Greetings, and welcome to the Kansas City Southern third quarter 2011 earnings call. (Operator instructions) As a reminder, this conference is being recorded. This presentation includes statements concerning potential future events involving the company, which could actually materially differ from the events that actually occur. The differences could be caused by a number of factors including those factors identified in the risk factors section of the company’s Form 10-K for the year ended December 31, 2010 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 Kansas City Southern website, www.kcsouthern.com. It is now my pleasure to introduce your host, Michael Havety, Executive Chairman for Kansas City Southern. Mr. Havety, you may begin.

Okay, thank you, and thank all of you for joining us this morning from Kansas City Southern’s third quarter earnings presentation, coming to you from Kansas City Southern headquarters. Today’s presenters are Dave Starling, the President and CEO; Dave Ebbrecht, Executive Vice President, Operations; Pat Ottensmeyer, Executive Vice President, Sales and Marketing; and Mike Upchurch, EVP and CFO. On the telephone from Mexico is Jose Bautista, President and Executive Representative, who will be available for the question and answer session. If you’re following on the website, if you would turn to slide number five the third quarter results. I’m not going to go through those numbers. Those are unadjusted numbers and throughout this presentation you are going to hear about a lot of adjustments as a result of the hurricane related insurance coverage – recovery. So there is no real reason for me to go into detail on that. Let me say this about the adjustments. I think that the management team did a very good job of showing in the adjustments just how well the company has performed, exclusive of the hurricane related insurance recoveries. And I think the way you are going to see is an apples to apples comparison done by the management team. Just to remind everyone, the hurricane we are talking about was Alex that hit in July 2010; main line in Kansas City Southern was out for 24 days from July 1 to the 24. and not only did management do a very good job of handling this disruption for that period of time, but also in the settlement that followed because they had very good data, very good documents we ended up collecting, a little over $63 million in cash from the insurance companies not only for direct losses, but also for loss of business. While this quarter has a lot of numbers that are affected by the hurricane, I think there are two things that you need to look at that really indicate just how well our company is doing, and that is if you look at the carloads which set a record, and also the revenues which set a record. So that is indicative of just how well this company is doing. That has nothing to do with the adjustments and to think that in the past quarters we have never handled this many carloads nor had these high revenues. I think it is a real testament where this company is headed. With that I am going to introduce Dave Starling, our President and CEO. Dave.

Okay, thank you Mike and good morning to everyone. We will start on slide seven. This is the chart that we showed during our second quarter earnings presentation, which provides a brief overview of how KCS is progressing relative to the guidance we have previously provided. The left-hand column restates the guidance we gave in January of low double-digit revenue growth, based on mid single digit volume and mid single pricing increases. Based on those projections, we anticipate 100 basis points to 150 basis points improvement in operating ratio in 2011. On the second quarter call, we slightly adjusted our guidance for the year, and stated that the second half of 2011 was shaping up to be somewhat better than the first half. This was all the more impressive given the first half came in a bit higher than our original guidance. KCS third-quarter results illustrate that we continue to deliver on our guidance. Our third quarter adjusted revenues rose 16% over adjusted third quarter revenues in third quarter 2010. Just to remind you as Mike said we have adjusted 2011 volume revenue and operating ratio numbers by taking out the impact of hurricane Alex, which virtually shut our railroad down in July of 2010. With the third quarter revenues in the book, our adjusted year-to-date revenue growth is 15%. Third quarter adjusted volume growth came in at 7%, somewhat higher than our mid single digit guidance, and in line with our six-month number. It should be noted as Mike said that third quarter volume and revenue numbers are records for KCS, and reflect the growth we are experiencing along our entire network. Third quarter same quarter pricing came in at 6.1%, and year-to-date same-store pricing is 5.7%. All in all we are comfortable that our entire 2011 (inaudible) pricing…

