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, 2005
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
DST Systems, Inc. 401(k) Profit Sharing Plan
Index to Financial Statements and Supplemental Information
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Page
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-12
Supplemental information* Schedule
Schedule H, line 4i - Schedule of Assets (Held At End of Year) I
Exhibit Index
Signature
* 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 Registered Public Accounting Firm
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,
2005 and 2004, 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 the standards of the Public Company Accounting
Oversight Board (United States). Those standards 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
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. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
As described under the heading "restatement" in Note 1 and as further described
in Note 5, the Plan's financial statements for the year ended December 31, 2004
have been restated.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
July 12, 2006
DST Systems, Inc. 401(k) Profit Sharing Plan
Statement of Net Assets Available for Benefits
--------------------------------------------------------------------------------
December 31,
-----------------------------
2005 2004
------------- -------------
(restated)
ASSETS
Cash and cash equivalents $ 7 $ 33,125
------------- -------------
Investments:
Mutual funds 237,228,206 248,926,016
DST common stock 23,406,118 27,256,363
Investment in master trust 340,707,934 317,117,474
Collateral held on loaned securities 21,222,600 10,843,200
Loans to participants 7,528,946 7,295,973
------------- -------------
Total investments 630,093,804 611,439,026
------------- -------------
Receivables:
Employer 18,542,367 22,179,626
Participants 908,059 1,029,333
Investment income and other 183,469 562,273
------------- -------------
19,633,895 23,771,232
------------- -------------
LIABILITIES
Due to broker for securities purchased 1,353,122 1,931,307
Payable for collateral on loaned securities 21,222,600 10,843,200
------------- -------------
Total liabilities 22,575,722 12,774,507
------------- -------------
Net assets available for benefits $ 627,151,984 $ 622,468,876
============= =============
The accompanying notes are an integral part of these financial statements.
DST Systems, Inc. 401(k) Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
--------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------
2005 2004
------------- -------------
(restated)
Additions:
Investment income:
Dividends, interest and other income $ 4,051,862 $ 3,440,850
Net appreciation in fair value of
investments 18,405,656 27,364,479
Net appreciation in fair value of
investment in master trust 34,841,466 27,344,262
------------- -------------
57,298,984 58,149,591
------------- -------------
Contributions:
Employer 31,418,775 34,883,324
Participants 35,392,314 32,028,374
------------- -------------
66,811,089 66,911,698
------------- -------------
Total additions 124,110,073 125,061,289
Deductions:
Distributions:
Benefits to participants (119,132,651) (29,573,417)
Administrative expenses (294,314) (125,581)
------------- -------------
(119,426,965) (29,698,998)
------------- -------------
Net change in net assets available for
benefits before plan transfers 4,683,108 95,362,291
Plan transfers:
Transfer from lock\line, LLC 401(k)
retirement plan 1,306,261
Transfer to Rapid Solutions Group profit
sharing plan (10,445,499)
------------- -------------
Net change in net assets available for
benefits 4,683,108 86,223,053
Net assets available for benefits:
Beginning of year 622,468,876 536,245,823
------------- -------------
End of year $ 627,151,984 $ 622,468,876
============= =============
The accompanying notes are an integral part of these financial statements.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The DST Systems, Inc. 401(k) Profit Sharing Plan (the "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.
On June 11, 2004, the lock\line, LLC 401(k) Retirement Plan was merged into the
Plan. The net assets available for the lock\line, LLC 401(k) Retirement Plan at
June 11, 2004 are shown as a transfer into the Plan on the Plan's financial
statements for the year ended December 31, 2004.
On January 26, 2004, the Plan transferred net assets to the Rapid Solutions
Group Profit Sharing Plan in connection with the completion of the Janus Capital
Group Inc. exchange.
SPONSOR
The Plan Sponsor is DST Systems, Inc. ("DST", the "Employer" or the "Sponsor").
Certain of its subsidiaries and affiliates participate in the Plan.
TRUSTEE AND INVESTMENT MANAGER
The trustee of the Plan is Marshall & Ilsley Trust Company N.A. (the "Trustee").
The Trustee holds and administers all assets of the Plan in accordance with the
provisions of the Plan agreement. One of the Plan's investments (the Marshall
Money Market Fund) is a mutual fund that is managed by an affiliate of the
Trustee. Transactions related to this investment, therefore, qualify as
party-in-interest transactions.
