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): October 28, 2008

KANSAS CITY SOUTHERN

(Exact name of company as specified in its charter)

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

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 October 28, 2008, announcing the Company’s quarter and year to date ending September 30, 2008 earnings and operating results. Included in Exhibit 99.1 are schedules regarding certain financial information discussed during the Company’s quarter and year to date ending September 30, 2008 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)

Press Release dated October 28, 2008 issued by Kansas City Southern entitled “KCS Reports Third Quarter Revenue Growth of 10.7%; Net Income Up 17.0%; Operating Ratio Improves to 77.4%”.

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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
October 28, 2008	By:	/s/ Michael K. Borrows
	Name:	Michael K. Borrows
	Title:	Senior Vice President & Chief Accounting Officer (Principal Accounting Officer)

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EX-99.1

Exhibit 99.1

October 28, 2008

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

KCS Reports Third Quarter Revenue Growth of 10.7%; Net Income Up 17.0%;
Operating Ratio Improves to 77.4%

Third Quarter Highlights

• Record revenues of $491.5 million, a 10.7% increase over 2007

• Record operating income of $111.0 million compared with $98.2 million in 2007, a 13.0% increase

• Operating ratio of 77.4%, a 0.5-point improvement over the prior year period

• Diluted EPS of $0.52

Kansas City, MO. Kansas City Southern (KCS) (NYSE:KSU) reported record third quarter revenues of $491.5 million, a 10.7% increase over third quarter 2007. The revenue growth was primarily related to a continued strong pricing environment. Carloadings were down 0.9% as compared to third quarter 2007 as a result of hurricanes disrupting service and refinery production during September. The financial impact to KCS of the two hurricanes that struck the Gulf Coast during the third quarter 2008 was more than one full point on the operating ratio or approximately $0.07 per diluted share.

For the third quarter, KCS revenue growth was led by the coal sector which had revenue growth of 13.2% driven by increased volumes of 0.7%. Agriculture and Minerals experienced revenue increases of 12.3% quarter-over-quarter. In addition, in the third quarter, revenues in Industrial and Consumer Products, which includes forest products, metals and scrap and other commodities, increased 11.8% driven by a strong market for metal shipments. Chemical and Petroleum Products revenues grew at 10.5%, and Intermodal revenue grew 15.8%. Automotive, a key component of Kansas City Southern de Mexico’s (KCSM) commodity mix, was down 13.4% due to the soft economy and decreased demand for new vehicles.

Third quarter operating expenses were $380.5 million, an increase of 10.0% over the prior year period. Fuel was the primary driver of increases in the quarter and up 35% over the same prior year period. Excluding the impact of fuel expense, operating expenses were up 4.0%.

Operating income for the third quarter of 2008 was a record $111.0 million compared with $98.2 million last year, a 13.0% improvement. The third quarter 2008 operating ratio was 77.4%, a 0.5 point improvement compared with third quarter 2007.

KCS recorded a foreign exchange loss of $7.5 million. This compares to a loss of $1.9 million in third quarter 2007. The loss is attributable to the strengthening U.S. dollar against the Mexican peso and had the effect of

reducing diluted earnings per share by $0.05 during the third quarter 2008 as compared to a loss of $0.01 in same quarter last year.

Net income available to common shareholders in the third quarter totaled $48.9 million, or $0.52 per diluted share, compared with $41.8 million, and $0.48 per diluted share, respectively, in third quarter 2007.

Comments from the Chairman

“The fact that KCS was able to report strong third quarter earnings despite having to withstand the impact of two hurricanes that struck the Gulf Coast in rapid succession is a tribute to the competence and dedication of our employees and the underlying strength of our business,” stated Chairman and Chief Executive Officer Michael R. Haverty.