Thank you Dave, and good morning everyone. If we could start on page 11, this first chart illustrates our operating expense per crew start versus the growth in linehaul revenue. Our operating team is keeping expenses under control, even though we are seeing a consistent upward trend in volumes and revenues. The small uptick you see in expenses in the third quarter is related to the inefficiencies that the Kansas City gateway associated with the flooding connecting carrier lines. The detours and surges in demand created a temporary imbalance, which has been rectified. We have been operating smoothly now for the last six weeks. On the next slide on page 12, I believe it is important to recognize that while we have been growing at record rates and volumes have exceeded prerecession levels, we have also accommodated that growth, while maintaining an efficient network. As you know velocity in dwell metrics are the cornerstones of measuring fluidity in the operation. Our velocity in dwell have been consistently strong during the post-recession recovery, and they have also improved this quarter. And both metrics are reflective of our latent capacity in not only our infrastructure, but our resource space. On the next slide, you notice that the headcount is one metric that continues to be a point of differentiation for our operations team. It reflects our ability to absorb additional carloads, with a relatively stable workforce. This chart clearly shows how we manage headcount at a relatively flat level and continue to realize our true network capacity. Given our current growth plans, we expect to continue this positive trend in the fourth quarter. I will now turn it over to Pat Ottensmeyer, EVP of sales and marketing.

Thank you Dave, and good morning everyone. I will begin my comments on slide 15, with a quick recap of the revenues and volumes for the quarter. As you heard earlier, our revenues for the third quarter were $544.5 million. This is a new record for any quarter, and 24% higher than last year, which of course was negatively impacted by hurricane Alex flooding. Adjusting for the impact of hurricane Alex, our revenues were 15% higher than last year. As Mike mentioned earlier, our volumes were also a new record, and for the first time we exceeded 500,000 carloads in any quarter. Moving on to the next slide, this illustrates the factors contributing to revenue growth for the quarter, and as you can see, every component of revenue change had a positive year-over-year impact for the third quarter. Last year we quantified the lost revenue impact of hurricane Alex at $33 million on a consolidated basis. So we’re showing the growth contribution from that adjusted level. Same-store pricing contributed 16 million of the revenue increase over last year, and the pool of revenue related to same-store movements was $251 million or approximately 65% of our total linehaul revenue. So the effective core pricing impact in the third quarter was 6.1%. I will talk more about that on the next slide. Increase in fuel surcharge revenue contributed 26 million or 5.9% of the overall revenue growth for the quarter. The foreign exchange fluctuation impact is a bit lower than in prior quarters, which is attributable to an increase in the peso dollar exchange-rate in September. The current exchange rates are the highest that we have seen since 2009. If the peso exchange rate stays where it is today, foreign exchange will likely be a negative factor in the fourth quarter. Mike…

Thanks Pat. I’m going to start my comments on page 26, and just highlight a few of the key items in our condensed income statements. Reported revenues increased 24%, while expenses were up 13%, resulting in a 57% improvement in operating income. Interest expense continues to decline year-over-year to 32 million, largely the result of refinancings, and the reduction in our gross debt repayment of roughly 465 million since the end of 2008. In fact, if you look at the peak quarterly interest that we have been incurring, we have seen about an annualized reduction of $50 million, and given some incremental debt repayments that we will complete by the end of the year we should expect that number to continue to decline. Foreign exchange losses were 7 million during the quarter that is reflected as a devaluation in the peso. This is largely offset by some tax benefits generated from the deteriorating exchange rate. When you look at our tax rate, our effective rate during the quarter was 30%, which is lower than prior quarterly rates this year, primarily due to the decline in the peso, which does provide a non-cash tax benefit to us related to our US dollar denominated debt that we have in Mexico. And you may recall similar exchange or changes in our tax rates in prior years when the peso fluctuated, as we look forward to the rest of the year assuming a stable exchange rate and we use projections from the Central Bank of Mexico, we would expect the full year 2011 effective tax rate to be 34%. That is slightly down from the 35% to 37% range that we have been guiding during the course of the year. And as you look at our 30% rate in the quarter, remember that GAAP…

Thank you Mike. If you will turn to slide 35, just a couple of brief comments about the Panama Canal Railway Company. You can see that Panama is fully recovered from the recession, the volumes are up above the previously high volumes. Total revenue of $14.2 million and the operating ratio was 48, we had a slight uptick in the operating ratio due to the price of fuel in Panama. Now I would like to make a few closing remarks, three years ago during our third quarter earnings call, we stated that we saw nothing in our car loading suggesting any kind of significant economic slowdown. Obviously we nailed [ph] that one. By the end of November, the North American economy was in a totally different place. With that as the backdrop, I feel obliged to tell you today there is nothing in KCS’ current car loadings, and nothing in the projections of our customers that lead us to believe that the economy is falling into another recession. So why do you think we are saying today has any greater validity than we did in 2008. While we don’t have a crystal ball, I do believe KCS has become much more sophisticated in its analysis of the business environment than it was three years ago. 2008 we were fixated on our own car loading numbers, today we track dozens of economic indicators and see how they correlate to our business. But even more than pouring [ph] over economic data, it is important to understand that there characteristics of our business market that are unique to KCS’ franchise. These give us confidence that we can grow on a soft economy. Let me briefly touch on a few of these. As Pat has stated, we continue to experience strong growth at Lázaro…

