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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 1-14037
THE DUN & BRADSTREET CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 13-3998945
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
ONE DIAMOND HILL ROAD, MURRAY HILL, N.J. 07974
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (908) 665-5000.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant: (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of December 31, 1999, 160,823,809 shares of Common Stock of The Dun &
Bradstreet Corporation were outstanding and the aggregate market value of such
Common Stock held by nonaffiliates* (based upon its closing transaction price on
the Composite Tape on such date) was approximately $4,738.6 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for use in
connection with its annual meeting of shareholders scheduled to be held on April
18, 2000, are incorporated into Part III of this Form 10-K.
The Index to Exhibits is located on Pages 61-63 of this Form 10-K
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* Calculated by excluding all shares held by executive officers and directors of
the Registrant without conceding that all such persons are "affiliates" of the
Registrant for purposes of federal securities laws.
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PART I
ITEM 1. BUSINESS
(a)(1) The Dun & Bradstreet Corporation (the "Company") is the parent
holding company for the Dun & Bradstreet operating company ("D&B operating
company") and Moody's Investors Service ("Moody's") and their respective
subsidiaries.
On December 15, 1999, the Company announced that it would pursue the
separation of Moody's and the D&B operating company into two independent,
publicly traded companies. On February 16, 2000, the Company announced that the
separation would be accomplished by spinning off, through a tax-free
distribution to shareholders (the "2000 Distribution"), a subsidiary corporation
comprising the business of the D&B operating company. The 2000 Distribution is
subject to final approval by the Company's Board of Directors and obtaining a
favorable ruling from the Internal Revenue Service with respect to the tax-free
treatment of the distribution. After the 2000 Distribution, the business of the
Company will consist entirely of the business conducted by Moody's, and the D&B
operating company business will comprise the business of a new publicly traded
company that will succeed to the name "The Dun & Bradstreet Corporation." The
Company expects to complete the reorganization by the end of the third quarter
of 2000.
On June 30, 1998 (the "1998 Distribution Date"), the company then known as
The Dun & Bradstreet Corporation ("Old D&B") separated into two publicly traded
companies -- The New Dun & Bradstreet Corporation ("New D&B" or the "Company")
and R.H. Donnelley Corporation. The separation (the "1998 Distribution") of the
two companies was accomplished through a tax-free dividend by Old D&B of the
Company, which was a new entity comprising Moody's and the D&B operating
company. New D&B changed its name to "The Dun & Bradstreet Corporation," and the
continuing entity (i.e., Old D&B), consisting of R.H. Donnelley Inc., the
operating company, and the DonTech partnership, changed its name to "R.H.
Donnelley Corporation" ("Donnelley"). The tax-free stock dividend was issued on
the 1998 Distribution Date to shareholders of record at the close of business on
June 17, 1998. Due to the relative significance of Moody's and the D&B operating
company, the transaction was accounted for as a reverse spin-off, and, as such,
Moody's and the D&B operating company were classified as continuing operations
and R.H. Donnelley Inc. and DonTech were classified as discontinued operations.
For purposes of effecting the 1998 Distribution and of governing certain of
the continuing relationships between the Company and Donnelley after the
transaction, the two companies have entered into various agreements, including a
Distribution Agreement (the "1998 Distribution Agreement"), a Tax Allocation
Agreement (the "1998 Tax Allocation Agreement") and an Employee Benefits
Agreement (the "1998 Employee Benefits Agreement"). The material terms of such
agreements are described below. These descriptions are qualified by reference to
the texts of such agreements, which are incorporated herein by reference.
1998 DISTRIBUTION AGREEMENT
The 1998 Distribution Agreement provided for, among other things, certain
corporate transactions required to effect the 1998 Distribution and other
arrangements between Old D&B (i.e., Donnelley) and the Company subsequent to the
1998 Distribution.
In particular, the 1998 Distribution Agreement defines the assets and
liabilities that were allocated to and assumed by the Company and those that
remained with Donnelley. The 1998 Distribution Agreement also defines what
constitutes the "New D&B Business" and what constitutes the "R.H. Donnelley
Business".
Pursuant to the 1998 Distribution Agreement, Old D&B transferred or caused
to be transferred to the Company all its right, title and interest in the assets
comprising the New D&B Business and other assets not specifically included in
the R.H. Donnelley Business, and the Company transferred or caused to be
transferred to Donnelley all its right, title and interest in the assets
comprising the R.H. Donnelley Business. All assets were transferred without any
representation or warranty, "as is-where is," and the relevant transferee bears
the risk that any necessary consent to transfer was not obtained. Each party
also agreed to exercise its respective
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commercially reasonable efforts promptly to obtain any necessary consents and
approvals and to take such actions as may be reasonably necessary or desirable
to carry out the purposes of the 1998 Distribution Agreement and the other
agreements summarized below.
In general, pursuant to the terms of the 1998 Distribution Agreement, all
assets of Old D&B prior to the 1998 Distribution Date, other than those relating
to the R.H. Donnelley Business, became assets of the Company. The 1998
Distribution Agreement also provides for assumptions of liabilities and cross
indemnities designed generally to allocate to the Company, effective as of the
1998 Distribution Date, financial responsibility for all liabilities of Old D&B,
other than those specified to be transferred to Donnelley on or prior to the
1998 Distribution Date or to remain with Donnelley subsequent to the 1998
Distribution Date (which liabilities primarily relate to the R.H. Donnelley
Business or the indebtedness incurred in connection with the 1998 Distribution).
The 1998 Distribution Agreement provides for the allocation generally to the
Company of the financial responsibility for the liabilities arising out of or in
connection with former businesses, other than those formerly conducted by
Donnelley prior to the 1998 Distribution.
The 1998 Distribution Agreement provides that the Company will comply with
and otherwise not take action inconsistent with each representation and
statement made to the Internal Revenue Service in connection with Old D&B's
request for a ruling letter as to certain tax aspects of the 1998 Distribution.
The Company agreed to maintain its status as a company engaged in the active
conduct of a trade or business, as defined in Section 355(b) of the Internal
Revenue Code, to continue to own stock of certain operating subsidiaries
constituting control (within the meaning of Section 368(c) of the Internal
Revenue Code) of such operating subsidiaries and to maintain at least 90% of the
fair market value of its assets in the form of stock and securities of certain
operating subsidiaries, in each case until June 30, 2000, the second anniversary
of the 1998 Distribution Date. The Company does not expect this limitation to
inhibit the Company's financing or other activities, the Company's ability to
implement the 2000 Distribution or its ability to respond to unanticipated
developments. As a result of the representations in the request for a ruling
letter and the covenants in the 1998 Distribution Agreement, the acquisition of
control of the Company prior to the second anniversary may be more difficult or
less likely to occur because of the potential substantial liabilities associated
with a breach of such representations or covenants. The 1998 Distribution
Agreement requires a party that takes or fails to take any action that
contributes to a determination that the 1998 Distribution is not tax-free to Old
D&B (i.e., Donnelley), the Company or their stockholders to indemnify the other
party and its stockholders from any taxes arising therefrom.
1998 TAX ALLOCATION AGREEMENT
Under the 1998 Tax Allocation Agreement, the Company is generally liable
for all income taxes of Old D&B (i.e., Donnelley) and its subsidiaries
attributable to periods prior to the 1998 Distribution, provided that in the
case of any separate company, state or local income taxes, Donnelley and its
subsidiaries and the Company and its subsidiaries are liable for their own
liabilities arising from any audit adjustment. For income taxes attributable to
periods beginning after the 1998 Distribution, the Company is liable for taxes
relating to the Company and its subsidiaries, and Donnelley is liable for taxes
relating to Donnelley and its subsidiaries. For all other taxes, the Company and
its subsidiaries and Donnelley and its subsidiaries are responsible for their
own liabilities for all periods.
1998 EMPLOYEE BENEFITS AGREEMENT
The 1998 Employee Benefits Agreement allocates responsibility for certain
employee benefits matters on and after the 1998 Distribution Date.
Under the 1998 Employee Benefits Agreement, Donnelley adopted a new defined
benefit pension plan and a new defined contribution savings plan for its
employees; the Company assumed and became the sponsor of the Old D&B defined
benefit pension plan and the Old D&B defined contribution savings plan for the
benefit of its employees and in general former employees who terminated
employment on or prior to the 1998 Distribution Date ("Former Old D&B
Employees"). Assets and liabilities of the Old D&B pension plan and
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account balances under the Old D&B savings plan that were attributable to
Donnelley employees were transferred to the applicable new Donnelley plan.
Generally, the Company assumed and became the sponsor of Old D&B's
nonqualified supplemental pension plans for the benefit of persons who, prior to
the 1998 Distribution Date, were participants thereunder -- provided, however,
that with respect to Donnelley employees, the Company generally retained only
those liabilities that were vested prior to the 1998 Distribution Date.
Donnelley is required to guarantee payment of the benefits under these plans to
its employees in the event that the Company is unable to satisfy its
obligations.
The 1998 Employee Benefits Agreement required Donnelley to adjust
outstanding equity-based grants (i.e., Old D&B stock options, restricted stock
and performance share opportunities) held by Donnelley employees as of the 1998
Distribution Date in a manner intended to preserve, as closely as possible, the
economic value of the pre-spin-off grants. Similarly, outstanding equity-based
grants held by Company employees as of the 1998 Distribution Date were canceled
and then converted into Company Common Stock-based grants in a manner intended
to preserve, as closely as possible, the economic value of the pre-spin-off
grants. Former Old D&B Employees holding Old D&B stock options were given the
choice of receiving either adjusted Donnelley stock options or replacement
Company stock options.
Except as otherwise provided in the 1998 Employee Benefits Agreement, as of
the 1998 Distribution Date, Donnelley employees generally ceased participation
in Old D&B's employee benefits plans, and Donnelley and the Company will each
generally recognize, among other things, its respective employees' past service
with Old D&B under its employee benefits plans.
1996 DISTRIBUTION AGREEMENTS
On November 1, 1996 (the "1996 Distribution Date"), the company then known
as The Dun & Bradstreet Corporation ("Historical D&B") reorganized into three
publicly traded, independent companies by spinning off, through a tax-free
dividend, two of its businesses to shareholders (the "1996 Distribution"). The
1996 Distribution resulted in the following three companies: (1) Old D&B, (2)
ACNielsen Corporation ("ACNielsen") and (3) Cognizant Corporation ("Cognizant").
For purposes of effecting the transaction and of governing certain of the
continuing relationships among Old D&B, Cognizant and ACNielsen after the 1996
Distribution, the three companies entered into various agreements, including a
Distribution Agreement (the "1996 Distribution Agreement"), a Tax Allocation
Agreement (the "1996 Tax Allocation Agreement"), an Employee Benefits Agreement
(the "1996 Employee Benefits Agreement") and an Indemnity and Joint Defense
Agreement (the "1996 Indemnity and Joint Defense Agreement"). The following
descriptions summarize some of the material terms of such agreements but are
qualified by reference to the texts of such agreements, which are incorporated
herein by reference.
The 1996 Distribution Agreement provided for, among other things,
assumptions of liabilities and cross indemnities designed generally to allocate
to Old D&B, effective as of the 1996 Distribution Date, financial responsibility
for all liabilities of Historical D&B, except for certain liabilities arising
out of or in connection with the businesses that became part of Cognizant or
ACNielsen as a result of the 1996 Distribution. Similarly, the 1996 Distribution
Agreement provided for the allocation generally to Old D&B of the financial
responsibility for the liabilities arising out of or in connection with
then-former businesses, including those formerly conducted by or associated with
Cognizant or ACNielsen, provided that liabilities related to certain prior
business transactions were allocated to Cognizant if such liabilities exceed
certain specified amounts. See Note 14 (Contingencies) in Part II, Item 8 on
Pages 49-51 of this Form 10-K.
Except as otherwise provided in the 1996 Distribution Agreement, the 1996
Tax Allocation Agreement provided, among other things, that Old D&B must pay
Historical D&B's entire consolidated tax liability for the tax years that
Cognizant and ACNielsen were included in Historical D&B's consolidated Federal
income tax return. For periods prior to the 1996 Distribution Date, Old D&B is
generally liable for state and local taxes measured by income or imposed in lieu
of income taxes. The 1996 Tax Allocation Agreement allocated
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liability to Old D&B, Cognizant and ACNielsen for their respective shares of
other state and local taxes, as well as any foreign taxes attributable to
periods prior to the 1996 Distribution Date.
The 1996 Employee Benefits Agreement provided, among other things, that Old
D&B retains responsibility for (i) benefits owed to former employees who
terminated employment with Historical D&B on or prior to the 1996 Distribution
Date under Historical D&B's defined benefit pension plan, defined contribution
savings plan and welfare plans; (ii) all benefits under Historical D&B's
nonqualified supplemental pension plans that were vested prior to the 1996
Distribution Date; (iii) unexercised Historical D&B stock options held by Old
D&B employees and Historical D&B retirees and disabled employees as of the 1996
Distribution Date, which options were adjusted to reflect the 1996 Distribution;
and (iv) all employee benefits litigation liabilities that were asserted prior
to the 1996 Distribution Date (but not such liabilities that relate to the
retirement and savings plan assets of Cognizant or ACNielsen employees that were
transferred to Cognizant and ACNielsen, respectively).
Pursuant to the 1996 Indemnity and Joint Defense Agreement, Old D&B,
Cognizant and ACNielsen agreed (i) to certain arrangements allocating potential
liabilities arising out of the legal action filed by Information Resources, Inc.
("IRI") on July 29, 1996 and, (ii) to conduct a joint defense of such action.
See Note 14 (Contingencies) in Part II, Item 8 on Pages 49-51 of this Form 10-K.
Pursuant to the terms of the 1996 Distribution Agreement, as a condition to
the 1998 Distribution, the Company undertook to be jointly and severally liable
with Old D&B (i.e., Donnelley) to Cognizant and ACNielsen for any liabilities
arising under the 1996 Distribution Agreement and related agreements. Pursuant
to the 1998 Distribution Agreement, as between Donnelley and the Company, all
liabilities and rights of Old D&B under the 1996 Distribution Agreement and
related agreements became liabilities and rights of the Company, and the Company
must indemnify Donnelley against any such liabilities.
On June 30, 1998, Cognizant completed a spin-off of its IMS Health
Incorporated subsidiary, after which Cognizant's name was changed to "Nielsen
Media Research, Inc." Pursuant to the terms of the 1996 Distribution Agreement,
as a condition to the Cognizant spin-off, IMS Health Incorporated undertook to
be jointly and severally liable with Cognizant (i.e., Nielsen Media Research,
Inc.) to Old D&B (i.e., Donnelley) and ACNielsen for any liabilities arising
under the 1996 Distribution Agreement and related agreements. As between
Donnelley and the Company, Donnelley's rights under this IMS Health Incorporated
undertaking were assigned to the Company pursuant to the provision of the 1998
Distribution Agreement described in the immediately preceding paragraph.
(a)(2) Not applicable.
(b) Operating segment data for the years ended December 31, 1999, 1998 and
1997 are included in Note 17 (Segment Information) in Part II, Item 8 on Pages
52-56 of this Form 10-K.
(c) The Company is a non-operating holding company whose revenue is derived
primarily from dividends received from its subsidiaries. As of December 31,
1999, the number of full-time equivalent employees of the Company was
approximately 12,200.
THE DUN & BRADSTREET OPERATING COMPANY
GENERAL
The D&B operating company is the world's largest provider of
business-to-business credit, marketing and purchasing information and commercial
receivables management services. It has been in business since 1841 and in 1999
had $1.4 billion in revenue. The D&B operating company operates offices in 36
countries, conducts operations in four other countries through minority
interests in joint-venture companies, and operates through independent
correspondents in more than 150 additional countries.
At the core of the D&B operating company's products and services is its
global database, the largest and most comprehensive database of its kind in the
world, containing information on more than 57 million public and private
businesses from more than 200 countries. In addition, the D&B operating
company's D&B
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D-U-N-S(R) Numbering System (a numerical system used to identify companies and
company affiliations) is an internationally recognized common company identifier
that is recommended or endorsed by the U.S. Government, the European Commission,
the International Standards Organization, the United Nations Edifact Council and
other global standard-setting organizations. The D&B operating company uses its
global database, the D&B D-U-N-S(R) Number's hierarchical information and its
expertise in organizing and rationalizing data to help customers determine
creditworthiness, predict market demand, pinpoint prospective clients and
increase purchasing efficiency. The D&B operating company's goal is to help
customers grow profitably by ensuring that their business strategies, decisions
and actions are based on a consistent flow of quality information throughout
their supply and demand chains.
The D&B operating company's 1999 revenue was derived from CREDIT
INFORMATION SERVICES (65.5%), MARKETING INFORMATION SERVICES (22.2%), PURCHASING
INFORMATION SERVICES (2.0%) and RECEIVABLES MANAGEMENT SERVICES (10.3%). The
revenues contributed by each of these product lines during each of the last
three fiscal years is included in Note 17 (Segment Information) in Part II, Item
8 on Pages 52-56 of this Form 10-K. Within these product lines, a further
differentiation may be made between the D&B operating company's traditional
products and services ("Traditional Products") and its value-added products and
services ("Value-Added Products").
In general, Traditional Products consist of standard-format reports
(typically credit reports and marketing lists and labels) containing information
from the D&B operating company's global database, whereas Value-Added Products
integrate customer and D&B data and provide decision-support tools and services
through the use of software and Internet solutions. Value-Added Products provide
easy, open access to the D&B operating company's database and are scalable for
use on individual desktops, in networks and on computer hosts. They are designed
to improve customers' decision making, speed-of-action and productivity and to
help customers realize greater value from their information and technology
investments. The D&B operating company also offers value-added services by which
it cleanses, consolidates and migrates legacy client and vendor data to a
customer's enterprise application software systems and links these data with the
D&B D-U-N-S(R) Number ("Data Rationalization Services").
The D&B operating company has begun to expand its Value-Added Products
through alliances with major enterprise application software providers, such as
Oracle Corporation ("Oracle"), Siebel Systems, Inc. ("Siebel") and SAP AG
("SAP"). Through these alliances the D&B operating company can offer real-time,
online access to its global database through the customer's enterprise
applications software. Management intends to improve customers' processes by
electronically integrating information from the D&B operating company's global
database into enterprise decision-support applications and believes that this
represents a significant opportunity for the D&B operating company.
Value-Added Products, including alliances with software providers, account
for an increasingly significant portion of the D&B operating company's revenues,
having grown since their introduction in 1994 to about $265 million in 1999.
Customers use the D&B operating company's CREDIT INFORMATION SERVICES to
help them extend commercial credit, approve loans and leases, underwrite
insurance, evaluate clients and make other financial and risk assessment
decisions. The D&B operating company's largest customers for this information
are major manufacturers and wholesalers, insurance companies, banks and other
credit and financial institutions. Its core credit information is available
through a variety of Traditional Products, including the Business Information
Report, which contains commercial credit information that may include basic
background information, financial and public records data and information on
financial strength and payment history. Distribution of Credit Information
Services is primarily through electronic methods (including desktop and
enterprise software applications and the Internet). Credit Information Services
are also distributed by a number of other firms, including leading vendors of
online and Internet information services, such as Lexis-Nexis, Dialog, Dow Jones
Interactive and Westlaw, and through enterprise software vendors such as Oracle,
Siebel and SAP.
Credit Information Services also include Value-Added Products such as
Predictive Scoring Services and Decision Support Services. Predictive Scoring
Services use statistical models to help customers predict the likelihood of
delinquent payment, failure to pay within terms, discontinuation of operations
or the filing of a bankruptcy petition. Decision Support Services include
desktop decision-support systems, such as Risk
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Assessment Manager(TM) and DecisionMaker(TM), which use customers' rules to
automate credit decisions using internal and external information, including
information from the D&B operating company's global database.
The D&B operating company's MARKETING INFORMATION SERVICES provide
business-to-business marketing information and analysis designed to help
customers conduct market segmentation, client profiling, prospect selection and
marketing list development using information from the D&B operating company's
global database. Marketing Information Services' Traditional Products are
delivered over the Internet, through online and Internet information services,
such as Lexis-Nexis, Dialog, Dow Jones Interactive and Westlaw, and in print, on
diskette, magnetic tape and CD-ROM. Marketing Information Services also include
Value-Added Products such as Market Spectrum(TM), a suite of database marketing
products and services that enhance internal customer data with external
information and analysis that can help customers target their most profitable
clients and prospects; analyze market penetration, territory alignment and
market segmentation; and perform demand estimation. Marketing Information
Services are also available through enterprise software vendors such as Siebel
and through an alliance with Acxiom Corporation ("Acxiom") that was entered into
in 1999.
The D&B operating company's PURCHASING INFORMATION SERVICES help customers
better understand their supplier base, providing them the tools to rationalize
their supplier rosters, leverage buying power, minimize supply-related risks and
identify and evaluate new sources of supply. Customers of these services are
able to use reports containing information from the D&B operating company's
global database delivered in a variety of ways and access Value-Added Products
such as Supplier Spend Analysis and Supplier Assessment Manager(TM). Supplier
Spend Analysis integrates customers' supplier data with information from the D&B
operating company's global database and from third parties and then applies
analytical and benchmarking techniques designed to identify opportunities for
reducing purchasing costs and risks. Supplier Assessment Manager(TM) uses
decision-support software to automate the scoring and monitoring of supplier
performance, capabilities and risks using internal and external information. The
D&B operating company has introduced a unique commodity coding system, the
Standard Product and Service Codes ("UN/SPSC") endorsed by the United Nations.
Commodity coding helps companies determine the specific types of products and
services comprising the supply base of their firm and allows them to identify
further vendor consolidation opportunities. Through an alliance with SAS
Institute, the D&B operating company also markets a joint purchasing solution
that includes Purchasing Information Services and SAS products.
The D&B operating company's RECEIVABLES MANAGEMENT SERVICES ("RMS")
business collects and services delinquent commercial receivables on behalf of
approximately 30,000 customers, primarily in the business-to-business market.
Principal markets include insurance, telecommunications and transportation
industries. RMS also provides cross-border commercial receivables services in
which the RMS worldwide offices service cross-border claims.
Revenues in the RMS business are generally earned on a contingent fee
basis. In addition, RMS is expanding its business to customers who outsource
their commercial accounts receivable function to RMS. Services provided in the
RMS business also include debt verification and collection, customer service
functions and analytical reporting.
Certain jurisdictions require licensing for consumer and commercial debt
collection. RMS and in some instances, the individual collectors must be
licensed in order to conduct business in these jurisdictions. The laws under
which such licenses are granted generally require annual license renewal and
provide for denial, suspension or revocation for improper actions or other
reasons.
GEOGRAPHIC BUSINESS SEGMENTS; COMPETITION
The D&B operating company manages its business globally through three
geographic segments: United States and Canada, Europe/Africa/Middle East, and
Asia Pacific and Latin America. Prior to January 1, 2000, the D&B operating
company's Canadian business was managed by its Asia Pacific and Latin America
geographic segment. Effective January 1, 2000, management of the D&B operating
company's Canadian business was moved to its U.S. geographic segment to take
advantage of marketing synergies between the U.S. and Canada. None of the D&B
operating company's business segments is dependent on a single customer or a few
customers, such that a loss of any one would have a material adverse effect on
that business segment.
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Dun & Bradstreet United States
The D&B operating company's United States segment ("D&B U.S.") had 1999
revenue of $891.5 million, comprising Credit Information Services (62.8%),
Marketing Information Services (25.4%), Purchasing Information Services (3.0%)
and Receivables Management Services (8.8%).
D&B U.S.'s Credit Information Services is the leading commercial
credit-reporting agency in the U.S. However, it faces substantial competition
from in-house operations of the businesses it seeks as customers and from other
general and specialized credit-reporting agencies, other information services
providers and the Internet. The principal competitive factors in its market
sector are price, information quality, availability and service.
D&B U.S.'s Marketing Information Services, while a market leader in its
industry, faces competition from data providers that have competitive prices,
information quality, availability and service.
D&B U.S.'s Purchasing Information Services enjoys a unique position as a
provider of business information that can be used to reduce purchasing costs. In
this area, D&B U.S. faces competition from in-house operations of the businesses
it seeks as customers and from other general and specialized information and
professional services providers. It believes the principal attributes in judging
the competition are price, information quality, availability and service.
RMS is the leader in the commercial receivables management industry in the
U.S. There are several consumer collection agencies that have larger receivables
portfolios, particularly health-care and credit card collection providers. The
third-party commercial collection market is highly fragmented, with more than
5,000 collection agencies. The outsourcing market has relatively fewer
competitors due to the need for larger-scale operations by the receivables
providers. Both markets are very price-competitive, with status, statistical
reporting and speed-of-service being key qualitative attributes.
Dun & Bradstreet Europe/Africa/Middle East
The D&B operating company's Europe/Africa/Middle East segment ("D&B
Europe") had 1999 revenue of $420.6 million, comprising Credit Information
Services (70.7%), Marketing Information Services (17.2%), Purchasing Information
Services (.3%) and Receivables Management Services (11.8%). D&B Europe began
offering Purchasing Information Services in 1999.
D&B Europe has operations in 20 countries and conducts operations in three
other countries through minority interests in joint-venture companies. D&B
Europe is believed to be the largest single supplier of commercial credit
information services in Europe. However, the competitive environment varies
considerably from country to country. In some countries, leadership positions
exist, whereas in others the markets are highly fragmented. The competition is
primarily local, and D&B Europe has a competitive edge with its range of global
services and capabilities. D&B Europe faces competition from banks, credit
insurance companies, public information suppliers (such as company registries),
consumer information companies, application software developers, online content
providers and in-house operations of businesses, as well as direct competition
from businesses providing similar services.
Management believes that the increase in cross-border trade expected to
result from the European Monetary Union ("EMU") may create opportunities for D&B
Europe over time since it is the leading pan-European commercial data provider.
The transition to a single European currency also entails certain risks to D&B
Europe's business, as described under the caption "New European Currency" in
Part II, Item 7 on Pages 27-28 of this Form 10-K.
D&B Europe continues to invest in data systems and has successfully rolled
out a new technology platform in the Netherlands, Belgium and Germany. D&B
Europe will continue to invest in its technology platform, which is expected to
result in enhanced product/service flexibility as well as opportunities to
streamline operations. In addition, D&B Europe plans to shift certain technology
development and maintenance to lower cost regions, which is expected to reduce
overall technology costs.
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D&B Europe is subject to the usual risks inherent in doing business in
certain countries outside of the U.S., including currency fluctuations and
possible nationalization, expropriation, price controls, changes in the
availability of data from public sector sources, limits on collecting certain
types of personal information or on providing information across borders or
other restrictive governmental actions. Management believes that the risks of
nationalization or expropriation are reduced because its basic service is the
delivery of information rather than the production of products that require
manufacturing facilities or the use of natural resources.
Dun & Bradstreet Asia Pacific, Canada and Latin America
The D&B operating company's Asia Pacific, Canada and Latin America segment
("D&B APCLA") had 1999 revenue of $95.6 million, comprising Credit Information
Services (67.5%), Marketing Information Services (14.5%), Purchasing Information
Services (.1%) and Receivables Management Services (17.9%). D&B APCLA began
offering Purchasing Information Services in 1999. Management of the Canadian
business was moved to the U.S. segment effective January 1, 2000.
D&B APCLA has operations in 15 countries and conducts operations in one
other country through a minority interest in a joint-venture company. It faces
competition from banks, credit insurance companies, public information suppliers
(such as company registries), consumer information companies, application
software developers, online and Internet based content providers and in-house
operations of businesses, as well as direct competition from businesses
providing similar services. The competition is primarily local, and D&B APCLA
has a competitive edge with its range of global services and capabilities.
D&B APCLA provides cross-border services originating in Latin America
through local affiliates, small local operations centers and an operations
center in Florida. In the Asia Pacific region, D&B APCLA has entered into
joint-venture and distribution arrangements to leverage its staff and data
sourcing and distribution capabilities and is exploring additional such
opportunities.
D&B APCLA is subject to the usual risks inherent in doing business in
certain countries outside of the U.S., including currency fluctuations and
possible nationalization, expropriation, price controls, changes in the
availability of data from public sector sources, limits on collecting certain
types of personal information or on providing information across borders or
other restrictive governmental actions. Management believes that the risks of
nationalization or expropriation are reduced because its basic service is the
delivery of information rather than the production of products that require
manufacturing facilities or the use of natural resources.
THE D&B OPERATING COMPANY'S STRATEGY
As technology changes and evolves, the D&B operating company is changing
the way it provides solutions to customers. The D&B operating company's strategy
is to integrate its information in business processes through both back-office
and front-office solutions and directly into e-commerce transactions. This means
extending its business beyond a core transaction-based product
offering -- primarily credit reports and marketing lists and labels -- to the
provision of quality business information through technology-based packaged
applications and the Internet. The D&B operating company is pursuing new
opportunities to increase revenue growth and profitability by building on its
core competencies in providing business information and analysis to companies
worldwide. The following are the key components of this strategy:
- EXPANDING THE USE OF TRADITIONAL PRODUCTS. Traditional Products annually
generate more than $1 billion in revenue worldwide. Increased
distribution of these products and services will be pursued through new
customer sales efforts and through expanded use of the Internet. The D&B
operating company will also leverage partners in this area both to expand
the database and to reach more customers. The alliance entered into in
1999 with Acxiom will help it achieve both of these objectives, by giving
the D&B operating company access to certain of Acxiom's data and products
and by distributing Traditional Products through Acxiom. Because many of
these products are used in conjunction with or are accessed through
Value-Added Products, including enterprise software applications, the D&B
operating company will seek to increase the distribution and sale of
Traditional Products globally through the sale of Value-Added Products
and through alliances with enterprise software vendors and companies that
implement such systems for customers.
9
<PAGE> 10
- FOCUSING RESOURCES ON THE DEVELOPMENT AND DEPLOYMENT OF VALUE-ADDED
PRODUCTS. Revenues from Value-Added Products are expected to continue to
grow through the accelerated rollout of Value-Added Products around the
world, as well as through the expansion of the D&B operating company's
Global Accounts Program. The Global Accounts Program targets large
customers having multi-country operations spanning the D&B operating
company's three geographic segments.
- BECOMING A MAJOR CONTENT PROVIDER FOR USERS OF ENTERPRISE
DECISION-SUPPORT SOFTWARE APPLICATIONS. The D&B operating company aims to
become the leading business information provider to the enterprise
decision-support software applications market. The D&B operating company
recently entered into alliances with Oracle, Siebel and SAP, all leading
providers of enterprise application solutions, to provide Data
Rationalization Services, utilizing the D&B D-U-N-S(R) Number and online
access to the D&B operating company's global database through such
companies' products. The D&B operating company recently entered into an
alliance with Deloitte Consulting LLC, an implementor of enterprise
application solutions, to promote Data Rationalization Services. The
alliance with SAS Institute will offer joint solutions to the purchasing
market. The UN/SPSC is used to allow customers to further consolidate
vendors identified within their enterprise system. The D&B operating
company is actively pursuing alliances with other major business
application software providers, as well as with firms that assist
customers with the implementation of these systems.
- IDENTIFYING AND DEVELOPING ELECTRONIC COMMERCE PRODUCTS AND SERVICES. In
1999, the D&B operating company began offering solutions to establish
itself as a major provider of information for business-to-business
electronic commerce via the Internet. Use of D&B data for verification,
authentication and registration services could help both buyers and
sellers as well as network providers to identify dependable business
partners. Management of the D&B operating company believes that the
significant growth anticipated in the electronic commerce marketplace
will create the need for a trusted, independent third party to provide
such services. The D&B operating company intends to identify and pursue
opportunities to participate in these processes and to develop new
products and services and reposition existing products and services for
the electronic commerce market. Distribution of these products and
services can occur directly from the D&B operating company or through
partners. In November 1999, the D&B operating company launched
eccelerate.com to take advantage of opportunities in this market.
eccelerate.com has entered into a relationship with Verisign, Inc., a
leading provider of digital certificate services, to introduce a range of
services for online business-to-business exchanges, including D&B
D-U-N-S(R)Number-embedded digital certificates for corporate users and
Web sites and real-time business verification and certificate validation
services to accelerate the growth of transactions conducted via the
Internet. In 1999, eccelerate.com also named Mitsubishi Corporation, one
of the world's largest trading companies, as a global distributor of
eccelerate.com products and as a partner in the development of localized
products for the Japanese market.
- IMPROVING THE PROFITABILITY OF INTERNATIONAL OPERATIONS. The accelerated
rollout of Value-Added Products around the world and the expansion of the
Global Accounts Program are expected to be key factors in improving
international profitability. In addition, cost structures have been and
will continue to be reviewed with the intent of implementing further
efficiencies and improving international profitability. For example, a
global data warehouse is currently being built that is expected to
eliminate redundant development efforts and reduce ongoing systems
maintenance costs. Further, the global data warehouse will support the
Value-Added Products and electronic commerce initiatives. This data
warehouse is expected to be available globally in 2000. Further, in
October and December 1999, the D&B operating company announced certain
initiatives aimed at improving international profitability, such as
globalizing certain sales, marketing, data collection and technology
functions in an effort to avoid redundancies and duplication of efforts,
while facilitating a more efficient decision-making process, increasing
the amount of technology development and maintenance done in lower cost
regions and improving efficiencies in sales and data collection
operations through office consolidations, organizational changes, vendor
renegotiations and other actions.
10
<PAGE> 11
MOODY'S INVESTORS SERVICE, INC.
GENERAL
Moody's is a leading global credit rating agency. Moody's publishes credit
opinions, research and ratings on fixed-income securities, issuers of securities
and other credit obligations. Credit ratings help investors analyze the credit
risks associated with fixed-income securities. Ratings also create efficiencies
in fixed-income markets by providing reliable, credible and independent
assessments of credit risk. For issuers, Moody's services are designed to
increase market liquidity and may reduce transaction costs.
Moody's employs more than 700 analytic staff and has more than 1,400
associates located around the world. Moody's maintains offices in 13 countries
and has expanded into developing markets through joint ventures or affiliation
agreements with local rating agencies. Moody's provides ratings and credit
research on governmental and commercial entities in approximately 100 countries.
Moody's customers for its ratings and credit research services include
investors; depositors, creditors, investment banks, commercial banks and other
financial intermediaries; and a wide range of corporate and governmental issuers
of securities. Moody's is not dependent on a single customer or a few customers,
such that a loss of any one would have a material adverse effect on its
business.
Moody's publishes rating opinions on a broad range of credit obligations.
These include various United States corporate and governmental obligations,
international cross-border notes and bonds, domestic obligations in foreign
local markets, structured finance securities and commercial paper programs. In
recent years, Moody's has moved beyond its traditional bond ratings activities,
assigning ratings to issuers of securities, insurance company obligations, bank
loans, derivative product companies, bank deposits and other bank debt, managed
funds and derivatives. At the end of 1999, Moody's had outstanding ratings on
approximately 100,000 corporate and more than 68,000 public finance obligations.
Ratings are disseminated to the public through a variety of print and electronic
media, including real-time systems widely used by securities traders and
investors.
In addition to its rating activities, Moody's publishes investor-oriented
credit research for more than 15,600 subscribers globally. Moody's publishes
more than 100 research products, including in-depth research on major issuers,
industry studies, special comments and summary credit opinion handbooks.
Detailed descriptions of both the rated issue and issuer, along with a summary
of the rationale for the assignment of the specific rating, also appear in
various Moody's credit research products. These research products include
insurance, utilities, speculative grade instruments, structured finance, bank
and global credit research.
Moody's Risk Management Services, Inc., a wholly owned subsidiary of
Moody's, develops and distributes credit risk assessment software used by banks
and other financial institutions in their commercial lending activities as well
as credit education materials, seminars and computer-based lending simulations.
On January 27, 2000, Moody's Risk Management Services acquired the Software
Products Group division of Crowe, Chizek and Company LLP. The Software Products
Group also provides credit risk assessment software to banks and other financial
institutions.
Moody's is registered as an investment adviser under the Investment
Advisers Act of 1940. Moody's has been designated as a Nationally Recognized
Statistical Rating Organization ("NRSRO") by the SEC. The SEC is currently
engaged in a rule-making process to establish the criteria for designation as an
NRSRO; such criteria, if enacted, may impose operating requirements upon
Moody's. Moody's is also subject to regulation in certain countries outside the
United States.
PROSPECTS FOR GROWTH
Over the past decade, the global public fixed-income markets have more than
doubled in outstanding principal amount. Moody's believes that the global credit
markets will continue to increase in size. In addition, the securities being
issued in the global fixed-income markets are becoming more complex. Moody's
expects that these trends will increase the demand for its high-quality,
independent credit opinions.
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<PAGE> 12
The size of the world capital markets is increasing because, in general,
the global political and economic climate has promoted economic growth and
productive capital investment. Moody's believes that the outlook is generally
favorable for the continued growth of the world capital markets, particularly in
Europe as a consequence of financial market integration under the EMU.
Lower-cost technology makes information about investment alternatives
available throughout the world. This technology enables investors to obtain
information about securities issued outside their national markets. Investors
are also able to obtain information about new financing techniques and new types
of securities that they may wish to purchase or sell. This availability of
information promotes globalization and integration of financial markets. A
number of new "emerging" capital markets have been created. Investor and
intermediary interest in domestic currency debt obligations from such markets
are now being sold cross-border in unprecedented volumes.
Another trend that is increasing the size of the world capital markets is
the ongoing disintermediation of the world's financial system. Issuers are
increasingly financing in the global public capital markets, rather than through
traditional financial intermediaries. Moreover, financial intermediaries are
selling assets in the global public capital markets, in addition to or instead
of retaining those assets. Structured finance securities markets for many types
of assets have developed in many countries and are contributing to those trends.
The complexity of capital market instruments is also growing. Consequently,
assessing the credit risk of such instruments is a challenge for financial
intermediaries and asset managers. In the credit markets, third-party ratings
represent an increasingly viable alternative to traditional in-house research as
the geographic scope and complexity of market instruments grow.
Rating fees paid by issuers account for most of Moody's revenues.
Therefore, a substantial portion of Moody's revenues are dependent upon the
volume of debt securities issued in the global capital markets. Accordingly,
Moody's is dependent on the prospects of the major world economies and the
fiscal and monetary policies pursued by their governments. However, annual fee
arrangements with frequent debt issuers and annual fees from commercial paper
and medium-term note programs, bank and insurance company financial strength
ratings and mutual fund ratings are less dependent on the volume of debt
securities issued in the global capital markets.
Moody's non-U.S. operations are subject to the usual risks inherent in
carrying on business in certain countries outside the United States, including
currency fluctuations and possible nationalization, expropriation, price
controls, changes in the availability of data from public sector sources, limits
on providing information across borders or other restrictive governmental
actions. Management believes that the risks of nationalization or expropriation
are reduced because its basic service is the creation and dissemination of
information, rather than the production of products that require manufacturing
facilities or the use of natural resources.
COMPETITION
Moody's competes with other credit rating agencies and with investment
banks and brokerage firms that offer credit opinions. Institutional investors
also have in-house credit research capabilities. Credit rating agencies compete,
in addition, with other methods of addressing credit risk, such as credit
insurance and credit derivatives. Moody's most direct competitor in the global
credit rating business is Standard and Poor's Corporation ("S&P"), a division of
The McGraw-Hill Companies, Inc. There are some rating markets, based on
industry, geography and/or instrument type, in which Moody's has made
investments and obtained market positions superior to S&P's. In other markets
the reverse is true. Moody's believes that its rating revenues for 1999 were
similar to S&P's.
Other rating agency competitors of Moody's are Duff & Phelps and Fitch
IBCA. Although Moody's and S&P are larger than Duff & Phelps and Fitch IBCA,
increased competition from these two rating agencies can be expected. In
addition, it is possible that one or more significant rating agencies will
emerge in Europe over the next few years in response to the growth in the
European capital markets and development of the EMU.
12
<PAGE> 13
Over the last decade, additional rating agencies have been established,
primarily in developing markets and primarily as a result of local capital
market regulation. Regulators worldwide have recognized that credible,
independent credit ratings can further regulatory objectives for the development
of public fixed-income securities markets. The result of such regulatory
activity has been the creation of a number of primarily national ratings
agencies in various countries around the world. Regulation may stimulate the
production of less credible ratings over time and tends to make all rating
systems appear undifferentiated, to the detriment of Moody's high-quality rating
opinions.
Regulators of financial institutions are attempting to improve their
approach to supervision. They are shifting away from rule-based systems that
address only specific risk components and institution-specific protections
toward more sophisticated, prudential supervision. The regulators' evolving
approach includes their making qualitative judgments about the sophistication of
each financial institution's risk management processes and systems, in terms of
both market and credit risk. While such regulatory trends present additional
opportunities for the use of Moody's ratings, they may also result in additional
competition for Moody's.
MOODY'S STRATEGY
Moody's intends to focus its business strategy on the following
opportunities:
- CONTINUING INTERNATIONAL EXPANSION. Moody's maintains a global network
of offices and business affiliations, including full-service rating and
marketing operations in the major global financial centers of Frankfurt,
Hong Kong, London, Paris and Tokyo. Moody's expects that these centers
will position it to benefit from the expansion in global capital markets
and offer the greatest potential for its revenue growth. Moody's also
expects accelerated growth of its ratings activities as a consequence of
financial market integration under the EMU and from ongoing global
development of non-traditional financial instruments (e.g., derivatives,
credit-linked bonds and catastrophe bonds). Moody's expects to continue
its expansion into developing markets through joint ventures or
affiliations.
- DEVELOPING NEW RATING PRODUCTS. Moody's is pursuing initiatives that
expand credit ratings from securities markets to other sectors with
credit risk exposures. Moody's has a committed effort to extend its
opinion franchise to the global bank counterparty universe through
emerging market ratings, including bank financial strength ratings.
Insurance financial strength ratings in the property and casualty,
reinsurance, and life insurance markets represent additional growth
opportunities. Moody's has also introduced issuer ratings for mid-sized
corporations not active in the debt markets and Moody's is investigating
numerous non-traditional opportunities to extend its opinion franchise.
As the loan and capital markets converge, Moody's expects to continue to
expand coverage for ratings of bank loans. Moody's has also introduced
equity mutual fund indices and fund analyzers for institutional fund
managers.
- PURSUING OPPORTUNITIES IN SECURITIZATION. The repackaging of financial
assets has had a profound effect on the U.S. fixed-income market. New
patterns of securitization are expected to emerge in the next decade.
Although, the bulk of assets securitized in the past five years are
consumer assets owned by banks, commercial assets, principally commercial
mortgages, term receivables and corporate loans, are now increasingly
being securitized. Securitization concepts are rapidly being exported to
Europe and Asia, evolving into a strategic corporate finance tool.
Moody's is aggressively pursuing opportunities in these areas.
- PURSUING CREDIT RISK MANAGEMENT SERVICES. Moody's will continue to
provide banks and other financial institutions with credit risk
management services. Moody's believes that there will be increased demand
for such services because of recent proposals by international bank
regulatory authorities to recognize bank internal credit risk management
systems for the purposes of determining regulatory capital.
- PURSUING GROWTH OF RESEARCH PRODUCTS. Moody's will continue to expand
its research products business by seeking customers in new geographic
areas, producing and acquiring by arrangements with others additional
research products and pursuing growth by means of Internet delivery.
Internet
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<PAGE> 14
delivery enables Moody's to provide services to more individuals within a
client organization than paper-based products and to offer higher-value
services because customers do not need to handle paper-based reports.
INTELLECTUAL PROPERTY
The Company owns and controls a number of trade secrets, confidential
information, trademarks, trade names, copyrights, patents and other intellectual
property rights that, in the aggregate, are of material importance to the
Company's business. Management of the Company believes that each of the "Dun &
Bradstreet" and "Moody's" names and related names, marks and logos are of
material importance to the Company. The Company is licensed to use certain
technology and other intellectual property rights owned and controlled by
others, and, similarly, other companies are licensed to use certain technology
and other intellectual property rights owned and controlled by the Company. The
Company considers its trademarks, service marks, databases, software and other
intellectual property to be proprietary, and the Company relies on a combination
of copyright, trademark, trade secret, patent, non-disclosure and contract
safeguards for protection.
The names of the Company's products and services referred to herein are
trademarks, service marks or registered trademarks or service marks owned by or
licensed to the Company or one or more of its subsidiaries.
(d) Financial information about foreign and domestic markets is included in
Note 17 (Segment Information) in Part II, Item 8 on Pages 52-56 of this Form
10-K.
ITEM 2. PROPERTIES
The executive offices of the Company are located at One Diamond Hill Road,
Murray Hill, New Jersey, in a 184,000-square-foot property owned by the Company.
This property also serves as the executive offices of D&B U.S. and D&B Asia
Pacific and Latin America.
