SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 1-7155
_______
THE DUN & BRADSTREET CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2740040
(State of Incorporation) (I.R.S. Employer
Identification No.)
187 Danbury Road, Wilton, CT 06897
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(203) 834-4200
______________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Shares Outstanding
Title of Class at October 31, 1995
______________
Common Stock,
par value $1 per share 169,346,670
<PAGE>
THE DUN & BRADSTREET CORPORATION
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
_____________________________ _____
Item 1. Financial Statements
Condensed Consolidated Statement of Income (Unaudited)
Three Months Ended September 30, 1995 and 1994 3
Nine Months Ended September 30, 1995 and 1994 4
Condensed Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30, 1995 and 1994 5
Condensed Consolidated Statement of Financial Position
(Unaudited)
September 30, 1995 and December 31, 1994 6
Notes to Condensed Consolidated Financial Statements
(Unaudited) 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION
____________________________
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
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<TABLE>
PART I. FINANCIAL INFORMATION
- - - -----------------------------
Item I. FINANCIAL STATEMENTS
THE DUN & BRADSTREET CORPORATION
Condensed Consolidated Statement of Income (Unaudited)
(In millions except per share amounts)
<CAPTION>
Three Months Ended
September 30
________________________
1995 1994
________________________
<S> <C> <C>
Operating Revenue $1,333.4 $1,203.4
Operating Costs, Selling and
Administrative Expenses 1,149.9 953.0
Restructuring (Income)/Expense - Net (77.2) 0.0
________ ________
Operating Income 260.7 250.4
Interest Expense - Net 8.0 4.3
Other Expense - Net 15.5 13.3
________ ________
Non-Operating Expense - Net 23.5 17.6
Income Before Provision for Taxes 237.2 232.8
Provision for Income Taxes 65.7 66.1
_______ _______
Net Income $171.5 $166.7
======= =======
Earnings Per Share of Common Stock $1.01 $0.98
======= =======
Dividends Paid Per Share of Common Stock $0.66 $0.65
======= =======
Average Number of Shares Outstanding 169.6 170.0
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
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<TABLE>
THE DUN & BRADSTREET CORPORATION
Condensed Consolidated Statement of Income (Unaudited)
(In millions except per share amounts)
<CAPTION>
Nine Months Ended
September 30
________________________
1995 1994
________________________
<S> <C> <C>
Operating Revenue $3,860.5 $3,487.3
Operating Costs, Selling and
Administrative Expenses 3,284.1 2,863.0
Restructuring (Income)/Expense - Net (77.2) 0.0
________ ________
Operating Income 653.6 624.3
Interest Expense - Net 19.8 4.1
Other Expense - Net 43.9 33.6
________ ________
Non-Operating Expense - Net 63.7 37.7
Income Before Provision for Taxes 589.9 586.6
Provision for Income Taxes 163.4 166.6
_______ _______
Net Income $426.5 $420.0
======= =======
Earnings Per Share of Common Stock $2.51 $2.47
======= =======
Dividends Paid Per Share of Common Stock $1.97 $1.91
======= =======
Average Number of Shares Outstanding 169.6 170.0
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
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</TABLE>
<PAGE>
<TABLE>
The Dun & Bradstreet Corporation
Condensed Consolidated Statement
of Cash Flows (Unaudited)
Nine Months Ended September 30
1995 1994
(Amounts in millions)
_____________________________________________________________________
<CAPTION>
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $426.5 $420.0
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 351.8 309.0
Gain on Sale of Dunsnet Assets 0.0 (36.0)
Revaluation of Computer Software and Other
Assets 0.0 38.8
Restructuring Gains from Sale of Businesses (90.0) (56.3)
Restructuring Provisions 12.8 56.3
Restructuring Payments (77.0) (109.6)
Postemployment Benefits Expense 85.7 5.2
Postemployment Benefits Curtailment
Loss/(Gain) 4.5 (33.4)
Postemployment Benefit Payments (89.6) (124.5)
Net Decrease in Accounts Receivable 48.2 75.0
Unearned Subscription Income 65.2 55.6
Income Taxes Paid- Net of Refunds (88.0) (139.7)
Net Changes in Other Working Capital Item 39.8 (21.2)
____________________________________________________________________
Net Cash Provided by Operating Activities 689.9 439.2
____________________________________________________________________
Cash Flows from Investing Activities:
Proceeds from Marketable Securities 28.0 123.7
Payments for Marketable Securities (20.0) (153.7)
Payments for Acquisition of Businesses (excluding cash
and cash equivalents acquired of $1.9 in 1994 (21.4) (181.9)
Proceeds from Sale of Businesses 201.0 143.6
Capital Expenditures (209.9) (213.7)
Additions to Computer Software and