Thank you. (Operator instructions) Our first question this morning is coming from the line of Bill Greene of Morgan Stanley. Please state your question.

Yes, hi there. Good morning. You know, can I ask just a little bit about the guidance update that you provided on Page 7 there. If you look through some of the top line numbers there, they are either at or sort of above kind of where the guidance was, and the operating ratios towards the lower end and yet you've done an excellent job on headcount. And so is there something either in the other cost that are sort of affecting that or should we expect there is sort of just some timing of items and as we look forward, we're going to see a pretty big acceleration in margin improvement. How should we think about fourth quarter maybe?

Yeah, Bill this is Mike Upchurch. You're absolutely right, although we're pretty close to that lower end of the range that we guided, but recall in the third quarter, we did have some incremental derailments, that is just a timing issue for us and I think you saw 8 million increase on a year-over-year basis. So, that's something we wouldn't expect to continue at that rate. And then certainly while we didn't put a lot quantification against it, the third quarter was negatively impacted by some of the flooding certainly a loss of revenue and some incremental cost there that we should get a little more efficiency going into the fourth quarter. So, I think those are the couple of items that give us comfort will be back in that range for the full year.

And when you look to '12 can you quantify what the locomotive lease buy out will help or buy [ph] if there is some number that you can talk?

About 40 basis points, Bill.

Okay, great. And then just on the headcount – sort of ask this almost every time, but like how much, sort of how much more productivity is there when I look at your sort of either carloads per employee or whatever metric you want to think about, it's getting to numbers where you start to say like what's left?

Well, this is Dave. I know you've been asking this every quarter, but we still have more opportunities in Mexico. We have our intermodal trains that we've started down there for our growth. We still have a great opportunity to continue to fill those trains up, without actually adding train starts. So, we still have more leverage to go.

Yes, that is great. Okay, thanks for the time.

Thank you. Our next question is coming from the line of Allison Landry of Credit Suisse. Please state your question.

Good morning. Thanks for taking my question. I was wondering if we could focus a little bit on the cross-border intermodal data that you provided, it looks like the volumes in the third quarter were up about 16% on a sequential basis, which seems pretty strong. So I was wondering if you could maybe provide some color on what drove the strength and maybe your expectations going forward.

Allison, this is Pat. As I mentioned in that comment it's just the level of engagement of a number of our key channel partners is just – at a very high level and increasing. They are all doing the right things in terms of resources, people, assets, marketing and it's beginning to really pay off.

Okay, and then maybe following up on that, so you are talking about currently having about 1% market share of the cross-border truckloads. Where do you see this number going maybe over the next two to three years?

It's going to be a lot bigger, but we really haven't given specific guidance on that but you know, what I have said, what we have said is, we don't see any reason why the market share in the cross-border lane shouldn't be ultimately about the same as it in some of the more well-established lanes in the United States. So, the facilities are there, the partners are there, the engagement is there, the business is certainly there, and not only the market share conversion, it's the opportunity here that's certainly what we're going after, but that market is growing. So, again we haven't given specific guidance in terms of the target, but we think there is a lot of opportunity. All the pieces are in place and this should, know five years from now, ten years from now look like any other intermodal corridors established maturing intermodal corridor in the United States.

Okay. That is very helpful. Thank you for the time.

Thank you. Our next question is coming from the line of Scott Group with Wolfe Trahan. Please state your question.

Hi, good morning guys. So, Pat you mentioned the expansion at Lazaro, I am just wondering how much of the current capacity at Lazaro is being utilized and within that how much of those volumes are you guys handling today, and if I can just add on to that, how much of that is actually going cross-border today?

