8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 7, 2016 (June 30, 2016)

DST SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-14036	43-1581814
(Commission File Number)	(I.R.S. Employer Identification No)
333 West 11th Street, Kansas City, Missouri	64105
(Address of principal executive offices)	(Zip Code)

(816) 435-1000

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 Entry into a Material Definitive Agreement

DST Systems, Inc. (the “Company”) participates in a $150.0 million accounts receivable securitization program (the “Program”) with Wells Fargo Bank, National Association (“Wells Fargo Bank”) as described in an Amended and Restated Receivables Purchase Agreement dated as of May 15, 2014 (the “Agreement”), as amended by Amendment Number 1 to Amended and Restated Receivables Purchase Agreement dated as of May 14, 2015 (the “First Amendment”), with commitments extending to May 14, 2018 (subject to Wells Fargo Bank’s rights to terminate the Program upon the occurrence of certain events and unless the Program is otherwise extended in accordance with its terms).

In preparation for the disposition described in Item 2.01 below, on June 30, 2016, by execution of a Receivables Sale Agreement (“Receivables Sale Agreement”), (a) the accounts receivable and related assets of each of the following subsidiaries of the Company (“Released Originators”) were sold and re-conveyed back to the Released Originators through sequential sales and re-conveyances by Wells Fargo Bank to Fountain City Finance, LLC (a wholly-owned bankruptcy remote special purpose subsidiary of the Company) (“SPE”), by SPE to the Company and by the Company to each of the Released Originators and (b) the Released Originators, their accounts receivable and related assets were removed and released from the Program, the Agreement, the First Amendment and related agreements. The Released Originators are DST Output, LLC; DST Mailing Services, Inc.; DST Output Central, LLC; DST Output East, LLC; DST Output Electronic Solutions, Inc.; DST Output West, LLC; Lateral Group NA, LLC; and Newkirk Products, Inc.

The Program was described in, and the Agreement was filed with, a Form 8-K filed on May 21, 2014 (“Initial 8-K”). The First Amendment was described in, and filed with, a Form 8-K filed on May 15, 2015 (“Second 8-K”, and together with the Initial 8-K, the “Prior 8-K’s”). This summary does not purport to be complete, and is qualified in its entirety by reference to the Prior 8-K’s, the Agreement, the First Amendment, and by the Receivables Sale Agreement which is attached hereto as Exhibit 10.1.

ITEM 2.01   Completion of Acquisition or Disposition of Assets

Effective July 1, 2016, the Company completed the sale of its North American Customer Communications business, consisting of DST Output, LLC, DST Mailing Services, Inc., DST Output Services, Inc., DST Output East LLC, DST Electronic Solutions LLC, DST Output Canada ULC, and other wholly-owned indirect subsidiaries (“NACC Business”) to affiliates of Broadridge Financial Solutions, Inc. (“Broadridge”), pursuant to the Purchase Agreement, dated June 14, 2016. Other than in respect of or as contemplated by the Purchase Agreement, there are no material relationships between the Company and its affiliates, on the one hand, and Broadridge and its affiliates, on the other hand.

At the closing, the consideration paid by affiliates of Broadridge to the Company and certain of its affiliates was $410.0 million, as adjusted for estimated working capital. The final purchase price is subject to working capital and other adjustments pursuant to the terms of the Purchase Agreement.

The foregoing description of the Purchase Agreement, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on June 14, 2016 and is incorporated herein by reference, does not purport to be complete and is qualified in its entirety by reference thereto.

ITEM 9.01  Financial Statements and Exhibits.

(b) Pro forma financial information

The pro forma financial information required to be filed pursuant to Item 9.01(b) of Form 8-K is attached hereto as Exhibit 99.1 and incorporated by reference herein.

(d)	Exhibits.
	Exhibit	Description
	10.1	Receivables Sale Agreement dated as of June 30, 2016, among Wells Fargo Bank, National Association; Fountain City Finance, LLC; the Company; and certain subsidiaries of the Company
	99.1	Company pro forma financial information

Safe Harbor Statement

Certain material presented in this report 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 report 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 report to reflect new information, future events or otherwise.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 7^th day of July, 2016.

