM increased 4% for both the fourth quarter and
year ended 2001 and our equity earnings increased 79% and 32% for the fourth
quarter and year ended 2001, respectively. Through Grupo TFM, we and our
partner, Grupo TMM, are continuing to pursue the purchase of the Mexican
government's 24.6% ownership in Grupo TFM through a call option. This
transaction has been delayed pending improved market conditions for Latin
American companies and is expected to be complete as soon as market conditions
become more favorable. We are excited about the prospects of increasing our
ownership position in Grupo TFM, which is fast becoming one of the rail
transportation leaders in North America.
It is regrettable that we had to bring legal actions challenging certain
resolutions adopted by Grupo TFM, but these actions were necessary to safeguard
our interests, as well as the interests of our shareholders, in the Company's
investment in Grupo TFM. This matter is between KCSI and Grupo TMM and we
continue to fully support Grupo TFM and its management team. I have met with Mr.
Jose Serrano, Chairman and CEO of Grupo TMM, and we are working to try and
resolve the issues without a protracted legal dispute. KCSI is, however,
prepared to pursue the litigation to ensure its interests in Mexico are
protected.
In 2002, our focus will be on protecting our revenue base in a down economy
while continuing to provide quality service to our customers. We will also
strive to further reduce our costs and our corporate debt structure. We expect
KCSR coal revenues to decline in 2002 as a result of a contractual rate
reduction at one of our coal customers, as well as the loss of certain business
due to the expiration of a contract that is not expected to be renewed. We
believe, however that this decline in coal revenues will be offset by higher
revenues for KCSR's other commodity groups through new business and targeted
rate increases. We believe our railroad franchise is well positioned to benefit
from an economic recovery. KCSR is currently operating very efficiently and we
believe our cost structure is well controlled. Given these factors, we believe
that meaningful revenue growth arising from an economic recovery would result in
improved profitability. We expect continued success with Grupo TFM and believe
that PCRC will provide us with future earnings growth beginning in early 2003.
Our commitment is to maximize the potential of our NAFTA rail network and build
long-term shareholder value."
(Note: The operating results and related amounts included herein for the fourth
quarter and year ended December 31, 2000 were derived from the Form 10-K/A for
the year ended December 31, 2000. These amounts reflect certain adjustments made
subsequent to our fourth quarter and year ended 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 dated December 11, 2001, each 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.
(Financial Information Attached)
KANSAS CITY SOUTHERN INDUSTRIES, INC. and SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(excludes Discontinued Operations(1))
(dollars in millions, except per share data)
(Unaudited)
Three Months Year Ended
Ended December 31, Ended December 31,
----------------- -----------------
2001 2000 2001 2000
------- ------- ------- -------
Revenues $ 145.5 $ 134.8 $ 577.3 $ 572.2
Costs and expenses 110.7 114.2 463.9 458.3
Depreciation and amortization 14.4 13.7 58.0 56.1
------- ------- ------- -------