Alright let us see if I remember all your questions here. How much of capacity? Well again as the capacity comes on, Hutchinson has told us that they are going to be able to increase their capacity by 30% in January. And ultimately, when they finish phase 2, it will more than double capacity. So as that capacity comes online, the utilization will obviously go down. And right – based on the current capacity before the additions come on, it's been running probably in the 70% range as far as what Hutch has told us they believe the capacity is. So, there is obviously going to be a lot more capacity coming on in the next two to three years, as Hutch completes their build out and as the second concession gets built.

One more piece of color there, Pat. This is Dave. You've got to remember for Hutch too, this is just phase 2 of their concession. They still got another phase that they can build out. So ultimately the numbers we've been told before were about 2.2 million on their final build out. That's before the new concession is awarded.

And the new concession is roughly the same physical footprint as the Hutch facility. So, we don't know the details of that yet. We expect the concession to be awarded in December, so hopefully at the fourth quarter call we'll have more to say about that. One thing that's happened at Lazaro, as it's grown, is that there has been more transshipment volume. So that's cargo that never sees the highway or the railroad, it just gets loaded from one vessel to the other. Of the traffic that does move inland, our market share has actually been growing recently. It's year-to-date, it's in the 55%, 60% range and recently it's been higher than that. We've seen some new customers, some new business come on that's been exclusively rail. And of the Lazaro traffic, very little of it still is cross-border. Less than 5%probably closer to 1% or 2%, but we are seeing a lot of interest, we're doing test loads for a major retailer and we're seeing interest in plastics moving to and from the Houston area coming through Lazaro. So, it is still very small, but we're seeing a lot of interest and still believe that particularly with respect to Houston, the Gulf Coast and the Southeast – some of the Southeast markets that that cross-border thesis is still very valid.

You hit all of them. Thank you. Just within that, just one follow-up there, what percent is moving inland, and what percentage is getting just transborder?

It's about two-thirds moving inland, and one-third train shipment.

Okay, great. And then just second line of question, when we think about a potential dividend or buyback next year, is this something where you think you would want to wait for a credit upgrade before you do it, do you feel confident doing it before a credit upgrade. And also with that if we do get a rating upgrade, is there something that triggers that lowers the interest expense even more beyond the debt payment coming in fourth quarter?

Scott, you're getting your monies worth now, that's about six questions I'm still counting here. This is Dave. We're still evaluating the dividend and we will certainly consider all those factors but that decision has not been made yet. So, Mike you want to take the interest question.

Yeah, Scott, those correlated benefit if we were to get to investment grade just because our metrics looks like an investment grade company, doesn't mean that the rating agencies are going to immediately move us to that level. And I would expect that there might be a bit of a waiting period there, we're at BB levels right now, I think it's realistic to think in the very short-term, we might get to BB plus, but then we'll have to continue to execute at those levels for a period of time. But if we get there, I think there may be somewhere around the 2 percentage point opportunity, and you have to look at the economics of refinancing our existing debt to try to take advantage of that. But the other big benefit that we get at an investment grade level would be able to do much longer maturity debt, which today we're largely limited to maybe 10 years in the public market. So, I envy the other railroads that can do 30, 40, l00 year debt.

Thanks for the time. I appreciate it.

Thank you. Our next question is from the line of Thomas Wadewitz with JP Morgan. Please state your question.

Good morning Tom. Thomas Wadewitz – JP Morgan: Yes, good morning. Let's see I wanted to ask you kind of a mix related question and how you would think about margins. It was very helpful, Dave, when you highlighted kind of the reasons why the franchise is resilient and the drivers of growth. But a number of them are Lazaro cross-border obviously are intermodal, you talked about automotive, and I tend to think of those as being lower margin within the mix compared to some of the bulk traffic or perhaps carload traffic. How would we think about margins in let's say 2012 if all of the growth in volumes came on the intermodal and auto side, would you still see margin improvement or would it be more flattish margin performance just how would we think about that?

Well Pat and I both will answer that one, but to start with, I think you're off on the automotive. The automotive is generally speaking both on the auto parts and the finished auto is very attractive margins. And then on the intermodal side since our competition is only truck, we have not had to discount into conversion in Mexico for the conversion. I mean, the economics are already there on the container or the truck. So, there is no real reason for us to have to do any market discounts to attract trucks to convert to intermodal.

