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 Act of 1934
Date of Report (Date of earliest event reported) January 27, 2004
(Exact name of registrant as specified in its charter)
DST Systems, Inc.
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
Delaware 1-14036 43-1581814
333 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 435-1000
Not Applicable
(Former name or former address, if changed since last report.)
FORM 8-K
DST SYSTEMS, INC.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
Exhibit No. Description of Document
99.1 News Release dated January 27, 2004
ITEM 12 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
See attached as an Exhibit to this Form 8-K a News Release dated January 27,
2004 concerning the announcement of financial results.
The information in this Current Report on Form 8-K, including the exhibit, 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, and shall
not be deemed to be incorporated by reference into the filings of the registrant
under the Securities Act of 1933.
SIGNATURE
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.
DST Systems, Inc.
/s/ Randall D. Young
Vice President, General Counsel and Secretary
Date: January 28, 2004
Exhibit 99.1
DST SYSTEMS, INC. ANNOUNCES FOURTH QUARTER 2003 FINANCIAL RESULTS
KANSAS CITY, MO. (January 27, 2004) - DST's consolidated net income for the
fourth quarter 2003 was $163.5 million ($1.54 per diluted share) compared to
fourth quarter 2002 net income of $45.4 million ($0.38 per diluted share).
Fourth quarter 2003 results include net after tax income of $100.8 million
comprised of the following: $108.9 million net gain associated with the exchange
transaction ("Janus Exchange") with Janus Capital Group Inc. ("Janus"), $2.5
million of net after tax gains on securities, $10.5 million of after tax costs
associated with termination of the reload feature of employee stock options and
$0.1 million of after tax costs for facility and other consolidations. Fourth
quarter 2002 results include net after tax losses of $7.5 million comprised of
the following: $2.0 million of net after tax costs associated with facility and
other consolidations within the Output Solutions segment, $1.2 million of net
after tax costs related to joint venture lease abandonment charges and $4.3
million of net after tax losses related to impairment charges on marketable
securities. The management of DST analyzes historical results adjusted for
certain items that are not necessarily ongoing in nature, do not have a high
level of predictability associated with them or are non-operational in nature.
Generally, these items include net gains (losses) on dispositions of business
units, net gains (losses) associated with securities, restructuring costs and
other similar items. Management believes the exclusion of these items provides a
better basis for evaluating underlying business unit performance. Excluding the
above mentioned items recorded in both the fourth quarters of 2003 and 2002,
DST's consolidated net income for the quarter ended December 31, 2003 would have
been $62.7 million ($0.59 per diluted share) compared to fourth quarter 2002 net
income of $52.9 million ($0.44 per diluted share), an 18.5% increase in net
income and a 34.1% increase in diluted earnings per share. Fourth quarter 2003
results were significantly enhanced by $21.4 million of international software
license sales as discussed further in Financial Services segment results.
Year to date, DST's consolidated net income was $320.8 million ($2.77 per
diluted share) in 2003 compared to $209.0 million ($1.72 per diluted share) in
2002. Year to date 2003 results include net after tax income of $102.8 million
resulting from $108.9 million of net gains associated with the Janus Exchange
and $6.1 million of net gains on securities, partially offset by $10.5 million
of after tax costs associated with termination of the reload feature of employee
stock options and costs of $1.7 million for facility and other consolidations.
Full year 2002 results include net after tax losses of $6.8 million, primarily
related to $7.9 million of costs associated with facility and other
consolidations within the Output Solutions segment and $1.2 million of costs
related to joint venture lease abandonment charges, partially offset by $2.3
million of net gains on securities. Excluding the above mentioned items recorded
in both 2003 and 2002, DST's consolidated net income for the year ended December
31, 2003 would have been $218.0 million ($1.88 per diluted share) compared to
2002 net income of $215.8 million ($1.77 per diluted share), a 1.0% increase in
net income and a 6.2% increase in diluted earnings per share.