Other Intangibles (151.1) (128.6)
Increase in Other Investments and
Notes Receivable (12.8) (53.9)
Other 6.2 17.4
______________________________________________________________________
Net Cash Used in Investing Activities (180.0) (447.1)
______________________________________________________________________
Cash Flows from Financing Activities:
Payment of Dividends (334.4) (324.8)
Payments for Purchase of Treasury Shares (50.7) (59.9)
Net Proceeds from Exercise of Stock Options 18.0 19.4
Increase in U.S. Short-term Borrowings 13.2 363.0
Payment of Alaska Native Corp. Obligations 0.0 (166.2)
Other (1.1) 30.4
______________________________________________________________________
Net Cash Used in Financing Activities (355.0) (138.1)
______________________________________________________________________
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 10.1 14.0
______________________________________________________________________
Increase (Decrease) in Cash & Cash Equivalents 165.0 (132.0)
Cash and Cash Equivalents, Beginning of Year 335.4 650.9
________________________________________________________________________
Cash and Cash Equivalents, End of Period $500.4 $518.9
________________________________________________________________________
<FN>
See accompanying notes to the condensed consolidated financial
statements(unaudited).
-5-
</TABLE>
<PAGE>
<TABLE>
THE DUN & BRADSTREET CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(Amounts in millions)
<CAPTION>
_________________________________________________________________________
September 30 December 31
1995 1994
_________________________________________________________________________
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $500.4 $335.4
Marketable Securities 14.8 26.9
Accounts Receivable - Net 1,212.8 1,256.5
Other Current Assets 377.8 362.2
_______ _______
Total Current Assets 2,105.8 1,981.0
____________________________________________________________________________
Investments
Marketable Securities 144.9 133.1
Other Investments and Notes Receivable 381.8 366.4
_______ _______
Total Investments 526.7 499.5
__________________________________________________________________________
Property, Plant and Equipment - Net 927.6 918.5
__________________________________________________________________________
Other Assets - Net
Deferred Charges 371.7 363.1
Computer Software 364.7 335.9
Other Intangibles 216.3 216.0
Goodwill 1,050.6 1,149.9
_______ _______
Total Other Assets - Net 2,003.3 2,064.9
_________________________________________________________________________
Total Assets $5,563.4 $5,463.9
_________________________________________________________________________
Liabilities and Shareowners' Equity
Current Liabilities
Accounts Payable $307.0 $290.2
Short-term Debt 513.5 500.6
Accrued and Other Current Liabilities 1,171.9 1,300.4
Accrued Income Taxes 124.3 95.4
_______ _______
Total Current Liabilities 2,116.7 2,186.6
________________________________________________________________________
Unearned Subscription Income 358.4 290.3
Postretirement and Postemployment Benefits 533.1 484.9
Deferred Income Taxes 202.8 209.3
Other Liabilities and Minority Interests 951.8 974.2
________________________________________________________________________
Total Liabilities $4,162.8 $4,145.3
Shareowners' Equity $1,400.6 $1,318.6
_________________________________________________________________________
Total Liabilities and Shareowners' Equity $5,563.4 $5,463.9
_________________________________________________________________________
<FN>
See accompanying notes to the condensed consolidated financial statements
(unaudited).
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</TABLE>
<PAGE>
THE DUN & BRADSTREET CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Interim Consolidated Financial Statements
These interim consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and
should be read in conjunction with the consolidated financial
statements and related notes of The Dun & Bradstreet Corporation
(the "Company" or "D&B")1994 Annual Report on Form 10-K.
In the opinion of management, all adjustments (consisting of
normal recurring accruals), considered necessary for a fair
presentation of financial position, results of operations
and cash flows at the dates and for the periods presented
have been included. Certain prior-year amounts have been
reclassified to conform with the 1995 presentation.
Note 2 - Restructuring and Postemployment Benefit Costs
In the third quarter of 1995, the Company completed the sale of
Interactive Data Corp. to the Financial Times Group for $201
million in cash. The $90 million restructuring gain on the
sale was offset by a restructuring charge of $12.8 million,
primarily to write off software for product lines that were
discontinued at Sales Technologies.
