DST Systems, Inc. Announces First Quarter 2001 Financial Results

Apr 23, 2001, 01:00 ET from DST Systems, Inc.

    KANSAS CITY, Mo., April 23 /PRNewswire Interactive News Release/ --
 Excluding non-recurring items recorded in the first quarters of 2001 and 2000,
 DST's consolidated net income for the quarter ended March 31, 2001 was
 $52.4 million ($0.41 per diluted share) compared to first quarter 2000 net
 income of $44.4 million ($0.34 per diluted share), an 18.0% increase in net
 income and a 20.6% increase in diluted earnings per share.  First quarter 2001
 results include after tax income of $2.1 million related to gains on sales of
 marketable equity securities, while first quarter 2000 results included after
 tax income of $11.8 million received in connection with the settlement of a
 legal dispute related to a former equity investment and gains on sales of
 marketable equity securities.  Including these non-recurring items, DST's
 consolidated net income for the first quarter 2001 was $54.5 million ($0.42
 per diluted share) compared to first quarter 2000 net income of $56.2 million
 ($0.44 per diluted share).
 
     The following table summarizes the Company's revenues and income from
 operations by segment (dollars in millions):
 
                                                            Quarter ended
                                                              March 31,
                                                         2001           2000
      Revenues
       Financial Services                              $167.5         $147.8
       Output Solutions                                 166.9          155.2
       Customer Management                               48.5           48.7
       Investments and Other                              9.1            8.2
       Eliminations                                    (21.0)         (19.5)
                                                       $371.0         $340.4
      Income from operations
       Financial Services                               $47.7          $35.8
       Output Solutions                                  24.7           24.0
       Customer Management                                3.7            2.5
       Investments and Other                              1.6            1.4
                                                        $77.7          $63.7
 
     Consolidated revenues increased $30.6 million or 9.0% over the prior year
 quarter, reflecting higher Financial Services and Output Solutions Segment
 revenues.  Consolidated income from operations totaled $77.7 million for the
 quarter, an increase of $14.0 million or 22.0% over the 2000 first quarter,
 primarily from increased operating earnings in Financial Services.
     DST Canada, a former wholly owned subsidiary, was contributed to
 International Financial Data Services, a newly formed joint venture with State
 Street Corporation in January 2001.  As a result, DST Canada's results of
 operations are no longer consolidated and the earnings of the joint venture
 are included as equity in earnings of unconsolidated affiliates in DST's
 results.  For the quarter ended March 31, 2000, DST Canada had revenues of
 $6.8 million and income from operations of $0.7 million.  For comparative
 purposes, if DST Canada were excluded from first quarter 2000 operating
 results, DST's first quarter 2001 consolidated revenues compared to first
 quarter 2000 would have increased $37.4 million or 11.2% and first quarter
 2001 consolidated income from operations compared to the first quarter 2000
 would have increased $14.7 million or 23.3% over the prior year quarter.
 
     Financial Services Segment
     Financial Services Segment revenues for the quarter were $167.5 million,
 an increase of $19.7 million or 13.3% over first quarter 2000.  Excluding DST
 Canada from the 2000 quarter, Financial Services Segment revenues for the
 first quarter of 2001 increased $26.5 million or 18.8%.  U.S. revenues
 increased $22.9 million or 19.2%, primarily from increases in mutual fund
 shareowner accounts processed.  U.S. mutual fund shareowner accounts processed
 totaled 73.5 million at March 31, 2001, an increase of 1.4 million or 1.9%
 from the 72.1 million serviced at December 31, 2000 and an increase of
 12.5 million or 20.5% from the 61.0 million serviced at March 31, 2000.  Total
 retirement plan accounts totaled 25.1 million at March 31, 2001, an increase
 of 1.3 million or 5.5% from the 23.8 million serviced at December 31, 2000.
 Net new IRA accounts for the first quarter of 2001 were 0.7 million, of which
 approximately 29% were Roth or Educational IRA accounts.  401(k) accounts
 serviced increased 0.6 million or 10.2% to 6.5 million accounts at March 31,
 2001 compared to the 5.9 million accounts serviced at December 31, 2000.  U.S.
 AWD(R) workstations licensed were 49,700 at March 31, 2001, an increase of
 3.8% over year end 2000 levels.
     For the period April 1-20, 2001, which generally coincides with the end of
 the U.S. IRA investment season, mutual fund shareowner accounts serviced
 increased an estimated 0.5 million, of which approximately 53% were IRA
 accounts.
     International revenues totaled $25.4 million for the first quarter 2001, a
 decrease of $3.2 million or 11.2% over comparable prior year quarter revenues.
 Excluding DST Canada from the 2000 quarter, international revenues for the
 first quarter of 2001 increased $3.6 million or 16.5% over the prior year.
 The increase is attributable to an increase in investment management software
 license revenues and investment management and AWD software maintenance
 revenues.  International AWD workstations licensed were 25,400 at March 31,
 2001, an increase of 0.4% over year end 2000 levels.
     Financial Services Segment income from operations for the first quarter
 2001 increased $11.9 million or 33.2% over the prior year quarter to $47.7
 million, resulting in an operating margin of 28.5% compared to 24.2% for the
 prior year.  Excluding DST Canada from the prior year quarter, income from
 operations for the first quarter 2001 increased $12.6 million or 35.9% over
 the prior year.  Costs and expenses increased 9.6%, primarily from increased
 personnel costs necessary to support revenue growth.  Depreciation and
 amortization costs decreased $1.3 million or 7.4%, primarily as a result of
 deconsolidating DST Canada.
 
