NEW YORK, April 18, 2014 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Kansas City Southern ("KCS" or the "Company") (NYSE: KSU). Investors are advised to contact Robert S. Willoughby at [email protected] or 888-476-6529, ext. 237.
The investigation concerns whether KCS and certain of its officers and/or directors have violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
On January 22, 2013, the Company issued a release announcing its fourth quarter and 2012 financial results. Later that day, the Company officers conducted an earnings conference call on behalf of the Company during which, in addition to discussing the Company's fiscal and fourth quarter 2012 results, they provided fiscal 2013 guidance that – if met – would convince the rating agencies to upgrade the Company's corporate debt ratings to investment grade. The market reacted positively to the news. As reported by Reuters that evening, the Company "forecast 2013 revenue growth in the high-single digits" and on this news, "[s]hares of Kansas City Southern, which have risen about 30 percent since the beginning of 2012, closed up nearly 5 percent at an all-time high of $91.67 on Tuesday."
On January 24, 2014, KCS issued a press release announcing its fourth quarter and fiscal 2013 financial results. The Company's reported fourth quarter and fiscal 2013 net income significantly missed the net income the investment community had been led to expect based on defendants' Class Period statements. The Company also offered a disappointing earnings growth outlook for fiscal 2014, forecasting per-share earnings for 2014 to rise only in the mid-teens, while the investment community had been led to expect 26% growth based on defendants' Class Period statements.
On this news, the price of KCS common stock declined $17.79 per share, or more than 15.17%, to close at $99.49, on unusually heavy trading volume, on January 24, 2014.
KCS operates its Mexican railroad under a 1997 concession from the Mexican government that purportedly extended to 2027 (the "Concession"). According to the Concession, KCS had the exclusive right to use, but did not own, all tracks and buildings necessary for its Mexican operation. KCS was obligated to maintain the right of way, track structure, buildings and related maintenance facilities to the operational standards specified in the Concession and to return the assets in that condition at the end of the Concession period.
On February 18, 2014, the market learned that the lower house of the Mexican legislature had approved a new bill to increase rail competition in Mexico by giving third-party companies access to KCS's exclusive freight and passenger rail networks, and to give the government control over tariffs. According to a Bloomberg news report, KCS obtained approximately 46% of its 2013 revenues from Mexican operations.
On this news, the price of KCS stock fell $4.29 per share, or more than 4.47%, on close at $91.67 on February 18, 2014.
The Pomerantz Firm, with offices in New York, Chicago, San Diego and Florida, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
SOURCE Pomerantz LLP