DST Systems, Inc.

By: /s/ Gregg Wm. Givens

Name: Gregg Wm. Givens

Title: Senior Vice President, Chief Financial

               Officer and Treasurer

EX-10.1

RECEIVABLES SALE AGREEMENT

THIS RECEIVABLES SALE AGREEMENT, dated as of June 30, 2016 (this “Agreement”), is entered into by and among Wells Fargo Bank, National Association, as Agent (the “Agent”), Fountain City Finance, LLC, a Delaware limited liability company (the “SPE”), DST Systems, Inc., a Delaware corporation (the “Parent” and, together with the SPE and the Agent, the “Transferors”), and each of the Originators (hereinafter defined).

1. Definitions. As used in this Agreement:

“Collections”means, with respect to any Receivable, all cash collections and other cash proceeds of such Receivable, including, without limitation, all finance charges and all cash proceeds of Related Security with respect to such Receivable, and any Collection of such Receivable deemed to have been received with respect thereto.

“Contract”means, in relation to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes, or other writings pursuant to which such Receivable arises or which evidence such Receivable or under which a Person becomes or is obligated to make payment in respect of such Receivable.

“Obligor” means with respect to any Receivable, the Person obligated to make payments in respect of such Receivable.

“Originator”means each of DST OUTPUT, LLC, a Delaware limited liability company, DST MAILING SERVICES, INC., a Delaware corporation, DST OUTPUT CENTRAL, LLC, a Delaware limited liability company, DST OUTPUT EAST, LLC, a Delaware limited liability company, DST OUTPUT ELECTRONIC SOLUTIONS, INC., a Missouri corporation, DST OUTPUT WEST, LLC, a Delaware limited liability company, LATERAL GROUP NA, LLC, a Delaware limited liability company, and NEWKIRK PRODUCTS, INC., a New York corporation.

“Person”means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

“Purchased Assets” means all Receivables, whether now owned and existing or hereafter acquired or arising, together with the Related Security and Collections with respect thereto and all proceeds of any and all of the foregoing.

“Receivable”means any indebtedness of any Person, whether constituting an account, chattel paper, investment or general intangible, arising in connection with the sale of goods or the rendering of services by an Originator, including the right to payment of any interest, fees or finance charges and other obligations of such Person with respect thereto.

“Related Security”means with respect to any Receivable:

(i)    all right, title and interest in any merchandise (including returned merchandise) relating to any sale giving rise to such Receivable;

(ii)    all security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise,

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together with all financing statements filed against an Obligor describing any collateral securing such Receivable;

(iii)    the Contract and all guaranties, indemnities, warranties, insurance (and proceeds and premium refunds thereof) and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise; and

(iv)    all contracts and all other documents, purchase orders, invoices, agreements, books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) relating to such Receivable and the related Obligor.

2.Sales of the Receivables, Related Security and Collections. On the date hereof, the following transactions shall occur in the order listed:

(a)For value received, the Agent, hereby absolutely and unconditionally, sells, assigns, conveys and transfers to the SPE (the Agent’s “Transferee”) all of the Agent’s existing and future right, title and interest in and to the Purchased Assets, without representation, warranty or recourse of any kind, express or implied, except as expressly provided in Section 2 below;

(b)For value received, the SPE, hereby absolutely and unconditionally, sells, assigns, conveys and transfers to the Parent (the SPE’s “Transferee”) all of the SPE’s existing and future right, title and interest in and to the Purchased Assets, without representation, warranty or recourse of any kind, express or implied, except as expressly provided in Section 2 below;

(c)For value received, the Parent, hereby absolutely and unconditionally, sells, assigns, conveys and transfers to the applicable Originator (the Parent’s “Transferee”) all of the Parent’s existing and future right, title and interest in and to the Purchased Assets, without representation, warranty or recourse of any kind, express or implied, except as expressly provided in Section 2 below; and

(d)Each of the Originators shall cease to be a party to (i) the Originator Purchase Agreement, dated as of May 21, 2009, by and among the Originators and certain of their affiliates, as “Sellers,” and DST Systems, Inc., a Delaware corporation, as the “Servicer” and as the “Purchaser,” as the same is amended, restated or otherwise modified from time to time after the date thereof, and (ii) the Amended and Restated Receivables Purchase Agreement, dated as of May 15, 2014, by and among Fountain City Finance, LLC, a Delaware limited liability company as the “Seller”, Wells Fargo Bank, National Association, individually and as Agent, DST Systems, Inc., a Delaware corporation, as the Servicer, and each of the Originators and various of their affiliates, as the same is amended, restate or otherwise modified from time to time after the date thereof.

