<PAGE>5
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of March 31, 2000
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments (2) Forma
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 388.5 $ (350.7) $ 37.8
Investments in advised funds 33.0 (33.0) -
Accounts receivable, net 343.7 (223.5) 120.2
Inventories 39.4 - 39.4
Other current assets 55.0 (42.1) 12.9
----------- ------------ -----------
Total current assets 859.6 (649.3) 210.3
Investments held for operating purposes 845.9 (498.4) 347.5
Properties, net 1,377.3 (94.3) 1,283.0
Intangibles and other assets, net 234.6 (190.7) 43.9
----------- ------------ -----------
Total assets $ 3,317.4 $ (1,432.7) $ 1,884.7
=========== ============ ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Debt due within one year $ 11.6 $ 200.0 $ 211.6
Accounts and wages payable 223.9 (172.7) 51.2
Accrued liabilities 216.0 (93.6) 122.4
----------- ------------ -----------
Total current liabilities 451.5 (66.3) 385.2
----------- ------------ -----------
Other Liabilities:
Long-term debt 688.3 (200.0) 488.3
Deferred income taxes 467.8 (166.0) 301.8
Other deferred credits 129.0 (44.5) 84.5
----------- ------------ -----------
1,285.1 (410.5) 874.6
----------- ------------ -----------
Minority Interest in consolidated
subsidiaries 66.9 (66.9) -
----------- ------------ -----------
Stockholders' Equity:
Preferred stock 6.1 - 6.1
Common stock 1.1 - 1.1
Retained earnings 1,394.7 (777.0) 617.7
Accumulated other comprehensive income 112.0 (112.0) -
----------- ------------ -----------
Total stockholders' equity 1,513.9 (889.0) 624.9
----------- ------------ -----------
Total liabilities & stockholders' equity $ 3,317.4 $ (1,432.7) $ 1,884.7
=========== ============ ===========
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>6
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of January 1, 2000
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments (3) Forma
----------- -------------- ---------
<S> <C> <C> <C>
Revenues $ 694.0 $ (545.1) $ 148.9
Costs and Expenses 399.6 (284.6) 115.0
Depreciation and Amortization 31.5 (15.6) 15.9
---------- ----------- ---------
Operating Income 262.9 (244.9) 18.0
Equity in Earnings of Uncon. Affiliates 27.6 (18.8) 8.8
Interest Expense (20.1) 2.6 (17.5)
Gain on litigation settlement 44.2 (44.2) -
Gain on sale of Janus Capital
Corporation stock 15.1 (15.1) -
Other, Net 12.6 (9.9) 2.7
---------- ----------- ---------
Pretax Income 342.3 (330.3) 12.0
Income Tax Provision 115.9 (114.3) 1.6
Minority interest in consolidated
earnings 27.3 (27.3) -
---------- ----------- ---------
Income from continuing operations $ 199.1 $ (188.7) (5)$ 10.4
========== =========== =========
Earnings per share:
Basic - from continuing operations $ 3.58 (4) (5)$ 0.19
========== =========
Diluted - from continuing operations $ 3.42 (4) (5)$ 0.18
========== =========
Weighted Average Common Shares
Outstanding (in thousands):
Basic 55,544 (4) 55,544
---------- ---------
Diluted 57,482 (4) 57,482
---------- ---------
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>7
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of January 1, 1999
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments(3) Forma
----------- ------------ -----------
<S> <C> <C> <C>
Revenues $ 385.2 $ (233.3) $ 151.9
Costs and Expenses 242.5 (129.3) 113.2
Depreciation and Amortization 21.1 (6.8) 14.3
----------- ------------ -----------
Operating Income 121.6 (97.2) 24.4
Equity in Earnings of Uncon. Affiliates 12.3 (11.2) 1.1
Interest Expense (15.0) 1.0 (14.0)
Other, Net 5.8 (4.9) 0.9
----------- ------------ -----------
Pretax Income 124.7 (112.3) 12.4
Income Tax Provision 44.9 (40.1) 4.8
Minority interest in consolidated 11.2 (11.2) -
----------- ------------ -----------
Income from continuing operations $ 68.6 $ (61.0) $ 7.6
=========== ============ ===========
Earnings per share:
Basic - from continuing operations $ 1.25 (4) $ 0.14
=========== ===========
Diluted - from continuing operations $ 1.19 (4) $ 0.13
=========== ===========
Weighted Average Common Shares Outstanding (in
thousands):
Basic 54,922 (4) 54,922
----------- -----------
Diluted 56,838 (4) 56,838
----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>8
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of January 1, 1999
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments(3) Forma
----------- ------------ -----------
<S> <C> <C> <C>
Revenues $ 1,813.7 $ (1,212.3) $ 601.4
Costs and Expenses 1,139.0 (658.6) 480.4
Depreciation and Amortization 92.3 (35.4) 56.9
