Greetings, and welcome to the Kansas City Southern Fourth Quarter and Full Year 2011 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. 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 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 its presentations to reflect future events or developments. All reconciliations to GAAP can be found on the KCS website, www.kcsouthern.com. It is now my pleasure to introduce your host, Michael Haverty, Executive Chairman for Kansas City Southern. Mr. Haverty, you may begin.

Thank you for joining Kansas City Southern’s fourth quarter and yearend 2011 earnings call. I have here with me today presenting, Dave Starling, President and CEO; Dave Ebbrecht, our EVP, Operations; Pat Ottensmeyer, EVP, Sales and Marketing; Mike Upchurch, EVP and CFO. Also with us today in here Kansas City is Jose Zozaya who is President and Executive Representative of Kansas City Southern to Mexico. Jose will be available for questions. If you’ll turn to the slide that says KCS Overview, let me make a few remarks about the 125th anniversary of Kansas City Southern. That took place on January 8. And I will say that, over the last 20 years, that there are probably some folks that wondered whether we would make it to the 125th anniversary. The railroad was for sale in 1993 and ’94, Western Rail mergers took place in the mid-‘90s, and a lot of people were writing the obituary of Kansas City Southern. Then in 2000 when the company spun off the financial assets of the company and we had to do a very painful reverse one-for-two split, we went out on the market. We did that because we were trying to maintain double-digit numbers. We went out on the market on July 13 of 2000 at $5.75, and our market cap at that time was just over -- or just under $350 million. The market cap at close today was just under $8 billion. So, I think (inaudible) in Mexico, as you’re going to hear from the team here today, was certainly a great thing that got us to this 125th anniversary. Second bullet point on my comments, dramatic turnaround from 2008 to 2011. The meltdown took place in the fall of 2008, and just things got fell off the end of the table there and our loadings just went down significantly. But we have come back not only from a standpoint of loading, the car loads in the model units, but also with a total enhancement of the capital structure of Kansas City Southern. That’s down and spread out. The cash flow and cash on hand has dramatically improved. Debt ratings have been upgraded. And the company has not been stronger during its 125 years. Final comment, 42% stock price appreciation in 2011. Some folks might say that’s over the top. I think there certainly has been a recognition and an understanding of the value of this franchise as it serves the growing manufacturing area of Mexico and connects with the rail carriers serving the US, Canada and Mexico. We also have heard from time to time that KCS multiples are higher than the rest of the industry. But if you look at our PE and our enterprise value over EBITDA ratios over the last decade, they have historically been above industry averages. With that, I'm going to turn it over to Dave Starling, CEO, to continue with the presentation.

Okay, Mike. Thanks. We’ll turn to page seven, Fourth Quarter Results. I’d like to point out some of the highlights and then guide up to full-year 2011, how we matched up with the guidance we gave during the past year. Fourth quarter volumes came in at about 7% higher than the previous year. Automotive, intermodal and coal were all strong drivers of growth. I don’t want to steal any of Pat Ottenmeyer’s thunder, but I’ll take the 22% volume increase in automotive, 18% in intermodal, and 8% in coal (inaudible). Chemicals and petroleum were a bit off in the quarter, but it does not appear that the slight decline had anything to do with either a slowing economy or KCS losing market share. Our customers we spoke with in the chemical industry are pointing towards a destocking of inventories by end-users in the fourth quarter, particularly in plastics, which is a significant commodity for us. While it’s an industry-wide phenomenon, more specific to KCS was that one of the refineries we serve was down for maintenance during the quarter. And another customer had to allocate some of its shipments to another rail carrier to meet its annual contractual obligation. The good news is while chemicals and petroleum were down in the quarter, they bounced back in the first quarter. Pat will have more to say about that later. Revenue in the fourth quarter, up 11%. Another solid quarter. The revenue would have been greater if not for the weakening of the (inaudible) the dollar which alone reduced our quarter-over-quarter revenue growth by about 2%. That being said, let me re-emphasize something we’ve said many times before. Swings in the currency exchange rate (inaudible) revenues on a quarterly basis have a very muted impact on our operating income. The reason for…

Hi. Thank you, Dave, and good afternoon, everyone. Starting on page 11, you can see that we really had a solid year in safety in 2011. We’re best in class in safety for the sixth year straight, while our volumes continue to grow at record levels and we expand our network. The safety culture at KCS is something we work very hard in improving and fostering on a daily basis. We will continue to sustain our progress in safety through consistently reinforcing our well-established expectations. Next slide, if you look on page 12, I believe it’s important to address our capacity from an infrastructure and a whirlwind stock asset perspective since we have been experiencing such good volume growth. We review all of our business unit projections thoroughly years ahead of the actual volume increases. It is through our cross-functional departmental analysis and decision-making that we’re able to invest appropriately and create the capacity needed at the right place and at the right time. We’re comfortable though with our current capital projects, investments and available assets that we’re able to continue to optimize our network’s capacity for the foreseeable future. We just completed the receipt of 30 new locomotives in December, and we’ll ramp up our locomotive purchases as necessary to accommodate our current growth plans in the years ahead. On the next slide, you can see the results of our extensive planning efforts with another critical assets, and that’s crews. Our crew utilization continues to get better and better as (inaudible) train and network capacity is targeted and consumed. We’re scaling below our volume growth through a combination of efforts. Our greatest success has been (inaudible) continually managing the balance of the network, appropriate resource crew districts, combined with well-executed crew utilization and a disciplined and balanced network, and…

