Company Quick10K Filing
Kansas City Southern
Price132.58 EPS6
Shares100 P/E23
MCap13,304 P/FCF25
Net Debt2,622 EBIT827
TEV15,926 TEV/EBIT19
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-17
10-Q 2020-03-31 Filed 2020-04-17
10-K 2019-12-31 Filed 2020-01-24
10-Q 2019-09-30 Filed 2019-10-18
10-Q 2019-06-30 Filed 2019-07-19
10-Q 2019-03-31 Filed 2019-04-17
10-K 2018-12-31 Filed 2019-01-25
10-Q 2018-09-30 Filed 2018-10-19
10-Q 2018-06-30 Filed 2018-07-20
10-Q 2018-03-31 Filed 2018-04-20
10-K 2017-12-31 Filed 2018-01-26
10-Q 2017-09-30 Filed 2017-10-20
10-Q 2017-06-30 Filed 2017-07-21
10-Q 2017-03-31 Filed 2017-04-21
10-K 2016-12-31 Filed 2017-01-27
10-Q 2016-09-30 Filed 2016-10-18
10-Q 2016-06-30 Filed 2016-07-19
10-Q 2016-03-31 Filed 2016-04-19
10-K 2015-12-31 Filed 2016-01-29
10-Q 2015-09-30 Filed 2015-10-16
10-Q 2015-06-30 Filed 2015-07-17
10-Q 2015-03-31 Filed 2015-04-21
10-K 2014-12-31 Filed 2015-01-30
10-Q 2014-09-30 Filed 2014-10-17
10-Q 2014-06-30 Filed 2014-07-18
10-Q 2014-03-31 Filed 2014-04-17
10-K 2013-12-31 Filed 2014-01-31
10-Q 2013-09-30 Filed 2013-10-18
10-Q 2013-06-30 Filed 2013-07-19
10-Q 2013-03-31 Filed 2013-04-22
10-K 2012-12-31 Filed 2013-02-04
10-Q 2012-09-30 Filed 2012-10-19
10-Q 2012-06-30 Filed 2012-07-17
10-Q 2012-03-31 Filed 2012-04-24
10-K 2011-12-31 Filed 2012-02-08
10-Q 2011-09-30 Filed 2011-10-21
10-Q 2011-06-30 Filed 2011-07-22
10-Q 2011-03-31 Filed 2011-04-21
10-K 2010-12-31 Filed 2011-02-09
10-Q 2010-06-30 Filed 2010-07-27
10-Q 2010-03-31 Filed 2010-04-27
10-K 2009-12-31 Filed 2010-02-12
8-K 2020-07-17 Earnings, Exhibits
8-K 2020-06-23
8-K 2020-06-09
8-K 2020-06-02
8-K 2020-05-20
8-K 2020-05-12
8-K 2020-05-05
8-K 2020-04-22
8-K 2020-04-17
8-K 2020-03-25
8-K 2020-03-17
8-K 2020-03-02
8-K 2020-01-17
8-K 2019-12-04
8-K 2019-11-18
8-K 2019-11-18
8-K 2019-11-12
8-K 2019-10-18
8-K 2019-07-19
8-K 2019-06-21
8-K 2019-06-05
8-K 2019-05-17
8-K 2019-05-14
8-K 2019-04-29
8-K 2019-04-17
8-K 2019-03-19
8-K 2019-03-05
8-K 2019-03-04
8-K 2019-02-20
8-K 2019-01-18
8-K 2018-11-28
8-K 2018-10-19
8-K 2018-10-05
8-K 2018-09-05
8-K 2018-08-14
8-K 2018-07-20
8-K 2018-05-17
8-K 2018-04-30
8-K 2018-04-20
8-K 2018-03-15
8-K 2018-03-08
8-K 2018-03-06
8-K 2018-01-19

KSU 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 kcsex31106302020.htm
EX-31.2 kcsex31206302020.htm
EX-32.1 kcsex32106302020.htm
EX-32.2 kcsex32206302020.htm

Kansas City Southern Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
0.80.60.50.30.20.02012201420172020
Rev, G Profit, Net Income
0.40.20.1-0.1-0.2-0.42012201420172020
Ops, Inv, Fin

Document
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ksu:restructuring_plans ksu:Segments ksu:agreements


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to        
Commission File Number 1-4717
KANSAS CITY SOUTHERN
(Exact name of registrant as specified in its charter)
Delaware
 
kcslineslogo2016a19.jpg
 
44-0663509
(State or other jurisdiction of
incorporation or organization)
 
 
(I.R.S. Employer
Identification No.)
427 West 12th Street
 
 
 
