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):
January 31, 1995
KANSAS CITY SOUTHERN INDUSTRIES. INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-4717 44-0663509
(State or other juris- (Commission file (IRS Employer
diction of incorporation) number) Identification number)
114 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Reqistrant's telephone number, including area code:
(816) 556-0303
N/A
(Former name or former address if changed since last report)
Item 2. Acquisition or Disposition of Assets
On January 31, 1995, Kansas City Southern Industries, Inc.'s ("the
Registrant's") wholly owned subsidiary, DST Systems, Inc. ("DST") together
with Kemper Financial Services, Inc. ("Kemper") closed the previously
disclosed sale of all of the outstanding Capital Stock of IFTC Holdings, Inc.
("Holdings"), to State Street Boston Corporation ("State Street"). Prior to
closing of the transaction, DST and Kemper each owned 50% of Holdings, which
wholly owns Investors Fiduciary Trust Company ("IFTC"). The closing was
completed in accordance with a definitive agreement ("the Agreement", which
was previously filed with the Securities and Exchange Commission as exhibit
10.1 to the Registrant's Form 10-Q for the period ended September 30, 1994,
File No. 1-4717,) entered into on September 27, 1994 between DST, Kemper and
State Street. Mr. A. Edward Allinson, a director of the Registrant, is an
Executive Vice President of State Street Boston Corporation.
Under the Agreement, State Street was to issue approximately 5.6 million
shares of its common stock to DST and Kemper in exchange for all of the
outstanding stock of Holdings. The actual amount of State Street shares
received upon closing was dependent upon a formula set forth in the definitive
agreement. Accordingly, on the date of closing, State Street issued 5,972,222
shares of its stock, of which DST received 2,986,111 shares. DST will
recognize a gain on sale of an equity investment and after consideration of
appropriate tax effects will record a net book gain of $4.8 million in first
quarter 1995.
The press release of the Registrant dated January 31, 1995 is filed herewith
as Exhibit 99.1
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma financial statements give
effect to the disposition of Holdings and its wholly owned
subsidiary IFTC as of September 30, 1994 for balance sheet
purposes; January 1, 1994 for income statement purposes covering
the nine months ended September 30, 1994; and January 1, 1993
for income statement purposes covering the year ended December
31, 1993, after giving effect to the pro forma adjustments
described in the accompanying notes. The pro forma financial
information is based on, and should be read in conjunction with,
the historical financial statements and notes related thereto of
the Registrant, which are on file with the Securities and
Exchange Commission (File No. 1-4717).
(c) Exhibits.
Exhibit No. Document
(99) Additional Exhibits
99.1 Press Release, dated January 31, 1995
SIGNATURE
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.
Kansas City Southern Industries, Inc.
Date: February 9, 1995 By: /s/ Louis G. Van Horn
Louis G. Van Horn
Comptroller
(Principal Accounting Officer)
Exhibit Index
Exhibit No. Document Page No.
99.1 Press Release, dated January 31, 1995 7
The following summarizes selected pro forma financial information of the
Registrant assuming the disposition of IFTC Holdings, Inc. had been completed
on September 30, 1994.
Kansas City Southern Industries, Inc.
Pro Forma Consolidated Condensed Balance Sheet
September 30, 1994
(Dollars in Millions)
(Unaudited)
Pro Forma
Registrant Adjustments Pro
Historical Debit Credit Forma
ASSETS
Current Assets:
Cash and equivalents $ 29.1 $ $ $ 29.1
Accounts receivable, net 216.2 216.2
Inventories 52.0 52.0
Other current assets 81.2 81.2
Total current assets 378.5 378.5
Investments (Held for
operating purposes) 210.1 39.7(1) 249.8
Properties (net of $637.9
accumulated depreciation
and amortization) 1,359.3 1,359.3
Other Assets 174.5 174.5
Total Assets $2,122.4 $ 39.7 $ $2,162.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Debt due within one year $ 57.5 $ $ $ 57.5
Accounts and wages payable 91.9 91.9
Other accrued and
current liabilities 144.6 144.6
Total current liabilities 294.0 294.0
Other Liabilities:
Long-term debt 855.5 855.5
Deferred income taxes 209.8 34.9(4) 244.7
Other deferred credits 99.8 99.8
Total other liabilities 1,165.1 34.9 1,200.0
Minority Interest 9.8 9.8
Stockholders' Equity:
Preferred stock 7.1 7.1
Common stock .4 .4
Capital surplus 338.8 338.8
Retained earnings 516.7 4.8(1) 521.5
Shares held in trust (200.0) (200.0)
ESOP debt guarantee (9.5) (9.5)
Total stockholders' equity 653.5 4.8 658.3
Total liabilities and
stockholders' equity $2,122.4 $ $ 39.7 $2,162.1
See notes to pro forma condensed financial statements.
