UNITED STATES
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):
August 10, 2005 (August 9, 2005)
DST SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-14036 43-1581814
(Commission File Number) (I.R.S. Employer Identification No.)
333 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
(816) 435-1000
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
See attached as Exhibit 99.1 to this Form 8-K a News Release dated
August 9, 2005 concerning a revision to the announcement of unaudited financial
results for the quarter ended June 30, 2005.
The information in this Item 2.02, and Exhibit 99.1 to this Current
Report on Form 8-K, shall not be deemed "filed" for the purposes of or otherwise
subject to the liabilities under Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Unless expressly incorporated into a
filing of DST under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act made after the date hereof, the information contained
in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference
into any filing of DST, whether made before or after the date hereof, regardless
of any general incorporation language in such filing.
ITEM 9.01 Financial Statements and Exhibits
(c). Exhibits.
Exhibit
Number Description
99.1 News Release dated August 9, 2005
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on this 10th day of August, 2005.
DST SYSTEMS, INC.
By: /s/ Kenneth V. Hager
Name: Kenneth V. Hager
Title: Vice President, Chief Financial Officer, Treasurer
Exhibit 99.1
DST SYSTEMS, INC. ANNOUNCES REVISION TO SECOND QUARTER 2005 FINANCIAL RESULTS
KANSAS CITY, MO. (August 9, 2005) - DST Systems, Inc. (NYSE: DST) previously
announced financial results for the three and six month periods ended June 30,
2005 on July 25, 2005. In that announcement, DST described a $154.4 million gain
recorded upon completion of the sale of EquiServe to Computershare Ltd. (AUS:
CPU) on June 17, 2005. In addition, DST described a $34 million charge related
to Fairway software, which was recorded as depreciation and amortization expense
when the EquiServe transaction was closed. DST has determined that the $34
million of Fairway software should be considered in determining the overall gain
on the sale of EquiServe rather than be recorded as depreciation and
amortization expense. Under the terms of the acquisition agreement, DST provided
a perpetual sourcecode license for Fairway to CPU and agreed to restrict DST's
use of the software. Upon the closing of this transaction, Fairway software was
redesignated from software that was developed for internal use in the Company's
stock transfer business to software that will be for external use, in accordance
with SOP 98-1, "Accounting for the Costs of Software Obtained or Developed for
Internal Use". As a result, the $34 million Fairway software has now been taken
into account in the determination of the $120.4 million pretax gain (the net
gain was approximately $70 million after taxes, deferrals and other expenses)
from the sale of the EquiServe business during the three and six month periods
ended June 30, 2005.
The table below presents the effect of the $34 million reclassification on the
consolidated statement of income for the three and six months ended June 30,
2005, as compared to amounts reported in the second quarter earnings release on
July 25, 2005 (amounts in millions, except per share amounts):
For the Three Months For the Six Months
ended June 30, 2005 ended June 30, 2005
As As
previously As previously As
reported revised reported revised
-------- -------- --------- --------
Depreciation and amortization $ 72.4 $ 38.4 $ 108.2 $ 74.2
Income from operations 48.1 82.1 124.9 158.9
Gain on sale of business 154.4 120.4 154.4 120.4
Income before income taxes 286.6 286.6 362.4 362.4
Net income 170.3 170.3 219.5 219.5
Diluted earnings per share $ 2.11 $ 2.11 $ 2.71 $ 2.71
The revision described above only affects the Financial Services Segment. The
revision does not change consolidated revenue, pretax income, net income, or
basic and diluted earnings per share. The revision does not affect the
consolidated balance sheet or net cash provided by operating activities.
Attached to this release is a revised condensed consolidated statement of income
that reflects this revision.
* * * * *
The information and comments above may include forward-looking statements
respecting DST and its businesses. Such information and comments are based on
DST's views as of today, and actual actions or results could differ. There could
be a number of factors affecting future actions or results, including those set
forth in DST's latest periodic financial report (Form 10-K or 10-Q) filed with
the Securities and Exchange Commission. All such factors should be considered in
evaluating any forward-looking comment. The Company will not update any
forward-looking statements in this press release to reflect future events.
DST SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
For the Three Months For the Six Months
ended June 30, ended June 30,
2005 2004 2005 2004
-------- -------- --------- --------
Operating revenues $ 469.2 $ 425.5 $ 906.3 $ 855.5
Out-of-pocket reimbursements 201.1 167.8 392.3 347.3
-------- -------- --------- --------
Total revenues 670.3 593.3 1,298.6 1,202.8
Costs and expenses 549.8 475.1 1,065.5 966.3
Depreciation and amortization 38.4 38.7 74.2 75.1
-------- -------- --------- --------
Income from operations 82.1 79.5 158.9 161.4
Interest expense (18.2) (13.2) (34.8) (26.7)
Other income, net 82.3 8.4 90.0 14.9
Gain on sale of business 120.4 120.4
Equity in earnings of
unconsolidated affiliates 20.0 5.6 27.9 10.7
-------- -------- --------- --------
Income before income taxes 286.6 80.3 362.4 160.3
Income taxes 116.3 28.5 142.9 56.9
-------- -------- --------- --------
Net income $ 170.3 $ 51.8 $ 219.5 $ 103.4
======== ======== ========= ========
Average common shares outstanding 78.6 84.3 78.5 84.2
Diluted shares outstanding 80.9 86.8 80.9 86.6
Basic earnings per share $ 2.17 $ 0.61 $ 2.79 $ 1.23
Diluted earnings per share $ 2.11 $ 0.60 $ 2.71 $ 1.19
DST Systems, Inc.
333 West 11th Street
Kansas City, MO
64105-1594
Contact:
Thomas A. McDonnell (816) 435-8684
President and Chief Executive Officer
Kenneth V. Hager (816) 435-8603
Vice President and Chief Financial Officer