DST Systems, Inc. Announces Fourth Quarter 2012 And Full Year 2012 Financial Results

 DST Systems, Inc. Announces Fourth Quarter 2012 And Full Year 2012 Financial
                                   Results

Board Authorizes New $250 Million Share Repurchase Plan

Implements Quarterly Cash Dividend of $0.30 Per Share Payable in First Quarter
2013

PR Newswire

KANSAS CITY, Mo., Jan. 31, 2013

KANSAS CITY, Mo., Jan. 31, 2013 /PRNewswire/ -- DST Systems, Inc. (NYSE: DST)
today announced its fourth quarter and full year 2012 financial results.

Fourth Quarter 2012 and Full Year 2012 Financial Results

DST reported consolidated net income attributable to DST ("DST Earnings") of
$37.9 million ($0.82 per diluted share) for the fourth quarter 2012 compared
to net income of $39.2 million ($0.88 per diluted share) for the fourth
quarter 2011. DST Earnings for the year ended December 31, 2012 were $324
million ($7.08 per diluted share) compared to $183.1 million ($3.95 per
diluted share) for the year ended December 31, 2011.

Taking into account certain non-GAAP adjustments explained herein,
consolidated DST Earnings were $55 million ($1.19 per diluted share) for
fourth quarter 2012 compared to $48 million ($1.07 per diluted share) for
fourth quarter 2011, and $182 million ($3.98 per diluted share) for the year
ended December 31, 2012 compared to $189.7 million ($4.09 per diluted share)
for the year ended December 31, 2011.

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

Reported GAAP diluted EPS                                              $ 0.82
Goodwill impairment                                                   1.32
Net gain on securities and other investments                           (0.95)
Net gain from unconsolidated affiliates                                (0.24)
Leased facility abandonment costs, net of gains on real estate assets  0.18
Employee termination expenses                                          0.16
Income tax benefits                                                    (0.10)
Adjusted Non-GAAP diluted EPS                                          $ 1.19

DST has renamed the Output Solutions Segment as the Customer Communications
Segment to reflect the changing focus from predominantly physical output to a
provider of data management and insight, electronic communication and physical
communication. The Company will refer to the Customer Communications Segment
and to its respective reporting units herein and on ago forward basis for
financial reporting.

"We are pleased with DST's operating results for the fourth quarter, including
year-over-year operating improvement in the Financial Services and Customer
Communications segments," said Steve Hooley, President and CEO of DST. "We
have converted, or are in the process of converting, a number of new clients
across our business lines, which we expect will generate revenue growth and
allow us to continue building upon our momentum."

Mr. Hooley continued, "Today, we announced a new share repurchase
authorization and increased the frequency of our dividend. We also continued
to monetize certain non-operating assets in both our investment and real
estate portfolios. Proceeds from these sales were used to repurchase DST
common shares and to reduce debt during the quarter, and we believe DST now
has an appropriate level of debt to provide the Company with sufficient
financial flexibility to support our growth initiatives. We are committed to
returning capital and enhancing value for shareholders, while continuing to
position the Company for future growth."

Fourth quarter 2012 financial highlights, taking into account non-GAAP
adjustments, were as follows:

  oConsolidated operating revenues (excluding out-of-pocket reimbursements)
    increased $29.7 million or 6.5% to $487 million, as compared to fourth
    quarter 2011. Financial Services operating revenues increased $24.7
    million, or 8.3%, and operating revenues for the Customer Communications
    Segment increased $4.3 million or 2.7%.
  oConsolidated income from operations increased $6.5 million, or 9.2%,
    compared to fourth quarter 2011. Excluding deferred compensation
    liability movements (the effect of which is offset in other income),
    consolidated income from operations was $78.4 million, an increase of $3.2
    million as compared to 2011. On the same basis, Financial Services income
    from operations decreased $3.7 million, or 5.4% during the quarter to
    $65.4 million, principally from client conversion and development costs
    for the retirement and brokerage businesses. Customer Communications
    Segment income from operations increased $6.6 million during the quarter
    to $12.5 million from higher North American revenues and lower costs in
    the U.K operations.
  oEquity in earnings of unconsolidated affiliates increased $3.5 million
    primarily from improved earnings at International Financial Data Services
    L.P. ("IFDS L.P."), which had higher revenues from the conversion of a new
    client with 1.2 million shareowner accounts.
  oThe Company's income tax rate was 33.4% for fourth quarter 2012, a
    decrease of 3.1% as compared to 36.5% for fourth quarter 2011, as a result
    of lower state income taxes and from changes in the mix of domestic and
    international profits.

Goodwill Impairment

As previously announced on January 29, 2013, the Company recorded a non-cash
goodwill impairment charge of $60.8 million in its Customer Communications
U.K. reporting unit during the quarter, which has been treated as a non-GAAP
item.

Income Tax Refund Claims

The Company has previously filed federal income tax refund claims for its
domestic manufacturing deduction under Internal Revenue Code Section 199.
During fourth quarter 2012, the Company and the IRS reached a resolution in
regards to the refund claim for the tax year ended December 31, 2005. As a
result, the Company recorded an income tax benefit of $2.3 million. In
addition, the Company recorded an income tax benefit of $1.6 million related
to research and experimentation tax credits related to certain post-audit
periods that are still subject to examination. These items have been treated
as non-GAAP adjustments.

