Kansas City Southern (KSU) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Date:	August 3, 2005
Media Contact:	William H. Galligan	816/983-1551
	William.h.galligan@kcsr.com

Kansas City Southern Reports Second Quarter 2005 Results;
Sets the Groundwork for the Integrated Operation of
KCSR, Tex Mex and TFM

Second Quarter Highlights

• Substantial progress made in integrating TFM, S.A. de C.V. (TFM) into Kansas City Southern (KCS) and creating a single rail network connecting the commercial and industrial heartlands of U.S. and Mexico.

• Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. (GTFM) financial results consolidated under KCS as of April 1, 2005. GTFM is the holding company for TFM, the railroad operating company in Mexico.

• KCS consolidated second quarter revenues increased 12.5% to $381.1 million over the pro forma second quarter 2004 combined revenues of $338.8 million, principally from its three rail operating companies: The Kansas City Southern Railway (KCSR), The Texas Mexican Railway (Tex Mex) and TFM.

• KCSR revenues rose 16.8% to $178.6 million; ninth consecutive quarter of substantial quarter-over-quarter growth.

• KCSR operating income improved 12.1% to $25.9 million.

• GTFM revenues increased 8.7% to $184.1 million from $169.3 million, but the quarter’s financial result was adversely impacted by tax rulings, purchase accounting and other costs.

• TFM refinanced $443.5 million of 11.75% Senior Discount Debentures saving $10.5 million of interest annually going forward.

• Tex Mex was granted a $50 million, 25-year loan under the Federal Railroad Administration’s RRIF program. The loan will be used to enhance Tex Mex as a rail link between the U.S. and Mexico.

Second Quarter 2005

Kansas City, MO. Kansas City Southern (KCS or Company) (NYSE:KSU) today reported second quarter 2005 financial results, which included the consolidation of TFM’s results following the acquisition of control on April 1, 2005. For the second quarter 2005, KCS consolidated revenues were $381.1 million versus $153.9 million in 2004. On a same rail system

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comparative basis, KCS consolidated second quarter revenues grew 12.5% over the 2004 pro forma combined revenues of the Company.

In connection with the April 1, 2005 acquisition of an additional 48.5% interest in GTFM, KCS consolidated operating expenses for the second quarter of 2005 were adversely impacted by a non-cash, pre-tax charge of $35.6 million related to a series of Mexican Supreme Court rulings, which eliminated TFM’s ability to use net operating losses to offset future employer statutory profit sharing contributions. In addition, consolidated pre-tax operating expenses were adversely impacted by $4.1 million related to the reduction of the carrying values of certain GTFM assets to reflect KCS’ revised plans relating to future use; $3.6 million in depreciation relating to the preliminary allocation of the purchase price; $4.9 million associated with disputed withholding tax receivables with the Mexican government, and $3.2 million associated with the higher bad debt and claims costs experienced by GTFM. After factoring in the impact of these pre-tax charges, KCS consolidated operating expenses were $386.4 million for the second quarter of 2005 versus $134.4 million in 2004, which is not comparable due to the consolidation of GTFM commencing in the second quarter of 2005.

Primarily as a result of the above described charges related to GTFM, KCS recorded a net loss of $25.8 million, or $(0.32) diluted earnings per share, for the second quarter of 2005, compared with $7.0 million of net income available to common shareholders, $0.11 diluted earnings per share, for the second quarter of 2004.

Year-to-Date 2005 Highlights

• Consolidated revenues of $579.3 million, which excludes first quarter 2005 revenues of GTFM.

• KCSR revenues increased 19.4% to $357.9 million.

• KCSR operating income improved 19.1% to $55.6 million.

• GTFM revenues increased to $354.2 million, or 9.7% on a separate company basis.

• Cross border KCSR-TFM revenues increased 25.9%.

Comments from the Chairman

“During the second quarter KCS began the essential steps of consolidating its North American operations following the acquisition of the 48.5% additional interest in GTFM,” stated Chairman, President and Chief Executive Officer Michael R. Haverty. “The progress made in growing the franchise was encouraging, especially as a great deal of attention was directed toward re-organizing the operations and marketing functions of KCSR, Tex Mex, and TFM, and strengthening the balance sheet at TFM.

