Kansas City Southern (KSU) 8-K Kansas City Southern’s Fourth Quarter and Year-End 2005 Results Driven by Acquisitions, Sustained Revenue Growth, Hurricane Impacts

EXHIBIT 99.1

Date:	February 2, 2006
Media Contact:	William H. Galligan	816/983-1551
	William.h.galligan@kcsr.com

Kansas City Southern’s Fourth Quarter and Year-End 2005 Results
Driven by Acquisitions, Sustained Revenue Growth, Hurricane Impacts

Fourth Quarter Highlights

• Consolidated revenues reached a record $388.2 million.

• Kansas City Southern (KCS) & Norfolk Southern Corporation (NSC) agree to form joint venture, which remains subject to Surface Transportation Board approval, with $300 million investment from NSC to enhance capacity and improve service on the Meridian Speedway.

• U.S. domestic revenues increase despite residual impact of hurricane damage to Gulf Coast customer base.

• KCS purchases 9 million shares of its common stock formerly owned by Grupo TMM, S.A., financed through the sale of $210 million of cumulative convertible preferred stock, which if converted at the current $30 exchange rate, would reduce the KCS shareholder base by 2.0 million common shares.

• KCS’ Mexican railroad subsidiary changes name to Kansas City Southern de Mexico, S.A. de C.V. (KCSM).

Fourth Quarter 2005

Kansas City, MO. Kansas City Southern (NYSE:KSU) today reported record consolidated revenues for fourth quarter 2005 of $388.2 million. On a historical basis, this represents an increase of $213.6 million, substantially as a result of the acquisitions of the Texas Mexican Railway Company (Tex Mex) and KCSM.

Consolidated operating expenses for the fourth quarter of 2005 were $341.6 million versus $147.2 million in the fourth quarter of 2004, primarily due to the previously referenced acquisitions and increased fuel costs net of reduced depreciation at KCSM as a result of a depreciation study completed in the fourth quarter.

For the fourth quarter 2005, KCS recorded a net loss available to common shareholders of $4.1 million, or $(0.05) per diluted share, compared with a net loss available to common shareholders of $1.4 million, or $(0.02) per diluted share in the fourth quarter of 2004. Fourth quarter 2005 earnings were negatively impacted by the residual effects of Gulf Coast hurricanes Katrina and Rita, which resulted in an estimated $12.8 million reduction in operating income.

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Year-to-Date 2005 Highlights

KCS reported consolidated earnings available to common shareholders of $1.03 per diluted share for 2005 compared with earnings available to common shareholders of $0.25 per diluted share in 2004. Adjusting 2004 earnings per diluted share for the effect of interest income received on certain income tax refunds ($0.10), results in normalized earnings per share of $0.15 for 2004. Similarly, adjusting earnings per diluted share for the gain on the VAT settlement ($1.42), the increase in claims reserves ($0.25), the write off of deferred profit sharing benefits in Mexico (PTU) of ($0.38) and the estimated impact to earnings from the hurricanes of $(0.16) nets to earnings of $0.41 per diluted share in 2005, nearly triple the adjusted 2004 earnings per share.

KCS also achieved record consolidated revenues for the year ended December 31, 2005 of $1.35 billion, which on a historical basis represents an increase of $712.5 million, primarily due to the completion of the acquisition of the Tex Mex on January 1, 2005, and acquisition of a controlling interest in KCSM on April 1, 2005.

Operating income for 2005 was $61.0 million compared to $83.5 million for 2004. The 2005 operating income reflects a third quarter charge of $37.8 million to increase claims reserves, a second quarter non-cash, pre-tax charge of $35.6 million related to the reversal of deferred profit sharing benefits in Mexican operations, and a $24.8 million reduction due to the Gulf Coast hurricanes. Net income available to common shareholders was $84.9 million, $1.03 per share on a diluted basis, compared with 2004 net income of $15.7 million, or $0.25 per diluted share. The 2005 net income incorporates income recognized on the third quarter settlement of the VAT claim in Mexico.

Comments from the Chairman

KCS Chairman, President & Chief Executive Officer Michael R. Haverty stated “Despite some of our U.S. customers suffering considerable residual effects from the two devastating Gulf Coast hurricanes, The Kansas City Southern Railway Company (KCSR), KCS’ primary U.S. subsidiary, achieved overall revenue growth of 8%, with four out of its five commodity groups posting quarter-over-quarter gains.

“The hurricanes had significant impacts on both revenues and expenses in the quarter. Katrina resulted in the rerouting of Class I connecting rail traffic away from the Gulf region, which caused congestion along parts of the KCSR system, as well as disrupting locomotive and freight car positioning and availability.

“Hurricane Rita had an even greater impact on revenues than Katrina. Twenty chemical plants and refineries were closed for varying periods in the fourth quarter and virtually all of the Gulf Coast plants served by KCSR operated at less than full capacity throughout the quarter. The forced closure of the New Orleans and Gulfport intermodal ramps also resulted in lost revenues.