Good everyone. I will begin my comments on slide 17 with a quick recap of the revenues and volumes for the quarter. As we saw earlier, revenues for the fourth quarter $530.3 million, up 11% from last year. Both revenue and car loads were the highest ever for a fourth quarter, and car loads actually set a new record for any quarter. Our volumes increased slightly from the third quarter of 2011, which was the previous record. Revenues were lower largely due to the impact of foreign exchange, which I’ll explain later. And as Dave mentioned earlier, adjusting for the FX reduction, revenue growth would have been 12.7% over last year. RPU was higher than last year, again in spite of the weaker peso, which reduced average RPU by about $17. Moving to the next slide, these are the factors contributing to revenue growth. And as you can see here, every component was positive except for foreign exchange which reduced revenues by $9 million. I think I gave some guidance about this in the third quarter call in October, and the peso continued to be even weaker -- at weaker levels just as we had forecasted at that time. Same-store pricing contributed $16 million to the revenue increase. The pool of revenue related to same-store movements was $320 million or approximately 72% of our length of haul revenue for the quarter. As I’ll get into on the next slide, effective core pricing impact for the quarter was 5.7% on a same-store basis. Increase in fuel surcharge revenue contributed $21 million over -- in the revenue growth, and fuel costs have recently dropped. However, we continue to experience positive year-over-year fuel surcharge revenues as the price is still higher than this time last year. The peso/dollar exchange rate began to rise…

Thanks, Pat, and good afternoon, everyone. I'm going to start my comments on slide 28. I won’t go through all of these numbers, but give you a few highlights. Again, fourth quarter revenues increased 11% while operating income was up 11.3%. Interest expense declined $31.4 million due to the refinancing of debt that lowered our overall effective interest rate to 7.4% during the quarter. Due to the declining peso, we did record a $2.3 million foreign currency loss in the quarter. The exchange rate at the end of the year was nearly 14 compared to 13.4 at September 30. Currently, the exchange rate has improved and stands at 13.2 again. Debt retirement costs were $24.6 million in the quarter, and the result of retiring our 13% KCSR notes with cash on hand in December. We did use approximately $140 million of cash to retire these notes. Our effective tax rate for the quarter was 1%, a reflection of the peso devaluation, and the non-cash tax benefits we recorded related to the US-dollar-denominated debt that we had in Mexico. And I’ll provide a few more details on that in a few minutes. Net income increased 73% to $96 million. Excluding debt retirement costs, adjusted EPS was $1.01. But it’s important to note that the lower effective tax rate did positively impact our quarter by $0.23 (inaudible) think about the quarter being $0.23 lower than the $1.01 adjusted EPS. And I’ll also comment in a few slides about some unfavorable year-over-year fuel comparisons along with some additional incentive compensation we booked in the quarter that did have negative impacts to both OR and EPS. On slide 29, let me talk about the full year. Revenues increased 16%, operating income increased 26%. Focusing on the interest expense, we saw a decline year-over-year of…

Okay. Thank you, Mike. If you turn to slide 36, I’ll be brief, (inaudible) railway had another strong quarter, rounding out a very successful year. Volumes up 23%, revenues up 31%, operating ratio 52.9 for the full year -- or for the quarter and 50.9 for the full year. Hard to complain about that. Next page, since it’s our 125th anniversary, I thought it’d be important to take another quick lookback. If you look at the operating ratio performance, before turning to some top line guidance, there are a couple of charts, show you just how far we’ve come in a short period of time. This first chart looks at KCS’s operating ratio performance relative to its railroad peers from 2006. We ended at the third quarter only because we obviously don’t have everyone’s full numbers yet. As you can see, from 2006 to 2009, KCS was a bit of an outlier, consistently higher than the group. We had made some progress in ’07 and ’08, but the recession which hit in the second half of 2008 set us back a bit. But when you look at 2010 and 2011, it becomes apparent that KCS has joined the pack. Our margins match those of our peers. A number of factors have driven our OR improvement: increased volumes, good pricing, more efficient operations have been prime contributors. If I have to single out one factor which really stands out is the emergence of our long-haul cross-border business, including the completion of our international intermodal corridor. If anyone ever doubted that the impact of long-haul moves on profitability, this chart should put those doubts to rest. Length of haul is by no means the only reason for our improvement, but it certainly is an important one. The second chart illustrates how KCS…

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You can press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Management requests that you limit your questions to two. One moment please while we poll for questions. Thank you. Our first question comes from the line of Bill Greene with Morgan Stanley-Smith Barney. Please proceed with your question. Bill Greene – Morgan Stanley-Smith Barney: Hey there. Good evening. Dave, you made some interesting comments about length of haul. I'm wondering if you could just share with us what’s been the change in length of haul over the last few years, because I think it’s an interesting relationship between OR and length of haul, and I'm not sure there’s as much color as I’d like around that. Maybe you can help us think that through.

Bill, if you go back to Pat’s graph on the cross-border conversion and you look at our cross-border revenues, up around 25%, that has really been the driver. Also a couple of our [full] moves are very long-haul moves deep into our system, but mainly it’s been the cross-border we’re getting moves all the way from Meridian into Mexico, Jackson into Mexico, and Kansas City deep into Mexico. Bill Greene – Morgan Stanley-Smith Barney: How much has length of haul actually moved for the system? Is it sort of a 10% move overall or is it much lower than that?

In terms of, you know, I think if you look at, as Dave mentioned, the percent of cross-border movement, we’ve certainly gotten the benefit of increased length of haul in both US and Mexico, but as Dave mentioned, our intermodal cross-border business, you can just kind of look at the growth there. Most of that intermodal cross-border business is not terminating on the KCS systems; it’s going to a gateway and moving into markets in, you know, on the [inner line] move that -- into another railroad’s markets. So that’s given us the opportunity to get length of haul of 1,500, 2,000 miles on the cross-border intermodal product. Bill Greene – Morgan Stanley-Smith Barney: All right. One of the things you guys have done in the past as well has done some JVs and with some success. And we often sort of think about kind of growth opportunities in your world being sort of organic, but there are certainly some strategic opportunities you could get involved in. How do you think about new growth avenues? Is JV, is that a realistic approach you could take, or is that not something you're going to pursue.