Asset Monetization Update

During the quarter, DST generated $113.6 million of pretax cash proceeds,
consisting of $85.7 million from the sales of marketable securities, $19.9
million of distributions from private equity funds and other investments and
$8 million from the sale of real estate assets. Included in the $85.7 million
of pretax cash proceeds received from sales of marketable securities are $41
million and $35.7 million from the sales of the Company's interests in Euronet
Worldwide and a portion of its position in State Street Corporation,
respectively.For the year ended December 31, 2012, DST realized $485.4
million of pretax cash proceeds, consisting of $396.8 million from the sales
of investments, $75 million in distributions from private equity funds and
other investments and $13.6 million from the sale of real estate assets.
After tax proceeds from these transactions were primarily used to reduce debt
and to repurchase shares of DST common stock.

In addition, the Company's joint venture, IFDS Canada sold its interest in a
Canadian real estate partnership which owned the building IFDS Canada and
other tenants occupy. IFDS Canada received proceeds of approximately $53.2
million, resulting in equity in earnings of $14.8 million for DST's portion of
the gain on the sale, which has been treated as a non-GAAP item. 

At December 31, 2012, the Company's total debt outstanding was $1,011.6
million, $89.9 million less than September 30, 2012 and $368.7 million less
than December 31, 2011.

Dividend Update

The Board of Directors of DST has unanimously determined to increase its
dividend frequency from a semi-annual basis to a quarterly basis beginning in
the first quarter of 2013. On January 30, 2013, the Board of Directors of DST
declared a quarterly cash dividend of $0.30 per share on its common stock,
payable on March 15, 2013, to shareholders of record at the close of business
on February 19, 2013.

During fourth quarter 2012, DST paid a semi-annual cash dividend of $0.40 per
share on its common stock.

Share Repurchase Plan & Share Related Activity

On January 30, 2013, the Board of Directors of DST authorized a $250 million
share repurchase plan, which replaces the Company's existing share repurchase
plan, under which DST had approximately 750,000 shares remaining. The plan,
as amended, allows, but does not require, the repurchase of common stock in
open market and private transactions.

The Company had 44.3 million shares of common stock outstanding at December
31, 2012, a decrease of approximately 900,000 shares from September 30, 2012
and an increase of 200,000 shares from December 31, 2011. During the fourth
quarter 2012, the Company spent $73.7 million to repurchase 1,250,000 shares
of DST common stock. 

Average diluted shares outstanding for fourth quarter 2012 were 46.1 million,
an increase of 100,000 shares or 0.2%, from third quarter 2012 and an increase
of 1.4 million shares or 3.1% from fourth quarter 2011. average diluted
shares outstanding from fourth quarter 2011 resulted from shares issued under
equity compensation plans and from higher dilutive effects of equity
compensation awards and convertible debentures, partially offset by share
repurchases made in the fourth quarter of 2012.

Total stock options, restricted stock and restricted stock units ("equity
units") outstanding at December 31, 2012 were 2.7 million, of which 1.7
million were stock options, 100,000 were restricted stock and 900,000 were
restricted stock units. Equity units decreased 600,000 units or 18.2% from
September 30, 2012 and 2.3 million units or 46% from December 31, 2011
primarily from fewer stock options outstanding.

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 fourth quarter 2012 increased $24.7 million or 8.3% to
$320.8 million as compared to fourth quarter 2011. DST HealthCare operating
revenues increased primarily from higher pharmacy claims processed. DST
Global Solutions recorded higher asset management software licenses and
professional service revenues. In addition, increased operating revenues were
recorded from ALPS from higher assets under distribution and administration
and the inclusion of a full quarter of financial results in 2012 versus two
months in 2011. These operating revenue increases were partially offset by
lower operating revenues for mutual fund processing resulting from lower
registered accounts serviced.

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

                                          Three Months
                                          Ended              Year Ended
                                          December 31, 2012  December 31, 2012
Registered Accounts
Beginning balance                         77.6               85.1
New client conversions                                      0.5
Subaccounting conversions to DST         (0.4)              (2.8)
platforms
Subaccounting conversions to non-DST     (1.4)              (6.3)
platforms
Conversions to non-DST platforms                            (0.9)
Organic growth (decline)                 (0.1)              0.1
Ending balance                           75.7               75.7
Subaccounts
Beginning balance                         11.8               14.6
New client conversions                   0.1                0.1
Conversions to non-DST platforms                            (6.1)
Conversions from non-DST registered      0.1                0.3
platforms
Conversions from DST's registered        0.4                2.8
accounts
Organic growth                                             0.7
Ending balance                           12.4               12.4
Total accounts                            88.1               88.1

Tax-advantaged accounts were 41.4 million at December 31, 2012, a decrease of
500,000 accounts from September 30, 2012 and a decrease of 1.3 million from
December 31, 2011. Tax-advantaged accounts represent 54.8% of total
registered accounts serviced at December 31, 2012, as compared to 50.2% at
December 31, 2011.

DST signed a new mutual fund registered account client in January 2013 which
is expected to add approximately 100,000 new accounts in the first quarter
2013. For 2013, DST currently projects total conversions of registered
accounts to subaccounts will approximate 5-6 million, of which approximately
30% will convert to DST's subaccounting platform.

A new subaccounting client with approximately 300,000 subaccounts was signed
during the quarter. Additionally, a previously announced new subaccounting
client converted 100,000 subaccounts in fourth quarter 2012 and the Company
currently expects that this client will convert 5.1 million subaccounts to
DST's subaccounting platform during first quarter 2013, an increase of 1.3
million from the Company's previous projection. In summary, the Company
expects 5.4 million new subaccounts to convert from non-DST subaccounting
platforms by the end of the first quarter 2013.

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 including information obtained from DST's clients. Actual results
could differ from the Company's estimates.

