Kansas City Southern Reports Fourth Quarter and Full-Year 2016

Kansas City Southern (KCS) (NYSE:KSU) reported fourth quarter 2016
revenues of $599 million, unchanged from fourth quarter 2015. Overall,
carload volumes were unchanged compared to the prior year. Excluding the
estimated impact of Mexican peso depreciation, revenues would have
increased by 3% compared to the fourth quarter of 2015.

Operating expenses in the fourth quarter were $388 million, an increase
of 2% from 2015. Excluding the estimated impact of Mexican peso
depreciation, operating expenses increased 7% compared to the fourth
quarter of 2015.

Operating income for the fourth quarter of 2016 was $211 million, a
decrease of 4% from the fourth quarter 2015. KCS reported a fourth
quarter operating ratio of 64.8%, a 1.4 point increase from fourth
quarter 2015. Reported net income in the fourth quarter of 2016 totaled
$130 million, or $1.21 per diluted share, compared with $140 million, or
$1.28 per diluted share, in the fourth quarter of 2015. Excluding the
impacts of foreign exchange fluctuations and 2015 debt retirement and
exchange costs, adjusted diluted earnings per share for fourth quarter
2016 was $1.12, compared to $1.23 in fourth quarter 2015.

For the full year of 2016, revenue was $2.3 billion, down 3% from 2015.
Carloads for 2016 were 2.17 million, a decrease of 2% from the prior
year. Full year 2016 operating income was $819 million, an increase of
2% from the prior year. The Company’s 2016 operating ratio was 64.9%, a
1.9 point improvement from the prior year’s reported operating ratio and
a 1.5 point improvement from the prior year’s adjusted operating ratio.

Reported net income in 2016 totaled $480 million or $4.43 per diluted
share, compared with $485 million, or $4.40 per diluted share, in 2015.
Excluding the impacts of foreign exchange fluctuations and 2015 lease
termination and debt retirement and exchange costs, adjusted diluted
earnings per share for 2016 was $4.48 compared to $4.49 in 2015.

“KCS’ ability to react swiftly and efficiently was proven throughout
2016, as our network faced challenging operational interruptions
throughout the year. In addition, volatility in key commodities such as
energy, consumer, and intermodal markets created uncertainty during
2016. Despite these conditions, KCS’ achieved a full-year operating
ratio of 64.9%, a 1.5 point improvement versus 2015 adjusted,” stated
Kansas City Southern’s President and Chief Executive Officer Patrick J.
Ottensmeyer.

“Looking ahead to 2017, the Company is aware of both economic and
political uncertainty. However, we continue to emphasize our commitment
to growth and we are well positioned to take full advantage of the
significant new business opportunities that lie ahead of us.”

Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE:
KSU) 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. 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., Mexico and Canada.

This news release contains “forward-looking statements” within the
meaning of the securities laws concerning potential future events
involving KCS and its subsidiaries, which could materially differ from
the events that actually occur. Words such as “projects,”
“estimates,” “forecasts,” “believes,” “intends,” “expects,”
“anticipates,” and similar expressions are intended to identify many of
these forward-looking statements. Such forward-looking statements
are based upon information currently available to management and
management’s perception thereof as of the date hereof. Differences
that actually occur could be caused by a number of external factors over
which management has little or no control, including: competition and
consolidation within the transportation industry; the business
environment in industries that produce and use items shipped by rail;
loss of the rail concession of KCS’ subsidiary, Kansas City Southern de
México, S.A. de C.V.; the termination of, or failure to renew,
agreements with customers, other railroads and third parties; access to
capital; disruptions to KCS’ technology infrastructure, including its
computer systems; natural events such as severe weather, hurricanes and
floods; market and regulatory responses to climate change; legislative
and regulatory developments and disputes; rail accidents or other
incidents or accidents on KCS’ rail network or at KCS’ facilities or
customer facilities involving the release of hazardous materials,
including toxic inhalation hazards; fluctuation in prices or
availability of key materials, in particular diesel fuel; dependency on
certain key suppliers of core rail equipment; changes in securities and
capital markets; availability of qualified personnel; labor
difficulties, including strikes and work stoppages; insufficiency of
insurance to cover lost revenue, profits or other damages; acts of
terrorism or risk of terrorist activities; war or risk of war; domestic
and international economic, political and social conditions; the level
of trade between the United States and Asia or Mexico; fluctuations in
the peso-dollar exchange rate; increased demand and traffic congestion;
the outcome of claims and litigation involving KCS or its subsidiaries;
and other factors affecting the operation of the business. More
detailed information about factors that could affect future events may
be found in filings by KCS with the Securities and Exchange Commission,
including KCS’ Annual Report on Form 10-K for the year ended December
31, 2015 (File No. 1-4717) and subsequent reports. Forward-looking
statements are not, and should not be relied upon as, a guarantee of
future performance or results, nor will they necessarily prove to be
accurate indications of the times at or by which any such performance or
results will be achieved. As a result, actual outcomes and
results may differ materially from those expressed in forward-looking
statements. KCS is not obligated to update any forward-looking
statements to reflect future events or developments.

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