     Output Solutions Segment
     Output Solutions Segment revenues for the quarter ended March 31, 2001
 were $166.9 million, an increase of $11.7 million or 7.5% over first quarter
 2000.  Revenue growth resulted from increased volumes from the U.S. mutual
 fund, telecommunications and healthcare industries, partially offset by a
 decline in brokerage related volumes.  Output Solutions Segment images
 produced in the first quarter 2001 increased 11.1% to 2.0 billion and
 statements mailed increased 3.0% to 508 million compared to the first quarter
 2000.
     The Output Solutions Segment business includes marketing fulfillment and
 confirmation production for the brokerage industry.  While the brokerage
 industry represents less than 8% of the Segment's revenues, it experienced a
 significant decline in volume related to stock market activity, which had a
 negative impact on the Segment's first quarter results.
     Output Solutions Segment income from operations for the first quarter
 increased $0.7 million or 2.9% over the prior year quarter to $24.7 million,
 resulting in an operating margin of 14.8% compared to 15.5% in the prior year
 quarter.  Costs and expenses increased 8.1% principally due to increased
 personnel costs, higher Internet-based electronic bill and statement product
 development and selling costs.  Depreciation and amortization increased 12.7%
 in the first quarter 2001 to $8.9 million from additional capital equipment to
 support growth.
 
     Customer Management Segment
     Customer Management Segment revenues for the quarter ended March 31, 2001
 were $48.5 million, a decrease of $0.2 million or 0.4% from the 2000 quarter.
 Processing and software service revenues increased $0.9 million or 2.0% and
 equipment sales decreased $1.1 million.  Total cable and satellite subscribers
 serviced were 44.2 million at March 31, 2001, an increase of 1.8% compared to
 year end 2000 levels, principally from higher satellite and international
 cable subscribers serviced.
     Customer Management Segment income from operations for the first quarter
 2001 increased $1.2 million to $3.7 million over the first quarter of 2000,
 resulting in an operating margin of 7.6%.  Costs and expenses decreased $1.5
 million or 3.6% from the first quarter 2000, primarily attributable to
 decreased costs for equipment sales.  Depreciation and amortization increased
 $0.1 million or 2.4%, primarily attributable to amortization of capitalized
 software development costs.
     No AWD software license revenues were recognized during the first quarter
 of 2001 from the previously announced AWD license agreement with Comcast Cable
 Communications, Inc.  The Company expects to recognize these revenues in 2001.
     The Company has been advised that its customer, MediaOne, which was
 acquired by AT&T, plans to discontinue its processing agreement.  It is
 expected that a substantial portion of MediaOne's approximately 4.0 million
 subscribers will be removed during 2001.
 
     Investments and Other
     Investments and Other Segment revenues, primarily rental income for
 facilities leased to the Company's operating segments, were $9.1 million for
 the quarter ended March 31, 2001, an increase of $0.9 million from the prior
 year quarter.  Investments and Other Segment income from operations increased
 $0.2 million over the prior year quarter.
 