Exchange Transaction with Janus
On December 1, 2003 DST completed the Janus Exchange under which DST received
from Janus 32.3 million shares of DST common stock (27.9% of the then
outstanding shares) in exchange for all of the stock of a DST subsidiary, DST
Output Marketing Services, Inc. ("OMS"), which was part of DST's Output
Solutions segment. At the time of the Janus Exchange, OMS held an operating
sheet-fed offset commercial printing, graphics design, laser printing and
fulfillment business and additional cash to equalize the value of the operating
business and shares being exchanged. Based on the average closing price of the
Company's common stock and Exchange Agreement terms, the exchange value used for
the DST shares received in connection with the Janus Exchange was $34.50 per
share. Under the terms of the Exchange Agreement, the OMS operations business
had a negotiated value of $115.0 million and its assets at closing included
additional cash of $999.4 million. For financial reporting purposes, 28.97
million DST shares were valued at $34.50 (representing the cash element of the
exchange transaction) while the remaining 3.33 million shares were valued at
$37.97 (representing the exchange value of OMS business based on the closing
price of DST common stock on December 1, 2003). Accordingly, DST recognized a
gain of $108.9 million from the Janus Exchange. The Janus Exchange was
structured as a tax-free split off in accordance with Section 355 of the
Internal Revenue Code and DST has not recognized any income tax expense relating
to the transaction.
Termination of Employee Stock Option Reload Feature
DST's Stock Option Plan permits option holders to use DST shares to exercise
their options, and also contains a feature that allows for reload stock options.
The reload stock option feature was included in stock options granted from
February 29, 2000 through October 7, 2003 to encourage associates to accumulate
stock ownership through periodic exercises of stock options using DST shares
owned. The reload feature provided for an automatic grant of a new stock option
at the then current market price for the number of DST shares tendered in the
exercise and the number of DST shares withheld to satisfy income tax
withholdings. Under its current accounting policies, DST is not required to
record a compensation charge for stock option grants and automatic grants of
reload stock options. Under proposed accounting rules (with an expected adoption
date of January 2005), the FASB has determined that, for accounting purposes,
all reload stock option grants will be treated as new grants and will therefore
require a separate compensation charge for each reload grant. This accounting
treatment created an uncertainty surrounding both the timing and amount of
compensation expense associated with reload stock option activity because DST
would be unable to control or estimate how many reloadable stock options could
be exercised in the future, or the impact on DST's financial statements of the
expensing of reload options.
DST determined that it was in the best interest of the Company to eliminate this
uncertainty from future financial results. The reload feature was removed from
all outstanding stock options in the fourth quarter 2003. Options with reload
features covered approximately 13.8 million shares of DST stock. DST compensated
optionees who had reload stock options for the termination of the reload feature
from their stock options. The compensation was paid in one of two forms.
Optionees received either cash in December 2003, or the promise to receive a
fixed number of shares of DST stock in the future. The form of compensation
depended on the number of reload options held by the optionee. DST recorded, in
the fourth quarter 2003, a pre-tax charge of approximately $15.5 million related
to the termination of the reload feature from outstanding stock options. No
additional charges are expected in connection with the termination of the reload
feature. The charge has been reflected in costs and expenses for each of the
respective segments. The shares to be issued in the future as compensation for
termination of the reload feature are treated as outstanding for purposes of
calculating diluted earnings per share. DST does not expect to include a reload
feature in any stock options that may be issued in the future.
Financial Overview
Revenues
The following table summarizes the Company's revenues by segment (in millions):
Quarter ended Year ended
December 31, December 31,
---------------------- ----------- ----------
2003 2002 2003 2002
-------- -------- -------- ---------
Revenues
Financial Services
Operating $ 288.6 $ 259.0 $1,060.5 $ 970.8
OOP reimbursements 24.3 31.6 126.8 143.9
-------- -------- --------- ---------
$ 312.9 $ 290.6 $1,187.3 $1,114.7
========= ======== ========= =========
Output Solutions
Operating $ 128.0 $ 134.8 $ 534.1 $ 567.8
OOP reimbursements 141.2 155.3 589.8 606.6
-------- -------- --------- ---------
$ 269.2 $ 290.1 $1,123.9 $1,174.4
========= ======== ========= =========
Customer Management
Operating $ 44.5 $ 43.1 $ 180.2 $ 177.5
OOP reimbursements 14.6 16.7 61.5 64.4
-------- -------- --------- ---------
$ 59.1 $ 59.8 $ 241.7 $ 241.9
========= ======== ========= =========
Investments and Other
Operating $ 15.2 $ 14.2 $ 59.8 $ 54.8
OOP reimbursements 0.2 0.2 0.5 0.6
-------- -------- --------- ---------
$ 15.4 $ 14.4 $ 60.3 $ 55.4
========= ======== ========= =========
Eliminations
Operating $ (27.9) $ (28.2) $ (109.7) $ (113.0)
OOP reimbursements (18.9) (22.1) (87.2) (89.6)
-------- -------- --------- ---------
$ (46.8) $ (50.3) $ (196.9) $ (202.6)
========= ======== ========= =========
Total Revenues
Operating $ 448.4 $ 422.9 $1,724.9 $1,657.9
OOP reimbursements 161.4 181.7 691.4 725.9
-------- -------- --------- ---------
$ 609.8 $ 604.6 $2,416.3 $2,383.8
========= ======== ========= =========
Consolidated operating revenues for the quarter increased $25.5 million or 6.0%
over the prior year quarter. Financial Services operating revenues increased
11.4% from higher U.S. mutual fund servicing revenues and an increase of $12.4
million of international software license revenues partially offset by a
decrease in EquiServe, Inc. ("EquiServe") corporate action servicing revenues.