The Company's other properties are geographically distributed to meet sales
and operating requirements worldwide. These properties are generally considered
to be both suitable and adequate to meet current operating requirements, and
virtually all space is being utilized. The most important of these other
properties include the following sites that are owned by the Company: (i) a
300,000-square-foot office building in New York, New York, that serves as the
executive offices of Moody's; (ii) two commercial office buildings (totaling
114,200 square feet) in Berkeley Heights, New Jersey, used as data processing
facilities for the U.S. operations of the D&B operating company and Moody's;
(iii) a 147,000-square-foot office building in Parsippany, New Jersey housing
personnel from the sales, marketing and technology groups of the D&B operating
company; and (iv) a 236,000-square-foot office building in High Wycombe,
England, that houses operational and technology services for D&B Europe. The
Company's operations are also conducted from 70 other offices located throughout
the U.S. (all of which are leased) and 99 non-U.S. office locations (95 of which
are leased).
ITEM 3. LEGAL PROCEEDINGS
Information in response to this Item is included in Note 14 (Contingencies)
in Part II, Item 8 on Pages 49-51 of this Form 10-K.
The following summarizes certain developments with respect to the IRI case
discussed in Note 14:
On October 15, 1996, defendants moved for an order dismissing all claims in
the complaint. On May 6, 1997, the United States District Court for the Southern
District of New York issued a decision dismissing IRI's claim of attempted
monopolization in the United States, with leave to replead within 60 days. The
Court denied defendants' motion with respect to the remaining claims in the
complaint. On June 3, 1997, defendants filed an answer denying the material
allegations in IRI's complaint, and A.C. Nielsen Company filed a counterclaim
alleging that IRI had made false and misleading statements about its services
and commercial activities. On July 7, 1997, IRI filed an Amended and Restated
Complaint repleading its alleged claim of monopolization in the United States
and realleging its other claims. By notice of motion dated August 18,
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<PAGE> 15
1997, defendants moved for an order dismissing the amended claim. On December 1,
1997, the Court denied the motion. Discovery in this case is ongoing.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Officers are elected by the Board of Directors to hold office until their
respective successors are chosen and qualified.
Listed below are the executive officers of the Registrant at February 16,
2000, and brief summaries of their business experience during the past five
years. Information concerning officer titles at The Dun & Bradstreet Corporation
reflects titles with (i) Old D&B and Historical D&B, as applicable, for periods
prior to the 1998 Distribution Date and (ii) the Company for periods after the
1998 Distribution Date.
<TABLE>
<CAPTION>
NAME TITLE AGE
- ---- ----- ---
<S> <C> <C>
Clifford L. Alexander, Jr............ Chairman of the Board and Chief Executive Officer 66
Frank S. Sowinski.................... Executive Vice President and President - Dun & 43
Bradstreet Operating Company
William F. Doescher.................. Senior Vice President and Chief Communications Officer 62
Elahe Hessamfar...................... Senior Vice President and Chief Technology Officer 46
Peter J. Ross........................ Senior Vice President and Business Affairs Officer 54
Chester J. Geveda, Jr................ Vice President and Controller and Acting Chief 53
Financial Officer
</TABLE>
Mr. Alexander has served as chairman and chief executive officer of the
Company since October 1999 and as a director since February 1993. Mr. Alexander
is also president of Alexander & Associates, Inc., a private consulting firm
specializing in work-force inclusiveness, which he founded in 1981.
Mr. Sowinski has served as president - Dun & Bradstreet operating company,
since September 1999, and executive vice president of The Dun & Bradstreet
Corporation since October 1999. Prior thereto, Mr. Sowinski served as senior
vice president and chief financial officer of The Dun & Bradstreet Corporation
from November 1996 to September 1999, as well as executive vice
president - global marketing of the Dun & Bradstreet operating company from
October 1997 to September 1999. He also previously served the Dun & Bradstreet
operating company as executive vice president - applications and alliances from
November 1996 to September 1997, as executive vice president - applications,
mass marketing and alliances from October 1994 to October 1996, as executive
vice president - marketing from April 1993 to September 1994 and as senior vice
president - finance & planning from August 1989 to March 1993.
Mr. Doescher has served as senior vice president and chief communications
officer of The Dun & Bradstreet Corporation since November 1996. He is also
senior vice president-global communications of the Dun & Bradstreet operating
company, a position he has held since April 1992.
Ms. Hessamfar has served as senior vice president and chief technology
officer of The Dun & Bradstreet Corporation since August 1997. Prior thereto,
she served as chief information officer of Turner Broadcasting System from July
1993 to July 1997 and as vice president - information systems of PAC Bell
Directories from May 1987 to June 1993.
Mr. Ross has served as senior vice president and business affairs officer
of The Dun & Bradstreet Corporation since November 1999. The Business Affairs
function comprises the Corporate Legal, Human Resources and Business Practices
departments. Prior thereto, he served as senior vice president and chief human
resources officer of The Dun & Bradstreet Corporation from November 1996 to
November 1999. He is also senior vice president - human resources of the Dun &
Bradstreet operating company, a position he has held since June 1988.
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<PAGE> 16
Mr. Geveda has served as vice president and controller of The Dun &
Bradstreet Corporation and as senior vice president - finance of the Dun &
Bradstreet operating company since November 1996. In September 1999 he was
appointed to the additional position of acting chief financial officer of the
Company. Prior thereto, he served as senior vice president - finance and
planning of the Dun & Bradstreet operating company from April 1993 to October
1996 and as senior vice president - finance and administration of Dun &
Bradstreet Europe/Africa/Middle East from September 1990 to March 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to this Item is set forth under the captions
"Dividends" and "Common Stock Information" in Part II, Item 7 on Page 28 of this
Form 10-K.
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<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Operating Revenues............................. $1,971.8 $1,934.5 $1,811.0 $1,782.5 $1,735.3
Costs and Expenses(1).......................... 1,532.9 1,513.8 1,407.3 1,725.3 1,522.4
-------- -------- -------- -------- --------
Operating Income............................... 438.9 420.7 403.7 57.2 212.9
Non-Operating Expense -- Net(2)................ (4.0) (20.9) (71.3) (71.2) (68.0)
-------- -------- -------- -------- --------
Income (Loss) from Continuing Operations before
Provision for Income Taxes................... 434.9 399.8 332.4 (14.0) 144.9
Provision for Income Taxes..................... 178.9 153.4 113.4 102.1 49.6
-------- -------- -------- -------- --------
Income (Loss) from:
Continuing Operations.......................... 256.0 246.4 219.0 (116.1) 95.3
Discontinued Operations, Net of Income
Taxes(3)..................................... -- 33.7 92.0 72.3 225.9
-------- -------- -------- -------- --------
Income (Loss) before Cumulative Effect of
Accounting Changes............................. 256.0 280.1 311.0 (43.8) 321.2
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit(4).......................... -- -- (127.0) -- --
-------- -------- -------- -------- --------
Net Income (Loss)................................ $ 256.0 $ 280.1 $ 184.0 $ (43.8) $ 321.2
======== ======== ======== ======== ========
Basic Earnings (Loss) Per Share of Common Stock:
Continuing Operations.......................... $ 1.58 $ 1.45 $ 1.28 $ (.69) $ .56
Discontinued Operations........................ -- .20 .54 .43 1.33
-------- -------- -------- -------- --------
Before Cumulative Effect of Accounting
Changes...................................... 1.58 1.65 1.82 (.26) 1.89
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit(4)........................ -- -- (.74) -- --
-------- -------- -------- -------- --------
Basic Earnings (Loss) Per Share of Common
Stock.......................................... $ 1.58 $ 1.65 $ 1.08 $ (.26) $ 1.89
======== ======== ======== ======== ========
Diluted Earnings (Loss) Per Share of Common
Stock:
Continuing Operations.......................... $ 1.56 $ 1.44 $ 1.27 $ (.69) $ .55
Discontinued Operations........................ -- .19 .53 .43 1.32
-------- -------- -------- -------- --------
Before Cumulative Effect of Accounting
Changes...................................... 1.56 1.63 1.80 (.26) 1.87
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit(4)........................ -- -- (.73) -- --
-------- -------- -------- -------- --------
Diluted Earnings (Loss) Per Share of Common
Stock.......................................... $ 1.56 $ 1.63 $ 1.07 $ (.26) $ 1.87
======== ======== ======== ======== ========
Dividends Paid Per Share......................... $ .74 $ .81 $ .88 $ 1.82 $ 2.63
======== ======== ======== ======== ========
Dividends Declared Per Share..................... $ .74 $ .775 $ 1.10 $ 1.82 $ 2.63
======== ======== ======== ======== ========
Weighted Average Number of Shares Outstanding --
Basic.......................................... 162.3 169.5 170.8 170.0 169.5
-------- -------- -------- -------- --------
Weighted Average Number of Shares Outstanding --
Diluted(5)..................................... 164.3 171.7 172.6 170.0 171.6
-------- -------- -------- -------- --------
Balance Sheet:
Total Assets(6)................................ $1,785.7 $1,789.2 $2,086.0 $2,225.4 $3,644.9
======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) 1999 included a charge of $41.2 million in conjunction with the
restructuring of the Dun & Bradstreet operating company. 1998 included a
charge of $28.0 million for reorganization costs associated with the 1998
Distribution. 1996 included charges of $161.2 million for reorganization
costs associated with the 1996 Distribution and a loss of $68.2 million on
the sale of American Credit Indemnity. 1995 included a charge of $188.5
million partially offset by gains of $90.0 million and $28.0 million from
the sale of
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Interactive Data Corporation and warrants received in connection with the
sale of Donnelley Marketing, respectively.
(2) 1999 included gains related to the sale of Financial Information Services
("FIS"), the publishing unit of Moody's Investors Service, of $12.2 million
and on the settlement of litigation of $11.9 million. 1998 included a gain
on the sale of FIS of $9.6 million (see Note 4 to the consolidated financial
statements).
(3) Income taxes on Discontinued Operations were $22.5 million, $52.2 million,
$145.1 million and $73.4 million in 1998, 1997, 1996 and 1995, respectively.
(4) 1997 included the impact of a change in revenue recognition policies (see
"Accounting Changes" in Note 1 to the consolidated financial statements).
(5) The exercise of diluted shares has not been assumed for the year ended
December 31, 1996, since the result is antidilutive.
(6) Included Net Assets of Discontinued Operations of $296.5 million, $430.6
million and $1,652.2 million in 1997, 1996 and 1995, respectively.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
To facilitate an analysis of the Company's operating results, certain
significant events should be considered.
1998 Distribution
On June 30, 1998, the company then known as The Dun & Bradstreet
Corporation ("Old D&B") separated into two publicly traded companies -- The New
Dun & Bradstreet Corporation ("New D&B" or the "Company") and R.H. Donnelley
Corporation. The separation (the "1998 Distribution") of the two companies was
accomplished through a tax-free dividend by Old D&B of the Company, which was a
new entity comprising Moody's Investors Service ("Moody's") and the Dun &
Bradstreet operating company ("D&B"). New D&B changed its name to "The Dun &
Bradstreet Corporation," and the continuing entity (i.e., Old D&B) consisting of
R.H. Donnelley Inc., the operating company, and the DonTech partnership changed
its name to R.H. Donnelley Corporation ("Donnelley"). The tax-free stock
dividend was issued on June 30, 1998, to shareholders of record at the close of
business on June 17, 1998. Due to the relative significance of Moody's and D&B,
the transaction has been accounted for as a reverse spin-off, and, as such,
Moody's and D&B have been classified as continuing operations and, R.H.
Donnelley Inc. and DonTech have been classified as discontinued operations. For
purposes of effecting the 1998 Distribution and of governing certain of the
continuing relationships between the Company and Donnelley after the
transaction, the two companies have entered into various agreements as described
in Note 2 to the Company's consolidated financial statements.
Pursuant to Accounting Principles Board Opinion ("APB") No. 30, "Reporting
the Results of Operations -- Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the consolidated financial statements of the Company have been
reclassified to reflect the 1998 Distribution. Accordingly, revenues, costs and
expenses, and cash flows of Donnelley have been excluded from the respective
captions in the Consolidated Statements of Operations and Consolidated
Statements of Cash Flows. The net operating results of these entities have been
reported, net of applicable income taxes, as "Income from Discontinued
Operations," and the net cash flows of these entities have been reported as "Net
Cash (Used in) Provided by Discontinued Operations."
1999 Restructuring Charge
During the fourth quarter of 1999, the Company's Board of Directors
approved plans to restructure the Dun & Bradstreet operating company. The
restructuring comprises three major components:
- D&B's International Operations are being realigned and streamlined
through a series of office consolidations and organizational changes. In
order to reduce the cost infrastructure in Europe, actions have been
taken to improve efficiencies in sales and data collection operations.
- D&B's Global Technology Organization has been realigned and streamlined
and will significantly increase the level of software and product
development outsourced to resources outside the United States and Europe.
- D&B's U.S. business has reengineered its data collection process so that
it now relies solely on telephonic data collection. This resulted in the
closure of 15 field data collection centers.
As a result of these actions, a pre-tax restructuring charge of $41.2
million ($27.9 million after-tax, $.17 per share basic and diluted) was included
in operating income in 1999. For management reporting purposes such charges are
not allocated to the business segments. Employee severance costs from planned
terminations of approximately 700 employees comprised $32.7 million (including
severance for two former corporate executives). The severance costs were based
on the amounts that will be paid to the affected employees pursuant to the
Company's policies and certain foreign governmental regulations. The balance of
the charge relates to the write-off of certain assets made obsolete or redundant
and abandoned by the restructuring and
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leasehold termination obligations arising from office closures. The Company
anticipates completion of its restructuring in fiscal 2000, including the
payment of the majority of the associated costs.
The restructuring actions are designed to strengthen customer service
worldwide, improve operating efficiencies and lower structural costs. The
Company expects savings of approximately $30 million in 2000 and $40 million in
2001 that it intends to reinvest in future revenue growth initiatives.
RESULTS OF OPERATIONS
OPERATING SEGMENTS
The Company's reportable segments are Dun & Bradstreet United States ("D&B
U.S."), Dun & Bradstreet Europe/Africa/Middle East ("D&B Europe"), Dun &
Bradstreet Asia Pacific/Canada/Latin America ("D&B APCLA") and Moody's.
Effective January 1, 2000, management of the Canadian business was moved to the
U.S. segment.
The three Dun & Bradstreet segments, managed on a geographical basis,
provide business-to-business Credit Information Services ("Credit"), Marketing
Information Services ("Marketing"), Purchasing Information Services
("Purchasing") and Receivables Management Services ("RMS"). The Moody's segment
provides credit opinions on investment securities and assigns ratings to
fixed-income securities and other credit obligations. Moody's also offers
investor-oriented credit research and credit risk assessment software for banks
and other financial institutions, as well as credit training. The Company
evaluates performance and allocates resources based on segment operating income.
Year Ended December 31, 1999, Compared with Year Ended December 31, 1998
For the year ended December 31, 1999, the Company reported net income of
$256.0 million, or $1.58 per share basic and $1.56 per share diluted. This
compares with 1998 income from continuing operations of $246.4 million and
earnings per share from continuing operations of $1.45 basic and $1.44 diluted.
1999 results included the $41.2 million pre-tax restructuring charge discussed
above ($27.9 million after-tax, $.17 per share basic and diluted), a $12.2
million pre-tax gain resulting from an adjustment to the July 1998 sale of
Financial Information Services ("FIS"), the financial publishing unit of Moody's
($7.5 million after-tax, $.05 per share basic and diluted), and an $11.9 million
pre-tax gain related to the settlement of outstanding litigation ($6.6 million
after-tax, $.04 per share basic and diluted). The 1998 results included
reorganization costs associated with the 1998 Distribution of $28.0 million
($23.2 million after-tax, $.14 per share basic, $.13 per share diluted) and a
gain of $9.6 million ($5.3 million after-tax, $.03 per share basic and diluted)
on the sale of FIS. 1998 net income of $280.1 million included income from
discontinued operations of $33.7 million. For the year ended December 31, 1998,
earnings per share of $1.65 basic and $1.63 diluted include earnings per share
from discontinued operations of $.20 basic and $.19 diluted.
Operating revenues grew 1.9% to $1,971.8 million in 1999 from $1,934.5
million in 1998. Excluding the results of FIS, which was sold in July 1998,
revenue increased 2.9%. Revenue growth for the year reflects continued strong
growth of 13.8% at Moody's offset by a decline of .8% at the D&B operating
company. Excluding the impact of foreign currency translation, D&B operating
company revenues were flat. The D&B operating company's results reflect a
decrease in usage of traditional credit services products, offset by growth in
Value-Added Products, including revenues from partnerships with providers of
enterprise software solutions. Excluding the results of FIS in 1998 and the
impact of foreign currency translation, the Company's operating revenues
increased 3.4% in 1999 compared with 1998.
Operating expenses decreased 1.5% to $559.5 million in 1999 compared with
$568.2 million in 1998. Operating expenses at the D&B operating company were
lower, resulting from expense control initiatives worldwide, while Moody's
operating expenses were increased to support its growth in revenues. Selling and
administrative expenses increased by 2.0% to $791.3 million in 1999 compared
with $776.0 million in 1998, resulting from the D&B operating company's
investment in Value-Added Products and partnerships with providers of enterprise
software solutions and Moody's continued business expansion. Operating costs in
1999 also included the $41.2 million charge for the restructuring of the D&B
operating company discussed above.
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In 1998, operating costs included $28.0 million in reorganization costs incurred
in conjunction with the 1998 Distribution.
Operating income grew 4.3% in 1999 to $438.9 million from $420.7 million in
1998. Excluding the $41.2 million restructuring charge in 1999 and the $28.0
million of reorganization costs in 1998, operating income in 1999 grew 7.0%
compared with 1998. This growth reflects the strong revenue results for Moody's
and the impact of expense control initiatives worldwide, offset by lower
revenues and increased selling and administrative expense at the D&B operating
company and Moody's.
Non-operating expense -- net was $4.0 million in 1999 compared with $20.9
million in 1998. Included in non-operating expense -- net is interest income and
expense, minority interest expense (which remained level when comparing 1999 and
1998) and other income (expense) -- net. Interest income of $3.0 million in 1999
was lower than 1998 due to lower cash levels, while interest expense of $5.0
million in 1999 was significantly lower than in 1998 as a result of the lower
debt levels in 1999 compared with 1998. Other income (expense) -- net was $20.4
million in 1999 compared with $7.3 million in 1998. Other income (expense) --
net included the gains in connection with the sale of FIS of $12.2 million and
$9.6 million in 1999 and 1998, respectively. 1999 other income (expense) -- net
also included a gain of $11.9 million on the settlement of litigation that arose
from a transaction related to the sale of Dun & Bradstreet Software in 1996.
These gains were offset by other miscellaneous non-operating income and expense
items, which were comparable in 1999 and 1998.
The Company's effective tax rate was 41.1% in 1999, compared with 38.4% in
1998. This increase resulted from a number of factors, including taxes imposed
on the proceeds from the settlement of litigation, the non-deductibility of
certain restructuring expenses and refinements of certain estimates.
Income from discontinued operations, net of income taxes, was $33.7 million
for the year ended December 31, 1998.
Segment Results
D&B U.S. revenues were $891.5 million in 1999, down 1.2% from 1998
revenues. In comparing 1999 and 1998 revenues, Credit decreased 6.5% to $560.1
million, Marketing increased 5.5% to $226.1 million, Purchasing increased 17.4%
to $27.0 million and RMS increased 18.8% to $78.3 million. The decline in Credit
revenues resulted from a number of factors, including sales force
reorganization, compensation and training issues, as well as increased
competition, including free or lower-cost information from online vendors and
other Internet sources. Additionally, the shift by former annual contract
customers to the monthly discount plan negatively affected revenues, as selling
incremental projects to those customers was more challenging. The growth in
Marketing, Purchasing and RMS was largely driven by revenues from Value-Added
Products, including from partnerships with providers of enterprise software
solutions. In addition to the restructuring plan approved by the Board of
Directors in the fourth quarter of 1999, management has implemented several
other actions also intended to improve revenue growth and address the issues
affecting the business. The Company is accelerating its Internet strategy to
focus on ways to better capitalize on electronic commerce. Senior sales
management has been changed, the sales organization has been realigned to
clarify product and channel responsibilities and provide better sales and
marketing support, the sales compensation plans have been revised, and the
pricing model for its products and services was changed.
D&B U.S. operating income was $258.2 million in 1999, down 4.3% from $269.9
million in the prior year due to the lower revenues and higher selling and
administrative expenses resulting from the investment in Value-Added Products
and partnerships with providers of enterprise software solutions.
D&B Europe's revenues were $420.6 million in 1999, down 1.7% when compared
with 1998 revenues of $427.7 million. Excluding the impact of foreign exchange,
D&B Europe's revenues were up 1.3%. In comparing 1999 with 1998, European Credit
revenues decreased 5.0% to $297.4 million, while Marketing revenues increased
10.7% to $72.2 million, and RMS revenues were flat at $49.6 million. D&B Europe
also reported revenues from newly introduced Purchasing products of $1.4 million
during 1999. Excluding the impact of foreign exchange, D&B Europe would have
reported in 1999 a decrease in Credit revenues of 2.2%,
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an increase in Marketing revenues of 14.3% and an increase in RMS revenues of
2.8% in comparison with 1998. The decline in European Credit revenues resulted
from ongoing price erosion in the local credit markets, as well as increased
competition, including the availability of free or lower-cost information from
online vendors and other Internet sources. Marketing revenue growth was largely
attributable to Value-Added Products. D&B Europe reported an operating loss of
$8.9 million in 1999, compared with a loss of $4.2 million in 1998. Europe's
loss resulted largely from investment in sales and marketing support for
Value-Added Products and partnerships with providers of enterprise software
solutions and higher costs for new technology and systems in the region. The
Company expects that the restructuring actions implemented in the fourth quarter
of 1999 will improve the profitability in Europe by reducing its cost structure.
Additionally, the Company is reviewing various strategic alternatives in Europe
and APCLA to accelerate revenue growth, improve efficiencies and improve
profitability.
D&B APCLA reported operating revenues of $95.6 million in 1999, up 7.9%
from 1998. Excluding the impact of foreign exchange, revenues would have been up
3.6%. In comparing 1999 with 1998, APCLA Credit revenues increased 14.2% to
$64.5 million, Marketing revenues decreased 9.2% to $13.9 million, and RMS
revenues increased 1.8% to $17.1 million. D&B APCLA also reported revenues from
the newly introduced Purchasing products of $.1 million during 1999. Excluding
the impact of foreign exchange, D&B APCLA would have reported in 1999 an
increase in Credit revenues of 8.0%, an increase in Marketing revenues of 3.4%
and a decrease in RMS revenues of 10.4% in comparison with 1998. D&B APCLA
reported an operating loss of $5.7 million in 1999, compared with a loss of $9.1
million in 1998. The decrease in operating losses in 1999 compared with 1998 is
due to expense control initiatives and revenue improvements.
Moody's revenues of $564.1 million in 1999 were up 13.8% from 1998
(excluding the 1998 results of FIS) due to gains in corporate bonds, structured
ratings and commercial paper. Strong international volumes drove growth in
corporate bonds. International issuance increased more than 50% over the prior
year, principally due to the introduction of a common currency for the European
Monetary Union, coupled with a significant increase in merger-related financing.
Structured ratings revenue grew more than 20% led by strength in the
asset-backed and derivatives markets in the U.S., Europe and Japan. In the
short-term markets, the level of commercial paper outstanding increased 20% from
a year ago. These revenue gains were partially offset by the effects of volume
declines in the high yield and U.S. municipal markets versus their strong
performances in 1998.
Moody's operating income of $273.9 million in 1999 was up 22.6% from 1998,
reflecting continued strong revenue growth partially offset by higher expenses.
Expenses versus last year show increased analytic headcount (both U.S. and
international) to support business growth. Analytic resources have been
increased particularly in Europe and in the structured groups to meet strong
market demands.
Year Ended December 31, 1998, Compared with Year Ended December 31, 1997
For the year ended December 31, 1998, the Company reported income from
continuing operations of $246.4 million and earnings per share from continuing
operations of $1.45 basic and $1.44 diluted. This compares with 1997 income from
continuing operations of $219.0 million and earnings per share from continuing
operations of $1.28 basic and $1.27 diluted. The Company's basic earnings per
share for 1998 were $1.65 compared with $1.08 per share in 1997, including
earnings per share from discontinued operations of $.20 and $.54 in 1998 and
1997, respectively. On a diluted basis, the Company's earnings per share in 1998
of $1.63 were up from the 1997 diluted earnings per share of $1.07, including
diluted earnings per share from discontinued operations of $.19 and $.53 in 1998
and 1997, respectively. The 1998 results include reorganization costs associated
with the 1998 Distribution of $28.0 million ($23.2 million after-tax, $.14 per
share basic, $.13 per share diluted) and a gain of $9.6 million ($5.3 million
after-tax, $.03 per share basic and diluted) on the sale of FIS. The 1997
results include a one-time, non-cash charge for the cumulative effect of
accounting changes ($.74 per share basic, $.73 per share diluted), with respect
to certain of the Company's revenue recognition methods.
Operating revenues grew 6.8% to $1,934.5 million in 1998 from $1,811.0
million in 1997. Excluding the results of FIS, revenues increased 7.8%. Revenue
growth for 1998 reflects significant growth at Moody's and
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strong growth at D&B U.S. offset by a decline at D&B APCLA. D&B Europe was
essentially unchanged. Excluding the impact of foreign exchange, operating
revenues for the Company grew 8.2% in 1998 from 1997.
1998 operating expenses increased 16.7% to $568.2 million, largely
attributable to increased Year 2000 spending, costs incurred by D&B Europe for
new systems and technology, and costs associated with the introduction of new
products and services. Selling and administrative expenses decreased slightly.
Operating income in 1998 of $420.7 million increased 4.2% from $403.7
million in 1997. 1998 operating income included $28.0 million in reorganization
costs incurred in conjunction with the 1998 Distribution. Excluding
reorganization costs, operating income increased 11.1%. Operating income growth
reflected strong growth at Moody's and D&B U.S.
Non-operating expense-net of $20.9 million in 1998, primarily comprising
interest income and expense, minority interest expense and other income
(expense) -- net, decreased by $50.4 million compared with 1997. The sharp
decrease was due to significantly lower interest expense and higher interest
income, as 1998 debt levels were lower than 1997 levels (see further discussion
in the Liquidity and Financial Position section).
In 1998, the Company's effective tax rate from continuing operations was
38.4%, compared with 34.1% in 1997. This increase resulted from an increase in
the estimated underlying effective tax rate to 36.8% and the non-deductibility
of certain reorganization costs.
Income from discontinued operations, net of income taxes, was $33.7 million
in 1998 and $92.0 million in 1997. Discontinued operations represents six months
of Donnelley operating results in 1998, compared with the full year of Donnelley
operating results reported as discontinued operations in 1997. Donnelley's
operating income was historically lower during the first half of the year.
Segment Results
D&B U.S. revenues were $902.5 million in 1998, up 8.4% from 1997, including
increases in Credit of 3.5% to $599.3 million, Marketing of 18.5% to $214.3
million, Purchasing of 46.5% to $23.0 million and RMS of 15.8% to $65.9 million.
The growth rates are largely attributable to the growth in revenues from Value-
Added Products, which increased by 60.6% to $198.0 million from the prior year.
D&B U.S. operating income was $269.9 million in 1998, up 6.7% from the prior
year, driven by the higher revenues, partially offset by higher expenses
incurred for selling, advertising, new product development and Year 2000
remediation.
D&B Europe's 1998 revenues of $427.7 million were flat compared with 1997,
due largely to the strengthening of the U.S. dollar. European Credit revenues
decreased .8% to $312.9 million in 1998, while Marketing revenues increased
16.6% to $65.2 million in 1998, and RMS decreased 9.3% to $49.6 million in 1998.
Excluding the impact of foreign exchange, D&B Europe would have reported a 3.8%
increase in revenues in 1998, including an increase in Credit revenues of 2.7%,
an increase in Marketing of 19.7% and a decrease in RMS of 6.3% from 1997.
Increases in product usage were partially offset by price erosion resulting from
the competitive environment in Europe. D&B Europe reported an operating loss of
$4.2 million, reflecting the continued investments in new technology and systems
in Europe and increased Year 2000 remediation costs.
D&B APCLA reported a 5.5% decrease in operating revenues to $88.6 million
in 1998 from $93.8 million in 1997, resulting from the negative impact of
foreign exchange rates. In 1998, APCLA Credit revenues decreased 5.7% to $56.5
million, Marketing revenues decreased 24.6% to $15.3 million, and RMS revenues
increased 23.5% to $16.8 million. Excluding the impact of foreign exchange, D&B
APCLA would have reported a 5.9% increase in revenues in 1998, comprising a 4.1%
increase in Credit, a 1.3% increase in Marketing and a 15.9% increase in RMS.
D&B APCLA reported an operating loss of $9.1 million in 1998, compared with an
operating loss of $6.3 million in 1997, due to lower reported operating revenues
and higher expenses, including Year 2000 costs and employee-related costs in
Asia.
Moody's revenues (excluding the results of FIS) of $495.5 million in 1998
were up 17.1% from 1997, driven by gains in corporate and municipal bonds,
structured ratings and commercial paper. Despite the market disruptions
occurring during the second half of 1998, issuance of high-yield corporate and
municipal
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bonds increased significantly when compared with 1997. Structured ratings
revenues grew more than 40% in 1998 compared with 1997 fueled by strength in the
mortgage-backed and derivative markets in the U.S. and Europe. Moody's operating
income of $223.5 million in 1998 was up 20.4% from 1997, reflecting strong
revenue growth.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133").
This statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires recognition of all
derivatives as either assets or liabilities on the balance sheet and measurement
of those instruments at fair value. If certain conditions are met, a derivative
may be designated specifically as: (a) a hedge of the exposure to changes in the
fair value of a recognized asset or liability or an unrecognized firm commitment
(a fair value hedge); (b) a hedge of the exposure to variable cash flows of a
forecasted transaction (a cash flow hedge); or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. In June, the Financial
Accounting Standards Board issued SFAS No. 137 delaying the effective date of
SFAS No. 133. The provisions of SFAS No. 133 are effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company
currently hedges foreign-currency-denominated transactions and expects to adopt
SFAS No. 133 beginning January 1, 2001. The effect of adopting SFAS No. 133 is
not expected to be material.
MARKET RISK SENSITIVE INSTRUMENTS
The Company operates in 37 countries through wholly or with majority-owned
entities and uses the capital markets to fund its operations. As such, the
Company is exposed to market risk from changes in foreign exchange rates and
interest rates, which could affect its results of operations and financial
condition. In order to reduce the risk from fluctuations in foreign currencies
and interest rates, the Company currently uses forward foreign exchange
contracts and in the past has used interest rate swap agreements. These
derivative financial instruments are viewed by the Company as risk management
tools that are entered into for hedging purposes only. The Company does not use
derivative financial instruments for trading or speculative purposes.
The Company also has investments in fixed-income marketable securities.
Consequently, the Company is exposed to fluctuations in rates on these
marketable securities. Market risk associated with investments in marketable
securities is immaterial and has been excluded from the sensitivity discussions.
A discussion of the Company's accounting policies for derivative financial
instruments is included in the Summary of Significant Accounting Policies in
Note 1 to the Company's consolidated financial statements, and further
disclosure relating to financial instruments is included in Note 6 -- Financial
Instruments with Off-Balance Sheet Risks. The following analysis presents the
sensitivity of the fair value of the Company's market risk sensitive instruments
to changes in market rates and prices.
Interest Rate Risk
The Company is exposed to market risk through its commercial paper program,
in which it borrows at prevailing short-term commercial paper rates. At December
31, 1999, the Company had $124.7 million of short-term commercial paper
outstanding with various maturities through February 2000, partially offset by
short-term investments of $47.6 million. As such, the market risk is immaterial
when calculated utilizing estimates of the termination value based upon a 10%
increase or decrease in interest rates from their December 31, 1999, levels.
The Company has in the past entered into interest rate swap agreements to
manage exposure to changes in interest rates. Interest rate swaps have allowed
the Company to raise funds at floating rates and effectively swap them into
fixed rates that are lower than those available to it if fixed-rate borrowings
were to be made directly. During 1998, in connection with the 1998 Distribution
and repayment of outstanding notes payable, Old D&B canceled all of its interest
rate swap agreements. The Company has not entered into any interest rate
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swap agreements since the 1998 Distribution and therefore is not subject to
interest rate risk on interest rate swaps.
Foreign Exchange Risk
The Company's non-U.S. operations generated approximately 33% of total
revenues in 1999. As of December 31, 1999, approximately 35% of the Company's
assets were located outside the U.S., and no single country had a significant
concentration of cash.
The Company follows a policy of hedging substantially all cross-border
intercompany transactions denominated in a currency other than the functional
currency applicable to each of its various subsidiaries. The Company only uses
forward foreign exchange contracts to implement its hedging strategy. Typically,
these contracts have maturities of six months or less. These forward contracts
are executed with creditworthy institutions and are denominated primarily in the
British pound sterling, the Euro and the Swedish krona.
The fair value of foreign currency risk is calculated by using estimates of
the cost of closing out all outstanding forward foreign exchange contracts,
given a 10% increase or decrease in forward rates from their December 31, 1999,
levels. At December 31, 1999, the Company had approximately $138 million in
forward foreign exchange contracts outstanding, with various expiration dates
through March 2000 (see Note 6 -- Financial Instruments with Off-Balance Sheet
Risks). At December 31, 1999, net unrealized gains related to the Company's
forward contracts were $.6 million. If forward rates were to increase by 10%
from December 31, 1999, levels, the unrealized loss on these contracts would be
$6.7 million. If forward rates were to decrease by 10% from December 31, 1999,
levels, the unrealized gain on these contracts would be $7.9 million. However,
the estimated potential gain or loss on forward contracts is expected to be
offset by changes in the dollar value of underlying transactions. Therefore, the
net impact of a 10% movement in foreign exchange rates would be immaterial.
LIQUIDITY AND FINANCIAL POSITION
The Company generates sufficient cash flow from its business operations to
fund its operating needs, service debt and pay dividends. The Company accesses
the commercial paper market from time to time to fund working capital needs and
share repurchases. Such borrowings have been supported by the Company's bank
credit facilities.
On December 15, 1999, the Company announced that it will pursue the
separation of Moody's and the D&B operating company into two independent,
publicly traded companies. On February 16, 2000, the Company announced that the
separation would be accomplished by spinning off, through a tax-free
distribution to shareholders (the "2000 Distribution"), a subsidiary corporation
comprising the business of the D&B operating company. The 2000 Distribution is
subject to final approval by the Company's Board of Directors and obtaining a
favorable ruling from the Internal Revenue Service with respect to the tax-free
treatment of the distribution. After the 2000 Distribution, the business of the
Company will consist entirely of the business conducted by Moody's, and the D&B
operating company business will comprise the business of a new publicly traded
company that will succeed to the name "The Dun & Bradstreet Corporation." The
Company expects to complete the 2000 Distribution by the end of the third
quarter of 2000.
Although the capital structures of the two independent companies have not
been finalized, it is expected that operating cash flows, supplemented as needed
with financing arrangements, will be sufficient to meet the needs of the two
companies in the future.
At December 31, 1999, cash and cash equivalents totaled $113.2 million, an
increase from $90.6 million in 1998. During 1999, the Company's share repurchase
program, discussed below, and commercial paper borrowings needed to support the
repurchase program affected cash flows. In 1998, cash and cash equivalents were
affected by the assumption of $500 million of debt by Donnelley in connection
with the separation (see further details below) offset by the paydown of
short-term borrowings outstanding at the time of the 1998 Distribution of $287.1
million and funds used to begin the share repurchase program.
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Operating activities generated net cash of $344.7 million in 1999 compared
with $325.5 million from continuing operations in 1998. Moody's cash flows from
operations remain strong consistent with its operating results. D&B U.S.'s
operating cash flows have improved in 1999, as the change to the new business
model implemented effective January 1, 1998 (whereby customers have the option
of purchasing Credit products and services on a monthly or annual contract
plan), is no longer negatively affecting cash flows. Higher payments made in
1999 for income taxes partially offset these increases in operating cash flows.
Operating activities of discontinued operations generated $16.7 million in 1998.
Net cash used in investing activities totaled $110.1 million in 1999,
compared with $104.7 million in 1998. 1998 cash flows used in investing
activities included proceeds from the sale of FIS of $26.5 million and cash used
in investing activities of discontinued operations of $3.1 million. In 1999,
spending for capital expenditures, computer software and other intangibles by
continuing operations totaled $122.8 million, compared with $147.1 million in
1998, due to higher expenditures in the prior year for certain back office
systems that were implemented in 1999. Currently, the Company has no material
commitments for capital expenditures.
Net cash used in financing activities was $211.7 million during 1999
compared with $227.3 million in 1998. Payments of dividends accounted for $120.1
million in 1999 compared with $137.4 million in 1998, due to the decrease in
dividends after the 1998 Distribution. The Company's share repurchase program
and commercial paper borrowings discussed below also affected the net cash used
in financing activities.
During 1999, the Company completed its special stock repurchase program,
authorized by the Board of Directors in June 1998, by purchasing 4.2 million
shares for $150.0 million. During 1999, the Company also repurchased 2.6 million
shares for $87.9 million to offset awards made under stock incentive plans and
in connection with the Company's Employee Stock Purchase Plan. In comparison,
during 1998, the Company repurchased 5.7 million shares for a total of $150.0
million under the special stock repurchase program and purchased 2.3 million
shares to offset awards made under stock incentive plans for a total of $70.2
million. Proceeds received in connection with the Company's stock incentive
plans were $48.4 million in 1999 compared with $41.0 million in 1998.
In June 1999, the Company renewed its $300 million 364-day revolving credit
facility. The Company has an additional $300 million facility maturing in June
2003. Under these facilities, the Company has the ability to borrow at
prevailing short-term interest rates. The Company has had no borrowings
outstanding under these facilities since they were established in June 1998. The
Company had commercial paper borrowings of $124.7 million and $35.9 million at
December 31, 1999 and 1998, respectively.
The Company intends to replace its existing revolving credit facilities
with new facilities for each of the new companies prior to the 2000 Distribution
and replace its commercial paper program with a new program for the new Dun &
Bradstreet Corporation.
In connection with the 1998 Distribution, during June 1998, R.H. Donnelley
Inc. borrowed $500 million, which was used to repay existing indebtedness
(commercial paper and other short-term borrowings) of Old D&B in the amount of
$287.1 million at the time of the 1998 Distribution. The Company used the excess
proceeds for general corporate purposes, including the payment of reorganization
costs. The $500 million of debt became an obligation of Donnelley upon the 1998
Distribution.
In connection with the 1998 Distribution and repayment of indebtedness, Old
D&B canceled all of its interest rate swap agreements and recorded into income
the previously unrecognized fair value loss at the time of termination. At the
time of the cancellation, the fair value of the interest rate swaps was a loss
of $12.7 million, of which $3.8 million ($.6 million in the first quarter of
1998 and $3.2 million in 1997) had been recognized in income relating to swaps
that did not qualify for settlement accounting. The previously unrecognized loss
of $8.9 million was recorded during the second quarter of 1998 and included in
reorganization costs.
On April 1, 1997, Old D&B raised $300 million of minority interest
financing involving a third-party investor. Funds raised by this financing were
used to repay outstanding short-term debt. Also during 1997, Old D&B reentered
the commercial paper market and used the proceeds to repay additional amounts
outstanding under its short-term debt facility. The Company maintained the
financing following the 1998 Distribution. At
26
<PAGE> 27
December 31, 1999 and 1998, the Company had $300 million of minority interest
financing. Under the terms of the financing, the third-party investor has a
right to take steps that would result in termination of the financing during or
after December 2000. Furthermore, the third-party investor would also have the
right to terminate the financing within 60 days after the 2000 Distribution if
the third-party investor has not consented to the 2000 Distribution. The Company
intends to replace the minority interest financing with new financing prior to
any such termination.
The Internal Revenue Service (IRS) is continuing its review of the
Company's utilization of certain capital losses generated during 1989 and 1990.
The Company believes that the total cash obligation to the IRS in respect of
this matter is approximately $550 million for taxes and accrued interest as of
December 31, 1999. Pursuant to a series of agreements, IMS Health Incorporated
and Nielsen Media Research, Inc. are jointly and severally liable to pay
one-half, and the Company the other half, of any payments for taxes and accrued
interest arising from this matter and certain other potential tax liabilities
after the Company pays the first $137 million. The Company's share of the taxes
and accrued interest in respect to this matter is approximately $345 million as
of December 31, 1999, of which $183 million represents tax-deductable interest.
The Company expects that an assessment will be issued from the IRS during the
second quarter of 2000. At that time, the Company will consider its options,
which include satisfying its obligation to the IRS for its share of the
liability. The funds that would be needed to make such a payment are expected to
come from external borrowings.
YEAR 2000
The Company's systems worldwide made a smooth transition to the Year 2000
and are operating in a business-as-usual capacity.
The Company initiated an extensive Year 2000 preparation program in 1996,
when it began actively addressing the information-technology-related components
of the Year 2000 issue. The program focused on the Company's products and
services (including its databases, software that manipulates these databases and
software provided to customers); billing, ordering and tracking systems;
technical infrastructure (such as LANs, WANs, voice and e-mail systems and Web
sites); desktop computers; suppliers; business operation support systems (such
as payroll) and facilities and equipment. The Company's proactive preparations
were substantially completed as of September 30, 1999.
Pursuant to the Company's detailed contingency and rollover plans, the
Company completed backups of systems on December 30 and 31, 1999. Critical
systems, including customer access and communication infrastructure, were put
through a series of carefully orchestrated tests during the rollover weekend to
simulate customer usage. No significant issues arose, and a monitoring and rapid
response program remains in place in the event of any future issues. These
business recovery plans are expected to be effective in addressing
technology-related issues going forward.
External and internal costs associated with modifying software for Year
2000 readiness were expensed as incurred and were funded through operating cash
flow. The Company believes no major issues will occur in the future; therefore,
the Company does not expect to incur significant further costs. The aggregate
cost of the Company's Year 2000 program was approximately $78 million. Through
December 31, 1999, the Company had incurred approximately $76 million ($11
million in 1997, $43 million in 1998 and $22 million in 1999) and expects to
incur $2 million in 2000. These figures do not include the costs of software and
systems that were replaced or upgraded in the normal course of business.
NEW EUROPEAN CURRENCY
On January 1, 1999, 11 of the countries in the European Union began a
three-year transition to the euro to replace the national currency of each
participating country. The Company intends to phase in its transition to the
euro over the next two years. The Company has established a task force to
address issues related to the euro. The Company believes that the euro
conversion may have a material impact on its operations and financial condition
if it fails to successfully address such issues. The task force has prepared a
project plan and is proceeding with the implementation of that plan.
27
<PAGE> 28
The Company's project plan includes the following: ensuring that the
Company's information technology systems that process data for inclusion in the
Company's products and services can appropriately handle amounts denominated in
euro contained in data provided to the Company by third-party data suppliers;
modification of the Company's products and services to deal with euro-related
issues; and modification of the Company's internal systems (such as payroll,
accounting and financial reporting) to deal with euro-related issues. The
Company does not believe that the cost of such modifications will have a
material effect on the Company's results of operations or financial condition.
There is no guarantee that all problems will be foreseen and corrected, or that
no material disruption of the Company's business will occur. The conversion to
the euro may have competitive implications for the Company's pricing and
marketing strategies, that could be material in nature; however, any such impact
is not known at this time.
DIVIDENDS
The Company paid a quarterly dividend of $.185 per share during 1999 and
for the third and fourth quarters of 1998. Old D&B paid quarterly dividends of
$.22 per share during the first half of 1998, resulting in a full-year dividend
per share paid of $.74 and $.81 for 1999 and 1998, respectively.
COMMON STOCK INFORMATION
The Company's common stock (symbol DNB) is listed on the New York Stock
Exchange. The number of shareholders of record was 9,202 at December 31, 1999.
The following table summarizes price and cash dividend information for Old
D&B's and the Company's common stock as reported in the periods shown. The
first-quarter 1998 and 1999 dividend declarations were made in the fourth
quarters of 1997 and 1998, respectively, although the record and payment dates
are both in the ensuing first quarters.
<TABLE>
<CAPTION>
PRICE PER SHARE ($) DIVIDENDS DIVIDENDS
-------------------------------- DECLARED PAID
1999 1998 PER SHARE ($) PER SHARE ($)
------------- ------------- -------------- --------------
HIGH LOW HIGH LOW 1999 1998 1999 1998
---- --- ---- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter........ 37 29 5/16 35 3/16 30 1/2 .185 -- .185 .22
Second Quarter....... 40 33 1/8 36 11/16 32 3/8 .185 .22 .185 .22
Third Quarter........ 37 13/16 23 3/8 34 7/16 21 3/4 .185 .185 .185 .185
Fourth Quarter....... 31 25 11/16 31 13/16 22 29/32 .185 .37 .185 .185
-- -- -- -- ---- ---- ---- ----
Year................. 40 23 3/8 36 11/16 21 3/4 .74 .775 .74 .81
== == == == ==== ==== ==== ====
</TABLE>
FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K are forward-looking.
