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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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44-0663509
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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427 West 12th Street
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Kansas City
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,
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Missouri
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64105
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Preferred Stock, Par Value $25 Per Share, 4%, Noncumulative
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KSU
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New York Stock Exchange
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Common Stock, $.01 Per Share Par Value
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KSU
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New York Stock Exchange
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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Item 1.
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Business
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•
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KCSM Servicios, S.A. de C.V. (“KCSM Servicios”), a wholly-owned and consolidated subsidiary that provides employee services to KCSM;
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•
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Meridian Speedway, LLC (“MSLLC”), a seventy percent-owned consolidated affiliate that owns the former KCSR rail line between Meridian, Mississippi and Shreveport, Louisiana, which is the portion of the rail line between Dallas, Texas and Meridian known as the “Meridian Speedway.” Norfolk Southern Corporation, through its wholly-owned subsidiary, The Alabama Great Southern Railroad Company, owns the remaining thirty percent of MSLLC;
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•
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TFCM, S. de R.L. de C.V. (“TCM”), a forty-five percent-owned unconsolidated affiliate that operates a bulk liquid terminal in San Luis Potosí, Mexico;
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•
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Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”), a twenty-five percent-owned unconsolidated affiliate that provides railroad services as well as ancillary services in the greater Mexico City area; and
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•
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PTC-220, LLC (“PTC-220”), a fourteen percent-owned unconsolidated affiliate that holds the licenses to large blocks of radio spectrum and other assets for the deployment of Positive Train Control (“PTC”). See Government Regulation section for further information regarding PTC.
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2019 Revenues
Business Mix
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Chemical and petroleum. This commodity group includes products such as chemicals, plastics, petroleum, liquefied petroleum gas, and petroleum refined products, such as gasoline and diesel. KCS transports these products across its network and through interchanges with other rail carriers. The chemical and plastic products are used in the automotive, housing and packaging industries as well as in general manufacturing. KCS hauls petroleum products across its network and as U.S. petroleum refineries have continued to increase their refining capacity, they have coordinated with KCS to develop additional long-term storage opportunities which complement a fluid freight railroad operation.
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•
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Conferring regularly with other railroads’ security personnel and with industry experts on security issues;
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•
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Routing shipments of certain chemicals, which might be toxic if inhaled, pursuant to federal regulations;
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•
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Initiating a series of over 20 voluntary action items agreed to between AAR and DHS as enhancing security in the rail industry;
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•
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Conducting constant and targeted security training as part of the scheduled training for operating employees and managers;
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•
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Developing smartphone applications to ensure immediate information, live video and pictures from security supervisors and protection assets pertaining to potential operational risks;
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•
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Developing a multi-layered security model using high-speed digital imaging, system velocity and covert and overt security filters to mitigate the risk of illicit activity;
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•
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Measuring key security metrics to ensure positive risk mitigation and product integrity trends;
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•
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Performing constant due diligence with the existing security model and by benchmarking rail security, including cyber security, on a world-wide basis to monitor threat streams related to rail incidents;
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•
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Implementing a Tactical Intelligence Center by KCSM, which provides constant training with core members in new technology helping to prevent, detect, deter, deny and respond to potentially illicit activities; and
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•
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Deploying an array of non-intrusive technologies including, but not limited to, digital video surveillance and analytics as part of an intelligent video security solution, including a closed circuit television platform with geo-fencing for intrusion detection, to allow for remote viewing access to monitor ports of entry, intermodal and rail yards.
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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2019
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2018
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||||||||||||||
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Owned
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Leased
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Total
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Owned
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Leased
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Total
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Freight Cars:
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Box cars
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2,106
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716
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2,822
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3,178
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991
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4,169
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Hoppers (covered and open top)
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4,998
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1,073
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6,071
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5,419
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1,108
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6,527
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Gondolas
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2,172
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158
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2,330
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2,560
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|
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169
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2,729
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Automotive
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3,316
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535
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3,851
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3,316
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742
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4,058
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Flat cars (intermodal and other)
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1,121
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1,075
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2,196
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1,142
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1,075
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2,217
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Tank cars
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—
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477
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477
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4
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570
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574
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Total
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13,713
|
|
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4,034
|
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17,747
|
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15,619
|
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4,655
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20,274
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Locomotives:
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||||||
Freight
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662
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88
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750
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708
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119
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827
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Switching
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199
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—
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199
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|
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222
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—
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222
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Total
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861
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88
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949
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930
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119
|
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1,049
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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2014
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2015
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2016
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2017
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2018
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2019
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Kansas City Southern
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$
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100.00
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$
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62.07
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$
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71.60
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$
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90.03
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$
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82.77
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$
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134.37
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S&P 500 (1)
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100.00
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101.38
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113.51
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138.29
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132.23
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173.86
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||||||
Dow Jones U.S. Industrial Transportation (2)
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100.00
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77.85
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100.82
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129.29
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119.16
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149.32
|
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(1)
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The S&P 500 is a registered trademark of Standard & Poor’s, a division of S&P Global, Inc. The S&P 500 Index reflects the weighted average market value for 500 companies whose shares are traded on the New York Stock Exchange, American Stock Exchange and the Nasdaq Stock Market.
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(2)
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The Dow Jones U.S. Industrial Transportation Index is a registered trademark of S&P Dow Jones Indices LLC, a division of S&P Global, Inc.
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Period
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(a) Total
Number
of Shares
(or Units)
Purchased (1)
|
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(b) Average
Price Paid
per Share (or Unit)
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(c) Total
Number of
Shares
(or Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs
|
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(d) Maximum
Number (or
Approximate
Dollar Value)
of Shares (or Units)
that may yet be
purchased under
the Plans
or Programs
|
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||||||||||
Common stock
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October 1-31, 2019
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—
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—
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—
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$
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59,329,074
|
|
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November 1-30, 2019 (2)
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3,022,760
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$
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154.66
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|
|
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3,022,760
|
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$
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1,532,500,000
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|
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December 1-31, 2019
|
|
—
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|
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—
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—
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$
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1,532,500,000
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|
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Total
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3,022,760
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|
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3,022,760
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$25 Par preferred stock
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||||||
October 1-31, 2019
|
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—
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—
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—
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—
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November 1-30, 2019
|
|
—
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—
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—
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—
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December 1-31, 2019
|
|
—
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|
|
|
—
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—
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|
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—
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Total
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|
—
|
|
|
|
|
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|
—
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(1
|
)
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All $25 par preferred stock repurchases were made other than through a publicly disclosed plan or program. Repurchases of $25 par preferred stock were made through open market purchases and/or privately negotiated transactions.
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(2
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)
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On November 19, 2019, the Company paid $550.0 million under two ASR agreements and received an aggregate initial delivery of 3,022,760 shares, which represents approximately 85% of the total shares to be received under the agreements. The initial delivery of shares and their market price at time of delivery are included in the table above. The final number of shares repurchased and cost of shares repurchased will be based on the volume-weighted-average price of the Company’s common stock during the term of the agreements, which are expected to be settled in the first quarter of 2020, at which time the Company will receive the remaining amount of shares. See Item 8, Financial Statements and Supplementary Data — Note 16, Stockholders’ Equity for additional information.
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Item 6.
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Selected Financial Data
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2019
|
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2018
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2017
|
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2016
|
|
2015
|
||||||||||
Earnings From Continuing Operations
|
|
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||||||||||
Revenues
|
$
|
2,866.0
|
|
|
$
|
2,714.0
|
|
|
$
|
2,582.9
|
|
|
$
|
2,334.2
|
|
|
$
|
2,418.8
|
|
Operating expenses (i) (ii) (iii) (iv)
|
1,979.7
|
|
|
1,727.7
|
|
|
1,661.3
|
|
|
1,515.7
|
|
|
1,615.0
|
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|||||
Operating income
|
$
|
886.3
|
|
|
$
|
986.3
|
|
|
$
|
921.6
|
|
|
$
|
818.5
|
|
|
$
|
803.8
|
|
Net income (v) (vi) (vii)
|
$
|
540.8
|
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|
$
|
629.4
|
|
|
$
|
963.9
|
|
|
$
|
479.9
|
|
|
$
|
485.3
|
|
Earnings per common share:
|
|
|
|
|
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|
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||||||||||
Basic
|
$
|
5.42
|
|
|
$
|
6.16
|
|
|
$
|
9.18
|
|
|
$
|
4.44
|
|
|
$
|
4.41
|
|
Diluted
|
5.40
|
|
|
6.13
|
|
|
9.16
|
|
|
4.43
|
|
|
4.40
|
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|||||
Financial Position
|
|
|
|
|
|
|
|
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|
||||||||||
Total assets
|
$
|
9,786.8
|
|
|
$
|
9,469.8
|
|
|
$
|
9,198.7
|
|
|
$
|
8,817.5
|
|
|
$
|
8,341.0
|
|
Total long-term debt obligations,
including current portion and short-term borrowings
|
3,246.0
|
|
|
2,689.4
|
|
|
2,619.4
|
|
|
2,478.2
|
|
|
2,401.1
|
|
|||||
Total stockholders’ equity
|
4,422.5
|
|
|
4,813.0
|
|
|
4,548.9
|
|
|
4,089.9
|
|
|
3,914.3
|
|
|||||
Total equity
|
4,745.9
|
|
|
5,132.7
|
|
|
4,865.4
|
|
|
4,404.5
|
|
|
4,224.7
|
|
|||||
Other Data Per Common Share
|
|
|
|
|
|
|
|
|
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||||||||||
Cash dividends declared per common share
|
$
|
1.48
|
|
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$
|
1.44
|
|
|
$
|
1.38
|
|
|
$
|
1.32
|
|
|
$
|
1.32
|
|
(i)
|
During 2019, the Company recognized pre-tax restructuring charges of $168.8 million within operating expenses related to the implementation of Precision Scheduled Railroading initiatives.
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(ii)
|
During 2018, the Company recognized a pre-tax gain of $17.9 million within operating expenses for insurance recoveries related to damage from Hurricane Harvey in 2017.
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(iii)
|
During 2018, 2017 and 2016, the Company recognized a pre-tax benefit of $37.7 million, $44.1 million and $62.8 million, respectively, within operating expenses related to a credit that was available for the excise tax included in the price of fuel that was purchased and consumed in locomotives and certain work equipment in Mexico. Effective January 1, 2019, the Company began recognizing the benefit as a reduction of income tax expense due to changes in Mexican tax law; and beginning April 30, 2019, railroads in Mexico are no longer eligible for the tax credit due to changes in Mexican tax regulations.
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(iv)
|
During 2015, the Company recognized pre-tax lease termination costs of $9.6 million within operating expenses due to the early termination of certain operating leases and the related purchase of equipment.
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(v)
|
During 2019, 2018 and 2015, the Company recognized pre-tax debt retirement and exchange costs of $1.1 million, $2.2 million and $7.6 million, respectively, related to debt retirement and restructuring activities that occurred during the periods.
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(vi)
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During 2019, the Company recognized a $12.8 million net tax benefit related to the Mexican fuel excise tax credit generated through April 29, 2019, noted in (iii) above.
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(vii)
|
During 2017, the Company recognized a provisional $413.0 million net tax benefit, as a result of the Tax Cuts and Jobs Act (the “Tax Reform Act”), which was signed into law December 22, 2017. During 2018, the Company recognized a $20.9 million net tax benefit for adjustments to the provisional tax impacts of the Tax Reform Act recognized in 2017.
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Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
the outcome of claims and litigation, including those related to environmental contamination, personal injuries and property damage;
|
•
|
changes in legislation and regulations or revisions of controlling authority;
|
•
|
the adverse impact of any termination or revocation of Kansas City Southern de México, S.A. de C.V. (“KCSM”)’s Concession by the Mexican government;
|
•
|
United States, Mexican and global economic, political and social conditions;
|
•
|
the effects of current and future multinational trade agreements on the level of trade among the United States, Mexico and Canada;
|
•
|
the level of trade between the United States and Asia or Mexico;
|
•
|
the effects of fluctuations in the peso-dollar exchange rate;
|
•
|
natural events such as severe weather, fire, floods, hurricanes, earthquakes or other disruptions to the Company’s operating systems, structures and equipment or the ability of customers to produce or deliver their products;
|
•
|
the effects of adverse general economic conditions affecting customer demand and the industries and geographic areas that produce and consume the commodities KCS carries;
|
•
|
the dependence on the stability, availability and security of the information technology systems to operate its business;
|
•
|
the effect of demand for KCS’s services exceeding network capacity or traffic congestion on operating efficiencies and service reliability;
|
•
|
uncertainties regarding the litigation KCS faces and any future claims and litigation;
|
•
|
the impact of competition, including competition from other rail carriers, trucking companies and maritime shippers in the United States and Mexico;
|
•
|
KCS’s reliance on agreements with other railroads and third parties to successfully implement its business strategy, operations and growth and expansion plans, including the strategy to convert customers from using trucking services to rail transportation services;
|
•
|
compliance with environmental regulations;
|
•
|
disruption in fuel supplies, changes in fuel prices and the Company’s ability to recapture its costs of fuel from customers;
|
•
|
material adverse changes in economic and industry conditions, including the availability of short and long-term financing, both within the United States and Mexico and globally;
|
•
|
climate change and the market and regulatory responses to climate change;
|
•
|
changes in labor costs and labor difficulties, including strikes and work stoppages affecting either operations or customers’ abilities to deliver goods for shipment;
|
•
|
KCS’s reliance on certain key suppliers of core rail equipment;
|
•
|
unavailability of qualified personnel; and
|
•
|
acts of terrorism, war or other acts of violence or crime or risk of such activities.
|
•
|
The Kansas City Southern Railway Company (“KCSR”), a wholly-owned subsidiary;
|
•
|
KCSM, a wholly-owned subsidiary;
|
•
|
Mexrail, Inc. (“Mexrail”), a wholly-owned consolidated subsidiary which, in turn, wholly owns The Texas Mexican Railway Company (“Tex-Mex”);
|
•
|
KCSM Servicios, S.A. de C.V. (“KCSM Servicios”), a wholly-owned subsidiary;
|
•
|
Meridian Speedway, LLC (“MSLLC”), a seventy percent-owned consolidated affiliate;
|
•
|
Panama Canal Railway Company (“PCRC”), a fifty percent-owned unconsolidated affiliate;
|
•
|
TFCM, S. de R.L. de C.V. (“TCM”), a forty-five percent-owned unconsolidated affiliate;
|
•
|
Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”), a twenty-five percent-owned unconsolidated affiliate; and
|
•
|
PTC-220, LLC (“PTC-220”), a fourteen percent-owned unconsolidated affiliate.
|
•
|
Customer service — improve and sustain consistency and reliability of service and create a more resilient and dependable network;
|
•
|
Facilitating growth — additional capacity for new opportunities;
|
•
|
Improving asset utilization — meet growing demand with the same or fewer assets; and
|
•
|
Improving the cost profile of the Company — increased profitability driven by volume and revenue growth and improved productivity and asset utilization.
|
|
|
Year ended
|
|
Improvement/ (Deterioration)
|
|
FY 2020
Goal
|
||
|
|
December 31,
|
|
|||||
|
|
2019
|
|
2018
|
|
|||
Gross velocity (mph) (i)
|
|
13.5
|
|
11.1
|
|
22%
|
|
17.0
|
Terminal dwell (hours) (ii)
|
|
20.8
|
|
24.8
|
|
16%
|
|
18.0
|
Train length (feet) (iii)
|
|
5,981
|
|
5,812
|
|
3%
|
|
6,350
|
Car miles per day (iv)
|
|
110.9
|
|
93.3
|
|
19%
|
|
135.0
|
Fuel efficiency (gallons per 1,000 GTM's) (v)
|
|
1.31
|
|
1.37
|
|
4%
|
|
1.24
|
(i) Gross velocity is the average train speed between origin and destination in miles per hour calculated as the sum of the miles traveled divided by the sum of total transit hours. Transit hours are measured as the difference between a train’s origin departure and destination arrival date and times broken down by segment across the train route (includes all time spent including crew changes, terminal dwell, delays, and incidents).
|
|||||
|
|
|
|
|
|
(ii) Terminal dwell is the average amount of time in hours between car arrival to and departure from the yard (excludes cars that move through a terminal on a run-through train, stored, bad ordered, and maintenance-of-way cars). Calculated by dividing the total number of hours cars spent in terminals by the total count of car dwell events.
|
|||||
|
|
|
|
|
|
(iii) Train length is the average length of a train across its reporting stations, including the origin and intermediate stations. Length of a train is the sum of car and locomotive lengths measured in feet.
|
|||||
|
|
|
|
|
|
(iv) Car miles per day is the miles a car travels divided by total transit days. Transit days are measured from opening event to closing event (includes all time spent in terminals and on trains).
|
|||||
|
|
|
|
|
|
(v) Fuel efficiency is calculated by taking locomotive fuel consumed in gallons divided by thousand gross ton miles (“GTM’s”) net of detours with no associated fuel gallons. GTM’s are the movement of one ton of train weight over one mile calculated by multiplying total train weight by distance the train moved. GTM’s exclude locomotive gross ton miles.