The investment manager of the DST Systems, Inc. Master Trust ("Master Trust") is
Ruane, Cunniff, Goldfarb & Co., Inc. (the "Investment Manager"). For the years
ended December 31, 2005 and 2004, the Sponsor paid management fees and expenses
to the Investment Manager of $4,197,554 and $3,838,946, respectively.
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 may be paid out of Plan assets, except
to the extent the Sponsor decides to pay these expenses. Income from securities
lending activities of the Plan and Master Trust is used to offset administrative
expenses of the Plan. For the year ended December 31, 2005, securities lending
income was sufficient to offset substantially all administrative expenses of the
Plan with the remainder being paid by the Sponsor on behalf of the Plan. For the
year ended December 31, 2004, the Plan incurred administrative expenses that
were paid by the Sponsor in the amount of $400,392.
ELIGIBILITY
All employees of the Sponsor and participating subsidiaries and affiliates are
eligible to participate in the Plan other than members of a collective
bargaining unit, leased employees, nonresident aliens, and persons performing
services for the Sponsor through an agreement with a third-party. The Plan entry
date is the first day of the calendar month following the date an employee,
other than seasonal or temporary employee, completes one hour of service.
Seasonal and temporary employees must complete one year of service, as defined
in the Plan document, prior to entering the Plan.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
CONTRIBUTIONS
Participant contributions are made through participant salary reductions and
rollovers from other eligible retirement plans. Participants can contribute from
1% to 25% of their annual gross salary to the Plan, subject to Internal Revenue
Service limitations ("highly compensated employees" may be subject to a lower
limitation). Beginning in 2002, participants aged 50 or older may make
additional contributions or "catch-up" contributions (subject to Internal
Revenue Service limitation) once they have satisfied the annual contribution
maximum as set by law or other applicable limitation.
Sponsor contributions consist of a dollar-for-dollar match of the first 3% of
participant salary reduction contributions. During the years ended December 31,
2005 and 2004, Sponsor matching contributions were $13,269,749 and $13,189,272,
respectively.
In addition, the Sponsor may make discretionary profit sharing contributions.
Generally, an employee must complete 1,000 hours of service during the Plan year
and be employed on December 31 of the Plan year to be eligible to receive an
allocation of discretionary profit sharing contributions for that year. During
the years ended December 31, 2005 and 2004, Sponsor profit sharing discretionary
contributions were $18,149,026 and $21,694,052, respectively.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's salary reduction
contributions, matching contributions, profit sharing contributions, rollover
contributions, forfeitures of terminated participants' non-vested accounts and
an allocation of Plan earnings or losses. Allocations of earnings or losses are
based on account balances. Discretionary contributions and forfeitures 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, rollover
contributions and catch-up contributions (as adjusted to reflect investment
earnings and losses).
Generally, participants 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 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
INVESTMENT OPTIONS
Participants may direct their salary reduction contributions, catch-up
contributions, matching contributions and rollover contributions into a variety
of mutual fund investment options as made available by the Advisory Committee or
into the DST Company Stock Fund, a unitized fund consisting primarily of DST
common stock. The investment options contain different degrees of risks.
Participants should refer to the respective fund prospectus for a more complete
description of the investment
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
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.
FORFEITURES
Forfeitures of unvested accounts are generally first used for the restoration of
reemployed participants' forfeited amounts and then added to the profit sharing
contribution and allocated accordingly. For the years ended December 31, 2005
and 2004, forfeitures of unvested accounts totaled $1,814,112 and $2,117,456,
respectively.
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.
Unless the terminated participant otherwise elects, balances not exceeding
$1,000 will be automatically distributed to the participant as a lump sum and
balances ranging in value from $1,001 to $5,000 will be automatically
distributed as an IRA rollover with Marshall & Ilsley Bank as soon as
administratively practicable. Balances exceeding $5,000 (excluding rollover
contributions and related earnings or losses) will be distributed upon
participant election as soon as administratively practicable but no later than
April 1 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. Participants under the age of 62
with balances exceeding $5,000 (excluding rollover contributions and related
earnings or losses) must consent to any distribution.
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.
During 2005, DST sold its wholly-owned subsidiaries, DST Innovis, Inc., DST
Interactive, Inc., and Equiserve, Inc. (comprising approximately 2,200
employees). Benefits to participants were higher in 2005 as a result of the sale
of these businesses and the termination of these employees.
PARTICIPANT LOANS Participants may borrow the lesser of $50,000 or 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%. At December 31, 2005
and 2004, interest rates on participant loans ranged from 4.0% to 10.5%.