These may be identified by the use of forward-looking words or phrases, such as
"believe," "expect," "anticipate," "should," "aims," "intends," "planned,"
"estimated," "potential," "target" and "goal," among others. All such
forward-looking statements are based on the Company's reasonable expectations at
the time they are made. The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for such forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in such
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's businesses
include: (1) complexity and uncertainty regarding the development of new
high-technology products; (2) possible loss of market share through competition;
(3) introduction of competing products or technologies by other companies; (4)
pricing pressures from competitors and/or customers; (5) changes in the business
information and risk management industries and markets; (6) the Company's
ability to protect proprietary information and technology or to obtain necessary
licenses on commercially reasonable terms; (7) the Company's ability to complete
the implementation of its euro plans on a timely basis and the competitive
implications that the conversion to the euro may have on the Company's pricing
and marketing strategies; (8) the possible loss of key employees to
28
<PAGE> 29
investment or commercial banks, or elsewhere; (9) fluctuations in foreign
currency exchange rates; (10) changes in the interest rate environment; (11) the
outcome of the IRS's review of the Company's utilization of capital losses
described above under the Liquidity and Financial Position section and the
associated cash flow implications; (12) the ability to complete pending
restructurings at the D&B operating company in a timely fashion at forecasted
costs without adverse effects on operations; and (13) the ability to implement
the 2000 Distribution on a timely basis without adverse impact on the conduct of
the Company's business.
The Company undertakes no obligation to publicly release any revision to
any forward-looking statement to reflect any future events or circumstances.
The Company may from time to time make oral forward-looking statements. In
connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby identifying important
factors that could cause actual results to differ materially from those
contained in any such forward-looking statement made by or on behalf of the
Company. Any such statement is qualified by reference to the factors set forth
above.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information in response to this Item is set forth under the caption "Market
Risk Sensitive Instruments" in Part II, Item 7 on Pages 24-25 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Independent Accountants........................... 30
Statement of Management Responsibility for Financial
Statements................................................ 31
CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1999 and 1998:
Consolidated Balance Sheets............................... 33
For the years ended December 31, 1999, 1998 and 1997:
Consolidated Statements of Operations..................... 32
Consolidated Statements of Cash Flows..................... 34
Consolidated Statements of Shareholders' Equity........... 35
Notes to Consolidated Financial Statements................ 36-58
</TABLE>
SCHEDULES
Schedules are omitted as not required or inapplicable or because the
required information is provided in the consolidated financial statements,
including the notes thereto.
29
<PAGE> 30
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Directors of The Dun & Bradstreet
Corporation:
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of The Dun & Bradstreet Corporation and Subsidiaries at December 31,
1999 and 1998, and the results of their operations and their cash flows for the
years ended December 31, 1999, 1998 and 1997, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company'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, 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 the opinion expressed
above.
As discussed in Note 1 to the consolidated financial statements, the
Company changed certain revenue recognition accounting policies in 1997.
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
February 2, 2000, except as to Note 16
which is as of February 16, 2000.
30
<PAGE> 31
STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
To the Shareholders of The Dun & Bradstreet Corporation:
Management has prepared and is responsible for the consolidated financial
statements and related information that appear in Items 6 and 7 and on pages
32-58 of this Form 10-K. The consolidated financial statements, which include
amounts based on the estimates of management, have been prepared in conformity
with accounting principles generally accepted in the United States. Other
financial information in this Annual Report on Form 10-K is consistent with that
in the consolidated financial statements.
Management believes that the Company's internal control systems provide
reasonable assurance at reasonable cost that assets are safeguarded against loss
from unauthorized use or disposition, and that the financial records are
reliable for preparing financial statements and maintaining accountability for
assets. These systems are augmented by written policies, an organizational
structure providing division of responsibilities, careful selection and training
of qualified financial personnel and a program of internal audits.
The independent accountants are engaged to conduct an audit of and render
an opinion on the financial statements in accordance with generally accepted
auditing standards. These standards include an assessment of the systems of
internal controls and tests of transactions to the extent considered necessary
by them to support their opinion.
The Board of Directors, through its Audit Committee, consisting solely of
outside directors of the Company, is responsible for reviewing and monitoring
the Company's financial reporting and accounting practices.
PricewaterhouseCoopers LLP and the internal auditors each have full and free
access to the Audit Committee and meet with it regularly, with and without
management.
/s/ CLIFFORD L. ALEXANDER, JR.
--------------------------------------
Clifford L. Alexander, Jr.
Chairman and Chief Executive Officer
/s/ CHESTER J. GEVEDA, JR.
--------------------------------------
Chester J. Geveda, Jr.
Vice President and Controller and
Acting Chief Financial Officer
31
<PAGE> 32
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
OPERATING REVENUES.................................. $ 1,971.8 $ 1,934.5 $ 1,811.0
----------- ----------- -----------
Operating Expenses.................................. 559.5 568.2 487.0
Selling and Administrative Expenses................. 791.3 776.0 788.4
Depreciation and Amortization....................... 140.9 141.6 131.9
Restructuring Expense............................... 41.2 -- --
Reorganization Costs................................ -- 28.0 --
----------- ----------- -----------
OPERATING INCOME.................................... 438.9 420.7 403.7
----------- ----------- -----------
Interest Income..................................... 3.0 6.4 1.8
Interest Expense.................................... (5.0) (12.1) (53.4)
Minority Interest Expense........................... (22.4) (22.5) (16.9)
Other Income (Expense) -- Net....................... 20.4 7.3 (2.8)
----------- ----------- -----------
Non-Operating Expense -- Net........................ (4.0) (20.9) (71.3)
----------- ----------- -----------
Income from Continuing Operations before Provision
for Income Taxes.................................. 434.9 399.8 332.4
Provision for Income Taxes.......................... 178.9 153.4 113.4
----------- ----------- -----------
Income from Continuing Operations................... 256.0 246.4 219.0
Income from Discontinued Operations, Net of Income
Taxes of $22.5 and $52.2 for 1998 and 1997,
respectively...................................... -- 33.7 92.0
----------- ----------- -----------
Income before Cumulative Effect of Accounting
Changes........................................... 256.0 280.1 311.0
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit of $87.7....................... -- -- (127.0)
----------- ----------- -----------
NET INCOME.......................................... $ 256.0 $ 280.1 $ 184.0
=========== =========== ===========
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Continuing Operations............................... $ 1.58 $ 1.45 $ 1.28
Discontinued Operations............................. -- .20 .54
----------- ----------- -----------
Before Cumulative Effect of Accounting Changes...... 1.58 1.65 1.82
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit................................ -- -- (.74)
----------- ----------- -----------
BASIC EARNINGS PER SHARE OF COMMON STOCK............ $ 1.58 $ 1.65 $ 1.08
=========== =========== ===========
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Continuing Operations............................... $ 1.56 $ 1.44 $ 1.27
Discontinued Operations............................. -- .19 .53
----------- ----------- -----------
Before Cumulative Effect of Accounting Changes...... 1.56 1.63 1.80
Cumulative Effect of Accounting Changes, Net of
Income Tax Benefit................................ -- -- (.73)
----------- ----------- -----------
DILUTED EARNINGS PER SHARE OF COMMON STOCK.......... $ 1.56 $ 1.63 $ 1.07
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING --
BASIC............................................. 162,253,000 169,492,000 170,765,000
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING --
DILUTED........................................... 164,284,000 171,703,000 172,552,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
32
<PAGE> 33
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1999 1998
----------- -----------
(DOLLAR AMOUNTS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents................................... $ 113.2 $ 90.6
Accounts Receivable--Net of Allowance of $38.0 in 1999 and
$39.0 in 1998............................................. 454.4 445.2
Other Current Assets........................................ 217.4 228.2
-------- --------
Total Current Assets................................... 785.0 764.0
-------- --------
NON-CURRENT ASSETS
Property, Plant and Equipment, Net.......................... 280.0 298.3
Prepaid Pension Costs....................................... 266.9 224.3
Computer Software, Net...................................... 156.2 148.6
Goodwill, Net............................................... 167.5 191.8
Other Non-Current Assets.................................... 130.1 162.2
-------- --------
Total Non-Current Assets............................... 1,000.7 1,025.2
-------- --------
TOTAL ASSETS................................................ $1,785.7 $1,789.2
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable............................................... $ 127.3 $ 36.9
Accrued Income Taxes........................................ 349.1 326.3
Other Accrued and Current Liabilities....................... 486.9 529.9
Unearned Subscription Income................................ 451.5 459.6
-------- --------
Total Current Liabilities.............................. 1,414.8 1,352.7
-------- --------
PENSION AND POSTRETIREMENT BENEFITS......................... 368.0 372.7
OTHER NON-CURRENT LIABILITIES............................... 117.6 133.1
CONTINGENCIES (NOTE 14)
MINORITY INTEREST........................................... 301.9 301.7
SHAREHOLDERS' EQUITY
Preferred Stock, authorized -- 10,000,000 shares; $.01 par
value per share -- outstanding -- none
Series Common Stock, authorized -- 10,000,000 shares; $.01
par value per share -- outstanding -- none
Common Stock, authorized -- 400,000,000 shares; $.01 par
value per share -- 1999 and 1998, issued -- 171,451,136
shares.................................................... 1.7 1.7
Capital Surplus............................................. 237.3 251.1
Retained Earnings........................................... (105.9) (240.9)
Treasury Stock, at cost, 10,627,327 and 6,396,924 shares for
1999 and 1998, respectively............................... (330.2) (168.1)
Cumulative Translation Adjustment........................... (181.1) (170.2)
Minimum Pension Liability................................... (38.4) (44.6)
-------- --------
TOTAL SHAREHOLDERS' EQUITY.................................. (416.6) (371.0)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $1,785.7 $1,789.2
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
33
<PAGE> 34
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- ---------
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 256.0 $ 280.1 $ 184.0
Less:
Income from Discontinued Operations....................... -- 33.7 92.0
------- ------- ---------
Income from Continuing Operations........................... 256.0 246.4 92.0
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Cumulative Effect of Accounting Changes, Net of Income Tax
Benefit................................................. -- -- 127.0
Depreciation and Amortization............................. 140.9 141.6 131.9
Gains from Sale of Business, Net of Income Taxes.......... (7.5) (5.3) --
(Increase) Decrease in Notes Receivable................... (7.5) 2.9 47.5
Restructuring Expense..................................... 41.2 -- --
Restructuring Payments.................................... (2.6) -- --
Postemployment Benefit Payments........................... (14.8) (16.3) (30.6)
Net (Increase) Decrease in Accounts Receivable............ (19.3) 5.0 (33.8)
Deferred Income Taxes..................................... 24.5 (49.2) 7.0
Accrued Income Taxes...................................... 22.8 317.8 (38.7)
(Decrease) Increase in Long-Term Liabilities.............. (14.9) (213.3) 38.7
Increase in Other Long-Term Assets........................ (39.5) (18.9) --
Net (Increase) Decrease in Other Working Capital Items.... (43.9) (100.1) 84.3
Other..................................................... 9.3 14.9 (45.3)
------- ------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Continuing Operations..................................... 344.7 325.5 380.0
Discontinued Operations................................... -- 16.7 120.4
------- ------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 344.7 342.2 500.4
------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sales of Marketable Securities................ 22.5 50.9 27.2
Payments for Marketable Securities.......................... (21.8) (50.4) (27.1)
Proceeds from Sale of Business.............................. -- 26.5 --
Capital Expenditures........................................ (44.1) (55.4) (50.3)
Additions to Computer Software and Other Intangibles........ (78.7) (91.7) (78.8)
Net Cash (Used in) Provided by Investing Activities of
Discontinued Operations................................... -- (3.1) 105.7
Other....................................................... 12.0 18.5 7.4
------- ------- ---------
NET CASH USED IN INVESTING ACTIVITIES....................... (110.1) (104.7) (15.9)
------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of Dividends........................................ (120.1) (137.4) (150.6)
Payments for Purchase of Treasury Shares.................... (237.9) (220.2) (60.1)
Net Proceeds from Stock Plans............................... 48.4 41.0 40.8
Increase (Decrease) in Commercial Paper Borrowings.......... 88.8 (385.7) 421.6
Increase in Minority Interest............................... -- -- 300.0
Increase (Decrease) in Other Short-Term Borrowings.......... 1.6 (28.9) (1,090.6)
Proceeds from Debt Assumed by R.H. Donnelley................ -- 500.0 --
Other....................................................... 7.5 3.9 9.2
------- ------- ---------
NET CASH USED IN FINANCING ACTIVITIES....................... (211.7) (227.3) (529.7)
------- ------- ---------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents............................................... (.3) (1.4) (.8)
------- ------- ---------
Increase (Decrease) in Cash and Cash Equivalents............ 22.6 8.8 (46.0)
Cash and Cash Equivalents, Beginning of Year................ 90.6 81.8 127.8
------- ------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 113.2 $ 90.6 $ 81.8
======= ======= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
34
<PAGE> 35
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1999
-----------------------------------------------------------
COMMON
STOCK CUMULATIVE
($1 AND $.01 CAPITAL RETAINED TREASURY TRANSLATION
PAR VALUE) SURPLUS EARNINGS STOCK ADJUSTMENT
------------ ------- -------- --------- -----------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997................... $188.4 $ 72.6 $ 456.7 $(1,019.7) $(153.3)
Net Income................................. 184.0
Dividends Declared ($1.10 per share)....... (188.1)
Adjustment to Stock Dividend to
Shareholders of Cognizant and
ACNielsen................................ (11.3)
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (2,010,091)........................ 7.6 (72.4) 115.6
Treasury Shares Reissued Under Restricted
Stock Plan (20,884)...................... .2
Treasury Shares Acquired (2,271,851)....... (60.1)
Change in Cumulative Translation
Adjustment............................... (9.3)
Change in Minimum Pension Liability........
Unrealized Losses on Investments........... (1.2)
------ ------ ------- --------- -------
Total Comprehensive Income.................
BALANCE, DECEMBER 31, 1997................. 188.4 80.2 367.7 (964.0) (162.6)
------ ------ ------- --------- -------
Dollar Par Common Stock:
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (1,514,773)........................ (52.6) 85.3
Treasury Shares Acquired (790,800)......... (27.2)
Stock Dividend to Shareholders of R.H.
Donnelley................................ 183.5
Adjustment to Penny Par Value.............. (169.6) 169.6
Recapitalization........................... (17.1) .5 (889.3) 905.9
Net Income................................. 280.1
Dividends Declared ($.775 per share)....... (130.4)
Penny Par Common Stock:
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (837,232).......................... (1.3) 24.3
Treasury Shares Earned Under Restricted
Stock Plan (5,595)....................... .6
Treasury Shares Acquired (7,239,751)....... (193.0)
Common Shares Issued Under Stock Options
and Restricted Stock Plan (159,819)...... 2.1
Change in Cumulative Translation
Adjustment............................... (7.6)
Change in Minimum Pension Liability........
Unrealized Gains on Investments............ .1
------ ------ ------- --------- -------
Total Comprehensive Income.................
BALANCE, DECEMBER 31, 1998................. 1.7 251.1 (240.9) (168.1) (170.2)
------ ------ ------- --------- -------
Net Income................................. 256.0
Dividends Declared ($.74 per share)........ (119.3)
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans and Restricted Stock Plan
(2,420,300).............................. (13.8) .3 71.0
Treasury Shares Reissued Under Employee
Stock Purchase Plan (153,097)............ (.6) 4.8
Treasury Shares Acquired (6,803,800)....... (237.9)
Change in Cumulative Translation
Adjustment............................... (10.9)
Change in Minimum Pension Liability........
Unrealized Losses on Investments........... (1.4)
------ ------ ------- --------- -------
Total Comprehensive Income.................
BALANCE, DECEMBER 31, 1999................. $ 1.7 $237.3 $(105.9) $ (330.2) $(181.1)
====== ====== ======= ========= =======
<CAPTION>
THREE YEARS ENDED DECEMBER 31, 1999
-----------------------------------------
MINIMUM TOTAL
PENSION SHAREHOLDERS' COMPREHENSIVE
LIABILITY EQUITY INCOME
--------- ------------- -------------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997................... $ -- $(455.3)
Net Income................................. 184.0 $184.0
Dividends Declared ($1.10 per share)....... (188.1)
Adjustment to Stock Dividend to
Shareholders of Cognizant and
ACNielsen................................ (11.3)
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (2,010,091)........................ 50.8
Treasury Shares Reissued Under Restricted
Stock Plan (20,884)...................... .2
Treasury Shares Acquired (2,271,851)....... (60.1)
Change in Cumulative Translation
Adjustment............................... (9.3) (9.3)
Change in Minimum Pension Liability........ (37.4) (37.4) (37.4)
Unrealized Losses on Investments........... (1.2) (1.2)
------ ------- ------
Total Comprehensive Income................. $136.1
BALANCE, DECEMBER 31, 1997................. (37.4) (527.7)
------ ------- ------
Dollar Par Common Stock:
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (1,514,773)........................ 32.7
Treasury Shares Acquired (790,800)......... (27.2)
Stock Dividend to Shareholders of R.H.
Donnelley................................ 183.5
Adjustment to Penny Par Value.............. --
Recapitalization........................... --
Net Income................................. 280.1 $280.1
Dividends Declared ($.775 per share)....... (130.4)
Penny Par Common Stock:
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans (837,232).......................... 23.0
Treasury Shares Earned Under Restricted
Stock Plan (5,595)....................... .6
Treasury Shares Acquired (7,239,751)....... (193.0)
Common Shares Issued Under Stock Options
and Restricted Stock Plan (159,819)...... 2.1
Change in Cumulative Translation
Adjustment............................... (7.6) (7.6)
Change in Minimum Pension Liability........ (7.2) (7.2) (7.2)
Unrealized Gains on Investments............ .1 .1
------ ------- ------
Total Comprehensive Income................. $265.4
BALANCE, DECEMBER 31, 1998................. (44.6) (371.0)
------ ------- ------
Net Income................................. 256.0 $256.0
Dividends Declared ($.74 per share)........ (119.3)
Treasury Shares Reissued Under Stock
Options, Deferred and Other Compensation
Plans and Restricted Stock Plan
(2,420,300).............................. 57.5
Treasury Shares Reissued Under Employee
Stock Purchase Plan (153,097)............ 4.2
Treasury Shares Acquired (6,803,800)....... (237.9)
Change in Cumulative Translation
Adjustment............................... (10.9) (10.9)
Change in Minimum Pension Liability........ 6.2 6.2 6.2
Unrealized Losses on Investments........... (1.4) (1.4)
------ ------- ------
Total Comprehensive Income................. $249.9
BALANCE, DECEMBER 31, 1999................. $(38.4) $(416.6)
====== ======= ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
35
<PAGE> 36
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABULAR DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
those of The Dun & Bradstreet Corporation (the "Company") and its subsidiaries
and investments in which the Company has a controlling interest. Investments in
companies over which the Company has significant influence but not a controlling
interest are carried on an equity basis. The effects of all significant
intercompany transactions have been eliminated.
The financial statements of subsidiaries outside the United States and
Canada reflect a fiscal year ended November 30 to facilitate timely reporting of
the Company's consolidated financial results.
As discussed more thoroughly in Note 2, R.H. Donnelley Corporation is
presented as discontinued operations.
CASH EQUIVALENTS. Marketable securities that mature within 90 days of
purchase date are considered cash equivalents and are stated at cost, which
approximates fair value.
MARKETABLE SECURITIES. In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," marketable securities at December 31, 1999 and
1998, are classified as "available for sale" and are reported at fair value,
with net unrealized gains and losses reported in shareholders' equity.
The fair value of current and non-current marketable securities was
estimated based on quoted market prices. Realized gains and losses on marketable
securities are determined on the specific identification method.
The Company's marketable securities, $45.4 million and $49.7 million at
December 31, 1999 and 1998, respectively, consisted primarily of debt securities
of the U.S. Government and its agencies.
PROPERTY, PLANT AND EQUIPMENT. Buildings, machinery and equipment are
depreciated principally using the straight-line method over a period of three to
40 years. Leasehold improvements are amortized on a straight-line basis over the
shorter of the term of the lease or the estimated useful life of the
improvement.
COMPUTER SOFTWARE, GOODWILL AND INTANGIBLE ASSETS. Effective January 1,
1999, the Company adopted Statement of Position ("SOP") 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." Among
other provisions, SOP 98-1 requires that entities capitalize certain
internal-use software costs once certain criteria are met. Under SOP 98-1,
overhead, general and administrative and training costs are not capitalized. In
addition, certain computer software costs are capitalized in accordance with
SFAS No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased
or Otherwise Marketed," and are reported at the lower of unamortized cost or net
realizable value. Costs incurred in connection with business process
reengineering are expensed as incurred.
Other intangibles result from acquisitions and database enhancements.
Computer software and other intangibles are being amortized, using the
straight-line method, over three to five years and three to 15 years,
respectively. Goodwill represents the excess purchase price over the fair value
of identifiable net assets of businesses acquired and is amortized on a
straight-line basis over five to 40 years.
In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
reviews for impairment of long-lived assets and certain identifiable intangibles
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. In general, the Company will recognize an
impairment loss when the sum of undiscounted expected future cash flows is less
than the carrying amount of such assets. The measurement for such an impairment
loss is then based on the fair value of the asset.
36
<PAGE> 37
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At each balance sheet date, the Company reviews the recoverability of
goodwill, not identified with long-lived assets, based on estimated undiscounted
future cash flows from operating activities compared with the carrying value of
goodwill, and recognizes any impairment on the basis of such comparison. The
recognition and measurement of goodwill impairment is assessed at the
business-unit level.
REVENUE RECOGNITION. The Company recognizes revenue as services are
performed, information is delivered and products and services are used by its
customers. Amounts billed for service and subscriptions are credited to unearned
subscription income and reflected in operating revenues as used over the
subscription term, which is generally one year.
ACCOUNTING CHANGES. Effective January 1, 1997, the Company changed its
revenue recognition method for its Credit Information Services business to
recognize revenue as products and services are used by its customers.
Previously, the Company recognized revenue ratably over the contract period.
This change is consistent with the Company's change in focus from a sales
contract basis to a product usage basis. Additionally, the Company changed its
revenue recognition method for its Moody's Investors Service ("Moody's")
business to recognize revenue over the service period from previously
recognizing revenue and costs at the time of billing. In the opinion of
management, these accounting changes bring revenue recognition methods more in
line with the economics of the business and provide a better measure of
operating results.
In accordance with Accounting Principles Board Opinion ("APB") No. 20,
"Accounting Changes," the cumulative effect of changing the accounting for
certain of the Company's revenue recognition policies resulted in a pre-tax
non-cash charge of $214.7 million ($127.0 million after-tax or $.74 per share
basic, $.73 per share diluted).
FOREIGN CURRENCY TRANSLATION. For all operations outside the United States
where the Company has designated the local currency as the functional currency,
assets and liabilities are translated using the end-of-year exchange rates, and
revenues and expenses are translated using average exchange rates for the year.
For these countries, currency translation adjustments are accumulated in a
separate component of shareholders' equity, whereas realized transaction gains
and losses are recognized in other income (expense) -- net. For operations in
countries that are considered to be highly inflationary, where the U.S. dollar
is designated as the functional currency, monetary assets and liabilities are
translated using end-of-year exchange rates, and nonmonetary accounts are
translated using historical exchange rates. Translation and transaction gains of
$.1 million, $1.0 million and $.9 million in 1999, 1998 and 1997, respectively,
are recognized in other income (expense) -- net.
EARNINGS PER SHARE OF COMMON STOCK. In accordance with SFAS No. 128,
"Earnings per Share" ("SFAS No. 128"), basic earnings per share are calculated
based on the weighted average number of shares of common stock outstanding
during the reporting period. Diluted earnings per share are calculated giving
effect to all potentially dilutive common shares, assuming such shares were
outstanding during the reporting period.
FINANCIAL INSTRUMENTS. At times, the Company uses forward foreign exchange
contracts and interest rate swaps to hedge existing assets, liabilities and firm
commitments. The Company does not use any derivatives for trading or speculative
purposes.
Gains and losses on forward foreign exchange contracts that qualify as
hedges of existing assets or liabilities are included in the carrying amounts of
those assets or liabilities and are ultimately recognized in income as part of
those carrying amounts. Gains and losses related to qualifying hedges of firm
commitments are also deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transactions occur. For forward foreign
exchange contracts, the risk reduction is assessed on a transaction basis, and
contract amounts and terms are matched to existing intercompany transactions.
37
<PAGE> 38
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has in the past used interest rate swaps to hedge interest rate
risk on commercial paper. Settlement accounting is accorded to the swaps that
have contractual, periodic payment terms considered to be aligned to the
expected future commercial paper issuances. Periodic swap payments and receipts
under interest rate swaps are recorded as part of interest expense. Neither the
swap contracts nor the gains or losses on these contracts, which are designated
and effective as hedges, are recognized in the financial statements.
If a hedging instrument is sold or terminated prior to maturity, gains and
losses will continue to be deferred until the hedged item is recognized in
income. If a hedging instrument ceases to qualify for settlement accounting, any
subsequent gains and losses are recognized currently in income.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates. Estimates are used in the
determination of allowances for doubtful accounts, employee benefits plans,
taxes and contingencies, and depreciation rates for property, plant and
equipment, computer software, goodwill and other capitalized costs, among
others.
RECLASSIFICATIONS. As discussed in Note 2, the consolidated financial
statements have been reclassified to identify separately the results of
operations and cash flows of the Company's discontinued operations. In addition,
certain prior-year amounts have been reclassified to conform to the 1999
presentation.
NOTE 2 REORGANIZATION AND DISCONTINUED OPERATIONS
Pursuant to APB No. 30, "Reporting the Results of Operations -- Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions," the consolidated financial
statements of the Company have been reclassified to reflect as discontinued
operations, the companies that constituted the Company's Directory Information
Services business segment as a result of the 1998 Distribution.
On June 30, 1998, the company then known as The Dun & Bradstreet
Corporation ("Old D&B") separated into two publicly traded companies -- The New
Dun & Bradstreet Corporation ("New D&B" or the "Company") and R.H. Donnelley
Corporation. The separation (the "1998 Distribution") of the two companies was
accomplished through a tax-free dividend by Old D&B of the Company, which was a
new entity comprising Moody's and the Dun & Bradstreet operating company
("D&B"). The new entity is now known as "The Dun & Bradstreet Corporation," and
the continuing entity (i.e., Old D&B), consisting of R.H. Donnelley Inc., the
operating company, and the DonTech partnership, changed its name to R.H.
Donnelley Corporation ("Donnelley"). Due to the relative significance of the new
entity, the transaction has been accounted for as a reverse spin-off and, as
such, Moody's and D&B have been classified as continuing operations, and
Donnelley and DonTech have been classified as discontinued operations. On June
3, 1998, following receipt of a ruling from the Internal Revenue Service ("IRS")
that the transaction would be tax-free to Old D&B and its U.S. shareholders, the
Board of Directors of Old D&B declared a dividend distribution to shareholders
of record on June 17, 1998, consisting of one share of New D&B for each share of
Old D&B common stock held as of the record date. The 1998 Distribution was
effected on June 30, 1998, and resulted in an increase to shareholders' equity
of $188.5 million. During the fourth quarter of 1998, adjustments to the
dividend of $5.0 million were recorded, primarily as a result of employee
benefits plan revisions.
For purposes of governing certain of the ongoing relationships between the
Company and Donnelley following the 1998 Distribution, the companies entered
into various agreements, including a Distribution Agreement, Tax Allocation
Agreement, Employee Benefits Agreement, Intellectual Property Agreement, Shared
Transaction Services Agreement, Data Services Agreement and Transition Services
Agreements.
38
<PAGE> 39
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The net operating results of the Directory Information Services segment
have been reported in the caption "Income from Discontinued Operations" in the
consolidated statements of operations. Summarized operating results for the
Directory Information Services segment for the years ended December 31 were as
follows:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Operating revenues.......................................... $107.8 $343.4
Income before provision for income taxes.................... 56.2 144.2
Net income.................................................. 33.7 92.0
</TABLE>
NOTE 3 RESTRUCTURING
During the fourth quarter of 1999, the Company recorded a restructuring
charge of $41.2 million, or $27.9 million on an after-tax basis. The
restructuring includes: (1) office consolidations and organization changes in
both Europe and other international locations and improvements in sales and data
collection operations in Europe; (2) realigning and streamlining the Company's
global technology organization and outsourcing certain software and product
development to resources outside the United States and Europe and (3) migrating
data collection in the U.S. to telephonic data collection and closing 15 U.S.
field data collection offices.
The restructuring charge includes $32.7 million related to severance costs
in connection with the termination of approximately 700 associates, including
two former corporate executives. The severance costs were determined based on
the amounts that will be paid pursuant to the Company's policies and certain
foreign governmental regulations. The balance of the charge relates to the
write-off of certain assets made obsolete or redundant and abandoned by the
restructuring and leasehold termination obligations arising from office
closures. The Company anticipates completion of the restructuring in fiscal
2000. The components of the restructuring charge are summarized in the table
below:
<TABLE>
<CAPTION>
D&B U.S. D&B EUROPE D&B APCLA CORPORATE TOTAL
-------- ---------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
Severance costs.............. $15.2 $12.2 $1.6 $3.7 $32.7
Assets written off........... 3.5 .4 -- -- 3.9
Lease termination
obligations................ 3.1 1.5 -- -- 4.6
----- ----- ---- ---- -----
$21.8 $14.1 $1.6 $3.7 $41.2
===== ===== ==== ==== =====
</TABLE>
The restructuring actions are designed to strengthen customer service
worldwide, improve operating efficiencies, lower structural costs and facilitate
investment in future revenue growth initiatives.
During 1999, severance payments of $2.5 million were made to 161 terminated
associates, and payments of $.1 million were made for lease obligations. At
December 31, 1999, $34.7 million of the restructuring reserve remains, of which
$30.2 million relates to severance, which will be paid out to the affected
former associates during the next 12 to 18 months, and $4.5 million relates to
lease obligations, which will be paid out over the term of the lease
commitments. Assets made obsolete or redundant and abandoned by restructuring
actions have been written off at December 31, 1999.
NOTE 4 NON-RECURRING ITEMS
During the fourth quarter of 1999, the Company received $11.9 million to
settle litigation that arose from a transaction related to the 1996 sale of the
Dun & Bradstreet Software Company. The Company recorded the $11.9 million gain
in other income (expense) -- net.
39
<PAGE> 40
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During the third quarter of 1999, certain agreements related to the sale in
July 1998 of Financial Information Systems ("FIS"), the financial publishing
unit of Moody's, expired or were completed. As a result, estimated liabilities
established at the time of the sale in connection with these agreements, which
were determined to be no longer required, were adjusted. These adjustments
resulted in a gain of $12.2 million included in other income (expense) -- net.
In July 1998, the Company sold FIS. The Company received $26.5 million in
cash and recorded within other income (expense) -- net a pre-tax gain of $9.6
million on the transaction. Also in 1998, the Company incurred pre-tax expenses
of $28.0 million in connection with the separation of Donnelley (primarily
professional fees of $19.1 million and costs resulting from the termination of
interest rate swaps of $8.9 million).
NOTE 5 RECONCILIATION OF WEIGHTED AVERAGE SHARES
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
(SHARE DATA IN THOUSANDS)
<S> <C> <C> <C>
Weighted Average Number Of Shares -- Basic.................. 162,253 169,492 170,765
Dilutive effect of shares issuable under stock options,
restricted stock and performance share plans.............. 1,884 2,017 1,629
Adjustment of shares applicable to stock options exercised
during the period and performance share plans............. 147 194 158
------- ------- -------
Weighted Average Number Of Shares -- Diluted................ 164,284 171,703 172,552
======= ======= =======
</TABLE>
As required by SFAS No. 128, the Company has provided a reconciliation of
basic weighted average shares to diluted weighted average shares within the
tables outlined above. Options to purchase 3.0 million, 3.4 million and 3.1
million shares of common stock were outstanding at December 31, 1999, 1998 and
1997, respectively, but were not included in the computation of diluted earnings
per share because the options' exercise prices were greater than the average
market price of the Company's common stock. The Company's options generally
expire 10 years after the initial grant date.
Upon the 1998 Distribution, employees of the Company were granted
substitute options, preserving the economic value, as closely as possible, of
the options that existed immediately prior to the 1998 Distribution and any
awards or options held by them in respect of Donnelley were canceled.
NOTE 6 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
The Company uses forward foreign exchange contracts and in the past has
used interest rate swap agreements to reduce exposure to fluctuations in foreign
exchange rates and in interest rates. The Company does not use derivative
financial instruments for trading or speculative purposes. If a hedging
instrument ceases to qualify as a hedge, any subsequent gains and losses are
recognized currently in income. Collateral is generally not required for these
types of instruments.
By their nature, all such instruments involve risk, including the credit
risk of non-performance by counterparties. However, at December 31, 1999 and
1998, in management's opinion there was no significant risk of loss in the event
of non-performance of the counterparties to these financial instruments. The
Company controls its exposure to credit risk through monitoring procedures.
FOREIGN EXCHANGE
In order to reduce the risk of foreign currency exchange rate fluctuations,
the Company follows a policy of hedging substantially all cross-border
intercompany transactions denominated in a currency other than the functional
currency applicable to each of its various subsidiaries. The financial
instruments used to hedge
40
<PAGE> 41
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
these cross-border intercompany transactions are forward foreign exchange
contracts with maturities of six months or less. These forward contracts are
executed with creditworthy institutions and are denominated primarily in the
British pound sterling, the euro and the Swedish krona. The gains and losses on
these forward contracts are recorded to income or expense and are essentially
offset by the gains and losses on the underlying foreign currency transactions.
At December 31, 1999 and 1998, the Company had approximately $138 million
and $117 million of forward foreign exchange contracts outstanding with various
expiration dates through March 2000 and March 1999, respectively. At December
31, 1999, unrealized gains on these contracts were $.9 million, and the
unrealized losses were $.3 million. At December 31, 1998, unrealized gains on
these contracts were $.9 million, and the unrealized losses were $.4 million.
INTEREST RATE SWAP AGREEMENTS
In the past, the Company has entered into interest rate swap agreements to
manage exposure to changes in interest rates. Interest rate swaps allowed the
Company to raise funds at floating rates and effectively swap them into fixed
rates that were lower than those available to it if fixed-rate borrowings were
to be made directly.
In connection with the 1998 Distribution and repayment of outstanding notes
payable, Old D&B canceled all of its interest rate swap agreements (which fixed
interest rates on $300 million of variable rate debt through January 2005) and
recorded into income the previously unrecognized fair value loss at the time of
termination. At the time of the cancellation, the fair value of the interest
rate swaps was a loss of $12.7 million, of which $3.8 million ($.6 million in
the first quarter of 1998 and $3.2 million in 1997) had been recognized in
income relating to swaps that did not qualify for settlement accounting. The
previously unrecognized loss of $8.9 million was recorded during the second
quarter of 1998 and included in reorganization costs.
NOTE 7 PENSION AND POSTRETIREMENT BENEFITS
<TABLE>
<CAPTION>
PENSION PLANS POSTRETIREMENT BENEFITS
---------------------- ------------------------
1999 1998 1999 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligation at January 1.................. $(1,236.2) $(1,227.3) $(214.0) $(216.6)
Service cost..................................... (18.4) (18.2) (2.9) (2.8)
Interest cost.................................... (81.6) (82.6) (13.8) (14.3)
Benefits paid.................................... 88.5 93.8 17.8 17.7
Impact of 1998 Distribution...................... -- 41.4 -- 6.1
Actuarial gain (loss)............................ 94.8 (43.3) 22.1 (1.3)
Plan participant contributions................... -- -- (2.7) (2.8)
--------- --------- ------- -------
Benefit obligation at December 31................ $(1,152.9) $(1,236.2) $(193.5) $(214.0)
========= ========= ======= =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1........... $ 1,465.1 $ 1,330.2 $ -- $ --
Actual return on plan assets..................... 279.6 264.3 -- --
Employer contribution............................ 24.4 25.3 15.1 14.9
Impact of 1998 Distribution...................... -- (60.9) -- --
Plan participant contributions................... -- -- 2.7 2.8
Benefits paid.................................... (88.5) (93.8) (17.8) (17.7)
--------- --------- ------- -------
Fair value of plan assets at December 31......... $ 1,680.6 $ 1,465.1 $ -- $ --
========= ========= ======= =======
</TABLE>
41
<PAGE> 42
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
PENSION PLANS POSTRETIREMENT BENEFITS
---------------------- ------------------------
1999 1998 1999 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
RECONCILIATION OF FUNDED STATUS TO TOTAL AMOUNT
RECOGNIZED
Funded status of plan............................ $ 527.7 $ 228.9 $(193.5) $(214.0)
Unrecognized actuarial (gain) loss............... (380.8) (112.1) (3.3) 18.8
Unrecognized prior service cost.................. 28.7 29.6 -- (2.7)
Unrecognized net transition asset................ (12.5) (24.3) -- --
--------- --------- ------- -------
Net amount recognized............................ $ 163.1 $ 122.1 $(196.8) $(197.9)
========= ========= ======= =======
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE
SHEETS
Prepaid pension costs............................ $ 266.9 $ 224.3 $ -- $ --
Pension and postretirement benefits.............. (162.5) (167.7) (196.8) (197.9)
Intangible assets................................ 20.3 20.9 -- --
Minimum pension liability........................ 38.4 44.6 -- --
--------- --------- ------- -------
Net amount recognized............................ $ 163.1 $ 122.1 $(196.8) $(197.9)
========= ========= ======= =======
</TABLE>
The benefit obligation and accumulated benefit obligation for pension plans
with accumulated benefit obligations in excess of plan assets were $176.9
million and $162.5 million in 1999 and $185.9 million and $167.7 million in
1998. Grantor trusts are used to fund these obligations. At December 31, 1999
and 1998, the balances of those trusts were $45.2 million and $46.9 million,
respectively.
<TABLE>
<CAPTION>
PENSION PLANS POSTRETIREMENT BENEFITS
--------------------------- ------------------------
1999 1998 1997 1999 1998 1997
------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC (INCOME) COST
Service cost................................... $ 18.4 $ 18.2 $ 18.4 $ 2.9 $ 2.8 $ 3.5
Interest cost.................................. 81.6 82.6 83.4 13.8 14.3 14.6
Expected return on plan assets................. (114.0) (109.4) (100.9) -- -- --
Amortization of transition (asset)
obligation................................... (11.7) 3.1 1.6 -- -- --
Amortization of prior service cost............. 3.8 4.4 4.5 (2.7) (4.4) (4.5)
Recognized actuarial loss (gain)............... 6.6 (10.4) (10.5) -- -- --
------- ------- ------- ----- ----- -----
Net periodic pension (income) cost............. $ (15.3) $ (11.5) $ (3.5) $14.0 $12.7 $13.6
======= ======= ======= ===== ===== =====
</TABLE>
1997 net periodic (income) cost includes expense attributable to
discontinued operations of $1.0 million and $1.7 million for pension plans and
postretirement plans, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ASSUMPTIONS AS OF DECEMBER 31
Discount rate.................................. 7.75% 6.75% 7.00% 7.75% 6.75% 7.00%
Expected return on plan assets................. 9.75 9.75 9.70 -- -- --
Rate of compensation increase.................. 4.91 3.91 4.46 4.91 3.91 4.46
Cash balance accumulation conversion rate...... 6.50 5.50 5.75 -- -- --
</TABLE>
For measurements purposes, a 6.5% annual rate of increase in the per capita
cost of covered health-care benefits was assumed for 2000. The rate was assumed
to decrease gradually to 5.0% for 2021 and remain at that level thereafter.
42
<PAGE> 43
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Assumed health-care cost trend rates have a significant effect on the
amounts reported for the health-care plans. A one-percentage-point change in the
assumed health-care cost trend rates would have the following effects.
<TABLE>
<CAPTION>
1% POINT
--------------------
INCREASE DECREASE
-------- --------
<S> <C> <C>
Benefit obligation at end of year........................... $16.3 $(14.9)
Service cost plus interest cost............................. 1.4 (1.3)
</TABLE>
PROFIT PARTICIPATION PLAN
The Company also has a profit participation plan covering substantially all
U.S. employees, that provides for an employee salary deferral contribution and
Company contributions. Employees may contribute up to 16% of their pay. The
Company contributes an amount equal to 50% of employee contributions, up to 6%
of the employee's pay. The Company also makes contributions to the plan if
certain objectives are met, based on performance over a two-year period. The
Company recognized expense associated with the plan of $12.1 million, $16.4
million and $13.3 million in 1999, 1998 and 1997, respectively.
NOTE 8 EMPLOYEE STOCK PLANS
Under its 1998 Key Employees' Stock Incentive Plan, the Company has granted
options to certain associates to purchase shares of its common stock at the
market price on the date of the grant. Options granted in December 1999 vest in
three equal installments, beginning on the third anniversary of the grant, while
other options granted under the plan vest 100% after five years, with the
opportunity for accelerated vesting if certain conditions are met. These options
expire 10 years from the date of the grant. The 1998 Key Employees Stock
Incentive Plan, adopted upon the 1998 Distribution, provides for the granting of
up to 16.5 million shares.
At the 1998 Distribution date, employees of the Company were granted
substitute options and other equity-based awards (under the 1998 Dun &
Bradstreet Corporation Replacement Plan for Certain Employees Holding Dun &
Bradstreet Corporation Equity-Based Awards), preserving the economic value, as
closely as possible, of the awards that existed immediately prior to the 1998
Distribution, and any awards held by them in respect to Donnelley were
surrendered. For employees of Donnelley, awards were adjusted immediately
following the 1998 Distribution to preserve, as closely as possible, the
economic value of the awards that existed immediately prior to the 1998
Distribution. The remaining holders of unexercised options, including retirees
and certain other former employees of the Company, were offered the choice of
converting their options to the Company's or continuing to hold Donnelley
options.
The Company applies APB No. 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized for the stock option plans. The Company
has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). Had compensation cost for the
Company's stock option plans been determined based on the fair value at the
grant date for awards in 1999, 1998 and 1997 (excluding awards granted to
employees of discontinued operations) consistent with the provisions of SFAS No.
123, the
43
<PAGE> 44
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's income from continuing operations and earnings per share would have
been reduced to the pro-forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Income from continuing operations
As reported............................................ $256.0 $246.4 $219.0
Pro-forma.............................................. $247.3 $240.1 $215.4
Basic earnings per share of common stock from continuing
operations
As reported............................................ $ 1.58 $ 1.45 $ 1.28
Pro-forma.............................................. $ 1.52 $ 1.42 $ 1.26
Diluted earnings per share of common stock from
continuing operations
As reported............................................ $ 1.56 $ 1.44 $ 1.27
Pro-forma.............................................. $ 1.51 $ 1.40 $ 1.25
</TABLE>
The pro-forma disclosures shown are not representative of the effects on
income and earnings per share in future years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
AFTER CONVERSION PRIOR TO
1998 AT 1998 1998
1999 DISTRIBUTION DISTRIBUTION DISTRIBUTION 1997
--------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Expected dividend yield........... 2.40% 2.75% 2.75% 3.3% 3.3%
Expected stock volatility......... 30% 20% 20% 20% 20%
Risk-free interest rate........... 6.41% 5.38% 5.42% 5.53% 5.73%
Expected holding period........... 5.0 years 6.0 years 2.3 years 4.5 years 4.5 years
</TABLE>
Options outstanding at December 31, 1999, were originally granted during
the years 1990 through 1999 and are exercisable over periods ending not later
than 2009. At December 31, 1999, 1998 and 1997, options for 7,899,386 shares,
8,527,343 shares and 8,133,155 shares of common stock, respectively, were
exercisable and 9,087,997 shares, 12,427,373 shares and 1,450,195 shares,
respectively, were available for future grants under the plans.