Kansas City
,
Missouri
 
 
64105
(Address of principal executive offices)
 
 
(Zip Code)
816.983.1303
(Registrant’s telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last report.)
____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Preferred Stock, Par Value $25 Per Share, 4%, Noncumulative
KSU
New York Stock Exchange
Common Stock, $.01 Per Share Par Value
KSU
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer  ý  Accelerated filer  Non-accelerated filer  Smaller reporting company  
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
July 10, 2020
Common Stock, $0.01 per share par value
 
94,349,268 Shares
 




Kansas City Southern and Subsidiaries
Form 10-Q
June 30, 2020
Index
 
 
Page
PART I — FINANCIAL INFORMATION
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II — OTHER INFORMATION
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 


2



PART I — FINANCIAL INFORMATION

Item 1.
Financial Statements (unaudited)

Kansas City Southern and Subsidiaries
Consolidated Statements of Income
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In millions, except share and per share amounts)
(Unaudited)
Revenues
$
547.9

 
$
714.0

 
$
1,279.6

 
$
1,388.8

Operating expenses:
 
 
 
 
 
 
 
Compensation and benefits
103.8

 
128.3

 
237.2

 
257.2

Purchased services
44.6

 
56.7

 
97.9

 
109.5

Fuel
39.5

 
87.7

 
114.4

 
170.7

Equipment costs
18.1

 
26.3

 
40.0

 
56.7

Depreciation and amortization
89.3

 
87.7

 
178.7

 
176.2

Materials and other
61.7

 
68.3

 
125.7

 
131.7

Restructuring charges
10.5

 
51.0

 
16.5

 
118.5

Total operating expenses
367.5

 
506.0

 
810.4

 
1,020.5

Operating income
180.4

 
208.0

 
469.2

 
368.3

Equity in net earnings (losses) of affiliates
0.2

 
(0.2
)
 
1.2

 
1.5

Interest expense
(38.1
)
 
(28.0
)
 
(72.3
)
 
(56.2
)
Debt retirement costs

 

 

 
(0.6
)
Foreign exchange gain (loss)
7.8

 
8.3

 
(51.7
)
 
12.9

Other income, net
0.8

 
0.1

 
2.2

 
0.2

Income before income taxes
151.1

 
188.2

 
348.6

 
326.1

Income tax expense
40.8

 
59.1

 
86.0

 
93.8

Net income
110.3

 
129.1

 
262.6

 
232.3

Less: Net income attributable to noncontrolling interest
0.6

 
0.4

 
1.1

 
0.8

Net income attributable to Kansas City Southern and subsidiaries
109.7

 
128.7

 
261.5

 
231.5

Preferred stock dividends

 

 
0.1

 
0.1

Net income available to common stockholders
$
109.7

 
$
128.7

 
$
261.4

 
$
231.4

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic earnings per share
$
1.16

 
$
1.29

 
$
2.75

 
$
2.31

Diluted earnings per share
$
1.16

 
$
1.28

 
$
2.74

 
$
2.30

 
 
 
 
 
 
 
 
Average shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
94,476

 
100,028

 
95,070

 
100,264

Potentially dilutive common shares
417

 
394

 
464

 
405

Diluted
94,893

 
100,422

 
95,534

 
100,669

See accompanying notes to the unaudited consolidated financial statements.


3



Kansas City Southern and Subsidiaries
Consolidated Statements of Comprehensive Income

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In millions)
(Unaudited)
Net income
$
110.3

 
$
129.1

 
$
262.6

 
$
232.3

Other comprehensive income (loss):
 
 
 
 
 
 
 
Unrealized gain (loss) on interest rate derivative instruments, net of tax of $1.5 million, $(2.4) million, $2.7 million and $(4.1) million, respectively
5.3

 
(7.6
)
 
10.1

 
(12.7
)
Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.2 million and $0.3 million, respectively
0.4

 

 
0.9

 

Foreign currency translation adjustments
0.2

 
0.1

 
(1.5
)
 
0.3

Other comprehensive income (loss)
5.9

 
(7.5
)
 
9.5

 
(12.4
)
Comprehensive income
116.2

 
121.6

 
272.1

 
219.9

Less: Comprehensive income attributable to noncontrolling interest
0.6

 
0.4

 
1.1

 
0.8

Comprehensive income attributable to Kansas City Southern and subsidiaries
$
115.6

 
$
121.2

 
$
271.0

 
$
219.1

See accompanying notes to the unaudited consolidated financial statements.


