XML 57 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
Equity
 9 Months Ended
Sep. 30, 2013
Equity [Abstract]  
Equity
Equity
 
Earnings per share
 
The computation of basic and diluted earnings per share is as follows (in millions, except per share amounts):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Net income
$
96.9

 
$
85.9

 
$
268.6

 
$
286.1

 
 
 
 
 
 
 
 
Average common shares outstanding
42.9

 
45.1

 
43.6

 
44.9

Incremental shares from restricted stock units, stock options and convertible debentures
0.6

 
0.9

 
0.9

 
0.7

Average diluted shares outstanding
43.5

 
46.0

 
44.5

 
45.6

 
 
 
 
 
 
 
 
Basic earnings per share
$
2.26

 
$
1.90

 
$
6.16

 
$
6.38

Diluted earnings per share
$
2.23

 
$
1.87

 
$
6.03

 
$
6.27


 
The Company had approximately 42.5 million and 45.2 million shares outstanding at September 30, 2013 and 2012, respectively. 

There were no shares from options to purchase common stock excluded from the diluted earnings per share calculation because they were anti-dilutive for the three and nine months ended September 30, 2013, as compared to 0.8 million for both for the three and nine months ended September 30, 2012. 

The Company’s Convertible debentures would have had a potentially dilutive effect on the Company’s stock if converted into stock.  The calculation of diluted earnings per share has historically included an incremental amount of shares assumed to be issued for the conversion spread when the Company’s average daily stock price exceeded the average accreted bond price per share.  For the three and nine months ended September 30, 2013, the dilutive effect of the Convertible debentures was 0.1 million and 0.3 million shares, respectively, related to the Company's average share price exceeding the average accreted bond price per share. There was no dilutive effect of the Convertible debentures for the three and nine months ended September 30, 2012. As further described in Note 7, the Company redeemed for cash the remaining Convertible debentures during the third quarter 2013. The Company settled the principal and conversion spread with cash and, therefore, the redemption did not result in a dilutive effect on earnings per share upon settlement.
 
Share based compensation
 
The Company has share based compensation plans covering its employees and non-employee directors.  During the nine months ended September 30, 2013, the Company granted approximately 0.5 million restricted stock units (“RSU’s”), of which approximately 0.3 million are performance stock units (“PSU's”).  A portion of the RSU grants contain performance features.  Additionally, during the nine months ended September 30, 2013, the Company had 0.7 million RSU's vest primarily as the result of the achievement of the performance features. At September 30, 2013, the Company had outstanding 0.6 million unvested RSU’s and 1.2 million stock options (of which 0.5 million are not yet exercisable).
 
The Company recognized share based compensation expense of $3.5 million and $13.9 million during the three and nine months ended September 30, 2013, respectively, as compared to $5.3 million and $20.1 million during the three and nine months ended September 30, 2012. 

At September 30, 2013, the Company had $25.1 million of total unrecognized compensation expense (included in Additional paid-in capital on the Condensed Consolidated Balance Sheet) related to its share based compensation arrangements, net of estimated forfeitures.  The Company estimates that the amortized compensation expense attributable to the stock option and restricted stock unit grants will be approximately $3.5 million for the remainder of 2013, $10.4 million for 2014, $7.2 million for 2015 and $1.0 million for 2016, based on awards currently outstanding. Future amortization is not projected on approximately $3.0 million of unrecognized compensation expense as the related awards are not currently expected to achieve their required performance features and therefore not expected to vest. 

Other comprehensive income (loss)
 
Accumulated other comprehensive income balances consist of the following (in millions), net of tax:
 
Unrealized Gain on Available-for-Sale Securities
 
Unrealized Loss on Cash Flow Hedges
 
Foreign Currency
Translation
Adjustments
 
Accumulated
Other
Comprehensive
Income
Balance, December 31, 2012
$
253.7

 
$
(1.4
)
 
$
4.5

 
$
256.8

 
 
 
 
 
 
 
 
Net current period other comprehensive income (loss)
40.7

 
1.2

 
2.4

 
44.3

 
 
 
 
 
 
 
 
Balance, September 30, 2013
$
294.4

 
$
(0.2
)
 
$
6.9

 
$
301.1



Additions to and reclassifications out of Accumulated other comprehensive income attributable to the Company:
 
Three Months Ended
 
September 30,
 
2013
 
2012
 
Pretax
 
Net of Tax
 
Pretax
 
Net of Tax
Available-for-sale securities:
 
 
 
 
 
 
 
Unrealized gains on available-for-sale securities
$
13.8

 
$
8.0

 
$
15.7

 
$
10.0

Reclassification of gains into net earnings on available-for-sale securities (1)
(49.6
)
 
