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KANSAS CITY, MO. (October 27, 2005) ─ DST Systems, Inc. (NYSE: DST)
announced today that it has signed a definitive agreement to merge its subsidiary
lock\line into Asurion Corporation, a privately held company, with principal
operations in Nashville, Tennessee, in a tax free merger. As a result of
the merger, DST will own approximately 35% of the combined Asurion/lock\line
organization. DST will receive no cash proceeds in connection with the agreement.
lock\line provides administrative services for the extended warranty programs
of telecommunications carriers, handset replacement programs for wireless
carriers and consumer debt protection programs. Asurion’s offerings
include warranty management, device protection, roadside assistance and
enterprise managed mobility solutions for technology firms in the U.S.,
Canada and Asia.
Asurion recorded revenues of $417.8 million and $517.3 million for the
year ended December 31, 2004 and the nine months ended September 30, 2005,
respectively, and has approximately 2,500 employees as of September 30,
2005. lock\line recorded operating revenues of $97.3 million and $93.0 million
for the year ended December 31, 2004 and nine months ended September 30,
2005, respectively, and has approximately 1,500 employees as of September
30, 2005.
For accounting purposes, DST will be required to treat the transaction
as both a sale of lock\line and a corresponding purchase of its interests
in Asurion. DST expects to recognize for book purposes a pre-tax gain on
the merger that will range from approximately $60 million to $85 million.
Asurion will be treated as an unconsolidated affiliate for financial reporting
purposes and DST will recognize in its income statement its pro-rata share
of Asurion earnings. DST estimates that the transaction may be slightly
dilutive to earnings per share, principally as a result of the amortization
of identified intangibles associated with purchase accounting.
The agreement is subject to regulatory approval under the Hart-Scott-Rodino
Act and receipt of final opinions from DST’s tax advisors as to the
tax free status of the reorganization.
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The information and comments above may include forward-looking statements respecting The information and comments above may include forward-looking statements respecting DST and its businesses. Such information and comments are based on DST's views as of today, and actual actions or results could differ. There could be a number of factors affecting future actions or results, including those set forth in DST's latest periodic report (Form 10-K or 10-Q) filed with the Securities and Exchange Commission. All such factors should be considered in evaluating any forward-looking comment. The Company will not update any forward-looking statements in this press release to reflect future events.
To learn more about DST Press Releases
, contact
us at ctgoldman@dstsystems.com
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