The improvement in revenue was led by Automotive with a 43 percent increase in first quarter 2011 as compared to the same period a year ago. Intermodal revenues also showed strength increasing 27 percent over the same time period. Other revenue improvements were 19 percent for Industrial and Consumer Products; 9 percent for Coal; and 8 percent for Chemical and Petroleum.

Agriculture and Minerals reported a decline of 1 percent, attributable to a decline in cross border traffic into Mexico as availability of crops from a strong Mexican harvest has been sufficient to meet the local demand.

Operating expenses for the first quarter of $361 million were $33 million higher than the corresponding 2010 period, primarily due to a 31 percent increase in fuel. Operating income for the first quarter of 2011 was $128 million, which was 18% higher than 2010. KCS’s record first quarter operating ratio of 73.8 percent compared favorably with the 75.2 percent operating ratio reported for the corresponding 2010 period.

Net income available to common stockholders in the first quarter totaled $63 million, or $0.58 per diluted share, compared to $33 million, or $0.34 per diluted share in first quarter 2010.

Sequentially, revenues recovered from third quarter 2010 which were negatively impacted by service disruptions caused by Hurricane Alex, the railroad said.

Revenue growth was experienced across all commodity groups. Automotive revenues were up 41 percent over fourth quarter 2009 as a combination of strong pricing and new cross border vehicle routings benefitted the commodity group. Coal revenues increased 31 percent from a year ago on improved contract pricing which took effect at the beginning of 2010.

Intermodal revenues were up 28 percent on a strong volume increase of 24 percent. Other period-over-period revenue improvements were 23 percent for Industrial & Consumer Products, 11 percent for Chemical & Petroleum, and 8 percent for Agriculture & Minerals.

Reported operating income for the fourth quarter was $135 million representing a 47 percent increase from a year ago. The Company reported a fourth quarter 2010 operating ratio of 71.8 percent compared with 77.3 percent in fourth quarter of 2009. Operating expenses in the fourth quarter increased 9 percent from a year ago on a revenue increase of 18 percent.

The company has produced positive free cash flow of $174 million year to date, including $48 million in the fourth quarter.

In nominating him for the Hammond Award, Union Pacific Chairman, President and CEO Jim Young described Sandoval as a teacher, coach and mentor who consistently demonstrates outstanding safety practices and a willingness to share his knowledge with others. Sandoval’s contributions to safety in the locomotive shop have helped the group sustain a sub 1.0 reportable rate since 1998, with injury-free years in 2003 and 2007.

The Harold F. Hammond Award was established in 1986 and honors an individual railroad employee who has demonstrated outstanding safety achievement during the preceding year. It is named after the late Harold F. Hammond, former president of the Transportation Association of America, who served many years as chairman of the Harriman Awards selection committee.

As a boilermaker in the mechanical department with nearly 40 years of service, Mr. Sandoval exhibits the highest degree of safety awareness in a highly skilled area that leaves no room for error – working with torches and volatiles gasses to repair and rebuild locomotives with structural damage. He also works with argon gas and is an expert in fuel tank inerting, a process that ensures tanks are rendered non-combustible. As the shop’s peer trainer, he helped develop the railroad’s Argon Gas Welding Training and led the Job Safety Analysis for boilermaker’s work.

Known for his “Topic of the Day” at safety briefings, Mr. Sandoval encourages employee feedback and fosters group discussion, even reaching out to people outside of his department to groups such as train, engine and yard employees. He recently helped roll out new safety programs, including Defensive Walking, and Ascending and Descending.  He is known for saying: “Watch out for each other; everyone goes home safe.”

Mr. Sandoval also is active in his community. The parents of a child with special needs, he and his wife have dedicated themselves to helping other parents in a similar situation. He is a board member of The Arc of Greater Tarrant County, which advocates on behalf of people with developmental disabilities, and he works tirelessly to help the organization raise funds and increase awareness of available services. Beyond these activities, Mr. Sandoval volunteers with the Hispanic Debutante Association, organizing its Cinco de Mayo fundraiser promoting educational opportunities for Hispanic teens.

Seven other railroad employees were honored with Certificates of Commendation for their work in enhancing safety.  They are:

– Ellis Cattan, conductor for Kansas City Southern Railways

– Lyle Evans, gang foreman with Montana Rail Inc.

– Jim Ewalt, signal maintainer, Canadian Pacific Railway

– Robby Hopkins, carman with BNSF Railway Co.

