SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K


                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                Date of Report (Date of earliest event reported):
                                   May 1, 2003


                              KANSAS CITY SOUTHERN
               (Exact name of company as specified in its charter)


         DELAWARE                     1-4717                   44-0663509
----------------------------  -------------------------  -----------------------
(State or other jurisdiction  (Commission file number)        (IRS Employer
       of incorporation)                                  Identification Number)

                427 West 12th Street, Kansas City, Missouri 64105
               (Address of principal executive offices) (Zip Code)


                Company's telephone number, including area code:
                                (816) 983 - 1303


                                 Not Applicable
          (Former name or former address if changed since last report)









<PAGE>


Item 9.  Regulation FD Disclosure

Kansas City Southern ("KCS" or "Company") is furnishing under Item 9 of this
Current Report on Form 8-K the information set forth below which was included in
a private placement offering memorandum under Rule 144A. The securities offered
in such private placement have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. The
information furnished under this Item 9 does not constitute an offer to sell, or
the solicitation of an offer to buy, any security. The information included in
this Current Report on Form 8-K is furnished pursuant to Item 9 and shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that Section.


                              PROPOSED ACQUISITIONS


         On April 21, 2003, KCS and Grupo TMM announced a series of agreements
that will, following shareholder and regulatory approval, place KCSR, Tex Mex
and TFM under the common control of a single transportation holding company,
NAFTA Rail, to be headquartered in Kansas City, Missouri. Grupo TFM holds an 80%
interest in TFM, which holds a 100% interest in Mexrail. Mexrail wholly-owns
Tex-Mex.

         Under an Acquisition Agreement, dated April 20, 2003 (the "Acquisition
Agreement"), upon the terms and subject to the conditions of the Acquisition
Agreement, KCS would acquire all of the interest of TMM Multimodal in Grupo TFM
for $200 million (up to $80 million of which may be paid with KCS equity) and 18
million shares of Class A Common Stock of KCS (the "Acquisition"). See
"Description of the Acquisitions--The Acquisition Agreement." Subject to
receiving shareholder approval, KCS would change its name to "NAFTA Rail."
Consummation of the Acquisition is subject to certain regulatory and other
consents, approvals and filings. The obligations of KCS and Grupo TMM to
complete the Acquisition are subject to a number of conditions. In the event the
Acquisition Agreement is terminated under specific circumstances, a termination
fee of $18 million will be paid by KCS to Grupo TMM, or by Grupo TMM to KCS,
depending upon such circumstances. Provided the Acquisition has occurred, KCS
may be required to make additional payments to Grupo TMM based on a resolution
of certain contingencies. A number of ancillary agreements will be entered into
prior to the closing of the Acquisition to carry out certain objectives of the
Acquisition Agreement and the Acquisition. Upon the terms and subject to the
conditions of a Stock Purchase Agreement, dated as of April 20, 2003 (the "Stock
Purchase Agreement"), KCS will purchase from TFM 51% of the outstanding shares
of Mexrail, a wholly-owned subsidiary of TFM, for $32,680,000. In addition, KCS
has an exclusive option through December 31, 2005 to purchase the remaining
outstanding shares of Mexrail as of the date of the exercise of the option. KCS
will deposit the initial purchased shares of Mexrail into an irrevocable voting
trust pending obtaining approval by the Surface Transportation Board ("STB") of
KCS's request to acquire control of Tex-Mex. TFM has repurchase rights for a
two-year period with respect to the Mexrail shares purchased by KCS. The
obligations of KCS and TFM to consummate the transaction under the Stock
Purchase Agreement are subject to a number of conditions.

         For a more detailed description of these matters, see "Description of
the Acquisitions."

                                      * * *


<PAGE>



                         DESCRIPTION OF THE ACQUISITIONS

         KCS and Grupo TMM have announced a series of agreements which have been
approved by both respective boards of directors that will, following shareholder
and regulatory approval, place KCSR, Tex-Mex and TFM under the common control of
a single transportation holding company, NAFTA Rail. Grupo TFM holds an 80%
interest in TFM, which holds a 100% interest in Mexrail. Mexrail wholly-owns
Tex-Mex.

The Acquisition Agreement

         Upon the terms and subject to the conditions of the Acquisition
Agreement, dated April 20, 2003, by and among KCS, KARA Sub, Grupo TMM, TMM
Holdings and TMM Multimodal, KCS would acquire all of the interest of TMM
Multimodal in Grupo TFM for consideration to TMM Multimodal of $200 million and
18 million shares of KCS Class A Common Stock. The Acquisition (defined below)
will be accomplished in three steps, the "Stock Purchase," the "Subsidiary
Investment" and the "Merger" described below (and together comprising the
"Acquisition"), all occurring sequentially and virtually simultaneously as
follows:

(1)  The Stock  Purchase.  KARA Sub will purchase from TMM  Multimodal all Grupo
     TFM shares held by TMM  Multimodal,  consisting  of 25,500 shares of Series
     "A" fixed  capital  stock of Grupo TFM and  3,842,901  shares of Series "A"
     variable  capital stock of Grupo TFM. The purchase price to be paid by KARA
     Sub to TMM  Multimodal  at the  closing  for the  purchase of the Grupo TFM
     shares is: (i) $200  million  (up to $80  million of which may be paid,  at
     KCS's option upon 30 days' written notice, in shares of KCS common stock or
     KCS Class A Common Stock); and (ii) a subordinated  promissory note of KARA
     Sub in the principal amount of $25 million.  KCS has agreed to provide KARA
     Sub with  sufficient  funds to make all payments  required to be made by it
     under the Acquisition Agreement.

(2)  The Subsidiary  Investment.  Immediately following the Stock Purchase,  TMM
     Multimodal will purchase from KARA Sub 100 shares of KARA Sub common stock,
     representing  10% of the issued and  outstanding  shares of KARA Sub common
     stock, in  consideration  for delivery by TMM Multimodal to KARA Sub of the
     KARA Sub subordinated promissory note.

(3)  The Merger.  KARA Sub will then be merged into KCS in  accordance  with the
     General Corporation Law of the State of Delaware ("DGCL").  The Merger will
     be  consummated  by  filing a  certificate  of  merger  with  the  Delaware
     Secretary of State in accordance with the DGCL. At such time, the shares of
     KARA Sub held by TMM Multimodal will be converted into and exchanged for 18
     million shares of KCS Class A Common Stock. As a result of the Merger,  the
     separate  corporate  existence of KARA Sub will cease and KCS will continue
     as the surviving corporation. Subject to approval by KCS stockholders, upon
     the date and time of the  filing of the  Certificate  of  Merger,  KCS will
     change its name to "NAFTA  Rail" or such other name as shall be  determined
     by KCS and the capital stock of KCS  (including  the KCS common stock,  the
     $25 par value  preferred stock and the preferred stock offered hereby) will
     continue to be issued and  outstanding  as the capital  stock of NAFTA Rail
     without further action by any holder thereof.  Subject to listing  approval
     by the New York Stock  Exchange  ("NYSE"),  the NAFTA Rail common stock and
     the $25 par value preferred stock will trade on the NYSE.

     KCS's  restated  certificate of  incorporation  and Bylaws would be amended
appropriately.  The closing of the  Acquisition is dependent upon the closing of
each of the Stock Purchase, the Subsidiary Investment and the Merger.
<PAGE>

         Conditions to Obligations to Complete the Acquisition

     The  obligations  of KCS and  Grupo TMM to  complete  the  Acquisition  are
subject to a number of conditions, including, among others:

o    KCS must have obtained  approval of KCS  stockholders  of the amendments to
     KCS's  restated  certificate of  incorporation  and the issuance of Class A
     Common Stock;

o    All  consents,  waivers,  authorizations  and  approvals  required from all
     governmental  authorities  to  consummate  the  Acquisition  must have been
     obtained and remain  effective  as of the closing  date of the  Acquisition
     Agreement;

o    The  securities  to be issued  pursuant to the Merger,  and any  securities
     issued as  payment  of a portion  of the  purchase  price for the Grupo TFM
     shares  purchased by KARA Sub,  must have been  approved for listing by the
     NYSE;

o    Each of the Ancillary  Agreements (as described  below) must have been duly
     executed  and  delivered  by or on behalf of KCS and each of Grupo TMM, TMM
     Holdings and TMM Multimodal, as the case may be;

o    Grupo TMM must have received  consents from the holders of its  outstanding
     Notes due 2003 and Notes due 2006; and

o    There must not be any insolvency or bankruptcy  proceeding  pending against
     TMM Multimodal,  TMM Holdings or TFM that has been pending for more than 60
     days, and certain material adverse effects shall not have occurred.

     Termination

     The  Acquisition  Agreement may be  terminated  prior to the closing of the
Acquisition as follows:

o    By written consent of KCS and Grupo TMM;

o    By KCS or Grupo TMM if any order of any governmental  authority permanently
     prohibiting  the  consummation  of the  Acquisition  has  become  final and
     non-appealable or if any of the approvals of any governmental  authority to
     perform the transactions  contemplated by the Acquisition Agreement imposes
     any  condition or  requirement,  the  satisfaction  of which is  reasonably
     likely to have a material adverse effect on either KCS or Grupo TMM;

o    By KCS if any conditions to the  obligations  of KCS under the  Acquisition
     Agreement becomes  incapable of fulfillment  through no fault of KCS and is
     not waived by KCS;

o    By  Grupo  TMM if any  condition  to the  obligations  of  Grupo  TMM,  TMM
     Multimodal  and  TMM  Holdings  (collectively,  the  "Sellers")  under  the
     Acquisition  Agreement becomes incapable of fulfillment through no fault of
     Sellers and is not waived by Grupo TMM;

o    By KCS if Grupo TMM has experienced a change of control, or by Grupo TMM if
     KCS has experienced a change of control; and
<PAGE>

o    By KCS or Grupo TMM if the closing of the Acquisition  does not occur on or
     prior to December 31, 2004 (the  "Termination  Date");  provided,  however,
     that the  Termination  Date may be extended by KCS and Grupo TMM by written
     agreement.

     A termination  fee of $18 million is payable in the event of termination of
the Acquisition  Agreement due to (i) a change of control of either KCS or Grupo
TMM, in which case the party  experiencing  the change of control  shall pay the
termination fee to the other party,  and (ii) the failure of the stockholders of
KCS or of Grupo TMM to approve the  Acquisition if at or prior to the meeting of
such stockholders to approve the Acquisition,  the board of directors of KCS, in
the case of the KCS  stockholders'  meeting,  or the board of directors of Grupo
TMM, in the case of the Grupo TMM stockholders' meeting, has failed to recommend
or has withdrawn and not reinstated its recommendation of the Acquisition,  then
the party whose  stockholders  have not approved the  Acquisition  shall pay the
termination fee to the other party.