----------- ------------ -----------
Operating Income 582.4 (518.3) 64.1
Equity in Earnings of Uncon. Affiliates 51.9 (46.7) 5.2
Interest Expense (63.3) 5.9 (57.4)
Other, Net 32.7 (27.4) 5.3
----------- ------------ -----------
Pretax Income 603.7 (586.5) 17.2
Income Tax Provision 223.1 (216.1) 7.0
Minority interest in consolidated
earnings 57.3 (57.3) -
----------- ------------ -----------
Income from continuing operations $ 323.3 $ (313.1) $ 10.2
=========== ============ ===========
Earnings per share:
Basic - from continuing operations $ 5.86 (4) $ 0.18
============ ===========
Diluted - from continuing operations $ 5.57 (4) $ 0.17
============ ===========
Weighted Average Common Shares Outstanding (in
thousands):
Basic 55,142 (4) 55,142
----------- -----------
Diluted 57,025 (4) 57,025
----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>9
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of January 1, 1998
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments(3) Forma
----------- ------------ -----------
<S> <C> <C> <C>
Revenues $ 1,284.3 $ (670.8) $ 613.5
Costs and Expenses 816.3 (373.4) 442.9
Depreciation and Amortization 73.5 (16.8) 56.7
----------- ----------- -----------
Operating Income 394.5 (280.6) 113.9
Equity in Earnings of Uncon. Affiliates 22.9 (25.8) (2.9)
Interest Expense (66.1) 6.5 (59.6)
Reduction in ownership of DST Systems, Inc. (29.7) 29.7 -
Other, Net 32.8 (19.1) 13.7
------------ ------------ -----------
Pretax Income 354.4 (289.3) 65.1
Income Tax Provision 130.8 (103.7) 27.1
Minority interest in consolidated
earnings 33.4 (33.4) -
------------ ------------ -----------
Income from continuing operations $ 190.2 $ (152.2) $ 38.0
============ ============ ===========
Earnings per share:
Basic - from continuing operations $ 3.47 (4) $ 0.69
============ ===========
Diluted - from continuing operations $ 3.32 (4) $ 0.67
============ ===========
Weighted Average Common Shares Outstanding (in
thousands):
Basic 54,610 (4) 54,610
----------- -----------
Diluted 56,530 (4) 56,530
----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>10
The following summarizes selected pro forma financial information of the
Registrant assuming the distribution of all of the outstanding shares of
Stilwell Financial Inc. had been completed as of January 1, 1997
<TABLE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(Dollars in Millions)
(Unaudited)
<CAPTION>
Registrant Pro Forma Pro
Historical Adjustments(3) Forma
----------- ------------ -----------
<S> <C> <C> <C>
Revenues $ 1,058.3 $ (485.1) $ 573.2
Costs and Expenses 680.2 (254.4) 425.8
Depreciation and Amortization 75.2 (13.1) 62.1
Restructuring, asset impairment and
other charges 196.4 (18.4) 178.0
---------- ---------- ----------
Operating Income (Loss) 106.5 (199.2) (92.7)
Equity in Earnings of Uncon. Affiliates 15.2 (24.9) (9.7)
Interest Expense (63.7) 10.4 (53.3)
Other, Net 21.2 (16.2) 5.0
---------- ---------- ----------
Pretax Income (Loss) 79.2 (229.9) (150.7)
Income Tax Provision (Benefit) 68.4 (87.0) (18.6)
Minority interest in consolidated
earnings 24.9 (24.9) -
---------- --------- ----------
Income (Loss) from continuing
operations $ (14.1) $ (118.0) $ (132.1)
========== ========= ==========
Earnings per share:
Basic $ (0.27) (4) $ (2.46)
========== ==========
Diluted $ (0.27) (4) $ (2.46)
========== ==========
Weighted Average Common Shares Outstanding (in
thousands):
Basic 53,801 (4) 53,801
----------- ----------
Diluted 53,801 (4) 53,801
----------- ----------
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
<PAGE>11
Notes to Unaudited Pro Forma Consolidated Financial Statements
General
Note 1:
On June 14, 2000, the Board of Directors of Kansas City Southern
Industries, Inc. ("KCSI") declared a dividend payable to the holders of
KCSI common stock, par value $0.01 per share ("KCSI Common Stock"),
distributing on a pro-rata basis (the "Distribution") all of the
outstanding shares of common stock of Stilwell Financial Inc., a Delaware
corporation ("Stilwell"), and a wholly-owned subsidiary of KCSI. Stilwell
holds the financial services businesses of KCSI, including, among others,
an approximate 81.5% ownership in Janus Capital Corporation, an approximate
86% ownership in Berger LLC, an 80% ownership in Nelson Money Managers plc
and an approximate 32% investment in DST Systems, Inc. Each holder of
record of KCSI Common Stock received two shares of common stock of
Stilwell, par value $0.01 per share ("Stilwell Common Stock"), for every
one share of KCSI Common Stock held on June 28, 2000 (the "Record Date").