I think the other thing Tom is, as we add volume and density to the train, we improve utilization, we've got a lot of capacity on the intermodal product right now and the cross-border opportunities that we're looking at are very long-haul opportunities. So you get the combination of soaking up what – excess capacity that we have today in improving the utilization and the length of haul. So as we look at it on incremental new business that we're putting on the trains, it is the margins, the contributions are very attractive. Thomas Wadewitz – JP Morgan: So it's fair to think that you'd still see margin improvement with respect to even if the mix was skewed, where most of the growth was intermodal and auto?

Absolutely. Now what you will see and we said this in the past is, as intermodal continues to grow even with some of the long-haul, you might see some interesting trends in the revenue per unit, but the contribution in the margins will still be very attractive. Thomas Wadewitz – JP Morgan: Okay, that's very helpful and then the second topic I guess. I don't think that you mentioned the crude oil has kind of Bakken Shale port out there opportunity on this call. Is there any kind of an update you can give on timing and size of that business looking at 2012?

We're still making very good progress with our partner Savage, talking to potential customers and subscribers. I have actually described that here internally a little bit like Thanksgiving dinner, the table is set, people are kind of standing around the table waiting to take their seat. There is a lot of interest, lot of activity, nothing specific that we can mention right now. I think the timing I really think we will have something in the next few months. The magnitude, we're not really prepared to talk about that at this point, but it's still moving along and I – as we continue to talk to people and interest develops, I think that is going to be a real opportunity for us and we'll hopefully have more to say about that in the next few months. Thomas Wadewitz – JP Morgan: Okay, when you say you will have something you mean like a customer announcement or something like that?

Yeah. Right now what we're doing is talking to a lot of potential customers, trying to gain some level of commitment or subscription for the capacity, and once we get to certain levels then Savage would begin to build the terminal at Port Arthur. Thomas Wadewitz – JP Morgan: Okay, great. Thank you for the time. I appreciate it.

Thank you. Our next question is from the line of Chris Wetherbee with Citigroup. Please state your question.

Great, thanks. Good morning guys.

Good morning Chris.

Just on the Hutchinson expansion down at Lazaro, Pat have they given any indication of securing new vessel calls, I was just trying to get a sense of how locked in some of that initial capacity growth is as you move forward into the next couple of quarters?

We do have one new vessel. MSC was serving Lazaro on a vessel sharing arrangement and just a couple of weeks ago they announced that they were going to do their own feeder vessel. But as they grow capacity, I think they will be in a much better position to more aggressively market one of the things that until this new capacity comes on there really is limited growth capacity to handle new vessels but that will change beginning next year. As far as any others, nothing specific but we do know that there continues to be a lot of interest in shifting away from Manzanillo, Manzanillo got hit pretty hard in the hurricane recently and we did see some short-term maneuvering to shift traffic away from Manzanillo to Lazaro, and we're hoping that some of that might stay more permanently.

Okay, and when you think about the new intermodal facility is that more of a complement for Lazaro, is it more of a complement for the cross-border, is it a combination of the two – I don't know if you can quantify kind of what the bigger opportunity of that facility is?

I think it's really both, but until we know who the concession is going to be awarded to, we have a pretty good idea of who the finalists are, we think there are four. But until we can really get into the details and the timing of the build out, we just don't know very much about that.

Okay, fair enough. And then I guess, one other question, I want to think about your Mexican employee contract, I think you had one negotiation, I think on compensation coming up. I don't know if that's been, I guess, resolved or where you stand on that just quick update on that if I could?

I think that's being resolved this week actually the documents are being signed. So, that one has been concluded.

Okay, and we'll have some more details on that shortly?

Right.

Okay, good. Thanks for the time. I will keep it short. Thanks.

Thank you. Our next question is from the line of Jeff Kauffman with Stern Agee. Please state your question.

Hi, it's actually Kanchana Pinnapureddy in for Jeff Kauffman. Kind of curious if you could walk us through how a 10% moves and the peso would impact the top line expenses, the global line and the net income?

