DST Systems, Inc. Announces Third Quarter 2012 Financial Results

       DST Systems, Inc. Announces Third Quarter 2012 Financial Results

PR Newswire

KANSAS CITY, Mo., Oct. 31, 2012

KANSAS CITY, Mo., Oct. 31, 2012 /PRNewswire/ --DST Systems, Inc. (NYSE: DST)
reported consolidated net income attributable to DST ("DST Earnings") of $85.9
million ($1.87 per diluted share) for the third quarter 2012 compared to $35.3
million ($0.76 per diluted share) for the third quarter 2011. Taking into
account certain non-GAAP adjustments explained herein, consolidated DST
Earnings were $44.1 million ($0.96 per diluted share) for third quarter 2012
compared to $41.6 million ($0.90 per diluted share) for third quarter 2011.

The diluted EPS impact of non-GAAP adjustments for third quarter 2012 is
summarized as follows:

Reported GAAP diluted EPS                         $  1.87
Net gains on securities and other investments     (0.69)
Income tax refund claims                          (0.31)
Charitable contribution of marketable securities  (0.05)
Real estate impairments                           0.08
Loss accrual                                      0.04
Employee termination expenses                     0.02
Adjusted Non-GAAP diluted EPS                     $  0.96

"We are pleased with our results for the quarter," said Steve Hooley,
President and CEO. "Both our Financial Services and Output Solutions segments
recorded higher revenues and improved income from operations on a normalized
basis."

Consolidated operating revenues (excluding out-of-pocket reimbursements)
increased $30.9 million or 7.1% to $464 million as compared to third quarter
2011. Financial Services operating revenues increased $27.6 million or 10%
primarily from $25.3 million of operating revenues from ALPS, which was
acquired on October 31, 2011, and an increase in health care revenues. Output
Solutions operating revenues increased $2.4 million or 1.5% from higher North
America revenues.

Taking into account non-GAAP adjustments, income from operations increased
$4.7 million or 7.5% compared to third quarter 2011. Excluding deferred
compensation liability increases (the effect of which is offset in other
income), Financial Services income from operations increased $4.3 million or
7.7% during the quarter to $59.9 million, principally from contributions from
ALPS, improvements in DST HealthCare, partially offset by a decline in mutual
fund servicing revenues. Output Solutions income from operations increased
$8.7 million during the quarter to $10.6 million from higher North American
revenues and lower costs in the United Kingdom.

Taking into account non-GAAP adjustments, equity in earnings of unconsolidated
affiliates declined $1.6 million from decreased earnings at IFDS, attributable
to costs to develop its insurance and pension recordkeeping services in the
United Kingdom and expenses associated with new client conversion activities
in both the United Kingdom and Canada.

Asset monetization update

During the quarter, DST recorded $128.3 million of cash proceeds from sales of
assets, including $104.5 million from the sale of the Company's remaining
interest in Computershare Ltd. For the nine months ended September 30, 2012,
DST has realized $361.8 million of pretax cash, consisting of $309 million of
proceeds from the sales of investments, $5.5 million from the sale of real
estate and a $47.3 million dividend from an investment in a privately held
company during the second quarter. After tax proceeds from these transactions
were primarily used to reduce debt.

Reduction in debt

At September 30, 2012, the Company's total debt outstanding was $1.102
billion, $112 million less than June 30, 2012 and $278.3 million less than
December 31, 2011.

Contribution of marketable securities

During the quarter, DST contributed 250,000 shares of State Street Corporation
common stock to a donor advised public charitable foundation. The
contribution expense of $11 million was offset by a book gain of $8.9 million
from the disposition of securities resulting in a net pretax expense of $2.2
million. The contribution of appreciated securities can be a tax efficient
way to fund charitable contributions. In making the contribution, DST
receives a tax deduction for the fair market value of the securities
contributed, but DST does not recognize any income tax expense on the
disposition of the securities. The income tax benefit associated with this
charitable contribution is approximately $5.0 million. However, the tax
effect will be recorded through the effective tax rate, which results in $4.3
million being recognized in third quarter 2012 and the remaining $700,000 to
be recognized in fourth quarter 2012. The net impact of the contribution is a
$0.05 increase in diluted EPS for the quarter (and $0.06 for the full year
2012), which has been treated as a non-GAAP adjustment. The amount of the
contribution should be sufficient to allow DST to direct charitable
contributions for approximately a three year period.

Income tax refund claims

The Company has previously filed federal income tax refund claims for research
and experimentation credits. During third quarter 2012, the Company and the
IRS reached a resolution in regards to the refund claims. As a result, the
Company recorded an income tax benefit of $14.4 million or $0.31 of diluted
EPS, which has been treated as a non-GAAP adjustment. This income tax benefit
relates to the resolved claim years and certain post-audit periods that are
still subject to examination. 

Share-related activity

The Company had 45.2 million shares of common stock outstanding at September
30, 2012, an increase of approximately 100,000 shares from June 30, 2012 and
1.0 million shares from September 30, 2011, primarily from shares issued under
equity compensation plans.

Average diluted shares outstanding for third quarter 2012 were 46 million, an
increase of 300,000 shares or 0.7%, from second quarter 2012 and a decrease of
400,000 shares or 0.9% from third quarter 2011. The increase in average
diluted shares outstanding from second quarter 2012 resulted from higher
dilutive effects of restricted stock awards and from shares issued under
equity compensation plans. The decrease in average diluted shares from third
quarter 2011 resulted from share repurchases made in the fourth quarter of
2011, partially offset by higher dilutive effects of restricted stock awards
and from shares issued under equity compensation plans.

Total stock options, restricted stock and restricted stock units ("equity
units") outstanding at September 30, 2012 were 3.3 million, of which 2.3
million were stock options, 100,000 were restricted stock and 900,000 were
restricted stock units. Equity units decreased 200,000 units or 6.6% from
June 30, 2012 and 1.1 million units or 25.7% from September 30, 2011 primarily
from fewer stock options outstanding.

The Company announced on October 4, 2012 that its Board of Directors declared
a cash dividend of $0.40 per share on its common stock. The dividend will be
payable November 8, 2012, to shareholders of record at the close of business
on October 19, 2012.

Detailed Review of Financial Results

The following discussion of financial results takes into account the non-GAAP
adjustments described in the section entitled "Use of Non-GAAP Financial
Information" and detailed in the attached schedule titled "Description of
Non-GAAP Adjustments."

