Santa Fe Southern Says Its 1st-Period Net Fell by a Half

Santa Fe Southern Pacific Corp. on Thursday reported sharply lower net income for the first quarter, citing expenses from its voluntary severence program.

The company posted earnings of $29.7 million for the quarter, down from $61.6 million a year ago.

Chairman John J. Schmidt said the lower earnings were caused by $38.8 million in expenses for voluntary severance programs for railway employees. The results also reflected lower operating income from petroleum and real estate operations.

Revenue for the quarter was $1.43 billion, down from $1.56 billion a year ago.

In a prepared statement, Schmidt said that the severance program would reduce expenses in the future. “These programs had a significant negative impact on the first quarter, but the long-term effect will be positive, as they will result in estimated annual reduced operating expenses of about $55 million,” he said.

“We will begin to realize those benefits in the second quarter.”

Southern Pacific Transportation had an operating loss of $59.7 million for the quarter, compared to a $26.3-million loss for the same period last year.

The transportation unit realized $34.7 million in losses related to the severance program, which affected 1,200 employees.

Pipeline operating income increased by 38% to $28.3 million, while operating income from petroleum production and marketing dropped to $18.8 million from $31.5 million.