         Required Regulatory and Other Consents, Approvals and Filings

         Certain regulatory approvals and filings and other consents are
required in connection with the closing of the Acquisition. These include, among
others:

     o    Prior  approval  of the  Mexican  Foreign  Investments  Commission  of
          control of Grupo TFM by a non-Mexican entity;
     o    Clearance  by the Mexican  Antitrust  Commission  of  anti-competitive
          concerns;
     o    Notice to the Mexican Ministry of Communications and Transportation;

     o    Filing with NYSE for listing of common stock issuable upon  conversion
          of Class A Common Stock;
     o    SEC clearance of proxy materials;
     o    Grupo TMM noteholder consents;
     o    Hart-Scott-Rodino  Act  filing  and  clearance  of  investment  by TMM
          Multimodal in KCS; and
     o    KCS  stockholder  approval of  amendments to restated  certificate  of
          incorporation and issuance of KCS equity.

     KCS has obtained an amendment to the New Credit Agreement.  The bank group,
led by JPMorgan Chase Bank as Agent, specifically approved amendments allowing:

          o    KCS (NAFTA Rail)  investment in further equity interests of Grupo
               TFM;

          o    KCS (NAFTA Rail) investment in equity interests  representing 51%
               of Mexrail's issued and outstanding capital stock;

          o    Use of KCS cash to acquire Mexrail.


     VAT Payments

     Provided  the  Acquisition  has  occurred  and  neither  KCS nor any of its
subsidiaries has purchased the TFM "Class III" shares  (representing  20% of the
capital stock of TFM) currently held by the Mexican  government upon exercise by
the Mexican government of its right to compel purchase of the shares of TFM held
by it (the "Put"),  as  compensation  for Grupo TMM's  services in obtaining the
final  settlement or resolution of TFM's claim against the Mexican  Treasury for
the refund of a value added tax ("VAT")
<PAGE>

payment in the original  principal amount of 2,111,111,790  pesos ("VAT Claim"),
KCS  will  make  or  cause  TFM to make a cash  payment  (the  "VAT  Contingency
Payment")  to  Grupo  TMM as set  forth  below,  following  the  date  of  final
resolution of the VAT Claim, and the receipt by TFM or its designee of shares or
cash compensation received by TFM or its designee from the Mexican government on
the VAT Claim (the "VAT Payment").  The VAT Payment must consist of at least (i)
all of the TFM "Class III" shares  currently  held by the Mexican  government or
(ii) a cash payment or other property acceptable to the parties which has a fair
value equal to or greater than the Put purchase  price as calculated on the date
the VAT Payment is  received.  In such event,  KCS will,  at its option,  pay or
cause TFM to pay to Grupo TMM (iii) $100 million  within 90 days  thereafter  or
(iv) $50 million within 90 days  thereafter and an additional $55 million within
365 days  thereafter.  If the VAT  Payment  exceeds  the Put  purchase  price as
calculated on the date the VAT Payment is received, KCS will pay or cause TFM to
pay to Grupo TMM within 90 days after the VAT  Payment and final  resolution  of
the VAT Claim the first $25 million  received above the Put purchase price,  and
15% of any  additional  amount  received above the Put purchase price beyond the
first $25 million,  not to exceed $50 million. The VAT Contingency Payment shall
be made after  reducing  the value of VAT Payment by the amount of all  expenses
incurred by or on behalf of TFM in effecting  final  resolution of the VAT Claim
and receipt of the VAT Payment.

     Third Party Matters

     Until the filing of the  Certificate of Merger for the Merger,  neither KCS
nor Sellers can seek or entertain  other  offers with  respect to  acquisitions,
mergers  or  business  combinations  of KCS  or  KCSR,  and  TMM  Holdings,  TMM
Multimodal, Grupo TFM or any of their respective subsidiaries,  respectively. In
addition, Grupo TMM will not enter into any agreement concerning any acquisition
or purchase of a  controlling  equity  interest in Grupo TMM by any  competitor.
These limitations are subject to the fiduciary duties of the respective board of
directors of KCS and Grupo TMM.

     Indemnification

     The representations and warranties of the Sellers and KCS survive for three
to five years.  The Sellers have jointly and severally  agreed to indemnify KCS,
the surviving  corporation and each of their subsidiaries,  and their respective
officers,   directors,    employees,   members,    stockholders,    agents   and
representatives  harmless  from and against all  losses,  damages,  liabilities,
claims, demands, obligations,  deficiencies,  payments, judgments,  settlements,
costs and expenses of any nature whatsoever ("Losses") resulting from or arising
out of any inaccuracy or misrepresentation  in, or breach of, any representation
or warranty of Sellers in  connection  with the  Acquisition  Agreement,  or any
breach or  nonfulfillment  of any covenant or agreement of any of the Sellers in
connection with the  Acquisition  Agreement,  or any claims,  causes of actions,
rights asserted or demands made by any third parties arising from or relating to
any  of  the  foregoing.  The  Sellers'  indemnification   obligations  for  any
inaccuracy or misrepresentation  in, or breach of any representation or warranty
regarding Grupo TFM or its subsidiaries is limited to 51% of Losses  aggregating
$5 million or more.  This limitation is not applicable to any Losses arising out
of or  resulting  from any action or  omission  on the part of any Seller or its
affiliate that involved a crime, fraud, willful misconduct or gross negligence.

     KCS has agreed to indemnify  the Sellers,  each of their  subsidiaries  and
each of their respective officers, directors,  employees, members, stockholders,
agents and representatives from and against all Losses resulting from or arising
out of any inaccuracy or misrepresentation  in, or breach of, any representation
or warranty of KCS in connection with the Acquisition  Agreement,  or any breach
or  nonfulfillment  of any covenant of KCS in  connection  with the  Acquisition
Agreement,  or any claims, causes of actions, rights asserted or demands made by
any third  parties  arising  from or  relating  to any of the  foregoing.  KCS's
indemnification  obligations  are limited to Losses  aggregating  $10 million or
more.  This  limitation  is not  applicable  to  any  Losses  arising  out of or
resulting  from any action or omission on the part of KCS or its affiliate  that
involved a crime, fraud, willful misconduct or gross negligence.
<PAGE>

The Ancillary Agreements

     A number of ancillary agreements have been, or will prior to the closing of
the  Acquisition  be,  entered  into to  carry  out  certain  objectives  of the
Acquisition Agreement and the Acquisition. These ancillary agreements include:

          o    The Stock Purchase Agreement discussed below;

          o    The Stockholders' Agreement to be entered into by KCS, Grupo TMM,
               TMM Holdings,  TMM Multimodal and certain principal  stockholders
               of Grupo TMM (the  "Grupo  TMM  Principal  Stockholders"),  which
               contains   standstill   provisions,   restrictions   on  transfer
               provisions  and  pre-emptive  rights  provisions  with respect to
               Grupo TMM, TMM Holdings, TMM Multimodal,  the Grupo TMM Principal
               Stockholders and their respective affiliates  (collectively,  the
               "TMM  Holders").   The  Stockholders'   Agreement  also  contains
               corporate   governance   provisions   involving  KCS,   including
               provisions  regarding  the  selection  of directors of KCS which,
               among other things, give TMM Holders the right to elect up to two
               directors  of KCS based upon their level of  ownership of Class A
               Common Stock.  The  Stockholders'  Agreement also contains voting
               agreement  provisions pursuant to which the TMM Holders will vote
               their shares of KCS voting securities in favor of the KCS Board's
               slate of director nominees and against any proposal to remove any
               director. Subject to specific termination provisions contained in
               the  Stockholders'  Agreement,  the entire  Agreement (with a few
               exceptions) terminates when the TMM Holders ownership falls below
               40% of the Voting Securities  initially  acquired pursuant to the
               Merger,  or the Class A nominees are not elected to the KCS Board
               (except for good cause).

          o    The  Registration  Rights  Agreement  to be entered  into by KCS,
               Grupo  TMM,  TMM  Holdings,  TMM  Multimodal  and the  Grupo  TMM
               Principal Stockholders, will provide Grupo TMM, TMM Holdings, TMM
               Multimodal,   the  Grupo  TMM  Principal   Stockholders  and  any
               Permitted  Transferee  (as  defined  in the  Registration  Rights
               Agreement)    (collectively,    the   "Holders")   with   certain
               registration  rights  with  respect  to the  shares of KCS common
               stock  (i)  issuable  upon  conversion  of the KCS Class A Common
               Stock,  (ii)  issued  in lieu of cash at  closing,  (iii)  issued
               pursuant  to  the  Consulting  Agreement  and  (iv)  acquired  on
               pre-emptive  exercises.  Beginning on the 180th day following the
               consummation of the Acquisition, the Holders shall have the right
               to request, and KCS shall use commercially  reasonable efforts to
               effect,  six  demand  registrations  (with one  additional  shelf
               registration  if KCS issues  equity in lieu of cash at  Closing).
               KCS can delay filing registrations under certain events described
               in the Registration Rights Agreement.

          o    The  Consulting  Agreement  to be  entered  into  by KCS  and the
               consulting firm of Jose Serrano Segovia (the  "Consulting  Firm")
               provides for the Consulting  Firm to provide  certain  consulting
               services  to the KCS  board  of  directors  and  Chief  Executive
               Officer  relating  to the Mexican  portion of KCS's rail  network
               operations,  including its customers  and  suppliers,  regulatory
               matters and regarding the Mexican  railroad  industry in general.
               The  Consulting  Agreement  has an  initial  term of three  years
               beginning  on the  closing  date  of the  Acquisition  Agreement,
               unless earlier  terminated under the provisions of the Consulting
               Agreement, and may be extended by KCS for an additional year upon
               notice to the Consulting  Firm.  Under the Consulting  Agreement,
               KCS will pay to the Consulting Firm an annual fee of $600,000. In
               addition,  KCS will grant to the Consulting Firm 2,100,000 shares
               of KCS  restricted  common  stock,  subject  to  certain  vesting
               provisions contained in the Consulting Agreement.  If KCS extends
               the initial term of the Consulting  Agreement,  KCS will grant to
               Consulting  Firm an additional  525,000  shares of KCS restricted
               common  stock.   The  Consulting
<PAGE>

               Agreement contains certain restrictions on transfer of the shares
               of KCS restricted common stock received under the Agreement.

          o    The Marketing and Services  Agreement to be entered into by Grupo
               TMM, TFM and KCS,  provides for the parties to enter into various
               most favored nations provisions,  requiring,  among other things,
               (i) KCS to provide  certain  services to Grupo TMM on terms which
               are no less  favorable  than the terms provided to third or forth
               party  logistics  companies;  (ii) that  Grupo TMM shall have the
               right  to  be  the  exclusive  provider  of  Road-Railer  freight
               services  over TFM's rail system within  Mexico;  (iii) Grupo TMM
               shall have the right,  but not the  obligation,  to operate KCS's
               intermodal terminals to the extent that KCS determines to utilize
               a third party to operate  such within  Mexico,  the terms of such
               operations  subject to mutual agreement of Grupo TMM and KCS; and
               (iv) that  Grupo  TMM shall  have the right to make a bid for the
               provision  of certain  transportation  related  services,  if TFM
               determines  to have such  services  provided by any  unaffiliated
               third party in Mexico or the United  States.  The initial term of
               the  Marketing  and  Services  Agreement  is five  years from the
               Effective Date (as defined in the Acquisition Agreement), subject
               to automatic renewal for periods of one year unless terminated by
               Grupo TMM or KCS.