Operating income 20.4 6.9 55.4 57.8
Equity in net earnings (losses) of
unconsolidated affiliates:
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V. (preliminary) 5.0 2.8 28.5 21.6
Other (1.2) (1.1) (1.4) 2.2
Interest expense (9.9) (11.6) (52.8) (65.8)
Other, net 1.2 1.2 4.2 6.0
------- ------- ------- -------
Income from continuing operations before
income taxes, extraordinary items and
cumulative effect of accounting change 15.5 (1.8) 33.9 21.8
Income tax provision (benefit) 4.4 (5.4) 2.8 (3.6)
------- ------- ------- -------
Income from continuing operations before
extraordinary items and cumulative effect
of accounting change 11.1 3.6 31.1 25.4
Extraordinary items, net of income taxes:
Debt retirement costs - - - (7.0)
Debt retirement costs - TFM - - - (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 $ 11.1 $ 3.6 $ 30.7 $ 16.7
======= ======= ======= =======
Per Share
Data:
Basic Weighted Average Common shares
outstanding (in thousands) 59,035 58,132 58,598 56,650
Basic Earnings (Loss) per Common
share from continuing operations $ 0.19 $ 0.06 $ 0.53 $ 0.44
Extraordinary items - - - (0.15)
Cumulative effect of accounting change - - (0.01) -
------- ------- ------- -------
Basic Earnings per Common share, net of
extraordinary items and cumulative effect
of accounting change $ 0.19 $ 0.06 $ 0.52 $ 0.29
======= ======= ======= =======
Diluted Weighted Average Common shares
outstanding (in thousands) 61,099 59,839 60,984 58,390
Diluted Earnings (Loss) per Common share
from continuing operations $ 0.18 $ 0.06 $ 0.51 $ 0.43
Extraordinary items - - - (0.15)
Cumulative effect of accounting change - - (0.01) -
------- ------- ------- -------
Diluted Earnings per Common
share, net of extraordinary
items and cumulative effect of
accounting change $ 0.18 $ 0.06 $ 0.50 $ 0.28
======= ======= ======= =======
(1) - Stilwell Financial Inc., the Company's formerly owned financial
services segment
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 Year Ended
Ended December 31, Ended December 31,
----------------- -----------------
2001 2000 2001 2000
------- ------- ------- -------
Revenues $ 145.5 $ 134.8 $ 577.3 $ 572.2
Costs and expenses 110.7 114.2 463.9 458.3
Depreciation and amortization 14.4 13.7 58.0 56.1
------- ------- ------- -------
Operating income 20.4 6.9 55.4 57.8
Equity in net earnings (losses) of
unconsolidated affiliates:
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V. (preliminary) 5.0 2.8 28.5 21.6
Other (1.2) (1.1) (1.4) 2.2
Interest expense (9.9) (11.6) (52.8) (65.8)
Other, net 1.2 1.2 4.2 6.0
------- ------- ------- -------
Income from continuing operations before
income taxes, extraordinary items and
cumulative effect of accounting change 15. 5 (1.8) 33.9 21.8
Income tax provision (benefit) 4.4 (5.4) 2.8 (3.6)
------- ------- ------- -------
Income from continuing operations before
extraordinary items and cumulative effect
of accounting change 11.1 3.6 31.1 25.4
Income from discontinued operations (1)
(net of income taxes) - - - 363.8
------- ------- ------- -------
Income before extraordinary items and
cumulative effect of accounting change 11.1 3.6 31.1 389.2
Extraordinary items, net of income taxes:
Debt retirement costs - - - (7.0)
Debt retirement costs - TFM - - - (1.7)
Cumulative effect of accounting change, net
of income taxes - - (0.4) -
------- ------- ------- -------
Net income $ 11.1 $ 3.6 $ 30.7 $ 380.5
======= ======= ======= =======
Per Share Data:
Basic Weighted Average Common shares
outstanding (in thousands) 59,035 58,132 58,598 56,650
Basic Earnings per Common share
Continuing operations $ 0.19 $ 0.06 $ 0.53 $ 0.44
Discontinued operations - - - 6.42
------- ------- ------- -------
Basic Earnings (Loss) per Common share before
extraordinary items and cumulative effect of
accounting change 0.19 0.06 0.53 6.86
Extraordinary items - - - (0.15)
Cumulative effect of accounting change - - (0.01) -
------- ------- ------- -------
Basic Earnings per Common share $ 0.19 $ 0.06 $ 0.52 $ 6.71
------- ------- ------- -------
Diluted Weighted Average Common shares
outstanding (in thousands) 61,099 59,839 60,984 58,390
Diluted Earnings per Common share
Continuing operations $ 0.18 $ 0.06 $ 0.51 $ 0.43
Discontinued operations - - - 6.14
------- ------- ------- -------
Diluted Earnings (Loss) per Common share before
extraordinary items and cumulative effect of
accounting change 0.18 0.06 0.51 6.57
Extraordinary items - - - (0.15)
Cumulative effect of accounting change - - (0.01) -
------- ------- ------- -------
Diluted Earnings per Common share 0.18 0.06 0.50 6.42
(1) - Stilwell Financial Inc., the Company's formerly owned financial
services segment
EXHIBIT 99.2
Kansas City Southern Railway*
Operating Statements
Dollars in Millions
Fourth Quarter Fourth Quarter Twelve Months Twelve Months
2001 2000 2001 2000
------------- ------------- ------------- -------------
Revenues
Freight Revenue $ 87.0 $ 82.6 $ 340.3 $ 348.5
Intermodal and Automotive
Revenue 15.1 15.7 66.0 62.1
Unit Coal Revenue 31.0 22.2 115.8 103.6
Haulage Revenue 3.4 3.5 13.0 12.6
Other Revenue 6.9 8.3 31.3 36.3
------------- ------------- ------------- -------------
Total Revenues 143.4 132.3 566.4 563.1
------------- ------------- ------------- -------------
Operating Expenses
Salaries & Wages 32.6 35.6 133.7 139.3
Fringe Benefits 13.6 11.3 54.0 52.6
Fuel 8.6 12.8 43.9 48.1
Material and Supplies 5.4 6.9 27.5 30.5
Car Hire 4.1 3.7 19.8 14.8
Purchased Services 10.7 12.0 47.7 47.9
Casualties & Insurance 12.9 9.5 40.6 34.0
Other 2.7 2.9 10.3 9.0
------------- ------------- ------------- -------------
Net Operating Expenses 90.6 94.7 377.5 376.2
------------- ------------- ------------- -------------
Fixed Expenses
Leases, Net 13.6 13.1 54.6 55.6
Depreciation 13.5 12.7 54.1 52.1
Taxes (Other Than Income) 3.7 2.1 13.2 13.2
------------- ------------- ------------- -------------
Total Fixed Expenses 30.8 27.9 121.9 120.9
------------- ------------- ------------- -------------
Total Expenses 121.4 122.6 499.4 497.1
------------- ------------- ------------- -------------
Operating Income $ 22.0 $ 9.7 $ 67.0 $ 66.0
* Includes the operations of the Gateway Western Railway Company. Effective
October 1, 2001, Gateway Western was merged into the Kansas City Southern
Railway.
Kansas City Southern Railway*
Carloadings By Commodity - Year Ended December 31, 2001
Dollars in Thousands
Carloadings Revenue
Year to Date % Year to Date %
---------------------- ---------------------
2001 2000 Change 2001 2000 Change
---------- --------- ------- --------- --------- -------
Coal
197,166 180,949 9.0% Unit Coal $115,825 $103,617 11.8%
5,167 3,216 60.7% Other Coal 2,923 1,343 117.6%
---------- --------- --------- ---------
202,333 184,165 9.9% Total 118,748 104,960 13.1%
Chemical & Petroleum Products
6,704 9,135 (26.6)% Agri Chemicals 5,304 6,422 (17.4)%
11,393 13,817 (17.5)% Gases 10,420 12,468 (16.4)%