|
|
2019
|
|
2018
|
|
Change
|
||||||
Revenues
|
$
|
2,866.0
|
|
|
$
|
2,714.0
|
|
|
$
|
152.0
|
|
Operating expenses
|
1,979.7
|
|
|
1,727.7
|
|
|
252.0
|
|
|||
Operating income
|
886.3
|
|
|
986.3
|
|
|
(100.0
|
)
|
|||
Equity in net earnings of affiliates
|
1.0
|
|
|
2.6
|
|
|
(1.6
|
)
|
|||
Interest expense
|
(115.9
|
)
|
|
(110.0
|
)
|
|
(5.9
|
)
|
|||
Debt retirement costs
|
(1.1
|
)
|
|
(2.2
|
)
|
|
1.1
|
|
|||
Foreign exchange gain
|
17.1
|
|
|
7.8
|
|
|
9.3
|
|
|||
Other income, net
|
1.0
|
|
|
2.4
|
|
|
(1.4
|
)
|
|||
Income before income taxes
|
788.4
|
|
|
886.9
|
|
|
(98.5
|
)
|
|||
Income tax expense
|
247.6
|
|
|
257.5
|
|
|
(9.9
|
)
|
|||
Net income
|
540.8
|
|
|
629.4
|
|
|
(88.6
|
)
|
|||
Less: Net income attributable to noncontrolling interest
|
1.9
|
|
|
2.0
|
|
|
(0.1
|
)
|
|||
Net income attributable to Kansas City Southern and subsidiaries
|
$
|
538.9
|
|
|
$
|
627.4
|
|
|
$
|
(88.5
|
)
|
|
Revenues
|
|
Carloads and Units
|
|
Revenue per Carload/Unit
|
|||||||||||||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
|||||||||||||
Chemical and petroleum
|
$
|
737.2
|
|
|
$
|
622.1
|
|
|
19
|
%
|
|
337.4
|
|
|
297.9
|
|
|
13
|
%
|
|
$
|
2,185
|
|
|
$
|
2,088
|
|
|
5
|
%
|
Industrial and consumer products
|
610.4
|
|
|
591.0
|
|
|
3
|
%
|
|
320.9
|
|
|
324.9
|
|
|
(1
|
%)
|
|
1,902
|
|
|
1,819
|
|
|
5
|
%
|
||||
Agriculture and minerals
|
506.3
|
|
|
486.4
|
|
|
4
|
%
|
|
253.3
|
|
|
241.9
|
|
|
5
|
%
|
|
1,999
|
|
|
2,011
|
|
|
(1
|
%)
|
||||
Energy
|
246.2
|
|
|
256.3
|
|
|
(4
|
%)
|
|
244.7
|
|
|
248.6
|
|
|
(2
|
%)
|
|
1,006
|
|
|
1,031
|
|
|
(2
|
%)
|
||||
Intermodal
|
370.2
|
|
|
382.8
|
|
|
(3
|
%)
|
|
979.8
|
|
|
1,030.4
|
|
|
(5
|
%)
|
|
378
|
|
|
372
|
|
|
2
|
%
|
||||
Automotive
|
255.6
|
|
|
253.2
|
|
|
1
|
%
|
|
154.9
|
|
|
161.9
|
|
|
(4
|
%)
|
|
1,650
|
|
|
1,564
|
|
|
5
|
%
|
||||
Carload revenues, carloads and units
|
2,725.9
|
|
|
2,591.8
|
|
|
5
|
%
|
|
2,291.0
|
|
|
2,305.6
|
|
|
(1
|
%)
|
|
$
|
1,190
|
|
|
$
|
1,124
|
|
|
6
|
%
|
||
Other revenue
|
140.1
|
|
|
122.2
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues (i)
|
$
|
2,866.0
|
|
|
$
|
2,714.0
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(i) Included in revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fuel surcharge
|
$
|
298.1
|
|
|
$
|
253.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemical and petroleum. Revenues increased $115.1 million for the year ended December 31, 2019, compared to 2018, due to a 13% increase in carload/unit volumes and a 5% increase in revenue per carload/unit. Volumes increased primarily due to increased refined fuel products and liquid petroleum gas shipments to Mexico. Revenue per carload/unit increased due to longer average length of haul, positive pricing impacts, and higher fuel surcharge.
|
|
Industrial and consumer products. Revenue increased $19.4 million for the year ended December 31, 2019, compared to 2018, due to a 5% increase in revenue per carload/unit as a result of positive pricing impacts, higher fuel surcharge, and longer average length of haul. This increase was partially offset by a 1% decrease in carload/unit volumes primarily driven by paper shipments as a result of lower demand and available truck capacity, partially offset by an increase in metals volumes due to a customer’s change in sourcing location.
|
|
Agriculture and minerals. Revenues increased $19.9 million for the year ended December 31, 2019 compared to 2018, due to a 5% increase in carload/unit volumes as a result of improved cycle times for grain and an increase in ores and minerals due to increased U.S. government infrastructure spending. This increase was partially offset by a 1% decrease in revenue per carload/unit due to negative mix impacts.
|
|
Energy. Revenues decreased $10.1 million for the year ended December 31, 2019, compared to 2018, due to a 2% decrease in carload/unit volumes and revenue per carload/unit. Volumes decreased due to crude oil attributable to decreasing Canadian crude spreads, and frac sand attributable to changes in sourcing patterns, partially offset by an increase in utility coal volumes caused by improved cycle times and demand. Revenue per carload/unit decreased due to shorter average length of haul and mix, partially offset by positive pricing impacts.
|
|
|
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percent
|
|||||||
Compensation and benefits
|
$
|
529.1
|
|
|
$
|
495.7
|
|
|
$
|
33.4
|
|
|
7
|
%
|
Purchased services
|
219.2
|
|
|
200.7
|
|
|
18.5
|
|
|
9
|
%
|
|||
Fuel
|
340.4
|
|
|
348.2
|
|
|
(7.8
|
)
|
|
(2
|
%)
|
|||
Mexican fuel excise tax credit
|
—
|
|
|
(37.7
|
)
|
|
37.7
|
|
|
(100
|
%)
|
|||
Equipment costs
|
108.6
|
|
|
126.1
|
|
|
(17.5
|
)
|
|
(14
|
%)
|
|||
Depreciation and amortization
|
350.7
|
|
|
346.7
|
|
|
4.0
|
|
|
1
|
%
|
|||
Materials and other
|
262.9
|
|
|
265.9
|
|
|
(3.0
|
)
|
|
(1
|
%)
|
|||
Restructuring charges
|
168.8
|
|
|
—
|
|
|
168.8
|
|
|
100
|
%
|
|||
Gain on insurance recoveries related to hurricane damage
|
—
|
|
|
(17.9
|
)
|
|
17.9
|
|
|
(100
|
%)
|
|||
Total operating expenses
|
$
|
1,979.7
|
|
|
$
|
1,727.7
|
|
|
$
|
252.0
|
|
|
15
|
%
|
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|||||||||
Income tax expense using the statutory rate in effect
|
$
|
165.6
|
|
|
21.0
|
%
|
|
$
|
186.2
|
|
|
21.0
|
%
|
|
$
|
(20.6
|
)
|
|
—
|
|
Tax effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Difference between U.S. and foreign tax rate
|
47.6
|
|
|
6.0
|
%
|
|
46.1
|
|
|
5.2
|
%
|
|
1.5
|
|
|
0.8
|
%
|
|||
Foreign exchange (i)
|
35.9
|
|
|
4.6
|
%
|
|
21.8
|
|
|
2.5
|
%
|
|
14.1
|
|
|
2.1
|
%
|
|||
Tax credits
|
(16.8
|
)
|
|
(2.1
|
%)
|
|
(14.2
|
)
|
|
(1.6
|
%)
|
|
(2.6
|
)
|
|
(0.5
|
%)
|
|||
Mexican fuel excise tax credit, net (ii)
|
(12.8
|
)
|
|
(1.6
|
%)
|
|
—
|
|
|
—
|
|
|
(12.8
|
)
|
|
(1.6
|
%)
|
|||
State and local income tax provision, net
|
11.5
|
|
|
1.5
|
%
|
|
7.5
|
|
|
0.8
|
%
|
|
4.0
|
|
|
0.7
|
%
|
|||
Withholding tax
|
9.5
|
|
|
1.2
|
%
|
|
11.2
|
|
|
1.3
|
%
|
|
(1.7
|
)
|
|
(0.1
|
%)
|
|||
Global intangible low-taxed income (“GILTI”) tax, net
|
2.7
|
|
|
0.3
|
%
|
|
11.8
|
|
|
1.3
|
%
|
|
(9.1
|
)
|
|
(1.0
|
%)
|
|||
Change in U.S. tax rate
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
(0.3
|
%)
|
|
2.2
|
|
|
0.3
|
%
|
|||
Deemed mandatory repatriation
|
—
|
|
|
—
|
|
|
(18.7
|
)
|
|
(2.1
|
%)
|
|
18.7
|
|
|
2.1
|
%
|
|||
Other, net
|
4.4
|
|
|
0.5
|
%
|
|
8.0
|
|
|
0.9
|
%
|
|
(3.6
|
)
|
|
(0.4
|
%)
|
|||
Income tax expense
|
$
|
247.6
|
|
|
31.4
|
%
|
|
$
|
257.5
|
|
|
29.0
|
%
|
|
$
|
(9.9
|
)
|
|
2.4
|
%
|
(i)
|
Mexican income taxes are paid in Mexican pesos, and as a result, the effective income tax rate reflects fluctuations in the value of the Mexican peso against the U.S. dollar. The foreign exchange impact on income taxes includes the gain or loss from the revaluation of the Company’s net U.S. dollar-denominated monetary liabilities into Mexican pesos which is included in Mexican taxable income under Mexican tax law. As a result, a strengthening of the Mexican peso against the U.S. dollar for the reporting period will generally increase the Mexican cash tax obligation and the effective income tax rate, and a weakening of the Mexican peso against the U.S. dollar for the reporting period will generally decrease the Mexican cash tax obligation and the effective tax rate. To hedge its exposure to this cash tax risk, the Company enters into foreign currency derivative contracts, which are measured at fair value each period and any change in fair value is recognized in foreign exchange gain (loss) within the consolidated statements of income. Refer to Note 12, Derivative Instruments for further information.
|
(ii)
|
See discussion of the inclusion of the Mexican fuel excise tax credit, net within the effective tax rate in the Mexico Tax Reform section, below.
|
•
|
Approximately 40-50% to capital projects and strategic investments; and
|
•
|
Approximately 50-60% to share repurchases and dividends.
|
•
|
An increase in the quarterly dividend on KCS’s common stock from $0.36 to $0.40 per share. The Board declared a cash dividend on its outstanding common stock for this increased amount payable on January 22, 2020, to stockholders of record at the close of business on December 31, 2019, and
|
•
|
A new $2.0 billion share repurchase program (“2019 Program”), expiring December 31, 2022. This new program replaced the $800 million stock repurchase authorization announced in 2017 under which the Company purchased approximately $741 million of Company stock.
|
|
2019
|
|
2018
|
||||
Cash flows provided by (used for):
|
|
|
|
||||
Operating activities
|
$
|
1,103.5
|
|
|
$
|
945.7
|
|
Investing activities
|
(676.3
|
)
|
|
(651.9
|
)
|
||
Financing activities
|
(378.9
|
)
|
|
(327.4
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
48.3
|
|
|
(33.6
|
)
|
||
Cash and cash equivalents beginning of year
|
100.5
|
|
|
134.1
|
|
||
Cash and cash equivalents end of year
|
$
|
148.8
|
|
|
$
|
100.5
|
|
|
Payments Due by Period
|
||||||||||||||||||
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 years
|
|||||||||||
Long-term debt and short-term borrowings (including interest and finance lease obligations) (i)
|
$
|
6,219.5
|
|
|
$
|
149.9
|
|
|
$
|
271.4
|
|
|
$
|
885.3
|
|
|
$
|
4,912.9
|
|
Operating leases
|
141.6
|
|
|
50.3
|
|
|
53.0
|
|
|
29.9
|
|
|
8.4
|
|
|||||
Deemed mandatory repatriation tax (ii)
|
5.8
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
4.8
|
|
|||||
Obligations due to uncertainty in income taxes
|
2.2
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|||||
Capital expenditure obligations (iii)
|
176.2
|
|
|
153.1
|
|
|
23.1
|
|
|
—
|
|
|
—
|
|
|||||
Other contractual obligations (iv)
|
448.0
|
|
|
79.7
|
|
|
120.5
|
|
|
88.8
|
|
|
159.0
|
|
|||||
Total
|
$
|
6,993.3
|
|
|
$
|
433.0
|
|
|
$
|
468.0
|
|
|
$
|
1,007.2
|
|
|
$
|
5,085.1
|
|
(i)
|
For variable rate obligations, interest payments were calculated using the December 31, 2019 rate. For fixed rate obligations, interest payments were calculated based on the applicable rates and payment dates.
|
(ii)
|
U.S. federal income tax on deemed mandatory repatriation is payable over 8 years pursuant to the Tax Reform Act.
|
(iii)
|
Capital expenditure obligations include minimum capital expenditures under the KCSM Concession agreement and other regulatory requirements.
|
(iv)
|
Other contractual obligations include purchase commitments and certain maintenance agreements.
|
|
|
2019
|
|
2018
|
||||
Roadway capital program
|
|
$
|
264.9
|
|
|
$
|
245.7
|
|
Locomotives and freight cars
|
|
182.8
|
|
|
101.2
|
|
||
Capacity
|
|
84.8
|
|
|
69.8
|
|
||
Positive train control
|
|
15.5
|
|
|
28.9
|
|
||
Information technology
|
|
29.8
|
|
|
35.4
|
|
||
Other
|
|
6.5
|
|
|
31.3
|
|
||
Total capital expenditures (accrual basis)
|
|
584.3
|
|
|
512.3
|
|
||
Change in capital accruals
|
|
2.9
|
|
|
8.0
|
|
||
Total cash capital expenditures
|
|
$
|
587.2
|
|
|
$
|
520.3
|
|
|
|
|
|
|
||||
Purchase or replacement of assets under operating leases:
|
|
|
|
|
||||
Locomotives
|
|
$
|
—
|
|
|
$
|
50.6
|
|
Freight cars
|
|
0.9
|
|
|
49.9
|
|
||
Office building
|
|
38.1
|
|
|
—
|
|
||
Total purchase or replacement of assets under operating leases (accrual basis)
|
|
39.0
|
|
|
100.5
|
|
||
Change in capital accruals
|
|
—
|
|
|
(1.6
|
)
|
||
Total cash purchase or replacement of assets under operating leases
|
|
$
|
39.0
|
|
|
$
|
98.9
|
|
|
2019
|
|
2018
|
||
Track miles of rail installed
|
122
|
|
|
166
|
|
Cross ties installed (thousands)
|
627
|
|
|
651
|
|
•
|
Statistical analysis of historical patterns of use and retirements of each asset class;
|
•
|
Evaluation of any expected changes in current operations and the outlook for the continued use of the assets;
|
•
|
Evaluation of technological advances and changes to maintenance practices;
|
•
|
Historical and expected salvage to be received upon retirement;
|
•
|
Review of accounting policies and assumptions; and
|
•
|
Industry precedents and trends.
