SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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KANSAS CITY SOUTHERN INDUSTRIES, INC.
------------------------------------------------
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[KANSAS CITY SOUTHERN INDUSTRIES, INC. LETTERHEAD]
July 1, 1998
RE: SPECIAL MEETING OF STOCKHOLDERS ON JULY 15, 1998
Dear Stockholder,
The Special Meeting of KCSI's Stockholders on July 15, 1998
is quickly approaching. You should have recently received a
proxy statement and other materials concerning that meeting. It
is VERY important that you vote at the Special Meeting. If you
are going to vote by proxy, please return your proxy card as soon
as possible. Your Board of Directors recommends that you vote
FOR each of the proposals to be considered at the Special
Meeting.
Many stockholders have questions about Proposal 1 for the
Special Meeting, which asks for stockholder approval of a reverse
stock split. Stockholders have also inquired about the
relationship of the reverse stock split to the previously
announced Spin-off (as described below) of KCSI's financial asset
management business. We want to share with you our responses to
the more frequently asked questions.
KCSI intends to separate its financial asset management and
transportation businesses by distributing in a dividend all or
substantially all of the outstanding common stock of FAM
Holdings, Inc. ("FAM") to KCSI's stockholders at a future date to
be determined by KCSI's Board of Directors. (FAM Holdings, Inc.
is the temporary name of a wholly owned KCSI subsidiary recently
formed to hold KCSI's financial asset management business.) This
distribution is referred to as the "Spin-off." The number of FAM
shares to be distributed for each outstanding share of KCSI
common stock has not been determined.
The Spin-off, when effective, will result in two independent
publicly traded companies; KCSI holding principally the current
transportation assets of KCSI and FAM holding principally the
current financial asset management assets of KCSI. These
financial asset management assets include KCSI's ownership
interests in Janus Capital Corporation, Berger Associates, Inc.,
DST Systems, Inc. and Nelson Money Managers PLC. KCSI has
requested a ruling from the Internal Revenue Service that the
Spin-off would be tax-free to both KCSI and its stockholders.
Application is being made to list FAM for trading on the New York
Stock Exchange.
THE REVERSE STOCK SPLIT WILL OCCUR ONLY AFTER THE SPIN-OFF
IS COMPLETED AND ONLY THEN IF THE KCSI BOARD OF DIRECTORS
DETERMINES THAT REVERSE STOCK SPLIT IS IN THE BEST INTEREST OF
KCSI AND ITS STOCKHOLDERS. Following the Spin-off, it is
expected that KCSI's common stock will trade on the New York
Stock Exchange at a materially lower price, reflecting the
divestiture of FAM. (Immediately after the Spin-off, KCSI
stockholders will separately hold all or substantially all of the
outstanding stock of FAM and the market will separately value
that stock.) For the reasons stated in the Proxy Statement, a
low per share price for the KCSI common stock is considered
undesirable. KCSI stockholders are, therefore, being asked in
Proposal 1 to approve a reverse stock split, which will combine
every two shares of KCSI common stock outstanding immediately
prior to the reverse stock split into one share immediately
thereafter. The reduction of the number of shares of KCSI common
stock outstanding is intended to move the per share market price
of KCSI common stock into a higher trading range. (Of course,
there can be no assurance that an increase in the market price of
the KCSI common stock will occur.) The reverse stock split will
not otherwise affect the KCSI common stock, and except for cash
in lieu of fractional shares, the reverse stock split will not
affect a stockholder's proportionate equity interest in KCSI.
THE SPECIAL MEETING PROXY STATEMENT CONTAINS AN EXPANDED
DISCUSSION OF THE REVERSE STOCK SPLIT, ITS IMPACT AND ITS
RELATIONSHIP TO THE SPIN-OFF. WE URGE YOU TO CAREFULLY CONSIDER
THAT DISCUSSION.
If you have not done so, please date, sign and promptly
return your proxy card. In the event that your proxy card is not
available, we enclose another card and a self-addressed, postage
prepaid envelope for your convenience. Your failure to vote at
the Special Meeting could result in KCSI having to delay the
Special Meeting and increasing the overall cost of the Special
Meeting. You may obtain another copy of the Special Meeting
Proxy Statement by contacting KCSI's Corporate Secretary's office
by mail at 114 West 11th Street, Kansas City, Missouri 64105, or
by telephone at (816) 983-1237.
If you have previously mailed your proxy card, please accept
our thanks. If, however, you wish to revoke your earlier proxy
card and submit another, you may do so by following the
procedures discussed in the Special Meeting Proxy Statement.
Thank you again for your cooperation.
Sincerely,
/s/ Richard P. Bruening
Vice President, General Counsel
and Corporate Secretary
