UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) April 13, 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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FIRST AMENDMENT AND RESTATEMENT TO CAUTIONARY STATEMENTS
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
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, DST Systems, Inc. (the "Company") is hereby
amending and restating its Form 8-K dated March 15, 1996 setting forth certain
cautionary statements identifying important factors that either individually or
in combination with other factors could cause the Company's actual operating
results to differ materially from those projected in forward-looking statements,
whether oral or written, concerning the Company and made by, or on behalf of,
the Company.
ITEM 6 RESIGNATIONS OF REGISTRANT'S DIRECTORS Not applicable.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
Cautionary statements for purposes of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 are attached hereto as Restated
and Amended Exhibit 99.
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 13, 1998
Restated and Amended
Exhibit 99
CAUTIONARY STATEMENTS AS AMENDED AND RESTATED APRIL 13, 1998
WITH RESPECT TO FORWARD-LOOKING COMMENTS FOR
PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
DST Systems, Inc. desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Act of 1995 and is filing this
Form 8-K/A-1 in order to do so. The Company or others on behalf of the Company
may make from time to time (whether orally or in writing) forward-looking
comments or statements concerning potential future events, including but not
limited to, the results of the Company's operations. Such forward-looking
statements are based upon assumptions by the Company's management at the time
the statements are made, including assumptions about risks and uncertainties
faced by the Company. If any of management's assumptions prove incorrect or
should unanticipated circumstances arise, the actual results could materially
differ from those anticipated by such forward-looking statements. The
differences could be caused by a number of factors or combinations of factors
including, but not limited to, those factors set forth below. Persons hearing or
reading such forward-looking comments should consider carefully the following
factors, in addition to the other information contained in the Company's public
documents, when evaluating such forward-looking comments. The Company does not
intend to update any forward-looking statement made or published to reflect
events or developments occurring after the making or publishing of such
statement.
Dependence on U.S. Mutual Fund Industry
The Company's future growth and success will depend in part upon the
further growth of the mutual fund industry in the United States. The Company
derives a substantial proportion of its consolidated revenues from the delivery
of services and products to United States mutual fund industry clients. Any
event affecting the mutual fund industry which results in a significant decline
in the number of shareowner accounts could have a material adverse effect on the
Company.
Impact of Technological Change
The markets served by the Company require the use of advanced computer
hardware and software technology, and the development of new products and
services to meet increasingly complex and rapidly changing client and regulatory
requirements. The Company's future success depends in part on its ability to
continue to adapt its technology, on a timely and cost effective basis, to meet
these requirements. There can be no assurance that the Company will be able to
respond adequately to these technological demands or that its competitors will
not develop more advanced technology that will place the Company's products and
services at a competitive disadvantage.
Reliance on Centralized Processing Facility
The Company's processing services are primarily dependent on the
Winchester Data Center, the Company's central computer operations and
information processing facility located in Kansas City, Missouri. Although the
Company has taken what it considers to be sufficient precautions to protect this
facility and to provide processing alternatives, a natural disaster or other
calamity that causes long-term damage to the facility could have a material
adverse effect on the Company.
Importance of Key Personnel
The Company's operations and the continuing implementation of its
business strategy are dependent upon the efforts of its technical personnel and
senior management. Recruiting and retaining capable personnel, particularly
those with expertise in the types of computer hardware and software utilized by
the Company, are vital to the Company's success. There is substantial
competition for qualified technical and management personnel and there can be no
assurance that the Company will be able to attract or keep the qualified
personnel it requires. The loss of key personnel or the failure to hire
qualified personnel could have a material adverse effect on the Company.
Potential Payments Under Incentive Compensation Plan
Under the Company's incentive compensation plan, officers and other key
employees of the Company are eligible to receive annual cash bonuses based upon
the achievement of targeted performance levels. The total annual amount payable
under the plan may be as much as 10 percent of the Company's pretax profits, as
defined in the plan.