Output Solutions operating revenues declined 5.0% from lower volumes and lower
unit pricing on certain product lines and the removal of OMS revenues subsequent
to the Janus Exchange. Customer Management operating revenues increased 3.2%
from higher software development revenues partially offset by lower equipment
revenues. Consolidated Out-of-Pocket ("OOP") reimbursements decreased $20.3
million or 11.2% from the prior year quarter, principally from lower volumes and
lower corporate action activities.
Consolidated operating revenues for the year ended December 31, 2003 increased
$67.0 million or 4.0% over the prior year principally from higher Financial
Services operating revenues.
Income from operations
The following table summarizes the Company's income from operations by segment
(in millions):
Quarter ended Year ended
December 31, December 31,
---------------- -----------------
2003 2002 2003 2002
------- ------- ------- -------
Income (loss) from operations
Financial Services $ 76.4 $ 67.5 $257.2 $252.9
Output Solutions (0.8) 0.3 11.9 23.1
Customer Management 3.7 5.2 27.9 20.1
Investments and Other 2.1 2.0 10.5 7.2
------- ------- ------- -------
$ 81.4 $ 75.0 $307.5 $303.3
======= ======= ======= =======
Consolidated income from operations for the quarter increased $6.4 million or
8.5% over the prior year quarter from increased Financial Services operating
income. Year to date consolidated income from operations increased $4.2 million
or 1.4% over the prior year from higher Financial Services and Customer
Management segment operating income partially offset by lower Output Solutions
segment operating income and stock option reload feature termination costs.
Segment Results
Financial Services Segment
Financial Services segment total revenues (including OOP reimbursements) for the
fourth quarter 2003 were $312.9 million, an increase of $22.3 million or 7.7%
over the fourth quarter 2002. Financial Services segment operating revenues
(excluding OOP reimbursements) for the fourth quarter 2003 were $288.6 million,
an increase of $29.6 million or 11.4% over the fourth quarter 2002.
Financial Services segment operating revenues in the U.S. for the fourth quarter
2003 increased $12.7 million or 5.6% over the prior year quarter. The increase
in U.S. revenues resulted from increased U.S. mutual fund servicing revenues and
higher AWD license and maintenance revenues partially offset by a decrease in
EquiServe revenues from lower levels of accounts serviced and lower corporate
action servicing revenues.
U.S. mutual fund open shareowner accounts processed totaled 87.9 million at
December 31, 2003, an increase of 1.0 million or 1.2% for the quarter and an
increase of 7.9 million or 9.9% from the 80.0 million serviced at December 31,
2002. Since the beginning of the year, excluding conversions of new clients,
accounts processed increased 2.4 million or 3.0%.
Tax-advantaged retirement and educational savings accounts serviced (which
include 529 and Coverdell savings plan accounts) totaled 33.9 million at
December 31, 2003, an increase of 600,000 or 1.8% for the quarter and an
increase of 3.9 million or 13.0% from the 30.0 million serviced at December 31,
2002. The increase in tax-advantaged accounts serviced during the quarter
resulted primarily from increased 529 savings plan accounts.
Four new client contracts, two of which are start-ups, have been signed. The
other two plus a previously reported new client will be converted in the second
quarter of 2004 for a total of approximately 900,000 accounts. There continues
to be a number of mutual fund companies who are in different stages of
evaluating their service options. The number of potential clients and aggregate
number of potential new accounts has declined from the prior quarter as a large
request for proposal has been withdrawn from the market.