4



Kansas City Southern and Subsidiaries
Consolidated Balance Sheets
 
 
June 30,
2020
 
December 31,
2019
 
(In millions, except share and per share amounts)
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
620.1

 
$
148.8

Accounts receivable, net
222.8

 
274.2

Materials and supplies
131.2

 
150.6

Other current assets
142.1

 
155.0

Total current assets
1,116.2

 
728.6

Operating lease right-of-use assets
80.8

 
158.4

Investments
44.0

 
47.6

Property and equipment (including concession assets), net
8,947.4

 
8,806.3

Other assets
99.7

 
45.9

Total assets
$
10,288.1

 
$
9,786.8

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Long-term debt due within one year
$
16.3

 
$
18.0

Accounts payable and accrued liabilities
440.6

 
473.3

Total current liabilities
456.9

 
491.3

Long-term operating lease liabilities
53.3

 
85.7

Long-term debt
3,765.4

 
3,228.0

Deferred income taxes
1,165.2

 
1,128.0

Other noncurrent liabilities and deferred credits
102.3

 
107.9

Total liabilities
5,543.1

 
5,040.9

Stockholders’ equity:
 
 
 
$25 par, 4% noncumulative, preferred stock, 840,000 shares authorized, 649,736 shares issued; 222,130 and 222,625 shares outstanding at June 30, 2020 and December 31, 2019, respectively
5.6

 
5.6

$.01 par, common stock, 400,000,000 shares authorized; 123,352,185 shares issued; 94,327,807 and 96,115,669 shares outstanding at June 30, 2020 and December 31, 2019, respectively
1.0

 
1.0

Additional paid-in capital
922.8

 
843.7

Retained earnings
3,510.7

 
3,601.3

Accumulated other comprehensive loss
(19.6
)
 
(29.1
)
Total stockholders’ equity
4,420.5

 
4,422.5

Noncontrolling interest
324.5

 
323.4

Total equity
4,745.0

 
4,745.9

Total liabilities and equity
$
10,288.1

 
$
9,786.8

See accompanying notes to the unaudited consolidated financial statements.


5



Kansas City Southern and Subsidiaries
Consolidated Statements of Cash Flows

 
Six Months Ended
 
June 30,
 
2020
 
2019
 
(In millions)
(Unaudited)
Operating activities:
 
 
 
Net income
$
262.6

 
$
232.3

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
178.7

 
176.2

Deferred income taxes
34.3

 
12.2

Equity in net earnings of affiliates
(1.2
)
 
(1.5
)
Share-based compensation
13.5

 
12.0

Distributions from affiliates
2.5

 
3.0

Settlement of foreign currency derivative instruments
(29.0
)
 
4.8

(Gain) loss on foreign currency derivative instruments
27.3

 
(10.9
)
Foreign exchange (gain) loss
24.4

 
(2.0
)
Restructuring charges
16.5

 
118.5

Cash payments for restructuring charges
(3.2
)
 
(1.4
)
Changes in working capital items:
 
 
 
Accounts receivable
44.1

 
16.0

Materials and supplies
19.3

 
4.5

Other current assets
(47.1
)
 
(15.0
)
Accounts payable and accrued liabilities
(16.2
)
 
(6.4
)
Other, net
(1.0
)
 
(1.1
)
Net cash provided by operating activities
525.5

 
541.2

 
 
 
 
Investing activities:
 
 
 
Capital expenditures
(194.7
)
 
(350.4
)
Purchase or replacement of assets under operating leases
(78.2
)
 
(0.9
)
Property investments in MSLLC
(20.0
)
 
(22.3
)
Investments in and advances to affiliates
(4.9
)
 
(15.3
)
Proceeds from disposal of property
8.0

 
12.3

Other, net
(9.4
)
 
2.5

Net cash used for investing activities
(299.2
)
 
(374.1
)
 
 
 
 
Financing activities:
 
 
 
Proceeds from issuance of long-term debt
545.6

 

Repayment of long-term debt
(4.8
)
 
(5.5
)
Dividends paid
(76.9
)
 
(72.6
)
Shares repurchased
(211.7
)
 
(142.7
)
Debt issuance costs paid
(6.6
)
 
(2.5
)
Proceeds from employee stock plans
4.5

 
3.3

Net cash provided by (used for) financing activities
250.1

 
(220.0
)
 
 
 
 
Effect of exchange rate changes on cash
(5.1
)
 

 
 
 
 
Cash and cash equivalents:
 
 
 
Net increase (decrease) during each period
471.3

 
(52.9
)
At beginning of year
148.8

 
100.5

At end of period
$
620.1

 
$
47.6

See accompanying notes to the unaudited consolidated financial statements.

