Kansas City Southern (KSU) 8-K Revenue Growth, Operating Ratio Improvement and Record Operating Income Highlight Kansas City Southern’s Fourth Quarter and Full-Year 2007 Earnings

Media Contact:	William H. Galligan	Phone: 816/983-1551
	william.h.galligan@kcsr.com

Revenue Growth, Operating Ratio Improvement and Record Operating Income Highlight
Kansas City Southern’s Fourth Quarter and Full-Year 2007 Earnings

Fourth Quarter 2007 Highlights

• Record revenues of $460.3 million, a 4.0 % increase

• Operating expenses of $351.6, a decrease of 0.7%

• Record operating income of $108.7 million, a 23.2% increase

• Operating ratio of 76.4%, a 3.7 point improvement

• Diluted EPS of $0.56, a 36.6% increase

Full-Year 2007

• Record annual revenues of $1.74 billion, a 5.0% increase

• Record operating income of $362.4 million, a 19.1% increase

• Operating ratio of 79.2%, compares favorably with 81.7% in 2006

• Diluted EPS of $1.57, a 45% improvement

Kansas City, MO, February 5, 2008. Kansas City Southern (KCS) (NYSE:KSU) reported record fourth quarter 2007 revenues of $460.3 million, a 4.0% increase over the corresponding 2006 period. Revenue growth was primarily the result of a continued strong pricing environment as well as volume growth in some key commodity segments.

For the quarter, new business was a significant contributor to a 12.0% revenue increase in chemical & petroleum. Led by increased volumes in Mexico, intermodal revenues grew by 11.6%. Also reflecting a strengthening Mexican base, automotive revenues grew by 6.2%. Coal revenues improved by 2.4% over fourth quarter 2006. Agriculture & minerals and forest products & metals both increased in the fourth quarter by 0.8%. Overall, volumes fell by 2.5%; however, excluding the loss of certain haulage traffic volumes would have been 4.9% higher than the fourth quarter 2006.

Operating expenses for the fourth quarter 2007 were $351.6 million, a decrease of 0.7%. Increased fuel, casualties and insurance and materials and other expenses were partially offset by reductions in compensation and benefits, purchased services and equipment costs. The improvement in compensation and benefits expense includes, among other things, certain non-cash credits related to profit sharing expense in Mexico driven

by various tax initiatives taken in response to new tax legislation enacted in the fourth quarter. Tax expense in the fourth quarter was driven higher by the recent tax legislation in Mexico increasing the effective rate for the quarter to 32.6% due to a non-recurring, non-cash adjustment of previously recognized net operating losses.

Operating income for the fourth quarter was a record $108.7 million compared with $88.2 million last year, a 23.2% increase. The fourth quarter 2007 operating ratio was 76.4% compared with 80.1% a year ago.

Net income available to common shareholders in the fourth quarter totaled $49.9 million, or $0.56 per diluted share, compared with $35.7 million, or $0.41 per diluted share in fourth quarter 2006, a 36.6% increase.

Comments from the Chairman

“While KCS’ 2007 revenue growth of 5% fell short of our projections going into the year, given the weakness in the U.S. economy, we were generally pleased by the year-over-year increase, and by the new business opportunities that developed during the year. Chemicals, intermodal and automotive were particularly strong in the fourth quarter and should remain so in 2008.

“We were also encouraged by meeting our target of achieving an operating ratio below 80% for the full year, coming in at 79.2%, which compares favorably with 81.7% in 2006. KCS is committed to continuous improvement in this area and will translate business growth, increased productivity and more efficient operations into further significant improvement in the operating ratio in 2008.

“While the uncertain economy will provide a challenge, KCS is confident that new business coming on-line both in the U.S. and Mexico, and continued strong pricing, will allow for volume growth in most commodity areas and revenue growth across-the-board.

“KCS has pledged to be the fastest growing railroad in North America. We believe that the company is positioned to make measurable strides toward attaining that goal in the year ahead.”

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. holding includes KCSR, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, serving northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent interest in 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.

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, 2006, 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.