     Equity in earnings of unconsolidated affiliates
     The following table summarizes the Company's equity in earnings (losses)
 of unconsolidated affiliates (dollars in millions):
 
 
                                                            Quarter ended
                                                              March 31,
                                                         2001           2000
 
      Boston Financial Data Services ("BFDS")            $1.6           $4.0
      European Financial Data Services ("EFDS")          (0.2)           0.3
      International Financial Data Services ("IFDS")      0.9
      Argus Health Systems ("Argus")                      0.1            0.2
      exchange-america                                  (1.1)
      Other                                             (0.4)          (0.4)
                                                         $0.9           $4.1
 
     Decreased earnings were recorded at BFDS from a decline in transaction
 revenue from services provided to the brokerage industry, a slowing in mutual
 fund revenue growth and an increase in costs, and the loss of a significant
 Canadian client at its subsidiary CFDS.  EFDS results reflect an increase in
 accounts serviced to 2.8 million at March 31, 2001, which is 0.1 million or
 3.7% above year end 2000 and 0.5 million or 21.7% over March 31, 2000 levels.
 EFDS was adversely affected by a significant decline in seasonal processing
 revenues related to U.K. retirement plan transactions.  U.K. product pricing
 is more sensitive to transaction volumes than in the U.S.  Exchange-america is
 a new joint venture of the Company which is developing and marketing a web-
 enabled process to submit insurance and annuities applications online.
 Exchange-america results reflect development and marketing expenses for its
 products.  Exchange-america initiated operations of its system for four new
 customers in the first quarter of 2001.  Argus' earnings decreased from the
 prior year quarter primarily from increased depreciation charges.
 
     Other income, net
     Other income was $6.6 million for the first quarter 2001, compared to
 $21.3 million for the first quarter 2000.  First quarter 2001 results include
 $3.3 million primarily related to interest and dividend income and
 $3.3 million related primarily to gains on sales of marketable equity
 securities.  First quarter 2000 results include $2.9 million primarily related
 to interest and dividend income and $18.4 million received in connection with
 the settlement of a legal dispute related to a former equity investment and
 gains on sales of marketable equity securities.
 
     Interest expense
     Interest expense totaled $1.2 million for the quarter ended March 31,
 2001, a decrease of $0.2 million from the prior year quarter.  Average debt
 balances were lower in 2001 compared to 2000.
 
     Income taxes
     DST's effective tax rate was 35.1% for the quarter ended March 31, 2001
 compared to 35.9% for the quarter ended March 31, 2000.  The 2001 and 2000 tax
 rates were affected by tax benefits relating to certain international
 operations and recognition of state tax benefits associated with income
 apportionment rules.
 
                                 Other Actions
 
     Stock Repurchase Program
     During the quarter ended March 31, 2001, DST purchased 2,673,000 shares of
 its common stock under previously announced share repurchase programs which
 total 16,350,000 shares.  Of the amount purchased during the quarter, 820,000
 shares will be utilized for DST's stock award, employee stock purchase and
 stock option programs and 1,853,000 shares will be used for general corporate
 purposes.  The shares were purchased at an average price of $35.10 per share,
 with 2,665,000 shares being acquired under previously executed forward
 purchase agreements.  As of March 31, 2001, the cost to settle the remaining
 forward purchase agreement, which expires in September 2002, would be
 approximately $88.2 million for 2.7 million shares ($32.67 per share).  The
 agreement allows the Company to elect net cash or net share settlement in lieu
 of physical settlement of the shares.
     As of March 31, 2001, DST has purchased 9,333,000 shares since the
 programs commenced.  Of the remaining 7,017,000 shares to be repurchased,
 3,020,000 shares are expected to be utilized for DST's stock award, employee
 stock purchase and stock option programs and 3,997,000 shares are expected to
 be used for general corporate purposes.
 
     EquiServe Acquisition
     On March 30, 2001, DST completed the acquisition of a 75% interest in
 EquiServe Limited Partnership ("EquiServe") by purchasing interests held by
 FleetBoston Financial and Bank One Corporation.
     EquiServe is one of the nation's largest corporate transfer agency service
 providers, maintaining and servicing the records of approximately 24 million
 shareholder accounts for approximately 1,400 publicly traded companies.
 EquiServe employs approximately 2,600 associates and recorded revenues of
 approximately $325 million for the year 2000.
     The acquisition was accounted for as a purchase and the results of
 EquiServe's operations are included in DST's 2001 consolidated financial
 statements from the date of acquisition.  The minimum purchase price of
 $140 million is to be paid in four installments.  The first installment of
 approximately $43.9 million was paid at closing.  The remaining three
 installments, which total approximately $96.1 million (discounted to
 $87.6 million for accounting purposes) are payable annually in varying amounts
 beginning February 28, 2002.  The remaining minimum purchase price
 installments are subject to increase pursuant to a formula that provides for
 additional consideration to be paid in cash if EquiServe's revenues for the
 years ending 2001, 2002 and 2003 exceed certain targeted levels.  The minimum
 purchase price (discounted to $131.5 million for accounting purposes) will be
 allocated to the net assets acquired based upon their fair values upon
 completion of an independent valuation.  The acquisition is not expected to
 have a material impact on DST's net income or earnings per share for 2001.
 
