8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2006

KANSAS CITY SOUTHERN

(Exact name of company as specified in its charter)

DELAWARE	1-4717	44-0663509
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS Employer Identification Number)

427 West 12th Street, Kansas City, Missouri 64105

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(816) 983 - 1303

Not Applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

Kansas City Southern (the “Company”, “KCS”) is furnishing under Item 2.02 of this Current Report on Form 8-K, the information included as Exhibit 99.1 to this report. Exhibit 99.1 is the Company’s press release, dated May 2, 2006, announcing the Company’s quarter and year to date ending March 31, 2006 earnings and operating results. Included in Exhibit 99.1 are schedules regarding certain financial information discussed during the Company’s third quarter and year to date March 31, 2006 analyst presentation and conference call.

The information included in this Item 2.02, and Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Unless expressly incorporated into a filing of KCS under the Securities Act of 1933, or the Exchange Act made after the date hereof, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any filing of KCS, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated May 2, 2006 issued by Kansas City Southern entitled “Revenue Growth, Improved Operations Highlight Kansas City Southern’s First Quarter 2006 Results”.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Kansas City Southern
May 4, 2006	By:	/s/ James S. Brook
		Name:	James S. Brook
		Title:	Vice President and Comptroller
			(Principal Accounting Officer)

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EX-99.1

KANSAS CITY SOUTHERN	NEWS RELEASE
CATHEDRAL SQUARE • 427 WEST 12th STREET • P.O. BOX 219335 • KANSAS CITY, MISSOURI 64121-9335
	NYSE Symbol: KSU

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

Revenue Growth, Improved Operations Highlight
Kansas City Southern’s First Quarter 2006 Results

First Quarter Highlights

• Operating income of $61.3 million, a 20.2% increase over combined first quarter 2005.

• Consolidated revenues of $388.4 million, increased 5.5% over combined first quarter 2005 revenues.

• Operating expenses totaled $327.1 million, an increase of 3.1% over combined first quarter 2005.

• Consolidated operating ratio of 84.2%, improved from combined first quarter 2005 operating ratio of 86.2%.

First Quarter 2006

Kansas City, MO. Kansas City Southern (KCS) (NYSE: KSU) today reported consolidated revenues for first quarter 2006 of $388.4 million, which is $20.1 million, or 5.4% higher, than combined first quarter 2005 revenues of $368.3 million. Revenue growth was primarily driven by KCS’ success in expanding higher margin business opportunities, improved service performance, a strong pricing environment, and fuel surcharges in both the U.S. and Mexico.

KCS’s operating expenses for the first quarter of 2006 were $327.1 million, which is $9.7 million, or 3.1%, higher than combined first quarter 2005 expenses, primarily attributable to an $8.6 million, or 17.3%, quarter-over-quarter increase in fuel costs. Operating income for first quarter 2006 was $61.3 million, an increase of $10.3 million, or 20.2%, over first quarter 2005 combined operating income.

Net income available to KCS common shareholders in the first quarter of 2006 was $8.0 million, or $0.11 per diluted share, which compares favorably with first quarter 2005 net income of $7.0 million, or $0.09 per diluted share.

Comments from the Chairman

Kansas City Southern’s Chairman, President, and Chief Executive Officer, Michael R. Haverty stated, “We were encouraged that by the beginning of March our operating metrics, especially train speeds, terminal dwell times, and cars on line, improved significantly and began to translate into greater bottom line profits. In addition, we have seen continued improvement in our safety measurements in the U.S. In Mexico, we are laying the groundwork for improvement as well and we expect to see measurable progress going forward.

“As part our ongoing integration of U.S. and Mexican shared services, our purchasing group has lowered the cost of purchased goods by terminating some unattractive arrangements and replacing them with market-competitive contracts. We expect further benefits from this effort over the next year.

“We are also working on ways to capture the value of our exceptional franchise. We expect to attract new business, to improve our yield, and to lower our costs as we migrate toward one seamless rail network across the border. In particular:

• we expect strong revenue growth from the imminent start-up of intermodal service between the southeast United States and the interior and Pacific Coast of Mexico;

• we see a strong pricing environment in the U.S. and Mexico for the rest of the year, and

• we anticipate substantial cost improvements by the fourth quarter as we install the KCS computer operating platform, MCS, in Mexico, allowing us to schedule and track individual cars.

“With every quarter, the potential of our combined rail network becomes increasingly evident.”