I'm not sure exactly what you're talking about, Bill. I mean, we will work with any company if the revenue opportunity is right and it’s a win-win for us. But generally speaking, what we’ve done with our intermodal product is there is a huge market conversion opportunity, and we have not tried to partner with any specific asset owner. We basically have opened up the international intermodal corridor for all of the participants, and working very hard with our connecting line carriers to also allow them to penetrate Mexico. We know the near-sourcing down there is very important for CSX and CN and NS and BN, for those railroads to have access to Mexico and to this growth. Bill Greene – Morgan Stanley-Smith Barney: Do you have a sense for what the organic growth rate is on that cross-border, not market share gains or just sort of opportunity of taking truck share and whatnot, but just what that trade is sort of growing up last year?

Well, we know that the study we’ve identified and we’ve shared with you has been 2.6 million truckloads in the past, and we still look right now, we’re still -- 2%, Pat?

One percent.

Yeah, Bill, a little over 1%. But you can look at the overall growth in trade between US and Mexico and get a feel -- get a decent feel for what the organic growth has been. And then we’ve got, as you mentioned, a great market share shift from truck to rail in addition to that. Bill Greene – Morgan Stanley-Smith Barney: All right. Thanks for the time.

Okay, Bill.

Thank you. Our next question comes from the line of Chris Ceraso with Credit Suisse. Please proceed with your question. Chris Ceraso – Credit Suisse: Thanks. Good evening. A couple of items. Is there any risk of your future growth plans for moving crude oil from the change in the direction of the seaway pipeline?

We’ve talked about the crude oil movements in the past. We are moving some crude. It’s not moving in unit trains, but we are moving some crude out into the Gulf. It’s not significant at this point. We’ve talked about it as a potential opportunity. And what’s happened since the announcements were made late last year about the seaway and other pipelines, is that a lot of the momentum, a lot of the discussions that we were having with potential customers have slowed down. Everyone is waiting to kind of see what this all means, what the timing is, what kind of capacity is going to be available for them. So, it has caused some of our discussions about that opportunity to slow down. But I would say that there’s still quite a bit of interest and there’s still -- it’s a huge market. And if you look at the seaway in particular, that pipeline runs from Cushing to Houston and it would only be in phase three which would be -- which would require the construction of a new pipeline that would move that product from Houston to Port Arthur. So, long and short of it, it has caused the -- everyone to kind of step back and assess what’s going to happen and what it’s going to mean for the crude by rail, but we still feel that there will be an opportunity there. Chris Ceraso – Credit Suisse: Okay. Another energy-related question, I think you mentioned something about plastics and maybe you had some plans that were offline, or traffic that was diverted. But if I think about broader shift in energy, it seems like some of the plastics manufacturer may start to move north to be closer to the source of cheap natural gas. Is there a risk in your chemicals business if that happens, or are you seeing any signs that that might unfold?

No. In fact, in the last few months of 2011, or probably the last six months of 2011, there were, that I'm aware of, there were six announcements of companies that were looking to build or expand manufacturing capacity basically from Corpus Christi to New Orleans. So, not all of those plants have developed into specific plans or timelines, but just based on the announcements and the conversations that we’ve had with customers, we still see that as a big opportunity. Don’t forget that the Eagle Ford Shale is really one of the biggest gas producers and it’s there in South Texas. Chris Ceraso – Credit Suisse: Right, okay. And then just lastly, you mentioned, just want to clarify, that coal pricing going forward will be limited just to the RCAF increase, is that right? And does that weigh on your -- I'm sorry, go ahead.

It’ll be more closely tied to that because we did complete renegotiation of all of our -- of all longer-term contracts by the middle of 2010. Chris Ceraso – Credit Suisse: But you still think overall for that, the system, you can do mid-single-digit pricing growth?

Yes. Chris Ceraso – Credit Suisse: Okay. Thank you.

You're welcome.

Thank you. Our next question comes from the line of Chris Wetherby with Citigroup Incorporated. Please proceed with your question. Chris Wetherby – Citigroup: Great, thanks. Good evening, guys.

Hi, Chris. Chris Wetherby – Citigroup: Maybe just on the cost side, could I ask a couple of questions, just how you think about 2012? You’ve laid out kind of the revenue opportunity for you, maybe specifically with comp and benefit, how do you think about kind of headcount and maybe cost inflation on a per employee basis for 2012?

Yeah, cost inflation, Chris, we’re probably looking at 3.5%. And I think from a headcount standpoint, we feel pretty comfortable continuing to manage headcount below our volume growth. Chris Wetherby – Citigroup: Okay. And I think you guys have said a couple of times recently that you might be able to keep it closer to flat. I mean, I guess on a relative basis, are we talking about something in the very low single digits or would it be potentially maybe 100 basis points lower than what your volume side looks like?

Yeah, I think that’s about right. You saw a half-percent increase year over year, and we feel pretty good about being able to continue to manage somewhere in that low-single-digit range. Chris Wetherby – Citigroup: Okay.

