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): April 30, 2009

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 April 30, 2009, announcing the Company’s first quarter 2009 operating results. Included in Exhibit 99.1 are schedules regarding certain financial information discussed during the Company’s first quarter 2009 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 April 30, 2009 issued by Kansas City Southern entitled “Kansas City Southern First Quarter 2009 Volumes and Revenue Declines Mitigated by Comprehensive Expense Control Program”.

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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
April 30, 2009	By:	/s/ Mary K. Stadler
		Name:	Mary K. Stadler
		Title:	Senior Vice President & Chief Accounting Officer (Principal Accounting Officer)

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EX-99.1

Exhibit 99.1

Date: April 30, 2009

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

Kansas City Southern First Quarter 2009 Volumes
and Revenue Declines Mitigated by Comprehensive
Expense Control Program

First Quarter Highlights

• Revenues of $346.0 million, a decline of 23%

• Operating Expenses of $297.5 million, a decline of 19%

• Operating Ratio of 86.0%, compared with 81.5% a year ago

Kansas City, MO. Kansas City Southern (KCS) (NYSE:KSU) reported first quarter 2009 revenues of $346.0 million compared with $450.6 million in the first quarter of 2008. Revenues were impacted by a 15% decline in volumes, the result of the weak United States, Mexico and overall global economies, as well as by a reduction of fuel surcharge revenues and a weakened Mexican peso. These three factors resulted in revenue declines in four out of five lines of business with only coal recording gains in volume and revenues.

Mitigating the negative impact of lower revenues on earnings was KCS’ comprehensive cost control program, which contributed to an overall 19.0% reduction in operating expenses. Leading the expense savings was fuel which benefited from lower diesel fuel prices, reduced consumption and greater fuel efficiency. Other expense areas also experienced substantial reductions, including casualties and insurance, 32.8% lower; compensation and benefits, 23.4% lower; purchased services, 13.1% lower, equipments costs, 11.9% lower; and, materials and other, 0.3% lower. Only depreciation and amortization expense increased 16.9% due to significant recent capital expenditures to expand capacity.

Operating income for the first quarter of 2009 was $48.5 million, compared with $83.4 million in 2008. The first quarter operating ratio was 86.0%, compared with 81.5% in the first quarter of 2008.

KCS recorded a net loss of $7.5 million, or ($0.08) per diluted share for the first quarter of 2009, compared with net income of $32.9 million, or $0.39 per share in the first quarter of 2008. The first quarter of 2009 includes the negative impact of $5.9 million, or ($0.04) per share, from debt retirement costs and $5.1 million, or ($0.04) per share, in foreign exchange loss associated with the weakened Mexican peso. Additionally, the diluted earnings per share calculation for the first quarter of 2009 does not assume the conversion of preferred stock or stock options into common shares, as those assumed conversions would be anti-dilutive. These assumed conversions were dilutive during 2008. This results in an incremental ($0.06) loss per diluted share, primarily due to preferred stock dividends being included in the diluted earnings per share calculation.

Comments from the Chairman

“With overall volume down 15%, KCS operating costs, excluding depreciation, were down 23%, yet operating performance metrics and customer service achieved all-time highs,” stated Michael R. Haverty, Chairman and CEO of Kansas City Southern.

“Four factors – foreign exchange losses, debt retirement costs, the impact of preferred stock dividends, and higher depreciation resulting from significant recent capital investment – had an adverse effect on KCS EPS for the quarter. However, these factors neither diminish our positioning for a strong rebound nor affect the long term strength of our franchise.

“KCS’ U.S. traffic volumes posted only a 7% decline; on the other hand, KCSM clearly felt the full impact of the widespread manufacturing downturn with a 26% decline in volumes. It is still too early to predict a timetable for renewed economic growth in North America, but we remain confident that KCS will benefit from and contribute to the eventual economic turnaround.

“This quarter, KCS completed an important refinancing of KCSM debt under difficult capital market conditions, and has strengthened its liquidity and financial position. We have also continued to invest in the Rosenberg to Victoria line in Texas, which improves our cross border competitiveness and immediately reduces our expenses by enough to finance the investment.

“For the near term, KCS will continue to make prudent operating expense and capital cost reductions, remaining focused on its central 2009 goal of ending the year free cash flow

neutral or modestly positive. At the same time, we are conscious of positioning the Company to experience a significant rebound when the economy recovers momentum.”