ALPS operating revenues increased during fourth quarter 2012 from new clients,
market appreciation and from having an additional month of operations in the
fourth quarter 2012 as compared to 2011. The following table summarizes ALPS
operating statistics (in billions):

                                 December 31,
                                 2012    2011
Assets Under Active Distribution $ 61.7  $ 51.9
Assets Under Administration      101.9   93.6
Assets Under Management          8.3     4.9

Retirement operating revenues for the fourth quarter 2012 declined from fourth
quarter 2011.The following table summarizes changes in defined contribution
participants serviced during the three months and year ended December 31, 2012
(in millions):

                                  Three              Year Ended
                                  Months Ended        December 31,
                                  December 31, 2012  2012
Defined Contribution Participants
Beginning balance                 4.4                 4.6
 New customer conversions      0.3                 0.3
 Organic growth (decline)      0.1                 (0.1)
Ending balance                    4.8                 4.8

As previously announced, the Company is in the process of converting a new
retirement client with approximately 1.3 million participants to DST's
platform, of which 300,000 converted in fourth quarter 2012 and 400,000 are
expected to convert in first quarter 2013.

DST HealthCare operating revenues during the fourth quarter 2012 increased
from higher volumes of pharmacy claims processed and from higher software
license sales. Pharmacy claims paid during fourth quarter 2012 increased by
12.4 million claims or 13.6% from fourth quarter 2011 to 103.8 million
claims. The increase in pharmacy claims paid in fourth quarter 2012 is
associated with increased Medicare and Medicaid members. Covered lives using
DST's medical claim processing platforms were 23.3 million at December 31,
2012, an increase of 800,000 covered lives from September 30, 2012 and an
increase of 700,000 from December 31, 2011. The increase in covered lives is
principally from organic growth within the existing customer base driven by
increased Medicaid third party administration processing. DST HealthCare also
signed two new full service clients during the quarter, which are expected to
increase covered lives processed by approximately 100,000 in first quarter
2013.Software license revenue also increased during fourth quarter 2012.

AWD operating revenues during the fourth quarter 2012 decreased slightly as
compared to fourth quarter 2011 primarily due to lower software license
revenues. Active AWD users at December 31, 2012 were 207,600, an increase of
1.6% from December 31, 2011 and an increase of 2% from September 30, 2012.

DST Global Solutions investment management operating revenues during fourth
quarter 2012 increased from the same period in 2011 due to higher license
sales and professional services revenue.

Financial Services Segment software license fee revenues are derived
principally from DST Global Solutions, DST Health Solutions and AWD.
Operating revenues include approximately $16.1 million of software license fee
revenues for fourth quarter 2012, an increase of $3.9 million or 32% from the
same period in 2011 reflecting higher Global Solutions and DST Health
Solutions software license fee revenues, offset by lower AWD 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 fourth quarter 2012, excluding
reimbursable operating costs, increased $24.7 million or 11.8% to $234.7
million. Excluding the effects of deferred compensation, operating costs and
expenses increased $28.0 million in fourth quarter 2012, primarily from the
inclusion of an additional month of ALPS operations, higher DST Retirement
Solutions conversion and operating costs and higher expenses for Brokerage
Solutions business expansion efforts.

Financial Services depreciation and amortization expense increased $400,000 in
fourth quarter 2012 to $22.1 million, primarily from an additional month of
ALPS operations in 2012.

Excluding the effects of deferred compensation, Financial Services Segment
income from operations decreased $3.7 million during fourth quarter 2012 to
$65.4 million. On this basis, operating margin for fourth quarter 2012 was
20.4% as compared to 23.3% in 2011. Operating margins were adversely affected
by the decline in mutual fund processing revenues and conversion and business
expansion costs in the retirement and brokerage business units.

Customer Communications Segment (formerly Output Solutions Segment)

The following tables present the financial results and the operating
statistics of the Customer Communications Segment for fourth quarter 2012 and
2011 (in millions):

               Three Months Ended December 31,
               2012                             2011
               Operating  Operating  Operating  Operating  Operating  Operating

               Revenue    Income     EBITDA     Revenue    Income     EBITDA
                                                           (Loss)
North America  $         $        $        $         $      $  
               115.3     11.5      19.7      108.2       11.1  19.3
United         51.0       1.0        5.4        53.8       (5.2)      (1.1)
Kingdom
Customer       $         $        $        $         $      $  
Communications 166.3     12.5      25.1      162.0             18.2
Segment                                                    5.9

                                Three Months Ended
                                December 31,
                                2012        2011
Images Produced:
 North America                  2,452.9     2,282.4
 United Kingdom                 531.7       526.6
 Total Customer Communications 2,984.6     2,809.0
Packages Mailed:
 North America                  557.5       509.5
 United Kingdom                 188.8       181.1
 Total Customer Communications  746.3       690.6

North America operating revenues increased 6.6% in fourth quarter 2012
principally from new client volumes. Increased operating revenues and the
related operating costs associated with higher production volumes, and lower
depreciation expense, resulted in a $400,000 increase in operating income over
fourth quarter 2011.

North America operating margin was 10% for fourth quarter 2012 as compared to
10.3% in fourth quarter 2011. North America Operating EBITDA increased
$400,000 or 2.1% from fourth quarter 2011.

During fourth quarter 2012, North America received a new client commitment
representing approximately 12 million of aggregate packages annually when
fully transitioned. Full conversion activities for this new client commitment
are expected to be completed in the second half of 2013.