In addition, in the third quarter of 1995, the Company
initiated actions to improve future productivity. Costs
included a provision of $77.2 million for postemployment
benefits, primarily severance, for workforce reductions,
which is included in operating costs.
In the second quarter of 1994, the Company sold Thomson
Directories and the Machinery Information Division of
Dataquest. The $56.3 million restructuring gain on the
sales were essentially offset by the costs of actions to
restructure certain operations and businesses.
Note 3 - Financial Instruments with Off-Balance-Sheet Risk
The Company is a party to financial instruments with off-
balance-sheet-risk, which are entered into in the normal
course of business to reduce exposure to fluctuations in
interest and foreign exchange rates. Interest rate swap
agreements are entered into primarily as hedges against
variable interest rate exposures. During the first
quarter of 1995, the Company executed swap agreements which
effectively fixed interest rates on an additional $100
million of variable rate debt. As a result, at September 30,
1995, the Company had swap agreements outstanding to fix
interest rates on a total of $400 million of variable rate
debt through fiscal 2004. The weighted average fixed rate
payable under these agreements is 7.07%. The differential
interest to be paid or received under these agreements is
included in interest expense over the life of the debt.
Note 4 - Short-term Borrowing Agreements
The Company maintains short-term borrowing agreements with several
banks. During the second quarter, the Company increased its U.S.
credit lines to $750 million, all of which support a commercial
paper program.
-7-
<PAGE>
Note 5 - Investment Partnerships
During 1993, three of the Company's subsidiaries contributed
assets and third-party investors contributed cash ($125
million) to a limited partnership. One of the Company's
subsidiaries serves as general partner. All of the other
partners, including the third-party investors, hold limited
partner interests. The partnership, which is a separate and
distinct legal entity, is in the business of licensing
database assets and computer software.
In addition, during 1993, the Company participated in the
formation of a limited partnership to invest in various
securities including those of the Company. One of the
company's subsidiaries serves as managing general partner.
Third-party investors hold limited partner and special
investors interests totaling $500 million. The special
investors are entitled to a specified return on their
investments. Funds raised by the partnership provided a
source of the financing for the Company's repurchase in 1993
of 8.3 million shares of its common stock.
For financial reporting purposes, the assets, liabilities,
results of operations and cash flows of the partnerships
described above are included in the Company's consolidated
financial statements. The third-parties investments in
these partnerships at September 30, 1995 and December 31,
1994 totaled approximately $625 million, and are reflected
in other liabilities and minority interests. Third-
parties share of partnerships results of operations,
including specified returns, is reflected in other
expense-net.
Note 6 - Litigation
The Company and its subsidiaries are involved in legal
proceedings,claims and litigation arising in the ordinary
course of business.
In addition, in March and April 1989, five purported class actions
were commenced by certain shareowners (the "Shareowner Class
Actions") against the Company and up to three members of its Board
of Directors (two of whom are also officers) in various United
States District Courts, each alleging violations of the federal
securities laws and seeking unspecified damages arising out of an
asserted failure to make public disclosure of information relating
to allegedly improper practices (the "alleged practices") of the
Company's wholly owned subsidiary, Dun & Bradstreet, Inc., in
connection with the selling of commercial-credit information
services. The Shareowner Class Actions were later consolidated in
the United States District Court for the Southern District of
New York.
In February 1990, an amended consolidated Shareowner Class Action
complaint was served on the defendants, alleging additional
violations of the securities laws arising out of an asserted
failure to make public disclosure of the effect that the
alleged practices would have on the Company's future sales and
income, and in September 1992, the District Judge granted a
motion to permit this Action to be maintained as a class action.
On April 16, 1993, attorneys for the defendants and attorneys for
the plaintiffs entered into a memorandum of intent to settle the
Shareowner Class Action for an amount between $15 million and $20
million. On January 14, 1994, a judgment was entered by the Court
approving the proposed settlement. The exact amount of the
settlement will depend on the monetary amount of claims filed by
shareowners who are part of the class.
-8-
<PAGE>
As a result of contribution to the settlement by the Company's
insurance carrier and provisions previously recorded by the
Company, the amount of the settlement did not materially
affect the Company's earnings.