Segment Results

Financial Services Segment

Operating revenues for the Financial Services Segment (excluding out-of-pocket
reimbursements) for third quarter 2012 increased $27.6 million or 10% to
$304.6 million as compared to third quarter 2011. ALPS contributed
approximately $25.3 million of operating revenues for the quarter. Healthcare
and brokerage operating revenues increased as compared to third quarter 2011.
These operating revenue increases were partially offset by lower operating
revenues for mutual fund registered shareowner account servicing resulting
from lower registered accounts serviced.

The following table summarizes changes in U.S. mutual fund registered accounts
and subaccounts (in millions):

                                        Three Months        Nine Months
                                        Ended               Ended
                                        September 30, 2012  September 30, 2012
Registered Accounts
Beginning balance                       80.2                85.1
New client conversions                                      0.5
Subaccounting conversions to DST        (0.6)               (2.4)
platforms
Subaccounting conversions to non-DST    (1.5)               (4.9)
platforms
Conversions to non-DST platforms                            (0.9)
Organic growth (decline)                (0.5)               0.2
Ending balance                         77.6                77.6
Subaccounts
Beginning balance                       17.0                14.6
Conversions to non-DST platforms        (6.1)               (6.1)
Conversions from non-DST registered                         0.2
platforms
Conversions from DST's registered       0.6                 2.4
accounts
Organic growth                         0.3                 0.7
Ending balance                         11.8                11.8
Total accounts                          89.4                89.4

Tax-advantaged accounts were 41.9 million at September 30, 2012, a decrease of
400,000 accounts from June 30, 2012. Tax-advantaged accounts represent 54.0%
of total registered accounts serviced at September 30, 2012, as compared to
50.2% at December 31, 2011.

As previously announced, a subaccounting client affiliated with a competitor
of DST converted 6.1 million subaccounts to its in-house platform during the
third quarter.

Projections of registered accounts converting to subaccounts are based on
information obtained from DST's clients and are subject to change. The
Company currently expects conversions of registered accounts to subaccounts
for the remainder of 2012 to be between 2-3 million, of which approximately
25% of these accounts are expected to convert to DST's subaccounting
platform. These estimates are consistent with prior estimates of 9-10 million
accounts for 2012.

For 2013, DST projects total conversions to subaccounts will approximate 5-6
million, of which approximately 30% will convert to DST's subaccounting
platform.The actual number of accounts estimated to convert to and from
various DST platforms, as well as the timing of those events, is dependent
upon a number of factors. Actual results could differ from the Company's
estimates.

A new subaccounting client with approximately 3.9 million subaccounts, based
on current levels, was signed during the third quarter. The conversion of the
subaccounts to DST's platform is expected to be completed in the second
quarter 2013.

Assets under active distribution by ALPS and assets under administration by
ALPS at September 30, 2012 were $63.1 billion and $97.2 billion, respectively,
an increase of $5.7 billion and $2.9 billion as compared to June 30, 2012.
The increase is attributable to new clients and market appreciation.

Retirement operating revenues for the third quarter 2012 were essentially
unchanged from third quarter 2011. Defined contribution participants were 4.4
million at September 30, 2012, essentially unchanged as compared to June 30,
2012 and December 31, 2011.

Previously announced participant conversions totaling approximately 1.3
million are expected to occur through the remainder of 2012 and in 2013, with
approximately 300,000 participant conversions expected to occur in fourth
quarter 2012.

DST HealthCare operating revenues during the third quarter 2012 increased from
higher volumes of pharmacy claims processed. Pharmacy claims paid during
third quarter 2012 increased 9.9 million claims or 11.1% from the prior year
quarter to 99 million claims. The increase in pharmacy claims paid in third
quarter 2012 is associated with new clients and higher volumes from existing
clients. Covered lives using DST's medical claim processing platforms were
22.5 million at September 30, 2012, a decrease of 100,000 covered lives from
both June 30, 2012 and September 30, 2011. 

AWD operating revenues during the third quarter 2012 increased slightly as
compared to third quarter 2011 due to higher software license revenues.
Active AWD users at September 30, 2012 were 203,500, essentially unchanged
from September 30, 2011 and an increase of 1.2% from June 30, 2012. DST
Global Solutions (investment management) operating revenues during third
quarter 2012 decreased slightly from the same period in 2011 due to lower
license sales.

Financial Services Segment software license fee revenues are derived
principally from DST Global Solutions, DST Health Solutions and AWD.
Operating revenues include approximately $10.8 million of software license fee
revenues for third quarter 2012, a decrease of $2.0 million or 15.6% from the
same period in 2011 reflecting higher AWD software license fee revenues, but
lower medical claims and investment management license fee revenues. While
license fee revenues are not a significant percentage of DST's operating
revenues, they can significantly impact earnings in the period in which they
are recognized. Revenues and operating results from individual license sales
depend heavily on the timing, size and nature of the contract.

Financial Services costs and expenses for third quarter 2012, excluding
reimbursable operating costs, increased $30.4 million or 15.4% to $227.4
million. Excluding deferred compensation, operating costs and expenses
increased $20.5 million in third quarter 2012, primarily from the inclusion of
ALPS and higher retirement and brokerage business development expenses.

Business development and start-up costs for the brokerage and retirement
businesses during the quarter were $9.2 million, an increase of $700,000 as
compared to third quarter 2011 costs for retirement, brokerage and insurance
processing solutions development activities. The Company anticipates that it
will recognize $0.12 of after tax expense per diluted share of business
development and start-up expenses for the brokerage and retirement businesses
during the fourth quarter 2012.

Changes in deferred compensation liabilities increased operating expenses by
$9.9 million as compared to third quarter 2011. The Company maintains a
limited number of deferred compensation plans, including a mandatory deferral
of a portion of the annual incentive compensation award. Under these plans,
participants can hypothetically invest their deferred compensation awards in
certain investments and are credited with deemed gains or losses of their
underlying hypothetical investments. The Company generally purchases matching
investments, designated as trading securities, to fund the deferred
compensation liability and to eliminate the income statement effect of changes
in the liability. The change in the liability, whether an increase or
decrease, is recorded in operating expense; the change in the corresponding
related investment assets is recorded in other income. However, in the
determination of pre-tax income, the two offset each other.

Financial Services depreciation and amortization increased $2.8 million in
third quarter 2012 to $21.7 million. Increased intangible asset amortization
of $2.0 million from 2011 Financial Services Segment acquisitions (of which
ALPS was $1.6 million) and increased depreciation from recent capital
expenditures were partially offset by lower intangible asset amortization from
DST Health Solutions as certain assets became fully amortized at September 30,
2011.