          o    According to the terms of an  Agreement,  dated June 9, 1997,  by
               and among the Federal  Government  of the Mexican  States,  Grupo
               TFM,  Grupo  TMM and  KCS  (the  "Put  Agreement"),  the  Mexican
               government  has the right to sell its 20% interest in TFM through
               a public  offering  on October  31, 2003 (or prior to October 31,
               2003,  with the consent of Grupo TFM).  If, on October 31,  2003,
               the Mexican  government  has not sold all of its capital stock in
               TFM, Grupo TFM is obligated to purchase the capital stock. In the
               event that Grupo TFM does not purchase  the Mexican  government's
               20%  interest  in TFM,  Grupo TMM and KCS,  will be  jointly  and
               severally   obligated  to  purchase   the  Mexican   government's
               remaining interest in TFM. Pursuant to an Agreement of Assignment
               and Assumption of Rights,  Duties and Obligations,  to be entered
               into by and among Grupo TMM,  KCS, and Grupo TFM,  Grupo TMM will
               assign and transfer to KCS,  and KCS will accept and assume,  all
               of Grupo TMM's rights, duties and obligations with respect to the
               purchase of the put shares under the Put Agreement.


The Stock Purchase Agreement

     Upon  the  terms  and  subject  to the  conditions  of the  Stock  Purchase
Agreement,  dated as of April 20, 2003, by and among KCS, Grupo TMM and TFM, KCS
will purchase from TFM 51% of the outstanding  shares of Mexrail, a wholly-owned
subsidiary of TFM, for  $32,680,000.  In addition,  KCS has an exclusive  option
until December 31, 2005 to purchase the remaining  outstanding shares of Mexrail
as of the date of the  exercise  of the  option.  KCS will  deposit  the initial
purchased shares of Mexrail into an irrevocable  voting trust pending  obtaining
approval by the STB of KCS's request to acquire control of Tex-Mex. Tex-Mex is a
wholly-owned subsidiary of Mexrail.

     Conditions to Closing Obligations

     The  obligations  of KCS  and  Grupo  TFM  to  consummate  the  transaction
contemplated  by the  Stock  Purchase  Agreement  are  subject  to a  number  of
conditions, including, among others:

          o    All governmental approvals,  including the approval by the STB of
               KCS's  acquisition of control of Tex-Mex,  required to consummate
               the  transaction  contemplated  by this Agreement shall have been
               obtained.
<PAGE>

          o    There shall be no injunction,  restraining  order or order of any
               nature by any court of competent  jurisdiction  that prevents the
               consummation  of  the  transaction   contemplated  by  the  Stock
               Purchase Agreement.
          o    KCS shall have  received  the  resignations  of each  director of
               Mexrail and Tex-Mex.
          o    The boards of directors  of each of Grupo TMM,  Grupo TFM and KCS
               must have approved the execution of the Stock Purchase  Agreement
               and authorized the  consummation of the transaction  contemplated
               thereby.
          o    TFM shall have  received a fairness  opinion  complying  with the
               requirements of the agreements listed in the disclosure  schedule
               to the Stock Purchase Agreement.

     Repurchase Right

     TFM has a right to  repurchase  all of the shares of Mexrail  capital stock
acquired by KCS at any time for the purchase  price paid by KCS,  subject to any
STB orders or directions. Upon any such repurchase, the Stock Purchase Agreement
automatically  terminates.  If not exercised within two years of the date of the
Stock Purchase Agreement, TFM's repurchase right expires.

     Termination

     The Stock Purchase Agreement may be terminated as follows:

          o    By mutual written consent of all of the parties at any time prior
               to the  closing of the initial  purchase  of 51% of Mexrail  (the
               "Initial Closing");

          o    KCS may terminate the Stock Purchase  Agreement by written notice
               to Grupo TMM and TFM at any time prior to the Initial  Closing in
               the  event   Grupo  TMM  or  TFM  has   breached   any   material
               representation,   warranty  or  covenant  contain  in  the  Stock
               Purchase  Agreement in any material way and has continued without
               cure for a period of 30 days after notice of the breach; and

          o    Grupo TMM and TFM may  terminate  the  Stockholders  Agreement by
               written notice to KCS at any time prior to the Initial Closing in
               the event KCS has breached any material representation,  warranty
               or  covenant  contain  in the  Stock  Purchase  Agreement  in any
               material  way and has  continued  without cure for a period of 30
               days after notice of the breach.

     Indemnification

         Grupo TMM and TFM have jointly and severally agreed to indemnify KCS
from and against all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses ("Adverse
Consequences") KCS may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences KCS may suffer after the end
of any applicable survival period) resulting from, arising out of, or caused by
the breach by either Grupo TMM or TFM of any of its representations, warranties
or covenants. The obligation of Grupo TMM and TFM to indemnify KCS for any
breach of representation or warranty shall be limited to 51% of the Adverse
Consequences and then only to the extent that such 51% of the Adverse
Consequences aggregating $2 million or more. This limitation is not applicable
to any Adverse Consequences arising out of or resulting from any action or
omission on the part of Grupo TMM or TFM or any of their respective affiliates
that involve a crime, fraud, willful misconduct or gross negligence.
<PAGE>


     KCS has agreed to indemnify  Grupo TMM or TFM from and against the entirety
of any Adverse  Consequences  that Grupo TMM or TFM may suffer through and after
the date of the claim for  indemnification  (including any Adverse  Consequences
Grupo TMM or TFM may suffer  after the end of any  applicable  survival  period)
resulting from,  arising out of, relating to, in the nature of, or caused by the
breach.

                                      * * *

                     DESCRIPTION OF THE CLASS A COMMON STOCK

     Shares of Class A Common Stock are to be issued pursuant to the Acquisition
Agreement and the transactions contemplated thereby. Additional shares of Class
A Common Stock may be issued pursuant to the Consulting Agreement. The Class A
Common Stock and the shares of common stock issuable upon conversion of the
Class A Common Stock will be subject to the rights and obligations contained in
the amended and restated certificate of incorporation, to be filed upon
occurrence of the Merger, and the Stockholders' Agreement.

     All capitalized terms used in this "Description of the Class A Common
Stock" section and not otherwise defined shall have the meanings set forth in
the Stockholders' Agreement and form of the amended and restated certificate of
incorporation attached as Exhibit A to the Acquisition Agreement.

Dividend Rights

     When and as dividends or other distributions are declared,  whether payable
in cash,  in property or in shares of stock of the  Company,  the holders of the
Class A Common Stock and common stock shall be entitled to share equally,  share
for share, in such dividends or other  distributions  as if all such shares were
of a single class.

Terms of Conversion

     The Class A Common Stock will be convertible into an equal number of shares
of common stock at any time, upon the option of holders,  and mandatorily,  upon
the  occurrence of certain  conditions.  Shares of Class A Common Stock shall be
converted  automatically,  without any action on the part of any Person, into an
equal  number of shares of common  stock upon the  occurrence  of the  following
events:  (i) a Transfer by any TMM Holder of any shares of Class A Common  Stock
to a  Person  other  than  Grupo  TMM,  TMM  Holdings,  TMM  Multimodal,  or the
stockholders  of Grupo TMM who will have  executed the  Stockholders'  Agreement
("Grupo TMM Principal  Stockholders")  (collectively,  the "TMM Holders"), or an
entity which is an Affiliate of any of the TMM Holders; (ii) on the first day on
which the TMM  Holders,  in the  aggregate,  cease to  beneficially  own, in the
aggregate,  at least 40% of the  Voting  Securities  initially  acquired  by TMM
Multimodal  pursuant to the Merger  contemplated by the  Acquisition  Agreement;
(iii) a Change of  Control of the  Company;  or (iv) a Change of Control of such
TMM  Holder,  if after  such  Change of  Control  a  Competitor  has  Beneficial
Ownership of more than a majority of the Total Voting Power of such TMM Holder.

     In order to facilitate optional conversions and transfers of Class A Common
Stock  (and,   except  for  Transfers  to  Affiliates  in  accordance  with  the
Stockholders'  Agreement,  the conversion of such shares into common stock), any
TMM  Holder  shall,  at its  option,  deliver  written  notice  of the  proposed
conversion  or  transfer,   together  with  the   certificate  or   certificates
representing  such shares to be  converted  and/or  transferred,  to  Conversion
Agent. Following any automatic conversion, the share or shares of Class A Common
Stock so converted shall cease to be outstanding  (notwithstanding the fact that
the holder or holders may not have  surrendered  the certificate or certificates
representing such Class A Common Stock for conversion),  and such certificate or
certificates   shall  thereafter   represent  solely  the
<PAGE>

right to receive a certificate  or  certificates  for common stock issuable upon
conversion  of the Class A Common  Stock so  converted,  upon  surrender of such
certificate or certificates to the Conversion Agent.

Voting Rights

     Each holder of Class A Common  Stock shall be entitled to one vote for each
share of such  stock  held by such  holder.  Each  outstanding  share of Class A
Common Stock shall be entitled to vote on each matter on which the  stockholders
of the Company shall be entitled to vote. However,  with respect to the election
of directors  other than the Class A Directors  (described  below),  the Class A
Common  Stock  shall be voted in favor of nominees  recommended  by the board of
directors who were nominated in compliance  with Article V of the  Stockholders'
Agreement.

     Voting separately as a class, the holders of the Class A Common Stock shall
have the right to elect Class A Director(s)  as follows:  (i) from and after the
effectiveness  of the amended and restated  certificate of  incorporation  until
such time as the TMM Holders cease to beneficially own in the aggregate at least
75% of the Voting  Securities  initially  acquired  by MM pursuant to the Merger
contemplated by the Acquisition  Agreement (80% if a Change of Control of TMM or
any TMM Holder shall have occurred),  two members of the board of directors will
be  elected  by the  holders  of the Class A Common  Stock  voting as a separate
class;  (ii) at such time as the TMM Holders  cease to  beneficially  own in the
aggregate  at  least  75% of the  Voting  Securities  initially  acquired  by MM
pursuant  to the Merger  contemplated  by the  Acquisition  Agreement  (80% if a
Change of Control of TMM or any TMM Holder  shall have  occurred)  and  provided
that such TMM Holders continue to beneficially own in the aggregate at least 40%
of the  Voting  Securities  initially  acquired  by MM  pursuant  to the  Merger
contemplated  by the  Acquisition  Agreement,  the number of directors which the
holders  of Class A Common  Stock  have the right to elect  voting as a separate
class  will be  decreased  from two to one;  and  (iii) at such  time as the TMM
Holders  cease to  beneficially  own in the aggregate at least 40% of the Voting
Securities  initially acquired by MM pursuant to the Merger  contemplated by the
Acquisition  Agreement,  the right of the holders of Class A Common Stock voting
as a  separate  class to elect  any  member  of the  board  of  directors  shall
terminate.  Notwithstanding  any of the  above to the  contrary,  if a Change of
Control of Grupo TMM or any TMM Holder shall have occurred and the acquiror is a
Competitor,  the  right  of the  holders  of Class A Common  Stock  voting  as a
separate  class  to  elect  any  member(s)  of  the  board  of  directors  shall
immediately terminate.