“The financial impact to KCS of Hurricanes Gustav and Ike equated to over one full point on our operating ratio which translates into approximately $0.07 per diluted share. Just prior to the hurricanes, KCS volumes were up 1.5% in the third quarter compared to last year, indicative of the Company’s growing business opportunities. Unfortunately, the storms took 15 refineries and chemical facilities out of service temporarily. In addition, KCS’ U.S. – Mexico cross border traffic was totally shut down for eight days as a result of Union Pacific’s track in southeastern Texas, over which KCS operates, being out of service due to hurricane-related issues. After the cross border route was reopened, traffic was limited for an additional week due to the congestion resulting from the backlog of business.

“Given these challenges, in addition to those posed by a slowing economy, it is notable that KCS recorded double-digit, 10.7%, revenue gains for the quarter, a 13.0% increase in operating income, a 17.0% improvement in net income, and a 0.5 point improvement in operating ratio to 77.4%. This illustrates the benefit of KCS’ diversified business mix in both the U.S. and Mexico, and our ability to deliver improved operational results even in less than ideal conditions.”

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						Nine Months
	Ended September 30,						Ended September 30,
	2008			2007			2008			2007
Revenues	$	491.5		$	444.1		$	1,428.3		$	1,282.5
Operating expenses:
Compensation and benefits		92.2			104.7			296.6			303.1
Purchased services		51.0			47.9			145.6			137.7
Fuel		90.1			66.6			259.2			194.8
Equipment costs		45.1			43.7			138.8			137.1
Depreciation and amortization		43.0			38.9			124.5			117.8
Casualties and insurance		23.8			15.9			62.0			52.8
Materials and other		35.3			28.2			102.6			85.5
Total operating expenses		380.5			345.9			1,129.3			1,028.8
Operating income		111.0			98.2			299.0			253.7
Equity in net earnings of unconsolidated affiliates		5.0			3.3			13.8			7.2
Interest expense		(35.5	)		(37.3	)		(102.7	)		(118.3	)
Debt retirement costs		—			—			(5.6	)		(6.9	)
Foreign exchange gain (loss)		(7.5	)		(1.9	)		0.7			(1.6	)
Other income		3.8			2.0			7.0			5.9
Income before income taxes and minority interest		76.8			64.3			212.2			140.0
Income tax expense		25.1			17.5			67.2			40.6
Income before minority interest		51.7			46.8			145.0			99.4
Minority interest		0.1			0.1			0.3			0.3
Net income		51.6			46.7			144.7			99.1
Preferred stock dividends		2.7			4.9			12.4			15.0
Net income available to common shareholders	$	48.9		$	41.8		$	132.3		$	84.1
Earnings per share:
Basic earnings per share	$	0.55		$	0.55		$	1.62		$	1.11
Diluted earnings per share	$	0.52		$	0.48		$	1.46		$	1.00
Average shares outstanding (in thousands):
Basic		88,400			75,935			81,618			75,797
Potential dilutive common shares		10,518			21,716			17,375			14,781
Diluted		98,918			97,651			98,993			90,578

Kansas City Southern
Revenue & Carloadings By Commodity — Third Quarter 2008
(Dollars in Millions)