Excluding the effects of deferred compensation, Financial Services Segment
income from operations increased $4.3 million during third quarter 2012 to
$59.9 million. On this basis, operating margin for third quarter 2012 was
19.7% as compared to 20.1% in 2011.

Output Solutions Segment

The following tables present the financial results and the operating
statistics of the Output Solutions Segment for third quarter 2012 and 2011 (in
millions):

          Three Months Ended September 30,
          2012                              2011
          Operating   Operating  Operating  Operating  Operating     Operating
          Revenue     Income     EBITDA     Revenue    Income        EBITDA
                      (Loss)                           (Loss)
North     $  115.4  $       $        $         $         $  
America               13.7      21.4      108.3     8.9          17.5
United    44.2        (3.1)      0.4        48.9       (7.0)         (2.8)
Kingdom
Output                $       $        $         $         $  
Solutions $  159.6  10.6      21.8      157.2     1.9          14.7
Segment

                          Three Months Ended
                          September 30,
                          2012        2011
Images Produced
 North America            2,415.8     2,272.6
 United Kingdom           530.5       530.1
 Output Solutions Segment 2,946.3     2,802.7
Packages Mailed
 North America            554.6       503.8
 United Kingdom           190.5       187.7
 Output Solutions Segment 745.1       691.5

Output's North America operating revenues increased in third quarter 2012
principally from new client volumes. The increase in revenues, as well as
lower operating costs and lower depreciation expense resulted in a $4.8
million increase in operating income over third quarter 2011.

North America operating margin was 11.9% for third quarter 2012 as compared to
8.2% in third quarter 2011. North America Operating EBITDA increased $3.9
million or 22.3% from third quarter 2011.

During third quarter 2012, Output Solutions received new client commitments in
North America representing, when fully transitioned, approximately 9.5 million
of aggregate packages annually. Full conversion activities for these new
clients are expected to be completed in the first quarter 2013.

DST Output U.K. operating revenues decreased in third quarter 2012 from lower
revenues per package. DST Output U.K. recorded a loss from operations of $3.1
million during third quarter 2012, a $3.9 million improvement over the loss
recorded in third quarter 2011. The improvement is the result of lower costs
from facility consolidations and improvements in operations. Output's U.K.
Operating EBITDA was $400,000, an increase of $3.2 million from third quarter
2011.

DST Output U.K. continues to review its current cost structure in order to
identify additional cost savings opportunities. As previously announced, the
Company has determined that it will close certain U.K. leased operating
locations before the end of 2012. The Company expects to incur facility
related restructuring charges in the fourth quarter 2012 as these leased
facilities become vacated.

Investments and Other Segment

Investments and Other Segment operating revenues for third quarter 2012
increased $800,000 or 5.6% as compared to third quarter 2011, primarily due to
higher third party rental activities. Income from operations increased $1.5
million to $3.2 million from higher real estate revenues, lower operating
expenses and lower depreciation expense.

Review of DST's U.S. Real Estate Holdings

During the third quarter 2012, DST sold a 50,000 square foot facility for $5.5
million.

Income from operations for DST's U.S. real estate holdings during the quarter
was $3.2 million, an increase of $1.3 million as compared to third quarter
2011, primarily from higher operating revenues and lower operating costs.
Operating EBITDA for third quarter 2012 was $5.3 million, an increase of $1.1
million as compared to 2011.

On a "funds from operations" ("FFO") basis, which is defined as net income
plus depreciation and amortization, including a pro-rata portion of
depreciation and amortization of unconsolidated affiliates, DST's real estate
holdings had FFO of $6.5 million, an increase of $1.8 million as compared to
third quarter 2011. FFO diluted EPS was $0.14 for third quarter 2012, an
increase of $0.04 per diluted share as compared to third quarter 2011.

Other Financial Results

Equity in earnings (losses) of unconsolidated affiliates

The following table summarizes the Company's equity in earnings (losses) of
unconsolidated affiliates (in millions):

         Three Months Ended                   Nine Months Ended
         September 30,                        September 30,
         2012              2011               2012             2011
BFDS     $      2.1  $      2.7   $           $     
                                              7.6             9.0
IFDS     (0.8)             3.4                1.3              13.0
Other   1.4               (1.8)              2.8              (2.1)
         $      2.7  $      4.3   $     11.7  $     19.9

BFDS recorded lower revenues in third quarter 2012 associated with reduced
levels of accounts serviced which was partially offset by lower operating
expenses. Average daily client cash balances invested by BFDS were $971
million during third quarter 2012 compared to $1.1 billion during third
quarter 2011 from lower levels of transaction activity. Average interest
rates earned on the balances increased from 0.09% in third quarter 2011 to
0.15% in third quarter 2012. The net earnings from client cash balances were
not sufficient to cover banking and transaction fees.

Equity in both IFDS U.K. and IFDS L.P. earnings declined over the third
quarter 2011. The decline in IFDS U.K. earnings was attributable to costs for
new product development initiatives and costs associated with client
conversion activities. Shareowner accounts serviced by IFDS U.K. were 9.3
million at September 30, 2012, an increase of 1 million accounts from June 30,
2012 and an increase of 1.3 million accounts from September 30, 2011. The
increase in accounts is attributable to new client conversions in third
quarter 2012. As previously announced, IFDS U.K. is in the process of
converting new shareowner processing clients with approximately 200,000
accounts, which are expected to convert by March 31, 2013, and new life and
pensions clients with 100,000 policies, which are expected to convert by June
30, 2013. New product development and client conversion costs will continue
to negatively impact IFDS earnings. 

The decline in IFDS Canada earnings was attributable to costs associated with
client conversion activities. Shareowner accounts serviced by IFDS Canada
were 10.2 million at September 30, 2012, a decrease of 100,000 accounts as
compared to June 30, 2012 and unchanged as compared to September 30, 2011. As
previously announced, IFDS Canada is in the process of converting a new client
which is expected to increase shareowner accounts serviced by approximately
1.2 million accounts in fourth quarter 2012.

DST's equity in earnings of other unconsolidated affiliates for third quarter
2012 increased $3.2 million to $1.4 million as compared to third quarter 2011,
primarily from improved performance at DST's real estate and other affiliates.

Other income (expense), net

Other income, net during third quarter 2012 increased $11.7 million from third
quarter 2011 to $12 million. The increase in other income is mostly
attributable to unrealized appreciation on trading securities associated with
deferred compensation plans (the effect of which is offset as an increase in
costs and expenses in the Financial Services Segment). In addition, foreign
currency gains were higher during third quarter 2012, but dividend income was
lower primarily due to the sale of Computershare.