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,
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
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 document.
RESTATEMENT
The accompanying financial statements of the Plan as of and for the year ended
December 31, 2004 have been restated to reflect the effect of the Plan's and
Master Trust's securities lending transactions. The effect of the restatement is
as follows:
--------------------- --------------------
STATEMENT OF NET ASSETS Amounts As
AVAILABLE FOR BENEFITS Previously Reported Restated
--------------------- --------------------
Collateral held on loaned securities $ $ 10,843,200
Payable for collateral on loaned
securities 10,843,200
--------------------- --------------------
STATEMENT OF CHANGES IN NET ASSETS Amounts As
AVAILABLE FOR BENEFITS Previously Reported Restated
--------------------- --------------------
Dividends, interest and other
income $ 3,436,234 $ 3,440,850
Net appreciation in fair value
of investment in master trust 27,317,554 27,344,262
Administrative expenses 94,257 125,581
The adjustments in the table above had no effect on the Plan's net assets
available for benefits at December 31, 2004. Also, as described in Notes 3 and
5, the Plan has restated its disclosures as of and for the year ended December
31, 2004 related to its investment in the Master Trust to present the Master
Trust's securities lending transactions on a gross basis. The Plan's securities
lending activities are described more fully in Notes 4 and 5 to these financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are presented on the accrual basis of
accounting, except for benefits to participants which are recorded upon
distribution. Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, and disclosure of contingent assets and
liabilities. 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.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
INVESTMENT VALUATION AND SECURITY TRANSACTIONS
Investments are recorded at fair value as determined by quoted prices in active
markets. Investments in mutual funds and the DST Company Stock Fund are valued
at net asset value representing the value at which shares of the fund may be
purchased or redeemed. Purchases and sales of securities are recorded on a
trade-date basis. Dividend income is accrued on the ex-dividend date. The Plan
presents in the Statement of Changes in Net Assets Available for Benefits, the
net appreciation in the fair value of its investments which consists of realized
gains or losses and net unrealized appreciation or depreciation on those
investments. The investments of the Master Trust are recorded at fair value as
determined by quoted prices in active markets. Mutual funds held in the Master
Trust are valued at net asset value representing the value at which shares of
the fund may be purchased or redeemed. Common and preferred stocks held in the
Master Trust are stated at fair value as determined by quoted prices on the last
business day of the Plan year. Investment income of the Master Trust is
allocated daily to participating plans based upon the fair value of
participating plan interests in the Master Trust at the end of each day. Net
assets of the Master Trust are allocated to participating plans based 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 to
participants are valued at the current amount due from participants, which
approximates fair value.
3. PLAN INVESTMENTS
The following investments represent 5% or more of net assets available for
benefits at year-end:
December 31,
------------------------------------
2005 2004
---------------- ----------------
Investment in master trust $ 340,707,934 $ 317,117,474
Vanguard Institutional Index Fund 34,355,504
During the years ended December 31, 2005 and 2004, the Plan's
participant-directed investments and non-participant directed investments
(including gains and losses on investments bought and sold, as well as held
during the year) appreciated in value as follows:
Year Ended December 31,
-----------------------------------------------------------
2005 2004 2004
----------------- ----------------- -----------------
(restated) (amounts
previously
reported)
Mutual funds $ 15,998,860 $ 21,852,654 $ 21,852,654
DST common stock 2,406,796 5,511,825 5,511,825
Investment in master trust 34,841,466 27,344,262 27,317,554
----------------- ----------------- -----------------
$ 53,247,122 $ 54,708,741 $ 54,682,033
================= ================= =================
As described in Note 1 "Restatement", the Master Trust information included in
the table above has been restated to reflect the effect of the Plan's securities
lending transactions as of and for the year ended December 31, 2004.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
4. SECURITIES LENDING TRANSACTIONS
The Plan engages in securities lending activities related to DST common stock.