Changes in stock options for the three years ended December 31, 1999, are
summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE($)
---------- --------
<S> <C> <C>
Options outstanding at January 1, 1997...................... 15,416,460 21.59
Granted................................................... 3,151,980 30.01
Exercised................................................. (2,008,234) 20.38
Surrendered or expired.................................... (840,878) 22.97
----------
Options outstanding at December 31, 1997.................... 15,719,328 23.36
Granted................................................... 87,390 32.84
Exercised................................................. (1,305,111) 20.77
Surrendered or expired.................................... (336,444) 24.53
----------
</TABLE>
44
<PAGE> 45
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE($)
---------- --------
<S> <C> <C>
Options outstanding at June 30, 1998........................ 14,165,163 23.63
Attributable to 1998 Distribution........................... (1,206,985) 24.78
----------
Options outstanding at June 30, 1998........................ 12,958,178 23.52
==========
Options converted at July 1, 1998........................... 13,734,489 22.19
Granted................................................... 4,171,907 32.47
Exercised................................................. (1,095,003) 18.84
Surrendered or expired.................................... (432,396) 26.35
----------
Options outstanding at December 31, 1998.................... 16,378,997 24.92
Granted................................................... 3,656,224 29.31
Exercised................................................. (2,286,242) 19.99
Surrendered or expired.................................... (825,818) 29.26
----------
Options outstanding at December 31, 1999.................... 16,923,161 26.32
==========
</TABLE>
The weighted average fair value of options granted during 1999, 1998 and
1997 was $8.78, $7.13 and $5.52, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING STOCK OPTIONS
------------------------------------- EXERCISABLE
WEIGHTED ---------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICES SHARES LIFE PRICE($) SHARES PRICE($)
- ------------------------ ---------- ----------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
$14.84 - $23.35..................... 7,188,764 5.1 years 21.01 6,557,689 20.96
$24.00 - $34.22..................... 9,734,397 8.6 years 30.25 1,341,697 28.48
---------- ---------
16,923,161 7,899,386
========== =========
</TABLE>
The plans also provide for the granting of stock appreciation rights
("SARs") and limited stock appreciation rights ("LSARs") in tandem with stock
options to certain key employees. Upon the 1998 Distribution, the Old D&B SARs
and LSARs were adjusted or converted in substantially the same manner as the
unexercised Old D&B stock options. At December 31, 1999 and 1998, there were
78,353 and 30,400 SARs and 761,191 and 1,518,215 LSARs attached to stock
options, which are exercisable only if, and to the extent that, the related
option is exercisable and, in the case of LSARs, only upon the occurrence of
specified contingent events.
Upon the 1998 Distribution, Old D&B restricted stock that had been granted
to key associates of the Company under the 1989 Key Employees Restricted Stock
Plan was forfeited and replaced with New D&B stock, preserving the economic
value that existed immediately prior to the 1998 Distribution. During 1999 and
1998, no new awards of restricted stock were granted, and during 1998, 36,620
shares were replaced. During 1997 restricted share grants of 20,000 were awarded
under the plan. There were no forfeitures during 1999, 1998 and 1997. The
restrictions on the majority of such shares lapse over a period of three years
from the date of the grant, and the cost is charged to compensation expense
ratably.
Under the 1998 Key Employees' Stock Incentive Plan, key employees may be
granted shares of the Company's stock based on the achievement of two-year
revenue growth goals or other key operating objectives, where appropriate. At
the end of the performance period, Company performance at target will yield
45
<PAGE> 46
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the targeted amount of shares, whereas Company performance above or below target
will yield larger or smaller share awards, respectively. Awards that were
outstanding at the 1998 Distribution were canceled and replaced, preserving the
economic value that existed prior to the 1998 Distribution. Recorded in selling
and administrative expenses was compensation expense of $14.9 million, $16.0
million and $14.6 million in 1999, 1998 and 1997, respectively, for the plans.
NOTE 9 INCOME TAXES
Income (loss) from continuing operations before provision for income taxes
consisted of:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
U.S. .................................................... $456.1 $407.2 $331.5
Non-U.S. ................................................ (21.2) (7.4) .9
------ ------ ------
$434.9 $399.8 $332.4
====== ====== ======
</TABLE>
The provision (benefit) for income taxes consisted of:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Current tax provision:
U.S. Federal........................................... $128.1 $176.0 $ 31.9
State and local........................................ 21.2 14.4 52.9
Non-U.S. .............................................. 5.1 12.2 21.6
------ ------ ------
Total current tax provision.............................. 154.4 202.6 106.4
------ ------ ------
Deferred tax provision (benefit):
U.S. Federal........................................... 17.4 (58.0) 36.5
State and local........................................ 4.1 7.6 (23.1)
Non-U.S. .............................................. 3.0 1.2 (6.4)
------ ------ ------
Total deferred tax provision (benefit)................... 24.5 (49.2) 7.0
------ ------ ------
Provision for income taxes............................... $178.9 $153.4 $113.4
====== ====== ======
</TABLE>
The following table summarizes the significant differences between the U.S.
Federal statutory tax rate and the Company's effective tax rate for financial
statement purposes.
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- -----
<S> <C> <C> <C>
Statutory tax rate.......................................... 35.0% 35.0% 35.0%
State and local taxes, net of U.S. Federal tax benefit...... 3.8 3.6 4.9
Non-U.S. taxes.............................................. 1.9 3.4 4.6
Recognition of ordinary losses.............................. -- (5.3) (10.4)
Non-recurring reorganization costs.......................... .4 1.5 --
Other....................................................... -- .2 --
---- ---- -----
Effective tax rate.......................................... 41.1% 38.4% 34.1%
==== ==== =====
</TABLE>
Income taxes paid were $165.1 million, $136.5 million and $170.3 million in
1999, 1998 and 1997, respectively. Income taxes refunded were $26.7 million,
$32.1 million and $37.6 million in 1999, 1998 and 1997, respectively.
46
<PAGE> 47
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets (liabilities) comprised the following at December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Deferred tax assets:
Operating losses....................................... $ 59.5 $ 48.3 $ 53.7
Postretirement benefits................................ 52.2 63.0 49.0
Postemployment benefits................................ 3.5 3.7 12.8
Restructuring and reorganization costs................. 14.0 31.0 4.4
Bad debts.............................................. 15.2 13.1 12.7
Other.................................................. .7 3.7 12.3
------ ------ ------
Total deferred tax assets................................ 145.1 162.8 144.9
Valuation allowance...................................... (59.5) (48.3) (53.7)
------ ------ ------
Net deferred tax asset................................... 85.6 114.5 91.2
------ ------ ------
Deferred tax liabilities:
Intangibles............................................ (16.5) (7.9) (31.7)
Tax-leasing transactions............................... (18.3) (20.4) (22.1)
Depreciation........................................... (2.2) (13.1) (13.5)
------ ------ ------
Total deferred tax liability............................. (37.0) (41.4) (67.3)
------ ------ ------
Net deferred tax asset................................... $ 48.6 $ 73.1 $ 23.9
====== ====== ======
</TABLE>
At December 31, 1999, undistributed earnings of non-U.S. subsidiaries
aggregated $133.9 million. Deferred tax liabilities have not been recognized for
these undistributed earnings because it is management's intention to reinvest
such undistributed earnings outside the U.S. If all undistributed earnings were
remitted to the U.S., the amount of incremental U.S. Federal and foreign income
taxes payable, net of foreign tax credits, would be $49.8 million.
During the three-year period ended December 31, 1983, the Company invested
$304.4 million in tax-leasing transactions, varying in length from 4.5 to 25
years. These leases provided the Company with significant benefits from tax
deductions in excess of taxable income for Federal income tax purposes. These
amounts are included in deferred income taxes.
NOTE 10 NOTES PAYABLE
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
------ -----
<S> <C> <C>
Commercial paper............................................ $124.7 $35.9
Bank notes.................................................. 2.6 1.0
------ -----
$127.3 $36.9
====== =====
</TABLE>
The Company had commercial paper borrowings of $124.7 million at December
31, 1999. The interest rates on these commercial paper borrowings ranged from
5.82% to 6.00%.
In June 1999, the Company renewed its $300 million 364-day revolving credit
facility. The Company has an additional $300 million facility maturing in June
2003. Under these facilities, the Company has the ability to borrow at
prevailing short-term interest rates. The Company has had no borrowings
outstanding under these facilities since they were established in June 1998.
47
<PAGE> 48
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1999, the Company also had non-committed lines of credit of
$27.1 million with $1.5 million of borrowings outstanding under these lines of
credit as of that date. These arrangements have no material commitment fees or
compensating balance requirements.
The weighted average interest rates on commercial paper and notes payable
at December 31, 1999 and 1998, were 5.90% and 6.06%, respectively.
Interest paid totaled $4.5 million, $12.1 million and $49.6 million for the
years ended December 31, 1999, 1998 and 1997, respectively.
In connection with the 1998 Distribution, during June 1998, R.H. Donnelley
Inc. borrowed $350 million under the R.H. Donnelley Inc. credit facility and
issued $150 million of senior subordinated notes under the R.H. Donnelley Inc.
indenture. This $500 million of debt remained an obligation of R.H. Donnelley
Inc. after the 1998 Distribution. A portion of the proceeds of this borrowing
was used by Old D&B to repay outstanding indebtedness at the time of the 1998
Distribution of $287.1 million. The Company used the remainder for general
corporate purposes, including the payment of costs and expenses associated with
the reorganization.
NOTE 11 INVESTMENT PARTNERSHIPS
During 1993, the Company participated in the formation of a limited
partnership to invest in various securities, including those of the Company.
Third-party investors held limited-partner and special investors' interests
totaling $500 million. During the fourth quarter of 1996, the Company redeemed
these partnership interests. This redemption was financed with short-term
borrowings.
The partnership is presently engaged in the business of licensing database
assets and computer software. One of the Company's subsidiaries serves as
managing general partner, and two subsidiaries hold limited-partner interests.
In April 1997, the partnership raised $300 million of minority interest
financing from a third-party investor. The Company's subsidiaries contributed
assets to the partnership, and the third-party investor contributed cash ($300
million) in exchange for a limited-partner interest. Funds raised by the
partnership were loaned to the Company and used to repay existing short-term
debt in April 1997. Under the terms of the partnership agreement, the
third-party investor has a right to take steps that would result in termination
of the minority interest financing during or after December 2000. Furthermore,
the third-party investor would also have the right to terminate the minority
interest financing within 60 days after the 2000 Distribution (see Note 16 to
the consolidated financial statements) if the third-party investor has not
consented to the 2000 Distribution. At December 31, 1999 and 1998, the
third-party investment in this partnership was included in minority interest.
For financial reporting purposes, the results of operations, assets,
liabilities and cash flows of the partnership described above are included in
the Company's consolidated financial statements.
NOTE 12 CAPITAL STOCK
Under the Company's Restated Certificate of Incorporation, the Company has
authority to issue 420,000,000 shares with a par value of $.01 per share, of
which 400,000,000 represent shares of common stock, 10,000,000 represent shares
of preferred stock and 10,000,000 represent shares of series common stock. The
preferred and series common stock can be issued with varying terms, as
determined by the Board of Directors.
On June 30, 1998, 171,291,317 shares of New D&B common stock were
distributed to the shareholders of Old D&B. Since New D&B has been treated as
the successor entity for accounting purposes, the Company's historical financial
statements reflect the recapitalization of New D&B in connection with the 1998
Distribution, including the elimination of treasury shares (which shares became
treasury shares of Donnelley), the adjustment of the par value of the preferred
stock and the common stock to $.01 per share, and the authorization of the
series common stock.
48
<PAGE> 49
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the 1998 Distribution, the Company entered into a Rights
Agreement designed to protect shareholders of the Company in the event of
unsolicited offers to acquire the Company and other coercive takeover tactics
which, in the opinion of the Board of Directors, could impair its ability to
represent shareholder interests. Under the Rights Agreement, each share of the
common stock has a right that trades with the stock until the right becomes
exercisable. Each right entitles the registered holder to purchase 1/1000 of a
share of Series A junior participating preferred stock, par value $.01 per
share, at a price of $150 per 1/1000 of a share, subject to adjustment. The
rights will generally not be exercisable until a person or group ("Acquiring
Person") acquires beneficial ownership of, or commences a tender offer or
exchange offer that would result in such person or group having beneficial
ownership of 15% or more of the outstanding common stock.
In the event that any person or group becomes an Acquiring Person, each
right will thereafter entitle its holder (other than the Acquiring Person) to
receive, upon exercise, shares of stock having a market value of two times the
exercise price in the form of the Company's common stock or, where appropriate,
the Acquiring Person's common stock. The Company may redeem the rights, which
expire in June 2008, for $.01 per right, under certain circumstances.
NOTE 13 LEASE COMMITMENTS
Certain of the Company's operations are conducted from leased facilities,
which are under operating leases that expire over the next 10 years. The Company
also leases certain computer and other equipment under operating leases that
expire over the next five years. These leases are frequently renegotiated or
otherwise changed as advancements in computer technology produce opportunities
to lower costs and improve performance. Additionally, the Company has agreements
with various third parties to purchase certain data processing and
telecommunications services extending beyond one year. Rental expenses under
operating leases were $79.3 million, $66.8 million and $80.9 million for the
years ended December 31, 1999, 1998 and 1997, respectively. Future minimum lease
payments under noncancelable leases at December 31, 1999, are as follows:
<TABLE>
<CAPTION>
THERE-
2000 2001 2002 2003 2004 AFTER TOTAL
----- ----- ----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
$54.2 $36.0 $21.9 $15.2 $10.0 $20.7 $158.0
</TABLE>
NOTE 14 CONTINGENCIES
The Company and its subsidiaries are involved in legal proceedings, claims,
litigation and tax matters arising in the ordinary course of business. In the
opinion of management, the outcome of such matters could have a material effect
on quarterly or annual operating results or cash flows. However, in the opinion
of management, these matters will not materially affect financial position when
resolved in a future period.
In addition, the Company also has certain other contingencies discussed
below.
Information Resources, Inc.
On July 29, 1996, Information Resources, Inc. ("IRI") filed a complaint in
the United States District Court for the Southern District of New York, naming
as defendants Old D&B, A.C. Nielsen Company (a subsidiary of ACNielsen) and IMS
International, Inc. (formerly a subsidiary of Cognizant and currently a
subsidiary of IMS Health Incorporated).
The complaint alleges various violations of United States antitrust laws,
including alleged violations of Sections 1 and 2 of the Sherman Act. The
complaint also alleges a claim of tortious interference with a contract and a
claim of tortious interference with a prospective business relationship. These
claims relate to the acquisition by defendants of Survey Research Group Limited
("SRG"). IRI alleges SRG violated an
49
<PAGE> 50
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
alleged agreement with IRI when it agreed to be acquired by the defendants and
that the defendants induced SRG to breach that agreement.
IRI's complaint alleges damages in excess of $350 million, which amount IRI
asked to be trebled under antitrust laws. IRI also seeks punitive damages in an
unspecified amount.
In connection with the IRI action, on October 28, 1996, Cognizant,
ACNielsen and Old D&B entered into an Indemnity and Joint Defense Agreement (the
"Indemnity and Joint Defense Agreement") pursuant to which they have agreed (i)
to certain arrangements allocating potential liabilities ("IRI Liabilities")
that may arise out of or in connection with the IRI action and (ii) to conduct a
joint defense of such action. In particular, the Indemnity and Joint Defense
Agreement provides that ACNielsen will assume exclusive liability for IRI
Liabilities up to a maximum amount to be calculated at such time such
liabilities, if any, become payable (the "ACN Maximum Amount"), and that Old D&B
and Cognizant will share liability equally for any amounts in excess of the ACN
Maximum Amount. The ACN Maximum Amount will be determined by an investment
banking firm as the maximum amount that ACNielsen is able to pay after giving
effect to (i) any plan submitted by such investment bank that is designed to
maximize the claims-paying ability of ACNielsen without impairing the investment
banking firm's ability to deliver a viability opinion (but which will not
require any action requiring stockholder approval), and (ii) payment of related
fees and expenses. For these purposes, financial viability means the ability of
ACNielsen, after giving effect to such plan, the payment of related fees and
expenses and the payment of the ACN Maximum Amount, to pay its debts as they
become due and to finance the current and anticipated operating and capital
requirements of its business, as reconstituted by such plan, for two years from
the date any such plan is expected to be implemented.
In connection with the 1998 Distribution, the Company and Donnelley entered
into an agreement whereby the Company has assumed all potential liabilities of
Old D&B arising from the IRI action and agreed to indemnify Donnelley in
connection with such potential liabilities.
During 1998, Cognizant separated into two new companies, IMS Health
Incorporated ("IMS") and Nielsen Media Research, Inc. ("NMR"). IMS and NMR are
each jointly and severally liable for all Cognizant liabilities under the
Indemnity and Joint Defense Agreement.
Management is unable to predict at this time the final outcome of the IRI
action or whether the resolution of this matter could materially affect the
Company's results of operations, cash flows or financial position.
Tax matters
The Company enters into global tax planning initiatives in the normal
course of business. These initiatives are subject to review by tax authorities.
As a result of the review process, uncertainties exist, and it is possible that
some of these matters could be resolved unfavorably for the Company.
The IRS, as part of its audit process, is continuing its review of the
Company's utilization of certain capital losses generated during 1989 and 1990.
While the Company has not received a formal assessment with respect to these
transactions, the Company expects that the IRS will challenge the Company's
utilization of these capital losses and expects to receive an assessment during
the second quarter of 2000. The Company believes that the total cash obligation
to the IRS is approximately $550 million for taxes and accrued interest at
December 31, 1999. Pursuant to a series of agreements, IMS and NMR are jointly
and severally liable to pay one-half, and the Company the other half of any
payments for taxes and accrued interest arising from this matter and certain
other potential tax liabilities after the Company pays the first $137 million.
50
<PAGE> 51
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the 1998 Distribution, the Company and Donnelley entered
into an agreement whereby the Company has assumed all potential liabilities
arising of Old D&B from these tax matters and has agreed to indemnify Donnelley
in connection with such potential liabilities.
As of December 31, 1999, the Company has accrued its anticipated share of
the probable liability (approximately $345 million, including $183 million of
tax-deductible interest) arising from the Company's utilization of these capital
losses in 1989 and 1990. As a result, the final resolution of this matter will
not have a material effect on the results of operations, but could have a
material effect on cash flows and financial position.
NOTE 15 SUPPLEMENTAL FINANCIAL DATA
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
OTHER CURRENT ASSETS:
At December 31,
Deferred taxes.............................................. $ 28.5 $ 37.0
Prepaid expenses............................................ 188.4 189.7
Other....................................................... .5 1.5
------ ------
$217.4 $228.2
====== ======
</TABLE>
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT -- NET:
At December 31,
Buildings................................................... $193.1 $198.6
Machinery and equipment..................................... 425.0 426.4
------ ------
618.1 625.0
Less: accumulated depreciation.............................. 392.0 382.2
------ ------
226.1 242.8
Leasehold improvements, less: accumulated amortization of
$52.2 and $47.9........................................... 25.6 26.8
Land........................................................ 28.3 28.7
------ ------
$280.0 $298.3
====== ======
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
OTHER INCOME (EXPENSE) -- NET:
Other expense............................................... $(3.7) $(2.3) $(2.8)
Gain on sale of FIS......................................... 12.2 9.6 --
Litigation settlement....................................... 11.9 -- --
----- ----- -----
$20.4 $ 7.3 $(2.8)
===== ===== =====
</TABLE>
51
<PAGE> 52
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
COMPUTER
SOFTWARE GOODWILL
-------- --------
<S> <C> <C>
COMPUTER SOFTWARE AND GOODWILL -- NET:
January 1, 1998............................................. $128.0 $194.6
Additions at cost........................................... 86.0 5.1
Amortization................................................ (55.6) (6.1)
Other deductions and reclassifications...................... (9.8) (1.8)(1)
------ ------
December 31, 1998........................................... 148.6 191.8
Additions at cost........................................... 73.9 .3
Amortization................................................ (65.3) (6.3)
Other deductions and reclassifications...................... (1.0) (18.3)(1)
------ ------
December 31, 1999........................................... $156.2 $167.5
====== ======
</TABLE>
- ---------------
(1) Impact of foreign currency fluctuations.
<TABLE>
<S> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
January 1, 1997............................................. $26.5
Additions charged to costs and expenses..................... 9.0
Net Recoveries.............................................. 3.9
-----
December 31, 1997........................................... 39.4
Additions charged to costs and expenses..................... 7.5
Net Write-offs.............................................. (7.9)
-----
December 31, 1998........................................... 39.0
Additions charged to costs and expenses..................... 8.3
Net Write-offs.............................................. (9.3)
-----
December 31, 1999........................................... $38.0
=====
</TABLE>
NOTE 16 REORGANIZATION PLAN
On December 15, 1999, the Company announced that it will pursue the
separation of Moody's and the D&B operating company into two independent,
publicly traded companies. On February 16, 2000, the Company announced that the
separation would be accomplished by spinning off, through a tax-free
distribution to shareholders (the "2000 Distribution"), a subsidiary corporation
comprising the business of the D&B operating company. The 2000 Distribution is
subject to final approval by the Company's Board of Directors and obtaining a
favorable ruling from the Internal Revenue Service with respect to the tax-free
treatment of the distribution. After the 2000 Distribution, the business of the
Company will consist entirely of the business conducted by Moody's, and the D&B
operating company business will comprise the business of a new publicly traded
company that will succeed to the name "The Dun & Bradstreet Corporation." The
Company expects to complete the reorganization by the end of the third quarter
of 2000.
NOTE 17 SEGMENT INFORMATION
In accordance with SFAS No. 131 ("Disclosures about Segments of an
Enterprise and Related Information"), the segment information is being reported
consistent with the Company's method of internal reporting, which excludes
divested operations from the segments. The Company's reportable segments for
1999 were Dun & Bradstreet United States ("U.S."), Dun & Bradstreet
Europe/Africa/Middle East ("Europe"), Dun & Bradstreet Asia Pacific/Canada/Latin
America ("APCLA") and Moody's Investors
52
<PAGE> 53
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Service. The three Dun & Bradstreet segments, managed on a geographical basis,
provide business-to-business credit, marketing and purchasing information and
receivables management services. The Moody's Investors Service segment provides
credit opinions on investment securities and assigns ratings to fixed-income
securities and other credit obligations. The accounting policies of the segments
are the same as those described in Note 1 -- Summary of Significant Accounting
Policies. The Company evaluates performance and allocates resources based on
segment operating income. Intersegment sales are immaterial.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES:
Dun & Bradstreet, U.S....................................... $ 891.5 $ 902.5 $ 832.2
Dun & Bradstreet, Europe.................................... 420.6 427.7 426.1
Dun & Bradstreet, APCLA..................................... 95.6 88.6 93.8
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 1,407.7 1,418.8 1,352.1
Moody's Investors Service................................... 564.1 495.5 423.1
All Other(1)................................................ -- 20.2 35.8
-------- -------- --------
Consolidated Total.......................................... $1,971.8 $1,934.5 $1,811.0
======== ======== ========
OPERATING INCOME (LOSS):
Dun & Bradstreet, U.S....................................... $ 258.2 $ 269.9 $ 252.9
Dun & Bradstreet, Europe.................................... (8.9) (4.2) .6
Dun & Bradstreet, APCLA..................................... (5.7) (9.1) (6.3)
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 243.6 256.6 247.2
Moody's Investors Service................................... 273.9 223.5 185.7
All Other(1)................................................ (78.6) (59.4) (29.2)
-------- -------- --------
Consolidated Total.......................................... 438.9 420.7 403.7
Non-Operating Expense -- Net................................ (4.0) (20.9) (71.3)
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
INCOME TAXES.............................................. $ 434.9 $ 399.8 $ 332.4
======== ======== ========
DEPRECIATION AND AMORTIZATION:(2)
Dun & Bradstreet, U.S....................................... $ 64.6 $ 60.5 $ 54.9
Dun & Bradstreet, Europe.................................... 52.8 55.1 51.6
Dun & Bradstreet, APCLA..................................... 6.5 7.0 6.4
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 123.9 122.6 112.9
Moody's Investors Service................................... 13.0 14.3 13.5
All Other(1)................................................ 4.0 4.7 5.5
-------- -------- --------
Consolidated Total.......................................... $ 140.9 $ 141.6 $ 131.9
======== ======== ========
</TABLE>
53
<PAGE> 54
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CAPITAL EXPENDITURES:
Dun & Bradstreet, U.S....................................... $ 15.4 $ 19.9 $ 19.3
Dun & Bradstreet, Europe.................................... 15.7 19.9 14.8
Dun & Bradstreet, APCLA..................................... 2.4 5.9 1.7
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 33.5 45.7 35.8
Moody's Investors Service................................... 9.8 7.5 11.0
All Other(1)................................................ .8 2.2 3.5
-------- -------- --------
Consolidated Total.......................................... $ 44.1 $ 55.4 $ 50.3
======== ======== ========
ADDITIONS TO COMPUTER SOFTWARE AND OTHER INTANGIBLES:
Dun & Bradstreet, U.S....................................... $ 40.6 $ 44.2 $ 44.7
Dun & Bradstreet, Europe.................................... 27.9 35.8 28.5
Dun & Bradstreet, APCLA..................................... .5 1.1 2.7
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 69.0 81.1 75.9
Moody's Investors Service................................... 3.4 4.5 2.9
All Other(1)................................................ 6.3 6.1 --
-------- -------- --------
Consolidated Total.......................................... $ 78.7 $ 91.7 $ 78.8
======== ======== ========
ASSETS:
Dun & Bradstreet, U.S....................................... $ 415.4 $ 409.3 $ 415.1
Dun & Bradstreet, Europe.................................... 536.6 599.9 581.0
Dun & Bradstreet, APCLA..................................... 67.3 68.9 90.3
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... 1,019.3 1,078.1 1,086.4
Moody's Investors Service................................... 150.6 152.4 153.0
Discontinued Operations..................................... -- -- 296.5
All Other(1)................................................ 615.8 558.7 550.1
-------- -------- --------
Consolidated Total.......................................... $1,785.7 $1,789.2 $2,086.0
======== ======== ========
SUPPLEMENTAL GEOGRAPHIC AND PRODUCT LINE INFORMATION:
Operating Revenues:
United States............................................... $1,315.0 $1,318.0 $1,213.3
International............................................... 656.8 616.5 597.7
-------- -------- --------
Consolidated Total.......................................... $1,971.8 $1,934.5 $1,811.0
======== ======== ========
LONG-LIVED ASSETS:
United States............................................... $ 526.6 $ 492.4 $ 482.1
International............................................... 408.7 446.9 448.8
-------- -------- --------
Consolidated Total.......................................... $ 935.3 $ 939.3 $ 930.9
======== ======== ========
</TABLE>
54
<PAGE> 55
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
PRODUCT LINE REVENUES:
Credit Information Services................................. $ 922.0 $ 968.7 $ 954.2
Marketing Information Services.............................. 312.2 294.8 257.0
Purchasing Information Services............................. 28.5 23.0 15.7
Receivables Management Services............................. 145.0 132.3 125.2
-------- -------- --------
Total Dun & Bradstreet Operating Company.................... $1,407.7 $1,418.8 $1,352.1
======== ======== ========
</TABLE>
- ---------------
(1) The following tables itemize "All Other":
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
OPERATING REVENUES:
Divested Operations:
Financial Information Services............................ $ -- $ 18.5 $ 34.3
Other Revenues.............................................. -- 1.7 1.5
------ ------ ------
Total "All Other"........................................... $ -- $ 20.2 $ 35.8
====== ====== ======
OPERATING INCOME (LOSS):
Divested Operations:
Financial Information Services............................ $ -- $ 4.2 $ 5.8
Corporate and Other......................................... (37.4) (35.6) (35.0)
Restructuring Expense....................................... (41.2) -- --
Reorganization Costs........................................ -- (28.0) --
------ ------ ------
Total "All Other"........................................... $(78.6) $(59.4) $(29.2)
====== ====== ======
DEPRECIATION AND AMORTIZATION:
Divested Operations:
Financial Information Services............................ $ -- $ 1.1 $ 2.6
Corporate and Other......................................... 4.0 3.6 2.9
------ ------ ------
Total "All Other"........................................... $ 4.0 $ 4.7 $ 5.5
====== ====== ======
CAPITAL EXPENDITURES:
Divested Operations:
Financial Information Services............................ $ -- $ .7 $ 3.4
Corporate and Other......................................... .8 1.5 .1
------ ------ ------
Total "All Other"........................................... $ .8 $ 2.2 $ 3.5
====== ====== ======
ADDITIONS TO COMPUTER SOFTWARE AND OTHER INTANGIBLES:
Corporate................................................. $ 6.3 $ 6.1 $ --
------ ------ ------
Total "All Other"........................................... $ 6.3 $ 6.1 $ --
====== ====== ======
</TABLE>
55
<PAGE> 56
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
ASSETS:
Divested Operations:
Financial Information Services............................ $ -- $ -- $ 6.0
Corporate and Other (primarily domestic pensions and
taxes).................................................... 615.8 558.7 544.1
------ ------ ------
Total "All Other"........................................... $615.8 $558.7 $550.1
====== ====== ======
</TABLE>
(2) Includes depreciation and amortization of Property, Plant and Equipment,
Computer Software, Goodwill and Other Intangibles.
NOTE 18 QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
-------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
1999
Operating Revenues:
Dun & Bradstreet, U.S............. $235.0 $219.6 $212.1 $224.8 $ 891.5
Dun & Bradstreet, Europe.......... 98.8 105.7 96.9 119.2 420.6
Dun & Bradstreet, APCLA........... 20.2 24.5 25.4 25.5 95.6
------ ------ ------ ------ --------
Total Dun & Bradstreet
Operating Company............ 354.0 349.8 334.4 369.5 1,407.7
Moody's Investors Service......... 136.9 147.5 139.3 140.4 564.1
------ ------ ------ ------ --------
Consolidated Operating Revenues..... $490.9 $497.3 $473.7 $509.9 $1,971.8
====== ====== ====== ====== ========
Operating Income (Loss):
Dun & Bradstreet, U.S............. $ 71.9 $ 55.7 $ 56.7 $ 73.9 $ 258.2
Dun & Bradstreet, Europe.......... (15.1) (2.6) (7.2) 16.0 (8.9)
Dun & Bradstreet, APCLA........... (3.8) (2.0) (.3) .4 (5.7)
------ ------ ------ ------ --------
Total Dun & Bradstreet
Operating Company............ 53.0 51.1 49.2 90.3 243.6
Moody's Investors Service......... 63.7 72.8 68.1 69.3 273.9
All Other(1)...................... (12.1) (8.4) (5.8) (52.3) (78.6)
------ ------ ------ ------ --------
Consolidated Operating Income....... $104.6 $115.5 $111.5 $107.3 $ 438.9
====== ====== ====== ====== ========
Net Income(2)....................... $ 60.4 $ 66.4 $ 66.1 $ 63.1 $ 256.0
====== ====== ====== ====== ========
Basic Earnings Per Share of Common
Stock............................. $ .37 $ .41 $ .41 $ .39 $ 1.58
====== ====== ====== ====== ========
Diluted Earnings Per Share of Common
Stock............................. $ .36 $ .40 $ .41 $ .39 $ 1.56
====== ====== ====== ====== ========
1998
Operating Revenues:
Dun & Bradstreet, U.S............. $225.5 $213.0 $219.8 $244.2 $ 902.5
Dun & Bradstreet, Europe.......... 92.4 106.6 98.9 129.8 427.7
Dun & Bradstreet, APCLA........... 20.1 23.4 22.3 22.8 88.6
------ ------ ------ ------ --------
Total Dun & Bradstreet
Operating Company............ 338.0 343.0 341.0 396.8 1,418.8
Moody's Investors Service......... 123.3 133.1 117.1 122.0 495.5
All Other(1)...................... 9.8 7.9 1.5 1.0 20.2
------ ------ ------ ------ --------
Consolidated Operating Revenues..... $471.1 $484.0 $459.6 $519.8 $1,934.5
====== ====== ====== ====== ========
</TABLE>
56
<PAGE> 57
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
-------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Operating Income (Loss):
Dun & Bradstreet, U.S............. $ 69.9 $ 52.7 $ 63.6 $ 83.7 $ 269.9
Dun & Bradstreet, Europe.......... (15.2) (2.8) (2.9) 16.7 (4.2)
Dun & Bradstreet, APCLA........... (5.1) (1.0) (1.6) (1.4) (9.1)
------ ------ ------ ------ --------
Total Dun & Bradstreet
Operating Company............ 49.6 48.9 59.1 99.0 256.6
Moody's Investors Service......... 55.8 62.3 51.3 54.1 223.5
All Other(1)...................... (12.6) (32.7) (7.3) (6.8) (59.4)
------ ------ ------ ------ --------
Consolidated Operating Income
(Loss)............................ $ 92.8 $ 78.5 $103.1 $146.3 $ 420.7
====== ====== ====== ====== ========
Income from:
Continuing Operations, Net of
Income Taxes(3)................ $ 51.5 $ 39.6 $ 68.7 $ 86.6 $ 246.4
Discontinued Operations, Net of
Income Taxes................... 12.0 21.7 -- -- 33.7
------ ------ ------ ------ --------
Net Income.......................... $ 63.5 $ 61.3 $ 68.7 $ 86.6 $ 280.1
====== ====== ====== ====== ========
Basic Earnings Per Share of Common
Stock:
Continuing Operations............. $ .30 $ .23 $ .40 $ .52 $ 1.45
Discontinued Operations........... .07 .13 -- -- .20
------ ------ ------ ------ --------
Basic Earnings Per Share of Common
Stock............................. $ .37 $ .36 $ .40 $ .52 $ 1.65
====== ====== ====== ====== ========
Diluted Earnings Per Share of Common
Stock(4):
Continuing Operations............. $ .30 $ .23 $ .40 $ .52 $ 1.44
Discontinued Operations........... .07 .12 -- -- .19
------ ------ ------ ------ --------
Diluted Earnings Per Share of Common
Stock............................. $ .37 $ .35 $ .40 $ .52 $ 1.63
====== ====== ====== ====== ========
</TABLE>
- ---------------
(1) The following tables itemize "All Other" for Operating Revenues and
Operating Income:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
-------- ------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C>
Operating Revenues:
1998:
Divested
Operations -- Financial
Information Services...... $ 9.2 $ 7.6 $ 1.4 $ .3 $ 18.5
Other Revenues.............. .6 .3 .1 .7 1.7
------ ------ ----- ------ ------
Total.......................... $ 9.8 $ 7.9 $ 1.5 $ 1.0 $ 20.2
====== ====== ===== ====== ======
Operating Income (Loss):
1999:
Restructuring Expense....... $ -- $ -- $ -- $(41.2) $(41.2)
Corporate and Other......... (12.1) (8.4) (5.8) (11.1) (37.4)
------ ------ ----- ------ ------
Total.......................... $(12.1) $ (8.4) $(5.8) $(52.3) $(78.6)
====== ====== ===== ====== ======
</TABLE>
57
<PAGE> 58
THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR
-------- ------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C>
1998:
Divested
Operations -- Financial
Information Services...... $ 2.8 $ 1.1 $ .3 $ -- $ 4.2
Reorganization Costs........ (.5) (27.5) -- -- (28.0)
Corporate and Other......... (14.9) (6.3) (7.6) (6.8) (35.6)
------ ------ ----- ------ ------
Total.......................... $(12.6) $(32.7) $(7.3) $ (6.8) $(59.4)
====== ====== ===== ====== ======
</TABLE>
(2) Net Income included an after-tax gain related to an adjustment on the sale
of Financial Information Services, the publishing unit of Moody's Investors
Service, of $7.5 million in the quarter ended September 30, an after-tax
gain on the settlement of outstanding litigation of $6.6 million and
after-tax restructuring expenses of $27.9 million.
(3) Income from Continuing Operations, Net of Income Taxes included after-tax
reorganization costs of $.5 million and $22.7 million incurred in the
quarters ended March 31 and June 30, respectively, and an after-tax gain on
the sale of Financial Information Services, the publishing unit of Moody's
Investors Service, of $5.3 million incurred in the quarter ended September
30.
(4) The number of weighted average shares outstanding changes as common shares
are issued for employee plans and other purposes or as shares are
repurchased. For this reason, the sum of quarterly earnings per share may
not be the same as earnings per share for the year.
58
<PAGE> 59
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the information relating to the executive officers of the
Company set forth in Part I of this Form 10-K, the information called for by
Items 10-13 will be contained in the Company's definitive proxy statement for
use in connection with its annual meeting of shareholders scheduled to be held
on April 18, 2000, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
(1) Financial Statements.
See Index to Financial Statements and Schedules in Part II, Item 8
on Page 29 of this Form 10-K.
(2) Financial Statement Schedules.
None.
(3) Exhibits.
See Index to Exhibits on Pages 61-63 of this Form 10-K.
(b) Reports on Form 8-K.
On October 26, 1999, the Company filed a report on Form 8-K concerning the
resignation of Volney (Terry) Taylor as Chairman, Chief Executive Officer and a
Director of the Company, and the appointment of Clifford L. Alexander, Jr., as
Chairman and Chief Executive Officer.
(c) Exhibits.
See Index to Exhibits on Pages 61-63 of this Form 10-K.
(d) Financial Statement Schedules.
None.
59
<PAGE> 60
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE DUN & BRADSTREET CORPORATION
(Registrant)
By: /s/
CLIFFORD L. ALEXANDER, JR.
------------------------------------
Clifford L. Alexander, Jr.
Chairman and Chief Executive Officer
Date: February 16, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C>
/s/ CLIFFORD L. ALEXANDER, JR. /s/ RONALD L. KUEHN, JR.
- --------------------------------------------------- ---------------------------------------------------
(Clifford L. Alexander, Jr., (Ronald L. Kuehn, Jr., Director)
Director and Chairman and Chief
Executive Officer) (principal executive officer)
/s/ CHESTER J. GEVEDA, JR. /s/ HENRY A. MCKINNELL, JR.
- --------------------------------------------------- ---------------------------------------------------
(Chester J. Geveda, Jr., Vice President and (Henry A. McKinnell, Jr., Director)
Controller and Acting Chief Financial Officer)
(principal financial and accounting officer)
/s/ HALL ADAMS, JR. /s/ VICTOR A. PELSON
- --------------------------------------------------- ---------------------------------------------------
(Hall Adams, Jr., Director) (Victor A. Pelson, Director)
/s/ MARY JOHNSTON EVANS /s/ MICHAEL R. QUINLAN
- --------------------------------------------------- ---------------------------------------------------
(Mary Johnston Evans, Director) (Michael R. Quinlan, Director)
/s/ ROBERT R. GLAUBER /s/ NAOMI O. SELIGMAN
- --------------------------------------------------- ---------------------------------------------------
(Robert R. Glauber, Director) (Naomi O. Seligman, Director)
</TABLE>
Date: February 16, 2000
60
<PAGE> 61
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REGULATION
S-K
EXHIBIT
NUMBER
- ----------
<C> <S>
</TABLE>
3 ARTICLES OF INCORPORATION AND BY-LAWS
<TABLE>
<C> <S>
.1 Restated Certificate of Incorporation of the Registrant
dated June 15, 1998, as amended effective June 30, 1998
(incorporated by reference to Exhibit 3.1 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.2 Amended and Restated By-laws of the Registrant (incorporated
by reference to Exhibit 3.2 to Registrant's Registration No.
001-14037 on Form 10, dated June 18, 1998).
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
.1 Multi-Year Revolving Credit and Competitive Advance
Facility, dated as of June 9, 1998, among the Registrant
(p.k.a. The New Dun & Bradstreet Corporation), the Borrowing
Subsidiaries parties thereto, the Lenders parties thereto,
The Chase Manhattan Bank, Citibank, N.A. and Morgan Guaranty
Trust Company (incorporated by reference to Exhibit 4.1 to
Registrant's Quarterly Report on Form 10-Q, filed August 14,
1998).
.2* Amended and Restated Credit Agreement, dated as of June 7,
1999, among the Registrant (p.k.a. The New Dun & Bradstreet
Corporation), the Borrowing Subsidiaries parties thereto,
the Lenders parties thereto, The Chase Manhattan Bank,
Citibank, N.A. and The Bank of New York.
.3 Specimen Common Stock certificate (incorporated by reference
to Exhibit 4.1 to Registrant's Registration No. 001-14037 on
Form 10, filed June 18, 1998).
.4 Rights Agreement, dated as of June 3, 1998, between the
Registrant (p.k.a. The New Dun & Bradstreet Corporation) and
First Chicago Trust Company of New York (incorporated by
reference to Exhibit 1 to Registrant's Registration No.
001-14037 on Form 8-A, filed June 18, 1998).
10 MATERIAL CONTRACTS
.1 Distribution Agreement dated as of June 30, 1998 between
R.H. Donnelley Corporation (p.k.a. The Dun & Bradstreet
Corporation) and the Registrant (p.k.a. The New Dun &
Bradstreet Corporation) (incorporated by reference to
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.2 Tax Allocation Agreement dated as of June 30, 1998 between
R.H. Donnelley Corporation (p.k.a. The Dun & Bradstreet
Corporation) and the Registrant (p.k.a. The New Dun &
Bradstreet Corporation) (incorporated by reference to
Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.3 Employee Benefits Agreement dated as of June 30, 1998
between R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation) and the Registrant (p.k.a. The New
Dun & Bradstreet Corporation) (incorporated by reference to
Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.4 Intellectual Property Agreement dated as of June 30, 1998
between R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation) and the Registrant (p.k.a. The New
Dun & Bradstreet Corporation) (incorporated by reference to
Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.5 Shared Transaction Services Agreement dated as of June 30,
1998 between R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation) and the Registrant (p.k.a. The New
Dun & Bradstreet Corporation) (incorporated by reference to
Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.6 Data Services Agreement dated as of June 30, 1998 between
R.H. Donnelley Corporation (p.k.a. The Dun & Bradstreet
Corporation) and the Registrant (p.k.a. The New Dun &
Bradstreet Corporation) (incorporated by reference to
Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.7 Transition Services Agreement dated as of June 30, 1998
between R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation) and the Registrant (p.k.a. The New
Dun & Bradstreet Corporation) (incorporated by reference to
Exhibit 10.7 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
</TABLE>
61
<PAGE> 62
<TABLE>
<C> <S>
.8 Amended and Restated Transition Services Agreement dated as
of June 30, 1998 among R.H. Donnelley Corporation (p.k.a.
The Dun & Bradstreet Corporation), the Registrant (p.k.a.
The New Dun & Bradstreet Corporation), Cognizant
Corporation, IMS Health Incorporated, ACNielsen Corporation
and Gartner Group, Inc. (incorporated by reference to
Exhibit 10.8 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.9 Undertaking of the Registrant (p.k.a. The New Dun &
Bradstreet Corporation) dated June 29, 1998 (incorporated by
reference to Exhibit 10.9 to Registrant's Quarterly Report
on Form 10-Q, filed August 14, 1998).
.10 Distribution Agreement dated as of October 28, 1996, among
R.H. Donnelley Corporation (p.k.a. The Dun & Bradstreet
Corporation), Cognizant Corporation and ACNielsen
Corporation (incorporated by reference to Exhibit 10(x) to
the Annual Report on Form 10-K of R.H. Donnelley Corporation
(p.k.a. The Dun & Bradstreet Corporation) for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
.11 Tax Allocation Agreement dated as of October 28, 1996, among
R.H. Donnelley Corporation (p.k.a. The Dun & Bradstreet
Corporation), Cognizant Corporation and ACNielsen
Corporation (incorporated by reference to Exhibit 10(y) to
the Annual Report on Form 10-K of R.H. Donnelley Corporation
(p.k.a. The Dun & Bradstreet Corporation) for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
.12 Employee Benefits Agreement dated as of October 28, 1996,
among R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation), Cognizant Corporation and ACNielsen
Corporation (incorporated by reference to Exhibit 10(z) to
the Annual Report on Form 10-K of R.H. Donnelley Corporation
(p.k.a. The Dun & Bradstreet Corporation) for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
.13 Indemnity and Joint Defense Agreement dated as of October
28, 1996, among R.H. Donnelley Corporation (p.k.a. The Dun &
Bradstreet Corporation), Cognizant Corporation and ACNielsen
Corporation (incorporated by reference to Exhibit 10(aa) to
the Annual Report on Form 10-K of R.H. Donnelley Corporation
(p.k.a. The Dun & Bradstreet Corporation) for the year ended
December 31, 1996, file number 1-7155, filed March 27,
1997).
.14 Amended and Restated Agreement of Limited Partnership of D&B
Investors L.P. dated April 1, 1997 (incorporated by
reference to Exhibit 10.14 to Registrant's Quarterly Report
on Form 10-Q, filed August 14, 1998).
.15 Amendment No. 1 dated July 14, 1997 to the Amended and
Restated Agreement of Limited Partnership of D&B Investors
L.P. dated April 1, 1997 (incorporated by reference to
Exhibit 10.15 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.16 Agreement to Retire General Partner Interest dated October
21, 1996 by and between D&B Investors L.P. and IMS America,
Ltd. (incorporated by reference to Exhibit 10.16 to
Registrant's Quarterly Report on Form 10-Q, filed August 14,
1998).
.17 Assignment Agreements dated as of June 15, 1998 relating to
rights and obligations in respect of D&P Investors L.P.
(incorporated by reference to Exhibit 10.17 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.18+ The Dun & Bradstreet Corporation Nonfunded Deferred
Compensation Plan for Non-Employee Directors (incorporated
by reference to Exhibit 10.18 to Registrant's Quarterly
Report on Form 10-Q, filed October 20, 1999).
.19+ 1998 Dun & Bradstreet Replacement Plan for Certain
Non-Employee Directors Holding Dun & Bradstreet Corporation
Equity-Based Awards (incorporated by reference to Exhibit
10.19 to Registrant's Quarterly Report on Form 10-Q, filed
August 14, 1998).
.20+ 1998 Dun & Bradstreet Non-Employee Directors' Stock
Incentive Plan (incorporated by reference to Exhibit 10.20
to Registrant's Quarterly Report on Form 10-Q, filed August
14, 1998).
