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) April 22, 1998
(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) 435-6568
Not Applicable
(Former name or former address, if changed since last report.)
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FORM 8-K
DST SYSTEMS, INC.
ITEM 1 CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
Not applicable.
ITEM 3 BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5 OTHER EVENTS
See attached as an Exhibit to this Form 8-K a News Release released April 22,
1998 concerning the announcement of financial results.
ITEM 6 RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
Not applicable.
ITEM 8 CHANGE IN FISCAL YEAR
Not applicable.
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/ Robert C. Canfield
Senior Vice President, General Counsel,
Secretary
Date: April 24, 1998
April 22, 1998
DST SYSTEMS, INC. ANNOUNCES FIRST QUARTER 1998 FINANCIAL RESULTS
DST Systems, Inc.(DST) announces financial results for the quarter ended
March 31, 1998.
For the quarter ended March 31, 1998, DST's consolidated net income was $18.6
million, an increase of 23.0% over first quarter 1997 net income of $15.1
million. Basic earnings per share were $.38 ($.37 on a diluted basis) for the
current year quarter, an increase of 26.7% and 23.3% respectively, compared to
earnings per share of $.30 (both basic and diluted)for the quarter ended March
31, 1997.
Revenues for the quarter ended March 31, 1998 totaled $187.4 million an increase
of 18.1% over the prior year. U.S. revenues were $157.5 million for the quarter,
an increase of 13.6% over 1997 revenues. The revenue increase resulted from
higher levels of mutual fund, output processing, Automated Work Distributor
(AWD(sm)) and subscriber management volumes.
U.S. mutual fund shareowner accounts serviced totaled 45.9 million at March 31,
1998, an increase of 2.0% from the 45.0 millio serviced at December 31, 1997
and an increase of 9.8% from the 41.8 million serviced at March 31, 1997. As
expected and earlier reported, during the quarter Prudentia internalized the
processing for approximately 900,000 mutual fund shareowner accounts. Excluding
the Prudential shareowner accounts removed, accounts serviced grew by 1.8
million, or 4.1% from December 31, 1997. Increased IRA activity contributed to
account growth. For the quarter ended March 31, 1998, new IRA accounts opened
increased by 470,000 accounts over the 1997 quarter, and approximately
two-thirds of the increase were the new Roth or Educational IRA accounts. U.S.
output processing pages printed for the quarter increased 9.1% over first
quarter 1997 volumes to 428.1 million pages. U.S. AWD workstations licensed
increased 4.6 % over year end 1997 levels.
International revenues totaled $29.9 million for the quarter, a 49.6% increase
over comparable prior year revenues. The increase was attributable to
significantly higher software and services revenues from the Company's
investment accounting products. Canadian mutual fund processing and
international AWD revenues also increased.
Consolidated income from operations increased 31.7% over the prior year quarter
to $31.2 million, resulting in an operating margin of 16.7%, as compared to
14.9% for the prior year. U.S. income from operations increased 8.0% to $28.1
million. U.S. costs and expenses increased 15.7%, principally due to increased
personnel costs to support revenue growth. U.S. depreciation and amortization
costs grew 10.4% in the first quarter 1998 to $19.7 million as a result of one
time write-offs of intangible assets totaling $3.2 million, primarily associated
with a $2.6 million contract termination fee received in the quarter. Without
these non-recurring items, U.S. income from operations would have risen by 10.2%
and U.S. operating margin would have been 18.5%. International businesses posted
an aggregate operating income of $3.1 million for the current year quarter, as
compared to an operating loss of $2.4 million for the 1997 quarter, primarily
resulting from increased investment accounting software and services and
Canadian mutual fund processing revenues.
Equity in earnings of unconsolidated affiliates was a loss of $0.4 million for
the quarter ended March 31, 1998, as compared to a profit of $1.0 million for
the quarter ended March 31, 1997, resulting from increased losses at European
Financial Data Services (EFDS), and lower earnings at Argus Health Systems, Inc.
Earnings at Boston Financial Data Services increased nominally over the prior
year.
Interest expense totaled $2.3 million for the quarter ended March 31, 1998, up
slightly from the $2.2 million recorded in the prior year quarter.
DST's effective tax rate rose to 36.8% for the first quarter 1998, as compared
to 35.2% for the prior year quarter, primarily caused by changes in the
components of taxable income.
Other Actions
During the quarter, DST purchased 200,000 shares of its common stock, completing
its 1.2 million share repurchase program. The shares purchased will be available
to employees under DST's stock award program and to provide to option holders
who exercise options.
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<CAPTION>
DST SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues $ 158,684 $ 187,423
Costs & Expenses 115,354 134,421
Depreciation & Amortization 19,629 21,780
---------------- ---------------
Income from Operations 23,701 31,222
Interest Expense (2,163) (2,301)
Other Income 979 841
Equity in Earnings (Losses) of Unconsolidated Affiliates 1,044 (444)
---------------- ---------------
Income Before Income Taxes & Minority Interest 23,561 29,318
Income Taxes 8,302 10,792
---------------- ---------------
Income Before Minority Interest 15,259 18,526
Minority Interest in Income (Losses) 156 (47)
---------------- ---------------
Net Income $ 15,103 $ 18,573
================ ===============
Average Common Shares Outstanding 49,529 49,002
Basic Earnings Per Share $0.30 $0.38
Diluted Earnings Per Share $0.30 $0.37
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DST Systems, Inc.
333 West 11th Street
Kansas City, MO
64105-1594
NYSE & CHX 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