Interest expense

Interest expense for third quarter 2012 decreased $300,000 to $10.6 million
compared to third quarter 2011, principally from lower weighted average debt
balances outstanding.

Income taxes

The Company's tax rate was 38.3% for third quarter 2012 as compared to 29.4%
in third quarter 2011, principally from decreased foreign tax credits and
qualified rehabilitation tax credits. Excluding the effect of discrete period
items, the Company expects its tax rate to be approximately 38% for the
remainder of 2012.

Use of Non-GAAP Financial Information

In addition to reporting operating income, pretax income, net income, net
income attributable to DST Systems, Inc. and earnings per share on a GAAP
basis, DST has also made certain non-GAAP adjustments which are described in
the attached schedule titled "Description of Non-GAAP Adjustments" and are
reconciled to the corresponding GAAP measures in the attached financial
schedules titled "Reconciliation of Reported Results to Income Adjusted for
Certain Non-GAAP Items" that accompany this earnings release. In making these
non‑GAAP adjustments, the Company takes into account the impact of items that
are not necessarily ongoing in nature, that do not have a high level of
predictability associated with them or that are non‑operational in nature.
Generally, these items include net gains on dispositions of business units,
net gains (losses) associated with securities and other investments,
restructuring and impairment costs and other similar items. Management
believes the exclusion of these items provides a useful basis for evaluating
underlying business unit performance, but should not be considered in
isolation and is not in accordance with, or a substitute for, evaluating
business unit performance utilizing GAAP financial information.

Management uses non-GAAP measures in its budgeting and forecasting processes
and to further analyze its financial trends and "operational run-rate," as
well as making financial comparisons to prior periods presented on a similar
basis. The Company believes that providing such adjusted results allows
investors and other users of DST's financial statements to better understand
DST's comparative operating performance for the periods presented.

The Company has also presented certain information about its real estate
holdings and related financial results on a "funds from operations" ("FFO")
basis, which is defined as net income plus depreciation and amortization,
including a pro-rata portion of depreciation and amortization of
unconsolidated affiliates. The National Association of Real Estate Investment
Trusts developed FFO as a non-GAAP financial measure of performance of an
equity REIT. FFO is a widely used measure of the operating performance of
real-estate companies and is typically provided by REIT's as a supplemental
measure to U.S. generally accepted accounting principles net income available
to common stockholders and earnings per share. FFO does not represent cash
flows from operations as defined by GAAP, is not indicative that cash flows
are adequate to fund all cash needs for the Company's real estate operations
and should not be considered an alternative to net income or any other GAAP
measure as a measurement of the results of our operations or our cash flows or
liquidity as defined by GAAP. It should also be noted that the Company is not
a REIT, and that not all REIT's calculate FFO the way the Company has, so
comparisons with REIT's should be made with care. Management has provided this
non-GAAP measure because it believes it will allow investors and other users
of DST's financial statements to better understand the operating performance
of DST's real estate holdings.

DST defines Operating EBITDA as income from operations before depreciation and
amortization. This supplemental non-GAAP liquidity measure is provided in
addition to, but not as a substitute for, cash flow from operations. As a
measure of liquidity, the Company believes Operating EBITDA is useful as an
indicator of its ability to generate cash flow. Operating EBITDA, as
calculated by the Company, may not be consistent with the computation of
Operating EBITDA by other companies. The Company believes a useful measure of
the Output Solutions and Investments and Other Segments contribution to DST's
results is to focus on cash flow and DST's management believes Operating
EBITDA is useful for this purpose. A reconciliation of Output Solutions
Segment and Investments and Other Segment income from operations to Operating
EBITDA is included in schedules that accompany this earnings release. The
non-GAAP adjustments to these reconciliations are described in the attached
schedule titled "Description of Non-GAAP Adjustments."

DST's management uses each of these non-GAAP financial measures in its own
evaluation of the Company's performance, particularly when comparing
performance to past periods. DST's non-GAAP measures may differ from similar
measures by other companies, even if similar terms are used to identify such
measures. Although DST's management believes non-GAAP measures are useful in
evaluating the performance of its business, DST acknowledges that items
excluded from such measures may have a material impact on the Company's income
from operations, pretax income, net income and earnings per share calculated
in accordance with GAAP. Therefore, management typically uses non‑GAAP
measures in conjunction with GAAP results. Investors and users of our
financial information should also consider the above factors when evaluating
DST's results.

* * * * *

Safe Harbor Statement

Certain material presented in the press release includes forward-looking
statements intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, (i)all
statements, other than statements of historical fact, included in this press
release that address activities, events or developments that we expect or
anticipate will or may occur in the future or that depend on future events, or
(ii)statements about our future business plans and strategy and other
statements that describe the Company's outlook, objectives, plans, intentions
or goals, and any discussion of future operating or financial performance.
Whenever used, words such as "may," "will," "would," "should," "potential,"
"strategy," "anticipates," "estimates," "expects," "project," "predict,"
"intends," "plans," "believes," "targets" and other terms of similar meaning
are intended to identify such forward-looking statements. Forward-looking
statements are uncertain and to some extent unpredictable, and involve known
and unknown risks, uncertainties and other important factors that could cause
actual results to differ materially from those expressed or implied in, or
reasonably inferred from, such forward-looking statements. Factors that could
cause results to differ materially from those anticipated include, but are not
limited to, the risk factors and cautionary statements included in the
Company's periodic and current reports (Forms 10-K, 10-Q and 8-K) filed from
time to time with the Securities and Exchange Commission. All such factors
should be considered in evaluating any forward-looking statements. The
Company undertakes no obligation to update any forward-looking statements in
this press release to reflect new information, future events or otherwise.



DST SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(In millions, except per share amounts)

(Unaudited)
                                    Three Months Ended    Nine Months Ended
                                    September 30,         September 30,
                                    2012       2011       2012       2011
Operating revenues                  $       $       $        $  
                                    464.0     433.1     1,405.4    1,286.7
Out-of-pocket reimbursements        168.0      158.3      512.6      478.6
Total revenues                      632.0      591.4      1,918.0    1,765.3
Costs and expenses                  544.4      496.5      1,643.1    1,466.4
Depreciation and amortization       40.5       33.7       116.8      95.1
Income from operations              47.1       61.2       158.1      203.8
Interest expense                    (10.6)     (10.9)     (34.0)     (34.6)
Other income (expense), net         72.4       (4.5)      296.3      27.3
Equity in earnings of               3.1        1.7        9.8        17.3
unconsolidated affiliates
Income before income taxesand      112.0      47.5       430.2      213.8
non-controlling interest
Income taxes                        26.1       14.0       144.1      72.8
Net income                          85.9       33.5       286.1      141.0
Net loss attributable to                       1.8                   2.9
non-controlling interest
Net income attributable to DST      $      $      $       $   
Systems, Inc.                       85.9      35.3      286.1     143.9
Average common shares outstanding   45.1       45.8       44.9       46.2
Average diluted shares outstanding  46.0       46.4       45.6       46.9
Basic earnings per share            $      $      $      $    
                                    1.90      0.77      6.38      3.11
Diluted earnings per share          $      $      $      $    
                                    1.87      0.76      6.27      3.07



DST SYSTEMS, INC.

