Consolidated net income for DST Systems, Inc. (NYSE: DST) was $72.8 million ($1.01 per diluted share) for the second quarter 2007 compared to $55.5 million ($0.76 per diluted share) for the second quarter 2006.
Consolidated net income for the six months ended June 30, 2007 was $138.2 million ($1.91 per diluted share) compared to $137.2 million ($1.87 per diluted share) for the six months ended June 30, 2006. Taking into account certain non-GAAP adjustments explained herein, consolidated net income was $58.7 million ($0.81 per diluted share) for the second quarter 2007 compared to $51.6 million ($0.70 per diluted share) for the second quarter 2006, and $121.3 million ($1.67 per diluted share) for the six months ended June 30, 2007 compared to $102.8 million ($1.40 per diluted share) for the six months ended June 30, 2006.
Second quarter 2007 highlights were as follows:
- Consolidated operating revenues increased $36.7 million or 9.6% compared to the second quarter 2006 primarily from inclusion of approximately $22.9 million of operating revenues from Amisys Synertech, Inc. ("ASI") and increases in AWD software license fees, mutual fund shareowner accounts serviced, international professional service revenues, and higher Output Solutions volumes.
- Consolidated income from operations increased $20.1 million or 28.8% to $89.9 million as compared to $69.8 million for second quarter 2006. Taking into account certain non-GAAP adjustments (a $12.4 million gain from sale of real estate and $1.5 million of 2007 ASI merger integration costs), income from operations increased $9.2 million or 13.2% as compared to second quarter 2006 primarily resulting from increased contributions from Output Solutions, higher AWD software license fees and higher contributions from mutual fund shareowner processing.
- Output Solutions operating income for second quarter 2007 increased $4.9 million from second quarter 2006. Contributing to the increase of operating income were higher U.S. volumes and cost efficiencies realized from the implementation of new proprietary printing and inserting technologies.
Share related activity during second quarter 2007 was as follows:
- During second quarter 2007, the Company repurchased 2,250,000 shares of DST common stock for $177.5 million or approximately $78.90 per share. At June 30, 2007, approximately 5.6 million shares remained under the existing share repurchase authorization.
- The Company had approximately 63.4 million shares outstanding at June 30, 2007, including approximately 2.5 million unvested restricted shares. The effect of share repurchases and shares issued from stock option exercises during the three months ended June 30, 2007 resulted in a net decrease in shares outstanding of approximately 1.8 million shares.
- Diluted shares outstanding for second quarter 2007 were 71.8 million shares, a decrease of 1.2 million shares or 1.6% from second quarter 2006, but unchanged from first quarter 2007. Diluted shares outstanding include an aggregate 10.2 million shares comprised of the dilutive effects of 6.5 million shares from convertible debentures, 2.3 million shares from outstanding stock options and 1.4 million shares from restricted stock. The aggregate dilutive effect of these items increased by approximately 1.5 million shares from first quarter 2007 from an increase in the Company's average share price.
- Total stock options and restricted stock ("equity units") outstanding at June 30, 2007 were 9.8 million, a decrease of 0.9 million equity units or 8.4% from March 31, 2007 and a decrease of 1.6 million equity units or 14.0% from December 31, 2006.
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