It is the intention of each Transferor and its applicable Transferee that the sale, assignment, conveyance and transfer by such Transferor set forth in clauses (a)-(c) above constitute a true sale and outright conveyance to its Transferee of all of its existing and future right, title and interest in and to the Purchased Assets, vesting its Transferee identified above with all benefits and burdens of owning the Purchased Assets, and none of the parties hereto intends any of the transactions contemplated hereby to constitute loans secured by the Purchased Assets. For the avoidance of doubt, after giving effect to the above sale, assignment, conveyance and transfer by each Transferor to its Transferee, such Transferor hereby absolutely and unconditionally releases any security interest or ownership interest it may have been granted in the Purchased Assets.

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3.Representations and Warranties.

(a)Each of the Transferors hereby represents and warrants to its Transferee that such Transferor’s sale, assignment, conveyance and transfer of its right, title and interest in and to the Purchased Assets is made free and clear of any lien, security interest, mortgage, pledge, assignment or other charge or encumbrance, or any other type of preferential arrangement created by or through such Transferor.

(b)Each of the parties hereto represents and warrants to the other parties hereto that this Agreement has been duly authorized, executed and delivered by such party, and constitutes is legally binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, receivership, moratorium or other similar Laws affecting the rights of creditors generally and general equitable principles (whether considered in a proceeding at law or in equity).

4. Miscellaneous.

(a)Each Transferee is hereby authorized to file a Uniform Commercial Code financing statement against its applicable Transferor to perfect the sale of the Purchased Assets by such Transferor to such Transferee. In addition, the Agent hereby authorizes each Originator to terminate the financing statement naming such Originator, as debtor/seller, the SPE, as original secured party/buyer and the Agent, as total assignee.

(b)No amendment or waiver of any provision of this Agreement or consent to any departure by any party therefrom shall be effective unless in writing signed by each of the parties hereto.

(c)THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY HERETO).

(d)This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery by a party hereto of an executed counterpart of this Agreement by facsimile or similar electronic means shall be deemed effective as delivery of the original executed counterpart by such party for purposes of execution hereof.

(e)Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in New York City in any action or proceeding arising out of or relating to this agreement, and each party hereto hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. The parties hereto hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(f)EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.

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<Signature pages follow>

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IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first above written.

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent

By: /s/ William P. Rutkowski
Name: William P. RutkowskiTitle: Vice President

FOUNTAIN CITY FINANCE, LLC,
DST SYSTEMS, INC.,DST OUTPUT, LLC,
DST MAILING SERVICES, INC. ,DST OUTPUT CENTRAL, LLC,DST OUTPUT EAST, LLC,DST OUTPUT ELECTRONIC SOLUTIONS, INC.,DST OUTPUT WEST, LLC, LATERAL GROUP NA, LLC ANDNEWKIRK PRODUCTS, INC.

By: /s/ Gregg Wm. Givens
Name:    Gregg Wm. Givens

Title:    Treasurer

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EX-99.1

Exhibit 99.1

DST Systems, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Information

On July 1, 2016, DST Systems, Inc. (“we,” “our,” “the Company” or “DST”) completed the previously announced sale of our North American Customer Communications businesses (“NACC”) to affiliates of Broadridge Financial Solutions, Inc. The following unaudited pro forma condensed consolidated financial information are based on our historical consolidated financial statements adjusted to give the effect of the sale of NACC as well as the expected future sale of our United Kingdom Customer Communications businesses (“UKCC”) (collectively, the “Transactions”). Beginning in the second quarter 2016, NACC and UKCC’s results will be reflected in our consolidated financial statements as discontinued operations.