On June 9, 1993, American Credit Indemnity ("ACI"), a company of
which the Company owns 95% of the outstanding common stock,
received a summons and a consolidated amended class action
complaint (the "Amended Complaint") in a purported class action
pending in the United States District Court for the Southern
District of New York captioned "In re Towers Financial
Corporation Noteholders Litigation." The Amended Complaint
named 17 defendants, including various subsidiaries and
controlling persons of Towers Financial Corporation ("Towers"),
as well as ACI, in addition to a "Broker-Dealer Defendant
Class," alleged to consist of more than 75 members.
The Amended Complaint was brought by an alleged class of persons
who bought promissory notes issued by Towers between February 15,
1989 and February 9, 1993. It alleged that Towers, now operating
under Chapter 11 of the Bankruptcy Code, sold nearly $215 million
of such notes to more than 2,800 investors and sought damages from
all the defendants in at least that amount, as well as punitive
damages. The Amended Complaint asserted claims against ACI for
negligent misrepresentation, negligence and fraud under common law
and for violations of Section 10(b) (and Rule 10b-5 thereunder)
of the Securities Exchange Act of 1934 (the "Exchange Act").
The Amended Complaint alleged that offering documents for the
notes mischaracterized insurance policies issued by ACI to Towers
with respect to accounts receivable securing or backing the notes.
It further alleged that ACI issued policies with limited scope
of coverage and for exorbitant premiums with knowledge that they
would be used by Towers to fraudulently market the notes. ACI
answered the Amended Complaint, denying its material terms, and
moved for judgment on the pleadings. While ACI's motion
was pending, the Supreme Court of the United States decided the
case of Central Bank of Denver, N.A. v. First Interstate Bank of
Denver, N.A., holding that a private plaintiff may not maintain an
aiding and abetting suit under Section 10(b) of the Exchange Act.
Thereafter, plaintiffs filed a Second Consolidated Amended Class
Action Complaint (the "Second Amended Complaint"), in which they
asserted a primary liability claim against ACI and others under
Section 10(b) of the Exchange Act, and certain common law claims.
ACI subsequently moved to dismiss the Second Amended Complaint.
On September 2, 1994, while ACI's motion to dismiss remained
pending, ACI and counsel for the plaintiffs entered into an
agreement to settle all claims that were or could have been
asserted against ACI in the Towers Class Action for $1.25 million.
The United States District Court has granted its preliminary
approval to the settlement, entered an order providing notice to
the class plaintiffs, and has scheduled a hearing on the proposed
settlement. The amount of the proposed settlement did not
materially affect the Company's earnings. In the opinion of
management, the outcome of all current proceedings, claims and
litigation could have a material effect on quarterly or annual
operating results when resolved in a future period. However, in
the opinion of management, these matters will not materially
affect the Company's consolidated financial position.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
__________________________________________________________
Condition and Results of Operations
____________________________________
Reported third-quarter revenue increased by 10.8% to $1,333.4
______________________________
million from $1,203.4 million a year ago. Revenues increased
as a result of a rebound at Moody's Investors Service due to
the upswing in corporate bond-market volumes, and strong
reported revenue growth at A.C. Nielsen (Nielsen), IMS
International (IMS), Nielsen Media Research, Gartner Group
and Dataquest. Dun & Bradstreet Information Services (DBIS)
maintained good topline performance, while D&B Software's
reported revenue growth hit double digits on the strength of
client/server sales.
Excluding the effects of acquisitions, divestitures and a weaker
U.S. dollar, third-quarter revenue growth was 7.8%, up from 5% in
the first half of 1995.
In the first nine months of 1995, reported revenue increased 10.7%
to $3,860.5 million from $3,487.3 million a year ago. Excluding
the effects of acquisitions, divestitures and a weaker U.S.
dollar,revenue for the period was up 6%.
Earnings per share in the third quarter rose 3.1% to $1.01 per
__________________
share,in line with expectations, reflecting previously
announced plans to increase investment spending. Earnings were
held down by weakness in DBIS' international operations,
including the impact of integrating certain acquisitions and
the effects of economic conditions in Latin America. Third-
quarter profits also were dampened by several insolvencies
that resulted in substantial losses at American Credit
Indemnity (ACI).
Based on long-term business requirements in Nielsen, D&B committed
substantial dollars in the second half of 1995 to its European
operations. The goal is to accelerate the transition from audit
to scanning technology for fast-moving consumer goods, coupled
with the introduction of the proven Household Panel Services in
France and Germany.
Earnings per share in the first nine months were $2.51, up
1.6% from $2.47 per share a year ago.