EquiServe shareowner accounts serviced totaled 22.3 million at December 31,
2003, a decrease of 700,000 during the quarter, primarily from clients offering
redemption programs for small investors and shareowner account attrition.
International Financial Services operating revenues totaled $47.4 million for
the fourth quarter 2003, an increase of $16.9 million or 55.4% over the prior
year quarter, primarily from an increase of $12.4 million in license revenues
principally from a single customer and an increase of $1.9 million in
maintenance revenues.
Financial Services segment income from operations for the fourth quarter 2003
increased $8.9 million or 13.2% over the prior year quarter to $76.4 million
principally from higher mutual fund servicing and international license revenues
partially offset by employee stock option reload feature termination costs and
increased new systems development and implementation costs. Costs and expenses
increased 5.7% compared to the prior year quarter, primarily from increased new
systems development and implementation costs and $11.5 million for the
termination of employee stock option reload feature partially offset by
EquiServe cost containment initiatives. Depreciation and amortization costs
increased 8.5% compared to the prior year quarter, primarily attributable to
capital costs for DST's recovery data center which became operational during the
quarter.
Financial Services segment operating revenues for the year ended December 31,
2003 were $1,060.5 million, an increase of $89.7 million or 9.2% over the prior
year principally from higher U.S. mutual fund servicing revenues, the
acquisition of lock\line and international software license revenues, partially
offset by a decrease in EquiServe revenues. Financial Services segment income
from operations for the year ended December 31, 2003 increased $4.3 million or
1.7% over the prior year to $257.2 million, principally from higher U.S. mutual
fund servicing revenues and the acquisition of lock\line, partially offset by
increased new systems development and implementation costs and stock option
reload feature termination costs. Costs and expenses increased 7.6% for the year
ended December 31, 2003, principally from the acquisition of lock\line and
increased new systems development and implementation costs and a charge of $11.5
million related to termination of the reload feature from employee stock
options, partially offset by lower EquiServe costs. Depreciation and
amortization increased 11.0% in the year ended December 31, 2003, primarily
attributable to the inclusion of lock\line.
Output Solutions Segment
Output Solutions segment total revenues for the fourth quarter 2003 totaled
$269.2 million, a decrease of $20.9 million or 7.2% compared to the fourth
quarter 2002. Segment operating revenues for the quarter ended December 31, 2003
were $128.0 million, a decrease of $6.8 million or 5.0% from fourth quarter
2002. Lower operating revenues were recorded from the mutual fund, brokerage,
banking, telecommunications and healthcare industries. Also, no OMS revenues
were recorded subsequent to the Janus Exchange. Items mailed decreased 0.7% to
431 million compared to fourth quarter 2002.
Output Solutions segment loss from operations for the fourth quarter was $0.8
million compared to income from operations of $0.3 million for the fourth
quarter 2002, principally from lower revenues and a $2.1 million charge in the
fourth quarter 2003 for the termination of the employee stock option reload
feature. Segment results include $0.2 million of costs in 2003 and $3.0 million
of costs in 2002 associated with previously announced facility and other
consolidations. Depreciation and amortization decreased $0.7 million compared to
the prior year quarter, primarily from lower capital expenditures.
Output Solutions segment operating revenues for the year ended December 31, 2003
were $534.1 million, a decrease of $33.7 million or 5.9% from the prior year.
Segment results include $2.6 million and $12.0 million of facility consolidation
costs for 2003 and 2002, respectively, and 2003 results include a charge of $2.1
million for stock option reload feature termination costs. Excluding these
items, Output Solutions segment income from operations for the year ended
December 31, 2003 decreased $18.5 million or 52.7% from the prior year period to
$16.6 million.
During the quarter, DST recorded $11.4 million in operating revenues and $1.6
million in income from operations for OMS. For the year, DST recorded $61.4
million in operating revenues and $3.6 million in income from operations for
OMS. OMS is no longer included in the Company's results subsequent to the
December 1, 2003 Janus Exchange.
During the quarter, the Company was notified that a telecommunications customer
would discontinue its use of the Output Solutions segment's services, effective
February 2004. The segment recorded operating revenues of $34.4 million from
this client in 2003. In addition, the Company expects volume and pricing
pressure in this segment to continue.
Customer Management Segment
Customer Management segment total revenues for the fourth quarter 2003 totaled
$59.1 million, a decrease of $0.7 million or 1.2% from fourth quarter 2002.