22,138 25,749 (14.0)% Organic 22,554 24,345 (7.4)%
19,419 16,976 14.4% Inorganic 20,544 19,684 4.4%
59,455 62,171 (4.4)% Petroleum 38,037 38,239 (0.5)%
26,892 26,276 2.3% Plastics 26,904 24,416 10.2%
---------- --------- --------- ---------
146,001 154,124 (5.3)% Total 123,763 125,574 (1.4)%
---------- --------- --------- ---------
Agriculture and Minerals
47,408 49,201 (3.6)% Domestic Grain 32,789 36,488 (10.1)%
13,309 11,060 20.3% Export Grain 9,595 8,077 18.8%
26,347 29,458 (10.6)% Food Products 21,879 23,537 (7.0)%
23,467 25,528 (8.1)% Ores and Minerals 12,434 13,192 (5.7)%
15,145 16,721 (9.4)% Stone, Clay & Glass 11,220 12,311 (8.9)%
---------- --------- --------- ---------
125,676 131,968 (4.8)% Total 87,917 93,605 (6.1)%
---------- --------- --------- ---------
Paper & Forest Products
85,634 90,577 (5.5)% Pulp/Paper 61,195 63,294 (3.3)%
6,960 7,181 (3.1)% Scrap Paper 3,812 3,898 (2.2)%
36,184 33,675 7.5% Pulpwood/Logchips 15,037 13,439 (2.2)%
26,268 28,291 (7.2)% Lumber/Plywood 23,109 24,879 (7.1)%
19,857 25,100 (20.9)% Metal/Scrap 15,315 18,847 (18.7)%
Military/Other
9,104 7,620 19.5% Carloads 11,880 7,975 49.0%
---------- --------- --------- ---------
184,007 192,444 (4.4)% Total 130,348 132,332 (1.5)%
---------- --------- --------- ---------
Intermodal & Automotive
34,684 21,655 60.2% Automotive 21,488 12,467 72.4%
256,429 247,604 3.6% Intermodal 44,488 49,621 (10.3)%
---------- --------- --------- ---------
291,113 269,259 8.1% Total 65,976 62,088 (10.3)%
---------- --------- --------- ---------
TOTAL FOR BUSINESS
949,130 931,960 1.8% UNITS 526,752 518,559 1.6%
34,762 41,499 (16.2)% Haulage 13,043 12,565 3.8%
(9,125) (8,561) 6.6% Adjustments (4,609) (4,369) 5.5%
---------- --------- --------- ---------
974,767 964,898 1.0% TOTAL $535,186 $526,755 1.6%
========== ========= ========= =========
* Includes the operations of Gateway Western Railway Company. Effective
October 1, 2001, Gateway Western Railway was merged into the Kansas City
Southern Railway.
Kansas City Southern Railway*
Carloadings By Commodity - Fourth Quarter 2001
Dollars in Thousands
Carloadings Revenue
Fourth Quarter % Fourth Quarter %
---------------------- ---------------------
2001 2000 Change 2001 2000 Change
---------- --------- ------- --------- --------- -------
Coal
52,899 39,451 34.1% Unit Coal $ 30,989 $ 22,211 39.5%
1,441 914 57.7% Other Coal 803 477 68.3%
---------- --------- --------- ---------
54,340 40,365 34.6% Total 31,792 22,688 40.1%
Chemical & Petroleum Products
1,777 2,146 (17.2)% Agri Chemicals 1,391 1,488 (6.5)%
2,989 3,301 (9.5)% Gases 2,746 2,921 (6.0)%
5,359 6,052 (11.5)% Organic 5,690 5,694 (0.1)%
4,825 4,043 19.3% Inorganic 5,171 4,607 12.2%
13,573 14,599 (7.0)% Petroleum 9,167 8,703 5.3%
6,886 6,466 6.5% Plastics 6,647 6,417 3.6%
---------- --------- --------- ---------
35,409 36,607 (3.3)% Total 30,812 29,830 3.3%
---------- --------- --------- ---------
Agriculture and Minerals
11,599 10,993 5.5% Domestic Grain 8,220 8,742 (6.0)%
4,838 2,674 80.9% Export Grain 4,000 2,165 84.8%
6,581 7,194 (8.5)% Food Products 5,619 5,906 (4.9)%
5,516 5,510 0.1% Ores and Minerals 2,864 3,136 (8.7)%
3,666 3,796 (3.4)% Stone, Clay &
Glass 2,738 2,800 (2.2)%
---------- --------- --------- ---------
32,200 30,167 6.7% Total 23,441 22,749 3.0%
---------- --------- --------- ---------
Paper & Forest Products
22,386 21,603 3.6% Pulp/Paper 16,530 15,227 8.6%
1,882 1,938 (2.9)% Scrap Paper 1,072 1,052 1.9%