Yes, I mean, they are not necessarily correlated perfectly and what I tried to indicate was all things being equal if we saw a 0.1% change in the exchange rate, you might expect to see roughly a 50 basis points movement in the tax rate, but they are really two different issues. I mean the FX loss that we booked during the quarter GAAP requires us to revalue our net monetary assets and liabilities. The benefit that we see in taxes relates to debt that we have in Mexico that is US dollar denominated and as the peso deteriorates, it requires more pesos to extinguish that US dollar debt. And the Mexican tax law allows us to take a tax benefit for that in the current period, even though it's unrealized. And the flip side would occur in periods of appreciation we'll have to bring that back into income. So, while during the quarter they netted, there is not a perfect correlation, but a rule of thumb that I did try to provide you there, hopefully that helps.

Thank you, it does. And then kind of curious if you could – could you quantify for us what the impact from weather was in the quarter?

We have not quantified it and we really – weather this is now to a business weather always impacts your results. I don't think there was anything material during the quarter, but quarterly some of the coal and grain shipments are being pushed out into the fourth quarter. And I think based on Pat's commentary we're expecting to see a pretty good quarter for both of those commodities during the fourth quarter.

Yes, this is Dave Starling. You would have some non-standard costs like equipment turn times, locomotive turn times. We did have some trains that we diverted trying to care of our customers to keep them in business. So we shared some costs with them to divert some trains over the Canadian Pacific up to some grain origin. Again, we really didn't really substantiate the numbers, but it was enough to move the needle.

Great. Thank you so much.

Thank you. Our next question is coming from the line of Ken Hoexter with Banc of America. Please state your question.

Hi, good morning. You talked about, Dave talked about earlier the latent capacity, can you talk about how much you think you have and with CapEx up at 23%, where is the focus of the expenditures, is it on equipment, is it on network capacity to further enhance that capacity. Can you kind of delve into where the money is going?

I'd say it's a myriad of all the things you mentioned. We currently have plans to purchase 30 locomotives and we will be receiving those all by the end of the year, this year between that addition and the additional infrastructure capacity that we've been putting in place based on our modeling analysis, I think that we have sufficient capacity to accommodate all our current growth plans. We also have the resource base that's in place now and the hiring only to accomplish supporting attrition. Currently it will basically suffice for what we've seen in the near future.

And Ken this is Mike Upchurch. Just keep in mind the lease buyouts, those are existing financial obligations. They just happen to be off balance sheet. They are operating leases. So bringing those on balance sheet and owning those, we pick up a portion of those cost as CapEx. To me, it's not really any incremental financial commitment that we're making there, but it's just the way it's reported in the cash flow statement.

Wonderful. Thanks Mike. And then secondly, I just want to clarify what your earlier comment was. You talked about a slowing Mexican GDP earlier, and some of the impacts and you kind of highlighted your operating ratio was at the lower end of the target, are you reiterating that 100, 150 or are you suggesting that we're going to see it today go on, I just want to understand if there is going to be catch up coming this fourth quarter, where we'll move back into your target range.

Yes, this is Mike again. You know sitting where we're sitting today and obviously you can't predict what's going to happen with things like fuel prices, but given a couple of the incremental expenses, we saw in the third quarter, particularly the derailment cost, we would expect some improvement going into the fourth quarter and be in that range. So, we are staying with our guidance of 100 to 150 basis points.

All right. Great, thanks for the time.

Thank you. Our next question is from the line of Jason Seidl with Dahlman Rose. Please state your question. Jason Seidl - Dahlman Rose & Company: Good morning guys. Thinking about sort of giving back to investors in 2012, could you walk me through sort of the thought process you have, you know, deciding between either share repurchase or a dividend policy, because you guys historically have not had a dividend, you've been thought of more as a growth company which has been borne out your numbers just with your results?

This is Dave. The first thing that we're going to evaluate is our business requirements for 2012, and we're still a growth company, and as Pat has talked about Lazaro Cardenas and the potential growth there continued growth in also Port Arthur, we will be evaluating that going into 2012 on what assets we might need to continue to grow that business. That's going to be our first priority. Once we know we've got that covered, we're not going to effect the company growth then our first – our second priority would be certainly looking at the dividend. We have not got to the decision tree on a stock buyback. This is really going to be a choice on the dividend going into 2012. Jason Seidl - Dahlman Rose & Company: Okay. That is great color. And quick question here for Mike. Mike, you mentioned some tax strips in the quarter. Can you give us some more details behind the numbers in terms of the exact dollar amount for the job?

I'm sorry, right at the end, the exact dollar amount… Jason Seidl - Dahlman Rose & Company: Dollar amount, yes, not sure?