Customer Management segment operating revenues for the quarter ended December
31, 2003 were $44.5 million, an increase of $1.4 million or 3.2% over the 2002
quarter. Processing and software service revenues for the quarter increased $2.3
million or 5.5% primarily as a result of higher software development revenues
and incremental revenues from additional product features. Equipment sales
decreased $0.9 million compared to fourth quarter 2002. Total cable and
satellite subscribers serviced were 39.3 million at December 31, 2003, a
decrease of 4.4% compared to year end 2002 levels, principally from a net
decrease in U.S. cable subscribers serviced.
Customer Management segment income from operations for the fourth quarter 2003
decreased $1.5 million or 28.8% over the prior year quarter to $3.7 million.
Costs and expenses increased $1.0 million or 1.9% from the fourth quarter 2002,
primarily attributable to a charge of $1.3 million associated with the
termination of the employee stock option reload feature. Depreciation and
amortization decreased $0.2 million compared to the prior year quarter.
Customer Management segment operating revenues for the year ended December 31,
2003 were $180.2 million, an increase of $2.7 million or 1.5% over the prior
year. Customer Management segment income from operations for the year ended
December 31, 2003 increased $7.8 million or 38.8% over the prior year period to
$27.9 million principally from higher revenues and cost containment activities.
As previously disclosed, two clients have discontinued their processing
agreements. At December 31, 2003 approximately 900,000 subscribers were serviced
for these clients. 2003 operating revenues for these two clients were $19.2
million.
Investments and Other Segment
Investments and Other segment operating revenues, primarily rental income for
facilities leased to the Company's operating segments, were $15.2 million for
the quarter ended December 31, 2003, an increase of $1.0 million from the prior
year quarter, primarily from increased real estate leasing activity. Investments
and Other segment income from operations for the quarter ended December 31, 2003
increased $0.1 million over the prior year quarter and included costs of $0.3
million for the termination of the employee stock option reload feature.
Equity in earnings of unconsolidated affiliates
The following table summarizes the Company's equity in earnings (losses) of
unconsolidated affiliates (in millions):
Quarter ended Year ended
December 31, December 31,
---------------- ------------------
2003 2002 2003 2002
------- ------- ------- -------
BFDS $ 2.6 $ 0.9 $ 9.7 $ 5.4
IFDS 1.4 (1.1) 0.7 (0.4)
Other 0.7 0.1 2.1 1.5
------- ------- ------- -------
$ 4.7 $(0.1) $12.5 $ 6.5
======= ======= ======= =======
BFDS earnings increased primarily from higher revenues from client additions and
improved operational efficiencies. IFDS results increased compared to prior year
primarily due to higher revenues associated with new clients, partially offset
by higher costs associated with new client conversion activity and accrued costs
associated with an underfunded defined benefit pension plan. 2002 results also
included $1.8 million of lease abandonment charges. Accounts serviced by IFDS
U.K. were 4.6 million at December 31, 2003, an increase of 700,000 or 17.9% for
the quarter and an increase of 1.1 million or 31.4% from year end 2002 levels,
primarily from new client conversions. An additional 700,000 accounts are
scheduled to convert during 2004. Accounts serviced by IFDS Canada were 2.7
million at December 31, 2003, a decrease of 800,000 or 22.9% for the quarter due
to the loss of a client and an increase of 200,000 or 8.0% from year end 2002
levels.
Other income, net
Other income was $9.5 million for the fourth quarter 2003, of which $5.1 million
primarily related to interest and dividend income and $3.8 million related to
net gains on securities. Other losses were $2.2 million for the fourth quarter
2002, of which $6.5 million related to net losses on securities (primarily a
$6.0 million impairment charge on marketable securities), partially offset by
$4.4 million of income primarily related to interest and dividend income.
Other income was $28.1 million for the year ended December 31, 2003, of which
$15.9 million primarily related to interest and dividend income and $9.3 million
primarily related to net gains on securities. For the year ended December 31,
2002, other income totaled $20.2 million, which included $16.8 million primarily
related to interest and dividend income, a $2.3 million gain from the sale of
the DST Output presort business and $1.2 million related primarily to net gains
on securities.
Interest expense
Interest expense was $12.6 million for the quarter ended December 31, 2003,
compared to $4.0 million in the prior year quarter. Interest expense was $26.9
million for the year ended December 31, 2003, compared to $13.4 million in the
prior year. Convertible debenture interest expense of $9.1 million was included
in the fourth quarter 2003. Average debt balances were higher in 2003 compared
to 2002, primarily as a result of the issuance of the $840 million convertible
debentures.