Kansas City Southern
Income Statement
(In millions, except share and per share amounts)
(Unaudited)

	Three Months						Twelve Months
	Ended December 31,						Ended December 31,
	2007			2006			2007			2006
Revenues	$	460.3		$	442.4		$	1,742.8		$	1,659.7
Operating expenses:
Compensation and benefits		91.0			104.5			394.1			393.6
Purchased services		47.0			51.3			184.7			204.7
Fuel		76.0			65.8			270.8			253.6
Equipment costs		45.3			49.6			182.4			179.7
Depreciation and amortization		42.4			42.1			160.2			155.0
Casualties and insurance		18.2			13.3			71.0			53.4
Materials and other		31.7			27.6			117.2			115.4
Total operating expenses		351.6			354.2			1,380.4			1,355.4
Operating income		108.7			88.2			362.4			304.3
Equity in net earnings of unconsolidated affiliates		4.2			1.6			11.4			7.3
Interest expense		(38.4	)		(43.7	)		(156.7	)		(167.2	)
Debt retirement costs		—			(2.6	)		(6.9	)		(4.8	)
Foreign exchange gain (loss)		0.7			3.0			(0.9	)		(3.7	)
Other income		6.1			9.4			12.0			18.7
Income before income taxes and minority interest		81.3			55.9			221.3			154.6
Income tax expense		26.5			15.2			67.1			45.4
Income before minority interest		54.8			40.7			154.2			109.2
Minority interest		0.1			0.1			0.4			0.3
Net income		54.7			40.6			153.8			108.9
Preferred stock dividends		4.8			4.9			19.8			19.5
Net income available to common shareholders	$	49.9		$	35.7		$	134.0		$	89.4
Earnings per share:
Basic earnings per share	$	0.66		$	0.48		$	1.77		$	1.20
Diluted earnings per share	$	0.56		$	0.41		$	1.57		$	1.08
Average shares outstanding (in thousands):
Basic		75,948			75,230			75,832			74,593
Potential dilutive common shares		21,785			24,718			21,784			17,793
Diluted		97,733			99,948			97,616			92,386

Kansas City Southern
Revenue & Carloadings By Commodity – Fourth Quarter 2007
(Dollars in Millions)

Carloadings								Revenue
Fourth Quarter				%				Fourth Quarter				%
2007		2006 (a)		Change				2007		2006 (a)		Change
							Coal
	66,395		67,445		(1.6	%)	Unit Coal	$	40.0	$	39.8		0.5	%
	15,271		14,459		5.6	%	Other Coal		11.8		10.8		9.3	%
	81,666		81,904		(0.3	%)	Total		51.8		50.6		2.4	%
							Forest Products and Metals
	27,742		32,364		(14.3	%)	Pulp/Paper		40.0		43.1		(7.2	%)
	4,749		1,610		195.0	%	Scrap Paper		5.6		1.6		250.0	%
	5,968		5,154		15.8	%	Pulpwood/Logs/Chips		5.6		4.6		21.7	%
	5,521		6,656		(17.1	%)	Lumber/Plywood		8.6		8.7		(1.1	%)
	26,879		31,204		(13.9	%)	Metal/Scrap		42.3		39.8		6.3	%
	25,859		30,555		(15.4	%)	Military/Other Carloads		28.3		31.6		(10.4	%)
	96,718		107,543		(10.1	%)	Total		130.4		129.4		0.8	%
							Chemical & Petroleum Products
	3,690		3,266		13.0	%	Agri Chemicals		5.0		4.0		25.0	%
	26,611		21,795		22.1	%	Other Chemicals		37.4		28.4		31.7	%
	16,229		16,715		(2.9	%)	Petroleum		23.1		23.4		(1.3	%)
	11,923		10,186		17.1	%	Plastics		17.5		18.3		(4.4	%)
	58,453		51,962		12.5	%	Total		83.0		74.1		12.0	%
							Agriculture and Minerals
	43,413		47,567		(8.7	%)	Grain		67.2		69.2		(2.9	%)
	14,151		13,898		1.8	%	Food Products		22.0		21.1		4.3	%
	13,233		13,285		(0.4	%)	Ores and Minerals		12.2		11.7		4.3	%
	4,377		3,156		38.7	%	Stone, Clay & Glass		6.0		4.6		30.4	%
	75,174		77,906		(3.5	%)	Total		107.4		106.6		0.8	%
							Intermodal & Automotive
	141,036		147,484		(4.4	%)	Intermodal		39.4		35.3		11.6	%
	28,951		27,524		5.2	%	Automotive		29.1		27.4		6.2	%
	169,987		175,008		(2.9	%)	Total		68.5		62.7		9.3	%
	481,998		494,323		(2.5	%)	TOTAL FOR BUSINESS UNITS		441.1		423.4		4.2	%
							Other KCSR Revenue		19.2		19.0		1.1	%
	481,998		494,323		(2.5	%)	TOTAL	$	460.3	$	442.4		4.0	%