     The information and comments above may include forward-looking statements
 respecting DST and its businesses.  Such information and comments are based on
 DST's views as of today, and actual results could differ.  There could be a
 number of factors affecting future results, including those set forth in Form
 8-K/A dated March 25, 1999 filed by DST with the Securities and Exchange
 Commission.  All such factors should be considered in evaluating any forward-
 looking comment.  The Company will not update any forward-looking statements
 in this press release to reflect future events.
 
 
                               DST SYSTEMS, INC.
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    (In millions, except per share amounts)
                                  (Unaudited)
 
                                                        For the Three Months
                                                           Ended March 31,
                                                         2001           2000
 
     Revenues                                         $ 371.0        $ 340.4
 
     Costs and expenses                                 262.0          245.1
     Depreciation and amortization                       31.3           31.6
 
     Income from operations                              77.7           63.7
 
     Interest expense                                   (1.2)          (1.4)
     Other income, net                                    6.6           21.3
     Equity in earnings of unconsolidated affiliates      0.9            4.1
 
     Income before income taxes                          84.0           87.7
 
     Income taxes                                        29.5           31.5
 
     Net income                                         $54.5          $56.2
 
     Average common shares outstanding                  124.2          125.8
     Diluted shares outstanding                         128.5          128.8
 
     Basic earnings per share                           $0.44          $0.45
     Diluted earnings per share                         $0.42          $0.44
 
     Net income before non-recurring items              $52.4          $44.4
     Diluted earnings per share before
      non-recurring items                               $0.41          $0.34
 
 
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SOURCE DST Systems, Inc.
    KANSAS CITY, Mo., April 23 /PRNewswire Interactive News Release/ --
 Excluding non-recurring items recorded in the first quarters of 2001 and 2000,
 DST's consolidated net income for the quarter ended March 31, 2001 was
 $52.4 million ($0.41 per diluted share) compared to first quarter 2000 net
 income of $44.4 million ($0.34 per diluted share), an 18.0% increase in net
 income and a 20.6% increase in diluted earnings per share.  First quarter 2001
 results include after tax income of $2.1 million related to gains on sales of
 marketable equity securities, while first quarter 2000 results included after
 tax income of $11.8 million received in connection with the settlement of a
 legal dispute related to a former equity investment and gains on sales of
 marketable equity securities.  Including these non-recurring items, DST's
 consolidated net income for the first quarter 2001 was $54.5 million ($0.42
 per diluted share) compared to first quarter 2000 net income of $56.2 million
 ($0.44 per diluted share).
 
     The following table summarizes the Company's revenues and income from
 operations by segment (dollars in millions):
 
                                                            Quarter ended
                                                              March 31,
                                                         2001           2000
      Revenues
       Financial Services                              $167.5         $147.8
       Output Solutions                                 166.9          155.2
       Customer Management                               48.5           48.7
       Investments and Other                              9.1            8.2
       Eliminations                                    (21.0)         (19.5)
                                                       $371.0         $340.4
      Income from operations
       Financial Services                               $47.7          $35.8
       Output Solutions                                  24.7           24.0
       Customer Management                                3.7            2.5
       Investments and Other                              1.6            1.4
                                                        $77.7          $63.7
 
     Consolidated revenues increased $30.6 million or 9.0% over the prior year
 quarter, reflecting higher Financial Services and Output Solutions Segment
 revenues.  Consolidated income from operations totaled $77.7 million for the
 quarter, an increase of $14.0 million or 22.0% over the 2000 first quarter,
 primarily from increased operating earnings in Financial Services.
     DST Canada, a former wholly owned subsidiary, was contributed to
 International Financial Data Services, a newly formed joint venture with State
 Street Corporation in January 2001.  As a result, DST Canada's results of
 operations are no longer consolidated and the earnings of the joint venture
 are included as equity in earnings of unconsolidated affiliates in DST's
 results.  For the quarter ended March 31, 2000, DST Canada had revenues of
 $6.8 million and income from operations of $0.7 million.  For comparative
 purposes, if DST Canada were excluded from first quarter 2000 operating
 results, DST's first quarter 2001 consolidated revenues compared to first
 quarter 2000 would have increased $37.4 million or 11.2% and first quarter
 2001 consolidated income from operations compared to the first quarter 2000
 would have increased $14.7 million or 23.3% over the prior year quarter.
 