STATEMENT OF INCOME FROM OPERATIONS BY SEGMENT

(In millions)

(Unaudited)
                 Three Months Ended September 30, 2012
                 Financial   Output     Investments  Elimination  Consolidated
                 Services    Solutions  / Other      Adjustments  Total
Operating        $  302.6  $        $        $            $   
revenues                     157.7      3.7                       464.0
Intersegment
operating        2.0         1.9        11.4         (15.3)
revenues
Out-of-pocket    12.9        156.9      0.1          (1.9)        168.0
reimbursements
Total revenues   317.5       316.5      15.2         (17.2)       632.0
Costs and        243.8       294.7      20.6         (14.7)       544.4
expenses
Depreciation and 21.7        11.2       8.2          (0.6)        40.5
amortization
Income (loss)    $   52.0  $        $          $        $    
from operations              10.6      (13.6)      (1.9)       47.1
                 Three Months Ended September 30, 2011
                 Financial   Output     Investments  Elimination  Consolidated
                 Services    Solutions  / Other      Adjustments  Total
Operating        $  274.6  $        $        $            $   
revenues                     155.4      3.1                       433.1
Intersegment
operating        2.4         1.8        11.2         (15.4)
revenues
Out-of-pocket    9.5         150.1      0.1          (1.4)        158.3
reimbursements
Total revenues   286.5       307.3      14.4         (16.8)       591.4
Costs and        208.0       292.6      10.0         (14.1)       496.5
expenses
Depreciation and 18.9        12.8       2.7          (0.7)        33.7
amortization
Income (loss)    $   59.6  $       $        $        $    
from operations              1.9       1.7          (2.0)       61.2



DST SYSTEMS, INC.

STATEMENT OF INCOME FROM OPERATIONS BY SEGMENT

(In millions)

(Unaudited)
                 Nine Months Ended September 30, 2012
                 Financial   Output     Investments  Elimination  Consolidated
                 Services    Solutions  / Other      Adjustments  Total
Operating        $  917.1  $        $         $            $  1,405.4
revenues                     477.6      10.7
Intersegment
operating        6.1         6.1        33.9         (46.1)
revenues
Out-of-pocket    40.5        477.7      0.2          (5.8)        512.6
reimbursements
Total revenues   963.7       961.4      44.8         (51.9)       1,918.0
Costs and        740.9       905.7      40.6         (44.1)       1,643.1
expenses
Depreciation and 69.9        33.3       15.5         (1.9)        116.8
amortization
Income (loss)    $  152.9  $        $          $        $   
from operations              22.4      (11.3)      (5.9)       158.1
                 Nine Months Ended September 30, 2011
                 Financial   Output     Investments  Elimination  Consolidated
                 Services    Solutions  / Other      Adjustments  Total
Operating        $  835.6  $        $        $            $  1,286.7
revenues                     442.0      9.1
Intersegment
operating        6.7         5.8        33.0         (45.5)
revenues
Out-of-pocket    30.3        451.2      1.5          (4.4)        478.6
reimbursements
Total revenues   872.6       899.0      43.6         (49.9)       1,765.3
Costs and        631.1       848.3      29.0         (42.0)       1,466.4
expenses
Depreciation and 54.8        34.4       7.9          (2.0)        95.1
amortization
Income (loss)    $  186.7  $        $        $        $   
from operations              16.3      6.7          (5.9)       203.8



DST SYSTEMS, INC.

OTHER SELECTED FINANCIAL INFORMATION

(In millions)

(Unaudited)
                                   September 30,        December 31,
Selected Balance Sheet Information 2012                 2011
   Cash and cash equivalents       $       103   $        41
   Debt                            1,102                1,380
                                   Nine Months Ended
                                   September 30,
Capital Expenditures, by Segment   2012                 2011
   Financial Services              $        50  $        48
   Output Solutions                25                   16
   Investments and Other           4                    8

DST Systems, Inc.
Description of Non-GAAP Adjustments

In addition to reporting operating income, pretax income, net income, net
income attributable to DST Systems, Inc. and earnings per share on a GAAP
basis, DST has also made certain non-GAAP adjustments that are described below
and are reconciled to the corresponding GAAP measures in the attached
financial schedules titled "Reconciliation of Reported Results to Income
Adjusted for Certain Non-GAAP Items" that accompany this earnings release.
DST's use of non-GAAP adjustments is further described in the section entitled
"Use of Non‑GAAP Financial Information."

The following items, which occurred during the quarter ended September 30,
2012, have been treated as non-GAAP adjustments:

  oBusiness advisory expenses associated with an action by the DST Board of
    Directors to retain independent advisors to assist the Board with its
    ongoing review of DST's business plan, assets and investment portfolio,
    included in costs and expenses, in the amount of $300,000. The income tax
    benefit associated with these expenses was approximately $100,000.

  oEmployee termination expenses of $1.3 million associated with reductions
    in workforce in the Financial Services Segment, which were included in
    costs and expenses. The income tax benefit associated with these costs
    was approximately $400,000.

  oLoss accrual of $1.9 million recorded on a dispute related to a 2001
    international software development agreement in the Financial Services
    Segment, which were included in costs and expenses.

  oImpairment charges on certain U.S. real estate assets not currently used
    in the Company's operations of $5.8 million, included in depreciation and
    amortization expense in the Investments & Other Segment. The income tax
    benefit associated with these costs was approximately $2.3 million.

  oExpenses and net gain related to a charitable contribution of marketable
    securities. The charitable contribution expense of $11 million, recorded
    by the Investments and Other Segment, was offset by a book gain of $8.9
    million from the disposition of securities, which was included in other
    income, net, and resulted in a net pretax expense of $2.2 million. The
    aggregate income tax benefit associated with this charitable contribution
    was approximately $5.0 million. However, the tax effect will be recorded
    through the effective tax rate, which results in $4.3 million being
    recognized in third quarter 2012 and the remaining $700,000 to be
    recognized in fourth quarter 2012.