The Trustee serves as the lending agent for the Plan and loans these securities
to approved brokers (the "Borrower"). The terms of the lending agreements
require that loans are secured, initially by collateral (cash or U.S. government
securities) having a market value equal to or greater than 102% of the market
value of securities on loan. The market value of the securities on loan and of
the collateral received is monitored daily. If at any time the value of the
collateral falls below 100% of the market value of securities on loan, the
borrower may be required to deliver additional collateral necessary to restore
the 102% ratio. If the value of the collateral increases above 102% of the
market value of securities on loan, the collateral in excess of the 102% ratio
may be returned to the borrower. The Plan retains any income earned on the
securities while on loan to the broker. In the event of default by the Borrower,
the Trustee shall indemnify the Plan by purchasing replacement securities equal
to the number of unreturned loaned securities or, if replacement securities are
not able to be purchased, the Trustee shall credit the Plan for the market value
of the unreturned securities. In each case, the Trustee would apply the proceeds
from the collateral for such a loan to make the Plan whole. The collateral
received pursuant to securities lending transactions is reflected on the
Statements of Net Assets Available for Benefits as both an asset and a
liability, and has no effect on the net assets available for benefits of the
Plan. As of December 31, 2005 and 2004, the Plan had DST common stock on loan
with a market value of $20,623,575 and $10,481,760, respectively. Securities
lending income for the Plan amounted to $6,016 and $4,616 for the years ended
December 31, 2005 and 2004, respectively. Securities lending income is
classified as interest income in the Statements of Changes in Net Assets
Available for Benefits.
To the extent that a loan of securities is secured by cash collateral, such
collateral is invested in an investment collateral pool managed by the Trustee.
The investment collateral pool invests primarily in investment grade instruments
including, but not limited to, money market type instruments. At no time shall
the weighted average maturity of the investment collateral pool investments
exceed the weighted average term of the pool of loans by more than 15 days. In
addition, the overall maturity of the investment collateral pool cannot exceed
30 days. Any income earned on investments in the investment collateral pool in
excess of agency fees to the Trustee and of a rebate to the Borrower is earned
by the Plan and is recorded as investment income.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
5. MASTER TRUST
The Master Trust was established for the investment of assets of the Plan and
other DST sponsored plans. Each participating plan has an undivided interest in
the Master Trust. The investment in Master Trust is non-participant directed and
is managed by the Investment Manager. At December 31, 2005 and 2004, the Plan's
percentage ownership in the Master Trust is 76.5% and 75.7%, respectively. The
following Master Trust disclosures represent 100% of the balances in the Master
Trust.
As described in Note 1 "Restatement", the Master Trust information included
below has been restated to reflect the effect of the Plan's securities lending
transactions as of and for the year ended December 31, 2004.
The Master Trust's net assets by general type at year-end are as follows:
December 31,
-----------------------------------------------------------
2005 2004 2004
----------------- ----------------- -----------------
(restated) (amounts
previously
reported)
Assets
Mutual funds $ 5,925,860 $ 44,308,641 $ 44,308,641
Common stocks 403,883,934 374,216,667 374,216,667
Government securities 26,773,562 1,634 1,634
Preferred stocks 8,480,305
Collateral held on loaned securities 262,584,067 83,966,302
Other receivables 489,404 334,018 334,018
----------------- ----------------- -----------------
Total assets 708,137,132 502,827,262 418,860,960
Liabilities
Payable for collateral on loaned
securities 262,584,067 83,966,302
Other liabilities 49,465 37,406 37,406
----------------- ----------------- -----------------
Total liabilities 262,633,532 84,003,708 37,406
----------------- ----------------- -----------------
Net Assets $ 445,503,600 $ 418,823,554 $ 418,823,554
================= ================= =================
As more fully described in Note 4, the Plan engages in securities lending
activities. In addition to DST common stock, the Plan allows the Trustee to loan
common stock held in the Master Trust to the Borrower. The terms and conditions
of the Plan's securities lending arrangements described in Note 4 are identical
to the securities lending arrangements for securities held in the Master Trust.
The collateral received pursuant to securities lending transactions is reflected
as both an asset and a liability of the Master Trust, and has no effect on the
net assets of the Master Trust. As of December 31, 2005 and 2004, the Master
Trust had common stocks on loan with a market value of $255,508,799 and
$81,616,441, respectively. Securities lending income for the Master Trust
amounted to $268,141 and $35,142 for the
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
years ended December 31, 2005 and 2004, respectively. Securities lending income
is classified as interest income.