With mid-single-digit volume increases. Chris Wetherby – Citigroup: Okay. That’s very helpful, I appreciate it. And then just as a follow-up question, just on Lazaro, clearly good stuff going on there, whether it be the concession from Maersk and then the potential for export coal opportunities. As you think about CapEx, I know you’ve given us a range for next year, how do we think about specific opportunities at Lazaro, or needs rather, at Lazaro? Are there -- is there anything that you need now or is it more of kind of 14 and 15 in go-forward period that you have to make more investments?

Chris, this is Dave. We looked at our plan in Mexico and moved some capital around on ties. There are some more ties we wanted to put in between [Maril] and Lazaro to kind of get it ready for the coal if it does come. So, all we did is just shift some resources around, we kept the budget the same. And then we’ve got the 30 locomotives that were just delivered in December, and we’ll probably have some locomotive orders coming up in the next year or two as well. I don’t really -- there’s nothing significant -- in fact, out of Lazaro, we still have some room to grow on some of our trains. So, we’re very excited about APM getting that second concession. We’ve been waiting on that for sometime. But it’s going to be 18 months at the best before they have a birth down there, may even take a little longer than that. So, we’ve got time for that. And again, we will cost in the export coal on the required locomotives and that would be more of a locomotive issue because they’ll furnish cars. Chris Wetherby – Citigroup: Okay. That’s very helpful. I appreciate the time.

Nice long move from Kansas City all the way down. Chris Wetherby – Citigroup: That would be a good length of haul. That’s great. Thanks for the time guys, appreciate it.

Thank you. Our next question comes from the line of Tom Wadewitz with JPMorgan Chase. Please proceed with your question. Tom Wadewitz – JPMorgan Chase & Co.: Yeah, good evening. So I guess I’ll start on the topic of coal, more on coal. How much natural gas price sensitivity do you think you have in your utility coal franchise? I guess we don’t think of PRB coal being that sensitive, but when gas prices get low enough, you wonder. So, is there, I guess, any sense you can give us on kind of risks to low natural gas prices?

Hard to know, Tom, but certainly in a market like Texas where there is low natural gas produced electricity, we serve a couple of plants in Texas that could be affected. We’re working with our customers to try to identify exactly what the price points are on natural gas. So, we certainly have a couple of plants that are affected by that, but it’s really hard to quantify at this point what that could mean in terms of changes to our volume or business mix. Tom Wadewitz – JPMorgan Chase & Co.: I mean, have you seen any early indications that utilities are actually taking action to utilize their plant’s life and fire up gas plants more, or is that --

It’s not so much that, it’s really -- but it’s similar, the impact of plants that we serve that could be affected by competing plants, or plants that would burn a different mix of PRB and Texas lignite, for example, to bring their costs down. But we think that if natural gas prices certainly collapse from where they are or go much lower, we could see some of that, but we haven’t really seen it happen yet. Tom Wadewitz – JPMorgan Chase & Co.: Okay. And then the follow-up, on the comp and benefits per worker, Mike, I think you pointed out in the fourth quarter you had a bit of a headwind from incentive comp rising. When you look at 2012 and think about comp and benefits per worker, does that number decelerate somewhat from the experience in 2011? Or does it stay at what’s fairly high level?

Well, I think I mentioned cost inflation to be about 3.5% and then, you know, it’s always a little bit of a guess on what incentive comp might be, but I don’t really see any other significant drivers of cost increases in comp and benefits. And again, we’ll manage the headcount levels very well in the operating side of the business. Tom Wadewitz – JPMorgan Chase & Co.: So that 3.5% is kind of overall inflation or that 3.5% is in comp and benefit per worker?

Comp and benefits per worker. Tom Wadewitz – JPMorgan Chase & Co.: Okay, aside from potential incentive impact I guess?

Correct. Tom Wadewitz – JPMorgan Chase & Co.: Okay. Okay. Thanks for the time.

Thank you. Our next question comes from the line of Matt Troy with Susquehanna Financial. Please proceed with your question. Matt Troy – Susquehanna Financial: Yeah, thanks. Two questions. One on the dividend or potential return of capital to shareholder. Previously I think had leaned towards a dividend, looking at your model and projections, what you did in free cash this year versus what’s implied in your guidance for next year, I mean we’ll north of $200 million free cash flow. I was wondering if you're still leaning towards a dividend, what the timing might look like. And more importantly, what are you benchmarking, is it the other Class 1’s, are you looking at midcap stocks? I'm just trying to get a sense for where they might fall out.

This is Dave. As we’ve said in the past, it’s definitely on our radar screen. It’s shining brighter on the screen as we get more of this refinancing done, take the interest costs out, make sure we’ve got adequate cash to keep our system running and expand. But it is definitely on the radar screen. And again, our preference is still from a dividend or stock buyback, is dividend. Matt Troy – Susquehanna Financial: And in terms of benchmarking, is there something we should be thinking about of what you will model in terms of either payout ratio or what do you consider your [comp growth]?

Matt, certainly we’ve taken a look at that, and I don’t believe given our better growth profile, that we need to be at industry averages. So, if we make that decision in the future, I think you should expect it to be lower than what the industry is. Matt Troy – Susquehanna Financial: Got it. Thank you. And the second question would be, just in terms of customer collocation along your lines down in Mexico, it’s a longer-term question, but it’s just in the news and it comes up every now and then in investor discussions, the security situation (inaudible) US border, just could you maybe refresh us in terms of why that’s not necessarily an issue or a burning issue for KSU and your operations down in Mexico, as the crime situation seems to have deteriorated markedly in 2011? Thank you.

We’re actually starting out 2012 with less noise. In talking to a couple of our Board members this morning, they’re also saying there could be a little less noise in Mexico. It still has not been an issue for us. We have had some spot issues on what we call our F-line, from Monterray to Matamoros. Matt Troy – Susquehanna Financial: Right.