     Financial Services Segment
     Financial Services Segment revenues for the quarter were $167.5 million,
 an increase of $19.7 million or 13.3% over first quarter 2000.  Excluding DST
 Canada from the 2000 quarter, Financial Services Segment revenues for the
 first quarter of 2001 increased $26.5 million or 18.8%.  U.S. revenues
 increased $22.9 million or 19.2%, primarily from increases in mutual fund
 shareowner accounts processed.  U.S. mutual fund shareowner accounts processed
 totaled 73.5 million at March 31, 2001, an increase of 1.4 million or 1.9%
 from the 72.1 million serviced at December 31, 2000 and an increase of
 12.5 million or 20.5% from the 61.0 million serviced at March 31, 2000.  Total
 retirement plan accounts totaled 25.1 million at March 31, 2001, an increase
 of 1.3 million or 5.5% from the 23.8 million serviced at December 31, 2000.
 Net new IRA accounts for the first quarter of 2001 were 0.7 million, of which
 approximately 29% were Roth or Educational IRA accounts.  401(k) accounts
 serviced increased 0.6 million or 10.2% to 6.5 million accounts at March 31,
 2001 compared to the 5.9 million accounts serviced at December 31, 2000.  U.S.
 AWD(R) workstations licensed were 49,700 at March 31, 2001, an increase of
 3.8% over year end 2000 levels.
     For the period April 1-20, 2001, which generally coincides with the end of
 the U.S. IRA investment season, mutual fund shareowner accounts serviced
 increased an estimated 0.5 million, of which approximately 53% were IRA
 accounts.
     International revenues totaled $25.4 million for the first quarter 2001, a
 decrease of $3.2 million or 11.2% over comparable prior year quarter revenues.
 Excluding DST Canada from the 2000 quarter, international revenues for the
 first quarter of 2001 increased $3.6 million or 16.5% over the prior year.
 The increase is attributable to an increase in investment management software
 license revenues and investment management and AWD software maintenance
 revenues.  International AWD workstations licensed were 25,400 at March 31,
 2001, an increase of 0.4% over year end 2000 levels.
     Financial Services Segment income from operations for the first quarter
 2001 increased $11.9 million or 33.2% over the prior year quarter to $47.7
 million, resulting in an operating margin of 28.5% compared to 24.2% for the
 prior year.  Excluding DST Canada from the prior year quarter, income from
 operations for the first quarter 2001 increased $12.6 million or 35.9% over
 the prior year.  Costs and expenses increased 9.6%, primarily from increased
 personnel costs necessary to support revenue growth.  Depreciation and
 amortization costs decreased $1.3 million or 7.4%, primarily as a result of
 deconsolidating DST Canada.
 
     Output Solutions Segment
     Output Solutions Segment revenues for the quarter ended March 31, 2001
 were $166.9 million, an increase of $11.7 million or 7.5% over first quarter
 2000.  Revenue growth resulted from increased volumes from the U.S. mutual
 fund, telecommunications and healthcare industries, partially offset by a
 decline in brokerage related volumes.  Output Solutions Segment images
 produced in the first quarter 2001 increased 11.1% to 2.0 billion and
 statements mailed increased 3.0% to 508 million compared to the first quarter
 2000.
     The Output Solutions Segment business includes marketing fulfillment and
 confirmation production for the brokerage industry.  While the brokerage
 industry represents less than 8% of the Segment's revenues, it experienced a
 significant decline in volume related to stock market activity, which had a
 negative impact on the Segment's first quarter results.
     Output Solutions Segment income from operations for the first quarter
 increased $0.7 million or 2.9% over the prior year quarter to $24.7 million,
 resulting in an operating margin of 14.8% compared to 15.5% in the prior year
 quarter.  Costs and expenses increased 8.1% principally due to increased
 personnel costs, higher Internet-based electronic bill and statement product
 development and selling costs.  Depreciation and amortization increased 12.7%
 in the first quarter 2001 to $8.9 million from additional capital equipment to
 support growth.
 