U.K. operating revenues decreased 5.2% in fourth quarter 2012 from decreased
demand and lower revenues per package. Income from U.K. operations was $1
million during fourth quarter 2012, a $6.2 million improvement over the loss
recorded in fourth quarter 2011. The improvement is the result of lower costs
from facility consolidations and lower headcount. Customer Communications U.K.
Operating EBITDA was $5.4 million, an increase of $6.5 million from fourth
quarter 2011.

Investments and Other Segment

Investments and Other Segment operating revenues for fourth quarter 2012
increased $100,000 or 0.7% as compared to fourth quarter 2011. Income from
operations increased $300,000 to $2.5 million from higher real estate revenues
and lower depreciation expense due to sales of real estate and previous asset
impairments. Income from operations and Operating EBITDA for DST's U.S. real
estate holdings during the quarter were essentially unchanged as compared to
fourth quarter 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 U.S. real
estate holdings had FFO of $7.9 million, a decrease of $200,000 as compared to
fourth quarter 2011. FFO diluted EPS was $0.17 for fourth quarter 2012, a
decrease of $0.01 per diluted share as compared to fourth 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   Year Ended
            December 31,         December 31,
            2012       2011      2012    2011
BFDS        $ 2.6      $ 3.5     $ 10.2  $ 12.5
IFDS U.K.   2.3        2.2       3.0     12.0
IFDS L.P.   2.5        0.5       3.1     3.7
Other      1.2        (1.1)     4.0     (3.2)
            $ 8.6      $ 5.1     $ 20.3  $ 25.0

BFDS recorded lower revenues in fourth 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 $1.2
billion during fourth quarter 2012 compared to $1.0 billion during fourth
quarter 2011 from higher levels of transaction activity. Average interest
rates earned on the balances increased from 0.07% in fourth quarter 2011 to
0.16% in fourth quarter 2012.

The increase in equity in IFDS U.K. earnings from fourth quarter 2011 is
primarily the result of revenues from new clients, partially offset by new
client conversion costs. Shareowner accounts serviced by IFDS U.K. were 9.4
million at December 31, 2012, an increase of 100,000 accounts from September
30, 2012 and an increase of 1.3 million accounts from December 31, 2011. The
increase in accounts from September 30, 2012 is attributable to organic growth
in fourth 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 affect IFDS U.K. earnings. 

The increase in IFDS L.P. earnings is attributable to higher revenues from a
new client in Canada, partially offset by increased operating costs to support
the new client. Shareowner accounts serviced by IFDS Canada were 11.3 million
at December 31, 2012, an increase of 1.1 million accounts as compared to
September 30, 2012 and an increase of 1.2 million accounts from December 31,
2011, both attributable to the new client conversion mentioned above.

Equity in earnings of other unconsolidated affiliates for fourth quarter 2012
increased $2.3 million as compared to fourth quarter 2011, primarily from
improved performance at DST's real estate and other affiliates.

Other income, net

Other income, net during fourth quarter 2012 decreased $2.6 million from
fourth quarter 2011 to $6.5 million. The decrease in other income is mostly
attributable to a decline in unrealized gains on trading securities associated
with deferred compensation plans (the effect of which is offset in costs and
expenses in the Financial Services Segment, as described above).

Interest expense

Interest expense for fourth quarter 2012 decreased $2.4 million to $9.5
million compared to fourth quarter 2011, principally from lower weighted
average debt balances outstanding.

Income taxes

The Company's tax rate was 33.4% for fourth quarter 2012 as compared to 36.5 %
in fourth quarter 2011, principally from lower state income taxes and from
changes in the mix of domestic and international profits. Excluding the
effect of discrete period items, the Company expects its tax rate to be
approximately 35% for 2013, but this rate will likely vary depending on the
timing of estimated 2013 sources of taxable income (e.g. domestic
consolidated, international, and/or joint venture).

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 Customer Communications 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 Customer
Communications 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  Year Ended
                                  December 31,        December 31,
                                  2012      2011      2012         2011
Operating revenues                $ 487.0   $ 457.3   $ 1,892.4    $ 1,744.0
Out-of-pocket reimbursements      171.6     166.1     684.2        644.7
Total revenues                    658.6     623.4     2,576.6      2,388.7
Costs and expenses                559.8     530.6     2,202.9      1,997.0
Depreciation and amortization
 (including goodwill impairment) 99.6      36.5      216.4        131.6
Income (loss) from operations     (0.8)     56.3      157.3        260.1
Interest expense                  (9.5)     (11.9)    (43.5)       (46.5)
Other income, net                 77.2      11.4      373.5        38.7
Equity in earnings of             22.4      4.4       32.2         21.7
unconsolidated affiliates
Income before income taxes
 and non-controlling interest    89.3      60.2      519.5        274.0
Income taxes                      51.4      23.0      195.5        95.8
Net income                        37.9      37.2      324.0        178.2
Net loss attributable to                    2.0                    4.9
non-controlling interest
Net income attributable to DST    $  37.9  $  39.2  $  324.0   $  183.1
Systems, Inc.
Average common shares outstanding 45.0      44.1      44.9         45.7
Average diluted shares            46.1      44.7      45.8         46.3
outstanding
Basic earnings per share          $  0.84  $  0.89  $   7.22  $   4.01
Diluted earnings per share        $  0.82  $  0.88  $   7.08  $   3.95



DST SYSTEMS, INC.