|
•
|
The Company’s executive management is dedicated to ensuring compliance with the various provisions of the Concession and to maintaining positive relationships with the SCT and other Mexican federal, state, and municipal governmental authorities;
|
•
|
During the time since the Concession was granted, the relationships between KCSM and the various Mexican governmental authorities have matured and the guidelines for operating under the Concession have become more defined with experience;
|
•
|
There are no known supportable sanctions or compliance issues that would cause the SCT to revoke the Concession or prevent KCSM from renewing the Concession; and
|
•
|
KCSM operations are an integral part of the KCS operations strategy, and related investment analyses and operational decisions assume that the Company’s cross border rail business operates into perpetuity, and do not assume that Mexico operations terminate at the end of the current Concession term.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
Hypothetical Change in Exchange Rate
|
|
Amount of Gain (Loss)
|
|
Affected Line Item in the Consolidated Statements of Income
|
Net monetary assets denominated in Mexican pesos at December 31, 2019:
|
|
|
|
|
|
|
Ps.1,956.9 million
|
|
From Ps.18.8 to Ps.19.8
|
|
($5.2 million)
|
|
Foreign exchange gain (loss)
|
Ps.1,956.9 million
|
|
From Ps.18.8 to Ps.17.8
|
|
$5.8 million
|
|
Foreign exchange gain (loss)
|
Hypothetical Change in Exchange Rate
|
|
Increase (Decrease) in Effective Income Tax Rate
|
|
Amount of Expense (Benefit)
|
|
Affected Line Item in the Consolidated Statements of Income
|
From Ps.18.8 to Ps.19.8
|
|
(2.0%)
|
|
($15.7 million)
|
|
Income tax expense (benefit)
|
From Ps.18.8 to Ps.17.8
|
|
2.2%
|
|
$17.5 million
|
|
Income tax expense (benefit)
|
Aggregate notional amount:
|
|
Hypothetical Change in Exchange Rate
|
|
Amount of Gain (Loss)
|
|
Affected Line Item in the Consolidated Statements of Income
|
$250.0 million
|
|
From Ps.19.0 to Ps.20.0
|
|
($12.5 million)
|
|
Foreign exchange gain (loss)
|
$250.0 million
|
|
From Ps.19.0 to Ps.18.0
|
|
$13.9 million
|
|
Foreign exchange gain (loss)
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
Financial Statement Schedules:
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions, except share
and per share amounts)
|
||||||||||
Revenues
|
$
|
2,866.0
|
|
|
$
|
2,714.0
|
|
|
$
|
2,582.9
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Compensation and benefits
|
529.1
|
|
|
495.7
|
|
|
493.8
|
|
|||
Purchased services
|
219.2
|
|
|
200.7
|
|
|
193.7
|
|
|||
Fuel
|
340.4
|
|
|
348.2
|
|
|
316.1
|
|
|||
Mexican fuel excise tax credit
|
—
|
|
|
(37.7
|
)
|
|
(44.1
|
)
|
|||
Equipment costs
|
108.6
|
|
|
126.1
|
|
|
129.2
|
|
|||
Depreciation and amortization
|
350.7
|
|
|
346.7
|
|
|
320.9
|
|
|||
Materials and other
|
262.9
|
|
|
265.9
|
|
|
251.7
|
|
|||
Restructuring charges
|
168.8
|
|
|
—
|
|
|
—
|
|
|||
Gain on insurance recoveries related to hurricane damage
|
—
|
|
|
(17.9
|
)
|
|
—
|
|
|||
Total operating expenses
|
1,979.7
|
|
|
1,727.7
|
|
|
1,661.3
|
|
|||
Operating income
|
886.3
|
|
|
986.3
|
|
|
921.6
|
|
|||
Equity in net earnings of affiliates
|
1.0
|
|
|
2.6
|
|
|
11.5
|
|
|||
Interest expense
|
(115.9
|
)
|
|
(110.0
|
)
|
|
(100.2
|
)
|
|||
Debt retirement costs
|
(1.1
|
)
|
|
(2.2
|
)
|
|
—
|
|
|||
Foreign exchange gain
|
17.1
|
|
|
7.8
|
|
|
41.7
|
|
|||
Other income (expense), net
|
1.0
|
|
|
2.4
|
|
|
(0.3
|
)
|
|||
Income before income taxes
|
788.4
|
|
|
886.9
|
|
|
874.3
|
|
|||
Income tax expense (benefit)
|
247.6
|
|
|
257.5
|
|
|
(89.6
|
)
|
|||
Net income
|
540.8
|
|
|
629.4
|
|
|
963.9
|
|
|||
Less: Net income attributable to noncontrolling interest
|
1.9
|
|
|
2.0
|
|
|
1.9
|
|
|||
Net income attributable to Kansas City Southern and subsidiaries
|
538.9
|
|
|
627.4
|
|
|
962.0
|
|
|||
Preferred stock dividends
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|||
Net income available to common stockholders
|
$
|
538.7
|
|
|
$
|
627.2
|
|
|
$
|
961.8
|
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
||||||||||
Basic earnings per share
|
$
|
5.42
|
|
|
$
|
6.16
|
|
|
$
|
9.18
|
|
Diluted earnings per share
|
$
|
5.40
|
|
|
$
|
6.13
|
|
|
$
|
9.16
|
|
|
|
|
|
|
|
||||||
Average shares outstanding (in thousands):
|
|
|
|
|
|
||||||
Basic
|
99,316
|
|
|
101,852
|
|
|
104,728
|
|
|||
Potentially dilutive common shares
|
431
|
|
|
418
|
|
|
312
|
|
|||
Diluted
|
99,747
|
|
|
102,270
|
|
|
105,040
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions)
|
||||||||||
Net income
|
$
|
540.8
|
|
|
$
|
629.4
|
|
|
$
|
963.9
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on interest rate derivative instruments during the period, net of tax of $(4.9) million, $1.0 million and $(2.2) million
|
(18.9
|
)
|
|
2.6
|
|
|
(3.4
|
)
|
|||
Reclassification adjustment from cash flow hedges included in net income, net of tax of less than $0.1 million
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustments, net of tax of $3.8 million for 2017
|
0.5
|
|
|
0.1
|
|
|
(3.3
|
)
|
|||
Other comprehensive income (loss)
|
(18.2
|
)
|
|
2.7
|
|
|
(6.7
|
)
|
|||
Comprehensive income
|
522.6
|
|
|
632.1
|
|
|
957.2
|
|
|||
Less: comprehensive income attributable to noncontrolling interest
|
1.9
|
|
|
2.0
|
|
|
1.9
|
|
|||
Comprehensive income attributable to Kansas City Southern and subsidiaries
|
$
|
520.7
|
|
|
$
|
630.1
|
|
|
$
|
955.3
|
|
|
2019
|
|
2018
|
||||
|
(In millions, except share
and per share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
148.8
|
|
|
$
|
100.5
|
|
Accounts receivable, net
|
274.2
|
|
|
301.2
|
|
||
Materials and supplies
|
150.6
|
|
|
160.3
|
|
||
Other current assets
|
155.0
|
|
|
73.4
|
|
||
Total current assets
|
728.6
|
|
|
635.4
|
|
||
Operating lease right-of-use assets
|
158.4
|
|
|
—
|
|
||
Investments
|
47.6
|
|
|
44.9
|
|
||
Property and equipment (including concession assets), net
|
8,806.3
|
|
|
8,691.1
|
|
||
Other assets
|
45.9
|
|
|
98.4
|
|
||
Total assets
|
$
|
9,786.8
|
|
|
$
|
9,469.8
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Long-term debt due within one year
|
$
|
18.0
|
|
|
$
|
10.1
|
|
Accounts payable and accrued liabilities
|
473.3
|
|
|
436.9
|
|
||
Total current liabilities
|
491.3
|
|
|
447.0
|
|
||
Long-term operating lease liabilities
|
85.7
|
|
|
—
|
|
||
Long-term debt
|
3,228.0
|
|
|
2,679.3
|
|
||
Deferred income taxes
|
1,128.0
|
|
|
1,079.9
|
|
||
Other noncurrent liabilities and deferred credits
|
107.9
|
|
|
130.9
|
|
||
Total liabilities
|
5,040.9
|
|
|
4,337.1
|
|
||
Stockholders’ equity:
|
|
|
|
||||
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued; 222,625 and 228,395 shares outstanding at December 31, 2019 and 2018, respectively
|
5.6
|
|
|
5.7
|
|
||
$.01 par, common stock, 400,000,000 shares authorized, 123,352,185 shares issued; 96,115,669 and 100,896,678 shares outstanding at December 31, 2019 and 2018, respectively
|
1.0
|
|
|
1.0
|
|
||
Additional paid-in capital
|
843.7
|
|
|
946.6
|
|
||
Retained earnings
|
3,601.3
|
|
|
3,870.6
|
|
||
Accumulated other comprehensive loss
|
(29.1
|
)
|
|
(10.9
|
)
|
||
Total stockholders’ equity
|
4,422.5
|
|
|
4,813.0
|
|
||
Noncontrolling interest
|
323.4
|
|
|
319.7
|
|
||
Total equity
|
4,745.9
|
|
|
5,132.7
|
|
||
Total liabilities and equity
|
$
|
9,786.8
|
|
|
$
|
9,469.8
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions)
|
||||||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
540.8
|
|
|
$
|
629.4
|
|
|
$
|
963.9
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
350.7
|
|
|
346.7
|
|
|
320.9
|
|
|||
Deferred income taxes
|
53.1
|
|
|
91.7
|
|
|
(301.3
|
)
|
|||
Equity in net earnings of affiliates
|
(1.0
|
)
|
|
(2.6
|
)
|
|
(11.5
|
)
|
|||
Share-based compensation
|
23.1
|
|
|
20.4
|
|
|
18.2
|
|
|||
Distributions from affiliates
|
7.0
|
|
|
5.5
|
|
|
12.5
|
|
|||
Settlement of foreign currency derivative instruments
|
11.9
|
|
|
13.9
|
|
|
(10.8
|
)
|
|||
Gain on foreign currency derivative instruments
|
(14.1
|
)
|
|
(6.3
|
)
|
|
(38.2
|
)
|
|||
Restructuring charges
|
168.8
|
|
|
—
|
|
|
—
|
|
|||
Cash payments for restructuring charges
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|||
Settlement of treasury lock agreements
|
(25.8
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on insurance recoveries related to hurricane damage
|
—
|
|
|
(17.9
|
)
|
|
—
|
|
|||
Insurance proceeds related to hurricane damage
|
—
|
|
|
17.9
|
|
|
—
|
|
|||
Deemed mandatory repatriation tax
|
—
|
|
|
(18.7
|
)
|
|
41.3
|
|
|||
Changes in working capital items:
|
|
|
|
|
|
||||||
Accounts receivable
|
36.4
|
|
|
(68.4
|
)
|
|
(46.7
|
)
|
|||
Materials and supplies
|
0.5
|
|
|
(4.5
|
)
|
|
1.4
|
|
|||
Other current assets
|
(56.8
|
)
|
|
(41.1
|
)
|
|
(68.6
|
)
|
|||
Accounts payable and accrued liabilities
|
10.5
|
|
|
(18.2
|
)
|
|
160.4
|
|
|||
Other, net
|
4.7
|
|
|
(2.1
|
)
|
|
(13.1
|
)
|
|||
Net cash provided by operating activities
|
1,103.5
|
|
|
945.7
|
|
|
1,028.4
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(587.2
|
)
|
|
(520.3
|
)
|
|
(585.4
|
)
|
|||
Purchase or replacement of assets under operating leases
|
(39.0
|
)
|
|
(98.9
|
)
|
|
(42.6
|
)
|
|||
Property investments in MSLLC
|
(27.5
|
)
|
|
(26.1
|
)
|
|
(26.0
|
)
|
|||
Investments in and advances to affiliates
|
(36.7
|
)
|
|
(19.2
|
)
|
|
(20.4
|
)
|
|||
Insurance proceeds related to hurricane damage
|
—
|
|
|
7.6
|
|
|
—
|
|
|||
Proceeds from disposal of property
|
22.1
|
|
|
8.7
|
|
|
8.8
|
|
|||
Other, net
|
(8.0
|
)
|
|
(3.7
|
)
|
|
(15.5
|
)
|
|||
Net cash used for investing activities
|
(676.3
|
)
|
|
(651.9
|
)
|
|
(681.1
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Net short-term borrowings
|
—
|
|
|
(348.1
|
)
|
|
159.0
|
|
|||
Proceeds from issuance of long-term debt
|
847.5
|
|
|
499.4
|
|
|
—
|
|
|||
Repayment of long-term debt
|
(285.0
|
)
|
|
(81.5
|
)
|
|
(25.4
|
)
|
|||
Dividends paid
|
(144.3
|
)
|
|
(147.5
|
)
|
|
(142.5
|
)
|
|||
Shares repurchased
|
(792.5
|
)
|
|
(243.5
|
)
|
|
(375.6
|
)
|
|||
Debt issuance and retirement costs paid
|
(11.6
|
)
|
|
(8.0
|
)
|
|
—
|
|
|||
Proceeds from employee stock plans
|
7.0
|
|
|
1.8
|
|
|
0.7
|
|
|||
Net cash used for financing activities
|
(378.9
|
)
|
|
(327.4
|
)
|
|
(383.8
|
)
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Net increase (decrease) during each year
|
48.3
|
|
|
(33.6
|
)
|
|
(36.5
|
)
|
|||
At beginning of year
|
100.5
|
|
|
134.1
|
|
|
170.6
|
|
|||
At end of year
|
$
|
148.8
|
|
|
$
|
100.5
|
|
|
$
|
134.1
|
|
Supplemental cash flow information
|
|
|
|
|
|
||||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Capital expenditures and purchase or replacement of assets under operating lease accrued but not yet paid at end of year
|
$
|
24.0
|
|
|
$
|
26.9
|
|
|
$
|
34.9
|
|
Other investing activities accrued but not yet paid at the end of the year
|
31.2
|
|
|
53.8
|
|
|
56.7
|
|
|||
Non-cash asset acquisitions
|
0.5
|
|
|
0.7
|
|
|
0.1
|
|
|||
Dividends accrued but not yet paid at end of year
|
39.0
|
|
|
36.6
|
|
|
37.2
|
|
|||
Cash payments:
|
|
|
|
|
|
||||||
Interest paid, net of amounts capitalized
|
$
|
110.5
|
|
|
$
|
105.0
|
|
|
$
|
97.9
|
|
Income tax payments, net of refunds
|
170.5
|
|
|
221.0
|
|
|
51.1
|
|
|
$25 Par
Preferred
Stock
|
|
$.01 Par
Common
Stock
|
|
Additional Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Non-
controlling
Interest
|
|
Total
|
|||||||||||||||
|
||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Balance at December 31, 2016
|
$
|
6.1
|
|
|
$
|
1.1
|
|
|
$
|
954.8
|
|
|
$
|
3,134.1
|
|
|
$
|
(6.2
|
)
|
|
$
|
314.6
|
|
|
$
|
4,404.5
|
|
|
Cumulative-effect adjustment due to adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
|
|
|
|
|
1.3
|
|
|
1.2
|
|
|
|
|
|
|
2.5
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
962.0
|
|
|
|
|
1.9
|
|
|
963.9
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(6.7
|
)
|
|
|
|
|
(6.7
|
)
|
||||||||
Dividends on common stock ($1.38/share)
|
|
|
|
|
|
|
(144.2
|
)
|
|
|
|
|
|
(144.2
|
)
|
|||||||||||||
Dividends on $25 par preferred stock ($1.00/share)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(0.2
|
)
|
|||||||||||||
Share repurchases
|
|
|
(0.1
|
)
|
|
(34.0
|
)
|
|
(341.5
|
)
|
|
|
|
|
|
(375.6
|
)
|
|||||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
3.0
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|
18.2
|
|
|
|
|
|
|
|
|
18.2
|
|
|||||||||||||
Balance at December 31, 2017
|
6.1
|
|
|
1.0
|
|
|
943.3
|
|
|
3,611.4
|
|
|
(12.9
|
)
|
|
316.5
|
|
|
4,865.4
|
|
||||||||
Reclassification due to adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
0.7
|
|
|
(0.7
|
)
|
|
|
|
—
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
627.4
|
|
|
|
|
2.0
|
|
|
629.4
|
|
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
2.7
|
|
|
|
|
|
2.7
|
|
||||||||
Contributions from noncontrolling interest
|
|
|
|
|
|
|
|
|
|
—
|
|
1.2
|
|
|
1.2
|
|
||||||||||||
Dividends on common stock ($1.44/share)
|
|
|
|
|
|
|
(146.7
|
)
|
|
|
|
|
|
(146.7
|
)
|
|||||||||||||
Dividends on $25 par preferred stock ($1.00/share)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(0.2
|
)
|
|||||||||||||
Share repurchases
|
(0.4
|
)
|
|
—
|
|
|
(21.1
|
)
|
|
(222.0
|
)
|
|
|
|
|
|
(243.5
|
)
|
||||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
4.0
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|
20.4
|
|
|
|
|
|
|
|
|
20.4
|
|
|||||||||||||
Balance at December 31, 2018
|
5.7
|
|
|
1.0
|
|
|
946.6
|
|
|
3,870.6
|
|
|
(10.9
|
)
|
|
319.7
|
|
|
5,132.7
|
|
||||||||
Net income
|
|
|
|
|
|
|
538.9
|
|
|
|
|
1.9
|
|
|
540.8
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
(18.2
|
)
|
|
|
|
|
(18.2
|
)
|
|||||||||
Contributions from noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
|
1.8
|
|
|||||||||||||
Dividends on common stock ($1.48/share)
|
|
|
|
|
|
|
(146.5
|
)
|
|
|
|
|
|
(146.5
|
)
|
|||||||||||||
Dividends on $25 par preferred stock ($1.00/share)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(0.2
|
)
|
|||||||||||||
Share repurchases
|
(0.1
|
)
|
|
—
|
|
|
(48.4
|
)
|
|
(661.5
|
)
|
|
|
|
|
|
(710.0
|
)
|
||||||||||
Forward contract for accelerated share repurchases
|
|
|
|
|
(82.5
|
)
|
|
|
|
|
|
|
|
(82.5
|
)
|
|||||||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
4.1
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|
23.9
|
|
|
|
|
|
|
|
|
23.9
|
|
|||||||||||||
Balance at December 31, 2019
|
$
|
5.6
|
|
|
$
|
1.0
|
|
|
$
|
843.7
|
|
|
$
|
3,601.3
|
|
|
$
|
(29.1
|
)
|
|
$
|
323.4
|
|
|
$
|
4,745.9
|
|
•
|
The Kansas City Southern Railway Company (“KCSR”), a wholly-owned consolidated subsidiary. KCSR is a U.S. Class I railroad that services the midwest and southeast regions of the United States;
|
•
|
Kansas City Southern de México, S.A. de C.V. (“KCSM”), a wholly-owned consolidated subsidiary which operates under the rights granted by the concession acquired from the Mexican government in 1997 (the “Concession”) as described below;
|
•
|
Mexrail, Inc. (“Mexrail”), a wholly-owned consolidated subsidiary; which wholly owns The Texas Mexican Railway Company (“Tex-Mex”);
|
•
|
KCSM Servicios, S.A. de C.V. (“KCSM Servicios”), a wholly-owned consolidated subsidiary which provides employee services to KCSM; and
|
•
|
Meridian Speedway, LLC (“MSLLC”), a seventy percent-owned consolidated affiliate. MSLLC owns the former KCSR rail line between Meridian, Mississippi and Shreveport, Louisiana, which is the portion of the rail line between Dallas, Texas and Meridian known as the “Meridian Speedway”.