     Customer Management Segment
     Customer Management Segment revenues for the quarter ended March 31, 2001
 were $48.5 million, a decrease of $0.2 million or 0.4% from the 2000 quarter.
 Processing and software service revenues increased $0.9 million or 2.0% and
 equipment sales decreased $1.1 million.  Total cable and satellite subscribers
 serviced were 44.2 million at March 31, 2001, an increase of 1.8% compared to
 year end 2000 levels, principally from higher satellite and international
 cable subscribers serviced.
     Customer Management Segment income from operations for the first quarter
 2001 increased $1.2 million to $3.7 million over the first quarter of 2000,
 resulting in an operating margin of 7.6%.  Costs and expenses decreased $1.5
 million or 3.6% from the first quarter 2000, primarily attributable to
 decreased costs for equipment sales.  Depreciation and amortization increased
 $0.1 million or 2.4%, primarily attributable to amortization of capitalized
 software development costs.
     No AWD software license revenues were recognized during the first quarter
 of 2001 from the previously announced AWD license agreement with Comcast Cable
 Communications, Inc.  The Company expects to recognize these revenues in 2001.
     The Company has been advised that its customer, MediaOne, which was
 acquired by AT&T, plans to discontinue its processing agreement.  It is
 expected that a substantial portion of MediaOne's approximately 4.0 million
 subscribers will be removed during 2001.
 
     Investments and Other
     Investments and Other Segment revenues, primarily rental income for
 facilities leased to the Company's operating segments, were $9.1 million for
 the quarter ended March 31, 2001, an increase of $0.9 million from the prior
 year quarter.  Investments and Other Segment income from operations increased
 $0.2 million over the prior year quarter.
 
     Equity in earnings of unconsolidated affiliates
     The following table summarizes the Company's equity in earnings (losses)
 of unconsolidated affiliates (dollars in millions):
 
 
                                                            Quarter ended
                                                              March 31,
                                                         2001           2000
 
      Boston Financial Data Services ("BFDS")            $1.6           $4.0
      European Financial Data Services ("EFDS")          (0.2)           0.3
      International Financial Data Services ("IFDS")      0.9
      Argus Health Systems ("Argus")                      0.1            0.2
      exchange-america                                  (1.1)
      Other                                             (0.4)          (0.4)
                                                         $0.9           $4.1
 
     Decreased earnings were recorded at BFDS from a decline in transaction
 revenue from services provided to the brokerage industry, a slowing in mutual
 fund revenue growth and an increase in costs, and the loss of a significant
 Canadian client at its subsidiary CFDS.  EFDS results reflect an increase in
 accounts serviced to 2.8 million at March 31, 2001, which is 0.1 million or
 3.7% above year end 2000 and 0.5 million or 21.7% over March 31, 2000 levels.
 EFDS was adversely affected by a significant decline in seasonal processing
 revenues related to U.K. retirement plan transactions.  U.K. product pricing
 is more sensitive to transaction volumes than in the U.S.  Exchange-america is
 a new joint venture of the Company which is developing and marketing a web-
 enabled process to submit insurance and annuities applications online.
 Exchange-america results reflect development and marketing expenses for its
 products.  Exchange-america initiated operations of its system for four new
 customers in the first quarter of 2001.  Argus' earnings decreased from the
 prior year quarter primarily from increased depreciation charges.
 
     Other income, net
     Other income was $6.6 million for the first quarter 2001, compared to
 $21.3 million for the first quarter 2000.  First quarter 2001 results include
 $3.3 million primarily related to interest and dividend income and
 $3.3 million related primarily to gains on sales of marketable equity
 securities.  First quarter 2000 results include $2.9 million primarily related
 to interest and dividend income and $18.4 million received in connection with
 the settlement of a legal dispute related to a former equity investment and
 gains on sales of marketable equity securities.
 
     Interest expense
     Interest expense totaled $1.2 million for the quarter ended March 31,
 2001, a decrease of $0.2 million from the prior year quarter.  Average debt
 balances were lower in 2001 compared to 2000.
 
