(The following article by Randolph Heaster was posted on Kansas City Star website on February 1.)
KANSAS CITY — Despite sharply higher fourth-quarter revenue and operating income, Kansas City Southern posted a slight loss because of a charge in connection with its Mexican railroad.
For the three months that ended Dec. 31, Kansas City Southern lost $1.4 million, or 2 cents a share, on $174.6 million in revenue. During the same time in 2003, the company lost $6.4 million, or 10 cents a share, on $148.5 million.
Kansas City Southern took a noncash charge of $8.8 million, or 14 cents a share, in the fourth quarter because of the Mexican government’s plan to lower corporate income tax rates. Grupo TFM carries nearly $690 million in deferred tax deductions on its balance sheet. However, lowering the tax rates will reduce the carrying value of those future tax deductions, Kansas City Southern officials said Monday.
While the change had a negative effect on the 2004 fourth quarter, Kansas City Southern’s future financial results will be positively affected by the lower income tax rates in Mexico, said Ron Russ, the company’s chief financial officer.
For 2004, Kansas City Southern earned $15.7 million, or 25 cents a share, on $639.5 million in revenue. In 2003, the company earned $6.3 million, or 10 cents a share, on $581.3 million in sales.