“KCSR streamlined its rail operations into three divisions in order to sharpen focus on strategic points along its system. Being able to focus on key traffic and interchange points will help KCSR

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structure its service to meet capacity issues as its traffic volumes steadily increase. The Tex Mex began a major upgrade of its track infrastructure funded by a 25-year, $50 million RRIF loan to expand capacity and ensure the efficient handling of growing traffic volumes between the U.S. and Mexico. TFM continued to make steady progress in reorganizing its marketing, operations, and finance and accounting functions to conform with and be integrated into the KCS system, including investing in the communications infrastructure required to ensure a timely installation of MCS in the first quarter of 2006.

“We were very pleased that Francisco Javier Rion elected to join TFM as chief executive officer. Highly respected within the Mexican and international business communities, he joins TFM with 30 years experience in the transportation industry, most recently serving as president of the Rail Control Solutions Division of Bombardier Transportation in the UK. Prior to that he served as Bombardier’s president and managing director in Mexico City. We are confident that Javier will help take TFM to a new level of service performance and profitability. We look forward to investors and the financial community having the opportunity to get to know Javier in the near future.

“He replaces Vicente Corta, who had served as interim chief executive officer since April 2005. Vicente remains a partner in the law firm of White & Case, S.C., and will continue to serve as counsel to TFM in Mexico. We are grateful to Vicente for his valuable leadership through this critical time of transition, and look forward to continuing our close association.

“The second quarter was a period of transition for TFM. 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. In addition, the decision was made to invest in SAP R-5 to be installed for use in 2007, following its installation for use by KCS’ U.S. operations in 2006.

“Also of note during the quarter was the progress of the Panama Canal Railway Company (PCRC), which in June had its first $1 million freight revenue month. During the month, average weekly container volumes approached 1,900 compared with about 700 a year ago. The progress made in the second quarter is indicative of growth we expect to continue in the future.

“Favorable progress has been made in a short time period in transforming KCS into a significantly larger transportation company. With every passing day, we identify new opportunities which serve to confirm our long-held belief that putting this system together will be of great benefit to North American shippers, as well as to our shareholders. Given the complexities of the transition everyone should be encouraged by how rapidly and smoothly the process has gone and can look forward to KCS being uniquely positioned to take advantage of newly emerging international traffic patterns.”

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Headquartered in Kansas City, MO., KCS is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holdings include The Kansas City Southern Railway Company, founded in 1887, and The Texas Mexican Railway Company, founded in 1885, serving the central and south central U.S. Its international holdings include a controlling interest in TFM, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lázaro Cardénas, Tampico and Veracruz, and a 50% interest in The Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS’ North American rail holdings and strategic alliances are primary components of a NAFTA Railway system, linking the commercial and industrial centers of the U.S., Canada and Mexico. Visit www.kcsi.com for more information.

This press release includes statements concerning potential future events involving the Company, which could materially differ from the events that actually occur. The differences could be caused by a number of factors including those factors identified in the “Risk Factors” and the “Cautionary Information” sections of the Company’s Form 10-K for the year ended December 31, 2004, filed by the Company with the Securities and Exchange Commission (SEC) (Commission file no. 1-4717). The Company will not update any forward-looking statements in this press release to reflect future events or developments.

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KANSAS CITY SOUTHERN
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except share and per share data)
(Unaudited)

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2005			2004			2005			2004
Revenues	$	381.1		$	153.9		$	579.3		$	301.7
Operating expenses
Compensation and benefits		93.4			52.2			154.7			103.0
Fuel		56.5			14.6			83.0			29.4
Purchased services		56.6			15.4			76.4			31.0
Equipment costs		41.0			11.6			58.2			24.6
Depreciation and amortization		40.4			13.1			54.7			25.9
Deferred profit sharing		35.7			—			35.7			—
Casualties and insurance		22.0			10.9			34.7			16.6
Other		40.8			16.6			62.4			34.3
Total operating expenses		386.4			134.4			559.8			264.8
Operating income		(5.3	)		19.5			19.5			36.9
Equity in net earnings (loss) of unconsolidated affiliates:
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.		—			2.9			(1.0	)		4.2
Other		1.5			0.3			0.4			0.4
Interest expense		(38.7	)		(10.9	)		(51.0	)		(21.7	)
Debt retirement costs		(3.9	)		—			(3.9	)		(4.2	)
Exchange gain (loss)		4.3			—			4.3			—
Other income		3.8			1.7			7.1			3.2
Income before income taxes and minority interest		(38.3	)		13.5			(24.6	)		18.8
Income tax provision		2.5			4.3			8.1			6.2
Income before minority interest		(40.8	)		9.2			(32.7	)		12.6
Minority interest		(17.2	)					(17.2	)
Net income		(23.6	)		9.2			(15.5	)		12.6
Preferred stock dividends		2.2			2.2			4.4			4.4
Net income available to common shareholders	$	(25.8	)	$	7.0		$	(19.9	)	$	8.2
Per Share Data
Earnings per Common share — basic	$	(0.32	)	$	0.11		$	(0.27	)	$	0.13
Earnings per Common share — diluted	$	(0.32	)	$	0.11		$	(0.27	)	$	0.13
Weighted average Common shares outstanding (in thousands) Basic		81,707			62,655			72,604			62,570
Potential dilutive Common shares		—			1,175			—			1,242
Diluted		81,707			63,830			72,604			63,812

