KSU^ Kansas City Southern

Risks

• KCS U.S. and Mexico rail common carrier subsidiaries are required by United States and Mexican laws, respectively, to transport hazardous materials, which could expose KCS to significant costs and claims.
• KCS’s business is subject to regulation by federal, state and local legislatures and agencies that could impose significant costs on the Company’s business operations.
• KCSM’s Mexican Concession is subject to revocation or termination in certain circumstances, which would prevent KCSM from conducting rail operations under the Concession and would have a material adverse effect on the Company’s consolidated financial statements.
• KCS’s ownership of KCSM and operations in Mexico subject it to economic and political risks.
• KCS depends on the stability, availability and security of its information technology systems to operate its business. Disruptions in KCS’s information technology (“IT”) systems could materially adversely affect the Company’s business and operating results.
• Capacity constraints could materially adversely affect service and operating efficiency.
• Downturns in the United States economy or in trade between the United States and Asia or Mexico and fluctuations in the peso-dollar exchange rates could have material adverse effects on KCS’s consolidated financial statements.
• Severe weather or other natural disasters could result in significant business interruptions and expenditures and our insurance coverage may not be sufficient to cover damages to us or all of our liabilities.
• KCS’s business may be adversely affected by changes in general economic or other conditions.
• KCS may be subject to various claims and litigation that could have a material adverse effect on KCS’s consolidated financial statements.
• KCS competes against other railroads and other transportation providers.
• KCS’s business strategy, operations and growth rely significantly on agreements with other railroads and third parties.
• KCS is subject to environmental regulations, which may impose significant costs on the Company’s business operations.
• KCS’s business is vulnerable to fluctuations in fuel costs and disruptions in fuel supplies.
• Weaknesses in the short and long-term debt markets could negatively impact the Company’s access to capital.
• KCS’s business may be affected by climate change and the market and regulatory responses to climate change.
• A majority of KCS’s employees belong to labor unions. Strikes or work stoppages could adversely affect operations.
• KCS is dependent on certain key suppliers of core rail equipment.
• The unavailability of qualified personnel could adversely affect KCS’s operations.
• KCS’s business may be affected by future acts of terrorism, war or other acts of violence or crime.