11-K 1 form11k_dst401k.txt FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission File Number 1-14036 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: DST SYSTEMS, INC. 333 West 11th Street Kansas City, Missouri 64105 REQUIRED INFORMATION 1. Report of PricewaterhouseCoopers LLP 2. Audited Statements of Net Assets Available for Benefits as of December 31, 2000 and 1999 3. Audited Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2000 and 1999 4. Notes to Financial Statements 5. Schedule of Assets Held for Investment Purposes at End of Year 6. Signature Page 7. Consent of PricewaterhouseCoopers LLP (Exhibit 23.1) DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION DECEMBER 31, 2000 AND 1999 DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION -------------------------------------------------------------------------------- PAGE REPORT OF INDEPENDENT ACCOUNTANTS 1 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-9 ADDITIONAL INFORMATION* SCHEDULE Line 4i - Schedule of Assets Held for Investment Purposes At End of Year I * Other schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and the Advisory Committee of the DST Systems, Inc. 401(k) Profit Sharing Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the DST Systems, Inc. 401(k) Profit Sharing Plan (the "Plan") at December 31, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets Held for Investment Purposes at End of Year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP Kansas City, Missouri June 25, 2001 DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS -------------------------------------------------------------------------------- DECEMBER 31, 2000 1999 ---- ---- Cash and cash equivalents $ 1,011,782 Investments: Mutual funds 61,637,108 $ 49,514,724 DST Common Stock 3,867,787 Investment in Master Trust 191,211,573 Loans to participants 1,326,437 -------------------- ------------------ 259,054,687 49,514,724 Receivables: Employer contributions 5,535,714 -------------------- ------------------ Net assets available for benefits $ 264,590,401 $ 49,514,724 -------------------- ------------------ The accompanying notes are an integral part of these financial statements. 2 DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2000 1999 ---- ---- Investment income: Dividends, interest and other distributions $ 5,421,529 $ 3,170,742 Net appreciation (depreciation) in fair value of investments (15,278,318) 13,233,573 Net appreciation (depreciation) in fair value of investment in Master Trust 35,538,869 ------------------ ------------------ 25,682,080 16,404,315 ------------------ ------------------ Contributions: Employer 23,330,703 Participants 24,975,504 9,133,561 ------------------ ------------------ 48,306,207 9,133,561 ------------------ ------------------ 73,988,287 25,537,876 Transfer from DST Profit Sharing Plan 158,414,150 Benefits paid to participants (17,289,613) (2,904,992) Administrative expenses (37,147) ------------------ ------------------ Net change in net assets available for benefits 215,075,677 22,632,884 Net assets available for benefits: Beginning of year 49,514,724 26,881,840 ------------------ ------------------ End of year $ 264,590,401 $ 49,514,724 ------------------ ------------------ The accompanying notes are an integral part of these financial statements. 3 DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The DST Systems, Inc. 401(k) Profit Sharing Plan is a contributory, defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The following brief description of the Plan is provided for general information purposes only. Participants should refer to the Plan agreement for more complete information. Effective January 1, 2000, the DST Systems, Inc. Profit Sharing Plan (the Profit Sharing Plan) merged into the DST Systems, Inc. 401(k) Plan (the 401(k) Plan) to form the DST Systems, Inc. 401(k) Profit Sharing Plan (the Plan). The net assets available for Plan benefits of the Profit Sharing Plan at December 31, 1999 is shown as a transfer into the Plan on the Plan's financial statements for the year ended December 31, 2000. The Form 5500 for both the Profit Sharing Plan and the 401(k) Plan reflects the transfer as of end of business on December 31, 1999. SPONSOR The Plan Sponsor is DST Systems, Inc. ("DST") and certain of its subsidiaries and affiliates (the Sponsor). TRUSTEE AND INVESTMENT MANAGER The trustee of the Plan is UMB Bank, n.a. (the Trustee). The Trustee holds and administers all assets of the Plan in accordance with the provisions of the Plan agreement. The investment manager of the DST Systems, Inc. Master Trust ("Master Trust") is Ruane, Cunniff & Co., Inc. (the Investment Manager). ADMINISTRATION OF THE PLAN An advisory committee (the Advisory Committee), which consists of members who are selected by the Board of Directors of DST, has full power, authority and responsibility to control and manage the operations and administration of the Plan. All expenses of operating the Plan are paid out of Plan assets, except to the extent the Sponsor decides to pay these expenses. ELIGIBILITY All full-time employees of the Sponsor who are not members of a collective bargaining unit are eligible to participate in the Plan on the Plan entry date. The Plan entry date is the first day of the calendar month following the date an employee, other than seasonal or temporary, completes one hour of service. Seasonal and temporary employees must complete 1,000 hours of service, as defined in the Plan agreement, prior to entering the Plan. CONTRIBUTIONS Contributions are made through participant salary reductions and rollovers from other qualified plans. Participants can contribute from 1% to 15% of their annual gross salary to the Plan (subject to Internal Revenue Service limitations). Sponsor 401(k) contributions consist of a dollar-for-dollar match of the first 3% of participant contributions ("highly compensated employees" are subject to Internal Revenue Service limitations). 