STATEMENT OF INCOME FROM OPERATIONS BY SEGMENT

(In millions)

(Unaudited)


                        Three Months Ended December 31, 2012
                        Financial  Customer        Investments  Elimination  Consolidated
                        Services   Communications  / Other      Adjustments  Total
Operating revenues      $ 318.5   $          $         $            $   487.0
                                   164.4          4.1
Intersegment operating  2.3        1.9             10.2         (14.4)
revenues
Out-of-pocket           14.3       159.0           0.1          (1.8)        171.6
reimbursements
Total revenues          335.1      325.3           14.4         (16.2)       658.6
Costs and expenses      256.8      309.2           7.3          (13.5)       559.8
Depreciation and
amortization(including 22.1       74.1            4.1          (0.7)        99.6
goodwill impairment)
Income (loss) from      $  56.2  $         $         $         $   
operations                         (58.0)          3.0         (2.0)       (0.8)
                        Three Months Ended December 31, 2011
                        Financial  Customer        Investments  Elimination  Consolidated
                        Services   Communications  / Other      Adjustments  Total
Operating revenues      $ 294.0   $          $         $            $   457.3
                                   160.1          3.2
Intersegment operating  2.1        1.9             11.0         (15.0)
revenues
Out-of-pocket           11.8       155.8           0.1          (1.6)        166.1
reimbursements
Total revenues          307.9      317.8           14.3         (16.6)       623.4
Costs and expenses      235.0      300.6           9.0          (14.0)       530.6
Depreciation and
amortization (including 21.7       12.3            3.1          (0.6)        36.5
goodwill impairment)
Income (loss) from      $  51.2  $         $         $         $   
operations                          4.9          2.2         (2.0)       56.3



DST SYSTEMS, INC.

STATEMENT OF INCOME FROM OPERATIONS BY SEGMENT

(In millions)

(Unaudited)


               Year Ended December 31, 2012
               Financial  Customer        Investments  Elimination  Consolidated
               Services   Communications  / Other      Adjustments  Total
Operating      $          $          $   14.8  $            $  1,892.4
revenues       1,235.6   642.0
Intersegment
operating      8.4        8.0             44.1         (60.5)
revenues
Out-of-pocket  54.8       636.7           0.3          (7.6)        684.2
reimbursements
Total revenues 1,298.8    1,286.7         59.2         (68.1)       2,576.6
Costs and      997.7      1,214.9         47.9         (57.6)       2,202.9
expenses
Depreciation
and
amortization
(including
goodwill       92.0       107.4           19.6         (2.6)        216.4
impairment)
Income (loss)  $        $         $         $   
from           209.1      (35.6)          (8.3)        (7.9)       $   157.3
operations
               Year Ended December 31, 2011
               Financial  Customer        Investments  Elimination  Consolidated
               Services   Communications  / Other      Adjustments  Total
Operating      $          $          $   12.3  $            $  1,744.0
revenues       1,129.6   602.1
Intersegment
operating      8.8        7.7             44.0         (60.5)
revenues
Out-of-pocket  42.1       607.0           1.6          (6.0)        644.7
reimbursements
Total revenues 1,180.5    1,216.8         57.9         (66.5)       2,388.7
Costs and      866.1      1,148.9         38.0         (56.0)       1,997.0
expenses
Depreciation
and
amortization
(including
goodwill       76.5       46.7            11.0         (2.6)        131.6
impairment)
Income (loss)  $        $         $         $   
from           237.9      21.2           8.9         (7.9)       $   260.1
operations



DST SYSTEMS, INC.

OTHER SELECTED FINANCIAL INFORMATION

(In millions)

(Unaudited)


                                   December 31,         December 31,
Selected Balance Sheet Information 2012                 2011
   Cash and cash equivalents       $        88  $        41
   Debt                            1,012                1,380
                                   Year Ended
                                   December 31,
Capital Expenditures, by Segment   2012                 2011
   Financial Services              $        64  $        65
   Customer Communications         38                   25
   Investments and Other           4                    9



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 December 31,
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 $8.4 million associated with reductions
    in workforce, included in costs and expenses, of which $7.5 million is in
    the Financial Services Segment and $900,000 is in the Customer
    Communications segment. The income tax benefit associated with these
    costs was approximately $1.2 million.
  oLeased facility abandonment costs of $8.8 million associated with vacating
    certain leased facilities in the U.K. that were used by the Customer
    Communications Segment. The $8.8 million of costs have been included in
    both costs and expenses ($8.1 million) and depreciation expense ($700,000)
    in the Customer Communications Segment. There was no income tax benefit
    associated with these costs.
  oNet gains on U.S. real estate assets of $500,000 in the Investments and
    Other Segment. The Company recorded gains on the sale of U.S. real estate
    of $1.9 million which was included as a reduction of costs and expenses.
    The Company also recorded impairments on certain U.S. properties of $1.4
    million which was included in depreciation expense. The income tax
    expense associated with this net gain was approximately $200,000.
  oGoodwill impairment of $60.8 million, included in depreciation and
    amortization in the Customer Communications Segment, associated with a
    reduction in the estimated fair value of the Customer Communications U.K.
    reporting unit. There was no income tax benefit associated with this
    charge.
  oNet gain on securities and other investments of $70.7 million, which were
    included in other income, net, is comprised of net realized gains from
    sales of available-for-sale securities of $67.1 million, net gains on
    private equity funds and other investments of $2.6 million and a dividend
    from a private company investment of $1.1 million, which were partially
    offset by other than temporary impairments on available-for-sale
    securities of $100,000. The income tax expense associated with the
    aggregate net gains on securities and other investments was approximately
    $26.6 million.
  oNet gain from unconsolidated affiliates of $13.8 million, included in
    equity in earnings of unconsolidated affiliates, is comprised of a $14.8
    million gain from the disposition of a Canadian real estate partnership by
    IFDS Canada, partially offset by impairments of other unconsolidated
    affiliates of $1 million related to real estate and other assets. The
    income tax expense associated with this net gain was approximately $2.9
    million. 
  oAn income tax benefit of approximately $3.9 million, including $2.3
    million related to the favorable resolution of a 2005 IRS refund claim for
    a domestic manufacturing deduction under Internal Revenue Code Section 199
    and $1.6 million related to research and experimentation tax credits
    related to certain post-audit periods that are still subject to
    examination.
  oAn income tax benefit of approximately $700,000, resulting from a
    charitable contribution of marketable securities during the third quarter
    2012. The total income tax benefit from this transaction was $5 million,
    of which $4.3 million was recorded through the effective tax rate in third
    quarter 2012 with the remainder being recorded in fourth quarter 2012.