“The total impact to fourth quarter U.S. revenues of the hurricanes was approximately $9.8 million, and the total revenue impact for the final four months of 2005 was approximately $14 million. In the first quarter of 2006, all chemical plants served by KCSR are back in operation, although three remain at less than full capacity.

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“Revenues from KCS’ Mexican railroad subsidiary, KCSM, were up 4.8% in the fourth quarter compared with pre-acquisition fourth quarter 2004. Major emphasis during the quarter was placed on streamlining and centralizing key decision-making areas, focusing on improving revenue per car and adding capacity to the KCSM network. These will continue to be key themes in 2006, along with bringing pricing more in line with North American market practices and adding infrastructure to begin developing an International Intermodal Corridor between Lazaro Cardenas and Nuevo Laredo.

“During the fourth quarter KCS and the Norfolk Southern Corporation (NSC) entered into a joint venture partnership that will result in system improvements and capacity enhancements along the 320-mile Meridian Speedway between Shreveport, Louisiana, and Meridian, Mississippi. As part of the joint venture, NS will invest $300 million, which will be used primarily to more than double capacity on the Speedway, as well as improve transit times.

“The upgrade of the Meridian Speedway, along with major capacity expansion projects in the U.S. and Mexico, provide clear evidence of KCS’ commitment to growing cross-border traffic far beyond historical levels. With Asian imports playing an increasingly significant role in the North American economy, and Lazaro Cardenas being identified by maritime carriers as a primary Pacific port destination, the market potential exists for KCS to experience expansive long-term growth serving major Mexican and U.S. population centers.

“During 2006, investors should expect to see KCS make tangible progress in reducing operating costs, enhancing main line and key terminal infrastructure and capacity, and inaugurating expedited long haul service between Mexico and the U.S. The installation of MCS, KCS’ state-of-the-art transportation IT system, at KCSM in the second quarter, along with the implementation of SAP, a powerful resource planning system, which started in first quarter 2006 in the U.S., will provide us with the management tools to improve efficiency across both companies. Every project KCS commits to is designed to contribute to the development and management of a fully coordinated rail system that can handle increasingly greater traffic volumes at lower per unit cost over the next ten years.

“Certainly, 2005 presented challenges as we began to integrate the Tex-Mex, KCSM and KCSR systems into a seamless KCS network stretching from the heartland of the U.S. to the heartland of Mexico and the Pacific coast. Previously, all three railroads were essentially semi-autonomous and, as with any integration of companies, there have been issues involving management philosophy, management structure, changes in responsibility and job security. The good news is that most of these issues have either been resolved or will be resolved during the first quarter of 2006. Operationally, Mexico is improving dramatically and train movements across the U.S. — Mexico border have been more fluid than we have ever experienced in the past.

“When one looks at the complex integration issues which management has contended with during this past year, while also coping with the effects of two devastating hurricanes that hit the heart of our U.S. chemical franchise and severely crippled a major U.S. rail gateway, we are not disappointed with 2005, particularly in view of all of the positive ownership and strategic accomplishments throughout the year, and look forward to significant operational improvements in 2006 and beyond.”

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

	Three Months Ended						Year Ended
	December 31,						December 31,
	2005			2004			2005			2004
Revenues	$	388.2		$	174.6		$	1,352.0		$	639.5
Operating expenses
Compensation and benefits		92.7			57.1			341.3			213.0
Purchased services		63.1			15.2			196.4			62.3
Fuel		64.3			20.6			206.9			66.4
Equipment costs		44.6			12.5			149.8			50.4
Depreciation and amortization		29.9			14.2			125.2			53.5
Casualties and insurance		13.4			11.9			103.4			42.4
Other		33.6			15.7			168.0			68.0
Total operating expenses		341.6			147.2			1,291.0			556.0
Operating income		46.6			27.4			61.0			83.5
Equity in net earnings (losses) of unconsolidated affiliates:
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V.		—			(8.3	)		(1.0	)		(2.4	)
Other		2.2			(1.9	)		3.9			(2.1	)
Interest expense		(42.7	)		(11.4	)		(133.3	)		(44.4	)
Debt retirement costs		(0.5	)		—			(4.4	)		(4.2	)
Foreign exchange gains		0.7			—			3.5			—
VAT settlement gain, net		—			—			131.9			—
Other income		3.5			5.8			13.3			17.6
Income before income taxes		9.8			11.6			74.9			48.0
Income tax provision (benefit)		11.0			10.9			(1.7	)		23.6
Income before minority interest		(1.2	)		0.7			76.6			24.4
Minority interest		—			—			17.8			—
Net income	$	(1.2	)	$	0.7		$	94.4		$	24.4
Preferred stock dividends		2.9			2.1			9.5			8.7
Net income (loss) available to Common shareholders	$	(4.1	)	$	(1.4	)	$	84.9		$	15.7
Per Share Data
Basic earnings (loss) per Common share	$	(0.05	)	$	(0.02	)	$	1.12		$	0.25
Diluted earnings (loss) per Common share	$	(0.05	)	$	(0.02	)	$	1.03		$	0.25
Weighted average Common shares outstanding (in thousands) Basic		79,764			62,986			75,527			62,715
Potential dilutive Common shares		—			—			17,214			1,268
Diluted		79,764			62,986			92,741			63,983