4 In addition, the Sponsor may make discretionary profit sharing contributions. An employee must complete 1,000 hours of service during the Plan year and be employed on December 31st to be eligible. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions, matching contributions, profit sharing contributions, rollover contributions, forfeitures of terminated participants' nonvested accounts and an allocation of Plan earnings or losses. Allocations of earnings or losses are based on account balances. Forfeitures are allocated based upon a participant's eligible compensation as provided in the Plan agreement. Discretionary contributions are allocated to participant accounts based on the proportion which the participant's eligible compensation bears to the aggregate eligible compensation of all participants for the year. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are always 100% vested in their own contributions and rollover contributions (as adjusted to reflect investment earnings and losses). Participants originally employed by the Sponsor prior to January 1, 2000, will become vested in Sponsor matching contributions and Sponsor profit sharing contributions (as adjusted to reflect investment earnings and losses) in accordance with the following schedule: YEARS OF SERVICE PERCENTAGE VESTED ---------------- ----------------- less than 1 0% 1 but less than 2 10% 2 but less than 3 20% 3 but less than 4 30% 4 but less than 5 60% 5 or more 100% Participants not within the above categories will be vested in Sponsor matching contributions and Sponsor profit sharing contributions (as adjusted to reflect investment earnings and losses) according to the following schedule: YEARS OF SERVICE PERCENTAGE VESTED ---------------- ----------------- less than 3 0% 3 but less than 4 30% 4 but less than 5 60% 5 or more 100% INVESTMENT OPTIONS Participants may direct their contributions into DST Common Stock ($0.01 par value) or any number of the mutual fund investment options as selected by the Advisory Committee. The investment options contain different degrees of risks. Participants should refer to the respective fund prospectus for a more 5 complete description of the investment objectives of each fund. The Advisory Committee reserves the right to change the available investment options from time to time. Participants may change their investment options daily. All profit sharing contributions are invested by the Trustee as advised by the Investment Manager. PLAN PARTICIPANTS The following summarizes the number of participants by fund as of December 31, 2000: American Century Value 324 American Century Growth 1,532 American Century Select 1,051 American Century Ultra 2,073 American Century International 485 DST Systems, Inc. Common Stock 1,505 Davis NY Venture 692 Fidelity Advisor Growth 769 Janus Investment 2,958 Janus Investment Enterprise 2,609 Janus Investment Mercury 3,682 Janus Investment Overseas 2,131 Managers Fund Special Equity 544 Money Market Obligs Prime Value 496 PIMCO Total Return 359 Rowe T. Price Mid-cap Growth 937 Royce Total Return 279 Standish Ayer & Wood Fixed Income 219 Vanguard Bond Index 1,174 Vanguard Index 500 2,540 Vanguard Value 538 DISTRIBUTION OF BENEFITS Benefit distributions generally will be made in the event of retirement, death, disability, resignation or dismissal. A participant's normal retirement age is 59 1/2. Balances not exceeding $5,000 will be automatically distributed as a lump sum as soon as administratively practicable following termination of employment. Balances exceeding $5,000 will be distributed upon participant election as soon as administratively practicable but no later than April 1st of the Plan year following the Plan year in which age 70 1/2 is attained. Such distributions may be elected as a lump sum or paid in monthly, quarterly or annual installments. Distributions shall be made in cash or, at the option of the Participant, in cash plus the number of whole shares of DST Common Stock allocated to the Participant's account. 6 Distributions must begin no later than the 60th day after the close of the Plan year in which a participant reaches normal retirement age or celebrates their 10th anniversary as a Plan member (whichever is later). Certain exceptions apply. Upon death, all sums credited to the participant's account will be paid to the beneficiary or beneficiaries designated by the participant. Distributions may also be made in the event of financial hardship of the participant. Certain restrictions apply. PARTICIPANT LOANS Participants may borrow up to 50% of their vested participant-directed accounts (subject to certain Plan and Internal Revenue Service limitations). Generally, loans must be repaid within five years. Loans bear a fixed rate of interest, which is set at loan origination using the Prime rate as published in the Wall Street Journal plus 1%. PLAN TERMINATION The Sponsor believes the Plan will continue without interruption; however, it reserves the right to terminate the Plan at any time subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in any unvested balances from Sponsor contributions and their respective account balances will be distributed in accordance with the Plan. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accompanying financial statements are presented on the accrual basis of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles general accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes in net assets available for plan benefits. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS Short-term liquid investments with a maturity of three months or less are considered cash equivalents. Due to the short-term nature of these investments, carrying value approximates market value. INVESTMENT VALUATION AND SECURITY TRANSACTIONS Investments are recorded at fair value. Unrealized gains and losses are recognized in the year in which they occur. Mutual fund investments are valued at net asset value representing the value at which shares of the fund may be purchased or redeemed. The investments of the Master Trust are recorded at fair value as determined by quoted prices in active markets. Investment income of the Master Trust is allocated quarterly to participating plans based upon the fair value of participating plan interests in the Master Trust at the beginning of each quarter. Net assets of the Master Trust are allocated to participating plans based 7 upon the value of the participating plan interests in the Master Trust at the beginning of the quarter plus actual contributions to the Master Trust and allocated investment income less actual distributions from the Master Trust. Loans are valued at the current amount due from participants. CONTRIBUTIONS Contributions are recognized in the year to which they relate. ACCOUNTING FOR OBLIGATIONS FOR BENEFIT PAYMENTS TO TERMINATED EMPLOYEES The Plan does not record a liability relating to the obligation for benefit payments to terminated employees. Distributions paid to participants in 2001 for in-service withdrawals and terminations during 2000 was $5,488,578. The amount paid in 2000 for in-service withdrawals and terminations during 1999 was $7,699,434. The Plan's Form 5500 reflects the liability in the year of termination or in-service withdrawal. INCOME TAX STATUS OF THE PLAN The Internal Revenue Service has determined and informed the Sponsor by a letter dated February 14, 1995, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (the IRC). The Plan has been amended since receiving the determination letter. However, the Advisory Committee and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan's financial statements. 3. PLAN INVESTMENTS The following investments represent 5% or more of net assets available for benefits at year-end: DECEMBER 31, DECEMBER 31, 2000 1999 ------------------- --------------------- American Century Growth $ 5,379,112 American Century Ultra 9,048,328 American Century Select 3,215,017 Janus Investment 6,092,948 Janus Investment Mercury 10,855,419 Janus Investment Enterprise 4,701,033 Janus Investment Overseas 4,082,976 Investment in Master Trust $ 191,211,573 The investments listed above are participant-directed, except the Investment in Master Trust. During 2000 and 1999, the Plan's participant-directed investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows: 8 YEAR ENDED YEAR ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 --------------------------- --------------------------- Mutual funds $ (16,265,732) $ 13,233,573 DST Common Stock 987,414 --------------------------- --------------------------- $ (15,278,318) $ 13,233,573 --------------------------- --------------------------- 4. MASTER TRUST The Plan's percentage ownership in the Master Trust is 72.8% at December 31, 2000. The Master Trust disclosure represents 100% of the balance in the Master Trust. The Master Trust's assets by general type at December 31, 2000 is as follows: Common stocks $ 232,402,259 Cash and cash equivalents 19,016,245 Corporate debt 3,232,588 Government securities 7,967,133 ------------------------- $ 262,618,225 ------------------------- The Master Trust's total investment income by type for the year ended December 31, 2000 is as follows: Interest $ 718,126 Dividends 1,489,541 Net appreciation 25,175,081 ------------------------- $ 27,382,748 ------------------------- The Master Trust's net appreciation (depreciation) of investments by type for the year ended December 31, 2000 is as follows: Common stocks $ 25,177,831 Corporate debt (84,584) Government securities 81,834 ------------------------- $ 25,175,081 ------------------------- 9
SCHEDULE I DST SYSTEMS, INC. 401(K) PROFIT SHARING PLAN EIN 43-1581814 / PIN 004 Line 4i-Schedule of Assets Held for Investment Purposes at End of Year December 31, 2000 (a) (b) Identity (c) Description (d) Cost (e) Current Value ----------------------- --------------------------- ----------------------------- --------------------- ------------------------- American Century Value (1) $ 307,778 American Century Growth (1) 4,571,450 American Century Select (1) 2,900,015 American Century Ultra (1) 7,435,290 American Century International (1) 399,710 * DST Systems, Inc. Common Stock (1) 3,946,334 Davis NY Venture (1) 938,449 Fidelity Advisor Growth (1) 852,813 Janus Investment Investment (1) 7,870,880 Janus Investment Enterprise (1) 6,046,198 Janus Investment Mercury (1) 12,208,040 Janus Investment Overseas (1) 5,072,796 Managers Fund Special Equity (1) 691,071 Money Market Obligs Prime Value (1) 1,341,297 PIMCO Total Return (1) 409,189 Rowe T. Price Mid-cap Growth (1) 1,284,753 Royce Total Return (1) 246,172 Standish Ayer & Wood Fixed Income (1) 224,296 Vanguard Bond Index (1) 1,944,859 Vanguard Index 500 (1) 6,153,552 Vanguard Value (1) 659,953 * Participant Loans Interest rate - Prime + 1% 0 1,326,437
* Indicates a party-in-interest (1) In accordance with instructions to the Form 5500, the Plan is not required to disclose the cost component of participant-directed investments SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. DST Systems, Inc. 401(k) Profit Sharing Plan Date: June 29, 2001 By: /S/ KENNETH V. HAGER -------------------------------------------- Kenneth V. Hager Vice President, Chief Financial Officer and Treasurer