  oOther net gain, in the amount of $51.5 million, associated with gains
    (losses) related to securities and other investments, which were included
    in other income, net. The income tax expense associated with this net
    gain was approximately $20.0 million. The $51.5 million of net gains on
    securities and other investments for third quarter 2012 was comprised of
    net realized gains from sales of available-for-sale securities of $49.4
    million and net gains on private equity funds and other investments of
    $2.5 million, partially offset by other than temporary impairments on
    available-for-sale securities of $400,000. The Company sold 11.9 million
    shares of Computershare Ltd. in third quarter 2012, received cash proceeds
    of approximately $104.5 million and recorded a gain of $42 million.

  oThe Company recorded a gain on the disposition of an unconsolidated
    affiliate, in the amount of $400,000, included in equity in earnings of
    unconsolidated affiliates. The gain is associated with the receipt of a
    cash distribution from a previously impaired investment. The aggregate
    income tax expense associated with this gain was approximately $200,000.

  oAn income tax benefit of approximately $14.4 million, resulting from the
    resolution of research and experimentation credits.

In addition to the items that occurred in the quarter ended September 30, 2012
as described above, the following items, which occurred during the six months
ended June 30, 2012, have been treated as non-GAAP adjustments:

  oBusiness advisory expenses associated with an action by the DST Board of
    Directors to retain independent advisors to assist the Board with its
    ongoing review of DST's business plan, assets and investment portfolio,
    included in costs and expenses, in the amount of $1.0 million. The income
    tax benefit associated with these expenses was approximately $400,000.

  oEmployee termination expenses of $7.6 million associated with reductions
    in workforce in the Financial Services Segment ($5.4 million) and the
    Output Solutions Segment ($2.2 million), which were included in costs and
    expenses. The aggregate income tax benefit associated with these costs
    was approximately $2.6 million.

  oLeased facility abandonment costs of $400,000, included in costs and
    expenses in the Output Solutions Segment, associated with properties not
    used in the U.K. operations. The aggregate income tax benefit associated
    with these costs was approximately $100,000.

  oImpairment charges on certain real estate assets not currently used in
    operations of $1.8 million, included in depreciation and amortization
    expense in the Investments & Other Segment. The charge was comprised of
    impairments in the U.S. of $1.2 million and internationally of $600,000.
    The aggregate income tax benefit associated with these costs was
    approximately $700,000.

  oLeased facility abandonment costs of $1.8 million, included in costs and
    expenses in the Investments & Other Segment, associated with exiting a
    leased office building. The aggregate income tax benefit associated with
    these costs was approximately $700,000.

  oPretax costs associated with ceasing the development of a processing
    solution for the insurance market, in the amount of $8.3 million. The
    costs were comprised of asset impairment charges of $5.8 million, which
    were included in depreciation and amortization expense, employee
    termination expenses of $1.9 million and other operating costs of $1.4
    million, which were both included in costs and expenses. These costs were
    partially offset by the recognition of previously deferred IFDS L.P.
    software license revenues of $800,000 (DST's share), included in equity in
    earnings of unconsolidated affiliates, related to the 2011 sale of its
    Percana software license to DST. The aggregate income tax benefit
    associated with these net costs is $3.2 million.

  oCash dividend and gain on sale of a private company investment of $186.0
    million, which was included in other income, net. In May 2012, the
    Company received a cash dividend of $47.3 million and realized a gain of
    $138.7 million on the sale of a portion of its shares in a privately held
    company investment. A portion of the dividend is estimated to qualify for
    the dividends received deduction. The aggregate income tax expense
    associated with this dividend and gain was approximately $68.9 million.

  oOther net gain, in the amount of $25.0 million, associated with gains
    (losses) related to the disposition of securities and other investments,
    which were included in other income, net. The income tax expense
    associated with this net gain was approximately $9.7 million. The $25.0
    million of net gains on securities and other investments for the six
    months ended June 30, 2012 was comprised of net realized gains from sales
    of available-for-sale securities of $22.7 million and net gains on private
    equity funds and other investments of $4.2 million, partially offset by
    other than temporary impairments on available-for-sale securities of $1.9
    million. The Company sold 3.1 million shares of Computershare Ltd. in the
    first six months of 2012 and recorded a gain of $11.6 million.

  oImpairment of unconsolidated affiliates, in the amount of $3.1 million,
    included in equity in earnings of unconsolidated affiliates. The
    aggregate income tax benefit associated with this expense was
    approximately $1.2 million.

The following items, which occurred during the quarter ended September 30,
2011, have been treated as non-GAAP adjustments:

  oBusiness development expenses (legal, accounting and other professional
    fees) associated with business acquisitions, included in costs and
    expenses, in the amount of $700,000. The income tax benefit associated
    with these expenses was approximately $300,000.

  oBusiness advisory expenses associated with an action by the DST Board of
    Directors to retain independent advisors to assist the Board with its
    ongoing review of DST's business plan, assets and investment portfolio,
    included in costs and expenses, in the amount of $800,000. The income tax
    benefit associated with these expenses was approximately $300,000.

  oOther net loss, in the amount of $4.5 million, associated with gains
    (losses) related to securities and other investments, which were included
    in other income (expense), net. The income tax benefit associated with
    this net loss was approximately $1.6 million. The $4.5 million of net
    losses on securities and other investments for third quarter 2011 was
    comprised of net losses on private equity funds and other investments of
    $2.7 million and other than temporary impairments on available-for-sale
    securities of $2.2 million, partially offset by net realized gains from
    sales of available-for-sale securities of $400,000.

  oNet loss, in the amount of $300,000, associated with the repurchase of
    senior convertible debentures, which was included in other income
    (expense), net. The income tax benefit associated with this net loss was
    approximately $100,000.

  oEmployee termination expenses at an unconsolidated affiliate, BFDS,
    associated with a reduction in workforce, included in equity in earnings
    of unconsolidated affiliates in the amount of $2.6 million. The income tax
    benefit associated with these expenses was approximately $300,000.