-- go in and clean those up. We stop them and they go away. And it’s still been more of a competitive advantage for us versus truck, versus other competition. Matt Troy – Susquehanna Financial: But to the extent folks have said that -- they’ve indicated plans to collocate or to do business with KSU, you haven’t seen anyone change those plans or pull back?

To collocate, you mean build on our line? Matt Troy – Susquehanna Financial: Correct.

Yeah. No. We have not. Matt Troy – Susquehanna Financial: Okay. Thank you for the time.

Thank you. Our next question comes from the line of Ken Hoexter with Bank of America Corporation. Please proceed with your question. Ken Hoexter – Bank of America: Hey, good afternoon. If I could just start off with a simple numerical one. Your car loads seemed a little bit different than the AAR in terms of the growth rate. Is there anything outstanding? I mean, if I just looked at some of the major categories like chem, ag and industrials, it seemed a little shy. Is there anything off the top of your head, Pat, that you would know why that would be different?

No. I'm not aware of any reason there’d be a difference. Ken Hoexter – Bank of America: Okay. It just seemed like they were a little bit higher. So, if I could just jump in on the pricing. Pat, you mentioned kind of mid single digits. It seems like you had been doing about 5.5% to 6% pure pricing over the past two years. Now this quarter is about just over 5%. Are we seeing a lot of those legacy contracts having now priced in and you're looking at kind of inflation-plus type of number going forward? I just want to understand, are there chances that you have some other contracts that can boost that up a bit? Or should we look at that to continue to slow down?

I don’t think it’s slowed down much, Ken. I mean, 5.7%, I don’t know if you're picking up the right number for the quarter, was 5.7%, if I look back over the last four quarters, the range has been 5.4% to 6.1%, and 5.7% is actually the second-highest that we’ve reported in the last four quarters. Ken Hoexter – Bank of America: No, got it. I thought you said 5.1%. I'm sorry, Pat.

No, no. It’s 5.7%. Ken Hoexter – Bank of America: Okay. And then on the -- just following up on the timing of -- you talked about the coal going to Lazaro, or -- yeah, down to the port, and also crude moving to Port Arthur eventually. Is there any development or enhanced contract discussions going on that could expedite some of those?

We are having contract discussions with a lot of people to expedite it as soon as we can. As I mentioned in the case of the crude oil, these announcements about the pipeline reversals has certainly caused people to just kind of take a little bit of a pause and see how that’s all going to work and what’s going to be available, and timing and capacity and all of that. Crude oil -- or I'm sorry, the export coal, the facility down at Lazaro is not yet open, and we’re expecting it to be end of the first quarter, early second quarter. And we’re trying to, you know, we’re engaged pretty heavily with a couple of producers that are very interested in looking at that opportunity as quickly as the middle of the year, second half of the year. Again, we don’t have anything on hand. It’s got to be competitive with world prices. We think we’re in the ballpark. And once the facility opens, we’re certainly prepared to get the locomotives and spend the capital to take advantage of that opportunity. Ken Hoexter – Bank of America: So, on the Savage announcement, it doesn’t sound like -- does it sound like it’s gotten more heated because of their announcement over a year ago, or?

No. I mean we’ve been working with Savage to identify potential shippers and subscribers and customers and all of that still going on. It’s just there’s been a bit of a pause while people absorb and understand the impact of these pipeline announcements. Ken Hoexter – Bank of America: Great. Thanks for the time.

Thank you. Our next question comes from the line of Art Hatfield with Morgan Keegan. Please proceed with your question. Art Hatfield – Morgan Keegan: Evening, everyone. Just really one question; most of my other questions have been answered. But Pat, if you think about, or I guess this could be for anybody, but if you were to start to materially improve your market share of cross-border traffic, besides rolling stock, are there any other significant investments that you’d need to do in infrastructure?

Not infrastructure. Again, most of the rolling stock, as you know, is shared fleet. The containers are privately-owned for the most part, although we do own some containers. But we have a lot of train capacity for our intermodal product. We’re working for, you know, to convert it, and fill up the utilization. I think we spent a lot of money on terminals, you're aware of that. We bought two terminals over the last two years to really complete our network. We built a new terminal at Rosenberg, we expanded a terminal in Monterrey. So we’ve spent a lot of money, and as Dave has pointed out to me, we spent a lot of money on the intermodal network and it’s time to light it up. So, I think we can run for quite a while here without a lot of additional capital. Art Hatfield – Morgan Keegan: Thank you. And just one other question on pricing, you had mentioned the impact on pricing going forward from the rollover of some of these legacy contracts on the call side. Are there any other areas to think about where you would see maybe the potential greatest risk or potential greatest positive upside to pricing over the next 12 months?

Nothing really stands out on either the risk or the opportunity side. And I’ll go back, I don’t feel like we did a great job of answering Bill’s question at the beginning about cross-border length of haul, we don’t disclose a lot of details, having disclosed specifically about length of haul. But the cross-border, as I mentioned, our cross-border intermodal business is about 10% of our total intermodal business unit volumes right now, and obviously a lot of room to grow, and you’ve seen the growth that we’ve had over the last couple of years. The length of haul for our cross-border is typically more than double what it is for either our US or Mexico -- intra-Mexico/intra-US, again because a lot of our focus on cross-border intermodal has been to move to final, you know, origins or destinations that are beyond the reach of KCS. So it’s Atlanta, the Southeast, it’s northern Ohio, it’s places that really stretch our network out to the maximum gateways, Meridian, Kansas City, Saint Louis. So, those are very long-haul moves. And that’s probably about as specific as we’ll get. But as that cross-border product grows as a percentage of our total intermodal, it’s going to have a big impact on length of haul again we’re moving this to the end of our network and not just a termination point on KCS. So, if that’s a little more helpful. Art Hatfield – Morgan Keegan: That is. Thank you so much.

