(The following story by Mark Davis appeared on The Kansas City Star website on June 1, 2009.)
KANSAS CITY, Mo. — Kansas City Southern expects to take a $7 million pretax hit in the second quarter after losing all appeals over a legal dispute with a tax adviser.
The dispute arose between Kansas City Southern de Mexico SA de CV and Mancera Ernst & Young SC. The latter had represented the railroad in a battle over Mexico’s value-added tax. The tax fight itself was part of Kansas City Southern’s 2005 acquisition of the Mexican railway that had been 20 percent government owned.
Although the tax spat and acquisition was settled, the tax fee squabble lasted until last Friday when Kansas City Southern’s lawyers told the company it was out of appeals.
Kansas City Southern said it already has paid $3 million in fees and had set aside $800,000 to cover additional expenses. It now expects to pay an additional $7 million, which includes anticipated interest expenses.
Shares of the Kansas City-based rail company shrugged off the news in an ebullient market day Monday, rising 32 cents and closing at $16.81.
•Digital Ally Inc. said it has hired an investment banker to serve as its vice president of strategic development.
Michael Caulfield had been a managing director at Banc of America Securities, where he handled large industrial companies for the investment banking firm. Digital Ally produces video equipment for law enforcement and other security users. Its shares gained 5 cents Monday and closed at $1.85.