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On Jan. 29, Kansas City Southern reported fourth-quarter revenue of $147 million, a 3 percent increase compared with the same 2002 period. The Class I — which increased revenue and traffic volume in every major commodity except plastics and coal — also improved its quarterly operating ratio 1.7 points to 86.9.

However, KCS reported a quarterly operating loss of $6.8 million compared with operating income of $13.9 million in fourth-quarter 2002. Railroad officials attribute the $20.7 million decline to a $27 million increase in casualties and insurance costs, and higher fuel expenses.

"KCS is no different from some of the other North American Class I railroads that have recently adjusted claims reserves to protect themselves from the realities of the tort litigation environment in the U.S. in which we operate," said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement."In order to adequately protect our company, we made the hard but correct decision to increase our claims reserves by $13.5 million, after-tax, in the fourth quarter."

For all of 2003, KCS earned net income of $11.2 million compared with $57.2 million in 2002. But a $21.1 million adjustment in claim reserves helped increase annual operating income to $50.2 million compared with $48 million in 2002. Also, annual revenue increased $15.1 million to $581.3 million and the railroad's operating ratio improved 0.6 points to 88.6 compared with 2002.

"We are looking ahead to 2004 with a high degree of confidence in our growth prospects," said Haverty. "The North American economy is strengthening [and] we are fully committed to continuing to grow traffic routed via KCS to and from Mexico. Last year, we saw a 25 percent increase in our KCS/TFM carloads and with a robust economy, we expect to see a continued positive trend."