• The Company registered good growth in 2003 as the U.S. economy began to improve. On a revenue basis, Kansas City registered growth of 3%, which was quite good. Operating profits also improved (ex-special charges).

• In addition to its U.S. rail properties, the company has strong railroad properties in Mexico and along the Texas/Mexico border. As a result of the NAFTA Treaty, two-way rail tonnage has increased dramatically over the past five years. With an improved economy, we anticipate higher volumes in 2004: particularly in higher value freight shipments.

• Because of its unique rail systems, Kansas City Southern is the main beneficiary of improving North/South economic activity. It should be noted that the U.S. Southwest is the fastest growing sector of the country.

• For 2004, we are expecting earnings of about $.60 per share, which is up from earnings of $.16 per share in 2003. We view our estimate for 2004 to be quite conservative. Should economic activity be higher than the expected 3%-4% growth, Kansas City Southern earnings may be higher than $.60 per share.

• The stock of Kansas City Southern has declined slightly since our January 5, 2004 recommended price of $14.75 per share. We consider Kansas City as a very attractive stock which will participate in a rising economy; particularly in cross border trader.