Net income in the third quarter grew 2.9% to $171.5 million from
___________
$166.7 million a year ago. Net income for the nine months
ended September 30,1995 increased 1.5% to $426.5 million from
$420.0 million a year ago.
Operating income in the third quarter increased 4.1% to $260.7
________________
million from $250.4 million a year ago. Growth in operating
income was held down by the increase in investment spending
and the factors that held down earnings, as discussed above.
Operating income in the first nine months increased 4.7% to
$653.6 million from $624.3 million a year ago Growth in
operating income for the nine months ended September 30,
1995 was held down by the substantial increase in investment
spending on new revenue initiatives, the cyclical decline at
Moody's during the first half of 1995, losses at ACI due to
an increase in receivable-loss claims related to several
insolvencies, and the effects on DBIS' operations of economic
conditions in Latin America.
Operating income for the period included a one-time $28 million
gain reported in the first quarter of 1995, which was related to
the sale of warrants received in connection with the divestiture
of Donnelley Marketing in 1991.
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<PAGE>
In the third quarter of 1995, the Company completed the sale of
Interactive Data Corp. to the Financial Times Group for $201
million in cash. The $90 million restructuring gain on the sale
was offset by actions to improve future productivity. Costs
included a provision of $77.2 million for postemployment
benefits, primarily severance, for workforce reductions and
$12.8 million primarily to write off software for product lines
that were discontinued at Sales Technologies. Consequently, the
sale and actions will not have a material effect on the Company's
financial condition or 1995 results of operations.
Several non-recurring gains and significant changes in costs were
included in the third quarter of 1994. As a result of the
decision to outsource communications services, the assets of
DunsNet were sold for a pre-tax gain of $36.0 million. Dun &
Bradstreet Plan Services was divested with no gain recorded.
The Company also took proactive measures to improve D&B's future
performance by accelerating the introduction of newer
technologies, though this resulted in a charge of $38.8
million. The charge principally reflected the revaluation
of certain computer software and other intangible assets
that will be replaced or no longer be used at DBS, IMS, DBIS
and Nielsen. In addition, a change in eligibility requirements
for the Company's postretirement medical plan resulted in a
curtailment gain of approximately $25.7 million, which was
largely offset by a substantial increase in spending for new-
product development.
Non-operating expense-net in the third quarter was $23.5 million,
_________________________
compared with $17.6 million a year ago. Non-operating expense-net
in the third quarter of 1995 increased, in part, due to a lower
cash position as a result of the use of cash for acquisitions
and past restructuring programs, higher interest rates paid on
increased U.S. short-term borrowings, and higher minority interest
expense related to both Gartner Group's increased income and to
a previously disclosed limited partnership. Non-operating
expense-net for the nine months ended September 30, 1995 was
$63.7 million compared with non-operating expense-net of $37.7
million a year ago, primarily as a result of the factors noted
above.
The Company's effective tax rate for the first nine months of 1995
was 27.7%, compared with 28.4% for the comparable period in 1994.
Business Segment Highlights
___________________________
Marketing Information Services reported 16.4% growth in third-quarter
______________________________
revenue to $598 million. Excluding the impact of a weaker U.S.
dollar and acquisitions (Survey Research Group, AGB Australia/New
Zealand and Amfac Chemdata), revenue growth for the segment was
9%. IMS' revenue rose 16% to $202 million on a reported basis,
and 7% on an underlying basis. Revenue growth for the quarter
was boosted by strong sales of new products and client winbacks
in the U.S. Nielsen's revenue was up 16% to $322 million on a
reported basis, and up 6% on an underlying basis. Nielsen
Media Research posted strong underlying revenue growth in the
third quarter, spurred by a robust advertising economy,
additional broadcast and cable network subscribers and new
services, such as local Hispanic audience measurement.
Risk Management and Business Marketing Information Services
____________________________________________________________
reported third-quarter revenue growth of 9.3% to $428 million.
Excluding the impact of a weaker U.S. dollar and the acquisition
of Orefro L'Informazione in Italy and S&W in France, segment
revenue increased 7%. Moody's Investors Service rebounded
sharply in the third quarter, posting a strong gain in revenue
driven by increased volume in the corporate bond market. DBIS'
revenue was up 9% to
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<PAGE>
$340 million on a reported basis, and rose 3% on an underlying
basis Revenue at DBIS U.S. increased 5% to $194 million,
driven mainly by new products, such as Credit Scoring, Risk
Assessment Manager and Database Marketing, as well as by an
increase in new customers targeted by the unit's revamped
sales force. While DBIS Europe's third-quarter revenue
increased 16% on a reported basis, underlying revenue was
down slightly due to weakness in several countries.