|
•
|
Panama Canal Railway Company (“PCRC”), a fifty percent-owned unconsolidated affiliate which provides ocean to ocean freight and passenger services along the Panama Canal;
|
•
|
TFCM, S. de R.L. de C.V. (“TCM”), a forty-five percent-owned unconsolidated affiliate that operates a bulk liquid terminal in San Luis Potosí, Mexico;
|
•
|
Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”), a twenty-five percent-owned unconsolidated affiliate that provides railroad services as well as ancillary services in the greater Mexico City area; and
|
•
|
PTC-220, LLC (“PTC-220”), a fourteen percent-owned unconsolidated affiliate that holds the licenses to large blocks of radio spectrum and other assets for the deployment of positive train control.
|
|
|
2019
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Year-to-Date
|
||||||||||
Restructuring charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset impairments
|
|
$
|
62.5
|
|
|
$
|
50.7
|
|
|
$
|
8.6
|
|
|
$
|
36.0
|
|
|
$
|
157.8
|
|
Workforce reduction
|
|
3.2
|
|
|
—
|
|
|
3.4
|
|
|
0.4
|
|
|
$
|
7.0
|
|
||||
Contract restructuring
|
|
1.8
|
|
|
0.3
|
|
|
—
|
|
|
1.9
|
|
|
$
|
4.0
|
|
||||
Total restructuring charges
|
|
$
|
67.5
|
|
|
$
|
51.0
|
|
|
$
|
12.0
|
|
|
$
|
38.3
|
|
|
$
|
168.8
|
|
Leases
|
|
Classification
|
|
December 31, 2019
(in millions)
|
||
Assets
|
|
|
|
|
||
Operating
|
|
Operating lease right-of-use assets
|
|
$
|
158.4
|
|
Finance
|
|
Property and equipment (including Concession assets), net
|
|
8.7
|
|
|
Total leased assets
|
|
|
|
$
|
167.1
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
Accounts payable and accrued liabilities
|
|
$
|
45.4
|
|
Finance
|
|
Long-term debt due within one year
|
|
1.9
|
|
|
Noncurrent
|
|
|
|
|
||
Operating
|
|
Long-term operating lease liabilities
|
|
85.7
|
|
|
Finance
|
|
Long-term debt
|
|
6.8
|
|
|
Total lease liabilities
|
|
|
|
$
|
139.8
|
|
|
|
|
|
Year ended
|
||
Lease Cost
|
|
Classification
|
|
December 31, 2019
(in millions)
|
||
Operating lease cost:
|
|
|
|
|
||
|
|
Equipment costs
|
|
$
|
43.0
|
|
|
|
Materials and other
|
|
10.7
|
|
|
Finance lease cost:
|
|
|
|
|
||
Amortization of finance lease assets
|
|
Depreciation and amortization
|
|
2.7
|
|
|
Interest on lease liabilities
|
|
Interest expense
|
|
1.1
|
|
|
Total lease cost
|
|
|
|
$
|
57.5
|
|
Cash Flow Information
|
|
|
||
Cash paid for operating leases included in operating activities
|
|
$
|
58.7
|
|
Cash paid for finance leases included in operating activities
|
|
1.1
|
|
|
Cash paid for finance leases included in financing activities
|
|
2.7
|
|
|
Right-of-use assets obtained in exchange for operating lease liabilities
|
|
35.2
|
|
Lease Term and Discount Rate
|
|
Weighted-Average Remaining Lease Term (years)
|
|
Weighted-Average Discount Rate
|
|
Operating leases
|
|
4.9
|
|
3.9
|
%
|
Finance leases
|
|
3.9
|
|
11.1
|
%
|
Remaining Maturities of Lease Liabilities
Year Ending December 31 (in millions),
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
|
$
|
50.3
|
|
|
$
|
2.7
|
|
2021
|
|
31.0
|
|
|
2.7
|
|
||
2022
|
|
22.0
|
|
|
2.7
|
|
||
2023
|
|
16.2
|
|
|
2.4
|
|
||
2024
|
|
13.7
|
|
|
0.1
|
|
||
Thereafter
|
|
8.4
|
|
|
—
|
|
||
Total lease payments
|
|
141.6
|
|
|
10.6
|
|
||
Less imputed interest
|
|
10.5
|
|
|
1.9
|
|
||
Total
|
|
$
|
131.1
|
|
|
$
|
8.7
|
|
|
Years ended December 31,
|
||||||||||
|
2019
(ASC 606)
|
|
2018
(ASC 606)
|
|
2017
(ASC 605)
|
||||||
Chemical & Petroleum
|
|
|
|
|
|
||||||
Chemicals
|
$
|
246.9
|
|
|
$
|
236.3
|
|
|
$
|
225.1
|
|
Petroleum
|
341.8
|
|
|
241.9
|
|
|
186.0
|
|
|||
Plastics
|
148.5
|
|
|
143.9
|
|
|
128.8
|
|
|||
Total
|
737.2
|
|
|
622.1
|
|
|
539.9
|
|
|||
|
|
|
|
|
|
||||||
Industrial & Consumer Products
|
|
|
|
|
|
||||||
Forest Products
|
261.4
|
|
|
268.0
|
|
|
255.8
|
|
|||
Metals & Scrap
|
232.9
|
|
|
208.2
|
|
|
223.3
|
|
|||
Other
|
116.1
|
|
|
114.8
|
|
|
109.2
|
|
|||
Total
|
610.4
|
|
|
591.0
|
|
|
588.3
|
|
|||
|
|
|
|
|
|
||||||
Agriculture & Minerals
|
|
|
|
|
|
||||||
Grain
|
298.4
|
|
|
289.9
|
|
|
278.1
|
|
|||
Food Products
|
149.4
|
|
|
145.7
|
|
|
151.1
|
|
|||
Ores & Minerals
|
25.0
|
|
|
20.9
|
|
|
19.9
|
|
|||
Stone, Clay & Glass
|
33.5
|
|
|
29.9
|
|
|
28.3
|
|
|||
Total
|
506.3
|
|
|
486.4
|
|
|
477.4
|
|
|||
|
|
|
|
|
|
||||||
Energy
|
|
|
|
|
|
||||||
Utility Coal
|
126.9
|
|
|
117.3
|
|
|
166.3
|
|
|||
Coal & Petroleum Coke
|
43.2
|
|
|
44.3
|
|
|
40.8
|
|
|||
Frac Sand
|
27.4
|
|
|
37.4
|
|
|
51.8
|
|
|||
Crude Oil
|
48.7
|
|
|
57.3
|
|
|
24.9
|
|
|||
Total
|
246.2
|
|
|
256.3
|
|
|
283.8
|
|
|||
|
|
|
|
|
|
||||||
Intermodal
|
370.2
|
|
|
382.8
|
|
|
363.8
|
|
|||
|
|
|
|
|
|
||||||
Automotive
|
255.6
|
|
|
253.2
|
|
|
230.8
|
|
|||
|
|
|
|
|
|
||||||
Total Freight Revenues
|
2,725.9
|
|
|
2,591.8
|
|
|
2,484.0
|
|
|||
|
|
|
|
|
|
||||||
Other Revenue
|
140.1
|
|
|
122.2
|
|
|
98.9
|
|
|||
|
|
|
|
|
|
||||||
Total Revenues
|
$
|
2,866.0
|
|
|
$
|
2,714.0
|
|
|
$
|
2,582.9
|
|
Contract liabilities
|
|
Years ended December 31,
|
||||||
|
|
2019
(ASC 606)
|
|
2018
(ASC 606)
|
||||
Beginning balance
|
|
$
|
32.4
|
|
|
$
|
26.8
|
|
Revenue recognized that was included in the contract liability balance at the beginning of the period
|
|
(32.4
|
)
|
|
(26.8
|
)
|
||
Increases due to consideration received, excluding amounts recognized as revenue during the period
|
|
30.5
|
|
|
32.4
|
|
||
Ending balance
|
|
$
|
30.5
|
|
|
$
|
32.4
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income available to common stockholders for purposes of computing basic and diluted earnings per share
|
$
|
538.7
|
|
|
$
|
627.2
|
|
|
$
|
961.8
|
|
Weighted-average number of shares outstanding (in thousands):
|
|
|
|
|
|
||||||
Basic shares
|
99,316
|
|
|
101,852
|
|
|
104,728
|
|
|||
Effect of dilution
|
431
|
|
|
418
|
|
|
312
|
|
|||
Diluted shares
|
99,747
|
|
|
102,270
|
|
|
105,040
|
|
|||
Earnings per share:
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
5.42
|
|
|
$
|
6.16
|
|
|
$
|
9.18
|
|
Diluted earnings per share
|
$
|
5.40
|
|
|
$
|
6.13
|
|
|
$
|
9.16
|
|
Potentially dilutive shares excluded from the calculation (in thousands):
|
2019
|
|
2018
|
|
2017
|
|||
Stock options excluded as their inclusion would be anti-dilutive
|
121
|
|
|
117
|
|
|
150
|
|
As of December 31, 2019
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
|
Depreciation
Rates for 2019
|
|||||||
Land
|
$
|
224.9
|
|
|
$
|
—
|
|
|
$
|
224.9
|
|
|
N/A
|
|
Concession land rights
|
141.1
|
|
|
(29.4
|
)
|
|
111.7
|
|
|
1.0
|
%
|
|||
Rail and other track material
|
2,122.9
|
|
|
(373.3
|
)
|
|
1,749.6
|
|
|
1.8-3.2%
|
|
|||
Ties
|
1,738.4
|
|
|
(405.7
|
)
|
|
1,332.7
|
|
|
1.4-5.0%
|
|
|||
Grading
|
991.5
|
|
|
(179.4
|
)
|
|
812.1
|
|
|
1.1
|
%
|
|||
Bridges and tunnels
|
823.8
|
|
|
(163.0
|
)
|
|
660.8
|
|
|
1.2
|
%
|
|||
Ballast
|
835.6
|
|
|
(236.4
|
)
|
|
599.2
|
|
|
2.2-4.7%
|
|
|||
Other (a)
|
1,449.9
|
|
|
(438.5
|
)
|
|
1,011.4
|
|
|
3.0
|
%
|
|||
Total road property
|
7,962.1
|
|
|
(1,796.3
|
)
|
|
6,165.8
|
|
|
2.8
|
%
|
|||
Locomotives
|
1,593.9
|
|
|
(429.7
|
)
|
|
1,164.2
|
|
|
5.2
|
%
|
|||
Freight cars
|
980.8
|
|
|
(196.6
|
)
|
|
784.2
|
|
|
2.4
|
%
|
|||
Other equipment
|
77.9
|
|
|
(30.4
|
)
|
|
47.5
|
|
|
4.5
|
%
|
|||
Total equipment
|
2,652.6
|
|
|
(656.7
|
)
|
|
1,995.9
|
|
|
4.1
|
%
|
|||
Technology and other
|
345.1
|
|
|
(207.3
|
)
|
|
137.8
|
|
|
16.3
|
%
|
|||
Construction in progress
|
170.2
|
|
|
—
|
|
|
170.2
|
|
|
N/A
|
|
|||
Total property and equipment (including Concession assets)
|
$
|
11,496.0
|
|
|
$
|
(2,689.7
|
)
|
|
$
|
8,806.3
|
|
|
N/A
|
|
(a)
|
Other includes signals, buildings and other road assets.
|
As of December 31, 2018
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
|
Depreciation
Rates for 2018
|
|||||||
Land
|
$
|
219.3
|
|
|
$
|
—
|
|
|
$
|
219.3
|
|
|
N/A
|
|
Concession land rights
|
141.1
|
|
|
(27.9
|
)
|
|
113.2
|
|
|
1.0
|
%
|
|||
Rail and other track material
|
2,064.4
|
|
|
(296.3
|
)
|
|
1,768.1
|
|
|
2.4-2.9%
|
|
|||
Ties
|
1,697.9
|
|
|
(465.6
|
)
|
|
1,232.3
|
|
|
2.0-4.8%
|
|
|||
Grading
|
978.2
|
|
|
(169.4
|
)
|
|
808.8
|
|
|
0.9
|
%
|
|||
Bridges and tunnels
|
803.9
|
|
|
(153.8
|
)
|
|
650.1
|
|
|
1.1
|
%
|
|||
Ballast
|
799.9
|
|
|
(223.9
|
)
|
|
576.0
|
|
|
2.5-4.2%
|
|
|||
Other (a)
|
1,367.2
|
|
|
(401.4
|
)
|
|
965.8
|
|
|
3.2
|
%
|
|||
Total road property
|
7,711.5
|
|
|
(1,710.4
|
)
|
|
6,001.1
|
|
|
2.8
|
%
|
|||
Locomotives
|
1,638.1
|
|
|
(436.3
|
)
|
|
1,201.8
|
|
|
4.9
|
%
|
|||
Freight cars
|
1,034.1
|
|
|
(200.9
|
)
|
|
833.2
|
|
|
2.7
|
%
|
|||
Other equipment
|
67.3
|
|
|
(29.0
|
)
|
|
38.3
|
|
|
5.7
|
%
|
|||
Total equipment
|
2,739.5
|
|
|
(666.2
|
)
|
|
2,073.3
|
|
|
4.1
|
%
|
|||
Technology and other
|
305.6
|
|
|
(173.9
|
)
|
|
131.7
|
|
|
16.6
|
%
|
|||
Construction in progress
|
152.5
|
|
|
—
|
|
|
152.5
|
|
|
N/A
|
|
|||
Total property and equipment (including
Concession assets)
|
$
|
11,269.5
|
|
|
$
|
(2,578.4
|
)
|
|
$
|
8,691.1
|
|
|
N/A
|
|
(a)
|
Other includes signals, buildings and other road assets.
|
|
2019
|
|
2018
|
||||
Refundable taxes
|
$
|
67.3
|
|
|
$
|
11.2
|
|
Advances to affiliates
|
47.3
|
|
|
6.3
|
|
||
Mexican fuel excise tax credit
|
—
|
|
|
30.9
|
|
||
Prepaid expenses
|
21.0
|
|
|
21.7
|
|
||
Other
|
19.4
|
|
|
3.3
|
|
||
Other current assets
|
$
|
155.0
|
|
|
$
|
73.4
|
|
|
2019
|
|
2018
|
||||
Accounts payable
|
$
|
157.1
|
|
|
$
|
180.5
|
|
Income and other taxes
|
34.4
|
|
|
35.2
|
|
||
Accrued wages and vacation
|
79.0
|
|
|
60.9
|
|
||
Short-term operating lease liability
|
45.4
|
|
|
—
|
|
||
Derailments, personal injury and other claim provisions
|
38.5
|
|
|
44.0
|
|
||
Dividends payable
|
38.7
|
|
|
36.4
|
|
||
Contract liabilities
|
30.5
|
|
|
32.4
|
|
||
Interest payable
|
23.1
|
|
|
20.1
|
|
||
Other
|
26.6
|
|
|
27.4
|
|
||
Accounts payable and accrued liabilities
|
$
|
473.3
|
|
|
$
|
436.9
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
Level 2
|
|
Level 2
|
||||
Assets
|
|
|
|
|
||||
Foreign currency derivative instruments
|
|
$
|
2.5
|
|
|
$
|
0.3
|
|
Liabilities
|
|
|
|
|
||||
Debt instruments
|
|
3,535.7
|
|
|
2,661.3
|
|
||
Treasury lock agreements
|
|
—
|
|
|
2.0
|
|
Foreign currency forward contracts
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Contracts to purchase Ps./pay USD
|
|
Offsetting contracts to sell Ps./receive USD
|
|
|
||||||||||||||||||||||
|
Notional amount
|
|
Notional amount
|
|
Weighted-average exchange rate
(in Ps./USD)
|
|
Notional amount
|
|
Notional amount
|
|
Weighted-average exchange rate
(in Ps./USD)
|
|
Cash received/(paid) on settlement
|
||||||||||||||
Contracts executed in 2019 and outstanding at December 31, 2019
|
$
|
105.0
|
|
|
Ps.
|
2,041.2
|
|
|
Ps.
|
19.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Contracts executed in 2019 and settled in 2019
|
$
|
400.0
|
|
|
Ps.