– Carl Lewis Jr., lineman with Amtrak

– Frank Sewastynowicz, signalman, CSX Transportation

– John Sobotka, engineer with Norfolk Southern Corp.

Double digit revenue improvements were experienced in each of the reported commodity groups led by Automotive with 76 percent improvement in revenues from a year ago. The other revenue improvements were 39 percent for Intermodal, 28 percent for Agriculture & Minerals, 25 percent for Chemical & Petroleum, 25 percent for Coal, and 22 percent for Industrial & Consumer Products. Overall, volumes improved 15 percent from a year ago and 2 percent from fourth quarter 2009.

Operating income for the first quarter was more than double last year’s level at $108.2 million compared with $47.6 million last year, a 127 percent increase. The first quarter 2010 operating ratio was 75.2 percent compared with 86.2 percent a year ago. Operating expenses for the first quarter 2010 were $328.1 million.

Net income available to common shareholders in the first quarter totaled $32.6 million, or $0.34 per diluted share, compared to a loss of $8.1 million, or $(0.09) per diluted share in first quarter 2009. First quarter 2010 results include a $0.10 reduction per share from debt retirement costs and a $0.04 reduction per share in first quarter 2009. Excluding these debt retirement charges from each quarter, adjusted diluted earnings per share was $0.44 in first quarter 2010 compared to $(0.05) in first quarter 2009.

Later this month, Kansas City Southern de Mexico, S.A. de C.V. will add direct train service from Lazaro Cardenas to Puerta Mexico, providing Mexico City import and export shippers with a service alternative featuring improved consistency and reliability and better transit times, the railroad said.

“Puerta Mexico is well-positioned on KCS’ International Intermodal Corridor, making it a valuable enhancement for our cross border service offering,” said David L. Starling, KCS president and chief operating officer.

With its connection to the KCS rail network, Puerta Mexico serves the industrial centers of Mexico and the U.S., several important seaports and the Toluca-Mexico City industrial corridor.  The facility provides intermodal rail and truck services, warehouse storage and has the only inland customs-clearing facility in the State of Mexico.

In addition to train service, Puerta Mexico offers multi-modal terminal services and on-site customs and bonded warehousing facilities to ocean carriers, intermodal and other logistics service providers.  With its direct access to KCSM’s “N” line, Puerta Mexico will become the terminal of choice for service to and from the central valley, the Port of Lazaro Cardenas and the border crossing at Nuevo Laredo/Laredo.

With an estimated capacity exceeding 150,000 containers and two million plus tons of cargo per year on more than 130 developed acres, it essentially doubles the intermodal capacity available to the greater Mexican central valley region and alleviates congestion in the region, according to the railroad.

“This record of accomplishment shows the depth of the freight railroad industry’s commitment to the safety of our employees, the communities we serve and the country’s rail network infrastructure,” said AAR President and CEO Edward R. Hamberger. “Our industry is only as safe as our employees make it. From their very first day on the job, they learn that safety is the most important aspect of their railroading job.”

Another factor leading to improved safety, Hamberger noted, was the industry’s continued near-record investments in maintaining and improving track, signaling systems, freight cars and locomotives. In spite of a poor economy, freight railroads last year invested more than $9 billion in capital improvement programs, the third highest investment in history. Since 1980, freight railroads have invested more than $460 billion — 40 cents of every revenue dollar — to maintain and improve the nation’s rail network.

The Federal Railroad Administration’s preliminary data shows that the total number of train accidents involving freight railroads declined by 26 percent last year, with the rate per million train-miles falling 12 percent from the previous record which was established in 2008. The number of employee casualties on freight railroads fell by 14 percent while the casualty rate declined 4 percent from 2008 when the previous record was established.

U.S. railroads originated 290,261 carloads during the week ended Feb. 27, up 2.6 percent from the comparable week in 2009 and the highest level reported since the week ended Dec. 6, 2008. However, the total was still down 13.5 percent from comparison week in 2008.

In order to offer a complete picture of the progress in rail traffic, AAR now reports 2010 weekly rail traffic with comparison weeks in both 2009 and 2008.

Intermodal traffic of 205,817 trailers and containers reached its highest level so far this year, up 17.5 percent from last year, but down 8.1 percent compared with 2008. Compared with the same week in 2009, container volume increased 23.2 percent and trailer volume fell 6.4 percent.

Compared with the same week in 2008, container volume was up 0.5 percent while trailer volume fell 37.5 percent. The comparison week from last year was affected by the Chinese New Year, which has a significant impact on container volume.