Control of Joint Ventures
The Company's business strategy for growth and expansion includes a
reliance on joint ventures. The Company derives a significant part of its net
income from its pro rata share in the earnings of these unconsolidated
companies. Although the Company owns significant equity interests in these
companies and has representation on their Boards of Directors, the Company is
not in a position to exercise control over their operations, strategies or
financial decisions without the concurrence of its equity partners. The
Company's equity interests in Boston Financial Data Services, Inc. ("BFDS") and
Argus Health Systems, Inc. also are subject to contractual buy/sell arrangements
that restrict the Company's ability to fully dispose of its interest in these
companies and that under certain circumstances permit such companies to purchase
the Company's interest.
Influence by Current Stockholder
Kansas City Southern Industries, Inc. ("KCSI") currently owns
approximately 41 percent of the outstanding common stock of the Company. In
addition, two directors of KCSI are also directors of the Company and KCSI is
generally exempted from the restrictions in the Company's Stockholders' Rights
Plan. As a result, KCSI may be able to significantly influence matters affecting
the Company, including matters submitted to a vote of the Company's
stockholders, such as the election of directors and the approval of corporate
transactions. The existence of cumulative voting and the exemption of KCSI from
the Company's Stockholders' Rights Plan provide KCSI with the potential to
effectively control the corporate governance of the Company.
Competition
The Company, its subsidiaries, joint ventures and strategic
associations encounter significant competition for the Company's services and
products from other third-party providers of similar services and products and
from in-house providers who have chosen not to outsource their own business. The
Company's ability to compete effectively is, in part, dependent on the
availability of capital and other resources, and some of these competitors have
greater resources and greater access to capital than the Company.
Regulation
As registered transfer agents, the Company, BFDS and BFDS' subsidiary,
National Financial Data Services, Inc. ("NFDS"), are subject to the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and to the rules and
regulations of the Securities and Exchange Commission ("SEC") under the Exchange
Act which require the Company, BFDS, and NFDS to register with the SEC and which
impose on them recordkeeping and reporting requirements. Certain of the
operations and records of the Company, BFDS, and NFDS are subject to examination
by the SEC and, as providers of services to financial institutions, to
examination by bank and thrift regulatory agencies. Material noncompliance with
the Exchange Act or SEC rules and regulations by the Company, BFDS, or NFDS
could result in their suspension or in the revocation of their transfer agent
registrations, which could have a material adverse effect on the Company.
Year 2000
Many computer programs use only two digits to identify a year in a date
field within the program (e.g., "98" or "02"). If not corrected, computer
applications making calculations and comparisons in different centuries may
cause inaccurate results, or fail by or at the Year 2000. These Year
2000-related issues are of particular importance to the Company. The Company
depends upon its computer and other systems, and the computer and other systems
of third-parties to conduct and manage the Company's business. Additionally, the
Company's products and services are dependent upon using accurate dates in order
to function properly. These Year 2000-related issues may also adversely affect
the operations and financial performance of one or more of the Company's
customers or suppliers. As a result, the failure of the Company's computer and
other systems, products or services, the computer systems and other systems upon
which the Company depends, or of the Company's customers or suppliers to be Year
2000 ready could have a material adverse effect on the Company.
The Company's goal is to be ready, internally, for the Year 2000 by
December 31, 1998. This goal allows for one full year of testing with clients
and the industry prior to the Year 2000. The Company's Year 2000 program is
underway, and the Company expects to achieve its goal.
Although the Company is not aware of any material operational or
financial Year 2000-related issues, the Company cannot make any assurances that
its computer systems, products, services or other systems or the computers and
other systems of others upon which the Company depends will be Year 2000 ready
on schedule, that the costs of its Year 2000 program will not become material or
that the Company's alternative plans will be adequate. The Company is currently
unable to anticipate accurately the magnitude, if any, of the Year 2000-related
issues arising from the Company's customers or suppliers. If any such risks
(either with respect to the Company or its customers or suppliers) materialize,
the Company could experience material adverse consequences to its business.
Miscellaneous
In addition to the factors noted above, there may be other factors that
cause any forward-looking comment not to materialize. Other factors include, but
are not limited to, changes in management strategies; changes in lines of
business; failure of anticipated opportunities to materialize; changes in the
cost of necessary supplies; changes in the economic, political or regulatory
environments in the United States and/or the international countries where the
Company now competes or may compete in the future; and litigation involving the
Company.