6



Kansas City Southern and Subsidiaries
Consolidated Statements of Changes in Equity
(in millions, except per share amounts)
(Unaudited)
 
 
$25 Par
Preferred
Stock
 
$.01 Par
Common
Stock
 
Additional Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Non-
controlling
Interest
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
5.7

 
$
1.0

 
$
946.6

 
$
3,870.6

 
$
(10.9
)
 
$
319.7

 
$
5,132.7

Net income
 
 
 
 
 
 
102.8

 
 
 
0.4

 
103.2

Other comprehensive loss
 
 
 
 
 
 
 
 
(4.9
)
 
 
 
(4.9
)
Contribution from noncontrolling interest
 
 
 
 
 
 
 
 
 
 
1.8

 
1.8

Dividends on common stock ($0.36/share)
 
 
 
 

 
(36.3
)
 
 
 
 
 
(36.3
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 
(0.1
)
 
 
 
 
 
(0.1
)
Share repurchases

 

 
(4.4
)
 
(45.9
)
 
 
 
 
 
(50.3
)
Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
(2.1
)
 
 
 
 
 
 
 
(2.1
)
Share-based compensation
 
 
 
 
6.0

 
 
 
 
 
 
 
6.0

Balance at March 31, 2019
5.7

 
1.0

 
946.1

 
3,891.1

 
(15.8
)
 
321.9

 
5,150.0

Net income
 
 
 
 
 
 
128.7

 
 
 
0.4

 
129.1

Other comprehensive loss
 
 
 
 
 
 
 
 
(7.5
)
 
 
 
(7.5
)
Dividends on common stock ($0.36/share)
 
 
 
 

 
(36.0
)
 
 
 
 
 
(36.0
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 

 
 
 
 
 

Share repurchases
(0.1
)
 

 
(7.3
)
 
(85.0
)
 
 
 
 
 
(92.4
)
Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
2.3

 
 
 
 
 
 
 
2.3

Share-based compensation
 
 
 
 
6.0

 
 
 
 
 
 
 
6.0

Balance at June 30, 2019
5.6

 
1.0

 
947.1

 
3,898.8

 
(23.3
)
 
322.3

 
5,151.5

Net income
 
 
 
 
 
 
180.2

 
 
 
0.4

 
180.6

Other comprehensive loss
 
 
 
 
 
 
 
 
(7.3
)
 
 
 
(7.3
)
Dividends on common stock ($0.36/share)
 
 
 
 

 
(35.6
)
 
 
 
 
 
(35.6
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 
(0.1
)
 
 
 
 
 
(0.1
)
Share repurchases

 

 
(7.7
)
 
(92.1
)
 
 
 
 
 
(99.8
)
Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
2.7

 
 
 
 
 
 
 
2.7

Share-based compensation
 
 
 
 
5.2

 
 
 
 
 
 
 
5.2

Balance at September 30, 2019
5.6

 
1.0

 
947.3

 
3,951.2

 
(30.6
)
 
322.7

 
5,197.2

Net income
 
 
 
 
 
 
127.2

 
 
 
0.7

 
127.9

Other comprehensive income
 
 
 
 
 
 
 
 
1.5

 
 
 
1.5

Dividends on common stock ($0.40/share)
 
 
 
 

 
(38.6
)
 
 
 
 
 
(38.6
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 

 
 
 
 
 

Share repurchases

 

 
(29.0
)
 
(438.5
)
 
 
 
 
 
(467.5
)
Forward contract for accelerated share repurchases
 
 
 
 
(82.5
)
 
 
 
 
 
 
 
(82.5
)
Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
1.2

 
 
 
 
 
 
 
1.2

Share-based compensation
 
 
 
 
6.7

 
 
 
 
 
 
 
6.7

Balance at December 31, 2019
5.6

 
1.0

 
843.7

 
3,601.3

 
(29.1
)
 
323.4

 
4,745.9

Net income
 
 
 
 
 
 
151.8

 
 
 
0.5

 
152.3

Other comprehensive income
 
 
 
 
 
 
 
 
3.6

 
 
 
3.6

Dividends on common stock ($0.40/share)
 
 
 
 

 
(38.2
)
 
 
 
 
 
(38.2
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 
(0.1
)
 
 
 
 
 
(0.1
)
Share repurchases
 
 

 
(11.4
)
 
(182.8
)
 
 
 
 
 
(194.2
)
Settlement of forward contract for accelerated share repurchases
 
 
 
 
82.5

 
 
 
 
 
 
 
82.5

Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
(0.1
)
 
 
 
 
 
 
 
(0.1
)
Share-based compensation
 
 
 
 
10.3

 
 
