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Rail News: Financials

CSX boosts 2011 capex budget; KCS settles Mexican hurricane insurance claim


Yesterday, CSX Corp. announced its board approved an increase in the 2011 capital spending budget from $2 billion to $2.2 billion. The additional capital will be used to purchase certain assets, primarily rail cars, to meet growing near- and long-term demand for export coal, CSX officials said in a prepared statement.
The increase is consistent with a previously announced plan to reinvest an average of 18 percent of total annual revenue in capital expenditures through 2015, they said.

The board also approved a quarterly dividend of 12 cents per share on common stock payable on Sept. 15 to shareholders of record at the close of business on Aug. 31.

For more insight into CSX’s financial and operational strategy, follow this link to read the cover story (“CSX ≤ 65”) in Progressive Railroading’s July issue.

Meanwhile, Kansas City Southern announced that as of July 7, it settled an insurance claim for lost profits, property damage and related expenses associated with Hurricane Alex for $66 million. KCS expects to settle a general liability claim related to third-party damages in the third quarter.

Hurricane Alex struck central Mexico on June 30, 2010, damaging more than 100 of Kansas City Southern de México S.A. de C.V.’s track segments and flooding a number of other segments. The storm also damaged the Anahuac Bridge, causing the closure of the primary cross-border rail corridor between the United States and Mexico until service was restored on July 24, 2010.

In the third quarter, KCS plans to record a $19.8 million pre-tax gain — primarily recoveries related to lost profits and the replacement value of property — because of the settled claim. The final cumulative earnings impact of Hurricane Alex will be a loss of about 5 cents per share, “which is consistent with guidance the company has provided since its third-quarter 2010 earnings conference call,” KCS officials said in a prepared statement.

Contact Progressive Railroading editorial staff.

More News from 7/14/2011