|
7,892.5
|
|
|
Ps.
|
19.7
|
|
|
$
|
410.7
|
|
|
Ps.
|
7,892.5
|
|
|
Ps.
|
19.2
|
|
|
$
|
10.7
|
|
Contracts executed in 2018 and settled in 2019
|
$
|
20.0
|
|
|
Ps.
|
410.9
|
|
|
Ps.
|
20.5
|
|
|
$
|
20.9
|
|
|
Ps.
|
410.9
|
|
|
Ps.
|
19.6
|
|
|
$
|
0.9
|
|
Contracts executed in 2016 and settled in 2017
|
$
|
340.0
|
|
|
Ps.
|
6,207.7
|
|
|
Ps.
|
18.3
|
|
|
$
|
287.0
|
|
|
Ps.
|
6,207.7
|
|
|
Ps.
|
21.6
|
|
|
$
|
(53.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Foreign currency zero-cost collar contracts
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Notional amount
|
|
Cash received/(paid) on settlement
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Contracts executed in 2018 and settled in 2019
|
$
|
120.0
|
|
|
$
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contracts executed in 2018 and settled in 2018
|
$
|
220.0
|
|
|
$
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contracts executed in 2017 and settled in 2018
|
$
|
80.0
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contracts executed in 2017 and settled in 2017
|
$
|
450.0
|
|
|
$
|
42.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
||||||||
|
Balance Sheet Location
|
|
2019
|
|
2018
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
2.5
|
|
|
$
|
—
|
|
Foreign currency zero-cost collar contracts
|
Other current assets
|
|
—
|
|
|
0.3
|
|
||
Total derivatives not designated as hedging instruments
|
|
|
2.5
|
|
|
0.3
|
|
||
Total derivative assets
|
|
|
$
|
2.5
|
|
|
$
|
0.3
|
|
|
Derivative Liabilities
|
||||||||
|
Balance Sheet Location
|
|
2019
|
|
2018
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Treasury lock agreements
|
Other noncurrent liabilities and deferred credits
|
|
—
|
|
|
2.0
|
|
||
Total derivatives designated as hedging instruments
|
|
|
—
|
|
|
2.0
|
|
||
Total derivative liabilities
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
|
Amount of Gain/(Loss) Recognized in OCI on Derivative
|
|
Location of Gain/(Loss) Reclassified from AOCI into Income
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Income
|
||||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Treasury lock agreements
|
|
$
|
(23.8
|
)
|
|
$
|
3.6
|
|
|
$
|
(5.6
|
)
|
|
Interest expense
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total
|
|
|
$
|
(23.8
|
)
|
|
$
|
3.6
|
|
|
$
|
(5.6
|
)
|
|
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain/(Loss) Recognized in Income on Derivative
|
|
Amount of Gain/(Loss) Recognized in Income on Derivative
|
||||||||||
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign currency forward contracts
|
|
Foreign exchange gain
|
|
$
|
14.1
|
|
|
$
|
—
|
|
|
$
|
(11.9
|
)
|
Foreign currency zero-cost collar contracts
|
|
Foreign exchange gain
|
|
—
|
|
|
6.3
|
|
|
50.1
|
|
|||
Total
|
|
|
|
$
|
14.1
|
|
|
$
|
6.3
|
|
|
$
|
38.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
Principal
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net
|
|
Principal
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net
|
||||||||||||
Revolving credit facilities, variable interest rate, due 2024
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
KCS 2.35% senior notes, due 2020
|
—
|
|
|
—
|
|
|
—
|
|
|
257.3
|
|
|
0.7
|
|
|
256.6
|
|
||||||
KCS 3.00% senior notes, due 2023
|
439.1
|
|
|
2.5
|
|
|
436.6
|
|
|
439.1
|
|
|
3.2
|
|
|
435.9
|
|
||||||
KCS 3.85% senior notes, due 2023
|
199.2
|
|
|
1.1
|
|
|
198.1
|
|
|
199.2
|
|
|
1.4
|
|
|
197.8
|
|
||||||
KCS 3.125% senior notes, due 2026
|
250.0
|
|
|
2.4
|
|
|
247.6
|
|
|
250.0
|
|
|
2.7
|
|
|
247.3
|
|
||||||
KCS 2.875% senior notes, due 2029
|
425.0
|
|
|
4.2
|
|
|
420.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
KCS 4.30% senior notes, due 2043
|
448.7
|
|
|
8.8
|
|
|
439.9
|
|
|
448.7
|
|
|
9.1
|
|
|
439.6
|
|
||||||
KCS 4.95% senior notes, due 2045
|
499.2
|
|
|
7.2
|
|
|
492.0
|
|
|
499.2
|
|
|
7.4
|
|
|
491.8
|
|
||||||
KCS 4.70% senior notes, due 2048
|
500.0
|
|
|
6.0
|
|
|
494.0
|
|
|
500.0
|
|
|
6.2
|
|
|
493.8
|
|
||||||
KCS 4.20% senior notes, due 2069
|
425.0
|
|
|
7.0
|
|
|
418.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
KCSR 3.85% to 4.95% senior notes, due through 2045
|
2.7
|
|
|
—
|
|
|
2.7
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
||||||
KCSM 2.35% to 3.00% senior notes, due through 2023
|
5.6
|
|
|
—
|
|
|
5.6
|
|
|
23.2
|
|
|
0.1
|
|
|
23.1
|
|
||||||
RRIF loans 2.96% to 4.29%, due serially through 2037
|
70.2
|
|
|
0.4
|
|
|
69.8
|
|
|
74.1
|
|
|
0.4
|
|
|
73.7
|
|
||||||
Financing agreements 9.311%, due serially through 2020
|
12.0
|
|
|
—
|
|
|
12.0
|
|
|
15.5
|
|
|
—
|
|
|
15.5
|
|
||||||
Finance lease obligations, due serially to 2024
|
8.7
|
|
|
—
|
|
|
8.7
|
|
|
11.4
|
|
|
—
|
|
|
11.4
|
|
||||||
Other debt obligations
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||||
Total
|
3,285.6
|
|
|
39.6
|
|
|
3,246.0
|
|
|
2,720.6
|
|
|
31.2
|
|
|
2,689.4
|
|
||||||
Less: Debt due within one year
|
18.0
|
|
|
—
|
|
|
18.0
|
|
|
10.1
|
|
|
—
|
|
|
10.1
|
|
||||||
Long-term debt
|
$
|
3,267.6
|
|
|
$
|
39.6
|
|
|
$
|
3,228.0
|
|
|
$
|
2,710.5
|
|
|
$
|
31.2
|
|
|
$
|
2,679.3
|
|
Years
|
Long-Term Debt
|
|
Net Present Value Finance Leases
|
|
Total
|
||||||
2020
|
$
|
16.1
|
|
|
$
|
1.9
|
|
|
$
|
18.0
|
|
2021
|
4.2
|
|
|
2.1
|
|
|
6.3
|
|
|||
2022
|
4.3
|
|
|
2.3
|
|
|
6.6
|
|
|||
2023
|
649.1
|
|
|
2.3
|
|
|
651.4
|
|
|||
2024
|
4.6
|
|
|
0.1
|
|
|
4.7
|
|
|||
Thereafter
|
2,598.6
|
|
|
—
|
|
|
2,598.6
|
|
|||
Total
|
$
|
3,276.9
|
|
|
$
|
8.7
|
|
|
$
|
3,285.6
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
22.3
|
|
|
$
|
(10.5
|
)
|
|
$
|
47.3
|
|
State and local
|
1.8
|
|
|
0.7
|
|
|
0.6
|
|
|||
Foreign
|
170.4
|
|
|
175.6
|
|
|
163.8
|
|
|||
Total current
|
194.5
|
|
|
165.8
|
|
|
211.7
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
27.5
|
|
|
77.6
|
|
|
(350.1
|
)
|
|||
State and local
|
14.8
|
|
|
9.1
|
|
|
11.9
|
|
|||
Foreign
|
10.8
|
|
|
5.0
|
|
|
36.9
|
|
|||
Total deferred
|
53.1
|
|
|
91.7
|
|
|
(301.3
|
)
|
|||
Total income tax expense (benefit)
|
$
|
247.6
|
|
|
$
|
257.5
|
|
|
$
|
(89.6
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
U.S.
|
$
|
250.3
|
|
|
$
|
366.2
|
|
|
$
|
331.8
|
|
Foreign
|
538.1
|
|
|
520.7
|
|
|
542.5
|
|
|||
Total income before income taxes
|
$
|
788.4
|
|
|
$
|
886.9
|
|
|
$
|
874.3
|
|
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Reserves not currently deductible for tax
|
$
|
36.8
|
|
|
$
|
36.6
|
|
Lease liability
|
35.1
|
|
|
—
|
|
||
Compensation and benefits
|
23.1
|
|
|
20.9
|
|
||
Tax credit and loss carryovers
|
21.5
|
|
|
28.9
|
|
||
Other
|
22.4
|
|
|
16.9
|
|
||
Gross deferred tax assets before valuation allowance
|
138.9
|
|
|
103.3
|
|
||
Valuation allowance
|
(4.4
|
)
|
|
(2.3
|
)
|
||
Net deferred tax assets
|
134.5
|
|
|
101.0
|
|
||
Liabilities:
|
|
|
|
||||
Property
|
(1,181.3
|
)
|
|
(1,099.2
|
)
|
||
Investments
|
(52.4
|
)
|
|
(49.7
|
)
|
||
Other
|
(28.8
|
)
|
|
(32.0
|
)
|
||
Gross deferred tax liabilities
|
(1,262.5
|
)
|
|
(1,180.9
|
)
|
||
Net deferred tax liability
|
$
|
(1,128.0
|
)
|
|
$
|
(1,079.9
|
)
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|||||||||
Income tax expense using the statutory rate in effect
|
$
|
165.6
|
|
|
21.0
|
%
|
|
$
|
186.2
|
|
|
21.0
|
%
|
|
$
|
306.0
|
|
|
35.0
|
%
|
Tax effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Difference between U.S. and foreign tax rate
|
47.6
|
|
|
6.0
|
%
|
|
46.1
|
|
|
5.2
|
%
|
|
(26.6
|
)
|
|
(3.0
|
%)
|
|||
Foreign exchange (i)
|
35.9
|
|
|
4.6
|
%
|
|
21.8
|
|
|
2.5
|
%
|
|
31.6
|
|
|
3.6
|
%
|
|||
Tax credits
|
(16.8
|
)
|
|
(2.1
|
%)
|
|
(14.2
|
)
|
|
(1.6
|
%)
|
|
(8.4
|
)
|
|
(1.0
|
%)
|
|||
Mexican fuel excise tax credit, net (ii)
|
(12.8
|
)
|
|
(1.6
|
%)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
State and local income tax provision, net
|
11.5
|
|
|
1.5
|
%
|
|
7.5
|
|
|
0.8
|
%
|
|
8.3
|
|
|
1.0
|
%
|
|||
Withholding tax
|
9.5
|
|
|
1.2
|
%
|
|
11.2
|
|
|
1.3
|
%
|
|
8.1
|
|
|
0.9
|
%
|
|||
Global intangible low-taxed income (“GILTI”) tax, net
|
2.7
|
|
|
0.3
|
%
|
|
11.8
|
|
|
1.3
|
%
|
|
—
|
|
|
—
|
|
|||
Change in U.S. tax rate
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
(0.3
|
%)
|
|
(487.6
|
)
|
|
(55.8
|
%)
|
|||
Deemed mandatory repatriation
|
—
|
|
|
—
|
|
|
(18.7
|
)
|
|
(2.1
|
%)
|
|
74.6
|
|
|
8.6
|
%
|
|||
Other, net
|
4.4
|
|
|
0.5
|
%
|
|
8.0
|
|
|
0.9
|
%
|
|
4.4
|
|
|
0.5
|
%
|
|||
Income tax expense (benefit)
|
$
|
247.6
|
|
|
31.4
|
%
|
|
$
|
257.5
|
|
|
29.0
|
%
|
|
$
|
(89.6
|
)
|
|
(10.2
|
%)
|
(i)
|
Mexican income taxes are paid in Mexican pesos, and as a result, the effective income tax rate reflects fluctuations in the value of the Mexican peso against the U.S. dollar. The foreign exchange impact on income taxes includes the gain or loss from the revaluation of the Company’s net U.S. dollar-denominated monetary liabilities into Mexican pesos which is included in Mexican taxable income under Mexican tax law. As a result, a strengthening of the Mexican peso against the U.S. dollar for the reporting period will generally increase the Mexican cash tax obligation and the effective income tax rate, and a weakening of the Mexican peso against the U.S. dollar for the reporting period will generally decrease the Mexican cash tax obligation and the effective tax rate. To hedge its exposure to this cash tax risk, the Company enters into foreign currency derivative contracts, which are measured at fair value each period and any change in fair value is recognized in foreign exchange gain (loss) within the consolidated statements of income. Refer to Note 12, Derivative Instruments in the consolidated financial statements for further information.
|
(ii)
|
For further discussion of the Mexican fuel excise tax credit, refer to Note 4, Mexican fuel excise tax credit.