KCSI effected the Distribution on July 12, 2000 by delivering all of the
outstanding shares of Stilwell Common Stock to the distribution agent for
distribution to the stockholders of record of KCSI Common Stock on the
Record Date. The total number of shares of Stilwell Common Stock
distributed was 222,999,786 based upon the number of shares of KCSI Common
Stock outstanding on the Record Date. Stilwell Common Stock certificates
were mailed on or about July 12, 2000.
No consideration was paid by KCSI's stockholders for the shares of Stilwell
Common Stock received in the Distribution, nor were stockholders required
to surrender or exchange shares of KCSI Common Stock nor take any other
action in order to receive shares of Stilwell Common Stock.
As a result of the distribution to current stockholders of all of the
Common Stock of Stilwell, the Registrant adjusted its consolidated
financial position and results of operations to reflect the separation of
the Stilwell businesses from KCSI's consolidated financial statements.
Additionally, on July 12, 2000, KCSI's Certificate of Incorporation was
amended (the "Amendment"), to effect a one for two reverse stock split (the
"Reverse Stock Split") of KCSI Common Stock. The Amendment was approved by
stockholders at a special meeting on July 15, 1998. The proxy statement
explaining the Reverse Stock Split was mailed to stockholders on or about
June 9, 1998.
The accompanying unaudited balance sheet and statements of operations
reflect the pro forma impact of these transactions as if they had occurred
as of: 1) March 31, 2000 for balance sheet purposes and; 2) January 1,
1999 and 2000, for the three months ended March 31, 1999 and 2000; and
January 1, 1997, 1998 and 1999, for the years ended December 31, 1997, 1998
and 1999, respectively, for statement of operations purposes.
Balance Sheet
Note 2:
Represents the separation of Stilwell from the consolidated Registrant
accounts as if the
<PAGE> 12
transaction had occurred on March 31, 2000. Each of Stilwell's respective asset
and liability account components is removed from the consolidated accounts as a
result of the distribution of the outstanding stock of Stilwell to KCSI Common
stockholders.
The Registrant reclassified $200 million of outstanding indebtedness from
long-term debt to debt due within one year. This debt, which is scheduled
to mature in January 2001, was classified as a long-term obligation in the
historical financial statements because the Registrant had the ability and
intent to refinance the obligation on a long-term basis. Following the
Distribution, a portion of the credit facility used to support the
long-term classification is no longer available. The Registrant intends
to refinance this obligation prior to its scheduled maturity.
Statement of Operations
Note 3:
Represents the separation of Stilwell from the consolidated Registrant
accounts as if the transaction had occurred on January 1 of each of the
respective periods presented. Each of Stilwell's respective income
statement caption amounts is removed from the consolidated accounts as a
result of the distribution of the outstanding stock of Stilwell to KCSI
Common stockholders.
Note 4:
The earnings per share calculations, for both Registrant historical and pro
forma, and associated pro forma weighted average common shares outstanding
reflect the impact of the one for two reverse stock split and the
separation of the results of operations of Stilwell from KCSI's
consolidated financial statements.
Note 5:
Income from continuing operations for the three months ended March 31, 2000
excludes an extraordinary loss of $5.9 million or $0.10 per diluted share
related to the early extinguishment of Registrant indebtedness.