Thank you. Our next question comes from the line of Scott Group with Wolfe Trahan & Co. Please proceed with your questions. Scott Group – Wolfe Trahan & Co.: Thanks. Good evening, guys.

Hey, Scott.

Hey Scott. Scott Group – Wolfe Trahan & Co.: Just wanted to clarify just real quick the guidance on the OR, the commentary on OR improvement. Is that relative to the 70.9 that you talked about in the slides?

Yes. Scott Group – Wolfe Trahan & Co.: Okay. So, okay, great. When we think about the longer-term move into the 60s, we’d become used to guidance of 100 to 150 basis points a year. Is that still a fair expectation going forward, or given the real significant improvement in margins the past five years, is that just a tougher hurdle to meet going forward?

Well, as you get closer down in the 60s, of course it’s more difficult than coming out of the 80s. But our goal is to continue to improve the operating ratio as much as we can. Are we going to hit 150 basis points every year? I don’t know. We’re going to continue to work the operating ratio down. If you average it out over time, we should be as good as any of the other railroads. So, I’d seen that they’ve set goals in the mid-60s, in the high 60s. But for right now, the goal we’re going to give you is our goal is to be in the 60s. We may not make it there in 2012, but we’re certainly -- that’s our target. Scott Group – Wolfe Trahan & Co.: Okay, great. And then last thing, Pat, can you give a little bit of color on the new coal business that started in January and how big of an opportunity that is, how should we think about modeling the volumes and revenue there?

It’s a longer haul opportunity, it’s going to have a, let’s put it this way, we serve eight coal plants, this is the ninth one. And it’s not one of the larger ones, but it’s a longer length of haul. So we’re not in a position to disclose the contract terms or the specifics, but it’s certainly going to have a nice impact on our revenues and volumes for 2012 and beyond. Scott Group – Wolfe Trahan & Co.: Can we just say that one of out nine, that’s almost 10% growth just from that contract? Is that a fair way to think about it within coal?

I would say it’s not one of our larger contracts. So it’s a long haul, but the tonnages are maybe not up to the level of some of the others. Scott Group – Wolfe Trahan & Co.: Got you. Okay, thanks for the time, appreciate it.

Thank you. Our next question comes from the line of John Barnes with RBC Capital Market. Please proceed with your question. John Barnes – RBC Capital Markets: Sorry, I apologize, I'm playing with my mute button over here. Real quick on two things. Number one, strength in the outlook for consumer and industrial, I know that’s a fairly broad category. Could you just give any or some color around why you're seeing an uptick in the strength of that, the outlook for that in 2012?

Paper, appliances, some steel. We’ve had a couple of steel facilities, metals that are -- have expanded their capacity on our network. We’ve got some new steel investments driven partly by the automotive growth in Mexico that are coming online. So it’s -- and it’s just also -- that’s where we’ve seen, as I mentioned, 26% year-over-year improvement in cross-border. So, this is being driven by a lot of that near-sourcing that we’re talking about and just the general increase in trade between the US and Mexico. John Barnes – RBC Capital Markets: Okay. And then my second question, last year you provided a fair amount of specifics around the operating ratio improvement. I think you started off the year kind of [gutted] to 100 to 150 basis points improvement. I'm just curious as to why the change in verbiage around that, why not more specifics around the magnitude of that improvement. Is it cost concerns or is it, you know, it’s kind of [gutted] to a level now where it becomes harder to see incremental improvement in it?

I think our track record is good enough that you're going to see continued improvement. We haven’t set a three to five-year goal. We had set this goal previously. We’re down in the hump with the rest of the group. We’ll continue to improve the operating ratio. John Barnes – RBC Capital Markets: All right, very good. Thanks for your time, guys.

Thank you. Our next question comes from the line of Keith Schoonmaker with Morningstar. Please proceed with your question. Keith Schoonmaker – Morningstar: Yes, thanks. Other than price improvements, what operating initiatives do you have in place to continue -- already noted an impressive operating ratio trajectory, I assume, continuing to drill long haul, and is there any low-hanging fruit left after this 10 percentage points of progress?

This is Dave Ebbrecht. And that’s -- low-hanging fruit, I would say there’s no huge opportunities that we’re going to see very large incremental improvements on. What it takes is a lot of little opportunities to create more efficiencies all over our network. We continue to standardize the network on both sides of the border. This creates a lot of car utilization efficiencies as well as locomotive efficiencies. We constantly look for efforts around fuel conservation, that’s also producing some big dividends. But mostly keeping a balanced network while we’re growing is going to create more scalable efficiencies than we’ve seen in the past. And so we continue to see our scaling well below the revenue growth with our cost.

Keith, this is Mike Upchurch. One other thing that we’ve talked about over the last year is leased equipment and looking at selectively converting that to owned assets which may also help us continue to drive costs down. We’ve got a little higher percentage of leased equipment, and with our better financial profile, can put our balance sheet and cash flows to use there to help reduce costs.

And this is Dave Starling. We have a lot of opportunity on the intermodal network. Our trains are not full. Pat has got a lot of work to do still to fill the intermodal trains out. That will be incremental, it’ll fall to the bottom line. So that’s a great opportunity for us. And I think to be more aggressive in the finished auto market, we continue to work on handling more finished autos through the north, and also through Lazaro Cardenas. So, we still have a lot of opportunities. We’re still a growth engine, and I think that’s still going to give us a lot of opportunities. Keith Schoonmaker – Morningstar: Sounds like no pressure on Pat there to grow the cross-border business. I want to ask just perhaps the most elementary question on that, and assuming that continuing to grow long-haul border is going to have a good impact on the operating ratio. But what’s the greatest obstacle in capturing more of that large cross-border business which the company currently enjoys just a percentage point or so?