In addition to the items that occurred in the quarter ended September 30,
2011, as described above, the following items, which occurred during the six
months ended June 30, 2011, have been previously reported as non-GAAP
adjustments:

  oContract termination payment, net of certain costs, resulting from the
    termination of a Financial Services subaccounting client, in the amount of
    $2.0 million. The net contract termination gain was comprised of
    operating revenues of $3.5 million, partially offset by certain costs of
    $1.5 million that were included in cost and expenses. The aggregate
    income tax expense associated with this net contract termination gain was
    approximately $800,000.

  oEmployee termination expenses of $5.4 million associated with reductions
    in workforce in the Financial Services Segment ($1.3 million) and the
    Output Solutions Segment ($4.1 million), which were included in costs and
    expenses. The aggregate income tax benefit associated with these costs
    was approximately $2.1 million.

  oBusiness development expenses (legal, accounting and other professional
    fees) associated with 2011 business acquisitions, included in costs and
    expenses, in the amount of $1.2 million ($1.0 million in Financial
    Services and $200,000 in Output Solutions). The income tax benefit
    associated with these expenses was approximately $500,000.

  oOther net gain, in the amount of $19.4 million, associated with gains
    (losses) related to securities and other investments, which were included
    in other income (expense), net. The income tax expense associated with
    this net gain was approximately $7.5 million. The $19.4 million of net
    gain on securities and other investments for the six months ended June 30,
    2011 was comprised of net realized gains from sales of available-for-sale
    securities of $18.4 million and net gains on private equity funds and
    other investments of $1.1 million, partially offset by other than
    temporary impairments on available-for-sale securities of $100,000.

  oNet loss, in the amount of $900,000, associated with the repurchase of
    senior convertible debentures, which was included in other income
    (expense), net. The income tax benefit associated with this net loss was
    approximately $300,000.

DST SYSTEMS, INC.
RECONCILIATION OF REPORTED RESULTS TO INCOME ADJUSTED FOR CERTAIN NON-GAAP
ITEMS
Three Months Ended September 30,
(Unaudited - in millions, except per share amounts)
                      2012
                      Operating    Pretax     Net        DST          Diluted
                      Income       Income     Income     Earnings*    EPS
Reported GAAP income  $        $       $       $        $   
                      47.1        112.0      85.9    85.9         1.87
 Adjusted to remove:
 Included in
operating income:
 Business advisory
expenses - Financial  0.3          0.3        0.2        0.2
Services
 Employee
termination expenses  1.3          1.3        0.9        0.9          0.02
- Financial Services
 Loss accrual -      1.9          1.9        1.9        1.9          0.04
Financial Services
 Impairment of real
estate assets -       5.8          5.8        3.5        3.5          0.08
Investments & Other
 Included in
operating income and
non-operating income:
 Charitable
contribution of       11.0         2.1        (2.2)      (2.2)        (0.05)
securities -
Investments & Other
 Included in
non-operating income:
 Net gain on
securities and other               (51.5)     (31.5)     (31.5)       (0.69)
investments
 Gain from
unconsolidated                     (0.4)      (0.2)      (0.2)
affiliate
 Income tax refund                           (14.4)     (14.4)       (0.31)
claims
Adjusted Non-GAAP     $        $       $       $        $   
income                67.4         71.5     44.1    44.1         0.96
                      2011
                      Operating    Pretax     Net        DST          Diluted
                      Income       Income     Income     Earnings*    EPS
Reported GAAP income  $        $       $       $        $   
                      61.2         47.5     33.5    35.3         0.76
 Adjusted to remove:
 Included in
operating income:
 Business
development expenses  0.7          0.7        0.4        0.4          0.01
- Financial Services
 Business advisory
expenses - Financial  0.8          0.8        0.5        0.5          0.01
Services
 Included in
non-operating income:
 Net loss on
securities and other               4.5        2.9        2.9          0.06
investments
 Net loss on
repurchase of                      0.3        0.2        0.2          0.01
convertible
debentures
 Employee
termination expenses               2.6        2.3        2.3          0.05
at unconsolidated
affiliates
Adjusted Non-GAAP     $        $       $       $        $   
income                62.7         56.4     39.8    41.6         0.90
                  See the "Description of Non-GAAP Adjustments" section for a
Note:             description of each of the above adjustments and see the Use
                  of Non-GAAP Financial Information section for management's
                  reasons for providing non-GAAP financial information.
                  DST Earnings has been defined as "Net income attributable to
*                 DST Systems, Inc." (taking into account the net loss
                  attributable to non-controlling interest).
DST SYSTEMS, INC.
RECONCILIATION OF REPORTED RESULTS TO INCOME ADJUSTED FOR CERTAIN NON-GAAP
ITEMS
Nine Months Ended September 30,
(Unaudited - in millions, except per share amounts)
                      2012
                      Operating    Pretax     Net        DST          Diluted
                      Income       Income     Income     Earnings*    EPS
Reported GAAP income  $ 158.1      $ 430.2    $ 286.1    $ 286.1      $ 6.27
Adjusted to remove:
Included in operating
income:
Business advisory
expenses - Financial  1.3          1.3        0.8        0.8          0.02
Services
Employee termination
expenses - Financial  6.7          6.7        4.2        4.2          0.09
Services
Loss accrual -        1.9          1.9        1.9        1.9          0.04
Financial Services
Employee termination
expenses - Output     2.2          2.2        1.7        1.7          0.04
Solutions
Leased facility
abandonment costs -   0.4          0.4        0.3        0.3          0.01
Output Solutions
Impairment of real
estate assets -       7.6          7.6        4.6        4.6          0.10
Investments & Other
Leased facility
abandonment costs -   1.8          1.8        1.1        1.1          0.02
Investments & Other
Included in operating
income and
non-operating income:
Asset impairment,
employee termination
and other expenses    9.1          8.3        5.1        5.1          0.11
from insurance
processing business -
Financial Services
Charitable
contribution of       11.0         2.1        (2.2)      (2.2)        (0.05)
securities -
Investments & Other
Included in
non-operating income:
Net gain on
securities and other               (76.5)     (46.8)     (46.8)       (1.03)
investments
Dividend and gain on
sale of a private                  (186.0)    (117.1)    (117.1)      (2.57)
company investment
Gain from
unconsolidated                     (0.4)      (0.2)      (0.2)
affiliate
Impairment of
unconsolidated                     3.1        1.9        1.9          0.04
affiliates
Income tax refund                             (14.4)     (14.4)       (0.31)
claims
Adjusted Non-GAAP     $ 200.1      $ 202.7    $ 127.0    $ 127.0      $ 2.78
income
                      2011
                      Operating    Pretax     Net        DST          Diluted
                      Income       Income     Income     Earnings*    EPS
Reported GAAP income  $ 203.8      $ 213.8    $ 141.0    $ 143.9      $ 3.07
Adjusted to remove:
Included in operating
income:
Contract
termination
payment, net -        (2.0)        (2.0)      (1.2)      (1.2)        (0.03)
Financial
Services
Employee
termination
expenses -            1.3          1.3        0.8        0.8          0.02
Financial
Services
Employee
termination           4.1          4.1        2.5        2.5          0.05
expenses - Output
Solutions
Business
development
expenses -            1.7          1.7        1.0        1.0          0.02
Financial
Services
Business
development           0.2          0.2        0.1        0.1
expenses - Output
Solutions
Business advisory
expenses -            0.8          0.8        0.5        0.5          0.01
Financial
Services
Included in
non-operating income:
Net gain on
securities and other               (14.9)     (9.0)      (9.0)        (0.19)
investments
Net loss on
repurchase of                      1.2        0.8        0.8          0.02
convertible
debentures
Employee termination
expenses at                        2.6        2.3        2.3          0.05
unconsolidated
affiliate
Adjusted Non-GAAP     $ 209.9      $ 208.8    $ 138.8    $ 141.7      $ 3.02
income