In addition to the items that occurred in the quarter ended December 31, 2012
as described above, the following items, which occurred during the nine months
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 $1.3 million. The income
    tax benefit associated with these expenses was approximately $500,000.
  oEmployee termination expenses of $8.9 million associated with reductions
    in workforce in the Financial Services Segment ($6.7 million) and the
    Customer Communications Segment ($2.2 million), which were included in
    costs and expenses. The income tax benefit associated with these costs
    was approximately $3 million.
  oLoss accrual of $1.9 million recorded on a dispute related to a 2001
    international software development agreement in the Financial Services
    Segment, which was included in costs and expenses.
  oLeased facility abandonment costs of $2.2 million, included in costs and
    expenses in the Customer Communications Segment ($400,000), associated
    with properties not used in the U.K. operations and within the Investments
    & Other Segment ($1.8 million), associated with exiting a leased office
    building. The aggregate income tax benefit associated with these costs
    was approximately $800,000.
  oImpairment charges on certain U.S. real estate assets not currently used
    in the Company's operations of $7.6 million, included in depreciation and
    amortization expense in the Investments & Other Segment. The charge was
    comprised of impairments in the U.S. of $7 million and internationally of
    $600,000. The aggregate income tax benefit associated with these costs
    was approximately $3 million.
  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.
  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 million. However, the tax effect recorded through
    the effective tax rate, resulted in $4.3 million being recognized during
    the nine months ended September 30, 2012.
  oNet gain on securities and other investments in the amount of $262.5
    million, included in other income, is comprised of a cash dividend and
    gain on sale of a private company investment of $186 million and net gains
    on the disposition of securities and other investments of $76.5 million.
    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. The $76.5 million of net gains on
    securities and other investments for the nine months ended September 30,
    2012 was comprised of net realized gains from sales of available-for-sale
    securities of $72.1 million and net gains on private equity funds and
    other investments of $6.7 million, partially offset by other than
    temporary impairments on available-for-sale securities of $2.3 million.
    The aggregate income tax expense associated with the dividend and gain on
    securities and other investments was approximately $98.6 million.
  oNet loss from unconsolidated affiliates of $2.7 million, which are
    included in equity in earnings of unconsolidated affiliates, is comprised
    of an impairment of $3.1 million, partially offset by a gain of $400,000
    from the receipt of a cash distribution from a previously impaired
    investment. The aggregate income tax benefit associated with this expense
    was approximately $1 million.
  oAn income tax benefit of approximately $14.4 million, resulting from the
    resolution of research and experimentation credits.

The following items, which occurred during the quarter ended December 31,
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 $1.4 million. The income tax benefit
    associated with these expenses was approximately $600,000. The business
    development expenses incurred during fourth quarter 2011 were associated
    with the completion of the ALPS transaction.
  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 million. The income
    tax benefit associated with these expenses was approximately $400,000.
  oRestructuring cost associated with amending sales / marketing agreements
    of acquired business, included in costs and expenses, in the amount of
    $7.3 million. The income tax benefit associated with this expense was
    approximately $2.9 million.
  oLoss accrual recorded for a regulatory inquiry regarding the processing of
    certain pharmacy claims during the period 2006 to 2009, included in costs
    and expenses, in the amount of $3.5 million. There were no income tax
    benefits attributed to this loss accrual.
  oEmployee termination expenses of $1 million associated with reductions in
    workforce in the Customer Communications Segment, included in costs and
    expenses. The aggregate income tax benefit associated with these costs
    was approximately $300,000. A portion of this cost ($200,000) was
    attributable to the non-controlling interest.
  oNet gain on securities and other investments of $2.3 million, which were
    included in other income, net, was comprised of net realizable gains from
    sales of available-for-sale-securities of $3 million and net gains on
    private equity funds and other investments of $800,000, partially offset
    by other than temporary impairments on available-for-sale securities of
    $1.5 million. The income tax expense associated with this net gain was
    approximately $800,000.
  oImpairment of unconsolidated affiliate, in the amount of $700,000,
    included in equity in earnings of unconsolidated affiliates. The income
    tax benefit associated with this expense was approximately $200,000.

In addition to the items that occurred in the quarter ended December 31, 2011,
as described above, the following items, which occurred during the nine months
ended September 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 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 costs 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
    Customer Communications 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, investment banking and
    other professional fees) associated with 2011 business acquisitions,
    included in costs and expenses, in the amount of $1.9 million ($1.7
    million in Financial Services and $200,000 in Customer Communications).
    The income tax benefit associated with these expenses was approximately
    $800,000.
  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 cost and expenses, in the amount of $800,000. The income tax
    benefit associated with these expenses was approximately $300,000.
  oNet gain on securities and other investments of $14.9 million, included in
    other income, was comprised of net realized gains from sales of
    available-for-sale securities of $18.8 million, partially offset by net
    losses on private equity funds and other investments of $1.6 million and
    other than temporary impairments on available-for-sale securities of $2.3
    million. The income tax expense associated with this net gain was
    approximately $5.9 million.
  oNet loss associated with the repurchase of senior convertible debentures
    in the amount of $1.2 million, which was included in other income, net.
    The income tax benefit associated with this net loss was approximately
    $400,000.
  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.