This press release may include statements concerning potential future events involving KCS and its subsidiaries, 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 KCS’ Form 10-K for the most recently ended fiscal year, filed by KCS with the Securities and Exchange Commission (SEC) (Commission file no. 1-04717). KCS will not update any forward-looking statements in this press release to reflect future events or developments.

 

Kansas City Southern
Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)

	Three Months
	Ended March 31,
	2009			2008
Revenues	$	346.0		$	450.6
Operating expenses:
Compensation and benefits		78.0			101.8
Purchased services		44.5			51.2
Fuel		43.3			77.8
Equipment costs		39.1			44.4
Depreciation and amortization		47.1			40.3
Casualties and insurance		12.5			18.6
Materials and other		33.0			33.1
Total operating expenses		297.5			367.2
Operating income		48.5			83.4
Equity in net earnings of unconsolidated affiliates		1.0			4.1
Interest expense		(41.8	)		(39.5	)
Debt retirement costs		(5.9	)		—
Foreign exchange gain (loss)		(5.1	)		2.5
Other income		1.5			3.0
Income (loss) before income taxes and noncontrolling interest		(1.8	)		53.5
Income tax expense		0.4			15.7
Net income (loss)		(2.2	)		37.8
Noncontrolling interest		(0.1	)		0.1
Net income (loss) attributable to Kansas City Southern and subsidiaries		(2.1	)		37.7
Preferred stock dividends		5.4			4.8
Net income (loss) available to common shareholders	$	(7.5	)	$	32.9
Earnings (loss) per share:
Basic earnings (loss) per share	$	(0.08	)	$	0.43
Diluted earnings (loss) per share	$	(0.08	)	$	0.39
Average shares outstanding (in thousands):
Basic		90,743			76,253
Potentially dilutive common shares		—			21,231
Diluted		90,743			97,484

Kansas City Southern
Revenue & Carloadings By Commodity – First Quarter 2009
(Dollars in Millions)

Carloadings							Revenue
First Quarter				%			First Quarter				%
2009		2008		Change			2009		2008		Change
						Coal
	65,055		59,120	10.0	%	Unit Coal	$	40.1	$	37.0	8.4	%
	9,962		13,651	(27.0	%)	Other Coal		7.2		10.0	(28.0	%)
	75,017		72,771	3.1	%	Total		47.3		47.0	0.6	%
						Industrial & Consumer Products
	29,435		42,713	(31.1	%)	Forest Products		40.3		59.7	(32.5	%)
	18,254		27,284	(33.1	%)	Metals & Scrap		23.3		39.7	(41.3	%)
	18,399		24,781	(25.8	%)	Other		18.4		24.5	(24.9	%)
	66,088		94,778	(30.3	%)	Total		82.0		123.9	(33.8	%)
						Chemical & Petroleum Products
	4,546		4,021	13.1	%	Agri Chemicals		5.7		5.4	5.6	%
	21,826		26,273	(16.9	%)	Other Chemicals		31.2		36.9	(15.4	%)
	15,189		16,489	(7.9	%)	Petroleum		18.0		24.1	(25.3	%)
	13,924		14,862	(6.3	%)	Plastics		16.6		20.3	(18.2	%)
	55,485		61,645	(10.0	%)	Total		71.5		86.7	(17.5	%)
						Agriculture & Minerals
	33,035		40,379	(18.2	%)	Grain		45.9		66.3	(30.8	%)
	13,272		14,546	(8.8	%)	Food Products		21.9		23.4	(6.4	%)
	12,438		12,523	(0.7	%)	Ores & Minerals		10.0		12.7	(21.3	%)
	3,423		4,352	(21.3	%)	Stone, Clay & Glass		4.8		6.4	(25.0	%)
	62,168		71,800	(13.4	%)	Total		82.6		108.8	(24.1	%)
						Intermodal & Automotive
	114,625		124,067	(7.6	%)	Intermodal		30.6		35.8	(14.5	%)
	10,665		27,212	(60.8	%)	Automotive		12.3		28.3	(56.5	%)
	125,290		151,279	(17.2	%)	Total		42.9		64.1	(33.1	%)
	384,048		452,273	(15.1	%)	TOTAL FOR BUSINESS UNITS		326.3		430.5	(24.2	%)
						Other Revenue		19.7		20.1	(2.0	%)
	384,048		452,273	(15.1	%)	TOTAL	$	346.0	$	450.6	(23.2	%)