.21+ The Dun & Bradstreet Corporation Cash Incentive Plan
(incorporated by reference to Exhibit 10.21 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.22+ The Dun & Bradstreet Corporation Covered Employee Cash
Incentive Plan (incorporated by reference to Exhibit 10.22
to Registrant's Quarterly Report on Form 10-Q, filed August
14, 1998).
</TABLE>
62
<PAGE> 63
<TABLE>
<C> <S>
.23+ 1998 Dun & Bradstreet Replacement Plan for Certain Employees
Holding Dun & Bradstreet Corporation Equity-Based Awards
(incorporated by reference to Exhibit 10.23 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.24+ 1998 Dun & Bradstreet Key Employees' Stock Incentive Plan
(incorporated by reference to Exhibit 10.24 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.25+ Form of Limited Stock Appreciation Rights Agreement
(incorporated by reference to Exhibit 10.25 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.26+ Forms of Change in Control Severance Agreements
(incorporated by reference to Exhibit 10.26 to Registrant's
Quarterly Report on Form 10-Q, filed August 14, 1998).
.27+ Executive Transition Plan (incorporated by reference to
Exhibit 10.27 to Registrant's Quarterly Report on Form 10-Q,
filed August 14, 1998).
.28+* Executive Transition Plan Agreement dated October 1, 1999,
between Frank Sowinski and the Registrant.
.29+* Pension Benefit Equalization Plan.
.30+* Supplemental Executive Benefit Plan.
.31+* Profit Participation Benefit Equalization Plan.
.32+* Career Transition Plan.
.33+* Employment Agreement effective as of October 25, 1999,
between Clifford L. Alexander, Jr. and the Registrant.
.34+* Severance Agreement and Release dated December 20, 1999,
between Volney Taylor and the Registrant.
21* SUBSIDIARIES OF THE REGISTRANT
List of Active Subsidiaries as of January 31, 2000.
23* CONSENTS OF EXPERTS AND COUNSEL
Consent of PricewaterhouseCoopers LLP.
27* FINANCIAL DATA SCHEDULE
</TABLE>
- ---------------
* Filed herewith
+ Represents a management contract or compensatory plan
63
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 7, 1999 (the
"Amendment and Restatement") amending and restating the Credit Agreement dated
as of June 9, 1998 (as in effect on the date hereof, the "Credit Agreement")
among THE DUN & BRADSTREET CORPORATION (the "Company") and the Borrowing
Subsidiaries Party thereto (the "Subsidiary Borrowers" and together with the
Company, the "Borrowers"), the LENDERS party thereto (the "Lenders"), THE CHASE
MANHATTAN BANK, as Administrative Agent (the "Agent"), CITIBANK, N.A., as
Syndication Agent, and THE BANK OF NEW YORK, as Documentation Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement to (i)
extend the Revolver Termination Date from the date that is 364 days after the
effective date of the Credit Agreement to the date that is 364 days after the
effective date hereof, (ii) amend the definitions and certain representations
set forth in the Credit Agreement and (iii) amend the Commitments of each
Lender, all as set forth herein; and
WHEREAS, the parties hereto wish to amend the Credit Agreement as set
forth herein and to restate the Credit Agreement in its entirety to read as set
forth in the Credit Agreement with the amendment specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment and Restatement
becomes effective, refer to the Credit Agreement as amended and restated hereby.
SECTION 2. Definitions.
(a) The definition of "Applicable Rate" in Section 1.01 of the Credit
Agreement is amended to read in full as follows:
<PAGE> 2
"Applicable Rate" means, for any day, (i) with respect to any
Eurodollar Revolving Loan, a rate per annum of 0.18%, and (ii) with respect to
the facility fees payable hereunder, a rate per annum of 0.07%.
(b) The definition of "Revolver Termination Date" in Section 1.01 of
the Credit Agreement is amended to read in full as follows:
"Revolver Termination Date" means June 6, 2000 or, if such day is not a
Business Day, the next preceding Business Day.
(c) The definitions in Section 1.01 of the Credit Agreement are further
amended by adding the following definition immediately after the definition of
"Alternative Base Rate":
"Amendment Effective Date" means June 7, 1999.
SECTION 3. Amendment to Section 3.06(c) of the Credit Agreement .
Section 3.06(c) of the Credit Agreement is amended by replacing the reference to
"the date of this Agreement" with "the Amendment Effective Date".
SECTION 4. Amendment to Section 3.12 of the Credit Agreement. Section
3.12 of the Credit Agreement is amended by replacing the reference to "as of the
date hereof and the Spin-Off Date" and "As of the Effective Date and the
Spin-Off Date" with "as of the Amendment Effective Date" and "As of the
Amendment Effective Date", respectively.
SECTION 5. Amendment to Schedules to the Credit Agreement. (a) Schedule
3.06 to the Credit Agreement is amended in its entirety to read as set forth in
Schedule 3.06 hereto.
(b) Schedule 3.12 to the Credit Agreement is amended in its entirety to
read as set forth in Schedule 3.12 hereto.
SECTION 6. Amendments to Commitments. With effect from and including
the date this Amendment and Restatement becomes effective in accordance with
Section 8, the Commitment of each Lender shall be the amount set forth opposite
the name of such Lender on Schedule I hereto. Any Lender whose Commitment is
changed to zero shall upon such effectiveness cease to be a Lender party to the
Credit Agreement, and all accrued fees and other amounts payable under the
Credit Agreement for the account of such Lender shall be due and payable on such
date; provided that the provisions of Sections 2.14, 2.16, Article 8 and 10.03
of the Credit Agreement shall continue to inure to the benefit of each such
Lender.
2
<PAGE> 3
SECTION 7. Representations and Warranties. Each Borrower represents and
warrants that on and as of the Amendment Effective Date:
(a) no Default has occurred and is continuing; and
(b) each representation and warranty of each Borrower set forth in the
Credit Agreement after giving effect to this Amendment and Restatement is true
and correct as though made on and as of such date (except the representations
and warranties set forth in Sections 3.04(a), 3.04(b) and 3.14, which
representations relate solely to an earlier date and were true and correct in
all material respects on such earlier date).
SECTION 8. Effectiveness. This Amendment and Restatement shall become
effective as of the date hereof when the following conditions are met (the
"Amendment Effective Date"):
(a) the Agent shall have received from each of the Borrowers and the
Lenders party hereto a counterpart hereof signed by such party or facsimile or
other written confirmation (in form satisfactory to the Agent) that such party
has signed a counterpart hereof;
(b) the Agent shall have received all fees and other amounts due and
payable on or prior to the Amendment Effective Date, including, to the extent
invoiced, reimbursement or payment of all reasonable out-of-pocket expenses
required to be reimbursed or paid by the Company hereunder; and
(c) the Agent shall have received a favorable written opinion
(addressed to the Agent and the Lenders party hereto and dated the Amendment
Effective Date) of Nancy L. Henry, Chief Legal Counsel to the Company,
substantially in the form of Exhibit A hereto and covering such additional
matters relating to the Company and this Amendment and Restatement as the
Required Lenders shall reasonably request. The Company hereby requests such
counsel to deliver such opinion.
SECTION 9. Confirmation of Agreement. Except as amended hereby, all of
the terms of the Credit Agreement shall remain in full force and effect and are
hereby confirmed in all respects.
SECTION 10. Governing Law. This Amendment and Restatement shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 11. Counterparts. This Amendment and Restatement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed as of the date first above written.
THE DUN & BRADSTREET
CORPORATION
By /s/ Roxanne E. Parker
-----------------------------------
Title: Vice President & Treasurer
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent
By /s/ Bruce E. Langenkamp
-----------------------------------
Title: Vice President
CITIBANK, N.A., individually and as
Syndication Agent
By /s/ William G. Martens, III
-----------------------------------
Title: Vice President
THE BANK OF NEW YORK, individually
and as Documentation Agent
By /s/ Ernest Fung
-----------------------------------
Title: Vice President
<PAGE> 5
SUNTRUST BANK, ATLANTA
By /s/ Ronald E. Alston
-----------------------------------
Title: Vice President
By /s/ Robin Cowan
-----------------------------------
Title: Operations Officer
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By /s/ William J. Derasmo
-----------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Tom Dao
-----------------------------------
Title: Corporate Banking Officer
<PAGE> 6
BANK OF MONTREAL
By /s/ Brian I. Banke
-----------------------------------
Title: Director
BARCLAYS BANK PLC
By /s/ Marlene Wechselblatt
-----------------------------------
Title:Vice President
HSBC BANK USA
By /s/ Johan Sorensson
-----------------------------------
Title: Assistant Vice President
THE NORTHERN TRUST COMPANY
By /s/ Nicole Boehm
-----------------------------------
Title: Commercial Credit Officer
<PAGE> 7
SCHEDULE I
<TABLE>
<CAPTION>
LENDER COMMITMENT
- -------------------------------------------------------------------------------
<S> <C>
The Chase Manhattan Bank $ 56,500,000
Citibank, N.A. $ 38,000,000
The Bank of New York $ 38,000,000
Bank of Montreal $ 25,000,000
Barclays Bank PLC $ 25,000,000
HSBC Bank USA $ 25,000,000
The Northern Trust Company $ 25,000,000
SunTrust Bank, Atlanta $ 25,000,000
Bank of Tokyo-Mitsubishi Trust Company $ 25,000,000
The First National Bank of Chicago $ 17,500,000
Morgan Guaranty Trust Company of New York $ 0
Toronto Dominion (Texas), Inc. $ 0
TOTAL
$300,000,000
</TABLE>
<PAGE> 1
EXHIBIT 10.28
October 1, 1999
Mr. Frank Sowinski
c/o The Dun & Bradstreet Corporation
One Diamond Hill Road
Murray Hill, NJ 07974
Dear Frank:
I am pleased to advise you that the Compensation and Benefits
Committee (the "Committee") of the Board of Directors of The Dun & Bradstreet
Corporation (the "Company") has authorized your participation in The Dun &
Bradstreet Executive Transition Plan (the "Transition Plan"). A copy of the
Transition Plan is annexed to this letter as Annex I. Unless otherwise
indicated, capitalized terms used in this letter without definition are used as
defined in the Transition Plan.
Your participation in the Transition Plan shall be effective as of the
date hereof. In connection with the authorization of your participation in the
Transition Plan, and in consideration of the valuable contributions you have
made and are expected to continue to make to the Company, the Committee further
agreed that the following provisions shall be effective with respect to the
terms of your participation in the Transition Plan:
Benefits. In the event of an Eligible Termination, you shall
be entitled to the benefits set forth on Schedule A to Annex I. In
that regard, it is understood that Annex II to this letter accurately
illustrates the calculation of benefits pursuant to Sections 1 and 3
of such Schedule A under the factual circumstances outlined therein.
Benefit Reductions and Related Actions. Notwithstanding the
provisions of Section 2.3 of the Transition Plan, with respect to the
period commencing on the date hereof and ending on the second
anniversary of the date hereof (the "Covered Period"), the Company's
Chief Executive Officer shall not exercise any authority thereunder to
reduce the benefits otherwise payable to you pursuant to Schedule A to
Annex I or otherwise modify the terms and conditions applicable to
<PAGE> 2
Mr. Frank Sowinski
October 1, 1999
Page 2
you under the Transition Plan in a manner that would be adverse to
you, unless the exercise of such authority is expressly approved by a
majority of the members of the Company's Board of Directors.
Involuntary Termination. No decision to effect an involuntary
termination of your employment with the Company during the Covered
Period for unsatisfactory performance in the execution of your duties
shall be effective unless either (i) such decision also constitutes a
termination for Cause or (ii) such decision is expressly approved by a
majority of the members of the Company's Board of Directors.
Other Modifications. Notwithstanding any contrary provision
of the Transition Plan, with respect to the Covered Period, no other
modification to the terms of the Plan that would be adverse to you
shall be applicable to you absent your prior written consent.
If the foregoing is consistent with your understanding of the terms of
your participation in the Transition Plan, please so acknowledge in the space
provided on the duplicate of this letter and return such duplicate to us. You
understand that, as contemplated by the Transition Plan, such acknowledgment
shall constitute a relinquishment of any benefits under the Dun & Bradstreet
Career Transition Plan.
Very truly yours,
THE DUN & BRADSTREET
CORPORATION
By: /s/ Volney Taylor
----------------------------
Volney Taylor
Chairman and Chief Executive
Officer
Acknowledged:
/s/ Frank Sowinski
- ------------------
Frank Sowinski
<PAGE> 3
Annex I
THE DUN & BRADSTREET EXECUTIVE TRANSITION PLAN
(AS AMENDED AND RESTATED)
The Dun & Bradstreet Corporation (the "Company") wishes to
define those circumstances under which it will provide assistance to an Eligible
Employee in the event of his or her Eligible Termination (as such terms are
defined herein). Accordingly, the Company hereby establishes The Dun &
Bradstreet Executive Transition Plan (the "Plan").
SECTION 1 - DEFINITIONS
1.1 "Administrative Committee" shall mean a committee of
Company management employees heretofore established by the Committee.
1.2 "Cause" shall mean (a) willful malfeasance or willful
misconduct by the Eligible Employee in connection with his or her employment,
(b) continuing failure to perform such duties as are requested by any employee
to whom the Eligible Employee reports or the Company's board of directors, (c)
failure by the Eligible Employee to observe material policies of the Company
applicable to the Eligible Employee or (d) the commission by an Eligible
Employee of (i) any felony or (ii) any misdemeanor involving moral turpitude.
1.3 "Committee" shall mean the Executive Compensation and
Stock Option Committee of the Board of Directors of the Company.
1.4 "Eligible Employee" shall mean the Chief Executive Officer
of the Company and such other executive officers of the Company or its
affiliates as are designated in writing by the Chief Executive Officer.
1.5 "Eligible Termination" shall mean (a) an involuntary
termination of employment with the Company by reason of a reduction in force
program, job elimination or unsatisfactory performance in the execution of an
Eligible Employee's duties or (b) a resignation mutually agreed to in writing by
the Company and the Eligible Employee. Notwithstanding the foregoing, an
Eligible Termination shall not include (w) a unilateral resignation, (x) a
termination by the Company for Cause, (y) a termination as a result of a sale
(whether in whole or in part, of stock or assets), merger or other combination,
spinoff, reorganization or liquidation, dissolution or other winding up or other
similar transactions involving the Company; provided however, that a termination
of employment as a result of a Change in Control and during the Change in
Control Period shall not be covered by this clause (y), or (z) any termination
where an offer of employment is made to the Eligible Employee of a comparable
position at the Company.
<PAGE> 4
1.6 "Salary" shall mean an Eligible Employee's annual base
salary at the time his or her employment terminates, except as otherwise
provided in Schedule A hereto.
1.7 "Severance and Release Agreement" shall mean an agreement
signed by the Eligible Employee substantially in the form attached hereto as
Exhibit 1. Notwithstanding the foregoing, the Company may, by action of its
chief human resources officer or chief legal counsel, modify the form of
Severance and Release Agreement to be signed by any Eligible Employee in a
manner approved by the Administrative Committee.
SECTION 2 - SEVERANCE BENEFITS
2.1 Subject to the provisions of this Section 2, in the event
of an Eligible Termination, an Eligible Employee shall be entitled to receive
from the Company the benefits set forth on Schedule A hereto.
2.2 The grant of severance benefits pursuant to Section 2.1
hereof is conditioned upon an Eligible Employee's (a) signing a Severance and
Release Agreement and the expiration of any revocation period set forth therein
and, (b) relinquishment of any right to benefits under the Dun & Bradstreet
Career Transition Plan.
2.3 Notwithstanding any other provision contained herein
(except as set forth in this Section 2.3), the Chief Executive Officer of the
Company may, at any time, take such action as such officer, in such officer's
sole discretion, deems appropriate to reduce or increase by any amount the
benefits otherwise payable to an Eligible Employee pursuant to Schedule A or
otherwise modify the terms and conditions applicable to an Eligible Employee
under this Plan provided that the Chief Executive Officer reports any reduction
or increase in benefits or other modification of the terms and conditions hereof
to the Committee and provided further that with respect to benefits payable, or
other modifications applicable, to the Chief Executive Officer, only the
Committee may take such action. Benefits granted hereunder may not exceed an
amount nor be paid over a period which would cause the Plan to be other than a
"welfare benefit plan" under section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
2.4 In the event the Company, in its sole discretion, grants
an Eligible Employee a period of inactive employee status, then, in such event,
any amounts paid to such Eligible Employee during any such period shall offset
the benefits payable under this Plan. For this purpose, a period of inactive
employee status shall mean the period beginning on the date such status
commences (of which the Eligible Employee shall be notified) and ending on the
date of such Eligible Employee's termination of employment.
SECTION 3 - AMENDMENT AND TERMINATION
3.1 The Company reserves the right to terminate the Plan at
any time and without any further obligation by action of its board of directors
or such other person or persons to whom the board properly delegates such
authority.
--2--
<PAGE> 5
3.2 The Company shall have the right to modify or amend the
terms of the Plan at any time, or from time to time, to any extent that it may
deem advisable by action of its board of directors, the Committee or such other
person or persons to whom the board or the Committee properly delegates such
authority.
3.3 All modifications of or amendments to the Plan shall be in
writing.
SECTION 4 - ADMINISTRATION OF THE PLAN
4.1 The Committee shall be the Plan Administrator and shall
have the exclusive right, power and authority to:
(a) interpret, in its sole discretion, any and all of the
provisions of the Plan;
(b) establish a claims and appeals procedure; and
(c) consider and decide conclusively any questions (whether of
fact or otherwise) arising in connection with the administration of the Plan or
any claim for severance benefits arising under the Plan.
Any decision or action of the Committee pursuant to this Section 4.1 shall be
conclusive and binding on any affected person.
4.2 The Committee may, in its sole discretion, cause the
Administrative Committee or its designee to function as the Committee for
purposes of this Section 4.
4.3 The Company shall indemnify any individual who is a
director, officer or employee of the Company or any affiliate, or his or her
heirs and legal representatives, against all liability and reasonable expense,
including counsel fees, amounts paid in settlement and amounts of judgments,
fines or penalties, incurred or imposed upon him or her in connection with any
claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative, in connection with his or her duties with respect to the Plan,
provided that any act or omission giving rise to such claim, action, suit or
proceeding does not constitute willful misconduct or is not performed or omitted
in bad faith.
SECTION 5 - MISCELLANEOUS
5.1 Neither the establishment of the Plan nor any action of
the Company, the Committee, or any fiduciary shall be held or construed to
confer upon any person any legal right to continue employment with the Company.
The Company expressly reserves the right to discharge any employee whenever the
interest of the Company, in its sole judgment, may so require, without any
liability on the part of the Company, the Committee, or any fiduciary.
5.2 Benefits payable under the Plan shall be paid out of the
general assets of the Company or an affiliate. The Company need not fund the
benefits payable under this Plan; however, nothing in this Section 5.2 shall be
interpreted as precluding the Company from funding or setting aside amounts in
anticipation of paying such benefits. Any benefits payable to an Eligible
Employee under this Plan shall
--3--
<PAGE> 6
represent an unsecured claim by such Eligible Employee against the general
assets of the Company that employed such Eligible Employee.
5.3 The Company shall deduct from the amount of any severance
benefits payable hereunder the amount required by law to be withheld for the
payment of any taxes and any other amount, properly to be withheld.
5.4 Benefits payable under the Plan shall not be subject to
assignment, alienation, transfer, pledge, encumbrance, commutation or
anticipation by the Eligible Employee. Any attempt to assign, alienate,
transfer, pledge, encumber, commute or anticipate Plan benefits shall be void.
5.5 This Plan shall be interpreted and applied in accordance
with the laws of the State of New York, except to the extent superseded by
applicable federal law.
5.6 This Plan will be of no force or effect to the extent
superseded by foreign law.
5.7 This Plan supersedes any and all prior severance
arrangements, policies, plans or practices of the Company (whether written or
unwritten). Notwithstanding the preceding sentence, the Plan does not affect the
severance provisions of any written individual employment contracts or written
agreements between an Eligible Employee and the Company. Benefits payable under
the Plan shall be offset by any other severance or termination payment made by
the Company including, but not limited to, amounts paid pursuant to any
agreement or law.
5.8 This Plan, as amended and restated, shall be effective as
of February 19, 1997.
--4--
<PAGE> 7
SCHEDULE A
An Eligible Employee entitled to benefits hereunder shall,
subject to Section 2 of the Plan, receive the following:
1. Salary Continuation
The Eligible Employee shall receive 104 weeks of Salary
continuation, provided, however, that for purposes of determining the Salary
continuation amount, in the event the Eligible Employee has incurred an Eligible
Termination other than by reason of unsatisfactory performance, "Salary" shall
include the Eligible Employee's guideline annual bonus opportunity under the
applicable Annual Incentive Plan (as defined in paragraph 3 hereof) for the year
of termination, payment of which will be prorated annually over a period equal
to the number of weeks of Salary continuation (the "Salary Continuation Period")
and made at the same time as other Salary continuation amounts. Salary
continuation hereunder shall be paid at the times the Eligible Employee's Salary
would have been paid if employment had not terminated, over the Salary
Continuation Period. In the event the Eligible Employee performs services for an
entity other than the Company or a Participating Company during the Salary
Continuation Period, such employee shall notify the Company on or prior to the
commencement thereof. For purposes of this Schedule A, to "perform services"
shall mean employment or services as a full-time employee, consultant, owner,
partner, associate, agent or otherwise on behalf of any person, principal,
partnership, firm or corporation (other than the Company or a Participating
Company). All Salary continuation payments shall cease upon re-employment by the
Company or a Participating Company. For purposes of this paragraph 1, a
"Participating Company" shall mean the Company or any other affiliated entity
more than 50% of the voting interests of which are owned, directly or
indirectly, by the Company and which has elected to participate in The Dun &
Bradstreet Corporation Career Transition Plan.
2. Welfare Benefit Continuation
Medical, dental and life insurance benefits shall be provided
throughout the Salary Continuation Period at the levels in effect for the
Eligible Employee immediately prior to termination of employment but in no event
greater than the levels in effect for active employees generally during the
Salary Continuation Period, provided that the Eligible Employee shall pay the
employee portion of any required premium payments at the level in effect for
employees generally of the Company for such benefits. For purposes of
determining an Eligible Employee's entitlement to continuation coverage as
required by Title I, Subtitle B, Part 6 of ERISA, such employee's 18-month or
other period of coverage shall commence on his or her termination of employment.
<PAGE> 8
3. Annual Bonus Payment
Subject to the provisions of this paragraph 3, a cash bonus
for the calendar year of termination may be paid in an amount equal to the
actual bonus which would have been payable to the Eligible Employee under the
annual bonus plan in which he or she participates (the "Annual Incentive Plan")
had such employee remained employed through the end of the year of such
termination multiplied by a fraction the numerator of which is the number of
full months of employment during the calendar year of termination and the
denominator of which is 12. Such bonus shall be payable at the time otherwise
payable under the Annual Incentive Plan had employment not terminated.
Notwithstanding the foregoing, no amount shall be paid under this paragraph in
the event the Eligible Employee incurred an Eligible Termination by reason of
unsatisfactory performance. The foregoing provisions of this paragraph 3 shall
be appropriately modified in the case of any plan not on a calendar year basis.
4. Long-Term Awards
Cash payments shall be made to an Eligible Employee as set
forth in this paragraph in respect of "Units" (as such term is defined in the
Key Employees Performance Unit Plan for The Dun & Bradstreet Corporation and
Subsidiaries (the "PUP")) otherwise payable under the PUP had the Eligible
Employee remained employed through the end of the applicable "Award Period" (as
defined in the PUP) in the event the Eligible Employee was employed by a
Participating Company for at least half the applicable Award Period. In such
event, cash payments shall be made to an Eligible Employee in amounts equal to
the value of the Units, as earned, otherwise payable under the PUP had the
employee remained employed through the end of the applicable Award Period
multiplied by a fraction the numerator of which is the number of full months of
employment with a Participating Company from the beginning of the Award Period
to termination of employment, and the denominator of which is the number of full
months in the Award Period. Such payments shall be made at the times the Units
in respect of which such payments are made would otherwise be payable under the
PUP had employment not terminated. Notwithstanding the foregoing, no amount
shall be paid under this paragraph in the event the Eligible Employee incurred
an Eligible Termination by reason of unsatisfactory performance. Nothing
contained herein shall reduce any amounts otherwise required to be paid under
the PUP except to the extent such amounts are paid hereunder.
5. Death
Upon the death of an Eligible Employee during the Salary
Continuation Period, the benefits described in paragraphs 1, 3 and 4 of this
Schedule shall continue to be paid to his or her estate, as applicable, at the
time or times otherwise provided for herein.
6. Other Benefits
The Eligible Employee shall be entitled to such executive
outplacement services during the Salary Continuation Period as shall be provided
by the Company. During the Salary continuation period, financial
planning/counseling shall be afforded to the Eligible Employee to the same
extent afforded immediately prior to termination of
--2--
<PAGE> 9
employment in the event the Eligible Employee incurred an Eligible Termination
other than by reason of unsatisfactory performance.
7. No Further Grants, Etc.
Following an Eligible Employee's termination of employment, no
further grants, awards, contributions, accruals or continued participation
(except as otherwise provided for herein) shall be made to or on behalf of such
employee under any plan or program maintained by the Company including, but not
limited to, any Annual Incentive Plan, any PUP, or any qualified or nonqualified
retirement, profit sharing, stock option or restricted stock plan of the
Company. Any unvested or unexercised options, unvested restricted stock and all
other benefits under any plan or program maintained by the Company (including,
but not limited to, any Annual Incentive Plan, any Long-Term Plan or any
qualified or nonqualified retirement, profit sharing, stock option or restricted
stock plan) which are held or accrued by an Eligible Employee at the time of his
or her termination of employment, shall be treated in accordance with the terms
of such plans and programs under which such options, restricted stock or other
benefits were granted or accrued.
--3--
<PAGE> 10
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE, made by and between
_____________________________________ (hereinafter referred to as "Employee"),
and The Dun & Bradstreet Corporation (hereinafter deemed to include its
worldwide subsidiaries and affiliates and referred to as "the Company").
WITNESSETH THAT:
WHEREAS, Employee has been employed by the Company since the
date specified in the Appendix; and
WHEREAS, the parties to this Agreement desire to enter into an
agreement in order to provide certain benefits and salary continuation to
Employee;
NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
1. Employee's employment with the Company, and Employee's
membership on any committees, is terminated effective on the date specified in
the Appendix.
2. Effective on the date set forth in the Appendix, Employee
will incur an "Eligible Termination" under The Dun & Bradstreet Executive
Transition Plan (the "Plan"), a summary plan description of which Employee
hereby acknowledges receipt, and will, accordingly, be entitled to the benefits
set forth therein subject to the terms and conditions of such Plan. A summary of
the benefits to which Employee is entitled under the Plan is set forth in the
Appendix.
3. Through the Termination Date specified in the Appendix,
Employee will be reasonably available to consult on matters, and will cooperate
fully with respect to any claims, litigations or investigations, relating to the
Company. No reimbursement for expenses incurred after the commencement of a
period of inactive employee status, or if there is no such period, after
termination of employment, shall be made to Employee unless authorized in
advance by the Company.
4. Employee agrees that until the Termination Date Employee
will not become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the over-the-counter market
and the Employee's ownership interest is not in excess of 2% of the company
whose shares are being purchased), employee, officer, director or consultant of
or to a corporation, or a member or an employee of or a consultant to a
partnership or any other business or firm, which competes with any of the
businesses owned or operated by the Company; nor if
<PAGE> 11
Employee becomes associated with a company, partnership or individual which
company, partnership or individual acts as a consultant to businesses in
competition with the Company will Employee provide services to such competing
businesses. The restrictions contained in this paragraph shall apply whether or
not Employee accepts any form of compensation from such competing entity or
consultant. Employee also agrees that until the Termination Date Employee will
not recruit or solicit any customers of the Company to become customers of any
business entity which competes with any of the businesses owned or operated by
the Company. In addition, Employee agrees that until the Termination Date
neither Employee nor any company or entity Employee controls or manages, shall
recruit or solicit any employee of the Company to become an employee of any
business entity.
5. If Employee performs services for an entity other than the
Company at any time prior to the Termination Date (whether or not such entity is
in competition with the Company), Employee shall notify the Company on or prior
to the commencement thereof. To "perform services" shall mean employment or
services as a full-time employee, consultant, owner, partner, associate, agent
or otherwise on behalf of any person, principal, partnership, firm or
corporation. For purposes of this paragraph 5 only, "Company" shall mean The Dun
& Bradstreet Corporation and any other affiliated entity more than 50% of the
voting interests of which are owned, directly or indirectly, by The Dun &
Bradstreet Corporation and which has elected to participate in The Dun &
Bradstreet Career Transition Plan by action of its board of directors.
6. Employee agrees that Employee will not directly or
indirectly disclose any proprietary or confidential information, records, data,
formulae, specifications and other trade secrets owned by the Company, whether
oral or written, to any person or use any such information, except pursuant to
court order (in which case Employee will first provide the Company with written
notice of such). All records, files, drawings, documents, models, disks,
equipment and the like relating to the businesses of the Company shall remain
the sole property of the Company and shall not be removed from the premises of
the Company. Employee further agrees to return to the Company any property of
the Company which Employee may have, no matter where located, and not to keep
any copies or portions thereof.
7. Employee shall not make any derogatory statements about the
Company and shall not make any written or oral statement, news release or other
announcement relating to Employee's employment by the Company or relating to the
Company, its subsidiaries, customers or personnel, which is designed to
embarrass or criticize any of the foregoing.
8. Employee agrees that in the event of any breach of the
covenants contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies
that may be available to the Company, the Company may cease all payments
required to be made to Employee under the Plan and recover all such payments
previously made to Employee pursuant to the Plan. The parties agree that any
such breach would cause injury to the Company which cannot reasonably or
adequately be quantified and that such relief does not constitute in any way a
penalty or a forfeiture.
9. Employee, for Employee, Employee's family, representatives,
successors and assigns releases and forever discharges the Company and its
successors, assigns, subsidiaries, affiliates, directors, officers, employees,
attorneys, agents and trustees or administrators of any Company plan from any
and all claims,
--2--
<PAGE> 12
demands, debts, damages, injuries, actions or rights of action of any nature
whatsoever, whether known or unknown, which Employee had, now has or may have
against the Company, its successors, assigns, subsidiaries, affiliates,
directors, officers, employees, attorneys, agents and trustees or administrators
of any Company plan, from the beginning of Employee's employment to and
including the date of this Agreement relating to or arising out of Employee's
employment with the Company or the termination of such employment other than a
claim with respect to a vested right Employee may have to receive benefits under
any plan maintained by the Company. Employee represents that Employee has not
filed any action, complaint, charge, grievance or arbitration against the
Company or any of its successors, assigns, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents and trustees or administrators of any
Company plan.
10. Employee covenants that neither Employee, nor any of
Employee's respective heirs, representatives, successors or assigns, will
commence, prosecute or cause to be commenced or prosecuted against the Company
or any of its successors, assigns, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents and trustees or administrators of any
Company plan any action or other proceeding based upon any claims, demands,
causes of action, obligations, damages or liabilities which are being released
by this Agreement, nor will Employee seek to challenge the validity of this
Agreement, except that this covenant not to sue does not affect Employee's
future right to enforce appropriately the terms of this Agreement in a court of
competent jurisdiction.
11. Employee acknowledges that (a) Employee has been advised
to consult with an attorney at Employee's own expense before executing this
Agreement and that Employee has been advised by an attorney or has knowingly
waived Employee's right to do so, (b) Employee has had a period of at least
twenty-one (21) days within which to consider this Agreement, (c) Employee has a
period of seven (7) days from the date that Employee signs this Agreement within
which to revoke it and that this Agreement will not become effective or
enforceable until the expiration of this seven (7) day revocation period, (d)
Employee fully understands the terms and contents of this Agreement and freely,
voluntarily, knowingly and without coercion enters into this Agreement, (e)
Employee is receiving greater consideration hereunder than Employee would
receive had Employee not signed this Agreement and that the consideration
hereunder is given in exchange for all of the provisions hereof and (f) the
waiver or release by Employee of rights or claims Employee may have under Title
VII of the Civil Rights Act of 1964, The Employee Retirement Income Security Act
of 1974, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Rehabilitation Act, the Worker Adjustment and Retraining
Act (all as amended) and/or any other local, state or federal law dealing with
employment or the termination thereof is knowing and voluntary and, accordingly,
that it shall be a breach of this Agreement to institute any action or to
recover any damages that would be in conflict with or contrary to this
acknowledgment or the releases Employee has granted hereunder. Employee
understands and agrees that the Company's payment of money and other benefits to
Employee and Employee's signing of this Agreement does not in any way indicate
that Employee has any viable claims against the Company or that the Company
admits any liability whatsoever.
12. This Agreement constitutes the entire agreement of the
parties and all prior negotiations or representations are merged herein. It
shall be binding upon and
--3--
<PAGE> 13
shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and legal representatives but neither this Agreement
nor any rights hereunder shall be assignable by Employee without the Company's
written consent. In addition, this Agreement supersedes any prior employment or
compensation agreement, whether written, oral or implied in law or implied in
fact between Employee and the Company, other than those contracts and agreements
excepted from the application of section 5.7 of the Plan pursuant to the terms
of such section, which prior agreements are hereby terminated.
13. If for any reason any one or more of the provisions of
this Agreement shall be held or deemed to be inoperative, unenforceable or
invalid by a court of competent jurisdiction, such circumstances shall not have
the effect of rendering such provision invalid in any other case or rendering
any other provisions of this Agreement inoperative, unenforceable or invalid.
14. This Agreement shall be construed in accordance with the
laws of the State of New Jersey, except to the extent superseded by applicable
federal law.
15. This Agreement shall terminate in its entirety any Change
in Control Agreement between the Company and Employee.
IN WITNESS WHEREOF, Employee and The Dun & Bradstreet
Corporation, by its duly authorized agent, have hereunder executed this
Agreement.
Dated:
--------------------------------
Employee
THE DUN & BRADSTREET CORPORATION
--------------------------------
Title:
--4--
<PAGE> 14
Annex II
Summary of Benefit Entitlements
Under The Dun & Bradstreet
Executive Transition Plan
<TABLE>
<S> <C>
Employment with ______________________________
Company Since:
Effective Date ______________________________
of Eligible Termination:
Positions Terminated: ______________________________
Salary Continuation: $____ per week for 104 weeks
Welfare Benefit Continuation: [LIST NAMES OF MEDICAL, DENTAL,
LIFE PLANS UNDER WHICH
EMPLOYEE COVERED]
Annual Bonus Payment: [x]/12 of the annual bonus otherwise
payable to you at time of normal payment.
Long-Term Bonus Payments: [x]/[y] of the long-term bonus otherwise
payable to you for the _______ cycles
at time of normal payment.
Executive Outplacement: As provided by the Company.
Financial Planning/Counseling:
</TABLE>
THE DESCRIPTION OF BENEFITS CONTAINED IN THIS APPENDIX IS ONLY A
SUMMARY AND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN. REFER
TO YOUR SUMMARY PLAN DESCRIPTION FOR MORE DETAIL.
<PAGE> 1
EXHIBIT 10.29
PENSION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
As in effect on January 1, 2000 with certain earlier effective dates
I. Purpose of the Plan
The purpose of the Pension Benefit Equalization Plan of The Dun &
Bradstreet Corporation (the "Plan") is to provide a means of equalizing the
benefits of those employees of The Dun & Bradstreet Corporation (the
"Corporation") and it subsidiaries participating in the Retirement Account of
The Dun & Bradstreet Corporation (the "Retirement Account") whose funded
benefits under the Retirement Account are or will be limited by the application
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the Internal Revenue Code of 1986, as amended (the "Code") or any applicable law
or regulation. The Plan is intended to be an "excess benefit plan", as that term
is defined in Section 3(36) of ERISA, with respect to those participants whose
benefits under the Retirement Account have been limited by Section 415 of the
Code, and a "top hat" plan meeting the requirements of Sections 201(2),
301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA with respect to those participants
whose benefits under the Retirement Account have been limited by Section
401(a)(17) of the Code.
II. Administration of the Plan
The Board of Directors ("Board") of the Corporation and the
Compensation and Benefits Committee appointed by the Board (the "Committee")
severally (and not jointly) shall be responsible for the administration of the
Plan. The Committee shall consist of not less than three (3) nor more than seven
(7) members, as may be appointed by the Board from time to time. Any member of
the Committee may resign at will by notice to the Board or be removed at any
time (with or without cause) by the Board.
The members of the Committee may from time to time allocate
responsibilities among themselves and may delegate to any management committee,
employee, director or agent its responsibility to perform any act hereunder,
including without limitation those matters involving the exercise of discretion,
provided that such delegation shall be subject to revocation at any time at its
discretion.
The Committee (and its delegees) shall have the exclusive authority to
interpret the provisions of the Plan and construe all of its terms (including,
without limitation, all disputed and uncertain terms), to adopt, amend, and
rescind rules and regulations for the administration of the
<PAGE> 2
2
Plan, and generally to conduct and administer the Plan and to make all
determinations in connection with the Plan as may be necessary or advisable. All
such actions of the Committee shall be conclusive and binding upon all
Participants, Former Participants, Vested Former Participants and Surviving
Spouses. All deference permitted by law shall be given to such interpretations,
determinations and actions.
Any action to be taken by the Committee shall be taken by a majority of
its members, either at a meeting or by written instrument approved by such
majority in the absence of a meeting. A written resolution or memorandum signed
by one Committee member and the secretary of the Committee shall be sufficient
evidence to any person of any action taken pursuant to the Plan.
Any person, corporation or other entity may serve in more than one
fiduciary capacity under the Plan.
III. Participation in the Plan
All members of the Retirement Account shall be eligible to participate
in this Plan whenever their benefits under the Retirement Account, as from time
to time in effect, would exceed the limitations on benefits and contributions
imposed by Sections 401, 415 or any other applicable Section of the Code,
calculated from and after September 2, 1974. For purposes of this Plan, benefits
of a participant in this Plan shall be determined as though no provision were
contained in the Retirement Account incorporating limitations imposed by
Sections 401, 415 or any other Section of the Code.
IV. Benefit Limitations
For purposes of this Plan and the Retirement Account, the limitations
imposed by Section 415 of the Code shall be deemed to be met when the sum of the
participant's defined benefit plan fraction and his defined contribution plan
fraction equals 1.0, as such fractions are computed for purposes of Section 415
of the Code and Section 19.4 of the Retirement Account. Effective for Plan Years
beginning on after December 31, 1999, in accordance with changes included in the
Small Business Job Protection Act of 1995, this Section IV shall no longer apply
with respect to any participant who has one (1) Hour of Service (as such term is
defined in the Retirement Account) after December 31, 1999.
V. Equalized Benefits
The Corporation shall pay to each eligible member of the Retirement
Account and his beneficiaries a supplemental pension benefit equal to the
benefit which would have been payable to them under the Retirement Account, as
if no provision were set forth therein incorporating limitations imposed by
Sections 401, 415 or any other applicable Section of the Code, to the extent
that such benefit otherwise payable under the Retirement Account exceeds the
benefit limitations related to the Retirement Account as described in Section
III of this Plan.
<PAGE> 3
3
Subject to Section XII of this Plan, such supplemental pension benefits
shall be payable in accordance with all of the terms and conditions applicable
to the participant's benefits under the Retirement Account, including whatever
optional benefits he may have elected; provided, however, if an Election (as
defined in Section IX of this Plan) or a Special Election (as defined in Section
X of this Plan) has been made and becomes effective prior to the date when
benefits under this Plan would otherwise be payable, the form of payment of
benefits under this Plan shall be in the form so elected pursuant to such
Election or Special Election; provided further, that notwithstanding any
Election or Special Election, if the lump sum value, determined in the same
manner as provided under Section IX below, of the benefits payable under this
Plan is Ten Thousand Dollars ($10,000) or less at the time such benefits are
payable under this Plan, such benefits shall be payable as a lump sum.
Any portion of the benefits payable under this Plan as a lump sum,
including any amounts payable as a lump sum under Section VI, shall be paid
sixty (60) days after the date when payments of the same benefits under this
Plan, if payable in the form of an annuity, would otherwise commence, or as soon
as practicable thereafter, provided the Committee has approved such payment. Any
such lump sum distribution of a participant's or beneficiary's benefits under
this Plan shall fully satisfy all present and future Plan liability with respect
to such participant or beneficiary for such portion or all of such benefits so
distributed. Any portion of the benefits payable under this Plan as an annuity
shall commence on the date when annuity benefits under this Plan would otherwise
commence, without regard to any Election or Special Election.
VI. Payments of Benefits in the Event of Death
In case of the death of the participant, the amount in his account
shall, where applicable and subject to Section XII of this Plan, be distributed
to the surviving beneficiary who has been designated to receive benefits under
the Retirement Account and in the manner which has been elected under the
Retirement Account; provided, however, if an Election (as defined in Section IX
of this Plan) or a Special Election (as defined in Section X of this Plan) has
been made and becomes effective prior to the date when benefits under this Plan
would otherwise be payable, the form of payment of benefits payable to such
surviving beneficiary under this Plan shall be in the form so elected pursuant
to such Election or Special Election; provided further, that notwithstanding any
Election or Special Election, if the lump sum value, determined in the same
manner as provided under Section IX below, of the benefits payable under this
Plan is Ten Thousand Dollars ($10,000) or less at the time such benefits are
payable to such surviving beneficiary under this Plan, such benefits shall be
payable as a lump sum.
If the participant has not designated a beneficiary under the
Retirement Account, or if no such beneficiary is living at the time of the
participant's death, the amount, if any, in the participant's account that is
distributable upon his death shall be distributed to the person or persons who
would otherwise be entitled to receive a distribution of the participant's
Retirement Account benefits. Payment to such person or persons shall completely
discharge the Plan with respect to the amount so paid.
<PAGE> 4
4
VII. Change in Control
Upon the occurrence of a "Change in Control" of the Corporation, as
such term is defined below,
(i) each participant and beneficiary already receiving benefits and/or
survivor's benefits under the Plan shall receive a lump sum
distribution of their unpaid benefits and/or survivor's benefits under
the Plan in an amount equal to the present value of such benefits
and/or survivor's benefits in full satisfaction of all present and
future Plan liability with respect to such participant or beneficiary,
and
(ii) each vested participant who is not already receiving benefits
under the Plan shall receive (a) a lump sum distribution of the present
value of his accrued benefit under the Plan as of the date of such
Change in Control, within thirty (30) days of the date of such Change
in Control and (b) a lump sum distribution of the present value of his
additional benefit, if any, accrued under the Plan from the date of the
Change in Control until the date he retires or terminates employment
with the Corporation, within thirty (30) days from the date of the
participant's retirement or termination of employment with the
Corporation.
In determining the amount of the lump sum distributions to be paid
under this Section VII, the following actuarial assumptions shall be used:
(I) the interest rate used shall be the interest rate used by the
Pension Benefit Guaranty Corporation for determining the value of
immediate annuities as of January 1st of either the year of the
occurrence of the Change in Control or the participant's retirement or
termination of employment, whichever is applicable;
(II) the 1983 Group Annuity Mortality Table shall be used; and
(III) it shall be assumed that all participants retired or terminated
employment with the Corporation on the date of the occurrence of the
Change in Control for purposes of determining the amount of the lump
sum distribution to be paid upon the occurrence of the Change in
Control.
For purposes of this Plan, a "Change in Control" shall be deemed to
have occurred if
(A) any "Person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, or any
corporation owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation), is or becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Corporation representing twenty
<PAGE> 5
5
percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities;
(B) during any period of twenty-four (24) months (not including any
period prior to the effective date of this provision), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (1) a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction
described in clause (A), (C) or (D) of this Section), (2) a director
designated by any Person (including the Corporation) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (3) a
director designated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's
securities) whose election by the Board or nomination for election by
the Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(C) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than (1)
a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than fifty percent
(50%) of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such
merger or consolidation and (2) after which no Person holds twenty
percent (20%) or more of the combined voting power of the then
outstanding securities of the Corporation or such surviving entity; or
(D) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
VIII. Funding
Benefits payable under this Plan shall not be funded and shall be made
out of the general funds of the Corporation; provided, however, that the
Corporation reserves the right to establish one (1) or more trusts to provide
alternate sources of benefit payments under this Plan, provided further,
however, that upon the occurrence of a "Potential Change in Control" of the
Corporation, as defined below, the appropriate officers of the Corporation are
authorized to make contributions to such a trust fund, established as an
alternate source of benefits payable under the Plan, as are necessary to fund
the lump sum payments to Plan participants required pursuant to Section VII of
this Plan in the event of a Change in Control of the Corporation; provided
further,
<PAGE> 6
6
however, that if payments are made from such trust fund, such payments will
satisfy the Corporation's obligations under this Plan to the extent made from
such trust fund.