(a) Certain amounts have been reclassified to reflect changes in the business groups and to conform to the current year presentation.

Kansas City Southern
Revenue & Carloadings By Commodity – Year to Date December 31, 2007
(Dollars in Millions)

Carloadings								Revenue
Year to Date				%				Year to Date				%
2007		2006 (a)		Change				2007		2006 (a)		Change
							Coal
	259,366		251,431		3.2	%	Unit Coal	$	152.1	$	137.8		10.4	%
	54,807		53,610		2.2	%	Other Coal		40.9		37.1		10.2	%
	314,173		305,041		3.0	%	Total		193.0		174.9		10.3	%
							Forest Products and Metals
	119,179		133,610		(10.8	%)	Pulp/Paper		165.5		164.5		0.6	%
	18,524		7,435		149.1	%	Scrap Paper		22.1		7.2		206.9	%
	19,339		19,380		(0.2	%)	Pulpwood/Logs/Chips		16.7		14.0		19.3	%
	25,617		31,139		(17.7	%)	Lumber/Plywood		36.2		39.7		(8.8	%)
	101,758		131,094		(22.4	%)	Metal/Scrap		140.7		148.8		(5.4	%)
	109,385		119,767		(8.7	%)	Military/Other Carloads		119.9		122.1		(1.8	%)
	393,802		442,425		(11.0	%)	Total		501.1		496.3		1.0	%
							Chemical & Petroleum Products
	14,152		14,434		(2.0	%)	Agri Chemicals		17.9		16.1		11.2	%
	103,486		88,882		16.4	%	Other Chemicals		140.4		109.8		27.9	%
	65,234		70,566		(7.6	%)	Petroleum		86.8		93.3		(7.0	%)
	45,382		43,708		3.8	%	Plastics		75.3		70.7		6.5	%
	228,254		217,590		4.9	%	Total		320.4		289.9		10.5	%
							Agriculture and Minerals
	165,135		168,854		(2.2	%)	Grain		235.8		222.0		6.2	%
	61,859		64,645		(4.3	%)	Food Products		96.6		96.3		0.3	%
	54,609		55,323		(1.3	%)	Ores and Minerals		48.0		45.3		6.0	%
	16,298		15,460		5.4	%	Stone, Clay & Glass		23.3		20.8		12.0	%
	297,901		304,282		(2.1	%)	Total		403.7		384.4		5.0	%
							Intermodal & Automotive
	526,370		547,643		(3.9	%)	Intermodal		143.1		135.4		5.7	%
	108,402		103,736		4.5	%	Automotive		110.9		101.8		8.9	%
	634,772		651,379		(2.5	%)	Total		254.0		237.2		7.1	%
	1,868,902		1,920,717		(2.7	%)	TOTAL FOR BUSINESS UNITS		1,672.2		1,582.7		5.7	%
							Other KCSR Revenue		70.6		77.0		(8.3	%)
	1,868,902		1,920,717		(2.7	%)	TOTAL	$	1,742.8	$	1,659.7		5.0	%

(a) Certain amounts have been reclassified to reflect changes in the business groups and to conform to the current year presentation.