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

Exhibit 99.1

July 31, 2008

Media Contact: William H. Galligan
bgalligan@kcsouthern.com Phone: 816/983-1551

KCS Reports Record Second Quarter Revenues for the 3 Months Ending June 30, 2008;
Operating Ratio of 78.5%, EPS of $0.56

Second Quarter Highlights

• Revenues of $486.2 million, a 13.8% increase over 2007 with all business units experiencing increases.

• Operating income of $104.6 million compared with $83.1 million in 2007, a 25.9% increase.

• Operating ratio of 78.5%, a 2-point improvement over the prior year period.

• Diluted EPS of $0.56 compared with $0.30 in 2007, an 86.7% increase.

Kansas City, MO. Kansas City Southern (KCS) (NYSE:KSU) reported record second quarter revenues of $486.2 million, a 13.8% increase over second quarter 2007. The revenue growth was attributable to a continued strong pricing environment, significant growth in certain business units and an increase in fuel surcharges.

For the second quarter, KCS revenue growth was led by the chemical and petroleum sector which had revenue growth of 19.9% driven by new business primarily in plastic products. Carloads in this sector were 13.2% higher than in the prior year period. Agriculture and minerals experienced revenue increases of 18.4% quarter-over-quarter. In addition, in the second quarter, revenues in industrial and consumer products, which includes forest products, metals and scrap and other commodities, increased 12.4%. Intermodal revenue grew 20.3%, automotive revenues increased 10.3% and coal revenue improved 5.7%.

Second quarter operating expenses were $381.6 million, an increase of 10.9% over the prior year period, primarily driven by a 38.8% increase in fuel expense. Excluding the impact of fuel expense, operating expenses were up 4.3%.

Operating income for the second quarter of 2008 was $104.6 million compared with $83.1 million last year, a 25.9% improvement. The second quarter 2008 operating ratio was 78.5%, a 2.0 point improvement compared with second quarter 2007.

Net income available to common shareholders in the second quarter totaled $50.5 million, or $0.56 per diluted share, compared with $25.3 million, and $0.30 per diluted share, respectively, in second quarter 2007.

Comments from the Chairman

“All the positive revenue and operational trends that highlighted KCS’ first quarter performance were even more pronounced over the prior three months resulting in a strong second quarter,” stated Chairman and Chief Executive Officer Michael R. Haverty. “Record revenues, a 26% increase in operating income, and productivity measured by increased velocity, higher locomotive availability and lower terminal dwell times contributed to strong performance and were important factors resulting in a two point improvement in the operating ratio to 78.5%.

“Also notable is that KCS recorded volume growth despite a U.S. economy that has provided a downward pressure on traffic related to building materials, appliances and automobiles. Volume pressure in those areas was more than compensated for by double digit volume gains in chemicals, metals and scrap, and a 44% increase in container volumes out of Lázaro Cárdenas.

“KCS’ diversified revenue portfolio and unique cross-border network characterized by a well-balanced mix of established customers and new business opportunities are central to the Company’s belief that we will be the fastest growing railroad in North America over the foreseeable future.”

Headquartered in Kansas City, Missouri, Kansas City Southern is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., 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. Kansas City Southern’s 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., Mexico and Canada.

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, 2007, 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						Six Months
	Ended June 30,						Ended June 30,
	2008			2007			2008			2007
Revenues	$	486.2		$	427.1		$	936.8		$	838.4
Operating expenses:
Compensation and benefits		98.3			98.5			204.4			198.4
Purchased services		49.7			43.1			94.6			89.8
Fuel		91.2			65.7			169.1			128.2
Equipment costs		47.9			48.5			93.7			93.4
Depreciation and amortization		40.8			40.8			81.5			78.9
Casualties and insurance		19.2			17.5			38.2			36.9
Materials and other costs		34.5			29.9			67.3			57.3
Total operating expenses		381.6			344.0			748.8			682.9
Operating income		104.6			83.1			188.0			155.5
Equity in net earnings of unconsolidated affiliates		4.7			2.8			8.8			3.9
Interest expense		(27.7	)		(41.6	)		(67.2	)		(81.0	)
Debt retirement costs		(5.6	)		(6.9	)		(5.6	)		(6.9	)
Foreign exchange gain		5.7			3.4			8.2			0.3
Other income		0.2			3.3			3.2			3.9
Income before income taxes and minority interest		81.9			44.1			135.4			75.7
Income tax expense		26.4			13.8			42.1			23.1
Income before minority interest		55.5			30.3			93.3			52.6
Minority interest		0.1			0.1			0.2			0.2
Net income		55.4			30.2			93.1			52.4
Preferred stock dividends		4.9			4.9			9.7			10.1
Net income available to common shareholders	$	50.5		$	25.3		$	83.4		$	42.3
Earnings per share:
Basic earnings per share	$	0.64		$	0.33		$	1.07		$	0.56
Diluted earnings per share	$	0.56		$	0.30		$	0.94		$	0.52
Average shares outstanding (in thousands):
Basic		79,272			75,892			77,896			75,737
Potential dilutive common shares		19,874			14,840			20,804			14,813
Diluted		99,146			90,732			98,700			90,550

