Welcome to the Kansas City Southern fourth quarter 2009 earnings call. (Operator Instructions) This presentation includes statements concerning potential future events involving the company which could materially differ from events that actually occur. The differences could be caused by a number of factors including those factors identified in the risk factor section of the company’s Form 10-K for the year ended December 31, 2008 filed with the SEC. The company will not update any forward-looking statements in this presentation to reflect future events or developments. All reconciliations to GAAP can be found on the KSC website www.kcsouthern.com. It is now my pleasure to introduce your host, Michael Haverty, Chairman and CEO for Kansas City Southern.

Good morning and thank you for joining us for the fourth quarter year end earnings call today. Joining me is Dave Starling, President and COO of Kansas City Southern, Pat Ottensmeyer, our EVP Sales and Marketing, Mike Upchurch, EVP and CFO and also on the telephone from Mexico City is Jose Socia who is our President and Executive representative of Kansas Southern Jamaica. Those of you following on the internet, if you will turn to Slide 4, we’ll start out with the fourth quarter highlights. First of all, the consolidated volume continued to rebound sequentially from third quarter to fourth quarter. Mexico was particularly strong. We were very pleased with that because first half of last year with automobile, steel, appliance production virtually coming to a halt, that has come back and we do not see anything changing going into this year. It still seems to be strong. Operating income increased slightly fourth quarter of 2009 versus 2008 in spite of the revenues being down 4% and that is reflective of the management team implementing tighter cost controls and productivity improvements. The cross border business is set to increase in 2010. We’ve got many developing opportunities and some have already been secured and they are helping us to execute our cross border strategy which is intended to extend our length of haul. Liquidity improvements continue. You saw a recent refinancing of the 9.3/8 debt due in 2012 in Mexico. We’ve done a lot of positive things during the year; second half positive free cash flow and we see that continuing going forward. Mike Upchurch will talk about the liquidity improvements when he comes up in a few minutes. Turn to Page 5, the financial results. What I think I’d like to focus on really is the sequential improvement from third quarter ’09 to fourth quarter ’09. Earnings per share up 22%, revenues up 5.4% and an operating ratio improvement of 70 basis points so sequentially, I think we’re seeing things improve and we don’t see anything changing certainly in the immediate future. With that, I’m going to turn it over to Dave Starling, our President and Chief Operating Officer.

If you’ll turn to Slide 7, KSC recorded an operating ratio of 77.4% in the fourth quarter. This was more than 100 basis point improvement over the fourth quarter of 2008 and seven points better than the third quarter 2009. Pat Ottensmeyer and Mike Upchurch will get into some more of the specifics leading to the margin improvement but from 35,000 feet I’ll say it’s a continuation of the winning formula of an improved business environment, coupled with the continued cost controls and efficient operations. If you turn to the next slide this chart you’ve seen in the past. It clearly speaks for itself. We did a good job of gaining maximum benefit from the sequential increase in business by keeping a firm control over our spending. The principal driver keeping expenses in line continues to be very strong operating discipline in the U.S. and Mexico. Stronger ongoing train operations and more efficient matching of equipment to traffic has allowed to keep 22% of our locomotive fleet in storage and 18% of our freight cars. As we continue to better coordinate U.S. and Mexico operations, we will be able to continue to reduce our car fleet. On top of the impressive across the board operations performance, all the individual departments in the company are continuing their strong cost control while maintaining our key metrics and meeting our customer commitments. KCS is committed to maintaining strict cost controls in 2010. We plan to stay in this margin sweet spot we’re experiencing throughout the year. We also continue to make progress in linking our trains ending this year with an average train link 13.2% longer than the year before. The large jump came as we redesigned parts of our transportation plan earlier in the year. Instead of designing our operations around feet…

