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Kansas City Southern Reports First Quarter 2016 First Quarter

The following excerpt is from the company's SEC filing.

2016 Results

Revenue of $563 million, a decrease of 7% from first quarter 2015.

Operating income of $188 million, 5% higher than a year ago. Excluding lease termination costs in 2015, operating income was flat compared to first quarter 2015.

Operating ratio of 66.6%, compared with 70.5% in first quarter 2015. Excluding lease termination costs in 2015, adjusted operating ratio decreased 2.3 points compared to first quarter 2015.

Diluted earnings per share of $0.99. Adjusted diluted earnings per share of $1.03 for first quarter 2016, which was flat compared to first quarter 2015.

Ka nsas City, Mo.,

April 19, 2016

Kansas City Southern (KCS) (NYSE:KSU) reported first quarter 2016 revenues of $563 million. Overall, carload volumes were 5% lower than in first quarter 2015. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, revenue declined 1% compared to the first quarter of 2015.

Operating expenses in the first quarter were $375 million, 12% lower than 2015. Excluding the estimated impacts of Mexican peso depreciation and lower U.S. fuel prices, adjusted operating expenses decreased 3% compared to the first quarter of 2015.

Operating income for the first quarter of 2016 was $188 million, which was flat compared to first quarter 2015 when excluding 2015 lease termination costs. KCS reported a first quarter 2016 operating ratio of 66.6%, a 2.3 point improvement from first quarter 2015, when excluding 2015 lease termination costs. Reported net income in the first quarter of 2016 totaled $108 million, or $0.99 per diluted share, compared with $101 million, or $0.91 per diluted share, in the first quarter of 2015. Excluding the impacts of foreign exchange rate fluctuations and 2015 lease termination costs, adjusted diluted earnings per share for first quarter 2016 was $1.03 which was flat compared to 2015.

“Despite flooding that shut down key portions of our U.S. rail network for over three weeks, KCS delivered solid earnings and operating results,” stated KCS Chief Executive Officer David L. Starling. “That we overcame this very significant challenge while simultaneously scaling costs across the network clearly demonstrates KCS’ ability to react quickly to rapid and unexpected changes to its operating environment.”

GAAP Reconciliations

($ in millions, except per share amounts)

Reconciliation of Diluted Earnings per Share to

Adjusted Diluted Earnings per Share

Income Before Income Taxes

Income Tax Expense

Net Income

As reported

Adjustments for:

Foreign exchange loss

Foreign exchange component of income taxes

Less: Noncontrolling interest and preferred

stock dividends

Adjusted net income available to common

stockholders - see (a) below

Three Months Ended March 31, 2015

Lease termination costs

GAAP Reconciliations (continued)

($ in millions)

Reconciliation of Operating Expenses to Adjusted

Operating expenses as reported

Adjustment for lease termination costs

Adjusted operating expenses - see (b) below

Operating income as reported

Adjusted operating income - see (b) below

Operating ratio (c) as reported

Adjusted operating ratio - see (b) and (c) below

Revenue Change Excluding Estimated Foreign Exchange

and U.S. Fuel Price Impacts

Change %

Reported revenues for the...


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