Software Services reported a 12.4% increase in third-quarter
________________
revenue to $106 million. Excluding the impact of the weaker
dollar and the acquisition of Pilot Software, underlying
revenue growth was 8%. D&B Software (DBS) posted a double-
digit increase in revenue growth, reflecting DBS' growing
momentum in the rapidly expanding client/ server marketplace.
For the full year, DBS' client/server revenue is expected
to increase more than 150% to over $100 million.
Directory Information Services reported a 2.1% increase in third-
______________________________
quarter revenue to $104 million. Growth for the quarter was
helped by timing of directory publications, but held down by
changes in commission rates and other contractual arrangements
with telephone companies. Underlying third-quarter sales of
Directory Information Services yellow pages directories were up slightly.
Other Business Services reported a 4.5% increase in third-quarter
_______________________
revenue to $98 million. Excluding the divestiture of D&B Plan
Services, segment revenue rose 27%. Gartner Group and Dataquest
both posted excellent growth in third-quarter revenue. NCH
Promotional Services reported a decrease in revenue for the
quarter, reflecting a decline in worldwide coupon redemptions
and competitive pricing in the industry.
Changes in Financial Condition at September 30, 1995
____________________________________________________
Compared with December 31, 1994
_______________________________
Goodwill decreased to $1,050.6 million at September 30, 1995 from
________
$1,149.9 million at December 31, 1994, primarily reflecting
amortization and the sale of Interactive Data Corp.
Unearned Subscription Income increased to $358.4 million at
____________________________
September 30, 1995 from $290.3 million at December 31, 1994,
reflecting the cyclical pattern of higher subscription sales
in the first quarter.
Condensed Consolidated Statement of Cash Flows
______________________________________________
Nine Months Ended September 30, 1995 and 1994
_____________________________________________
Net cash provided by operating activities for the nine months
ended September 30, 1995 totaled $689.9 million compared with
$439.2 million for the comparable period in 1994. The
increase of $250.7 million reflected higher non-cash charges
for depreciation and amortization ($42.8 million), lower
restructuring and postemployment benefit payments ($67.5
million) and higher postemployment benefits expense ($80.5
million). The current period also included higher
deferred revenue ($25.8 million) at D&B Software (included in
net changes in other working capital items) and a decrease
in income taxes paid-net of refunds ($52.1 million). These
favorable variances were partially offset by higher
restructuring gains, net of restructuring provisions ($77.2
million).
-12-
<PAGE>
Net cash used in investing activities for the nine months ended
September 30, 1995 totaled $180.0 million compared with $447.1
million for the comparable period in 1994. The decrease in cash
usage of $267.1 million primarily reflected lower payments for
acquisition of businesses ($160.5 million), lower payments for
equity investments($41.1 million), included in other investments
and notes receivable and higher proceeds from sale of businesses
($57.4 million).
Net cash used in financing activities was $355.0 million for the
nine months ended September 30, 1995 compared with net cash used
in financing activities of $138.1 million for the comparable
period in 1994. The increase in cash usage of $216.9 million
primarily reflected lower U.S. short-term borrowings ($349.8
million) and lower non-U.S. borrowings ($31.5 million) included
in other financing, partially offset by the absence of payments
to an Alaska Native Corporation ($166.2 million).
Other
_____
Regarding 1995, the Company's fourth quarter outlook shows a
continuation of the current revenue momentum. The Company is
cautiously optimistic that this may generate a slightly better
full-year revenue performance than originally anticipated.
However, increased investment spending, the adverse trends
at ACI and weakness at DBIS' international operations are
expected to hold earnings growth slightly below mid-
single-digit.
Item 6. Exhibits and Reports on Form 8-K.
_________________________________________
(a) Exhibits:
(10) Material Contracts.
(x) Agreement and Release, dated July 20, 1995, between
Registrant and Edwin A. Bescherer, Jr.
(27) Financial Data Schedule for the period ended September
30, 1995
(b) Reports on Form 8-K:
None.