Kansas City Southern
Revenue & Carloadings By Commodity – Second Quarter 2008
(Dollars in Millions)

Carloadings							Revenue
Second Quarter				%			Second Quarter					%
2008		2007		Change			2008		2007			Change
						Coal
	56,015		64,721	(13.5	%)	Unit Coal	$	38.2	$	36.9		3.5	%
	12,687		12,884	(1.5	%)	Other Coal		9.9		8.6		15.1	%
	68,702		77,605	(11.5	%)	Total		48.1		45.5		5.7	%
						Industrial & Consumer Products
	41,165		47,297	(13.0	%)	Forest Products		60.0		61.1		(1.8	%)
	31,029		24,008	29.2	%	Metal/Scrap		47.3		31.2		51.6	%
	29,117		28,726	1.4	%	Other		32.7		32.3		1.2	%
											��
	101,311		100,031	1.3	%	Total		140.0		124.6		12.4	%
						Chemical & Petroleum Products
	5,058		3,561	42.0	%	Agri Chemicals		6.8		4.2		61.9	%
	26,707		26,959	(0.9	%)	Other Chemicals		39.7		36.1		10.0	%
	16,567		15,245	8.7	%	Petroleum		25.0		18.8		33.0	%
	16,231		11,264	44.1	%	Plastics		22.4		19.2		16.7	%
	64,563		57,029	13.2	%	Total		93.9		78.3		19.9	%
						Agriculture & Minerals
	40,093		42,596	(5.9	%)	Grain		68.7		57.2		20.1	%
	14,918		15,733	(5.2	%)	Food Products		25.3		24.5		3.3	%
	15,752		12,897	22.1	%	Ores & Minerals		16.6		11.2		48.2	%
	4,834		4,477	8.0	%	Stone, Clay & Glass		7.1		6.5		9.2	%
	75,597		75,703	(0.1	%)	Total		117.7		99.4		18.4	%
						Intermodal & Automotive
	127,512		121,160	5.2	%	Intermodal		40.3		33.5		20.3	%
	27,666		28,615	(3.3	%)	Automotive		32.1		29.1		10.3	%
	155,178		149,775	3.6	%	Total		72.4		62.6		15.7	%
	465,351		460,143	1.1	%	TOTAL FOR BUSINESS UNITS		472.1		410.4		15.0	%
						Other Revenue		14.1		16.7		(15.6	%)
	465,351		460,143	1.1	%	TOTAL	$	486.2	$	427.1		13.8	%

Kansas City Southern
Revenue & Carloadings By Commodity – Year to Date June 30, 2008
(Dollars in Millions)

Carloadings							Revenue
Year to Date				%			Year to Date				%
2008		2007		Change			2008		2007		Change
						Coal
	115,135		127,020	(9.4	%)	Unit Coal	$	75.2	$	72.5	3.7	%
	26,338		25,728	2.4	%	Other Coal		19.9		18.1	9.9	%
	141,473		152,748	(7.4	%)	Total		95.1		90.6	5.0	%
						Industrial & Consumer Products
	83,878		91,947	(8.8	%)	Forest Products		119.7		118.0	1.4	%
	58,313		53,239	9.5	%	Metal/Scrap		87.0		67.9	28.1	%
	53,898		56,900	(5.3	%)	Other		57.2		60.9	(6.1	%)
	196,089		202,086	(3.0	%)	Total		263.9		246.8	6.9	%
						Chemical & Petroleum Products
	9,079		6,991	29.9	%	Agri Chemicals		12.2		8.4	45.2	%
	52,980		49,730	6.5	%	Other Chemicals		76.6		65.9	16.2	%
	33,056		33,149	(0.3	%)	Petroleum		49.1		42.1	16.6	%
	31,093		21,743	43.0	%	Plastics		42.7		37.5	13.9	%
	126,208		111,613	13.1	%	Total		180.6		153.9	17.3	%
						Agriculture & Minerals
	80,472		81,752	(1.6	%)	Grain		135.0		109.2	23.6	%
	29,464		31,764	(7.2	%)	Food Products		48.7		49.5	(1.6	%)
	28,275		27,105	4.3	%	Ores & Minerals		29.3		23.0	27.4	%
	9,186		7,952	15.5	%	Stone, Clay & Glass		13.5		11.5	17.4	%
	147,397		148,573	(0.8	%)	Total		226.5		193.2	17.2	%
						Intermodal & Automotive
	251,579		250,465	0.4	%	Intermodal		76.1		66.3	14.8	%
	54,878		51,454	6.7	%	Automotive		60.4		52.8	14.4	%
	306,457		301,919	1.5	%	Total		136.5		119.1	14.6	%
	917,624		916,939	0.1	%	TOTAL FOR BUSINESS UNITS		902.6		803.6	12.3	%
						Other Revenue		34.2		34.8	(1.7	%)
	917,624		916,939	0.1	%	TOTAL	$	936.8	$	838.4	11.7	%