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, 2003, 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
(Dollars in millions except per share data)
(Unaudited)

	Ended March 31,
	2006			2005 (a)
Revenues	$	388.4		$	368.3
Operating expenses
Compensation and benefits		94.0			90.0
Fuel		58.3			49.7
Purchased services		54.9			56.7
Equipment costs		44.5			38.9
Depreciation and amortization		38.4			36.4
Casualties and insurance		12.6			14.9
Other		24.4			30.7
Total operating expenses		327.1			317.3
Operating income		61.3			51.0
Equity in net earnings (loss) of unconsolidated affiliates:		0.5			(1.2	)
Interest expense		(40.6	)		(39.6	)
Other income and expense		(1.3	)		3.7
Income before income taxes		19.9			13.9
Income tax provision		7.0			4.5
Minority interest		—			(0.2	)
Net income		12.9			9.2
Preferred stock dividends		4.9			2.2
Net income available to common shareholders	$	8.0		$	7.0
Per Share Data
Earnings per common share — basic	$	0.11		$	0.09
Earnings per share — diluted	$	0.11		$	0.09
Weighted average Common shares outstanding (in thousands)
Basic		73,926			81,501
Potential dilutive Common shares		1,822			1,308
Diluted		75,748			82,809

(a) The 2005 results include the combined operations of Grupo TFM and Kansas City Southern and are presented for comparison purposes only. Certain adjustments that would be required for Proforma presentation have been omitted. Additional information can be found on the Company’s website at www.kcsi.com “Historical Analyst Data.”

Kansas City Southern
Carloadings By Commodity – First quarter
(Dollars in Thousands)

(2005 Combined for comparison purposes)

Carloadings							Revenue
First Quarter			%				First Quarter				%
2006	2005		Change				2006		2005		Change
						Coal
60,985		59,715		2.1	%	Unit Coal	$	32,012.0	$	30,394.0		5.3	%
1,109		719		54.2	%	Other Coal		883.0		318.0		177.7	%
62,094		60,434		2.7	%	Total		32,895.0		30,712.0		7.1	%
						Chemical & Petroleum
3,320		2,641		25.7	%	Agri Chemicals		3,342.3		2,341.0		42.8	%
25,197		27,492		-8.3	%	Petroleum		23,781.5		22,880.0		3.9	%
11,599		11,939		-2.8	%	Plastics		17,683.8		17,836.0		-0.9	%
23,132		24,438		-5.3	%	Other		28,384.5		28,296.2		0.3	%
63,248		66,510		-4.9	%	Total		73,192.1		71,353.2		2.6	%
						Agriculture & Minerals
35,007		40,129		-12.8	%	Grain		41,395.4		44,127.4		-6.2	%
21,070		21,545		-2.2	%	Food Products		28,631.7		25,826.0		10.9	%
15,539		16,307		-4.7	%	Ores and Minerals		12,606.3		11,702.0		7.7	%
17,955		19,270		-6.8	%	Stone, Clay & Glass		14,282.2		14,198.0		0.6	%
89,571		97,251		-7.9	%	Total		96,915.6		95,853.4		1.1	%
						Paper & Forest Products
33,755		33,317		1.3	%	Pulp/Paper		37,070.2		31,961.3		16.0	%
6,545		7,536		-13.2	%	Scrap Paper		6,716.8		6,863.3		-2.1	%
5,959		9,454		-37.0	%	Pulpwood/Logs/Chips		3,975.6		6,185.4		-35.7	%
7,632		8,314		-8.2	%	Lumber/Plywood		9,794.0		9,489.0		3.2	%
31,271		32,164		-2.8	%	Metal/Scrap		32,954.0		29,479.4		11.8	%
15,548		13,596		14.4	%	Military/Other Carloads		20,991.3		12,200.7		72.0	%
100,710		104,381		-3.5	%	Total		111,501.9		96,179.1		15.9	%
						Intermodal & Automotive
27,148		28,841		-5.9	%	Automotive		25,843.4		28,703.5		-10.0	%
120,844		128,434		-5.9	%	Intermodal		29,404.1		30,246.1		-2.8	%
147,992		157,275		-5.9	%	Total		55,247.5		58,949.6		-6.3	%
463,615		485,851		-4.6	%	BUSINESS UNITS Total		369,752		353,047		4.7	%
—		—				Other		18,660.0		15,251.3		22.4	%
463,615		485,851		-4.6	%	TOTAL	$	388,412.1	$	368,298.6		5.5	%