Liquidation Rights

     In the event of any voluntary or  involuntary  liquidation,  dissolution or
winding up of the affairs of the  Company,  holders of the Class A Common  Stock
and common stock shall be entitled to share  ratably  according to the number of
shares held by them, in all assets of the Company  available for distribution to
its stockholders.

Preemption Rights

     The holders of Class A Common Stock shall have preemptive rights to acquire
additional  shares of Class A Common  Stock in the event the Company  authorizes
the issuance or sale of any shares of common stock or any securities  containing
options  or rights to  acquire  any  shares of  common  stock  (other  than as a
dividend on the outstanding common stock).  Notwithstanding  the foregoing,  the
holders of Class A Common  Stock do not have  preemptive  rights with respect to
issuances of common stock  (including  for this purpose,  options,  warrants and
other  securities  into or  exercisable  for common  stock)  issued:  (i) to the
Company's employees, directors,  consultants, agents, independent contractors or
other service providers in connection with a Plan existing on the date hereof or
a Plan  approved by the board of directors  and adopted by the Company after the
date hereof;  (ii) upon the  conversion of Class A Common Stock;  (iii) upon the
exercise  of  any  options,  warrants,  or  exchangeable  securities  which  are
outstanding
<PAGE>

as  of  the  effective   date  of  the  amended  and  restated   certificate  of
incorporation  hereof;  or (iv) in connection  with the  acquisition (by merger,
consolidation,  acquisition  of assets or equity  interests or otherwise) of the
equity interests or assets of another Person.

     The Company shall first notify  then-existing TMM Holders of Class A Common
Stock of any proposed  transaction  triggering  preemptive rights of the Class A
Common Stock and offer to sell to each such Person a number of shares of Class A
Common Stock (or, as applicable,  options,  warrants or other securities into or
exercisable  for  Class A Common  Stock)  determined  according  to the  formula
specified  in the amended and  restated  certificate  of  incorporation.  To the
extent that any TMM Holder elects not to participate in such preemptive  rights,
each of the other TMM  Holders  shall have a pro rata right to  purchase  at the
same price and on the same terms and conditions the Voting Securities which such
non-participating  TMM Holder had the right but  elected  not to  purchase.

     The  preemptive  rights of the TMM  Holders of Class A Common  Stock  shall
immediately  and  irrevocably  terminate on the date that the TMM Holders do not
beneficially  own in the  aggregate  at  least  40%  of  the  Voting  Securities
initially acquired by TMM Multimodal pursuant to the Acquisition Agreement.

Transfer Restrictions

     For a period of five years from and after the  effectiveness of the amended
and restated  certificate of incorporation,  the TMM Holders shall not, directly
or indirectly,  alone or in concert with others, sell, assign, transfer, pledge,
hypothecate,  otherwise subject to any lien, grant any option with respect to or
otherwise   dispose  of  any   interest  in  (or  enter  into  an  agreement  or
understanding   with  respect  to  the  foregoing)  any  Voting   Securities  (a
"Disposition") to a Competitor.  Disposition  pursuant to a Public Offering or a
Rule 144  Transaction  will not be deemed to  violate  this  prohibition  if the
selling TMM Holder(s) follow appropriate and reasonable  procedures  designed to
prevent the sale of such Voting Securities to any Competitor. After the earliest
of (i) five years following the date of the amended and restated  certificate of
incorporation,  or (ii) the first date on which the TMM Holders beneficially own
in the aggregate,  directly or indirectly and alone or as part of a Group,  less
than 15% of the outstanding  Voting Securities of the Company,  a TMM Holder may
propose to sell Voting  Securities to a  Competitor;  provided the Company shall
have the right (but not the  obligation) to purchase,  in whole but not in part,
such Voting  Securities at a per share cash purchase price equal to the purchase
price in the  agreement  between the selling TMM Holder and a  Competitor.  This
purchase right shall be  assignable,  in whole or in part, by the Company to any
other Person, but no such assignment shall relieve the Company of its obligation
to assure payment of the purchase price for any Voting  Securities as to which a
notice of election to exercise the Right of First Refusal is made by the Company
or any such assignee.

     For a period of five years from and after the  effectiveness of the amended
and restated  certificate  of  incorporation,  each of the TMM Holders shall not
effect a Disposition of Voting  Securities to any Affiliate of either Grupo TMM,
TMM  Holdings or TMM  Multimodal  or any  Affiliate  of any Grupo TMM  Principal
Stockholders unless such Affiliate agrees in writing to be bound by the terms of
the Stockholders' Agreement.  The TMM Holders shall remain responsible,  jointly
and severally, for any breaches of the Stockholders' Agreement by such Affiliate
(provided that any TMM Holder which is a Grupo TMM Principal  Stockholder  shall
be  severally  responsible  only for  breaches by an  Affiliate of the Grupo TMM
Principal  Stockholder to which such Grupo TMM Principal  Stockholder  effects a
Distribution).

         Subject to the foregoing transfer restrictions, TMM Holders may sell
any or all Voting Securities beneficially owned by such Person provided that:
(i) no Disposition that in the aggregate represents 5% or more of the
outstanding Voting Securities shall be made to any Person other than a Person
who is eligible to file reports pursuant to Rule 13d-1 under the Exchange Act (a
"13G Filer"), unless such Person would
<PAGE>

not be so  eligible  with  respect to the Voting  Securities  acquired  from the
Disposition;  and (ii) no Disposition of Voting Securities that in the aggregate
represents 5% or more of the outstanding  Voting Securities shall be made to any
13G Filer  unless  (a) such 13G Filer  would  continue  to be  eligible  to file
reports  pursuant  to Section  13G under the  Exchange  Act with  respect to the
Voting Securities after giving effect to the proposed acquisition of such Voting
Securities; and (b) the selling TMM Holder shall have delivered a written notice
to the  Company  advising  the  Company of the number of Voting  Securities  the
seller  desires  to  sell  and  the  terms,  including  price,  of the  proposed
transaction and the Company has been provided the right (but not the obligation)
to purchase,  in whole or in part,  such Voting  Securities  at a per share cash
purchase price equal to the purchase price in the proposed transaction.

     Notwithstanding  any provision of the amended and restated  certificate  of
incorporation  to the contrary,  no  Disposition  shall be made to any Person or
Group that would,  together with such Person's  Affiliates  and  Associates  and
after giving effect to the acquisition of such Voting  Securities,  beneficially
own or have the right to acquire  more than 15% of the Total Voting Power of the
Company.

     TMM Holders shall be permitted to make a Disposition,  notwithstanding  any
contrary provision in the amended and restated certificate of incorporation,  in
connection with any tender or exchange offer made by an unaffiliated third party
to acquire KCS common stock so long as certain conditions are satisfied.

     The transfer  restrictions  imposed by the amended and restated certificate
of incorporation  (with the exception of the Company's right of first refusal in
the event a TMM  Holder  intends  to sell  shares  of Class A Common  Stock to a
Competitor,  which shall survive indefinitely) shall immediately and irrevocably
terminate upon the earlier of the first date the TMM Holders beneficially own in
the aggregate less than 15% of the outstanding  Voting Securities of the Company
for at least 30  consecutive  days, or the  occurrence of a Change of Control of
the Company.

Pledges

     Subject to the transfer restrictions  contained in the amended and restated
certificate of incorporation, a TMM Holder may pledge or hypothecate as security
for  any  indebtedness  or  other  obligations  any  or  all  Voting  Securities
beneficially owned by such Person; provided that such TMM Holder obtains written
consent  from the pledgee that upon the  occurrence  of an event which gives the
pledgee the right to foreclose on the pledged  Voting  Securities  ("Foreclosure
Event") such pledgee shall provide to the Company  prompt written notice of such
Foreclosure Event and provide the Company the right to purchase,  in whole or in
part,  such Voting  Securities at a price  determined  in  accordance  with such
provision  of the  amended  and  restated  certificate  of  incorporation.  This
purchase right shall be  assignable,  in whole or in part, by the Company to any
other Person, but no such assignment shall relieve the Company of its obligation
to assure  payment of the purchase  price for any Voting  Securities as to which
the Company has delivered such a written notice.



In connection with the proposed transaction, Kansas City Southern ("KCS") will
file relevant materials with the Securities and Exchange Commission ("SEC"),
including a proxy statement soliciting shareholder approval of certain actions
in connection with the transaction. Shareholders are urged to read the proxy
statement, as well as any amendments and supplements to the proxy statement (if
and when they become available) and any other relevant documents filed with the
SEC, because they will contain important information about the transaction.
Shareholders and investors may obtain the proxy statement and any other relevant
documents free of charge at the SEC's Internet web site at www.sec.gov.
Shareholders may also obtain free of charge the proxy statement and any other
relevant documents by contacting the office of the Corporate Secretary at
<PAGE>

KCS's principal executive offices at (816) 983-1538.  Written requests should be
mailed to P.O. Box 219335,  Kansas City,  Missouri  64121-9335 (or if by federal
express or other form of express delivery to 427 West 12th Street,  Kansas City,
Missouri 64105).  Such proxy statement is not currently  available.  KCS and its
directors  and  executive  officers  may be  deemed  to be  participants  in the
solicitation  of proxies  from KCS  shareholders  with  respect to  approval  of
certain actions in connection with the transaction.  Information regarding these
directors and executive officers and their beneficial ownership interests in KCS
can be found in KCS's proxy  statement  on Schedule  14A,  filed with the SEC on
April 4, 2003, in connection  with the 2003 annual meeting of KCS  shareholders.
Investors  may obtain  additional  information  regarding  the interests of such
participants  by  reading  the  proxy  statement  filed in  connection  with the
transaction when it becomes available.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.