The Unaudited Pro Forma Condensed Consolidated Balance Sheet for March 31, 2016 is presented as if the Transactions occurred on March 31, 2016. The Unaudited Pro Forma Consolidated Statement of Income for the three months ended March 31, 2016 and for the years ended December 31, 2015, 2014 and 2013 are presented as if the Transactions occurred on January 1, 2013.

The pro forma condensed consolidated financial statements are based on information currently available including certain assumptions and adjustments that the Company believes are reasonable. They are presented for informational purposes only and do not necessarily represent what our financial position and results of operations would have been if the dispositions occurred on the dates above, or to project our financial performance for any future period. The unaudited pro forma condensed consolidated financial information and the related notes should be read in conjunction with our audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2016.

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DST SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

March 31, 2016

(in millions)

	DST Systems, Inc. As Reported		Disposition of NACC			Pro Forma Adjustments		Notes	Subtotal		Disposition of UKCC			DST Systems, Inc. Pro Forma
Assets
Current assets
Cash and cash equivalents	$	73.4	$	(1.0	)	$	410.0	(a)	$	482.4	$	(13.4	)	$	469.0
Funds held on behalf of clients	225.7		—			—			225.7		—			225.7
Client funding receivable	66.9		—			—			66.9		—			66.9
Accounts receivable	376.5		(106.9		)	—			269.6		(48.2		)	221.4
Other assets	95.2		(17.4		)	—			77.8		(12.9		)	64.9
	837.7		(125.3		)	410.0			1,122.4		(74.5		)	1,047.9
Investments	350.1		—			—			350.1		—			350.1
Unconsolidated affiliates	328.0		—			—			328.0		(0.4		)	327.6
Properties, net	307.3		(30.3		)	—			277.0		(33.7		)	243.3
Intangible assets, net	175.2		(1.4		)	—			173.8		(18.5		)	155.3
Goodwill	543.4		(18.7		)	—			524.7		(5.9		)	518.8
Other assets	62.8		(8.4		)	—			54.4		(0.2		)	54.2
Total assets	$	2,604.5	$	(184.1	)	$	410.0		$	2,830.4	$	(133.2	)	$	2,697.2
Liabilities
Current liabilities
Current portion of debt	$	154.6	$	—		$	—		$	154.6	$	(0.5	)	$	154.1
Client funds obligations	292.6		—			—			292.6		—			292.6
Accounts payable	83.4		(17.8		)	4.3		(b)	69.9		(19.3		)	50.6
Accrued compensation and benefits	79.5		(13.8		)	—			65.7		(3.4		)	62.3
Deferred revenues and gains	43.5		(3.3		)	—			40.2		(1.4		)	38.8
Income taxes payable	—		—			88.6		(c)	88.6		—			88.6
Other liabilities	129.6		(42.2		)	—			87.4		(7.5		)	79.9
	783.2		(77.1		)	92.9			799.0		(32.1		)	766.9
Long-term debt	566.9		—			—			566.9		(2.2		)	564.7
Income taxes payable	69.3		—			—			69.3		—			69.3
Deferred income taxes	100.6		(3.1		)	—			97.5		—			97.5
Other liabilities	66.5		(36.5		)	—			30.0		(2.4		)	27.6
Total liabilities	1,586.5		(116.7		)	92.9			1,562.7		(36.7		)	1,526.0
Redeemable Non-controlling Interest	20.2		—			—			20.2		—			20.2
Stockholders’ Equity	997.8		(67.4		)	317.1		(d)	1,247.5		(96.5		)	1,151.0
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	2,604.5	$	(184.1	)	$	410.0		$	2,830.4	$	(133.2	)	$	2,697.2

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

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DST SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Three Months Ended March 31, 2016

(In millions, except share amounts)