During the quarter, the Company entered into a $650 million syndicated line of
credit facility to replace its $315 million syndicated line of credit facility.
The $650 million facility is comprised of a $400 million three-year revolving
line of credit and a $250 million three-year term note and is secured by certain
assets of one of the Company's subsidiaries. Interest rates are based on LIBOR
plus an applicable margin with facility and utilization fees applied.
Approximately $500 million was initially drawn against this facility to
partially finance the Janus Exchange, which closed on December 1, 2003.
Income taxes
DST's effective tax rate was 14.8% for the quarter and 25.4% for the year ended
December 31, 2003, compared to 34.0% for the quarter and year ended December 31,
2002. During the quarter, DST recognized a book gain of $108.9 million related
to the Janus Exchange. The Janus Exchange was structured as a tax-free split off
under Section 355 of the Internal Revenue Code. Accordingly, DST should not
incur income tax relating to the split-off of OMS. Excluding the effect of the
Janus Exchange, DST's effective tax rate would have been 34.0% for the quarter
and year ended December 31, 2003. The 2003 and 2002 tax rates were affected by
tax aspects of certain international operations and of state tax income
apportionment rules.
Stock Repurchase Program
As of December 31, 2003, DST had 2.2 million shares remaining to be purchased
under existing authorized programs. There were no shares purchased under these
programs during the quarter.
The 32.3 million shares of DST stock received from the Janus Exchange were
covered under a separate authorization and not part of the Company's existing
authorized programs. DST had 83.9 million shares of common stock outstanding at
December 31, 2003.
Earnings Guidance
The Company will no longer provide earnings guidance for future periods.
Management of the Company believes that the focus placed on achieving short-term
earnings estimates detracts from the Company's strategy to create long-term
value for its shareowners. The Company will continue to provide information
critical to understanding its business, including perspective on factors that
materially affect future earnings performance.
* * * *
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 results could differ. There could be a
number of factors affecting future results, including those set forth in Form
8-K/A dated March 17, 2003 filed by DST 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 Year
ended December 31, ended December 31,
2003 2002 2003 2002
------- ------- ------- --------
Operating revenues $ 448.4 $ 422.9 $1,724.9 $1,657.9
Out-of-pocket reimbursements 161.4 181.7 691.4 725.9
------- ------- ------- --------
Total revenues 609.8 604.6 2,416.3 2,383.8
Costs and expenses 486.7 488.4 1,958.4 1,936.7
Depreciation and amortization 41.7 41.2 150.4 143.8
------- ------- ------- --------
Income from operations 81.4 75.0 307.5 303.3
Interest expense (12.6) (4.0) (26.9) (13.4)
Other income, net 9.5 (2.2) 28.1 20.2
Gain on Janus Exchange 108.9 108.9
Equity in earnings (losses) of
unconsolidated affiliates 4.7 (0.1) 12.5 6.5
------- ------- ------- --------
Income before income taxes 191.9 68.7 430.1 316.6
Income taxes 28.4 23.3 109.3 107.6
------- ------- ------- --------
Net income $ 163.5 $ 45.4 $ 320.8 $ 209.0
======= ======= ======= ========
Average common shares outstanding 104.5 119.5 114.5 120.0
Diluted shares outstanding 106.2 120.5 116.0 121.7
Basic earnings per share $ 1.56 $ 0.38 $ 2.80 $ 1.74
Diluted earnings per share $ 1.54 $ 0.38 $ 2.77 $ 1.72
DST SYSTEMS, INC.
OTHER SELECTED FINANCIAL INFORMATION
(In millions)
(Unaudited)
December 31, December 31,
Selected Balance Sheet Information 2003 2002
-----------------------------------------
Cash $ 100 $ 92
Total assets 3,220 2,744
Total debt 1,470 439
Total stockholders' equity 700 1,422
For the Year
Ended December 31,
Selected Cash Flow Information 2003 2002
--------------------- -------------------
Capital expenditures
Operating segments $ 180 $ 111
Investments and Other segment 90 62
DST Systems, Inc.
333 West 11th Street
Kansas City, MO
64105-1594
NYSE Symbol: DST
Contact:
Thomas A. McDonnell (816) 435-8684
President and Chief Executive Officer
Kenneth V. Hager (816) 435-8603
Vice President and Chief Financial Officer