In determining the amount of the necessary contribution to the trust
fund in the event of a Potential Change in Control, the following actuarial
assumptions shall be used:
(i) the interest rate used shall be the interest rate used by the
Pension Benefit Guaranty Corporation for determining the value of
immediate annuities as of January 1st of the year of the occurrence of
the Potential Change in Control;
(ii) the 1983 Group Annuity Mortality Table shall be used; and
(iii) it shall be assumed that all participants will retire or
terminate employment with the Corporation as soon as practicable after
the occurrence of the Potential Change in Control.
For the purposes of this Plan, "Potential Change in Control" means:
(a) the Corporation enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control of the
Corporation;
(b) any person (including the Corporation) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Corporation;
(c) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation (or a
Corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation), who is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing
nine and one-half percent (9.5%) or more of the combined voting power
of the Corporation's then outstanding securities, increases his
beneficial ownership of such securities by five percent (5%) or more
over the percentage so owned by such person; or
(d) the Board of Directors of the Corporation adopts a resolution to
the effect that, for purposes of this Plan, a Potential Change in
Control of the Corporation has occurred.
IX. Election of Form of Payment
A participant under this Plan may make an election, on a form supplied
by the Committee, to receive all, none, or a specified portion of his benefits
under this Plan in a lump sum and to receive any balance of such benefits in the
form of an annuity (an "Election"); provided, that any such Election shall be
effective for purposes of this Plan only if (i) such participant remains in the
employment of the Corporation or an Affiliate (as defined under
<PAGE> 7
7
Section XII below), as the case may be, for the full twelve (12) calendar months
immediately following the Election Date of such Election, except in the case of
such participant's death or disability, as provided below, and (ii) such
participant complies with the administrative procedures set forth by the
Committee with respect to the making of the Election. A participant making such
Election shall be subject to the provisions of Section XII of this Plan.
A participant may elect a payment form different than the payment form
previously elected by him under this Section IX by filing a revised election
form; provided, that any such new Election shall be effective only if the
conditions in clauses (i) and (ii) of the immediately preceding paragraph are
satisfied with respect to such new Election. Any prior Election made by a
participant that has satisfied such conditions remains effective for purposes of
this Plan until such participant has made a new Election that satisfies such
conditions.
A participant making an election under this Section IX may specify the
portion of his benefits under this Plan to be received in a lump sum as follows:
zero percent (0%), twenty five percent (25%), fifty percent (50%), seventy-five
percent (75%) or one hundred percent (100%).
In the event a participant who has made an Election dies or becomes
"totally disabled" (as defined in The Dun & Bradstreet Corporation Long Term
Disability Plan) while employed by the Corporation or an Affiliate and such
death or total disability occurs during the twelve (12) calendar month period
immediately following the Election Date of such Election, the condition that
such participant remain employed with the Corporation or an Affiliate (as
defined in Section XII) for such twelve (12) month period shall be deemed to be
satisfied and such Election shall be effective with respect to benefits payable
to such participant or participant's beneficiaries under this Plan.
The amount of any portion of the benefits payable as a lump sum under
this Section IX will equal the present value of such portion of such benefits,
and the present value shall be determined (i) based on a discount rate equal to
the average of eighty-five percent (85%) of the fifteen (15) year non-callable
U.S. Treasury bond yields as of the close of business on the last business day
of each of the three (3) months immediately preceding the date the annuity value
is determined and (ii) using the 1983 Group Annuity Mortality Table.
"Election Date" for purposes of this Plan means the date that a
properly completed election form with respect to an Election or Special Election
(as defined in Section X below) is received by the Corporate Assistant Treasurer
of the Corporation.
X. Special Election of Form of Payment
Any participant under this Plan (except for the Chairman of the Board
of Directors of the Corporation on December 21, 1994) who, as of December 31,
1994, (i) is age fifty-four (54) or older and (ii) has at least four (4) years
of Credited Service (as defined in the Corporation's Supplemental Executive
Benefit Plan), may make an election, on a form supplied by the Committee, to
receive all, none, or a specified portion, in the same percentages as described
in
<PAGE> 8
8
Section IX above, of his benefits under this Plan in a lump sum and to receive
any balance of such benefits in the form of an annuity (a "Special Election");
provided, that any such Special Election shall be effective for purposes of this
Plan only if such participant remains in employment with the Corporation or an
Affiliate (as defined in Section XII below), as the case may be, for the one (1)
calendar month immediately following the Election Date, except in the case of
death or disability as provided below and complies with the administrative
procedures set forth by the Committee with respect to the making of the Special
Election; and provided further, that the Election Date with respect to any such
Special Election may not be later than January 31, 1995. A participant making
such Special Election shall be subject to the provisions of Section XII of this
Plan.
In the event a participant who has made a Special Election dies or
becomes "totally disabled" (as defined in The Dun & Bradstreet Corporation Long
Term Disability Plan) while employed by the Corporation or an Affiliate (as
defined in Section XII below) and such death or total disability occurs during
the one (1) calendar month period immediately following the Election Date of
such Special Election, the participant shall, for purposes of this Section X, be
deemed to have been employed with the Corporation or an Affiliate (as defined in
Section XII below), as the case may be, for such one (1) calendar month period,
and such Special Election shall be effective with respect to benefits payable to
such participant or participant's beneficiaries under this Plan.
The amount of any portion of the benefits payable as a lump sum under
this Section X will equal the present value of such portion of such benefits,
and the present value shall be determined (i) based on a discount rate equal to
the average of eighty-five percent (85%) of the fifteen (15) year non-callable
U.S. Treasury bond yields as of the close of business on the last business day
of each of the three (3) months immediately preceding the date the annuity value
is determined and (ii) using the 1983 Group Annuity Mortality Table.
XI. Indemnification
Subject to certain conditions as provided below, the Corporation shall
indemnify each participant or beneficiary who receives any benefits under this
Plan in the form of an annuity for any interest and penalties that may be
assessed by the U.S. Internal Revenue Service (the "Service") with respect to
U.S. federal income tax on such benefits (payable under the Plan in the form of
an annuity) upon final settlement or judgment with respect to any such
assessment in favor of the Service, provided the basis for the assessment is
that the amendment of this Plan to provide for the Election or the Special
Election causes the participant or the beneficiary, as the case may be, to be
treated as being in constructive receipt of such benefits prior to the time when
such benefits are actually payable under the Plan.
In case any such assessment shall be made against a participant or
beneficiary, such participant or beneficiary, as the case may be (the
"indemnified party"), shall promptly notify the Corporation's Treasurer in
writing, and the Corporation, upon request of such indemnified party, shall
select and retain an accountant or legal counsel reasonably satisfactory to the
indemnified
<PAGE> 9
9
party to represent the indemnified party in connection with such assessment and
shall pay the fees and expenses of such accountant or legal counsel related to
such representation, and the Corporation shall have the right to determine how
and when such assessment by the Service should be settled, litigated or
appealed. In connection with any such assessment, any indemnified party shall
have the right to retain his own accountant or legal counsel, but the fees and
expenses of such accountant or legal counsel shall be at the expense of such
indemnified party unless the Corporation and the indemnified party shall have
mutually agreed to the retention of such accountant or legal counsel.
The Corporation shall not be liable to a participant or beneficiary for
any payments under this Section XI with respect to any assessment described in
the second preceding paragraph if such participant or beneficiary against whom
such assessment is made has not notified or allowed the Corporation to
participate with respect to such assessment in the manner described above or,
following demand by the Corporation, has not made the deposit to avoid
additional interest or penalties as described below, or has agreed to, or
otherwise settled with the Service with respect to, such assessment without the
Corporation's written consent, provided, however, (i) if such assessment is
settled with such consent or if there is a final judgment for the Service, (ii)
the Corporation has been notified and allowed to participate in the manner as
provided above, and (iii) such participant or beneficiary has made any required
deposit to avoid additional interest or penalties as described below, the
Corporation agrees to indemnify the indemnified party to the extent set forth in
this Section XI.
In the event a final settlement or judgment with respect to an
assessment as described under this Section XI has been made against a
participant or beneficiary, such participant or beneficiary may elect to receive
a portion or all of his benefits that is otherwise payable as an annuity under
the Plan in the form of a lump sum in accordance with procedures as the
Committee may set forth, and such lump sum distribution will be made as soon as
practicable after any such election. At the time such assessment is made against
such participant or beneficiary (the "assessed party") and prior to any final
settlement or judgement with respect to such assessment, if so directed by the
Corporation, such assessed party shall, as a condition to receiving an indemnity
under this Section XI, as soon as practicable after notification of such
assessment make a deposit with the Service to avoid any additional interest or
penalties with respect to such assessment and, upon the request of such assessed
party, the Corporation shall lend, or arrange for the lending to, such assessed
party a portion of his remaining benefit under the Plan, not to exceed the lump
sum value of such benefit under the Plan, determined using the actuarial
assumptions set forth in Section IX, solely for purposes of providing the
assessed party with funds to make a deposit with the Service to avoid any
additional interest or penalties with respect to such assessment.
XII. Limitations on Payment of Benefits
If a participant under this Plan has, at any time, made an Election or
a Special Election to have all or a portion of the benefits under this Plan
distributed in a lump sum, such participant shall be subject to this Section
XII.
<PAGE> 10
10
Notwithstanding any other provision of this Plan to the contrary, no
benefits or further benefits, as the case may be, shall be paid to a participant
who is subject to this Section XII if the Committee reasonably determines that
such participant has:
(i) To the detriment of the Corporation or any Affiliate, directly or
indirectly acquired, without the prior written consent of the
Committee, an interest in any other company, firm, association, or
organization (other than an investment interest of less than one
percent (1%) in a publicly-owned company or organization), the business
of which is in direct competition with the business (present or future)
of the Corporation or any of its Affiliates;
(ii) To the detriment of the Corporation or any Affiliate, directly or
indirectly competed with the Corporation or any Affiliate as an owner,
employee, partner, director or contractor of a business, in a field of
business activity in which the participant has been primarily engaged
on behalf of the Corporation or any Affiliate or in which he has
considerable knowledge as a result of his employment by the Corporation
or any Affiliate, either for his own benefit or with any person other
than the Corporation or any Affiliate, without the prior written
consent of the Committee; or
(iii) Been discharged from employment with the Corporation or any
Affiliate for "Cause."
An "Affiliate" for purposes of this Plan means any corporation,
partnership, division or other organization controlling, controlled by or under
common control with the Corporation or any joint venture entered into by the
Corporation.
"Cause" for purposes of this Section XII shall include the occurrence
of any of the following events or such other dishonest or disloyal act or
omission as the Committee determines to be "cause":
(a) The participant has misappropriated any funds or property of the
Corporation or any Affiliate;
(b) The participant has, without the prior knowledge or written consent
of the Committee, obtained personal profit as a result of any
transaction by a third party with the Corporation or any Affiliate; or
(c) The participant has sold or otherwise imparted to any person, firm,
or corporation the names of the customers of the Corporation or any
Affiliate or any confidential records, data, formulae, specifications
and other trade secrets or other information of value to the
Corporation or any Affiliate derived by his or her association with the
Corporation or any Affiliate.
<PAGE> 11
11
In any case described in this Section XII, the participant shall be
given prior written notice that no benefits or no further benefits, as the case
may be, will be paid to such participant. Such written notice shall specify the
particular act(s), or failures to act, on the basis of which the decision to
terminate his benefits has been made.
Notwithstanding any other provision of this Plan to the contrary, a
participant who receives in a lump sum any portion of his benefits under this
Plan pursuant to an Election or Special Election shall receive such lump sum
portion of his benefits subject to the condition that if such participant
engages in any of the acts described in clause (i) or (ii) of this Section XII,
then such participant shall, within sixty (60) days after written notice by the
Corporation, repay to the Corporation the amount described in the immediately
following sentence. The amount to be repaid shall equal the amount, as
determined by the Committee, of the participant's lump sum benefit paid under
this Plan to which such participant would not have been entitled, if such lump
sum benefit had instead been payable in the form of an annuity under this Plan
and such annuity payments were subject to the provisions of this Section XII.
XIII. Miscellaneous
This Plan may be terminated at any time by the Board, in which event
the rights of participants to their accrued benefits shall become
nonforfeitable. This Plan may also be amended at any time by the Board, except
that no such amendment shall deprive any participant of his benefits accrued at
the time of such amendment.
No right to payment or any other interest under this Plan may be
alienated, sold, transferred, pledged, assigned, or made subject to attachment,
execution, or levy of any kind.
Nothing in this Plan shall be construed as giving any employee the
right to be retained in the employ of the Corporation. The Corporation expressly
reserves the right to dismiss any employee at any time without regard to the
effect which such dismissal might have upon him under the Plan.
This Plan shall be construed, administered and enforced according to
the laws of the State of New York.
XIV. Other
Notwithstanding anything in this Plan to the contrary, in accordance
with the terms of Article IV of the Employee Benefits Agreement dated as of
October 28, 1996, among the Corporation, Cognizant Corporation ("Cognizant") and
ACNielsen Corporation ("ACNielsen") ("Cognizant EBA"):
(i) Following the Effective Time (as such term is defined in the
Cognizant EBA) of the reorganization of the Corporation's businesses
referred to therein, the Corporation
<PAGE> 12
12
shall retain liability for benefits under this Plan of ACNielsen
Employees (as such term is defined in the Cognizant EBA) and Cognizant
Employees (as such term is defined in the Cognizant EBA) who were
participants in this Plan immediately prior to the Effective Time (the
"Cognizant and ACNielsen PEBP Participants") to the extent that, prior
to the Effective Time, such benefits were accrued and to which such
participants had earned vested rights hereunder;
(ii) Solely with respect to determining the level of benefits payable
under this Plan, Cognizant and ACNielsen shall have the authority to
consent to the termination of employment prior to age sixty (60) of a
Cognizant or ACNielsen PEBP Participant from the Cognizant Group (as
such term is defined in the Cognizant EBA) or the ACNielsen Group (as
such term is defined in the Cognizant EBA), as the case may be;
(iii) Benefits under this Plan shall not become payable to a Cognizant
or ACNielsen PEBP Participant until such participant terminates
employment from the Cognizant Group or the ACNielsen Group (as the case
may be);
(iv) Employment of a Cognizant or ACNielsen PEBP Participant by a
member of the Cognizant Group or the ACNielsen Group (as the case may
be) after the Effective Time shall not be deemed a violation of the
noncompetition clauses of Article XII of this Plan; and
(v) Cognizant and ACNielsen PEBP Participants who participated in this
Plan immediately prior to the Effective Time shall receive a
distribution hereunder, based on their notional elective deferrals
through the Effective Time, at the time distributions are otherwise
made under the Plan.
Notwithstanding anything in this Plan to the Contrary, in accordance
with the terms of Article IV of the Employee Benefits Agreement dated as of June
30, 1998, between the Corporation and The New Dun & Bradstreet Corporation ("RHD
EBA"):
(a) Following the Effective Time (as such term is defined in the RHD
EBA) of the reorganization of the Corporation's businesses referred to
therein, the Corporation shall retain liability for benefits under this
Plan of those persons who, immediately after the Effective Time, are
employed by R.H. Donnelly Inc. ("RHD") or any member of the RHD Group
(as such term is defined in the RHD EBA) who were participants in this
Plan immediately prior to the Effective Time (the "RHD PEBP
Participants") to the extent that, prior to the Effective Time, such
benefits were accrued and to which such participants had earned vested
rights hereunder;
(b) Solely with respect to determining the level of benefits payable
under this Plan, RHD shall have the authority to consent to the
termination of employment prior to age sixty (60) of an RHD PEBP
Participant from the RHD Group;
<PAGE> 13
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(c) Benefits under this Plan shall not become payable to an RHD PEBP
Participant until such participant terminates employment from the RHD
Group;
(d) Employment of an RHD PEBP Participant by the RHD Group after the
Effective Time, shall not be deemed a violation of the noncompetition
clauses of Article XII of this Plan; and
(e) RHD PEBP Participants who participated in this Plan immediately
prior to the Effective Time shall receive a distribution hereunder,
based on their notional elective deferrals through the Effective Time,
at the time distributions are otherwise made under the Plan.
XV. Effective Date
This Plan shall be effective as of October 17, 1990, upon its adoption
by the Board of Directors of The Dun & Bradstreet Corporation.
<PAGE> 1
EXHIBIT 10.30
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
OF
THE DUN & BRADSTREET CORPORATION
As in effect as of January 1, 2000 with certain earlier effective dates
PREAMBLE
The principal purpose of this Supplemental Executive Benefit
Plan is to ensure the payment of a competitive level of retirement income and
disability benefits in order to attract, retain and motivate selected executives
of the Corporation and its affiliated companies.
SECTION 1
Definitions
1.1 "Affiliate" means any corporation, partnership, division
or other organization controlling, controlled by or under common control with
the Corporation or any joint venture entered into by the Corporation.
1.2 "Average Final Compensation" means the greater of (a) a
Participant's or Vested Former Participant's average final compensation as
defined in The Dun & Bradstreet Corporation Retirement Account as if no
provision were set forth therein incorporating limitations imposed by Sections
401, 415 or any other applicable Section of the Code, or (b) if the Participant
is disabled at the time of his Retirement, the Participant's Basic Earnings. For
purposes of (a), Average Final Compensation will not include an employee's
compensation while the employee is a Vested Former Participant or a Former
Participant and will include compensation from the date of the Participant's
employment with the Corporation or an Affiliate.
1.3 "Basic Disability Plan" means as to any Participant either
(a) the long-term disability plan of the Corporation or an Affiliate pursuant to
which long-term disability benefits are payable to such Participant or (b) if
the Affiliate which employs such Participant has not adopted a long-term
disability plan, the long-term disability plan of the Corporation.
1.4 "Basic Disability Plan Benefit" means the amount of
benefits actually payable to a Participant from the Basic Disability Plan or
which would be payable if the Participant were a member of such Plan. For
purposes of determining a Participant's Basic Disability Plan Benefit, a
disability benefit shall not be treated as actually payable to a Participant
unless the Participant is actually covered by a long-term disability plan of the
Corporation or an Affiliate.
<PAGE> 2
2
1.5 "Basic Earnings" means the total amount paid by the
Corporation or any Affiliate to a Participant in the twelve (12) months
immediately preceding the onset of the Participant's disability, (a) including
salary, wages, regular cash bonuses and commissions, lump sum payments in lieu
of foregone merit increases, "bonus buyouts" as the result of job changes, and
any portion of such amounts (i) voluntarily deferred or reduced by the
Participant under any employee benefit plan of the Corporation or any Affiliate
available to all levels of Employees of the Corporation and/or any Affiliate(s)
on a non-discriminatory basis upon satisfaction of eligibility requirements or
(ii) voluntarily deferred or reduced under any executive deferral plan of the
Corporation or any Affiliate (so long as such amounts would otherwise not have
been excluded had they not been deferred), but (b) excluding any pension,
retainers, severance pay, special stay-on bonus payments, income derived from
stock options, stock appreciation rights and restricted stock awards and
dispositions of stock acquired thereunder, payments dependent upon any
contingency after the period of Credited Service and other special remuneration
(including performance units).
1.6 "Basic Plan" means, as to any Participant or Vested Former
Participant, the defined benefit pension plan of the Corporation or an
Affiliate, which is intended to meet the requirements of Section 401(a) of the
Code and pursuant to which retirement benefits are payable to such Participant
or Vested Former Participant or to the Surviving Spouse or designated
beneficiary of a deceased Participant or Vested Former Participant.
1.7 "Basic Plan Benefit" means the amount of benefits payable
from the Basic Plan to a Participant or Vested Former Participant.
1.8 "Board" means the Board of Directors of The Dun &
Bradstreet Corporation.
1.9 "Change in Control" means:
(a) Any "person," as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, or any Corporation
owned, directly or indirectly, by the shareholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities;
(b) during any period of twenty-four (24) months (not
including any period prior to the effective date of this provision), individuals
who at the beginning of such period constitute the Board, and any new director
(other than (i) a director designated by a person who has entered into an
agreement with the Corporation to effect a transaction described in clause (a),
(c) or (d) of this Section), (ii) a director designated by any Person (including
the Corporation) who publicly announces an intention to take or to consider
taking actions
<PAGE> 3
3
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control, or (iii) a director designated
by any Person who is the Beneficial Owner, directly or indirectly, of securities
of the Corporation representing ten percent (10%) or more of the combined voting
power of the Corporation's securities) whose election by the Board or nomination
for election by the Corporation's shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to constitute at least
a majority thereof;
(c) the shareholders of the Corporation approve a merger
or consolidation of the Corporation with any other company, other than (i) a
merger or consolidation which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the combined voting power
of the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation and (ii) after which no Person
holds twenty percent (20%) or more of the combined voting power of the then
outstanding securities of the Corporation or such surviving entity; or
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets.
1.10 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.11 "Committee" means the Compensation and Benefits Committee
of the Board.
1.12 "Corporation" means The Dun & Bradstreet Corporation, a
Delaware corporation, and any successor or assigns thereto.
1.13 "Credited Service" means a Participant's, Former
Participant's or Vested Former Participant's Credited Service as defined in The
Dun & Bradstreet Corporation Retirement Account, except that Credited Service
will include service while the Participant is receiving Disability Benefits and
service from the date the Participant, Former Participant or Vested Former
Participant was employed by the Corporation or an Affiliate, but will not
include service while an employee is a Former Participant or Vested Former
Participant. In the case of an acquired company, however, the Participant's,
Former Participant's or Vested Former Participant's service with that company
prior to the date of acquisition will not be counted unless such service is
recognized for benefit accrual purposes under the relevant Basic Plan.
1.14 "Disability Benefit" means the benefits provided to
Participants and Vested Former Participants pursuant to Section 5 of the Plan.
<PAGE> 4
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1.15 "Effective Date" means July 1, 1989.
1.16 "Election" means an election as to the form of benefit
payment made pursuant to Section 4.5 of the Plan.
1.17 "Election Date" means the date that a properly completed
election form with respect to an Election or a Special Election is received by
the Corporation's Treasurer.
1.18 "Former Participant" means an employee who has not
completed five (5) or more years of Credited Service at the time his employment
with the Corporation or an Affiliate terminates or at the time he was removed,
upon written notice by the Chief Executive Officer of the Corporation and with
the approval of the Committee, from further participation in the Plan.
1.19 "Other Disability Income" means (a) the disability
insurance benefit that the Participant is entitled to receive under the Federal
Social Security Act while he is receiving the Basic Disability Plan Benefit and
(b) the disability income payable to a Participant from the following sources:
(i) any supplemental executive disability plan of any
Affiliate; and
(ii) any other contract, agreement or other arrangement
with the Corporation or an Affiliate (excluding any Basic Disability Plan) to
the extent it provides disability benefits.
1.20 "Other Retirement Income" means (a)(i) the Social
Security retirement benefit that the Participant or Vested Former Participant is
entitled to receive under the Federal Social Security Act as of the date of his
Retirement or (ii) if the Participant or Vested Former Participant is not
eligible to receive a Social Security retirement benefit commencing on such
date, the Social Security retirement benefit he is entitled to receive at the
earliest age he is eligible to receive such a benefit, discounted to the date
his Benefit under the Plan actually commences, using the actuarial assumptions
then in use under the relevant Basic Plan, assuming for purposes of (i) and (ii)
above that for years prior to the Participant's employment with the Corporation
and for years following the Participant's termination of employment with the
Corporation up until the Participant attains age sixty-two (62), the Participant
earned compensation so as to accrue the maximum Social Security benefits, and
(b) the retirement income payable to a Participant or Vested Former Participant
from the following sources:
(A) any retirement benefits equalization plan of the
Corporation or an Affiliate or any former Affiliate, the purpose of which is to
provide the Participant or Vested Former Participant with the benefits he is
precluded from receiving under any relevant Basic Plan as a result of
limitations under the Internal Revenue Code; and
<PAGE> 5
5
(B) any supplemental executive retirement plan of any
Affiliate; and
(C) any other contract, agreement or other arrangement
with the Corporation or an Affiliate or any former Affiliate (excluding any
Basic Plan and any defined contribution plan intended to meet the requirements
of Section 401(a) of the Code) to the extent it provides retirement or pension
benefits.
1.21 "Participant" means an employee of the Corporation or an
Affiliate who becomes a participant in the Plan pursuant to Section 2 and has
not been removed pursuant to Section 2.2.
1.22 "Plan" means this Supplemental Executive Benefit Plan of
The Dun & Bradstreet Corporation, as amended from time to time.
1.23 "Potential Change in Control" means:
(a) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control of
the Corporation;
(b) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Corporation;
(c) any person, other than a trustee or their fiduciary
holding securities under an employee benefit plan of the Corporation (or a
Corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation), who is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing nine and one half
percent (9.5%) or more of the combined voting power of the Corporation's then
outstanding securities, increases his beneficial ownership of such securities by
five percent (5%) or more over the percentage so owned by such person; or
(d) the Board adopts a resolution to the effect that, for
purposes of this Plan, a Potential Change in Control of the Corporation has
occurred.
1.24 "Retirement" means the termination, other than at death,
of a Participant's or Vested Former Participant's employment with the
Corporation or an Affiliate (a) after reaching age fifty-five (55) and
completing ten (10) years of Vesting Service, or (b) immediately following the
cessation of the payment of Disability Benefits under the Plan to such
Participant or Vested Former Participant while he is still disabled, as such
term is defined under the Basic Disability Plan.
<PAGE> 6
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1.25 "Retirement Benefit" means the benefits provided to
Participants and Vested Former Participants pursuant to Section 4 of the Plan.
1.26 "Special Election" means an election as to the form of
benefit payment made pursuant to Section 4.6 of the Plan.
1.27 "Surviving Spouse" means the spouse of a deceased
Participant or Vested Former Participant to whom such Participant or Vested
Former Participant is legally married immediately preceding such Participant or
Vested Former Participant's death.
1.28 "Surviving Spouse's Benefits" mean the benefits provided
to a Participant's or Vested Former Participant's Surviving Spouse pursuant to
Section 6 of the Plan.
1.29 "Vested Former Participant" means an employee who
completed five (5) or more years of Credited Service at the time his employment
with the Corporation or an Affiliate terminated or at the time he was removed,
upon written notice by the Chief Executive Officer of the Corporation and with
the approval of the Committee, from further participation in the Plan.
1.30 The masculine gender, where appearing in the Plan, will
be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary.
SECTION 2
Eligibility and Participation
2.1 All key management employees of the Corporation and its
Affiliates who are responsible for the management, growth or protection of the
business of the Corporation and its Affiliates, who are designated by the Chief
Executive Officer of the Corporation in writing, are eligible, upon approval by
the Committee, for participation in the Plan as of the effective date of such
designation.
2.2 A Participant's participation in the Plan shall terminate
upon termination of his or her employment. Prior to termination of employment, a
Participant may be removed, upon written notice by the Chief Executive Officer
of the Corporation and with the approval of the Committee, from further
participation in the Plan. As of the date of termination or removal, no further
benefits shall accrue to such individual.
<PAGE> 7
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SECTION 3
Eligibility For Benefits
3.1 Each Participant or Vested Former Participant is eligible
for an annual Retirement Benefit under this Plan upon Retirement, or upon
termination of employment with the Corporation before Retirement after
completing five (5) or more years of Credited Service.
3.2 Each Participant is eligible to commence receiving a
Disability Benefit under this Plan upon the actual or deemed commencement of
benefits under the relevant Basic Disability Plan. Notwithstanding the above, a
Participant may not receive a Disability Benefit if he has not previously
enrolled for the maximum disability insurance coverage available under the
relevant Basic Disability Plan.
3.3 Notwithstanding any other provision of the Plan to the
contrary, no benefits or no further benefits, as the case may be, shall be paid
to a Participant, Vested Former Participant or Surviving Spouse if the Committee
reasonably determines that such Participant or Vested Former Participant has:
(a) to the detriment of the Corporation or any Affiliate,
directly or indirectly acquired, without the prior written consent of the
Committee, an interest in any other company, firm, association, or organization
(other than an investment interest of less than one percent (1%) in a
publicly-owned company or organization), the business of which is in direct
competition with any business of the Corporation or an Affiliate;
(b) to the detriment of the Corporation or any Affiliate,
directly or indirectly competed with the Corporation or any Affiliate as an
owner, employee, partner, director or contractor of a business, in a field of
business activity in which the Participant or Vested Former Participant has been
primarily engaged on behalf of the Corporation or any Affiliate or in which he
has considerable knowledge as a result of his employment by the Corporation or
any Affiliate, either for his own benefit or with any person other than the
Corporation or any Affiliate, without the prior written consent of the
Committee; or
(c) been discharged from employment with the Corporation
or any Affiliate for "Cause". "Cause" shall include the occurrence of any of the
following events or such other dishonest or disloyal act or omission as the
Committee reasonably determines to be "cause":
(i) the Participant or Vested Former Participant has
misappropriated any funds or property of the Corporation or any Affiliate or
committed any other act of willful malfeasance or willful misconduct in
connection with his or her employment;
<PAGE> 8
8
(ii) the Participant or Vested Former Participant has,
without the prior knowledge or written consent of the Committee, obtained
personal profit as a result of any transaction by a third party with the
Corporation or any Affiliate;
(iii) the Participant or Vested Former Participant has
sold or otherwise imparted to any person, firm, or corporation the names of the
customers of the Corporation or any Affiliate or any confidential records, data,
formulae, specifications and other trade secrets or other information of value
to the Corporation or any Affiliate derived by his or her association with the
Corporation or any Affiliate;
(iv) the Participant or Vested Former Participant
fails, on a continuing basis, to perform such duties as are requested by any
employee to whom the Participant or Vested Former Participant reports or the
Board; or
(v) the Participant or Vested Former Participant
commits any felony or any misdemeanor involving moral turpitude.
In any case described in this Section 3.3, the Participant, Vested Former
Participant or Surviving Spouse shall be given prior written notice that no
benefits or no further benefits, as the case may be, will be paid to such
Participant, Vested Former Participant or Surviving Spouse. Such written notice
shall specify the particular act(s), or failures to act, on the basis of which
the decision to terminate benefits has been made.
3.4 (a) Notwithstanding any other provision of the Plan to the
contrary, a Participant or Vested Former Participant who receives in a lump sum
any portion of his Retirement Benefit pursuant to an Election or Special
Election shall receive such lump sum portion of his Retirement Benefit subject
to the condition that if such Participant or Vested Former Participant engages
in any of the acts described in clause (i) or (ii) of Section 3.3(c), then such
Participant or Vested Former Participant shall, within sixty (60) days after
written notice by the Corporation, repay to the Corporation the amount described
in Section 3.4(b).
(b) The amount described under this Section 3.4(b) shall
equal the amount, as determined by the Committee, of the Participant's or Vested
Former Participant's lump sum benefit paid under this Plan to which such
Participant or Vested Former Participant would not have been entitled, if such
lump sum benefit had instead been payable in the form of an annuity under this
Plan and such annuity payments were subject to the provisions of Section 3.3.
<PAGE> 9
9
SECTION 4
Amount and Form of Retirement Benefits
4.1 The Retirement Benefit provided by the Plan is designed to
provide each Participant and Vested Former Participant with an annual pension
from the Plan and certain other sources equal to his Retirement Benefit as
hereinafter specified. Thus, the Retirement Benefits described hereunder as
payable to Participants and Vested Former Participants will be offset by
retirement benefits payable from sources outside the Plan as specified herein.
4.2 (a) The Retirement Benefit of a Participant or Vested
Former Participant upon Retirement shall be an annual benefit equal to
(i) for a Participant or Vested Former Participant who
had attained age fifty (50) and had been credited with at least ten (10) years
of Vesting Service as of January 15, 1997 or a Participant or Vested Former
Participant whose age plus years of Vesting Service is equal to or greater than
seventy (70) as of January 15, 1997, or other individuals designated by the
Chief Executive Officer: fifty percent (50%) of his Average Final Compensation
with respect to his first ten (10) years of Credited Service, plus two percent
(2%) of such Average Final Compensation for each year of Credited Service in
excess of ten (10) years of Credited Service, but not to exceed fifteen (15)
years of Credited Service, offset by his Other Retirement Income and his Basic
Plan Benefit; a full month is credited for each completed and partial month of
age and Credited Service;
(ii) for each other Participant or Vested Former
Participant: forty percent (40%) of his Average Final Compensation with respect
to his first ten (10) years of credited service, plus two percent (2%) of
Average Final Compensation for each year of Credited Service in excess of ten
(10) years of Credited Service, but not to exceed twenty (20) years of Credited
Service, offset by his Other Retirement Income and his Basic Plan Benefit. A
full month is credited for each completed and partial month of Credited Service.
If such a Participant or Vested Former Participant retires before age sixty (60)
without the Corporation's consent, his Retirement Benefit shall be reduced by
three percent (3%) for each year or fraction thereof that Retirement commenced
prior to reaching age sixty (60).
(b) Any portion of the Retirement Benefit provided under
this Section 4.2 payable in the form of an annuity pursuant to Section 4.4 shall
be payable in monthly installments and will commence on the first day of the
calendar month coinciding with or next following the day the Participant or
Vested Former Participant retires, and any portion of such Retirement Benefit
payable in a lump sum pursuant to Section 4.4 shall be paid on the date that is
sixty (60) days after the date when annuity payments under this Section 4.2
commence, or would commence if any portion of the Retirement Benefit were
payable in the form of an annuity, or as soon as practicable thereafter,
provided the Committee has approved any such lump sum payments.
<PAGE> 10
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4.3 (a) Subject to Section 4.3(c), the Retirement Benefit of a
Participant or Vested Former Participant who terminates employment with the
Corporation with five (5) or more years of Credited Service before he is
eligible to retire under the relevant Basic Plan shall be an annual benefit
equal to
(i) for a Participant or Vested Former Participant who
had attained age fifty (50) and had been credited with at least ten (10) years
of Vesting Service as of January 15, 1997 or a Participant or Vested Former
Participant whose age plus years of Vesting Service is equal to or greater than
seventy (70) as of January 15, 1997, or other individuals designated by the
Chief Executive Officer: twenty-five percent (25%) of his Average Final
Compensation for his first five (5) years of Credited Service, plus five percent
(5%) of Average Final Compensation for each additional year of Credited Service
between six (6) and ten (10) years of Credited Service, plus two percent (2%) of
Average Final Compensation for each additional year of Credited Service from
eleven (11) to fifteen (15) years, offset by his Other Retirement Income and his
Basic Plan Benefit; a full month is credited for each completed and partial
month of Credited Service; and
(ii) for each other Participant or Vested Former
Participant: twenty percent (20%) of his Average Final Compensation with respect
to his first five (5) years of Credited Service, plus four percent (4%) of
Average Final Compensation for each additional year of Credited Service between
six (6) and ten (10) years of Credited Service, plus two percent (2%) of Average
Final Compensation for each additional year of Credited Service from eleven (11)
to twenty (20) years, offset by his Other Retirement Income and his Basic Plan
Benefit; a full month is credited for each completed and partial month of
Credited Service.
(b) Any portion of the Retirement Benefit provided under
this Section 4.3 payable in the form of an annuity pursuant to Section 4.4 shall
be payable in monthly installments and will commence on the first day of the
calendar month coinciding with or next following the day the Participant or
Vested Former Participant reaches age fifty-five (55) or the date of his
termination, if later, and any portion of such Retirement Benefit payable in a
lump sum pursuant to Section 4.4 shall be paid on the date that is sixty (60)
days after the date when annuity payments under this Section 4.3 commence, or
would commence if any portion of the Retirement Benefit were payable in the form
of an annuity, or as soon as practicable thereafter, provided the Committee has
approved any such lump sum payments.
(c) If a Participant or Vested Former Participant
terminates employment with the Corporation without the Corporation's consent,
and the payment of his Retirement Benefit commences, or would commence if it
were payable in the form of an annuity, before he reaches age sixty (60), his
Retirement Benefit shall be reduced by ten percent (10%) for each year or
fraction thereof that the payment of his Retirement Benefit commences, or would
commence if it were payable in the form of an annuity, prior to his reaching age
sixty (60).
<PAGE> 11
11
4.4 (a) Except as provided under Section 4.4(b) or Section
4.4(c), a Retirement Benefit under this Plan shall be payable to a Participant
or Vested Former Participant in the form of a straight life annuity and without
regard to any optional form of benefits elected under the Basic Plan.
(b) If a Participant or a Vested Former Participant makes
an Election while he is a Participant pursuant to Section 4.5 or a Special
Election pursuant to Section 4.6 and such Election or Special Election becomes
effective (i) prior to the date such Participant or such Vested Former
Participant retires or terminates employment with the Corporation or an
Affiliate and (ii) while he was still a Participant, a Retirement Benefit under
this Plan shall be payable to such Participant or such Vested Former Participant
in the form or combination of forms of payment elected pursuant to such Election
or Special Election under Section 4.5 or Section 4.6, as the case may be, and
without regard to any optional form of benefit elected under the Basic Plan. Any
lump sum distribution of a Participant's or Vested Former Participant's
Retirement Benefit under the Plan shall fully satisfy all present and future
Plan liability with respect to such Participant or Vested Former Participant for
such portion or all of such Retirement Benefit so distributed.
(c) Notwithstanding any Election or Special Election made
under Section 4.5 or 4.6, if the lump sum value, determined in the same manner
as provided under Section 4.5(a), of a Participant's or Vested Former
Participant's Retirement Benefit is Ten Thousand Dollars ($10,000) or less at
the time such Retirement Benefit is payable under this Plan, such benefit shall
be payable as a lump sum.
(d) If the Retirement Benefit under this Plan is payable
to a Participant or Vested Former Participant in a different form and/or at a
different time than his Other Retirement Income or his Basic Plan Benefits, the
offset provided in this Plan for such Participant's or Vested Former
Participant's Other Retirement Income and Basic Plan Benefit shall be converted,
using actuarial assumptions that are reasonable and appropriate and in
accordance with applicable law at the time the benefit under this Plan is
determined, to the extent required as follows, but solely for purposes of
calculating the amount of such offset:
(i) a percentage of the benefits to be offset equal to
the percentage of such Participant's or Vested Former Participant's benefits
payable in the form of an annuity under this Plan shall be actuarially converted
to the extent required into the form of a straight life annuity, commencing at
the time such benefits payable under this Plan commence or on the date such
Participant or Vested Former Participant would first become eligible for the
payment of such benefits under this Plan, if earlier; and
(ii) the balance, if any, of the benefits to be offset
shall be actuarially converted to a lump sum payment payable on the date which
is sixty (60) days after the date described in Section 4.4(d)(i).
<PAGE> 12
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4.5 (a) A Participant may elect, on a form supplied by the
Committee, to receive all, none, or a specified portion, as provided in Section
4.5(c), of his Retirement Benefit under the Plan in a lump sum and to receive
any balance of such Retirement Benefit in the form of an annuity; provided, that
any such Election shall be effective for purposes of this Plan only if the
conditions of Section 4.5(b) are satisfied. A Participant may elect a payment
form different than the payment form previously elected by him under this
Section 4.5(a) by filing a revised election form; provided, that any such new
Election shall be effective only if the conditions of Section 4.5(b) are
satisfied with respect to such new Election. Any prior Election made by a
Participant that has satisfied the conditions of Section 4.5(b) remains
effective for purposes of the Plan until such Participant has made a new
Election satisfying the conditions of Section 4.5(b). The amount of any portion
of a Participant's or a Vested Former Participant's Retirement Benefit payable
as a lump sum under this Section 4.5 will equal the present value of such
portion of the Retirement Benefit, and such present value shall be determined
(i) based on a discount rate equal to eighty-five percent (85%) of the average
of the fifteen (15) year non-callable U.S. Treasury bond yields as of the close
of business on the last business day of each of the three months immediately
preceding the date the annuity value is determined and (ii) using the 1983 Group
Annuity Mortality Table.
(b) A Participant's Election under Section 4.5(a) becomes
effective only if the following conditions are satisfied: (i) such Participant
remains in the employment of the Corporation or an Affiliate, as the case may
be, for the full twelve (12) calendar months immediately following the Election
Date of such Election, except in case of death or disability of such Participant
as provided in Section 4.5(d), and (ii) such Participant complies with the
administrative procedures set forth by the Committee with respect to the making
of the Election.
(c) A Participant making an election under Section 4.5(a)
may specify the portion of his Retirement Benefit under the Plan to be received
in a lump sum as follows: zero percent (0%), twenty-five percent (25%), fifty
percent (50%), seventy-five percent (75%) or one hundred percent (100%).
(d) In the event a Participant who has made an Election
pursuant to Section 4.5(a) dies or becomes totally and permanently disabled for
purposes of the relevant Basic Disability Plan while employed by the Corporation
or an Affiliate and such death or total and permanent disability occurs during
the twelve (12) calendar month period, as described under Section 4.5(b)(i),
immediately following the Election Date of such Election, the condition under
Section 4.5(b)(i) shall be deemed satisfied with respect to such Participant.
4.6 (a) Any Participant (except the Chairman of the Board of
Directors of the Corporation on December 21, 1994) who, as of December 31, 1994
(i) is age fifty-four (54) or older and (ii) has at least four (4) years of
Credited Service, may elect, on a form supplied by the Committee, to receive
all, none, or a specified portion, in the same percentages as described in
Section 4.5(c), of his Retirement Benefit under the Plan in a lump sum and to
receive any balance of such Retirement Benefit in the form of an annuity;
provided, that any such Special Election shall be effective for purposes of this
Plan only if such Participant remains in
<PAGE> 13
13
employment with the Corporation or an Affiliate, as the case may be, for the one
(1) calendar month immediately following the Election Date, except in the case
of death or total and permanent disability as provided in Section 4.6(b), and
complies with the administrative procedures set forth by the Committee for
making such Special Election; and provided further, that the Election Date with
respect to any such Special Election is not later than January 31, 1995. The
amount of any portion of a Participant's or a Vested Former Participant's
Retirement Benefit payable as a lump sum under this Section 4.6 will equal the
present value of such portion of the Retirement Benefit, and such present value
shall be determined (A) based on a discount rate equal to the average of
eighty-five percent (85%) of the fifteen (15) year non-callable U.S. Treasury
bond yields as of the close of business on the last business day of each of the
three (3) months immediately preceding the date the annuity value is determined,
and (B) using the 1993 Group Annuity Mortality Table.
(b) In the event a Participant who has made a Special
Election pursuant to Section 4.6(a) dies or becomes totally and permanently
disabled for purposes of the relevant Basic Disability Plan while employed by
the Corporation or an Affiliate and such death or total and permanent disability
occurs during the one (1) calendar month period, as described under Section
4.6(a) immediately following the Election Date of such Special Election, the
condition under Section 4.6(a) requiring that such Participant remain employed
with the Corporation or an Affiliate, as the case may be, for the one (1)
calendar month period immediately following the Election Date of such Election
shall be deemed satisfied.
4.7 Subject to Section 3.1, Section 3.3, Section 3.4 and the
foregoing limitations of this Section 4, the Retirement Benefit of each
Participant and Vested Former Participant under the Plan shall at all times be
one hundred percent (100%) vested and nonforfeitable.
4.8 (a) Subject to Section 4.8(c), the Corporation shall
indemnify each Participant, Vested Former Participant and Surviving Spouse who
receives any portion of a Retirement Benefit or Surviving Spouse's Benefit under
this Plan in the form of an annuity for any interest and penalties that may be
assessed by the U.S. Internal Revenue Service (the "Service") with respect to
U.S. federal income tax on such benefits (payable under the Plan in the form of
an annuity) upon final settlement or judgment with respect to any such
assessment in favor of the Service, provided the basis for the assessment is
that the amendment of the Plan to provide for the Election or the Special
Election causes the Participant, Vested Former Participant or Surviving Spouse,
as the case may be, to be treated as being in constructive receipt of such
benefits prior to the time when such benefits are actually payable under the
Plan.
(b) In case any assessment shall be made against a
Participant, Vested Former Participant or Surviving Spouse as described in
Section 4.8(a), such Participant, Vested Former Participant or Surviving Spouse,
as the case may be (the "indemnified party"), shall promptly notify the
Corporation's Treasurer in writing and the Corporation, upon request of such
indemnified party, shall select and retain an accountant or legal counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party in connection with such assessment
<PAGE> 14
14
and shall pay the fees and expenses of such an accountant or legal counsel
related to such representation, and the Corporation shall have the right to
determine how and when such assessment by the Service should be settled,
litigated or appealed. In connection with any such assessment, any indemnified
party shall have the right to retain his own accountant or legal counsel, but
the fees and expenses of such accountant or legal counsel shall be at the
expense of such indemnified party unless the Corporation and the indemnified
party shall have mutually agreed to the retention of such accountant or legal
counsel.