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Kansas City Southern
Carloadings By Commodity — Second Quarter, 2005
Dollars in Thousands
(Preliminary)

Carloadings							Revenue
Second Quarter			%				Second Quarter				%
2005	2004		Change				2005		2004		Change
						Coal
51,032		47,128		8.3	%	Unit Coal	$	26,651	$	22,902		16.4	%
746		556		34.2	%	Other Coal		348		344		1.2	%
51,778		47,684		8.6	%	Total		26,999		23,246		16.1	%
						Chemical & Petroleum Products
3,395		1,520		123.4	%	Agri Chemicals		3,055		1,005		204.0	%
25,062		16,834		48.9	%	Other		26,998		16,578		62.9	%
26,834		14,561		84.3	%	Petroleum		21,422		10,808		98.3	%
12,519		4,679		167.6	%	Plastics		17,519		5,404		224.2	%
67,810		37,594		80.4	%	Total		68,994		33,795		104.2	%
						Agriculture and Minerals
48,785		17,942		171.9	%	Grain		51,984		15,489		235.6	%
17,109		7,588		125.5	%	Food Products		20,216		6,882		193.8	%
16,496		6,718		145.5	%	Ores and Minerals		11,415		4,091		178.9	%
21,321		4,334		391.9	%	Stone, Clay & Glass		15,731		3,555		342.5	%
103,711		36,582		183.5	%	Total		99,346		30,017		231.0	%
						Paper & Forest Products
36,775		23,915		53.8	%	Pulp/Paper		33,492		19,400		72.6	%
8,000		1,931		314.3	%	Scrap Paper		7,322		1,355		440.4	%
8,384		6,239		34.4	%	Pulpwood/Logs/Chips		5,478		2,993		83.0	%
8,846		8,459		4.6	%	Lumber/Plywood		10,063		8,700		15.7	%
30,784		4,377		603.3	%	Metal/Scrap		25,885		3,830		575.8	%
19,639		1,547		1169.5	%	Military/Other Carloads		19,623		1,978		892.1	%
112,428		46,468		141.9	%	Total		101,863		38,256		166.3	%
						Intermodal & Automotive
33,488		1,429		2243.5	%	Automotive		33,796		1,159		2816.0	%
146,481		85,639		71.0	%	Intermodal		34,011		15,369		121.3	%
179,969		87,068		106.7	%	Total		67,807		16,528		310.3	%
515,696		255,396		101.9	%	TOTAL FOR BUSINESS UNITS		365,009		141,842		157.3	%
(138)		4,202		(103.3	)%	Other Freight Revenue		4,212		2,653		58.8	%
						Other Revenue		11,927		9,421		33.8	%
515,558		259,598		98.6	%	TOTAL	$	381,148	$	153,916		147.6	%

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Kansas City Southern
Carloadings By Commodity — Year to date June 30, 2005
Dollars in Thousands
(Preliminary)