The Master Trust's total investment income by type is as follows:
Year Ended December 31,
--------------------------------------------------------
2005 2004 2004
---------------- ---------------- ----------------
(restated) (amounts
previously
reported)
Interest $ 1,290,733 $ 858,026 $ 822,884
Dividends 2,346,925 2,020,693 2,020,693
Net appreciation 41,654,998 32,484,963 32,484,963
---------------- ---------------- ----------------
$ 45,292,656 $ 35,363,682 $ 35,328,540
================ ================ ================
The Master Trust's net appreciation (depreciation) of investments by type is as
follows:
Year Ended December 31,
--------------------------------------
2005 2004
----------------- -----------------
Common stocks 41,613,075 32,657,865
Preferred stocks 42,314
Corporate debt (172,764)
Government securities (391) (138)
----------------- -----------------
$ 41,654,998 $ 32,484,963
================= =================
6. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such change could materially affect
participants' account balances and the amounts reported in the statement of net
assets available for benefits.
7. INCOME TAX STATUS OF THE PLAN
The Internal Revenue Service has determined and informed the Sponsor by a letter
dated January 18, 2006, 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. The Advisory Committee believes 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.
DST Systems, Inc. 401(k) Profit Sharing Plan
Notes to Financial Statements
--------------------------------------------------------------------------------
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits according
to the financial statements as compared to the Form 5500:
December 31,
--------------------------------------
2005 2004
----------------- -----------------
Net assets available for benefits
according to the financial
statements $ 627,151,984 $ 622,468,876
Amounts allocated to withdrawing
participants (44,451) (36,929)
----------------- -----------------
Net assets available for benefits
according to the Form 5500 $ 627,107,533 $ 622,431,947
================= ==================
The following is a reconciliation of benefits to participants according to the
financial statements as compared to the Form 5500:
December 31,
------------------
2005
------------------
Benefits to participants according
to the financial statements $ 119,132,651
Add: Amounts allocated to withdrawing
participants at December 31, 2005 44,451
Less: Amounts allocated to withdrawing
participants at December 31, 2004 (36,929)
------------------
Benefits to participants according to the Form 5500 $ 119,140,173
==================
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet distributed as of that date.
Schedule I
DST Systems, Inc. 401(k) Profit Sharing Plan
EIN 43-1581814 / PIN 004
Schedule H, line 4i -- Schedule of Assets (Held At End of Year)
December 31, 2005
(a) (b) Identity (c) Description (d) Cost (e) Current Value
American Century Value Mutual Fund $ (1) $ 8,886,617
American Century Growth Mutual Fund (1) 6,576,001
American Century Select Mutual Fund (1) 4,134,572
American Century Ultra Mutual Fund (1) 9,917,033
American Century
International Mutual Fund (1) 3,680,464
Davis NY Venture Mutual Fund (1) 8,491,089
Dodge & Cox Balanced Mutual Fund (1) 9,788,129
Dodge & Cox International Mutual Fund (1) 8,204,449
* DST Systems, Inc. Common Stock (1) 23,406,118
* DST Systems, Inc. Master
Trust Master Trust 204,702,529 340,707,934
Federated Prime Value
Obligations Mutual Fund (1) 6,710,367
Fidelity Advisor Growth Mutual Fund (1) 3,858,808
Janus Fund Mutual Fund (1) 10,091,512
Janus Enterprise Mutual Fund (1) 11,331,893
Janus Mercury Mutual Fund (1) 16,826,594
Janus Overseas Mutual Fund (1) 13,923,743
Laudus Rosenberg
International Mutual Fund (1) 5,159,586
Lord Abbett Affiliated
Class A Mutual Fund (1) 3,367,125
Lord Abbett Bond
Debenture Mutual Fund (1) 1,799,121
Managers Fund Special
Equity Mutual Fund (1) 5,744,516
* Marshall & Ilsley
Collateral Pool Money Market Fund 21,222,600 21,222,600
* Marshall Money Market
Fund Mutual Fund (1) 571,438
* Participant Loans
(Prime + 1%) Participant Loans (1) 7,528,946
PIMCO Total Return Mutual Fund (1) 8,631,612
Royce Total Return Mutual Fund (1) 14,482,072
Standish Mellon Fixed
Income Mutual Fund (1) 3,724,748
T. Rowe Price Mid-cap
Growth Mutual Fund (1) 19,504,733
Vanguard Bond Index Mutual Fund (1) 18,025,418
Vanguard Index 500 Mutual Fund (1) 27,800,879
Vanguard Value Mutual Fund (1) 5,995,687
* 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.
EXHIBIT INDEX
23.1 Consent of PricewaterhouseCoopers LLP
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
July 13, 2006 /s/ Kenneth V. Hager
--------------------------------------
Kenneth V. Hager
Vice President, Chief Financial Officer
and Treasurer