(c) The Corporation shall not be liable for any payments
under this Section 4.8 with respect to any assessment described in Section
4.8(a) if a Participant, Vested Former Participant or Surviving Spouse against
whom such assessment is made has not promptly notified or allowed the
Corporation to participate with respect to such assessment in the manner
described in Section 4.8(b) or, following demand by the Corporation, has not
made the deposit to avoid additional interest or penalties as described in
Section 4.8(d) or has agreed to, or otherwise settled with the Service with
respect to, such assessment without the Corporation's written consent; provided,
however, if (i) such assessment is settled with such consent or if there is a
final judgment for the Service, (ii) the Corporation has been notified and
allowed to participate in the manner as provided in Section 4.8(b), and (iii)
such Participant, Vested Former Participant or Surviving Spouse has made any
required deposit to avoid additional interest or penalty as described in Section
4.8(d), the Corporation agrees to indemnify the indemnified party to the extent
set forth in this Section 4.8.
(d) In the event a final settlement or judgment with
respect to an assessment as described under Section 4.8 has been made against a
Participant, Vested Former Participant or Surviving Spouse, such Participant,
Vested Former Participant or Surviving Spouse may elect to receive a portion or
all of his Retirement Benefit or Surviving Spouse's Benefit that is otherwise
payable as an annuity under the Plan in the form of a lump sum in accordance
with procedures as the Committee may set forth, and such lump sum distribution
will be made as soon as practicable after any such election. At the time such
assessment is made against such Participant, Vested Former Participant or
Surviving Spouse (the "assessed party") and prior to any final settlement or
judgment with respect to such assessment, if so directed by the Corporation,
such assessed party shall, as a condition to receiving any indemnity under this
Section 4.8, as soon as practicable after notification of such assessment make a
deposit with the Service to avoid any additional interest or penalties with
respect to such assessment and, upon the request of such assessed party, the
Corporation shall lend, or arrange for the lending to, such assessed party a
portion of his remaining Retirement Benefit or Surviving Spouse's Benefit under
the Plan, not to exceed the lump sum value of such benefit under the Plan,
determined using the actuarial assumptions set forth in Section 4.5(a), solely
for purposes of providing the assessed party with funds to make a deposit with
the Service to avoid any additional interest or penalties with respect to such
assessment.
<PAGE> 15
15
SECTION 5
Disability Benefits
5.1 The Disability Benefit provided by the Plan is designed to
provide each Participant with a disability benefit from the Plan and certain
other sources equal to his Disability Benefit as hereinafter specified. Thus,
Disability Benefits described hereunder as payable to Participants will be
offset by disability benefits payable from sources outside the Plan (other than
benefits payable under the relevant Basic Disability Plan) as specified herein.
5.2 In the event that a Participant has become totally and
permanently disabled for the purposes of the relevant Basic Disability Plan, an
annual Disability Benefit shall be payable in monthly installments under this
Plan during the same period as disability benefits are actually or deemed paid
by the relevant Basic Disability Plan, in an amount equal to sixty percent (60%)
of the Participant's Basic Earnings. Such Disability Benefit shall be offset by
the Participant's Other Disability Income, if any. A Participant's Disability
Benefits shall also be offset by the Participant's Basic Plan Benefit, if the
Participant's Basic Disability Plan Benefit does not already include such an
offset.
SECTION 6
Surviving Spouse's Benefits
6.1 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least ten (10) years of Credited Service with the Corporation or an
Affiliate and has attained age fifty-five (55), his Surviving Spouse will be
entitled to a Surviving Spouse's Benefit under this Plan equal to fifty percent
(50%) of the Retirement Benefit that would have been provided from the Plan had
the Participant or Vested Former Participant retired from the Corporation or an
Affiliate with the Corporation's consent, on the date of his death.
6.2 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least five (5) years of Credited Service with the Corporation or an
Affiliate and has not attained age fifty-five (55), his Surviving Spouse will be
entitled to a Surviving Spouse's Benefit under this Plan equal to fifty percent
(50%) of the Retirement Benefit that would have been provided from the Plan had
the Participant or Vested Former Participant terminated employment with the
Corporation or an Affiliate on the date of his death with the Corporation's
consent, and elected to have the payment of his Basic Plan Benefit commence at
age fifty-five (55) in the form of a straight life annuity.
6.3 Upon the death of a Vested Former Participant while no
longer employed by the Corporation or an Affiliate, who has not attained age
fifty-five (55), his Surviving Spouse will be entitled to a Surviving Spouse's
Benefit under this Plan equal to fifty percent (50%) of the
<PAGE> 16
16
Retirement Benefit that would have been provided from the Plan to the Vested
Former Participant at age fifty-five (55), taking into account whether the
Corporation consented to the termination.
6.4 Upon the death of a Participant or Vested Former
Participant, while employed by the Corporation or an Affiliate, who has
completed at least five (5), but less than ten (10) years of Credited Service
with the Corporation or an Affiliate and has attained age fifty-five (55), his
Surviving Spouse will be entitled to a Surviving Spouse's Benefit under this
Plan equal to fifty percent (50%) of the Retirement Benefit that would have been
provided from the Plan had the Participant or Vested Former Participant
terminated employment with the Corporation or an Affiliate on the date of his
death with the Corporation's consent and his Basic Plan Benefit commenced
immediately in the form of a straight life annuity.
6.5 Upon the death of a Vested Former Participant while he is
receiving Retirement Benefits, his Surviving Spouse shall receive a Surviving
Spouse's Benefit equal to fifty percent (50%) of the Retirement Benefit the
Vested Former Participant was receiving at the time of his death.
6.6 Except as provided in Section 6.8, the Surviving Spouse's
Benefit provided under Section 6.1, 6.4 and 6.5 will be payable monthly, will
commence as of the first day of the month coincident with or next following the
month in which the Participant or Vested Former Participant dies, and will
continue until the first day of the month in which the Surviving Spouse dies.
6.7 Except as provided in Section 6.8, the Surviving Spouse's
Benefit provided under Section 6.2 and 6.3 will be payable monthly, will
commence as of the first day of the month coincident with or next following the
month in which the Participant or Vested Former Participant would have attained
age fifty-five (55), and will continue until the first day of the month in which
the Surviving Spouse dies.
6.8 (a) If a Participant or a Vested Former Participant while
he was a Participant has made an Election under Section 4.5 or a Special
Election under Section 4.6 and such Election or Special Election is effective on
the date of such Participant's or Vested Former Participant's death, the
Surviving Spouse's Benefit payable to a Surviving Spouse of such Participant or
Vested Former Participant will be payable in the form or combination of forms of
payment so elected by such Participant or Vested Former Participant pursuant to
such Election or Special Election. The amount of any lump sum payment under this
Section 6.8 shall be the present value of the applicable portion of the
Surviving Spouse's Benefit payable under the Plan, and such present value shall
be determined using the actuarial assumptions set forth in Section 4.5(a). Any
lump sum distribution of a Surviving Spouse's Benefit under the Plan shall fully
satisfy all present and future Plan liability with respect to such Surviving
Spouse for such portion or all of such Surviving Spouse's Benefit so
distributed.
<PAGE> 17
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(b) Notwithstanding any Election or Special Election made
under Section 4.5 or 4.6, if the lump sum value, determined in the same manner
as provided under Section 4.5(a), of a Surviving Spouse's Benefit is Ten
Thousand Dollars ($10,000) or less at the time such Surviving Spouse's Benefit
is payable under this Plan, such benefit shall be payable as a lump sum.
(c) Any portion of a Surviving Spouse's Benefit provided
under Section 6.1, 6.4 and 6.5 which is payable as an annuity shall be paid in
the manner and at such time as set forth in Section 6.6, and any such benefit
which is payable as a lump sum shall be paid sixty (60) days after the date when
annuity payments commence, or would commence if any portion of such Surviving
Spouse's Benefit were payable as an annuity as set forth in Section 6.6.
(d) Any portion of a Surviving Spouse's Benefit provided
under Section 6.2 and 6.3 which is payable as an annuity shall be paid in the
manner and at such time as set forth in Section 6.7, and any such benefit which
is payable as a lump sum shall be paid sixty (60) days after the date when
annuity payments commence, or would commence if any portion of such Surviving
Spouse's Benefit were payable as an annuity, as set forth in Section 6.7.
6.9 Notwithstanding the foregoing provisions of Section 6, the
amount of a Surviving Spouse's Benefit shall be reduced by one (1) percentage
point for each year (including a half year or more as a full year) in excess of
ten (10) that the age of the Participant or Vested Former Participant exceeds
the age of the Surviving Spouse.
SECTION 7
Committee
7.1 The Board and the Committee severally (and not jointly)
shall be responsible for the administration of the Plan. The Committee shall
consist of not less than three (3) nor more than seven (7) members, as may be
appointed by the Board from time to time. Any member of the Committee may resign
at will by notice to the Board or may be removed at any time (with or without
cause) by the Board.
7.2 The members of the Committee may, from time to time,
allocate responsibilities among themselves, and may delegate to any management
committee, employee, director or agent its responsibility to perform any act
hereunder, including, without limitation, those matters involving the exercise
of discretion, provided that such delegation shall be subject to revocation at
any time at its discretion.
7.3 The Committee (and its delegees) shall have the exclusive
authority to interpret the provisions of the Plan and construe all of its terms
(including, without limitation, all disputed and uncertain terms), to adopt,
amend, and rescind rules and regulations for the
<PAGE> 18
18
administration of the Plan, and generally to conduct and administer the Plan and
to make all determinations in connection with the Plan as may be necessary or
advisable. All such actions of the Committee shall be conclusive and binding
upon all Participants, Former Participants, Vested Former Participants and
Surviving Spouses. All deference permitted by law shall be given to such
interpretations, determinations and actions.
7.4 Any action to be taken by the Committee shall be taken by
a majority of its members, either at a meeting or by written instrument approved
by such majority in the absence of a meeting. A written resolution or memorandum
signed by one (1) Committee member and the secretary of the Committee shall be
sufficient evidence to any person of any action taken pursuant to the Plan.
7.5 Any person, corporation or other entity may serve in more
than one (1) fiduciary capacity under the Plan.
SECTION 8
Miscellaneous
8.1 The Board may, in its sole discretion, terminate, suspend
or amend this Plan at any time or from time to time, in whole or in part.
However, no termination, suspension or amendment of the Plan may adversely
affect a Participant's or Vested Former Participant's vested benefit under the
Plan, or a retired Participant's or Vested Former Participant's right or the
right of a Surviving Spouse to receive or to continue to receive a benefit in
accordance with the Plan as in effect on the date immediately preceding the date
of such termination, suspension or amendment.
8.2 Nothing contained herein will confer upon any Participant,
Former Participant or Vested Former Participant the right to be retained in the
service of the Corporation or any Affiliate, nor will it interfere with the
right of the Corporation or any Affiliate to discharge or otherwise deal with
Participants, Former Participants or Vested Former Participants with respect to
matters of employment without regard to the existence of the Plan.
8.3 Notwithstanding anything herein to the contrary, at any
time following the termination of service of a Participant or Vested Former
Participant, the Committee may authorize, under uniform rules applicable to all
Participants, Vested Former Participants and Surviving Spouses under the Plan, a
lump sum distribution of a Participant's, Vested Former Participant's and/or
Surviving Spouse's Retirement Benefit or Surviving Spouse's Benefit under the
Plan in an amount equal to the present value of such Retirement Benefit or
Surviving Spouse's Benefit, using the actuarial assumptions then in use for
funding purposes under The Dun & Bradstreet Corporation Retirement Account, in
full satisfaction of all present and future Plan liability with respect to such
Participant, Vested Former Participant and/or Surviving Spouse, if the amount of
such present value is less than Two Hundred Fifty Thousand Dollars
<PAGE> 19
19
($250,000). Such lump sum distribution may be made without the consent of the
Participant, Vested Former Participant or Surviving Spouse.
8.4 (a) Notwithstanding anything in this Plan to the contrary,
if a Participant has less than five (5) years of Credited Service at the time of
a Change in Control, and as a result of the Change in Control, and before he
completes five (5) years of Credited Service, (i) the Plan is terminated, (ii)
the Participant is removed from further participation in the Plan, or (iii) the
Participant is terminated as a result of action initiated directly or indirectly
by the Corporation or any Affiliate, such Participant shall be entitled to a
Benefit of twenty percent (20%) of his Average Final Compensation and the
Corporation will remain obligated to pay all benefits under the Plan.
(b) Notwithstanding anything in this Plan to the contrary,
upon the occurrence of a Change in Control,
(i) no reduction shall be made in a Participant's or
Vested Former Participant's Retirement Benefit, notwithstanding his termination
of employment or Retirement prior to age sixty (60) without the Corporation's
consent;
(ii) the provisions of Section 3.3(i) and (ii) shall
not apply to any Participant, Vested Former Participant or Surviving Spouse;
(iii) each Participant and Vested Former Participant
already receiving a Retirement Benefit under the Plan shall receive a lump sum
distribution of his unpaid Retirement Benefit and, if he is married, his
Surviving Spouse's Benefit under the Plan within thirty (30) days of the Change
of Control in an amount equal to the present value of such Retirement Benefit
and Surviving Spouse's Benefit in full satisfaction of all present and future
Plan liability with respect to such Participant, Vested Former Participant and
Surviving Spouse, if any, and each Surviving Spouse already receiving a
Surviving Spouse's Benefit under the Plan shall receive a lump sum distribution
of his unpaid Surviving Spouse's Benefit at the same time in an amount equal to
the present value of such Surviving Spouse's Benefit in full satisfaction of
Plan liability to such Surviving Spouse;
(iv) each Vested Former Participant who is not already
receiving a Retirement Benefit under the Plan shall receive a lump sum
distribution of his unpaid Retirement Benefit and, if he is married, his
Surviving Spouse's Benefit within thirty (30) days of the Change in Control in
an amount equal to the present value of such Retirement Benefit and Surviving
Spouse's Benefit, and each Surviving Spouse of either a Vested Former
Participant or a Participant with five (5) or more years of Credited Service who
is not already receiving a Surviving Spouse's Benefit under the Plan shall
receive a lump sum distribution of his unpaid Surviving Spouse's Benefit at the
same time in amount equal to the present value of such Surviving Spouse's
Benefit;
<PAGE> 20
20
(v) each Participant with less than five (5) years of
Credited Service who is entitled to a benefit under Section 8.4(a) shall receive
a lump sum distribution of the present value of such Retirement Benefit within
thirty (30) days from the earlier of the date the Plan is terminated, the date
he is removed from further participation in the Plan, or the date his employment
with the Corporation is terminated, and of his Surviving Spouse's Benefit based
upon the amount of such Retirement Benefit if he is married on the applicable
date; and
(vi) each Participant who is not included in (v) above
and who is not already receiving a Retirement Benefit under the Plan shall
receive
(A) within thirty (30) days of the later to occur
of the date of such Change in Control or the date he completes five (5) years of
Credited Service, a lump sum distribution of the present value of his accrued
Retirement Benefit under the Plan as of the applicable date and, if he is
married on such date, the present value of his Surviving Spouse's Benefit, and
(B) within thirty (30) days from the earliest of
the date of his Retirement or termination of employment with the Corporation,
the date the Plan is terminated or the date he is removed from further
participation in the Plan, a lump sum distribution of the present value of his
additional Retirement Benefit accrued after the applicable event in (A) computed
as of the applicable date herein set forth in (B) and, if he is married on such
applicable date, the present value of his surviving Spouse's Benefit.
In determining the amount of the lump sum distributions to be paid under this
Section 8.4, the following actuarial assumptions shall be used: (I) the interest
rate used shall be the interest rate used by the Pension Benefit Guaranty
Corporation for determining the value of immediate annuities as of January 1st
of either the year of the occurrence of the Change in Control or the
Participant's retirement or termination of employment, whichever is applicable,
(II) the 1983 Group Annuity Mortality Table shall be used; and (III) it shall be
assumed that all Participants retired or terminated employment with the
Corporation on the date of the occurrence of the Change in Control and with the
Corporation's consent for purposes of determining the amount of the lump sum
distribution to be paid upon the occurrence of the Change in Control.
8.5 (a) The Plan is unfunded, and the Corporation will make
Plan benefit payments solely on a current disbursement basis, provided, however,
that the Corporation reserves the right to purchase insurance contracts, which
may or may not be in the name of a Participant or Vested Former Participant, or
establish one or more trusts to provide alternative sources of benefit payments
under this Plan, provided, further, however, that upon the occurrence of a
"Potential Change in Control" the appropriate officers of the Corporation are
authorized to make such contributions to such trust or trusts as are necessary
to fund the lump sum distributions to Plan Participants required pursuant to
Section 8.4 of this Plan in the event of a Change in Control. In determining the
amount of the necessary contribution to the trust or trusts in the event of a
Potential Change in Control, the following actuarial assumptions shall be used:
<PAGE> 21
21
(i) the interest rate used shall be the interest rate
used by the Pension Benefit Guaranty Corporation for determining the value of
immediate annuities as of January 1st of the year of the occurrence of the
Potential Change in Control,
(ii) the 1983 Group Annuity Mortality Table shall be
used; and
(iii) it shall be assumed that all Participants will
retire or terminate employment with the Corporation as soon as practicable after
the occurrence of the Potential Change in Control and with the Corporation's
consent.
The existence of any such insurance contracts, trust or trusts shall not relieve
the Corporation of any liability to make benefit payments under this Plan, but
to the extent any benefit payments are made from any such insurance contract in
the name of the Corporation or any Affiliate or from any such trust, such
payment shall be in satisfaction of and shall reduce the Corporation's
liabilities under this Plan. Further, in the event of the Corporation's
bankruptcy or insolvency, all benefits accrued under this Plan shall immediately
become due and payable in a lump sum and all Participants, Vested Former
Participants and Surviving Spouses shall be entitled to share in the
Corporation's assets in the same manner and to the same extent as general
unsecured creditors of the Corporation.
(b) Members and Vested Former Members shall have the status of
general unsecured creditors of the Corporation and this Plan constitutes a mere
promise by the Corporation to make benefit payments at the time or times
required hereunder. It is the intention of the Corporation that this Plan be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended and any trust created by the Corporation
in meeting its obligations under the Plan shall meet the requirements necessary
to retain such unfunded status.
8.6 If any dispute arises under the Plan between the
Corporation and a Participant, Former Participant, Vested Former Participant or
Surviving Spouse (collectively or individually referred to as "Participant" in
this Section 8.6) as to the amount or timing of any benefit payable under the
Plan or as to the persons entitled thereto, such dispute shall be resolved by
binding arbitration proceedings initiated by either party to the dispute in
accordance with the rules of the American Arbitration Association and the
results of such proceedings shall be conclusive on both parties and shall not be
subject to judicial review. If the disputed benefits involve the benefits of a
Participant who is no longer employed by the Corporation or any Affiliate, the
Corporation shall pay or continue to pay the benefits claimed by the Participant
until the results of the arbitration proceedings are determined unless such
claim is patently without merit; provided, however, that if the results of the
arbitration proceedings are adverse to the Participant, then in such event the
recipient of the benefits shall be obligated to repay the excess benefits to the
Corporation. The Corporation expressly acknowledges that the amounts payable
under the Plan are necessary to the livelihood of Participants and their family
members and that any refusal or neglect to pay benefits under the preceding
sentence prior to the resolution of any dispute shall be prima facie evidence of
bad faith on its part and will be conclusive
<PAGE> 22
22
grounds for an arbitration award resulting in an immediate lump sum payment to
the Participant, of the Participant's benefits under the Plan then due and
payable to him, unless the arbitrator determines that the claim for the disputed
benefits was without merit. The amount of such lump sum payment shall be equal
to the then actuarial value of such benefits calculated by utilizing the
actuarial assumptions then in use for funding purposes under The Dun &
Bradstreet Corporation Retirement Account. In addition, in the event of any
dispute covered by this Section 8.6 the Corporation agrees to pay the entire
costs of any arbitration proceeding or legal proceeding brought hereunder,
including the fees and expenses of counsel and pension experts engaged by a
Participant and that such expenses shall be reimbursed promptly upon evidence
that such expenses have been incurred without awaiting the outcome of the
arbitration proceedings; provided, however, that such costs and expenses shall
be repaid to the Corporation by the recipient of same if it is finally
determined by the arbitrators that the position taken by such person was without
merit.
8.7 To the maximum extent permitted by law, no benefit under
the Plan shall be assignable or subject in any manner to alienation, sale,
transfer, claims of creditors, pledge, attachment or encumbrances of any kind.
8.8 The Corporation may withhold from any benefit under the
Plan an amount sufficient to satisfy its tax withholding obligations.
8.9 The Plan is established under and will be construed
according to the laws of the State of New York.
8.10 Notwithstanding anything in this Plan to the contrary, in
accordance with the terms of Article IV of the Employee Benefits Agreement dated
as of October 28, 1996, among the Corporation, Cognizant Corporation
("Cognizant") and ACNielsen Corporation ("ACNielsen") ("Cognizant EBA"):
(a) Following the Effective Time (as such term is defined
in the Cognizant EBA) of the reorganization of the Corporation's businesses
referred to therein, the Corporation shall retain liability for benefits under
this Plan of ACNielsen Employees (as such term is defined in the Cognizant EBA)
and Cognizant Employees (as such term is defined in the Cognizant EBA) who were
participants in this Plan immediately prior to the Effective Time (the
"Cognizant and ACNielsen SEBP Participants") to the extent that, prior to the
Effective Time, such benefits were accrued and to which such participants had
earned vested rights hereunder;
(b) Solely with respect to determining the level of
benefits payable under this Plan, Cognizant and ACNielsen shall have the
authority to consent to the termination of employment prior to age sixty (60) of
a Cognizant or ACNielsen SEBP Participant from the Cognizant Group (as such term
is defined in the Cognizant EBA) or the ACNielsen Group (as such term is defined
in the Cognizant EBA), as the case may be;
<PAGE> 23
23
(c) Benefits under this Plan shall not become payable to
a Cognizant or ACNielsen SEBP Participant until such participant terminates
employment from the Cognizant Group or the ACNielsen Group (as the case may be);
(d) Employment of a Cognizant or ACNielsen SEBP
Participant by a member of the Cognizant Group or the ACNielsen Group (as the
case may be) after the Effective Time shall not be deemed a violation of the
noncompetition clauses of Section 3.3 of this Plan; and
(e) Cognizant and ACNielsen SEBP Participants who
participated in this Plan immediately prior to the Effective Time shall receive
a distribution hereunder, based on their notional elective deferrals through the
Effective Time, at the time distributions are otherwise made under the Plan.
8.11 Notwithstanding anything in this Plan to the Contrary, in
accordance with the terms of Article IV of the Employee Benefits Agreement dated
as of June 30, 1998, between the Corporation and The New Dun & Bradstreet
Corporation ("RHD EBA"):
(a) Following the Effective Time (as such term is defined
in the RHD EBA) of the reorganization of the Corporation's businesses referred
to therein, the Corporation shall retain liability for benefits under this Plan
of those persons who, immediately after the Effective Time, are employed by R.H.
Donnelly Inc. ("RHD") or any member of the RHD Group (as such term is defined in
the RHD EBA) who were participants in this Plan immediately prior to the
Effective Time (the "RHD SEBP Participants") to the extent that, prior to the
Effective Time, such benefits were accrued and to which such participants had
earned vested rights hereunder;
(b) Solely with respect to determining the level of
benefits payable under this Plan, RHD shall have the authority to consent to the
termination of employment prior to age sixty (60) of an RHD SEBP Participant
from the RHD Group;
(c) Benefits under this Plan shall not become payable to
an RHD SEBP Participant until such participant terminates employment from the
RHD Group;
(d) Employment of an RHD SEBP Participant by the RHD
Group after the Effective Time, shall not be deemed a violation of the
noncompetition clauses of Section 3.3 of this Plan; and
(e) RHD SEBP Participants who participated in this Plan
immediately prior to the Effective Time shall receive a distribution hereunder,
based on their notional elective deferrals through the Effective Time, at the
time distributions are otherwise made under the Plan.
<PAGE> 1
EXHIBIT 10.31
PROFIT PARTICIPATION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
As in effect as of January 1, 2000 with certain earlier effective dates
I. Purpose of the Plan
The purpose of the Profit Participation Benefit Equalization Plan of
The Dun & Bradstreet Corporation (the "Plan") is to provide a means of
equalizing the benefits of those employees of The Dun & Bradstreet Corporation
("the Corporation") and its subsidiaries participating in the Profit
Participation Plan of The Dun & Bradstreet Corporation (the "Profit
Participation Plan"), whose funded benefits under the Profit Participation Plan
are or will be limited by the application of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986,
as amended (the "Code"), or any applicable law or regulation. The Plan is
intended to be an "excess benefit plan" as that term is defined in Section 3(36)
of ERISA with respect to those participants whose benefits under the Profit
Participation Plan have been limited by Section 415 of the Code, and a "top hat"
plan meeting the requirements of Sections 201(2), 301(a)(3), 401(a)(1) and
4021(b)(6) of ERISA with respect to those participants whose benefits under the
Profit Participation Plan have been limited by Section 401(a)(17) of the Code.
II. Administration of the Plan
The Board of Directors ("Board") of the Corporation and the
Compensation and Benefits Committee appointed by the Board (the "Committee")
severally (and not jointly) shall be responsible for the administration of the
Plan. The Committee shall consist of not less than three (3) nor more than seven
(7) members, as may be appointed by the Board from time to time. Any member of
the Committee may resign at will by notice to the Board or be removed at any
time (with or without cause) by the Board.
The members of the Committee may from time to time allocate
responsibilities among themselves and may delegate to any management committee,
employee, director or agent its responsibility to perform any act hereunder,
including, without limitation, those matters involving the exercise of
discretion, provided that such delegation shall be subject to revocation at any
time at its discretion.
The Committee (and its delegees) shall have the exclusive authority to
interpret the provisions of the Plan and construe all of its terms (including,
without limitation, all disputed and
<PAGE> 2
2
uncertain terms), to adopt, amend, and rescind rules and regulations for the
administration of the Plan, and generally to conduct and administer the Plan and
to make all determinations in connection with the Plan as may be necessary or
advisable. All such actions of the Committee shall be conclusive and binding
upon all Participants, Former Participants, Vested Former Participants and
Surviving Spouses. All deference permitted by law shall be given to such
interpretations, determinations and actions.
Any action to be taken by the Committee shall be taken by a majority of
its members, either at a meeting or by written instrument approved by such
majority in the absence of a meeting. A written resolution or memorandum signed
by one Committee member and the secretary of the Committee shall be sufficient
evidence to any person of any action taken pursuant to the Plan.
Any person, corporation or other entity may serve in more than one (1)
fiduciary capacity under the Plan.
III. Participation in the Plan
All members of the Profit Participation Plan shall be eligible to
participate in this Plan whenever their benefits under the Profit Participation
Plan, as from time to time in effect, would exceed the limitations on benefits
and contributions imposed by Sections 401, 415 or any other applicable Section
of the Code, calculated from and after September 2, 1974. For purposes of this
Plan, benefits of a participant in this Plan shall be determined as though no
provision were contained in the Profit Participation Plan incorporating
limitations imposed by Sections 401, 415 or any other Section of the Code.
IV. Benefit Limitations
For purposes of this Plan and the Profit Participation Plan, the
limitations imposed by Section 415 of the Code shall be deemed to be met when
the sum of the participant's defined benefit plan fraction and his defined
contribution plan fraction equals 1.0, as such fractions are computed for
purposes of Section 415 of the Code and Section 14.4 of the Profit Participation
Plan. Effective for Plan Years beginning after December 31, 1999, in accordance
with changes included in the Small Business Job Protection Act of 1995, this
Section IV shall no longer apply with respect to any participant who has one (1)
Hour of Service (as such term is defined in the Profit Participation Plan) after
December 31, 1999.
V. Equalized Benefits
If member participating contributions or Company contributions to the
Profit Participation Plan are suspended during any calendar year because any
such contributions would cause the participant's account under such plan to
exceed the benefit limitations related to such plan as described in Section III
of this Plan, the Corporation shall pay the participant, on or about March 1st
of the following year, an amount equal to:
<PAGE> 3
3
(i) the Company contributions that otherwise would have been credited
to such participant's account under the Profit Participation Plan for
the balance of the year in which such suspension occurs, as if no
provision were set forth therein incorporating limitations imposed by
Section 401, 415 or any other applicable Section of the Code, and the
participant had continued his participating contributions to the Profit
Participation Plan at the rate in effect at the time such contributions
were suspended for the balance of the year in which such suspension
occurs, plus
(ii) an interest factor equal to one-half (1/2) of the annual return
which would have been received by the participant had such payment been
invested eighty percent (80%) in the Special Fixed Income Fund of the
Profit Participation Plan and twenty percent (20%) in the S&P 500 Index
Fund managed by Barclays Global Investors of the Profit Participation
Plan during the year in which such suspension occurs, less
(iii) any applicable withholding taxes.
VI. Change in Control
Upon the occurrence of a "Change in Control", each participant under
the Plan shall receive a lump sum distribution equal to:
(i) the total amount which such participant had accrued under the Plan
which has not yet been distributed to such participant pursuant to
Section V(i) hereof as of the date of such Change in Control, plus
(ii) an interest factor equal to one-half (1/2) of the return which
would have been received by the participant had such amount been
invested eighty percent (80%) in the Special Fixed Income Fund of the
Profit Participation Plan and twenty (20%) in the S&P 500 Index Fund
managed by Barclays Global Investors of the Profit Participation Plan
during the portion of the calendar year subsequent to the date
contributions to such participant's account were suspended under the
Profit Participation Plan and prior to such Change in Control, less
(iii) any applicable withholding taxes.
Any such lump sum distribution shall be paid to the participant within
sixty (60) days of the Change in Control, provided, however, that any such
payment will not prevent the further accrual of benefits under the Plan after
the date of such Change in Control.
For purposes of this Plan, a "Change in Control" shall be deemed to
have occurred if
(a) any "Person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the
<PAGE> 4
4
Corporation, or any corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation), is or becomes the
"Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the
Corporation's then outstanding securities;
(b) during any period of twenty-four (24) months (not including any
period prior to the effective date of this provision), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (1) a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction
described in clause (a), (c) or (d) of this Section), (2) a director
designated by any Person (including the Corporation) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (3) a
director designated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Corporation representing ten
percent (10%) or more of the combined voting power of the Corporation's
securities) whose election by the Board or nomination for election by
the Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than (1)
a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than fifty percent
(50%) of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such
merger or consolidation and (2) after which no Person holds twenty
percent (20%) or more of the combined voting power of the then
outstanding securities of the Corporation or such surviving entity; or
(d) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
VII. Miscellaneous
This Plan may be terminated at any time by the Board of Directors of
the Corporation, in which event the rights of participants to their accrued
benefits shall become nonforfeitable. This Plan may also be amended at any time
by the Board of Directors of the Corporation, except that no such amendment
shall deprive any participant of his benefits accrued at the time of such
amendment.
<PAGE> 5
5
Benefits payable under this Plan shall not be funded and shall be made
out of the general funds of the Corporation; provided, however, that the
Corporation reserves the right to establish a trust fund as an alternate source
of benefits payable under the Plan and to the extent payments are made from such
trust, such payments will satisfy the Corporation's obligations under this Plan.
No right to payment or any other interest under this Plan may be
alienated, sold, transferred, pledged, assigned, or made subject to attachment,
execution, or levy of any kind.
Nothing in this Plan shall be construed as giving any employee the
right to be retained in the employ of the Corporation. The Corporation expressly
reserves the right to dismiss any employee at any time without regard to the
effect which such dismissal might have upon him under the Plan.
This Plan shall be construed, administered and enforced according to
the laws of the State of New York.
VIII. Effective Date
This Plan shall be effective as of October 17, 1990, upon its adoption
by the Board of Directors of The Dun & Bradstreet Corporation.
<PAGE> 1
EXHIBIT 10.32
THE DUN & BRADSTREET CAREER TRANSITION PLAN
(AS IN EFFECT AS OF JUNE 17, 1998 WITH
CERTAIN EARLIER EFFECTIVE DATES)
The Dun & Bradstreet Corporation (the "Company") wishes to define
those circumstances under which it will provide assistance to an Eligible
Employee in the event of his or her Eligible Termination (as such terms are
defined herein). Accordingly, the Company hereby establishes The Dun &
Bradstreet Career Transition Plan (the "Plan").
SECTION 1 - DEFINITIONS
1.1 "Cause" shall mean (a) willful malfeasance or willful misconduct
by the Eligible Employee in connection with his or her employment, (b)
continuing failure to perform such duties as are requested by any employee to
whom the Eligible Employee reports or the Participating Company's board of
directors, (c) failure by the Eligible Employee to observe material policies of
the Participating Company applicable to the Eligible Employee or (d) the
commission by an Eligible Employee of (i) any felony or (ii) any misdemeanor
involving moral turpitude.
1.2 "Committee" shall mean the Compensation and Benefits Committee of
the Board of Directors of the Company.
1.3 "Eligible Employee" shall mean a full-time salaried employee or
regular part-time salaried employee of any Participating Company who is:
(a) on the United States payroll of a Participating Company and
earning a Salary of less than $100,000 at the time of an Eligible Termination,
in which case Schedule A hereto shall apply; or
(b) on the United States payroll of a Participating Company and
earning a Salary equal to or greater than $100,000 at the time of an Eligible
Termination, in which case Schedule B hereto shall apply.
1.4 "Eligible Termination" shall mean (a) an involuntary termination
of employment with a Participating Company by reason of a reduction in force
program, job elimination or unsatisfactory performance in the execution of an
Eligible Employee's duties or (b) a resignation mutually agreed to in writing
by the Participating Company and the Eligible Employee. Notwithstanding the
foregoing, an Eligible Termination shall not include (w) a unilateral
resignation, (x) a termination by a Participating Company for Cause, (y) a
termination as a result of a sale (whether in whole or in part, of stock or
assets), merger or other combination, spinoff, reorganization or liquidation,
dissolution or other winding up or other similar transaction involving a
Participating Company; or (z) any termination where an offer of employment is
made to the Eligible Employee of a comparable position at a Participating
Company concurrently with his or her Eligible Termination.
1
<PAGE> 2
1.5 "Participating Company" shall mean the Company or any other
affiliated entity more than 50% of the voting interests of which are owned,
directly or indirectly, by the Company and which has elected to participate in
the Plan by action of its board of directors.
1.6 "Salary" shall mean an Eligible Employee's annual base salary at
the time his or her employment terminates.
1.7 "Severance and Release Agreement" shall mean an agreement signed
by the Eligible Employee substantially in the form attached hereto as Exhibit
1. Notwithstanding the foregoing, a Participating Company may, by action of its
chief human resources officer or chief legal counsel, modify the form of
Severance and Release Agreement to be signed by any Eligible Employee in a
manner approved by the Committee (or its delegee).
1.8 "Years of Service" shall mean one-twelfth (1/12th) of an Eligible
Employee's total number of full months of regular employment (whether full-time
or part-time) with a Participating Company (beginning with his or her initial
date of hire); provided that such number of Years of Service shall be rounded
up to the next whole number.
SECTION 2 - SEVERANCE BENEFITS
2.1 Subject to the provisions of this Section 2, in the event of an
Eligible Termination, an Eligible Employee shall be entitled to receive from
the Participating Company the benefits set forth on Schedule A or B hereto, as
applicable.
2.2 The grant of severance benefits pursuant to Section 2.1 hereof is
conditioned upon an Eligible Employee's signing a Severance and Release
Agreement and the expiration of any revocation period set forth therein.
2.3 Notwithstanding any other provision contained herein, the Chief
Executive Officer of the Company may, at any time, take such action as such
officer, in such officer's sole discretion, deems appropriate to reduce or
increase by any amount the benefits otherwise payable to an Eligible Employee
pursuant to the applicable Schedule or otherwise modify the terms and
conditions applicable to an Eligible Employee under this Plan. Benefits granted
hereunder may not exceed an amount nor be paid over a period which would cause
the Plan to be other than a "welfare benefit plan" under section 3 (1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
2.4 In the event a Participating Company, in its sole discretion,
grants an Eligible Employee a period of inactive employee status, then, in such
event, any amounts paid to such Eligible Employee during any such period shall
offset the benefits payable under this Plan. For this purpose, a period of
inactive employee status shall mean the period beginning on the date such
status commences (of which the Eligible Employee shall be notified) and ending
on the date of such Eligible Employee's termination of employment.
2
<PAGE> 3
SECTION 3 - AMENDMENT AND TERMINATION
3.1 The Company reserves the right to terminate the Plan on behalf of
any or all Participating Companies at any time and without any further
obligation by action of its board of directors or such other person or persons
to whom the board properly delegates such authority. Any other Participating
Company may cease participation in the Plan by action of its board of directors
or such other person or persons to whom such board properly delegates such
authority.
3.2 The Company shall have the right to modify or amend the terms of
the Plan at any time, or from time to time, to any extent that it may deem
advisable by action of its board of directors, the Committee or such other
person or persons to whom the board or the Committee properly delegates such
authority.
3.3 All modifications of or amendments to the Plan shall be in
writing.
SECTION 4 - ADMINISTRATION OF THE PLAN
4.1 The Board of Directors and the Compensation and Benefits Committee
shall be the named fiduciaries (the "Named Fiduciaries") who severally and not
jointly shall have authority to control and manage the operation and
administration of the Plan and to manage and control its assets. The
Compensation and Benefits Committee shall consist of not less than three (3)
nor more than seven (7) members, as may be appointed by the Board of Directors
from time to time. Any member of the Compensation and Benefits Committee may
resign at will by notice to the Board of Directors or be removed at any time
(with or without cause) by the Board of Directors.
4.2 The Named Fiduciaries may from time to time allocate fiduciary
responsibilities among themselves and may designate persons other than Named
Fiduciaries to carry out fiduciary responsibilities under the Plan, and such
persons shall be deemed to be fiduciaries under the Plan with respect to such
delegated responsibilities. Fiduciaries may employ one or more persons to
render advice with regard to any responsibility such fiduciary has under the
Plan.
4.3 The Named Fiduciaries (and their delegees) shall have the
exclusive right to interpret any and all of the provisions of the Plan and to
determine any questions arising thereunder or in connection with the
administration of the Plan. Any decision or action by the Named Fiduciaries
(and their delegees) shall be conclusive and binding upon all Employees,
Members and Beneficiaries. In all instances the Named Fiduciaries (and their
delegees) shall have complete discretionary authority to determine eligibility
for participation and benefits under the Plan, and to construe and interpret
all provisions of the Plan and all documents relating thereto including,
without limitation, all disputed and uncertain terms. All deference permitted
by law shall be given to such constructions, interpretations and
determinations.
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<PAGE> 4
4.4 Any action to be taken by the Named Fiduciaries shall be taken by
a majority of its members either at a meeting or by written instrument approved
by such majority in the absence of a meeting. A written resolution or
memorandum signed by one Committee member and the secretary of the Compensation
and Benefits Committee shall be sufficient evidence to any person of any action
taken pursuant to the Plan.
4.5 Any person, corporation or other entity may serve in more than
one fiduciary capacity under the Plan.
4.6 The Company shall indemnify any individual who is a director,
officer or employee of a Participating Company, or his or her heirs and legal
representatives, against all liability and reasonable expense, including
counsel fees, amounts paid in settlement and amounts of judgments, fines or
penalties, incurred or imposed upon him or her in connection with any claim,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, in connection with his or her duties with respect to the Plan,
provided that any act or omission giving rise to such claim, action, suit or
proceeding does not constitute willful misconduct or is not performed or
omitted in bad faith.
SECTION 5 - MISCELLANEOUS
5.1 Neither the establishment of the Plan nor any action of a
Participating Company, the Committee, or any fiduciary shall be held or
construed to confer upon any person any legal right to continue employment with
a Participating Company. Each Participating Company expressly reserves the
right to discharge any employee whenever the interest of such Participating
Company, in its sole judgment, may so require, without any liability on the
part of such Participating Company, the Committee, or any fiduciary.
5.2 Benefits payable under the Plan shall be paid out of the general
assets of a Participating Company. No Participating Company need fund the
benefits payable under this Plan; however, nothing in this Section 5.2 shall be
interpreted as precluding any Participating Company from funding or setting
aside amounts in anticipation of paying such benefits. Any benefits payable to
an Eligible Employee under this Plan shall represent an unsecured claim by such
Eligible Employee against the general assets of the Participating Company that
employed such Eligible Employee.
5.3 A Participating Company shall deduct from the amount of any
severance benefits payable hereunder the amount required by law to be withheld
for the payment of any taxes and any other amounts properly to be withheld.
5.4 Benefits payable under the Plan shall not be subject to
assignment, alienation, transfer, pledge, encumbrance, commutation or
anticipation by the Eligible Employee. Any attempt to assign, alienate,
transfer, pledge, encumber, commute or anticipate Plan benefits shall be void.
5.5 The Committee shall, in its sole discretion, convert all
references to dollar amounts in the Plan to foreign currency of the country in
which a Participating Company is located or the Eligible Employee is employed.
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<PAGE> 5
5.6 This Plan shall be interpreted and applied in accordance with the
laws of the State of New York, except to the extent superseded by applicable
federal law.
5.7 This Plan will be of no force or effect to the extent superseded
by foreign law.
5.8 This Plan supersedes any and all prior severance arrangements,
policies, plans or practices of the Company and of any Participating Company
(whether written or unwritten). Notwithstanding the preceding sentence, the
Plan does not affect the severance provisions of any written individual
employment contracts or written agreements between an Eligible Employee and a
Participating Company. Benefits payable under the Plan shall be offset by any
other severance or termination payment made by a Participating Company
including, but not limited to, amounts paid pursuant to any agreement or law.
5
<PAGE> 6
SCHEDULE A
This Schedule A is applicable to Eligible Employees covered by Section
1.4 (a) of the Plan. An Eligible Employee entitled to benefits hereunder shall,
subject to Section 2 of the Plan, receive the following:
1. Salary Continuation
If the Eligible Employee incurs an Eligible Termination for any reason
other than unsatisfactory performance, he or she shall receive the higher of
(i) four weeks of Salary continuation or (ii) 1.5 weeks of Salary continuation
for each Year of Service. If the Eligible Employee incurs an Eligible
Termination by reason of unsatisfactory performance, he or she shall receive
the higher of (i) two weeks of Salary continuation or (ii) one week of Salary
continuation for each Year of Service. In any event, such amounts shall be
payable at the times the Eligible Employee's Salary would have been paid if
employment had not terminated, over a period equal to the number of weeks of
Salary continuation (the "Salary Continuation Period"). The maximum amount of
Salary continuation hereunder shall be 52 weeks. All Salary continuation
payments shall cease upon reemployment by a Participating Company.
2. Welfare Benefit Continuation
Medical, dental and life insurance benefits shall be provided
throughout the Salary Continuation Period at the levels in effect for the
Eligible Employee immediately prior to termination of employment but in no
event greater than the levels in effect for active employees generally during
the Salary Continuation Period, provided that the Eligible Employee shall pay
the employee portion of any required premium payments at the level in effect
for employees generally of the Participating Company for such benefits. For
purposes of determining an Eligible Employee's entitlement to continuation
coverage as required by Title I, Subtitle B, Part 6 of ERISA, such employee's
18-month or other period of coverage shall commence on his or her termination
of employment.
3. Annual Bonus Payment
Subject to the provisions of this paragraph 3, a cash bonus for the
calendar year of termination may be paid in the event the Eligible Employee was
employed by a Participating Company for at least six full months during such
year and the Eligible Employee participated in an annual bonus plan (the
"Annual Incentive Plan") immediately prior to termination of employment. In
such event, the Eligible Employee shall receive a bonus in an amount equal to
the actual bonus which would have been payable under the Annual Incentive Plan
had such employee remained employed through the end of the year of such
termination multiplied by a fraction the numerator of which is the number of
full months of employment during the calendar year of termination and the
denominator of which is 12. Such bonus shall be payable at the time otherwise
payable under the Annual Incentive Plan had employment not terminated.
Notwithstanding the foregoing, no amount shall be paid under this paragraph in
the event the Eligible Employee incurred an Eligible Termination by reason of
unsatisfactory performance. The foregoing provisions of this paragraph 3 shall
be appropriately modified in the case of any plan not on a calendar year basis.
4. Long-Term Awards
<PAGE> 7
Cash payments shall be made to an Eligible Employee as set forth in
this paragraph in respect of "Performance-Based Awards" (as such term is
defined in the 1998 Dun & Bradstreet Key Employees' Stock Incentive Plan (the
"Stock Incentive Plan")) otherwise payable under the Stock Incentive Plan had
the Eligible Employee remained employed through the end of the applicable
performance period in the event the Eligible Employee was employed by a
Participating Company for at least half the applicable performance period. In
such event, cash payments shall be made to an Eligible Employee in amounts
equal to the value of the Performance Based Awards, as earned, otherwise
payable under the Stock Incentive Plan had the employee remained employed
through the end of the applicable performance period multiplied by a fraction
the numerator of which is the number of full months of employment with a
Participating Company from the beginning of the performance period to
termination of employment, and the denominator of which is the number of full
months in the performance period. Such payments shall be made at the times the
Performance Based Awards in respect of which such payments are made would
otherwise be payable under the Stock Incentive Plan had employment not
terminated. Notwithstanding the foregoing, no amount shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination
by reason of unsatisfactory performance. Nothing contained herein shall reduce
any amounts otherwise required to be paid under the Stock Incentive Plan except
to the extent such amounts are paid hereunder.