                                     Kansas City Southern


Date: May 1, 2003                  By:
                                      ------------------------------------------
                                                  Louis G. Van Horn
                                           Vice President and Comptroller
                                           (Principal Accounting Officer)
[{"type": "8-K", "sequence": "1", "filename": "propaqui8k.txt", "description": "PROPOSED AQUISITION", "secsgml_size_bytes": 51008}]
{"company-data": {"conformed-name": "KANSAS CITY SOUTHERN", "cik": "0000054480", "assigned-sic": "4011", "irs-number": "440663509", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-04717", "film-number": "03679627"}, "business-address": {"street1": "427 WEST 12TH STREET", "city": "KANSAS CITY", "state": "MO", "zip": "64105", "phone": "8169831303"}, "mail-address": {"street1": "427 WEST 12TH STREET", "city": "KANSAS CITY", "state": "MO", "zip": "64105"}, "former-company": {"former-conformed-name": "KANSAS CITY SOUTHERN INDUSTRIES INC", "date-changed": "19920703"}}
SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported):
                                   May 1, 2003

                              KANSAS CITY SOUTHERN
               (Exact name of company as specified in its charter)

         DELAWARE                     1-4717                   44-0663509
----------------------------  -------------------------  -----------------------
(State or other jurisdiction  (Commission file number)        (IRS Employer
       of incorporation)                                  Identification Number)

                427 West 12th Street, Kansas City, Missouri 64105
               (Address of principal executive offices) (Zip Code)

                Company's telephone number, including area code:
                                (816) 983 - 1303

                                 Not Applicable
          (Former name or former address if changed since last report)
Item 9.  Regulation FD Disclosure

Kansas City Southern ("KCS" or "Company") is furnishing under Item 9 of this
Current Report on Form 8-K the information set forth below which was included in
a private placement offering memorandum under Rule 144A. The securities offered
in such private placement have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. The
information furnished under this Item 9 does not constitute an offer to sell, or
the solicitation of an offer to buy, any security. The information included in
this Current Report on Form 8-K is furnished pursuant to Item 9 and shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that Section.

                              PROPOSED ACQUISITIONS

         On April 21, 2003, KCS and Grupo TMM announced a series of agreements
that will, following shareholder and regulatory approval, place KCSR, Tex Mex
and TFM under the common control of a single transportation holding company,
NAFTA Rail, to be headquartered in Kansas City, Missouri. Grupo TFM holds an 80%
interest in TFM, which holds a 100% interest in Mexrail. Mexrail wholly-owns
Tex-Mex.

         Under an Acquisition Agreement, dated April 20, 2003 (the "Acquisition
Agreement"), upon the terms and subject to the conditions of the Acquisition
Agreement, KCS would acquire all of the interest of TMM Multimodal in Grupo TFM
for $200 million (up to $80 million of which may be paid with KCS equity) and 18
million shares of Class A Common Stock of KCS (the "Acquisition"). See
"Description of the Acquisitions--The Acquisition Agreement." Subject to
receiving shareholder approval, KCS would change its name to "NAFTA Rail."
Consummation of the Acquisition is subject to certain regulatory and other
consents, approvals and filings. The obligations of KCS and Grupo TMM to
complete the Acquisition are subject to a number of conditions. In the event the
Acquisition Agreement is terminated under specific circumstances, a termination
fee of $18 million will be paid by KCS to Grupo TMM, or by Grupo TMM to KCS,
depending upon such circumstances. Provided the Acquisition has occurred, KCS
may be required to make additional payments to Grupo TMM based on a resolution
of certain contingencies. A number of ancillary agreements will be entered into
prior to the closing of the Acquisition to carry out certain objectives of the
Acquisition Agreement and the Acquisition. Upon the terms and subject to the
conditions of a Stock Purchase Agreement, dated as of April 20, 2003 (the "Stock
Purchase Agreement"), KCS will purchase from TFM 51% of the outstanding shares
of Mexrail, a wholly-owned subsidiary of TFM, for $32,680,000. In addition, KCS
has an exclusive option through December 31, 2005 to purchase the remaining
outstanding shares of Mexrail as of the date of the exercise of the option. KCS
will deposit the initial purchased shares of Mexrail into an irrevocable voting
trust pending obtaining approval by the Surface Transportation Board ("STB") of
KCS's request to acquire control of Tex-Mex. TFM has repurchase rights for a
two-year period with respect to the Mexrail shares purchased by KCS. The
obligations of KCS and TFM to consummate the transaction under the Stock
Purchase Agreement are subject to a number of conditions.

         For a more detailed description of these matters, see "Description of
the Acquisitions."

                                      * * *
DESCRIPTION OF THE ACQUISITIONS

         KCS and Grupo TMM have announced a series of agreements which have been
approved by both respective boards of directors that will, following shareholder
and regulatory approval, place KCSR, Tex-Mex and TFM under the common control of
a single transportation holding company, NAFTA Rail. Grupo TFM holds an 80%
interest in TFM, which holds a 100% interest in Mexrail. Mexrail wholly-owns
Tex-Mex.

The Acquisition Agreement

         Upon the terms and subject to the conditions of the Acquisition
Agreement, dated April 20, 2003, by and among KCS, KARA Sub, Grupo TMM, TMM
Holdings and TMM Multimodal, KCS would acquire all of the interest of TMM
Multimodal in Grupo TFM for consideration to TMM Multimodal of $200 million and
18 million shares of KCS Class A Common Stock. The Acquisition (defined below)
will be accomplished in three steps, the "Stock Purchase," the "Subsidiary
Investment" and the "Merger" described below (and together comprising the
"Acquisition"), all occurring sequentially and virtually simultaneously as
follows:

(1)  The Stock  Purchase.  KARA Sub will purchase from TMM  Multimodal all Grupo
     TFM shares held by TMM  Multimodal,  consisting  of 25,500 shares of Series
     "A" fixed  capital  stock of Grupo TFM and  3,842,901  shares of Series "A"
     variable  capital stock of Grupo TFM. The purchase price to be paid by KARA
     Sub to TMM  Multimodal  at the  closing  for the  purchase of the Grupo TFM
     shares is: (i) $200  million  (up to $80  million of which may be paid,  at
     KCS's option upon 30 days' written notice, in shares of KCS common stock or
     KCS Class A Common Stock); and (ii) a subordinated  promissory note of KARA
     Sub in the principal amount of $25 million.  KCS has agreed to provide KARA
     Sub with  sufficient  funds to make all payments  required to be made by it
     under the Acquisition Agreement.

(2)  The Subsidiary  Investment.  Immediately following the Stock Purchase,  TMM
     Multimodal will purchase from KARA Sub 100 shares of KARA Sub common stock,
     representing  10% of the issued and  outstanding  shares of KARA Sub common
     stock, in  consideration  for delivery by TMM Multimodal to KARA Sub of the
     KARA Sub subordinated promissory note.

(3)  The Merger.  KARA Sub will then be merged into KCS in  accordance  with the
     General Corporation Law of the State of Delaware ("DGCL").  The Merger will
     be  consummated  by  filing a  certificate  of  merger  with  the  Delaware
     Secretary of State in accordance with the DGCL. At such time, the shares of
     KARA Sub held by TMM Multimodal will be converted into and exchanged for 18
     million shares of KCS Class A Common Stock. As a result of the Merger,  the
     separate  corporate  existence of KARA Sub will cease and KCS will continue
     as the surviving corporation. Subject to approval by KCS stockholders, upon
     the date and time of the  filing of the  Certificate  of  Merger,  KCS will
     change its name to "NAFTA  Rail" or such other name as shall be  determined
     by KCS and the capital stock of KCS  (including  the KCS common stock,  the
     $25 par value  preferred stock and the preferred stock offered hereby) will
     continue to be issued and  outstanding  as the capital  stock of NAFTA Rail
     without further action by any holder thereof.  Subject to listing  approval
     by the New York Stock  Exchange  ("NYSE"),  the NAFTA Rail common stock and
     the $25 par value preferred stock will trade on the NYSE.

     KCS's  restated  certificate of  incorporation  and Bylaws would be amended
appropriately.  The closing of the  Acquisition is dependent upon the closing of
each of the Stock Purchase, the Subsidiary Investment and the Merger.
Conditions to Obligations to Complete the Acquisition

     The  obligations  of KCS and  Grupo TMM to  complete  the  Acquisition  are
subject to a number of conditions, including, among others:

o    KCS must have obtained  approval of KCS  stockholders  of the amendments to
     KCS's  restated  certificate of  incorporation  and the issuance of Class A
     Common Stock;

o    All  consents,  waivers,  authorizations  and  approvals  required from all
     governmental  authorities  to  consummate  the  Acquisition  must have been
     obtained and remain  effective  as of the closing  date of the  Acquisition
     Agreement;

o    The  securities  to be issued  pursuant to the Merger,  and any  securities
     issued as  payment  of a portion  of the  purchase  price for the Grupo TFM
     shares  purchased by KARA Sub,  must have been  approved for listing by the
     NYSE;

o    Each of the Ancillary  Agreements (as described  below) must have been duly
     executed  and  delivered  by or on behalf of KCS and each of Grupo TMM, TMM
     Holdings and TMM Multimodal, as the case may be;

o    Grupo TMM must have received  consents from the holders of its  outstanding
     Notes due 2003 and Notes due 2006; and

o    There must not be any insolvency or bankruptcy  proceeding  pending against
     TMM Multimodal,  TMM Holdings or TFM that has been pending for more than 60
     days, and certain material adverse effects shall not have occurred.

     Termination

     The  Acquisition  Agreement may be  terminated  prior to the closing of the
Acquisition as follows:

o    By written consent of KCS and Grupo TMM;

o    By KCS or Grupo TMM if any order of any governmental  authority permanently
     prohibiting  the  consummation  of the  Acquisition  has  become  final and
     non-appealable or if any of the approvals of any governmental  authority to
     perform the transactions  contemplated by the Acquisition Agreement imposes
     any  condition or  requirement,  the  satisfaction  of which is  reasonably
     likely to have a material adverse effect on either KCS or Grupo TMM;

o    By KCS if any conditions to the  obligations  of KCS under the  Acquisition
     Agreement becomes  incapable of fulfillment  through no fault of KCS and is
     not waived by KCS;

o    By  Grupo  TMM if any  condition  to the  obligations  of  Grupo  TMM,  TMM
     Multimodal  and  TMM  Holdings  (collectively,  the  "Sellers")  under  the
     Acquisition  Agreement becomes incapable of fulfillment through no fault of
     Sellers and is not waived by Grupo TMM;

o    By KCS if Grupo TMM has experienced a change of control, or by Grupo TMM if
     KCS has experienced a change of control; and
o    By KCS or Grupo TMM if the closing of the Acquisition  does not occur on or
     prior to December 31, 2004 (the  "Termination  Date");  provided,  however,
     that the  Termination  Date may be extended by KCS and Grupo TMM by written
     agreement.

     A termination  fee of $18 million is payable in the event of termination of
the Acquisition  Agreement due to (i) a change of control of either KCS or Grupo
TMM, in which case the party  experiencing  the change of control  shall pay the
termination fee to the other party,  and (ii) the failure of the stockholders of
KCS or of Grupo TMM to approve the  Acquisition if at or prior to the meeting of
such stockholders to approve the Acquisition,  the board of directors of KCS, in
the case of the KCS  stockholders'  meeting,  or the board of directors of Grupo
TMM, in the case of the Grupo TMM stockholders' meeting, has failed to recommend
or has withdrawn and not reinstated its recommendation of the Acquisition,  then
the party whose  stockholders  have not approved the  Acquisition  shall pay the
termination fee to the other party.