|
|
2019
|
|
2018
|
||||
Balance at January 1,
|
$
|
2.2
|
|
|
$
|
—
|
|
Additions for tax positions of prior years
|
—
|
|
|
2.2
|
|
||
Balance at December 31,
|
$
|
2.2
|
|
|
$
|
2.2
|
|
|
Shares Authorized
|
|
Shares Issued
|
||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
|||||
$25 par, 4% noncumulative, preferred stock
|
840,000
|
|
|
840,000
|
|
|
649,736
|
|
|
649,736
|
|
$1 par, preferred stock
|
2,000,000
|
|
|
2,000,000
|
|
|
—
|
|
|
—
|
|
$.01 par, common stock
|
400,000,000
|
|
|
400,000,000
|
|
|
123,352,185
|
|
|
123,352,185
|
|
|
2019
|
|
2018
|
||
$25 par, 4% noncumulative, preferred stock
|
222,625
|
|
|
228,395
|
|
$.01 par, common stock
|
96,115,669
|
|
|
100,896,678
|
|
Third Party Institution
|
|
Agreement Date
|
|
Total Amount of Agreement (in millions)
|
|
Initial Shares Delivered
|
|
Fair Market Value of Initial Shares
(in millions)
|
|
Weighted-Average Price Per Share
|
|||||||
ASR Agreement #1
|
|
November 2019
|
|
$
|
275.0
|
|
|
1,511,380
|
|
$
|
233.75
|
|
|
$
|
154.66
|
|
|
ASR Agreement #2
|
|
November 2019
|
|
$
|
275.0
|
|
|
1,511,380
|
|
$
|
233.75
|
|
|
$
|
154.66
|
|
|
Total
|
|
|
|
$
|
550.0
|
|
|
3,022,760
|
|
|
$
|
467.5
|
|
|
$
|
154.66
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
22,455,507
|
|
|
20,315,380
|
|
|
16,745,566
|
|
Shares repurchased
|
5,076,530
|
|
|
2,272,213
|
|
|
3,759,678
|
|
Shares issued to fund stock option exercises
|
(109,560
|
)
|
|
(24,024
|
)
|
|
(9,110
|
)
|
Employee stock purchase plan shares issued
|
(72,707
|
)
|
|
(62,866
|
)
|
|
(76,401
|
)
|
Nonvested shares issued
|
(124,031
|
)
|
|
(51,191
|
)
|
|
(124,519
|
)
|
Nonvested shares forfeited
|
10,777
|
|
|
5,995
|
|
|
20,166
|
|
Balance at end of year
|
27,236,516
|
|
|
22,455,507
|
|
|
20,315,380
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash dividends declared per common share
|
$
|
1.48
|
|
|
$
|
1.44
|
|
|
$
|
1.38
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Expected dividend yield
|
1.33
|
%
|
|
1.36
|
%
|
|
1.52
|
%
|
|||
Expected volatility
|
26.38
|
%
|
|
27.09
|
%
|
|
30.74
|
%
|
|||
Risk-free interest rate
|
2.64
|
%
|
|
2.80
|
%
|
|
2.20
|
%
|
|||
Expected term (years)
|
5.7
|
|
|
6.0
|
|
|
6.0
|
|
|||
Weighted-average grant date fair value of stock options granted
|
$
|
27.70
|
|
|
$
|
28.52
|
|
|
$
|
24.49
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|||||
|
|
|
|
|
In years
|
|
In millions
|
|||||
Options outstanding at December 31, 2018
|
564,515
|
|
|
$
|
83.24
|
|
|
|
|
|
||
Granted
|
142,348
|
|
|
108.00
|
|
|
|
|
|
|||
Exercised
|
(109,560
|
)
|
|
63.57
|
|
|
|
|
|
|||
Forfeited or expired
|
(789
|
)
|
|
104.48
|
|
|
|
|
|
|||
Options outstanding at December 31, 2019
|
596,514
|
|
|
$
|
92.73
|
|
|
6.2
|
|
$
|
36.0
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2019
|
391,685
|
|
|
$
|
86.42
|
|
|
4.9
|
|
$
|
26.1
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Aggregate grant-date fair value of stock options vested
|
$
|
3.0
|
|
|
$
|
1.9
|
|
|
$
|
2.8
|
|
Intrinsic value of stock options exercised
|
7.2
|
|
|
1.0
|
|
|
0.2
|
|
|||
Cash received from option exercises
|
7.0
|
|
|
1.8
|
|
|
0.7
|
|
|||
Tax benefit from options exercised during the annual period
|
1.8
|
|
|
0.2
|
|
|
0.1
|
|
|
Number of
Shares
|
|
Weighted-
Average Grant
Date Fair
Value
|
|
Aggregate
Intrinsic
Value
|
|||||
|
|
|
|
|
In millions
|
|||||
Nonvested stock at December 31, 2018
|
257,621
|
|
|
$
|
96.61
|
|
|
|
||
Granted
|
96,163
|
|
|
114.69
|
|
|
|
|||
Vested
|
(122,812
|
)
|
|
101.67
|
|
|
|
|||
Forfeited
|
(10,777
|
)
|
|
102.44
|
|
|
|
|||
Nonvested stock at December 31, 2019
|
220,195
|
|
|
$
|
101.40
|
|
|
$
|
33.7
|
|
|
Target Number of Shares *
|
|
Weighted-Average Grant Date Fair Value
|
|||
Nonvested stock, at December 31, 2018
|
152,979
|
|
|
$
|
91.74
|
|
Granted
|
50,681
|
|
|
110.13
|
|
|
Vested
|
(51,072
|
)
|
|
82.71
|
|
|
Forfeited
|
(4,403
|
)
|
|
104.47
|
|
|
Nonvested stock, at December 31, 2019
|
148,185
|
|
|
$
|
100.76
|
|
|
Exercise Date
|
|
Received
from
Employees(i)
In millions
|
|||||||||
|
Date
Issued
|
|
Purchase
Price
|
|
Shares
Issued
|
|
||||||
|
|
|
|
|
|
|
|
|||||
July 2019 offering
|
January 3, 2020
|
|
$
|
104.83
|
|
|
27,949
|
|
|
$
|
2.9
|
|
January 2019 offering
|
July 2, 2019
|
|
81.83
|
|
|
36,735
|
|
|
3.0
|
|
||
July 2018 offering
|
January 3, 2019
|
|
81.13
|
|
|
35,972
|
|
|
2.9
|
|
||
January 2018 offering
|
July 2, 2018
|
|
90.07
|
|
|
32,271
|
|
|
2.9
|
|
||
July 2017 offering
|
January 4, 2018
|
|
89.18
|
|
|
30,595
|
|
|
2.7
|
|
||
January 2017 offering
|
July 5, 2017
|
|
68.70
|
|
|
40,293
|
|
|
2.8
|
|
(i)
|
Represents amounts received from employees through payroll deductions for share purchases under applicable offering.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Expected dividend yield
|
1.36
|
%
|
|
1.22
|
%
|
|
1.47
|
%
|
|||
Expected volatility
|
17.43
|
%
|
|
13.29
|
%
|
|
17.09
|
%
|
|||
Risk-free interest rate
|
2.31
|
%
|
|
1.73
|
%
|
|
0.89
|
%
|
|||
Expected term (years)
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|||
Weighted-average grant date fair value
|
$
|
21.56
|
|
|
$
|
18.66
|
|
|
$
|
17.90
|
|
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
$
|
19.6
|
|
|
$
|
19.3
|
|
Accruals
|
6.3
|
|
|
5.3
|
|
||
Changes in estimate
|
0.2
|
|
|
2.4
|
|
||
Payments
|
(5.2
|
)
|
|
(7.4
|
)
|
||
Balance at end of year
|
$
|
20.9
|
|
|
$
|
19.6
|
|
|
Fourth
|
|
Third
|
|
Second
|
|
First
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
729.5
|
|
|
$
|
747.7
|
|
|
$
|
714.0
|
|
|
$
|
674.8
|
|
Operating income (i)
|
236.0
|
|
|
282.0
|
|
|
208.0
|
|
|
160.3
|
|
||||
Net income (iii)
|
127.9
|
|
|
180.6
|
|
|
129.1
|
|
|
103.2
|
|
||||
Net income attributable to Kansas City Southern and subsidiaries
|
127.2
|
|
|
180.2
|
|
|
128.7
|
|
|
102.8
|
|
||||
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
1.31
|
|
|
$
|
1.81
|
|
|
$
|
1.29
|
|
|
$
|
1.02
|
|
Diluted earnings per common share
|
1.30
|
|
|
1.81
|
|
|
1.28
|
|
|
1.02
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
694.0
|
|
|
$
|
699.0
|
|
|
$
|
682.4
|
|
|
$
|
638.6
|
|
Operating income (ii)(iv)
|
256.4
|
|
|
265.4
|
|
|
245.8
|
|
|
218.7
|
|
||||
Net income (v)
|
161.8
|
|
|
174.0
|
|
|
148.7
|
|
|
144.9
|
|
||||
Net income attributable to Kansas City Southern and subsidiaries
|
161.1
|
|
|
173.6
|
|
|
148.2
|
|
|
144.5
|
|
||||
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
1.59
|
|
|
$
|
1.71
|
|
|
$
|
1.45
|
|
|
$
|
1.41
|
|
Diluted earnings per common share
|
1.59
|
|
|
1.70
|
|
|
1.45
|
|
|
1.40
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property and equipment (including Concession assets), net
|
|
|
|
||||
U.S.
|
$
|
5,435.9
|
|
|
$
|
5,401.3
|
|
Mexico
|
3,370.4
|
|
|
3,289.8
|
|
||
Total property and equipment (including Concession assets), net
|
$
|
8,806.3
|
|
|
$
|
8,691.1
|
|
|
2019
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,325.8
|
|
|
$
|
42.7
|
|
|
$
|
1,541.4
|
|
|
$
|
(43.9
|
)
|
|
$
|
2,866.0
|
|
Operating expenses
|
5.3
|
|
|
1,044.7
|
|
|
37.6
|
|
|
934.7
|
|
|
(42.6
|
)
|
|
1,979.7
|
|
||||||
Operating income (loss)
|
(5.3
|
)
|
|
281.1
|
|
|
5.1
|
|
|
606.7
|
|
|
(1.3
|
)
|
|
886.3
|
|
||||||
Equity in net earnings (losses) of affiliates
|
548.7
|
|
|
(1.1
|
)
|
|
3.7
|
|
|
(0.3
|
)
|
|
(550.0
|
)
|
|
1.0
|
|
||||||
Interest expense
|
(109.7
|
)
|
|
(85.4
|
)
|
|
—
|
|
|
(28.0
|
)
|
|
107.2
|
|
|
(115.9
|
)
|
||||||
Debt retirement costs
|
(0.7
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(1.1
|
)
|
||||||
Foreign exchange gain
|
—
|
|
|
—
|
|
|
—
|
|
|
17.1
|
|
|
—
|
|
|
17.1
|
|
||||||
Other income (expense), net
|
107.5
|
|
|
(1.1
|
)
|
|
—
|
|
|
2.0
|
|
|
(107.4
|
)
|
|
1.0
|
|
||||||
Income before income taxes
|
540.5
|
|
|
193.3
|
|
|
8.8
|
|
|
597.3
|
|
|
(551.5
|
)
|
|
788.4
|
|
||||||
Income tax expense
|
1.6
|
|
|
44.4
|
|
|
0.7
|
|
|
201.3
|
|
|
(0.4
|
)
|
|
247.6
|
|
||||||
Net income
|
538.9
|
|
|
148.9
|
|
|
8.1
|
|
|
396.0
|
|
|
(551.1
|
)
|
|
540.8
|
|
||||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
||||||
Net income attributable to Kansas City Southern and subsidiaries
|
538.9
|
|
|
148.9
|
|
|
8.1
|
|
|
394.1
|
|
|
(551.1
|
)
|
|
538.9
|
|
||||||
Other comprehensive income (loss)
|
(18.2
|
)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
(0.5
|
)
|
|
(18.2
|
)
|
||||||
Comprehensive income attributable to Kansas City Southern and subsidiaries
|
$
|
520.7
|
|
|
$
|
148.9
|
|
|
$
|
8.1
|
|
|
$
|
394.6
|
|
|
$
|
(551.6
|
)
|
|
$
|
520.7
|
|
|
2018
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,279.2
|
|
|
$
|
45.2
|
|
|
$
|
1,433.5
|
|
|
$
|
(43.9
|
)
|
|
$
|
2,714.0
|
|
Operating expenses
|
5.2
|
|
|
877.2
|
|
|
38.7
|
|
|
848.4
|
|
|
(41.8
|
)
|
|
1,727.7
|
|
||||||
Operating income (loss)
|
(5.2
|
)
|
|
402.0
|
|
|
6.5
|
|
|
585.1
|
|
|
(2.1
|
)
|
|
986.3
|
|
||||||
Equity in net earnings (losses) of affiliates
|
635.6
|
|
|
(1.1
|
)
|
|
4.5
|
|
|
0.3
|
|
|
(636.7
|
)
|
|
2.6
|
|
||||||
Interest expense
|
(96.1
|
)
|
|
(78.8
|
)
|
|
—
|
|
|
(28.6
|
)
|
|
93.5
|
|
|
(110.0
|
)
|
||||||
Debt retirement costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
||||||
Foreign exchange gain
|
—
|
|
|
—
|
|
|
—
|
|
|
7.8
|
|
|
—
|
|
|
7.8
|
|
||||||
Other income, net
|
92.5
|
|
|
1.6
|
|
|
—
|
|
|
1.9
|
|
|
(93.6
|
)
|
|
2.4
|
|
||||||
Income before income taxes
|
626.8
|
|
|
323.7
|
|
|
11.0
|
|
|
564.3
|
|
|
(638.9
|
)
|
|
886.9
|
|
||||||
Income tax expense (benefit)
|
(0.6
|
)
|
|
69.7
|
|
|
2.6
|
|
|
186.3
|
|
|
(0.5
|
)
|
|
257.5
|
|
||||||
Net income
|
627.4
|
|
|
254.0
|
|
|
8.4
|
|
|
378.0
|
|
|
(638.4
|
)
|
|
629.4
|
|
||||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
||||||
Net income attributable to Kansas City Southern and subsidiaries
|
627.4
|
|
|
254.0
|
|
|
8.4
|
|
|
376.0
|
|
|
(638.4
|
)
|
|
627.4
|
|
||||||
Other comprehensive income
|
2.7
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
2.7
|
|
||||||
Comprehensive income attributable to Kansas City Southern and subsidiaries
|
$
|
630.1
|
|
|
$
|
254.0
|
|
|
$
|
8.4
|
|
|
$
|
376.1
|
|
|
$
|
(638.5
|
)
|
|
$
|
630.1
|
|
|
2017
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,220.8
|
|
|
$
|
43.5
|
|
|
$
|
1,359.0
|
|
|
$
|
(40.4
|
)
|
|
$
|
2,582.9
|
|
Operating expenses
|
5.7
|
|
|
862.8
|
|
|
39.1
|
|
|
791.0
|
|
|
(37.3
|
)
|
|
1,661.3
|
|
||||||
Operating income (loss)
|
(5.7
|
)
|
|
358.0
|
|
|
4.4
|
|
|
568.0
|
|
|
(3.1
|
)
|
|
921.6
|
|
||||||
Equity in net earnings of affiliates
|
974.8
|
|
|
19.0
|
|
|
4.5
|
|
|
9.6
|
|
|
(996.4
|
)
|
|
11.5
|
|
||||||
Interest expense
|
(81.3
|
)
|
|
(72.2
|
)
|
|
—
|
|
|
(34.4
|
)
|
|
87.7
|
|
|
(100.2
|
)
|
||||||
Debt retirement costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange gain
|
—
|
|
|
—
|
|
|
—
|
|
|
41.7
|
|
|
—
|
|
|
41.7
|
|
||||||
Other income (expense), net
|
86.7
|
|
|
(0.6
|
)
|
|
—
|
|
|
1.2
|
|
|
(87.6
|
)
|
|
(0.3
|
)
|
||||||
Income before income taxes
|
974.5
|
|
|
304.2
|
|
|
8.9
|
|
|
586.1
|
|
|
(999.4
|
)
|
|
874.3
|
|
||||||
Income tax expense (benefit)
|
9.9
|
|
|
(310.6
|
)
|
|
(42.5
|
)
|
|
254.2
|
|
|
(0.6
|
)
|
|
(89.6
|
)
|
||||||
Net income
|
964.6
|
|
|
614.8
|
|
|
51.4
|
|
|
331.9
|
|
|
(998.8
|
)
|
|
963.9
|
|
||||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
||||||
Net income attributable to Kansas City Southern and subsidiaries
|
964.6
|
|
|
614.8
|
|
|
51.4
|
|
|
330.0
|
|
|
(998.8
|
)
|
|
962.0
|
|
||||||
Other comprehensive income (loss)
|
(6.7
|
)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
(0.5
|
)
|
|
(6.7
|
)
|
||||||
Comprehensive income attributable to Kansas City Southern and subsidiaries
|
$
|
957.9
|
|
|
$
|
614.8
|
|
|
$
|
51.4
|
|
|
$
|
330.5
|
|
|
$
|
(999.3
|
)
|
|
$
|
955.3
|
|
|
December 31, 2019
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
$
|
214.7
|
|
|
$
|
534.3
|
|
|
$
|
5.3
|
|
|
$
|
406.2
|
|
|
$
|
(431.9
|
)
|
|
$
|
728.6
|
|
Operating lease right-of-use assets
|
—
|
|
|
124.5
|
|
|
—
|
|
|
37.7
|
|
|
(3.8
|
)
|
|
158.4
|
|
||||||
Investments
|
—
|
|
|
3.5
|
|
|
9.5
|
|
|
34.6
|
|
|
—
|
|
|
47.6
|
|
||||||
Investments in consolidated subsidiaries
|
5,201.4
|
|
|
1.9
|
|
|
203.0
|
|
|
—
|
|
|
(5,406.3
|
)
|
|
—
|
|
||||||
Property and equipment (including Concession assets), net
|
—
|
|
|
4,440.0
|
|
|
158.8
|
|
|
4,217.1
|
|
|
(9.6
|
)
|
|
8,806.3
|
|
||||||
Other assets
|
2,526.2
|
|
|
16.2
|
|
|
—
|
|
|
26.4
|
|
|
(2,522.9
|
)
|
|
45.9
|
|
||||||
Total assets
|
$
|
7,942.3
|
|
|
$
|
5,120.4
|
|
|
$
|
376.6
|
|
|
$
|
4,722.0
|
|
|
$
|
(8,374.5
|
)
|
|
$
|
9,786.8
|
|
Liabilities and equity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
$
|
365.5
|
|
|
$
|
250.1
|
|
|
$
|
68.8
|
|
|
$
|
241.2
|
|
|
$
|
(434.3
|
)
|
|
$
|
491.3
|
|
Long-term operating lease liabilities
|
—
|
|
|
64.7
|
|
|
—
|
|
|
23.9
|
|
|
(2.9
|
)
|
|
85.7
|
|
||||||
Long-term debt
|
3,147.2
|
|
|
1,826.8
|
|
|
—
|
|
|
777.0
|
|
|
(2,523.0
|
)
|
|
3,228.0
|
|
||||||
Deferred income taxes
|
(6.1
|
)
|
|
844.8
|
|
|
85.5
|
|
|
206.2
|
|
|
(2.4
|
)
|
|
1,128.0
|
|
||||||
Other liabilities
|
13.2
|
|
|
76.2
|
|
|
0.2
|
|
|
18.3
|
|
|
—
|
|
|
107.9
|
|
||||||
Stockholders’ equity
|
4,422.5
|
|
|
2,057.8
|
|
|
222.1
|
|
|
3,132.0
|
|
|
(5,411.9
|
)
|
|
4,422.5
|
|
||||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
323.4
|
|
|
—
|
|
|
323.4
|
|
||||||
Total liabilities and equity
|
$
|
7,942.3
|
|
|
$
|
5,120.4
|
|
|
$
|
376.6
|
|
|
$
|
4,722.0
|
|
|
$
|
(8,374.5
|
)
|
|
$
|
9,786.8
|
|
|
December 31, 2018
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
