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Kansas City Southern Reports Operating Results (10-Q)

July 17, 2012 | About:
10qk

10qk

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Kansas City Southern (KSU) filed Quarterly Report for the period ended 2012-06-30.

Kansas City Southern has a market cap of $7.71 billion; its shares were traded at around $66.98 with a P/E ratio of 22.5 and P/S ratio of 3.7. The dividend yield of Kansas City Southern stocks is 1.1%. Kansas City Southern had an annual average earning growth of 13.1% over the past 10 years.

Highlight of Business Operations:

Concession Duty. Under KCSM s 50-year railroad concession from the Mexican government (the “Concession”), KCSM paid concession duty expense of 0.5% of gross revenues for the first 15 years of the Concession period and, on June 24, 2012, KCSM began paying 1.25% of gross revenues, which is effective for the remaining years of the Concession. For the three and six months ended June 30, 2012, the concession duty expense, which is recorded within operating expenses, was $1.4 million and $2.7 million, respectively, compared to $1.3 million and $2.4 million for the same periods in 2011.

The Company reported quarterly earnings of $1.09 per diluted share on consolidated net income of $120.4 million for the three months ended June 30, 2012, compared to quarterly earnings of $0.64 per diluted share on consolidated net income of $70.8 million for the same period in 2011.

Operating expenses decreased 11% during the three months ended June 30, 2012, as compared to the same period in 2011, primarily due to the elimination of the deferred Mexican statutory profit sharing liability, as discussed below. In addition, operating expenses decreased due to the effect of fluctuations in the value of the Mexican peso against the value of the U.S. dollar for operating expenses denominated in Mexican pesos. These decreases were partially offset by an increase in operating expenses due to higher carload/unit volumes. Operating expenses as a percentage of revenues declined to 62.6% for the three months ended June 30, 2012, as compared to 71.7% for the same period in 2011.

Freight revenues include both revenue for transportation services and fuel surcharges. For the three and six months ended June 30, 2012, revenues increased $10.4 million and $69.3 million compared to the same periods in 2011, primarily due to positive pricing impacts, increased fuel surcharge and volume, partially offset by the effect of fluctuations in the value of the Mexican peso against the value of the U.S. dollar for revenues denominated in Mexican pesos. Revenue per carload/unit decreased by 3% and increased 1% for the three and six months ended June 30, 2012, compared to the same periods in 2011, reflecting the unfavorable effects of fluctuations in the value of the Mexican peso against the value of the U.S. dollar and commodity mix.

expense increased $4.7 million for the six months ended June 30, 2012, compared to the same period in 2011, primarily due to a larger reduction in the personal injury liability in the second quarter of 2011, as compared to the same period in 2012, and increases in employee expenses, property tax expense and a settlement of a legal dispute in the first quarter of 2012. These increases were partially offset by lower derailment expense in the second quarter of 2012, as compared to the same period in 2011. KCSM paid concession duty expense of 0.5% of gross revenues for the first 15 years of the Concession period, and on June 24, 2012, KCSM began paying 1.25% of gross revenues, which is effective for the remaining years of the Concession. The concession duty rate increase is expected to increase expense in 2012 by approximately $4.0 million.

Read the The complete Report

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10qk
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