         Required Regulatory and Other Consents, Approvals and Filings

         Certain regulatory approvals and filings and other consents are
required in connection with the closing of the Acquisition. These include, among
others:

     o    Prior  approval  of the  Mexican  Foreign  Investments  Commission  of
          control of Grupo TFM by a non-Mexican entity;
     o    Clearance  by the Mexican  Antitrust  Commission  of  anti-competitive
          concerns;
     o    Notice to the Mexican Ministry of Communications and Transportation;

     o    Filing with NYSE for listing of common stock issuable upon  conversion
          of Class A Common Stock;
     o    SEC clearance of proxy materials;
     o    Grupo TMM noteholder consents;
     o    Hart-Scott-Rodino  Act  filing  and  clearance  of  investment  by TMM
          Multimodal in KCS; and
     o    KCS  stockholder  approval of  amendments to restated  certificate  of
          incorporation and issuance of KCS equity.

     KCS has obtained an amendment to the New Credit Agreement.  The bank group,
led by JPMorgan Chase Bank as Agent, specifically approved amendments allowing:

          o    KCS (NAFTA Rail)  investment in further equity interests of Grupo
               TFM;

          o    KCS (NAFTA Rail) investment in equity interests  representing 51%
               of Mexrail's issued and outstanding capital stock;

          o    Use of KCS cash to acquire Mexrail.

     VAT Payments

     Provided  the  Acquisition  has  occurred  and  neither  KCS nor any of its
subsidiaries has purchased the TFM "Class III" shares  (representing  20% of the
capital stock of TFM) currently held by the Mexican  government upon exercise by
the Mexican government of its right to compel purchase of the shares of TFM held
by it (the "Put"),  as  compensation  for Grupo TMM's  services in obtaining the
final  settlement or resolution of TFM's claim against the Mexican  Treasury for
the refund of a value added tax ("VAT")
payment in the original  principal amount of 2,111,111,790  pesos ("VAT Claim"),
KCS  will  make  or  cause  TFM to make a cash  payment  (the  "VAT  Contingency
Payment")  to  Grupo  TMM as set  forth  below,  following  the  date  of  final
resolution of the VAT Claim, and the receipt by TFM or its designee of shares or
cash compensation received by TFM or its designee from the Mexican government on
the VAT Claim (the "VAT Payment").  The VAT Payment must consist of at least (i)
all of the TFM "Class III" shares  currently  held by the Mexican  government or
(ii) a cash payment or other property acceptable to the parties which has a fair
value equal to or greater than the Put purchase  price as calculated on the date
the VAT Payment is  received.  In such event,  KCS will,  at its option,  pay or
cause TFM to pay to Grupo TMM (iii) $100 million  within 90 days  thereafter  or
(iv) $50 million within 90 days  thereafter and an additional $55 million within
365 days  thereafter.  If the VAT  Payment  exceeds  the Put  purchase  price as
calculated on the date the VAT Payment is received, KCS will pay or cause TFM to
pay to Grupo TMM within 90 days after the VAT  Payment and final  resolution  of
the VAT Claim the first $25 million  received above the Put purchase price,  and
15% of any  additional  amount  received above the Put purchase price beyond the
first $25 million,  not to exceed $50 million. The VAT Contingency Payment shall
be made after  reducing  the value of VAT Payment by the amount of all  expenses
incurred by or on behalf of TFM in effecting  final  resolution of the VAT Claim
and receipt of the VAT Payment.

     Third Party Matters

     Until the filing of the  Certificate of Merger for the Merger,  neither KCS
nor Sellers can seek or entertain  other  offers with  respect to  acquisitions,
mergers  or  business  combinations  of KCS  or  KCSR,  and  TMM  Holdings,  TMM
Multimodal, Grupo TFM or any of their respective subsidiaries,  respectively. In
addition, Grupo TMM will not enter into any agreement concerning any acquisition
or purchase of a  controlling  equity  interest in Grupo TMM by any  competitor.
These limitations are subject to the fiduciary duties of the respective board of
directors of KCS and Grupo TMM.

     Indemnification

     The representations and warranties of the Sellers and KCS survive for three
to five years.  The Sellers have jointly and severally  agreed to indemnify KCS,
the surviving  corporation and each of their subsidiaries,  and their respective
officers,   directors,    employees,   members,    stockholders,    agents   and
representatives  harmless  from and against all  losses,  damages,  liabilities,
claims, demands, obligations,  deficiencies,  payments, judgments,  settlements,
costs and expenses of any nature whatsoever ("Losses") resulting from or arising
out of any inaccuracy or misrepresentation  in, or breach of, any representation
or warranty of Sellers in  connection  with the  Acquisition  Agreement,  or any
breach or  nonfulfillment  of any covenant or agreement of any of the Sellers in
connection with the  Acquisition  Agreement,  or any claims,  causes of actions,
rights asserted or demands made by any third parties arising from or relating to
any  of  the  foregoing.  The  Sellers'  indemnification   obligations  for  any
inaccuracy or misrepresentation  in, or breach of any representation or warranty
regarding Grupo TFM or its subsidiaries is limited to 51% of Losses  aggregating
$5 million or more.  This limitation is not applicable to any Losses arising out
of or  resulting  from any action or  omission  on the part of any Seller or its
affiliate that involved a crime, fraud, willful misconduct or gross negligence.

     KCS has agreed to indemnify  the Sellers,  each of their  subsidiaries  and
each of their respective officers, directors,  employees, members, stockholders,
agents and representatives from and against all Losses resulting from or arising
out of any inaccuracy or misrepresentation  in, or breach of, any representation
or warranty of KCS in connection with the Acquisition  Agreement,  or any breach
or  nonfulfillment  of any covenant of KCS in  connection  with the  Acquisition
Agreement,  or any claims, causes of actions, rights asserted or demands made by
any third  parties  arising  from or  relating  to any of the  foregoing.  KCS's
indemnification  obligations  are limited to Losses  aggregating  $10 million or
more.  This  limitation  is not  applicable  to  any  Losses  arising  out of or
resulting  from any action or omission on the part of KCS or its affiliate  that
involved a crime, fraud, willful misconduct or gross negligence.
The Ancillary Agreements

     A number of ancillary agreements have been, or will prior to the closing of
the  Acquisition  be,  entered  into to  carry  out  certain  objectives  of the
Acquisition Agreement and the Acquisition. These ancillary agreements include:

          o    The Stock Purchase Agreement discussed below;

          o    The Stockholders' Agreement to be entered into by KCS, Grupo TMM,
               TMM Holdings,  TMM Multimodal and certain principal  stockholders
               of Grupo TMM (the  "Grupo  TMM  Principal  Stockholders"),  which
               contains   standstill   provisions,   restrictions   on  transfer
               provisions  and  pre-emptive  rights  provisions  with respect to
               Grupo TMM, TMM Holdings, TMM Multimodal,  the Grupo TMM Principal
               Stockholders and their respective affiliates  (collectively,  the
               "TMM  Holders").   The  Stockholders'   Agreement  also  contains
               corporate   governance   provisions   involving  KCS,   including
               provisions  regarding  the  selection  of directors of KCS which,
               among other things, give TMM Holders the right to elect up to two
               directors  of KCS based upon their level of  ownership of Class A
               Common Stock.  The  Stockholders'  Agreement also contains voting
               agreement  provisions pursuant to which the TMM Holders will vote
               their shares of KCS voting securities in favor of the KCS Board's
               slate of director nominees and against any proposal to remove any
               director. Subject to specific termination provisions contained in
               the  Stockholders'  Agreement,  the entire  Agreement (with a few
               exceptions) terminates when the TMM Holders ownership falls below
               40% of the Voting Securities  initially  acquired pursuant to the
               Merger,  or the Class A nominees are not elected to the KCS Board
               (except for good cause).

          o    The  Registration  Rights  Agreement  to be entered  into by KCS,
               Grupo  TMM,  TMM  Holdings,  TMM  Multimodal  and the  Grupo  TMM
               Principal Stockholders, will provide Grupo TMM, TMM Holdings, TMM
               Multimodal,   the  Grupo  TMM  Principal   Stockholders  and  any
               Permitted  Transferee  (as  defined  in the  Registration  Rights
               Agreement)    (collectively,    the   "Holders")   with   certain
               registration  rights  with  respect  to the  shares of KCS common
               stock  (i)  issuable  upon  conversion  of the KCS Class A Common
               Stock,  (ii)  issued  in lieu of cash at  closing,  (iii)  issued
               pursuant  to  the  Consulting  Agreement  and  (iv)  acquired  on
               pre-emptive  exercises.  Beginning on the 180th day following the
               consummation of the Acquisition, the Holders shall have the right
               to request, and KCS shall use commercially  reasonable efforts to
               effect,  six  demand  registrations  (with one  additional  shelf
               registration  if KCS issues  equity in lieu of cash at  Closing).
               KCS can delay filing registrations under certain events described
               in the Registration Rights Agreement.

          o    The  Consulting  Agreement  to be  entered  into  by KCS  and the
               consulting firm of Jose Serrano Segovia (the  "Consulting  Firm")
               provides for the Consulting  Firm to provide  certain  consulting
               services  to the KCS  board  of  directors  and  Chief  Executive
               Officer  relating  to the Mexican  portion of KCS's rail  network
               operations,  including its customers  and  suppliers,  regulatory
               matters and regarding the Mexican  railroad  industry in general.
               The  Consulting  Agreement  has an  initial  term of three  years
               beginning  on the  closing  date  of the  Acquisition  Agreement,
               unless earlier  terminated under the provisions of the Consulting
               Agreement, and may be extended by KCS for an additional year upon
               notice to the Consulting  Firm.  Under the Consulting  Agreement,
               KCS will pay to the Consulting Firm an annual fee of $600,000. In
               addition,  KCS will grant to the Consulting Firm 2,100,000 shares
               of KCS  restricted  common  stock,  subject  to  certain  vesting
               provisions contained in the Consulting Agreement.  If KCS extends
               the initial term of the Consulting  Agreement,  KCS will grant to
               Consulting  Firm an additional  525,000  shares of KCS restricted
               common  stock.   The  Consulting
Agreement contains certain restrictions on transfer of the shares
               of KCS restricted common stock received under the Agreement.