The following summarizes selected pro forma financial information of the
Registrant assuming the disposition of IFTC Holdings, Inc. had been completed
on January 1, 1994.
Kansas City Southern Industries, Inc.
Pro Forma Consolidated Condensed Statement of Income
Nine Months Ended September 30, 1994
(Dollars in Millions, Except per Share Data)
(Unaudited)
Pro Forma
Registrant Adjustments Pro
Historical Debit Credit Forma
Sales and revenues $ 805.7 $ $ 1.3 (3) $ 807.0
Costs and expenses 633.8 633.8
Income from Operations 171.9 1.3 173.2
Equity in net earnings of
unconsolidated affiliates 17.9 4.5(2) 13.4
Interest expense (39.7) (39.7)
Pretax income 150.1 4.5 1.3 146.9
Income tax provision 56.1 .2 (4) 55.9
Income before minority interest 94.0 4.5 1.5 91.0
Minority interest 6.0 6.0
Net Income $ 88.0 $ 4.5 $ 1.5 $ 85.0
Primary Earnings per Common Share:
(based upon weighted average shares
outstanding of 45,112,000) $ 1.95 $ 1.88
See notes to pro forma condensed financial statements.
The following summarizes selected pro forma financial information of the
Registrant assuming the disposition of IFTC Holdings, Inc. had been completed
on January 1, 1993.
Kansas City Southern Industries, Inc.
Pro Forma Consolidated Condensed Statement of Income
Year Ended December 31, 1993
(Dollars in Millions, Except per Share Data)
(Unaudited)
Pro Forma
Registrant Adjustments Pro
Historical Debit Credit Forma
Sales and revenues $ 961.1 $ $ 1.5(3) $ 962.6
Costs and expenses 749.0 749.0
Income from Operations 212.1 1.5 213.6
Equity in net earnings of
unconsolidated affiliates 14.1 4.8(2) 9.3
Interest expense (51.2) (51.2)
Pretax income 175.0 4.8 1.5 171.7
Income tax provision 69.0 .2(4) 68.8
Income before minority interest 106.0 4.8 1.7 102.9
Minority interest 9.0 9.0
Net Income before Cumulative
effect of Accounting Changes $ 97.0 $ 4.8 $ 1.7 $ 93.9
Primary Earnings per Common Share:
(based upon weighted average shares
outstanding of 44,728,000) from
ongoing operations before
cumulative effect of accounting
changes $ 2.16 $ 2.10
See notes to pro forma condensed financial statements.
Kansas City Southern Industries, Inc.
Notes to Pro Forma Condensed Financial Statements
Note 1: Exchange of Investment in IFTC for State Street Stock
Pursuant to a definitive agreement, the Registrant's wholly-owned subsidiary,
DST, exchanged its 50% interest in IFTC Holdings, Inc. ("Holdings") and its
wholly-owned subsidiary Investors Fiduciary Trust Company ("IFTC") for
2,986,111 shares of Common stock of State Street Boston Corporation ("State
Street"). As a result of this transaction, DST increased its investment book
basis to the total amount of fair value of the State Street shares received at
the date of closing. Upon closing of the transaction, DST increased its book
investment basis and recorded a gain on the sale of an equity investment of
$39.7 million. In addition, as a result of the book/tax basis difference
arising from the exchange of an equity investment to a cost basis investment
and the Registrant's consistent tax policy of not providing deferred tax on
unremitted earnings of unconsolidated affiliates prior to January 1, 1993 as
those earnings had been reinvested, adjustments were required to record
deferred income taxes of $34.9 million, thereby resulting in a one-time net
gain on the transaction of $4.8 million, which will be recorded in first
quarter 1995.
The attached pro forma condensed income statements for the year ended December
31, 1993 and the nine months ended September 30, 1994 exclude the effect of
the one-time gain discussed above.
Note 2: Elimination of Equity in IFTC Earnings
Assuming the IFTC transaction would have occurred on January 1, 1993 or
January 1, 1994, DST would not have recorded equity in earnings for the year
ended December 31, 1993 or the nine months ended September 30, 1994.
Note 3: State Street Dividends
Assuming the IFTC transaction would have occurred on January 1, 1993 or
January 1, 1994, DST would have received normal quarterly cash dividends from
State Street on the shares received at closing. These dividends amounted to
$.50 and $.43 per share of State Street Common stock for the year ended
December 31, 1993 and nine months ended September 30, 1994, respectively.
Note 4. Tax Impact
The pro forma tax effect of the IFTC transaction includes a combination of:
(a) income tax provisions for the dividend income received on the State Street
Common stock and; (b) the elimination of the income tax provision for
recognition of equity in earnings of IFTC.