	DST Systems, Inc. As Reported			Disposition of NACC			Subtotal			Disposition of UKCC			DST Systems, Inc. Pro Forma
Operating revenues	$	521.1		$	(113.4	)	$	407.7		$	(46.4	)	$	361.3
Out-of-pocket reimbursements	224.7			(191.1		)	33.6			(14.2		)	19.4
Total revenues	745.8			(304.5		)	441.3			(60.6		)	380.7
Costs and expenses	642.0			(279.1		)	362.9			(56.0		)	306.9
Depreciation and amortization	28.4			(3.6		)	24.8			(2.6		)	22.2
Income from operations	75.4			(21.8		)	53.6			(2.0		)	51.6
Interest expense	(6.1		)	—			(6.1		)	—			(6.1		)
Other income, net	6.3			—			6.3			—			6.3
Equity in earnings of unconsolidated affiliates	6.7			—			6.7			—			6.7
Income before income taxes and non-controlling interest	82.3			(21.8		)	60.5			(2.0		)	58.5
Income taxes	25.3			(5.2		)	20.1			—			20.1
Net income	57.0			(16.6		)	40.4			(2.0		)	38.4
Net loss attributable to non-controlling interest	1.1			—			1.1			—			1.1
Net income attributable to DST Systems, Inc.	$	58.1		$	(16.6	)	$	41.5		$	(2.0	)	$	39.5
Weighted average common shares outstanding	33.8						33.8						33.8
Weighted average diluted shares outstanding	34.3						34.3						34.3
Basic earnings per share	$	1.72					$	1.23					$	1.17
Diluted earnings per share	$	1.70					$	1.21					$	1.15

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

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DST SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31, 2015

(In millions, except share amounts)

	DST Systems, Inc. As Reported			Disposition of NACC			Subtotal			Disposition of UKCC			DST Systems, Inc. Pro Forma
Operating revenues	$	2,013.0		$	(413.2	)	$	1,599.8		$	(194.8	)	$	1,405.0
Out-of-pocket reimbursements	812.1			(684.2		)	127.9			(58.9		)	69.0
Total revenues	2,825.1			(1,097.4		)	1,727.7			(253.7		)	1,474.0
Costs and expenses	2,397.5			(1,009.4		)	1,388.1			(237.9		)	1,150.2
Depreciation and amortization	122.0			(21.5		)	100.5			(9.4		)	91.1
Income from operations	305.6			(66.5		)	239.1			(6.4		)	232.7
Interest expense	(24.1		)	—			(24.1		)	0.3			(23.8		)
Other income, net	204.5			—			204.5			—			204.5
Equity in earnings of unconsolidated affiliates	45.8			—			45.8			(0.4		)	45.4
Income before income taxes and non-controlling interest	531.8			(66.5		)	465.3			(6.5		)	458.8
Income taxes	173.7			(24.5		)	149.2			—			149.2
Net income	358.1			(42.0		)	316.1			(6.5		)	309.6
Net loss attributable to non-controlling interest	0.1			—			0.1			—			0.1
Net income attributable to DST Systems, Inc.	$	358.2		$	(42.0	)	$	316.2		$	(6.5	)	$	309.7
Weighted average common shares outstanding	36.0						36.0						36.0
Weighted average diluted shares outstanding	36.4						36.4						36.4
Basic earnings per share	$	9.95					$	8.78					$	8.60
Diluted earnings per share	$	9.83					$	8.69					$	8.51

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

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DST SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31, 2014

(In millions, except share amounts)

	DST Systems, Inc. As Reported			Disposition of NACC			Subtotal			Disposition of UKCC			DST Systems, Inc. Pro Forma
Operating revenues	$	2,042.0		$	(385.3	)	$	1,656.7		$	(211.2	)	$	1,445.5
Out-of-pocket reimbursements	707.3			(587.7		)	119.6			(60.3		)	59.3
Total revenues	2,749.3			(973.0		)	1,776.3			(271.5		)	1,504.8
Costs and expenses	2,309.4			(905.6		)	1,403.8			(254.7		)	1,149.1
Depreciation and amortization	131.0			(26.5		)	104.5			(11.5		)	93.0
Income from operations	308.9			(40.9		)	268.0			(5.3		)	262.7
Interest expense	(26.6		)	—			(26.6		)	0.3			(26.3		)
Gain on sale of business	100.5			—			100.5			—			100.5
Other income, net	373.5			(0.1		)	373.4			(0.3		)	373.1
Equity in earnings of unconsolidated affiliates	35.4			—			35.4			(0.7		)	34.7
Income before income taxes	791.7			(41.0		)	750.7			(6.0		)	744.7
Income taxes	198.4			(14.5		)	183.9			—			183.9
Net income	$	593.3		$	(26.5	)	$	566.8		$	(6.0	)	$	560.8
Weighted average common shares outstanding	40.0						40.0						40.0
Weighted average diluted shares outstanding	40.5						40.5						40.5
Basic earnings per share	$	14.82					$	14.17					$	14.02
Diluted earnings per share	$	14.66					$	14.00					$	13.85