$
|
229.8
|
|
|
$
|
257.6
|
|
|
$
|
5.0
|
|
|
$
|
350.4
|
|
|
$
|
(207.4
|
)
|
|
$
|
635.4
|
|
Operating lease right-of-use assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investments
|
—
|
|
|
3.9
|
|
|
4.4
|
|
|
36.6
|
|
|
—
|
|
|
44.9
|
|
||||||
Investments in consolidated subsidiaries
|
4,852.8
|
|
|
4.4
|
|
|
190.2
|
|
|
—
|
|
|
(5,047.4
|
)
|
|
—
|
|
||||||
Property and equipment (including Concession assets), net
|
—
|
|
|
4,429.2
|
|
|
165.1
|
|
|
4,104.8
|
|
|
(8.0
|
)
|
|
8,691.1
|
|
||||||
Other assets
|
2,523.4
|
|
|
59.3
|
|
|
—
|
|
|
36.8
|
|
|
(2,521.1
|
)
|
|
98.4
|
|
||||||
Total assets
|
$
|
7,606.0
|
|
|
$
|
4,754.4
|
|
|
$
|
364.7
|
|
|
$
|
4,528.6
|
|
|
$
|
(7,783.9
|
)
|
|
$
|
9,469.8
|
|
Liabilities and equity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
$
|
214.2
|
|
|
$
|
109.2
|
|
|
$
|
80.1
|
|
|
$
|
252.3
|
|
|
$
|
(208.8
|
)
|
|
$
|
447.0
|
|
Long-term operating lease liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Long-term debt
|
2,563.0
|
|
|
1,828.8
|
|
|
—
|
|
|
808.5
|
|
|
(2,521.0
|
)
|
|
2,679.3
|
|
||||||
Deferred income taxes
|
(4.4
|
)
|
|
812.8
|
|
|
84.7
|
|
|
188.8
|
|
|
(2.0
|
)
|
|
1,079.9
|
|
||||||
Other liabilities
|
20.2
|
|
|
94.8
|
|
|
0.2
|
|
|
15.8
|
|
|
(0.1
|
)
|
|
130.9
|
|
||||||
Stockholders’ equity
|
4,813.0
|
|
|
1,908.8
|
|
|
199.7
|
|
|
2,943.5
|
|
|
(5,052.0
|
)
|
|
4,813.0
|
|
||||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
319.7
|
|
|
—
|
|
|
319.7
|
|
||||||
Total liabilities and equity
|
$
|
7,606.0
|
|
|
$
|
4,754.4
|
|
|
$
|
364.7
|
|
|
$
|
4,528.6
|
|
|
$
|
(7,783.9
|
)
|
|
$
|
9,469.8
|
|
|
2019
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided
|
$
|
354.4
|
|
|
$
|
375.4
|
|
|
$
|
1.0
|
|
|
$
|
587.7
|
|
|
$
|
(215.0
|
)
|
|
$
|
1,103.5
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
—
|
|
|
(278.8
|
)
|
|
(1.0
|
)
|
|
(307.4
|
)
|
|
—
|
|
|
(587.2
|
)
|
||||||
Purchase or replacement of assets under operating leases
|
—
|
|
|
(38.4
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
(39.0
|
)
|
||||||
Property investments in MSLLC
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.5
|
)
|
|
—
|
|
|
(27.5
|
)
|
||||||
Insurance proceeds related to hurricane damage
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investments in and advances to affiliates
|
(14.3
|
)
|
|
—
|
|
|
(14.3
|
)
|
|
(31.4
|
)
|
|
23.3
|
|
|
(36.7
|
)
|
||||||
Proceeds from repayment of loans to affiliates
|
147.0
|
|
|
—
|
|
|
—
|
|
|
130.0
|
|
|
(277.0
|
)
|
|
—
|
|
||||||
Loans to affiliates
|
(147.0
|
)
|
|
—
|
|
|
—
|
|
|
(130.0
|
)
|
|
277.0
|
|
|
—
|
|
||||||
Proceeds from disposal of property
|
—
|
|
|
17.8
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
22.1
|
|
||||||
Other investing activities
|
—
|
|
|
(12.5
|
)
|
|
—
|
|
|
2.6
|
|
|
1.9
|
|
|
(8.0
|
)
|
||||||
Net cash used
|
(14.3
|
)
|
|
(311.9
|
)
|
|
(15.3
|
)
|
|
(360.0
|
)
|
|
25.2
|
|
|
(676.3
|
)
|
||||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net short-term borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Proceeds from issuance of long-term debt
|
847.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
847.5
|
|
||||||
Repayment of long-term debt
|
(257.4
|
)
|
|
(2.8
|
)
|
|
—
|
|
|
(24.8
|
)
|
|
—
|
|
|
(285.0
|
)
|
||||||
Debt issuance and retirement costs paid
|
(9.1
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
(11.6
|
)
|
||||||
Dividends paid
|
(144.3
|
)
|
|
—
|
|
|
—
|
|
|
(213.1
|
)
|
|
213.1
|
|
|
(144.3
|
)
|
||||||
Shares repurchased
|
(792.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(792.5
|
)
|
||||||
Proceeds from loans from affiliates
|
130.0
|
|
|
147.0
|
|
|
—
|
|
|
—
|
|
|
(277.0
|
)
|
|
—
|
|
||||||
Repayment of loans from affiliates
|
(130.0
|
)
|
|
(147.0
|
)
|
|
—
|
|
|
—
|
|
|
277.0
|
|
|
—
|
|
||||||
Contributions from affiliates
|
—
|
|
|
—
|
|
|
14.3
|
|
|
9.0
|
|
|
(23.3
|
)
|
|
—
|
|
||||||
Proceeds from employee stock plans
|
7.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.0
|
|
||||||
Net cash provided (used)
|
(348.8
|
)
|
|
(4.0
|
)
|
|
14.3
|
|
|
(230.2
|
)
|
|
189.8
|
|
|
(378.9
|
)
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net increase (decrease)
|
(8.7
|
)
|
|
59.5
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
48.3
|
|
||||||
At beginning of year
|
41.5
|
|
|
28.1
|
|
|
—
|
|
|
30.9
|
|
|
—
|
|
|
100.5
|
|
||||||
At end of year
|
$
|
32.8
|
|
|
$
|
87.6
|
|
|
$
|
—
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
148.8
|
|
|
2018
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided
|
$
|
223.8
|
|
|
$
|
460.9
|
|
|
$
|
1.2
|
|
|
$
|
501.3
|
|
|
$
|
(241.5
|
)
|
|
$
|
945.7
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
—
|
|
|
(244.8
|
)
|
|
(1.1
|
)
|
|
(274.4
|
)
|
|
—
|
|
|
(520.3
|
)
|
||||||
Purchase or replacement of assets under operating leases
|
—
|
|
|
(88.4
|
)
|
|
—
|
|
|
(10.5
|
)
|
|
—
|
|
|
(98.9
|
)
|
||||||
Property investments in MSLLC
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.1
|
)
|
|
—
|
|
|
(26.1
|
)
|
||||||
Insurance proceeds related to hurricane damage
|
—
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
||||||
Investments in and advances to affiliates
|
(7.8
|
)
|
|
—
|
|
|
(7.8
|
)
|
|
(15.2
|
)
|
|
11.6
|
|
|
(19.2
|
)
|
||||||
Proceeds from repayment of loans to affiliates
|
4,584.5
|
|
|
—
|
|
|
—
|
|
|
125.0
|
|
|
(4,709.5
|
)
|
|
—
|
|
||||||
Loans to affiliates
|
(4,515.6
|
)
|
|
—
|
|
|
—
|
|
|
(125.0
|
)
|
|
4,640.6
|
|
|
—
|
|
||||||
Proceeds from disposal of property
|
—
|
|
|
4.1
|
|
|
—
|
|
|
4.6
|
|
|
—
|
|
|
8.7
|
|
||||||
Other investing activities
|
—
|
|
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
(3.7
|
)
|
||||||
Net cash provided (used)
|
61.1
|
|
|
(327.6
|
)
|
|
(8.9
|
)
|
|
(321.6
|
)
|
|
(54.9
|
)
|
|
(651.9
|
)
|
||||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net short-term borrowings
|
(348.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(348.1
|
)
|
||||||
Proceeds from issuance of long-term debt
|
499.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
499.4
|
|
||||||
Repayment of long-term debt
|
—
|
|
|
(3.9
|
)
|
|
(0.1
|
)
|
|
(77.5
|
)
|
|
—
|
|
|
(81.5
|
)
|
||||||
Debt issuance and retirement costs paid
|
(6.2
|
)
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|
—
|
|
|
(8.0
|
)
|
||||||
Dividends paid
|
(147.5
|
)
|
|
—
|
|
|
—
|
|
|
(239.1
|
)
|
|
239.1
|
|
|
(147.5
|
)
|
||||||
Shares repurchased
|
(243.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(243.5
|
)
|
||||||
Proceeds from loans from affiliates
|
125.0
|
|
|
4,465.6
|
|
|
—
|
|
|
50.0
|
|
|
(4,640.6
|
)
|
|
—
|
|
||||||
Repayment of loans from affiliates
|
(125.0
|
)
|
|
(4,584.5
|
)
|
|
—
|
|
|
—
|
|
|
4,709.5
|
|
|
—
|
|
||||||
Contributions from affiliates
|
—
|
|
|
—
|
|
|
7.8
|
|
|
3.8
|
|
|
(11.6
|
)
|
|
—
|
|
||||||
Proceeds from employee stock plans
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||
Net cash provided (used)
|
(244.1
|
)
|
|
(122.8
|
)
|
|
7.7
|
|
|
(264.6
|
)
|
|
296.4
|
|
|
(327.4
|
)
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net increase (decrease)
|
40.8
|
|
|
10.5
|
|
|
—
|
|
|
(84.9
|
)
|
|
—
|
|
|
(33.6
|
)
|
||||||
At beginning of year
|
0.7
|
|
|
17.6
|
|
|
—
|
|
|
115.8
|
|
|
—
|
|
|
134.1
|
|
||||||
At end of year
|
$
|
41.5
|
|
|
$
|
28.1
|
|
|
$
|
—
|
|
|
$
|
30.9
|
|
|
$
|
—
|
|
|
$
|
100.5
|
|
|
2017
|
||||||||||||||||||||||
|
Parent
|
|
KCSR
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
KCS
|
||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided
|
$
|
220.4
|
|
|
$
|
556.6
|
|
|
$
|
0.4
|
|
|
$
|
266.9
|
|
|
$
|
(15.9
|
)
|
|
$
|
1,028.4
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
—
|
|
|
(375.2
|
)
|
|
(0.3
|
)
|
|
(209.9
|
)
|
|
—
|
|
|
(585.4
|
)
|
||||||
Purchase or replacement of assets under operating leases
|
—
|
|
|
(42.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42.6
|
)
|
||||||
Property investments in MSLLC
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.0
|
)
|
|
—
|
|
|
(26.0
|
)
|
||||||
Insurance proceeds related to hurricane damage
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investments in and advances to affiliates
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
(20.4
|
)
|
|
1.2
|
|
|
(20.4
|
)
|
||||||
Proceeds from repayment of loans to affiliates
|
12,241.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,241.7
|
)
|
|
—
|
|
||||||
Loans to affiliates
|
(12,102.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,102.6
|
|
|
—
|
|
||||||
Proceeds from disposal of property
|
—
|
|
|
6.0
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
8.8
|
|
||||||
Other investing activities
|
—
|
|
|
(17.2
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
3.4
|
|
|
(15.5
|
)
|
||||||
Net cash provided (used)
|
138.5
|
|
|
(429.0
|
)
|
|
(0.9
|
)
|
|
(255.2
|
)
|
|
(134.5
|
)
|
|
(681.1
|
)
|
||||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net short-term borrowings
|
159.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
159.0
|
|
||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repayment of long-term debt
|
—
|
|
|
(3.5
|
)
|
|
(0.1
|
)
|
|
(21.8
|
)
|
|
—
|
|
|
(25.4
|
)
|
||||||
Debt issuance and retirement costs paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends paid
|
(142.5
|
)
|
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|
12.5
|
|
|
(142.5
|
)
|
||||||
Shares repurchased
|
(375.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(375.6
|
)
|
||||||
Proceeds from loans from affiliates
|
—
|
|
|
12,102.6
|
|
|
—
|
|
|
—
|
|
|
(12,102.6
|
)
|
|
—
|
|
||||||
Repayment of loans from affiliates
|
—
|
|
|
(12,241.7
|
)
|
|
—
|
|
|
—
|
|
|
12,241.7
|
|
|
—
|
|
||||||
Contributions from affiliates
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
(1.2
|
)
|
|
—
|
|
||||||
Proceeds from employee stock plans
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Net cash provided (used)
|
(358.4
|
)
|
|
(142.6
|
)
|
|
0.5
|
|
|
(33.7
|
)
|
|
150.4
|
|
|
(383.8
|
)
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net increase (decrease)
|
0.5
|
|
|
(15.0
|
)
|
|
—
|
|
|
(22.0
|
)
|
|
—
|
|
|
(36.5
|
)
|
||||||
At beginning of year
|
0.2
|
|
|
32.6
|
|
|
—
|
|
|
137.8
|
|
|
—
|
|
|
170.6
|
|
||||||
At end of year
|
$
|
0.7
|
|
|
$
|
17.6
|
|
|
$
|
—
|
|
|
$
|
115.8
|
|
|
$
|
—
|
|
|
$
|
134.1
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Plan Category
|
Number of Securities
to Be Issued upon
Exercise of
Outstanding Options,
Warrants and Rights (i)
|
|
Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants and
Rights
|
|
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans-Excluding
Securities Reflected in
the First Column (ii)
|
||||
Equity compensation plans:
|
|
|
|
|
|
||||
Approved by security holders
|
792,252
|
|
|
$
|
94.98
|
|
|
6,593,887
|
|
Not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
792,252
|
|
|
$
|
94.98
|
|
|
6,593,887
|
|
(i)
|
Includes 606,514 outstanding options, 148,185 outstanding performance shares (at target), 9,604 outstanding deferred shares and dividend equivalents, and 27,949 ESPP shares purchased on December 31, 2019.
|
(ii)
|
Includes 3,414,797 shares available for issuance under the 2009 Employee Stock Purchase Plan and 3,179,090 shares available for issuance under the 2017 Plan in the form of nonvested shares, bonus shares, performance units or performance shares or issued upon the exercise of options (including incentive stock options) or stock appreciation rights awarded under the 2017 Plan.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Exhibit
|
Description
|
3.1
|
|
|
|
3.1.1
|
|
|
|
3.1.2
|
|
|
|
3.2
|
|
|
|
4.1
|
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries because the total amount of securities authorized under any of such instruments does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish a copy of any such agreements to the Securities and Exchange Commission upon request.
|
|
|
4.2
|
|
|
|
4.2.1
|
|
|
|
4.2.2
|
|
|
|
4.3
|
|
|
|
4.3.1
|
|
|
|
4.3.2
|
Exhibit
|
Description
|
4.4
|
|
|
|
4.4.1
|
|
|
|
4.4.2
|
|
|
|
4.5
|
|
|
|
4.5.1
|
|
|
|
4.5.2
|
|
|
|
4.5.3
|
|
|
|
4.6
|
|
|
|
4.6.1
|
|
|
|
4.6.2
|
|
|
|
4.6.3
|
|
|
|
4.6.4
|
|
|
|
4.6.5
|
|
|
|
4.6.6
|
|
|
|
4.6.7
|
|
|
|
4.6.8
|
Exhibit
|
Description
|
4.6.9
|
|
|
|
4.6.10
|
|
|
|
4.6.11
|
|
|
|
4.6.12
|
|
|
|
4.7
|
|
|
|
10.1
|
|
10.2
|
|
|
|
10.3*
|
|
|
|
10.4*
|
|
|
|
10.5*
|
|
|
|
10.6*
|
|
|
|
10.7
|
|
|
|
10.7.1
|
|
|
|
10.7.2
|
|
|
|
10.7.3
|
|
|
|
10.7.4
|
|
|
|
Exhibit
|
Description
|
10.7.5
|
|
|
|
10.8
|
|
|
|
10.8.1
|
|
|
|
10.8.2
|
|
|
|
10.8.3
|
|
|
|
10.8.4
|
|
|
|
10.8.5
|
|
|
|
10.9*
|
|
|
|
10.9.1*
|
|
|
|
10.9.2*
|
|
|
|
10.9.3*
|
|
|
|
10.9.4*
|
|
|
|
10.9.5*
|
|
|
|
10.9.6*
|
|
|
|
Exhibit
|
Description
|
10.9.7*
|
|
|
|
10.9.8*
|
|
|
|
10.10*
|
|
|
|
10.10.1*
|
|
|
|
10.11*
|
|
|
|
10.11.1*
|
|
|
|
10.11.2*
|
|
|
|
10.11.3*
|
|
|
|
10.11.4*
|
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.15.1
|
|
|
|
Exhibit
|
Description
|
10.16
|
|
|
|
10.17*
|
|
|
|
10.18*
|
|
|
|
10.19*
|
|
|
|
10.20*
|
|
|
|
10.20.1*
|
|
|
|
10.20.2*
|
|
|
|
10.20.3*
|
|
|
|
10.20.4*
|
|
|
|
10.20.5*
|
|
|
|
21.1
|
|
|
|
23.1
|
|
|
|
23.2
|
|
|
|
24.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
Kansas City Southern
|
|
|
|
By:
|
/S/ PATRICK J. OTTENSMEYER
|
|
Patrick J. Ottensmeyer
President, Chief Executive Officer and Director
|
Signature
|
|
Title
|
|
|
|
/S/ PATRICK J. OTTENSMEYER
|
|
President, Chief Executive Officer and Director (Principal Executive Officer).