Good morning everyone. I’m going to start on Slide 13. As you can see, consolidated revenues for the quarter were $406.8 million, a decrease of about $17 million or 4% from 2008. However, more than of all of the revenue decrease was attributable to fuel. Our line haul revenue actually increased by about 1% over the fourth quarter of 2008. Looking at the sequential trends, revenue increased by 5% from the third quarter of 2009 with four of our six business units showing quarter to quarter increases. As was the case in the third quarter revenues and volumes in Mexico increased more strongly than in the U.S. and that trend is continuing into January as well. Pricing continues to be strong as evidenced by increases in our same store sales and line haul rate per mile. Looking ahead we expect that core pricing increases will continue to be in the same range that we have been experiencing recently in the mid single digit area and I’ll talk more about pricing in a few moments. Slide 14 shows the quarterly revenue detail by commodity group compared to fourth quarter of ’08 and third quarter of ’09. The slide illustrates the continued sequential improvement in our business as revenue increased in four of the six business units from third quarter levels. Petroleum and chemicals declined due to normal seasonal patterns in the U.S. partially offset by new business in Mexico. The decline in coal was due primarily to an outage at one of the plants that we serve that lasted for most of the quarter as well as some difficult weather that interrupted deliveries at the end of December. As I mentioned earlier, our fourth quarter revenue was 4% lower than a year ago due largely to reduction in fuel surcharge. Line…

Good morning everyone. Let me start on Page 22 providing a few comments about our fourth quarter and full year P&L. In the fourth quarter revenues declined what we believe to be an industry best 4%. Expenses declined 5% thus resulting in a slight improvement in operation income year over year. Let me comment on a few other key line items. Interest expense was $45.3 million. That’s an increase over a year ago primarily the result of higher effective interest rates and average debt balances. We also reported a $2.7 million FX gain in the fourth quarter of ’09. That compares favorably to $21.7 million FX loss from 2008 and that’s really the result of an improved and more stable Peso exchange rate than we experienced a year ago. Our effective tax for the quarter was 33.6% within the range of 32% to 34% that we guided at the end of the third quarter. EPS is $0.33. That has been computed on a 95.9 outstanding shares and does not include 7 million potentially diluted securities because including those would have been anti-dilutive during the quarter. For the full year our revenues declined 20% while expenses declined 17%. Our equity and earnings declined nearly 50% really as a result of negative economic conditions that impacted our results for PCRC, Southern Capital and FTVM. Interest increase has an increase of $35 million, again the result of higher rates and higher average debt balances. As mentioned earlier, the Peso did stabilize somewhat during 2009 and we had a $2.1 million full year versus a loss of $21 million in 2008 when the exchange rate deteriorated significantly in the fourth quarter of ’08. Our effective rate for the full year was 33%. That is an increase over the 26% that we had in 2008…

Let me make a few comments about the MLF&L railway company. A ratings report came out here recently that was a little bit negative about PCRC. We think that might have been more appropriate in late ’08 or the first few months of ’09. You look at the graph on Slide 30 on the right you can see that we began to build back up after a significant drop in ’08 and early ’09 on our units handled down there. If you look sequentially on the left hand side, you see that the volumes fourth quarter over third quarter were up by 5%. Revenues were up by 5.1%. We improved the operating ratio by 100 basis points and if you look at the operating ratio for the entire year it was 65%. So it was a pretty good operating ratio. Cash at the end of the year is $9.4 million actually down a little bit from the third quarter but that was only because the PCRC paid down some debt that it owed to the two partners to us for some locomotives to our partners for some lift equipment. So for the entire year the company had positive free cash flow so if you’re a bond holder, PCRC you should feel pretty good. We feel pretty good about the way things are turning down there. Slide 31, let me close by talking a little bit about what we see for 2010 and I want to really emphasize here that this is based on a modest economic recovery. Sometimes it’s even been referred to as kind of the Nike swoosh recovery, very slow upward trend and we certainly have seen that through the second half of ’09 and that’s kind of what we see going forward. So this is based on…

(Operator Instructions) Your first question comes from Ken Hoexter – Merrill Lynch. Ken Hoexter – Merrill Lynch: You talked about the yields on a pure basis and on the call last quarter you talked about them staying in that 4% to 5% range yet we’re seeing a drop down of 3.9%. I’m wondering if you can give us a little bit more color on that.