(30.3
)
 
(57.9
)
 
(35.3
)
Net change in available-for-sale securities
(35.8
)
 
(22.3
)
 
(42.2
)
 
(25.3
)
Cash flow hedges:
 
 
 
 
 
 
 
Unrealized losses on cash flow hedges
(0.1
)
 
—

 
(0.3
)
 
(0.2
)
Reclassification of losses into net earnings on foreign currency cash flow hedges (2)
0.2

 
0.2

 
—

 
—

Reclassification of losses into net earnings on interest rate cash flow hedges (3)
0.5

 
0.3

 
0.7

 
0.4

Net change in cash flow hedges
0.6

 
0.5

 
0.4

 
0.2

Cumulative translation adjustments
7.9

 
7.8

 
(15.2
)
 
(8.6
)
Total other comprehensive income (loss)
$
(27.3
)
 
$
(14.0
)
 
$
(57.0
)
 
$
(33.7
)
 
Nine Months Ended
 
September 30,
 
2013
 
2012
 
Pretax
 
Net of Tax
 
Pretax
 
Net of Tax
Available-for-sale securities:
 
 
 
 
 
 
 
Unrealized gains on available-for-sale securities
$
200.1

 
$
122.2

 
$
64.7

 
$
40.0

Reclassification of gains into net earnings on available-for-sale securities (1)
(133.5
)
 
(81.5
)
 
(78.7
)
 
(48.0
)
Net change in available-for-sale securities
66.6

 
40.7

 
(14.0
)
 
(8.0
)
Cash flow hedges:
 
 
 
 
 
 
 
Unrealized losses on cash flow hedges
(0.8
)
 
(0.5
)
 
(0.8
)
 
(0.5
)
Reclassification of losses into net earnings on foreign currency cash flow hedges (2)
0.2

 
0.2

 
—

 
—

Reclassification of losses into net earnings on interest rate cash flow hedges (3)
2.5

 
1.5

 
2.1

 
1.2

Net change in cash flow hedges
1.9

 
1.2

 
1.3

 
0.7

Cumulative translation adjustments
2.4

 
2.4

 
(21.1
)
 
(12.7
)
Total other comprehensive income (loss)
$
70.9

 
$
44.3

 
$
(33.8
)
 
$
(20.0
)
    
(1) Realized (gains)/losses on available for sale securities are recognized in Other income, net.
(2) Reclassification to net earnings of derivatives qualifying as effective foreign currency cash flow hedges are recognized in Costs and expenses
(3) Reclassification to net earnings of derivatives qualifying as effective interest rate cash flow hedges are recognized in Interest expense.

One of DST’s unconsolidated affiliates had an interest rate swap liability with a fair market value of $52.6 million and $73.5 million at September 30, 2013 and December 31, 2012, respectively.  DST’s 50% proportionate share of this interest rate swap liability was $26.3 million and $36.8 million at September 30, 2013 and December 31, 2012, respectively.  The Company records in Investments and AOCI its proportionate share of this liability in an amount not to exceed the carrying value of its investment in this unconsolidated affiliate. Because the carrying value of this unconsolidated affiliate investment balance was zero at both September 30, 2013 and December 31, 2012, no interest rate swap liability was recorded in the consolidated financial statements.
 
Stock repurchases
 
The Company repurchased approximately 2.6 million shares of DST common stock for $181.8 million during the nine months ended September 30, 2013, resulting in approximately $70.7 million remaining under the Company’s existing share repurchase plan.  No shares were repurchased during the nine months ended September 30, 2012. 
 
Shares received in exchange for satisfaction of the option exercise price and for tax withholding obligations arising from the exercise of options to purchase the Company’s stock or from the vesting of restricted stock shares are included in Common stock repurchased in the Condensed Consolidated Statement of Cash Flows.  The amount of such share receipts and withholdings for option exercises and restricted stock vesting was $23.3 million and $30.0 million during the nine months ended September 30, 2013 and 2012, respectively.
 
Dividends
 
The Board of Directors of DST declared a quarterly cash dividend of $0.30 per common share during the first, second and third quarters of 2013.  The total dividends for the nine months ended September 30, 2013 were $39.8 million, of which $12.8 million were paid in September 2013, $13.1 million were paid in June 2013 and $13.3 million were paid in March 2013.  The remaining amount of the dividend represents dividend equivalent shares of restricted stock units in lieu of the cash dividend. On October 31, 2013, the Board of Directors declared a quarterly dividend of $0.30 per common share, payable on December 13, 2013, to shareholders of record at close of business on November 18, 2013.