      See the "Description of Non-GAAP Adjustments" section for a description
Note: of each of the above adjustments and see the Use of Non-GAAP Financial
      Information section for management's reasons for providing non-GAAP
      financial information.
      DST Earnings has been defined as "Net income attributable to DST
*     Systems, Inc." (taking into account the net loss attributable to
      non-controlling interest).



DST SYSTEMS, INC.
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO EBITDA
OUTPUT SOLUTIONS SEGMENT
(Unaudited - in millions)
                                        Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                        2012      2011       2012      2011
Reported GAAP income (loss) from        $ 10.6    $  1.9    $ 22.4    $ 16.3
operations
 Adjusted to remove:
 Depreciation and amortization         11.2      12.8       33.3      34.4
Operating EBITDA, before non-GAAP items 21.8      14.7       55.7      50.7
 Adjusted to remove:
 Leased facility abandonment costs                          0.4
 Employee termination expenses                              2.2       4.1
 Business development expenses                                        0.2
Adjusted operating EBITDA, after        $ 21.8    $ 14.7     $ 58.3    $ 55.0
non-GAAP items

      See the "Description of Non-GAAP Adjustments" section for a description
Note: of each of the above adjustments and see the "Use of Non-GAAP Financial
      Information" section for management's reasons for providing non-GAAP
      financial information.



DST SYSTEMS, INC.
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO EBITDA
INVESTMENTS AND OTHER SEGMENT - U.S. REAL ESTATE OPERATIONS
(Unaudited - in millions)
                                Three Months Ended        Nine Months Ended
                                September 30,             September 30,
                                2012         2011         2012       2011
Reported GAAP income (loss)     $         $       $       $    
from operations                 (13.6)      1.7         (11.3)     6.7
 Adjusted to remove:
 GAAP income (loss) from non   (11.0)       (0.2)        (12.0)     (0.7)
U.S. real estate operations
U.S. Real Estate Operations
GAAP income (loss) from         (2.6)        1.9          0.7        7.4
operations
 Adjusted to remove:
 Depreciation and amortization 7.9          2.3          13.8       6.6
Operating EBITDA, before        5.3          4.2          14.5       14.0
non-GAAP items
 Adjusted to remove:
 Leased facility abandonment                             1.8
costs
Adjusted operating EBITDA,      $       $       $      $    
after non-GAAP items            5.3         4.2         16.3      14.0

      See the "Description of Non-GAAP Adjustments" section for a description
Note: of each of the above adjustments and see the "Use of Non-GAAP Financial
      Information" section for management's reasons for providing non-GAAP
      financial information.





DST SYSTEMS, INC.
RECONCILIATION OF EARNINGS BEFORE INTEREST AND INCOME TAXES
TO FUNDS FROM OPERATIONS ("FFO") AND DILUTED EPS
INVESTMENTS AND OTHER SEGMENT - U.S. REAL ESTATE OPERATIONS
(Unaudited - in millions, except per share amounts)
                                        Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                        2012       2011      2012       2011
Reported GAAP earnings before interest  $ 53.6     $ (1.3)   $ 275.3    $ 31.8
and income taxes
Adjusted to remove:
GAAP earnings from non U.S. real estate 54.1       (3.2)     271.1      24.3
operations
Reported U.S. Real Estate Operations
GAAP earnings before interest and       (0.5)      1.9       4.2        7.5
income taxes
Less: interest expense                  (1.5)      (1.7)     (4.5)      (4.7)
Less: income tax (expense) benefit on   0.8                  0.1        0.5
earnings above
Reported U.S. Real Estate Operations    $ (1.2)    $ 0.2     $ (0.2)    $ 3.3
GAAP net income (loss)
Reported U.S. Real Estate Operations    $ (0.03)   $ 0.00    $ (0.00)   $ 0.07
GAAP diluted EPS
Reported U.S. Real Estate Operations    $ (1.2)    $ 0.2     $ (0.2)    $ 3.3
GAAP net income (loss)
Adjusted to remove net income effect of
non-GAAP items:
Impairment of real estate assets - U.S. 3.5                  4.2
Leased facility abandonment costs -                          1.1
U.S.
Adjusted U.S. Real Estate Operations    $ 2.3      $ 0.2     $ 5.1      $ 3.3
non-GAAP net income
Adjusted U.S. Real Estate Operations    $ 0.05     $ 0.00    $ 0.11     $ 0.07
non-GAAP diluted EPS
Adjusted U.S. Real Estate Operations    $ 2.3      $ 0.2     $ 5.1      $ 3.3
non-GAAP net income
Adjusted to remove:
Depreciation and amortization           2.1*       2.3       6.8*       6.6
Pro-rata portion of depreciation and
amortization of unconsolidated          2.1        2.2       6.3        6.6
affiliates
U.S. Real Estate Funds from operations, $ 6.5      $ 4.7     $ 18.2     $ 16.5
non-GAAP
U.S. Real Estate Funds from operations  $ 0.14     $ 0.10    $ 0.40     $ 0.35
non-GAAP diluted EPS

      See the "Description of Non-GAAP Adjustments" section for a description
Note: of each of the above adjustments and see the "Use of Non-GAAP Financial
      Information" section for management's reasons for providing non-GAAP
      financial information.
*     Adjusted for applicable Non-GAAP items



SOURCE DST Systems, Inc.

Contact: Kenneth V. Hager, Vice President and Chief Financial Officer, DST,
+1-816-435-8603, Media, Matthew Sherman, Nicholas Lamplough, Joele Frank,
Wilkinson Brimmer Katcher, +1-212-355-4449; Investors, Art Crozier, Jennifer
Shotwell, Larry Miller, Innisfree M&A Incorporated, +1-212-750-5833
 
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