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Kansas City Southern Consolidated
Revenues and Carloadings By Commodity
Fourth Quarter
Dollars in Thousands

Carloadings					Revenue
Fourth Quarter					Fourth Quarter
2005		2004			2005		2004
				Coal
	59,237		49,859	Unit Coal	$	31,089	$	23,925
	854		620	Other Coal		510		360
	60,091		50,479	Total		31,599		24,285
				Chemical & Petroleum Products
	2,736		1,542	Agri Chemicals		2,766		1,143
	21,597		16,401	Other		26,150		17,149
	22,758		14,235	Petroleum		21,121		10,897
	11,355		4,617	Plastics		17,338		5,686
	58,446		36,795	Total		67,375		34,875
				Agriculture and Minerals
	43,595		18,509	Grain		48,783		18,804
	22,278		7,505	Food Products		28,767		6,888
	14,712		7,977	Ores and Minerals		11,077		4,963
	19,342		4,919	Stone, Clay & Glass		14,459		4,722
	99,927		38,910	Total		103,086		35,377
				Paper & Forest Products
	37,435		26,796	Pulp/Paper		38,237		23,191
	7,321		2,354	Scrap Paper		7,149		1,872
	6,420		7,795	Pulpwood/Logs/Chips		5,004		4,478
	7,121		7,914	Lumber/Plywood		9,003		8,801
	29,765		4,016	Metal/Scrap		29,176		3,777
	14,017		2,798	Military/Other Carloads		15,796		6,126
	102,079		51,673	Total		104,365		48,245
				Intermodal & Automotive
	31,327		2,112	Automotive		30,362		1,820
	139,886		84,757	Intermodal		33,283		16,456
	171,213		86,869	Total		63,645		18,276
	491,756		264,726	TOTAL FOR BUSINESS UNITS		370,070		161,058
				Other Revenue		18,098		12,656
	491,756		264,726	TOTAL		388,168		173,714

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Kansas City Southern Consolidated
Revenues and Carloadings By Commodity
Year to Date
Dollars in Thousands

Carloadings					Revenue
Year to Date					Year to Date
2005		2004			2005		2004
				Coal
	230,115		192,220	Unit Coal	$	120,606	$	90,586
	3,306		2500	Other Coal		1,694		1540
	233,421		194,720	Total		122,300		92,126
				Chemical & Petroleum Products
	10,893		5,877	Agri Chemicals		9,958		3,966
	87,317		66,870	Other		98,211		66,651
	91,910		56,515	Petroleum		78,462		42,180
	43,370		18,653	Plastics		61,306		22,183
	233,490		147,915	Total		247,937		134,980
				Agriculture and Minerals
	154,070		71,278	Grain		161,671		64,484
	78,131		30,234	Food Products		95,403		26,823
	57,015		29,399	Ores and Minerals		40,233		17,799
	65,852		18,469	Stone, Clay & Glass		50,825		16,066
	355,068		149,380	Total		348,132		125,172
				Paper & Forest Products
	141,301		100,079	Pulp/Paper		134,468		82,988
	25,492		8,176	Scrap Paper		23,761		5,924
	30,452		28,377	Pulpwood/Logs/Chips		20,455		14,494
	32,265		33,200	Lumber/Plywood		38,264		34,450
	94,839		17,726	Metal/Scrap		90,567		15,540
	50,493		9,773	Military/Other Carloads		52,940		16,190
	374,842		197,331	Total		360,455		169,586
				Intermodal & Automotive
	95,911		6,813	Automotive		94,799		5,526
	500,830		336,023	Intermodal		113,667		61,296
	596,741		342,836	Total		208,466		66,822
	1,793,562		1,032,182	TOTAL FOR BUSINESS UNITS		1,287,290		588,686
				Other Revenue		64,787		46,992
	1,793,562		1,032,182	TOTAL		1,352,077		635,678

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Within this press release, management has provided a measure of earnings per share (EPS) which is not calculated in accordance with generally accepted accounting principles. Specifically, this calculation excludes the impact of certain one-time transactions in order to provide the reader with a measure of earnings per share which in management’s opinion is more comparable to the prior year and more reflective of the results of current year operating activities.

	Amount in millions,			Pro forma
	net of tax			EPS
Diluted earnings per share as reported -2005				$	1.03
Impact to be removed (based on 92,741,000 dilutive shares)
Less impact of VAT Settlement	$	131.9			(1.42	)
Plus impact of casualty reserve increase		(23.2	)		0.25
Plus impact of hurricanes in the third and fourth quarters		(15.2	)		0.16
Write down of deferred profit sharing at KCSM		(35.6	)		0.38
Pro Forma Earnings Per Share — 2005				$	0.41
Diluted earnings per share as reported - 2004				$	.25
Impact to be removed (based on 63,983 dilutive shares)
Interest income on income tax refunds		6.7			(0.10	)
Pro Forma Earnings Per Share - 2004				$	0.15

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