          o    The Marketing and Services  Agreement to be entered into by Grupo
               TMM, TFM and KCS,  provides for the parties to enter into various
               most favored nations provisions,  requiring,  among other things,
               (i) KCS to provide  certain  services to Grupo TMM on terms which
               are no less  favorable  than the terms provided to third or forth
               party  logistics  companies;  (ii) that  Grupo TMM shall have the
               right  to  be  the  exclusive  provider  of  Road-Railer  freight
               services  over TFM's rail system within  Mexico;  (iii) Grupo TMM
               shall have the right,  but not the  obligation,  to operate KCS's
               intermodal terminals to the extent that KCS determines to utilize
               a third party to operate  such within  Mexico,  the terms of such
               operations  subject to mutual agreement of Grupo TMM and KCS; and
               (iv) that  Grupo  TMM shall  have the right to make a bid for the
               provision  of certain  transportation  related  services,  if TFM
               determines  to have such  services  provided by any  unaffiliated
               third party in Mexico or the United  States.  The initial term of
               the  Marketing  and  Services  Agreement  is five  years from the
               Effective Date (as defined in the Acquisition Agreement), subject
               to automatic renewal for periods of one year unless terminated by
               Grupo TMM or KCS.

          o    According to the terms of an  Agreement,  dated June 9, 1997,  by
               and among the Federal  Government  of the Mexican  States,  Grupo
               TFM,  Grupo  TMM and  KCS  (the  "Put  Agreement"),  the  Mexican
               government  has the right to sell its 20% interest in TFM through
               a public  offering  on October  31, 2003 (or prior to October 31,
               2003,  with the consent of Grupo TFM).  If, on October 31,  2003,
               the Mexican  government  has not sold all of its capital stock in
               TFM, Grupo TFM is obligated to purchase the capital stock. In the
               event that Grupo TFM does not purchase  the Mexican  government's
               20%  interest  in TFM,  Grupo TMM and KCS,  will be  jointly  and
               severally   obligated  to  purchase   the  Mexican   government's
               remaining interest in TFM. Pursuant to an Agreement of Assignment
               and Assumption of Rights,  Duties and Obligations,  to be entered
               into by and among Grupo TMM,  KCS, and Grupo TFM,  Grupo TMM will
               assign and transfer to KCS,  and KCS will accept and assume,  all
               of Grupo TMM's rights, duties and obligations with respect to the
               purchase of the put shares under the Put Agreement.

The Stock Purchase Agreement

     Upon  the  terms  and  subject  to the  conditions  of the  Stock  Purchase
Agreement,  dated as of April 20, 2003, by and among KCS, Grupo TMM and TFM, KCS
will purchase from TFM 51% of the outstanding  shares of Mexrail, a wholly-owned
subsidiary of TFM, for  $32,680,000.  In addition,  KCS has an exclusive  option
until December 31, 2005 to purchase the remaining  outstanding shares of Mexrail
as of the date of the  exercise  of the  option.  KCS will  deposit  the initial
purchased shares of Mexrail into an irrevocable  voting trust pending  obtaining
approval by the STB of KCS's request to acquire control of Tex-Mex. Tex-Mex is a
wholly-owned subsidiary of Mexrail.

     Conditions to Closing Obligations

     The  obligations  of KCS  and  Grupo  TFM  to  consummate  the  transaction
contemplated  by the  Stock  Purchase  Agreement  are  subject  to a  number  of
conditions, including, among others:

          o    All governmental approvals,  including the approval by the STB of
               KCS's  acquisition of control of Tex-Mex,  required to consummate
               the  transaction  contemplated  by this Agreement shall have been
               obtained.
o    There shall be no injunction,  restraining  order or order of any
               nature by any court of competent  jurisdiction  that prevents the
               consummation  of  the  transaction   contemplated  by  the  Stock
               Purchase Agreement.
          o    KCS shall have  received  the  resignations  of each  director of
               Mexrail and Tex-Mex.
          o    The boards of directors  of each of Grupo TMM,  Grupo TFM and KCS
               must have approved the execution of the Stock Purchase  Agreement
               and authorized the  consummation of the transaction  contemplated
               thereby.
          o    TFM shall have  received a fairness  opinion  complying  with the
               requirements of the agreements listed in the disclosure  schedule
               to the Stock Purchase Agreement.

     Repurchase Right

     TFM has a right to  repurchase  all of the shares of Mexrail  capital stock
acquired by KCS at any time for the purchase  price paid by KCS,  subject to any
STB orders or directions. Upon any such repurchase, the Stock Purchase Agreement
automatically  terminates.  If not exercised within two years of the date of the
Stock Purchase Agreement, TFM's repurchase right expires.

     Termination

     The Stock Purchase Agreement may be terminated as follows:

          o    By mutual written consent of all of the parties at any time prior
               to the  closing of the initial  purchase  of 51% of Mexrail  (the
               "Initial Closing");

          o    KCS may terminate the Stock Purchase  Agreement by written notice
               to Grupo TMM and TFM at any time prior to the Initial  Closing in
               the  event   Grupo  TMM  or  TFM  has   breached   any   material
               representation,   warranty  or  covenant  contain  in  the  Stock
               Purchase  Agreement in any material way and has continued without
               cure for a period of 30 days after notice of the breach; and

          o    Grupo TMM and TFM may  terminate  the  Stockholders  Agreement by
               written notice to KCS at any time prior to the Initial Closing in
               the event KCS has breached any material representation,  warranty
               or  covenant  contain  in the  Stock  Purchase  Agreement  in any
               material  way and has  continued  without cure for a period of 30
               days after notice of the breach.

     Indemnification

         Grupo TMM and TFM have jointly and severally agreed to indemnify KCS
from and against all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses ("Adverse
Consequences") KCS may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences KCS may suffer after the end
of any applicable survival period) resulting from, arising out of, or caused by
the breach by either Grupo TMM or TFM of any of its representations, warranties
or covenants. The obligation of Grupo TMM and TFM to indemnify KCS for any
breach of representation or warranty shall be limited to 51% of the Adverse
Consequences and then only to the extent that such 51% of the Adverse
Consequences aggregating $2 million or more. This limitation is not applicable
to any Adverse Consequences arising out of or resulting from any action or
omission on the part of Grupo TMM or TFM or any of their respective affiliates
that involve a crime, fraud, willful misconduct or gross negligence.
KCS has agreed to indemnify  Grupo TMM or TFM from and against the entirety
of any Adverse  Consequences  that Grupo TMM or TFM may suffer through and after
the date of the claim for  indemnification  (including any Adverse  Consequences
Grupo TMM or TFM may suffer  after the end of any  applicable  survival  period)
resulting from,  arising out of, relating to, in the nature of, or caused by the
breach.

                                      * * *

                     DESCRIPTION OF THE CLASS A COMMON STOCK

     Shares of Class A Common Stock are to be issued pursuant to the Acquisition
Agreement and the transactions contemplated thereby. Additional shares of Class
A Common Stock may be issued pursuant to the Consulting Agreement. The Class A
Common Stock and the shares of common stock issuable upon conversion of the
Class A Common Stock will be subject to the rights and obligations contained in
the amended and restated certificate of incorporation, to be filed upon
occurrence of the Merger, and the Stockholders' Agreement.

     All capitalized terms used in this "Description of the Class A Common
Stock" section and not otherwise defined shall have the meanings set forth in
the Stockholders' Agreement and form of the amended and restated certificate of
incorporation attached as Exhibit A to the Acquisition Agreement.

Dividend Rights

     When and as dividends or other distributions are declared,  whether payable
in cash,  in property or in shares of stock of the  Company,  the holders of the
Class A Common Stock and common stock shall be entitled to share equally,  share
for share, in such dividends or other  distributions  as if all such shares were
of a single class.

Terms of Conversion

     The Class A Common Stock will be convertible into an equal number of shares
of common stock at any time, upon the option of holders,  and mandatorily,  upon
the  occurrence of certain  conditions.  Shares of Class A Common Stock shall be
converted  automatically,  without any action on the part of any Person, into an
equal  number of shares of common  stock upon the  occurrence  of the  following
events:  (i) a Transfer by any TMM Holder of any shares of Class A Common  Stock
to a  Person  other  than  Grupo  TMM,  TMM  Holdings,  TMM  Multimodal,  or the
stockholders  of Grupo TMM who will have  executed the  Stockholders'  Agreement
("Grupo TMM Principal  Stockholders")  (collectively,  the "TMM Holders"), or an
entity which is an Affiliate of any of the TMM Holders; (ii) on the first day on
which the TMM  Holders,  in the  aggregate,  cease to  beneficially  own, in the
aggregate,  at least 40% of the  Voting  Securities  initially  acquired  by TMM
Multimodal  pursuant to the Merger  contemplated by the  Acquisition  Agreement;
(iii) a Change of  Control of the  Company;  or (iv) a Change of Control of such
TMM  Holder,  if after  such  Change of  Control  a  Competitor  has  Beneficial
Ownership of more than a majority of the Total Voting Power of such TMM Holder.

     In order to facilitate optional conversions and transfers of Class A Common
Stock  (and,   except  for  Transfers  to  Affiliates  in  accordance  with  the
Stockholders'  Agreement,  the conversion of such shares into common stock), any
TMM  Holder  shall,  at its  option,  deliver  written  notice  of the  proposed
conversion  or  transfer,   together  with  the   certificate  or   certificates
representing  such shares to be  converted  and/or  transferred,  to  Conversion
Agent. Following any automatic conversion, the share or shares of Class A Common
Stock so converted shall cease to be outstanding  (notwithstanding the fact that
the holder or holders may not have  surrendered  the certificate or certificates
representing such Class A Common Stock for conversion),  and such certificate or
certificates   shall  thereafter   represent  solely  the
right to receive a certificate  or  certificates  for common stock issuable upon
conversion  of the Class A Common  Stock so  converted,  upon  surrender of such
certificate or certificates to the Conversion Agent.

Voting Rights

     Each holder of Class A Common  Stock shall be entitled to one vote for each
share of such  stock  held by such  holder.  Each  outstanding  share of Class A
Common Stock shall be entitled to vote on each matter on which the  stockholders
of the Company shall be entitled to vote. However,  with respect to the election
of directors  other than the Class A Directors  (described  below),  the Class A
Common  Stock  shall be voted in favor of nominees  recommended  by the board of
directors who were nominated in compliance  with Article V of the  Stockholders'
Agreement.