I think the obstacles that we run into are just people who are really unfamiliar with the realities of the way intermodal works cross-border. I think we’ve done an outstanding job of educating and working with our partners, the major truckload carriers. But it’s just really continuing to educate people, make them aware of the efficiencies of the cross-border rail movement, making them aware of the investments that we’ve made. I mean, one of the things that is definitely a factor in driving this conversion is the investment that we’ve made in the network. We have a world-class, first-class intermodal terminal network cross-border that didn’t exist four, five, ten years ago. So it’s just really getting people to understand how it works today and get them to understand the consequences and the cost and the time of continuing to move cross-border via truck and the advantages of the rail. And we’re doing that, our partners are doing that. Later this week I'm speaking and giving a presentation at the National Sales Kickoff Meeting for one of our major partners. We did another similar, one of my colleagues here, Brian Bowers did a similar presentation last week at another one of our partners. So it’s really just getting our partners motivated and excited and shipping away at the market. And I think we’re all pretty pleased with the level of engagement that we’ve had and just continuing to go after it one bit at a time. Keith Schoonmaker – Morningstar: Thanks. And if I could ask just one more finally, of the full-year 56% growth in cross-border intermodal, can you estimate what portion that’s from convergence, or is this more of the same market share, just more volume flowing in that pipeline?

I don’t think it’s possible to break it out. I mean it’s -- because certainly some of the customers that we converted a year ago are growing, so it’s really difficult to break it out. Keith Schoonmaker – Morningstar: All right, great. Thanks very much.

Thank you. Our next question comes from the line of Anthony Gallo with Wells Fargo. Please proceed with your question. Anthony Gallo – Wells Fargo: Yes, thank you. Congratulations on a fantastic year. Just one quick question if I may. I think it was Mike that mentioned that your adjusted EPS of $1.01, that maybe a more representative figure would be to take $0.23 off of that, assuming that the debt retirement costs were not there. Is that with a 27% tax rate or a 34%?

Well, the 23 really didn’t have anything to do with debt retirement, right? That really was the changing FX rate and the impact that had on our tax rate. So we disclosed in our press release that we had kind of a one-time benefit of $0.23, and that was based on an effective rate that was much lower than what the statutory rate is. If you go back to the chart in the slide on page 31, the effective rate was 27 and our statutory rate is 35. Anthony Gallo – Wells Fargo: Okay. So that’s how you got to that. Okay.

Correct. Anthony Gallo – Wells Fargo: Okay. You know what? I’ll leave it at that. Thank you.

Thank you. Our next question comes from the line of Jeff Kauffman with Sterne Agee. Please proceed with your questions. Sal Vitale – Sterne Agee: Hi, this is Sal Vitale on for Jeff. So, two quick questions on the labor side. Number one, on the productivity front, so you’ve had some really nice increases in productivity. So, how long -- how much longer do you think you can keep increasing the car loads per employee at this mid-single-digit pace, with 6.2% year over year for the fourth quarter?

This is Dave Ebbrecht. That’s really hard to quantify. I think we still have a lot of in-train capacity that we can absorb, as we have had a lot of new train starts with our startup business. But we also have other trains that are getting full in force and other new train starts. So, the law of averages here will say that, you know, we’ll see some stair-stepping up of that measurement, and it just depends on how quickly we grow. Sal Vitale – Sterne Agee: Okay. Is it fair to say that next year is probably going to be a slower gain than 2012?

I think that right now we’re still growing within our train sizes, and I think that will continue to grow at a pace that’s commensurate with how we’ve been growing in the past. Sal Vitale – Sterne Agee: Okay. And then just shifting gears over to the incentive comp side. So there was a $6 million increase in the fourth quarter. How do we think about 2012?

From an incentive standpoint? Sal Vitale – Sterne Agee: Right.

Well, the $6 million was really just moving into higher level payout for the year, and we trued that up for the full year. A little difficult to guess at this stage of the year after less than a month what incentive comp might be for the full year. Sal Vitale – Sterne Agee: Okay. And then just the last question, I guess thinking about the salaries line in total, should we think about it growing at some percentage point plus over what the volume growth is? Or how do we think about that line item?

Well, I think we’ll stick to maybe some of the guidance that we gave on cost inflation and try to maintain headcount levels well below our volume growth and let you do the math on that one. Sal Vitale – Sterne Agee: Okay, very good. Thank you.

Thank you. Our next question comes from the line of Brad Delco with Stephens. Please proceed with your question. Brad Delco – Stephens Inc.: Good evening, gentlemen. Thanks for --

You're from Stephans, Brad? Brad Delco – Stephens Inc.: That’s right, in Arkansas. I guess one question, on the guidance you guys gave on the various commodity groups, did you build anything in? I imagine nothing from Savage that sounds like even if that got ramped up, that’d be 2013. But any export coal in that coal guidance for double digit, and how should we think about laying that on if that is in your guidance?