The 3.9% is on the same store sales. It’s quarter over quarter and it is a weighted average calculation. So it can be heavily influenced by the contracts that are re-pricing in any given quarter. If we looked at that same metric just on a pure simple average basis, the number would be above this. It would actually be probably closer to that 5% to 6% range. So again, I think looking at these metrics but also looking at the contracts that we’re actually signing, the new business that the contracts that have actually been renewed in the quarter, looking at what we have coming in the pipeline coming in the first quarter and beyond and particularly that we talked about the impact of some of the legacy contracts that we have renegotiated particularly in the coal group that we’ll see the pricing impact beginning in the first quarter. We feel pretty comfortable with the range that we’ve quoted for 2010. Ken Hoexter – Merrill Lynch: You mentioned a large part of the growth was also a big part of Mexico rebounding or continuing to rebound. Can you talk about how the operating ratio differential between Mexico and the U.S. operations?

We’ll be filing our K on February 10 so we’ll disclose all those details but I think just a general comment, it’s consistent with what we’ve discussed in the past, is with volume increases that’s certainly going to create some leverage and with the improved volumes we had in Mexico you might expect that kind of improvement but we’ll wait until we get those K’s filed. Ken Hoexter – Merrill Lynch: Can you talk about what the annual cost savings you expect on a fuel accrual and anything else is directly from the Victoria Rosenburg link what your savings would be on the operational link, operational expense savings.

I think we’ve previously communicated about $1.4 million a month and we’ve been experiencing something pretty close to that since we opened the line. The volumes are quite at the initial estimates we had but as traffic is coming back we feel pretty good with that number going into 2010. Ken Hoexter – Merrill Lynch: How are you going to take that offering from Mexico to Atlanta, that six day service? Has that kicked off? Are you seeing volume for that?

Yes it kicked off in January. We’re seeing the volumes are starting from a low base but we’re seeing very good results and a lot of interest as I mentioned on the part of major truck load carriers for that service.

Your next question comes from Edward Wolfe – Wolfe Research. Edward Wolfe – Wolfe Research: Can you talk a little bit more about the pricing? You said in your comments that the 3.9% same store was really 4.5% if you remove an adjustment that was one time. Can you talk more about that adjustment and what it was?

It was an adjustment; actually it was just the impact of a year over year change in a coal contract that I would not expect to see the same impact going forward. Edward Wolfe – Wolfe Research: So apples to apples you’re at 4.5% on that same store metric and that same store metric you think you’re guiding to 5% to 6% for 2010?

Overall pricing of 5% to 6% based on what we’re seeing going forward. Again, as I mentioned, the numbers in any particular quarter are going to be influenced by the contracts that are coming due in that particular quarter. If we look at the contracts that re-priced during the fourth quarter and the impact of that re-pricing you will begin to see in 2010 and beyond. We’re pretty comfortable that the numbers are going to higher than this. Edward Wolfe – Wolfe Research: So in the slides where it says 3.9% same store, is that the number you expect not every quarter but to average 5% to 6% or do you expect that number to average more like 4.5% and the total number to average 5% to 6%?

I would say that this number would be in the 4% to 5% range but the total when we consider the entire portfolio the total will be in the 5% to 6% range. Edward Wolfe – Wolfe Research: On the coal side can we talk a little bit about volume? I know you said revenue will be up because of the re-pricing of the contract. What’s your expectation when you start to see coal volumes turn positive if at all during 2010?

I think our coal volumes are going to be fairly stable in 2010 so we’re not projecting that coal is going to be down. We talked I think a couple of quarters ago that we were seeing heavy coal shipments in 2009 ahead of the contract renewal but the contract renewal has taken place and the expectations and forecasts for deliveries are actually going to be flat from last year’s levels. We had some heavy weather at the plants we serve that depleted the stock piles and so our current forecast and projections show fairly stable volumes. Edward Wolfe – Wolfe Research: Mike you gave an operation ratio guidance give or take those second half of the year, directionally how are you think that splits out between Mexico and the U.S.?