Well, I think we guided to 35% to 37% effective tax rate and for the quarter it came in at 30%, I think that, that may get to you about $6 million in lower tax expense and then that's offset by the $7 million FX loss, and if you tax effect that that's about $5 million. So, I think you get a net $1 million pick up in the quarter between taxes and FX. Jason Seidl - Dahlman Rose & Company: Yes and on FX you guys said that if the rate stay at current levels you're looking at a similar or slightly greater FX rate in 4Q is I read that right?

No, not necessarily, the Federal Bank of Mexico that's the projection that we use, and it remains to be seen whether we actually will see that materialize at the end of the year. But my guidance around the effective tax rate was 34% for the year. Jason Seidl - Dahlman Rose & Company: And now I was referring to more of your foreign exchange loss in the quarter, and you said that if the rates stayed at current levels it could be a headwind in 4Q, are we talking of similar headwinds in 3Q?

No, I think we're not going to get into trying to project what that FX rate might be. But my statement was all about the tax rate. Jason Seidl - Dahlman Rose & Company: Well done guys. Okay, clear enough. Guys, I appreciate the time as always.

Thank you.

Thank you. Our next question is from the line of Anthony Gallo with Wells Fargo. Please state your question.

Yes, thank you. Congratulations. Mike I enjoyed your comments around accountability for making macro calls, may be more of us should do that. My question is on the bulk shipment opportunities at Lazaro. In the past when you've gone into some of these newer markets you've shared with us what you saw as the economic benefits of rail transportation were. So I'm just curios what do the numbers look like for customers who might choose to use Lazaro Cardenas for bulk shipments versus say some of the eastern rails. Can you just give us a rough idea of the benefits?

It's a little too early to quantify that. We are still in pretty early stage discussions. Terminals not actually going to be up and running until probably the second quarter of next year. But the real – I mean ultimately it's going to have to be price competitive to get from whether it's coming – iron ore coming out of Mexico or coal coming out of the U.S. We've looked at some indicative pricing and rates. Obviously the rail was only a portion of the move, you've got the vessel from Lazaro to Asia, but we think we can be competitive. But the real factor that's driving this interest is the lack of availability of capacity of the West Coast particularly. We're looking at Colorado coal and Illinois coal that wants to move to Asia that has a very few options because the West Coast has nothing. Canada, there is a capacity in Canada but it's pretty tight. And when you look at the coal coming from the central part of the United States moving to Asia going to the East Coast you've got a very long vessel voyage. So, the total transit is much longer going off the East Coast granted most of that is on the vessel, but we think the numbers that we're working up and the economics and the contributions so far in our early stage of discussions with potential shippers and customers, they are still interested in talking about that. So, again, a longwinded answer to say, it's kind of too early to know, how to quantify the timing and magnitude of that, but there is very strong interest in going through that analysis.

This is Dave. I might add that the rail tracks are being built into the facility is being set up for a rail to ship transfer. So, we're going to move something into that facility, and perhaps just trying to ensure it's the longest haul we could possibly get over the right gateway.

There is a lot of details, and then last question, I thought I heard $8 million in derailment expense, is that correct and what does it normally run each quarter?

Well, we talk about $8 million in casualties, so that is a combination of all of our different events there. The majority of it related to derailment expenses, but it was an unusual quarter for us. You know, you have to appreciate that can bounce around a little bit based on the experience during the quarter. We're just trying to point out it was little bit higher in this quarter than most quarters.

And unfortunately it was two derailments and just so happened that they were both fully loaded trains, quite a few cars, so the relating damage was much higher than what we generally have in a derailment. So, it was very bad luck and consolidated into a short period of time. So, we don't like to talk about it and we generally are not going to look when we talk around about derailments, but this is something again it was a timing issue for us.

Fair enough. Thank you gentlemen.

Thank you sir. Our next question is coming from the line of Neal Deaton, BB&T Capital Markets. Please state your question? Neal Deaton - BB&T Capital Market: Hi guys. Congratulations on the strong quarter. Quick question on your utility coal, if I heard you correctly I believe you said that you feel like the outlook in the fourth quarter is fairly strong given where stock markets are some of the utilities that you serve. I guess just question is – is it across the board with utilities in the Southeast or there are just a few that have the lower stockpiles, as I know as a whole across the country, a lot of the stockpiles are still above average? And then the second question with that is of the utilities you serve how many of them have the ability to run natural gas and have already converted over to natural gas?