I guess the way I’d answer, Brad, is we’ve, you know, we build our outlook based on -- largely based on customer specific that -- have a little bit of risk in there and if the risk factor could be met by a number of these opportunities, and we sort of try to balance it out. So, I think we do have something in here in the back half of the year for export coal. Savage -- let me just clarify one thing. The crude oil opportunity and the movement of crude oil over our network to Port Arthur is not completely dependent on Savage and the big Port Arthur crude terminal that we announced our partnership with. There’s a lot of crude oil opportunities that moves in unit trains or in smaller blocks to other refineries, and we are moving some of that. So, again, we’re already seeing some of the crude oil opportunity come to fruition. The bigger project which we’re still very enthusiastically pursuing with Savage is going to take some time to build, once we get contracts, then there’s a licensing, permitting process, and then the construction process of the big terminal there, and that’s probably going to take nine to 12 months. So that’s going to be a 2013 and beyond opportunity. Brad Delco – Stephens Inc.: Got you. And I guess next question is just a clarification. The 3.5% inflation, was that just comp and benefits, or should we think about that percentage in general x fuel?

Well, I answered -- this is Mike Upchurch -- I answered the question specific to comp and benefits. I think if you looked at the overall inflation, we’re probably looking somewhere in that 3% range. X fuel, who knows what fuel is going to do for the year? Brad Delco – Stephens Inc.: Exactly. Yes. And then last, just to kind of clarify a point, not to beat a dead horse, on the OR, but with the buy versus lease decisions that you guys have already made, I think you identified 40 basis points or so of margin improvement. Is that -- when did that kind of start, or has it started yet? Or should we think about that being sort of a given for ’12?

That was -- we did talk about that on a prior call. That was a full-year impact. It was primarily derived from the purchase of some locomotives under lease which we completed in the September timeframe, so we would have seen a small benefit in 2011, but a larger benefit in 2012.

But Brad, we’ll have more opportunities like this in the future that I would say are not currently baked into plan. Brad Delco – Stephens Inc.: Got you. Okay. Well, Dave, congrats on your recognition for being Railroader of the Year. No one’s mentioned, so I figured I might as well. And if that’s the case, yes on a great year.

Thank you, Brad.

Our next question comes from the line of Neal Deaton with BB&T Capital Markets. Please proceed with your question. Neal Deaton – BB&T Capital Markets: Hey, thanks. I’d like to echo what Brad said. Congrats to you, Dave, and congrats on a great year.

Thanks. Neal Deaton – BB&T Capital Markets: I wanted just to see, I don’t think you mentioned this, what’s -- can you quantify like the total revenue and/or car load impact of the three little items that you mentioned in your press release that fall under the chemicals and petroleum group, which explain why it was down, one was cost, needed to fulfill an obligation on the rail, then you had a closure, can you quantify that at all, what the revenue impact was there, what would it have been or (inaudible) had these things not occurred?

No, I don’t think we want to get terribly specific down to the customer level, Neal. But it was -- all of those factors combined and the timing of those factors was different for each one. But that clearly drove the results for the quarter, and the softness, the weakness that we saw heading into the end of the year. And I think in the third quarter call -- one of the reasons that we wanted to call this out is because we were watching our chemical business very closely heading into the end of the year thinking that this might be, you know, if there was a red flag out there, if there was a metric or an indicator that was telling us that we were heading into a downturn, that’s where it kind of appeared to us it might be. And then the point of the analysis in the presentation would show that based on what we’ve seen in the first few weeks of 2012, it really seems like there were other things going on. And of course, in the case of plant shutdowns and maintenance and those types of things, we knew those were hopefully blips in the quarter that would work through. But as recently, toward the end of the year, we were having conversations with a lot of our major chemical and plastics and petroleum shippers just to stay close to them and see what was going on. So again, the short story there is we don’t see the weakness that we saw at the end of the year really signaling that we’re heading to any kind of a downturn. And in fact, in the first few weeks of the year, it’s picked up pretty nicely. Neal Deaton – BB&T Capital Markets: Okay. That’s a good answer. And then just one or two housekeeping questions. You all mentioned, I believe, that once you did your refinancing, your interest rate I believe is around 7.5%. Is that kind of a good proxy number to use for 2012 until you do any more refinancing?

Well, I think that number actually would be negatively impacted by the fact that the 13’s were outstanding most of the year. So if you took the 13’s out that we paid off at December, you’d expect that number to be even lower. Then any refinancing that we would be able to complete would further push that number down. Neal Deaton – BB&T Capital Markets: Okay. So the 7.4 was -- okay, [in closing]. And then, I know this is hard because of the exchange rate, but any kind of tax guidance you could give for next year at all in the effective rate?

I was hoping that we would get through this call without that question. Certainly we’ve had a history of using the Central Bank of Mexico’s forecasted exchange rate, which is 13.1, and if that’s where the exchange rate ends up for the year, it could push our tax rate above the 35 statutory rate. It honestly could put it as high as 40. But again, that’s a non-cash issue for us. We will at some point become a cash taxpayer in Mexico, and we do have some thoughts and ideas that we’ll continue to pursue that could mitigate some of that volatility. Neal Deaton – BB&T Capital Markets: Okay. I appreciate that answer. Thanks a lot.

Thank you. Our next question comes from the line of Scott Nichols with Bishop Rosen. Please proceed with your question. Scott Nichols – Bishop Rosen: Yes. Here’s a question for Pat. Pat, if -- as and when the administration gives the go-ahead to build the pipeline from the [Tarzans] and to the Gulf, from day one when construction starts, how many years do you estimate it would take to build it?

Well, I have no idea, Scott. I mean, that’s such a big wildcard and there are people who are a lot closer to this topic and a lot better information than I do that -- including a lot of the customers that we’re talking to, potential customers down in the Gulf Coast who are asking the same question. Scott Nichols – Bishop Rosen: Okay. Thank you.

There are no further questions at this time. Mr. Haverty, I would like to turn the floor back over to you for closing comments.

Okay. I think that concludes the call. Everyone, farewell, and thank you for joining us.