     Voting separately as a class, the holders of the Class A Common Stock shall
have the right to elect Class A Director(s)  as follows:  (i) from and after the
effectiveness  of the amended and restated  certificate of  incorporation  until
such time as the TMM Holders cease to beneficially own in the aggregate at least
75% of the Voting  Securities  initially  acquired  by MM pursuant to the Merger
contemplated by the Acquisition  Agreement (80% if a Change of Control of TMM or
any TMM Holder shall have occurred),  two members of the board of directors will
be  elected  by the  holders  of the Class A Common  Stock  voting as a separate
class;  (ii) at such time as the TMM Holders  cease to  beneficially  own in the
aggregate  at  least  75% of the  Voting  Securities  initially  acquired  by MM
pursuant  to the Merger  contemplated  by the  Acquisition  Agreement  (80% if a
Change of Control of TMM or any TMM Holder  shall have  occurred)  and  provided
that such TMM Holders continue to beneficially own in the aggregate at least 40%
of the  Voting  Securities  initially  acquired  by MM  pursuant  to the  Merger
contemplated  by the  Acquisition  Agreement,  the number of directors which the
holders  of Class A Common  Stock  have the right to elect  voting as a separate
class  will be  decreased  from two to one;  and  (iii) at such  time as the TMM
Holders  cease to  beneficially  own in the aggregate at least 40% of the Voting
Securities  initially acquired by MM pursuant to the Merger  contemplated by the
Acquisition  Agreement,  the right of the holders of Class A Common Stock voting
as a  separate  class to elect  any  member  of the  board  of  directors  shall
terminate.  Notwithstanding  any of the  above to the  contrary,  if a Change of
Control of Grupo TMM or any TMM Holder shall have occurred and the acquiror is a
Competitor,  the  right  of the  holders  of Class A Common  Stock  voting  as a
separate  class  to  elect  any  member(s)  of  the  board  of  directors  shall
immediately terminate.

Liquidation Rights

     In the event of any voluntary or  involuntary  liquidation,  dissolution or
winding up of the affairs of the  Company,  holders of the Class A Common  Stock
and common stock shall be entitled to share  ratably  according to the number of
shares held by them, in all assets of the Company  available for distribution to
its stockholders.

Preemption Rights

     The holders of Class A Common Stock shall have preemptive rights to acquire
additional  shares of Class A Common  Stock in the event the Company  authorizes
the issuance or sale of any shares of common stock or any securities  containing
options  or rights to  acquire  any  shares of  common  stock  (other  than as a
dividend on the outstanding common stock).  Notwithstanding  the foregoing,  the
holders of Class A Common  Stock do not have  preemptive  rights with respect to
issuances of common stock  (including  for this purpose,  options,  warrants and
other  securities  into or  exercisable  for common  stock)  issued:  (i) to the
Company's employees, directors,  consultants, agents, independent contractors or
other service providers in connection with a Plan existing on the date hereof or
a Plan  approved by the board of directors  and adopted by the Company after the
date hereof;  (ii) upon the  conversion of Class A Common Stock;  (iii) upon the
exercise  of  any  options,  warrants,  or  exchangeable  securities  which  are
outstanding
as  of  the  effective   date  of  the  amended  and  restated   certificate  of
incorporation  hereof;  or (iv) in connection  with the  acquisition (by merger,
consolidation,  acquisition  of assets or equity  interests or otherwise) of the
equity interests or assets of another Person.

     The Company shall first notify  then-existing TMM Holders of Class A Common
Stock of any proposed  transaction  triggering  preemptive rights of the Class A
Common Stock and offer to sell to each such Person a number of shares of Class A
Common Stock (or, as applicable,  options,  warrants or other securities into or
exercisable  for  Class A Common  Stock)  determined  according  to the  formula
specified  in the amended and  restated  certificate  of  incorporation.  To the
extent that any TMM Holder elects not to participate in such preemptive  rights,
each of the other TMM  Holders  shall have a pro rata right to  purchase  at the
same price and on the same terms and conditions the Voting Securities which such
non-participating  TMM Holder had the right but  elected  not to  purchase.

     The  preemptive  rights of the TMM  Holders of Class A Common  Stock  shall
immediately  and  irrevocably  terminate on the date that the TMM Holders do not
beneficially  own in the  aggregate  at  least  40%  of  the  Voting  Securities
initially acquired by TMM Multimodal pursuant to the Acquisition Agreement.

Transfer Restrictions

     For a period of five years from and after the  effectiveness of the amended
and restated  certificate of incorporation,  the TMM Holders shall not, directly
or indirectly,  alone or in concert with others, sell, assign, transfer, pledge,
hypothecate,  otherwise subject to any lien, grant any option with respect to or
otherwise   dispose  of  any   interest  in  (or  enter  into  an  agreement  or
understanding   with  respect  to  the  foregoing)  any  Voting   Securities  (a
"Disposition") to a Competitor.  Disposition  pursuant to a Public Offering or a
Rule 144  Transaction  will not be deemed to  violate  this  prohibition  if the
selling TMM Holder(s) follow appropriate and reasonable  procedures  designed to
prevent the sale of such Voting Securities to any Competitor. After the earliest
of (i) five years following the date of the amended and restated  certificate of
incorporation,  or (ii) the first date on which the TMM Holders beneficially own
in the aggregate,  directly or indirectly and alone or as part of a Group,  less
than 15% of the outstanding  Voting Securities of the Company,  a TMM Holder may
propose to sell Voting  Securities to a  Competitor;  provided the Company shall
have the right (but not the  obligation) to purchase,  in whole but not in part,
such Voting  Securities at a per share cash purchase price equal to the purchase
price in the  agreement  between the selling TMM Holder and a  Competitor.  This
purchase right shall be  assignable,  in whole or in part, by the Company to any
other Person, but no such assignment shall relieve the Company of its obligation
to assure payment of the purchase price for any Voting  Securities as to which a
notice of election to exercise the Right of First Refusal is made by the Company
or any such assignee.

     For a period of five years from and after the  effectiveness of the amended
and restated  certificate  of  incorporation,  each of the TMM Holders shall not
effect a Disposition of Voting  Securities to any Affiliate of either Grupo TMM,
TMM  Holdings or TMM  Multimodal  or any  Affiliate  of any Grupo TMM  Principal
Stockholders unless such Affiliate agrees in writing to be bound by the terms of
the Stockholders' Agreement.  The TMM Holders shall remain responsible,  jointly
and severally, for any breaches of the Stockholders' Agreement by such Affiliate
(provided that any TMM Holder which is a Grupo TMM Principal  Stockholder  shall
be  severally  responsible  only for  breaches by an  Affiliate of the Grupo TMM
Principal  Stockholder to which such Grupo TMM Principal  Stockholder  effects a
Distribution).

         Subject to the foregoing transfer restrictions, TMM Holders may sell
any or all Voting Securities beneficially owned by such Person provided that:
(i) no Disposition that in the aggregate represents 5% or more of the
outstanding Voting Securities shall be made to any Person other than a Person
who is eligible to file reports pursuant to Rule 13d-1 under the Exchange Act (a
"13G Filer"), unless such Person would
not be so  eligible  with  respect to the Voting  Securities  acquired  from the
Disposition;  and (ii) no Disposition of Voting Securities that in the aggregate
represents 5% or more of the outstanding  Voting Securities shall be made to any
13G Filer  unless  (a) such 13G Filer  would  continue  to be  eligible  to file
reports  pursuant  to Section  13G under the  Exchange  Act with  respect to the
Voting Securities after giving effect to the proposed acquisition of such Voting
Securities; and (b) the selling TMM Holder shall have delivered a written notice
to the  Company  advising  the  Company of the number of Voting  Securities  the
seller  desires  to  sell  and  the  terms,  including  price,  of the  proposed
transaction and the Company has been provided the right (but not the obligation)
to purchase,  in whole or in part,  such Voting  Securities  at a per share cash
purchase price equal to the purchase price in the proposed transaction.

     Notwithstanding  any provision of the amended and restated  certificate  of
incorporation  to the contrary,  no  Disposition  shall be made to any Person or
Group that would,  together with such Person's  Affiliates  and  Associates  and
after giving effect to the acquisition of such Voting  Securities,  beneficially
own or have the right to acquire  more than 15% of the Total Voting Power of the
Company.

     TMM Holders shall be permitted to make a Disposition,  notwithstanding  any
contrary provision in the amended and restated certificate of incorporation,  in
connection with any tender or exchange offer made by an unaffiliated third party
to acquire KCS common stock so long as certain conditions are satisfied.

     The transfer  restrictions  imposed by the amended and restated certificate
of incorporation  (with the exception of the Company's right of first refusal in
the event a TMM  Holder  intends  to sell  shares  of Class A Common  Stock to a
Competitor,  which shall survive indefinitely) shall immediately and irrevocably
terminate upon the earlier of the first date the TMM Holders beneficially own in
the aggregate less than 15% of the outstanding  Voting Securities of the Company
for at least 30  consecutive  days, or the  occurrence of a Change of Control of
the Company.

Pledges

     Subject to the transfer restrictions  contained in the amended and restated
certificate of incorporation, a TMM Holder may pledge or hypothecate as security
for  any  indebtedness  or  other  obligations  any  or  all  Voting  Securities
beneficially owned by such Person; provided that such TMM Holder obtains written
consent  from the pledgee that upon the  occurrence  of an event which gives the
pledgee the right to foreclose on the pledged  Voting  Securities  ("Foreclosure
Event") such pledgee shall provide to the Company  prompt written notice of such
Foreclosure Event and provide the Company the right to purchase,  in whole or in
part,  such Voting  Securities at a price  determined  in  accordance  with such
provision  of the  amended  and  restated  certificate  of  incorporation.  This
purchase right shall be  assignable,  in whole or in part, by the Company to any
other Person, but no such assignment shall relieve the Company of its obligation
to assure  payment of the purchase  price for any Voting  Securities as to which
the Company has delivered such a written notice.

In connection with the proposed transaction, Kansas City Southern ("KCS") will
file relevant materials with the Securities and Exchange Commission ("SEC"),
including a proxy statement soliciting shareholder approval of certain actions
in connection with the transaction. Shareholders are urged to read the proxy
statement, as well as any amendments and supplements to the proxy statement (if
and when they become available) and any other relevant documents filed with the
SEC, because they will contain important information about the transaction.
Shareholders and investors may obtain the proxy statement and any other relevant
documents free of charge at the SEC's Internet web site at www.sec.gov.
Shareholders may also obtain free of charge the proxy statement and any other
relevant documents by contacting the office of the Corporate Secretary at
KCS's principal executive offices at (816) 983-1538.  Written requests should be
mailed to P.O. Box 219335,  Kansas City,  Missouri  64121-9335 (or if by federal
express or other form of express delivery to 427 West 12th Street,  Kansas City,
Missouri 64105).  Such proxy statement is not currently  available.  KCS and its
directors  and  executive  officers  may be  deemed  to be  participants  in the
solicitation  of proxies  from KCS  shareholders  with  respect to  approval  of
certain actions in connection with the transaction.  Information regarding these
directors and executive officers and their beneficial ownership interests in KCS
can be found in KCS's proxy  statement  on Schedule  14A,  filed with the SEC on
April 4, 2003, in connection  with the 2003 annual meeting of KCS  shareholders.
Investors  may obtain  additional  information  regarding  the interests of such
participants  by  reading  the  proxy  statement  filed in  connection  with the
transaction when it becomes available.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.

                                     Kansas City Southern

Date: May 1, 2003                  By:
                                      ------------------------------------------
                                                  Louis G. Van Horn
                                           Vice President and Comptroller
                                           (Principal Accounting Officer)