9,238 7,637 21.0% Pulpwood/Logs/Chips 3,852 3,103 24.1%
6,301 6,603 (4.6)% Lumber/Plywood 5,745 5,787 (0.7)%
3,571 5,581 (36.0)% Metal/Scrap 2,654 4,288 (38.1)%
2,246 1,660 35.3% Military/Other
carloads 3,188 1,793 77.8%
---------- --------- --------- ---------
45,624 45,022 1.3% Total 33,041 31,250 5.7%
---------- --------- --------- ---------
Intermodal & Automotive
6,042 6,668 (9.4)% Automotive 3,745 3,696 1.3%
64,387 67,926 (5.2)% Intermodal 11,351 12,004 (5.4)%
---------- --------- --------- ---------
70,429 74,594 (5.6)% Total 15,096 15,700 (3.8)%
---------- --------- --------- ---------
TOTAL FOR BUSINESS
238,002 226,755 5.0% UNITS 134,182 122,217 9.8%
9,197 8,863 3.8% Haulage 3,399 3,544 (4.1)%
(2,097) (2,721) (22.9)% Adjustments (1,130) (1,704) (33.7)%
---------- --------- --------- ---------
245,102 232,897 5.2% TOTAL $136,451 $124,057 10.0%
========== ========= ========= =========
* Includes the operations of Gateway Western Railway Company. Effective
October 1, 2001, Gateway Western Railway was merged into the Kansas City
Southern Railway.
Kansas City Southern Industries, Inc.
Consolidated Balance Sheets
Unaudited
(Dollars in Millions)
December 31, December 31,
2001 2000
---------------- ----------------
Assets
Cash $ 24.7 $ 21.5
Accounts receivable 130.0 135.0
Inventories 27.9 34.0
Other current assets 44.2 25.9
---------------- ----------------
Total current assets 226.8 216.4
Investments held for operating purposes 386.8 358.2
Properties, net of depreciation 1,327.4 1,327.8
Other assets 42.3 42.1
---------------- ----------------
Total assets $ 1,983.3 $ 1,944.5
================ ================
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 46.7 $ 36.2
Accounts payable 50.4 52.9
Accrued liabilities 132.8 159.9
---------------- ----------------
Total current liabilities 229.9 249.0
Long-term debt 611.7 638.4
Deferred income taxes 370.2 332.2
Other 91.2 81.5
Stockholders' equity 680.3 643.4
---------------- ----------------
Total liabilities and stockholders'
equity $ 1,983.3 $ 1,944.5
================ ================
KANSAS CITY SOUTHERN INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
YEAR TO DATE - DECEMBER 31, 2001
(in thousands)
(Unaudited)
CASH FLOWS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES:
Net income $30,739
Adjustments to net income:
Depreciation and amortization 58,093
Deferred income taxes 31,660
Equity in undistributed earnings (27,075)
Distributions from unconsolidated 3,000
Gain on Sale of Property (5,774)
Gain on Sale of Investments 82
Tax Benefit Associated with Exercised Stock Options 5,583
Changes in working capital items:
Accounts receivable 3,997
Inventories 6,182
Other current assets 7,998
Accounts payable (5,097)
Accrued liabilities (47,926)
Other, net 14,603
-------------
Net from operations 76,066
-------------
INVESTING ACTIVITIES:
Property acquisitions (66,001)
Proceeds from disposals of property 18,133
Investments in and Loans to affiliates (8,168)
Proceeds from disposal of investments 634
Other, net (306)
-------------
Net from investing (55,707)
-------------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 35,000
Repayment of long-term debt (51,287)
Debt issue and recapitalization costs (389)
Proceeds from stock plans 8,898
Cash dividends paid (242)
Other, net (9,155)
-------------
Net from financing (17,175)
-------------
CASH AND EQUIVALENTS:
Net increase 3,184
At beginning of year 21,536
-------------
At end of period $24,720
-------------