5. Death
Upon the death of an Eligible Employee during the Salary Continuation
Period, the benefits described in paragraphs 1, 3 and 4 of this Schedule shall
continue to be paid to his or her estate, as applicable, at the time or times
otherwise provided for herein.
6. Cash Equivalency Payment
The Eligible Employee shall receive, as soon as practicable following
the date of termination, an amount in cash equal to the fair market value on
such date of termination of the number of shares of restricted Company common
stock then held by such employee. For purposes of this paragraph 6, the fair
market value of the Company common stock shall equal the closing price of such
stock on the New York Stock Exchange composite tape on the date of termination,
or if such date is not a trading day, on the trading day immediately prior
thereto. Notwithstanding the foregoing, no amounts shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination
by reason of unsatisfactory performance.
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<PAGE> 8
7. Other Benefits
The Eligible Employee shall be entitled to such group outplacement
services during the Salary Continuation Period as shall be provided by the
Participating Company.
8. No Further Grants, Etc.
Following an Eligible Employee's termination of employment, no further
grants, awards, contributions, accruals or continued participation (except as
otherwise provided for herein) shall be made to or on behalf of such employee
under any plan or program maintained by a Participating Company including, but
not limited to, any Annual Incentive Plan, the Stock Incentive Plan or any
qualified or nonqualified retirement, profit sharing, stock option or
restricted stock plan of a Participating Company. Any unvested or unexercised
options, unvested restricted stock and all other benefits under any plan or
program maintained by a Participating Company (including, but not limited to,
any Annual Incentive Plan, the Stock Incentive Plan or any qualified or
nonqualified retirement, profit sharing, stock option or restricted stock plan)
which are held or accrued by an Eligible Employee at the time of his or her
termination of employment, shall be treated in accordance with the terms of
such plans and programs under which such options, restricted stock or other
benefits were granted or accrued.
3
<PAGE> 9
SCHEDULE B
This Schedule B is applicable to Eligible Employees covered by Section
1.3 (b) of the Plan, provided, however that an Eligible Employee who incurs an
Eligible Termination for any reason other than unsatisfactory performance with
more than 17 Years of Service, may elect to have Schedule A apply in its
entirety in lieu of this Schedule B. An Eligible Employee entitled to benefits
hereunder shall, subject to Section 2 of the Plan, receive the following:
1. Salary Continuation
(a) If the Eligible Employee incurs an Eligible Termination for any
reason other than unsatisfactory performance and his or her Salary at the
time employment terminates is equal to or greater than $100,000 but less
than $150,000, the Eligible Employee shall receive 26 weeks of Salary
continuation. If an Eligible Employee incurs an Eligible Termination by
reason of unsatisfactory performance and his or her Salary at the time
employment terminates is equal to or greater than $100,000 but less than
$150,000, the Eligible Employee shall receive 13 weeks of Salary
continuation.
(b) If the Eligible Employee incurs an Eligible Termination for any
reason other than unsatisfactory performance and his or her Salary at the
time employment terminates is between $150,000 and $200,000 inclusive, the
Eligible Employee shall receive 39 weeks of Salary continuation. If an
Eligible Employee incurs an Eligible Termination by reason of
unsatisfactory performance and his or her Salary at the time employment
terminates is between $150,000 and $200,000 inclusive, the Eligible
Employee shall receive 20 weeks of Salary continuation.
(c) If the Eligible Employee incurs an Eligible Termination for any
reason other than unsatisfactory performance and his or her Salary at the
time employment terminates is greater than $200,000, the Eligible Employee
shall receive 52 weeks of Salary continuation. If an Eligible Employee
incurs an Eligible Termination by reason of unsatisfactory performance and
his or her Salary at the time employment terminates is greater than
$200,000, the Eligible Employee shall receive 26 weeks of Salary
continuation.
The amounts set forth in this paragraph 1 shall be payable at the
times the Eligible Employee's Salary would have been paid if employment had not
terminated, over a period equal to the number of weeks of Salary continuation
(the "Salary Continuation Period"). In the event the Eligible Employee performs
services for an entity other than a Participating Company during the Salary
Continuation Period, such employee shall notify the Participating Company on or
prior to the commencement thereof. For purposes of this Schedule B, to "perform
services" shall mean employment or services as a full-time employee,
consultant, owner, partner, associate, agent or otherwise on behalf of any
person, principal, partnership, firm or corporation (other than a Participating
Company). All Salary continuation payments shall cease upon re-employment by a
Participating Company.
<PAGE> 10
2. Welfare Benefit Continuation
Medical, dental and life insurance benefits shall be provided
throughout the Salary Continuation Period at the levels in effect for the
Eligible Employee immediately prior to termination of employment but in no
event greater than the levels in effect for active employees generally during
the Salary Continuation Period, provided that the Eligible Employee shall pay
the employee portion of any required premium payments at the level in effect
for employees generally of the Participating Company for such benefits. For
purposes of determining an Eligible Employee's entitlement to continuation
coverage as required by Title I, Subtitle B, Part 6 of ERISA, such employee's
18-month or other period of coverage shall commence on his or her termination
of employment.
3. Annual Bonus Payment
Subject to the provisions of this paragraph 3, a cash bonus for the
calendar year of termination may be paid in the event the Eligible Employee was
employed by a Participating Company for at least six full months during such
year and the Eligible Employee participated in an annual bonus plan (the
"Annual Incentive Plan") immediately prior to termination of employment. In
such event, the Eligible Employee shall receive a bonus in an amount equal to
the actual bonus which would have been payable under the Annual Incentive Plan
had such employee remained employed through the end of the year of such
termination multiplied by a fraction the numerator of which is the number of
full months of employment during the calendar year of termination and the
denominator of which is 12. Such bonus shall be payable at the time otherwise
payable under the Annual Incentive Plan had employment not terminated.
Notwithstanding the foregoing, no amount shall be paid under this paragraph in
the event the Eligible Employee incurred an Eligible Termination by reason of
unsatisfactory performance. The foregoing provisions of this paragraph 3 shall
be appropriately modified in the case of any plan not on a calendar year basis.
4. Long-Term Awards
Cash payments shall be made to an Eligible Employee as set forth in
this paragraph in respect of "Performance-Based Awards" (as such term is
defined in the 1998 Dun & Bradstreet Key Employees' Stock Incentive Plan (the
"Stock Incentive Plan")) otherwise payable under the Stock Incentive Plan had
the Eligible Employee remained employed through the end of the applicable
performance period in the event the Eligible Employee was employed by a
Participating Company for at least half the applicable performance period. In
such event, cash payments shall be made to an Eligible Employee in amounts
equal to the value of the Performance Based Awards, as earned, otherwise
payable under the Stock Incentive Plan had the employee remained employed
through the end of the applicable performance period multiplied by a fraction
the numerator of which is the number of full months of employment with a
Participating Company from the beginning of the performance period to
termination of employment, and the denominator of which is the number of full
months in the performance period. Such payments shall be made at the times the
Performance Based Awards in respect of which such payments are made would
otherwise be payable under the Stock Incentive Plan had employment not
terminated. Notwithstanding the foregoing, no amount shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination
by reason of unsatisfactory performance. Nothing contained herein shall reduce
any amounts otherwise
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<PAGE> 11
required to be paid under the Stock Incentive Plan except to the extent such
amounts are paid hereunder.
5. Death
Upon the death of an Eligible Employee during the Salary Continuation
Period, the benefits described in paragraphs 1, 3 and 4 of this Schedule shall
continue to be paid to his or her estate, as applicable, at the time or times
otherwise provided for herein.
6. Cash Equivalency Payment
The Eligible Employee shall receive, as soon as practicable following
the date of termination, an amount in cash equal to the fair market value on
such date of termination of the number of shares of restricted Company common
stock then held by such employee. For purposes of this paragraph 6, the fair
market value of the Company common stock shall equal the closing price of such
stock on the New York Stock Exchange composite tape on the date of termination,
or if such date is not a trading day, on the trading day immediately prior
thereto. Notwithstanding the foregoing, no amounts shall be paid under this
paragraph in the event the Eligible Employee incurred an Eligible Termination
by reason of unsatisfactory performance.
7. Other Benefits
The Eligible Employee shall be entitled to such individual
outplacement services during the Salary Continuation Period as shall be
provided by the Participating Company. During the Salary Continuation Period,
financial planning/counseling shall be afforded to the Eligible Employee to the
same extent afforded immediately prior to termination of employment in the
event the Eligible Employee incurred an Eligible Termination other than by
reason of unsatisfactory performance.
8. No Further Grants, Etc.
Following an Eligible Employee's termination of employment, no further
grants, awards, contributions, accruals or continued participation (except as
otherwise provided for herein) shall be made to or on behalf of such employee
under any plan or program maintained by a Participating Company including, but
not limited to, any Annual Incentive Plan, the Stock Incentive Plan or any
qualified or nonqualified retirement, profit sharing, stock option or
restricted stock plan of a Participating Company. Any unvested or unexercised
options, unvested restricted stock and all other benefits under any plan or
program maintained by a Participating Company (including, but not limited to,
any Annual Incentive Plan, the Stock Incentive Plan or any qualified or
nonqualified retirement, profit sharing, stock option or restricted stock plan)
which are held or accrued by an Eligible Employee at the time of his or her
termination of employment shall be treated in accordance with the terms of such
plans and programs under which such options, restricted stock or other benefits
were granted or accrued.
3
<PAGE> 12
Exhibit 1
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE, made by and between
______________________ (hereinafter referred to as "Employee"), and [insert
name of D&B company] (hereinafter deemed to include its worldwide parent(s),
subsidiaries and affiliates and referred to as "the Company").
WITNESSETH THAT:
WHEREAS, Employee has been employed by the Company since the
Employment Date specified in the Appendix; and
WHEREAS, the parties to this Agreement desire to enter into an
agreement in order to provide certain benefits and salary continuation to
Employee;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter provided and of the actions taken pursuant thereto, the parties
agree as follows:
1. Employee's employment with the Company, and Employee's membership
on any committees, is terminated effective on the Effective Date of Eligible
Termination specified in the Appendix.
2. As of the Effective Date of Eligible Termination, Employee will
incur an "Eligible Termination" under The Dun & Bradstreet Career Transition
Plan (the "Plan"), a summary plan description of which Employee hereby
acknowledges receipt, and will, accordingly, be entitled to the benefits set
forth therein subject to the terms and conditions of such Plan. A summary of
the benefits to which Employee is entitled under the Plan is set forth in the
Appendix.
3. Through the Last Day of Salary Continuation specified in the
Appendix, Employee will be reasonably available to consult on matters, and will
cooperate fully with respect to any claims, litigations or investigations,
relating to the Company. No reimbursement for expenses incurred after the
commencement of a period of inactive employee status, or if there is no such
period, after termination of employment, shall be made to Employee unless
authorized in advance by the Company. A period of inactive employee status
means the period beginning on the date such status commences (of which Employee
will be notified) and ending on the date of Employee's termination of
employment.
<PAGE> 13
4. Employee agrees that until the Last Day of Salary Continuation
Employee will not become a stockholder (unless such stock is listed on a
national securities exchange or traded on a daily basis in the over-the-counter
market and the Employee's ownership interest is not in excess of 2% of the
company whose shares are being purchased), employee, officer, director or
consultant of or to a corporation, or a member or an employee of or a
consultant to a partnership or any other business or firm, which competes with
any of the businesses owned or operated by the Company; nor if Employee becomes
associated with a company, partnership or individual which company, partnership
or individual acts as a consultant to businesses in competition with the
Company will Employee provide services to such competing businesses. The
restrictions contained in this paragraph shall apply whether or not Employee
accepts any form of compensation from such competing entity or consultant.
Employee also agrees that until the Last Day of Salary Continuation Employee
will not recruit or solicit any customers of the Company to become customers of
any business entity which competes with any of the businesses owned or operated
by the Company. In addition, Employee agrees that until the Last Day of Salary
Continuation neither Employee nor any company or entity Employee controls or
manages, shall recruit or solicit any employee of the Company to become an
employee of any business entity.
5. If Employee performs services for an entity other than the Company
at any time prior to the Last Day of Salary Continuation (whether or not such
entity is in competition with the Company), Employee shall notify the Company
on or prior to the commencement thereof. To "perform services" shall mean
employment or services as a full-time employee, consultant, owner, partner,
associate, agent or otherwise on behalf of any person, principal, partnership,
firm or corporation. For purposes of this paragraph 5 only, "Company" shall
mean The Dun & Bradstreet Corporation and any other affiliated entity more than
50% of the voting interests of which are owned, directly or indirectly, by The
Dun & Bradstreet Corporation and which has elected to participate in the Plan
by action of its board of directors.
6. Employee agrees that Employee will not directly or indirectly
disclose any proprietary or confidential information, records, data, formulae,
specifications and other trade secrets owned by the Company, whether oral or
written, to any person or use any such information, except pursuant to court
order (in which case Employee will first provide the Company with written
notice of such). All records, files, drawings, documents, models, disks,
equipment and the like relating to the businesses of the Company shall remain
the sole property of the Company and shall not be removed from the premises of
the Company. Employee further agrees to return to the Company any property of
the Company which Employee may have, no matter where located, and not to keep
any copies or portions thereof.
7. Employee shall not make any derogatory statements about the Company
and shall not make any written or oral statement, news release or other
announcement relating to Employee's employment by the Company or relating to
the Company, its subsidiaries, customers or personnel, which is designed to
embarrass or criticize any of the foregoing.
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<PAGE> 14
8. Employee agrees that in the event of any breach of the covenants
contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies that may be
available to the Company, the Company may cease all payments required to be
made to Employee under the Plan and recover all such payments previously made
to Employee pursuant to the Plan. The parties agree that any such breach would
cause injury to the Company which cannot reasonably or adequately be quantified
and that such relief does not constitute in any way a penalty or a forfeiture.
9. Employee, for Employee, Employee's family, representatives,
successors and assigns releases and forever discharges the Company and its
successors, assigns, subsidiaries, affiliates, directors, officers, employees,
attorneys, agents and trustees or administrators of any Company plan from any
and all claims, demands, debts, damages, injuries, actions or rights of action
of any nature whatsoever, whether known or unknown, which Employee had, now has
or may have against the Company, its successors, assigns, subsidiaries,
affiliates, directors, officers, employees, attorneys, agents and trustees or
administrators of any Company plan, from the beginning of Employee's employment
to and including the date of this Agreement relating to or arising out of
Employee's employment with the Company or the termination of such employment
other than a claim with respect to a vested right Employee may have to receive
benefits under any plan maintained by the Company. Employee represents that
Employee has not filed any action, complaint, charge, grievance or arbitration
against the Company or any of its successors, assigns, subsidiaries,
affiliates, directors, officers, employees, attorneys, agents and trustees or
administrators of any Company plan.
10. Employee covenants that neither Employee, nor any of Employee's
respective heirs, representatives, successors or assigns, will commence,
prosecute or cause to be commenced or prosecuted against the Company or any of
its successors, assigns, subsidiaries, affiliates, directors, officers,
employees, attorneys, agents and trustees or administrators of any Company plan
any action or other proceeding based upon any claims, demands, causes of
action, obligations, damages or liabilities which are being released by this
Agreement, nor will Employee seek to challenge the validity of this Agreement,
except that this covenant not to sue does not affect Employee's future right to
enforce appropriately the terms of this Agreement in a court of competent
jurisdiction.
11. Employee acknowledges that (a) Employee has been advised to
consult with an attorney at Employee's own expense before executing this
Agreement and that Employee has been advised by an attorney or has knowingly
waived Employee's right to do so, (b) Employee has had a period of at least
twenty-one (21) days within which to consider this Agreement, (c) Employee has
a period of seven (7) days from the date that Employee signs this Agreement
within which to revoke it and that this Agreement will not become effective or
enforceable until the expiration of this seven (7) day revocation period, (d)
Employee fully understands the terms and contents of this Agreement and freely,
voluntarily, knowingly and without coercion enters into this Agreement, (e)
Employee is receiving greater consideration hereunder than Employee would
receive had Employee not signed this Agreement and that the consideration
hereunder is given in exchange for all of the provisions hereof and (f) the
waiver or release by Employee of rights or claims Employee may have under Title
VII of the Civil Rights Act of 1964, The Employee Retirement Income Security
Act of 1974, the Age Discrimination in Employment Act of 1967, the Older
Workers Benefit Protection Act, the Fair Labor Standards Act, the Americans
with Disabilities Act, the Rehabilitation Act, the Worker Adjustment and
-3-
<PAGE> 15
Retraining Act (all as amended) and/or any other local, state or federal law
dealing with employment or the termination thereof is knowing and voluntary
and, accordingly, that it shall be a breach of this Agreement to institute any
action or to recover any damages that would be in conflict with or contrary to
this acknowledgment or the releases Employee has granted hereunder. Employee
understands and agrees that the Company's payment of money and other benefits
to Employee and Employee's signing of this Agreement does not in any way
indicate that Employee has any viable claims against the Company or that the
Company admits any liability whatsoever.
12. This Agreement constitutes the entire agreement of the parties and
all prior negotiations or representations are merged herein. It shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and legal representatives but neither
this Agreement nor any rights hereunder shall be assignable by Employee without
the Company's written consent. In addition, this Agreement supersedes any prior
employment or compensation agreement, whether written, oral or implied in law
or implied in fact between Employee and the Company, other than those contracts
and agreements excepted from the application of section 5.8 of the Plan
pursuant to the terms of such section, which prior agreements are hereby
terminated.
13. If for any reason any one or more of the provisions of this
Agreement shall be held or deemed to be inoperative, unenforceable or invalid
by a court of competent jurisdiction, such circumstances shall not have the
effect of rendering such provision invalid in any other case or rendering any
other provisions of this Agreement inoperative, unenforceable or invalid.
14. This Agreement shall be construed in accordance with the laws of
the State of New Jersey, except to the extent superseded by applicable federal
law.
IN WITNESS WHEREOF, Employee and The Dun & Bradstreet Corporation, by
its duly authorized agent, have hereunder executed this Agreement.
Dated:
-----------------------------------
Employee
THE DUN & BRADSTREET CORPORATION
-----------------------------------
Title:
-4-
<PAGE> 16
Appendix
Summary of Benefit Entitlements
Under The Dun & Bradstreet
Career Transition Plan
<TABLE>
<S> <C>
Employment Date:
------------------------------
Effective Date of Eligible Termination:
------------------------------
Positions Terminated:
------------------------------
Salary Continuation: $ per week for weeks
--------- ----
Last Day of Salary Continuation:
------------------------------
Welfare Benefit Continuation: [LIST NAMES OF MEDICAL,
DENTAL, LIFE PLANS UNDER
WHICH EMPLOYEE COVERED]
Annual Bonus Payment: [x] of the annual bonus
12
otherwise payable to you at time of normal
payment.
Long-Term Incentive Payment: [x] of the long-term incentive
[y]
otherwise payable to you for the _________
cycles at time of normal payment.
[INDIVIDUAL] [GROUP] Outplacement:
As provided by the Company.
</TABLE>
THE DESCRIPTION OF BENEFITS CONTAINED IN THIS APPENDIX IS ONLY A SUMMARY AND IS
SUBJECT TO THE TERMS AND CONDITIONS OF THE PLAN. REFER TO YOUR SUMMARY PLAN
DESCRIPTION FOR MORE DETAIL.
<PAGE> 1
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
This Agreement is made between The Dun & Bradstreet Corporation (the
"Corporation") and Clifford L. Alexander, Jr. (the "Executive"), for mutual
consideration, the receipt and adequacy of which are acknowledged by the
parties, who agree:
1. Position. The Executive is engaged to serve as the Corporation's
Interim Chairman and Chief Executive Officer, effective October 25, 1999.
Executive will have the duties and responsibilities of the Corporation's
Chairman and Chief Executive Officer, as specified in the Corporation's Bylaws,
and as directed by the Corporation's Board of Directors, to whom the Executive
will report. It is understood that among his other duties, Executive will lead
the search for a non-interim Chairman and Chief Executive Officer in full
consultation with the Board of Directors.
2. Compensation and Benefits. Effective October 25, 1999, the salary
of the Executive as Interim Chairman and Chief Executive Officer will be
$125,000 per month, subject to appropriate deductions and withholdings for
taxes. The salary will be payable in installments at least once a month. In
addition, the Corporation will grant Executive options to acquire 100,000
shares of the Corporation's common stock at an exercise price equal to the fair
market value of the shares on November 4, 1999 which is the date of grant of
such options. Such options will be immediately exercisable and will remain
exercisable for a period of 10 years from the date of grant regardless of the
Executive's termination of services to the Corporation during such period. The
options will be issued pursuant to the 1998 Dun & Bradstreet Corporation Key
Employees' Stock Incentive Plan ("Plan"), subject to the specific provisions of
this Agreement. In the event of any conflict between the Plan and this
Agreement, this Agreement will control. In view of the interim nature of the
position, Executive waives coverage and benefits under the Corporation's
benefit plans for executives related to retirement and health insurance.
However, Executive will be an insured under appropriate officers' and
directors' insurance, any other applicable liability policies and any life
insurance and disability insurance policy for which he is eligible. The parties
will consider the appropriateness of an increase in compensation if Executive
continues to serve as Interim Chairman and Chief Executive Officer past
December 31, 1999.
<PAGE> 2
3. Termination.
A. The Executive will resign his employment under this Agreement
immediately upon the commencement of employment of a non-interim Chairman and
Chief Executive Officer duly selected by the Corporation. In the event
unforeseen circumstances make it necessary for Executive to resign his
employment under this Agreement before a non-interim Chairman and Chief
Executive Officer commences employment, Executive will immediately consult with
the Board and provide as much notice as is possible in the circumstances. In
the event of the Executive's resignation, the Corporation will pay Executive's
salary through the effective date of resignation.
B. The Corporation may terminate Executive's employment under this
Agreement prior to commencement of employment of a non-interim Chairman and
Chief Executive Officer: (i) immediately in the event of the death of the
Executive or in the event of "cause" as defined below, or (ii) thirty days
after the onset of physical or mental disability, confirmed by a professional
medical diagnosis, that prevents the effective performance of the Executive's
duties. "Cause" for purposes of this subsection 3B means conviction of a
felony, fraud, moral turpitude, breach of fiduciary responsibility,
insubordination or intentional dereliction of duty. In the event of termination
under this subsection 3B, the Corporation will pay Executive's salary through
the effective date of termination.
C. The Corporation may terminate Executive's employment under this
Agreement for any other reason prior to commencement of employment of a
non-interim Chairman and Chief Executive Officer by giving the Executive
written notice of termination and continuing to pay Executive his monthly
salary stated in section 2 above for a period of three months following the
effective date of termination.
4. Indemnification. The Corporation indemnifies, holds harmless, and
will defend the Executive against claims arising against the Executive in
connection with the Executive's employment by the Corporation under this
Agreement to the fullest extent permitted by law.
5. Other. Executive may continue his other professional activities and
employment concurrent with his employment under this Agreement, provided that
they do not interfere with his duties under this Agreement.
2
<PAGE> 3
6. Entire Agreement. This document contains the entire agreement of
the Corporation and the Executive with respect to the position covered herein.
It may not be changed orally but only by an agreement in writing signed by the
Corporation and the Executive.
CLIFFORD L. ALEXANDER, JR. THE DUN & BRADSTREET
CORPORATION
/s/ Clifford L. Alexander, Jr. Peter J. Ross
- -------------------------------- ------------------------------------
11/12/99 11/11/99
- -------------------------------- ------------------------------------
Date Date
3
<PAGE> 1
EXHIBIT 10.34
SEVERANCE AGREEMENT AND RELEASE
THIS SEVERANCE AGREEMENT AND RELEASE, made by and between Volney
Taylor (hereinafter referred to as "Employee"), and The Dun & Bradstreet
Corporation (hereinafter deemed to include its worldwide subsidiaries and
affiliates and referred to as "the Company").
WITNESSETH THAT:
WHEREAS, Employee has been employed by the Company since the date
specified in the Appendix; and
WHEREAS, the parties to this Agreement desire to enter into an
agreement in order to provide certain benefits and salary continuation to
Employee;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter provided and of the actions taken pursuant thereto, the parties
agree as follows:
1. Employee's employment with the Company as Chairman, Chief Executive
Officer and director, and Employee's membership on any committees, is
terminated effective on the date specified in the Appendix. Employee shall
remain an employee of the Company through December 31, 1999 at which time
Employee will retire from the Company. Employee's salary for remaining an
employee of the Company through December 31, 1999 is specified in the Appendix.
2. Effective on the date set forth in the Appendix, Employee will
incur an "Eligible Termination" under clause (b) of the definition of "Eligible
Termination" set forth in the Dun & Bradstreet Executive Transition Plan (the
"Plan"), a summary plan description of which Employee hereby acknowledges
receipt, and will, accordingly, be entitled to the benefits set forth therein
subject to the terms and conditions of such Plan. A summary of the benefits to
which Employee is entitled under the Plan is set forth in the Appendix.
3. Through October 25, 2001, Employee will be reasonably available to
consult on matters, and will cooperate fully with respect to any claims,
litigations or investigations, relating to the Company. Employee shall be
reimbursed for any reasonable out-of-pocket expenses incurred by Employee in
connection with the performance of his services pursuant to this Section 3.
4. Employee agrees that until October 25, 2001 Employee will not
become a stockholder (unless such stock is listed on a national securities
exchange or traded on a daily basis in the over-the-counter market and the
Employee's ownership interest is not in excess of 2% of the company whose
shares are being purchased), employee, officer, director or consultant of or to
a corporation, or a member or an employee of or a consultant to a partnership
or any other business or firm, which competes with any of the businesses owned
or operated by the Company; nor if Employee becomes associated with a company,
partnership or individual which
<PAGE> 2
company, partnership or individual acts as a consultant to businesses in
competition with the Company will Employee provide services to such competing
businesses. The restrictions contained in this paragraph shall apply whether or
not Employee accepts any form of compensation from such competing entity or
consultant. Employee also agrees that until October 25, 2001 Employee will not
recruit or solicit any customers of the Company to become customers of any
business entity which competes with any of the businesses owned or operated by
the Company. In addition, Employee agrees that until October 25, 2001 neither
Employee nor any company or entity Employee controls or manages, shall recruit
or solicit any employee of the Company to become an employee of any business
entity.
5. If Employee performs services for an entity other than the Company
at any time prior to October 25, 2001 (whether or not such entity is in
competition with the Company), Employee shall notify the Company on or prior to
the commencement thereof. To "perform services" shall mean employment or
services as a full-time employee, consultant, owner, partner, associate, agent
or otherwise on behalf of any person, principal, partnership, firm or
corporation. For purposes of this paragraph 5 only, "Company" shall mean The
Dun & Bradstreet Corporation and any other affiliated entity more than 50% of
the voting interests of which are owned, directly or indirectly, by The Dun &
Bradstreet Corporation and which has elected to participate in The Dun &
Bradstreet Career Transition Plan by action of its board of directors.
6. Employee agrees that Employee will not directly or indirectly
disclose any proprietary or confidential information, records, data, formulae,
specifications and other trade secrets owned by the Company, whether oral or
written, to any person or use any such information, except pursuant to court
order (in which case Employee will first provide the Company with written
notice of such). All records, files, drawings, documents, models, disks,
equipment and the like relating to the businesses of the Company shall remain
the sole property of the Company and shall not be removed from the premises of
the Company. Employee further agrees to return to the Company any property of
the Company which Employee may have, no matter where located, and not to keep
any copies or portions thereof, provided Employee shall be permitted to retain
the personal computer and fax machine purchased by the Company on behalf of
Employee and located in Employee's personal residence.
7. Employee shall not make any derogatory statements about the Company
and shall not make any written or oral statement, news release or other
announcement relating to Employee's employment by the Company or relating to
the Company, its subsidiaries, customers or personnel, which is designed to
embarrass or criticize any of the foregoing.
8. Employee agrees that in the event of any breach of the covenants
contained in paragraphs 3, 4, 5, 6 or 7 in addition to any remedies that may be
available to the Company, the Company may cease all payments required to be
made to Employee under the Plan and recover all such payments previously made
to Employee pursuant to the Plan. The parties agree that any such breach would
cause injury to the Company which cannot reasonably or adequately be quantified
and that such relief does not constitute in any way a penalty or a forfeiture.
9. In consideration of the agreements set forth herein, the
sufficiency of which Employee hereby acknowledges, Employee, for Employee,
Employee's family, heirs,
-2-
<PAGE> 3
executors, representatives, successors and assigns releases and forever
discharges the Company and its successors, assigns, subsidiaries, affiliates,
any and all current and former directors, officers, employees, attorneys and
agents and their heirs and assigns, and any and all employee pension benefit or
welfare benefit plans of the Company, including current and former trustees and
administrators of any Company plan, from any and all claims, demands, debts,
damages, injuries, actions or rights of action of any nature whatsoever,
whether known or unknown, which Employee had, now has or may have against the
Company, its successors, assigns, subsidiaries, affiliates, any and all current
and former directors, officers, employees, attorneys and agents and their heirs
and assigns, and any and all employee pension benefit or welfare benefit plans
of the Company, including current and former trustees and administrators of any
Company plan, from the beginning of Employee's employment to and including the
date of this Agreement, including without limitation, any claims relating to or
arising out of Employee's employment with the Company or the termination of
such employment other than a claim with respect to a vested right Employee may
have to receive benefits under any plan maintained by the Company. Employee
represents that Employee has not filed any action, complaint, charge, grievance
or arbitration against the Company or any of its successors, assigns,
subsidiaries, affiliates, directors, officers, employees, attorneys, agents and
trustees or administrators of any Company plan.
10. Employee covenants that neither Employee, nor any of Employee's
respective heirs, representatives, successors or assigns, will commence,
prosecute or cause to be commenced or prosecuted against the Company or any of
its successors, assigns, subsidiaries, affiliates, directors, officers,
employees, attorneys, agents and trustees or administrators of any Company plan
any action or other proceeding based upon any claims, demands, causes of
action, obligations, damages or liabilities which are being released by this
Agreement, nor will Employee seek to challenge the validity of this Agreement,
except that this covenant not to sue does not affect Employee's future right to
enforce appropriately the terms of this Agreement in a court of competent
jurisdiction.
11. Employee acknowledges that (a) Employee has been advised to
consult with an attorney at Employee's own expense before executing this
Agreement and that Employee has been advised by an attorney or has knowingly
waived Employee's right to do so, (b) Employee has had a period of at least
twenty-one (21) days within which to consider this Agreement, (c) Employee has
a period of seven (7) days from the date that Employee signs this Agreement
within which to revoke it and that this Agreement will not become effective or
enforceable until the expiration of this seven (7) day revocation period, (d)
Employee fully understands the terms and contents of this Agreement and freely,
voluntarily, knowingly and without coercion enters into this Agreement, (e)
Employee is receiving greater consideration hereunder than Employee would
receive had Employee not signed this Agreement and that the consideration
hereunder is given in exchange for all of the provisions hereof and (f) the
waiver or release by Employee of rights or claims Employee may have under Title
VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of
1991 (which prohibit discrimination in employment based upon race, color, sex,
religion, and national origin); the Americans with Disabilities Act of 1990, as
amended, and the Rehabilitation Act of 1973 (which prohibit discrimination
based upon disability); the Family and Medical Leave Act of 1993 (which
prohibits discrimination based on requesting or taking a family or medical
leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits
discrimination based upon race); Section 1985(3) of the Civil Rights Act of
1871 (which prohibits conspiracies to discriminate); the
-3-
<PAGE> 4
Employee Retirement Income Security Act of 1974, as amended (which prohibits
discrimination with regard to benefits); any other federal, state or local laws
against discrimination; or any other federal, state, or local statute, or
common law relating to employment, wages, hours, or any other terms and
conditions of employment is knowing and voluntary and, accordingly, that it
shall be a breach of this Agreement to institute any action or to recover any
damages that would be in conflict with or contrary to this acknowledgment or
the releases Employee has granted hereunder. Employee understands and agrees
that the Company's payment of money and other benefits to Employee and
Employee's signing of this Agreement does not in any way indicate that Employee
has any viable claims against the Company or that the Company admits any
liability whatsoever. Employee acknowledges that this Agreement includes
release by Employee of any claims for wrongful discharge, breach of contract,
torts or any other claims in any way related to the Employee's employment with
or resignation or termination from the Company. This release also includes a
release of any claims for age discrimination under the Age Discrimination in
Employment Act, as amended.
12. This Agreement constitutes the entire agreement of the parties and
all prior negotiations or representations are merged herein. It shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and legal representatives but neither
this Agreement nor any rights hereunder shall be assignable by Employee without
the Company's written consent. In addition, this Agreement supersedes any prior
employment, compensation or other agreement, whether written, oral or implied
in law or implied in fact between Employee and the Company which prior
agreements are hereby terminated.
13. If for any reason any one or more of the provisions of this
Agreement shall be held or deemed to be inoperative, unenforceable or invalid
by a court of competent jurisdiction, such circumstances shall not have the
effect of rendering such provision invalid in any other case or rendering any
other provisions of this Agreement inoperative, unenforceable or invalid.
14. This Agreement shall be construed in accordance with the laws of
the State of New Jersey, except to the extent superseded by applicable federal
law.
15. This Agreement shall terminate in its entirety any Change in
Control Severance Agreement between the Company and Employee.
-4-
<PAGE> 5
IN WITNESS WHEREOF, Employee and The Dun & Bradstreet Corporation, by
its duly authorized agent, have hereunder executed this Agreement.
Dated: December 20, 1999
/s/ Volney Taylor
-------------------------------------------
Volney Taylor
THE DUN & BRADSTREET CORPORATION
/s/ Peter J. Ross
-------------------------------------------
Name: Peter J. Ross
Title: Senior Vice President and Business
Affairs Officer
-5-
<PAGE> 6
Appendix
Summary of Benefit Entitlements
Under The Dun & Bradstreet
Executive Transition Plan
<TABLE>
<S> <C>
EMPLOYMENT WITH
COMPANY SINCE: January 17, 1972.
EFFECTIVE DATE
OF ELIGIBLE TERMINATION: October 25, 1999.
POSITIONS TERMINATED: Chairman, Chief Executive Officer and
Director.
SALARY FOR REMAINING AN EMPLOYEE THROUGH
DECEMBER 31, 1999 At the rate of $13,903.85 per week in the
aggregate, payable in accordance with the
Company's normal payroll policies.
SALARY CONTINUATION: At the rate of $27,403.85 per week for 104 weeks,
payable in accordance with the Company's normal
payroll policies.
1999 ANNUAL BONUS PAYMENT: The annual bonus that Employee would
have earned based on achievement of
performance objectives under the
letter dated June 11, 1999 from Peter
J. Ross to Employee, payable at time of
normal payment.
OUTSTANDING STOCK OPTIONS AS OF DECEMBER Exercisable for the shorter of five years
31, 1999 after December 31, 1999 or the remaining term
of the options.
PERFORMANCE SHARES: Performance Shares that would otherwise be payable
to Employee for the 1998/1999 and 1999/2000
periods under the letter dated June 11, 1999 from
Peter J. Ross to Employee will be cashed out in a
pro rata amount for the portion of the award up to
December 31, 1999.
WELFARE BENEFIT CONTINUATION: Employee will continue to participate as an
employee through December 31, 1999 in the
Company's medical, dental and life insurance plans
in which he participated as of October 31, 1999.
As of January 1, 2000, Employee
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
will participate in such plans as a retiree.
COMPANY CAR: The Company will continue to make lease payments
on Employee's company-provided car through the end
of the lease term. Employee will have the option
of buying the car at the end of the lease term.
PENSION AND RETIREMENT BENEFITS: Treated as provided under the terms of the
relevant Plan.
EXECUTIVE OUTPLACEMENT: As provided by the Company.
FINANCIAL PLANNING/COUNSELING: Will continue for salary continuation period to
the same extent as provided by the Company prior
to October 25, 1999.
</TABLE>
The description of benefits contained in this Appendix is only a summary and
is subject to the terms and conditions of the Plan. Refer to your summary plan
description for more detail.
-2-
<PAGE> 1
EXHIBIT 21
LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 2000
<TABLE>
<CAPTION>
OWNERSHIP
COMPANY NAME JURISDICTION OF CREATION PERCENTAGE
- ------------------------------------------------- ------------------------- ----------
<S> <C> <C>
Arrebnac Pty. Ltd................................ Australia 100%
Beheer en Beleggingsmaatschappij Stivaco B.V..... Netherlands 100%
College Mercantile Pty. Ltd...................... Australia 100%
Consorzio Manifatturieri srl..................... Italy 100%
Corinthian Leasing Corporation................... Delaware 100%
D&B Acquisition Corp............................. Delaware 100%
D&B Data & Services s.r.l........................ Italy 100%
D&B Espana S.A................................... Spain 100%
D&B Europe Limited............................... England 100%
D&B Group Ltd.................................... Delaware 100%
D&B Information Services (M) Sdn. Bhd............ Malaysia 100%
D&B International Consultant (Shanghai) Co. Ltd.. Peoples Republic of China 100%
D&B Schimmelpfeng-Unterstutzungskasse GmbH....... Germany 100%
Dataquest Europe................................. England 100%
Dun & Bradstreet (Australia) Group Pty. Ltd...... Australia 100%
Dun & Bradstreet (Australia) Holdings Pty........ Australia 100%
Dun & Bradstreet (Australia) Pty. Limited........ Australia 100%
Dun & Bradstreet (C&EE) Holding B.V.............. Netherlands 100%
Dun & Bradstreet (France) B.V.................... Netherlands 100%
Dun & Bradstreet (HK) Limited.................... Hong Kong 100%
Dun & Bradstreet (Israel) Ltd.................... Israel 100%
Dun & Bradstreet (New Zealand) Limited........... New Zealand 100%
Dun & Bradstreet (Nominees) Pty. Ltd............. Australia 100%
Dun & Bradstreet (S.C.S.) B.V.................... Netherlands 100%
Dun & Bradstreet (Singapore) Pte. Ltd............ Singapore 100%
Dun & Bradstreet (Switzerland) AG................ Switzerland/Delaware 100%
Dun & Bradstreet (U.K.) Pension Plan Trustee
Company Ltd.................................... England 100%
Dun & Bradstreet B.V............................. Netherlands 100%
Dun & Bradstreet Canada B.V...................... Netherlands 100%
Dun & Bradstreet Canada Holding, Ltd............. Canada 100%
Dun & Bradstreet Computer Leasing, Inc........... Delaware 100%
Dun & Bradstreet Credit Control, Ltd............. Delaware 100%
Dun & Bradstreet Danmark Holding A/S............. Denmark 100%
Dun & Bradstreet de Mexico, S.A. de C.V.......... Mexico 100%
Dun & Bradstreet Denmark A/S..................... Denmark 100%
Dun & Bradstreet Deutschland GmbH................ Germany/Delaware 100%
Dun & Bradstreet Do Brasil, Ltda................. Brazil/Delaware 100%
Dun & Bradstreet Ekonomiforlaget AB.............. Sweden 100%
Dun & Bradstreet European Outsourcing Center B.V. Netherlands 100%
Dun & Bradstreet Finance Ltd..................... England 100%
Dun & Bradstreet Finland OY...................... Finland 100%
Dun & Bradstreet France S.C.S............... France 100%
Dun & Bradstreet Holding Norway A/S......... Norway 100%
Dun & Bradstreet Holdings B.V............... Netherlands 100%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
OWNERSHIP
COMPANY NAME JURISDICTION OF CREATION PERCENTAGE
- ------------------------------------------------- ------------------------- ----------
<S> <C> <C>
Dun & Bradstreet Hungaria Informacio
Szolgaltato Korlatolt Felelosegu Tarasag.... Hungary 100%
Dun & Bradstreet Information Services
Ges.mbH..................................... Austria 100%
Dun & Bradstreet Information Services India
Pvt. Ltd.................................... India 100%
Dun & Bradstreet International, Ltd......... Delaware 100%
Dun & Bradstreet Japan Ltd.................. Japan 100%
Dun & Bradstreet Limited.................... Ireland 100%
Dun & Bradstreet Limited.................... England 100%
Dun & Bradstreet Management S.A.S........... France 100%
Dun & Bradstreet Marketing Pty. Ltd......... Australia 100%
Dun & Bradstreet Marketing Services N.V.-
S.A......................................... Belgium 100%
Dun & Bradstreet Nordic AB.................. Sweden 100%
Dun & Bradstreet Norge A/S.................. Norway 100%
Dun & Bradstreet Outsourcing Services N.V... Belgium 100%
Dun & Bradstreet Poland sp. zo.o............ Poland 100%
Dun & Bradstreet Portugal, Ltda............. Portugal 100%
Dun & Bradstreet Pty. Ltd................... Australia 100%
Dun & Bradstreet RMS Franchise Corporation.. Delaware 100%
Dun & Bradstreet S.A........................ Argentina 100%
Dun & Bradstreet S.A........................ Peru 100%
Dun & Bradstreet S.p.A...................... Italy 100%
Dun & Bradstreet spol s. r. o............... Czech Republic 100%
Dun & Bradstreet Sverige AB................. Sweden 100%
Dun & Bradstreet Telecenter B.V............. Netherlands 100%
Dun & Bradstreet Teleupdate Center GmbH..... Germany 100%
Dun & Bradstreet Unit Trust................. Australia 100%
Dun & Bradstreet Zimbabwe (Private) Limited. Zimbabwe 100%
Dun & Bradstreet, Inc....................... Delaware 100%
Duns Holding, Inc........................... Delaware 100%
Duns Investing VII Corporation.............. Delaware 100%
DunsNet, Inc................................ Delaware 100%
eccelerate.com, Inc......................... Delaware 100%
Enshrine CA Pty. Ltd........................ Australia 50%
Fillupar Leasing Partnership................ Delaware 98%
Infotrade N.V.-S.A.......................... Belgium 100%
Moody's (Canada) Inc........................ Canada 100%
Moody's America Latina Ltda................. Brazil 100%
Moody's Asia Pacific Limited................ Hong Kong 100%
Moody's Deutschland GmbH.................... Germany 100%
Moody's France SA........................... France 100%
Moody's Interbank Credit Service Limited.... Cyprus 100%
Moody's Investment Company India Pvt. Ltd... India 100%
Moody's Investors Service Espana, S.A....... Spain 100%
Moody's Investors Service Ltd............... England 100%
Moody's Investors Service Pty. Limited...... Australia 100%
Moody's Investors Service, Inc.............. Delaware 100%
Moody's Italia S.r.l........................ Italy 100%
Moody's Japan Kabushiki Kaisha.............. Japan 100%
Moody's Overseas Holdings, Inc.............. Delaware 100%
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
OWNERSHIP
COMPANY NAME JURISDICTION OF CREATION PERCENTAGE
- ------------------------------------------------- ------------------------- ----------
<S> <C> <C>
Moody's Risk Management Services,
Inc........................................ Delaware 100%
Moody's Risk Management Services Ltd England 100%
Moody's Singapore Pte. Ltd................. Singapore 100%
N.V. Dun & Bradstreet-Eurinform S.A Belgium/Delaware 100%
Orefro L'Informazione S.p.A................ Italy 100%
S&W S.A.S.................................. France 100%
Schimmelpfeng Inkasso GmbH................. Germany 100%
Socogestion S.A.S.......................... France 100%
The D&B Companies of Canada Ltd............ Canada 100%
Vlaamse Bedrijfsdatabank N.V.-S.A.......... Belgium 100%
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements of The Dun & Bradstreet Corporation on Forms S-8 (File Nos.
333-57267, 333-57915, 333-60737, 333-64653, 333-68555 and 333-81121) of our
report, dated February 2, 2000 except as to Note 16 which is dated February 16,
2000, relating to the consolidated financial statements of The Dun & Bradstreet
Corporation at December 31, 1999 and 1998 and for the years ended December 31,
1999, 1998 and, which report is incorporated in this Annual Report on Form 10-K.
/S/ PRICEWATERHOUSECOOPERS LLP
New York, New York
February 16, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 113,169
<SECURITIES> 10
<RECEIVABLES> 454,427
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 217,412
<PP&E> 724,178
<DEPRECIATION> 444,140
<TOTAL-ASSETS> 1,785,740
<CURRENT-LIABILITIES> 1,414,850
<BONDS> 0
0
0
<COMMON> 1,714
<OTHER-SE> (418,275)
<TOTAL-LIABILITY-AND-EQUITY> 1,785,741
<SALES> 0
<TOTAL-REVENUES> 1,971,811
<CGS> 0
<TOTAL-COSTS> 1,491,693
<OTHER-EXPENSES> 1,940
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,080
<INCOME-PRETAX> 434,897
<INCOME-TAX> 178,865
<INCOME-CONTINUING> 256,033
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 256,033
<EPS-BASIC> 1.58
<EPS-DILUTED> 1.56
</TABLE>