|
Patrick J. Ottensmeyer
|
|
|
|
|
|
/S/ MICHAEL W. UPCHURCH
|
|
Executive Vice President and
Chief Financial Officer (Principal Financial Officer).
|
Michael W. Upchurch
|
|
|
|
|
|
/s/ SUZANNE M. GRAFTON
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer).
|
Suzanne M. Grafton
|
|
|
|
|
|
/S/ ROBERT J. DRUTEN
|
|
Chairman of the Board and Director.
|
Robert J. Druten
|
|
|
|
|
|
/s/ LYDIA I. BEEBE
|
|
Director.
|
Lydia I. Beebe
|
|
|
|
|
|
/S/ LU M. CÓRDOVA
|
|
Director.
|
Lu M. Córdova
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
/S/ ANTONIO O. GARZA, JR.
|
|
Director.
|
Antonio O. Garza, Jr.
|
|
|
|
|
|
/S/ DAVID GARZA-SANTOS
|
|
Director.
|
David Garza-Santos
|
|
|
|
|
|
/S/ JANET H. KENNEDY
|
|
Director.
|
Janet H. Kennedy
|
|
|
|
|
|
/s/ MITCHELL J. KREBS
|
|
Director.
|
Mitchell J. Krebs
|
|
|
|
|
|
/s/ HENRY J. MAIER
|
|
Director.
|
Henry J. Maier
|
|
|
|
|
|
/S/ THOMAS A. MCDONNELL
|
|
Director.
|
Thomas A. McDonnell
|
|
|
|
|
•
|
the title and stated value;
|
•
|
voting rights, if any;
|
•
|
any rights and terms of redemption (including sinking fund provisions);
|
•
|
the dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation;
|
•
|
whether dividends are cumulative or non-cumulative, the date from which dividends will accumulate;
|
•
|
the relative ranking and preferences of the preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of KCS’s affairs;
|
•
|
the terms and conditions, if applicable, upon which the preferred stock will be convertible into KCS’s Common Stock, including the conversion price (or manner of calculation) and conversion period;
|
•
|
the provision for redemption, if applicable;
|
•
|
the provision for a sinking fund, if any;
|
•
|
liquidation preferences;
|
•
|
any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the class or series of preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of KCS’s affairs; and
|
•
|
any other specific terms, preferences, rights, limitations or restrictions of the preferred stock.
|
•
|
the number of shares offered, the liquidation preference per share and the offering price;
|
•
|
the procedures for any auction and remarketing, if any;
|
•
|
any listing of the preferred stock on any securities exchange; and
|
•
|
a discussion of any material and/or special U.S. federal income tax considerations.
|
•
|
restricting dividends on KCS’s Common Stock;
|
•
|
diluting the voting power of KCS’s Common Stock;
|
•
|
impairing the liquidation rights of KCS’s Common Stock; or
|
•
|
delaying or preventing a change in control of KCS’s without further action by its stockholders.
|
•
|
senior to all classes or series of KCS’s Common Stock and to all of its equity securities ranking junior to the preferred stock;
|
•
|
on a parity with all of KCS’s equity securities the terms of which provide that the equity securities rank on a party with the preferred stock; and
|
•
|
junior to all of KCS’s equity securities the terms of which specifically provide that the equity securities rank senior to the preferred stock.
|
(1)
|
in connection with any sale, disposition or transfer of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) KCS or a Guarantor;
|
(2)
|
in connection with any sale, disposition or transfer of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) KCS or a Guarantor;
|
(3)
|
upon the release or discharge of such Guarantors’ Guarantee of the applicable Credit Agreement or under the Debt that triggered such Guarantor’s Note Guarantee;
|
(4)
|
upon the liquidation or dissolution of such Guarantor; provided that no Default or Event of Default shall occur as a result thereof or has occurred and is continuing; or
|
(5)
|
upon defeasance or satisfaction and discharge of the Indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge.”
|
(1)
|
accept for payment all Notes or portions of Notes properly tendered pursuant to KCS’s offer;
|
(2)
|
deposit with the paying agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes properly tendered; and
|
(3)
|
deliver or cause to be delivered to the trustee the Notes properly accepted, together with an officer’s certificate stating the aggregate principal amount of Notes being purchased by KCS.
|
(1)
|
KCS or such Guarantor shall be the continuing Person, or the Person (if other than KCS or such Guarantor) formed by such consolidation or into which KCS or such Guarantor is merged or that acquired or leased such property and its assets shall be a corporation organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia (or in the case of a Guarantor, a corporation, partnership, limited liability company or similar entity organized and validly existing under the laws of the jurisdiction under which such Guarantor was organized) and shall expressly assume, by a supplemental indenture, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all of the obligations of KCS or such Guarantor under the Notes, the Note Guarantee and the Indenture, as applicable; provided that this clause (1) shall not apply with respect to a Guarantor whose Note Guarantee is released as described in the second paragraph under the caption “—Note Guarantees”;
|
(2)
|
immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and
|
(3)
|
KCS delivers to the trustee an officer’s certificate and an opinion of counsel, in each case stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or other deposition and such supplemental indenture complies with this covenant.
|
(1)
|
default in the payment of principal of (or premium, if any, on) any Note of such series when the same becomes due at maturity, upon acceleration, redemption or otherwise;
|
(2)
|
default in the payment of interest on any Note of such series when due and such default continues for a period of 30 days;
|
(3)
|
default in the performance of any covenant of KCS or a Guarantor in the Indenture (other than a default specified in clause (1) or (2) above), and such default continues for a period of 90 days after written notice by the applicable trustee or the holders of 25% or more in aggregate principal amount of the Notes of such series;
|
(4)
|
a court having jurisdiction in the premises enters a decree or order for:
|
(A)
|
relief in respect of KCS or a Guarantor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect,
|
(B)
|
appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for KCS or a Guarantor or for all or substantially all of the property and assets of KCS or a Guarantor, or
|
(C)
|
the winding-up or liquidation of the affairs of KCS or a Guarantor;
|
(5)
|
KCS or a Guarantor:
|
(A)
|
commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law,
|
(B)
|
consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for KCS or a Guarantor or for all or substantially all of the property and assets of KCS or a Guarantor, or
|
(C)
|
effects any general assignment for the benefit of creditors;
|
(6)
|
any Note Guarantee with respect to the Notes of such series ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or any Guarantor or Person acting on behalf of such Guarantor denies or disaffirms such Guarantor’s obligations under the Indenture or any Note Guarantee with respect to such series of Notes and such default continues for a period of 10 days after written notice by the applicable trustee or the holders of 25% or more in aggregate principal amount of the Notes of such series; and
|
(7) (A)
|
the Concession Title shall cease to grant to KCSM the rights provided therein as of the applicable Closing Date and such cessation has had a material adverse effect on KCS and its Subsidiaries taken as a whole,
|
(B)
|
(x) the Concession Title shall for any reason be terminated (other than as a result of the expiration or termination of the Concession Title in June 2047 or, if extended, on any other expiration date pursuant to its terms) and not reinstated within 30 days or (y) rights provided therein which were originally exclusive to KCSM shall become nonexclusive and the cessation of such exclusivity has had a material adverse effect on KCS and its Subsidiaries taken as a whole, or
|
(C)
|
the operations of the Northeast Rail Lines shall be commandeered or repossessed (a requisa) for a period of 90 days or more.
|
•
|
the holder gives the trustee written notice of a continuing Event of Default;
|
•
|
the holders of at least 25% in aggregate principal amount of such series of Notes then outstanding make a written request to the trustee to pursue the remedy;
|
•
|
such holder or holders offer the trustee indemnity satisfactory to the trustee against any costs, liability or expense;
|
•
|
the trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and
|
•
|
during such 60-day period, the holders of a majority in aggregate principal amount of such series of Notes then outstanding do not give the trustee a direction that is inconsistent with the request.
|
(1)
|
the rights of holders of such series of Notes then outstanding to receive payments in respect of the principal of, or interest, or premium, if any, on, such Notes when such payments are due from the trust referred to below;
|
(2)
|
KCS’s obligations with respect to such series of Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;
|
(3)
|
the rights, powers, trusts, duties and immunities of the trustee, and the obligations of KCS and the Guarantors in connection therewith; and
|
(4)
|
the Legal Defeasance and Covenant Defeasance provisions of the Indenture.
|
(1)
|
KCS must irrevocably deposit with the applicable trustee, in trust, for the benefit of the holders of the applicable series of Notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, premium, if any, and interest on, such series of Notes then outstanding on the Stated Maturity thereof or on the applicable redemption date, as the case may be, and KCS must specify whether such series of Notes are being defeased to such Stated Maturity or to a particular redemption date;
|
(2)
|
in the case of Legal Defeasance, KCS must deliver to the trustee an opinion of counsel (or opinions of counsel) confirming that (x) KCS has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date of the issuance of such series of Notes, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of such series of Notes then outstanding will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
|
(3)
|
in the case of Covenant Defeasance, KCS must deliver to the trustee an opinion of counsel (or opinions of counsel) confirming that the holders of such series of Notes then outstanding will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
|
(4)
|
no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit or liens securing such borrowing) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which KCS is a party or by which KCS is bound;
|
(5)
|
such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which KCS or any of its Subsidiaries is a party or by which KCS or any of its Subsidiaries is bound;
|
(6)
|
KCS must deliver to the trustee an officer’s certificate stating that the deposit was not made by KCS with the intent of preferring the holders of such series of Notes over the other creditors of KCS with the intent of defeating, hindering, delaying or defrauding any creditors of KCS or others; and
|
(7)
|
KCS must deliver to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
|
(1)
|
either:
|
(A)
|
all Notes of such series that have been authenticated thereunder, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to KCS, have been delivered to the trustee for cancellation; or
|
(B)
|
all Notes of such series issued thereunder that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and KCS has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders of such series of Notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such series of Notes not delivered to the trustee for cancellation for principal, premium, if any, and accrued interest to the Stated Maturity or redemption, as the case may be;
|
(2)
|
no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit or liens securing such borrowing) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which KCS is a party or by which KCS is bound;
|
(3)
|
KCS has paid or caused to be paid all sums payable by it under the Indenture with respect to the Notes of such series; and
|
(4)
|
KCS has delivered irrevocable instructions to the trustee under the Indenture to apply the deposited money toward the payment of the Notes of such series issued thereunder at Stated Maturity or on the redemption date, as the case may be.
|
•
|
change the Stated Maturity of the principal of, or any installment of interest on, any such series of Note;
|
•
|
reduce the principal amount of, or premium, if any, or interest on, any such series of Note;
|
•
|
change the place or currency of payment of principal of, or premium, if any, or interest on, any such series of Note;
|
•
|
impair the right to institute suit for the enforcement of any payment on or with respect to any such series of Note;
|
•
|
reduce the percentage or principal amount of such series of Notes outstanding, the consent of whose holders is necessary to modify or amend the Indenture or waive compliance with certain provisions of the Indenture or waive certain Defaults;
|
•
|
waive a Default in the payment of principal of, premium, if any, or interest on, the Notes of such series; or
|
•
|
release any Guarantor from any of its obligations under its applicable Note Guarantee or the Indenture, except as set forth under the caption “—Note Guarantees.”
|
•
|
to cure any ambiguity, omission, mistake, defect or inconsistency;
|
•
|
to provide for uncertificated Notes in addition to or in place of certificated Notes of such series;
|
•
|
to provide for the assumption of the obligations of KCS or a Guarantor to holders of the Notes of such series and the Note Guarantees with respect to the Notes of such series in the case of a merger or consolidation or a sale, assignment, transfer, conveyance, lease or other disposition of all or substantially all of the assets of KCS or such Guarantor, as applicable, in accordance with the terms of the Indenture;
|
•
|
to make any change that would provide any additional rights or benefits to the holders of such series of Notes or that does not adversely affect the legal rights under the Indenture of any such holder;
|
•
|
to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act of 1939, as amended;
|
•
|
to conform the text of the Indenture, the Note Guarantees with respect to the Notes of such series and the Notes of such series to any provision of the relevant “Description of Notes” in the applicable prospectus or the applicable confidential offering memorandum and consent solicitation statement to the extent that such provision in such “Description of Notes” was intended to be a verbatim recitation of a provision of the applicable Indenture or the Notes of such series;
|
•
|
to add a Guarantor or release any Guarantor from its Note Guarantee with respect to the Notes of such series if such release is in accordance with the terms of the applicable Indenture; or
|
•
|
to provide for the issuance of Additional Notes of such series in accordance with the limitations set forth in the Indenture.
|
|
|
Percent
Ownership
|
|
Jurisdiction of
Incorporation or
Organization
|
|
Arrendadora KCSM, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Canama Transportation
|
|
100
|
|
|
Cayman Islands
|
Caymex Transportation, Inc.
|
|
100
|
|
|
Delaware
|
Ferrocarril y Terminal del Valle de México, S.A. de C.V. (1)
|
|
25
|
|
|
Mexico
|
Financiera Inspira, S.A.P.I., de C.V., SOFOM, E.N.R.
|
|
100
|
|
|
Mexico
|
Gateway Eastern Railway Company
|
|
100
|
|
|
Illinois
|
Highstar Harbor Holdings Mexico, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Internacional Railway Support S.A. de C.V.
|
|
100
|
|
|
Mexico
|
Inversiones Internacionales en Ferrocarriles S. a r.l.
|
|
100
|
|
|
Luxembourg
|
Joplin Union Depot Co.(1)
|
|
33
|
|
|
Missouri
|
Kansas City Southern de México, S.A. de C.V.
|
|
100
|
|
|
Mexico
|
Kansas City Southern Holdings B.V.
|
|
100
|
|
|
Netherlands
|
Kansas City Southern International Ventures, S.A.
|
|
100
|
|
|
Mexico
|
Kansas City Terminal Railway Company (1)
|
|
17
|
|
|
Missouri
|
KCS Holdings I, Inc.
|
|
100
|
|
|
Delaware
|
KCS International Holdings, S.A.R.L.
|
|
100
|
|
|
Luxembourg
|
KCS Investment I, Ltd.
|
|
100
|
|
|
Delaware
|
KCS Spectrum, Inc.
|
|
100
|
|
|
Delaware
|
KCS Ventures I, Inc.
|
|
100
|
|
|
Delaware
|
KCSM B.V.
|
|
100
|
|
|
Netherlands
|
KCSM Holdings LLC
|
|
100
|
|
|
Delaware
|
KSU Holdings LLC
|
|
100
|
|
|
Delaware
|
KCSM Servicios, S.A. de C.V.
|
|
100
|
|
|
Mexico
|
KCSRC y Compania, S. de N.C. de C.V.
|
|
100
|
|
|
Mexico
|
Meridian Speedway, LLC
|
|
70
|
|
|
Delaware
|
Mexrail, Inc.
|
|
100
|
|
|
Delaware
|
MTC Puerta Mexico, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
MTC Puerta Mexico Logistics, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Luxico International, S.A.R.L.
|
|
100
|
|
|
Luxembourg
|
NAFTA Rail, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
North American Freight Transportation Rail Company, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Pabtex, Inc.
|
|
100
|
|
|
Delaware
|
Panama Canal Railway Company (1)
|
|
50
|
|
|
Cayman Islands
|
Panarail Tourism Company (1)
|
|
50
|
|
|
Cayman Islands
|
PTC-220, LLC (1)
|
|
14
|
|
|
Delaware
|
Servicios de Apoyo al Ferrocarril, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Servicios Puerta Mexico, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Soporte Logistico Ferroviaria, S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Southern Development Company
|
|
100
|
|
|
Missouri
|
Southern Industrial Services, Inc.
|
|
100
|
|
|
Delaware
|
Stillwell RE Holdings, LLC
|
|
100
|
|
|
Delaware
|
TFCM, S. de R.L. de C.V. (1)
|
|
45
|
|
|
Mexico
|
The Kansas City Northern Railway Company
|
|
100
|
|
|
Delaware
|
The Kansas City Southern Railway Company
|
|
100
|
|
|
Missouri
|
The Texas Mexican Railway Company
|
|
100
|
|
|
Texas
|
TransFin Insurance, Ltd.
|
|
100
|
|
|
Missouri
|
Transportacion y Soluciones en Logistica Ferroviaria S. de R.L. de C.V.
|
|
100
|
|
|
Mexico
|
Trans-Serve, Inc. (d/b/a Superior Tie and Timber)
|
|
100
|
|
|
Delaware
|
Vamos a Mexico, S.A. de C.V.
|
|
100
|
|
|
Mexico
|
Veals, Inc.
|
|
100
|
|
|
Delaware
|
(1)
|
Unconsolidated Subsidiary
|
1.
|
I have reviewed this annual report on Form 10-K of Kansas City Southern (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ PATRICK J. OTTENSMEYER
|
Patrick J. Ottensmeyer
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Kansas City Southern (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ MICHAEL W. UPCHURCH
|
Michael W. Upchurch
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ PATRICK J. OTTENSMEYER
|
Patrick J. Ottensmeyer
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ MICHAEL W. UPCHURCH
|
Michael W. Upchurch
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer)
|