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During its first quarter with TFM S.A. de C.V. in the fold, Kansas City Southern’s consolidated revenue shot up to $381.1 million compared with $153.9 million in second-quarter 2004. The good news for KCS is that second-quarter revenue on a same-railroad basis (sans TFM) of $178.6 million increased 12.5 percent compared with the same 2004 period.

The bad news is the railroad reported a $25.8 million quarterly net loss compared with second-quarter 2004’s net income of $7 million. KCS’ consolidated operating expenses increased because of a non-cash, pre-tax charge of $35.6 million related to a series of Mexican Supreme Court rulings and other costs tied to the TFM transaction.

"The second quarter was a period of transition for TFM,” said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. “Several major efforts were undertaken in the finance area, such as the refinancing of high interest rate debt, re-evaluation of the balance sheet as required by purchase accounting, and a review of TFM’s accounting operations and procedures.”

Subsidiary Kansas City Southern Railway’s (KCSR) quarterly revenue of $178.6 million and operating income of $25.9 million rose 16.8 percent and 12.1, respectively, compared with second-quarter 2004. However, quarterly operating expenses increased 20 percent to $132.8 million and the railway’s operating ratio worsened 0.6 points to 85.5.

During the year’s first half, KCSR generated revenue of $357.9 million, a 19.4 percent increase compared with the same 2004 period. Operating income rose 19.1 percent to $55.6 million. But KCSR’s operating expenses increased 22.1 percent to $262.2 million and operating ratio worsened 0.1 points to 84.5 compared with first-half 2004.