-13-
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE DUN & BRADSTREET CORPORATION
Date: November 10, 1995
By: \s\ NICHOLAS L. TRIVISONNO
Nicholas L. Trivisonno
Executive Vice President -
Finance and Chief Financial
Officer
Date: November 10, 1995
By: \s\ THOMAS W. YOUNG
Thomas W. Young,
Senior Vice President and
Controller
-14-
<PAGE>
Index to Exhibits
Regulation S-K
______________
Exhibit Number Page Number
______________ ____________
10. Memorandum of Agreement, dated 16
July 20, 1995, between Registrant and Edwin A. Bescherer, Jr.
27. Financial Data Schedule
(Filed electronically) --
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 500417
<SECURITIES> 14672
<RECEIVABLES> 1212761
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2105802
<PP&E> 1995989
<DEPRECIATION> 1068423
<TOTAL-ASSETS> 5563347
<CURRENT-LIABILITIES> 2116708
<BONDS> 0
<COMMON> 188417
0
0
<OTHER-SE> 1212136
<TOTAL-LIABILITY-AND-EQUITY> 5563347
<SALES> 0
<TOTAL-REVENUES> 3860465
<CGS> 0
<TOTAL-COSTS> 3206913
<OTHER-EXPENSES> 43861
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19822
<INCOME-PRETAX> 589869
<INCOME-TAX> 163394
<INCOME-CONTINUING> 426475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 426475
<EPS-PRIMARY> 2.51
<EPS-DILUTED> 2.51
</TABLE>
<PAGE>
Exhibit 10
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE, made by and between Edwin A.
Bescherer, Jr. (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 will resign as Executive Vice President-Finance
and Chief Financial Officer of the Company and from any other titled
positions held by him with the Company upon the naming of a new Chief
Financial Officer of the Company.
2. Effective on March 1, 1996, Employee will be entitled
to the benefits provided under The Dun & Bradstreet Executive
Transition Plan (the "Plan"), a copy of which Employee hereby
acknowledges receipt, subject to the terms and conditions of such
Plan and in accordance with the Summary of Benefit Entitlements
specified in the Appendix. Effective on that same date, Employee
will retire under the provisions of the Retirement Plan, the Pension
Benefit Equalization Plan and the Supplemental Executive Benefit Plan
(SEBP). For the purpose of determining benefits under the SEBP,
Employee will be deemed to have terminated his employment with the
consent of the Company. No amendment to the Plan shall affect the
rights of Employee hereunder.
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.
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,
16
<PAGE>
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 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,
on a full-time basis, as an employee, 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 shall not directly or
indirectly disclose any proprietary or confidential information,
records, data, formulae, specifications or 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, where applicable,
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, demands, debits, damages, injuries, actions or rights of
action of any nature whatsoever, whether know 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
17
<PAGE>
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 (i) a vested right
Employee may have to receive benefits under any plan maintained by
the Company; (ii) a right to indemnification by the Company regarding
conduct of the Employee prior to the Termination Date; or (iii)
rights arising under this Agreement. 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.
18
<PAGE>
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 either party without the
other party's 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. Upon Employee's resignation as set forth in paragraph 1
hereof, the Change in Control Severance Agreement between the Company
and Employee shall terminate in its entirety.
15. This Agreement shall be construed in accordance
with the internal laws of the State of New York, 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: July 20, 1995
\s\Edwin A. Bescherer, Jr.
---------------------------
Employee
THE DUN & BRADSTREET CORPORATION
\s\Earl H. Doppelt
-----------------------------
Senior Vice President and
General Counsel
<PAGE>
Appendix
Summary of Benefit Entitlements
Under The Dun & Bradstreet Executive Transition Plan
Employment with Company Since: July 31, 1978
Effective Date of
Commencement of Benefits: March 1, 1996
Termination Date: February 28, 1998
Salary Continuation: Salary - $810,000 per year
Period of Time - 104 weeks
Welfare Benefit Continuation: The Dun & Bradstreet Corporation
Medical, Dental and Life
Insurance Plans
Annual Bonus Payment: 100% of the annual bonus
for 1995;2/12 of the annual
bonus for 1996 at time of
normal payment
Long-Term Award: 100% of the long-term
awards otherwise payable for
the 1993-1995; 1994-1996;
and 1995-1997 cycles at time
of normal payment
Financial Planning/Counseling: As previously provided by the
Company (through 2/28/98)
Profit Participation Plan
Participation: Through February 29, 1996
Exercisability of Stock Options: As provided in the applicable
Stock Option Plan upon retirement
Restrictions on Restricted Stock: To lapse upon retirement in
accordance with the applicable
Restricted Stock Plan