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

5

DST SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31, 2013

(In millions, except share amounts)

	DST Systems, Inc. As Reported			Disposition of NACC			Subtotal			Disposition of UKCC			DST Systems, Inc. Pro Forma
Operating revenues	$	1,960.6		$	(403.8	)	$	1,556.8		$	(188.6	)	$	1,368.2
Out-of-pocket reimbursements	698.0			(586.9		)	111.1			(57.4		)	53.7
Total revenues	2,658.6			(990.7		)	1,667.9			(246.0		)	1,421.9
Costs and expenses	2,202.1			(921.7		)	1,280.4			(229.4		)	1,051.0
Depreciation and amortization	143.3			(30.8		)	112.5			(13.3		)	99.2
Income from operations	313.2			(38.2		)	275.0			(3.3		)	271.7
Interest expense	(34.5		)	—			(34.5		)	0.3			(34.2		)
Other income, net	243.2			(0.2		)	243.0			—			243.0
Equity in earnings of unconsolidated affiliates	23.0			—			23.0			(0.3		)	22.7
Income before income taxes	544.9			(38.4		)	506.5			(3.3		)	503.2
Income taxes	192.3			(13.8		)	178.5			—			178.5
Net income	$	352.6		$	(24.6	)	$	328.0		$	(3.3	)	$	324.7
Weighted average common shares outstanding	43.2						43.2						43.2
Weighted average diluted shares outstanding	44.1						44.1						44.1
Basic earnings per share	$	8.15					$	7.59					$	7.52
Diluted earnings per share	$	8.00					$	7.44					$	7.36

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

6

DST Systems, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

Note 1. Basis of Presentation

The following notes relate to the pro forma adjustments included in the Unaudited Pro Forma Condensed Consolidated Balance Sheet for March 31, 2016 which is presented as if the Transactions occurred on March 31, 2016.

(a) This adjustment represents the receipt of estimated cash consideration of $410.0 million from the disposition of NACC. The net proceeds are subject to working capital and other adjustments pursuant to the terms of the transaction.

The Company has separately announced plans to use its net cash proceeds in accordance with its capital plan including investments in the business, share repurchases, strategic acquisitions, debt repayments and other corporate purposes. The outcome of these actions is uncertain at this time and therefore not reflected as adjustments within the pro forma condensed consolidated financial information.

(b) This adjustment reflects the factually supportable transaction costs directly attributable to the disposition of NACC.

(c) This adjustment reflects the tax effect of pro forma adjustments using the respective statutory tax rates for the quarter ended March 31, 2016.

(d) This adjustment reflects the receipt of cash consideration, net of estimated transaction costs and provision for income taxes, arising from the sale of NACC as of March 31, 2016.

The estimated net after-tax cash proceeds, offset by the net book value of NACC as of March 31, 2016 of $67.4 million, results in an estimated gain of $249.7 million. This estimated gain has not been reflected in the Unaudited Pro Forma Consolidated Statement of Income as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the purchase agreement.

The gain arising from the sale of NACC will be presented within discontinued operations in the Company’s Condensed Consolidated Statement of Income for the quarterly period ended September 30, 2016. The amount of actual gain will be calculated based on the actual proceeds after working capital and other adjustments and the final net book value of NACC as of the closing of the transaction on July 1, 2016 and therefore will differ from the current estimate.

As a definitive agreement has not yet been entered into with respect to the sale of UKCC, no pro forma adjustments have been reflected to estimate the impacts of a sale as of March 31, 2016.

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