Carloadings							Revenue
Year to Date			%				Year to Date				%
2005	2004		Change				2005		2004		Change
						Coal
110,747		94,985		16.6	%	Unit Coal	$	57,045	$	44,459		28.3	%
1,465		1,238		18.3	%	Other Coal		666		708		(5.9	)%
112,212		96,223		16.6	%	Total		57,711		45,167		27.8	%
						Chemical & Petroleum Products
5,135		2,975		72.6	%	Agri Chemicals		4,339		1,916		126.5	%
42,717		32,945		29.7	%	Other		45,522		32,341		40.8	%
42,904		28,164		52.3	%	Petroleum		33,915		20,758		63.4	%
19,515		9,190		112.4	%	Plastics		24,451		10,731		127.9	%
110,271		73,274		50.5	%	Total		108,227		65,746		64.6	%
						Agriculture and Minerals
78,037		37,907		105.9	%	Grain		77,320		32,939		134.7	%
26,545		14,687		80.7	%	Food Products		28,765		12,934		122.4	%
26,931		13,627		97.6	%	Ores and Minerals		17,901		8,085		121.4	%
26,523		8,363		217.1	%	Stone, Clay & Glass		20,875		6,786		207.6	%
158,036		74,584		111.9	%	Total		144,861		60,744		138.5	%
						Paper & Forest Products
66,272		47,199		40.4	%	Pulp/Paper		58,862		38,191		54.1	%
10,452		3,757		178.2	%	Scrap Paper		9,298		2,497		272.4	%
16,779		12,781		31.3	%	Pulpwood/Logs/Chips		10,830		5,915		83.1	%
17,267		16,564		4.2	%	Lumber/Plywood		19,552		16,639		17.5	%
38,271		8,742		337.8	%	Metal/Scrap		32,807		7,418		342.3	%
21,165		3,676		475.8	%	Military/Other Carloads		22,033		4,312		411.0	%
170,206		92,719		83.6	%	Total		153,382		74,972		104.6	%
						Intermodal & Automotive
35,369		2,508		1310.2	%	Automotive		35,273		2,030		1637.6	%
227,503		165,200		37.7	%	Intermodal		50,387		29,125		73.0	%
262,872		167,708		56.7	%	Total		85,660		31,155		174.9	%
813,597		504,508		61.3	%	TOTAL FOR BUSINESS UNITS		549,841		277,784		97.9	%
(534)		7,964		(106.7	)%	Other Freight Revenue		4,582		5,298		(13.5	)%
						Other Revenue		24,921		18,628		26.6	%
813,063		512,472		58.7	%	TOTAL	$	579,344	$	301,710		92.0	%

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Kansas City Southern Railway
Operating Statements
Dollars in Millions
(Preliminary)

	Second			Second
	Quarter			Quarter			Year to Date			Year to Date
	2005			2004			2005			2004
Revenues
Chemical and Petroleum	$	36.0		$	33.8		$	72.3		$	65.7
Paper and Forest		50.5			38.3			98.1			75.0
Agricultural and Mineral		36.4			30.0			74.5			60.7
Intermodal and Automotive Revenue		18.3			16.5			34.9			31.2
Unit Coal Revenue		26.9			22.9			57.5			44.5
Haulage Revenue		0.3			2.7			0.7			5.3
Other Revenue		10.2			8.7			19.9			17.5
Total Revenues		178.6			152.9			357.9			299.9
Operating Expenses
Compensation and Benefits		55.5			50.9			110.7			100.6
Purchased Services		14.8			14.4			28.1			28.3
Fuel		25.7			14.4			49.8			29.4
Equipment Costs		11.5			11.6			25.6			24.6
Casualties & Insurance		12.8			9.8			22.8			14.3
Material and Supplies		8.5			6.4			17.5			11.9
Other		4.0			2.8			7.6			5.5
Variable Operating Expenses		132.8			110.3			262.1			214.6
Fixed Expenses
Other Lease		2.6			2.9			5.6			5.7
Depreciation		13.5			12.9			27.1			25.5
Taxes (Other Than Income)		3.8			3.7			7.5			7.4
Fixed Operating Expenses		19.9			19.5			40.2			38.6
Total Operating Expenses		152.7			129.8			302.3			253.2
Operating Income	$	25.9		$	23.1		$	55.6		$	46.7
Operating Ratio		85.5	%		84.9	%		84.5	%		84.4	%

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Kansas City Southern Railway
Carloadings By Commodity — Second Quarter, 2005
Dollars in Thousands
(Preliminary)