DST SYSTEMS, INC.
RECONCILIATION OF REPORTED RESULTS TO INCOME ADJUSTED FOR CERTAIN NON-GAAP
ITEMS
Three Months Ended December 31,
(Unaudited - in millions, except per share amounts)
                             2012
                             Operating     Pretax  Net     DST        Diluted
                             Income        Income  Income  Earnings*  EPS
                             (Loss)
Reported GAAP income (loss)  $        $      $      $       $  0.82
                                (0.8)   89.3   37.9   37.9
 Adjusted to remove:
 Included in operating
income:
 Business advisory expenses 0.3           0.3     0.2     0.2
- Financial Services
 Employee termination
expenses - Financial         7.5           7.5     6.4     6.4        0.14
Services
 Employee termination
expenses - Customer          0.9           0.9     0.8     0.8        0.02
Communications
 Leased facility
abandonment costs - Customer 8.8           8.8     8.8     8.8        0.19
Communications
 Net gain on real estate    (0.5)         (0.5)   (0.3)   (0.3)      (0.01)
assets - Investments & Other
 Impairment of goodwill -   60.8          60.8    60.8    60.8       1.32
Customer Communications
 Included in non-operating
income:
 Net gain on securities and               (70.7)  (44.1)  (44.1)     (0.95)
other investments
 Net gain from                            (13.8)  (10.9)  (10.9)     (0.24)
unconsolidated affiliates
 Income tax refund claims                         (3.9)   (3.9)      (0.08)
 Income tax benefit on
charitable contribution of                         (0.7)   (0.7)      (0.02)
securities
Adjusted Non-GAAP income     $        $      $      $       $  1.19
                                77.0    82.6   55.0   55.0
                             2011
                             Operating     Pretax  Net     DST        Diluted
                             Income        Income  Income  Earnings*  EPS
Reported GAAP income         $        $      $      $       $  0.88
                                56.3    60.2   37.2   39.2
 Adjusted to remove:
 Included in operating
income:
 Business development
expenses - Financial         1.4           1.4     0.8     0.8        0.02
Services
 Business advisory expenses 1.0           1.0     0.6     0.6        0.01
- Financial Services
 Restructuring cost to
amend sales agreements -     7.3           7.3     4.4     4.4        0.10
Financial Services
 Loss accrual - Financial   3.5           3.5     3.5     3.5        0.07
Services
 Employee termination
expenses - Customer          1.0           1.0     0.7     0.5        0.01
Communications
 Included in non-operating
income:
 Net gain on securities and               (2.3)   (1.5)   (1.5)      (0.03)
other investments
 Impairment of                            0.7     0.5     0.5        0.01
unconsolidated affiliate
Adjusted Non-GAAP income     $        $      $      $       $  1.07
                                70.5    72.8   46.2   48.0

      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 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
Year Ended December 31,
(Unaudited - in millions, except per share amounts)


                         2012
                         Operating  Pretax     Net        DST        Diluted
                         Income     Income     Income     Earnings*  EPS
Reported GAAP income     $       $  519.5  $  324.0  $       $  7.08
                         157.3                            324.0
 Adjusted to remove:
 Included in operating
income:
 Business advisory
expenses - Financial     1.6        1.6        1.0        1.0        0.02
Services
 Employee termination
expenses - Financial     14.2       14.2       10.6       10.6       0.23
Services
 Employee termination
expenses - Customer      3.1        3.1        2.5        2.5        0.06
Communications
 Loss accrual -         1.9        1.9        1.9        1.9        0.04
Financial Services
 Leased facility
abandonment costs -      9.2        9.2        9.1        9.1        0.20
Customer Communications
 Leased facility
abandonment costs -      1.8        1.8        1.1        1.1        0.02
Investments & Other
 Impairment of goodwill
- Customer               60.8       60.8       60.8       60.8       1.33
Communications
 Net loss on real
estate assets -          7.1        7.1        4.3        4.3        0.09
Investments & Other
 Included in operating
income and non-operating
income:
 Asset impairment,
employee termination and
other expenses
 from insurance
processing business -    9.1        8.3        5.1        5.1        0.11
Financial Services
 Charitable
contribution of          11.0       2.1        (2.9)      (2.9)      (0.06)
securities - Investments
& Other
 Included in
non-operating income:
 Net gain on securities            (333.2)    (208.0)    (208.0)    (4.54)
and other investments
 Net gain from
unconsolidated                      (11.1)     (9.2)      (9.2)      (0.20)
affiliates
 Income tax refund                            (18.3)     (18.3)     (0.40)
claims
Adjusted Non-GAAP income $       $  285.3  $  182.0  $       $  3.98
                         277.1                            182.0
                         2011
                         Operating  Pretax     Net        DST        Diluted
                         Income     Income     Income     Earnings*  EPS
Reported GAAP income     $       $  274.0  $  178.2  $       $  3.95
                         260.1                            183.1
 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 - Financial     1.3        1.3        0.8        0.8        0.02
Services
 Employee termination
expenses - Customer      5.1        5.1        3.2        3.0        0.06
Communications
 Business development
expenses - Financial     3.1        3.1        1.8        1.8        0.04
Services
 Business development
expenses - Customer      0.2        0.2        0.1        0.1
Communications
 Business advisory
expenses - Financial     1.8        1.8        1.1        1.1        0.02
Services
 Restructuring cost to
amend sales agreements   7.3        7.3        4.4        4.4        0.10
- Financial Services
 Loss accrual -         3.5        3.5        3.5        3.5        0.08
Financial Services
 Included in
non-operating income:
 Net gain on securities            (17.2)     (10.5)     (10.5)     (0.23)
and other investments
 Net loss on repurchase
of convertible                      1.2        0.8        0.8        0.02
debentures
 Employee termination
expenses at                         2.6        2.3        2.3        0.05
unconsolidated affiliate
 Impairment of                     0.7        0.5        0.5        0.01
unconsolidated affiliate
Adjusted Non-GAAP income $       $  281.6  $  185.0  $       $  4.09
                         280.4                            189.7