     Income taxes
     DST's effective tax rate was 35.1% for the quarter ended March 31, 2001
 compared to 35.9% for the quarter ended March 31, 2000.  The 2001 and 2000 tax
 rates were affected by tax benefits relating to certain international
 operations and recognition of state tax benefits associated with income
 apportionment rules.
 
                                 Other Actions
 
     Stock Repurchase Program
     During the quarter ended March 31, 2001, DST purchased 2,673,000 shares of
 its common stock under previously announced share repurchase programs which
 total 16,350,000 shares.  Of the amount purchased during the quarter, 820,000
 shares will be utilized for DST's stock award, employee stock purchase and
 stock option programs and 1,853,000 shares will be used for general corporate
 purposes.  The shares were purchased at an average price of $35.10 per share,
 with 2,665,000 shares being acquired under previously executed forward
 purchase agreements.  As of March 31, 2001, the cost to settle the remaining
 forward purchase agreement, which expires in September 2002, would be
 approximately $88.2 million for 2.7 million shares ($32.67 per share).  The
 agreement allows the Company to elect net cash or net share settlement in lieu
 of physical settlement of the shares.
     As of March 31, 2001, DST has purchased 9,333,000 shares since the
 programs commenced.  Of the remaining 7,017,000 shares to be repurchased,
 3,020,000 shares are expected to be utilized for DST's stock award, employee
 stock purchase and stock option programs and 3,997,000 shares are expected to
 be used for general corporate purposes.
 
     EquiServe Acquisition
     On March 30, 2001, DST completed the acquisition of a 75% interest in
 EquiServe Limited Partnership ("EquiServe") by purchasing interests held by
 FleetBoston Financial and Bank One Corporation.
     EquiServe is one of the nation's largest corporate transfer agency service
 providers, maintaining and servicing the records of approximately 24 million
 shareholder accounts for approximately 1,400 publicly traded companies.
 EquiServe employs approximately 2,600 associates and recorded revenues of
 approximately $325 million for the year 2000.
     The acquisition was accounted for as a purchase and the results of
 EquiServe's operations are included in DST's 2001 consolidated financial
 statements from the date of acquisition.  The minimum purchase price of
 $140 million is to be paid in four installments.  The first installment of
 approximately $43.9 million was paid at closing.  The remaining three
 installments, which total approximately $96.1 million (discounted to
 $87.6 million for accounting purposes) are payable annually in varying amounts
 beginning February 28, 2002.  The remaining minimum purchase price
 installments are subject to increase pursuant to a formula that provides for
 additional consideration to be paid in cash if EquiServe's revenues for the
 years ending 2001, 2002 and 2003 exceed certain targeted levels.  The minimum
 purchase price (discounted to $131.5 million for accounting purposes) will be
 allocated to the net assets acquired based upon their fair values upon
 completion of an independent valuation.  The acquisition is not expected to
 have a material impact on DST's net income or earnings per share for 2001.
 
     The information and comments above may include forward-looking statements
 respecting DST and its businesses.  Such information and comments are based on
 DST's views as of today, and actual results could differ.  There could be a
 number of factors affecting future results, including those set forth in Form
 8-K/A dated March 25, 1999 filed by DST with the Securities and Exchange
 Commission.  All such factors should be considered in evaluating any forward-
 looking comment.  The Company will not update any forward-looking statements
 in this press release to reflect future events.
 
 
                               DST SYSTEMS, INC.
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    (In millions, except per share amounts)
                                  (Unaudited)
 
                                                        For the Three Months
                                                           Ended March 31,
                                                         2001           2000
 
     Revenues                                         $ 371.0        $ 340.4
 
     Costs and expenses                                 262.0          245.1
     Depreciation and amortization                       31.3           31.6
 
     Income from operations                              77.7           63.7
 
     Interest expense                                   (1.2)          (1.4)
     Other income, net                                    6.6           21.3
     Equity in earnings of unconsolidated affiliates      0.9            4.1
 
     Income before income taxes                          84.0           87.7
 
     Income taxes                                        29.5           31.5
 
     Net income                                         $54.5          $56.2
 
     Average common shares outstanding                  124.2          125.8
     Diluted shares outstanding                         128.5          128.8
 
     Basic earnings per share                           $0.44          $0.45
     Diluted earnings per share                         $0.42          $0.44
 
     Net income before non-recurring items              $52.4          $44.4
     Diluted earnings per share before
      non-recurring items                               $0.41          $0.34
 
 
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 SOURCE  DST Systems, Inc.