As we always say, we look at it on a consolidated basis. That’s kind of the way we try to run the company. I think when the 10-K comes out you can take a look at that but we look at this as one company and what we’re really doing is focusing on cross border. So when we talk about operating ratio, you’re going to see improvements in both countries but we look at consolidated. Edward Wolfe – Wolfe Research: But just directionally. I’m not looking for precision. Mexico had been better and then last year with the weakness in the volumes and the difficulty of reducing the labor it had gotten a lot worse. Directionally should Mexico be better than U.S., not precision just directionally? Are they fairly even at this point?

I think if you look at what the volume increases are in Mexico right now I think logically you could say that with the rebound that we’re seeing there should be a pretty positive improvement in Mexico. Edward Wolfe – Wolfe Research: Toyota, is there any impact to you anywhere in the network from the actions Toyota’s taking?

No, not based on current business. It’s not material. Edward Wolfe – Wolfe Research: Obviously I’m talking about if they shut things down in February but Toyota overall is not material or these facilities are not material?

It’s not a material part of our automotive revenue at this point.

Your next question comes from Anthony Gallo – Wells Fargo. Anthony Gallo – Wells Fargo: You provided the improvements that you’ve seen in train length. Within the unit train businesses, how much farther can you go with that, and in the manifest business are there any service trade offs or other operational hurdles? There may be some targets in that group as well.

We still have more opportunity to stretch the current trains. Our coal trains are pretty much running at length but the way our elevators work north of Kansas City, usually those trains come to us in 75 car trains and we always have the opportunity to fill those trains out. So as we get a stronger grain market which we are going to have throughout 2010, the grain business we’ve got keyed up that gives us an opportunity to fill out those trains and continue to have the savings on train miles. We do have more room in the network to extend the train length. We’ve modeled it out to around 6,000 feet before we get into any kind of restrictions so there’s certainly room there but also what the operating team has done in flattening out the volumes. That’s allowed us to get away from the peaks in the middle of the weak and allow us to more efficiently run the volume through the pipeline on a seven day week basis. So there’s so certainly more room in the network. Anthony Gallo – Wells Fargo: On the operating ratio, the pricing looks pretty impressive going into 2010 and you walked us through the compensation expense issues. Are there any other cost headwinds that we should think about as we thing about the OR?

I think in compensation going into 2010 obviously with volumes continuing [audio break]

Your next question comes from Chris Weatherby – FBR Capital Markets. Chris Weatherby – FBR Capital Markets: If I could jump back in on the pricing, if you could give some color on the environment in Mexico relative to the U.S. and how you see that playing out over the course of 2010?

As I’ve said in the past, I think the pricing environment in Mexico is just as good or possibly better than what we’re seeing in the U.S. A lot of contract renew annually in Mexico. The inflation rate has come down, but if I look at business that we actually signed up and was awarded in the last two or three months with price increases, I would say that the outlook there is maybe slightly better than I would characterize it in the U.S. Chris Weatherby – FBR Capital Markets: When you think about 2010 could you give us a sense of what percentage of your book of business is already been contracted for or at least a percent that you have a very good visibility into at this point?

It’s probably about 75% to 80%. We’ve got actually probably more like 70% to 75%. We have about 28% of our book of business that is going to re-price at some point in 2010. Chris Weatherby – FBR Capital Markets: And that’s a combination of contracts that may be one year in duration up to three or four or longer term I’m assuming.

Correct. Chris Weatherby – FBR Capital Markets: On Lazero, if you could give an update on how things look there and to the extent that you’re seeing any market shift back to the rail from truck and obviously there were some disruptions in 2009 given where the Peso was and operational issues at the port. I just wanted to get a sense of how that looks right now.