Carloadings							Revenue
Second Quarter			%				Second Quarter				%
2005	2004		Change				2005		2004		Change
						Coal
51,032		47,128		8.3	%	Unit Coal	$	26,651	$	22,902		16.4	%
587		556		5.6	%	Other Coal		273		344		(20.6	)%
51,619		47,684		8.3	%	Total		26,924		23,246		15.8	%
						Chemical & Petroleum Products
1,691		1,520		11.3	%	Agri Chemicals		1,296		1,005		29.0	%
17,567		16,834		4.4	%	Other		17,363		16,578		4.7	%
14,472		14,561		(0.6	)%	Petroleum		11,514		10,808		6.6	%
4,650		4,679		(0.6	)%	Plastics		5,864		5,404		8.5	%
38,380		37,594		2.1	%	Total		36,037		33,795		6.6	%
						Agriculture and Minerals
16,346		17,942		(8.9	)%	Grain		17,036		15,489		10.0	%
7,572		7,588		(0.2	)%	Food Products		7,946		6,882		15.5	%
9,353		6,718		39.2	%	Ores and Minerals		6,120		4,091		49.5	%
5,251		4,334		21.2	%	Stone, Clay & Glass		5,295		3,555		48.9	%
38,522		36,582		5.3	%	Total		36,397		30,017		21.3	%
						Paper & Forest Products
26,154		23,915		9.4	%	Pulp/Paper		23,151		19,400		19.3	%
1,845		1,931		(4.5	)%	Scrap Paper		1,540		1,355		13.7	%
7,128		6,239		14.2	%	Pulpwood/Logs/Chips		4,628		2,993		54.6	%
8,681		8,459		2.6	%	Lumber/Plywood		9,910		8,700		13.9	%
5,336		4,377		21.9	%	Metal/Scrap		5,529		3,830		44.4	%
4,008		1,547		159.1	%	Military/Other Carloads		5,766		1,978		191.5	%
53,152		46,468		14.4	%	Total		50,524		38,256		32.1	%
						Intermodal & Automotive
1,650		1,429		15.5	%	Automotive		1,371		1,159		18.3	%
83,640		85,639		(2.3	)%	Intermodal		16,892		15,369		9.9	%
85,290		87,068		(2.0	)%	Total		18,263		16,528		10.5	%
266,963		255,396		4.5	%	TOTAL FOR BUSINESS UNITS		168,145		141,842		18.5	%
(12)		4,202		(100.3	)%	Other Freight Revenue		336		2,653		(87.3	)%
						Other Revenue		10,116		8,378		20.7	%
266,951		259,598		2.8	%	TOTAL	$	178,597	$	152,873		16.8	%

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Kansas City Southern Railway
Carloadings By Commodity — Year to date June 30, 2005
Dollars in Thousands
(Preliminary)

Carloadings							Revenue
Year to Date			%				Year to Date				%
2005	2004		Change				2005		2004		Change
						Coal
110,747		94,985		16.6	%	Unit Coal	$	57,045	$	44,459		28.3	%
1,115		1,238		(9.9	)%	Other Coal		497		708		(29.8	)%
111,862		96,223		16.3	%	Total		57,542		45,167		27.4	%
						Chemical & Petroleum Products
3,387		2,975		13.8	%	Agri Chemicals		2,548		1,916		33.0	%
34,809		32,945		5.7	%	Other		35,586		32,341		10.0	%
28,572		28,164		1.4	%	Petroleum		22,663		20,758		9.2	%
9,181		9,190		(0.1	)%	Plastics		11,489		10,731		7.1	%
75,949		73,274		3.7	%	Total		72,286		65,746		9.9	%
						Agriculture and Minerals
35,182		37,907		(7.2	)%	Grain		36,710		32,939		11.4	%
15,261		14,687		3.9	%	Food Products		15,579		12,934		20.4	%
18,085		13,627		32.7	%	Ores and Minerals		11,978		8,085		48.2	%
10,160		8,363		21.5	%	Stone, Clay & Glass		10,213		6,786		50.5	%
78,688		74,584		5.5	%	Total		74,480		60,744		22.6	%
						Paper & Forest Products
52,653		47,199		11.6	%	Pulp/Paper		46,125		38,191		20.8	%
3,836		3,757		2.1	%	Scrap Paper		3,252		2,497		30.2	%
15,523		12,781		21.5	%	Pulpwood/Logs/Chips		9,980		5,915		68.7	%
16,985		16,564		2.5	%	Lumber/Plywood		19,296		16,639		16.0	%
11,391		8,742		30.3	%	Metal/Scrap		11,451		7,418		54.4	%
5,312		3,676		44.5	%	Military/Other Carloads		7,999		4,312		85.5	%
105,700		92,719		14.0	%	Total		98,103		74,972		30.9	%
						Intermodal & Automotive
3,146		2,508		25.4	%	Automotive		2,608		2,030		28.5	%
161,501		165,200		(2.2	)%	Intermodal		32,323		29,125		11.0	%
164,647		167,708		(1.8	)%	Total		34,931		31,155		12.1	%
536,846		504,508		6.4	%	TOTAL FOR BUSINESS UNITS		337,342		277,784		21.4	%
(408)		7,964		(105.1	)%	Other Freight Revenue		706		5,298		(86.7	)%
						Other Revenue		19,886		16,769		18.6	%
536,438		512,472		4.7	%	TOTAL	$	357,934	$	299,851		19.4	%

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