Carloadings							Revenue
Third Quarter				%				Third Quarter			%
2008		2007		Change			2008		2007		Change
						Coal
	67,033		65,951	1.6	%	Unit Coal	$	46.1	$	39.6	16.4	%
	13,276		13,808	(3.9	%)	Other Coal		11.2		11.0	1.8	%
	80,309		79,759	0.7	%	Total		57.3		50.6	13.2	%
						Industrial & Consumer Products
	40,376		46,732	(13.6	%)	Forest Products		63.3		62.7	1.0	%
	29,671		21,640	37.1	%	Metal/Scrap		48.2		30.5	58.0	%
	24,478		26,626	(8.1	%)	Other		27.0		30.7	(12.1	%)
	94,525		94,998	(0.5	%)	Total		138.5		123.9	11.8	%
						Chemical & Petroleum Products
	4,696		3,471	35.3	%	Agri Chemicals		6.5		4.5	44.4	%
	25,686		27,145	(5.4	%)	Other Chemicals		41.2		37.1	11.1	%
	14,752		15,856	(7.0	%)	Petroleum		24.3		21.6	12.5	%
	14,637		11,716	24.9	%	Plastics		20.3		20.3	—
	59,771		58,188	2.7	%	Total		92.3		83.5	10.5	%
						Agriculture & Minerals
	38,179		39,970	(4.5	%)	Grain		66.9		59.4	12.6	%
	15,059		15,944	(5.6	%)	Food Products		26.1		25.1	4.0	%
	14,671		14,271	2.8	%	Ores & Minerals		15.2		12.8	18.8	%
	4,862		3,969	22.5	%	Stone, Clay & Glass		7.6		5.8	31.0	%
	72,771		74,154	(1.9	%)	Total		115.8		103.1	12.3	%
						Intermodal & Automotive
	136,813		134,869	1.4	%	Intermodal		43.3		37.4	15.8	%
	21,469		27,997	(23.3	%)	Automotive		25.1		29.0	(13.4	%)
	158,282		162,866	(2.8	%)	Total		68.4		66.4	3.0	%
	465,658		469,965	(0.9	%)	TOTAL FOR BUSINESS UNITS		472.3		427.5	10.5	%
						Other Revenue		19.2		16.6	15.7	%
	465,658		469,965	(0.9	%)	TOTAL	$	491.5	$	444.1	10.7	%

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

Carloadings								Revenue
Year to Date				%				Year to Date				%
2008		2007		Change				2008		2007		Change
							Coal
	182,168		192,971		(5.6	%)	Unit Coal	$	121.3	$	112.1		8.2	%
	39,614		39,536		0.2	%	Other Coal		31.1		29.1		6.9	%
	221,782		232,507		(4.6	%)	Total		152.4		141.2		7.9	%
							Industrial & Consumer Products
	124,254		138,679		(10.4	%)	Forest Products		183.0		180.7		1.3	%
	87,984		74,879		17.5	%	Metal/Scrap		135.2		98.4		37.4	%
	78,376		83,526		(6.2	%)	Other		84.2		91.6		(8.1	%)
	290,614		297,084		(2.2	%)	Total		402.4		370.7		8.6	%
							Chemical & Petroleum Products
	13,775		10,462		31.7	%	Agri Chemicals		18.7		12.9		45.0	%
	78,666		76,875		2.3	%	Other Chemicals		117.8		103.0		14.4	%
	47,808		49,005		(2.4	%)	Petroleum		73.4		63.7		15.2	%
	45,730		33,459		36.7	%	Plastics		63.0		57.8		9.0	%
	185,979		169,801		9.5	%	Total		272.9		237.4		15.0	%
							Agriculture & Minerals
	118,651		121,722		(2.5	%)	Grain		201.9		168.6		19.8	%
	44,523		47,708		(6.7	%)	Food Products		74.8		74.6		0.3	%
	42,946		41,376		3.8	%	Ores & Minerals		44.5		35.8		24.3	%
	14,048		11,921		17.8	%	Stone, Clay & Glass		21.1		17.3		22.0	%
	220,168		222,727		(1.1	%)	Total		342.3		296.3		15.5	%
							Intermodal & Automotive
	388,392		385,334		0.8	%	Intermodal		119.4		103.7		15.1	%
	76,347		79,451		(3.9	%)	Automotive		85.5		81.8		4.5	%
	464,739		464,785		—		Total		204.9		185.5		10.5	%
	1,383,282		1,386,904		(0.3	%)	TOTAL FOR BUSINESS UNITS		1,374.9		1,231.1		11.7	%
							Other Revenue		53.4		51.4		3.9	%
	1,383,282		1,386,904		(0.3	%)	TOTAL	$	1,428.3	$	1,282.5		11.4	%