Neal, this is Pat it's not really across the board, it's probably at two or three of our major utilities where we're seeing little bit of catch up from the second and third quarter, I think that will pretty much all be made up by the end of the fourth quarter. I did mention that we are gaining a new contract in the first quarter beginning in January and their stockpiles are also low. So, we are actually working to accelerate some of those shipments in the fourth quarter and we expect to move some coal to that plant before the end of the year and the new contract begins. As far as we don't really see a big threat for natural gas conversion at the plant that we serve, these are all really baseload plants and we've done the analysis and we think that the – we've got one customer in utility in Texas that is has some potential issues with the cross-border air pollution rules, but as far as loss of business to conversion of natural gas we don't see that as a real threat to our business for the utility that we serve. Neal Deaton - BB&T Capital Market: Okay, and are most of those utilities updated with scrubbers and those kind of things and maybe are there going to be an issue it's kind of mirror with…?

As I said, there are couple that are not in Texas. Neal Deaton - BB&T Capital Market: Okay, doesn’t impact this, okay.

Yes, we don’t see – we think those will get resolved and those plants will be producing at similar rates going forward. But there is political maneuvering with the EPA and some of that is yet to be resolved, but we think it will be a favorable outcome. Neal Deaton - BB&T Capital Market: Okay, you don't see the volume falling off much there?

No. Neal Deaton - BB&T Capital Market: And then just second question and I'll done, you know, it sounds like your intermodal performance in the US was pretty solid what's driving that, is it highly conversion [ph] with your IMC partners and is it stronger movements under the Meridian Speedway or what specifically are the drivers of that – of kind of the US only intermodal business?

We're seeing growth in the Meridian Speedway, we're seeing growth not only in the haulage business that we handle with Norfolk Southern but in our own business between Dallas and Atlanta, and then it's also the north bound portion, the US portion of our cross-border growth that you're seeing in our domestic US numbers. Neal Deaton - BB&T Capital Market: Okay. That is good color. Thanks a lot. Congrats.

Thank you.

Thank you. Our next question is from Art Hatfield with Morgan Keegan. Please state your question. Art Hatfield – Morgan Keegan: Thanks. My questions have all been answered. You guys have a good weekend.

Hey, you too. Same to you.

Thank you. Our next question is from Tyler Brown of Raymond James. Please state your question.

Good morning guys. I was wondering if you could give some details on how the curfews and some congestion down in your track to drive between Beaumont and Robstown. How that's impacting your intermodal service and in fact kind of held you back at all on your cross-border?

Yes, this is Dave Ebbrecht. I think that we did face some issues in the summer as the drought conditions throughout Texas were affecting some of the regions and putting some flow orders on some track that congestion in food for about six weeks period. I think once we got out of the drought period that service levels have restored back to a normal level, and we have not seen any congestion threshold exceeded since that time. So, we're flowing normally for about the past six weeks, and we expect to continue that way in the near future.

Okay, great. And then Dave on your fall demand letter you mentioned that you still have a couple of significant projects on the Meridian Speedway. I was kind of under the impression that that line was more fully computerized kind of humming. Can you talk about what those projects specifically are and will you make those investments or will MS help you in that?

We're at the tail end of the capital investment of the MSLLC. I think we've got approximately $35 million to $40 million left, and these are projects that were already identified jointly by MS and KSC upon what we needed to do to expand. One was the Jackson switch tender with real low fully power and upgrade to cross-over, so we could go through that area at 30 miles an hour, which will help us and the CN. We also have some areas through Jackson yard that will be completed, but this is all still part of the master plan. There is nothing new in there that wasn't already agreed to when the MSLLC was formed. So, we're just in the final stages of (inaudible) and finishing it up.

Okay. So about 35 to 40, and then you will be grab it all up.

That is correct.

Okay. Well, I will stick to two questions. Thank you.

Thank you. We have come to the end of our allotted time for question-and-answer session. I would now like to turn the floor back over Mr. Haverty for closing comments.

Okay. I think that everything was pretty well covered and got a lot of good questions, and then I think we'll close the session here, and we'll talk to you in January on the fourth quarter results. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.