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Kansas City Southern Posts Strong Second Quarter & Year-to-Date Results.

Article Excerpt
KANSAS CITY, Mo. -- Kansas City Southern (KCS or Company) (NYSE:KSU) reported consolidated net income of $ 9.2 million, or $0.11 per diluted share, for the second quarter of 2004, compared to a net loss of $0.5 million, or ($0.03) per diluted share for the second quarter of 2003. The results were driven by The Kansas City Southern Railway Company's (KCSR) and Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.'s (Grupo TFM) improved operating and financial results.

KCS reported consolidated net income of $12.6 million, or $0.13 per diluted share, for the 6 months ended June 30, 2004. This compares to $4.2 million, or $0.05 per diluted share, in 2003, exclusive of a one-time $8.9 million benefit related to the cumulative effect of a required change in accounting (Statement of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations," SFAS 143) that was recorded in the first quarter of 2003.

Second Quarter

Second quarter revenues for KCSR were $152.9 million, an increase of $8.3 million (5.7%) over second quarter 2003. Four of KCSR's five commodity groups posted substantial quarter-over-quarter revenue increases. Overall yields also increased, led by Agriculture & Minerals which posted a 6.2% yield gain.

KCSR revenues from Chemical & Petroleum products increased by $3.2 million (10.3%) in the second quarter of 2004 over comparable 2003, led by strong growth in petroleum products and industrial gases. Agriculture & Minerals continued to be a consistently strong revenue producer with a quarter-over-quarter increase of $2.8 million (10.2%) driven by strong export and domestic grain volumes. Intermodal & Automotive second quarter 2004 revenues grew by $1.6 million (10.8%) over the comparable 2003 period due to significant growth in intermodal volumes and increases in intermodal haulage business. Second quarter 2004 coal revenues grew $1.2 million (5.3%) over second quarter 2003 due to increased volumes. Strong increases in lumber and paper traffic were offset by reduced military shipments and log and chip volumes, resulting in a very slight quarter-over-quarter decline (0.4%) in the Paper & Forest products group, the only group not to show a substantial gain.

Second quarter 2004 KCSR costs and expenses increased by $4.1 million over second quarter 2003. Lower equipment costs ($3.8 million), depreciation ($3.0 million), and material and supplies ($0.8 million) were more than offset by increases in compensation costs ($4.4 million), from price pressure on fuel ($3.0 million), and from casualties and insurance ($2.6 million).

KCSR's 2004 second quarter operating income was $23.1 million, compared to $18.9 million the previous year, a $4.2 million, or 22%, quarter-over-quarter increase. KCSR's operating ratio for the second quarter of 2004...