We have had some success and positive movement back toward rail. About the middle of the year we introduced a currency adjustment factor which was taking into consideration that the local truck market that had taken share away from us is priced in Pesos. A significant portion of our costs in Mexico are in Pesos so what we did was offered an adjustment mechanism to reflect the deterioration in the Peso exchange rate as an attempt to get some of the traffic back that we had lost to truck. The recent trends towards the end of the year were suggesting that that mechanism was working and our market share was increasing. Chris Weatherby – FBR Capital Markets: And from Hutches perspective are they kind of handling the higher trans load levels or just on the dock and back on vessel kind of loads that they had seen in 2009? Are they absorbing that a little bit at a faster rate at this point?

Right. The operational problems that we experienced in late ’08 are behind us and the terminal is working very smoothly. Chris Weatherby – FBR Capital Markets: Dave you mentioned the capacity and train length and how that’s playing out. When you look at Mexico and the volumes for at least the first couple of weeks this year and certainly towards the end of last year are looking fairly positive on a year over year basis. Can you talk a little bit about the capacity that you have on the Mexico network specifically and how you think about absorbing those year over year increases?

In October of 2008 we were handling as a system about 160,000 car loads and we’re not down in a range of about 140,000 to 145,000 car loads so we can clearly surge back up to the 160,000 and then our capacity model tells us that we can go up into the 180’s 185 with the existing car fleet and locomotives we have. And then the track structure should take us up around 200,000 a month. So we’ve got ample capacity in the U.S. We’ve got ample capacity in Mexico. We really don’t have any restrictions bringing any of this volume on. Chris Weatherby – FBR Capital Markets: Have you had to bring any of the locomotives and the cars stored back in the last couple of weeks as we’re staring to see those volumes build or just because you have this kind of seasonal slow down on absolute volumes you’ve been able to maintain those levels?

We have. We haven’t put any of our locomotives back in service. We’ve been able to operate with the same number. We’ve still got over 30 of our newer locomotives that are still in storage. What we’re doing is whittling away at a lot of our older locomotives. Some we had on lease. Some of them we just don’t need. So we’re paring away some of the older obsolete locomotives as we’re moving forward and trying to continually eliminate the lease costs in some of the locomotives that we took on during the surge before we bought the new power. Chris Weatherby – FBR Capital Markets: I wanted to get a sense of when you feel like you’ll have the opportunity to take a crack at refinancing some of the expensive debt that you had to put on a year ago, the 13% and the 12.5% notes? Is there any real opportunity to take a crack at those in 2010 or is that more of a 2011 and 12 type of scenario?

Both issues had some no call provisions in it that wouldn’t necessarily allow us to do that immediately. We could repurchase in the open market at least in Mexico. In the U.S. our credit facility would prevent us from repurchasing those prior to extinguishing the debt under our revolver. Chris Weatherby – FBR Capital Markets: So there may be some opportunity in the near term. On the revolver in Mexico, do you have a sense of the timing of maybe trying to layer that back in and give you that additional capital in Mexico that you talked about before?

We’re having some discussions with some banks and just evaluating market conditions. I don’t know that we feel that we have to have that right now, but I’m probably targeting first half of the year to see if we can get that put back in place and improve our overall liquidity profile.

Your next question comes from Randy Cousins – BMO Capital Markets. Randy Cousins – BMO Capital Markets: Can you comment on depreciation, what you expect as sort of a run rate that we should model? And is the depreciation charge associated with the Rosenburg project in the numbers now or is that something to come?

It is in the depreciation expense that we have. As I commented, we did have some adjustment and some depreciation realized in the quarter so I think you ought to look at something slightly above the fourth quarter number going into 2010 maybe $46 million a quarter, somewhere in that range. Randy Cousins – BMO Capital Markets: With reference to the surcharge, I think you mentioned $2 million in the fourth quarter of this year. Surcharge lag benefit was a big issue for a lot of the other railroads in the fourth quarter of last year. Could you give us a refresher as to what the surcharge lag benefit was in Q4 of ’08 or was it a material number for you?