      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-GAAPfinancial information.
      DST Earnings has been defined as "Net income attributable to DST
*     Systems, Inc." (taking into account thenet lossattributable to
      non-controlling interest).



DST SYSTEMS, INC.
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO EBITDA
CUSTOMER COMMUNICATIONS SEGMENT
(Unaudited - in millions)
                                        Three Months Ended   Year Ended
                                        December 31,         December 31,
                                        2012      2011       2012      2011
Reported GAAP income (loss) from        $ (58.0)  $  4.9   $ (35.6)  $ 21.2
operations
 Adjusted to remove:
 Depreciation and amortization         74.1      12.3       107.4     46.7
(including goodwill impairment)
Operating EBITDA, before non-GAAP items 16.1      17.2       71.8      67.9
 Adjusted to remove:
 Leased facility abandonment           8.1                  8.5
costs
 Employee termination expenses         0.9       1.0        3.1       5.1
 Business development expenses                                        0.2
Adjusted operating EBITDA, after        $  25.1  $ 18.2    $  83.4  $ 73.2
non-GAAP items

         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 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  Year Ended
                                          December 31,       December 31,
                                          2012       2011     2012     2011
Reported GAAP income (loss) from          $ 3.0      $ 2.2    $ (8.3)  $  8.9
operations
 Adjusted to remove:
 GAAP income (loss) from non U.S. real   (0.1)      (0.3)    (12.1)   (1.0)
estate operations
U.S. Real Estate Operations GAAP          3.1        2.5      3.8      9.9
income from operations
 Adjusted to remove:
 Depreciation and amortization           3.6        2.4      17.4     9.0
(including goodwill impairment)
Operating EBITDA, before non-GAAP items   6.7        4.9      21.2     18.9
 Adjusted to remove:
 Gain on sale of real estate             (1.9)               (1.9)
 Leased facility abandonment costs                           1.8
Adjusted operating EBITDA, after non-GAAP $ 4.8      $ 4.9    $ 21.1   $ 18.9
items

        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 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   Year Ended
                                      December 31,         December 31,
                                      2012       2011      2012        2011
Reported GAAP earnings before         $ 85.2     $  8.1   $ 360.5     $ 39.9
interest and income taxes
 Adjusted to remove:
 GAAP earnings from non U.S. real    81.6       5.2       352.7       29.5
estate operations
Reported U.S. Real Estate Operations
GAAP earnings before interest and     3.6        2.9       7.8         10.4
income taxes
 Less: interest expense              (1.2)      (1.5)     (5.7)       (6.2)
 Less: income tax benefit on         1.5        2.2       1.6         2.2
earnings above
Reported U.S. Real Estate Operations  $  3.9    $  3.6   $   3.7   $  6.4
GAAP net income
Reported U.S. Real Estate Operations  $ 0.08     $ 0.08    $  0.08    $ 0.14
GAAP diluted EPS
Reported U.S. Real Estate Operations  $  3.9    $  3.6   $   3.7   $  6.4
GAAP net income
 Adjusted to remove net income
effect of non-GAAP items:
Impairment of real estate assets -   0.9                  5.1
U.S.
Gain on sale of real estate - U.S.   (1.2)                (1.2)
Leased facility abandonment costs -                       1.1
U.S.
Adjusted U.S. Real Estate Operations  $  3.6    $  3.6   $   8.7   $  6.4
non-GAAP net income
Adjusted U.S. Real Estate Operations  $ 0.08     $ 0.08    $  0.19    $ 0.14
non-GAAP diluted EPS
Adjusted U.S. Real Estate Operations  $  3.6    $  3.6   $   8.7   $  6.4
non-GAAP net income
 Adjusted to remove:
 Depreciation and amortization     2.2      * 2.4       9.0       * 9.0
(including goodwill impairment)
 Pro-rata portion of depreciation
and amortization of unconsolidated    2.1        2.1       8.4         8.7
affiliates
U.S. Real Estate Funds from           $  7.9    $  8.1   $  26.1    $ 24.1
operations, non-GAAP
U.S. Real Estate Funds from           $ 0.17     $ 0.18    $  0.57    $ 0.52
operations 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: DST, Kenneth V. Hager, +1-816-435-8603, Vice President and Chief
Financial Officer; or Media, Matthew Sherman or Nicholas Lamplough both of
Joele Frank, Wilkinson Brimmer Katcher, +1-212-355-4449, or Investors, Art
Crozier or Jennifer Shotwell or Larry Miller, all of Innisfree M&A
Incorporated, +1-212-750-5833
 
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