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A Corporate Communications Corp. Publication ---- All Rights Reserved
Long-Term Report
March 4, 2004
52-week range $10.60-$15.35
Market Cap $862.2M
Shares Outstanding 62M
Book Value $15.46
Price/Book 0.90
Average Daily Vol. 382.5K
Target Price $24.00
Target Percentage 72%
Kansas City Southern is a transportation holding company whose primary assets are the Kansas City Southern R.R. two Mexican railroads (Grupo TFM and the Tex-Mex R.R.) and the Panama Railway Co.
We are attracted to Kansas City Southern for the following reasons:

• 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.

Our target price is $24.00 per share.



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