It was a very material number. It was a positive to the tune of about $17 million so fourth quarter of ’09 I said about a $2 million negative benefit. And remember our profile is a little bit different because of different market price for fuel being controlled by government down in Mexico. Randy Cousins – BMO Capital Markets: Could you comment on your expectations on the tax rate side? Obviously there’s a huge growth in your Mexican business. You suggested that the Mexican operation so the Mexican tax rate is lower than the U.S. tax rate. How should we thing about taxes for modeling for 2010?

I’d probably stick with the 32% to 34% range. That comment about Mexico, obviously the statutory rate is lower there. What was really more of a fourth quarter comment where through the first three quarters of the year our overall pre tax income was a single digit percentage of the total so the mix is obviously going to improve going forward.

Your next question comes from Sal Vitale – Stern Agee. Sal Vitale – Stern Agee: First what you mentioned in your prepared remarks is that you’re looking for double digit revenue growth for 2010. Did I hear that right?

I think Mike mentioned that in terms of the long range plan objectives. We’re back in the range. We’ve updated our long range plan and the outlook is for revenue growth in that 10% to 14% range that we had originally stated in our long range plan obviously from a lower base because of what happened in the economy in 2009. But yes, we’re looking at revenue growth in that range. Sal Vitale – Stern Agee: So given the same store sales numbers that you talked about earlier for 2010 of about 5% or 6% that would imply about 6% to 7% volume growth for 2010?

Yes, that’s a fair range. Sal Vitale – Stern Agee: Any segment where that will be more driven by?

I think the fastest growing areas are going to be Intermodal and automotive. We really expect all of our business units perhaps with the exception of the housing related and lumber business in our industrial and commercial but the fastest growing segments are going to be Intermodal and automotive. Sal Vitale – Stern Agee: A little earlier you said that you expect coal to be fairly stable for 2010. Is that roughly flat?

Volumes. Sal Vitale – Stern Agee: You mentioned earlier that, I think you said that 70% to 75 % of your 2010 book has been priced and that 28% of the book will re-price in 2010.

It’s about 28% that we’ll re-price in 2010. Sal Vitale – Stern Agee: So does that imply that the average duration of your contract is about three to four years? Is that the right way to look at that?

That’s probably about right. Our contracts tend to be shorter in Mexico so we do have some long term contracts. Our coal contracts are longer term but the weighted average I would say is maybe four or five years. Sal Vitale – Stern Agee: Excluding coal that is?

No, in total. Sal Vitale – Stern Agee: And excluding coal that would be a little shorter then, right?

Yes. Sal Vitale – Stern Agee: Did you talk earlier about what you saw in the export business in the quarter and what your outlook for that is in 2010 whether that’s on plastics or other?

I don’t think we talked specifically about that but we are seeing some improvement, some increases in exports out of Cardenas and expect that to continue. We see particularly in appliances and automotive and some other areas where Mexico is really gaining in terms of its manufacturing presence and with the Peso being where it is, it’s fairly attractive. We are seeing a pick up in export through the Port Lazero Cardenas but in terms of being specific about the volumes and the revenues associated with that, we haven’t done that.

Your next question comes from Arthur Hatfield – Morgan Keegan. Arthur Hatfield – Morgan Keegan: On CapEx for 2009, the $282 million in my notes from the Q3 call you had made the comment that the ’10 CapEx would probably be in the same ball park. Is that still the case?

We’re looking in the 17% of revenue range. Again you’ll see very little capacity capital. It’s mainly in maintenance and equipment, IT, revenue opportunities, cost saving opportunities, but no real expansion capital. Arthur Hatfield – Morgan Keegan: You had commented on where you were at from a capacity standpoint and with existing equipment you could get up to the 180,000 car loads a month. As you get back to that number, would you be able to do that, I hate to bring it up in this vein, but with fewer or more people that you were doing it before?

I think what you’re going to see is the leverage that we’ve got in the system will continue as we talked about in the past. You will see some stair stepping. If you go back to that one graph quarter to quarter it shows a stair step on the expense side, but the revenue is certainly outpacing the expense side and the spread is being maintained, and that’s what we’re working towards.

There are no further questions at this time. Mr. Haverty I’d like to turn the floor over to you for any comments.