Total volume for the week was estimated at 31.6 billion ton-miles, up 3.9 percent from last year but down 10.5 from 2008.

PTC is an integrated set of technologies that will help avert train-to-train collisions, derailments caused by excessive speed, accidents caused by human error or misaligned switches, and harm to roadway workers.

“Safety is our highest priority, and we believe the installation of this equipment will make our nation’s railroads safer,” LaHood said.

PTC sends and receives a continuous stream of data transmitted by wireless signals about the location, speed, and direction of trains. PTC systems utilize advanced technologies including digital radio links, global positioning systems and wayside computer control systems that aid dispatchers and train crews in safely managing train movements.

“We believe this final rule, as mandated by Congress, is a giant step forward toward ensuring the safety and reliability of our freight, commuter and intercity passenger rail routes,” Szabo said.

The final rule will also allow railroads to immediately begin finalizing their PTC Implementation Plans, which are required by statute to be submitted to FRA by April 16, 2010.

The final rule issued today is the result of over a decade of work by FRA and its stakeholders, carried out in partnership through the Railroad Safety Advisory Committee (RSAC). The Rail Safety Improvement Act of 2008 mandates that interoperable PTC systems must be fully instituted by the end of 2015. Train control systems such as PTC are now mandatory for most passenger rail operations and for trains hauling certain hazardous materials, but they are not required for closed passenger rail systems such as light rail, rapid transit and subways.

Unrelated to any deadlines contained in this final rule, FRA is seeking additional comments on a few specific provisions of this final rule as to whether clarity can be improved and whether further opportunities for cost savings, consistent with safety, are available.

“Like many companies in North America, the economy has had a significant effect on our business, so we had to think carefully about whether to run the Holiday Express train this year,” said KCS chairman and chief executive officer Michael R. Haverty. “We decided the goodwill, contributions to those in need and the holiday spirit that the Holiday Express generates in communities by bringing Santa to town is even more important this year.”

“The Holiday Express is also a source of pride for our employees, and it’s important to us that they know this is a good place to work,” Haverty said. “When we thought about what the Holiday Express means to communities and our employees, there was no question that the train should run again in 2009.”

In addition to bringing Santa Claus and his elves to many communities, the Holiday Express also has a charitable component. At each scheduled stop, The KCS Charitable Fund will make a contribution of Walmart gift cards to the local Salvation Army to provide warm clothing for children in need. Thanks to contributions from KCS’ employees, vendors and friends, The KCS Charitable Fund raised $112,825 in 2009 to purchase gift cards.

Special thanks to the major sponsors, who helped make the charitable contribution possible, including Michael and Marlys Haverty, DST Systems, Inc., Greenberg Traurig, LLP, Kansas City University of Medicine and Biosciences, Morgan Keegan and Watco Companies.

Led by KCS’ Southern Belle business train, the six-car Holiday Express train includes a smiling tank car “Rudy;” a flat car carrying Santa’s sleigh, reindeer and a miniature village; a ginger bread box car; the elves’ workshop; the reindeer’s stable; and a little red caboose. The Holiday Express was created in 2001 after volunteers dedicated over 8,000 hours to the rigorous transformation of the retired freight train. Festive music and lights complete the package.

The Holiday Express train was built on the tradition of the former Gateway Western (GWWR) Santa Train, which made stops in small towns from East St. Louis, Ill., to Blue Springs, Mo. (GWWR was purchased by KCS in 1997). In 2000, KCS employees noticed that the Santa Train was the only Christmas some kids had, and that some did not even have essential items like coats, hats and gloves.

The campaign is targeted toward 18-34 year olds.

“Young adults also may be distracted by cell phones, texting, or listening to MP3 players if they’re near the tracks. This new public awareness campaign has a simple message: staying away from the tracks is common sense, and it can save your life,” Cliff Stayton, a former locomotive engineer, said in a news release.

The Common Sense campaign aims to teach the public how dangerous it is to trespass on railroad property through an interactive Web site, internet ads, videos and local events. It will be test-marketed in markets where pedestrian rail trespass incidents frequently occur.

States with the highest number of pedestrian rail trespass deaths in 2008 are California, Illinois, Texas, Florida, Pennsylvania, New Jersey, Tennessee, North Carolina, New York, Ohio, Massachusetts and Georgia.

“If you are driving don’t try to beat a train at a crossing and if you are walking stay off the tracks-it’s really just common sense,” Joe Deely, Amtrak General Superintendent, Pacific Division, said in a news release.

For more information, log onto www.CommonSenseUseIt.com.

– Todd DeFeo