 
 
 
 
 
10.3

Balance at March 31, 2020
$
5.6

 
$
1.0

 
$
925.0

 
$
3,532.0

 
$
(25.5
)
 
$
323.9

 
$
4,762.0

Net income
 
 
 
 
 
 
109.7

 
 
 
0.6

 
110.3

Other comprehensive income
 
 
 
 
 
 
 
 
5.9

 
 
 
5.9

Dividends on common stock ($0.40/share)
 
 
 
 

 
(37.8
)
 
 
 
 
 
(37.8
)
Dividends on $25 par preferred stock ($0.25/share)
 
 
 
 
 
 

 
 
 
 
 

Share repurchases

 

 
(6.8
)
 
(93.2
)
 
 
 
 
 
(100.0
)
Options exercised and stock subscribed, net of shares withheld for employee taxes
 
 

 
(0.3
)
 
 
 
 
 
 
 
(0.3
)
Share-based compensation
 
 
 
 
4.9

 
 
 
 
 
 
 
4.9

Balance at June 30, 2020
$
5.6

 
$
1.0

 
$
922.8

 
$
3,510.7

 
$
(19.6
)
 
$
324.5

 
$
4,745.0


See accompanying notes to the unaudited consolidated financial statements.

7



Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
For purposes of this report, “KCS” or the “Company” may refer to Kansas City Southern or, as the context requires, to one or more subsidiaries of Kansas City Southern.

1. Basis of Presentation
In the opinion of the management of KCS, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to reflect a fair statement of the results for interim periods in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. Certain prior year amounts have been reclassified to conform to the current year presentation.
During the first quarter of 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses,” which required the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. Adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.
During the first quarter of 2020, the Company early adopted the SEC’s, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities rules, which simplify the disclosure requirements related to the Company’s registered securities under Rule 3-10 of Regulation S-X. The final rule also allows for the simplified disclosure to be included within Management’s Discussion and Analysis of Financial Condition and Results of Operations.

2. Restructuring Charges
COVID-19. In March 2020, the World Health Organization categorized Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The U.S. and Mexico governments have deemed rail transportation as “critical infrastructure” providing essential services during this global emergency. As a provider of critical infrastructure, Kansas City Southern has an obligation to keep employees working and freight moving. KCS remains focused on protecting the health and wellbeing of its employees and the communities in which it operates while assuring the continuity of its business operations.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. The Company estimates the payment of approximately $11.0 million of employer payroll taxes otherwise due in 2020 will be delayed with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. The CARES Act did not have a material impact on the Company’s consolidated financial statements.
The Company began to experience the impacts of COVID-19 on customer demand in late March 2020. Revenues for the three months ended June 30, 2020 decreased by 23% as compared to the same period in 2019, primarily due to an overall decline in demand due to COVID-19. As revenues declined, the Company responded quickly and implemented cost-saving measures and accelerated precision scheduled railroading (“PSR”) initiatives by further consolidating trains, which increased train length and reduced crew costs. In June of 2020, the Company offered a voluntary separation program, which resulted in a restructuring charge of $9.2 million for the three months ended June 30, 2020, consisting of severance and benefit costs that will be paid out in either lump-sum payments or over a six to twelve-month period. Approximately 6% of management employees were irrevocably accepted into the voluntary separation program.
PSR. During 2019, the Company began implementing principles of PSR, which focus on providing reliable customer service, facilitating growth, improving asset utilization, and improving the cost profile of the Company. As a result of the PSR initiatives in 2019, management approved four separate restructuring plans that totaled $168.8 million, including restructuring plans of $67.5 million and $51.0 million in the first and second quarters of 2019, respectively. The restructuring plans were substantially completed in 2019.
During the first quarter of 2020, the Company purchased 91 locomotives for $78.2 million that were part of two existing leases. Of the 91 locomotives, 13 were impaired during the fourth quarter of 2019. The purchase of the impaired lease locomotives resulted in $6.0 million of make-whole payments recorded as incremental restructuring charges in the first quarter of 2020. During the second

8


Kansas City Southern and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements—(Continued)

quarter of 2020, the Company recognized approximately $1.3 million of restructuring charges from the disposal of held for sale equipment.
    
3. Revenue
Disaggregation of Revenue
The following table presents revenues disaggregated by the major commodity groups as well as the product types included within the major commodity groups (in millions). The Company believes disaggregation by product type best depicts how cash flows are affected by economic factors. See Note 12 for revenues by geographical area.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2020
 
2019
 
2020
 
2019
Chemical & Petroleum
 
 
 
 
 
 
 
Chemicals
$